/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080513.mbx 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-text copies of the company's consolidated financial statements for the quarter ended April 1, 2008, are available for free at http://researcharchives.com/t/s?2bc8 About Einstein Noah Headquartered in Lakewood, Colo., Einstein Noah Restaurant Group Inc. (Nasdaq: BAGL) -- http://www.einsteinnoah.com/-- operates a a retail chain of quick casual restaurants in the United States, specializing in foods for breakfast and lunch. The company operates locations primarily under the Einstein Bros.(R) Bagels and Noah's New York Bagels(R) brands and primarily franchises locations under the Manhattan Bage(R) brand. The company's retail system consists of more than 600 restaurants, including more than 100 license locations, in 35 states plus the District of Columbia. ENTERCOM COMMS: S&P Holds 'BB-' Rating, Removes Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Bala Cynwyd, Pennsylvania-based radio broadcaster Entercom Communications Inc., including its 'BB-' corporate credit rating. At the same time, S&P removed the ratings from CreditWatch negative, where it originally placed them on March 17, 2008 based on S&P's concerns regarding the company's narrow margin of covenant compliance. The outlook is negative. "The affirmation and CreditWatch removal reflects the company's slight improvement in its cushion of covenant compliance for the quarter ended March 31, 2008, due to debt repayment and modest EBITDA growth," explained Standard & Poor's credit analyst Michael Altberg. In addition, S&P's action incorporates the company's decision to reduce its quarterly dividend to 10 cents per share from 38 cents per share, which, on a pro forma basis, increases Entercom's conversion of EBITDA to discretionary cash flow to roughly 47%, from 21%, for the 12 months ended March 31, 2008. Although S&P expect the company to use excess discretionary cash flow for share buybacks under its recently extended $100 million repurchase program (which had $40.2 million in capacity available as of March 31, 2008), S&P believe the dividend reduction offers Entercom increased flexibility to protect the advantageous pricing under its credit agreement and repay debt if needed. At the same time, S&P assigned a recovery rating to the 7.625% senior subordinated notes due 2014 at the company's finance subsidiary, Entercom Radio LLC, and left the issue-level ratings on this debt unchanged. The issue-level rating remains 'B' (two notches below the 'BB-' corporate credit rating), and S&P assigned a recovery rating of '6', indicating its expectation of negligible (0%-10%) recovery in the event of a payment default. The rating on Entercom Communications Corp. reflects financial risk from debt-financed radio station acquisitions, the potential for additional acquisitions that could weigh on credit measures, a competitive operating environment, and the potential for advertising volatility. The company's good competitive positions in large radio markets, radio broadcasting's decent margin and discretionary cash flow potential, and largely resilient station asset values only partially offset these factors. FIRST MARBLEHEAD: TERI Bankruptcy Causes $315MM Decrease in Value ----------------------------------------------------------------- The First Marblehead Corporation (NYSE: FMD) released last week its financial and operating results for the third quarter of fiscal 2008 and for the nine-month period ended March 31, 2008. For the third quarter of fiscal 2008, the company recorded a net loss of $229.6 million or $2.36 per diluted share compared to net income of $71.2 million or $0.75 per diluted share for the third quarter of fiscal 2007. The Company's net loss for the nine-month period was $178.4 million or $1.88 per diluted share compared to net income of $293.3 million or $3.09 per diluted share for the same period last year. Total revenues for the nine months ended March 31, 2008 were $5.0 million, compared to $681 million for the same period last year. Revenues declined principally as a result of illiquidity in the financing market for private student loans, leading to the Company's inability to complete a securitization transaction. In addition, adjustments made to certain assumptions used to estimate the fair value of service receivables, which resulted in a $315 million pre-tax decrease in their total value. The voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code by The Education Resources Institute (TERI), on April 7, 2008, had a significant negative impact on the estimate of the fair value of service receivables. "Our earnings this fiscal quarter were disappointing and affected by the continued disruption in the capital markets and the challenging consumer credit cycle. However, we recognize that the demand for private student loans and other services continues to be very strong," said Jack L. Kopnisky, First Marblehead's Chief Executive Officer and President. During the third quarter of fiscal 2008, the Company facilitated student loan origination for its clients of $1.0 billion, up 19% over the same period last year. The rolling twelve-month volume increased to $5.0 billion, up 38% for the twelve months ended March 31, 2008. "Management has taken a number of actions to reposition its business model in light of the current environment and as part of its planned transition into a diversified education finance products and services company. Earlier this week, we announced a significant reduction in our cost structure," said Kopnisky. "In addition, we continue to work with GS Capital Partners to close its investment." First Marblehead hosted a conference call on May 8, 2008, to discuss the results. Mr. Kopnisky, and John A. Hupalo, Senior Executive Vice President and Chief Financial Officer, hosted the call. A replay of the call will be available on First Marblehead's Web site until May 15. Dial (888) 286-8010 from the U.S. Or (617) 801-6888 from abroad, and enter the pass code 90020698. About The First Marblehead First Marblehead Corporation -- http://www.firstmarblehead.com/-- provides financial solutions that help students achieve their dreams. The company helps meet the growing demand for private education loans by providing national and regional financial institutions and educational institutions, well as businesses and other enterprises, with an integrated suite of design, implementation and securitization services for student loan programs. First Marblehead supports responsible lending for borrowers and is a strong proponent of the smart borrowing principle, which encourages students to access scholarships, grants and federally guaranteed loans before considering private education loans. At Dec. 31, 2008, the company's balance sheet showed total assets of $1,584,564,000, total liabilities of $663,514,000 and total stockholders' equity of $921,050,000 * * * As reported by the Troubled Company Reporter on April 9, 2008, First Marblehead's stocks dropped 37% after The Education Resources Institute, guarantor of its loans, filed for Chapter 11 protection. According to Bloomberg News, First Marblehead declined $2.84 to $4.86 in New York Stock Exchange trading after TERI's bankruptcy filing. The descent is the biggest one-day drop in the securities' record and reduces First Marblehead below 89% for the past 12 months. First Marblehead is scheduled as TERI's largest unsecured creditor, holding claims of $11 million, according to papers TERI filed in bankruptcy court. First Marblehead said it is analyzing the implications of TERI's Chapter 11 filing on its lenders, investors, borrowers, well as the The National Collegiate Student Loan Trusts. FORTIUS II: Moody's Slashes Ratings on Two Note Classes to Ca ------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Fortius II Funding, Ltd. Class Description: $325,000,000 Class A-1 Floating Rate Notes Due 2042 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: B2, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $50,000,000 Class A-2 Floating Rate Notes Due 2042 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Ca Class Description: $45,000,000 Class B Floating Rate Notes Due 2042 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: Ca Class Description: $20,000,000 Class C Deferrable Floating Rate Notes Due 2042 -- Prior Rating: Caa2, on review for possible downgrade -- Current Rating: C Class Description: $27,500,000 Class D Deferrable Floating Rate Notes Due 2042 -- Prior Rating: Ca -- Current Rating: C Class Description: $7,500,000 Class E Deferrable Floating Rate Notes Due 2042 -- Prior Rating: Ca -- Current Rating: C Class Description: $10,000,000 Combination Notes Due 2042 -- Prior Rating: Caa2, on review for possible downgrade -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. FREMONT GENERAL: Expects to File for Bankruptcy ----------------------------------------------- Fremont General Corporation (Pink Sheets: FMNT), doing business primarily through its wholly owned bank subsidiary, Fremont Investment & Loan provided updated information on matters that pertain to its previously announced transactions with CapitalSource, Inc. and Litton Loan Servicing LP as well as with respect to its future plans. On April 13, 2008, the Company, Fremont General Credit Corporation, a California corporation and the Company's wholly- owned subsidiary and FIL entered into a Purchase and Assumption Agreement with CapitalSource TRS Inc., a wholly owned subsidiary of CapitalSource, Inc., and, for limited reasons described in the P&A Agreement, CapitalSource. The P&A Agreement provides for the purchase of a substantial portion of FIL's assets, including all of FIL's branches, and the assumption of all of FIL's deposits, by a California industrial bank to-be-organized and wholly owned by the Purchaser. All regulatory applications for approval of the CapitalSource transaction have since been filed by the Purchaser. Upon approval of the requisite regulatory applications, the CapitalSource industrial bank so formed would be a Federal Deposit Insurance Corporation insured depository institution with deposits insured to the fullest extent provided by law. On May 8, 2008, FGC announced that FIL had entered into an Asset Purchase Agreement with Litton Loan Servicing LP, an affiliate of Goldman Sachs & Co., that provides for the sale of FIL's remaining mortgage servicing rights on its $12.2 billion serviced loan portfolio, as of March 31, 2008. With the execution of the agreement, FIL has now contracted to sell substantially all of FIL's remaining assets. Subject to receipt of non-objection from the Regulatory Authorities, FIL expects that it should be in a position to close the Servicing Asset Sale prior to the receipt of all requisite regulatory approvals for the CapitalSource transaction. Because of the regulatory prohibitions that the Company and FIL are operating under and due to lack of other viable alternatives available to FGC, which is described in more detail in a Form 8-K which is concurrently being filed with the Securities and Exchange Commission, the Board of Directors of FGC believes that it should take all actions necessary and appropriate to consummate the transactions contemplated by the P&A Agreement in order to: (1) comply with the terms of the Supervisory Prompt Corrective Action Directive issued on March 26, 2008, by the FDIC with the concurrence of the California Department of Financial Institutions, which has been disclosed in prior press releases, (2) enhance the capital of FIL, and (3) avoid further action by the Regulatory Authorities, which could be detrimental to FGC's constituencies. For this reason, FGC publicly disclosed in announcing the CapitalSource transaction that in the event that FGC was not in a position to produce required consolidated financial information in a timely manner to conduct a proxy solicitation, FGC would likely determine to file a voluntary petition for bankruptcy following receipt of the requisite approvals for the CapitalSource transaction from the Regulatory Authorities. The Company has determined that it is not in a position to provide in any type of realistic time frame current and complete consolidated financial information of FGC that would be required by the SEC proxy rules to solicit shareholders for approval of the transaction with CapitalSource. Accordingly, absent the occurrence of another viable transaction for the remaining assets and liabilities of the Company and FIL, or of a transaction for the entire consolidated company or an alternative transaction with respect to FIL, which in the case of a transaction for the entire consolidated Company or for FIL would require the board of directors of the Company or FIL to determine that the failure to pursue such alternative transaction would be a breach of the respective boards' fiduciary duties under applicable laws, it is the expectation of the board of directors of FGC that it will cause FGC to file a petition for a voluntary bankruptcy proceeding solely with respect to FGC under Chapter 11 of the U.S. Bankruptcy Code following the receipt of all requisite approvals of the Regulatory Authorities of the CapitalSource transaction. Under such circumstances, the Company would request approval of the CapitalSource transaction in accordance with federal bankruptcy laws. The bankruptcy filing will not impact the operation of FIL or affect the FDIC insurance of its deposits. Information related to the various efforts of the Company's new management to resolve the various legacy issues confronting the Company and FIL, which leads to the decision to file for bankruptcy, is described in the referenced Form 8-K filed with the SEC. If the Company is able to close on the CapitalSource transaction and the Servicing Asset Sale as contemplated, the FIL board of directors would provide certification to the FDIC that all deposit liabilities were assumed by the newly formed, FDIC insured CapitalSource industrial bank, resulting in termination of its FDIC insured status, and then file application with the DFI to surrender its banking charter. Completion of the CapitalSource transaction and of the Servicing Asset Sale, and termination of the Bank's insurance of accounts and surrender of the Bank's charter would effectively end the Bank's supervision by the Regulatory Authorities. At that time, the FIL's board of directors expects to begin the process of an orderly liquidation of FIL. Notwithstanding a bankruptcy filing by FGC, FIL's objective during such a liquidation process will be to continue to work to resolve FIL's liabilities as new management has been doing, with the goal of providing as much liquidity as possible to be available to satisfy, in whole or in part, the claims of FGC's creditors and, to the extent any liquidity remains, FGC's shareholders. FGC can give no assurance that it will be successful in such efforts. FGC management expects to continue to publicly report on its continuing efforts to resolve legacy claims at FGC and FIL. Background of Events Leading to CapitalSource Transaction On February 27, 2007, FGC and the Bank received a proposed Cease and Desist Order from the FDIC, which ordered the Company and FIL to cease and desist from unsafe and unsound banking practices and violations of law and regulations and required FIL to make a variety of changes designed to correct lending deficiencies in FIL's subprime residential mortgage and commercial real estate business, to adopt a Capital Adequacy Plan to maintain adequate Tier 1 leverage capital in relation to FIL's risk profile, to provide for enhanced regulatory oversight, and for FIL to have and retain qualified management acceptable to the Regulatory Authorities. On March 7, 2007, FGC and FIL formally consented to the proposed Order issued by the FDIC, without admitting to any of the allegations contained in the Order. FGC and FIL entered into a Final Order with the DFI on April 13, 2007, which is substantially similar in content to the Order. FGC retained a new management team in November 2007, which management team was also authorized by the Regulatory Authorities to serve at FIL in the same capacities in December 2007. In January 2008, a new board of directors for FGC was also appointed. At the direction of the new management team, FGC has since embarked on a series of initiatives to resolve many of the legacy issues confronting both FGC and FIL. Among new management's accomplishments are: reducing operating expenses through a reduction in staff as well as overhead, closure of FIL's Irving, Texas loan servicing center and FGC's Santa Monica headquarters, selling a portion of FIL's performing and non-performing loans, negotiating resolution of several of FIL's outstanding litigation matters, resolving net worth covenant breaches by FGC, and negotiating potential resolutions of a portion of FIL's residential mortgage loan repurchase demands. In addition, with the assistance of FGC's investment banking firms, FGC began marketing FGC for sale, as well as FIL's deposits, branches and assets. Shortly after FGC's new management team was retained, a joint examination by the Regulatory Authorities was commenced. During the course of the joint regulatory examination and following discussions with Regulatory Authorities, FGC commenced a re-evaluation of the carrying value and related reserves for various assets and liabilities, including the repurchase reserve on previously sold or securitized residential mortgage loans completed between 2004 and 2007 in connection with the preparation of its 2007 year end consolidated financial statements. FGC publicly announced on February 28, 2008 that, in connection with ongoing reviews and the Company's preparation of its 2007 consolidated financial statements, it was possible that it could record asset write-downs and provisions in a significantly greater amount than what was reflected on FGC's books and records and reflected in regulatory call reports filed by FIL. FGC further publicly announced that its independent auditors were going to be delayed in completing their audit of FGC's consolidated financial statements for the year ended December 31, 2007, causing FGC to file a Form 12b-25 with the SEC announcing the delay in filing the 2007 Annual Report on Form 10-K. On March 12, 2008, FGC announced that it would not be filing its 2007 Annual Report on Form 10-K with the SEC by the end of the 15-day extension period. On March 26, 2008, the FDIC, with the concurrence of the DFI, issued a Supervisory Prompt Corrective Action Directive to the Bank, FGC and FGCC. The Directive requires the Bank, FGC and FGCC to take one or more of the following actions to recapitalize the Bank within 60 days of the Directive (i.e., by May 26, 2008): * The Bank shall sell enough voting shares or obligations of the Bank so that the Bank will be "adequately capitalized," as defined under the Federal Deposit Insurance Act and the related FDIC regulations, after the sale; and/or * The Bank shall accept an offer to be acquired by a depository institution holding company or combine with another insured depository institution; and * In connection with any such acquisition transaction, FGC and FGCC shall divest themselves of the Bank. Following receipt of the Directive, FGC and FIL, with the assistance of the Company's investment banking firms, devoted substantially all of their attention towards exploring the possible sale, recapitalization or merger of FGC and/or FIL or the sale of FIL's assets. FGC's investment bankers approached approximately 70 parties since November 2007, and 35 of those parties showed interest and requested confidentiality agreements. As a result and after a number of those parties under confidentiality agreements conducted due diligence, the solicitation and marketing process resulted in only two written bids, each for individual branch locations at significant discounts. On March 8, 2008, and in follow up to an earlier indication of interest expressed during 2007 to acquire certain Bank assets, CapitalSource submitted an offer. The CapitalSource offer was the only serious offer received by FGC since new management arrived at FGC in November 2007. FGC and the Purchaser negotiated the P&A Agreement with the encouragement of the Regulatory Authorities. While FGC believes that the Regulatory Authorities will continue to support the CapitalSource transaction and, in doing so, expedite their review and approval of the required applications associated with the CapitalSource transaction beyond the May 26, 2008 deadline set forth in the Directive because the P&A Agreement was executed well before such date, if for some reason the requisite regulatory approvals are not received, or if FGC were for some other reason unable to complete the CapitalSource transaction, the Regulatory Authorities would, in all likelihood, place FIL into receivership and FGC would lose all control over FIL. Under such circumstances, deposits at FIL would continue to be insured to the fullest extent permitted by law. In large part due to the restrictions placed on FIL by the Orders and the Directive, which prohibit any dividends being made by FIL to FGC, FGC has limited liquidity remaining. For the reasons referenced above concerning the Company's prior efforts to raise capital and to market FGC and/or FIL, FGC's board of directors and new management do not believe that there exists any meaningful opportunity for FGC to obtain capital through some form of equity or debt offering. FGC's liquidity concern discussed herein does not take into consideration FGC's obligations under the 2009 Series B Senior Notes as to which an aggregate of $165.8 million was outstanding at March 31, 2008, and the semi-annual interest payment which was not paid as required by its terms on March 17, 2008. The majority holder of such Senior Notes has currently agreed to forbear from acceleration of the obligations owed under such Senior Notes while FGC seeks to negotiate a restructuring of the Senior Notes obligations, which mature in March 2009. No assurance can be made that such Senior Note holder will continue to forbear from pursuing its rights under the Senior Notes and the related indenture, or that FGC will enter into such an agreement with the majority holder of the Senior Notes or that, even if FGC does, such an agreement will provide any meaningful benefits to the FGC's shareholders. FGC has also exercised its right to defer interest payments due on its Junior Subordinated Debentures, as to which an aggregate $103.1 million was outstanding at March 31, 2008. FGC and FIL have individually and, in certain instances, jointly, been named as defendants in a number of lawsuits which seek significant monetary damages, penalties and other injunctive relief. While management believes that the more significant lawsuits are without merit and intends to vigorously defend them, the outcome of litigation is always uncertain. In addition, as described below, FIL is subject to potential obligations to repurchase a significant amount of residential mortgage loans previously sold for alleged violations of representations and warranties made in connection with such loan sales and securitizations. While based on internal investigations, management does not agree with the underlying basis for a substantial number of such repurchase claim requests, no assurance can be given as to the ultimate outcome of these contingent claims or whether amounts that FIL has previously reserved are sufficient to satisfy all existing and potential future claims. For these reasons, FGC can give no assurance that the amount of cash that will be available following the Servicing Asset Sale and the CapitalSource transaction will be sufficient to satisfy all of the claims and contingent obligations which FIL has outstanding. Further, even assuming that all of the claims and obligations of FIL can be settled, there can be no assurance that there will be any monies available to FGC's shareholders, given that the claims of the holders of the Senior Notes and of the Junior Subordinated Debentures, as well as any other creditors of FGC, must be satisfied in full before FGC's shareholders are entitled to receive anything. About Fremont General Headquartered in Brea, California, Fremont General Corporation (NYSE: FMT) -- http://www.fremontgeneral.com/-- is a financial services holding company which is engaged in deposit gathering through a retail branch network in Central and Southern California and residential real estate mortgage servicing through its wholly owned subsidiary Fremont Investment & Loan. Fremont Investment funds its operations primarily through deposit accounts sourced through its 22 retail banking branches which are insured up to the maximum legal limit by the Federal Deposit Insurance Corporation. It had $8.8 billion in total assets at Sept. 30, 2007. The Retail banking Division of Fremont Investment & Loan continues to offer a variety of savings and money market products as well as certificates of deposits across its 22 branch network. Customer deposits remain fully insured by the FDIC up to at least $100,000 and retirement accounts remain insured separately up to an additional $250,000. * * * As reported in the Troubled Company Reporter on April 21, 2008, Fitch Ratings downgraded Fremont General Corporation ratings and removed the negative rating outlook as: (i) long-term issuer default rating to 'D' from 'CC'; and (ii) individual rating to 'F' from 'E'. FRONTIER AIRLINES: Creditors Panel Taps Wilmer Cutler as Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of Frontier Airlines Holdings Inc. and its subsidiaries seeks authority from the U.S. Bankruptcy Court for the Southern District of New York to retain Wilmer Cutler Pickering Hale and Dorr LLP as its counsel, nunc pro tunc to April 24, 2008. The Committee selected WilmerHale based on, among other things, the firm's considerable national experience and knowledge in the field of creditors' rights and business reorganizations under Chapter 11, and in other related areas of law, including, but not limited to, aviation and aircraft finance, corporate, banking and litigation matters, R. Douglas Greco, vice president of Committee chair Airbus Americas Holding, Inc., states. As the Committee's counsel, WilmerHale is expected to: (a) advise the Committee with respect to its rights, duties and powers in the Debtors' Chapter 11 cases; (b) assist and advise the Committee in its consultations with the Debtors; (c) assist the Committee in analyzing the Debtors' capital structure, the claims of the Debtors' creditors, and in negotiating with holders of claims and equity interests; (d) investigate the acts, conduct, assets, liabilities and financial condition of the Debtors and of the operation of the Debtors' businesses; (e) analyze, and negotiate with, the Debtors or any third party concerning matters related to, among other things, (i) the assumption or rejection of certain leases of non- residential real property and executory contracts, asset dispositions, financing of other transactions, and (ii) the terms of one or more plans of reorganization for the Debtors and accompanying disclosure statements and related Plan of Reorganization documents; (f) assist and advise the Committee as to its communications to the general creditor body regarding significant matters in the Debtors' Chapter 11 cases; (g) participate in all hearings and other proceedings; (h) review and analyze all motions, applications, orders, statements of operations and schedules filed with the Court; (i) assist and advise the Committee with respect to any legislative or governmental activities; (j) prepare pleadings and applications as may be necessary to uphold the Committee's interests and objectives; (k) investigate and analyze any claims against the Debtors' non-debtor affiliates; (l) prepare, on behalf of the Committee, any pleadings, including without limitation, motions, memoranda, complaints, adversary complaints, objections or comments; and (m) perform other legal services as may be required or are otherwise deemed to be in the interests of the Committee in accordance with the Committee's powers and duties. The professionals in WilmerHale will be paid according to their customary hourly rates of: Professional Hourly Rate ------------ ----------- Partners $550 - $765 Counsel $515 - $595 Associates $345 - $515 Paralegals $210 - $250 Andrew N. Goldman, Esq., a partner at WilmerHale, asserts that the firm does not represent any interest adverse to the Debtors, their estates or creditors. WilmerHale is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, Mr. Goldman assures the Court. About Frontier Airlines Inc. Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provide air transportation for passengers and freight. They operate jet service carriers linking their Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. As of May 18, 2007 they operated 59 jets, including 49 Airbus A319s and 10 Airbus A318s. The Debtor and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-11297 thru 08-11299.) Hugh R. McCullough, Esq. at Davis Polk & Wardwell represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. At Dec. 31, 2007, Frontier Airlines Holdings Inc. and its subsidiaries' total assets was $1,126,748,000 and total debts was $933,176,000. (Frontier Airlines Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Gets Court Nod to Hire Davis Polk as Counsel --------------------------------------------------------------- Frontier Airlines Holdings Inc. and its subsidiaries obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Davis Polk & Wardwell as their counsel, nunc pro tunc to April 10, 2008. DPW is expected to: (a) take necessary or appropriate actions to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtors, the negotiation of disputes in which the Debtors are involved, and the preparation of objections to claims filed against the Debtors' estates; (b) prepare on behalf of the Debtors, as debtors-in- possession, necessary or appropriate motions, applications, answers, orders, reports and other papers in connection with the administration of the Debtors' estates; (c) provide advice, representation, and preparation of necessary documentation and pleadings regarding debt restructuring, statutory bankruptcy issues, postpetition financing, securities laws, real estate, employee benefits, environmental, business and commercial litigation, tax, aircraft financing and, as applicable, asset dispositions; (d) counsel the Debtors with regard to their rights and obligations as debtors-in-possession, and their powers and duties in the continued management and operations of their businesses and properties; (e) take necessary or appropriate actions in connection with a plan or plans of reorganization and related disclosure statements and all related documents, and further actions as may be required in connection with the administration of the Debtors' estates; and (f) act as general bankruptcy counsel for the Debtors and perform all other necessary or appropriate legal services in connection with the Chapter 11 cases. DPW will be paid based on it its hourly rates: Partners and counsel $620 to $960 Associates $305 to $675 Paraprofessionals and staff $100 to $355 During the 12-month period prior to the bankruptcy filing, DPW received from the Debtors an aggregate of $955,304 for professional services performed and expenses incurred. As of the bankruptcy filing, DPW was not a creditor of the Debtors because DPW waived any unpaid amounts -- believed to be zero -- for services it performed before the bankruptcy filing. Prior to the Chapter 11 filing, the Debtors had established a retainer balance with DPW. Subsequently, DPW issued a final pre- filing invoice to the Debtors and drew down the amount due from the retainer. DPW held a retainer as of the bankruptcy filing equal to $510,740. Marshall S. Huebner, Esq., at Davis Polk & Wardwell, assured the court that DPW is a "disinterested person" as defined in Section 101(14), as modified by Section 1107(b) of the Bankruptcy Code. The firm neither holds nor represents any interests adverse to the Debtors and their estates, Mr. Heubner said. About Frontier Airlines Inc. Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provide air transportation for passengers and freight. They operate jet service carriers linking their Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. As of May 18, 2007 they operated 59 jets, including 49 Airbus A319s and 10 Airbus A318s. The Debtor and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-11297 thru 08-11299.) Hugh R. McCullough, Esq. at Davis Polk & Wardwell represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. At Dec. 31, 2007, Frontier Airlines Holdings Inc. and its subsidiaries' total assets was $1,126,748,000 and total debts was $933,176,000. (Frontier Airlines Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FRONTIER AIRLINES: Can Employ Togut Segal as Conflicts Counsel -------------------------------------------------------------- Frontier Airlines Holdings Inc. and its subsidiaries obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Togut Segal & Segal LLP as their conflicts counsel, nunc pro tunc to April 10, 2008. Togut Segal is expected to: (a) advise the Debtors regarding their powers and duties as Debtors and debtors-in-possession in the continued management and operation of their businesses and properties; (b) attend meetings and negotiate with representatives of creditors and other parties-in-interest; (c) take necessary action to protect and preserve the Debtors' estates and to represent the Debtors' interests in negotiations concerning litigation in which the Debtors are involved, including, but not limited to objections to claims files against the estates; (d) prepare on the Debtors' behalf, motions, applications, adversary proceedings, answers, orders, reports and papers necessary to the administration of the estates; (e) advise the Debtors in connection with any potential sale of the assets; (f) appear before the Court and to protect the interests of the Debtors' estates before the Court; and (g) perform other necessary legal services and provide other necessary advice to the Debtors in connection with the Chapter 11 cases. The firm will perform the duties of counsel to the Debtors on all matters where DPW cannot perform its services, making the the firm's service complimentary rather than duplicative to DPW's role as bankruptcy and reorganization counsel, says Mr. Christie. The Debtors will pay Togut Segal based on the firm's hourly rates and will be reimbursed for its actual, necessary expenses. The firm's hourly rates are: Partners $725 to $845 Associates and Counsel 245 to 650 Paralegals and Law Clerks 125 to 245 Alber Togut, Esq., a member of Togut Segal, assures the court that his firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. About Frontier Airlines Inc. Headquartered in Denver, Colorado, Frontier Airlines Inc. -- http://www.frontierairlines.com/-- provide air transportation for passengers and freight. They operate jet service carriers linking their Denver, Colorado hub to 46 cities coast-to-coast, 8 cities in Mexico, and 1 city in Canada, well as provide service from other non-hub cities, including service from 10 non-hub cities to Mexico. As of May 18, 2007 they operated 59 jets, including 49 Airbus A319s and 10 Airbus A318s. The Debtor and its debtor-affiliates filed for Chapter 11 protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.: 08-11297 thru 08-11299.) Hugh R. McCullough, Esq. at Davis Polk & Wardwell represent the Debtors in their restructuring efforts. Togul, Segal & Segal LLP is Debtors' Conflicts Counsel, Faegre & Benson LLP is the Debtors' Special Counsel, and Kekst and Company is the Debtors' Communications Advisors. At Dec. 31, 2007, Frontier Airlines Holdings Inc. and its subsidiaries' total assets was $1,126,748,000 and total debts was $933,176,000. (Frontier Airlines Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FURLONG SYNTHETIC: EOD Occurrence Prompts Moody's to Chip Ratings ----------------------------------------------------------------- Moody's Investors Service has downgraded ratings of five classes of notes issued by Furlong Synthetic ABS CDO 2006-1, Ltd., and left on review for possible further downgrade the rating of two of these classes. The notes affected by rating action are: Class Description: $335,000,000 Class A-S1VF Senior Secured Floating Rate Notes Due October 2046 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: Baa1, on review for possible downgrade Class Description: $52,000,000 Class A1 Senior Secured Floating Rate Notes Due October 2046 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade Class Description: $50,000,000 Class A2 Senior Secured Floating Rate Notes Due October 2046 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: Ca Class Description: $21,000,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due October 2046 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: C Class Description: $19,500,000 Class B Mezzanine Secured Deferrable Interest Floating Rate Notes Due October 2046 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: C The rating downgrade actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence, as reported by the Trustee on April 11, 2008, of an event of default that occurs when the Senior Credit Test is not satisfied, as described in Section 5.1(h) of the Indenture dated June 28, 2006. Furlong Synthetic ABS CDO 2006-1, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of certain Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued following the event of default. Because of this uncertainty, the ratings assigned to the Class A-S1VF Notes and Class A-1 Notes remains on review for possible further action. GATEHOUSE MEDIA: S&P Places 'B+' Corp. Credit Under Negative Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings for GateHouse Media Operating Inc., including the 'B+' corporate credit rating, on CreditWatch with negative implications. "The CreditWatch placement reflects a deteriorating cushion in the company's total leverage covenant in its revolving credit facility," explained Standard & Poor's credit analyst Emile Courtney. GateHouse stated on its March 2008 earnings call that leverage (as measured by the revolving credit agreement) was 6.3x, versus the maximum total leverage covenant of 6.5x. While GateHouse also reported that same-store adjusted EBITDA improved by 1.4% in the March 2008 quarter, the company borrowed $22 million on its revolver to make an acquisition of a group of weekly publications in Delaware, thereby leading to increased debt levels and a thinning covenant cushion in the quarter. In addition, while GateHouse expects to continue to increase pro forma same-store adjusted EBITDA over the remainder of 2008, and the company has exhibited operating performance over the past several quarters that has outperformed its peers, S&P are concerned about the covenant cushion level during this period of economic uncertainty and heightened industry volatility. GateHouse announced that it expects to sell about $35 million worth of noncore assets by the end of the September 2008 quarter, proceeds from which would be partly used for debt repayment. In resolving the CreditWatch listing, S&P will consider the near- term operating environment, the likely benefit to the company from synergies, and management's financial strategy for remaining in compliance with its covenants. GCI INC: S&P Cuts Issuer Level Rating on Sr. Unsecured Debt to B ---------------------------------------------------------------- Standard & Poor's Rating Services lowered its issue level rating on the senior unsecured debt of Anchorage, Alaska-based GCI Inc. to 'B' from 'B+' and revised the recovery rating to '6' from '5', indicating expectations for negligible (0% to 10%) recovery in the event of payment default. The recovery rating revision reflects the increase in secured debt following the company's $145 million tack-on term loans, which reduces recovery prospects for holders of GCI's senior unsecured debt. At the same time, S&P affirmed the 'BB-' corporate credit rating given that the resultant increase in operating lease adjusted leverage to 4.5x from 3.8x at year-end 2007, was already incorporated into our current rating. The outlook is stable. Pro forma total debt is about $684 million. The ratings on Anchorage, Alaska-based GCI Inc. reflect its significant exposure to the highly competitive Alaskan telecom market, lack of geographic diversity, uncertain growth prospects for new investment projects, and high leverage. Tempering factors include GCI's well-positioned incumbent cable TV business and limited competition from direct-to-home satellite services; its network access business, which is bolstered by long-term contracts despite moderate pricing pressure; and bundled service offerings, which help improve customer retention. GCI primarily offers telecom and cable TV services in Alaska. While the local telecom business has shown impressive growth, including attaining a wireline penetration almost equal to the incumbent telecom provider, Alaska Communications Systems Holdings Inc. in a number of major Alaskan markets, GCI still faces highly competitive conditions. In contrast, GCI's cable and network access segments have more favorable business characteristics. The network access (long distance and carrier services) segment accounts for approximately 35% of revenue and 50% to 60% of EBITDA. This business has a dominant share of the long distance market and has experienced solid growth, although declining price trends and increased competition may erode financial performance longer term. GENTA INC: March 31 Balance Sheet Upside-Down by $4 Million ----------------------------------------------------------- Genta Incorporated's balance sheet at March 31, 2008, showed total assets of $25.1 million and total liabilities of $28.8 million resulting in a total stockholders' deficit of $3.7 million. The company reported a net loss of $9.7 million for the first quarter ended March 31, 2008, compared with a net loss of $5.6 million for the first quarter of 2007. The larger net loss in 2008 is due to recognition of the tesetaxel license payments of $2.5 million, the lower reduction in provision for settlement of litigation of $1.3 million, and higher expenses resulting from the AGENDA clinical trial. "Genta has successfully diversified with three high-value clinical-stage products in our portfolio," Dr. Raymond P. Warrell, Jr., Genta's chairman and chief executive officer, noted. "The Phase 3 trial of Genasense in melanoma has now enrolled more than 25% of its target, we expect accrual completion this year, and positive results should enable worldwide regulatory filings in 2009." "During the quarter, FDA provided substantial guidance on the development of each of our compounds. With G4544, an internally developed compound for skeletal diseases, we have the opportunity to submit a NDA for a product via a streamlined 505(b)(2) regulatory strategy," Mr. Warrell added. "Our in-licensing of worldwide rights to tesetaxel has provided us with a leading oral taxane that addresses a very large and well-characterized market. This portfolio includes unique compounds that offer significant partnering opportunities to accelerate their development." At March 31, 2008, Genta had cash, cash equivalents and marketable securities totaling $4.1 million compared with $7.8 million at Dec. 31, 2007. In February 2008, the company issued 6.1 million shares of its common stock at a price of $0.50 per share, raising approximately $3.1 million, before estimated fees and expenses. During the first three months of 2008, cash used in operating activities was $6.2 million compared with $9.8 million for the same period in 2007. Lower cash used in operating activities was primarily due to the timing of payments in the two respective periods. In April 2008, the company reduced its workforce by approximately 30% in order to conserve cash. Genta also disclosed that it would seek a buyer for its sole marketed product, Ganite(R). In a recent action, the company has also terminated its license to c-myb antisense due to diminishing patent life. Possible Bankruptcy The company will maintain an appropriate level of spending over the upcoming fiscal year, given the uncertainties inherent in its business and its current liquidity position. However, absent additional funding, Genta will run out of funds in the second quarter of 2008. If the company is unable to raise additional funds, it could be required to reduce its spending plans, reduce its workforce, license or sell assets or products it would otherwise seek to commercialize on its own, or file for bankruptcy. There can be no assurance that the company can obtain financing, if at all, on acceptable terms. Due to the company's inability to demonstrate sustained compliance with the minimum stockholders' equity requirement for continued listing on The NASDAQ Capital Markets, the company's common stock was recently transferred to the Over-the-Counter Bulletin Board maintained by FINRA fka the NASD. About Genta Inc. Genta Incorporated (NasdaqGM: GNTA) -- http://www.genta.com -- operates as a biopharmaceutical company with a diversified product portfolio that is focused on delivering products for the treatment of cancer patients. Its research platform has two principal programs: DNA/RNA-based Medicines and Small Molecules. The company's lead compound from its DNA/RNA Medicines program is Genasense (oblimersen sodium) injection. Genta Incorporated is recruiting patients to the AGENDA Trial, a global Phase 3 trial of Genasense in patients with advanced melanoma. The company is marketing its Ganite (gallium nitrate injection), the leading drug in its Small Molecule program, in the United States for the treatment of symptomatic patients with cancer- related hypercalcemia that is resistant to hydration. It also developed G4544, an oral formulation of the active ingredient in Ganite, which entered clinical trials as a potential treatment for diseases associated with accelerated bone loss. Genta Incorporated sells Ganite and Genasense on a named-patient' basis in countries outside the United States. The company was founded in 1988 and is based in Berkeley Heights, New Jersey. Going Concern Doubt As reported in the Troubled Company Reporter on March 28, 2008, Deloitte & Touche LLP raised substantial doubt about the ability of Genta Incorporated to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditing firm pointed to the company's recurring losses from operations and negative cash flows from operations. GLACIER FUNDING: Moody's Downgrades Ratings on Six Note Classes --------------------------------------------------------------- Moody's Investors Service has downgraded ratings of six classes of notes issued by Glacier Funding CDO IV Ltd., and left on review for possible further downgrade the ratings of three of these classes. The notes affected by the rating action are: Class Description: $296,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due 2045 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Ba3, on review for possible downgrade Class Description: $40,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2045 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Class Description: $23,000,000 Class B Third Priority Senior Secured Floating Rate Notes Due 2045 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Class Description: $14,000,000 Class C Mezzanine Secured Deferrable Floating Rate Notes Due 2045 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: C Class Description: $12,000,000 Class D Mezzanine Secured Deferrable Floating Rate Notes Due 2045 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: C Class Description: $4,000,000 Class E Mezzanine Secured Deferrable Floating Rate Notes Due 2045 -- Prior Rating: Ca -- Current Rating: C The rating downgrade actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence, as reported by the Trustee on April 14, 2008, of an event of default that occurs when the Class A/B Overcollateralization Test is not satisfied, as described in Section 5.1(i) of the Indenture dated April 12, 2006. Glacier Funding CDO IV Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of certain Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued following the event of default. Because of this uncertainty, the ratings assigned to the Class A-1 Notes, Class A-2 Notes and Class B Notes remain on review for possible further action. G SQUARE: Moody's Junks Ratings on Two Note Classes --------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by G Square Finance 2006-1 Ltd. Class Description: $28,250,000 Class B Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $46,600,000 Class C-1 Floating Rate Deferrable Notes Due 2018 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: C Class Description: 17,000,000 Euros Class C-2 Fixed Rate Deferrable Notes Due 2018 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. HEREFORD STREET: Moody's Lowers Rating to Ba2 on $10.8MM Notes -------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Hereford Street ABS CDO I, Ltd. Class Description: $96,000,000 Class A-2 Floating Rate Notes Due 2045 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $48,000,000 Class B Floating Rate Notes Due 2045 -- Prior Rating: Aa2 -- Current Rating: A1, on review for possible downgrade Class Description: $34,800,000 Class C Floating Rate Deferrable Interest Notes Due 2045 -- Prior Rating: A3 -- Current Rating: Baa2, on review for possible downgrade Class Description: $10,800,000 Class D Floating Rate Deferrable Interest Notes due 2045 -- Prior Rating: Baa2 -- Current Rating: Ba2, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. HG-COLL 2007-1: Moody's Junks Note Ratings on Three Classes ----------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings on these notes issued by HG-COLL 2007-1 Ltd.: Class Description: $830,000,000 Class A-1LA Floating Rate Notes Due April 2052 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $95,000,000 Class A-1LB Floating Rate Notes Due April 2052 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $37,000,000 Class A-2L Floating Rate Notes Due April 2052 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Ca Class Description: $12,000,000 Class A-3L Floating Rate Notes Due April 2052 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: C Class Description: $14,000,000 Class B-1L Floating Rate Notes Due April 2052 -- Prior Rating: Ca -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. HILEX POLY: Obtains Interim Access to $140 Million DIP Financing ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized, on May 7, 2008, Hilex Poly Co. LLC and its debtor-affiliates to obtain, on interim basis, up to $140 million secured postpetition financing from General Electric Capital Corp., as administrative agent. The DIP facility will be used to repay the prepetition revolver indebtness, make payments with respect to working capital and other general corporate purposes, and pay fees and expenses owed to postpetition agents and postpetition lenders. The DIP Facility contemplates (i) a $90 million DIP Revolving Loan Facility, subject to a borrowing base, and (ii) a $50 million DIP Term Loan Facility. The DIP Facility also includes a swingline subfacility of up to $15 million. Advances under the DIP Revolving Loan Facility may be borrowed and reborrowed on and after the date of the closing of the DIP Facility. The Revolving Loans will bear an interest, at the LIBOR Rate plus 3.5% with a floor on the LIBOR Rate of 2.90%. The Term Loans will bear interest at the LIBOR Rate plus 8% with a floor on the LIBOR Rate of 4%. To secure their DIP obligations, the lenders will be granted a second priority postpetition term liens on all of the DIP Collateral. Cash Collateral Approval The Court also authorized, on an interim basis, the limited use of GE Capital's cash collateral. The Debtors' Prepetition Revolver Indebtness consists of approximately $51 million, plus $1,950,000 in issued and outstanding letters of credit, and $115.1 million, plus fees, costs and charges under the Prepetition First Priority Documents. The Debtors intend to use the cash collateral to meet their liquidity needs. As adequate protection, the GE Capital, as administrative agent, has a security interest in and lien upon substantially all of each of the Debtors' assets. A full-text copy of the Debtors Senior Secured, Super-Priority DIP Credit Agreement with GE Capital is available for free at: http://bankrupt.com/misc/Hilex_--_DIP_--_credit_agreement.pdf About Hilex Poly Headquartered in Hartsville, South Carolina, Hilex Poly Co. LLC -- http://www.hilexpoly.com/-- manufactures plastic bag and film products. Focusing primarily on high density polyethylene (HDPE) film products and related services, their products range from bagging systems to agricultural films. The company and its debtor-affiliate, Hilex Poly Holding co. LLC, filed for Chapter 11 protection on May 6, 2008 (Bankr. D. Del. Case Nos. 08-10890 and 08-10891). Edmon L. Morton, Esq. and Kenneth J. Enos, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, represent the Debtors. The debtors listed assets and debts between $100 million and $500 million. HOME INTERIORS: Section 341 Meeting of Creditors Set June 6 ----------------------------------------------------------- William Neary, the United States Trustee for the Northern District of Texas, will convene a meeting of creditors in the Chapter 11 case of Home Interiors & Gifts, Inc. and its debtor-affiliates on June 6, 2008, at 10:00 a.m. in Dallas, Texas. The meeting will be held at the Office of the United States Trustee, 1100 Commerce Street, Room 976. The U.S. Trustee can be reached at: William T. Neary Office of the United States Trustee 1100 Commerce Street - Room 976 Dallas, TX 75242-1496 Tel: (214) 767-8967 Fax: (214) 767-8971 This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in the Debtors' case. The Section 341(a) Meeting has been scheduled within the time required by Rule 2003 of the Federal Rules of the Bankruptcy Procedure. All creditors are invited, but not required, to attend. The Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtors under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. About Home Interiors Headquartered in Carrollton, Texas, Home Interiors & Gifts, Inc. -- http://www.homeinteriors.com/-- manufactures, imports and distributes indoor and outdoor home decorative accessories. The company and six of its affiliates filed for Chapter 11 protection on April 29, 2008 (Bankr. N.D. Tex. Lead Case No.08-31961). Andrew E. Jillson, Esq., Cameron W. Kinvig, Esq., Lynnette R. Warman, Esq., and Michael P. Massad, Jr., Esq., at Hunton & Williams, LLP, represent the Debtors in their restructuring efforts. The U.S. Trustee for Region 6 has not appointed any creditors to serve on an Official Committee of Unsecured Creditors to date. When the Debtors file for protection against their creditors, they listed assets and debts between $100 million and $500 million. HOME INTERIORS: Meridith Seeks Clarification of Setoff Rights ------------------------------------------------------------- At the request of Home Interiors & Gifts, Inc., and its debtor- affiliates, the U.S. Bankruptcy Court for the Northern District of Texas extended the Debtors' deadline to file schedules of assets and liabilities and statements of financial affairs until June 2, 2008. The Debtors explained to the Court that their bankruptcy filing has been precipitated by events which have not allowed them the opportunity to compile the detailed information necessary for the statements and schedules. The original deadline for filing the statements and schedules is May 14, 2008. The Debtors believe an extension will not prejudice any party-in- interest because it is expected that the Section 341 meeting of creditors will occur after the extension. The administration of their Chapter 11 cases will not be delayed by permitting the Debtors to have additional time to file the schedules and statements. The Debtors consulted with the Office of the United States Trustee, who indicated that it is not opposed to the requested extension. The U.S. Trustee, however, required the Debtors to file their statements and schedules by 5:00 p.m. (Dallas Time) on June 2, 2008, and bring extra physical copies of the statements and schedules to the Section 341 meeting. The Debtors have agreed to comply with this request. About Home Interiors Headquartered in Carrollton, Texas, Home Interiors & Gifts, Inc. -- http://www.homeinteriors.com/-- manufactures, imports and distributes indoor and outdoor home decorative accessories. The company and six of its affiliates filed for Chapter 11 protection on April 29, 2008 (Bankr. N.D. Tex. Lead Case No.08-31961). Andrew E. Jillson, Esq., Cameron W. Kinvig, Esq., Lynnette R. Warman, Esq., and Michael P. Massad, Jr., Esq., at Hunton & Williams, LLP, represent the Debtors in their restructuring efforts. The U.S. Trustee for Region 6 has not appointed any creditors to serve on an Official Committee of Unsecured Creditors to date. When the Debtors file for protection against their creditors, they listed assets and debts between $100 million and $500 million. IAC/INTERACTIVECORP: Says Liberty's Appeal Won't Delay Spin Offs ---------------------------------------------------------------- IAC/InterActiveCorp said that it is certain that the Delaware Supreme Court's decision to allow the company to spin off businesses will not be changed by an appeal filed by the firm's largest shareholder, The Wall Street Journal reports. Various reports say that Liberty Media Corp. filed a notice of appeal with the Court to stop IAC from continuing its plan to breakup its businesses into new companies. IAC doesn't expect Liberty's filing to delay the plan, the WSJ report says. IAC plans to complete the spinoffs as soon as August. The businesses IAC is preparing to spin off are Ticketmaster, LendingTree, HSN home-shopping network and Interval International, a time-share exchange, WSJ notes. WSJ indicates that Liberty's court filing comes as the two companies have been in negotiations on a way to get Liberty to agree to the restructuring. Liberty's bargaining leverage appears to have been weakened by the court decision, WSJ states. WSJ, citing IAC Chairman Barry Diller, says that one scenario previously seen as a possible solution -- Liberty's exchange of its stake in IAC for an IAC asset -- appeared highly unlikely. About IAC IAC/InterActiveCorp (Nasdaq: IACI) -- http://iac.com/-- operates a portfolio of specialized and global brands in the sectors: Retailing, which includes the United States and International segments; Services, which includes the Ticketing, Lending, Real Estate, Teleservices and Home Services reporting segments; Media & Advertising, and Membership & Subscriptions, which includes the Vacations, Personals and Discounts reporting segments. * * * As reported in the Troubled Company Reporter on Feb. 1, 2008, Standard & Poor's Rating Services said its ratings on IAC/InterActiveCorp, including the 'BB' corporate credit rating, remain on CreditWatch with negative implications, where they were initially placed on Nov. 5, 2007, following IAC's announcement that it plans to divide itself into five publicly traded companies. INDEPENDENCE IV: Moody's Cuts Ratings on Credit Deterioration ------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Independence IV CDO, Ltd. Class Description: U.S. $120MM Class A-1 (Series I) First Priority Senior Secured Floating Rate Notes Due 2038 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $120MM Class A-1 (Series 2) First Priority Senior Secured Floating Rate Notes Due 2038 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $40MM Class A-2 Second Priority Senior Secured Floating Rate Notes Due 2038 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $38MM Class A-3 Third Priority Senior Secured Floating Rate Notes Due 2038 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Class Description: $40MM Class B Fourth Priority Senior Secured Floating Rate Notes Due 2038 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $26MM Class C Mezzanine Secured Floating Rate Notes Due 2038 -- Prior Rating: Caa2, on review for possible downgrade -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. INTERNATIONAL BANCORP: Fitch Holds and Withdraws All Ratings ------------------------------------------------------------ Fitch Ratings affirmed the long-term Issuer Default Rating of International Bancorp of Miami, Inc. and its subsidiary, The International Bank of Miami, N.A. at 'BB+' and simultaneously withdraws all ratings of IBOM and its subsidiaries. Fitch will no longer provide ratings on either. The rating action reflects the company's strong capital ratios that should provide a cushion to weather the credit cycle downturn. Rating constraints are the company's geographic concentration, which is mainly in southern Florida. The Florida real estate market is experiencing severe stress, which could add additional pressures to its financial flexibility. Although commercial real estate comprises about 41% of total loans, Fitch notes that the company's CRE portfolio is backed mostly by nonresidential properties such as retail, office and warehouse space. Fitch recognizes that the company has been in a transition over the past two years as TIBOM shifted its focus to a more domestic franchise. In the past, the company had relied on international business lines to support its revenue stream. Since the change in strategy, TIBOM has been challenged to maintain its operating performance at previous levels. The company's profitability measures have remained low. Fitch affirmed and withdraws these ratings: International Bancorp of Miami, Inc. -- Long-term IDR at 'BB+'; -- Individual at 'C'; -- Short-term IDR at 'B'; -- Support at '5'. The International Bank of Miami, N.A. -- Long-term IDR at 'BB+'; -- Long-term deposit at 'BBB-'; -- Short-term IDR at 'B'; -- Short-term deposit obligations at 'F3'; -- Individual at 'C'; -- Support at '5'. INTERSTATE BAKERIES: Closes Amended $249.7 Million DIP Facility --------------------------------------------------------------- Interstate Bakeries Corporation and eight of its debtor affiliates closed on May 9, 2008, an amended and restated Debtor-in- Possession revolving credit agreement to replace the company's former DIP credit agreement which will expire on June 2, 2008. Under the terms of the amended and restated DIP credit agreement, the maturity date has been extended to Sept. 30, 2008, and the amount available for borrowing under the agreement has been increased from $200 million to $249.7 million subject to the terms of the agreement. The company received Court approval on April 29, 2008, to enter into the amended and restated DIP credit agreement with certain of the company's existing lenders under its current DIP credit facility, other new lenders and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent for the lenders. "We are very appreciative of the support our lenders have continued to demonstrate," Chief Executive Officer Craig Jung said. "With our new DIP facility in place IBC now has sufficient time and liquidity to support normal business operations while we continue discussions with multiple parties to achieve a confirmable, stand-alone plan of reorganization, and at the same time, continue to conduct a parallel process to sell the Company's business and assets." IBC adopted this dual path process to ensure that it meets its obligation to protect and maximize constituent value in the event a confirmable, stand-alone plan of reorganization cannot be realized. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh-baked bread and sweet goods, under various national brand names, including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and Drake's(R). Currently, IBC employs more than 25,000 people and operates 45 bakeries, as well as approximately 800 distribution centers and approximately 800 bakery outlets throughout the country. The company and eight of its subsidiaries and affiliates filed for chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No. 04 45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6% senior subordinated convertible notes due Aug. 15, 2014) in total debts. The Debtors' filed their Chapter 11 Plan and Disclosure Statement on Nov. 5, 2007. Their exclusive period to file a chapter 11 plan expired on November 8. On Jan. 25, 2008, the Debtors filed their First Amended Plan and Disclosure Statement. On Jan. 30, 2008, the Debtors received Court approval of the First Amended Disclosure Statement. IBC confirmed that it has not received any qualifying alternative proposals for funding its plan of reorganization in accordance with the Court-approved alternative proposal procedures. As a result, no auction was held on Jan. 22, 2008, as would have been required under those procedures. The deadline for submission of alternative proposals was Jan. 15, 2008. (Interstate Bakeries Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). INTERPHARM HOLDINGS: Sells Assets to Amneal Pharma for $61.6 Mil. ----------------------------------------------------------------- Interpharm Holdings, Inc., and Amneal Pharmaceuticals of New York, LLC, entered into an Asset Purchase Agreement in which Amneal will acquire substantially all of Interpharm's assets for $61.6 million. A separate contract of sale was entered into by Interpharm and Kashiv, LLC, relating to the sale of the real property located at 50 Horseblock Road, Yaphank, New York. Taken together, the Asset Purchase Agreement and Real Estate Contract provide for the sale of substantially all of the assets of the company for a purchase price of $68.5 million in cash as well as certain adjustments and prorations under the Real Estate Contract. Approximately $3.5 million of the purchase price paid at closing will be placed in escrow with a bank for the purposes of securing the indemnification obligations of the company and Interpharm Inc. under the Asset Purchase Agreement. Loan and Security Agreement In connection with the Asset Purchase Agreement, on April 24, 2008 Amneal and Interpharm Inc. entered into a Loan and Security Agreement providing for Amneal to make an initial loan to Interpharm Inc. of $500,000 and up to four additional loans of $250,000 each on the last business day of each of the four weeks after the initial loan is made. Interest on the outstanding principal of the loans made pursuant to the Loan Agreement accrues at the rate of 6% per annum. The initial loan and all subsequent loans shall be repayable 90 days after the termination of the Asset Purchase; provided, however, that in the event of a closing under the Asset Purchase Agreement all outstanding loans shall be (i) deemed discharged and satisfied in full and (ii) credited against the purchase price due under the Asset Purchase Agreement. The loans to be made under the Loan Agreement are secured by a security interest granted by Interpharm Inc. to Amneal in certain assets of Interpharm Inc. On April 24, 2008, Amneal entered into an Intercreditor Agreement with Wells Fargo Bank, National Association with respect to certain matters, including the indebtedness of Interpharm Inc. in respect of the loans and the security interest therefor. The stockholders of the company who are parties to the Asset Purchase Agreement include the holders of a majority of the issued and outstanding shares of the Common Stock, par value $0.01 per share, of the company and a majority of the shares of the Series A-1 Preferred Stock, par value $.01 per share of the company and all of the shares of Series D-1 Preferred Stock, par value $.01 per share. Such stockholders executed the Asset Purchase Agreement only with respect to certain sections of the agreement. The majority stockholders also have given their written consent to the adoption of the Asset Purchase Agreement, the Real Estate Contract and the transactions. A full-text copy of the Asset Purchase Agreement is available for free at http://ResearchArchives.com/t/s?2bcb About Interpharm Holdings Based in Hauppauge, New York, Interpharm Holdings Inc. (AMEX: IPA) -- http://www.interpharminc.com/ -- currently develops, manufactures and distributes generic prescription strength and over-the-counter pharmaceutical products. Interpharm Holdings Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $64.3 million in total assets, $53.1 million in total liabilities, and $16.5 million in redeemable convertible preferred stock, resulting in a $5.3 million total stockholders' deficit. Forbearance Agreement On Feb. 5, 2008, the company and Wells Fargo Business Credit entered into a Forbearance Agreement whereby Wells Fargo agreed to, among other things: (i) forbear from exercising its remedies arising from the company's default under its Credit Agreement until June 30, 2008, provided no further default occurs; (ii) provide a moratorium on certain principal payment; (iii) and advance the company up to $3,000,000 under a newly granted real estate line of credit mortgage on the company's real estate, which amounts will be due on June 30, 2008. The total amount outstanding with Wells Fargo at Dec. 31, 2007, was $30,590,000. JOHN CARD: Files for Chapter 7 Liquidation in North Carolina ------------------------------------------------------------ John S. Card Residential Builders Inc. filed for Chapter 7 liquidation with the U.S. Bankruptcy Court for the Middle District of North Carolina, The Business Journal of the Greater Triad Area reported. According to court filings, the Debtor listed around $650,000 worth of real estate, and total liabilities of $634,368. Court filings show that unsecured creditors will not be paid, the Journal noted. The Debtor is a home builder based in Lewisville, North Carolina. KINGSWAY FINANCIAL: Posts $34MM Net Loss in Quarter ended March 31 ------------------------------------------------------------------ Kingsway Financial Services Inc. reported net loss for the first quarter ended March 31, 2008, of $34.4 million, a 276% decrease compared to net income of $19.6 million in the first quarter of last year. The net loss was attributable to a further $52.8 million reserve increase for estimated net unfavourable reserve developments for prior accident years at its Lincoln General subsidiary and a $12.2 million reserve increase at its Kingsway General subsidiary. As a result of the reserve development at Lincoln, a further $8 million of valuation allowance was recorded against the future income tax asset for operating losses in the U.S. "Our results for the first quarter of 2008 are unacceptable and we are working expeditiously to deal with problem areas and return to profitability soon as possible," Shaun Jackson, president and chief executive officer, said. "Only by establishing more conservative reserving practices throughout the organization can we more quickly identify and remedy underperforming business." The additional reserves related primarily to Lincoln General's trucking policies written for the 2007 accident year," added Mr. Jackson. "The results were also negatively impacted by exceptionally bad winter weather in certain of our operating regions." "We continue to eliminate and reprice business at Lincoln and this has led to a change in its mix of business, in particular moving us away from the highly competitive commercial lines in the U.S. These reductions are being offset by increased premium levels from non-standard automobile through our Mendota subsidiary acquired in April 2007." "I have been working closely with our executive team and Board to address performance issues that are affecting our results," Mr. Jackson continued. "We continue to be well capitalized and have preserved a strong securities portfolio which has weathered the recent market volatility relatively well. Over the next few quarters we will be carefully reviewing those aspects of our operations that are not performing satisfactorily and will take decisive actions where required to improve profitability." "The property and casualty insurance markets in Canada and the U.S. remain highly competitive, with the industry experiencing continued soft pricing, and slow premium growth, while having increased levels of capital and surplus," Mr. Jackson added. "We expect that industry combined ratios will continue to deteriorate throughout 2008 which, coupled with weak equity markets and potential impairments of assets, we believe will lead to firmer pricing in many of the markets before the end of 2008. Breach of Covenant Bank indebtedness decreased from $172.4 million at Dec. 31, 2007, to $163.3 million. During the quarter the company repaid approximately $7.5 million of outstanding debt under its credit facilities. The undrawn amount available under the bank credit facility as at March 31, 2008, was approximately $80.4 million. Bank indebtedness, which totaled $163.3 million as at March 31, 2008, is subject to compliance with financial covenants and other provisions of the Credit Agreement. As a result of the loss before income taxes the interest coverage ratio was negative 0.5 as at March 31, 2008, placing the company in breach of this covenant. Subsequent to the balance sheet date, the company has obtained a waiver over compliance with the March 31, 2008, interest coverage covenant under the Credit Agreement. Although the future terms of the Credit Agreement are under review, the borrowing costs on this facility will increase as a result of the covenant breach. Liquidity and Capital Resources During the three months ended March 31, 2008, the cash used in operating activities was $64.2 million as a result of higher than expected claims payments. The company believes that the cash generated from the operating activities will be sufficient to meet its ongoing cash requirements, including interest payment obligations and dividend payments. During the three months ended March 31, 2008, the company repurchased 368,200 common shares under the normal course issuer bid for a total purchase price of $4.4 million at an average price of $11.87 or C$11.93. As at March 31, 2008, the company's subsidiaries were adequately capitalized to support their premium volume. At March 31, 2008, the company's balance sheet showed total assets of $4.5 billion, total liabilities of $3.6 billion and total shareholders' equity of about $900,000. Dividend The board of directors has declared a quarterly dividend of C$0.075 per common share, payable on June 30, 2008 to shareholders of record on June 16, 2008. About Kingsway Financial Headquartered in Ontario, Canada, Kingsway Financial Services Inc. (TSX:KFS, NYSE:KFS) - http://www.kingsway-financial.com/-- is a holding company that operates through its wholly owned subsidiaries in the property and casualty insurance business. The company's principal lines of business are trucking and non- standard automobile insurance. KFSI also writes motorcycle insurance in Canada and writes taxi cab insurance in Chicago, Illinois and Las Vegas, Nevada. * * * As reported in the Troubled company Reporter on Dec. 21, 2007, Standard & Poor's Ratings Services lowered its senior unsecured and long-term counterparty credit ratings on Kingsway Financial Services Inc. to 'BB+' from 'BBB-'. S&P also lowered the debt ratings on Kingsway's subsidiaries to 'BB+' from 'BBB-'. The outlook is negative. KINGSWAY FINANCIAL: S&P Chips Unsecured Debt Rating to BB from BB+ ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its long-term counterparty credit and senior unsecured debt ratings on Toronto- based specialty insurance provider Kingsway Financial Services Inc. to 'BB' from 'BB+'. S&P also lowered the debt ratings on Kingsway's subsidiaries to 'BB' from 'BB+'. The outlook is negative. "The downgrade follows Kingsway's first-quarter 2008 earnings announcement, which included disclosure that its lead U.S. operating company, Lincoln General Insurance Co. (unrated), had incurred further unfavorable reserve adjustments beyond our expectations," said Standard & Poor's credit analyst Foster Cheng. Specifically, Kingsway posted an additional US$52.8 million (all reserve adjustments quoted on a pretax basis) in adjustments for Lincoln General, making this the sixth consecutive quarter in which it needed to increase reserves for this subsidiary. The cumulative amount of reserve increases for Lincoln General has been US$337.1 million during the past nine quarters (US$76.1 million in 2006, US$208.2 million in 2007, and US$52.8 million in first-quarter 2008). All of these adjustments can be attributed to under-reserving and deterioration in Lincoln General's trucking and general liability lines of business. The total cost of these net reserve adjustments equals about two years' of earnings for Kingsway. Lincoln General is the largest U.S. operating insurance company within Kingsway and represents just under half of the group's gross written premiums and about a quarter of the total assets. However, partially offsetting these developments were US$14.3 million and US$37.6 million in reserve releases that were recognized elsewhere within the Kingsway group during 2006 and 2007. On a positive note, Kingsway has demonstrated the capacity to absorb these reserve adjustments for the most part without dipping into its consolidated capital (until this quarter) and has continued to maintain solid capital ratios. However, the ongoing reserve adjustments at Lincoln General and the lack of definitive proof that these issues have been resolved cause us to question the quality of governance, senior management oversight, and enterprise risk management within its operations. In S&P's July 23, 2007, annual review of Kingsway, it concluded ERM practices were weak relative to those of its insurance peers; this opinion has not changed. The negative outlook reflects the uncertainty surrounding the ongoing strength of the company's insurance franchise and management infrastructure, given all of the negative news that has surfaced in the group. Moreover, it also reflects the reduction in financial flexibility, considering the reserve overhang that continues to persist around Lincoln General and the resulting unfavorable operating earnings. If Kingsway were to experience material deterioration within its insurance franchise, or if future reserve adjustments exceeded S&P's expectations, it could lower the ratings by another notch. However, if Kingsway is able to demonstrate stability around its underlying franchise position, reserves, and underwriting performance, S&P could revise the outlook to stable within the next six to 18 months. To improve the ratings, Kingsway will need to improve its management oversight, ERM, and financial performance metrics, specifically its fixed-charge coverage ratio (currently negative 3.9x) and consolidated combined ratio (currently 115.6%). By the end of this year, Standard & Poor's expects Kingsway to maintain a leverage ratio of less than 40%, a fixed charge coverage ratio of 3x or better, and a hybrid-to-total capital ratio of less than 15%. Double leverage should be maintained at less than 125%. KINGSWAY LINKED: S&P Cuts Rating on LROC Preferred Units to BB -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the LROC preferred units of Kingsway Linked Return of Capital Trust. The lowering of these ratings mirrors the lowering of the Kingsway ROC GP's senior unsecured 10-year note to which the issue of LROC preferred units is linked. Ratings Lowered Kingsway Linked Return of Capital Trust Rating ------ Class To From -- ---- LROC preferred units Canada national scale P-3 P-3(High) Global scale BB BB+ (Related note: Kingsway ROC GP senior unsecured 10-year note) KLIO II: Moody's Junks Rating on Two Notes Classes -------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Klio II Funding, Ltd. Class Description: $292,500,000 Class A-1 Floating Rate Notes Due 2039 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $70,000,000 Class A-2 Floating Rate Subordinate Notes Due 2039 -- Prior Rating: Aa2 --Current Rating: Baa1, on review for possible downgrade Class Description: $50,000,000 Class B Floating Rate Subordinate Notes Due 2039 -- Prior Rating: A3 -- Current Rating: Ba3, on review for possible downgrade Class Description: $50,000,000 Class C Floating Rate Junior Subordinate Notes Due 2039 -- Prior Rating: Baa2 -- Current Rating: Caa1, on review for possible downgrade Class Description: 34,500 Preferred Shares, Par Value $0.01 Per Share -- Prior Rating: Ba1 -- Current Rating: Caa2, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. KOPPERS HOLDINGS: Strong Performance Cues Moody's to Lift Rating ---------------------------------------------------------------- Moody's Investors Service upgraded the corporate family rating of Koppers Holdings Inc. to Ba3 from B1 following two years of strong performance since an initial public offering in February 2006. Ratings were also upgraded on debt located at Koppers Inc, KHI's wholly owned subsidiary as indicated in the debt list below. The outlook for KHI and Koppers remains stable. The upgrade of KHI's CFR reflects continued strong financial performance followings its IPO in February 2006 that enabled the company to significantly reduce debt and has resulted in much improved credit metrics that drive the upgrade. The IPO raised approximately $112 million in net proceeds at KII Holdings Inc. and was used to purchase stock of its subsidiary Koppers Inc. to enable the redemption, at a premium, of $101.8 million aggregate principal amount of its 9.875% senior secured notes due 2013. KHI's ratings are further supported by geographic diversity, strong market shares in certain business segments, favorable cost positions, demonstrated stability in a highly leveraged and acquisitive environment, and a dearth of available substitutes for its products. The ratings are constrained by the inherent historical cyclicality of the company's commodity products and end markets, customer concentrations, elevated environmental risks associated with carbon-based chemical materials, and a considerable number of items that could potentially consume cash in the future including: antitrust investigations, product liability lawsuits, legal costs, plant closure costs, and to a lesser degree underfunded defined benefit pension plans. The stable outlook reflects consistent operating performance, strong market share, and Moody's expectation that Koppers' businesses will remain strong for the remainder of 2008 and 2009. In February 2006, Moody's upgraded the CFR to B1 from B2 following the company's initial public offering and associated changes in the capital structure. Upgrades: Issuer: Koppers Holdings Inc. -- Corporate Family Rating, Upgraded to Ba3 from B1 -- Probability of Default Rating, Upgraded to Ba3 from B1 -- Senior Unsecured Regular Bond/Debenture, Upgraded to B2 - 88% LGD5 from B3 Issuer: Koppers Inc. -- Senior Secured Regular Bond/Debenture, Upgraded to Ba3 -- 49% LGD 3 from B2 Koppers, Inc., headquartered in Pittsburgh, Pennsylvania, is a global producer of carbon compounds and treated wood products used in the aluminum, chemical, railroad, and steel industries. Revenues were approximately $1.3 billion for the year ending Dec. 31, 2007. LACERTA ABS: Moody's Cuts and Reviews Ratings on Three Classes -------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings of three classes of notes issued by Lacerta ABS CDO 2006-1, Ltd.: Class Description: $200,000,000 Class A-1 Floating Rate Senior Secured Notes Due 2046 -- Prior Rating: Baa1, on review for possible downgrade -- Current Rating: Ba3, on review for possible downgrade Class Description: $100,000,000 Class A-2 Floating Rate Senior Secured Notes Due 2046 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Class Description: $110,000,000 Class B Floating Rate Deferrable Interest Secured Notes Due 2046 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $80,000,000 Class C Floating Rate Deferrable Interest Secured Notes Due 2046 -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: Ca Lacerta ABS CDO 2006-1, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. On February 7, 2008 the transaction experienced an event of default caused by the Net Outstanding Portfolio Collateral Balance plus the MVS Account Excess falling below the sum of the Remaining Unfunded Notional Amount plus the Outstanding Swap Counterparty Amount plus the Aggregate Outstanding Amount of the Class A Notes, as described under Section 5.1(h) of the Indenture dated November 29, 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 Secured 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 ratings of Class A-1, Class A-2, and Class B Notes issued by Lacerta ABS CDO 2006-1, Ltd. are on review for possible further action. LAKESIDE CDO: Moody's Lowers Class B Notes Rating to Ca from Ba1 ---------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Lakeside CDO I, LTD. Class Description: Class A-2 Second Priority Senior Secured Floating Rate Notes -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: Class B Third Priority Senior Secured Floating Rate Notes -- Prior Rating: Ba1, 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. LANCER FUNDING: Moody's Cuts $30MM Notes Rating to Caa3 from A2 --------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Lancer Funding, Ltd. Class Description: $1,200,000,000 Class A1S1 Senior Floating Rate Notes Due April 2046 -- Prior Rating: Aaa -- Current Rating: Aa1, on review for possible downgrade Class Description: $150,000,000 Class A1S2 Senior Floating Rate Notes Due April 2046 -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: $61,000,000 Class A1J Senior Floating Rate Notes Due April 2046 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $33,500,000 Class A2 Senior Floating Rate Notes Due April 2046 -- Prior Rating: Aa2 -- Current Rating: Ba1, on review for possible downgrade Class Description: $30,000,000 Class A3 Deferrable Floating Rate Notes Due April 2046 -- Prior Rating: A2 -- Current Rating: Caa3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $10,500,000 Class B Deferrable Floating Rate Notes Due April 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. LEINER HEALTH: Seeks Court Approval for Proposed DOJ Agreement -------------------------------------------------------------- Leiner Health Products Inc. submitted to the U.S. Bankruptcy Court in Delaware for approval a proposed agreement with the United States Department of Justice to resolve the investigation concerning the production, control and distribution of certain over-the-counter drug products at the company's now defunct facility in Fort Mill, South Carolina. The agreement is subject to approval and acceptance by the United States District Court in Columbia, South Carolina. This agreement would resolve the government's investigation of allegations against Leiner, which were related to a Form 483 report the company received from the Food and Drug Administration on March 16, 2007. Both the investigation and the Form 483 pertained to activities that took place at the now closed Fort Mill facility prior to the arrival of the current Quality Control management team. "Leiner took immediate action to correct this situation," Robert K. Reynolds, CEO and President of Leiner, said. "In addition to the closure of the affected facility, we also restructured our Quality Control systems, including top to bottom personnel changes and implementation of strengthened compliance programs to ensure that all products conform to Leiner's rigorous standards." Under the terms of the agreement, Leiner Health Products, LLC, a subsidiary of Leiner Health Products Inc., would enter a plea of guilty to one count of mail fraud and would forfeit $10 million in cash in lieu of a fine. The agreement in no way implicates or affects Leiner's ability to manufacture and distribute vitamin and mineral products. "We are pleased to put these issues behind us, and we are committed to providing consumers with the best value and highest- quality products available in the marketplace," Mr. Reynolds continued. Based in Carson, California, Leiner Health Products Inc. -- http://www.leiner.com/-- manufacture and supply store brand vitamins, minerals and nutritional supplements products, and over- the-counter pharmaceuticals in the US food, drug and mass merchant and warehouse club retail market. In addition to their primary VMS and OTC products, they provide contract manufacturing services. During the fiscal year ended March 31, 2007, the VMS business comprised approximately 61% of net sales. On March 20, 2007, they voluntarily suspended the production and distribution of all OTC products manufactured, packaged or tested at its facilities in the US. The company filed for Chapter 11 protection on March 10, 2008 (Bankr. D. Del. Lead Case No.08-10446). Jason M. Madron, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. The Debtors selected Garden City Group Inc. as noticing, claims and balloting agent. The U.S. Trustee for Region 3 appointed creditors to serve on an Official Committee of Unsecured Creditors in these cases. As reported in the Troubled Company Reporter on April 10, 2008, the Debtors' schedules of assets and liabilities showed total assets of $133,412,547 and total debts of $477,961,526. * * * As reported in the Troubled Company Reporter on April 14, 2008, the Court authorized the Debtors to access, on an interim basis, up to $54 million postpetition financing to allow the company to continue operations until they are able to sell their business. LIBERTY MEDIA: Wants to Stop IAC/InterActiveCorp's Spinoff Plans ---------------------------------------------------------------- Liberty Media Corp. filed a notice of appeal with the Delaware Supreme Court to stop IAC/InterActiveCorp from continuing its plan to break up its businesses into new companies, various reports say. As reported in the Troubled Company Reporter on March 31, 2008, Vice Chancellor Stephen Lamb of the Delaware Chancery Court ruled that IAC doesn't need to ask Liberty's consent before it proceeds with its plan to spin-off IAC into five separate companies. TCR said that Judge Lamb permitted IAC to execute its plan based on its proposed single-voting structure and allowed Liberty to raise objections as the spin-off progresses. The filing enables Liberty to dispute a ruling from a Delaware judge who sided with IAC CEO Barry Diller on the breakup plans, reports add. According to The Wall Street Journal, Liberty opposes the plan because it would dilute Liberty's voting interest in the new companies. Liberty's court filing, made shortly before a deadline for appeals, didn't indicate on what grounds it would contest the decision, several reports state. WSJ, citing Liberty CEO Greg Maffei, indicates that the filing was intended to keep Liberty's options open. Mr. Maffei, according to WSJ, relates that the purpose of the filing was to potentially appeal if they go forward on a basis Liberty doesn't like. WSJ relates that IAC is confident that the decision will not be reversed and that it doesn't expect the filing to delay the spins. IAC plans to complete the spinoffs soon as August. The businesses IAC is preparing to spin off are Ticketmaster, LendingTree, HSN home-shopping network and Interval International, a time-share exchange, WSJ notes. About Liberty Media Headquartered in Englewood, Colorado, Liberty Media Corporation (NasdaqGS: LINTA) -- http://www.libertymedia.com/-- owns interests in a broad range of electronic retailing, media, communications and entertainment businesses. Those interests are attributed to two tracking stock groups: the Liberty Interactive group, which includes Liberty's interests in QVC, Provide Commerce, IAC/InterActiveCorp, and Expedia, and the Liberty Capital group, which includes Liberty's interests in Starz Entertainment, News Corporation, and Time Warner. * * * As reported in the Troubled Company Reporter on March 14, 2008, Standard & Poor's Ratings Services said that Liberty Media Corp.'s (BB+/Negative/--) new share repurchase authorization of up to $1 billion of Liberty Entertainment common stock and up to $300 million of Liberty Capital common stock does not affect the ratings on the company. The $1.3 billion total authorization replaces a prior $1 billion purchase authorization of Liberty Capital common stock, but does not affect the existing Liberty Interactive repurchase authorization, which has $780 million remaining. LONG HILL: Moody's Chips and Reviews 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 Long Hill 2006-1 CDO, Ltd. Class Description: $125,000,000 Class A-S2T Senior Secured Floating Rate Notes Due 2045 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Class Description: $40,000,000 Class Al Senior Secured Floating Rate Notes Due 2045 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: B2, on review for possible downgrade Class Description: U $140,000,000 Class A2 Senior Secured Floating Rate Notes Due 2045 -- Prior Rating: B2, on review for possible downgrade -- Current Rating: Caa1, on review for possible downgrade Moody's Investors Service announced that it has downgraded the following notes issued by Long Hill 2006-1 CDO, Ltd. Class Description: $28,000,000 Class A3 Secured Deferrable Interest Floating Rate Notes Due 2045 -- Prior Rating: Caa1, on review for possible downgrade -- Current Rating: C Class Description: $25,000,000 Class B Senior Secured Deferrable Interest Floating Rate Notes Due 2045 -- Prior Rating: Ca -- Current Rating: C Class Description: $5,000,000 Class C Mezzanine Secured Deferrable Interest Floating Rate Notes Due 2045 -- Prior Rating: Ca -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. LONGPORT FUNDING: Moody's Cuts Ca Rating on Three Classes to C -------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible downgrade the ratings on these notes issued by Longport Funding III, Ltd.: Class Description: $450,000,000 Class A1-VF Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $63,750,000 Class A2A Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: Ca -- Current Rating: C Class Description: $45,000,000 Class A2B Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: Ca -- Current Rating: C Class Description: $97,500,000 Class B Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: Ca -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. LONGPORT FUNDING: Moody's Reviews Ratings for Possible Downgrade ---------------------------------------------------------------- Moody's Investors Service has put the ratings on these notes issued by Longport Funding Ltd. on review for possible further downgrade: Class Description: $153,000,000 Class A1-A Senior Secured Floating Rate Notes Due 2035 -- Prior Rating: Aaa, -- Current Rating: Aaa, on review for possible downgrade Class Description: $153,000,000 Notional Amount Class A1 Senior Secured Interest Only Notes Due 2035 -- Prior Rating: Aaa, -- Current Rating: Aaa, on review for possible downgrade Additionally, Moody's downgraded these notes and left on review for possible further downgrade: Class Description: $35,600,000 Class A1-B Senior Secured Floating Rate Notes Due 2035 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $55,000,000 Class A-3 Senior Secured Floating Rate Notes Due 2038 -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $14,000,000 Class B Senior Secured Floating Rate Notes Due 2038 -- Prior Rating: Aa2 -- Current Rating: Baa2, on review for possible downgrade Class Description: $,5,000,000 Class C Senior Secured Floating Rate Notes Due 2038 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade Class Description: $3,000,000 Class D-1 Mezzanine Secured Floating Rate Notes Due 2038 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Class Description: $7,000,000 Class D-2 Mezzanine Secured Floating Rate Notes Due 2038 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Class Description: 14,000 Preference Shares -- Prior Rating: Ba3, on review for possible downgrade -- 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. MAAX HOLDINGS: Extends Forbearance Period to June 12 ---------------------------------------------------- MAAX Holdings Inc. and certain of its subsidiaries further amended the Credit and Guaranty Agreement, dated as of Jan. 9, 2007, with its senior secured lenders by entering into an amendment and restatement of the forbearance agreement on April 1, 2008, among the Lenders, the company and certain of the company's subsidiaries. Brookfield Bridge Lending Fund Inc., its collateral agent, administrative agent and lender, and its swingline lender, HSBC Bank Canada are the company's senior secured lenders. Pursuant to the Amendment, Brookfield Bridge Lending Fund Inc. and HSBC agreed to extend the forbearance period under the forbearance agreement until June 12, 2008, and further agreed to increase by $35.0 million the Canadian revolving commitments available to the Company, for a total increase of $45.0 million of the Canadian revolving commitments over the initial amount agreed to by the parties at inception of the credit facility. The Company also recently announced that it has developed and is pursuing a sales process to market the entire Company in the pursuit of its overall objective of reducing its debt and improving its capital structure. In parallel with that sales process, the Company is also continuing its discussions with its key stakeholders, and continues to operate in the normal course. "We continue to face adverse market conditions, particularly in the United States. In the meantime, our focus remains on improving operating efficiencies, on-time delivery, new innovative product development and introduction, as well as on restructuring our balance sheet to improve liquidity and financial flexibility. This focus will allow us to protect and improve our market position, and take advantage of any growth opportunity that would result from an eventual rebound in our market environment", stated Paul Golden, President of the Company, and President and Chief Executive Officer of MAAX Corporation. 4th Quarter & Year Ended Feb. 29 Results MAAX Holdings released last week its earnings for the fourth quarter and fiscal year ended February 29, 2008. The following presents a comparison of the Company's results of operations for the quarterly and annual periods ended February 29, 2008 against the results for the same periods ended February 28, 2007. Net sales for the fourth quarter ended February 29, 2008 decreased 10.8% to $76.9 million from net sales of $86.2 million for the fourth quarter ended February 28, 2007. Net sales were mainly impacted by the decline in the U.S. housing industry. Operating losses decreased from $62.0 million for the quarter ended February 28, 2007 to $59.3 million for the quarter ended February 29, 2008 including a non cash impairment charge of $49.7 million incurred on our goodwill and trademarks, compared to a similar charge of $60.7 million during the fourth quarter of the previous fiscal year ended February 28, 2007. Net sales for the fiscal year ended February 29, 2008 decreased 11.8% to $375.5 million from net sales of $425.9 million for the fiscal year ended February 28, 2007. Operating losses for the same period increased $60.2 million, from a loss of $44.6 million for the fiscal year ended February 28, 2007 to a loss of $104.8 million for the fiscal year ended February 29, 2008, including a non cash impairment charge of $99.4 million incurred on our goodwill and trademarks, compared to a similar charge of $60.7 million for the previous fiscal year ended February 28, 2007. For the fiscal year ended February 29, 2008, the company posted a net loss of $176.5 million, compared with $115.1 million in 2007. Net loss of the fourth quarter was $73.3 million compared with $77.1 million in the same period in 2007. Free cash flow (cash flow related to operating activities minus capital spending net of asset disposal) for the twelve months ended February 29, 2008 was $(23.6) million. Total debt amounted to $540.9 million as of February 29, 2008 compared to $479.8 million as of February 28, 2007, an increase of $61.1 million. As of February 29, 2008, the company showed strained liquidity with $79 million current assets available to pay $598.6 million debts coming due with the next 12 months. Total assets reached $384.3 million while total liabilities is almost twice as much at $622.8 million, resulting in a shareholders' deficit of $245.4 million. A year ago, the company's shareholders' deficit was $92.4 million. About MAAX Headquartered in Quebec, MAAX Corporation -- http://www.maax.com/ -- is a North American manufacturer of bathroom products, and spas for the residential housing market. The Company is committed to offering its customers an enjoyable experience: distinctive, stylish and innovative products and the best customer service practices in the industry. MAAX offerings are available through plumbing wholesalers, bath, and spa specialty boutiques and home improvement centers. The corporation employs more than 2,000 people and currently operates 16 manufacturing facilities and independent distribution centers throughout North America and Europe. MAAX Corporation is a subsidiary of Beauceland Corporation, itself a wholly owned subsidiary of MAAX Holdings, Inc. The Troubled Company Reporter reported on April 8, 2008, that Moody's Investors Service withdrew all ratings on MAAX Holdings, Inc. and MAAX Corporation for business reasons. These ratings were withdrawn on MAAX Holdings, Inc.: -- Corporate Family Rating, Ca -- Probability of Default Rating, Ca -- Speculative Grade Liquidity Rating, SGL-4 -- $152 million 11.57% senior unsecured discount notes due 2012, C (LGD6, 93%) This rating was withdrawn on MAAX Corporation: -- $150 million 9.75% senior subordinated notes due 2012, Ca (LGD5, 73%) MAGNA ENTERTAINMENT: Obtains Waiver From Canadian Lender -------------------------------------------------------- Magna Entertainment Corp. disclosed that at March 31, 2008, it had a working capital deficiency of $218.0 million and $229.1 million of debt scheduled to mature in the 12-month period ending March 31, 2009, including amounts owing under MEC's $40.0 million senior secured revolving credit facility with a Canadian financial institution, which is scheduled to mature on May 23, 2008. During the three months ended March 31, 2008, the maturity date of the $40.0 million MEC Credit Facility was extended from March 31, 2008 to April 30, 2008. The maturity date was further extended to May 23, 2008 subsequent to quarter-end. Borrowings under the MEC Credit Facility are available by way of U.S. dollar loans and letters of credit, each bearing interest at the U.S. base rate plus 5.0% or the London Interbank Offered Rate plus 6.0%. Loans under the MEC Credit Facility are collateralized by a first charge on the assets of Golden Gate Fields and a second charge on the assets of Santa Anita Park, and are guaranteed by certain of MEC's subsidiaries. At March 31, 2008, MEC had borrowed $34.9 million under the MEC Credit Facility and had issued letters of credit totaling $3.4 million, such that $1.7 million was unused and available. The weighted average interest rate on the borrowings outstanding under the MEC Credit Facility at March 31, 2008 was 8.7%. At March 31, 2008, MEC was not in compliance with one of the financial covenants of the MEC Credit Facility. A waiver was obtained from the lender on April 30, 2008 for the financial covenant breach at March 31, 2008. As reported in the Troubled Company Reporter on March 20, 2008, Ernst & Young LLP in Toronto, Canada, expressed substantial doubt about Magna Entertainment Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years Dec. 31, 2007, and 2006. The auditing firm pointed to the company's recurring operating losses and working capital deficiency. About Magna Entertainment Headquartered in Aurora, Ontario, Magna Entertainment Corp. (Nasdaq: MECA)(TSX: MEC.A) -- http://www.magnaentertainment.com/ -- acquires, develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. The company also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MAKINO RESTAURANT: Case Summary & 12 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Makino Restaurant Group, Inc. 3965 S. Decatur Blvd. Ste 5 Las Vegas, NV 89103 Bankruptcy Case No.: 08-14533 Type of Business: The Debtor owns and operates restaurants that serve Pan-Asian food. Chapter 11 Petition Date: May 5, 2008 Court: District of Nevada (Las Vegas) Judge: Bruce A. Markell Debtor's Counsel: David J. Winterton, Esq. Email: david@davidwinterton.com 211 N. Buffalo Dr. Ste. A Las Vegas, NV 89145 Tel: (702) 363-0317 http://www.davidwinterton.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's 12 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Nevada Dept. of Taxation $119,934 Revenue Division Capital Complex 101 N. Carson St. Ste. 3 Carson City, NV 89701-3714 Blue Marine Seafood $40,011 4988 Corona Ave. Vernon, CA 90058 US Food Service $21,929 1685 W. Cheyenne Ave. North Las Vegas, NV 89032 IRS $20,981 SKD Construction $20,000 International Marine Products $16,642 JFC International $11,007 Nishimuto Trading $10,634 Makino Eastern $8,000 Maruhana USA $6,344 Sysco Food Services $5,709 Lombardo Produce $3,976 MARATHON REAL: Fitch Holds 'B' Rating on $26.7MM Class K Notes -------------------------------------------------------------- Fitch has affirmed these floating-rate classes of Marathon Real Estate CDO 2006-1, Ltd/LLC: -- $520,000,000 class A-1 at 'AAA'; -- $50,000,000 class A-2 at 'AAA'; -- $99,000,000 class B at 'AA'; -- $51,500,000 class C at 'A+'; -- $16,000,000 class D at 'A'; -- $14,000,000 class E at 'A-'; -- $23,500,000 class F at 'BBB+'; -- $15,500,000 class G at 'BBB'; -- $26,000,000 class H at 'BBB-'; -- $56,300,000 class J at 'BB'; -- $26,700,000 class K at 'B'. Fitch's affirmation of the above classes is based on the transaction staying within its covenanted limits and maintaining adequate reinvestment cushion. Deal Summary: Marathon CRE CDO is a revolving commercial real estate cash flow collateralized debt obligation, which closed on May 18, 2006. It was incorporated to issue $1,000,000,000 of floating-rate notes and preferred shares. As of the April 21, 2008 trustee report, the CDO was substantially invested as: commercial mortgage whole loans/A-notes (47.8%), B-notes (17.0%), mezzanine loans (11.8%), commercial mortgage backed securities (CMBS) (10.8%), real estate bank loans (3.0%), credit tenant lease loans (4.6%), asset-backed securities (0.9%), CRE CDO (3.1%), preferred equity (0.3%), and cash (0.7%). The CDO is also permitted to invest in real estate investment trust (REIT) debt and synthetic assets. The portfolio is selected and monitored by Marathon Asset Management, LLC. The CDO has a five-year reinvestment period, during which, if all reinvestment criteria are satisfied, principal proceeds may be used to invest in substitute collateral. The reinvestment period ends May 18, 2011. Asset Manager: Marathon Asset Management LLC is a global alternative investment and asset management company that manages $10.5 billion in capital and $20 billion in assets. Founded in January 1998, Marathon maintains its headquarters in New York City and has offices in London and Hong Kong. The company formed its Real Estate Finance Group as an originator and investor in commercial real estate debt in 2003 and has made more than $3 billion in investments. The REFG team consists of 17 real estate professionals plus support staff. Fitch finds Marathon to be an acceptable commercial real estate loan CDO asset manager. Marathon has engaged Wachovia Securities as its master servicer, rated 'CMS2' by Fitch. Marathon's asset managers oversee Wachovia's loan administration. Marathon manages its sub-performing loan activities directly. To date, Marathon has had one real estate loan within the CDO that reached the workout stage. This loan was successfully resolved. Performance Summary: As of the April 21, 2008 trustee report, the overall poolwide expected loss increased to 35.625% from 30.625% as of the effective date (February 12, 2007). The negative credit migration of the portfolio is primarily attributed to the following two factors: first, several loans have fallen behind in their business plans resulting in higher expected losses for those loans. Secondly, a majority of the newly added loans consist of highly levered hotel and health care properties. Generally, these asset types carry higher than average expected losses. At the same time that the credit profile of the portfolio has gotten riskier, the as-is weighted average spread has declined. As a result, the amount of reinvestment cushion has decreased to 6.175% from to 13.625% at the effective date. The CDO's Fitch PEL covenant varies depending on the trustee reported WAS. Based on the trustee reported WAS, the PEL covenant can range from 38.750% to 51.050% (the WAS/PEL matrix). As the current reported WAS is 2.40%, the PEL covenant has declined to 41.800% from 44.250% at the effective date. Of the loans that are behind in their business plans, one loan (0.57%) is a Miami hotel that was originally planned to be converted into a condominium. The conversion plan has since been abandoned and the property is expected to remain a hotel. Another loan (0.79%) is secured by a New Jersey office property with 38% occupancy. This property is behind in its lease-up plan. A third loan (3.66%) consists of a portfolio of four manufactured housing properties that have experienced declining occupancy since loan closing. Fitch increased the expected losses on these three loans. In addition, one loan (0.74%) is currently 90 days delinquent and was modeled with a 100% probability of default. Since last review, approximately 50% of the collateral has paid off with the proceeds reinvested resulting in a significantly different portfolio composition. Many of the loans that were added include highly leveraged hotel and health care loans with a Fitch weighted average stressed loan to value above 100%. The portfolio's concentration in hotel and health care properties increased to 28.2% and 6.5% from 16.6% and 2.7%, respectively, as of the effective date. The overall Fitch stressed LTV has increased to 121.7% from 97.5% at the effective date. The rated collateral in this transaction (22.5%) consists of CMBS, ABS, CRE CDOs, REBLs, and CTL loans. Since last review, this collateral has negatively migrated toward a 'B/B+' weighted average rating from a 'BB-/B+' weighted average rating. The overcollateralization and interest coverage ratios of all classes have remained above their covenants, as of the April 21, 2008 trustee report. Collateral Analysis: Although the portfolio has migrated to a higher concentration of whole loans since last review (47.8% from 34.5%), many of these loans are secured by transitional and non-traditional property types, such as hotel and health care properties. Several mezzanine loans have paid off since last review decreasing the concentration of this asset type to 11.9% from 22.9%. The deal has maintained a 0.3% concentration of preferred equity positions. Uninvested proceeds comprise 0.7% of the collateral balance. Per the April 21, 2008 trustee report and based on Fitch categorizations, the CDO is within all property type covenants; hotels have the highest concentration at 28.2%; this concentration is near its covenant maximum of 30.0%. A positive trend has been reduced exposures to other non-traditional property types. Investment in land loans has decreased to 0.0% from 8.9%, while condominium conversion loans have declined to 2.6% from 11.1%. The CDO is also within all its geographic covenants with the highest concentration in New York at 20.1%. The Fitch Loan Diversity Index is 207, which represents a diverse portfolio as compared to other CRE CDOs with the largest loan comprising only 5.8% of the CDO and the top five assets only representing 18.9% of the CDO. The Fitch LDI covenant is 435. Rating Definitions: The ratings of the class A-1, A-2 and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the class C, D, E, F, G, H, J and K notes address the likelihood that investors will receive ultimate interest and capitalized interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. Ongoing Surveillance: Upgrades during the reinvestment period are unlikely given the pool could still migrate to the PEL covenant. The Fitch PEL is a measure of the hypothetical loss inherent in the pool at the 'AA' stress environment before taking into account the structural features of the CDO liabilities. Fitch PEL encompasses all loan, property, and poolwide characteristics modeled by Fitch. MAYFLOWER CDO: Moody's Lowers Ratings on Two Note Classes to Ca --------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Mayflower CDO I Ltd. Class Description: $609,000,000 Class A-1LA Investor Swap -- Prior Rating: A2, on review for possible downgrade -- Current Rating: Ba3, on review for possible downgrade Class Description: $20,000,000 Class X Notes Due September 2012 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $157,000,000 Class A-1LB Floating Rate Notes Due June 2046 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $75,000,000 Class A-2L Floating Rate Notes Due June 2046 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: Ca Class Description: $46,000,000 Class A-3L Floating Rate Notes Due June 2046 -- Prior Rating: Caa1, 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. MEDIACOM COMMS: March 31 Balance Sheet Upside-Down by $295 Million ------------------------------------------------------------------ Mediacom Communications Corp. reported Wednesday its financial results for the three months ended March 31, 2008. At March 31, 2008, the company's consolidated balance sheet showed $3.6 billion in total assets and $3.9 billion in total liabilities, resulting in a $295.8 million total stockholders' deficit. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $118.8 million in total current assets available to pay $416.2 million in total current liabilities. Net Loss The company reported a net loss of $30.6 million for the first quarter ended March 31, 2008, compared with a net loss of $16.9 million in the same period in 2007. Revenues Revenues rose 10.3% to $339.7 million, largely due to an increase in video revenues, growth in high-speed data and phone customers and a favorable comparison to the prior year period when results were affected by a retransmission consent dispute with a major television station group. Video revenues grew 6.0% from the first quarter of 2007, due to price increases and customer growth in the company's digital and other advanced video products and services, including DVRs and HDTV, partially offset by a lower number of basic subscribers. High-speed data revenues rose 17.3%, primarily due to a 14.7% year-over-year increase in unit growth. During the quarter, high- speed data customers grew by 30,000, as compared to a gain of 22,000 in the prior year period, ending the quarter with 688,000 customers, or 24.3% penetration of estimated homes passed. Phone revenues rose 69.3%, mainly due to a 65.9% year-over-year increase in unit growth. During the quarter, phone customers grew by 19,000, as compared to a gain of 18,000 in the prior year period, ending the quarter with 204,000 customers, or 8.0% penetration of estimated marketable phone homes. As of March 31, 2008, Mediacom Phone was marketed to nearly 90% of the company's 2.84 million estimated homes passed. Advertising revenues decreased by 2.8%, largely as a result of an overall reduction in national advertising, offset in part by an increase in national and local political advertising. Operating Costs Total operating costs increased 6.7% to $213.9 million, primarily due to increases in: (i) programming unit costs; (ii) expenses related to corresponding growth in the company's phone customers; and (iii) sales and marketing activities. These higher costs were offset in part by non-recurring expenses in the prior year period relating to a retransmission consent dispute and a significant reduction in delivery costs for the company's high-speed data product. Adjusted OIBDA/Operating Income Adjusted OIBDA increased 17.1% to $125.8 million, resulting in a margin of 37.0%, up from 34.9% in the prior year period. Operating income increased 23.5% to $64.6 million, due to the increase in Adjusted OIBDA, offset in part by higher depreciation and amortization. Adjusted OIBDA excludes non-cash, share-based compensation charges. Management's Comments "While we expected that our financial and operating performance this quarter would benefit from comparisons to an unusually weak prior year period, we significantly surpassed expectations and produced record results, giving us a great deal of momentum for the balance of 2008," said Rocco B. Commisso, Mediacom's chairman and chief executive officer. "Our quarterly RGU additions were the best ever, and we generated the highest year-over-year Adjusted OIBDA growth in over five years. Moreover, for the first time since early 2005, we grew basic subscribers sequentially." "Our results for the first quarter give us good reason to raise our financial guidance for full year 2008. While we plan to spend more to satisfy strong customer demand for HDTV/DVR set-top boxes and our growing commercial enterprise business, we still expect to generate positive free cash flow for the year, due in part to a dramatic reduction in the cost of debt capital. Despite the continuing turmoil in the credit markets, our financial position remains solid, as we have meaningfully reduced our balance sheet leverage, even after returning $82.0 million to shareholders through our stock repurchase program over the past twelve months," concluded Mr. Commisso. Liquidity and Capital Resources Significant sources of cash for the three months ended March 31, 2008, were: -- Net cash flows from operating activities of $51.5 million; and -- Net borrowings of revolving bank loans of $15.3 million Significant uses of cash for the three months ended March 31, 2008, were: -- Capital expenditures of approximately $64.0 million; and -- Repurchases of shares of Class A common stock totaling $12.9 million Free cash flow was positive $7.2 million for the three months ended March 31, 2008, as compared to negative $1.4 million in the prior year period. Financial Position At March 31, 2008, the company had total debt outstanding of $3.2 billion, an increase of $15.3 million from year-end 2007. As of the same date, the company had unused credit facilities of $602.0 million. As of May 7, 2008, 68.0% of the company's total debt is at fixed interest rates or subject to interest rate protection. Stock Repurchase Program and Activity During the three months ended March 31, 2008, the company repurchased approximately 2.8 million shares of its Class A Common Stock for an aggregate cost of $12.9 million. At March 31, 2008, the company had approximately 96.5 million shares of Class A and Class B common stock outstanding, and $7.1 million was available under the company's stock repurchase program. During April 2008, the company repurchased an additional 1.5 million shares of Class A common stock with substantially all of the remaining funds available in its program. On May 5, 2008, the company's Board of Directors authorized a new $50.0 million stock repurchase program. 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?2bbc About Mediacom Communications Based in Middletown, New York, Mediacom Communications Corporation (Nasdaq: MCCC) -- http://www.mediacomcc.com/-- is a cable television company focused on serving the smaller cities and towns in the United States. The company offers a wide array of broadband products and services, including traditional video services, digital television, video-on-demand, digital video recorders, high-definition television, high-speed Internet access and phone service. * * * As reported in the Troubled Company Reporter on March 6, 2008, Moody's Investors Service affirmed its 'B1' corporate family rating for Mediacom Communications Corp.. The rating outlook remains stable. MERITAGE HOMES: Has No Plan to Issue Preferred Stock ---------------------------------------------------- Meritage Homes Corporation's board of directors has adopted a policy regarding designation of preferred stock. At the upcoming annual meeting of Meritage's stockholders to be held on May 15, 2008, stockholders are being asked to approve Proposal No. 5, an amendment to Meritage's Articles of Incorporation to provide for the issuance of preferred stock as may be determined by the board of directors in its discretion. In order to address concerns regarding the use of the preferred stock, the Meritage board has adopted a policy requiring that, unless approved by a vote of the stockholders, any designation of preferred stock in connection with the adoption of a stockholder rights plan include provisions effecting the termination of that plan within one year. The policy also requires that other uses of preferred stock be limited to bona fide capital raising or business acquisition transactions. As disclosed in the proxy statement distributed in connection with the upcoming annual meeting of stockholders, Meritage has no current plans to issue preferred stock. Rather, this proposal to approve the creation of preferred stock is designed to provide Meritage's board of directors with the flexibility to issue such preferred stock, should they, at some time in the future, determine that such measures are necessary or desirable. Stockholders and other investors are urged to read the proxy statement, which contains important information that should be read carefully before any decision is made with respect to all proposals, including the proposal to approve the creation of the preferred stock. Headquartered in Scottsdale, Arizona, Meritage Homes Corporation (NYSE: MTH) -- http://www.meritagehomes.com/-- is ranked by Builder magazine as the 12th largest homebuilder in the U.S., ranked #580 on the 2007 Fortune 1000 list. Meritage operates in many of the historically dominant homebuilding markets of the southern and western United States, including six of the top 10 single-family housing markets in the country for 2006. Meritage Homes has reported three consecutive quarterly net losses beginning June 30, 2007 until Dec. 31, 2007. * * * As reported in the Troubled Company Reporter on Jan. 21, 2008, Moody's lowered the ratings of Meritage Homes Corporation, including its corporate family rating to B1 from Ba3, and its senior unsecured notes rating to B1 from Ba3. The ratings outlook is negative. MI DEVELOPMENTS: Gets Reorganization Proposal From Stronach Group ----------------------------------------------------------------- MI Developments Inc. released last week its results for the three months ended March 31, 2008, reporting a consolidated net income of $6,597,000, compared with $23,283 in the same period in 2007. MID also disclosed that on March 31, 2008, the company received a reorganization proposal on behalf of various shareholders of MID, including entities affiliated with the Stronach Trust, MID's controlling shareholder. Institutional holders of MID Class A Subordinate Voting Shares holding an aggregate of over 50% of the outstanding MID Class A Subordinate Voting Shares have agreed to support the proposed reorganization. In addition, holders of MID Class B Shares (including the Stronach Group) representing an aggregate of approximately 95% of the class have agreed to support the proposal. The stated objective of the reorganization is to: (a) effect a substantial cash distribution to MID shareholders and (b) create a focused real estate investment vehicle, which will distribute 80% of its available cash flow, in which the interests of all shareholders will be fully aligned. Further details of the reorganization proposal are included in the proposal term sheet, which is posted on MID's Web site at http://www.midevelopments.com/ The principal components of the reorganization proposal include: * Holders of MID Class A Subordinate Voting Shares and MID Class B Shares would exchange their existing MID shares for $15.50 in cash and shares of a new public company. * New MID would be owned approximately 80% by the former public shareholders, 10% by the Stronach Group and 10% by Magna International Inc. * MID's multiple voting share structure would be eliminated, with all of New MID's common shares carrying one vote per share and being equal in all respects except for Board nomination rights. * The New MID Board of Directors would consist of nine members -- five nominated by the Stronach Group and Magna, and four nominated by the public shareholders. Major decisions would require approval by more than two-thirds of the New MID Board. * MID's controlling equity investment in Magna Entertainment Corp. would be sold to an entity to be identified by the Stronach Group for $25.0 million in cash. * MID would transfer to a new limited partnership all of the MID Lender's loans to MEC and its subsidiaries, $150.0 million in cash (subject to adjustment if the amount of the MID Lender's loans to MEC is more or less than $247.0 million) and certain of MID's development lands in Aurora, Ontario. The Stronach Group would control the limited partnership through a 51% ownership interest and as general partner would have exclusive control and authority over all activities of the limited partnership. Unless consented to by more than two- thirds of the New MID Board of Directors, the limited partnership would be wound up after five years. New MID's public shareholders would hold special shares that would provide them with a 49% interest in the limited partnership. The Stronach Group would invest an additional $25.0 million as part of the proposed reorganization. * New MID would be prohibited from entering into any future transactions with MEC or the limited partnership without the unanimous consent of New MID's Board of Directors. * New MID would alter its capital structure by significantly increasing its credit facilities to $1.1 billion. Magna would be asked to guarantee a $1.0 billion five-year term loan in exchange for a guarantee fee from New MID. Magna would pay an amount equal to the guarantee fee for its 10% interest in New MID. UBS Securities LLC and Bank of Montreal have provided a highly confident letter concerning the term loan. * New MID would distribute at least 80% of its available annual cash flow to its shareholders. * New MID and Magna would agree to negotiate a new leasing framework which is intended to be mutually beneficial without changing the current economics of MID's existing leases. The proposed reorganization would be carried out by way of a court-approved plan of arrangement under Ontario law, requiring at least two-thirds of the votes cast by each class of MID's shareholders in favour of the proposal at a special meeting of shareholders to consider the proposal. In addition, the proposal would be subject to applicable regulatory approvals, including those contained in Multilateral Instrument 61-101. The proposal contemplates MID calling by May 30, 2008 a special meeting to consider the reorganization and closing the transaction no later than July 30, 2008. Institutional holders of MID Class A Subordinate Voting Shares holding an aggregate of over 50% of the outstanding MID Class A Subordinate Voting Shares have agreed to support the proposed reorganization. In addition, holders of MID Class B Shares (including the Stronach Group) representing an aggregate of approximately 95% of the class have agreed to support the proposal. In addition, the proposed reorganization is conditional on, among other things, Magna's participation in the proposed transaction and the provision of the guarantee of the New MID term loan by Magna, the closing of the New MID loan facilities, the finalization of definitive documentation and dissent rights not being exercised by holders of more than 10% of the MID Class A Subordinate Voting Shares. Magna has not made any commitment to participate in the reorganization proposal. MID has advised Magna of the receipt of the proposal and has requested that the Magna Board of Directors review the proposal and advise MID following its review as to its willingness to participate in the proposal. There can be no assurance that Magna will agree to participate in the transaction or the terms on which it might agree to participate. The Board has not yet made any decisions or recommendations with respect to the reorganization proposal and has constituted a Special Committee of the Board to review and make recommendations relating thereto. The proposal is subject to certain material conditions, some of which are beyond MID's control, and there can be no assurance that the transaction contemplated by the reorganization proposal will be completed. The unaudited interim consolidated financial statements do not reflect any adjustments that may be required should the reorganization proposal be completed. About MID MID -- http://www.midevelopments.com/-- is a real estate operating company focusing primarily on the ownership, leasing, management, acquisition and development of a predominantly industrial rental portfolio for Magna and its subsidiaries in North America and Europe. MID also acquires land that it intends to develop for mixed-use and residential projects. MID holds a controlling interest in MEC, North America's number one owner and operator of horse racetracks, based on revenue, and one of the world's leading suppliers, via simulcasting, of live horse racing content to the growing inter-track, off-track and account wagering markets. MIDORI CDO: Credit Quality Deterioration Cues Moody's Ratings Cut ----------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Midori CDO, Ltd. Class Description: $122,500,000 Class A-1 Secured Funded Notes Due 2047 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $202,500,000 Class A-1 Secured Unfunded Notes Due 2047 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $6,500,000 Class A-X Secured Notes Due 2047 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Aa1, on review for possible downgrade Class Description: $81,500,000 Class A-2 Secured Floating Rate Notes Due 2047 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $28,000,000 Class B Secured Floating Rate Notes Due 2047 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: Ca Class Description: $26,000,000 Class C Secured Floating Rate Deferrable Notes Due 2047 -- Prior Rating: Caa1, on review for possible downgrade -- Current Rating: C Class Description: $14,000,000 Class D Secured Floating Rate Deferrable Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C Class Description: $5,500,000 Class E Secured Floating Rate Deferrable Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. NEIGHBORHOOD OIL: Case Summary & 18 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Neighborhood Oil Centers, Inc. dba Kwik Kar Lube & Tune on Dalrock Road 6706 Dalrock Rd. Rowlett, TX 75089 Bankruptcy Case No.: 08-32104 Type of Business: The Debtor provides car and auto lube & oil change services. Chapter 11 Petition Date: May 5, 2008 Court: Northern District of Texas (Dallas) Judge: Stacey G. Jernigan Debtor's Counsel: Mark I. Agee, Esq. Email: dallasbankruptcylawyer@gmail.com 5401 N. Central Expressway, Ste. 220 Dallas, TX 75205 Tel: (214) 320-0079 Fax: (214) 320-2966 Total Assets: $855,204 Total Debts: $2,110,647 Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Business Loan Center business loan; value $944,258 One Independence Pointe Ste. of security: $675,767 102 Greenville SC 29615 Loyd Judd wages $480,000 P.O. Box 8632 Greenville TX 75404 Carla S. Judd wages $304,167 P.O. Box 8632 Greenville TX 75404 Loyd & Carla Judd investment $139,000 Kwik Industries second lien, personal $124,045 guarantee Loyd & Carla Judd business loan $59,880 Pennzoil-Quaker State Co. business debt $5,062 Old Glory Insurance insurance $3,000 North American Insurance insurance $2,400 Nationwide Insurance insurance $613 SBC phone $353 Unifirst Holdings, LP business debt $186 Alldata, LLC subscription $159 Dish Network cable $60 O'Reilly Auto Parts business debt $10 National Oil & Lube News subscription $0 Interstate Battery inventory $0 BI-LO Wholesale inventory $0 NEWCASTLE MORTGAGE: Moody's Chips Ratings to B1 on Two Classes -------------------------------------------------------------- Rating actions for Newcastle Mortgage Securities Trust 2006-1 appeared incorrectly in the April 21st release. The original ratings on Cl. M-2, Cl. M-3, and Cl. M-4 have not changed and were incorrectly listed as downgraded. Incorrect ratings were published for Cl. M-5 through M-9. Revised release follows: Moody's Investors Service has downgraded the ratings of 5 tranches from 1 subprime RMBS transaction issued by Newcastle Mortgage Securities Trust. 2 downgraded tranches remain on review for possible further downgrade. The collateral backing these transactions consists primarily of first-lien, fixed and adjustable-rate, subprime residential 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 surveillance process. Complete rating actions are: Issuer: Newcastle Mortgage Securities Trust 2006-1 -- Cl. M-5, Downgraded to Baa1 from A2 -- Cl. M-6, Downgraded to Baa3 from A3 -- Cl. M-7, Downgraded to B1 from Baa1 -- Cl. M-8, Downgraded to B1 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. M-9, Downgraded to B2 from Baa3; Placed Under Review for further Possible Downgrade NEXSTAR BROADCASTING: Q1 Balance Sheet Upside-Down by $104MM ------------------------------------------------------------ Nexstar Broadcasting Group Inc. reported Wednesday financial results for the first quarter ended March 31, 2008. At March 31, 2008, the company's consolidated balance sheet showed $748.3 million in total assets and $852.3 million in total liabilities, resulting in a $104.0 million total stockholders' deficit. The company reported a net loss of $15.3 million for the quarter ended March 31, 2008, compared with a net loss of $9.0 million in the same period in 2007. Net revenue for the quarter ended March 31, 2008, grew 2.6% to $63.7 million compared to $62.1 million in the first quarter of 2007. Loss from operations was $61,000 for the three months ended March 31, 2008, compared with income from operations of $6.1 million in the quarter ended March 31, 2007. During the quarter ended March 31, 2008, the company recorded a one-time, pre-tax, non-cash contract termination charge of $7.2 million related to the company's change in national sales representation firms at 24 of its television stations. Excluding the impact of the 2008 first quarter non-cash charge, the company's income from operations totaled $7.1 million, representing an increase of $1.0 million, or 16.4% over income from operations in the quarter ended March 31, 2007. Broadcast cash flow totaled $21.3 million in the first quarter of 2008 compared with $20.8 million for the same period in 2007. EBITDA totaled $18.1 million for the first quarter of 2008, compared to $17.7 million in the first quarter of 2007. Free cash flow was $4.3 million in the first quarter of 2008, compared with $2.0 million in the first quarter of 2007. Broadcast cash flow is calculated as income from operations plus corporate expenses, plus non-cash contract termination fees, depreciation, amortization of intangible assets and broadcast rights (excluding barter), loss (gain) on asset exchange and loss (gain) on asset disposal, net, minus broadcast rights payments. CEO Comment Perry A. Sook, chairman, president and chief executive officer of Nexstar Broadcasting Group Inc., commented, "The first quarter results indicate that Nexstar continues to outperform the industry and is on plan to generate record setting operating results in 2008. The company's financial results throughout the year will benefit from several visible growth drivers. We expect to garner strong shares of political advertising, further grow our high margin retransmission revenue stream and realize a full year benefit of last year's re-launch of our TV station websites into community portals. "Nexstar's 2008 first quarter revenue, broadcast cash flow, EBITDA and free cash flow exceeded last year's first quarter levels and are in line with the guidance range we provided at the time we reported our 2007 fourth quarter results. Increases in local, political, new media and retransmission consent revenues overcame declines in national, network compensation and trade and barter revenues. "The $63.7 million of Q1 2008 net revenue reflects approximately $1.8 million of net political advertising revenue and compares with $62.1 million of net revenue in last year's first quarter, which included approximately $340,000 of net political ad revenue. "First quarter 2008 retransmission consent revenue grew 18.0% to $4.6 million and we generated $2.0 million in new media revenue compared to $250,000 in Q1 2007. For the full year, we expect these recently launched revenue sources to account for approximately $30.0 million in total revenue a 35.0% increase compared with their total contributions in 2007. "Throughout 2008 we'll apply free cash to complete our digital television cap ex program and to reduce debt. We view our projected 2008 digital television cap ex spending of approximately $30.0 million as one-time in nature so 2009 free cash flow will benefit materially from the conclusion of the program. We expect to end 2008 with the lowest debt leverage ratio in the company's history." Outstanding Debt The company's total net debt at March 31, 2008, was $670.4 million, compared to $665.0 million at Dec. 31, 2007. The total debt figures include the company's 11.375% notes, which accreted to $130.0 million at March 31, 2008. As defined in the company's credit agreement, consolidated total net debt was $583.9 million at March 31, 2008. The company's total leverage ratio at March 31, 2008, was 6.47x compared to a permitted leverage covenant of 6.75x. The company projects that its total debt leverage ratio at year- end 2008 will be less than 5.5x compared to its permitted leverage covenant of 6.50x at Dec. 31, 2008. Total interest expense in the first quarter of 2008 was $14.0 million, compared to $13.7 million for the same period in 2007. Cash interest expense for the first quarter of 2008 was $10.1 million, compared to $10.3 million for the same period in 2007. Cash interest expense excludes non-cash interest expense related to amortization of debt financing costs and accretion of the discount on Nexstar's 11.375% senior discount notes and 7.0% senior subordinated notes. On April 1, 2008, Nexstar redeemed a principal amount of approximately $46.9 million of 11.375% notes outstanding sufficient to ensure that the 11.375% notes would not be "applicable high yield discount obligations" within the meaning of Section 163(i)(1) of the Internal Revenue Code. This principal payment was funded with cash generated from operations and from borrowings under its senior secured credit facility. 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?2bc5 About Nexstar Broadcasting Headquartered in Irving, Tex., Nexstar Broadcasting Group Inc. (Nasdaq: NXST) -- http://www.nexstar.tv/-- currently owns, operates, programs or provides sales and other services to 50 television stations in 29 markets in the states of Illinois, Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania, Louisiana, Arkansas, Alabama and New York. Nexstar's television station group includes affiliates of NBC, CBS, ABC, FOX, MyNetworkTV and The CW and reaches approximately 8.25% of all U.S. television households. * * * As reported in the Troubled Company Reporter on April 15, 2008, Standard & Poor's Ratings Services placed its ratings on Nexstar Broadcasting Group Inc., including the 'B' corporate credit rating, on CreditWatch with negative implications. NEXSTAR BROADCASTING: Names T. Busch and B. Jones as Co-COO ----------------------------------------------------------- Nexstar Broadcasting Group, Inc. disclosed the appointment of Timothy Busch, and Brian Jones to the additional positions of Co- Chief Operating Officer. Messrs. Busch and Jones will replace current COO, Duane Lammers, who is leaving the Company to pursue other interests. The changes are effective June 1, 2008. Tim Busch and Brian Jones bring extensive broadcast industry experience and deep knowledge of Nexstar's stations, markets and operating philosophy to their new positions. In their new roles, they will retain regional operating responsibilities while overseeing all facets of Nexstar's current television station and online operations and developing new revenue opportunities for Nexstar which further leverage the value of the Company's local station programming and content. While they will collaborate as Co-Chief Operating Officers, Mr. Busch will focus on traditional advertising revenue opportunities, including political advertising, while Mr. Jones will focus on the company's digital media platforms and sales. Messrs. Busch and Jones will report directly to Nexstar Broadcasting Group President and Chief Executive Officer, Perry Sook. "We are delighted to fill the COO position with in-house executive talent as both Tim and Brian have contributed extensively to the Company's financial growth and in establishing a culture of innovation among all of our associates," Perry Sook commented. "The appointments acknowledge their leadership roles at Nexstar while the Co-COO structure organizes functions and reporting in a manner that emphasizes each individual's respective expertise and strengths. As such, we are confident that their proven management skills, outstanding individual and collective contributions and extensive experience in the markets we serve will enable Nexstar to extend its successful track record of innovation and anticipating the needs of consumers and advertisers." Since 2002, Tim Busch has served as Senior Vice President and Regional Manager of Nexstar's Eastern Region consisting of 15 television stations in 10 markets, and brings over 23 years of television broadcasting experience to his new role. Mr. Busch previously served as VP and General Manager of Nexstar's WROC-TV, the CBS affiliate in Rochester, New York. Before joining Nexstar, Busch was General Sales Manager of the Gannett-owned NBC affiliate in Buffalo, New York for seven years. He also held advertising sales management positions in television and radio since 1988. Mr. Busch also serves as the Vice Chairman of the CBS Affiliates Association. "Having spent my entire career in the broadcasting industry, I truly appreciate the unique direction that Nexstar has taken to delivering value to customers which in turn has generated operating results that outperform the industry," Mr. Busch commented. "I look forward to working closer with Perry, Brian and our entire team to ensure that Nexstar continues its success and industry leadership in this evolving age of multi-platform distribution and consumption." Since 2003, Brian Jones has served as Senior Vice President and Regional Manager of Nexstar's Southwest Region consisting of 20 television stations in 11 markets. Mr. Jones previously served for seven years as Vice President and General Manager of CBS owned and operated KTVT and KTXA-TV in Dallas/Fort Worth. Prior to that, he held various executive management and sales positions with KTVT, MMT Sales Inc. and KXAS-TV (NBC). Collectively he has over 27 years of experience in local television. Mr. Jones also serves as the Chairman of the FOX Affiliates Association Board of Governors and serves on the board of directors of the Texas Association of Broadcasters and is a member of the National Association of Broadcasters Small Market Advisory Committee. "Our local markets are dynamic and invigorated as we continually seek to leverage the value of our core broadcasting assets," Mr. Jones commented. "This focus is creating new opportunities for our employees, viewers, customers and shareholders and I am delighted to assume additional responsibilities at this exciting time. Last year's re-launch of our TV station websites into community portals is just one of several current growth drivers and I am confident will underscore our commitment to building each of our properties on the strengths of their local business." About Nexstar Broadcasting Headquartered in Irving, Texas, Nexstar Broadcasting Group Inc. (NasdaqGM: NXST) -- http://www.nexstar.tv/-- currently owns, operates, programs or provides sales and other services to 50 television stations in 29 markets in the states of Illinois, Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania, Louisiana, Arkansas, Alabama and New York. Nexstar's television station group includes affiliates of NBC, CBS, ABC, FOX, MyNetworkTV and The CW and reaches approximately 8.25% of all U.S. television households. * * * As reported in the Troubled Company Reporter on April 15, 2008, Standard & Poor's Ratings Services placed its ratings on Nexstar Broadcasting Group Inc., including the 'B' corporate credit rating, on CreditWatch with negative implications. NPS PHARMA: Posts $13.1 Million Net Loss in 2008 First Quarter -------------------------------------------------------------- NPS Pharmaceuticals Inc. reported on Wednesday its financial results for the first quarter ended March 31, 2008. The company's net loss was $13.1 million for the first quarter of 2008, versus a net loss of $21.1 million for the first quarter of 2007. Operating expenses decreased to $20.1 million for the first quarter of 2008 as compared to $25.9 million for the first quarter of 2007. Revenues increased to $25.2 million for the first quarter of 2008, as compared to $10.0 million for the first quarter of 2007. First Quarter Highlights NPS completed the implementation of its new business strategy, which focused its development programs on specialty indications for gastrointestinal and endocrine disorders and consolidated operations into one facility in New Jersey. NPS appointed Francois Nader, M.D., as president, chief executive officer and director. Dr. Nader previously served as executive vice president and chief operating officer of NPS and played a key role in the development and implementation of the company's new business strategy. NPS appointed Alan G. Harris, M.D., Ph.D., as senior vice president and chief medical officer. NPS reported positive top-line results from a blinded Phase 3- extension study of GATTEX(TM) for patients with short bowel syndrome (SBS) who are dependent upon parenteral nutrition (PN). Data from this study demonstrated a favorable safety profile and a number of positive efficacy measures. Sixty eight percent of the 25 patients who had received low-dose GATTEX therapy and 52% of the 27 patients who had received high-dose GATTEX therapy achieved a 20.0% or greater reduction in PN after a total of 52 weeks of therapy. Three GATTEX-related abstracts were accepted for presentation at the 2008 Digestive Disease Week conference, including two oral presentations of data from the Phase 3 study of GATTEX for PN- dependent SBS patients. Kirin launched REGPARA(R) (cinacalcet HCl) in Japan for secondary hyperparathyroidism during maintenance dialysis. Francois Nader, M.D., president and chief executive officer, stated: "The first quarter was marked by the continued advancement of our proprietary and partnered pipeline. We reported positive top-line results from our Phase 3-extension study of GATTEX for SBS and our partner Kirin launched REGPARA in Japan. We are finalizing our protocol for a Phase 3 confirmatory study for GATTEX and we remain on track to launch the study in the third quarter of this year. Our second late-stage program, NPSP558, for hypoparathyroidism continues to progress with the initiation of a pivotal study on target for the second half of this year. Equally important, we continue to manage our expenses in line with our 2008 cash burn guidance." 2008 Financial Results Revenues increased to $25.2 million for the first quarter of 2008, as compared to $10.0 million for the first quarter of 2007. The increase is primarily due to (i) license fee revenue recognized under the company's agreement with Nycomed for GATTEX, (ii) royalty revenue on Amgen's sales of Sensipar(R) (cinacalcet HCl), and (iii) revenues associated with the company's agreement with Nycomed for Preotact(R) (parathyroid hormone 1-84 [rDNA origin] injection). Sensipar royalties are paid directly to a restricted cash account of a subsidiary of NPS and used to secure non-recourse debt issued in December 2004 and August 2007. After repayment of the debt, Sensipar royalties will return to NPS. Preotact royalties are paid directly to DRI Capital in accordance with non-recourse debt issued in July 2007. The Preotact royalties will return to NPS if royalty payments to DRI Capital exceed two and one-half times the amount of advanced principal, including any milestone payments. Research and development expenses were $6.4 million for the first quarter of 2008 versus $10.2 million for the first quarter of 2007. The reduction in research and development expenses during 2007 was attributable to the implementation of the company's new strategy and the corresponding reduction in personnel and related costs, as well as the discontinuation of activities that were no longer strategically aligned. General and administrative expenses were $9.3 million for the first quarter of 2008 versus $6.6 million for the first quarter of 2007. NPS reported a $282,000 credit for restructuring charges for the first quarter of 2008 as compared to a $7.1 million expense for the first quarter of 2007. R estructuring charges primarily comprised employee termination benefits. Interest expense, net, was $15.1 million for the first quarter of 2008 versus $5.2 million for the first quarter of 2007. NPS recorded an impairment charge of $3.5 million on its auction- rate securities in the first quarter of 2008 following the company's determination that the change in fair value of its ARS investments is "other than temporary." The company's ARS investments have experienced failed auctions since the latter part of 2007 due to liquidity issues in the global credit and capital markets. Cash and Investments At March 31, 2008, NPS' cash, cash equivalents, short- and long- term investments totaled $149.1 million, as compared to $161.7 million at Dec. 31, 2007. At March 31, 2008, NPS held AAA-rated ARS investments with a cost basis of $29.7 million and an estimated fair value of $26.2 million. NPS has classified its ARS investments as a non- current asset within its balance sheet. Restatement of 2007 Financial Results NPS will file an amendment on Form 10-K/A to its annual report for the year ended Dec. 31, 2007, due to an error in the computation of the cash sweep premium interest expense associated with the company's Class A Notes. NPS detected this error during the course of its preparation and review of its quarterly report on Form 10-Q for the period ended March 31, 2008. While the error affects the interest expense reported in the company's financial statements, NPS does not expect it to affect its current projections for the retirement of the Class A Notes. The Class A Notes are non-recourse to NPS and are secured by royalties on sales of Sensipar. NPS expects the corrections to result in an increase of $3.8 million in accrued expenses and interest expense; a reduction of $100,000 in income taxes payable and income tax expense; and an increase in retained deficit of $3.7 million. About NPS Pharmaceuticals Headquartered in Bedminster, N.J., NPS Pharmaceuticals (Nasdaq: NPSP) -- http://www.npsp.com/-- is developing specialty therapeutics for gastrointestinal and endocrine disorders with high unmet medical need. The company is currently advancing two late-stage programs. Teduglutide, a proprietary analog of GLP-2, is in Phase 3 clinical development for intestinal failure associated with short bowel syndrome as GATTEX(TM) and in preclinical development for gastrointestinal mucositis and necrotizing enterocolitis. NPSP558 (parathyroid hormone 1-84 [rDNA origin] injection) is in Phase 2 clinical development as a hormone therapy for hypoparathyroidism. NPS complements its proprietary programs with a royalty-based portfolio of products and product candidates that includes strategic partnerships with Amgen, GlaxoSmithKline, Janssen, Kirin, and Nycomed. * * * As reported in the Troubled Company Reporter on April 29, 2008, NPS Pharmaceuticals Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $231.8 million in total assets and $419.8 million in total liabilities, resulting in a $188.0 million total shareholders' deficit. OMEGA WALLBEDS: Files for Chapter 11 Protection in Arizona ---------------------------------------------------------- Omega Wallbeds Inc. filed for Chapter 11 protection with the U.S. Bankruptcy Court for the District of Arizona, the Arizona Daily Star reported. Omega Wallbeds sought bankruptcy protection after it encountered difficulty dealing with its main creditor, California Bank and Trust, according to a comment posted by Omega Wallbeds president Jay Allen in response to the Arizona Daily Star report. Owner Sarah Lee-Allen said that company operations will still continue with around seven employees, Mr. Allen indicated in his post. Ms. Lee-Allen said it is business as usual and that the company has a strong backlog and the support of customers. Counsel for the Debtor, Eric Slocum Sparks, Esq., said, "It is always difficult to negotiate with out-of-state banks who have little or no financial interest in the local community and the people that business employs." California Bank and Trust has regional headquarters in Los Angeles, Oakland, and San Diego, California. About Omega Wallbeds Omega Wallbeds Inc. -- http://www.omegawallbeds.com/-- designs and hand crafts custom guest rooms, hobby and office systems for the Tucson area. The showroom displays 18 different and unusual wallbed styles. The company is known for its award winning designs, outstanding service and workplace excellence. Its designs have been recognized in such national publications a "Wood Magazine", and "Closet Magazine". Oracle Healthcare Acquisition Corp. Announces Stockholder Approval of Proposed Dissolution and Plan of Liquidation ORACLE HEALTHCARE: Stockholders Decide on Liquidation ----------------------------------------------------- The stockholders of Oracle Healthcare Acquisition Corp. voted to approve the dissolution of the Company and announced its proposed plan of liquidation, as presented in the Company's proxy statement dated April 16, 2008, at a special meeting of stockholders held on May 7, 2008. The Company had set May 7, 2008 as the record date for determining the stockholders entitled to receive a liquidating distribution, if any, from the trust account in which the proceeds from the Company's initial public offering were placed and the Company expects to pay the liquidating distribution, if any, on or around May 12, 2008. The Company has filed a certificate of dissolution with the Secretary of State of the State of Delaware for the purpose of effecting its dissolution and has filed a Certificate of Termination of Registration on Form 15 with the Securities and Exchange Commission for the purpose of deregistering its securities under the Securities Exchange Act of 1934, as amended. As a result, the Company will no longer be a public reporting company and its securities will cease trading on the OTC Bulletin Board. Headquartered in Greenwich, Conn., Oracle Healthcare Acquisition Corp. does not have significant operations. It intends to acquire, through a merger, capital stock exchange, asset acquisition, stock purchase, or other similar business combination, an operating business in the healthcare industry. ORION 2006-1: Moody's Cuts Baa2 Rating to Caa2 on $936MM Swap ------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these Swap transaction entered into by Orion 2006-1 Ltd. Class Description: $936,000,000 Senior Swap Agreement dated as of May 26, 2006 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade Additionally, Moody's downgraded the following notes: Class Description: $98,500,000 Class A Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Ca Class Description: $81,000,000 Class B Secured Floating Rate Notes due 2046 -- Prior Rating: Caa1, 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. PAINCARE HOLDINGS: To Voluntarily Delist from AMEX on May 29 ------------------------------------------------------------ PainCare Holdings, Inc., (Amex: PRZ), a provider of pain-focused medical and surgical solutions and services, said that it will voluntarily withdraw its common stock from listing on the American Stock Exchange. PainCare's Board of Directors considered several factors that include the following: -- The Company has failed to timely file periodic reports with the Securities and Exchange Commission, in violation of Sections 134 and 1101 of the AMEX Company Guide. -- The Company has failed to comply with Sections 1003(a)(i); Section 1003(a)(ii) and Section 1003(a)(iii) as well as Section 1003(a)(iv) of the AMEX Company Guide. PainCare currently intends that the delisting will be effective on or about Thursday, May 29, 2008. After withdrawal of its common stock from listing on the AMEX, the Company expects that the shares will be quoted on the OTC Pink Sheets. PainCare will announce its new ticker symbol at that time. The Troubled Company Reporter previously reported that on April 16, 2008, PainCare released a news statement reflecting its comparative results for the 2006 and 2007 fiscal years, ended Dec. 31. PainCare reported it could not complete the form 10-K within the prescribed time because the company effected numerous dispositions of physician practices during the 2007 fiscal year resulting in the need for additional time to complete the associated accounting and financial reporting. According to the TCR, based on its review of the preliminary financial information reported in news statement, the AMEX had notified PainCare that the company is not in compliance with Section 1003(a)(i) of the company guide with stockholders' equity of less than $2,000,000 and losses from continuing operations and net losses in two out of its three most recent fiscal years, Section 1003(a)(ii) of the company Guide with stockholders' equity of less than $4,000,000 and losses from continuing operations and net losses in three out of its four most recent fiscal years, Section 1003(a)(iii) of the company Guide with stockholders' equity of less than $6,000,000 and losses from continuing operations and net losses in its five most recent fiscal years and Section 1003(a)(iv) of the company Guide in that it has sustained losses which are so substantial in relation to its overall operations or its existing financial resources, or its financial condition has become so impaired that it appears questionable, in the opinion of the Exchange, as to whether the company will be able to continue operations and meet its obligations as they mature. About PainCare Holdings, Inc. Headquartered in Orlando, Florida, PainCare Holdings, Inc. -- http://www.paincareholdings.com/-- is a provider of pain-focused medical and surgical solutions and services. Through its proprietary network of acquired or managed physician practices, and in partnership with independent physician practices and medical institutions throughout the United States and Canada, PainCare is committed to utilizing the most advanced science and technologies to diagnose and treat pain stemming from neurological and musculoskeletal conditions and disorders. Through its subsidiary Integrated Pain Solutions (IPS), the Company is engaged in pioneering the nation's first managed services organization that offers a multi-disciplinary healthcare network focused on the treatment of pain. POPE & TALBOT: Wants to Sell Eagle Bay to Sage for $5.7 Million --------------------------------------------------------------- Pope & Talbot Ltd. and its subsidiaries seek the authority of the British Columbia Supreme Court to sell their surplus land in Eagle Bay, Canada, to Sage Investments Ltd., for $5,700,000, exclusive of federal goods and services tax and any and all other applicable taxes, pursuant to an asset purchase agreement dated April 21, 2008. The sale of Eagle Bay was approved by Ernst & Young, Inc., the Canadian Court-appointed Monitor on April 9, 2008 and by the Applicants' DIP Lenders on April 28, Kathy L. Mah, Esq., at Stikeman Elliott LLP, in Toronto, Canada, discloses. Sage Investments is prepared to acquire Eagle Bay on an "as is, where is" basis, Ms. Mah states. Eagle Bay is one of several parcels of land which the Applicants determine are redundant and surplus to their ongoing and future operations. About Pope & Talbot Based in Portland, Oregon, Pope & Talbot Inc. (Other OTC: PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products business. Pope & Talbot was founded in 1849 and produces market pulp and softwood lumber at mills in the US and Canada. Markets for the company's products include the US, Europe, Canada, South America and the Pacific Rim. The company and its U.S. and Canadian subsidiaries applied for protection under the Companies' Creditors Arrangement Act of Canada on Oct. 28, 2007. The Debtors' CCAA Stay expired on Jan. 16, 2008. The company and fourteen of its debtor-affiliates filed for Chapter 11 protection on Nov. 19, 2007 (Bankr. D. Del. Lead Case No. 07-11738). Shearman & Sterling LLP is the Debtor's bankruptcy counsel, while Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl & Jones L.L.P. represents the Debtors as bankruptcy co-counsel. The Official Committee of Unsecured Creditors selected Fried, Frank, Harris, Shriver & Jacobson LLP as its bankruptcy counsel. When the Debtors filed for bankruptcy, they listed total assets of $681,960,000 and total debts of $601,090,000. Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21, 2007, filed an application for relief under Belgian bankruptcy laws in the commercial court in Brussels. If the Belgian court grants Pope & Talbot Europe's application, it is expected it will be liquidated through the bankruptcy proceeding. (Pope & Talbot Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * The Court extended the time within which the Debtors have the exclusive right to file a Chapter 11 plan, through and including June 2, 2008, as reported in the Troubled Company Reporter on March 17, 2008. POPE & TALBOT: PT Pindo Ends Sale Deal of Three Pulp Mills ---------------------------------------------------------- PT Pindo Deli Pulp and Paper Mills and its assignees, Columbia Pulp and Paper Inc. and Columbia Pulp and Paper Ltd., served on Pope & Talbot Inc. on May 1, 2008, a written notice of termination of an Asset Purchase Agreement relating to the sale of three pulp mills of Pope & Talbot Ltd. and its subsidiaries located in Halsey, Oregon; Nanaimo, British Columbia; and Mackenzie, British Columbia. Pindo Deli, et al., are the proposed buyers of the Pope & Talbot pulp mills under the APA. P&T Inc. relates in a regulatory filing with the Securities and Exchange Commission that it disputes the basis for and the validity of Pindo Deli's termination of the APA. The company asserts that the APA remains in full force and effect following its receipt of Pindo Deli's termination notice. In its termination letter, Pindo Deli indicated a willingness to engage in discussions regarding mutually acceptable alternative transactions. No discussions, however, have occurred between the parties to date, R. Neil Stuart, vice president and chief financial officer of P&T Inc., stated. Subsequently, on May 5, 2008, P&T Inc. issued a letter (i) terminating the APA due to Pindo Deli's material breach of a representation leading to a failure to satisfy a condition to closing and the passing of an April 30, 2008 termination date, and (ii) reserving all of its rights under the APA and against Pindo Deli. To recall, Pindo Deli has committed to pay P&T Inc. $105,290,000 in cash for the Pulp Business Assets and to assume certain liabilities, including $15,000,000 of accrued employee vacation pay, subject to certain adjustments, including reduction for costs and expenses required to cure and reinstate material contracts being assigned to Pindo Deli. Accounts receivable, accounts payable, and finished goods inventory were excluded from the proposed Asset Sale. P&T Inc. had estimated that it would realize a net of approximately $100,000,000 from those working capital items. Accordingly, the value of the proposed sale transaction to P&T Inc. was estimated at approximately $225,000,000. A full-text copy of the APA Termination is available at the SEC: http://ResearchArchives.com/t/s?2bc3 Company Financing in Danger In other news, P&T's creditors have opted not to extend the company's financing, The Portland Business Journal reports. P&T has began shutting down operations at its mills, to take effect May 8, The Portland Journal adds. The current stay period that applies to P&T's CCAA proceedings expired on May 5, 2008. P&T spokesman Mark Rossolo reportedly said that the Canadian Court has extended the CCAA stay period for 48 hours, to give the company time to close its sale transactions. Mr. Rossolo told The Portland Journal that P&T is considering other alternatives, including selling off the assets individually. "The pulp mills -- starting [May 5] -- are going to begin the process of winding down operations so they will move into idle," The Times Colonist quotes Mr. Rossolo, as saying. "Obviously, as the company is just beginning the wind-down stage, it doesn't know what staffing needs it will have. There will certainly be some staff and maintenance needs going forward." According to the paper, the company's mills employ about 600 employees. "We watched as other pulp and sawmills shut down, but we never saw it happening to us. So I think the best way to describe our feelings is that of complete disbelief," Reg Miller, a Pope & Talbot employee, told the Times Colonist. * * * Prior to the termination of the Pindo Deli APA, Judge Sontchi authorized the Debtors to assume two agreements with these corresponding cure costs: Agreement Cure Amount --------- ----------- A Chip and Pulp Log Supply C$928,702 Agreement dated May 26, 1994, between MacMillan Bloedel Limited and Harmac Pacific Inc. A Hog Fuel Supply Agreement C$469 dated May 26, 1994 between MacMIllan Bloedel Limited and Harmac Pacific Inc. The Agreements were supposed to have been assigned to Columbia Pulp and Paper Ltd., as the assignee of Pindo Deli, pursuant to the Pindo Deli APA. About Pope & Talbot Based in Portland, Oregon, Pope & Talbot Inc. (Other OTC: PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products business. Pope & Talbot was founded in 1849 and produces market pulp and softwood lumber at mills in the US and Canada. Markets for the company's products include the US, Europe, Canada, South America and the Pacific Rim. The company and its U.S. and Canadian subsidiaries applied for protection under the Companies' Creditors Arrangement Act of Canada on Oct. 28, 2007. The Debtors' CCAA Stay expired on Jan. 16, 2008. The company and fourteen of its debtor-affiliates filed for Chapter 11 protection on Nov. 19, 2007 (Bankr. D. Del. Lead Case No. 07-11738). Shearman & Sterling LLP is the Debtor's bankruptcy counsel, while Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl & Jones L.L.P. represents the Debtors as bankruptcy co-counsel. The Official Committee of Unsecured Creditors selected Fried, Frank, Harris, Shriver & Jacobson LLP as its bankruptcy counsel. When the Debtors filed for bankruptcy, they listed total assets of $681,960,000 and total debts of $601,090,000. Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21, 2007, filed an application for relief under Belgian bankruptcy laws in the commercial court in Brussels. If the Belgian court grants Pope & Talbot Europe's application, it is expected it will be liquidated through the bankruptcy proceeding. (Pope & Talbot Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * The Court extended the time within which the Debtors have the exclusive right to file a Chapter 11 plan, through and including June 2, 2008, as reported in the Troubled Company Reporter on March 17, 2008. POPE & TALBOT: Sells Wood Products Biz to International Forest -------------------------------------------------------------- Pope & Talbot Inc. and its debtor-affiliates have completed the sale of its Wood Products Business to International Forest Products Limited, according to a regulatory filing with the United States Securities and Exchange Commission on April 30, 2008. Interfor purchased the Castlegar and Grand Forks sawmills and related timber tenures, and Neiman Enterprises, Inc., Interfor's assignee, purchased the Spearfish sawmill and related cutting rights. Accounts receivable were excluded from the sale. Debtors Seek to Reject 250 Contracts The Debtors seek the U.S. Bankruptcy Court for the District of Delaware for authority to reject 250 executory contracts and unexpired leases excluded from an asset purchase agreement governing the sale of the Debtors' Wood Products Business to Interfor, nunc pro tunc to April 30, 2008. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, relates that the Excluded Contracts relate to assets that the Debtors sold to Interfor pursuant to the Interfor APA, but are not being assumed by Interfor. Ms. Jones notes that the Excluded Contracts are not required for the operation of the Debtors' estates now that the Interfor sale has closed. A list of Excluded Contracts is available for free at: http://bankrupt.com/misc/Pope_ExcludedContracts.pdf http://bankrupt.com/misc/Pope_4thExcludedContracts.pdf http://bankrupt.com/misc/Pope_5thExcludedContracts.pdf Pursuant to the Amended and Restated CCAA Order, the Canadian Debtors repudiated the Excluded Contracts, nunc pro tunc to April 30, 2008. In order to avoid the incurrence of administrative expenses arising from the continuation of the Excluded Contracts, the Debtors believe that it is in the best interests of their estates and all parties-in-interest to reject the Excluded Contracts. Other Wood Products Business The Debtors' disclosed in a regulatory filing with the SEC, that it completed on April 30, 2008, the sale of its Remaining Wood Products assets located in Midway, British Columbia. The Assets consists of substantially all of P&T Inc.'s real property at that location and certain related tangible property located at Midway, as well as all secured receivables under a bill of sale in favor of Midway Forest Products, ULC dated September 14, 2006. The sale was made under the terms of an Asset Purchase Agreement P&T Inc. entered into, as of February 5, 2008, with Fox Lumber Sales Inc. At the closing, Fox Lumber paid P&T Inc. $750,000 in cash and assumed certain liabilities, including certain environmental liabilities related to the purchased assets. About Pope & Talbot Based in Portland, Oregon, Pope & Talbot Inc. (Other OTC: PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products business. Pope & Talbot was founded in 1849 and produces market pulp and softwood lumber at mills in the US and Canada. Markets for the company's products include the US, Europe, Canada, South America and the Pacific Rim. The company and its U.S. and Canadian subsidiaries applied for protection under the Companies' Creditors Arrangement Act of Canada on Oct. 28, 2007. The Debtors' CCAA Stay expired on Jan. 16, 2008. The company and fourteen of its debtor-affiliates filed for Chapter 11 protection on Nov. 19, 2007 (Bankr. D. Del. Lead Case No. 07-11738). Shearman & Sterling LLP is the Debtor's bankruptcy counsel, while Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl & Jones L.L.P. represents the Debtors as bankruptcy co-counsel. The Official Committee of Unsecured Creditors selected Fried, Frank, Harris, Shriver & Jacobson LLP as its bankruptcy counsel. When the Debtors filed for bankruptcy, they listed total assets of $681,960,000 and total debts of $601,090,000. Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21, 2007, filed an application for relief under Belgian bankruptcy laws in the commercial court in Brussels. If the Belgian court grants Pope & Talbot Europe's application, it is expected it will be liquidated through the bankruptcy proceeding. (Pope & Talbot Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * The Court extended the time within which the Debtors have the exclusive right to file a Chapter 11 plan, through and including June 2, 2008, as reported in the Troubled Company Reporter on March 17, 2008. POPE & TALBOT: PWC Reveals Results of Various Sales Processes ------------------------------------------------------------- PricewaterhouseCoopers Inc., as monitor of the proceedings commenced by Pope & Talbot Ltd. and its subsidiaries under the Companies' Creditors Arrangement Act, delivered its 14th report on May 4, 2008, to apprise the Canadian Court of developments in the Applicants' operations from April 26 to May 3. Update on Various Sales Processes A. Wood Products Business The Monitor reports that the Applicants' sale of their Wood Products Business to International Forest Products Limited closed as anticipated on April 30, 2008. A final accounting of the transaction net proceeds though will not be completed for a few weeks given the need to resolve certain post-closing matters, including final inventory counts, the Monitor notes. According to the Monitor, the Applicants issued a payment of US$7.9 million to their Lenders on May 1, 2008, which relates to net proceeds from inventory. All other net proceeds are being held in escrow pending the final accounting. B. Pulp Business The Applicants' sale of their Pulp Business to PT Pindo Deli Pulp and Paper Mills was to be completed by April 30, 2008, pursuant to the Pindo Deli APA. The transaction, however, did not close and on May 1, Pindo Deli provided the Applicants with written notice of termination of the APA on the grounds that the Applicants were unable to cure certain terms and conditions under the APA. The Applicants believe that they have met all of the terms and conditions of the APA by April 30. They are currently assessing how to proceed further with respect to the Pindo Deli termination notice, the Monitor relates. A US$10 million deposit was provided by Pindo Deli for the Pulp Business transaction. Pindo Deli nevertheless suggested, in its termination letter, that it was willing to engage in discussions with the Applicants to resolve the outstanding issues, including mutually acceptable alternative transactions, according to the Monitor. The Monitor notes that as of May 5, there was no indication as to whether meaningful discussions were underway between Pindo Deli and the Applicants with respect to either reviving the sale or discussing a new sale transaction. C. Remaining Wood Products Business (Fort St. James sawmill) The Monitor notes that the APA for the sale of the Fort St. James sawmill expired on April 30, 2008, but the sale transaction was not completed. Unlike the the Applicants' Pulp Business Assets, Pindo Deli did not issue a notice of termination for the sawmill sale. The Monitor has been independently advised by both the Applicants and Pindo Deli that each party wish to complete the transaction and is continuing to work towards resolving the outstanding issues. All regulatory approvals required to complete the transaction have been obtained, according to the Monitor. The major outstanding issue that relate to completion of the transaction is with respect to the assumption of liabilities, the Monitor cites. The Monitor has been advised by both parties that they are hopeful of resolving the outstanding issues and moving to a completion of the transaction during the week of May 5, 2008. D. Surplus Land Sales The Applicants had executed seven additional purchase agreements with aggregate net sale proceeds totaling C$3,600,000. The Monitor has confirmed that all seven transactions have now closed and C$2,400,000 has been paid to the Applicants' Secured Lenders, pursuant to their first ranking security. The remaining net proceeds of C$1,200,000, relate to sales that closed on April 30, 2008, the net proceeds of which will be paid to the Lenders shortly. E. U.S. Surplus Land Sales The Monitor reports that the Applicants have received offers for four U.S. Surplus Lands. According to the Monitor, the U.S. Bankruptcy Court still has to approve a De minimus Value Property Sale Procedure, which will be dealt with by the US Court during the week of May 5, 2008. Company Operations The Applicants continue to operate three Pulp mills at Nanaimo (Harmac), Mackenzie, and Halsey. In April 2008, the Applicants sold their sawmills in Midway, Grand Forks, Castlegar, and Spearfish. The Applicants' remaining sawmill in Fort St. James continues to be operational dormant due to market conditions. There are no immediate plans to start-up the sawmill, the Monitor states. Variance Analysis Revised Forecast vs Actual Cash Flow for the Period From 04/19/2008 - 04/25/2008 ( in U.S. dollars) Actual Forecast Variance ---------- ----------- ---------- Total Receipts $10,947,000 $7,460,000 $3,487,000 Bankruptcy-Related - (1,153,000) 1,153,000 Disbursements Operating (5,657,000) (13,285,000) 7,628,000 Disbursements Total Disbursements (5,567,000) (14,438,000) 8,781,000 ---------- ----------- ---------- Net Cash Flow $5,290,000 ($6,978,000) $12,268,000 ========== =========== ========== Reporting Under the DIP Credit Agreement The Applicants continue to report their cash flows weekly to their DIP Lenders, the Monitor notes. The Applicants also continue to trigger Material Adverse Deviations in their cash flow reporting but has obtained the necessary waivers in respect of the Material Adverse Deviations. As of April 25, 2008, the total amount outstanding under the operating portion of the DIP Credit Agreement was US$56.1 million. This includes outstanding revolver borrowings of US$43.5 million and DIP Term Borrowings supporting the operating portion of US$12.6 million. The non-operating portion of the DIP Credit Agreement totals US$189.2 million, resulting in total borrowings under the DIP Credit Agreement of approximately US$245.3 million. The Applicants maintained compliance under the DIP Loan Agreement for total borrowings and has not exceeded amounts available under the borrowing base formula. Revolver Balance as at April 25, 2008 Borrowing Base US$56,034,000 Less: Letter of Credit Reserve (7,016,000) ------------- Net Availability 49,018,000 Revolver Balance 43,503,000 ------------- Excess of Availability US$5,515,000 ============= Post-Filing Accounts Payables The Monitor says that the estimate of the Applicants' total post- filing creditors that are not covered by the DIP carve-out has increased by a total of US$600,000. Noteworthy items include: * Amounts owing for Professional fees increased by an estimated US$900,000 as the Applicants' expected payments to professionals at the end of April 2008 were not made as a result of restricted cash flow and the Applicants' focus on purchasing fibre to meet the requirements under the Pindo Deli APA; and * Amounts owing to trade suppliers decreased by an estimated US$300,000 from a combination of the Applicants making several large payments to key suppliers which threaten to cut-off supply without prepayment, and from the Applicants restricting all non-essential purchasing during the last week of April 2008 in anticipation of the closing their Pulp Business sale. The Monitor estimates that there are more than 500 post-filing creditors, excluding employees. Updated Cash Flow Forecast to May 9, 2008 The Applicants have prepared an updated cash flow forecast for the period ending May 9, 2008. The significant operating assumptions within the Fourth Revised Forecast are: -- The DIP agreement is extended under the same terms and conditions. In particular, the calculation of the revolver borrowing base is unchanged; -- The Fort St. James asset sale closes the week of May 5, 2008 and results in US$4,000,000 paid down on the revolving line of credit. This is in additional to the US$7,900,000 pay-down that was made on May 1, related to the Interfor sale; -- Pulp operations are continued; and -- All amounts owing to post-filing creditors during the forecast period are paid. Under the cash flow presented, the Applicants are forecasting that they will incur negative cash flow for the week for US$3,000,000, and will have surplus borrowing base availability of US$1,500,000 at May 9, 2008. "This assumes the DIP Lenders do not amend the borrowing base formula," the Monitor points out. About Pope & Talbot Based in Portland, Oregon, Pope & Talbot Inc. (Other OTC: PTBT.PK) -- http://www.poptal.com/-- is a pulp and wood products business. Pope & Talbot was founded in 1849 and produces market pulp and softwood lumber at mills in the US and Canada. Markets for the company's products include the US, Europe, Canada, South America and the Pacific Rim. The company and its U.S. and Canadian subsidiaries applied for protection under the Companies' Creditors Arrangement Act of Canada on Oct. 28, 2007. The Debtors' CCAA Stay expired on Jan. 16, 2008. The company and fourteen of its debtor-affiliates filed for Chapter 11 protection on Nov. 19, 2007 (Bankr. D. Del. Lead Case No. 07-11738). Shearman & Sterling LLP is the Debtor's bankruptcy counsel, while Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl & Jones L.L.P. represents the Debtors as bankruptcy co-counsel. The Official Committee of Unsecured Creditors selected Fried, Frank, Harris, Shriver & Jacobson LLP as its bankruptcy counsel. When the Debtors filed for bankruptcy, they listed total assets of $681,960,000 and total debts of $601,090,000. Pope & Talbot Pulp Sales Europe, LLC, a subsidiary, on Nov. 21, 2007, filed an application for relief under Belgian bankruptcy laws in the commercial court in Brussels. If the Belgian court grants Pope & Talbot Europe's application, it is expected it will be liquidated through the bankruptcy proceeding. (Pope & Talbot Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * The Court extended the time within which the Debtors have the exclusive right to file a Chapter 11 plan, through and including June 2, 2008, as reported in the Troubled Company Reporter on March 17, 2008. PRC LLC: Judge Glenn Approves Disclosure Statement -------------------------------------------------- The Honorable Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved PRC LLC and its debtor- affiliates' Amended Disclosure Statement explaining the Debtors' Joint Plan of Reorganization on May 8, 2008. The Court finds that the Amended Disclosure Statement provides "adequate information" pursuant to Section 1125 of the U.S. Bankruptcy Code. The Voting Record Date for creditors entitled to vote on the Plan, including the holders of Class 4 Allowed Prepetition First Lien Claims, Class 5 Allowed Prepetition Second Lien Claims, and Class 6 General Unsecured Claims, is May 8, 2008, the Court ruled. The Debtors are directed to complete the mailing of the Solicitation Packages no later than May 15, 2008. The Solicitation Packages will contain, among other things, a copy of the Disclosure Statement and Plan, the Disclosure Statement Order; the Confirmation Hearing Notice; and the appropriate Ballot and ballot instructions together with a return envelope. The Court also approved the proposed form of the ballots, and the proposed tabulation and voting procedures. All Ballots of voting parties-in-interest must be properly executed, completed, and delivered to the Epiq Systems Bankruptcy Solutions by first-class mail, overnight courier, or personal delivery no later than 4:00 p.m., on June 9, 2008. The Confirmation Hearing will be held on June 19, 2008, at 10:00 a.m. Any response or objection to the approval of the Plan must be filed with the Court by June 12, at 4:00 p.m. Objections Overruled Among those who disputed the Disclosure Statement before the Court's approval order were Verizon Communications, Inc., and its affiliates, ACE American Insurance Company, ACE Property & Casualty Insurance Company, and Illinois Union Insurance Company. In response to Verizon's objections, the Debtors contended that: * Verizon did not cite any authority to deny them the right to amend the schedule of executory contracts up to the Plan confirmation as being in some point violating the "adequate information" provision of Section 1125; * it is not their purpose to delay payment. The relevant provision of the Disclosure Statement merely provides that "[e]xcept to the extent that different treatment has been agreed to by the parties, within 30 days after the Effective Date, the Reorganized Debtors will cure all undisputed defaults under any executory contract or unexpired lease assumed by the Debtors pursuant to the Plan;" * contrary to Verizon's arguments, Section 365 of the Bankruptcy Code allows removal of an executory contract from the schedule of assumed contracts, post-confirmation, based on the resolution of a disputed cure claim. In addition, the Debtors proposed to delete the final clause "except as ordered by the Court before the Voting Deadline" in order to clarify that any creditor whose claim is subject to an objection can file a motion under Rule 3018(a) of the Federal Rules of Bankruptcy Procedure for temporary allowance of their claim. IAC/InterActiveCorp also asked the Court to postpone the recently concluded Disclosure Statement hearing, asserting that the Disclosure Statement improperly incorporated the approval of the Debtors' settlement with the Official Committee of Unsecured Creditors on only five days' notice, in plain violation of Rules Rules 2002 and 9019 of the Federal Rules of Bankruptcy Procedure. "A 20 days' notice is required under Rules 2002 and 9019 to approve a settlement entered into by a debtor," Janet M. Weiss, Esq., at Gibson, Dunn & Crutcher LLP, in New York, said. The Court, however, ruled that all objections to the Disclosure Statement not otherwise withdrawn or resolved are overruled; provided that the objections raised by ACE Group of Companies will be heard at the Confirmation Hearing. A full-text copy of the Disclosure Statement Order is available for free at: http://researcharchives.com/t/s?2bc7 About PRC LLC Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC -- http://www.prcnet.com/-- is a leading provider of customer management solutions. PRC markets its services to brand-focused, Fortune 500 U.S. corporations and delivers these services through a global network of call centers in the U.S., Philippines, India, and the Dominican Republic. PRC is the sole member of each of PRC B2B, LLC, and Precision Response of Pennsylvania, LLC, and the sole shareholder of Access Direct Telemarketing, Inc., each of which is a debtor and debtor- in-possession in PRC's joint Chapter 11 cases. Panther/DCP Intermediate Holdings, LLC, is the sole member of PRC. PRC, together with its operating subsidiaries PRC B2B, Access Direct, and PRC PA, is a leading provider of complex, consultative, outsourced services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry. Since 1982, the company has acquired and grown customer relationships for some of the world's largest and most brand-focused corporations in the financial services, media, telecommunications, transportation, and retail industries. The company and four of its affiliates filed for Chapter 11 protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08- 10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors chose Stephen Dube, at CXO LLC, as their restructuring and turnaround advisor. Additionally, Evercore Group LLC provides investment and financial counsel to the Debtors. The Debtors' consolidated financial condition as of Dec. 31, 2007 showed total assets of $354,000,000 and total debts of $261,000,000. (PRC LLC Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PRC LLC: Can Hire Epiq Systems as Voting and Tabulation Agent ------------------------------------------------------------- PRC LLC and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to employ Epiq Bankruptcy Solutions as their voting and tabulation agent. As reported in the Troubled Company Reporter, April 18, 2008, the Debtors sought to hire Epiq for the purpose of assisting with, among other things, the solicitation and calculation of votes and the distribution as required in furtherance of confirmation of the Debtors' plan of reorganization, Alfredo Perez, Esq., at Weil, Gotshal & Manges LLP, in Houston, Texas, related. In an effort to reduce administrative expenses related to Epiq's retention, the Debtors sought authorization to pay Epiq's fees and expenses, as set in the Epiq Agreement dated Jan. 18, 2008, without the necessity of Epiq filing formal fee applications. The Debtors believe that no additional information regarding Epiq's disinterestedness to support the firm's employment as voting and tabulation agent is required as they have received authorization to retain Epiq as their claims and noticing agent. About PRC LLC Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC -- http://www.prcnet.com/-- is a leading provider of customer management solutions. PRC markets its services to brand-focused, Fortune 500 U.S. corporations and delivers these services through a global network of call centers in the U.S., Philippines, India, and the Dominican Republic. PRC is the sole member of each of PRC B2B, LLC, and Precision Response of Pennsylvania, LLC, and the sole shareholder of Access Direct Telemarketing, Inc., each of which is a debtor and debtor- in-possession in PRC's joint Chapter 11 cases. Panther/DCP Intermediate Holdings, LLC, is the sole member of PRC. PRC, together with its operating subsidiaries PRC B2B, Access Direct, and PRC PA, is a leading provider of complex, consultative, outsourced services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry. Since 1982, the company has acquired and grown customer relationships for some of the world's largest and most brand-focused corporations in the financial services, media, telecommunications, transportation, and retail industries. The company and four of its affiliates filed for Chapter 11 protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08- 10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors chose Stephen Dube, at CXO LLC, as their restructuring and turnaround advisor. Additionally, Evercore Group LLC provides investment and financial counsel to the Debtors. The Debtors' consolidated financial condition as of Dec. 31, 2007 showed total assets of $354,000,000 and total debts of $261,000,000. The Court approved the Debtors' Disclosure Statement on May 8, 2008. (PRC LLC Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PRC LLC: Wants to Employ Korn Ferry as Hiring Consultants --------------------------------------------------------- PRC LLC and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Korn/Ferry International as their executive search consultants, pursuant to the terms and conditions of an agreement entered into with Korn/Ferry dated May 1, 2008. Korn/Ferry will assist in the identification of candidates to fill the chief executive officer and chief financial officer positions for the Debtors. Korn/Ferry is a premier provider of executive talent management solutions, conducting more than 10,000 senior-level searches for clients worldwide each year, the Debtors note. Korn/Ferry's consultants are based in more than 80 offices in nearly 40 countries in the Americas, Asia/Pacific, Europe, the Middle East and Africa. Korn/Ferry's services will be paid at fixed rates of $200,000 for the successful identification of a chief executive officer candidate, and $110,000 for the successful identification of chief financial officer position. Korn/Ferry will also be reimbursed for all search-related expenses, to be billed at 12% of the fee capped at $15,000. Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, in Houston, Texas, says that although the Court previously approved the retention of the Debtors' current Chief Executive Officer, Regis G. McElhatton, Mr. McElhatton's term of employment as CEO will expire on January 23, 2009. The Debtors have also employed an interim chief financial officer pursuant to a Court order approving the retention of CXO, LLC, as restructuring advisors. The Debtors believe that hiring the firm will enable them to execute faithfully their duties as debtors and debtors in possession and to further their reorganization efforts. Moreover, the Debtors maintain that the retention of Korn/Ferry represents a prudent business decision as the company will soon need to search for candidates to serve as permanent CEO and CFO to provide for a seamless transition of senior leadership following the company's successful emergence from their Chapter 11 cases. The Debtors will pay the Korn/Ferry's first retainer on the earlier of (i) the entry of a Court order approving the firm's employment, or (ii) June 30, 2008. About PRC LLC Founded in 1982 and based in Fort Lauderdale, Florida, PRC, LLC -- http://www.prcnet.com/-- is a leading provider of customer management solutions. PRC markets its services to brand-focused, Fortune 500 U.S. corporations and delivers these services through a global network of call centers in the U.S., Philippines, India, and the Dominican Republic. PRC is the sole member of each of PRC B2B, LLC, and Precision Response of Pennsylvania, LLC, and the sole shareholder of Access Direct Telemarketing, Inc., each of which is a debtor and debtor- in-possession in PRC's joint Chapter 11 cases. Panther/DCP Intermediate Holdings, LLC, is the sole member of PRC. PRC, together with its operating subsidiaries PRC B2B, Access Direct, and PRC PA, is a leading provider of complex, consultative, outsourced services in the Customer Care and Sales & Marketing segments of the business process outsourcing industry. Since 1982, the company has acquired and grown customer relationships for some of the world's largest and most brand-focused corporations in the financial services, media, telecommunications, transportation, and retail industries. The company and four of its affiliates filed for Chapter 11 protection on Jan. 23, 2008 (Bankr. S.D.N.Y. Lead Case No. 08- 10239). Alfredo R. Perez, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. The Debtors chose Stephen Dube, at CXO LLC, as their restructuring and turnaround advisor. Additionally, Evercore Group LLC provides investment and financial counsel to the Debtors. The Debtors' consolidated financial condition as of Dec. 31, 2007 showed total assets of $354,000,000 and total debts of $261,000,000. The Court approved the Debtors' Disclosure Statement on May 8, 2008. (PRC LLC Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) PRIORITY ONE PARTNERS: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Debtor: Priority One Partners, LLC P.O. Box 1222 22 Hidden Acres Drive Voorhees, NJ 08043 Bankruptcy Case No.: 08-18293 Chapter 11 Petition Date: May 5, 2008 Court: District of New Jersey (Camden) Debtor's Counsel: Larry S. Byck, Esq. Email: lbycklaw@comcast.net 540 North Route 73 Berlin, NJ 08091 Tel: (856) 767-0800 Fax: (856) 719-8720 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million The Debtor does not have any creditors who are not insiders. QUAIL LAKE: Files Schedules of Assets and Liabilities --------------------------------------------------------- Quail Lake Estates Associates, LP delivered to the United States Bankruptcy Court for the Northern District of California its schedules of assets and liabilities disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $23,100,000 B. Personal Property 10,239 C. Property Claimed as Exempt D. Creditors Holding $22,532,688 Secured Claims E. Creditors Holding 0 Unsecured Priority Claims F. Creditors Holding 1,013,086 Unsecured Nonpriority Claims ------------ ------------- TOTAL $23,110,239 $23,545,774 Based in Emeryville, California, Quail Lake Estates Associates, LP filed for Chapter 11 protection on Mar. 18, 2008 (Bankr. N.D. Calif. Case No. 08-41296). James D. Wood, Esq. represents the Debtor in its restructuring efforts. RESIDENTIAL ASSET: Moody's Chips Ratings on 29 Tranches ------------------------------------------------------- Moody's Investors Service has downgraded the ratings of 29 tranches from 13 Alt-A transactions issued by Residential Asset Securitization Trust. Six tranches remain on review for possible further downgrade. Additionally, 132 tranches were placed on review for possible downgrade The collateral backing these transactions consists primarily of first-lien, fixed -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: Residential Asset Securitization Trust 2005-A11CB -- Cl. B-1, Downgraded to A3 from Aa2 -- Cl. B-2, Downgraded to Baa1 from Aa3 -- Cl. B-3, Downgraded to Ba3 from A2 -- Cl. B-4, Downgraded to B2 from A3 -- Cl. B-5, Downgraded to B2 from Baa2; Placed Under Review for further Possible Downgrade -- Cl. B-6, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade Issuer: Residential Asset Securitization Trust 2005-A12 -- Cl. A-5, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-8, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-9, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. PO, Placed on Review for Possible Downgrade, currently Aaa -- Cl. B-1, Downgraded to A3 from Aa2 -- Cl. B-3, Downgraded to B1 from A2 -- Cl. B-5, Downgraded to B3 from Baa2; Placed Under Review for further Possible Downgrade Issuer: Residential Asset Securitization Trust 2005-A15 -- Cl. 1-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-8, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-9, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 1-A-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-8, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-9, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-12, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-13, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 2-A-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 4-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 5-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 5-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 5-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. PO, Placed on Review for Possible Downgrade, currently Aaa -- Cl. B-1, Downgraded to Ba1 from Aa2 -- Cl. B-2, Downgraded to B2 from Baa1; Placed Under Review for further Possible Downgrade -- Cl. B-3, Downgraded to Ca from B1 Issuer: Residential Asset Securitization Trust 2006-A1 -- Cl. I-B-1, Downgraded to A2 from Aa2 Issuer: Residential Asset Securitization Trust 2006-A11 -- Cl. 1-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-6, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 1-A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-PO, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-1, Placed on Review for Possible Downgrade, currently Aaa Issuer: Residential Asset Securitization Trust 2006-A14CB -- Cl. 1-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-4, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 2-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-5, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 2-A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. PO, Placed on Review for Possible Downgrade, currently Aaa Issuer: Residential Asset Securitization Trust 2006-A3CB -- Cl. A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. PO, Placed on Review for Possible Downgrade, currently Aaa Issuer: Residential Asset Securitization Trust 2006-A4IP -- Cl. 1-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-8, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-9, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-10, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-PO, Placed on Review for Possible Downgrade, currently Aaa Issuer: Residential Asset Securitization Trust 2006-A5CB -- Cl. A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-5, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. PO, Placed on Review for Possible Downgrade, currently Aaa -- Cl. B-1, Downgraded to B2 from Aa3 -- Cl. B-2, Downgraded to Caa3 from Ba3 -- Cl. B-3, Downgraded to Ca from B3 Issuer: Residential Asset Securitization Trust 2006-A7CB -- Cl. 1-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. PO, Placed on Review for Possible Downgrade, currently Aaa -- Cl. B-1, Downgraded to Ba2 from Aa2 -- Cl. B-2, Downgraded to Ca from Ba2 -- Cl. B-3, Downgraded to Ca from B3 Issuer: Residential Asset Securitization Trust 2006-A8 -- Cl. 1-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 1-A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 2-A-8, Placed on Review for Possible Downgrade, currently Aa1 -- Cl. 3-A-1, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-8, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-9, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-10, Placed on Review for Possible Downgrade, currently Aaa -- Cl. 3-A-11, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. PO, Placed on Review for Possible Downgrade, currently Aaa -- Cl. B-1, Downgraded to B2 from Aa2 -- Cl. B-2, Downgraded to B2 from Aa3; Placed Under Review for further Possible Downgrade -- Cl. B-3, Downgraded to B3 from Baa3; Placed Under Review for further Possible Downgrade -- Cl. B-4, Downgraded to Ca from Ba3 -- Cl. B-5, Downgraded to Ca from B2 -- Cl. B-6, Downgraded to Ca from B3 -- Cl. B-7, Downgraded to Ca from Caa2 Issuer: Residential Asset Securitization Trust 2006-A9CB -- Cl. A-2, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-3, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-4, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-5, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-6, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-7, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-8, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-9, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-10, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-11, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-12, Placed on Review for Possible Downgrade, currently Aaa -- Cl. A-X, Placed on Review for Possible Downgrade, currently Aaa -- Cl. PO, Placed on Review for Possible Downgrade, currently Aaa -- Cl. B-1, Downgraded to B3 from Aa2 -- Cl. B-2, Downgraded to Ca from Ba2 -- Cl. B-3, Downgraded to Ca from B3 Issuer: Residential Asset Securitization Trust 2007-A1 -- Cl. A-2, Placed on Review for Possible Downgrade, currently Aa1 RH DONNELLEY: Posts $1.6 Billion Net Loss in 2008 First Quarter --------------------------------------------------------------- R.H. Donnelley Corporation reported on Thursday financial results for the first quarter ended March 31, 2008. Net loss for the quarter was $1.6 billion, which includes a $2.5 billion non-cash pre-tax charge associated with goodwill impairment to reflect the recent decline in the market value of the company's debt and equity securites. Excluding the effect of goodwill impairment recorded in the quarter, net income would have been $15.0 million. The company said that the charge does not impact the company's current or future cash flow, compliance with debt covenants, tax attributes or management's outlook for the business. As of March 31, 2008, RHD's net debt outstanding was $9.9 billion, excluding the purchase accounting fair value adjustment of $100.0 million. The company reported first quarter 2008 net revenues of $675.0 million, up 2.0% over the same period in the prior year. Adjusted EBITDA in the quarter was $357.0 million and adjusted EBITDA margin was 52.9%. Adjusted free cash flow in the quarter was $92.0 million based on cash flow from operations of $100.0 million, capital expenditures of $10.0 million and $2.0 million of adjustments related to other compensation expense at Business.com. "We generated strong revenues in the quarter driven by the pull through of ad sales from the prior year, lower claims and allowances and the addition of Business.com. This resulted in solid EBITDA in the quarter. Ad sales, a leading indicator of revenues, reflected weak economic conditions in our markets as we expected," said David C. Swanson, chairman and chief executive officer of R.H. Donnelley. "We are aggressively managing costs in response to this operating environment." Swanson continued, "We are also launching a series of refinancings today that are expected to reduce near-term mandatory debt repayments, extend our maturity profile and reduce debt levels. These actions provide us with greater flexibility to navigate through this business cycle and manage the business for sustainable growth when a better climate returns." Refinancing The company announced its intention to refinance the Dex West credit facility and amend the R.H. Donnelley Inc. credit agreement to provide additional covenant flexibility as well as extend the maturity date of the revolving credit facility. The company expects to incur additional interest expense in connection with the proposed refinancings. Liquidity and Capital Resources On the assumption that the company successfully completes the Dex Media West credit facility refinancing, the company believes that cash flows from operations, along with borrowing capacity under the revolver portions of the company's credit facilities, will be adequate to fund its operations and capital expenditures and meet its debt service requirements for at least the next 24 months. At March 31, 2008, the company had $29.9 million of cash and cash equivalents before checks not yet presented for payment of $14.9 million, and combined available borrowings of $364.7 million under the $175.0 million RHDI, the $100.0 million Dex Media East, and the $100.0 million Dex Media West revolving credit facilities. Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed $13.5 billion in total assets, $13.3 billion in total liabilities, and $183.0 million in total stockholders' equity. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $1.5 billion in total current assets available to pay $1.7 billion in total current liabilities. 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?2bce About R.H. Donnelley Headquartered in Cary, N.C., R.H. Donnelley Corp. (NYSE: RHD) -- http://www.rhd.com/-- one of the nation's leading Yellow Pages and online local commercial search companies, connects businesses and consumers through its portfolio of print and interactive marketing solutions. * * * Fitch Ratings has affirmed the Issuer Default Ratings on R.H. Donnelley Corp, R.H. Donnelley, Inc., Dex Media, Inc., Dex Media East and Dex Media West at 'B+'. Fitch expects to rate the amended RHDI credit facility 'BB+/RR1' and the proposed DXW credit facility 'BB+/RR1'. The Rating Outlook has been changed to Negative from Stable. RH DONNELLEY: Fitch Affirms 'B+' Issuer Default Ratings ------------------------------------------------------- Fitch Ratings has affirmed the Issuer Default Ratings on R.H. Donnelley Corp, R.H. Donnelley, Inc., Dex Media, Inc., Dex Media East and Dex Media West at 'B+'. Fitch expects to rate the amended RHDI credit facility 'BB+/RR1' and the proposed DXW credit facility 'BB+/RR1'. The Rating Outlook has been changed to Negative from Stable. The company disclosed in its form 10-Q and on its conference call that it has launched a series of financing activities which are expected to reduce near term mandatory debt repayments, provide additional covenant flexibility and extend its maturity profile. The company intends to amend the RHDI credit facility and refinance its DXW credit facility. Fitch expects to rate each of these facilities 'BB+/RR1' reflecting their priority in the capital structure and Fitch's expectation that more than 90% recovery is achievable. The company also intends to exchange approximately $700 million in lower interest rate senior unsecured notes outstanding at RHD for $488 million of higher interest rate notes at RHDI. At the issue level, this action would be negative for RHD bonds as their recovery ratings had been dependent on residual asset value from RHDI. The bonds that are intended to be placed at RHDI will now have a higher claim on RHDI asset value (residual value remaining after RHDI secured obligations are satisfied) than the RHD bonds and thus a higher rating. If the exchange is executed as proposed and assuming there are no changes in the provisions of the bonds, Fitch expects that RHDI bonds could be assigned a 'BB-/RR3' rating reflecting the expectation that 51%-70% recovery is reasonable. The RHD bonds would likely be downgraded to 'B-/RR6' reflecting negligible recovery prospects. The enhanced covenant and maturity flexibility provided by the potential credit facility actions are offset by materially higher interest costs (which could exceed $50 million in incremental interest). In regard to the exchange, Fitch views the action as largely neutral to the consolidated credit profile; headline leverage would be lower, but interest coverage is relatively unchanged. While Fitch acknowledges that these actions remove several near-term overhangs, the negative outlook reflects that top line pressure, the limited scalability of the cost structure and increased interest costs could make it difficult to meet our prior deleveraging expectations. Fitch will continue to monitor operating performance closely for more evidence regarding the cyclical and secular components of revenue deterioration. Acceleration of revenue declines that are sustained beyond mid-single digits and not offset by cost cuts could weigh negatively on the rating. Fitch estimates the company can endure low single digit revenue declines and still delever the balance sheet, albeit slower than previously anticipated. Future rating actions could also include the implications of potential changes to the distressed EBITDA multiple used in Fitch's analysis (Fitch presently uses 6x). A lower multiple would reflect changes in market and transaction multiples and could pressure recovery ratings. Going forward, Fitch expects management will be exclusively focused on paying down debt under the secured facilities, however, Fitch continue to expect consolidated leverage levels to remain above management's stated target of 6.0x (or below) in the intermediate term. Fitch currently rates RHD and its subsidiaries as: R.H. Donnelley Corp. (RHD Holding Company) -- Issuer Default Rating 'B+'; -- Senior unsecured 'B/RR5'. R.H. Donnelley Inc. (Operating Company; subsidiary of RHD) -- IDR 'B+'; -- Bank facility 'BB+/RR1'. Dex Media, Inc. (Dex Holding Company; subsidiary of RHD) -- IDR 'B+'; -- Senior unsecured 'B/RR5'. Dex Media East, Inc. (Operating Company; subsidiary of Dex) -- IDR 'B+'; -- Bank facility 'BB+/RR1'. Dex Media West, Inc. (Operating Company; subsidiary of Dex) -- IDR 'B+'; -- Bank facility 'BB+/RR1'; -- Senior unsecured 'BB+/RR1'; -- Senior subordinated 'B/RR5'. RH DONNELLEY: Moody's Rates Proposed $488MM Unsecured Notes at B1 ------------------------------------------------------- Moody's Investors Service has assigned a B1 rating to R.H. Donnelley Inc.'s proposed $488 million senior unsecured notes and a Ba1 rating to Dex Media West LLC's proposed senior secured credit facilities, while affirming R.H. Donnelley Corporation's B1 Corporate Family rating, in connection with a proposed note exchange and refinancing. The affirmation of Donnelley's B1 Corporate Family rating reflects Moody's view that while the proposed transactions and amendment of R.H. Donnelley Inc.'s senior secured credit facility will address prospective covenant and maturity pressures, the reduction of Donnelley's debt by approximately $152 million (net of fees and expenses) represents only a relatively modest reduction of the company's current consolidated debt burden (approximately $10 billion). The B1 Corporate family rating incorporates R.H. Donnelley's high leverage, its vulnerability to weakened market conditions facing the directory publishing business, the increasing threat posed by competing directory publishers and web-based directory service providers in virtually all its markets, a recent erosion of equity support provided to debtholders, and the dependence of the holding companies ( R. H. Donnelley Corporation and Dex Media, Inc.) upon continued covenant- compliant restricted payments from the three major operating companies in order to service the holdco debt obligations. The rating is supported by Donnelley's scale, the strong market position conferred by its exclusive publishing agreements with Embarq Corporation, Qwest Communications, and AT&T Inc. as the "official" yellow pages directory within a number of their incumbent markets. In addition the ratings reflect Donnelley's very good liquidity profile; its diversified customer and geographic market base; and strong cash flow generation. The continuing negative rating outlook underscores Moody's concern that recent declines in R.H. Donnelley's advertising sales (down 4.8% in 1Q08) might continue through the intermediate term, due largely to cuts in customer spending on yellow pages print advertising in most of its markets, especially hard-hit sub-prime markets in Florida, Arizona and Nevada. Ratings could be lowered if Donnelley fails to report an improvement in operating performance or that it is on track to meaningfully reduce financial leverage in the near term. Details of the rating action are: Ratings assigned: R.H. Donnelley, Inc. -- Proposed $488.4 million 11.75% senior unsecured notes due 2015 -- B1, LGD3, 44% -- Proposed $175 million revolving credit facility due 2011-- Ba1 LGD2, 15% Dex Media West LLC -- Proposed $100 million revolving credit facility due 2013 -- Ba1, LGD2, 15% -- Proposed $140 million term loan A due 2013 - Ba1, LGD2, 15% -- Proposed $950 million term loan B due 2014 - Ba1, LGD2, 15% Ratings affirmed: R. H. Donnelley Corporation -- Corporate Family rating - B1 -- PDR: B1 -- Speculative Grade Liquidity rating -- SGL-1 -- 8.875% series A-4 senior notes due 2017 -- B3, LGD5, 87% -- 6.875% senior notes due 2013 -- B3, LGD5, 87% -- 6.875% Series A-1 senior discount notes due 2013 -- B3, LGD5, 87% -- 6.875% Series A-2 senior discount notes due 2013 -- B3, LGD5, 87% -- 8.875% Series A-3 senior notes due 2016 -- B3, LGD5, 87% R.H. Donnelley Inc. -- $1,507 million senior secured term loan D due 2011 - Ba1, LGD2, 15% Dex Media East LLC -- $100 million senior secured revolving credit facility due 2013 -- Ba1, LGD2, 15% -- $700 million senior secured delayed draw term loan A due 2013 -- Ba1, LGD2, 15% -- $400 million senior secured delayed draw term loan B due 2014 -- Ba1, LGD2, 15% Dex Media West LLC -- 9.875% senior subordinated notes due 2013 -- B1, LGD4 (revised from LGD3), 55% Dex Media Inc. -- 8% senior unsecured global notes due 2013 -- B2, LGD4, 67% -- 9% senior discount global notes due 2013 -- B2, LGD4, 67% Ratings Downgraded: Dex Media West LLC -- 8.5% senior unsecured notes due 2010 -- to B1, LGD3, 44% from Ba3, LGD3, 41% -- 5.875% senior unsecured notes due 2011 -- to B1, LGD3, 44% from Ba3, LGD3, 41% Ratings affirmed, subject to withdrawal at closing: Dex Media West LLC -- Senior secured revolving credit facility due 2009 -- Senior secured term loan A due 2009 -- Senior secured term loan B due 2010 -- Senior secured term loan B-1 due 2010 R.H. Donnelley Inc. -- Senior secured revolving credit facility due 2009 The rating outlook remains negative The downgrade of Dex Media West LLC's senior unsecured notes is largely due to the increase in the amount of senior unsecured operating company notes within the consolidated capital structure and an offsetting reduction in the junior debt cushion provided to these noteholders following the retirement of holdco notes, in connection with the proposed debt exchange. On May 8, 2008, R.H. Donnelley Inc. offered to exchange a portion of R.H. Donnelley Corp's outstanding notes for up to $488 million aggregate principal amount of new senior notes to be issued by R.H. Donnelley, Inc. In addition, the company announced its plans to amend R.H. Donnelley Inc.'s credit facility to loosen financial covenants and extend the revolver maturity date and refinance Dex Media West's senior secured credit facility. The B1 CFR could be downgraded if Donnelley is unable to cut costs in response to a weakening business environment, if its free cash flow generation continues to worsen, if it is unable to successfully defend it market share, if it deploys cash for purposes other than the repayment of debt, if it faces prospective covenant default under its financial leverage tests or if the operating companies are unable to effect dividend sufficient for the holdco and intermediate holdco to service their debt obligations. Headquartered in Cary, North Carolina, R. H. Donnelley is one of the largest US yellow page directory publishing companies. The company reported revenues of $2.6 billion for the FYE Dec. 31, 2007. ROYALTY PHARMA: S&P Rates Proposed $200MM Unsecured Loan at BB+ --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' rating to Royalty Pharma Finance Trust's proposed $200 million senior unsecured term loan due 2015. Proceeds will be used to fund the company's future acquisitions. In addition, the Trust increased the size of its senior secured term loan due 2013 by $100 million, to $2.2 billion. The 'BBB-' rating on the loan was affirmed. The corporate credit rating on New York City-based Royalty Pharma is 'BBB-' and the rating outlook is stable. The 'BBB-' rating reflects the company's diverse portfolio of royalty-generating pharmaceutical assets, the solid sales growth prospects of those assets, and management's solid track record in conducting acquisitions. These strengths are partially offset by Royalty Pharma's aggressive acquisition pace and financial policies. Ratings List Royalty Pharma Corporate Credit Rating BBB-/Stable/-- New Rating Royalty Pharma Finance Trust $200 mil sr unsecd term loan B due 2015 BB+ Affirmed Rating Royalty Pharma Finance Trust $2.2 bil secd term loan due 2013 BBB- SATURN VENTURES: Moody's Cuts Baa2 Rating on $20MM Notes to Ba2 --------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings on these notes issued by Saturn Ventures II, Limited: Class Description: $50,000,000 Class A-2 Floating Rate Senior Notes -- Prior Rating: Aaa -- Current Rating: A3, on review for possible downgrade Class Description: $25,000,000 Class A-3 Floating Rate Senior Notes -- Prior Rating: Aa2 -- Current Rating: Baa3, on review for possible downgrade Class Description: $20,000,000 Class B Floating Rate Subordinate Notes -- Prior Rating: Baa2 -- Current Rating: Ba2, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. SEA CONTAINERS: Court Delays Decision on Pact Document Disclosure ----------------------------------------------------------------- The Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware reserved its decision on the request of the Official Committee of Unsecured Creditors of Sea Containers Services Ltd., to compel the Official Committee of Unsecured Creditors of Sea Containers Ltd. to produce certain documents. The SCSL Committee had asked the Court to compel the SCL Committee to produce documents that have been withheld on the basis of the common interest privileges between the SCL Committee and the DIP lenders or the bondholders. The Debtors previously asked the Court to approve the pension scheme agreement between them and the trustees of the two main Sea Containers Pension Schemes to agree on the amount of their claims against the Sea Containers estate. As a result of extensive negotiations that commenced prior to the bankruptcy filing and have continued throughout these Chapter 11 cases, the Debtors, their Official Committee of Unsecured Creditors, and the Trustees agreed to the Settlement under which the Schemes' claims against the Debtors are fully resolved. The SCSL Committee's Document Requests sought to obtain from the SCL Committee various categories of documents directly relevant to the issues raised by its objection to the Settlement, including: -- documents relating to the SCL Committee's evaluation and analysis of the Pension Schemes' claims; -- documents concerning communications between the SCL Committee and the Debtors or their creditors about: * the Pension Schemes' claims; * the SCL Committee's contention that the Pension Schemes and the SCSL Committee violated the automatic stay; and * set-off rights between the Debtors; and -- documents relating to the grounds raised in the objection to the Pension Schemes' proofs of claim filed by the SCL Committee. David B. Stratton, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, said the SCL Committee has not produced, and does not intend to produce, a privilege log for the documents withheld based on the common interest privileges it asserted. Although the parties did agree that privilege logs need not be produced for documents withheld based on the attorney-client privilege or attorney-work product doctrine, reflecting communications between the committees and their members and advisors, no agreement was reached with respect to documents withheld based on a common interest privilege, he continues. Dispute on Common Interests Mr. Stratton argued that the SCL Committee's assertion that it has a "common interest" privilege with respect to all communications between the SCL Committee and two groups of creditors, the DIP Lenders, and a group of unsecured bondholders represented by Kramer Levin Naftalis & Frankel LLP, is not supported by law. Mr. Stratton told Judge Carey that there is no common interest between the DIP Lenders and the SCL Committee. He asserted that the interests of the DIP Lenders, by virtue of their position, differ significantly from, and potentially conflict with, the interests of unsecured creditors. He notes that it was this divergence in interest that led the U.S. Trustee to remove certain noteholders, who became DIP Lenders, from the original SCL Committee. Hence, he pointed out, the SCL Committee cannot withhold communications with the DIP Lenders under the guise of a "common interest" privilege. Although the SCL Committee and the Bondholders may share a common commercial interest, that interest alone is insufficient to give rise to a common interest privilege, Mr. Stratton argued. He contends that the SCL Committee cannot demonstrate that it shares a common legal interest with the Bondholders in opposing the Debtors' request to approve the settlement regarding the pension claims. As a result of the expansive privileges asserted by the SCL Committee, its entire document production consists of seven documents, a number of which are duplicates, totaling eleven pages in the aggregate, Mr. Stratton told the Court. He noted that the SCSL Committee, the Sea Containers 1983 Pension Scheme and the Sea Containers 1990 Pension Scheme have produced more than 20,000 pages of documents in response to the SCL Committee's discovery requests. Court Wants Privilege Log Produced Judge Carey directed the SCL Committee to produce to the SCSL Committee a privilege log identifying all documents that: -- were created prior to the filing of the Debtors' request for the approval of their settlement agreement with the Trustees of the Pension Schemes to settle the Pension Claims; -- have been withheld on the basis of a common interest privilege; and -- evidence communications between the SCL Committee and the DIP Lenders or the unsecured bondholders represented by Kramer Levin Naftalis & Frankel LLP regarding the Pension Claims, the question of violation of the automatic stay, or the Debtors' Settlement Request. The Court said that upon review of the privilege log, the SCSL Committee may seek further relief as necessary with respect to its request to compel. The Court has noted that the rights of objecting parties as to the SCSL Committee's request are reserved. With regards the joint request of the SCSL Committee and the Pension Scheme Trustees for a protective order limiting the scope of discovery sought by the SCL Committee concerning the equalization reserve component of the Pension Settlement, Judge Carey granted the request except the portion limiting the scope of scheduled depositions. The Court has directed the Pension Schemes to produce to the SCL Committee their financial statements for the years 1994 to 1997. About Sea Containers Based in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady, Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors and the Financial Members Sub-Committee of the Official Committee of Unsecured Creditors of Sea Containers Ltd. is represented by William H. Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris, Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s Official Committee of Unsecured Creditors is represented by attorneys at Willkie Farr & Gallagher LLP. In its schedules filed with the Court, Sea Containers disclosed total assets of $62,400,718 and total liabilities of $1,545,384,083. (Sea Containers Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SEA CONTAINERS: Wants to Supplement Non-Insider Retention Plan -------------------------------------------------------------- Sea Containers Ltd. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to supplement their existing non-insider retention plan with respect to certain employees. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that the Debtors and Towers Perrin -- the Debtors' compensation consultants -- structured a narrowly focused retention plan that identified certain non- insider, critical employees without whom the Debtors believed they may suffer breakdowns in operating and reporting functions, which will destroy value for the bankruptcy estates. Mr. Brady informs the Court that retention payments were paid in three separate installments. The first installment was paid on Oct. 15, 2007. An additional one-third installment was paid on Jan. 15, 2008. The final one third will be paid at the end of April 2008. While the last payment pursuant to the Retention Plan will be made shortly, due to the unanticipated length of the Debtors' bankruptcy cases, Mr. Brady relates that the Debtors have determined they still need to employ seven of the eligible employees. Accordingly, the Debtors seek the Court's permission to amend the Retention Plan with respect to the seven eligible employees. Under the Amended Retention Plan, the Debtors will make two additional payments, on July 15, 2008, and October 15, 2008, to the seven eligible employees. The total cost of the Amended Retention Plan will not exceed GBP184,000 or $364,320. Mr. Brady tells the Court that the seven eligible employees are experienced and talented employees who are intimately familiar with the Debtors' business but, at the same time, have other employment options that must be weighed against continued employment with the Debtors. Furthermore, it would be difficult and expensive for the Debtors to attract and hire qualified replacements if the seven eligible employees left. The Debtors submit that the cost of the Amended Retention Plan, far outweigh the costs resulting from deterioration of the value of the Debtors' estates from loss of the seven eligible employees and the time and expense of recruiting and hiring a replacement personnel. The Debtors further ask the Court to place the Amended Retention Plan under seal, and not be available to anyone other than the Court, the U.S. Trustee, and the counsel to the Committees. Mr. Brady relates that if the confidential information contained in the Amended Retention Plan is exposed, the Debtors' competitors may use it to lure the seven eligible employees away from the Debtors' business by offering enhanced compensation and bonuses. "This, in turn, would cause a significant disruption in the Debtors' operations and may jeopardize the efforts to confirm and implement a reorganization plan," Mr. Brady concludes. About Sea Containers Based in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady, Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors and the Financial Members Sub-Committee of the Official Committee of Unsecured Creditors of Sea Containers Ltd. is represented by William H. Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris, Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s Official Committee of Unsecured Creditors is represented by attorneys at Willkie Farr & Gallagher LLP. In its schedules filed with the Court, Sea Containers disclosed total assets of $62,400,718 and total liabilities of $1,545,384,083. (Sea Containers Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SUN-TIMES MEDIA: Will Not Cure NYSE Listing Non-Compliance ---------------------------------------------------------- Sun-Times Media Group, Inc. (NYSE: SVN), whose Class A Common Stock is listed on the New York Stock Exchange, said it has notified NYSE Regulation, Inc. that the Company does not intend to attempt to cure its previously announced non-compliance with the NYSE's continued listing standards relating to average closing share price and average market capitalization. The Company expects the NYSE to suspend trading of the Class A Common Stock and to commence procedures to delist the stock, which the Company does not intend to appeal. The Company expects to move trading of the Class A Common Stock to the OTC Bulletin Board, effective upon delisting from the NYSE. Cyrus F. Freidheim, Jr., President and Chief Executive Officer, stated: "It is important to note this decision will not impact the Company's financial status or organization, nor will it have any effect on the way we conduct our business, or on the nature of our existing and future customer and partner relationships. It will also have no impact on Sun-Times Media Group's previously announced plan to explore strategic alternatives for the Company." Mr. Freidheim emphasized that this decision will not affect the Company's reporting and other obligations under the federal securities laws and that the Company will continue to report to shareholders on the same basis it has been. "We remain committed to achieving the goals we've shared all along: improved operating performance, resolution of the Company's unique legacy issues, and exploration of strategic alternatives for the Company." As reported by the Troubled Company Reporter, on March 26, 2008, the company was notified by NYSE Regulation Inc. that it was not in compliance with the NYSE's continued listing standard related to maintaining a consecutive 30-day average closing price for its Class A common stock of at or above $1.00 per share. Under NYSE rules, the company has six months to bring its share price and 30-day average closing price above $1.00, during which time the company's Class A common stock will continue to be listed on the NYSE. On April 4, 2008, Sun-Times Media was notified by NYSE Regulation that it is not in compliance with the New York Stock Exchange's continued listing standards because over a consecutive 30 trading day period the company's average total market capitalization was less than $75 million and the company's most reported shareholders' equity was below $75 million. Under applicable NYSE procedures, the company had 45 days from the receipt of the notice to submit a plan to the NYSE to demonstrate its ability to achieve compliance with the continued listing standards within 18 months. The company said that time that intends to submit a plan that will demonstrate compliance with the listing standards within the required time frame. About Sun-Times Media Group Headquartered in Chicago, Sun-Times Media Group Inc. (NYSE: SVN) - - http://www.thesuntimesgroup.com/-- is dedicated to being the premier source of local news and information for the greater Chicago area. Its media properties include the Chicago Sun-Times and Suntimes.com as well as newspapers and Web sites serving more than 200 communities throughout the Chicago area. Hollinger Inc. (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- which owns approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group Inc., along with two affiliates, 4322525 Canada Inc. and Sugra Limited, filed separate Chapter 15 petitions on Aug. 1, 2007 (Bankr. D. Del. Case Nos. 07-11029 through 07-11031). Hollinger also initiated Court-supervised restructuring under the Companies' Creditors Arrangement Act (Canada) on the same day. As reported in the Troubled Company Reporter on April 3, 2008, Sun-Times Media Group Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $791.6 million in total assets and $866.6 million in total liabilities, resulting in a total stockholders' deficit of $75.0 million. SHARPS CDO: Moody's Slashes Aaa Rating on $600MM Notes to Ba1 ------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings on these notes issued by Sharps CDO II Ltd.: Class Description: $600,000,000 Class A-1 Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Class Description: $100,000,000 Class A-2 Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $60,000,000 Class A-3 Senior Secured Floating Rate Notes due 2046 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: B2, on review for possible downgrade Class Description: $82,000,000 Class B Senior Secured Floating Rate Notes due 2046 -- Prior Rating: A1, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $52,000,000 Class C Senior Secured Deferrable Interest Floating Rate Notes due 2046 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Ca Class Description: $34,000,000 Class D-1 Senior Secured Deferrable Interest Floating Rate Notes due 2046 -- Prior Rating: Ba1, on review for possible downgrade -- Current Rating: C Class Description: $27,000,000 Class D-2 Senior Secured Deferrable Interest Floating Rate Notes due 2046 -- Prior Rating: B1, on review for possible downgrade -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. STACK 2007-1: Moody's Chips Notes Ratings to C from Ca ------------------------------------------------------ Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings of three classes of notes issued by Stack 2007-1 Ltd.: Class Description: $600,000,000 Class A1A Floating Rate Notes Due 2047 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ba3, on review for possible downgrade Class Description: $150,000,000 Class A1B Floating Rate Notes Due 2047 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $150,000,000 Class A2 Floating Rate Notes Due 2047 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded ratings of these notes: Class Description: $225,000,000 Class A3 Floating Rate Notes Due 2047 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: Ca Class Description: $151,000,000 Class A4 Floating Rate Notes Due 2047 -- Prior Rating: Caa1, on review for possible downgrade -- Current Rating: Ca Class Description: $68,000,000 Class B Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C Class Description: $46,000,000 Class C Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C Class Description: $45,000,000 Class D Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C Class Description: $10,000,000 Class E Deferrable Floating Rate Notes Due 2047 -- Prior Rating: Ca -- Current Rating: C Stack 2007-1, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. On December 17, 2007 the transaction experienced an event of default caused by a failure of the Principal Coverage Ratio relating to the Class A Notes to equal or exceed 88%, as required under Section 5.1(d) of the Indenture dated May 3, 2007. 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 Secured 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 ratings of the Class A1A, A1B, and A2 Notes issued by Stack 2007-1, Ltd. are on review for possible further action. STURGIS IRON: Files Schedules of Assets and Liabilities --------------------------------------------------------- Sturgis Iron & Metal Co., Inc. delivered to the United States Bankruptcy Court for the Western District of Michigan its schedules of assets and liabilities disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $23,363,626 C. Property Claimed as Exempt D. Creditors Holding $56,423,149 Secured Claims E. Creditors Holding 2,784,272 Unsecured Priority Claims F. Creditors Holding 37,139,318 Unsecured Nonpriority Claims ----------- ----------- TOTAL $23,363,626 $96,346,739 Based in Sturgis, Michigan, Sturgis Iron & Metal Co., Inc. sells ferrous metal scrap & waste in wholesale. It also manufactures secondary nonferrous metals, and provides pre-finishing iron or steel processes services, finishing metal processing services, and smelting metal services. The company filed for chapter 11 protection on Apr. 4, 2008 (Bankr. W.D. Mich. Case No. 08-02966). Jay L. Welford, Esq., Judith Greenstone Miller, Esq., Paige Barr, Esq., Paul R. Hage, Esq. and Richard E. Kruger, Esq., at Jaffe Raitt Heuer & Weiss, P.C. represent the Debtor in its restructuring efforts. The Debtor selected Kurtzman Carson Consultants LLC as claims agent. The U.S. Trustee for Region 9 appointed an Official Committee of Unsecured Creditors in this case. SUNCREST LLC: Files Schedules of Assets and Liabilities ------------------------------------------------------- Suncrest LLC delivered to the United States Bankruptcy Court for the District of Utah its schedules of assets and liabilities disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $44,471,476 B. Personal Property $9,586,446 C. Property Claimed as Exempt D. Creditors Holding $44,471,476 Secured Claims E. Creditors Holding 45,000 Unsecured Priority Claims F. Creditors Holding 10,813,175 Unsecured Nonpriority Claims ----------- ----------- TOTAL $54,057,922 $55,329,651 Based in Draper, Utah, SunCrest, L.L.C. fka DAE/Westbrook LLC -- http://www.suncrest.com-- develops master planned community located in the Traverse Ridge in Draper in both Salt Lake and Utah Counties. At present, approximately 2,452 homes sites remain available out of 3,903 sites. The company holds a majority of the representative positioms with the SunCrest Home Owners Association. The company has spent at least $102 million on land development in the aggregate, pursuant to court documents. The Debtor filed chapter 11 protection on April 11, 2008 (Bankr. D. Utah Case No. 08-22302) with Judge William T. Thurman presiding. John E. Mitchell, Esq., P. Beth Lloyd, Esq., and William L. Wallander, Esq., at Vinson & Elkins L.L.P., represent the Debtor. TABAER INC: Case Summary & 15 Largest Unsecured Creditors --------------------------------------------------------- Lead Debtor: TABaer, Inc. aka Jones Shipley Xpress aka JSX 16125 Business Pkwy. Hagerstown, MD 21742 Bankruptcy Case No.: 08-16116 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- JSH Transportation Services, LLC 08-16280 Type of Business: The Debtors provide transportation and trucking services. See http://www.jsxpress.com/ Chapter 11 Petition Date: May 1, 2008 Court: District of Maryland (Greenbelt) Judge: Paul Mannes Debtors' Counsel: John Douglas Burns, Esq. Email: burnslaw@burnslaw.algxmail.com 6303 Ivy Lane, Ste. 102 Greenbelt, MD 20770 Tel: (301) 441-8780 TABaer, Inc's Financial Condition: Estimated Assets: Less than $50,000 Estimated Debts: $1 million to $10 million A. TABaer, Inc. did not file a list of its largest unsecured creditors. B. JSH Transportation Services, LLC's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sovereign Bank bank loan $1,551,403 100 W. Washington St. Hagerstown, MD 21740 Quarles Fuel Network $86,879 1701 Fall Hill Ave., Ste. 300 Fredericksburg, VA 22401 Key Equipment Finance trade debt $68,419 P.O. Box 74713 Cleveland, OH 44194-0796 Warehouse & Terminal $37,972 Properties RLI Insurance Co. $37,903 Bowman Sales & Equipment $18,004 Pilot Corp. $15,622 Ryder Transportation Services $15,118 Auto Electric $11,803 American Interstate Insurance $10,828 Co. 24759 Comdata $8,732 Central Truck & Trailer $8,221 Donald B. Rice trade debt $5,463 Penske Truck Leasing Co., LP $3,268 Tigers Eye $2,515 TAHERA DIAMOND: To Cut Staff at Jericho Mine; Gets Bid for Assets ----------------------------------------------------------------- Tahera Diamond Corporation reiterates that it intends to satisfy the alternative information guidelines recommended by Ontario Securities Commission Policy 57-603 and Canadian Securities Administrators Staff Notice 57-301. The Company has completed processing at the Jericho Mine. The processing plant and mine infrastructure are now being prepared for a period of care and maintenance. It is expected that this exercise will take a number of weeks to complete. Staff at the mine will be reduced to a level that will meet the care and maintenance work requirements. A final diamond valuation will be completed in May 2008, which will contain diamonds recovered from the cut-off date for the April valuation to the end of the processing. As previously announced, on January 16, 2008, Tahera entered into protection under the Companies' Creditors Arrangement Act (CCAA). The stay period under the court order extends to June 30, 2008. As discussed in the biweekly update of April 25, 2008 the Company was seeking expressions of interest in respect of its business and assets by April 28, 2008 pursuant to the Court ordered Marketing Process. The Company has received a number of preliminary expressions of interest and these are in the process of being analyzed. It is expected that a number of parties will be invited to participate in the next stage of the Marketing Process. At this time there is no certainty as to the outcome of the Marketing Process. Accordingly, it is unclear whether or not there will be any value for holders of Tahera's common shares at the conclusion of the CCAA proceedings. About Tahera Diamond Tahera Diamond Corporation (TSX: TAH) -- http://www.tahera.com/-- is a Canadian owned diamond mining company. Tahera's wholly-owned Jericho project, commencing commercial production in early 2006, represents Canada's third, and Nunavut's first, diamond mine. On Jan. 16, 2008, Tahera obtained an order from the Ontario Superior Court of Justice granting Tahera and its subsidiary protection pursuant to the provisions of the CCAA. Tahera sought protection under CCAA, as its current cash flows and cash on hand would not allow it to meet its current obligations and its obligations with respect to the 2008 winter road resupply. The Court extended until June 30, 2008, the stay it granted to Tahera under the Companies' Creditors Arrangement Act. TAZLINA FUNDING: Moody's Slashes Ratings on Notes to C ------------------------------------------------------ Moody's Investors Service has downgraded ratings of five classes of notes issued by Tazlina Funding CDO I, Ltd., and left on review for possible further downgrade the rating of two of these classes. The notes affected by rating action are: Class Description: $1,320,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes due September 2046 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade Class Description: $85,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes due September 2046 -- Prior Rating: Aa3, on review for possible downgrade -- Current Rating: B3, on review for possible downgrade Class Description: $42,000,000 Class B Third Priority Senior Secured Floating Rate Notes due September 2046 -- Prior Rating: A1, on review for possible downgrade -- Current Rating: C Class Description: $11,000,000 Class C Fourth Priority Mezzanine Secured Deferrable Floating Rate Notes due September 2046 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: C Class Description: $23,500,000 Class D Fifth Priority Mezzanine Secured Deferrable Floating Rate Notes due September 2046 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: C The rating downgrade actions reflect deterioration in the credit quality of the underlying portfolio, as well as the occurrence, as reported by the Trustee on April 23, 2008, of an event of default that occurs when the Class A/B Overcollateralization Ratio fails to equal or exceed 98 per cent, as described in Section 5.1(i) of the Indenture dated June 1, 2006. Tazlina Funding CDO I, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, holders of certain Notes may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. The rating downgrades taken today reflect the increased expected loss associated with each tranche. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of losses of certain tranches may be different, however, depending on the timing and choice of remedy to be pursued following the event of default. Because of this uncertainty, the ratings assigned to the Class A-1 Notes and Class A-2 Notes remain on review for possible further action. TERRA INDUSTRIES: Good Performance Cues Fitch to Lift Ratings ------------------------------------------------------------- Fitch has upgraded the Issuer Default Ratings and outstanding debt ratings of Terra Industries, Inc. and its subsidiaries as: Terra Industries -- IDR to 'BB' from 'B+'; -- Convertible preferred shares to 'BB-' from 'B-/RR6'. Terra Capital -- IDR to 'BB' from 'B+'; -- Senior unsecured notes to 'BB' from 'B+/RR4'. Terra Nitrogen, L.P. -- IDR to 'BB' from 'B+'. Fitch has also affirmed these bank loan ratings: Terra Capital -- Senior secured credit facility at 'BB+'; Terra Nitrogen, L.P. -- Senior secured credit facility at 'BB+'. The Rating Outlook remains Positive. In accordance with Fitch's published methodology, the Recovery Ratings on all issues of Terra will no longer be published. The rating upgrade is driven by last year's performance which is being repeated this year and has resulted in a substantial accumulation of cash. At the heart of Terra's good fortunes is a growing worldwide demand for corn and wheat, the U.S. mandate to increase the production of ethanol as a fuel supplement, and the low value of the U.S. dollar. The latter has established the U.S. as a low cost producer of ammonia and nitrogen fertilizers once again while working to support prices which are being raised by overseas imports for 66% of the nitrogen fertilizers used annually in the U.S. Terra's average realizations for ammonium nitrate in the first quarter of this year are 37% higher than last year, and operating income, which grew six-fold year over year in 2007, is 2 1/2 times higher in first-quarter comparisons. Cash flow from operations is up 137% in the first quarter with cash and equivalents of $817 million more than double long-term debt of $330 million. There are no obvious near-term headwinds to deter Terra's performance, the basis for the Positive Outlook. The nearest capacity additions which could influence prices are not scheduled to come on-stream until 2010. Petitions are being made to the EPA to ease ethanol requirements and lower corn prices; however, this is not likely to have an immediate or serious impact on nitrogen fertilizer prices and would not unwind Terra's financial progress to date. Fitch does anticipate that pressure will mount to reward shareholders. Terra repurchased $87 million worth of stock last year and has just refreshed its authorization to buy back an additional ten million shares and has declared a $.10 quarterly dividend. A further upgrade in Terra's ratings could accompany a good outlook for the 2008/09 growing season but will depend on how much cash Terra spends and for what purpose. Terra Industries is a major North American fertilizer company. Terra earned $883 million in EBITDA in 2007 on approximately $2.6 billion in revenues. Terra manufactures anhydrous ammonia, urea, ammonium nitrate, urea ammonium nitrate and methanol. Terra owns roughly 75% of Terra Nitrogen Company, L.P. which runs the second largest UAN production facility in North America. THE O'BRYAN CO: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: The O'Bryan Co., Inc. aka Zinfandel Pharmacy aka Pacific West Healthcare Supply aka Pacific West Healthcare Supply Pharmacy 5145 Golden Foothill Pkwy., Ste. 180 El Dorado Hills, CA 95762 Bankruptcy Case No.: 08-25810 Type of Business: The Debtor owns and operates a pharmacy. Chapter 11 Petition Date: May 2, 2008 Court: Eastern District of California (Sacramento) Judge: Michael S. McManus Debtor's Counsel: Aristides G. Tzikas, Esq. 3638 American River Dr. Sacramento, CA 95864 Tel: (916) 978-3434 Estimated Assets: $1 million to $10 million Estimated Debts: $100,000 to $500,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Sigma Supply & Distribution vendor & supplier $75,375 701 W. Harvard St. Glendale, CA 91204 Kendall Healthcare Products vendor & supplier $73,433 Co. Dept. 0823 P.O. Box 120001 Dallas, TX 75312 Internal Revenue Service federal income taxes $59,461 Insolvency Group Two 4330 Watt Ave., SA 5357 North Highlands, CA 95660 Gulf South vendor & supplier $58,016 Cardinal Health vendor & supplier $57,430 Medline Industries, Inc. vendor & supplier $42,002 American Express vendor & supplier $38,881 McKesson vendor & supplier $38,351 MMS vendor & supplier $34,154 Independent Pharmacy Group vendor & supplier $21,912 United Parcel Service vendor & supplier $16,260 Matheny, Sears, et al. vendor & supplier $15,625 Ross Products vendor & supplier $13,117 California Overnight vendor & supplier $11,595 Valley Wholesale Drug vendor & supplier $11,539 Ceres Strategies, Inc. vendor & supplier $10,068 J&S Jackson Center, LLC vendor & supplier $8,376 Invacare Supply Group vendor & supplier $7,735 State Farm Insurance vendor & supplier $7,639 Nestle U.S.A. vendor & supplier $5,924 TORO ABS: Moody's Lowers Rating C from Ba1 on 17,600 Pref Shares ---------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings on these notes issued by TORO ABS CDO I, LTD.: Class Description: $895,000,000 Class A First Priority Senior Secured Floating Rate Delayed Draw Notes Due 2042 -- Prior Rating: Aaa -- Current Rating: Aa2, on review for possible downgrade Class Description: $76,000,000 Class B Second Priority Senior Secured Floating Rate Notes Due 2042 -- Prior Rating: Aa2 -- Current Rating: Baa1, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $15,000,000 Class C Third Priority Mezzanine Secured Deferrable Floating Rate Notes Due 2042 -- Prior Rating: Baa2 -- Current Rating: Ca Class Description: 17,600 Preference Shares with an Aggregate Liquidation Preference of $17,600,000 -- Prior Rating: Ba1 -- Current Rating: C According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. TRIARC COMPANIES: Posts $68MM Net Loss in Quarter Ended March 31 ---------------------------------------------------------------- Triarc Companies Inc., the parent company of the Arby's restaurant system, reported the results of operations for fiscal first quarter ended March 30, 2008. Net income declined $74.6 million to a loss of $67.5 million in the first quarter of 2008 from net income of $7.1 million in the first quarter of 2007. This decline is attributed to the investment loss. Selected balance sheet data at March 30, 2008, showed total stockholders' equity of $363.5 million compared to $448.8 million in December 2007. As of March 30, 2008, there were a total of 3,694 Arby's restaurants in the system, including 1,156 company-owned and 2,538 franchised locations. Other significant corporate highlights include: * Signing of definitive merger agreement with Wendy's International Inc. for an all stock transaction in which Wendy's shareholders will receive 4.25 shares of Triarc's Class A Common Stock for each share of Wendy's common stock; and * Distribution of Deerfield Capital Corp. common stock to Triarc stockholders. Merger Agreement With Wendy's On April 24, 2008, Triarc disclosed a definitive merger agreement with Wendy's for an all stock transaction in which Wendy's shareholders will receive 4.25 shares of our Class A Common Stock for each share of Wendy's common stock they own. Under the agreement, Triarc stockholders will also be asked to approve the conversion of each share of Triarc Class B Common Stock, Series 1, into one share of Triarc Class A Common Stock, resulting in a post-merger company with a single class of common stock. The transaction is subject to regulatory approvals, customary closing conditions and the approval of both Triarc stockholders and Wendy's shareholders. There can be no assurance that shareholder and other approvals will be obtained or that the merger will be consummated. The transaction is expected to close in the second half of 2008. Triarc and Wendy's expect to file with the Securities and Exchange Commission a joint proxy/prospectus statement in the next few weeks. Deerfield Distribution On Dec. 21, 2007, Triarc completed the sale of its stake in Deerfield & Company LLC, an asset management business, to DFR. Based on a decline in the market price of the 9.8 million shares of DFR common stock the company received in connection with its sale of the asset management business to DFR, the company concluded that the carrying value of our DFR investment was impaired. On March 11, 2008, Triarc's board of directors approved the distribution of DFR common stock to Triarc stockholders and on April 4, 2008, the DFR stock was distributed to holders of record of Class A Common Stock and Class B Common Stock on March 29, 2008. Sale-Leaseback Obligations A significant number of the underlying leases for the company's sale-leaseback obligations and its capitalized lease obligations, well as its operating leases, require or required periodic financial reporting of certain subsidiary entities or of individual restaurants, which in many cases has not been prepared or reported. The company has negotiated waivers and alternative covenants with it most significant lessors which substitute consolidated financial reporting of its restaurant business for that of individual subsidiary entities and which modify restaurant level reporting requirements for more than half of the affected leases. As of March 30, 2008, the company was not in compliance, and remain not in compliance, with the reporting requirements under those leases for which waivers and alternative financial reporting covenants have not been negotiated. None of the lessors has asserted that the company is in default of any of those lease agreements. About Triarc Companies Inc. Triarc Companies Inc. (NYSE: TRY.B or TRY) -- http://www.triarc.com/-- is a holding company and, through its subsidiaries, is the franchisor of the Arby's restaurant system and the owner of approximately 94% of the voting interests, 64% of the capital interests and at least 52% of the profits interests in Deerfield & Company LLC, an asset management firm. The Arby's restaurant system is comprised of approximately 3,600 restaurants, of which, as of Dec. 31, 2006, 1,061 were owned and operated by the company's subsidiaries. Deerfield & Company LLC, through its wholly-owned subsidiary, Deerfield Capital Management LLC, is a Chicago-based asset manager offering a diverse range of fixed income and credit-related strategies to institutional investors with about $13.2 billion under management as of Dec. 31, 2006. TRIBUNE COMPANY: Appoints Mark Shapiro to Board of Directors ------------------------------------------------------------ Tribune Company elected Mark Shapiro, a native Chicagoan, to the company's board of directors. Mr. Shapiro is president and chief executive officer of Six Flags Inc., a position he has held since December 2005. "[Mr. Shapiro] is a great addition to the board," Sam Zell, the company's chairman and chief executive officer, said. "This company's been on a roller coaster ride the last few years -- who better to help guide us into the future than a guy in charge of amusement parks? [Mr. Shapiro] has great experience in broadcasting and entertainment and knows how to reach audiences -- he's smart and innovative. Besides, we're hoping he'll cut us a break on season passes to Six Flags!" Mr. Shapiro has helped Six Flags grow its entertainment portfolio, leading the company's acquisition of 40% of Dick Clark productions in 2007. Prior to joining Six Flags, Mr. Shapiro served as executive vice president and programming and production at ESPN, responsible for the development and scheduling of all programming on ESPN, ESPN2 and its affiliate networks. Mr. Shapiro was elected at Tribune's regularly scheduled board meeting held May 7. In other business, the board also elected Gary Weitman as senior vice president and corporate relations. Mr. Weitman joined Tribune in 2000 as vice president and corporate communications. He oversees internal and external communication, including media and investor relations, employee communications, and Tribune's internal and external websites. About Tribune Company Headquartered in Chicago, Tribune Company (NYSE: TRB) -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting. It reaches more than 80% of U.S. households and is the only media organization with newspapers, television stations and websites in the nation's top three markets. In publishing, Tribune's leading daily newspapers include the Los Angeles Times, Chicago Tribune, Newsday (Long Island, New York), The Sun (Baltimore), South Florida Sun-Sentinel, Orlando Sentinel and Hartford Courant. The company's broadcasting group operates 23 television stations, Superstation WGN on national cable, Chicago's WGN-AM and the Chicago Cubs baseball team. * * * As reported in the Troubled Company Reporter on March 20, 2008, Standard & Poor's Ratings Services lowered its ratings on the class A and B units from the $79.795 million Structured Asset Trust Unit Repackaging Tribune Co. Debenture Backed Series 2006-1 to 'CCC' from 'CCC+' and removed them from CreditWatch with negative implications. TRUMP ENTERTAINMENT: S&P Chips Corp. Credit Rating to B- from B --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Atlantic City-based Trump Entertainment Resorts Holdings L.P.; the corporate credit rating was lowered to 'B-' from 'B'. The rating outlook is negative. In addition, the issue-level rating on the company's 8.5% senior secured second-lien notes was lowered to 'CCC+' from 'B'. The recovery rating on the notes was revised to '5', indicating the expectation for modest (10% to 30%) recovery in the event of a payment default, from '4'. "The ratings downgrade reflects our expectation for continued challenges to TER's business position, resulting largely from ongoing competitive pressures from operators in Pennsylvania and New York," explained Standard & Poor's credit analyst Ben Bubeck. Furthermore, a partially complete expansion at Harrah's Atlantic City and the near-term opening of the Water Club expansion at the Borgata are expected to put additional pressure on TER's operations. Overall economic weakness is also playing a role in the decline of gaming revenues in the Atlantic City market, as it is in most other U.S. gaming markets. These factors have driven a meaningful deterioration of TER's credit metrics over the past several months. While S&P expect TER to realize some level of return on recent additions and refurbishments to its properties, and from the new 782-room tower at Trump Taj Mahal expected to open in phases beginning around Labor Day, the company's cash flow cushion relative to its debt service obligations is limited. EBITDA generated during the 12 months ended March 31, 2008, approximated interest expense. If EBITDA declines do not stabilize, TER's ability to meet its debt service obligations in 2009 will be strained, even if the company achieves a solid return on its ongoing capital investments. The 'B-' rating reflects TER's small portfolio of casino assets, which rely exclusively on cash generated in the highly competitive Atlantic City market, high debt leverage, and limited liquidity. While S&P expect ongoing capital spending to enhance TER's competitive position, gaming revenues in the Atlantic City market have trended downward nearly every month since January 2007, and there will likely be additional competition coming online in both Pennsylvania and New York over the intermediate term. UNITED RENTALS: Moody's Affirms B1 Rating on Sr. Unsecured Debt --------------------------------------------------------------- Moody's Investors Service assigned a Baa3 rating to United Rentals (North America), Inc.'s new $1.0 billion senior secured credit facility, affirmed the ratings of its other debt instruments -- senior unsecured at B1, senior subordinate at B3, and affirmed the rating for the Quarterly Income Preferred Securities issued by United Rentals Trust I at B3. United Rentals, Inc.'s existing rating of Ba1 for its senior secured credit facility was not affected by these rating actions and will be withdrawn once the new senior secured credit facility closes. Moody's maintains the B1 corporate family and probability of default ratings for United Rentals, but has relocated them to United Rentals (North America), Inc. level as United Rentals, Inc. will not have any rated debt outstanding upon closing of the proposed senior secured credit facility. Moody's is also maintaining the speculative grade liquidity rating of SGL-2. The outlook remains stable. United Rentals, Inc. is a holding company that conducts its operations through United Rentals (North America), Inc. and its subsidiaries. URI's B1 corporate family rating reflects its leading competitive position in the North American equipment rental industry. URI's moderate leverage profile, scale and high regional diversification represent credit positives. For the twelve months ended March 2008, URI's key credit metrics (as adjusted per Moody's Methodology) were: debt/EBITDA 2.6x; EBIT/interest expense 3.0x; and, EBITDA/interest expense of 5.5x. These strengths are balanced against the slowing of the non- residential construction end markets which Moody's expects will weaken over the balance of 2008 and into 2009. The B1 corporate family rating also reflects the potential for URI to pursue shareholder enhancing activity. Additionally, URI remains subject to various SEC investigations and shareholder lawsuits related to its past accounting irregularities. Moody's believes that the company has made significant progress in resolving these outstanding issues. Moody's notes that URI is now subject to other shareholder lawsuits principally focusing on the acquisition of URI by Cerberus and the ensuing breakdown in negotiations. The stable outlook reflects URI's solid credit metrics, good liquidity, and the progress the company has made in resolving its outstanding issues with the SEC and shareholder lawsuits. These ratings/assessments were affected by this action: United Rentals, Inc.: The SGL-2 speculative grade liquidity rating and the B1 corporate family and probability of default ratings were relocated to the United Rentals (North America), Inc. level. Previously, United Rentals, Inc. was a named borrower under the revolving credit facility. However, United Rentals, Inc. is not a named borrower under the proposed senior secured credit facility, and the ratings have been relocated to the United Rentals (North America), Inc. level in accordance with Moody's standard rating practices. United Rentals (North America), Inc: -- Corporate family rating at B1; -- Probability of default rating at B1; -- $1.0 billion senior secured revolving credit facility due 2013 assigned at Baa3 (LGD2, 11%); -- $1.0 billion senior unsecured notes due 2012 affirmed at B1, but its loss given default assessment is changed to LGD3 (42%) from LGD3 (45%); -- $525 million senior subordinated notes due 2013 affirmed at B3 but its loss given default assessment is changed to (LGD5, 80%) from LGD5 (81%); -- $375 million senior subordinated notes due 2014 affirmed at B3 but its loss given default assessment is changed to (LGD5, 80%) from LGD5 (81%); and, -- $144 million convertible notes due 2023 affirmed at B3 but its loss given default assessment is changed to (LGD5, 80%) from LGD5 (81%); United Rentals Trust I: -- $146 million Quarterly Income Preferred Shares ("QUIPS") due 2028 affirmed at B3 (LGD6, 96%). United Rentals, Inc., located in Greenwich, CT, is the world's largest equipment rental company operating approximately 670 rental locations throughout the United States, Canada and Mexico. The company maintains over 2,900 classes of rental equipment having an original equipment cost of $4.2 billion. Revenues for the twelve months ended March 2008 totaled about $3.6 billion. VERMEER FUNDING: Moody's Cuts Securities Rating to B1 from Ba2 -------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings on these notes issued by Vermeer Funding, Ltd: Class Description: Class C Mezzanine Secured Floating Rate Notes due 2039 -- Prior Rating: Baa2, on review for possible downgrade -- Current Rating: Ba1, on review for possible downgrade Class Description: Combination Securities due June 3, 2039 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. VERNON APARTMENTS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Vernon Apartments, Ltd. dba The Arbors 4705 Ranch View Rd. Fort Worth, TX 76109 Bankruptcy Case No.: The Debtor owns and manages apartments. Type of Business: 08-42065 Chapter 11 Petition Date: May 5, 2008 Court: Northern District of Texas (Ft. Worth) Judge: Russell F. Nelms Debtor's Counsel: Julie C. McGrath, Esq. Forshey & Prostok, LLP 777 Main St., Ste. 1290 Ft. Worth, TX 76102 Tel: (817) 877-8855 Email: jcm@forsheyprostok.com http://www.forsheyprostok.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ U.S. Dept. of Agriculture promissory note; $942,000 Rural Dev. value of security: Attn: Bryan Daniel $436,000 101 South Main Federal Bldg. Ste. 102 Temple, TX 76501 Sabine Valley Group management fee $28,605 4705 Ranch View Rd. Ft. Worth, TX 76109 Home Depot Supply, Inc. service $13,330 4850 S.W. Loop 820 Ft. Worth, TX 76109 Wilbarger CAD taxes $11,012 Stewart Catlin & Lillard PC service $4,575 Lou Ann Montey & Associates, service $3,976 PC City of Vernon utilities $2,544 Dixie Carpet Installations, service $2,025 Inc. George Morgan & Sneed, PC service $1,950 WTU Retail Energy service $1,871 Shiplet Plumbing service $1,642 General Electric service $931 E&A Services, Inc. service $875 Vernon Daily Record service $864 Cole Pest Control service $360 Red River Ranch Supply service $322 Wood Printing Co. service $224 Coble-Burdette Mechanical, service $166 Inc. Birch Telecom of Texas, Ltd. telephone $103 Deluxe Business Checks & check order $56 Solutions VICORP RESTAURANT: Gets Final OK to Use Wells Fargo's $60MM Loan ---------------------------------------------------------------- The Hon. Kevin Gross of the United States Bankruptcy Court for the District of Delaware authorized VICORP Restaurants Inc. and VI Acquisition Corporation to obtain, on a final basis, up to $60 million debtor-in-possession credit facility with Wells Fargo Foothill Inc., as lender, arranger and administrative agent, and Ableco Finance LLC, as lender. As reported in the Troubled Company Reporter on April 7, 2008, Judge Gross gave the Debtors permission to use, on an interim basis, up to $17,500,000 under a $60,000,000 DIP financing from the lenders. The Debtors owed the lenders $37,732,088 -- inclusive of outstanding letters of credit of $7,365,139 -- plus accrued interest -- as of April 1, 2008. The Debtors also incurred roughly $15,000,000 in unpaid trade debt to their suppliers and other vendors. Access to the DIP facility will terminate on April 14, 2010. The lenders' DIP loan will incur interest at a rate equal to 6% per annum plus 5.50%, or 3% per annum plus 7.50%. Furthermore, the Debtors agree to pay a host of fees to the lenders, including a closing fee of $500,000. The postpetition loan agreement contains conditional and customary events of default. The DIP lien is subject to a carve-out for payment to professional advisors to the Debtors and statutory committee appointed in these cases, and the U.S. Trustee of Court fees. Kimberly E. C. Robinson, Esq., at Reed Smith LLP in Wilmington, Delaware, said the lenders' DIP loan is secured by lien on and security interests in substantially all of the Debtors' assets. The facility will be used to finance Debtors' liquidity during the Chapter 11 reorganization process, adds Ms. Robinson. Among other things, Judge Gross also approved the Debtors' requests to: -- continue payment of salaries, wages and health and welfare benefits to employees as normal; -- pay vendors for post-petition goods and services provided on or after April 3, 2008; and, -- continue honoring customer programs and policies, including those pertaining to direct mail coupons, gift cards and special promotional programs. Reed Smith LLP represents the Debtors as legal advisor, and Piper Jaffrey & Co. as their financial advisor. About VICORP Restaurants Headquartered in Denver, Colorado, VICORP Restaurants Inc. and VI Acquisition Corp. -- http://www.vicorpinc.com/-- owns and operates 306 restaurants in 25 states and were the franchisor for 93 restaurants operated under the name of Village Inn or Bakers Square, as of April 1, 2008. The Debtor closed 56 of their company-owned restaurants before April 2, 2008, in attempt to eliminate the underperforming locations. The Debtors employed approximately 12,750 employees -- comprised of 7,500 part-time workers and 5,250 full-time employees. The total personnel was reduced to 11,000 employees as of the Debtors' bankruptcy filing, due primarily to the closure of the restaurants. The companies filed for Chapter 11 protection on April 3, 2008 (Bankr. D. Del. Lead Case No.08-10623). Donna L. Culver, Esq., at Morris, Nichols, Arsht & Tunnell, and Kimberly Ellen Connolly Lawson, Esq., Kurt F. Gwynne, Esq., and Richard A. Robinson, Esq., at Reed Smith LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection against their creditors, they listed assets and debts between $100 million and $500 million. VIRGIN MOBILE: In Negotiations with Helio LLC on Possible Merger ---------------------------------------------------------------- Virgin Mobile USA Inc. and Helio LLC are in advanced merger talks that could result in a deal, The Wall Street Journal reportes citing people familiar with the matter. The companies expect that a merger would help diversify the types of customers they target, WSJ relates. WSJ cites Michael Nelson, a telecom analyst at Stanford Financial Group., as saying that both Virgin and Helio have faced difficulties. According to Mr. Nelsen, Virgin, which markets prepaid plans popular with lower-income customers, is pressed by rising competition from other low-end providers such as Leap Wireless International Inc. and MetroPCS Communications Inc., as well as the economic downturn, which has hit less affluent customers like Virgin's especially hard. Their customers are purchasing fewer minutes, WSJ notes. Virgin, which has 5.1 million subscribers, disclosed lower first- quarter results, its profit dropped 75% to $4.8 million, compared with $19.2 million a year earlier, the WSJ report adds. Its October initial public offering was a failure, with Virgin shares dropping from $15 to $3.16 as of May 9 composite trading on the New York Stock Exchange, WSJ adds. The report states that Helio, which sells high-end handsets and services, tend to be more expensive and data-intensive, appeals to younger, tech-savvy consumers. WSJ states that it has high average revenue per user of more than $85 per month, but only a few hundred thousand subscribers. WSJ says that Helio is expecting a full-year net loss of $340 million to $360 million. According to WSJ, the discussions focused on the consolidation pressure among mobile virtual-network operators, which resell wireless service from larger wireless carriers, as the wireless market nears saturation. WSJ quotes Ranjan Mishra, president of research firm ESS Analysis, as saying: "Since they both offer wireless service on Sprint Nextels Corp.'s network, it would also be relatively easy to merge them from an operational standpoint. But serving Virgin's prepaid customers and deeper-pocketed Helio subscribers could present marketing and technical challenges. These two customers are distinct, and their requirements are different." WSJ, citing Kevin Roe, a telecom analyst, notes that Virgin has previously expressed interest in consolidating other mobile resellers. But Mr. Roe questioned Virgin's timing, saying the market would be more confident after a stronger quarter, WSJ says. WSJ adds that Mr. Roe stated that for now Virgin must stick to their knitting before they pursue opportunities like Helio. About Helio LLC Helio LLC -- http;//www.helio.com/ -- is a joint venture between SK Telecom (NYSE: SKM), Korea's mobile communications company, and EarthLink (NASDAQ: ELNK), an Internet service provider. About Virgin Mobile USA Inc. Headquartered in Warren, New Jersey, Virgin Mobile USA Inc. (NYSE: VM) -- http://www.virginmobileusa.com/-- is a provider of wireless, pay-as-you-go communications services without annual contracts. Voice pricing plans range from monthly options with unlimited nights and weekends to by-the-minute offers, allowing consumers to adjust how and what they pay according to their needs. Virgin Mobiles full slate of handsets, including the Wild Card, Super Slice and Cyclops, are available at top retailers in more than 35,000 locations nationwide and online, with Top-Up cards available at more than 130,000 locations. At March 31, 2008, the company's balance sheet showed total assets of $259.1 million and total liabilities of $668.6 million, resulting in a total stockholders' deficit $409.5 million. VIRGIN MOBILE: March 31 Balance Sheet Upside-Down by $409 Million ----------------------------------------------------------------- Virgin Mobile USA Inc.'s balance sheet at March 31, 2008, showed total assets of $259.1 million and total liabilities of $668.6 million, resulting in a total stockholders' deficit $409.5 million. The company reported net income of $4.7 million for the quarter ended March 31, 2008, which was lower compared to net income of $19.2 million for the same period in 2007. The $2.1 million accrual for payments under the company's tax receivable agreements has contributed to the decline in net income. While net income declined from the first quarter 2007, the company was able to produce continued profitability while increasing its marketing investment by an incremental $7.5 million year over year. Virgin Mobile USA's continued profitability reflects the growth of its customer base, and the company expects to produce growth in profitability for the full year 2008. "We executed against our business plan in the first quarter, delivering a strong start to the year," Dan Schulman, chief executive officer, Virgin Mobile USA, said. "While the current economic environment presents challenges, our business performed above our expectations, producing strong profitability and cash flow, even as we increased our marketing spend by $7.5 million year over year, to support the launch of our new voice and data plans. "We believe our new service plans, which will be in all of our channels by the end of the second quarter, represent some of the best value available to wireless consumers," Mr. Schulman added. "These offers provide compelling value and present a clear choice for consumers. Early indications are positive, with our monthly plans representing 38% of gross additions for the new offers in April, and average ARPU on the new monthly plans of approximately $40." "I'm also pleased we will be substantially increasing our retail footprint with both new and existing retail partners in the months ahead," Mr. Schulman continued. "These include increased expansion into independent wireless retail through American Wireless stores, our planned launch into over 900 new Sears locations, and increased penetration and retail space with our largest retail partner." "We believe this expansion, in combination with the launch of our new offers, represents a strong incremental growth opportunity for Virgin Mobile USA in the second half of the year, and we remain confident in our estimates for the full year 2008," Mr. Schulman concluded. Free cash flow for the quarter totaled $10.4 million, a decline from $14.3 million from the first quarter of 2007. The decline in free cash flow in the first quarter 2008 was caused by lower top up streams associated with a decline in consumer spending within the current economic environment, which was in line with company expectations for the quarter. Capital expenditures for the first quarter of 2008 were $6.2 million, compared to $5.3 million for the first quarter of 2007, reflecting continuing investment, although at a lower level than the competition. Interest expense for the first quarter was $9.3 million, down from $13.6 million in the first quarter of 2007. "Our business performed well in the first quarter 2008, and we continue to generate strong cash flow to service our debt and fund the growth of our business, John Feehan, chief financial officer of Virgin Mobile USA commented. "We believe there is a great deal of opportunity for growth in the second half of the year." As of March 31, 2008, the company had over 5.1 million customers, an increase of 4.5% over March 31, 2007. Average revenue per user, or ARPU, for the first quarter was $19.93, reflecting a decline from the prior year's first quarter ARPU of $22.41, well as a stabilization of declining usage trends in the prepaid base experienced during the fourth quarter 2007. This decline was the result of lower customer usage of the traditional prepaid plans, which the company attributes in part to a migration of its higher-spending prepaid customers to monthly hybrid offers. ARPU continues to be supported by sales of Virgin Mobile USA's monthly hybrid plans, which offset declining usage on the traditional prepaid side within a challenging economic environment. About Virgin Mobile USA Inc. Headquartered in Warren, New Jersey, Virgin Mobile USA Inc. (NYSE: VM) -- http://www.virginmobileusa.com/-- is a provider of wireless, pay-as-you-go communications services without annual contracts. Voice pricing plans range from monthly options with unlimited nights and weekends to by-the-minute offers, allowing consumers to adjust how and what they pay according to their needs. Virgin Mobiles full slate of handsets, including the Wild Card, Super Slice and Cyclops, are available at top retailers in more than 35,000 locations nationwide and online, with Top-Up cards available at more than 130,000 locations. VITAMIN SHOPPE: Moody's Holds B3 Rating; Changes Outlook to Pos. ---------------------------------------------------------------- Moody's Investors Service changed the ratings outlook of Vitamin Shoppe Industries, Inc. to positive from stable and affirmed the existing ratings (corporate family rating at B3). The change in outlook to positive reflects the company's continued solid sales growth (both from comparable store sales growth and new store earnings) which has produced earnings growth and improvement in the company's credit metrics. The B3 corporate family rating continues to reflect Vitamin Shoppe's weak credit metrics, aggressive financial policies, and small scale. The rating category also incorporates that the company's competitive position as the number three stand alone vitamin, mineral and nutritional supplement retailer and that the company's profitability lags the average for its industry peer group. The rating also incorporates the ongoing challenges in matching changing consumer preferences for non-core VMS products and the potentially adverse impact of the occasional product- safety issues associated with the vitamin, mineral, and nutritional supplement industry. The rating is supported by several positive qualitative elements of the company's franchise such as its established market niche as offering a wide and deep VMS selection, the relative lack of cash flow seasonality, and two years of solid comparable store sales growth. The positive outlook reflects Moody's expectation that the company's credit metrics are likely to modestly improve to levels supporting a higher rating category over the next twelve months as a result of continued sales growth. In addition the positive outlook reflects Moody's expectation that the company will maintain adequate liquidity and generate break even free cash flow. These ratings are affirmed: -- Corporate family rating at B3; -- Probability of default rating at B3; -- Senior secured notes at B3 (LGD3, 49%). Vitamin Shoppe Industries, Inc., headquartered in North Bergen, New Jersey, retails vitamins, minerals, and nutritional supplements through direct marketing (catalogue and internet) and 341 stores located in 31 states. The company is wholly owned by affiliates of Bear Stearns. Revenues for the fiscal year ended Dec. 29, 2007 were nearly $538 million. VOLUME SERVICES: Moody's Slashes CF Rating to Caa1 from B3 ---------------------------------------------------------- Moody's Investors Service downgraded Volume Services America, Inc.'s Corporate Family Rating to Caa1 from B3, senior secured credit facility rating to B3 from B2 and Probability of Default rating to Caa1 from B3. Concurrently, the company's Speculative Grade Liquidity rating was lowered to SGL-4 from SGL-3. The rating outlook is negative. The downgrade of the Corporate Family Rating to Caa1 reflects Moody's belief that on a run-rate basis that VSA's credit metrics and liquidity profile are more indicative of a Caa rating and will likely remain weak over the extended period as the company continues to face challenges in stabilizing its margin and improving its cash flow. Moody's expects that the unfavorable economic outlook such as slowdown in business activities at convention centers, the loss of company's largest client -- the Yankee Stadium, and ever-intensifying competition among concessionaire operators will continue to weigh on its operating performance and cash flow generation. In addition, VSA's already weak cash flow is further exacerbated by its significant upfront capital expenditure to maintain or acquire contract rights as well as the increasingly burdensome dividend and interest distribution under its Income Deposit Security. Therefore, Moody's estimates that the company's negative free cash flow will persist in the coming year even after taking into account the potential dividend suspension on IDS, and the borrowing under its revolving credit facility is likely to increase from its current level, which could result in weaker credit metrics more commensurate with a Caa rating category. "Despite the fact the VSA's revenues grew by almost 9% in 2007, its margin declined considerably during the same period as it has become more expensive and capital intensive to acquire new contracts or to renew existing contracts in part due to fierce competition and commodity cost inflation, among other factors," Commented Moody's analyst John Zhao. The downgrade of the liquidity rating to SGL-4 from SGL-3 reflects the company's weakening liquidity position, as Moody's anticipates that VSA's operating cash flow will likely not be sufficient to fund its working capital fluctuation, maintenance and growth capital expenditure and debt service requirement on its credit facilities as well as the IDS subordinated notes over the next twelve months. While the company has planned that it will cut back on dividend in the near term, Moody's expects that the negative free cash flow trend will more than offset any cash freed up from reduced dividend distribution. Therefore, VSA may need to increase drawing under its revolving credit facility to supplement the cash shortfalls. However, the company has limited cushion under its financial covenants. Moody's cautions that continued weak operating performance and aggressive borrowing under the revolver to fund IDS distribution will not only result in higher leverage, but could also jeopardize the company's relationship with its senior lenders. The company's ratings may therefore be further downgraded if the company has difficulty in obtaining bank waivers in the event that it trips its covenants. The negative outlook encompasses VSA's limited prospects in improving its performance and cash flow in light of the on-going operating challenges and a capital structure that is misaligned with the company's growth strategy. The outlook also reflects concern regarding the company's liquidity position. These ratings are affected: -- Corporate Family Rating -- downgraded to Caa1 from B3 -- Probability of default rating -- downgraded to Caa1 from B3 -- $215 million senior credit facilities -- downgrade to B3 (LGD3, 35%) from B2 (LGD3, 34%) -- Speculative grade liquidity rating -- downgraded to SGL-4 from SGL-3 Rating Outlook -- revised to Negative from Stable Moody's does not rate the subordinated notes due 2013 that were issued by Centerplate -VSA's parent company. Volume Services America, Inc. is the rated subsidiary of Centerplate, Inc. which operates concession, catering and merchandise services in sports facilities, convention centers and other entertainment facilities. Centerplate, the ultimate parent of Volume Services, Inc. and Service America Corporation, has its principal executive office in Stamford, Connecticut and a corporate office in Spartanburg, South Carolina. Through these subsidiaries, Centerplate generated revenues totaling approximately $741 million during fiscal 2007. WATERFORD GAMING: S&P Holds 'BB-' Rating; Revises Outlook to Neg. ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Waterford Gaming LLC to negative from stable. Ratings on the company, including the 'BB-' issuer credit rating, were affirmed. The outlook revision stems from a similar action on Mohegan Tribal Gaming Authority (MTGA; BB-/Negative/--). Waterford relies solely on distributions from MTGA, which are linked to gross revenues at Mohegan Sun to service its debt obligations; as a result, its default risk and, therefore, the issuer credit rating, are directly linked to the default risk and issuer rating of MTGA. The issuer rating on Waterford would never be higher than that on MTGA. "The 'BB-' rating reflects the reasonably stable revenue stream from the operations of the Mohegan Sun Casino, operated by MTGA," said Standard & Poor's credit analyst Melissa Long. "Partly offsetting this is Waterford Gaming's high debt level and its reliance on a single property for its cash flow." Waterford Gaming is a wholly owned subsidiary of Waterford Group LLC. Since Waterford Gaming is not a bankruptcy remote entity, the ratings for this company also take into consideration the credit quality of its parent. WCI COMMUNITIES: Posts $84 Million Net Loss in 2008 First Quarter ----------------------------------------------------------------- WCI Communities Inc. reported on Wednesday its results for the first quarter of 2008. For the three months ended March 31, 2008, the company reported a net loss of $84.1 million, compared with a net loss of $15.8 million in the first quarter of 2007. Revenues for the first quarter of 2008 were $137.1 million, compared with $338.2 million for the first quarter of 2007, a 59.5% decrease. The company disclosed that aggregate number of gross new Traditional and Tower Homebuilding orders increased by 6.0% to 335; however, the aggregate number of net new orders for the quarter declined 22.8% to 183, as contract cancellations and defaults at closing continued at higher than long-term historical rates. The aggregate value of the net new orders for the quarter fell 49.8% over the same period a year ago to $78.3 million. "We experienced a sequential lift in traffic and new orders during the first quarter in Florida reflecting seasonal patterns, but saw a dramatic drop in traffic and new orders in the Northeast and Mid-Atlantic", said Jerry Starkey, president and chief executive officer. "In Florida we wrote 97 new orders for Tower units compared to only 11 during the same quarter last year, but in most instances the prices were significantly discounted. Even with the sequential increase, Traditional Homebuilding gross and net orders in Florida were down 5.6% and 21.0% year-over-year. "Over ninety percent of our Florida Traditional Homebuilding new orders were spec sales, with very few purchasers paying the premium for 'to-be-built' homes", Starkey continued. "Beyond the seasonal lift in Florida, there are no signs that demand has firmed - many potential purchasers continue to sit on the sidelines afraid of falling prices and the direction of the economy. Our primary focus continues to be on reducing costs and generating cash to pay down debt." Traditional Homebuilding First quarter 2008 revenues for Traditional Homebuilding, including lot sales, fell 56.7% to $92.7 million from $214.2 million for the first quarter of 2007. The company closed 170 homes compared with 306 for the same period a year ago. Florida revenues totaled $73.9 million, or 79.7%, of total Traditional Homebuilding revenues during the first quarter of 2008 versus $137.3 million, or 64.1%, for the first quarter of 2007. Revenues from WCI's Northeast Division accounted for 13.0% of Traditional Homebuilding revenues during the first quarter of 2008 versus 27.7% during the same period a year ago and the company's Mid-Atlantic Division accounted for 7.7% and 8.2% for the first quarters of 2008 and 2007, respectively. Gross margin as a percentage of revenue for Traditional Homebuilding decreased to 0.4% for the first quarter of 2008 from 16.6% a year ago. The year-over-year decrease was due to lower margins achieved on the sale of finished spec inventory and also due to $6.9 million of impairment charges during the first quarter of 2008, which were primarily related to backlog orders that cancelled and as a result were marked down to the values of comparable units as they were returned to inventory. Excluding the impact of the impairment charge, the gross margin was 7.8%. Spec home closings accounted for 82.0% of the closings during the quarter and produced an average gross margin percentage of revenue of 4.7%. Traditional Homebuilding backlog at March 31, 2008, was $165.9 million, down 73.7% from $631.3 million at the end of the first quarter of 2007. The average projected gross margin in backlog at the end of the quarter was approximately 14.0%. Tower Homebuilding For the three months ended March 31, 2008, revenues in Tower Homebuilding decreased 95.6% to $3.3 million from $74.0 million for the same period a year ago. A total of 56 Tower units were closed during the quarter from our inventory of completed and unsold units representing $50.5 million of revenue. In addition, $4.4 million of revenue resulted from backlog units still under construction using the percentage of completion method, and $3.8 million resulted from retained deposits from defaults. Lastly, 52 units previously accounted for under the percentage of completion method defaulted during the period resulting in revenue reversals of $55.4 million which offset the revenue amounts discussed above. Only one tower was under construction and recognizing revenue during the first quarter of 2008 compared to 11 towers under construction and recognizing revenue during the first quarter of 2007. Tower Homebuilding gross margin as a percentage of revenue was negative for the quarter due to the impact of defaulted units, default reserve increases and other cost adjustments, compared to 1.1% for the three months ended March 31, 2007. Gross margin from spec closings during the quarter totaled $9.1 million, or 19.0%, which was offset by the impact of a reversal of $14.0 million of gross margin from defaulting units. Tower Homebuilding backlog at March 31, 2008 totaled $36.9 million, a 76.9% decrease from the $159.4 million backlog at March 31, 2007. Real Estate Services Revenues for the Real Estate Services Division for the first quarter of 2008 were $17.3 million, a 32.3% decrease from the $25.6 million recorded for the same period a year ago. The decline was primarily due to the continued slow market for new and resale homes during the quarter. Transactions for Prudential Florida WCI Realty declined 15.8% over the same period a year ago. Gross margin as a percentage of revenue for the period was 1.3% compared with 8.2% in the first quarter of 2007. Amenities Division Revenues for the Amenities Division for the first quarter 2008 were $22.6 million, which was equal to revenue for the same period a year ago. Gross margin as a percent of revenue increased to 12.4% for the first quarter of 2008 versus 5.3% in the first quarter of 2007. Other Income and Expense Other income and expense in the first quarter included a $9.5 million non-cash mark-to-market charge on the interest rate swap agreement that the company entered into in December 2005 to hedge against interest rate fluctuations on its senior variable rate bank debt. Selling, general, and administrative expenses including real estate taxes declined $7.4 million to $39.5 million for the first quarter, versus $46.9 million a year ago, due to cost reductions in salaries and benefits, as well as reductions in sales and marketing expenses. As a percentage of revenue, SG&A increased to 28.8%, up from 13.9% in the first quarter of the previous year largely due to lower revenues including the impact of revenue reversals from the 52 tower unit defaults discussed above, which lowered overall revenue by $55.4 million. Net interest expense of $30.5 million for the quarter was $14.1 million or 86.4% higher than the first quarter of 2007 primarily due to less interest capitalized as fewer projects are under development. Income tax expense was $200,000 for the first quarter of 2008 compared to a benefit of $10.5 million for the same period last year. The income tax benefit generated through the company's operating loss in the first quarter of 2008 would have been approximately $26.0 million; however, pursuant to FAS 109, the company was required to fully reserve against this benefit as all recognizable tax benefit under current tax law was recorded at Dec. 31, 2007. Cash Flow/Financial Position/Balance Sheet For the three months ended March 31, 2008, net cash generated from operating and investing activities totaled $66.4 million compared with $94.6 million in the same period a year ago. The company amended its senior secured tower construction facility (the "Tower Loan") on March 17, 2008. The amendments provide for consistencies with the governing provisions of, as well as cross collateralization on a subordinate basis with the Term Loan and Revolving Credit Facility. In addition, the amendment also restricts the company from requesting future advances from the Tower Loan, which is consistent with the company's de-leveraging strategy and the upcoming maturity of the facility in December 2008. The ratio of net debt to net capitalization increased to 83.3% compared with 65.5% at March 31, 2007, and increased from 80.5% at Dec. 31, 2007. As of March 31, 2008, excluding $53.4 million in letters of credit, the company had approximately $192.4 million available commitments under its senior secured credit facility which was further limited by borrowing base availability which was an estimated $115.0 million at March 31, 2008, plus $48.5 million of cash and cash equivalents. At March 31, 2008, the company's consolidated balance sheet showed $2.6 billion in total assets, $2.2 billion in total liabilities, $28.2 million in minority interests, and $336.6 million in total stockholders' equity. 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?2bbd Going Concern Disclaimer Ernst & Young LLP, in Miami, expressed substantial doubt about WCI Communities Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. Holders of the company's $125.0 million, 4.0% Contingent Convertible Senior Subordinated Notes due 2023 have an option of requiring the company to repurchase the convertible notes at a price of 100.0% of the principal amount on Aug. 5, 2008. Pursuant to certain amendments in the company's revolving credit facility and Senior Term Loan Agreement, the company will need to have sufficient liquidity after giving effect to, on a pro forma basis, the repurchase of the convertible notes. The company does not anticipate having sufficient liquidity to satisfy bank covenant liquidity tests. If the company is unable to obtain an amendment or waiver, issue exchange securities, or otherwise satisfy its obligations to repurchase the convertible otes, the convertible note holders would have the right to exercise remedies specified in the Indenture, including accelerating the maturity of the convertible notes, which would result in the acceleration of substantially all of the company's other outstanding indebtedness. In addition, if the company is determined to be in default on the convertible notes, it may be prohibited from drawing additional funds under the revolving credit facility, which could impair its ability to maintain sufficient working capital. About WCI Communities WCI Communities Inc. (NYSE: WCI) -- http://www.wcicommunities.com/ -- named America's Best Builder in 2004 by the National Association of Home Builders and Builder Magazine, has been creating amenity-rich, master-planned lifestyle communities since 1946. Florida-based WCI caters to primary, retirement, and second-home buyers in Florida, New York, New Jersey, Connecticut, Maryland and Virginia. The company offers traditional and tower home choices with prices from the high-$100,000s to more than $10.0 million and features a wide array of recreational amenities in its communities. In addition to homebuilding, WCI generates revenues from its Prudential Florida WCI Realty Division, and title businesses, and its recreational amenities, as well as through land sales and joint ventures. The company currently owns and controls developable land on which the company plans to build over 15,000 traditional and tower homes. The company operates in three principal business segments: Tower Homebuilding, Traditional Homebuilding, which includes sales of lots, and Real Estate Services, which includes real estate brokerage and title operations. * * * WCI Communities Inc. still carries Moody's Caa2 corporate family and Caa3 senior subordinate ratings. Outlook is negative. WELLMAN INC: Says CRO Necessary to Avoid DIP Facility Default ------------------------------------------------------------- Wellman Inc. and its debtor-affiliates slam the objection of the Official Committee of Unsecured Creditors to the proposed employment of Conway, Del Genio, Gries & Co., LLC, as chief restructuring officer, saying that it is required by the $225 million DIP facility. "If the [Debtors] fail to do so, [they] will be in default under the DIP facility, and their ability to continue operating their business in chapter 11 will be jeopardized," says Jonathan Henes, Esq., at Kirkland & Ellis LLP, in New York. As reported in the Troubled Company Reporter on April 28, 2008, the Debtors' Official Committee of Unsecured Creditors told the U.S. Bankruptcy Court for the Southern District of New York that the Debtors do not need a chief restructuring officer since they already have a sufficient management team, two large firms and a major investment bank, to help them operate their business, run their bankruptcy cases, and sell assets. The TCR previously reported that the the Debtors sought authority from the Court to employ Conway, Del Genio, Gries & Co., LLC, to provide restructuring management services. The Debtors stated it selected CDG because of its long-standing reputation in assisting companies through complex financial restructuring, including Chapter 11 cases. Since CDG was founded, it has advised on over 90 restructuring and interim management transactions. The panel says that retaining a chief restructuring officer at the cost of $125,000 a month, where administrative insolvency is a distinct possibility makes little sense. Mr. Henes says that the employment of Conway may impose additional costs on the Debtors' estates, however, the benefits of having a seasoned CRO in-house outweighs the costs. "The terms of Conway's engagement are designed to ensure that the benefits outweigh the costs. The Debtors have engaged only a few of Conway's professionals, it is being paid a fixed monthly fee rather than charging hourly rates, and there is no success fee component of its engagement," Mr. Henes points out. With regards to the Creditors Committee's assertion that Conway's services will not benefit all creditors, and will duplicate the efforts of other professionals retained by the Debtors, Mr. Henes assures the Court that they are monitoring the services provided by the various professionals to avoid duplication. About Wellman Headquartered in Fort Mill, South Carolina, Wellman Inc. -- http://www.wellmaninc.com/-- manufactures and markets packaging and engineering resins used in food and beverage packaging, apparel, home furnishings and automobiles. They manufacture resins and polyester staple fiber a three major production facilities. The company and its debtor-affiliates filed for Chapter 11 protection on Feb. 22, 2008 (Bankr. S.D. N.Y. Case No. 08-10595). Jonathan S. Henes, Esq., at Kirkland & Ellis, LLP, in New York City, represents the Debtors. Wellman Inc., in its bankruptcy petition, listed total assets of $124,277,177 and total liabilities of $600,084,885, as of Dec. 31, 2007, on a stand-alone basis. Debtor-affiliate ALG, Inc., listed assets between $500 million and $1 billion on a stand-alone basis at the time of the bankruptcy filing. Debtor-affiliates Fiber Industries Inc., Prince Inc., and Wellman of Mississippi Inc., listed assets between $100 million and $500 million at the time of their bankruptcy filings. On a consolidated basis, Wellman Inc., and its debtor-affiliates listed $498,867,323 in assets and $684,221,655 in liabilities as of Jan. 31, 2008. (Wellman Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) WORLD HEART: Could Default on $5 Mil. Convertible Promissory Note ----------------------------------------------------------------- On May 2, 2008, World Heart Corp. learned that its potential primary investor may not be able to give assurance of commitment to allow the company to access capital to meet current financing needs. This information resulted in the company making the determination that its available cash would be insufficient to pay the company's obligations as they become due, which constitutes an event of default under the company's secured convertible promissory note in the amount of $5.0 million issued on Dec. 11, 2007 to Abiomed, Inc. Since January 2008, World Heart has aggressively pursued various financing alternatives to raise additional capital, including through equity financing transactions and corporate collaborations, in order to continue operations. At April 30, 2008, the company had cash and cash equivalents of approximately $500,000, and current liabilities of approximately $2.6 million. This event of default under the note results in the outstanding principal balance of the note, together with accrued but unpaid interest and any other amounts owing under the Abiomed note documents, becoming immediately due and payable to Abiomed. The note is secured by security agreements entered into by the company and the company's wholly owned subsidiary, World Heart, Inc., in favor of Abiomed, that grant a security interest in all of their respective assets. Abiomed could exercise its remedies under law and under the security agreements, including foreclosing on the assets of the company and WHI. An event of default also permits Abiomed to terminate the clinical and marketing support services agreement. The company has an immediate need for additional capital in order to satisfy its obligations and to continue operations. The company continues to aggressively pursue various financing alternatives but its efforts to raise additional capital have not been successful as of the date of this report. The company estimates that it has cash available to continue operations only through the latter part of May 2008. If the company is unable to secure additional funding, it will be forced to take extraordinary business measures which could include filing for bankruptcy, ceasing operations and liquidating assets. Board Director Majteles Resigns On May 5, 2008, the company was informed by Robert J. Majteles that he is resigning from the Board of Directors and all of the committees of the Board, effective immediately. The company intends to reconstitute all of the committees of the Board, such that Mr. William C. Garriock, Dr. Michael Estes and Mr. Gary Goertz, the three remaining independent directors, will be members of each of the committees. Annual Shareholders' Meeting Results On April 29, 2008, the company held its Annual Meeting of Shareholders where proposals for shareholders' vote were presented for these purposes: (1) to receive and to consider the company's audited consolidated financial statements for the year ended Dec. 31, 2007, that have been prepared in accordance with generally accepted accounting principles in the United States, together with the report of the auditors thereon; (2) to elect directors to serve until the next annual meeting of the shareholders or until their successors are elected or appointed, unless the office is vacated earlier; (3) to appoint Burr, Pilger & Mayer LLP as independent auditors of the company and to authorize the directors to fix their remuneration; and (4) to approve conversion of the secured promissory note in the principal amount of up to $5,000,000, previously issued to Abiomed convertible at Abiomed's option into the company's common shares at $1.748948 per share, subject to adjustments, including any conversion of interest owed, and approval of the exercise of a five year warrant to purchase up to 3,400,000 common shares of the company, exercisable at $0.01 per share, issued to Abiomed in connection with the secured promissory note. The election of directors, the appointment of the auditors and the conversion of the note and exercise of the warrant issued to Abiomed were carried by a majority of the votes at the meeting in person or by proxy. About World Heart Headquartered in Oakland, California, World Heart Corporation (NASDAQ: WHRT, TSX: WHT) -- http://www.worldheart.com/ -- develops mechanical circulatory support systems with broad-based next-generation technologies. The company has additional facilities in Salt Lake City, Utah and Herkenbosch, Netherlands. Going Concern As reported in the Troubled Company Reporter on April 5, 2007, PricewaterhouseCoopers LLP expressed substantial doubt about World Heart Corporation's ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2006, and 2005. The auditing firm pointed to the company's recurring losses for the years ended Dec. 31, 2006, and 2005. XL CAPITAL: Earns $211.9 Million in 2008 First Quarter ------------------------------------------------------ XL Capital Ltd. reported net income available to ordinary shareholders for the quarter ended March 31, 2008, of $211.9 million, compared with $549.7 million for the quarter ended March 31, 2007. The reduction in net income of $337.8 million is due primarily to: -- a decrease in net income from investment affiliates of $107.1 million -- net realized losses on investments of $102.3 million, as compared to a gain of $9.3 million in the prior year quarter -- a decrease in underwriting profit from Property and Casualty operations of $52.4 million -- an increase in foreign exchange losses of $44.2 million -- a decrease in net income from financial operating affiliates of $39.6 million Net income excluding net realized gains and losses for the first quarter of 2008 was $276.9 million for the prior year quarter. Annualized return on ordinary shareholders' equity was 9.9% and 22.7% for the three months ended March 31, 2008, and 2007, respectively. Return on ordinary shareholders' equity, based on net income excluding net realized gains and losses was 12.9% and 22.3% for the three months ended March 31, 2008, and 2007, respectively. Commenting on the current quarter results, president, chief executive officer and acting chairman Brian M. O'Hara said: "Although XL is steadily navigating through some extremely difficult global credit market conditions, which is reflected in our lower investment performance relative to the outstanding results in the prior year quarter, we have still achieved another solid performance from our Insurance, Reinsurance, and Life operations." Total operating expenses were $263.8 million for the first quarter 2008, a decrease from $280.5 million in the prior year quarter. The decrease is primarily due to the inclusion of $24.1 million of operating expenses of SCA in the prior year quarter. Segment Highlights A) Insurance Underwriting profit for the quarter ended March 31, 2008, was $40.7 million compared with $116.8 million in the prior year quarter. Included in the current quarter's underwriting results is net favorable prior year development of $17.3 million, as compared with $20.2 million in the prior year quarter. Gross premiums written increased 3.1% primarily due to higher levels of long-term agreements, positive foreign exchange movements, favorable customer retention, and selective writing of new business. These increases have been partially offset by the decline in premium rates across most lines and lower premiums from the run off of ICAT. Net premiums earned decreased 4.1% mainly as a result of an increase in ceded premiums of $41.0 million related to the purchase of an adverse development cover related to the company's Lloyd's operations. The combined ratio was 96.7% compared with 89.2% for the prior year quarter. The loss ratio excluding the impact of net prior year development for the current and prior year quarter was 69.6% and 63.5%, respectively. The increase in the loss ratio reflects an increase in property risk and catastrophe losses in the current quarter relative to the prior year quarter, as well as the effect of the decline in premium rates. B) Reinsurance Underwriting profit for the quarter ended March 31, 2008, was $67.4 million compared with $43.6 million for the prior year quarter. Included in the current quarter's underwriting results is net favorable prior year development of $49.7 million, as compared with $44.5 million in the prior year quarter. Gross premiums written decreased by 22.0% due principally to selective treaty cancellations and competitive market conditions. Favorable foreign exchange movements offset the impact of timing differences on certain large contracts. Net premiums earned decreased marginally by 0.4% primarily due to lower net premiums written in previous quarters that have been partially offset by the earned impact of the decrease in the cession rate to Cyrus Re. The combined ratio was 87.8% compared with 92.0% in the prior year quarter. The loss ratio excluding the impact of net prior year development for the current and prior year quarter was 67.2% and 71.9%, respectively. The decrease in the loss ratio is due mainly to a lower level of property catastrophe losses in the current quarter relative to the prior year quarter that included Windstorm Kyrill. C) Life Operations Gross premiums written were $235.0 million compared with $213.3 million in the prior year quarter. The contribution to earnings from life operations was $27.4 million as compared with $23.1 million in the first quarter last year, due mainly to business growth, higher net investment income and favorable foreign exchange movements. D) Investment Operations Net investment income from P&C operations, excluding investment income from Structured Products, decreased 2.0% from the prior year period to $308.0 million primarily due to lower investment yields. Net income from investment affiliates was $11.8 million in the first quarter of 2008 compared with $118.9 million in the first quarter of 2007. Net income from investment manager affiliates was $12.9 million as compared with $37.4 million for the prior year period. Net realized losses on investments were $102.3 million in the current quarter. This includes charges of $114.8 million for "other than temporary impairments." Net unrealized losses on investments, net of tax, were $1.4 billion at March 31, 2008, compared with net unrealized losses, net of tax of $332.5 million at Dec. 31, 2007. The increase in net unrealized losses of $1.1 billion for the quarter was substantially due to continuing widening credit spreads on corporate and structured credit investments, and unfavorable foreign exchange rate movements, partially offset by declines in interest rates. Total investments available for sale decreased from $36.3 billion at Dec. 31, 2007, to $32.2 billion at March 31, 2008, due mainly to asset sales to fund the redemption of the company's muni-GIC liabilities. Operating Expenses Total operating expenses were $263.8 million for the first quarter 2008, a decrease from $280.5 million in the prior year quarter. The decrease is primarily due to the inclusion of $24.1 million of operating expenses of SCA in the prior year quarter. Exchange Losses The quarter ended March 31, 2008, includes a foreign exchange loss of $67.7 million as compared with a loss of $23.6 million in the prior year quarter. The current quarter loss is primarily driven by the significant decline of the U.S. Dollar against most European currencies. The overall impact of foreign exchange movement has been accretive to shareholders' equity, as the foreign exchange loss in the current quarter was more than offset by currency translation gains. Other Items The quarter ended March 31, 2007, included $23.5 million of net income from SCA as a consolidated subsidiary and $11.1 million of income from XL's share of earnings from Primus Guaranty Ltd ("Primus"). The current quarter includes a charge of $4.8 million related to the unwinding of the discounted loss reserves ceded by SCA and no equity earnings from SCA or Primus. Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed $54.8 billion in total assets, $45.5 million in total liabilities, $1.6 million in minority interest in equity of consolidated subsidiaries, and $9.3 million in total shareholders' equity. 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?2bbe About XL Capital Headquartered in Bermuda, XL Capital Ltd (NYSE: XL) -- http://www.xlcapital.com/-- through its operating subsidiaries, is a leading provider of global insurance and reinsurance coverages to industrial, commercial and professional service firms, insurance companies and other enterprises on a worldwide basis. * * * As reported in the Troubled Company Reporter on April 3, 2008, Last week, Fitch downgraded XLCA's Insurer Financial strength rating to 'BB' and removed the IFS from Rating Watch Negative. * S&P Says Telecom Competition Pressures Industry Players --------------------------------------------------------- The days of neat divisions in telephone and cable service are over. Customers now get television from a telephone company, phone service from a cable operator, and broadband Internet connections from both. While this competition may be good for subscribers in most respects, it's creating challenges across all U.S. telecom sectors, according to a report released by Standard & Poor's Ratings Services. The report, "Issuer Ranking: Competition Is Heating Up Across U.S. Telecom Sectors," shows that the fierce battle between telecommunications and cable companies for the residential customer is well underway as Verizon Communications Inc. and AT&T Inc.'s growing video subscriber counts demonstrate. Most major cable operators continue to report a flat to modestly eroding video customer base. The trends Standard & Poor's see emerging portend generally good prospects for wireless companies for the rest of 2008. "We note that the recent two-notch downgrade of Sprint Nextel Corp. did not connote weak wireless industry conditions, rather it reflected post-merger operational problems pertaining only to that company," said Standard & Poor's credit analyst Richard Siderman. "In contrast to the favorable outlook for the overall wireless industry, we see a rougher road for the pure-play wireline carriers." Cable television, too, is clearly feeling the impact of competition from satellite and, increasingly, telephone companies, and a mature pay-TV base. Although rating and outlook actions since year-end 2007 were mixed overall, with roughly equal amounts of negative and positive rating actions, they belie the underlying reality that heightened competition, particularly resulting from alternative technologies, means that no player in any telecommunications or cable sector is guaranteed long-term business stability. * S&P Lowers Ratings on 251 Classes of US RMBS from 89 Transaction ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 251 classes of U.S. residential mortgage-backed securities from 89 transactions backed by prime jumbo loan collateral issued in 2005. S&P removed 79 of the lowered ratings from CreditWatch with negative implications. In addition, S&P placed two ratings on CreditWatch negative. Finally, S&P affirmed its ratings on two classes and removed them from CreditWatch negative and affirmed its ratings on 3,719 other outstanding U.S. prime jumbo RMBS classes issued in 2005. All of the ratings that were removed from CreditWatch were placed on CreditWatch on March 17, 2008. The classes affected by the negative rating actions represent an issuance amount of approximately $860.755 million, or about 0.480% of the par amount of U.S. RMBS transactions backed by prime jumbo mortgage loans rated by Standard & Poor's in 2005. Standard & Poor's is currently reviewing its rated collateralized debt obligation transactions, asset-backed commercial paper conduits, and structured investment vehicle and SIV-lite structures with exposure to these U.S. prime jumbo RMBS classes to determine whether any ratings are adversely affected by these rating actions. 2005 Prime Jumbo Rating Actions The downgrades and CreditWatch placements reflect S&P's opinion that projected credit support for the affected classes is insufficient to maintain the ratings at their previous levels, given its current projected losses. Loss Assumptions S&P are currently projecting lifetime losses of approximately 0.29%-0.34% of the original principal balance for the 2005-vintage U.S. prime jumbo mortgages collateralizing Standard & Poor's rated securities. S&P calculated individual transaction projections by multiplying the current foreclosure amount by the rate of change that the foreclosure curve forecasted for the upcoming periods. Due to current market conditions, S&P are assuming that it will take approximately 18 months to liquidate loans in foreclosure and approximately eight months to liquidate loans categorized as real estate owned. S&P are assuming a loss severity of 23% for these U.S. prime jumbo RMBS transactions. Finally, S&P assumed that the loans that are currently REO would be liquidated in equal amounts over the first eight periods and then added that amount to the projected loss from foreclosures. S&P used the 1999 prime jumbo vintage as our benchmark default curve to forecast foreclosures the 2005 vintage. The 1999 vintage experienced the most stress of any issuance year over the past 10 years (excluding years since 2005) in terms of foreclosures. S&P expect the losses for the 2005 vintage to significantly exceed those experienced for the 1999 vintage; however, in S&P's opinion, the timing of the losses, and therefore the shape of the loss curve, is more likely to be similar to that of 1999 than to any subsequent issuance year. The lowered ratings reflect S&P's assessment of the creditworthiness of each class and its ability to withstand additional credit deterioration. In order to maintain a rating higher than 'B', a class had to absorb losses in excess of the base case assumption S&P used in its analysis. For example, one prime jumbo class may have to withstand 150% of our projected loss assumption in order to maintain a 'BB' rating, while a different class may have to withstand losses of approximately 200% of its base case loss assumption to maintain a 'BBB' rating. Each class that has an affirmed 'AAA' rating can generally withstand approximately 350% of our projected loss assumptions under S&P's analysis. The rating actions announced resolve all of the CreditWatch placements taken March 17, 2008, on the 2005 U.S. prime jumbo RMBS vintage. The CreditWatch placements affect two 'AAA' rated certificates. Standard & Poor's will assess whether further rating actions are warranted by considering available credit enhancement for the certificates relative to the projected losses during the timeframe S&P expect the certificates to be outstanding. Factors Driving U.S. RMBS Rating Actions Monthly performance data reveals that delinquencies and foreclosures continue to increase for the 2005 vintage. As of the April 25, 2008, distribution date, serious delinquencies (90-plus days, foreclosures, and REOs) on all U.S. prime jumbo RMBS transactions issued during 2005 were 1.49%, up 53.61% since December 2007. During the same period, cumulative realized losses had increased to 0.04% from 0.02%. In reviewing the 2005 prime jumbo RMBS transactions, we employed the surveillance assumptions announced on Jan. 15, 2008, which are described in "U.S. RMBS Surveillance, CDO Of ABS Assumptions Revised Amid Defaults, Negative Housing Outlook." S&P believe that the application of expected lifetime losses has become appropriate as the depth and duration of the housing downturn continue to increase. S&P lowered its ratings on those classes with expected lifetime losses that exceeded the credit enhancement available to 'CCC'. In addition, S&P lowered its ratings on many of the 2005-vintage certificates that were previously rated 'B' and 'CCC' and its ratings on various pools with high levels of severely delinquent loans to 'CC', as its analysis revealed that these classes have a greater likelihood of default in the near future. The extent to which S&P adjusted the ratings was based on its view of each class' ability to withstand losses in excess of our projections. Table 1 details the classes with ratings lowered and ratings placed on CreditWatch negative as a percentage of the original balance of the total issuance amount affected ($860.755 million). Table 1 2005-Vintage U.S. Prime Jumbo RMBS Total actions (%) by original balance Rating Downgrades CreditWatch negative ------ ---------- ------------------- AAA 0.00 5.02 AA+ 0.74 0.00 AA 15.25 0.00 AA- 0.25 0.00 A+ 0.66 0.00 A 16.29 0.00 A- 0.42 0.00 BBB+ 0.65 0.00 BBB 14.00 0.00 BBB- 2.67 0.00 BB+ 0.00 0.00 BB 17.69 0.00 BB- 0.08 0.00 B+ 0.08 0.00 B 24.66 0.00 B- 0.71 0.00 CCC 0.81 0.00 Total 94.98 5.02 Table 2 details the classes with ratings lowered and ratings placed on CreditWatch negative as a percentage of the total number of classes with ratings lowered or placed on CreditWatch. Table 2 2005-Vintage U.S. Prime Jumbo RMBS Total actions (%) by original balance Rating Downgrades CreditWatch negative ------ ---------- -------------------- AAA 0.00 0.79 AA+ 0.40 0.00 AA 5.14 0.00 AA- 0.40 0.00 A+ 0.40 0.00 A 10.28 0.00 A- 0.79 0.00 BBB+ 0.79 0.00 BBB 13.44 0.00 BBB- 6.32 0.00 BB+ 0.00 0.00 BB 20.55 0.00 BB- 0.40 0.00 B+ 0.40 0.00 B 37.15 0.00 B- 1.58 0.00 CCC 1.19 0.00 Total 99.21 0.79 S&P will continue to evaluate individual transactions against its loss expectations and make individual adjustments when warranted. S&P will continue to monitor changes in the market and economic conditions and incorporate them into its assumptions as warranted. S&P plan to review the 2007 prime jumbo vintage next and expect to announce the results of our analysis within the coming weeks. * S&P Downgrades Ratings on 17 Tranches from Three US CDOs ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 17 tranches from three U.S. cash flow collateralized debt obligation of asset-backed securities transactions and removed them from CreditWatch with negative implications. The three CDO transactions have significant exposure to U.S. Alternative-A residential mortgage-backed securities collateral that was downgraded on April 29, 2008. The downgraded CDO tranches have a total issuance amount of $1.443 billion. All of the affected transactions are mezzanine structured finance CDOs of ABS, which are collateralized in large part by mezzanine tranches of RMBS and other SF securities. The affected CDO transactions were all issued in 2006 or 2007. To date, including the CDO tranches listed below and including actions on both publicly and confidentially rated tranches, S&P have lowered its ratings on 3,370 tranches from 789 U.S. cash flow, hybrid, and synthetic CDO transactions as a result of stress in the U.S. residential mortgage market and credit deterioration of U.S. RMBS. In addition, 576 ratings from 158 transactions are currently on CreditWatch negative for the same reasons. In all, S&P have downgraded $352.150 billion of CDO issuance. Additionally, S&P's ratings on $12.101 billion in securities have not been lowered but are currently on CreditWatch negative, indicating a high likelihood of downgrades. Rating Actions Rating ------ Transaction Class To From ----------- ----- -- ---- Sharps CDO I Ltd. A-1 A+ AA+/Watch Neg Sharps CDO I Ltd. A-2 A+ AA+/Watch Neg Sharps CDO I Ltd. B CC A+/Watch Neg Sharps CDO I Ltd. C CC BBB-/Watch Neg Sharps CDO I Ltd. D CC CCC+/Watch Neg Sorin CDO V Ltd. A1J CCC+ A-/Watch Neg Sorin CDO V Ltd. A1S BB AA-/Watch Neg Sorin CDO V Ltd. A2 CC BBB-/Watch Neg Sorin CDO V Ltd. A3 CC BB+/Watch Neg Sorin CDO V Ltd. B CC BB/Watch Neg Sorin CDO V Ltd. C CC B/Watch Neg Sorin CDO VI Ltd. A-1LA BB- A+/Watch Neg Sorin CDO VI Ltd. A-1LB B- A-/Watch Neg Sorin CDO VI Ltd. A-2L CCC BBB/Watch Neg Sorin CDO VI Ltd. A-3L CC BBB-/Watch Neg Sorin CDO VI Ltd. B-1L CC BB/Watch Neg Sorin CDO VI Ltd. B-2L CC B+/Watch Neg Other Outstanding Rating Transaction Class Rating ----------- ----- ------ Sharps CDO I Ltd E CC * S&P Says US Finance Cos. Are Taking Bold Steps to Secure Funding ------------------------------------------------------------------ Many U.S. finance companies are taking bold steps to secure funding and liquidity for at least the next 12 months in hopes that by next year credit markets will have returned to some degree of normalcy, said a report released by Standard & Poor's Ratings Services titled, "AFSA Special Edition: U.S. Finance Companies Hunker in Their Bunkers." U.S. finance companies continue to shore up their capital bases, even though spreads have widened considerably. At this point, companies are showing a willingness to do whatever it takes to ensure their solvency and reduce the pressures of margin calls. On the bright side, the ability to tap equity markets is a positive in the current operating environment, since it says a lot about the market's confidence in a company's longer term prospects. U.S. finance companies will long remember first-quarter 2008 as one of the more difficult they have faced. Companies with diversified income streams, sound balance sheets, and good financial flexibility are best positioned to meet the challenges the remainder of 2008 will likely bring. "For now, many rated finance companies are choosing to hunker in their bunkers until this storm passes and wait for brighter days ahead," said Standard & Poor's credit analyst Ernest D. Napier. * S&P Says US Banks to Face Leveraged Loan Market Losses -------------------------------------------------------- After weathering the fallout in subprime securities, the leveraged loan market, and collateralized mortgage obligations, U.S. banks are facing related loan losses in the coming months that will likely weigh heavily on the sector. In his opening remarks at Standard & Poor's Ratings Services' Bank Sector Hot Topics Seminar in New York City on May 6, Rodrigo Quintanilla, managing director in the financial services banking group, noted that the sector is entering a new credit cycle phase, but doing so from a position of strength. "Clearly, we now expect a harder landing than we did before," he said, and conditions will shift away from markdowns in the securities portfolios to a more familiar credit cycle where loan losses start rising, he said. Despite a more negative outlook and greater risk to earnings, Standard & Poor's doesn't expect massive downgrades. "That is not to say that our rated banks will sail through fine," he added, "but it is comforting to know that rating changes or outlook revisions will continue to be selective." Tanya Azarchs, a managing director, commented on just how problematic the loan losses, particularly in the consumer and construction sector, will likely become for banks as they build reserves this year. Losses in the loan accrual book, she said, "promise to be as severe as what happened with the collateralized debt obligations, securities, and mark-to-market issues, but they'll play out over a longer period of time and give banks the ability to recapitalize and rebuild with the revenue base that they have." That severity will be one for the record books. During the next four quarters, Standard & Poor's believes charge-off rates for residential mortgages and second-lien home equity loans will rise above historical peaks for FDIC-insured banks, to a 0.75% and 5.00% annual rate, respectively, as house prices continue to decline in a base-case stress scenario. Construction real estate loans are also deteriorating very rapidly, but won't likely climb above historical norms of 4%. Despite these increased losses, rated U.S. banks and thrifts are well capitalized, having raised $58 billion since the end of 2007. The additional $34 billion that they will likely need to cover losses during a two-year period in a worst-case scenario and to remain within a regulatory comfort zone is "not a huge hurdle for banks to overcome," Ms. Azarchs added. Banks' capital ratios deteriorated somewhat between 2005 and mid- 2007 as a result of dividends and share repurchases, asset growth, and acquisitions. Since then, banks have made a rapid about face, seeking to bolster their capital by cutting dividends and curtailing share repurchases. Most dramatically, financial institutions have also raised $160 billion-$170 billion in new capital since mid-2007 by issuing common stock and hybrid capital, largely offsetting their incurred losses. But raising capital in this way does not mean all has been neutral from a credit perspective, said Scott Sprinzen, a managing director. For instance, shareholder dilution from common stock issuance could eventually be reversed through share repurchases. And hybrid capital, which has both equity and debt components, typically has dividend or interest payments that act like fixed charges, because banks are very reluctant--in light of market expectations--to defer them. Although banks face sizable credit risk from residential mortgages and home equity loans, asset class is just one of several factors in Standard & Poor's analysis. Banks' exposure to troubled housing regions such as California and Florida is as much if not more of a concern. "Geography is what really matters, more so than loan-to-value ratios, more so than FICO scores," said credit analyst Victoria Wagner, who spoke about the consumer finance sector. "The velocity of [first-lien and second-lien mortgage] losses has really picked up, and we expect this trend to continue through 2008 and into 2009," she added. Other key factors that could affect sector profitability include heightened regulatory oversight of credit card lending practices; and the surfacing of additional credit-related expenses as government-sponsored enterprises become more aggressive, pushing back loans to their major lenders due to breaches of representation and warranty language in the mortgage document. Standard & Poor's doesn't expect significant credit deterioration within commercial real estate loan portfolios among regional banks. However, construction loans are showing the fastest credit deterioration, albeit off a low base, most notably among lenders to homebuilders in California, Florida, Nevada, and Arizona. "We don't expect significant rating changes for lenders with the highest CRE exposures, but certain issuers could see negative action," said credit analyst Robert Hansen. In addition, most CRE banks remain profitable in terms of pretax margin, said credit analyst Catherine Mattson. Several large CRE banks are also cutting dividends, issuing stock, and suspending share buybacks to preserve their capital ratios, which will help support the ratings. Furthermore, lending standards are more conservative than during the last downturn, and lower loan-to- value ratios should help mitigate potential losses for CRE lenders. CRE is holding up well as it relates to commercial mortgage-backed securities, largely because they exclude land and construction loans. Moreover, refinancing risk is modest during the next three years, said Kim Diamond, a managing director in the structured finance group. CMBS deals also have structural provisions such as extension options that offer an additional layer of protection in times of tight liquidity. While valuations haven't declined much, CRE is a lagging indicator. "You're not going to see an ultimate effect on real estate until after you see what happens in the overall economy," she said. "However, we don't expect the current recession and liquidity crunch ultimately to affect commercial real estate to the same degree seen in the late 1980s to early 1990s, owing to a much healthier balance between supply and demand." What's happening to the economy is a mild recession, according to Beth Ann Bovino, senior economist. However, Ms. Bovino warned during a panel discussion that certain risks could trigger an alternative scenario. Factors that would indicate a more severe slowdown, closer to the recession in the early 1980s rather than the one in 2001, would be if oil prices stay high (above $125 per barrel) instead of fall, affecting inflation and further squeezing the consumer; foreign investors pull back from buying U.S. assets, so that interest rates rise sharply, putting further pressure on home prices and the housing sector; and the U.S. dollar weakens significantly, adding to inflation pressure. Even though the sector's earnings will likely decline, the banks that Standard & Poor's rates appear to be ready for difficult times. Indeed, their resilience is evident in how they've answered unprecedented losses with unprecedented capital raising. "The banking industry is poised for challenges ahead," added Mr. Quintanilla. "A large portion of the problems that will negatively affect the industry will be outside the rating universe." * Anti-Foreclosure Bill Faces Bush Veto Threat ---------------------------------------------- Bloomberg's Alison Vekshin writes that the U.S. House of Representatives has passed legislation allowing a federal agency to insure up to $300.0 billion in mortgages to assist homeowners avoid foreclosure, a day after the White House threatened to veto the measure. The housing package was sponsored by Democrat Representative Barney Frank. The plan lets the Federal Housing Administration insure refinanced mortgages after lenders agree to a reduction in loan principal to make payments more affordable. "We're in a recession and a major cause of that recession is the subprime crisis," Frank, chairman of the House Financial Services Committee, said on the House floor before the vote. "We do not see any alternatives to this bill." According to the report, the White House, who favors a voluntary, industry-led program to modify loan terms, has issued a veto threat against Frank's bill. Republicans oppose using government funds, saying that the legislation rewards reckless lenders and investors, and is unfair to homeowners who have kept up with mortgage payments. Federal Reserve chairman Ben S. Bernanke has indicated support for the plan during a May 5 speech, although he has not explicitly endorsed it. The Democrats' housing package also includes a provision that would shield loan-servicing companies that modify mortgages from investor lawsuits. Connecticut-Democrat Senator Christopher Dodd, who chairs the Senate Banking Committee, said the panel is working to pass similar legislation. Bloomberg adds that the House also approved Thursday a bill that would create a $15.0 billion loan-and-grant program to help states buy and rehabilitate foreclosed homes. Democrats said the measure is needed to avert the further decline in home values and to prevent "the blight and crime that vacant homes attract." * Bankruptcy Filings in Hawaii Rose to 158 in April --------------------------------------------------- Greg Wiles of The Honolulu Advertiser reports that the number of bankruptcy filings in Hawaii rose during April, as "overextended consumers" sought bankruptcy protection to avoid paying their mounting credit card debt or to avoid foreclosure. Mr. Wiles says U.S. Bankruptcy Court filings in Honolulu totaled 158 in April, compared with 131 sought a year ago. Mr. Wiles attributes the increase in bankruptcy filings in April to the slowdown in the economy and the downture in the housing market which have had an adversely effect on "people who were carrying too much debt." According to Mr. Wiles, Chapter 13 bankruptcies climbed to 33 from 12 in April 2007. Citing an Institute for Financial Literacy study last year, Mr. Wiles says about 64% of petitioners in 2006 were working, while unemployed people were the second-largest category at 13.1%. * U.S. Business Bankruptcy Filings Rose 49% in April Versus 2007 ---------------------------------------------------------------- Bill Rochelle and Bob Willis report for Bloomberg News that business bankruptcy filings in the United States increased 49% in April from a year ago, as more companies shut down operations due to the slowing economy. According to Bloomberg, business petitions climbed to 5,173 in April, citing statistics compiled from court records by Jupiter eSources LLC in Oklahoma City. Total bankruptcy filings rose 31% from a year earlier to 93,096, the group said. The report says that the economy lost jobs in April for the fourth month in a row, for a total of 260,000 jobs cuts so far this year. Messrs. Rochelle and Willis add that according to Irvine, California-based RealtyTrac, which monitors foreclosures, the U.S. is facing its worst housing recession in a quarter century, with almost 650,000 properties in some stage of foreclosure during the final quarter of 2007, up 112% percent from the same period of 2007. Bloomberg also points out that declining home prices make it more difficult for homeowners in the U.S. to refinance before adjustable-rate mortgages reset. Citing the National Association of Realtors, Bloomberg reports that median prices for existing homes fell in 22 metropolitan areas in February, down 7.7% percent from that of Februay a year earlier. The Bloomberg reports that more than 18,000 businesses filed for bankruptcy protection in the first four months of 2008, of which about 2,700 were made under Chapter 11 of the Bankruptcy Code.* * True Partners' Cathleen Bucholtz Assumes Managing Director Role ----------------------------------------------------------------- True Partners Consulting LLC promoted Cathleen Bucholtz to managing director and national unclaimed property practice leader. As the national leader for True Partners' Unclaimed Property practice, Ms. Bucholtz oversees one of the largest dedicated professional teams in the industry that provides multi- jurisdictional unclaimed property services in the areas of audit defense, voluntary disclosures, comprehensive diagnostic reviews, annual compliance, process improvements, and other customized services to meet client needs. She brings more than 16 years of experience in both unclaimed property and sales and use tax consulting, including statistical sampling, training client personnel, and identification of planning opportunities. "[Ms. Bucholtz] was a natural fit for this position," said Cary McMillan, chief executive officer of True Partners. "Her proven excellence in this area is of utmost value to the firm, and her industry leadership and involvement will help us continue our tremendous growth." Prior to joining True Partners Consulting, Ms. Bucholtz was the western region leader for KPMG's Unclaimed Property practice and prior to 2002 she was an integral member of Arthur Andersen's National Unclaimed Property team. Before entering public accounting, Bucholtz worked for the California State Board of Equalization as a senior tax auditor and acting field audit supervisor, where she was responsible for conducting a wide variety of field audits of major corporations in various industries. "It is exciting to continue leveraging my background on behalf of the firm's clients," Ms. Bucholtz said. "The in-depth experience I have gained over the last 16 years has enabled me to provide the highest quality service to my clients. I look forward to applying that knowledge and experience to an increased segment of clients in my new role." Ms. Bucholtz has a long standing history and commitment to the education of industry professionals in the area of unclaimed property. She has spoken before numerous trade and professional organizations including the Unclaimed Property Professionals Organization; American Payroll Association; Institute for Professionals in Taxation; and the National Business Institute. Since 2006, Ms. Bucholtz has served as the UPPO Education Committee Co-Chair and is responsible for the development and execution of the organization's annual and regional educational conferences for hundreds of participants annually from a wide variety of industries, including transportation, financial, insurance, retail, manufacturing, and health care. She was nominated for candidacy as the second vice president to the UPPO board of directors for 2008, a prominent leadership position that automatically succeeds to first vice president in 2009 and president in 2010. A graduate of the University of California in Santa Barbara, Ms. Bucholtz earned a Bachelor of Arts degree in business economics, and is a licensed Certified Public Accountant in the states of California and Washington. Ms. Bucholtz is also a member of the American Institute of Certified Public Accountants. About True Partners Consulting LLC True Partners Consulting -- http://www.tpctax.com/-- is a tax and business advisory firm that helps large public and private enterprises navigate complex financial regulations without the Sarbanes-Oxley-created conflicts inherent in offering both tax consulting and audit services. The firm provides a broad range of services, including analysis and counsel concerning the tax impact of business issues such as organic or acquisition-driven growth, filing practices, business restructuring or bankruptcy. The firm also conducts refund reviews, analyzes clients' tax exposure and prepares responses to audit inquiries, in addition to helping clients address compliance issues. The firm has offices in Chicago; New York; Los Angeles; San Jose, California; Tampa Bay, Florida; Boston; and London. There is also a Paris office, ArtemTax International, which is the first member firm in the True Partners Consulting International network. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------ ------- Absolute Software ABT (3) 83 30 AFC Enterprises AFCE (40) 155 (20) APP Pharmaceutic APPX (80) 1,077 214 Ariad Pham ARIA (8) 101 65 Bare Escentuals BARE (104) 224 84 Blount Intl BLT (54) 412 129 CableVision System CVC (5,097) 9,141 (607) Carrols Restaurant TAST (13) 463 (29) Centennial Comm CYCL (1,063) 1,343 14 Centerplate-IDS CVP (18) 332 (20) Cheniere Energy CQP (228) 1,905 146 Cheniere Energy LNG (16) 2,962 428 Choice Hotels CHH (157) 328 (42) Cincinnati Bell CBB (668) 2,020 0 Claymont Stell PLTE (40) 158 80 Compass Minerals CMP (5) 820 201 Corel Corp. CRE (14) 266 (15) Crown Media HL CRWN (684) 676 4 CV Therapheutics CVTX (185) 259 177 Cyberonics CYBX (15) 136 (15) Deltek Inc PROJ (86) 166 (28) Denny's Corp DENN (179) 381 74 Domino's Pizza DPZ (1,450) 473 51 Dun & Bradstreet DNB (437) 1,659 (192) Einstein Noah Re BACL (34) 149 4 Extendicare Real EXE-U (32) 1,440 (15) Gencorp Inc. GY (52) 995 77 General Motors GM (35,480) 148,883 (9,720) Healthsouth Corp. HLS (1,070) 2,051 (331) Human Genome Sci HGSI (12) 949 47 ICO Global C-New ICOG (131) 602 101 IDEARC Inc IAR (8,600) 1,667 205 IMAX Corp IMAX (85) 208 (8) IMAX Corp IMX (85) 208 (8) Incyte Corp INCY (160) 276 228 Indevus Pharma IDEV (86) 199 40 Intermune Inc ITMN (31) 262 209 IPCS Inc IPCS (40) 547 76 Knology Inc KNOL (35) 619 7 Koppers Holdings KOP (14) 669 189 Life Sciences Re LSR (29) 502 1 Linear Tech Corp LLTC (564) 1,410 912 Lodgenet Interac LNET (48) 694 8 Maxxam Inc MXM (242) 544 120 Mediacom Comm-A MCCC (253) 3,615 (268) Moody's Corp MCO (784) 1,715 (360) National Cinemed NCMI (572) 464 67 Navistar Intl NAVZ (1,699) 10,786 164 New Flyer Indust NFI-U (23) 907 44 Nexstar Broadcasting NXST (89) 709 (11) NPS Pharm Inc NPSP (188) 231 107 Primedia Inc PRM (129) 282 6 Protection One PONE (23) 673 6 Radnet Inc RDNT (53) 434 41 Redwood Trust RWT (718) 9,938 N.A. Regal Entertai-A RGC (119) 2,635 (2) Riviera Holdings RIV (48) 218 14 RSC Holdings Inc RRR (44) 3,460 (128) Rural Cellular-A RCCC (590) 1,350 110 Sally Beauty Hol SBH (745) 1,440 414 Sealy Corp. ZZ (113) 1,025 22 Solutia Inc SOA (1,449) 2,638 (293) Sonic Corp SONC (102) 765 (27) Spectrum Brands SPC (141) 3,265 828 St John Knits Inc SJKI (52) 213 80 Station Casinos STN (291) 3,932 (50) Stelco Inc STE (64) 2,657 693 Theravance THRX (66) 162 101 UST Inc UST (292) 1,487 446 Valence Tech VLNC (61) 20 8 Voyager Learning VLCY (53) 917 (637) Warner Music Gro WMG (47) 4,599 (764) Weight Watchers WTW (926) 1,046 (172) WR Grace & Co. GRA (316) 3,869 (1,057) XM Satellite-A XMSR (925) 1,609 (403) ZIX Corp ZIXI 0 19 (1) ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Melanie C. Pador, Ludivino Q. Climaco, Jr., Loyda I. Nartatez, Tara Marie A. Martin, Philline P. Reluya, Joseph Medel C. Martirez, Ma. Cristina I. Canson, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2008. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***