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/raid1/www/Hosts/bankrupt/TCR_Public/080515.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, May 15, 2008, Vol. 12, No. 115 Headlines 1ST FINANCIAL: Moody's Confirms Ratings on Three Note Classes AGRIUM INC: Moody's Withdraws United Agri Product's Low-B Ratings ALOHA AIRLINES: Court OKs Asset Sale to Saltchuk for $10.5 Mil. AMBAC FINANCIAL: Has No Material Exposure to Subprime Borrowers AMP'D MOBILE: To Sell Accounts Receivable to Afni for $2,560,000 AMP'D MOBILE: To Sell Remaining "Hard" Assets to Great American AMPEX CORP: Files Amended Disclosure Statement and Chapter 11 Plan ATARI INC: Infogrames Entertainment Declares 51.6% Equity Stake BANK OF AMERICA MORTGAGE: Fitch Affirms BB Rating on Two Classes BARR LABORATORIES: Moody's Affirms Ba1 Ratings & Revises Outlook BEXAR FINANCE: Moody's Holds Ba2 Rating on Subordinate Bonds BOSTON GENERATING: S&P Holds 'B+' Rating on $1.13 Billion Loan BRESNAN COMMUNICATIONS: Moody's Affirms B2 Corp. Family Rating BROADWAY GEN: S&P Holds 'BB-' Preliminary Rating on $800MM Loan CANADIAN TRUSTS: Ontario Court Defers Ruling on ABCP Amended Plan CANADIAN TRUSTS: ABCP Panel Responds to Demand for Plan Changes CANADIAN TRUSTS: Ernst & Young Delivers 7th Status Report CANADIAN TRUSTS: Creditors Assert Claims Against CCAA Parties CENTURY CASINOS: Lender Grants Waiver in Exchange for Cash Payment CENTURY CASINOS: Inks Credit Facility Amendment with Lenders CHECKSMART FINANCIAL: Moody's Reviewing Caa2 Rating for Downgrade CHRYSLER LLC: Issues Gas Price Policy to Ease Customer Concerns CONSTELLATION COPPER: Cure Period for C$69MM Debentures Expires CONSTELLATION COPPER: March 31 Balance Sheet Upside-Down by $39MM CONSTELLATION COPPER: Has Until June 2 to Comply with TSX's Rule COPANO ENERGY: Moody's Assigns B1 Rating to Proposed $250MM Notes COPANO ENERGY: S&P Puts 'B+' Rating on $250MM Sr. Unsecured Notes COUNTRYWIDE FINANCIAL: BofA Assures $4BB Acquisition will Continue CUMULUS MEDIA: Terminates $1.3BB Merger Deal with Investor Group CUMULUS MEDIA: Terminated Merger Won't Affect S&P's 'B' Rating DANA HOLDING: Appoints James Yost as EVP and CFO Effective May 22 DAVIS SQUARE FUNDING I: Moody's Junks Class B Participating Notes DAVIS SQUARE FUNDING II: Moody's Cuts Class B Notes' Rating to B3 DELTA AIR: Grants 3% Salary Raise to Front-Line Workers DELTA AIR: Employees First to Benefit from Merger with Northwest DRS TECHNOLOGIES: Sold to Italys Finmeccanica for $5.2 Billion DRS TECHNOLOGIES: Fitch Places Sr. Sub. Notes' B Rating on Watch DRS TECHNOLOGIES: Finmeccanica Deal Cues Moody's Rating Review DRS TECHNOLOGIES: Finmeccanica Acquisition Cues S&P's Pos. Watch EOS AIRLINES: U.S. Trustee Selects Five-Member Creditors' Panel ESTERLINE TECHNOLOGIES: Moody's Upgrades Sr. Notes' Rating to Ba2 FIRST NLC TRUST: Moody's Cuts Rating on Class M-9 Bonds to B2 FORTUNA MANAGED: Fitch Likely to Cut Rating of 2 Classes to BB FRONTIER AIRLINES: Union Says Golden Parachute Will Break Deal FRONTIER DRILLING: Liquidity Pressures Cue Moody's to Junk Ratings GABRIEL RESOURCES: Earns C$11 Million in 2008 First Quarter HEADWATERS INC: S&P Puts Ratings Under Neg. Watch on Weak Earnings HILEX POLY: Sec. 341 Meeting of Creditors Scheduled for June 11 HILEX POLY: Can File Schedules and Statements Until July 20 HILEX POLY: Gets Authority to Hire Epiq as Claims & Notice Agent HOLLINGER INC: Inks Term Sheet with Secured Creditor & Sun-Times HOME INTERIORS: Taps Richards Partners as Communications Expert HOME INTERIORS: Can Hire Kurtzman Carson as Notice & Claims Agent IDLEAIRE TECHNOLOGIES: Says Board Requires Special Counsel IDLEAIRE TECHNOLOGIES: Wants to Hire Holland & Knight as Counsel INDEPENDENCE VII: Expected Losses Cue Moody's to Cut Ratings INDYMAC BANCORP: Fitch Junks Short-Term Issuer Default Rating INFINITY ENERGY: Execs Stay Optimistic as 1Q Loss Narrows INTERPHARM HOLDINGS: Perry Sutaria et al. Declare 65.4% Stake JEFFERSON COUNTY: $53MM Debt Payment Deadline Extended to June 1 JOE PACHECO: Case Summary & 16 Largest Unsecured Creditors JOHN CLARKE: Case Summary & 13 Largest Unsecured Creditors KLEROS REAL: Moody's Reviewing Caa3 Rating on Class A-2 Notes LEVITT AND SONS: Pact Between Wachovia Debtors & Cananwill Okayed M FABRIKANT: Court Confirms Modified Chapter 11 Liquidation Plan MADACY ENT: Has until May 31 to Comply with Coverage Covenant MARATHON HEALTHCARE: May Access Webster Bank's DIP Facility MARATHON HEALTHCARE: May Use Webster Bank's Cash Collateral MASHANTUCKET PEQUOT: Moody's Cuts $500MM Notes Rating to Ba2 MATRIA HEALTHCARE: $144M Acquisition by Inverness Now Complete MATRIA HEALTHCARE: Inverness Sale Cues Moody's to Withdraw Ratings MATRIA HEALTHCARE: S&P Withdraws Ratings After Completed Merger MBIA INC: Securitizations Differ from Moody's Second Lien RMBS MESA AIR: Shuts Down Air Midwest Operations Due to Fuel Costs NATCHEZ HOSPITAL: To be Sold Following Privatization NORTEK INC: S&P Rates Proposed $750MM Senior Secured Notes B NORTHWEST AIRLINES: Employees First to Benefit from Merger NORTHWEST AIRLINES: EVP Neal Cohen to Leave on June 16 NTK HOLDINGS: Moody's Affirms Caa2 Rating on $403MM Senior Notes ORCHID STRUCTURED: Moody's Chips Ratings on Two Note Classes to Ca PACIFIC LUMBER: BoNY, et al., Challenge Global Settlement PACIFIC LUMBER: BoNY Asserts Claim for Drop in Scopac Collateral PAMPELONNE CDO II: Moody's Junks $1.6 Billion Class S Senior Notes PAMPELONNE CDO I: Moody's Junks Rating on $1.06 Bil. Class S Notes PAPPAS TELECASTING: Seeks Leave to Hire Kaye Scholer as Counsel PAPPAS TELECASTING: Wants to Hire Pachulski Stang as Co-Counsel PARCS-R MASTER: S&P Slashes AA Rating to BB on S. 2007-16 Trust PORTA SYSTEMS: Signs Debt Restructuring Agreement With Cheyne POWERMATE HOLDING: Sues Home Depot for $3.6M Contract Breach POWERMATE CORP: Taps RAS Management as Interim Managers POWERMATE CORP: Taps Windham to Collect $1.3M in Receivables RADNOR HOLDINGS: Expects $57 Mil. Gross Preference Transfers RAFFLES PLACE: Moody's Junks Ratings on $20 Million Notes RATHGIBSON INC: Moody's Cuts Corporate Family Rating to B3 RELIANT CHANNELVIEW: Dispute with Equistar Placed Under Mediation RESIDENTIAL ASSET: Fitch Rates 23 Classes Below Investment Grade RURAL/METRO CORP: Improved Liquidity Cues S&P to Revise Outlook SALOMON BROS TRUST: S&P Junks Rating on Class K Certificates SALT CREEK: Fitch Affirms Class B-6$L Notes' B+ Rating SATURNS TRUST: S&P Lowers Ratings on Two Classes of Trust to 'BB' SCIENTIFIC GAMES: Moody's Puts Ba1 Rating on Proposed $850MM Loans SCIENTIFIC GAMES: S&P Holds 'BB' Credit Rating with Stable Outlook SENTINEL MANAGEMENT: CFTC Files Suit Over Fund Misappropriation SHAPES/ARCH HOLDINGS: Unsecured Creditors to Get 14% Under Plan SHAPES/ARCH HOLDINGS: Wants Bid Procedures for Sale of Equity OK'd SHAPES/ARCH HOLDINGS: Disclosure Statement Hearing Set for May 23 SHIPPING PARTNERS: Moody's Junks Senior Secured Debt Rating SILVERWING ENERGY: In Breach of Demand Loan Facility Covenant SIX FLAGS: March 31 Balance Sheet Upside-Down by $410.6 Million SIX FLAGS: Commences Exchange Offer for $400MM New Senior Notes SKYBUS AIRLINES: Sec. 341 Creditors Meeting Set Today SKYBUS AIRLINES: Seeks to Employ Smith Gambrell as Lead Counsel SKYBUS AIRLINES: Can Employ Landis Roth as Local Counsel SOLUTIA INC: Earns $1.4 Billion in First Quarter 2008 STANDARD PACIFIC: Barclays Global et al. Declares 10.87% Stake STANDARD PACIFIC: Elevated Debt Prompts Moody's to Chip Ratings TEKNI-PLEX INC: March 28 Balance Sheet Upside-Down by $427 Million THERMAL NORTH: S&P Withdraws 'BB-' Corporate Credit Rating TRIGEM COMPUTER: US Court Dismisses Claims Against Toshiba TRONOX WORLDWIDE: Fitch Downgrades Senior Unsec. Notes to 'B/RR4' TROPICANA ENTERTAINMENT: Gets $100MM Funding Offer from Onex Corp. TROPICANA ENTERTAINMENT: Taps Richards Layton as Bankr. Co-Counsel TRUMP ENTERTAINMENT: Posts $18.6 Million Net Loss in 2008 1st Qtr. UAP HOLDING: Completes Acquisition Agreement with Agrium Inc. UAP HOLDING: Completed Agrium Deal Cues S&P to Lift Rtng. from BB- WARNACO GROUP: S&P Puts 'BB' Corp. Credit Rating Under Pos. Watch WARNEX INC: Reports Progress in Restructuring C$11.3M Debentures WARNEX INC: Enters $4M Financing Agreement with Desjardins Group WESTMORELAND COAL: March 31 Balance Sheet Upside-Down by $177.8 MM WILSONS LEATHER: Gets Nasdaq Deficiency Notice for Noncompliance X-RITE INC: Sustainability Concerns Prompt Moody's to Junk Ratings * Moody's Says Regional Casinos Can Profit Despite Weak Economy * Moody's Sees Higher Demand for Biz-Oriented Trustees in Schools * Moody's Changes the Outlook for US Restaurant Sector to Negative * Moody's Takes Negative Rating Actions on 839 Second Lien RMBS * Moody's Says Consumer Finance Industry's Outlook is Negative * Moody's Sees Tighter Underwriting Standards for Loans in CMBS * S&P Says Retail Sales for April Drops 0.2% Month Over Month * S&P Comments on Credit Quality of Not-for-Profit Hospitals * S&P Says Falling Home Prices Create a Wide Swath of Problems * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ********* 1ST FINANCIAL: Moody's Confirms Ratings on Three Note Classes ------------------------------------------------------------- Moody's Investors Service has confirmed the Ba3 ratings on three classes of subordinated notes issued from the 1st Financial Credit Card Master Note Trust and 1st Financial Credit Card Master Note Trust II. These securities were placed under review for possible downgrade on Feb. 14, 2008. The confirmation of the ratings concludes Moody's review of the outstanding securities. These ratings were confirmed: Issuer: 1st Financial Credit Card Master Note Trust -- $7,500,000 Fixed Rate Asset-Backed Notes, Series 2005-1, Class B, rated Ba3 Issuer: 1st Financial Credit Card Master Note Trust II -- $7,500,000 Fixed Rate Asset-Backed Notes, Series 2005-A, Class B, rated Ba3 -- $7,500,000 Fixed Rate Asset-Backed Notes, Series 2005-B, Class B, rated Ba3 Rationale The affected notes were placed under review for possible downgrade in February 2008 following rating actions on a number of monoline financial guarantors that insure some of the Trust's senior notes. In Moody's view, early amortization triggers tied to the rating downgrade of one or more of these financial guarantors make it more likely that a significant portion of 1st Financial's securitized transactions would begin to amortize before their scheduled maturity. Moody's review assessed 1st Financial's ability to finance cardholders' new purchases on their credit cards as well as its ability to execute on its contingency funding plans. Since the initiation of the review, the company has refinanced and restructured a significant portion of its securitized debt so as to reduce, but not eliminate, its susceptibility to liquidity constraints caused by the potential for further downgrades of the financial guarantors, which continue to insure several of the Trusts' outstanding transactions. Moody's will continue to monitor 1st Financial's liquidity position and ability to finance card receivables, including those through the securitization market. The performance of the collateral backing these transactions is within Moody's expectations and was not a factor in placing the ratings under review. Background The Trusts consist of approximately $433 million of credit card receivables originated and serviced by 1st Financial Bank (unrated), a South Dakota Bank. AGRIUM INC: Moody's Withdraws United Agri Product's Low-B Ratings ----------------------------------------------------------------- Moody's Investors Service confirmed Agrium Inc's Baa2 ratings with a stable outlook. The ratings for United Agri Products were withdrawn as all of its existing bank facilities have been repaid. This concludes the review of Agrium and UAP that was initiated Dec. 3, 2007 when it was announced that the two companies had entered into a definitive agreement, whereby a wholly-owned subsidiary of Agrium would acquire all of the outstanding shares of UAP. This transaction was completed on May 7, 2008. The following factors were considered by Moody's in reaching its decision to confirm Agrium's ratings. The transaction will improve Agrium's business profile by adding scale, broader diversification, purchasing power, and stability to earnings. Despite the initial rise in debt to fund the acquisition, offset by a material amount of equity issuance of $1.4 billion, Moody's expects that management will maintain its historically conservative financial policies and investment discipline. Moody's notes the increased reliance on retail sales that results from the acquisition of UAP will likely weaken EBITDA margins but this is likely to be more than offset by the current strength of Agrium's wholesale business. Moody's, however, still favorably views the company's selling price advantage in the Pacific Northwest relative to the vast majority of North American ammonia producers. In addition, the transaction is consistent with Agrium's operating strategy and will create the largest North American agricultural retailer while enhancing margin stability. Conversely, the transaction involves some execution risk and a reduction in financial flexibility when other recent acquisitions are considered on a combined basis. Specifically, Moody's believes the company will be challenged with blending different retail business philosophies together. Agrium operates a value added services business model whereas UAP manages a low service, high volume model. Furthermore, Moody's expects equity capital contributions for the joint venture nitrogen facility in Egypt to remain a call on cash. The company will not achieve returns on the non-recourse financing project until after the completion of the facility in 2010. The rating outlook is stable in light of robust industry conditions and anticipated positive free cash flow generation. It is also Moody's belief that Agrium will maintain its historically conservative financial policies and investment discipline. Moody's expects management to lower its debt position and work to integrate and leverage the acquisitions that have been made in recent periods. Confirmations Issuer: Agrium, Inc. -- Senior Unsecured Shelf, Baa2 -- Senior unsecured notes and debentures at Baa2; Withdrawals Issuer: United Agri Products, Inc. Ba3 - corporate family rating -- PDR: Ba3 -- Gtd Sr Sec Revolving Credit Facility due 2011, Ba1 (LGD2, 17%) -- Gtd Sr Sec Term Loan due 2012, Ba3 (LGD3, 45%) Agrium Inc., headquartered in Calgary, Alberta, Canada, is a leading global producer and marketer of agricultural nutrients and industrial products and a major retail supplier of agricultural products and services in both North and South America. Agrium produces and markets three primary groups of nutrients: nitrogen, phosphate and potash as well as controlled release fertilizers and micronutrients. Agrium reported net sales of US$5.6 billion for the last 12 months ending March 31, 2008. ALOHA AIRLINES: Court OKs Asset Sale to Saltchuk for $10.5 Mil. --------------------------------------------------------------- The Hon. Lloyd King of the United States Bankruptcy Court for the District of Hawaii authorized Dane S. Field, interim Chapter 7 Trustee for Aloha Airlines Inc. and its debtor-affiliates to sell the Debtors' "Air Cargo Assets" to Saltchuk Resources Inc. for $10.5 million free and clear of all liens and encumbrances. At closing, the Chapter 7 Trustee is expected to: -- pay all usual and customary closing costs paid by Saltchuk, -- pay all accrued and unpaid employee wages and salaries for the period April 16, 2008, until April 29, 2008, -- establish an interest bearing escrow account to be used to pay the transaction fee due to Imperial Capital LLC under the engagement letter dated March 19, 2008, and -- set aside in an interest bearing account 5% of the proceeds, net of fees and expenses incurred in the sale. Furthermore, the Chapter 7 Trustee will set aside $270,000 from the proceeds of the sale, which represent the estimated fees and cost of special counsel retained by the Trustee. The Trustee will dole out of the $270,000 as: i) $90,000 to Berger Singerman P.A, counsel ii) $105,000 to Char Sakamoto ISII Lum & Ching, special corporate counsel, iii) $60,000 to Shepard Mullin Richter & Hampton LLP, special counsel, and iv) $15,000 Squire Sanders & Dempsey LLP, regulatory counsel. As reported in the Troubled Company Reporter on May 6, 2008, Saltchuk and GMAC Commercial Finance LLC, the Debtors' senior secured lender, entered into a letter of intent for Saltchuk's purchase of the "Air Cargo Assets" from the Debtors' bankruptcy estates. The Air Cargo Assets handles 85% of the cargo traffic in the state of Hawaii, including a contract with the U.S. Postal Services. The salient terms of the letter of intent include, among other things: i) a $10.5 million purchase price; ii) a $1,000,000 earnest money deposit, including $500,000 previously deposited; iii) the assumption of aircraft and facility leases and other executory contracts, as selected by Saltchuk; and iv) a closing on or before May 14, 2008. Furthermore, the letter of intent requires GMAC Financial to finance the operation of the "Air Cargo Assets" pending the sale, which GMAC Financial is only willing to fund until May 14, 2008. GMAC Financial agrees to carve-out a portion of the proceeds of the sale for the benefit of the Debtors' estates, wherein 5% of the proceeds, net of fees and expenses incurred in the sale, will be paid to th Chapter 7 Trustee to pay expenses and fees. A full-text copy of the Letter of Intent is available for free at: http://ResearchArchives.com/t/s?2b70 As reported in the Troubled Company Reporter on April 25, 2008, Saltchuk Resources lost the bid for Aloha Airlines Inc.'s contract services operations to Pacific Air Cargo, which offered $2 million for those assets. As reported in the Troubled Company Reporter on April 30, 2008, Judge King converted the Debtors' jointly administered Chapter 11 cases to liquidation proceedings under Chapter 7. On May 1, 2008, Judge King authorized the Chapter 7 Trustee to operate the Debtors' "Air Cargo Assets" under Section 721 of the Bankruptcy Code until the closing date. About Aloha Airlines Based in Honolulu, Hawaii, Aloha Airgroup Inc., Aloha Airlines Inc. -- http://www.alohaairlines.com/-- and its affiliates are carriers that fly passengers and freight to Hawaii's five major airports, as well as to half a dozen destinations in the western U.S. They operate a fleet of about 20 aircraft, all Boeing 737s, including three configured as freighters. This is the airline's second bankruptcy filing. Aloha filed for Chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063), and emerged from Chapter 11 bankruptcy protection in February 2006. The company and its affiliates filed again for Chapter 11 protection on March 18, 2008 (Bankr. D. Hawaii Lead Case No. 08- 00337). Brian G. Rich, Esq., Jordi Guso, Esq., and Paul Steven Singerman, Esq., at Berger Singerman P.A., and David C. Farmer, Esq., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts of $100 million to $500 million. AMBAC FINANCIAL: Has No Material Exposure to Subprime Borrowers --------------------------------------------------------------- Ambac Financial Group, Inc. responded to Moody's Investors Services May 13, 2008 press release about the poor performance of certain second lien RMBS and its impact on financial guarantor ratings. In a Special Report titled "U.S. Subprime Second Lien RMBS Rating Actions Update" dated May 12, 2008, Moody's discussed its rating actions to date related to subprime second lien residential mortgage-backed securities issued between 2005 and 2007. Additionally, it discussed subprime second lien loan performance to date and its cumulative loss projections for the asset class within those vintages. As reported in the Troubled Company Reporter on May 14, 2008, Moody's notes that financial guarantors have significant exposure to second lien RMBS, primarily through guaranties on direct RMBS transactions, and to a lesser extent, through exposure to ABS CDOs, where second lien RMBS securities typically constitute less than 5% of collateral within such CDOs. Moody's loss expectations for this asset class are higher than previously anticipated, owing to worse-than-expected performance trends. This could have material implications for the estimated capital adequacy of financial guarantors most exposed to this risk. In recent announcements of first-quarter 2008 earnings, MBIA and Ambac both reported material credit impairment losses on ABS CDOs and loss reserve charges on direct RMBS exposures, including second lien securitizations. Moody's said that incurred losses within both firms direct RMBS and ABS CDO portfolios are now meaningfully higher than the rating agencys prior expected-case loss estimates, elevating existing concerns about capitalization levels relative to the Aaa benchmark. Moody's intends, in the short term, to assess whether worsening performance in this sector is likely to be material for exposed financial guarantors, and will update the market as appropriate. In response to the reports, Ambac, in a press release, states that (all amounts as of March 31, 2008): * As reported on its Web site, Ambac has closed end second lien exposure amounting to approximately $0.1 billion, $3.5 billion and $1.0 billion in vintage years 2005, 2006 and 2007, respectively. * Ambac has home equity line of credit exposure amounting to approximately $2.0 billion, $2.7 billion and $4.1 billion in vintage years 2005, 2006 and 2007, respectively. * Ambac has no material exposure to subprime borrowers in either asset class. The estimated range of average FICO scores for borrowers within pools Ambac insured in these asset classes is 695 - 745. * Ambac analyzes these portfolios on a transaction by transaction basis using the most recent actual performance data and projecting future performance using "roll rate" analysis. * Within the CES portfolio, Ambac has downgraded seven transactions (amounting to $2.1 billion) to below investment grade. The seven transactions are represented by three issuers, all were originated in 2005 to 2007 and all have reserves estimated. While Ambac has not paid claims on any of its CES transactions to date, Ambac has established reserves based on estimates of cumulative losses over the lives of the stressed transactions. * The vast majority of the remaining CES portfolio from this time period comprises three 2006 Countrywide transactions that are performing satisfactorily, with cumulative losses to date ranging from 0% to 0.5%. * Within the HELOC portfolio, Ambac has downgraded seven transactions amounting to $2.2 billion) to below investment grade. The seven transactions are represented by five issuers, all were originated in 2005 to 2007 and all have reserves estimated. * Ambac has observed clear performance differences within these portfolios, particularly earlier versus later vintages and bank versus non-bank originators. Moody's commented in its Special Report, "Moody's expectations on individual transactions can vary significantly around those numbers (Moody's expected cumulative loss estimates by vintage), based on the quarter of origination as well as deal- and issuer-specific characteristics." Ambac fully agrees that performance varies greatly and has appropriately reserved for its underperforming transactions. The stress Ambac is experiencing within each of these portfolios is limited to a relatively few transactions. The remaining transactions in both asset classes are performing within expectations and are internally rated investment grade. * Ambac is in the process of aggressively remediating this portfolio. Several transactions within these two portfolios are the subject of diagnostic, forensic and legal scrutiny. Ambac has begun the process of putting back loans that it believes do not fit the various criteria represented by the originators. While the bond insurer believes that these remediation efforts may have a material impact on the ultimate losses in these transactions, it have not factored in any potential recovery into its loss estimates at this time. In summary, Ambac has already taken substantial reserves against its CES and HELOC portfolios (48% and 33%, respectively, against below investment grade exposure). Moreover, Ambac has not assumed any recoveries related to its active remediation efforts. Despite very stressful loss estimates of its portfolio, Ambac believes it has already exceeded Moody's stressed Aaa ratings target as of April 30, 2008 and it continues to build excess capital. Maintaining its Aaa Moody's rating is an important business objective. As such, Ambac has scheduled to have detailed discussions with Moody's to present an updated drill down analysis on its second lien exposures. As previously reported in the TCR, Ambac disclosed a first quarter 2008 net loss of $1.6 billion. This compares to first quarter 2007 net income of $213.3 million. The first-quarter result was primarily affected by non-cash, mark-to-market losses on credit derivative exposures amounting to $1.7 billion in the first quarter 2008 driven by the continued disruption in the global credit markets impacting the fair value of Ambacs derivatives exposures during the quarter. The decrease was also caused in part by the current quarters loss provision on Ambacs financial guarantee direct exposures to mortgage-related securities which amounted to $1.0 billion, as well as by other than temporary impairment charges on certain investment securities within the financial services investment portfolio. About Ambac Financial Based in New York City, Ambac Financial Group, Inc. is a holding company that provides financial guarantees and financial services to clients in both the public and private sectors around the world through its principal operating subsidiary, Ambac Assurance Corporation. As an alternative to financial guarantee insurance credit protection is provided by Ambac Credit Products, a subsidiary of Ambac Assurance, in credit derivative format. * * * As reported in the Troubled Company Reporter on March 7, 2008, Moody's Investors Service said in a news statement that Ambac Financial Group Inc., if successful with its equity offering of $1.5 billion, will likely retain its "Aaa" rating. Moody's said that it will evaluate Ambacs ability to raise capital at reasonable terms as an indication of the companys financial flexibility and overall level of support from investors. In Moody's view, Ambacs new equity and equity linked capital through a public offering represents an important component of its overall plan to strengthen the credit profile of its financial guaranty insurance subsidiary, Ambac Assurance Corporation. On Jan. 18, Fitch Ratings downgraded Ambac to double-A after the insurer put off plans to raise equity capital. Moody's, the TCR said Jan. 17, 2008, placed the Aaa insurance financial strength ratings of Ambac Assurance Corporation and Ambac Assurance UK Limited on review for possible downgrade. In the same rating action, Moody's also placed the ratings of the holding company, Ambac Financial Group, Inc. (senior debt at Aa2), and related financing trusts on review for possible downgrade. Moody's stated that this rating action follows Ambacs announcement of record losses, a capital raising plan, and the retirement of its CEO. AMP'D MOBILE: To Sell Accounts Receivable to Afni for $2,560,000 ---------------------------------------------------------------- Amp'd Mobile, Inc., sought and obtained authority from the U.S. Bankruptcy Court for the District of Delaware to sell its accounts receivable and all causes of actions relating solely to those accounts receivable to Afni, Inc., for $2,560,000, free and clear of all liens, claims, encumbrances, and interests. Upon analysis of its ongoing collection efforts, the Debtor's management concluded that the sale of the AR Portfolio in its entirety was the best method to maximize the recovery to the estate, Steven M. Yoder, Esq., at Potter, Anderson & Corroon LLP in Wilmington, Delaware, relates. The bid submitted by Afni is the highest and the best bid that the Debtor has received for the AR Portfolio Assets after a prolonged marketing period, Mr. Yoder says. The Debtor thus determined that the sale of the AR Portfolio to Afni will provide a significant influx of cash to the estate and will alleviate the need to continue to employ collection agencies who attempt to collect the accounts receivable in a piecemeal fashion over a prolonged period of time. The Debtor notes that a copy of the the account receivables to be sold to Afni is voluminous and is available upon request. Concurrent with the execution of the Purchase Agreement, Afni will deposit into escrow with Potter Anderson & Corroon LLP $256,000 in good funds. The Deposit will be non-refundable except if (i) the Agreement is terminated for any other reason other than Afni's default or breach, or (ii) the Debtor is unable to consummate the transaction. The Debtor asserts that any liens, claims, encumbrances, and interest on the AR Portfolio are capable of being satisfied by cash payment. Furthermore, the Debtor's Secured Lender has indicated its support for the Sale, according to Mr. Yoder. Stewart's Commission The Debtor also sought and obtained the Court's authority to pay a 2% commission fee to Shannon Stewart as compensation for his efforts in assisting with the negotiations of the terms of Afni sale. The Debtor notes that Mr. Stewart is its former employee who possessed the most knowledge of the AR portfolio. Following the cessation of the Debtor's operations in late July 2007, Mr. Stewart remained with the Debtor for a period of time to help assist with the disposition of the AR Portfolio. Those efforts proved unsuccessful, but Mr. Stewart assisted the Debtor in making arrangements with the various collection agencies that have since been attempting to maximize the recovery of the AR Portfolio. Recently, the Debtor was approached by Mr. Stewart and was informed that he had identified some potential new prospects interested in purchasing the AR Portfolio, Mr. Yoder tells the Court. "With no guarantee of payment, Mr. Stewart worked diligently and expeditiously to identify the level of interest and willingness of a potential buyer to proceed with a transaction," he cites. Without Mr. Stewart's efforts, the Debtor does not believe it would be in a position to sell the AR Portfolio and would instead be plodding along with its continued collection efforts. As a result, the Debtor, with the consent of the Secured Lender, believes that awarding Mr. Stewart the Commission Fee in connection with the Afni Transaction is fair and a good use of the estate assets under the circumstances. About Amp'd Mobile Headquartered in Los Angeles, California, Amp'd Mobile Inc. aka Amp'D Mobile LLC -- http://www.ampd.com/-- is a mobile virtual network operator that provides voice, text and entertainment content to subscribers who contract for cellular telephone service. The company filed for chapter 11 protection on June 1, 2007 (Bankr. D. Del. Case No. 07-10739). Steven M. Yoder, Esq., Eric M. Sutty, Esq. and Mary E. Augustine, Esq. at The Bayard Firm, represent the Debtor in its restructuring efforts. Attorneys at Otterbourg, Steindler, Houston & Rosen, P.C. and Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor listed total assets of $47,603,629 and total debts of $164, 569,842. The Debtor's exclusive period to file a plan expired on Sept. 29, 2007. The Debtor is in the process of selling various assets. (Amp'd Mobile Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). AMP'D MOBILE: To Sell Remaining "Hard" Assets to Great American --------------------------------------------------------------- Amp'd Mobile, Inc., seeks permission from the U.S. Bankruptcy Court for the District of Delaware to sell certain of its furniture and studio equipment to Great American Group LLC, for $170,000, free and clear of all liens, claims, encumbrances, and interests. Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP in Wilmington Delaware, relates that since late July 2007, the Debtor's management has continued to market and solicit interest in the Debtor's remaining assets. The Debtor has sold furniture, equipment, and computers; completed a sale of its handset and handset accessories inventory; assigned its assets and rights related to certain intellectual property rights; sold its accounts receivable portfolio; marketed its remaining intellectual property assets; and commenced a large volume of avoidance actions all in an effort to maximize value for all its creditors. "[The latest proposed] sale [to Great American] represents the last remaining of the remaining 'hard' assets of the Debtor," Mr. Yoder tells the Court. Mr. Yoder notes that after eight months of marketing the Remaining Assets, the Debtor's management have concluded that the bid submitted by Great American is the highest and best bid the Debtor has received for the remaining assets. The Debtor also assert that the proposed sale will maximize recovery into its estate and prevent further deterioration of the value of the Assets. The Remaining Hard Assets will be sold on an "as is, where is" basis. A full-text copy to the Afni Asset Purchase Agreement is available for free at http://bankrupt.com/misc/AMPD_AFNIAPA.pdf About Amp'd Mobile Headquartered in Los Angeles, California, Amp'd Mobile Inc. aka Amp'D Mobile LLC -- http://www.ampd.com/-- is a mobile virtual network operator that provides voice, text and entertainment content to subscribers who contract for cellular telephone service. The company filed for chapter 11 protection on June 1, 2007 (Bankr. D. Del. Case No. 07-10739). Steven M. Yoder, Esq., Eric M. Sutty, Esq. and Mary E. Augustine, Esq. at The Bayard Firm, represent the Debtor in its restructuring efforts. Attorneys at Otterbourg, Steindler, Houston & Rosen, P.C. and Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor listed total assets of $47,603,629 and total debts of $164, 569,842. The Debtor's exclusive period to file a plan expired on Sept. 29, 2007. The Debtor is in the process of selling various assets. (Amp'd Mobile Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Services Inc. http://bankrupt.com/newsstand/or 215/945-7000). AMPEX CORP: Files Amended Disclosure Statement and Chapter 11 Plan ------------------------------------------------------------------ Ampex Corporation and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the Southern District of New York an Amended Disclosure Statement dated May 9, 2008, explaining their Amended Joint Chapter 11 Plan of Reorganization. Overview of the Plan The Plan will enable the Debtors to continue their business operations without the possibility of a subsequent liquidation or further financial reorganization. Financial advisor Conway Mackenzie & Dunleavy estimates the Debtors' total enterprise value at at least $79 million by June 30, 2008. The enterprise value is based upon an aggregation of individual identifiable assets providing cash flow streams. Under the Plan, the Debtors' pension plans -- employees' retirement plan and Quantegy Media Corporation retirement plan -- will not be terminated. The Debtor will continue to fund the plans in accordance with the minimum financing standards under the Internal Revenue Code and ERISA. The Debtors have estimated contributions of at least $52,900,000 by 2013. Credit Agreement Hillside Capital Incorporated and its affiliates will provide $25 million in loan to the Debtors. The loan will bear interest at 10% per annum. To secure the loan obligation, Hillside is entitled to a second priority and subordinate lien on substantially all assets of the Debtors. Treatment of Claims and Interests Type of Estimated Estimated Class Claims Treatment Amount recovery ----- ------- --------- --------- --------- unclassified Administrative $100,000 100% Expense Claims unclassified Fee Claims $2,900,000 100% unclassified Priority Tax $200,000 100% Claims 1 Priority Non- unimpaired $0 100% Tax Claims 2 Senior Secured impaired $6,900,000 100% Note Claims 3 Other Secured unimpaired $0 100% Claims 4 Hillside impaired $11,000,000 100% Secured Claims 5 General impaired $51,600,000 100% Unsecured Claims 6 Existing Common impaired $0 0% Stock 7 Existing impaired $0 0% Securities Laws Claims 8 Other Existing impaired $0 0% Interests A full-text copy of the Amended Joint Chapter 11 Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?2be6 A full-text copy of the Amended Disclosure Statement is available for free at http://ResearchArchives.com/t/s?2be8 About Ampex Headquartered in Redwood City, California, Ampex Corp. -- http://www.ampex.com/-- (Nasdaq:AMPX) is a licensor of visual information technology. The company has two business segments: Recorders segment and Licensing segment. The Recorders segment primarily includes the sale and service of data acquisition and instrumentation recorders (which record data and images rather than computer information), and to a lesser extent mass data storage products. The Licensing segment involves the licensing of intellectual property to manufacturers of consumer digital video products through their corporate licensing division. On March 30, 2008, Ampex Corp. and six affiliates filed for protection under Chapter 11 of the Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of New York (Case Nos. 08-11094 through 08-11100). Matthew Allen Feldman, Esq., and Rachel C. Strickland, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors in their restructuring efforts. The Debtors have also retained Conway Mackenzie & Dunleavy as their financial advisors. In its schedules of assets and liabilities filed with the Court, Ampex Corp. disclosed total assets of $9,770,089 and total debts of $82,488,054. The Debtors have nine foreign affiliates that are incorporated in seven countries -- one each in the United Kingdom, Japan, Belgium, Colombia and Brazil and two each in Germany and Mexico. With the exception of the affiliates located in the U.K. and Japan, none of the other foreign affiliates conduct meaningful business activity. As of March 30, 2008, none of the foreign affiliates have commenced insolvency proceedings. ATARI INC: Infogrames Entertainment Declares 51.6% Equity Stake --------------------------------------------------------------- Infrogames Entertainment S.A. and California U.S. Holdings, Inc. declare beneficial ownership of 6,926,245 shares of Atari Inc. common stock, representing 51.6% of the company's outstanding common stock. Headquartered in New York, Atari Incorporated, (NASDAQ: ATAR) -- http://www.atari.com/-- publishes and distributes interactive entertainment software in the U.S. The company's 1,000+ published titles distributed by the company include hard-core, genre- defining franchises such as Test Drive(R); and mass-market and children's franchises such Dragon Ball Z(R). Atari Inc. is a majority-owned subsidiary of France- based Infogrames Entertainment SA, an interactive games publisher in Europe. As reported in the Troubled Company Reporter on Feb. 20, 2008, Atari Inc.'s consolidated balance sheet at Dec. 31, 2007, showed $43.5 million in total assets and $60.3 million in total liabilities, resulting in a $16.8 million total stockholders' deficit. * * * New York-based Deloitte & Touche LLP expressed substantial doubt about Atari's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended March 31, 2007. The auditing firm pointed to the company's significant operating losses. As reported in the Troubled Company Reporter on March 28, 2008, Atari Inc. received a Staff Determination Letter from the Nasdaq Listing Qualifications Department stating that Atari Inc. has not gained compliance with the requirements of Nasdaq Marketplace Rule 4450(b)(3), and that its securities are therefore subject to delisting from The Nasdaq Global Market. On Dec. 21, 2007, the Nasdaq Listing Qualifications Department notified Atari Inc. that, pursuant to Nasdaq Marketplace Rule 4450(e)(1), unless the market value of Atari Inc.'s publicly held shares, which is calculated by reference to Atari Inc.'s total shares outstanding, less any shares held by officers, directors or beneficial owners of 10% or more, maintains an aggregate market value of $15 million or more for a minimum of 10 consecutive business days prior to March 20, 2008, Atari Inc.'s securities would be subject to delisting. BANK OF AMERICA MORTGAGE: Fitch Affirms BB Rating on Two Classes ---------------------------------------------------------------- Fitch Ratings has taken rating action on these Bank of America (BOAM) mortgage pass-through certificates: Series 2003-6 Group 1; -- Class 1A-1 affirmed at 'AAA', removed from Rating Watch Negative; -- Class 1A-2 affirmed at 'AAA' -- Class 1A-3 affirmed at 'AAA' -- Classes 1A-5 through 1A-27 affirmed at 'AAA'; -- Classes 1A-29 through 1A-41 affirmed at 'AAA'; -- Class 1A-PO affirmed at 'AAA'; Series 2004-4 Group 1; -- Classes 1A-1 through 1A-11 affirmed at 'AAA'; -- Class 1A-12 affirmed at 'AAA', removed from Rating Watch Negative; -- Class 1A-PO affirmed at 'AAA'; -- Class 130-IO affirmed at 'AAA'; -- Class 30B-2 affirmed at 'A'; -- Class 30B-3 affirmed at 'BBB'; -- Class 30B-4 affirmed at 'BB'. Series 2004-7 Groups 1 & 5; -- Class 1A-1 affirmed at 'AAA' -- Class 1A-2 affirmed at 'AAA' -- Classes 1A-5 through 1A-19 affirmed at 'AAA'; -- Classes 5A-1 through 5A-15 affirmed at 'AAA'; -- Class 5A-16 affirmed at 'AAA', removed from Rating Watch Negative; -- Class 1X-PO affirmed at 'AAA'; -- Class 130-IO affirmed at 'AAA'; -- Class 5X-PO affirmed at 'AAA'; -- Class 530-IO affirmed at 'AAA'; -- Class 30B-1 affirmed at 'AA'; -- Class 30B-2 affirmed at 'A'; -- Class 30B-3 affirmed at 'BBB'; -- Class 30B-4 affirmed at 'BB'; -- Class 30B-5 rated 'B', placed on Rating Watch Negative. The collateral on the aforementioned transactions consists of mixed term fixed-rated mortgages extended to prime borrowers. Bank of America deposited the loans into the trust, and acts as the servicer for the collateral. Bank of America Mortgage has a servicer rating of 'RPS1' provided by Fitch. Class 1A1 from series 2003-6, Class 1-A-12 from series 2004-4, and Class 5-A-16 from series 2004-7 are insured by MBIA. For more information please refer to 'Fitch Moves to Underlying Ratings for MBIA-Insured Bonds' dated Apr. 4, 2008, available on the Fitch Ratings Web site at http://www.fitchratings.com/ BARR LABORATORIES: Moody's Affirms Ba1 Ratings & Revises Outlook ---------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Barr Laboratories, Inc. including the Ba1 Corporate Family rating and the SGL-2 Speculative Grade Liquidity Rating. At the same time, Moody's revised the rating outlook to stable from positive. The rating outlook had been positive since the initial rating assignment of Barr on Aug. 25, 2006. The outlook revision to stable reflects Moody's belief that Barr appears increasingly unlikely in the near term to comfortably sustain the cash flow to debt ratios appropriate for Moody's "Baa" range outlined in Moody's Global Pharmaceutical Rating Methodology. These ratios include cash flow from operations to debt of 25% to 40% and free cash flow to debt of 15% to 25%. For the twelve months ended March 31, 2008, Moody's estimates that Barr's CFO/Debt was 17% and FCF/Debt was 10%, reflecting Moody's standard adjustments. Moody's anticipates improvement in these ratios during 2008, but at a slower pace than prior expectations. "Barr's cash flow to debt ratios should solidly sustain the current Ba1 rating, but appear unlikely to support an upgrade to investment grade in the near term," stated Moody's Senior Vice President Michael Levesque. Barr's U.S. generic sales and contraceptives sales experienced softness during the first quarter of 2008, declining 15% and 18% respectively because of increasing competition and pricing pressure. Moody's believes that these factors are unlikely to be fully offset by new generic launches in 2008 along with rising sales in Barr's proprietary business. Barr's Ba1 continues to reflect the criteria outlined in Moody's Global Pharmaceutical Rating Methodology, with consideration given to Barr's large presence as a generic drug manufacturer. Positive factors on size/scale ("Baa"), EBITA margin ("Aa") and return on equity ("A") are offset by lower scores on CFO/Debt ("Ba"), FCF/Debt ("Ba") and cash coverage of debt ("B"). Over time, factors that would support positive rating pressure include healthier growth rates in Barr's generics business, cash flow to debt ratios to levels solidly within the "Baa" ranges, and a disciplined approach to any future business development with clearly defined capital structure targets or credit ratio metrics. Conversely, factors that would create negative pressure include inability to sustain cash flow to debt ratios near the high end of Moody's "Ba" ranges, faster than expected price erosion combined with few launches of new products, or debt-financed acquisitions. Ratings affirmed: Barr Laboratories, Inc.: -- Ba1 Corporate Family Rating -- Ba1 Probability of Default Rating -- Ba1 (LGD4, 50%) senior unsecured Term Loan A due 2011 -- Ba1 (LGD4, 50%) senior unsecured Revolving Credit Facility of $300 million due 2011 -- SGL-2 Speculative Grade Liquidity rating Outlook change: to stable from positive Headquartered in Montvale, New Jersey, Barr Pharmaceuticals, Inc. [NYSE: BRL] is one of the five largest companies specializing in the U.S. generic pharmaceutical market. The company reported $2.5 billion of net revenues during 2007. Barr Laboratories, Inc. is a wholly-owned subsidiary of Barr Pharmaceuticals, Inc. BEXAR FINANCE: Moody's Holds Ba2 Rating on Subordinate Bonds ------------------------------------------------------------ Moody's Investors Service has affirmed the Bexar County Housing Finance Corporation Multifamily Revenue Refunding Bonds (Doral Club and Sutton House Apartments Project), Series 2001 A at Baa2 and Subordinate Series 2001C at Ba2. The Series A Bonds will continue to maintain MBIA bond insurance. The rating affirmations are reflective of debt service coverage levels that are consistent with Moody's benchmarking standards. The outlook remains negative. Doral Club, which is a 297 unit multi-family property, was built in 1985 and is composed of 11, three story buildings located in the northwest section of San Antonio. Sutton House Apartments, which was also built in 1985, is a 265 unit multi-family garden style complex comprised of 18 three story buildings located in the north central section of San Antonio. Legal Security: All bonds are secured by revenues of the project as well as by funds and investments pledged to the trustee as security for the bonds. Strengths: -- Revenues continue to generate enough funds for all expenses and debt service payments. -- The properties are located near major employment centers. Challenges: -- Debt service coverage of senior and subordinate debt have both declined but remain above 2005 levels. -- A substantial number of multi-family units are currently in the pipeline within the northwest and north central San Antonio submarket which will likely reduce occupancies at existing properties. Recent Developments: Interim financial statements indicate coverage declined slightly in 2007 with projected senior debt coverage of 1.47x and subordinate coverage projected at 1.18x. Occupancy at the Doral and Sutton developments were 92% and 96.23% respectively in 2007, which is consistent with the 94.7% average in each submarket reported by Torto Wheaton Research. Vacancy in the submarket is forecasted to decrease to 93.5% and 93.4%, respectively, in 2008 and 92.60% and 92.40%, respectively, in 2009 by TWR. In 2007, a total of 1,228 units of new multi-family housing were completed in the North Central and Northwest San Antonio submarkets. Both developments will likely be negatively impacted as the new product will provide strong competition. The local economy has improved with approximately 16,000 jobs added to the local work force in 2007. Over the past five years, employment has grown at an average annual rate of 2.0%, while in the U.S., the employment has grown at a slower 1.2% annually. Although the overall economy has strengthened, competition continues to increase as the market remains overbuilt. The market has seen 5,933 new units added during the prior 12 months. There are over 3,818 units planned for 2008. 925 of these units are directly in the Sutton sub-market and 759 units are in the Doral sub-market. What could change the rating -UP Stabilization of occupancy and increase in debt service coverage. What could change the rating -DOWN A decline in occupancy and/or a decrease in debt service coverage. Outlook The outlook remains negative. BOSTON GENERATING: S&P Holds 'B+' Rating on $1.13 Billion Loan -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' issue-level rating on Boston Generating LLC's $1.13 billion first-lien term loan B due in 2013, its $70 million revolving facility, and its $250 million LOC facility. The '1' recovery rating on these issues remains unchanged. Standard & Poor's also affirmed its 'B-' rating on the issuer's second-lien $350 million term loan C. The '4' recovery rating on this loan remains unchanged. The outlook is negative. The $300 million of holding company notes outstanding at parent EBG Holdings are not rated. The affirmation follows the project's commitment to improve credit quality by taking remedial steps to improve financial performance after lower-than-expected financial performance for 2007. The project has entered into a new hedge agreement with Sempra Energy for the Fore River facility, and restructured its existing hedge agreement on Mystic 8 and 9 with Credit Suisse. It also resolved the dispute and restructured its fuel supply agreement with Distrigas. While Standard & Poor's views these actions positively, no immediate improvement in financial performance is expected until second half of 2009, when higher capacity prices, improved margins due to lower basis risk, and benefits of restructured fuel supply agreement are expected to become visible. The negative outlook on Boston Gen reflects S&P's concern that financial performance has fallen short of anticipated levels. The rating may be lowered if the project is forced to use a significant proportion of its restricted cash to meet its 2008 covenants as described earlier, or if it's unable to demonstrate sustainable improvement in its financial performance thereafter. Prospects for an upgrade or outlook revision to positive in the near term are unlikely given the increase in refinancing risk when the debt matures in 2013, and the expectation of tight covenant ratios through most of 2008. BRESNAN COMMUNICATIONS: Moody's Affirms B2 Corp. Family Rating -------------------------------------------------------------- Moody's Investors Service affirmed its ratings for Bresnan Communications, LLC, as outlined below. At the same time, Moody's changed the rating outlook to positive from stable based on the Company's strong operating performance and de-leveraging, coupled with expectations of similar industry outperformance over the forward rating horizon. Moody's has taken these rating actions: Bresnan Communications, LLC -- Corporate Family Rating -- Affirmed B2 -- Probability-of-Default Rating -- Affirmed B2 -- $125 million senior 1st lien secured revolving credit facility due 2012 -- Affirmed B2, LGD3 -- 44% -- $75 million senior 1st lien secured term loan A due 2012 -- Affirmed B2, LGD3 -- 44% -- $540 million senior 1st lien secured term loan B due 2013 -- Affirmed B2, LGD3 -- 44% -- $100 million senior 2nd lien secured term loan due 2014 -- Affirmed Caa1, LGD6 -- 94% -- Outlook -- Changed to Positive from stable The B2 corporate family rating reflects the company's high financial risk, as evidenced by moderately high leverage, weak coverage and negative free cash flow. These risks are exacerbated by the company's relatively small scale and the likelihood of heightened business risks in future periods as the competitive environment intensifies. The rating is also constrained by the predominantly financial sponsor-driven ownership structure, which has historically demonstrated a propensity for effecting shareholder distributions through debt-financed transactions. These risks are mitigated, however, by the company's good liquidity profile and strong historical operating performance since 2005, as well as expectations of similar results going forward. The business environment in Bresnan's markets has also been somewhat benign from a competitive perspective, with only a relatively limited threat posed by incumbent phone service providers contributing to above average penetration rates for ancillary products and service offerings to date. The rating is also supported by the continuing relationship with Comcast Corporation, a minority owner of the company, the benefits of affiliation with which support margin enhancement through savings under programming procurement contracts as well as other cash flow benefits via equipment purchase discounts, and which Moody's believes afford additional flexibility to compete more aggressively for customers. The positive outlook specifically incorporates Moody's expectation of continued deleveraging of the company's balance sheet and the achievement of modestly positive free cash flow driven by ongoing above-average operating performance over the next 12-to-18 months, which could prompt a rating upgrade during this period. Bresnan Communications, LLC is a multiple cable television system operator serving more than 300,000 subscribers in the states of Colorado, Montana, Wyoming, and Utah. Headquartered in Purchase, New York, the company's revenue was $354 million for the twelve- month period ended March 31, 2008. BROADWAY GEN: S&P Holds 'BB-' Preliminary Rating on $800MM Loan --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its preliminary 'BB-' credit rating on merchant power generator Broadway Gen Funding LLC's $800 million first-lien term loan due 2014, $150 million first-lien revolving credit facility due 2013, and $165 million first-lien LOC facility due 2014. Standard & Poor's also affirmed its '1' recovery rating on the combined $1.115 billion first-lien debt obligations, reflecting the expectation of very high (90%- 100%) recovery of principal in the event of a default. Standard & Poor's also affirmed its preliminary 'B' debt rating and '3' recovery rating on the $250 million second-lien term loan. The '3' recovery rating indicates the expectation of meaningful (50% to 80%) recovery of principal under an assumed default scenario. Standard & Poor's also revised the outlook on all the loans to positive from stable, reflecting its expectation that all or nearly all debt will be repaid in the near term. The project sponsor expects all debt principal to be repaid about May 2008 as a result of the following four asset sales: Shady Hills Power Co. LLC (sale date June 21, 2007), Zeeland Power Co. LLC (sale date Dec. 21, 2007), Bosque Power Co. LLC (sale date Jan. 15, 2008) and Sugar Creek Power Co. LLC (expected sale date May 2008). Broadway Gen used the debt issuance to finance its acquisition of six gas-fired power-generation facilities that Mirant Corp. (B+/Stable/--) previously owned and operated. The asset sale followed Mirant's announced intention to focus on its core markets in the Mid-Atlantic and Northeast regions and in California. "The positive outlook on Broadway Gen reflects our view that all or nearly all debt will be repaid in the near term by means of a fourth asset sale (Sugar Creek Power Co. LLC ), expected to close about May 2008," said Standard & Poor's credit analyst Matthew Hobby. "Although we expect the Sugar Creek sale to be completed, if it is not completed, the outlook could be revised to stable," he continued. CANADIAN TRUSTS: Ontario Court Defers Ruling on ABCP Amended Plan ----------------------------------------------------------------- Ontario Superior Court Justice Colin Campbell convened a sanction hearing on May 12 and 13, 2008, to consider the Amended Plan of Compromise and Arrangement proposed by the Pan-Canadian Investors Committee for Third Party Structured Asset Backed Commercial Paper. No official ruling has been issued as of press time. Mr. Justice Campbell has said he plans to enter a decision on the matter very soon, according to Reuters. "I will try to do my part in a relatively short period of time," Reuters quoted Mr. Justice Campbell as saying. Mr. Justice Campbell has noted during the May 12 hearing that he has a problem with the ABCP Plan provision that provides certain ABCP participants immunity from lawsuits, according to John Greenwood of Canwest News Service. At the hearing, investors represented by the Pan-Canadian Investors Committee for Third Party Structured Asset Backed Commercial Paper appeared before the Ontario Superior Court to convince the Court to sanction the Plan for these reasons: -- The requisite majorities of the Applicants' creditors overwhelmingly approved the Amended Plan; -- There has been compliance with all statutory requirements and adherence to previous orders of the Court; -- Nothing has been done or purported to be done that is not authorized by the Companies' Creditors Arrangement Act, R.S.C. 1985, C. C-36, as amended; -- The Amended Plan is fair and reasonable; and -- The Applicants rely upon Rules 1.04 and 3.02 of the Rules of Civil Procedure and Section 6 of the Companies' Creditors Arrangement Act, R.S.C. 1985, c., C-36, as amended. The Applicants have proposed that upon the sanction of the Amended ABCP Plan, Ernst & Young Inc., as Monitor; the CCAA Parties; the Issuing and Paying Agents; the New Issuer Trustee; the issuing and paying agents in respect of the Plan Notes; the Depositary and CDS Clearing & Depository Services Inc., and the participants will be authorized to complete the distributions contemplated under the Amended Plan. Any distributions under the Amended Plan will not constitute a "distribution" for the purposes of Section 159 of the Income Tax Act (Canada), Section 270 of the Excise Tax Act (Canada) and Section 107 of the Corporations Tax Act (Ontario). In making any payments under the Amended Plan, any party is not considered "distributing", nor will it be considered to have "distributed", the funds. A paying party will also not incur any liability for making any payments ordered by the Court, and will thus be forever released from any claims against it. The Applicants have contemplated that as of the Plan Implementation Date, the Amended Plan, including all compromises, arrangements, transactions, releases, discharges and injunctions related to it, will inure to the benefit of, and be binding and effective on the Noteholders, the Monitor, and all other persons affected. No Person who is a party to any obligation or agreement with the CCAA Parties will, following the Implementation Date, accelerate, terminate, rescind, refuse to perform or repudiate its obligations under the Plan, or enforce or exercise any right -- including any right of set-off, dilution or other remedy -- or make any demand in respect of any obligation or agreement. On the Implementation Date, the Monitor will be discharged and released and will have no further obligations or responsibilities, except only with respect to any remaining duties or powers required to implement and give effect to the terms of the Amended Plan. The CCAA Charges on the assets of the CCAA Parties provided for in the Initial CCAA Order and any subsequent Orders in the CCAA Proceedings will automatically be fully and finally terminated, discharged and released on the Plan Implementation Date. However, the Monitor will continue to hold the benefit of a CCAA Charge, as provided in the Initial CCAA Order, until the Monitor has completed its duties under the Plan and the fees and disbursements of the Monitor and its counsel have been fully paid. The provisions of the Initial CCAA Order will remain in full force and effect until the Implementation Date. Effective on the Implementation Date, all the compromises, arrangements, exculpations, releases, discharges and injunctions will be sanctioned because these are necessary for the success of the Plan, the Applicants noted. About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of Sept. 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CANADIAN TRUSTS: ABCP Panel Responds to Demand for Plan Changes --------------------------------------------------------------- The Honourable Mr. Justice Colin Campbell of the Ontario Superior Court of Justice heard on April 22 and 23, 2008, a number of motions seeking amendments to the Plan of Compromise and Arrangement presented by the Pan-Canadian Investors Committee for Third Party Structured Asset Backed Commercial Paper. Representing the Applicants, Benjamin Zarnett, at Goodmans LLP, in Toronto, Ontario, notes that some creditors have argued that they required further information in order to cast their votes in an informed manner. Ernst & Young, Inc., has confirmed holdings of more than of C$31 billion in total ABCP and that, from that total, the holders of approximately $30.1 billion of ABCP -- representing approximately 97% of all of the Affected Canadian ABCPs -- cast votes at a creditors' meeting held on April 25, 2008. Of that amount, the holders of approximately $28.9 billion in ABCP, or 96%, voted in favour of the Plan, Mr. Zarnett points out. Logically, one would expect that people who felt they did not have enough information to vote would either abstain or vote against the Plan unless their information needs were satisfied, Mr. Zarnett contends. He notes that both the absence of any significant number of abstentions and the overwhelming support for the Plan establish that the holders of ABCP were able to and did vote as they wished. A concern has been raised that it is unreasonable to expect Noteholders to ratify the Plan when final definitive documents for all aspects of the Plan are not yet available, Mr. Zarnett says. The fact that Noteholders voted 96% in favour of the Plan answers this concern, he avers. In addition, he cites, the Plan, as approved by Noteholders, describes the material terms of certain "approved agreements" which will implement the Plan. Some parties question whether the need to provide global releases to the Asset Providers and certain Canadian banks has been fully established. "The Applicants submit that 96% of the Noteholders have expressed the view that they do not propose to play a high- stakes game of chicken to test the resolve of the parties whose contributions to this restructuring are essential," Mr. Zarnett says. Some Noteholders argue that they voted "yes" while reserving their rights to challenge the global releases, and that this qualifies the degree of support that can be drawn from the 96% approval. However, their vote must signify a willingness to accept the Plan even if modified releases are not available, Mr. Zarnett observes. If they were not prepared to accept the Plan at all, they would have voted "no", he concludes. CIBC Mellon and Paquette Entities Present Side A. CIBC Mellon, et al. Indenture Trustees CIBC Mellon Trust Company, Computershare Trust Company of Canada and BNY Trust Company of Canada assert that the Court has the jurisdiction and power to include them in the Plan Release Provisions. Jeffrey S. Leon, Esq., at Bennett Jones LLP, in Toronto, Ontario, relates that Mr. Justice Campbell advised on May 2, 2008, that if any party opposes the inclusion of the Indenture Trustees, in the Plan Releases, it should inform counsel of the Indenture Trustees prior to the Sanction Hearing. Mr. Leon discloses that as of May 9, no party has communicated its opposition to the inclusion of the Indenture Trustees to the Release Parties. "It is fair, reasonable, appropriate and necessary that the Indenture Trustees are included in the Release," Mr. Leon insists. "It would be unreasonable to expect the Indenture Trustees to incur liability when a debtor becomes insolvent." According to Mr. Leon, a restructuring that involves the property of the trust necessitates that any potential claims against the Indenture Trustees be compromised and released as part of the Plan so that the assets of the trusts can be dealt with in the restructuring for the benefit of the Noteholders. B. Paquette Entities Paquette & Associes Huissers en Justice, s.e.n.c. and Andre Perron, Francois Taillefer, Jean-Guy LaChance, Jean-Marc Paquette, Pierre LaMarche, Francois Cantin and Charles Pacquette objects to a request made by Cinar Corporation, Cinar Productions (2004) Inc. and Cookie Jar Animation Inc., to exclude the Paquette Entities from the Plan Release provisions. According to Cinar, the Paquette Entities have obligations to distribute proceeds from a judicial sale of certain "Weinberg Properties." Murray Stieber, Esq., at Stieber Berlach LLP, in Toronto, Ontario, relates that the Paquette Entities sold the Weinberg Properties in December 2006, and placed the proceeds into Paquette's general trust account at National Bank of Canada. The Paquette Entities named Cinar as a creditor under a "scheme of collocation." Subsequently, the Paquette Entities transferred the proceeds to a special trust at National Bank Financial -- with the consent of Cinar -- to allow the money to earn interest. The Paquette Entities then invested the proceeds in the purchase of ABCP, which NBF depicted as a safe investment. According to Mr. Stieber, the Paquette Entities acted at all times, in accordance with its duties and obligations as a bailiff. It would be unfair if Mr. Justice Campbell granted Cinar's request and exclude the Paquette Entities from the Release Parties, without similarly denying NBC and NBF's inclusion in the Release Parties, Mr. Stieber argues. About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of Sept. 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CANADIAN TRUSTS: Ernst & Young Delivers 7th Status Report --------------------------------------------------------- Ernst & Young, Inc., as monitor of the proceedings commenced by the Pan-Canadian Investors Committee for Third-Party Structured Asset-Backed Commercial Paper under Canada's Companies' Creditors Arrangement Act, delivered its seventh monitor report on May 6, 2008, to the Ontario Superior Court of Justice to inform Honorable Justice Colin Campbell of, among other things, additional information with respect to a summary of alleged claims that was provided to the Court by the Monitor in connection with a May 2 case conference. The Monitor reports that on May 1 and 2, 1008, Borden Ladner Gervais LLP, the Monitor's counsel, provided the Court with certain information regarding the May 2 case conference: -- a summary of alleged claims prepared by the Monitor based on information it has received from counsel to various moving parties; -- a copy of a submission from National Bank Financial in response to certain claims asserted against it based on the Summary of Alleged Claims; -- a letter from Coventree, Inc., Coventree Capital Inc., and Coventree Mortgage Finance Corp. to counsel of the Monitor, indicating the parties against which Coventree would assert counter-claims if certain of the litigation against Coventree were not released by the implementation of the Plan; and -- a summary chart of the types of parties against which claims and claims over might be asserted based on the Summary of Alleged Claims, the submission from National Bank Financial, and the letter from Coventree. According to the Monitor, the Summary of Alleged Claims indicates that various moving parties have asserted that their aggregate holdings of Affected ABCP are in the range of C$1.6 billion to C$3.4 billion. The broad range of dollar amounts arises primarily from the information provided by counsel to the Ad Hoc Committee of Holders of Non-Bank Sponsored Asset-Backed Commercial Paper, which has specified a range of dollar amounts for the quantum of holdings of Affected ABCP by each person represented on the Ad Hoc Committee, the Monitor states. The Monitor has reviewed the amounts of the holdings of Affected ABCP indicated to the Monitor by those parties that are listed in the Alleged Claim Summary who filed Voter Identification Forms or Voter Confirmation Forms with the Monitor. To preserve confidentiality, the Monitor has not indicated the dollar value holdings of Affected ABCP by party, but reports that: a) Not all of the parties listed in the Alleged Claim Summary filed VIFs or VCFs with the Monitor. It is not currently possible for the Monitor to report the aggregate holdings of Affected ABCP by those parties; b) The names of the persons included in the Summary of Alleged Claims in respect of the Ad Hoc Committee have not been provided to the Monitor and therefore, it is unable to definitively identify the holdings of Affected ABCP for those parties; and c) The aggregate holdings of Affected ABCP indicated by the parties listed in the Alleged Claim Summary (i) whose names were provided to the Monitor, and (ii) that did file VIFs or VCFs with the Monitor, aggregate approximately C$1.1 billion. About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of Sept. 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CANADIAN TRUSTS: Creditors Assert Claims Against CCAA Parties ------------------------------------------------------------- In its Seventh Monitor Report, Ernst & Young Inc., as Monitor in the CCAA proceedings commenced by The Investors represented the Pan-Canadian Investors Committee for Third Party Structured Asset Backed Commercial Paper, disclosed that several creditors have asserted claims against the CCAA Parties, certain banks, including National Bank of Canada, dealers and liquidity providers. The CCAA Parties include the Assets Backed Commercial Paper Trusts or the Conduits and the Issuer Trustees of the ABCP Trusts or the Respondents. The Creditors alleged causes of action which include: * breach of contract, * breach of fiduciary duty, * breach of statutory duty, * negligence, * failure to act as a prudent dealer and advisor, * misrepresentation, * acting in bad faith and in conflict of interest, and * failure to disclose. The Creditors who have asserted claims include: Estimated Claimant Damages Sought -------- -------------- Domtar Inc., as administrator C$352,644,706 for retirement plans Air Trans A.T. Inc. 143,501,000 Aeroports de Montreal 58,500,000 Agence Metropolitaine de 44,500,000 Transport The Jean Coutu Group (PJC) Inc. 34,288,000 Pomerleau Inc. 26,500,000 Hy Bloom Inc. and 12,258,000 Cardacian Mortgage Services, Inc. Giro Inc. 7,800,000 A full-text copy of the Alleged Claims is available for free at: http://bankrupt.com/misc/ABCP_AllegedClaims.pdf National Bank of Canada Responds National Bank of Canada and its affiliates, having been identified by certain creditors as likely targets of claims in the event that the Plan of Compromise and Arrangement proposed by the Pan-Canadian Committee's CCAA proceedings is not sanctioned by the Court, notes that Alleged Claims are generally in the nature of "broker-dealer" claims. According to the National Bank, the ABCP market operated on a continuous and uninterrupted basis for many years preceding the market freeze in August, 2007. National Bank noted that it was in the context of a fully functioning market that it participated and dealt with ABCPs as a broker-dealer. National Bank contends that if the Claimants' actions are allowed to proceed, it will be necessary for all market participants to become parties to the litigation in order to assess whether their conduct, acts or omissions were relevant to the failure of the ABCP market and if so, to determine whether that conduct, or those acts or omissions, give rise to liability to National Bank or to other parties who in turn may be liable to National Bank in the event that it is adjudged to have any liability to one or more of the Claimants. The National Bank prepared a chart which identifies for each conduit engaged by a claim, the party or parties that could be the target of a potential claim by National. A copy of the Summary Chart is available for free at: http://bankrupt.com/misc/ABCP_SummaryChart.pdf Redcorp & Jura Hold HSBC Responsible Redcorp Ventures Ltd. and Jura Energy Corporation, noteholders of affected ABCP, inform the Court that they Purchased ABCP on the advice of HSBC Bank Canada, and on the basis of HSBC's assurances that the investments were safe, short-term and liquid. Redcorp is holder of about C$91.4 million Affected ABCP in four Conduits -- Aurora Trust, Comet Trust, SIT III Trust and Rocket Trust. Jura invested C$14.9 million in Series A Notes. Redcorp and Jura assert that they was not aware of HSBC's involvement in the structuring of ABCP, nor that HSBC was an asset provider or liquidity provider. Redcorp and Jura also state that at the time they were seeking investment advice from HSBC, the Bank was fully aware that safety and liquidity were their primary concerns. Redcorp and Jura insist that because of the nature of their individual relationships with HSBC, the Bank had obligations to thoroughly investigate and recommend to the companies only those investments that were consistent with their objectives of safety and liquidity. At no time until the ABCP market froze on August 13, 2007, did anyone at HSBC disclose to Redcorp and Jura information about the deterioration in the non-bank ABCP market in Canada and globally, the companies insist. According to Jura and Redcorp, their companies need access to cash resources in the near future. They also said that long-term notes contemplated by the proposed ABCP Plan are of no use to them, since they need cash or highly liquid instruments to meet their companies' expenditures. Redcorp and Jura assert that bringing a claim against HSBC is very important to them, because they hold HSBC responsible for the situation they are currently in. About the ABCP Trusts Apollo Trust, Apsley Trust, Aria Trust, Aurora Trust, Comet Trust, Devonshire Trust, Encore Trust, Gemini Trust, Ironstone Trust, MMAI-1 Trust, Newshore Canadian Trust, Opus Trust, Planet Trust, Rocket Trust, Selkirk Funding Trust, Silverstone Trust, Slate Trust, Structured Asset Trust, Structured Investment Trust III, Symphony Trust, Whitehall Trust are entities based in Canada that issue securities called third-party structured finance asset- backed commercial paper. As of Sept. 14, 2007, these 21 Canadian Trusts had approximately $33 billion of outstanding ABCP. As reported by the Troubled Company Reporter on March 18, 2008, Justice Colin Campbell of the Ontario Superior Court of Justice granted an application filed on March 17 by The Pan-Canadian Investors Committee for Third-Party Structured ABCP under the provisions of the Companies' Creditors Arrangement Act. The Committee asked the Court to call a meeting of ABCP noteholders to vote on a plan to restructure 20 trusts affecting $32 billion of notes. The trusts were covered by the Montreal Accord, an agreement entered by international banks and institutional investors on Aug. 16, 2007 to work out a solution for the ABCP crisis in Canada. Justice Campbell appointed Ernst & Young, Inc., as the Applicants' monitor, on March 17, 2008. (Canadian ABCP Trusts Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CENTURY CASINOS: Lender Grants Waiver in Exchange for Cash Payment ------------------------------------------------------------------ Century Casinos Inc. received in April 28, 2008, a written waiver from its lender in Central City, Colorado, for a covenant violation in adjusted fixed charge coverage. The waiver was granted in exchange for a cash payment of $162,500. The company's net earnings for the quarter ended March 31, 2008, was of $541,000. Net earnings for the 2007 first quarter were $1,542,000. At March 31, 2008, the company's balance sheet showed total assets of $186.2 million, total liabilities of $76.4 million and total shareholders' equity of $109.8 million. Headquartered in Colorado Springs, Colorado, Century Casinos Inc. (Nasdaq: CNTY) -- http://www.centurycasinos.com/-- is an international casino entertainment company that owns and operates the Womacks Casino and Hotel in Cripple Creek, Colorado, the Century Casino & Hotel in Central City, Colorado, the Century Casino & Hotel in Edmonton, Alberta, Canada, and the Century Casino Millennium in the Marriott Hotel in Prague, Czech Republic. The company also operates casinos aboard the Silver Cloud, The World of ResidenSea, and the vessels of Oceania Cruises. Through its subsidiary Century Casinos Africa (Pty) Limited, it owns and operates The Caledon Hotel, Spa & Casino near Cape Town, South Africa, as well as 60% of, and provides technical casino services to, Century Casino Newcastle, in Newcastle, South Africa. Furthermore, the company's Austrian subsidiary, Century Casinos Europe GmbH, holds a 33.3% ownership interest in Casinos Poland Ltd, the owner and operator of seven full casinos and one slot casino in Poland. CENTURY CASINOS: Inks Credit Facility Amendment with Lenders ------------------------------------------------------------ Century Casinos Inc. entered into an Eighth Amendment to its Amended and Restated Credit Agreement dated April 21, 2000, to: 1) extend the maturity date of the credit agreement from Dec. 31, 2008, to Dec. 31, 2009; 2) reduce the aggregate commitment and maximum permitted balance available to the Borrowers from $15.5 million to $10.0 million; 3) eliminates the requirements to make any Scheduled Reductions prior to Dec. 31, 2009 and the TFCC Ratio; 4) redefines and modifies the covenant requirements for the Interest Expense Coverage Ratio and the Restriction on Distributions Covenant; and 5) Adds a Minimum Make-Well Adjusted Quarterly EBITDA financial covenant. This financial covenant permits the Borrower to receive an Equity Contribution within 40 days after the end of the Fiscal Quarter which is subject to the Minimum Make-Well Adjusted Quarterly EBITDA financial covenant. This Equity Contribution will be added to the EBITDA realized by the Borrower for such fiscal quarter. The Equity Contribution will result in a permanent reduction in the amount available to the Borrower equal to the amount of the Equity Contribution. The Borrower Consolidation is required to maintain the Make-Well Adjusted Quarterly EBITDA: Fiscal Quarter Ended Minimum Make-Well Adjusted Quarterly EBITDA for such Quarter -------------------- --------------------------- March 31, 2008 N/A June 30, 2008 $1,410,000 Sept. 30, 2008 $1,130,000 Dec. 31, 2008 $753,000 March 31, 2009 $899,000 June 30, 2009 $902,000 Sept. 30, 2009 $1,425,000 Dec.31, 2009 Maturity The amendment was entered among WMCK Venture Corp., Century Casinos Cripple Creek, Inc., WMCK Acquisition Corp. , Century Casinos Inc. and Wells Fargo Bank, National Association, as agent. The TFCC Ratio is defined as: -- EBITDA, minus Distributions, minus Non-Financed Capital Expenditures incurred during the period under review divided by -- Interest Expense actually paid (excluding Subordinated Debt), plus current portion of Scheduled Reductions actually paid where required during the preceding four quarters to bring the Aggregate Outstandings down to the required Maximum Scheduled Balance and Capitalized Lease Liabilities required during the preceding four quarters, plus actual Interest Expense and principal paid (without duplication) on Subordinated Debt. About Century Casinos Inc. Headquartered in Colorado Springs, Colorado, Century Casinos Inc. (Nasdaq: CNTY) -- http://www.centurycasinos.com/-- is an international casino entertainment company that owns and operates the Womacks Casino and Hotel in Cripple Creek, Colorado, the Century Casino & Hotel in Central City, Colorado, the Century Casino & Hotel in Edmonton, Alberta, Canada, and the Century Casino Millennium in the Marriott Hotel in Prague, Czech Republic. The company also operates casinos aboard the Silver Cloud, The World of ResidenSea, and the vessels of Oceania Cruises. Through its subsidiary Century Casinos Africa (Pty) Limited, it owns and operates The Caledon Hotel, Spa & Casino near Cape Town, South Africa, as well as 60% of, and provides technical casino services to, Century Casino Newcastle, in Newcastle, South Africa. Furthermore, the company's Austrian subsidiary, Century Casinos Europe GmbH, holds a 33.3% ownership interest in Casinos Poland Ltd, the owner and operator of seven full casinos and one slot casino in Poland. CHECKSMART FINANCIAL: Moody's Reviewing Caa2 Rating for Downgrade ----------------------------------------------------------------- Moody's Investors Service placed the ratings of Checksmart Financial Company under review for possible downgrade. The rating action reflects recent legislative action in the Ohio state legislature related to the payday lending industry. If enacted into law, the proposed legislation would have a material negative effect on Checksmart's business. The proposed legislation would substantially alter the payday lending business in Ohio by capping the annual interest rate, lowering the maximum amount of a loan, extending the minimum life of a loan, capping the number of loans a consumer could obtain per year, and mandating that consumers who take more than three payday loans in a period of 90 days attend a financial literacy program. CheckSmart, in addition to other member companies of the Community Financial Services Association, is actively working to defeat the progress of the legislation. 100 of Checksmart's 256 stores are located in the state of Ohio, the company's home state. Therefore, as noted, if enacted the legislation would have a material negative effect on Checksmart's revenues, earnings, cash flow, and financial condition. During the review period Moody's will review the prospects for passage of the proposed legislation, in either its current or modified form, and the potential effects on the company's financial condition and debt service capability. Based in Dublin, Ohio, Checksmart is a provider of payday lending loans and offers check cashing services and other financial products. The company operates 256 stores in eleven states. These ratings were placed on review for possible downgrade: -- Corporate Family Rating -- B3 -- Senior Secured First Lien Revolving Credit Facility -- B3 -- Senior Secured First Lien Term Loan -- B3 -- Senior Secured Second Lien Term Loan -- Caa2 CHRYSLER LLC: Issues Gas Price Policy to Ease Customer Concerns --------------------------------------------------------------- In response to direct customer feedback citing the prospect of rising gas prices as a top concern, Chrysler LLC disclosed its own economic stimulus package: an exclusive gas price protection policy that eliminates the risk of further spikes in fuel prices. With the U.S. purchase of eligible Chrysler, Jeep and Dodge vehicles, customers can enroll in the "Let's Refuel America" program and receive a gas card that immediately lowers their gas price to $2.99 a gallon, and keeps it there for three years. The offer is available at 3,511 U.S. Chrysler, Jeep and Dodge dealerships through June 2, 2008, and is available on vehicles ranging from popular new compacts, crossovers and minivans to full-size diesel-powered pickup trucks. "We are proud to introduce an unprecedented program to help put customers' minds at ease and do something to help working people who are worried about the volatility of fuel prices and vehicle cost of ownership," Jim Press, Vice-Chairman and President, Chrysler LLC, said. "The Let's Refuel America Price Guarantee puts money in your pocket today, and allows our customers to better manage their fuel expenses. And you can't get it anywhere else besides a Chrysler, Jeep or Dodge dealership." The Let's Refuel America program offers consumers a combination of the fuel price protection program and additional bonus cash up to $3,000 on available vehicles, including Chrysler PT Cruiser, Dodge Charger, Jeep Grand Cherokee, Dodge Dakota and Dodge Ram. Consumer Economic Solutions Chrysler has a number of solutions to help our customers during these tough economic times. "Chrysler is committed to providing the best value, and the least worries, for our customers," Mr. Press said. Chrysler's lineup includes five models for under $20,000 that get 28 miles-per-gallon or better on the highway. To protect consumers from unexpected repair costs in the future, Chrysler models come with the industry's best powertrain warranty, covering the original owner for the life of the vehicle. And Chrysler has made a number of its most popular options standard on its New Day Package vehicles. Fuel Economy Solutions Chrysler currently offers six models that get better than 28 miles-per-gallon on the highway: Chrysler Sebring, Chrysler Sebring Convertible, Dodge Avenger, Jeep Compass, Jeep Patriot and Dodge Caliber. Through April, the six of these models combined have higher sales than in the first four months of 2007. The recently-launched 2009 Dodge Journey comes with an available 173-hp four cylinder engine, helping it achieve best in class fuel economy. The Jeep Grand Cherokee diesel 3.0-liter engine provides a class- leading driving range of approximately 450 miles and gets an estimated fuel economy of 18 miles/city and 23 miles/highway for 4x2 models and 17 miles/city and 22 miles/highway for 4x4 models. Outside of North America where fuel-saving diesel engines are in higher demand, Chrysler offers 17 models with diesel powertrains. This fall, Chrysler will launch in the United States, two new hybrid SUVs, the Dodge Durango Hybrid and Chrysler Aspen Hybrid, boasting a fuel economy improvement of more than 25% overall, and 40% in the city. In 2010, the Dodge Ram Hybrid will reach the market. Chrysler is currently in the midst of a $3 billion powertrain investment offensive to develop new fuel-efficient powertrains and axles for our next-generation models. Chrysler supports the federal government's new dramatically increased CAFE fuel economy standards, which will increase fuel efficiency by an average of 40% by 2020. Recently, Chrysler joined the US Climate Action Partnership, working to find solutions to global greenhouse gas emissions. Customer Advisory Board In February, Chrysler created the industry's first Customer Advisory Board to encourage a direct dialogue with customers and gather insight and feedback. A recent Advisory Board survey generated these results: -- 76% of the community is "very concerned" or "extremely concerned" about fuel prices. -- 83% of the community responded that fuel prices will affect their summer vacation plans. Program Description The Let's Refuel America gas card program works when a customer purchases a new and unused Chrysler, Jeep or Dodge vehicle and selects the program in lieu of other available incentives. The customer is provided with the registration process documentation and registers providing their required personal information via the dedicated web site or toll-free 800 number. Once registered, the customer receives their gas card and separately, their Personal Identification Number within 4 to 6 weeks of application. The customer then swipes their Let's Refuel America Gas Card at an eligible gas station, selecting up to 87 octane regular, E85 fuel or diesel fuel, and enters their PIN to begin the fueling process. After the fuel transaction occurs, the customer's personal credit card is charged $2.99 per gallon. Let's Refuel America Eligibility These vehicles are eligible for the Let's Refuel America program: 1) Small/Compact Car * Dodge Caliber, Chrysler PT Cruiser, Chrysler PT Cruiser Convertible 2) Mid-size Car * Dodge Avenger, Chrysler Sebring, Chrysler Sebring Convertible 3) Large Car * Dodge Charger, Chrysler 300, Dodge Magnum 4) Crossover * Dodge Journey 5) Minivan * Dodge Grand Caravan, Chrysler Town and Country 6) Compact SUV * Jeep Patriot, Jeep Compass 7) Mid-size SUV * Dodge Nitro, Jeep Liberty 8) Large SUV * Jeep Grand Cherokee, Jeep Commander, Dodge Durango, Chrysler Aspen 9) Pickup Truck * Dodge Dakota, Dodge Ram, Dodge Ram HD These vehicles are not eligible for the Let's Refuel America program: All SRT models, Dodge Viper, Dodge Challenger, Dodge Ram Chassis Cab, Chrysler Crossfire, Jeep Wrangler and Dodge Sprinter. Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. * * * As reported in the Troubled Company Reporter on May 9, 2008, Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'B' from 'B+', with a Negative Rating Outlook. Fitch has also downgraded the senior secured bank facilities, including senior secured first-lien bank loan to 'BB/RR1' from 'BB+/RR1'; and senior secured second-lien bank loan to 'CCC+/RR6' from 'BB+/RR1'. The recovery rating on the second lien was also downgraded from 'BB+/RR1' to 'CCC+/RR6' based on lower asset value assumptions and associated recoveries in the event of a stress scenario. CONSTELLATION COPPER: Cure Period for C$69MM Debentures Expires --------------------------------------------------------------- Constellation Copper Corporation disclosed that the 30-day cure period in relation to the company's failure to pay C$1,897,500 on its convertible debentures due on March 31, 2008, expired on April 30, 2008. After a prescribed cure period, the non-payment of interests has been considered an event of default requiring the company to accrete the debentures up to their full C$69,000,000 face value or $67,503,000 at the March 31, 2008, exchange rate and classified the entire amount as a current liability. Accretion was charged to operations as interest expense. Headquartered in Lakewood, Colorado, Constellation Copper Corporation (CCU: TSX) -- http://www.constellationcopper.com/-- evaluates and develops mineral properties in the United States and Mexico. The company holds its properties primarily through three of its wholly owned subsidiaries, Lisbon Valley Mining Co. LLC, Minera Terrazas S.A. de C.V. and San Javier del Cobre S.A. de C.V. LVMC operates the Lisbon Valley copper mine, which comprises three main deposits: Sentinel, Centennial and GTO, plus the Cashin satellite deposit, with reserves and resources totalling +50 million tons and grading an average 0.48% copper. Minera Terrazas holds the company's interest in the Terrazas zinc-copper project located in north- central Mexico. The property has a total resource of 90 million tonnes grading 1.37% zinc and 0.32% copper in two adjacent deposits. San Javier del Cobre S.A. de C.V. holds the company's interest in the San Javier copper property located in northwestern Mexico. Constellation Copper Corporation's balance sheet at March 31, 2008, showed total assets of $65.6 million and total liabilities of $105.0 million, resulting in a total shareholders' deficit of $39.4 million. Going Concern As reported in the Troubled Company Reporter on Jan. 15, 2008, the company related that there is significant doubt about the its ability to continue as a going concern. The cash balance of $10.87 million at September 30, has been reduced further to approximately $3.20 million at Dec. 31, 2007, and in order to provide liquidity, the company is pursuing various near term financing alternatives, including bank financing, equity investment, mergers, and sale of certain assets or sale of the entire company. In late November 2007, as a result of a comprehensive management evaluation of Lisbon Valley operations, the company disclosed its decision to cease mining and crushing activities and convert the Lisbon Valley mine to a leach only operation in early 2008. The evaluation included analyses of various mining plans, waste stripping requirements, contract mining arrangements, available mining equipment, projected copper prices and extensive operating cost and cash flow projections. In connection with the evaluation and conversion to a leach only operation, the company recorded an asset impairment of $92.9 million. CONSTELLATION COPPER: March 31 Balance Sheet Upside-Down by $39MM ----------------------------------------------------------------- Constellation Copper Corporation's balance sheet at March 31, 2008, showed total assets of $65.6 million and total liabilities of $105.0 million, resulting in a total shareholders' deficit of $39.4 million. The company had a net loss of $18.8 million for the first quarter of 2008, including $14.6 million of additional accretion of convertible debentures up to their full C$69.0 million face value or $67.5 million at March 31, 2008, exchange rate as a result of expiration of the cure period related to the company's failure to pay interest on the debentures when due. Total accretion of $15.3 million is included in interest expense related to the debentures during the first quarter of 2008. Liquidity At March 31, 2008, the company had $2.7 million of cash. The company continues to pursue various near term financing alternatives, including bank financing, equity investment, mergers, and sale of certain assets or sale of the entire company. In addition to not paying interest on its convertible debentures and only paying a portion of forward sales settlements, the company has been unable to pay many of its vendor obligations when they were originally due, which may eventually result in vendors requiring payment before delivery of goods and services necessary to continue operations. The company, however, has made substantial progress in reducing its vendor payables. The company may consider filing for legal protection from its creditors in both Canada and the United States if cash liquidity problems can not be resolved. Cash flows The company's cash balance at March 31, 2008 was $2.7 million. In addition to not paying C$1.8 million of convertible debenture interest when it was due on March 31, 2008, the company has only paid a portion of the losses on forward sales contract settlements during the first quarter of 2008 and has been unable to pay all vendor and property tax obligations when originally due. Cash used in operating activities was $122,000 for the quarter ended March 31, 2008. The $1.3 million realized loss on settlement of the January 2008 forward sale contracts was deferred by the lender in connection with an amendment of the commodity swap arrangement. In addition, at March 31, 2008, the company has only paid $1.8 million toward realized losses in February and March totaling $3.1 million. In the first quarter of 2008, the company funded working capital of $241,000. As a result of the cessation of mining and crushing activities in January 2008, the company has completed stacking ore on the leach pad and began drawing down ore-in-process inventories. In addition, the company continues to pay down past due vendor accounts. In the quarter ended March 31, 2008, the company used $53,000 to settle ARO obligations. About Constellation Copper Headquartered in Lakewood, Colorado, Constellation Copper Corporation (CCU: TSX) -- http://www.constellationcopper.com/-- evaluates and develops mineral properties in the United States and Mexico. The company holds its properties primarily through three of its wholly owned subsidiaries, Lisbon Valley Mining Co. LLC, Minera Terrazas S.A. de C.V. and San Javier del Cobre S.A. de C.V. LVMC operates the Lisbon Valley copper mine, which comprises three main deposits: Sentinel, Centennial and GTO, plus the Cashin satellite deposit, with reserves and resources totalling +50 million tons and grading an average 0.48% copper. Minera Terrazas holds the company's interest in the Terrazas zinc-copper project located in north- central Mexico. The property has a total resource of 90 million tonnes grading 1.37% zinc and 0.32% copper in two adjacent deposits. San Javier del Cobre S.A. de C.V. holds the company's interest in the San Javier copper property located in northwestern Mexico. Going Concern As reported in the Troubled company Reporter on Jan. 15, 2008, the company related that there is significant doubt about the its ability to continue as a going concern. The cash balance of $10.87 million at September 30, has been reduced further to approximately $3.20 million at Dec. 31, 2007, and in order to provide liquidity, the company is pursuing various near term financing alternatives, including bank financing, equity investment, mergers, and sale of certain assets or sale of the entire company. In late November 2007, as a result of a comprehensive management evaluation of Lisbon Valley operations, the company disclosed its decision to cease mining and crushing activities and convert the Lisbon Valley mine to a leach only operation in early 2008. The evaluation included analyses of various mining plans, waste stripping requirements, contract mining arrangements, available mining equipment, projected copper prices and extensive operating cost and cash flow projections. In connection with the evaluation and conversion to a leach only operation, the company recorded an asset impairment of $92.9 million. CONSTELLATION COPPER: Has Until June 2 to Comply with TSX's Rule ---------------------------------------------------------------- Constellation Copper Corporation disclosed that the Toronto Stock Exchange is reviewing whether the common shares of the company meet TSX's continued listing requirements. The company has been granted 30 days in which to demonstrate compliance with these requirements, pursuant to the Remedial Review Process. The TSX has advised the company that the reason for this review is that it believes the financial condition and operating results of the company do not meet the continued listing requirements under sections 709 and 710(a)(i) of the TSX Company Manual and the price of the company's securities have been reduced so as not to warrant continued listing pursuant to section 711 of the TSX Company Manual. The company continues to pursue various near term financing alternatives, including debt financing, equity investment, mergers, and sale of certain assets or sale of the entire company. The company commits to making sufficient progress to obtain an extension of the review period for meeting the TSX's continued listing requirements. In the event that the company is not able to obtain an extension or comply with all of the TSX's continued listing requirements by June 2, 2008, the company has been informed that its common shares will be delisted from the TSX within 30 days thereafter. About Constellation Copper Headquartered in Lakewood, Colorado, Constellation Copper Corporation (CCU: TSX) -- http://www.constellationcopper.com/-- evaluates and develops mineral properties in the United States and Mexico. The company holds its properties primarily through three of its wholly owned subsidiaries, Lisbon Valley Mining Co. LLC, Minera Terrazas S.A. de C.V. and San Javier del Cobre S.A. de C.V. LVMC operates the Lisbon Valley copper mine, which comprises three main deposits: Sentinel, Centennial and GTO, plus the Cashin satellite deposit, with reserves and resources totaling +50 million tons and grading an average 0.48% copper. Minera Terrazas holds the company's interest in the Terrazas zinc-copper project located in north- central Mexico. The property has a total resource of 90 million tonnes grading 1.37% zinc and 0.32% copper in two adjacent deposits. San Javier del Cobre S.A. de C.V. holds the company's interest in the San Javier copper property located in northwestern Mexico. Constellation Copper Corporation's balance sheet at March 31, 2008, showed total assets of $65.6 million and total liabilities of $105.0 million, resulting in a total shareholders' deficit of $39.4 million. Going Concern As reported in the Troubled Company Reporter on Jan. 15, 2008, the company related that there is significant doubt about its ability to continue as a going concern. The cash balance of $10.87 million at September 30, has been reduced further to approximately $3.20 million at Dec. 31, 2007, and in order to provide liquidity, the company is pursuing various near term financing alternatives, including bank financing, equity investment, mergers, and sale of certain assets or sale of the entire company. In late November 2007, as a result of a comprehensive management evaluation of Lisbon Valley operations, the company disclosed its decision to cease mining and crushing activities and convert the Lisbon Valley mine to a leach only operation in early 2008. The evaluation included analyses of various mining plans, waste stripping requirements, contract mining arrangements, available mining equipment, projected copper prices and extensive operating cost and cash flow projections. In connection with the evaluation and conversion to a leach only operation, the company recorded an asset impairment of $92.9 million. COPANO ENERGY: Moody's Assigns B1 Rating to Proposed $250MM Notes ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of Copano Energy, L.L.C., including its Corporate Family Rating to Ba3 from B1 and its 8.125% senior unsecured notes due 2016 to B1 (LGD 4, 69%) from B2 (LGD 5, 75%). Moody's also assigned a B1 rating (LGD 4, 69%) to Copano's proposed $250 million of senior unsecured notes due 2018. Proceeds from the proposed notes will be used to repay borrowings under Copano's revolving credit facility. The outlook is stable. The upgrade reflects (i) Copano's increased scale and greater geographic diversification relative to when ratings were initially assigned in January 2006; (ii) good execution and solid performance on acquired assets; (iii) its consistency in following financial policies that maintain leverage at or below 4.0x, ample equity funding of acquisitions and growth capital expenditures, and healthy distribution coverage; (iv) its experienced and long- term oriented management team; and (v) the absence of incentive distribution rights which results in improved governance and a lower cost of equity capital that improves its competitiveness relative to peers. The ratings remain tempered by Copano's rapid pace of change in recent years and desire for high growth both in terms of organic projects and opportunistically through acquisitions. Copano's ratings also reflect its lack of broad value-chain and geographic diversification. Copano has above average exposure to commodity prices, given its focus on gathering and processing activities. However, this exposure is mitigated by expected growth in Copano's fee-based income (primarily due to growth in its Rocky Mountains operations, acquired from Cantera last year), a partial natural hedge on its natural gas position (its Mid-Continent volumes are priced on percentage-of-proceeds basis which helps offset its net short position due to keep-whole exposure at its Houston Central Processing Plant), and hedges at favorable prices on a significant portion of its expected volumes of natural gas liquids. Copano's hedges are primarily in the form of puts, which limits downside risk, has a transparent cost, and avoids some of the potential shortcomings associated with swaps. In addition, Copano's frac spread exposure associated with its keep-whole contracts at Houston Central is limited by the ability to condition gas (for a fee) at the plant when processing is uneconomic. While Moody's recognizes that these mitigants are important, particularly the hedges which provide protection for the next couple of years, Copano's underlying activities still have commodity risk through the cycle which amplifies the financial risk associated with paying out a substantial portion of cash flow in the form of distributions. A further improvement in Copano's rating, beyond perhaps another notch, would require a more stable base of assets, which might come through a much larger scale of activities that are geographically spread out or other types of primarily fee-based activities, such as transmission. Moody's estimates that Copano's adjusted EBITDA (adjusted to add back Copano's share of depreciation and amortization included in equity in earnings from unconsolidated affiliates and the amortization of equity method goodwill), pro forma for the acquisition of both Cantera and Cimmarron, was approximately $173 million in 2007. Moody's estimates that Copano's adjusted EBITDA will range $205 to $225 million in 2008, reflecting volume growth and the benefit of higher prices. As of Dec. 31, 2007, Copano's pro forma adjusted debt/EBITDA, including its share of non-recourse debt at Fort Union and a standard Moody's adjustment for operating leases, was approximately 4.0x (debt/EBITDA was approximately 3.6x excluding the adjustments). Copano's distribution coverage averaged approximately 1.5x in 2007 (and was over 2.0x in 4Q07), which is notably higher than many of Copano's peers and allows it to generate excess cash flow that can be used to fund expansion. Moody's also changed Copano's speculative grade liquidity rating to SGL-2 from SGL-3, reflecting the significant amount of availability under its revolving credit facility following the notes offering. Copano Energy, L.L.C. is headquartered in Houston, Texas. COPANO ENERGY: S&P Puts 'B+' Rating on $250MM Sr. Unsecured Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Copano Energy LLC. At the same time, S&P assigned its 'B+' rating and '5' recovery rating on the company's $250 million privately placed senior unsecured notes due 2018. The outlook remains positive. The rating affirmation and positive outlook reflect Copano's stronger liquidity position and reduced need to access the capital markets in the near term to fund its growth capital program as a result of the notes offering. Copano will use the proceeds from the notes offering to repay amounts outstanding under the revolving credit facility. Leverage metrics remain strong for the rating category. The 'B+' rating and '5' recovery rating on the proposed $250 million notes reflect expectations of modest (10%-30%) recovery for unsecured lenders in a payment default. Houston, Texas-based Copano is a midstream energy company that primarily gathers, processes, and transports natural gas in Texas, Oklahoma, and the Rocky Mountain region. The outlook on Copano is positive. "An upward rating action could occur with continued disciplined financing for acquisitions and growth projects that lower debt leverage," said Standard & Poor's credit analyst Plana Lee. Upward rating movement would also rely on continued hedging to manage commodity price risk. "Conversely, lower-than-expected margins, disappointing volumes, greater-than-expected debt-financed capital spending, or weakened financial credit metrics could result in downward rating movement," she continued. COUNTRYWIDE FINANCIAL: BofA Assures $4BB Acquisition will Continue ------------------------------------------------------------------ Liam McGee, president of Bank of America Corp.'s global consumer and small business banking, confirmed that the bank's proposed $4 billion purchase of Countrywide Financial Corp. remains on track amid forecasts of worsening losses on home-equity loans and economy shrink, various reports say. Bank of America agreed to issue 0.1822 of a share for each Countrywide share, valuing Countrywide at about $6.82 per share, based on Monday's closing price, reports add. Reports cite Mr. McGee as saying: "BofA expected bumps on the road during the transaction and it continues to look hard at Countrywide's earnings, assets and cash flow." According to CreditSights analyst David Hendler, BofA's commentary could be an indication that it was not ruling out a change in the offer price. In May 13 trading, Countrywide shares rose 23 cents to $5.02, while Bank of America shares fell 70 cents to $36.74. About Bank of America Based in Charlotte, North Carolina, Bank of America Corp. (NYSE:BAC) -- http://www.bankofamerica.com-- is a bank holding company. Bank of America provides banking and non-banking financial services and products through three business segments: global consumer and small business banking, global corporate and investment banking, and global wealth and investment management. In December 2006, the company sold its retail and commercial business in Hong Kong and Macau to China Construction Bank. In October 2006, BentleyForbes, a commercial real estate investment and operations company, acquired Bank of America plaza in Atlanta from CSC Associates, a partnership of Cousins Properties Incorporated and the company. In June 2007, the company acquired the reverse mortgage business of Seattle Mortgage Company, an indirect subsidiary of Seattle Financial Group Inc. In October 2007, ABN AMRO Holding N.V. completed the sale of its United States subsidiary, LaSalle Bank Corporation, to Bank of America. About Countrywide Financial Based in Calabasas, California, Countrywide Financial Corporation (NYSE: CFC) -- http://www.countrywide.com/-- is a diversified financial services provider and a member of the S&P 500, Forbes 2000 and Fortune 500. Through its family of companies, Countrywide originates, purchases, securitizes, sells, and services residential and commercial loans; provides loan closing services such as credit reports, appraisals and flood determinations; offers banking services which include depository and home loan products; conducts fixed income securities underwriting and trading activities; provides property, life and casualty insurance; and manages a captive mortgage reinsurance company. * * * As reported in the Troubled Company Reporter on Jan. 15, 2008, Moody's placed the ratings of Countrywide Financial Corporation and its subsidiaries under review for upgrade. CFC and Countrywide Home Loans senior debt is rated Baa3 and short-term debt is rated Prime-3. Countrywide Bank FSB's bank financial strength rating is C-, deposits are rated Baa1 and short-term debt Prime-2. All long and short-term ratings are placed under review for possible upgrade. The company is continuing to face a barrage of lawsuits coming from disgruntled homeowners that filed for bankruptcy protection. Countrywide has been accused by these homeowners and various federal agencies of dubious and questionable lending practices, and for abusing the bankruptcy system. CUMULUS MEDIA: Terminates $1.3BB Merger Deal with Investor Group ---------------------------------------------------------------- Cumulus Media Inc. entered into an agreement with the investor group led by Lew Dickey, the Company's Chairman, President and CEO, and an affiliate of Merrill Lynch Global Private Equity, to terminate the merger agreement entered into between the Company and the investor group on July 23, 2007. The members of the investor group informed the Company that, after exploring possible alternatives, they were unable to agree on terms on which they could proceed with the transaction. As a result of the termination of the merger agreement, and in accordance with its terms, the investor group has agreed to promptly pay the Company a termination fee of $15 million, and the terms of the previously announced amendment to the Company's existing credit agreement will not take effect. Lew Dickey, Chairman, President and CEO of the Company, commented, "Our business remains fundamentally sound and we intend to continue to operate it aggressively and explore opportunities to create and deliver value for our shareholders." The Company also announced that its board of directors intends to explore, in the very near term, the possible implementation of a new stock repurchase plan that would provide liquidity opportunities to stockholders. There can be no assurance, however, that the Company will implement such a plan. As reported by the Troubled Troubled Company Reporter on July 24, 2007, the parties disclosed the execution of a definitive merger agreement under which the investor group will acquire Cumulus in a transaction valued at approximately $1.3 billion. Under the terms of the agreement, Cumulus stockholders will receive $11.75 in cash for each share of Cumulus common stock, representing a premium of approximately 40.4% over the closing price per share of the company's Class A Common Stock on July 20, 2007, the last trading day prior to announcement of the transaction. Holders of the company's Class A, Class B and Class C Common Stock will each receive the same price per share. Headquartered in Atlanta, Georgia, Cumulus Media Inc. -- http://www.cumulus.com-- is the second-largest radio company in the United States based on station count. Giving effect to the completion of all pending acquisitions, Cumulus, directly and through its investment in Cumulus Media Partners, will own or operate 339 radio stations in 65 U.S. media markets. Cumulus Media Inc. shares are traded on the NASDAQ Global Select Market under the symbol CMLS. CUMULUS MEDIA: Terminated Merger Won't Affect S&P's 'B' Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that the announcement by Atlanta Georgia-based Cumulus Media Inc. (B/Stable/--) that it has terminated its merger agreement with a group of investors, including an affiliate of Merrill Lynch Global Private Equity and Cumulus Chairman, President, and CEO Lewis Dickey, has no effect on the ratings at this time. The parties had entered into the agreement on July 23, 2007. As a result of the agreement's termination, the company will no longer be amending its credit agreement, as previously announced, and will receive a $15 million termination fee from the investor group. The company has also announced that it is contemplating a new stock repurchase plan. S&P will continue to monitor developments with respect to a potential repurchase plan and any other shareholder-favoring initiatives, and their repercussions for the company's credit measures and financial policy. Debt to EBITDA is high, at 7.1x for the 12 months ended March 31, 2008, against a covenant of 7.75x, which steps down to 7.50x at Oct. 1, 2008. Maintenance of the rating hinges on the company's ability to preserve sufficient headroom against financial covenants, and its operating outlook. DANA HOLDING: Appoints James Yost as EVP and CFO Effective May 22 ----------------------------------------------------------------- Dana Holding Corporation has appointed James A. Yost, 59, as Executive Vice President and Chief Financial Officer effective May 22. Mr. Yost comes to Dana from Hayes Lemmerz International, Inc. (Nasdaq: HAYZ), where he most recently served as Executive Vice President and Chief Financial Officer with responsibility for the automotive supplier's global financial and information technology functions. "Gary Convis and I are pleased to welcome such a highly respected industry financial leader to our team," said Dana Executive Chairman John Devine. "We look forward to capitalizing on Jim's experience and strategic perspective." "I'm excited to join the Dana team and to have an opportunity to play such a meaningful role in the company's continued resurgence," Mr. Yost added. Mr. Yost succeeds Kenneth A. Hiltz, who served as the company's Chief Financial Officer during its Chapter 11 reorganization and recent emergence. Mr. Yost joined Hayes Lemmerz in 2002 after 27 years at Ford Motor Company, from which he retired in 2001 as Vice President of Corporate Strategy. At Ford, he also held positions as Vice President and Chief Information Officer, Executive Director of Corporate Finance, General Auditor and Executive Director of Finance Process and Systems Development, Finance Director of Ford Europe, and Controller of Autolatina (South America). Mr. Yost earned a Bachelor of Engineering Science degree in computer science from the Johns Hopkins University in Baltimore, Md. He also earned a Masters of Business Administration degree in finance from the University of Chicago. Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/ -- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. Dana has facilities in China in the Asia-Pacific, Argentina in the Latin-American regions and Italy in Europe. The company and its affiliates filed for chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of Nov. 30, 2007, the Debtors listed $7,131,000,000 in total assets and $7,665,000,000 in total debts resulting in a total shareholders' deficit of $534,000,000. Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represented the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners served as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represented the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP served as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC served as counsel to the Official Committee of Non-Union Retirees. The Debtors filed their Joint Plan of Reorganization on Aug. 31, 2007. On Oct. 23, 2007, the Court approved the adequacy of the Disclosure Statement explaining their Plan. Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Third Amended Joint Plan of Reorganization of the Debtors on Dec. 26, 2007. The Debtors' Third Amended Joint Plan of Reorganization was deemed effective as of Jan. 31, 2008. Dana Corp., starting on the Plan Effective Date, operated as Dana Holding Corporation. (Dana Corporation Bankruptcy News, Issue No. 74; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on Feb. 12, 2008, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Dana Holding Corp. following the company's emergence from Chapter 11 on Feb. 1, 2008. The outlook is negative. At the same time, Standard & Poor's assigned Dana's $650 million asset-based loan revolving credit facility due 2013 a 'BB+' rating (two notches higher than the corporate credit rating) with a recovery rating of '1', indicating an expectation of very high recovery in the event of a payment default. In addition, S&P assigned a 'BB' bank loan rating to Dana's $1.43 billion senior secured term loan with a recovery rating of '2', indicating an expectation of average recovery. The TCR reported on Feb. 18, 2008, that Moody's Investors Service affirmed the ratings of the reorganized Dana Holding Corporation as: Corporate Family Rating, B1; Probability of Default Rating, B1. In a related action, Moody's affirmed the Ba3 rating on the senior secured term loan and raised the rating on the senior secured asset based revolving credit facility to Ba2 from Ba3. The outlook is stable. The financing for the company's emergence from Chapter 11 bankruptcy protection has been funded in line with the structure originally rated by Moody's in a press release dated Jan. 7, 2008. DAVIS SQUARE FUNDING I: Moody's Junks Class B Participating Notes ----------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings on these notes issued by Davis Square Funding I, Ltd. Class Description: $100,000,000 Class A-1MT-a Medium Term Floating Rate Notes Due 2038 -- Prior Rating: Aaa -- Current Rating: Aa3, on review for possible downgrade Class Description: $192,500,000 Class A-1MT-b Medium Term Floating Rate Notes Due 2038 -- Prior Rating: Aaa -- Current Rating: Aa3, on review for possible downgrade Class Description: $192,500,000 Class A-1MT-c Medium Term Floating Rate Notes Due 2038 -- Prior Rating: Aaa -- Current Rating: Aa3, on review for possible downgrade Class Description: $192,500,000 Class A-1MT-d Medium Term Floating Rate Notes Due 2038 -- Prior Rating: Aaa -- Current Rating: Aa3, on review for possible downgrade Class Description: $50,000,000 Class A-2 Floating Rate Notes Due 2038 -- Prior Rating: Aaa -- Current Rating: Baa3, on review for possible downgrade Class Description: $75,000,000 Class B Participating Notes Due 2038 -- Prior Rating: A3 -- 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. DAVIS SQUARE FUNDING II: Moody's Cuts Class B Notes' Rating to B3 ----------------------------------------------------------------- Moody's Investors Service has downgraded and placed on review for possible further downgrade the ratings on these notes issued by Davis Square Funding II, Ltd.: Class Description: Class A-1 Long Term Floating Rate Notes -- Prior Rating: Aaa -- Current Rating: A1, on review for possible downgrade Class Description: $57,000,000 Class A-2 Floating Rate Notes Due 2039 -- Prior Rating: Aaa -- Current Rating: Ba2, on review for possible downgrade Class Description: $54,000,000 Class B Floating Rate Notes Due 2039 -- Prior Rating: A3 -- Current Rating: B3, on review for possible downgrade Additionally, Moody's placed these notes on review for possible downgrade: Class Description: $15,000,000 Class C Floating Rate Notes Due 2039 -- Prior Rating: Baa3 -- Current Rating: Baa3, on review for possible downgrade According to Moody's, the rating actions reflect increased deterioration in the credit quality of the structured finance securities. DELTA AIR: Grants 3% Salary Raise to Front-Line Workers ------------------------------------------------------- Delta Air Lines, Inc.'s 38,000 front-line employees composed of flight attendants, ticket agents and other hourly workers will get 3% pay raises effective July 1, 2008, the Atlanta Journal Constitution reports. The raises do not apply to pilots, the newspaper says. According to AJC, Delta deferred earlier in the year a decision on pay increases as it worked to re-forecast the impact of record fuel prices and a looming recession to ensure that it can afford pay adjustments. Management and salaried employees will also get varied raises that are generally targeted at 3%, Delta said in a memo addressed to its employees. Delta's chief executive officer, Richard Anderson, and president, Ed Bastian, disclosed that the Company has gained confidence in its business amid the impact of skyrocketing fuel prices. The executives cited that the company is offsetting the fuel costs, as evidenced by its achieved revenue targets and acquisition of fuel hedge contracts currently valued at $350,000,000. The company said it remains "on track" in its effort to cut operating costs by $550,000 annually. The pay raise for non-pilot Delta employees coincides with the carrier's contract with the pilots union, which members have started voting whether to ratify the Agreement. The decision is also tied to Delta's plans to merge with Northwest Airlines, AJC says. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. DELTA AIR: Employees First to Benefit from Merger with Northwest ---------------------------------------------------------------- More than 100,000 employees and retirees of Delta Air Lines, Inc. and Northwest Airlines Corporation will gain reciprocal access to both airlines' worldwide route systems for free, standby travel, effective May 6, 2008, the carriers said in a statement. The enhanced program will allow Delta and Northwest employees and their families to fly for free to more than 390 worldwide destinations in 67 countries. "Non-revenue travel privileges continue to be one of the most popular aspects of airline employees' total compensation and benefits," said Delta chief executive officer Richard Anderson. "With great coordination and partnership between the airlines, we are offering an immediate benefit by extending free travel on each other's flights -- something that has never been offered this quickly following the announcement of a major airline merger," he said. Northwest CEO Doug Steenland added, "We wanted our own employees to be the first to benefit from the Northwest-Delta combination with a travel benefit that is unique in the airline industry. Having immediate access to the combined network will open up a whole new world of travel opportunities, giving both airlines' employees a sample of the benefits our customers will also experience in the new global airline." The addition of enhanced travel privileges is part of previously announced merger-related commitments to Delta and Northwest employees, including: * a significant equity stake for U.S.-based employees of both companies upon closing of the transaction, where international employees will receive a cash payment in lieu of equity; * pay increases that will continue the progression toward industry-standard pay; * no involuntary furloughs of frontline employees as a result of the merger; * seniority protection through a fair and equitable seniority integration process; and * the protection of the existing pension plans for both companies' employees. The enhanced travel program is an early step in the combination of Delta and Northwest that can be achieved in advance of completion of the regulatory review process. Delta and Northwest expect to complete the regulatory review process by the end of 2008. Delta Pilots Vote To Ratify Merger-Related Agreement Delta's pilots began voting on May 1, 2008, on whether to ratify the tentative agreement between Delta management and the Delta pilots union, which will provide certain modifications to Delta's current Pilot Working Agreement, The Atlanta Journal Constitution reports. Ratification of the Agreement will "ease the way" toward Delta's planned merger with Northwest, says the report. Voting by the Delta pilots union's 6,000 members will end on May 14. As previously reported, the proposed deal between Delta and the union grants the pilots: * a 3.5% equity stake in the combined Company; and * annual pay raises of 5% in 2009, and 4% in 2010 to 2012 under an extended contract. According to AJC, the pay raise is in exchange for rule changes giving Delta more flexibility to integrate their flight networks with Northwest's. The Agreement being considered still has the seniority issues outstanding and there are plans "to [work] with the Northwest [pilots union leaders] to resolve them at the earliest opportunity," said Lee Moak, executive committee head of Delta's pilots union, reports AJC. Seniority is a major determinant of pilots' pay levels and work schedules, among other things. During the earlier months of Delta's and Northwest's merger talks, the airlines' pilot unions tried, but failed, to reach an agreement on a joint labor contract and a plan for merging the seniority lists of the unions' 11,000 pilots, AJC says. Northwest's pilot union -- whose members have not been included in the pay raises and equity in the new company that Delta pilots have been promised with -- has vowed to oppose the planned merger, AJC reports. However, The Associated Press says Northwest's pilot group has disclosed that it will meet with pilots from Delta for two days next week to "focus on a joint contract, with seniority issues to come later." Northwest pilots have noted that they oppose the deal with Delta because they were left out, according to the report. Delta To Keep 450 Jobs at Northwest's Chisholm Reservation Center Delta Air Lines officials assured legislators that they will keep thousands of Northwest Airlines jobs in Minnesota after the merger, reports Carissa Wyant of Minneapolis/St. Paul Business Journal. Delta will attempt to retain 450 jobs at Northwest's reservation center in Chisholm, Delta's CEO, Richard Anderson, told members of Congress on Wednesday, according to reports. Ms. Wyant says Mr. Anderson further assured that there will be no job cuts for pilots, trainers, flight attendants, cargo workers and other ground workers. However, since headquarters will shift to Atlanta, there would likely be job losses at Northwest's headquarters, which has about 1,100 employees. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News, Issue No. 91; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on April 17, 2008, Moody's Investors Service placed the debt ratings of Delta Air Lines, Inc. ("Delta", corporate family at B2) and Northwest Airlines Corporation ("Northwest", corporate family rating at B1) on review for possible downgrade. The review was prompted by the announcement that the two airlines have agreed to combine in an all-stock transaction with a combined enterprise value of approximately $18 billion. Fitch Ratings has affirmed the debt ratings of Delta Air Lines, Inc. following the announcement that Delta has agreed to merge with Northwest Airlines Corp., subject to approval by the two airlines' shareholders and the U.S. Department of Justice. Delta's ratings were affirmed as: Issuer Default Rating at 'B'; First-lien senior secured credit facilities at 'BB/RR1'; Second- lien secured credit facility (Term Loan B) at 'B/RR4'. The issue ratings apply to $2.5 billion of committed credit facilities. The Rating Outlook for Delta has been revised to Negative from Stable. Standard & Poor's Ratings Services placed its ratings, including the 'B+' long-term corporate credit rating, on Northwest Airlines Corp. on CreditWatch with negative implications, following announcement of a merger agreement with Delta Air Lines Inc. (B/Watch Pos/--). The CreditWatch listing affects enhanced equipment trust certificates with various ratings, excepting those that are insured by a bond insurer. S&P's listing of Northwest ratings on CreditWatch with negative implications and those of Delta on CreditWatch with positive implications implies that S&P foresee a corporate credit rating of either 'B' or 'B+' for the combined entity. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. DRS TECHNOLOGIES: Sold to Italys Finmeccanica for $5.2 Billion --------------------------------------------------------------- Finmeccanica, S.p.A. and DRS Technologies, Inc. signed a definitive merger agreement under which Finmeccanica will acquire 100% of DRS stock for US$81 per share in cash. The transaction allows Finmeccanica to consolidate its international role as a key supplier of integrated systems for defense and security, entering the U.S. market as a key player. It further allows DRS to seek new business opportunities in the U.S. and abroad. The transaction, valued at approximately US$5.2 billion (EUR3.4 billion), inclusive of approximately $1.2 billion in net debt, following the conversion of DRS convertible notes, represents a premium of 27 percent to DRS closing share price on May 7, 2008; it is also a 32 percent premium over DRS thirty-day average stock price traded on the NYSE. The Boards of Directors of Finmeccanica and DRS have each approved the terms of the agreement. DRS will operate as a wholly-owned subsidiary, maintaining its current management and headquarters. As is customary in this type of transaction, DRS and Finmeccanica will comply with all national security requirements and will propose to the Defense Security Service that the company operate under a Special Security Agreement, with its own board of directors comprised predominantly of U.S. citizens holding security clearances and a government security committee. With increased business opportunities that will arise following the transaction, it is expected that DRS will expand its overall employment base. "[The] transaction is a perfect fit; the complementary technologies and platforms will establish a new competitive player in defense and security markets in the U.S. and around the world," said Pier Francesco Guarguaglini, chairman and chief executive officer of Finmeccanica. "The merger furthers Finmeccanicas tradition of investing in the U.S. and supporting the American warfighter with superior technology and value." "DRS dramatic growth over the past five years and the premium provided through this acquisition will provide attractive returns for our stockholders," said Mark S. Newman, chairman of the board, president and chief executive officer of DRS. "This investment in DRS - with an increased emphasis on research and development - will mean the combined company will be able to compete for and win additional contracts around the world, accelerating growth and expanding opportunities at our facilities in the U.S." For DRS, the combination with Finmeccanica will enable an American company and brand to better compete in the global military and security market. The transaction will help the new company to bid and win larger-scale projects in the U.S. and abroad. For Finmeccanica, the transaction will boost its existing position as a top-tier competitor, enabling it to enhance the product and service solutions it provides to its customers. Finmeccanicas platforms and areas of expertise (helicopters; defense electronics and security; aeronautics; space; defense systems; energy; and transportation) wholly complement DRS growing market penetration by its four primary business segments: Command, Control, Communications, Computers & Intelligence (C4I); Reconnaissance, Surveillance & Target Acquisition (RSTA); Sustainment Systems; and Technical Services. Finmeccanica and its subsidiaries in Pennsylvania, New York, Texas, California, New Jersey, Kansas, Virginia, North and South Carolina have a rich history in the U.S., including its work for the U.S. government on programs such as the VH-71 presidential helicopter and the C-27J joint cargo aircraft. DRS will lead Finmeccanicas defense electronics efforts in the U.S. after the transaction closes. Financing for the acquisition will be structured so as to preserve a solid capital structure, guarantee adequate financial flexibility to further support growth and deliver value creation to Finmeccanicas shareholders. Finmeccanica will fund the acquisition with a Syndicated Loan Facility to be taken out by a combination of equity issuance, long-term debt issuance, and divestitures of its assets. Among these will be an IPO of AnsaldoEnergia. Terms and conditions will be determined upon completion of the transaction. The transaction is subject to approval by the stockholders of DRS, the receipt of regulatory approvals and other closing conditions, including review by U.S. Antitrust Authorities, the Committee on Foreign Investment in the United States (CFIUS) and the Defense Security Service (DSS). The transaction is expected to close by the fourth quarter of 2008. Goldman Sachs International, IntesaSanPaolo S.p.A., Mediobanca- Banca di Credito Finanziario S.p.A. and Unicredit Group are serving as Bookrunners and Mandated Lead Arrangers of the Syndicated Loan Facility. Sullivan & Cromwell LLP is acting as legal advisor to Finmeccanica in connection with the Syndicated Loan Facility. Linklaters and Legance are acting as legal advisors to the banks. Lehman Brothers Holdings Inc. is serving as financial advisor to Finmeccanica, with Goldman Sachs International and Mediobanca providing a fairness opinion. Arnold & Porter LLP is serving as legal advisor to Finmeccanica. Bear Stearns & Co. Inc. and Merrill Lynch & Co. are serving as financial advisors to DRS and rendered fairness opinions to the DRS board of directors. DRS legal advisors are Skadden, Arps, Slate, Meagher & Flom LLP. About Finmeccanica Headquartered in Italy, Finmeccanica -- http://www.finmeccanica.com-- is a leading global high-tech company with core competencies in the design and manufacture of helicopters, civil and military aircraft, aero structures, satellites, space infrastructure, missiles and defense electronics and security. The company is listed on the Milan stock exchange and operates throughout the world. It employs more than 60,000 people worldwide and 10,000 in the United Kingdom. About Finmeccanica in North America In North America, Finmeccanica employs more than 2,100 employees at 32 sites across the country through its subsidiaries: AnsaldoBreda; Ansaldo STS; Ansaldo Energia; Thales Alenia Space; MBDA; Alenia North America; Bell Agusta Aerospace; SELEX Systemi Integrati; SELEX Galileo; SELEX Communications; Global Military Aircraft Systems; Global Aeronautica; Telespazio North America; OTO Melara North America; and Elsag North America. Whether flying the President, transporting troops and cargo, securing the borders, tracing criminals, enhancing the Navys capabilities, Finmeccanica products ensure safety and security in the United States. About DRS DRS, headquartered in Parsippany, N.J. -- http://www.drs.com-- is a leading supplier of integrated products, services and support to military forces, government agencies and prime contractors worldwide. The company employs approximately 10,000 people and in fiscal 2007 generated revenues of $2.821 billion. DRS TECHNOLOGIES: Fitch Places Sr. Sub. Notes' B Rating on Watch ---------------------------------------------------------------- Fitch Ratings has placed the ratings for DRS Technologies, Inc. (NYSE: DRS) on Rating Watch Positive following the announcement that Finmeccanica SpA (Finmeccanica) has agreed to purchase DRS for approximately US$5.2 billion. The Ratings Watch Positive applies to these ratings: -- Issuer Default Rating (IDR) 'B+'; -- Senior secured revolving credit facility 'BB+/RR1'; -- Senior secured term loan 'BB+/RR1'; -- Senior unsecured notes 'BB+/RR1'; -- Senior unsecured convertible notes 'BB+/RR1'; -- Senior subordinated notes 'B/RR5'. On May 12, Finmeccanica, a leading European aerospace and defense firm based in Rome, Italy, announced its intention to acquire DRS for EUR3.4 billion (approximately US$5.2 billion) to be funded through a bridge loan facility. The facility is expected to be replaced by a combination of new equity issuance, cash proceeds from asset sales, and new debt issued by Finmeccanica. The Rating Watch Positive is based on the likelihood of lower debt levels at DRS as a result of the transaction. Finmeccanica is not expected to guarantee any surviving debt at DRS, but debt levels at DRS will likely fall as a result of the paydown of the term loan and the change of control put option incorporated into DRS's bond indentures. Fitch expects Finmeccanica will repay and terminate DRS's current senior secured credit facility at closing. DRS's existing senior subordinated notes obligations (US$250 million of 7.625% notes due 2018, and US$550 million of 6.875% notes due 2013) both contain change of control put provisions within their indentures, which require the redemption of the notes at 101% of par, at the option of the holders, if the transaction is consummated. The US$350 million of 6.625% senior unsecured notes due 2016 also contain the same provision. The US$346 million of 2% senior convertible notes would likely become convertible into cash up to the amount of the consideration given for the company's common equity. However, should any of these notes remain outstanding after the transaction closes, they would likely benefit from some debt repayment triggered by the change of control, as well as the stronger parent credit profile. Fitch anticipates a relatively strong parent subsidiary linkage between DRS and Finmeccanica based on legal and strategic integration of the two entities, although Fitch expects DRS could remain primarily independent from an operating perspective and it is unlikely that the ratings of Finmeccanica and DRS would be put at the same level. At this time, Fitch does not expect Finmeccanica to guarantee any surviving DRS debt. The Rating Watch is expected to be resolved at or before the closing of the transaction, which is anticipated to be in the fourth quarter of 2008. The transaction has been approved by the boards of directors at both firms, but remains subject to certain regulatory approvals. Should the acquisition not close, Fitch expects that the current ratings and Positive Outlook will remain in place. If for any reason the credit facility or notes were to remain in place after a successful closing, Fitch expects that the ratings within the capital structure could migrate toward that of the new parent, whose IDR and senior unsecured debt are currently rated 'BBB' with a Positive Outlook by Fitch, depending on the final corporate structure and relationship between the entities. However, as stated above, Fitch would not likely rate DRS debt at the same ratings level as Finmeccanica. DRS Technologies, Inc. -- http://www.drs.com/-- headquartered in Parsippany, New Jersey, U.S.A., is a leading supplier of integrated products, services and support to military forces, intelligence agencies and prime contractors worldwide. Focused on defense technology, the Company develops, manufactures and supports a broad range of systems for mission critical and military sustainment requirements, as well as homeland security. DRS TECHNOLOGIES: Finmeccanica Deal Cues Moody's Rating Review -------------------------------------------------------------- Moody's Investors Service placed the A3 senior unsecured debt rating of Finmeccanica S.p.A under review for possible downgrade. Moody's also placed the debt ratings of DRS Technologies. Inc. -- corporate family and senior unsecured at B1, senior secured at Ba1 -- under review for possible upgrade. These rating actions follow Finmeccanica's agreement to purchase DRS in a transaction valued at about $5.2 billion including debt assumption -- equal to about 12x DRS's EBITDA for the last twelve months ending Dec. 31, 2007. Moody's expects to complete its rating review when the transaction closes, which the company projects to be during the 4th quarter of 2008. "This proposed transaction is consistent with Finmeccanica's plan to grow by acquisitions which are likely to be sizeable, with the U.S. defense market being particularly attractive", according to Bob Jankowitz, Senior Vice President at Moody's. DRS is sizable with about $3.3 billion of revenue likely for its fiscal year ending March 31, 2008, equal to about 20% of Finmeccanica's revenue. Over 80% of DRS's revenue is to the U.S. Department of Defense and much of the balance is to other US government agencies, with about $3.6 billion in the backlog. Several of its units -- particularly the infrared technology, and battle management systems -- are a natural extension of Finmeccanica's high-margin defense electronics business. Nonetheless, "the rating outcome depends critically on the amount of incremental debt used to fund the transaction, and Moody's review will focus on Finmeccanica's target capital structure and the timing in achieving that profile", noted Jankowitz of Moody's. Finmeccanica contemplates a combination of new debt, along with primary equity and proceeds from assets sales which Finmeccanica expects will account for about 2/3 of the total transaction value. The amount of each of the components and the timing to realize proceeds form asset sales are still uncertain, however. Moody's notes that an all-debt funded transaction would likely pressure the A3 senior unsecured debt rating down. This is because such a funding plan would increase Finmeccanica's debt. However, a more limited increase in debt producing pro-forma credit metrics consistent Finmeccanica's recent results (Retained cash flow to debt of 23% and debt to EBITDA of 3x, for example) could result in the A3 rating being confirmed. DRS's high operating margin, which is better than that of Finmeccanica, and the company's record of fairly steady cash flow and the sizeable backlog provides some support for Finmeccanica's use of debt as part of the financing for the acquisition. In addition, Moody's rating review will consider the ongoing role of acquisitions in Finmeccanica's growth strategy following the acquisition of DRS. Because of the Italian government's 34% stake, Finmeccanica's debt rating follows Moody's rating methodology for Government Related Issuers (see the Summary Opinion of Finmeccanica dated January 24, 2008 for further discussion). Moody's estimate of default dependence (low) with the Italian government and the anticipated support from the government (medium) provides some lift from the Base Line Credit Assessment to the A3 senior unsecured rating. As a primary equity offering would dilute the government's ownership somewhat, the rating review will consider the prospective level of government support in that context as well any impact on the support level as a result of a substantial investment by Finmeccanica in a non-EU business. As DRS would likely be operated as a stand-alone business, limited merger-related cost synergies are anticipated. Over time, it is possible that Finmeccanica could move some of its manufacturing to the U.S. which would be a positive development as it would reduce some exposure to the high Euro. The review, however, will also consider the degree to which a change in ownership could affect DRS's future cash flows, as well as how the competitive environment could change if this transaction prompts more consolidation activity in DRS's markets. Moody's anticipates extensive review of the transaction by the U.S. Department of Defense, the Committee on Foreign Investment in the United States, and the U.S. Department of Justice as well as other agencies. This could be time consuming and, because of DRS's defense related operations, it is possible there could be some modifications to the transaction prior to closing. DRS's debt ratings are under review for possible upgrade because of the anticipated assumption of its outstanding debt by Finmeccanica, a higher rated entity. The debt ratings will depend on where the DRS instruments will reside in the ultimate legal organization structure of the new group, as well as whether Finmeccanica will provide a guaranty. Moody's also notes that the DRS debt does have change of control puts available to the holders, which may be exercised. On Review for Possible Downgrade: Issuer: Finmeccanica Finance S.A. -- Senior Unsecured Conv./Exch. Bond/Debenture, Placed on Review for Possible Downgrade, currently A3 -- Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Downgrade, currently A3 -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently A3 Issuer: Finmeccanica S.p.A. -- Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Downgrade, currently A3 -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently A3 On Review for Possible Upgrade: Issuer: DRS Technologies, Inc. -- Probability of Default Rating, Placed on Review for Possible Upgrade, currently B1 -- Corporate Family Rating, Placed on Review for Possible Upgrade, currently B1 -- Senior Subordinated Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently 84 - LGD5 -- Senior Secured Bank Credit Facility, Placed on Review for Possible Upgrade, currently 12 - LGD2 -- Senior Unsecured Conv./Exch. Bond/Debenture, Placed on Review for Possible Upgrade, currently 46 - LGD3 -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Upgrade, currently 46 - LGD3 Outlook Actions: Issuer: DRS Technologies, Inc. -- Outlook, Changed To Rating Under Review From Positive Issuer: Finmeccanica Finance S.A. -- Outlook, Changed To Rating Under Review From Stable Issuer: Finmeccanica S.p.A. -- Outlook, Changed To Rating Under Review From Stable Finmeccanica, based in Rome, Italy, is a leading international defense contractor. DRS Technologies, Inc., based in Parsippany New Jersey, manufactures defense electronics systems. DRS TECHNOLOGIES: Finmeccanica Acquisition Cues S&P's Pos. Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including the 'BB-' corporate credit rating, on DRS Technologies Inc. on CreditWatch with positive implications. "The CreditWatch follows the announcement that DRS is to be acquired by the higher rated Finmeccanica SpA [BBB/Watch Neg/A-2] of Italy," said Standard & Poor's credit analyst Christopher DeNicolo. The $5.2 billion transaction, including net debt of $1.2 billion and assuming the conversion of the company's convertible notes, is expected to close by the end of 2008. The deal is subject to DRS shareholder approval and regulatory approvals in the U.S., including by the Committee on Foreign Investment in the United States, the Defense Security Service, and antitrust officials. Ratings could be withdrawn if all outstanding rated debt is repaid. Parsippany, New Jersey-based DRS is a leading midtier supplier of defense electronics, including infrared and electro-optical sighting, targeting and weapon sensor systems, naval displays, signals intelligence processing equipment and battle management tactical computer systems. The company also provides logistics, IT, and training services and military support equipment. EOS AIRLINES: U.S. Trustee Selects Five-Member Creditors' Panel --------------------------------------------------------------- Diana G. Adams, the U.S. Trustee for Region 2, appointed five creditors to serve on an Official Committee of Unsecured Creditors of EOS Airlines Inc.'s Chapter 11 bankruptcy proceeding. The members of the creditor's committee are: 1) Servisair LLC ATTN: Dino G. Noto, Vice President & General Counsel 151 Northpoint Drive Houston, Texas 77060 Tel: (281) 260-3911 Fax: (281) 260-3965 2) Systems and Software Enterprises, Inc. d/b/a IMS Consultants ATTN: Timothy Graven, Chief Financial Officer 2929 E. Imperial Highway Brea, California 92821 Tel: (714) 854-8663 Fax: (714) 854-8723 3) Pan Am International Flight Academy ATTN: Eric Freeman, Executive Vice President 5000 N.W. 36 Street Miami, Florida 33122 Tel: (305) 874-6639 Fax: (305) 874-6644 4) Peter Mochnal, Representative of Warn Act Claimants 3 Walnut Terrace East Hanover, New Jersey 07936 Tel: (973) 885-5661 5) Sourcespeed LLC ATTN: Geoffrey Wolfe, Partner & CEO 420 Wolfe Street Alexandria, VA 22314 Tel: (703) 201-3593 Fax: (928) 447-0807 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About EOS Airlines Based in Purchase, New York, EOS Airlines, Inc. -- http://www.eosairlines.com/-- is a transatlantic airline. The company filed for Chapter 11 protection April 26, 2008 (Bankr. S.D.N.Y. Case No.08-22581). Stephen D. Lerner, Esq., at Squire Sanders & Dempsey, LLP, represents the Debtor in its restructuring efforts. The Debtor selected Kurztman Carson Consultants LLC as claims agent. When the Debtor filed for protection against it creditors, it listed total assets of $70,233,455 and total debts of $34,858,485. ESTERLINE TECHNOLOGIES: Moody's Upgrades Sr. Notes' Rating to Ba2 ----------------------------------------------------------------- Moody's Investors Service has upgraded the ratings of Esterline Technologies Corp.'s $175 million senior unsecured global notes due 2017 to Ba2 LGD3 49% from Ba3 LGD4 67% and affirmed all other ratings including the company's Ba2 corporate family and probability of default ratings. The rating outlook remains stable. The upgrade of the $175 million senior unsecured global notes follows Esterline's prepayment of $166 million of senior secured term loan debt since April 2007. The senior secured debt prepayment has reduced the amount of senior secured debt within the company's capital structure, improving recovery prospects for the senior unsecured debt class in a default scenario. In October 2007 the company issued equity for proceeds of $187 million, which enabled the senior secured term loan prepayment, while the company applied the bulk of its internal cash flow generation toward its cash balance. The affirmation of the company's Ba2 CFR reflects the company's relatively strong debt protection metrics, good internal cash flow generation, and good liquidity profile. As of Feb. 1, 2008 Esterline's debt to EBITDA and EBIT to interest metrics were 2.6x and 3.0x, respectively, on a Moody's adjusted basis. The Ba2 rating acknowledges the company's recently strong financial performance stemming from the recently high commercial aircraft and defense related demand. Constraining the rating is Esterline's acquisition growth strategy, the relatively high purchase price multiples of attractive aerospace and defense assets and the likelihood that the company's current credit metrics could weaken in the future with acquisitions. Moody's also notes that despite the company's relatively strong debt protection measures, it is likely that defense spending growth has peaked and will increase at a much slower rate over the next 12 to 24 months. The stable outlook reflects Moody's expectation that Esterline will continue to generate free cash flow and maintain credit metrics supportive of the Ba2 CFR while pursuing its acquisition growth strategy. Additionally, Moody's notes that the level of demand for commercial aircraft should remain robust over the intermediate term which should more than offset lower defense related demand growth. These ratings have been upgraded: -- $175 million 6.625% Senior Unsecured Notes due 2017 . . . to Ba2 LGD3 49% from Ba3 LGD4 67% These ratings have been affirmed: -- Corporate Family Rating . . . Ba2 -- Probability of Default Rating . . . Ba2 -- $175 million 7.25% Senior Subordinated Notes due 2013 . . . B1 LGD5 86% Esterline Technologies Corporation, headquartered in Bellevue, Washington, serves aerospace and defense customers with products for avionics, propulsion and guidance systems. The company operates in three business segments: Avionics & Controls, Sensors & Systems and Advanced Materials. Revenues for the twelve months ended February 1, 2008 were approximately $1.4 billion. FIRST NLC TRUST: Moody's Cuts Rating on Class M-9 Bonds to B2 ------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of seven tranches issued in two transactions from the First NLC Trust 2005 shelf. The collateral backing each transaction consists primarily of first lien adjustable-rate and fixed-rate subprime mortgage loans. The deals being reviewed have experienced an increasing proportion of severely delinquent loans. Subsequent increase of losses will cause the protection available to the subordinated bonds to be diminished. Complete rating actions are: Issuer: First NLC Trust 2005-1 -- Cl. M-12, downgraded from Baa2 to Ba1 -- Cl. M-13, downgraded from Baa3 to B1 Issuer: First NLC Trust 2005-2 -- Cl. M-5, downgraded from A2 to Baa1 -- Cl. M-6, downgraded from A3 to Baa2 -- Cl. M-7, downgraded from Baa1 to Ba1 -- Cl. M-8, downgraded from Baa2 to Ba3 -- Cl. M-9, downgraded from Baa3 to B2 FORTUNA MANAGED: Fitch Likely to Cut Rating of 2 Classes to BB -------------------------------------------------------------- Fitch Ratings has placed 26 classes of notes on Rating Watch Negative. All notes were issued by Fortuna Managed Synthetic CDO. Fourteen classes of notes were issued as part of Morgan Stanley Managed ACES SPC series 2006-6 (series 2006-6), one class was issued as part of the Morgan Stanley Managed ACES SPC series 2006- 8 (series 2006-8) and 11 classes were issued as part of the Morgan Stanley Managed ACES SPC series 2006-9 (series 2006-9). The Rating Watch Negative actions reflect Fitch's view on the credit risk of the rated notes following the release of its new Corporate CDO rating Criteria. Morgan Stanley Managed ACES SPC series 2006-6 -- US$30,000,000 junior super senior secured floating-rate notes, 'AAA' on Rating Watch Negative; -- US$65,000,000 class IA secured floating-rate notes, 'AAA' on Rating Watch Negative; -- JPY2,200,000,000 class IB secured floating-rate notes, 'AAA' on Rating Watch Negative; -- Eur20,000,000 class IC secured floating-rate notes, 'AAA' on Rating Watch Negative; -- US$90,000,000 class IIA secured floating-rate notes, 'AA' on Rating Watch Negative; -- JPY3,000,000,000 class IIB secured floating-rate notes, 'AA' on Rating Watch Negative; -- JPY1,000,000,000 class IID secured floating-rate notes, 'AA' on Rating Watch Negative; -- US$110,000,000 class IIIA secured floating-rate notes, 'A' on Rating Watch Negative; -- EUR13,000,000 class IIIB secured fixed-rate notes, 'A' on Rating Watch Negative; -- EUR3,000,000 class IIIC secured floating-rate notes, 'A' on Rating Watch Negative; -- US$5,000,000 class IIID secured fixed-rate notes, 'A' on Rating Watch Negative; -- US$10,000,000 class IVA secured floating-rate notes, 'BBB' on Rating Watch Negative; -- JPY1,000,000,000 class IVB secured fixed-rate notes, 'BBB' on Rating Watch Negative; -- EUR10,000,000 class IVC secured floating-rate notes, 'BBB' on Rating Watch Negative. Morgan Stanley Managed ACES SPC series 2006-8 -- US$20,000,000 class IA secured floating-rate notes affirmed at 'AAA' on Rating Watch Negative. Morgan Stanley Managed ACES SPC series 2006-9 -- US$30,000,000 junior super senior secured floating rate notes, 'AAA' on Rating Watch Negative; -- EUR25,000,000 junior super senior B secured floating rate notes, 'AAA' on Rating Watch Negative; -- US$1,000,000 sub junior super senior floating-rate notes, 'AAA' on Rating Watch Negative; -- US$5,000,000 class IA secured floating-rate notes, 'AAA' on Rating Watch Negative; -- EUR7,500,000 class IC secured floating-rate notes, 'AAA' on Rating Watch Negative; -- US$3,000,000 class IIA secured floating-rate notes, 'AA' on Rating Watch Negative; -- JPY500,000,000 class IIB secured floating-rate notes, 'AA' on Rating Watch Negative; -- EUR3,000,000 class IIC secured fixed-rate notes, 'AA' on Rating Watch Negative; -- EUR25,000,000 class IID secured floating-rate notes, 'AA' on Rating Watch Negative; -- US$42,000,000 class IIIA secured floating-rate notes, 'A' on Rating Watch Negative; -- JPY4,000,000,000 class IIIB secured fixed-rate notes, 'A' on Rating Watch Negative. Key drivers of this transactions credit risk include: -- Portfolio credit risk deteriorating to an average portfolio quality of 'BBB-' from 'BBB'/'BBB-' in January 2008, with 12.5% of the portfolio rated below investment grade. -- Portfolio migration risk with 10.3% of the portfolio on Rating Watch Negative and 27.0% of the portfolio on Outlook Negative. -- Industry concentration of 49.3% in the three largest, made up of 31.5% in Banking & Finance, 10.8% in Telecommunications and 7.1% in Building & Materials. Given Fitch's view of concentration and the current credit quality of the portfolio, the credit enhancement levels below are not sufficient to justify the current rating of these notes. -- Series 2006-6 and 2006-9 junior super senior notes 9.0%; -- Series 2006-9 sub junior super senior notes 7.1%; -- Series 2006-6, 2006-8 and 2006-9 class I notes 6.5%; -- Series 2006-6 and 2006-9 class II notes 5.8%; -- Series 2006-6 and 2006-9 class III notes 5.2%; -- Series 2006-6 class IV notes 4.3%. Resolution of the Rating Watch negative status will incorporate any changes made to the portfolio or the transaction along with additional portfolio migration. If there are no significant changes prior to the resolution of the Rating Watch Negative status, the notes will likely be downgraded to the rating categories indicated below. -- Series 2006-6 and 2006-9 junior super senior notes 'AA' category; -- Series 2006-9 sub junior super senior notes 'A' category; -- Series 2006-6, 2006-8 and 2006-9 class I notes 'BBB' category; -- Series 2006-6 and 2006-9 class II notes 'BBB' category; -- Series 2006-6 and 2006-9 class III notes 'BB' category; -- Series 2006-6 class IV notes 'BB' category. Fortuna Managed Synthetic CDO is a partially funded synthetic CDO referencing a portfolio of primarily investment grade corporate obligations. The portfolio maximum notional amount is US$10 billion. At close, proceeds from the issuance of the notes were used to collateralize credit default swaps (CDS) between the issuer and Morgan Stanley Capital Services Inc. (guaranteed by Morgan Stanley rated 'AA-/F1+'; Outlook Negative by Fitch). The portfolio is actively managed by AIG Investments. FRONTIER AIRLINES: Union Says Golden Parachute Will Break Deal -------------------------------------------------------------- The Teamsters Union on Wednesday said Frontier Airlines management is demanding a golden parachute even as it demands pay reductions from employees. Managers at Frontier (FRNT) want to grant workers little to nothing if the company fails. But they want to give themselves up to six months pay. "We negotiated in good faith with Frontier management even though they already have the lowest labor costs of all low-cost carriers," said Matthew Fazakas, president of Teamsters Local 961. "They continually moved the goal posts for a deal. But we met every savings demand they made. Now we learn they had a secret plan to give themselves golden parachutes while workers get nothing. "Golden parachutes for management are a deal breaker," Fazakas said. The union said Frontier's bankruptcy has nothing to do with labor costs. Frontier has among the lowest labor costs in the industry and the lowest among low-cost carriers. The airline's bankruptcy resulted from a dispute with its credit card processor. Nonetheless, Frontier employees agreed to $10.2 million in labor savings. During negotiations, Teamster employees agreed to a performance bonus plan for both management and line employees. "Suddenly, on Tuesday, management sprang on us a new severance plan that would give them pay up to six months," Fazakas said. "We would get nothing. "We're outraged by this secret plan for a golden parachute," Fazakas said. "They concealed this plan from us throughout bargaining. They want us to have confidence in their plan to emerge from bankruptcy, but obviously they have no confidence in it themselves." Frontier employs about 425 members of the International Brotherhood of Teamsters as aircraft technicians, ground service technicians, tool room attendants, material specialists and aircraft appearance agents. Founded in 1903, the International Brotherhood of Teamsters represents 1.4 million hardworking men and women in the United States, Canada and Puerto Rico. 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 DRILLING: Liquidity Pressures Cue Moody's to Junk Ratings ------------------------------------------------------------------ Moody's Investors Service downgraded Frontier Drilling ASA's Corporate Family Rating to Caa2 from B3, the probability of default rating to Caa3 from B3, the first secured credit facilities to B2 (LGD2, 10%) from B1 (LGD2, 28%) , and second lien senior secured term loan to Caa3 (LGD3, 32%) from Caa1 (LGD5, 73%). The ratings remain under review for possible further downgrade. The Caa2 CFR reflects the increased liquidity pressures resulting from the lower than expected earnings and cash flows from the Duchess coming off contract work earlier than expected and the company's election to accelerate planned shipyard work for the Duchess, the planned dry docking of the Seillean vessel in June, and yet another set of larger than expected cost overruns for the drillship Phoenix (formerly named the Deepwater) upgrade. When Moody's placed FDR's ratings under review on 4/8/08, Moody's were looking for the signing of a new contract for the Duchess by early May as a way of avoiding a Minimum EBITDA covenant violation under the company's senior secured credit facilities. However, since that time, the Duchess has not been signed to a new contract, which raises the possibility of a covenant breach this quarter. In addition, FDR has completed its project review of the Phoenix upgrade and has determined that the cost overruns are much higher than an earlier estimate and remains faced with the possibility of completion being delayed somewhat beyond the currently scheduled completion date of the end of August. This is the third upward cost revision for the Phoenix and with the delivery of the Phoenix being possibly delayed, there is additional pressure on the company's overall liquidity position. The combination of these events has resulted in the urgent need for additional liquidity over the next quarter. The company estimates the funding shortfall for the remainder of the Phoenix upgrade and the Seillean dry docking to be in the vicinity of $125 million, which is much higher than previous estimates. Under the credit facilities, FDR is prohibited from committing to any further funding commitments for the cost overruns, and therefore, would need a waiver from the lenders. The Caa3 probability of default reflects Moody's view that there is a significantly increased default risk given the multiple issues facing the company at this time. Under our Loss Given Default methodology, the first lien credit facilities are now rated B2. This reflects a higher than average recovery rate based on the current demand/supply fundamentals of the offshore drilling market which Moody's believes helps support FDR's asset values and therefore, the recovery prospects for the first secured lenders. The second lien facilities are rated Caa3, reflecting the amount of first lien debt in the capital structure. The ratings remain on review for further downgrade reflecting Moody's heightened concern regarding the liquidity and potential default facing FDR. While the company remains in contract negotiations for the Duchess, the company is also in talks with its stakeholders regarding additional liquidity as well as the potential covenant violations. However, not having a contract for the Duchess by this time raises the possibility of the company not meetings its covenant requirements by Q2'08. In concluding the review, Moody's will want to know whether the company's equity sponsors Carlyle/Riverstone and DLJ Merchant Banking Partners will provide equity contributions to help fund the cash shortfall. Moody's would also need more clarification on the timing, amount, and form of any contribution that may be made. While the addition of debt capital could help the company's overall liquidity position, Moody's would view that as a credit negative given the already high levels of leverage in the company at this time, and could result in a further downgrade of the ratings. Moody's also notes that an affiliate company of FDR, which is refurbishing another drillship, is also running into tight liquidity which may affect the negotiations with its equity sponsors and stakeholders for additional support. In addition to the Duchess coming off its contract early, FDR elected to have the Duchess undergo early shipyard work, including its five-year survey that was originally planned for Q4'08. Furthermore, the Seillean vessel currently under contract with Petrobras is due to go into dry dock in June 2008 for an upgrade which includes replacement of its thrusters, gas turbines, and power management system at an estimated cost of $49 million. Moody's believes that the accelerated expense for the Duchess combined with the Phoenix costs currently estimated to be approximately $98 million higher (going from $255 million to $353 million) than original estimates, and the Seillean upgrade cost of $49 million will result in the company having a funding shortfall of at least $125 million. Although the Company's approximate $50 million cash balance (which includes the full draw of the $60 million senior secured revolver) may cover its obligations through June, the company is still facing a significant funding deficit. While the company is currently evaluating new contracts for the Duchess, nothing has been signed yet and the shipyard work is virtually complete. As a result, the company faces the potential risk of not meeting the minimum EBITDA test for Q2'08 unless it signs a contract (at projected dayrates) and starts working by the end of May. The Caa2 CFR reflects Frontier's considerably higher leverage than similarly rated oilfield services providers, especially when incorporating the non-recourse debt at affiliated companies and the shareholder PIK subordinated notes (estimated at over a $1 billion funded debt). While the debt at the other subsidiaries of FDR Holdings (Frontier Drilling ASA's parent) is non-recourse to ASA and the PIK notes are subordinated to the first lien facilities, Moody's have consolidated them for CFR purposes. The Caa2 also considers the ongoing risks associated with the upgrade programs and the potential for further cost overruns and/or delays which pressures liquidity and the financial profile of the company for additional funding and materially delaying debt reduction. In addition, the ratings reflect the somewhat specialized use and age of the drillship fleet and the inherently volatile offshore contract drilling markets that could affect Frontier's ability to rollover expiring contracts at comparable dayrates. The Caa2 CFR is supported by Frontier's position as a niche provider of offshore contract drilling and production services to the oil and gas industry with some vessels that have Arctic drilling capabilities; the firm, long-term contracts for the upgraded drillships with affiliates of Royal Dutch Shell provide visible cash flows for the ensuing three years for each contract and also appear to contain certain protections of cashflows against cancellation; and the favorable outlook for the offshore drilling market at least over the next year which should help in supporting asset values. Frontier Drilling ASA is incorporated in Norway, however, maintains its administrative offices in Houston, Texas. GABRIEL RESOURCES: Earns C$11 Million in 2008 First Quarter ----------------------------------------------------------- Gabriel Resources Ltd. reported net income of C$11.0 million for the first quarter ended March 31, 2008, compared with a net loss of C$2.5 million in the corresponding period in 2007. The first quarter net income includes foreign exchange gains, amounting to C$12.1 million on EURO cash balances held to finance planned future EURO-denominated development activities. The company has not commenced commercial production of its mineral properties. As a result, the company expects to incur operating losses until commercial production commences and revenues are generated. Total operating expenses decreased to C$2.5 million for the three- month period ended March 31, 2008, as compared to C$3.1 million in 2007 due to lower corporate, general and administrative and financing costs, partially offset by higher stock-based compensation costs compared to the corresponding 2007 period. "We are using every means at our disposal to get our environmental impact assessment (EIA) review process back on track," said Alan R. Hill, president and chief executive officer. "We have designed Rosia Montana to be a model project in every aspect - technically, environmentally, socially and culturally - and we are confident the merits of our project will be recognized." Financing Cash, cash equivalents and short-term investments at March 31, 2008, totaled C$139.2 million. During the first quarter of 2008, the company spent C$16.0 million for project development activities compared to C$17.7 million in the first quarter of 2007. The budgeted expenditures for the Rosia Montana Project for 2008 are approximately C$66.0 million as the company placed most activities on hold until the EIA permit is approved. This is the minimum level of expenditures required to maintain the value of the company's investment. The company said that project financing discussions with traditional lenders have advanced as far as they can at this time. No further discussions can be held until the EIA permit has been approved. A key condition to accessing the debt facilities will be acquiring 100.0% of the surface rights in the industrial zone. Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed C$521.3 million in total assets, C$35.4 million in total liabilities, and C$485.9 million in total stockholders' equity. About Gabriel Resources Gabriel Resources Ltd. -- http://www.gabrielresources.com/-- is a Canadian based resource company engaged in the exploration and development of mineral properties in Romania and is presently developing its 80.0% owned Rosia Montana gold project. Since acquiring the exploitation license, the company has been focused on identifying and defining the size of the four ore bodies, engineering to design the size and scope of the Project, environmental assessment and permitting, rescue archaeology and surface rights acquisitions. Going Concern Management of Gabriel Resources believes that there exists substantial doubt about the company's ability to continue as a going concern. As at March 31, 2008, the company had no sources of operating cash flows, and had an accumulated deficit of C$82.0 million. Accordingly, the company does not have sufficient cash to fund the development of the Project and therefore will require additional funding which, if not raised, would result in the curtailment of activities and result in project delays. In addition, the company said that its Rosia Montana Project has long faced opposition from a group of foreign-funded non- governmental organizations, certain Romanian organizations and some members of the Hungarian Government. In September 2007 Romania's new Minister of Environment and Sustainable Development announced it was impossible to continue the EIA review process for the Project and he suspended the Technical Assessment Committee meetings to review the EIA, asserting a linkage between a minor procedural certificate and the EIA review process that, the company believes, lacks any basis in law. The company disclosed that it is focused on doing everything within its power to restart the permitting process. To that end, the company stepped up its advocacy efforts in Romania and abroad and has filed a lawsuit against the Ministry of the Environment to restart the permitting process. HEADWATERS INC: S&P Puts Ratings Under Neg. Watch on Weak Earnings ------------------------------------------------------------------ Standard & Poor's Ratings Services placed all of its ratings, including its 'BB-' corporate credit rating, on Headwaters Inc. on CreditWatch with negative implications. "The CreditWatch listing reflects our belief that earnings in fiscal 2008, ending Sept. 30, will be weaker than expected," said Standard & Poor's credit analyst Pamela Rice. "While we had incorporated the loss of revenue from Headwaters' synthetic fuels business into our ratings, the company's financial performance has been hurt by the deeper housing downturn, lower remodeling spending, and poor weather conditions in the fiscal second quarter, ended March 31." Although Headwaters expects cash from operations in fiscal 2008 could exceed $100 million, it could also have more than $100 million in capital expenditures, well above its normal level, primarily to construct additional coal cleaning facilities that should begin to generate meaningful earnings and cash flow in fiscal 2009. "In the near term, we are concerned that availability under the company's $60 million revolving credit facility and the cushion under financial covenants could shrink further than we previously expected, given the uncertainty about residential markets, the general economy, and cost pressures, Ms. Rice said. In resolving the CreditWatch listing, S&P will discuss with management its business outlook, financial projections, cost savings initiatives, and any contingency plans it has developed to weather the current difficult operating conditions. "If as a result of our analysis a downgrade is warranted, we would not necessarily limit it to one notch," said Ms. Rice. HILEX POLY: Sec. 341 Meeting of Creditors Scheduled for June 11 --------------------------------------------------------------- Roberta A. DeAngelis, the acting United States Trustee for Region 3, will convene a meeting of creditors in the Chapter 11 cases of Hilex Poly Holding Co., LLC, and Hilex Poly Co., LLC, on June 11, 2008, at 10:00 a.m. The meeting will be held at J. Caleb Boggs Federal Building, 5th Floor, Room 5209, in Wilmington, Delaware. 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. Joseph J. McMahon, Jr., Esq., represents the U.S. Trustee in the Debtors' cases. The U.S. Trustee may be reached at: United States Department of Justice Office of the United States Trustee District of Delaware J. Caleb Boggs Federal Building 844 King Street, Suite 2207, Lockbox 35 Wilmington, Delaware 19801 Tel: (302) 573-6491 Fax: (302) 573-6497 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. At December 31, 2006, Hilex Poly Co. reported $318,200,000 in total assets and $329,100,000 in total debts. For the same period, Hilex Poly Holding Co. reported $37,200,000 in total assets and $31,000,000 in total liabilities. HILEX POLY: Can File Schedules and Statements Until July 20 ----------------------------------------------------------- At the behest of Hilex Poly Holding Co., LLC, and Hilex Poly Co., LLC, the Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware extended the Debtors' deadline to file schedules of assets and liabilities and statements of financial affairs until July 20, 2008. The Debtors informed the Court that the 30-day initial deadline pursuant to Rule 1007(c) of the Federal Rules of Bankruptcy Procedure and Local Rule 1007-1(b) of the Delaware Bankruptcy Court are insufficient to complete the Schedules and Statements. The Debtors point the Court to the number of creditors of their estates, the size and complexity of their cases and the limited staffing available to gather, process and complete the documents. Upon filing for bankruptcy, the Debtors also delivered to the Court a joint prepackaged plan of reorganization and an accompanying disclosure statement and proposed solicitation procedures. The Debtors are seeking a joint hearing to consider the adequacy of the Disclosure Statement and confirmation of the Plan. Judge Carey waived the Debtors' requirement to file Schedules and Statements if the Debtors' plan is confirmed and becomes effective prior to the expiration of the extended period. Given the prepackaged nature of their chapter 11 cases, the Debtors believe the purposes served by filing the Schedules and Statements have been served by other means, and the completion of the Schedules and Statements are not justified given the costs to their estates. 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. At December 31, 2006, Hilex Poly Co. reported $318,200,000 in total assets and $329,100,000 in total debts. For the same period, Hilex Poly Holding Co. reported $37,200,000 in total assets and $31,000,000 in total liabilities. HILEX POLY: Gets Authority to Hire Epiq as Claims & Notice Agent ---------------------------------------------------------------- The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware granted Hilex Poly Holding Co., LLC, and Hilex Poly Co., LLC, permission to employ Epiq Bankruptcy Solutions, LLC, as their claims, noticing, and balloting agent. The Debtors require Epiq to perform noticing functions, assist them in balloting in connection with any proposed chapter 11 plan, and, if necessary, assist them in analyzing and reconciling proofs of claim filed against their estates. According to Hilex Treasurer Rick P. Martin, although the Debtors have yet to file their schedules of assets and liabilities and statements of financial affairs, they anticipate that there will be hundreds of entities that will have to be served with various notices, pleadings and other documents filed in their cases. Epiq's retention should expedite the distribution of notices and relieve the Clerk of Court f the administrative burden of processing those notices, Mr. Martin says. Daniel C. McElhinney, senior vice president and director of operations for Epiq, attests that the firm is not connected with the Debtors or any other interested parties in the cases, and does not hold or represent any interest adverse to the Debtors. Mr. McElhinney says his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Epiq will be paid for its services pursuant to an engagement letter. Prior to their bankruptcy filing, the Debtors paid Epiq a $10,000 retainer for prepetition fees and expenses. The firm has requested a $15,000 post-bankruptcy retainer. Mr. McElhinney says the amount of the prepetition retainer reduces the total amount of the postpetition retainer. 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. At December 31, 2006, Hilex Poly Co. reported $318,200,000 in total assets and $329,100,000 in total debts. For the same period, Hilex Poly Holding Co. reported $37,200,000 in total assets and $31,000,000 in total liabilities. HOLLINGER INC: Inks Term Sheet with Secured Creditor & Sun-Times ---------------------------------------------------------------- Hollinger Inc. entered into a term sheet with Davidson Kempner Management LLC and certain of its affiliates and Sun-Times Media Group, Inc. DK is the holder of approximately 42% of the outstanding principal amount of Hollinger's secured notes issued pursuant to indentures dated March 10, 2003 and Sept. 30, 2004. Hollinger holds an approximate 70% voting interest and 19.7% equity interest in Sun- Times. In order to become effective, the Settlement must be approved by an order issued by the Ontario Superior Court of Justice. Hollinger and its subsidiaries, Sugra Ltd. and 4322525 Canada Inc. are currently subject to proceedings in Canada under the Companies' Creditors Arrangement Act (Canada) and in the United States under Chapter 15 of the U.S. Bankruptcy Code. An agreement between Hollinger and Sun-Times was filed by the Applicants with the Ontario Court on April 10, 2008 in connection with the CCAA proceeding. The Settlement replaces the Sun-Times Agreement. The Settlement provides that DK will withdraw its motion seeking the bankruptcies of the Applicants, and that DK will support Court Approval of the Settlement and the other relief sought by the Applicants on April 10, 2008. As soon as possible after Court Approval, the 14,990,000 Class B Common Stock of Sun-Times owned directly or indirectly by Hollinger will be converted into Class A Common Stock of Sun-Times on a one-for-one basis and an additional 1,499,000 Class A Common Stock of Sun-Times will be issued to Hollinger. The Settlement provides that the Exchanged Shares and the Additional Shares, which provide security for the Notes, will be voted by the indenture trustees of the Notes for the benefit of and at the direction of the Noteholders (with certain restrictions). The indenture trustees will be entitled to exercise all other rights attached to the Exchanged Shares and the Additional Shares and may realize upon the Exchanged Shares and the Additional Shares in any commercially reasonable manner. Upon the later of (i) Court Approval and (ii) immediately after the next annual meeting of Sun-Times' shareholders scheduled for June 17, 2008, the six directors appointed by Hollinger to the board of directors of Sun-Times (G. Wesley Voorheis, William Aziz, Edward Hannah, Peter Dey, Brent Baird and Albrecht Bellstedt) will submit their resignations from that board. Sun-Times and Hollinger will cooperate to maximize the recoverable portion of the class action insurance settlement proceeds payable to them and such proceeds shall be allocated so that Sun-Times receives 85% of such proceeds, and Hollinger receives 15% of such proceeds. Hollinger and Sun-Times agree to divide their respective recoveries from the insolvency proceeding of The Ravelston Corporation Limited and certain affiliates equally as between them. A standard CCAA claims process shall be implemented immediately for all claims against the Applicants, as outlined in the Settlement. Sun-Times' claims will continue to be dealt with as previously outlined in the Sun-Times Agreement. Upon Court Approval, Hollinger will pay to Sun-Times the reasonable fees and costs incurred by Sun-Times in connection with the CCAA proceedings from Aug. 1, 2007 to the date of Court Approval, subject to a cap of $2,000,000 in the aggregate. Subject to certain reserves, all cash of the Applicants shall be distributed to the creditors who have proved claims in accordance with the claims process. Distributions will be determined on a non-consolidated basis giving effect to inter-company claims but including only 50% of a claim by 432 against Hollinger in the aggregate amount of approximately $342,500,000 and subject to these payments: (a) to pay a transaction fee to DK of $1,500,000 in consideration of the Settlement; (b) to pay the reasonable legal costs of the indenture trustees of the Notes up to and including Court Approval; and (c) to pay the reasonable legal costs of DK up to and including Court Approval; provided that the total amount paid will not exceed $4,500,000. The Settlement provides that John D. Ground, a retired justice of the Ontario Court of Justice (Commercial List), shall be appointed as an officer of the Court to perform the role of litigation trustee of all claims and causes of action in favour of the Applicants on such terms as may be agreed between the Applicants and justice Ground and subject to approval by the Court. An advisory committee shall be established to provide advice and direction to the Litigation Trustee comprised of the Litigation Trustee, one representative of DK and one representative of the Applicants. Upon Court Approval, G. Wesley Voorheis will resign as an officer and director of the Applicants and their subsidiaries. The appointment of William Aziz, or an entity controlled by him, as the Chief Restructuring Officer of the Applicants and an officer of the Court shall be sought as part of the Court Approval. About Hollinger Inc. Based in Toronto, Ontario, Hollinger Inc. (TSX: HLG.C)(TSX: HLG.PR.B) -- http://www.hollingerinc.com/-- owns approximately 70.1% voting and 19.7% equity interest in Sun-Times Media Group Inc. (formerly Hollinger International Inc.), a media company with assets which include the Chicago Sun-Times newspaper and Suntimes.com and a number of community newspapers and websites serving communities in the Chicago area. The company, 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. Derek C. Abbott, Esq., and Kelly M. Dawson, Esq., at Morris, Nichols, Arsht & Tunnell LLP, represents the Debtors in their U.S. proceedings. As reported in the Troubled Company Reporter on Feb. 22, 2008, Hollinger Inc.'s consolidated balance sheet at Dec. 31, 2007, showed C$79.8 million in total assets and C$219.3 million in total liabilities, resulting in a C$139.5 million total stockholders' deficit. HOME INTERIORS: Taps Richards Partners as Communications Expert --------------------------------------------------------------- Home Interiors & Gifts, Inc., and its debtor-affiliates will appear before the U.S. Bankruptcy Court for the Northern District of Texas to seek permission to employ Richards Partners, a division of The Richards Group, as Communications Consultant effective as of the Debtors' bankruptcy filing. The Debtors need Richards Partners to assist and advise them with internal and external communications with respect to the Debtors' restructuring and reorganization strategy, including preparing initial and ongoing public relations plans for internal and external audiences; and recommending media relations protocols. The Debtors initially retained Richards Partners on April 15, 2008. Richards assisted the Debtors as their communications consultant in connection with the internal and external communications strategy and execution plan. As a result, the Debtors note, Richards Partners has developed a great deal of institutional knowledge regarding the Debtors' operations, assets, capital structure, and related matters; and Richards Partners' professionals have worked closely with the Debtors' management team and their other advisors. Richards Partners will be paid $17,500 per month for its services and reimbursed of expenses. Upon execution of the engagement letter, the Debtors paid Richards Partners its initial monthly fee of $17,500. George McCane, principal at Richards Partners , disclosed that as of the bankruptcy filing date, Richards Partners has incurred and has been paid for $52,500 in prepetition fees associated with assisting Debtors with their communications. Mr. McCane attests that Richards Partners and its professionals are disinterested persons, within the meaning of Section 101(14) of the Bankruptcy Code and as required by Section 327(a). The firm, Mr. McCane says, does not hold nor represent an interest adverse to the estate and does not have any connection with the Debtors, their creditors, or any other party-in-interest. 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 filed for protection from their creditors, they listed assets and debts between $100 million and $500 million. HOME INTERIORS: Can Hire Kurtzman Carson as Notice & Claims Agent ----------------------------------------------------------------- Home Interiors & Gifts, Inc., and its debtor-affiliates sought and obtained permission from the U.S. Bankruptcy Court for the Northern District of Texas to employ Kurtzman Carson Consultants LLC, as their official noticing and balloting agent. KCC will perform these services, among others: (i) serve as the Court's notice agent to mail notices to the estates' creditors and parties-in-interest, (ii) provide computerized balloting database services, provide expertise, consultation, and assistance in ballot processing and with other administrative information related to the Debtors' bankruptcy cases, and (iii) assist with preparation of statements of financial affairs and schedules of assets and liabilities. The Debtors relate that they have identified roughly 4,000 creditors and potential creditors. In other large cases, the Debtors note, courts have found that the office of the Clerk of the Bankruptcy Court for the applicable district is not equipped to send notices to the thousands of creditors and other parties- in-interest. Accordingly, the Debtors relate, the most effective and efficient manner in which to accomplish necessary noticing and the process of receiving, docketing, maintaining, photocopying, and transmitting ballots in their cases is to engage an independent third party to act as an agent of the Court. KCC's Sheryl Betance attests that neither KCC nor any of its employees: -- have any connection with the Debtors, their creditors, or any other party-in-interest; and are "disinterested persons," as that term is defined in Section 101(14) of the Bankruptcy Code, and -- do not hold or represent any interest adverse to the Debtors' estate. KCC will be given a $50,000 evergreen retainer for services to be performed and expenses to be incurred. KCC can be reached at: Kurtzman Carson Consultants LLC 2335 Alaska Ave. El Segundo, CA 90245 Attn: James Le Tel: (310) 823-9000 Fax: (310) 823-9133 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. IDLEAIRE TECHNOLOGIES: Says Board Requires Special Counsel ---------------------------------------------------------- IdleAire Technologies Corp. asked authority from the U.S. Bankruptcy Court for the District of Delaware to employ Williams & Anderson PLC as special counsel for the independent members of IdleAire's board of directors. The Debtor told the Court that the board requires a separate counsel, in part, because of the proposed sale of substantially all of the Debtor's assets. The Debtor added that Williams & Anderson is familiar with the board's business affairs and potential legal issues that may arise in the context of the chapter 11 case. The firm's professionals charge at these rates: Name Designation Rate ---- ----------- ---- Paul W. Hoover, Jr., Esq. Partner $350 Teresa M. Wineland, Esq. Of Counsel $260 Kelly M. DeGostin, Esq. Associate $170 Astrid C. Elliot Legal Assistant $95 The Debtor paid the firm $42,743 for its services in connection with the case. According to the Debtor, the firm does not hold or represent any interest adverse to the Debtor or the Debtor's estate. Wells Fargo Waiver Requires Special Counsel In a separate motion, the Debtor asked the Court for permission to employ Holland & Knight LLP as its counsel, nunc pro tunc to their bankruptcy filing. The Debtor disclosed, among others, that in the past, Holland & Knight represented the Debtor's creditor, Wells Fargo Bank NA and its related entities in connection with residential and commercial loan financing matters unrelated to the Debtor. Wells Fargo served as trustee and collateral agent to the lenders regarding a prepetition financing to the Debtor. Total fees received for services rendered by the firm for Well Fargo during 2007 was less than 1/2 of one percent of the total fees received during that period. The firm received a waiver of potential conflict of interest from Wells Fargo. The waiver provides that special counsel would be required in the event that an adversary or other litigation develops between the Debtor and the bank during the course of the bankruptcy case. The Debtor maintained, however, that there is no restriction on the firm's ability to bring avoidance actions or challenge the perfection of Wells Fargo's security. Going Concern Doubt Public accounting firm Ernst & Young reported that the company has a history of net losses, an accumulated deficit of $246,400,000 and working capital of $900,000 as of Dec. 31, 2007, which raise substantial doubt about the company's ability to continue as a going concern, according the company's regulatory filing with the Securities and Exchange Commission. The company's balance sheets showed total assets of $210,879,000 and total debts of $303,616,000 resulting in a $92,737,000 total stockholders' deficit during the fiscal year ended Dec. 31, 2007. The company posted a $93,442,000 net loss for the year ended Dec. 31, 2008, compared to a $60,285,000 net loss a year earlier. About IdleAire Knoxville, Tennessee-based IdleAire Technologies Corp. -- http://www.idleaire.com/-- is a privately held corporation founded in June 2000. It manufactures and services an advanced travel center electrification system providing heating, ventilation & air conditioning, Internet and other services to truck drivers parked at rest stops. The company delivers its services to long-haul drivers through its patented Advanced Travel Center Electrification(R) system, or ATE system, comprised of an in-cab service module connected to an external heating, ventilation and air conditioning unit, or HVAC unit, mounted on a truss structure above parking spaces. It employs about 1,200 people. The company filed chapter 11 petition on May 12, 2008 (Bankr. D. Del. Case No. 08-10960). Judge Kevin Gross presides over the case. Elihu Ezekiel Allinson, III, Esq., William A. Hazeltine, Esq., and William David Sullivan, Esq., at Sullivan Hazeltine Allinson, LLC represent the Debtor in its restructuring efforts. As of Dec. 31, 2007, the Debtor had total assets of $210,879,000 and total debts of $303,616,000. IDLEAIRE TECHNOLOGIES: Wants to Hire Holland & Knight as Counsel ---------------------------------------------------------------- IdleAire Technologies Corp. asked authority from the U.S. Bankruptcy Court for the District of Delaware to employ Holland & Knight LLP as its counsel, nunc pro tunc to the Debtor's bankruptcy filing. The firm, according to the Debtor, is both well qualified and uniquely able, due to its historical perspective, to provide the services needed in the case. Holland and Knight will, among others, advise the Debtor with respect to its powers and duties as debtor-in-possession in the continued management and operation of its business and properties and represent the Debtor with respect to general corporate and transactional matters. Holland & Knight's hourly rates for these professionals are: Name Designation Rate ---- ----------- ---- Sandra E. Mayerson, Esq. Partner $620 John J. Monaghan, Esq. Partner $480 Richard E. Lear, Esq. Partner $480 Kerry S. Kehoe, Esq. Partner $475 Barbra R. Parlin, Esq. Partner $475 Peter A. Zisser, Esq. Senior Counsel $395 Lynne B. Xerras, Esq. Associate $365 Dianne N. Rallies, Esq. Associate $275 Shannan E. Whalen Paralegal $175 Based on the Debtor's motion, since the firm's engagement with respect to restructuring efforts in April and May 2008 until the Debtor's bankruptcy filing in May 12, 2008, the firm received about $448,025 in fees and reimbursement for expenses. The Debtor told the Court that it paid $300,000 retainer to Holland & Knight. Potential Conflict of Interest The Debtor informed the Court that the firm and its professionals and employees do not have any connection with the parties-in- interest in the case, except: a. Thomas Boroughs, Esq., a Holland & Knight partner in Orlando, owns 4,000 shares, or 0.0007713%, of IdleAire; b. in the past, Holland & Knight represented the Debtor's creditor, Wells Fargo Bank NA and its related entities in connection with residential and commercial loan financing matters unrelated to the Debtor. Wells Fargo served as trustee and collateral agent to the lenders regarding a prepetition financing to the Debtor. Total fees received for services rendered by the firm for Well Fargo during 2007 was less than 1/2 of one percent of the total fees received during that period. The firm received a waiver of potential conflict of interest from Wells Fargo. The waiver provides that special counsel would be required in the event that an adversary or other litigation develops between the Debtor and the bank during the course of the bankruptcy case. The Debtor maintained, however, that there is no restriction on the firm's ability to bring avoidance actions or challenge the perfection of Wells Fargo's security; c. other entities that were represented by the firm in the past or may have interest in the case include: -- United Parcel Service of America Inc., -- AT&T Corporation, -- Verizon Business, -- unsecured creditor United Rentals Inc., -- unsecured creditor Blue Cross Blue Shield, -- Bowne of New York LLC and Bowne & Co., -- 10% equity holder Parsons Brinckerhoff, Quade & Douglas Inc., -- 10% equity holders Jefferies & Company, State Street Bank and Trust Company, and Bear Sterns & Company, -- corporate site lessor Home Properties Inc., -- travel site lessor TA Operating Corporation, -- travel site lessor Flying J Inc., and -- CRG Partners Group LLC, Stephen S. Gray and Gordian Group LLC employed by the Debtor or creditors as expert witnesses of financial advisor in the case. Going Concern Doubt Public accounting firm Ernst & Young reported that the company has a history of net losses, an accumulated deficit of $246,400,000 and working capital of $900,000 as of Dec. 31, 2007, which raise substantial doubt about the company's ability to continue as a going concern, according the company's regulatory filing with the Securities and Exchange Commission. The company's balance sheets showed total assets of $210,879,000 and total debts of $303,616,000 resulting in a $92,737,000 total stockholders' deficit during the fiscal year ended Dec. 31, 2007. The company posted a $93,442,000 net loss for the year ended Dec. 31, 2008, compared to a $60,285,000 net loss a year earlier. About IdleAire Knoxville, Tennessee-based IdleAire Technologies Corp. -- http://www.idleaire.com/-- is a privately held corporation founded in June 2000. It manufactures and services an advanced travel center electrification system providing heating, ventilation & air conditioning, Internet and other services to truck drivers parked at rest stops. The company delivers its services to long-haul drivers through its patented Advanced Travel Center Electrification(R) system, or ATE system, comprised of an in-cab service module connected to an external heating, ventilation and air conditioning unit, or HVAC unit, mounted on a truss structure above parking spaces. It employs about 1,200 people. The company filed chapter 11 petition on May 12, 2008 (Bankr. D. Del. Case No. 08-10960). Judge Kevin Gross presides the case. Elihu Ezekiel Allinson, III, Esq., William A. Hazeltine, Esq., and William David Sullivan, Esq., at Sullivan Hazeltine Allinson, LLC represent the Debtor in its restructuring efforts. As of Dec. 31, 2007, the Debtor had total assets of $210,879,000 and total debts of $303,616,000. INDEPENDENCE VII: Expected Losses Cue Moody's to Cut Ratings ------------------------------------------------------------ Moody's Investors Service has downgraded ratings of eight classes of notes issued by Independence VII CDO, Ltd., and left on review for possible further downgrade the rating of two of these classes. The notes affected by the rating action are: Class Description: $360,000,000 Class A-1A First Priority Senior Secured Floating Rate Delayed Draw Notes due 2045 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Ba3, on review for possible downgrade Class Description: $60,000,000 Class A-1B First Priority Senior Secured Floating Rate Notes due 2045-2 -- Prior Rating: A3, on review for possible downgrade -- Current Rating: Ba3, on review for possible downgrade Class Description: $30,600,000 Class A-2 Second Priority Senior Secured Floating Rate Notes due 2045 -- Prior Rating: Baa3, on review for possible downgrade -- Current Rating: Ca Class Description: $60,000,000 Class B Third Priority Senior Secured Floating Rate Notes due 2045 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: Ca Class Description: $28,500,000 Class C Fourth Priority Senior Secured Floating Rate Notes due 2045 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Ca Class Description: $15,000,000 Class D Fifth Priority Mezzanine Deferrable Floating Rate Notes due 2045 -- Prior Rating: Caa2, on review for possible downgrade -- Current Rating: C Class Description: $24,900,000 Class E Sixth Priority Mezzanine Deferrable Floating Rate Notes due 2045 -- Prior Rating: Ca -- Current Rating: C Class Description: $5,400,000 Class F Seventh Priority Mezzanine 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 9,2008, of an event of default caused when the Net Outstanding Portfolio Collateral Balance is less than the sum of the Aggregate Outstanding Amount of the Class A , Class B and Class C Notes, described in Section 5.1(i) of the Indenture dated March 28, 2006. Independence VII CDO, 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-1A Notes and Class A-1B Notes remain on review for possible further action. INDYMAC BANCORP: Fitch Junks Short-Term Issuer Default Rating ------------------------------------------------------------- Fitch Ratings has downgraded the long-term Issuer Default Ratings (IDRs) of Indymac Bancorp Inc. (IMB) and its wholly owned bank subsidiary Indymac Bank FSB (bank). In addition, Fitch has placed the affected ratings on Rating Watch Negative. Fitch's action reflects the company's challenges in returning to profitability and decision to defer dividend payments on preferred stock issued by IMB and the bank. Approximately $19.9 billion of debt and deposits are involved in Fitch's rating action. A complete list of rating actions is provided at the end of this release. Ratings downgraded and placed on Rating Watch Negative: * Indymac Bancorp Inc. -- Long-term IDR to 'B-' from 'BB'; -- Short-term IDR to 'C' from 'B'; -- Individual to 'D/E' from 'C/D'. Fitch's downgrade reflects the cumulative effect of several quarters of operating losses on the bank's capital position which has led IMB to defer dividend payments on hybrid securities. While the bank is deemed well capitalized under its regulator, the Office of Thrift Supervision (OTS), Fitch believes that several quarters of operating losses and the prospect that the company will not return to profitability in 2008 places undue pressure on IMB's ability to manage capital. While Fitch believes the company's election to defer dividends and preserve capital was prudent, the deferral period, absent a meaningful capital raise, may not be temporary. Fitch has also differentiated the ratings of IMB and the bank as they have distinct regulatory oversight and legal structures. Fitch's downgrade of preferred stock issued by IMB and the bank reflects the uncertain recovery prospects for preferred shareholders which is driven by the priority claim on IMB's mortgage loans and securities by the Federal Home Loan Bank (FHLB) of San Francisco and obligations to the bank's insured depositors. Accordingly, Fitch has assigned average recovery ratings to bank's deposits with recovery prospects for preferred stock more uncertain. At March 31, 2008 IMB had $10.4 billion in FHLB advances and $18.9 billion in deposits. Fitch may downgrade IMB's ratings further should continued weakness in operating performance cause regulatory capital to fall below well capitalized levels. Fitch may also remove IMB from Rating Watch Negative and assign a Negative Outlook if capital levels stabilize and have a reasonable probability of improving. Fitch expects that, given the continued weakness in the U.S. housing market, IMB faces significant challenges for the balance of 2008. Ratings Downgraded and placed on Rating Watch Negative: * Indymac Bank F.S.B. -- Long-term IDR to 'B' from 'BB'; -- Short-term IDR to 'C' from 'B'; -- Long-term deposits to'B'/'RR4' from 'BB+'; -- Individual to 'D' from 'C/D'; -- Short-term deposits to 'C' from 'B'; -- Preferred stock to 'CCC-/RR6' from 'B+'. * Indymac Capital Trust I -- Preferred stock to 'CCC-/RR6' from 'B+'. Ratings affirmed: * Indymac Bancorp, Inc. -- Support '5'; -- Support floor 'NF'. * Indymac Bank F.S.B: -- Support '5'; -- Support floor 'NF'. INFINITY ENERGY: Execs Stay Optimistic as 1Q Loss Narrows --------------------------------------------------------- Infinity Energy Resources, Inc. (Pink Sheets: IFNY.PK) reported that for the three months ended March 31, 2008, revenues approximated $1.2 million, compared with approximately $2.1 million in the first quarter of 2007. An operating loss of $796,000 was recorded in the most recent quarter, compared with an operating loss of $2,191,000 in the corresponding period of the previous year. The Company reported a net loss of $1,252,000, or $0.07 per share, for the quarter ended March 31, 2008, versus a net loss of $3,780,000, or $0.21 per share, in the quarter ended March 31, 2007. Operating results for the first quarters of 2008 and 2007 included expenses of $35,000 and $1,574,000, respectively, related to changes in derivative values. During the first quarter of 2007, the Company's Infinity-Wyoming subsidiary incurred $623,000 in expenses to settle a disputed volume commitment deficiency involving a third-party gatherer and processor of gas in Wyoming. EBITDA (earnings from continuing operations before interest, income taxes, depreciation, depletion, amortization and accretion expenses, and change in derivative fair value) for the three months ended March 31, 2008 approximated a negative ($312,000). Exploration and production operations produced 122.9 million cubic feet equivalents (MMcfe) during the three months ended March 31, 2008, compared with 310.0 MMcfe in the first quarter of 2007. The following table provides information for the three months ended March 31, 2008 and 2007, respectively: For the Three Months Ended March 31, 2008 2007 ------------------- Production: Natural gas (MMcf) 121.4 229.0 Crude oil (thousands of barrels) 0.3 13.5 Total (MMcfe) 122.9 310.0 Financial Data (thousands of dollars): Total revenue $1,200 $2,099 Production expenses 780 2,058 Production taxes 27 135 Financial Data per Unit ($ per Mcfe): Total revenue $9.76 $6.77 Production expenses 6.34 6.64 Production taxes 0.22 0.44 Infinity achieved oil and gas revenue of $1.2 million in the three months ended March 31, 2008 compared to $2.1 million in the prior- year period. The $0.9 million, or 43%, decrease in revenue consisted of an approximate $1.3 million decrease attributable to lower oil and gas production, offset by a $0.4 million increase in average prices. The decrease in equivalent production was principally the result of production in 2007 from properties sold to Forest Oil in January 2008. Approximately $2.5 million in net cash was used in operating activities during the three months ended March 31, 2008, compared with $4.3 million in net cash used in operating activities in the year-earlier quarter. Net cash provided by investing activities, including proceeds from the sale of certain producing properties in the Rocky Mountain region, totaled $16.7 million in the first quarter of 2008, versus $5.4 million of cash used in investing activities in the first quarter of 2007. As of March 31, 2008, the company showed strained liquidity with total current assets of $5.2 million available to $18.5 million in liabilities coming due within the next 12 months. The company had total assets of $25.8 million, total liabilities of $19.2 million, resulting in a stockholders' equity of $6.6 million. Sale of Assets & Farmout On January 7, 2008, Infinity Oil & Gas of Wyoming, Inc., a wholly owned subsidiary of the Company, completed the sale of essentially all of its producing oil and gas properties in Colorado and Wyoming, along with 80% of its working interest in undeveloped leaseholds in Routt County, Colorado and Sweetwater County, Wyoming to Forest Oil Corporation. In addition, on December 27, 2007, Infinity Oil and Gas of Texas, Inc., a wholly owned subsidiary of the Company, entered into a Farmout and Acquisition Agreement with Forest Oil for certain oil and gas leaseholds in Erath County, Texas. Under the agreement, Forest Oil will operate and earn a 75% interest in the spacing unit for each well in a 10-well drilling program. If Forest Oil completes the drilling program, it will earn a 50% interest in the approximate 25,000 remaining undeveloped net acres and existing Erath County infrastructure owned by Infinity-Texas Management Comments "The first quarter of 2008 was noteworthy in several respects from an operating perspective," noted Stanton E. Ross, Chief Executive Officer of Infinity Energy Resources, Inc. "Although our revenue declined significantly following the sale of our producing oil and gas properties in Colorado and Wyoming to Forest Oil in January 2008, the Company's first quarter operating loss was reduced by almost two-thirds when compared with the prior-year period. Higher oil and gas prices widened our revenue/expense spread per Mcfe from only $0.13 in the first quarter of 2007 to $3.42 per Mcfe in the most recent quarter. At the same time, we were able to reduce our general and administrative expenses by approximately 17%, when compared with the first quarter of 2007." "The sale of our producing properties in Colorado and Wyoming to Forest Oil allowed Infinity to significantly reduce its outstanding debt, and we kept 100% of our exploratory properties in the Piceance Basin and LaBarge areas in the Rocky Mountains and a 20% working interest in any future wells that Forest Oil drills in the Sand Wash Basin. Meanwhile, we are working closely with Amegy to financially reposition the Company in accordance with its business strategy and focus upon oil and gas development activities in Texas and offshore Nicaragua." "I am pleased to report that Forest Oil has commenced drilling the first in a series of up to ten new wells in Erath County, Texas, in accordance with its farmout relationship with Infinity," stated Dr. Renato Bertani, Chief Operating Officer of the Company. "Assuming drill results are favorable, we would expect to realize the benefits of initial production from these activities, which are being funded by Forest Oil, beginning in the third or fourth quarters of 2008. Meanwhile, our Infinity-Texas subsidiary anticipates that its 2008 capital expenditures will be limited to less than $1 million to potentially complete two vertical wells that were drilled last year. Our Infinity-Wyoming subsidiary expects to spend less than $1 million to plug and abandon and perform reclamation activities on several wells and potentially to conduct additional geological and geophysical analysis." "We continue to work towards finalizing the contracts related to our 1.4 million-acre oil and gas concessions offshore Nicaragua," observed Ross. "Recently, a privately-owned company with offshore concessions adjacent to ours received final approval of its exploration contracts by Nicaragua's federal government and regional authorities, and we view this development favorably in terms of its implications for Infinity's efforts to secure ratification of its contracts and concessions. I plan to travel to Nicaragua later this month to follow up on significant progress that we have made with the Autonomous Region of the Southern Atlantic regional government council. Along with the President of RAAS, Lourdes Aguilar Gibbs, the council of the RAAS has invited Infinity to make presentations to the local communities in the region, after which our contracts will be submitted for a vote by the RAAS assembly. Because of the commitment by President Aguilar Gibbs to bring investment into her region, the prospects for ratification of our offshore oil and gas concession and related exploration contracts by the RAAS have improved substantially in recent weeks. If we receive RAAS ratification, we are prepared to move quickly to begin hiring local employees and move our exploration agenda forward. We believe the development of Infinity's offshore concession has the potential to deliver significant economic benefits to residents of the RAAS region, and we are eager to get started." "Meanwhile, our negotiations with the Autonomous Region of the Northern Atlantic regional government council have proven more difficult, as RAAN disapproved Infinity's contracts at a meeting in late February. At the request of the governing board of the RAAN, Infinity made a new request to the Ministry of Energy and Mines that Infinity's contracts be re-submitted to the RAAN for approval. Because of the assurances we have received from Nicaragua's President, Daniel Ortega, and the cooperation and support of ProNicaragua (the Nicaraguan Investment Promotion Agency), and the Ministry of Energy and Mines, we remain hopeful that the RAAN will approve Infinity's contract pertaining to that region. Meanwhile, we are prepared to move forward with the RAAS in an expeditious manner as soon as that regional assembly approves our contracts." "Once we receive ratifications, we plan to conduct an environmental study and develop geological information from the reprocessing of existing 2-D seismic data to be acquired over our Perlas and Tyra concession blocks. We have cash on deposit to secure letters of credit of approximately $1 million for this initial work on the leases. Infinity also intends to seek offers from other industry operators for interests in the acreage, in exchange for cash and a carried interest in exploration and development operations. We continue to believe the offshore Nicaragua concessions have 'world-class' potential and could be the Company's most valuable asset," concluded Ross. Conference Call and Webcast The Company held an investor conference call on May 12, 2008. A replay of the conference call will be available until 5:00 pm EDT July 11, 2008, by dialing 877-344-7529 (international/local participants dial 412-317-0088) and entering the conference ID 419500. The call will also be archived on the Internet through August 10, 2008, at http://www.videonewswire.com/event.asp?id=48573and on the Company's Web site at http://www.infinity-res.com. About Infinity Energy Resources, Inc. Headquartered in Denver, Colorado, Infinity Energy Resources Inc. -- http://www.infinity-res.com/-- is an independent energy company engaged in the exploration, development production of natural gas and oil and the acquisition of natural gas and oil properties in Texas and the Rocky Mountain region of the United States. The company also has a 1.4 million-acre oil and gas concession offshore Nicaragua in the Caribbean Sea. The Troubled Company Reporter reported on May 14, 2008, that Infinity Energy Resources Inc. entered into a Second Forbearance Agreement with Infinity-Texas, Infinity-Wyoming and Amegy Bank N.A. in relation to the company's several existing defaults. The agreement also provides that Amegy Bank N.A. will waive and forebear from exercising any remedies through May 31, 2008. Under the term of the agreement, the borrowing base under the loan agreement was reduced to $3.8 million, with a resulting borrowing base deficiency of $7.1 million. The deficiency is required to be cured by May 31, 2008, through the sale of assets, refinancing of the loan or some other means of raising capital. The agreement gives Amegy the right to require Infinity to proceed with the sale and marketing of the oil and gas properties and leasehold interests held by Infinity-Texas. The company may seek an extension to repay the borrowing base deficiency if it will be unable to sell assets or obtain alternative sources of funding to repay the deficiency by May 31, 2008. The company said there can be no assurance that such an extension can be obtained at all or on satisfactory terms. According to Infinity Energy, these matters, as wells as other risk factors related to the Company's liquidity and financial position, raise substantial doubt as to the Company's ability to continue as a going concern. INTERPHARM HOLDINGS: Perry Sutaria et al. Declare 65.4% Stake ------------------------------------------------------------- Perry Sutaria, Dr. Maganlal K. Sutaria, Bhupatlal K. Sutaria, Rajs Holdings I, LLC, Raj Sutaria, P & K Holdings I, LLC, Ravis Holdings I, LLC, and Ravi Sutariato beneficially own an aggregate of 46,326,370 shares or 64.5% of 66,738,422 shares of Interpharm Holdings Inc. common stock outstanding as of Feb. 11, 2008, consisting of: (i) 41,201,768 shares of common stock; (ii) 3,774,602 shares of common stock issuable upon conversion of 3,774,602 shares of Series A-1 Stock; and (iii) 1,350,000 shares of common stock issuable upon exercise within 60 days pursuant to options to purchase 1,350,000 shares of common stock. Perry Sutaria owns 34,823,576 Interpharm shares; Dr. Maganlal K. Sutaria owns 3,802,952 shares; Bhupatlal K. Sutaria owns 11,069,026 shares; Rajs Holdings I, LLC, owns 16,150,327 shares; Raj Sutaria owns 2,780,946 shares; P & K Holdings I, LLC, owns 8,014,928 shares; Ravis Holdings I, LLC, owns 10,518,645; and Ravi Sutaria owns 1,864,800. Based in Hauppauge, New York, Interpharm Holdings Inc. (AMEX: IPA) -- http://www.interpharminc.com/-- develops, manufactures and distributes generic prescription strength and over-the-counter pharmaceutical products. The company'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. * * * 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. JEFFERSON COUNTY: $53MM Debt Payment Deadline Extended to June 1 ---------------------------------------------------------------- NBC 13 reports that the Jefferson County Commission has secured a two-week extension for the payment of a $53 million sewer debt. The $53 million should have been the first installment in a series of 16 equal quarterly payments for $850 million of variable rate demand notes. On April 15, 2008, the county's commercial banks entered into a forbearance agreement to extend the debt payment for 30 days. The forbearance agreement would have expired May 15, 2008. Under the most recent agreement, the new deadline is set for June 1. Jefferson County has $4.6 billion in overall debt, including $3.2 billion in sewer bonds. As reported by the Troubled Company Reporter on March 10, 2008, Jefferson County was in technical default in relation to the sewer debt. The county was unable to post $184 million in collateral on $5.4 billion of interest-rate swaps tied to the bonds. The collateral was required under the agreement after a series of downgrades on the debt. The county has 13 interest-rate swap transactions with Bank of America, Bear Stearns Inc., JPMorgan Chase & Co. and Lehman Brothers. Previously, Jefferson county refused to pledge reserves against the interest-rate swaps tied to the sewer debt According to the NBC report, negotiations to reset the debt structure are ongoing between Jefferson County attorneys and its bond insurers. Two of the firms that guarantee to make the payments on Jefferson County's sewer bonds in the event of default were FGIC Corp. and XL Capital Assurance Inc. FGIC insured $1.56 billion of Jefferson County auction-rate securities, and XL Capital backed $397 million of the bonds. Meanwhile, the County Commission has voted to enter an agreement with Haskell, Slaughter, Young and Rediker to help the county find a way to avert a bankruptcy that stands to be the largest municipal bankruptcy in U.S. history. About Jefferson County Jefferson County has its seat in Birmingham. It has a population of 660,000. It ended its 2006 fiscal year with a $42.6 million general fund balance, according to Standard & Poor's. Patrick Darby, a lawyer with the Birmingham firm of Bradley Arant Rose & White, represents Jefferson County. Porter, White & Co. in Birmingham is the county's financial adviser. * * * As reported by the TCR on March 28, 2008, Moody's Investors Service downgraded to Caa3 from B3 the rating on the $3.2 billion outstanding sewer revenue warrants. Moody's said the county has not presented a concrete plan that would prevent a default on its sewer obligations. The county has publicly proposed using excess funds generated by a countywide 1% sales and use tax, currently securing the outstanding school warrants. The tax generated an additional $27 million in fiscal 2007 over the school warrant debt service; the initial intention was to use the excess for early redemption of debt. This proposal would require state legislation and it is unclear that the additional funds would provide enough revenue to cover the county's sewer obligations. As reported by the TCR on April 2, 2008, Standard & Poor's Ratings Services lowered its underlying rating on Jefferson County's series 2003 B-2 through 2003 B-7 sewer revenue refunding warrants to 'D' from 'CCC' due to the sewer system's failure to make a principal payment on the warrants when due on April 1, 2008, in accordance with the terms of the standby warrant purchase agreement. As reported by the TCR on April 10, 2008, Moody's Investors Service downgraded the rating on $800,000 of outstanding Jefferson County Assisted Housing Corporation, First Mortgage Refunding Housing Revenue Bonds (Spring Gardens Project) Series 1999 to Ba2 from Baa1. The outlook has been revised to negative from stable. The downgrade is based on a significant decline in debt service coverage, resulting from an increase in property expenses and a lack of rental rate increases. JOE PACHECO: Case Summary & 16 Largest Unsecured Creditors ---------------------------------------------------------- Debtors: Joe F. Pacheco and Luisa Pacheco dba J and L Dairy 2200 S. Marks Fresno, CA 93706 Bankruptcy Case No.: 08-12006 Type of Business: The Debtors own J and L Dairy. Chapter 11 Petition Date: April 10, 2008 Court: Eastern District of California (Fresno) Judge: Whitney Rimel Debtors' Counsel: David R. Jenkins, Esq. David R. Jenkins, P.C. P.O. Box 1406 Fresno, CA 93716 Tel: (559) 264-5695 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million Debtor's 16 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Western Milling $1,287,328 P.O. Box 1029 Goshen, CA 93227 Jess Smith & Sons Commodities $279,545 2905 F Street Bakersfield, CA 93301 Kings Dairy Supply $157,212 5835 13th Avenue Hanford, CA 93230 Mountain Valley Hay $23,659 Phillips Silage Harvesting, Inc. $16,355 Mesa Verde Trading Co., Inc. $13,377 Veterinary Pharmaceuticals, Inc. $5,631 Tony Savant $5,000 Cap One $3,806 Stanley Tulchin Associates $2,819 Ford Motor Company $1,572 Sears/CBSD $1,034 LVNV Funding $456 HSBC Bank $49 PG&E $46 Chevron $42 JOHN CLARKE: Case Summary & 13 Largest Unsecured Creditors ---------------------------------------------------------- Debtors: John A. Clarke, Jr., and Irene Gil-Llamas 91 N. Hamilton Park Avenue Columbus, OH 43203 Bankruptcy Case No.: 08-53360 Type of Business: The Debtors previously filed for chapter 11 protection on Oct. 11, 2007 (Bankr. S.D. Ohio Case No. 07-58179). Chapter 11 Petition Date: April 14, 2008 Court: Southern District of Ohio (Columbus) Judge: Charles M. Caldwell Debtors' Counsel: Grady L. Pettigrew, Jr., Esq. Pettigrew & Associates, LLC 502 South Third Street Columbus, OH 43215-5702 Tel: (614) 224-1113 Fax: (614) 224-4949 Total Assets: $2,529,003 Total Debts: $2,298,741 Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Central Loan Admin Keene Drive, $188,000 P.O. Box 986 Westerville, Ohio Newark, NJ 07184-0597 Value of Security: $150,000 Capital One Credit card $13,422 P.O. Box 650365 Dallas, TX 75265-0635 Javitch Block & Rathbone $17,419 1100 Superior Avenue, 19th Floor Cleveland, OH 44114-2518 Providian Processing Services $5,798 Franklin County Treasurer 5833 Lou Street & $5,727 5835 Lou Street, Columbus, Ohio GE Money Bank Credit Card $4,992 Columbia Gas Utility Gas $4,840 Micro Center Computer $4,188 Retail Services $4,188 Atty. Ben Benbow Legal Service $3,000 City of Columbus Utility $672 Newark Water Utility $433 Big O Refuse Garbage Pickup $138 Newark, Ohio 267 Hudson $138 Newark, Ohio 26 Harrison $138 Newark, Ohio KLEROS REAL: Moody's Reviewing Caa3 Rating on Class A-2 Notes ------------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible further downgrade the rating of two classes of notes issued by Kleros Real Estate I, Ltd. The notes affected by the rating action are as follows: Class Description: $900,000,000 Class A-1 First Priority Senior Secured Floating Rate Notes Due October 2046 -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $30,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due October 2046 -- Prior Rating: Caa2, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade The rating action reflects deterioration in the credit quality of the underlying portfolio, as well as the occurrence on April 29, 2008, as reported by the Trustee, of an event of default caused by a failure of the Class A-1A Par Value Ratio to be greater than or equal to 102 percent, pursuant Section 5.1(i) of the Indenture dated June 30, 2006. 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 the A-1 and A-2 tranches. Losses are attributed to diminished credit quality on the underlying portfolio. The severity of loss of the tranche may be different, however, depending on the timing and choice of remedy to be pursued following the default event. Because of this uncertainty, the ratings assigned to Class A-1 Notes and Class A-2 Notes remain on review for possible further action. Kleros Real Estate I, Ltd. is a collateralized debt obligation backed primarily by a portfolio of Structured Finance securities. LEVITT AND SONS: Pact Between Wachovia Debtors & Cananwill Okayed ----------------------------------------------------------------- At the behest of Soneet R. Kapila, as chief administrator for certain Levitt and Sons LLC debtor-affiliates that are borrowers under a DIP Loan Agreement with Wachovia Bank N.A., the U.S. Bankruptcy Court for the Southern District of Florida approved a postpetition commercial premium finance agreement between the Wachovia Debtors and Cananwill, Inc. As Chief Administrator, Mr. Kapila is authorized by the Court to manage and supervise the Wachovia Debtors, their projects and related operations, in accordance with the DIP Loan Agreement and an Asset Management Agreement with the Wachovia Debtors. Moreover, under the terms of the DIP Loan Agreement and the Asset Management Agreement, Mr. Kapila is required to obtain insurance coverage for the Wachovia Debtors and their assets. Mr. Kapila has found general liability, excess liability and builders risk insurance for the Wachovia Debtors for an annual premium of $1,245,949, Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, relates. In order to fund the premium, the Wachovia Debtors needed to obtain premium financing. Mr. Kapila obtained the best quote from Cananwill, out of four premium finance companies. Under the Cananwill Premium Finance Agreement: (a) the Wachovia Debtors will be required to make a down payment of $621,882, and eight monthly payments of $79,635 at an annual percentage rate of 5.53%; and (b) Cananwill will be protected by a security interest in amounts payable to the Wachovia Debtors under the Policies, including any unearned or returned premiums and claim payments that result in a reduction of unearned premiums. Upon the Wachovia Debtors' default on any payment due and owing under the Premium Finance Agreement, the automatic stay will be immediately lifted and Cananwill may cancel the Policies after giving any notice required by applicable state law, and may apply any unearned or return premiums due under the Policies to any amounts owing by the Wachovia Debtors to Cananwill without Court order. In the event that upon cancellation of the Policies, the unearned or return premiums are insufficient to pay the Wachovia Debtors' total amount due to Cananwill under the Premium Finance Agreement, then any remaining amount owing to Cananwill will be given priority as an administrative expense under Section 503 of the Bankruptcy Code in any distribution of assets of the estate. About Levitt and Sons Based in Fort Lauderdale, Florida, Levitt and Sons LLC -- http://www.levittandsons.com/-- is the homebuilding subsidiary of Levitt Corporation (NYSE:LEV). Levitt Corp. -- http://www.levittcorporation.com/-- together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States. The company operates in two divisions, homebuilding and land. The homebuilding division primarily develops single and multi-family homes for adults and families in Florida, Georgia, Tennessee, and South Carolina. The land division engages in the development of master-planned communities in Florida and South Carolina. Levitt and Sons LLC and 38 of its homebuilding affiliates filed for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at Berger Singerman, P.A., represent the Debtors in their restructuring efforts. The Debtors chose AP Services, LLC as their crisis managers, and Kurtzman Carson Consultants, LLC as their claims and noticing agent. Levitt Corp., the parent company, is not included in the bankruptcy filing. The Debtors' latest consolidated financial condition as of Sept. 30, 2007 reflect total assets of $900,392,000, and total liabilities of $780,969,000. (Levitt and Sons Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) M FABRIKANT: Court Confirms Modified Chapter 11 Liquidation Plan ---------------------------------------------------------------- The Hon. Stuart M. Bernstein of the United States Bankruptcy Court for the Southern District of New York confirmed the Modified Joint Chapter 11 Plan of Liquidation dated April 24, 2008, filed by M. Fabrikants & Sons Inc. and Fabrikant-Leer International Ltd., together with the Official Committee of Unsecured Creditors and other current lenders As reported in the Troubled Company Reporter on Nov. 13, 2007, the Court determined that the Disclosure Statement filed by the Debtors and the Committee contains adequate information within the meaning of Section 1125 of the U.S. Bankruptcy Code. Plan-Created Trusts The Plan provides for the liquidation of the assets of the estates, including the investigation and prosecution of certain causes of action, by two liquidating trusts to be formed pursuant to the Plan and related liquidating trust agreements. The first of these trusts is the Shared Assets Trust, which shall contain the trust assets. The second of these trusts is the GUC Trust, which shall contain the GUC trust assets. The beneficiaries of the Shared Assets Trust are the Debtors' current lenders and the GUC Trust, while the beneficiaries of the GUC Trust are the GUC Trust beneficiaries, who are holders of the GUC Trust Interests. The Shared Assets Trust is charged with liquidating the trust assets, which are: i) any and all claims or causes of action of the Debtors, their estates, or the Committee, against third parties; ii) any and all claims or causes of action of their current lenders, the Wilmington Trust Company, or any of their respective predecessors in interest; iii) affiliate receivables or subsidiary equity which secure the current lender claims; iv) any unencumbered assets of the estates; and v) the remaining cash held by for the benefit for the estates upon entry of the confirmation order. The proceeds of the Trust Assets shall be distributed to the holders of Class 2 Claims and the GUC Trust -- the ultimate beneficiaries of which are holders of allowed Class 4 Claims and Class 5 Claims on account of their claims against the Debtors. The Shared Assets Trust shall also make distributions on account of allowed administrative and priority claims and be charged with reconciling disputed administrative and priority claims. The Shared Assets Trust shall be managed by the Shared Assets Trustee, as well as a five-member Shared Assets Trust Beneficiary Committee, three of whose members shall be selected by the Current Lenders and two of whose members shall be selected by the Committee. The GUC Trust is charged with: i) liquidating the original lender litigation claims; ii) receiving distributions on account of the Shared Assets Trust Class B Interests; and iii) making distributions in respect of: a) any distributions to the GUC Trust on account of the Shared Assets Trust Class B Interests; and b) proceeds, if any, of the original lender litigation claims to the holders of allowed Class 4 Claims on account of their Unsecured Claims against M Fabrikant and the holders of Allowed Class 5 Claims on account of their Unsecured Claims against Fabrikant-Leer. The GUC Trust shall also be responsible for objecting to and reconciling Disputed Class 4 Claims and Disputed Class 5 Claims. Treatment of Claims Each holder of an allowed administrative claim, priority tax claims, and professional fee claims will receive cash from the remaining cash or the shared assets trust in an amount equal to each respective claim. Priority tax claims holders will also receive deferred cash payments from remaining cash and the trust. Each holder of allowed Class 1 other priority claims will be paid in full in cash from the remaining cash or the shared assets trust. Each holder of an allowed Class 2 current lender claims will receive its pro rata share of the Share Assets Trust Class A Interests. Class 3 other secured claims holders will receive one of the alternative treatments, at the election of a Shared Assets Trustee: a) such Claim shall be paid in full in cash from the remaining cash or the Shared Assets Trust; b) the legal, equitable and contractual rights; c) such claim shall receive the treatment described in Section 1124(2) of the U.S. Bankruptcy Code; or d) all collateral securing such claim shall be transferred and surrendered to such holder, without representation or warranty by or recourse against the Debtors, the Shared Assets Trust, or the GUC Trust. Each holder of an allowed Class 4 Debtor claims and Class 5 Fabrikant-Leer claims will receive its pro rata share of the GUC Trust Interests. No distributions will be made with respect to any Class 6 interest claims. A full-text copy of the Modified Joint Chapter 11 Plan of Liquidation is available for free at http://ResearchArchives.com/t/s?2beb Based in New York City, M. Fabrikant & Sons, Inc. -- http://www.fabrikant.com/-- sells diamonds and jewelries. The company and its affiliate, Fabrikant-Leer International Ltd., filed for chapter 11 protection on Nov. 17, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-12737). Mitchel H. Perkiel, Esq., Lee W. Stremba, Esq., and Paul H. Deutch, Esq., at Troutman Sanders LLP represent the Debtors in their restructuring efforts. Alan Kolod, Esq., Lawrence L. Ginsberg, Esq., and Christopher J. Caruso, Esq., at Moses & Singer LLP serve as counsel to the Official Committee of Unsecured Creditors. In schedules filed with the Court, M. Fabrikant disclosed total assets of $225,612,204 and total debts of $439,993,890. The Debtors filed their Plan of Liquidation and accompanying Disclosure Statement in October 2007. MADACY ENT: Has until May 31 to Comply with Coverage Covenant ------------------------------------------------------------- Madacy Entertainment Income Fund obtained a waiver of compliance with its fixed charge coverage covenant for the inclusive months of March to May 2008. The waiver relates to its banking facility with ABN AMRO Bank N.V., Canada Branch. The fund related that the balance outstanding on the revolving credit facility as at March 29, 2008, is $18 million. Of this, $13 million is classified as long-term debt as the amount is not repayable and is not anticipated to be repaid within the next 12 months. The fund has further assessed its anticipated future funding requirements and consequently, with its bank consent, has reduced the amount of its revolving credit facility from $27 million to $23 million. The fund has pledged all of its assets as security for the borrowing. About Madacy Entertainment Income Fund Headquartered in Quebec, Canada, Madacy Entertainment Income Fund (TSX: MEG.UN) -- http://www.madacy.com/-- operates in the business of recorded music and home video products with a primary focus on the development and marketing of budget and mid-priced recorded music products. Madacy is also involved in the licensing of its proprietary recordings. MARATHON HEALTHCARE: May Access Webster Bank's DIP Facility ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut gave its second interim approval for Marathon Healthcare Group LLC and its debtor-affiliates to access debtor-in-possession financing from Webster Bank NA. The Debtors needed to borrow up to $1,661,614 through the week ending April 25, 2008, and up to $1,217,643 through the week ending May 2, 2008. The Debtors again need to borrow up to $2,429,300 for the period commencing May 3, 2008, through May 16, 2008, subject to the conditions in a proposed agreed final order. On April 9, 2008, the Debtors obtained an interim borrowing order relating to access of their lender's postpetition financing through April 18, 2008. The Debtors also obtained an interim order permitting them to use lender's cash collateral. A separate story on the second interim order on the use of lender's cash collateral is in today's Troubled Company Reporter. As of April 15, 2008, the Debtors owe Webster Bank about $6,657,406, together with accrued interest. The Debtors executed a loan and security agreement dated Nov. 13, 2006, as amended on Feb. 6, 2007, and six revolving line of credit notes dated Nov. 13, 2006, with a face amount of $6,000,000. Two irrevocable letters of credit were issued by Webster Bank naming Health Care REIT Inc. as beneficiary. The two letters of credit include (i.) irrevocable letter of credit number 10288 dated Nov. 13, 2006, in the amount of $575,000, as renewed from year to year; and (ii.) irrevocable letter of credit number 10313 dated Jan. 29, 2007, in the amount of $712,500, as renewed for an additional year. The Debtors are in default under the prepetition loan documents. The Debtors' obligations to Webster Bank are jointly secured by the same collateral. East Hartford, Connecticut-based Marathon Healthcare Group, LLC -- http://www.marathonhealthcare.com/-- provides nursing and long term care. Together with seven affiliates, the healthcare provider filed for chapter 11 protection on April 3, 2008 (Bankr. D. Conn. Lead Case No. 08-20591). Barry S. Feigenbaum, Esq., at Rogin Nassau, LLC, represents the Debtors in their restructuring efforts. Zeisler & Zeisler PC serves as counsel to the Official Committee of Unsecured Creditors. When the Debtors filed for chapter 11, they listed assets between $100,000 and $1 million and debts between $1 million and $10 million. MARATHON HEALTHCARE: May Use Webster Bank's Cash Collateral ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut gave its second interim approval for Marathon Healthcare Group LLC and its debtor-affiliates to use cash collateral that secures obligations to Webster Bank NA, Health Care REIT Inc. and the State of Connecticut. The Debtors told the Court that they need access to their lenders' cash collateral in order to continue operations and maintain assets. As of April 7, 2008, the Debtors owe Webster Bank about $6,130,009, together with accrued interest. The Debtors executed a loan and security agreement dated Nov. 13, 2006, as amended on Feb. 6, 2007, and six revolving line of credit notes dated Nov. 13, 2006, with a face amount of $6,000,000. Two irrevocable letters of credit were issued by Webster Bank naming Health Care REIT as beneficiary. The two letters of credit include (i.) irrevocable letter of credit number 10288 dated Nov. 13, 2006, in the amount of $575,000, as renewed from year to year; and (ii.) irrevocable letter of credit number 10313 dated Jan. 29, 2007, in the amount of $712,500, as renewed for an additional year. The Debtors are in default under the prepetition loan documents. The Debtors' obligations to Webster Bank are jointly secured by the same collateral. East Hartford, Connecticut-based Marathon Healthcare Group, LLC -- http://www.marathonhealthcare.com/-- provides nursing and long- term care. Together with seven affiliates, the healthcare provider filed for chapter 11 protection on April 3, 2008 (Bankr. D. Conn. Lead Case No. 08-20591). Barry S. Feigenbaum, Esq., at Rogin Nassau, LLC, represents the Debtors in their restructuring efforts. Zeisler & Zeisler PC serves as counsel to the Official Committee of Unsecured Creditors. When the Debtors filed for chapter 11, they listed assets between $100,000 and $1 million and debts between $1 million and $10 million. MASHANTUCKET PEQUOT: Moody's Cuts $500MM Notes Rating to Ba2 ------------------------------------------------------------ Moody's Investors Service lowered Mashantucket (Western) Pequot Tribal Nation's ratings based on the expectation that it will achieve the longer-term leverage reductions at a slower pace than needed to maintain its previous ratings. This rating action concludes the formal review process that was initiated on Jan. 18, 2008. Ratings Affected -- $638 million Special Revenue Obligations to Baa3 from Baa2 -- $376 million Subordinated Special Revenue Bonds to Ba1 from Baa3 -- $500 million Series A Notes to Ba2 from Ba1 Lower-than-expected operating results caused by a slowing economy and increased competition in the Northeast US, along with a significant amount of construction related debt, will make it more difficult than previously projected for the Tribe to significantly reduce leverage during fiscal 2008. Debt/EBITDA is currently at about 5.2 times. Foxwoods' investment grade rating and stable outlook continue to acknowledge the favorable demographics and growth prospects of its primary and secondary market area. It also reflects our expectation that the earnings contributed by the new MGM Grand at Foxwoods Resort Casino, scheduled to open later this month, will reduce debt/EBITDA, albeit at a slower pace than originally expected. Foxwoods Resort Casino is owned by the Mashantucket (Western) Pequot Tribal Nation. The Mashantucket Pequot Gaming Enterprise, a wholly-owned, unincorporated division of the Tribe, conducts the Tribe's gaming and resort operations. MATRIA HEALTHCARE: $144M Acquisition by Inverness Now Complete -------------------------------------------------------------- Inverness Medical Innovations has completed its acquisition of Matria Healthcare, Inc. The deal became effective prior to the opening of business on May 9, 2008. Matria, headquartered in Marietta, Georgia, provides comprehensive, integrated health management services particularly in the areas of women's and children's health, cardiology and oncology. The final purchase price consisted of approximately $143.9 million, and approximately 1.8 million shares of Inverness Series B Convertible Perpetual Preferred Stock (Amex: IMA.PR.B). In addition, existing options to purchase Matria stock have been assumed by Inverness and have converted into options to purchase approximately 1.5 million shares of Inverness common stock. As a result of the merger, Matria's common stock will no longer trade on The NASDAQ Global Select Market. Pursuant to the merger, each outstanding share of Matria common stock, not owned by Matria or its affiliates and not subject to appraisal rights, has been automatically converted into the right to receive: (i) $6.50 in cash, without interest, and (ii) a portion of a share of Series B Preferred Stock of Inverness. About Matria Healthcare Headquartered in Marietta, Georgia, Matria Healthcare -- http://www.matria.com--is a provider of integrated comprehensive health enhancement programs to health plans, employers and government agencies. It manages major chronic diseases and episodic conditions including diabetes, congestive heart failure, coronary artery disease, asthma, chronic obstructive pulmonary disease, high-risk obstetrics, cancer, musculoskeletal and chronic pain, depression, obesity, and other conditions. Matria delivers programs that address wellness, healthy living, productivity improvement and navigation of the healthcare system, and provides case management of acute and catastrophic conditions. It operates through nearly 50 offices around the United States. MATRIA HEALTHCARE: Inverness Sale Cues Moody's to Withdraw Ratings ------------------------------------------------------------------ Moody's Investors Service withdrew Matria Healthcare, Inc.'s B1 Corporate Family Rating, B2 Probability of Default Rating and B1 rating on the senior secured revolver and senior secured term loan following the completed acquisition of the company by Inverness Medical Innovations, Inc. These ratings were withdrawn: -- B1 Corporate Family Rating; -- B2 Probability of Default Rating; -- B1 (LGD3/33%) rating on the Senior Secured Revolver due 2011, and; -- B1 (LGD3/33%) rating on the Senior Secured Term Loan due 2012. Headquartered in Marietta, Georgia, Matria Healthcare, Inc. is a leading provider of comprehensive, integrated health enhancement and disease management services and related products. For the last twelve months ended Dec. 31, 2007, the company reported revenues of approximately $352 million. MATRIA HEALTHCARE: S&P Withdraws Ratings After Completed Merger --------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'B+' counterparty credit rating on Matria Healthcare Inc. in connection with its completed merger with Inverness Medical Innovations Inc. Standard & Poor's also said that it withdrew its 'BB-' senior debt rating on Matria's bank borrowings because they were paid down in connection with the transaction. MBIA INC: Securitizations Differ from Moody's Second Lien RMBS -------------------------------------------------------------- MBIA Inc. disclosed that Moody's Investors Service is again revising its assumptions on 2005-2007 vintage subprime second lien mortgage products and the potential impact on financial guarantors. As reported in the Troubled Company Reporter on May 14, 2008, Moody's published a special comment entitled "U.S. Subprime Second Lien RMBS Rating Actions Update", which highlights the persistent poor performance and continued downward rating migration among 2005-2007 vintage second lien mortgage securities. Moody's notes that financial guarantors have significant exposure to second lien RMBS, primarily through guaranties on direct RMBS transactions, and to a lesser extent, through exposure to ABS CDOs, where second lien RMBS securities typically constitute less than 5% of collateral within such CDOs. Moody's loss expectations for this asset class are higher than previously anticipated, owing to worse-than-expected performance trends. This could have material implications for the estimated capital adequacy of financial guarantors most exposed to this risk. In recent announcements of first-quarter 2008 earnings, MBIA and Ambac both reported material credit impairment losses on ABS CDOs and loss reserve charges on direct RMBS exposures, including second lien securitizations. Moody's said that incurred losses within both firms direct RMBS and ABS CDO portfolios are now meaningfully higher than the rating agencys prior expected-case loss estimates, elevating existing concerns about capitalization levels relative to the Aaa benchmark. Moody's intends, in the short term, to assess whether worsening performance in this sector is likely to be material for exposed financial guarantors, and will update the market as appropriate. According to MBIAs press statement, while it is unclear what impact, if any, the revised assumptions may have on MBIA, the bond insurer believes that there are significant differences between subprime second lien pools referenced in Moody's report and the prime second lien securitizations it has guaranteed. As discussed on MBIAs earnings call on Monday, May 12, 2008, the company has modeled its portfolio on a deal by deal basis using issuer specific data and it is comfortable with the resulting loss reserves and stress analysis it reported to the market. MBIA has provided the rating agencies its stress test and loss reserve analysis on its prime second lien portfolio. Loans with lower FICO scores and limited documentation within the bond insurers securitizations have driven losses to-date, but those lower FICO borrowers represent a small part of the collateral in our deals which largely comprise prime quality borrowers. In addition, MBIA also noted that it has begun the process of putting back a significant number of loans to the originators which do not meet the criteria for prime credits as represented by originators. Ultimately, MBIA believe that its remediation efforts will have a material positive effect on the outcome of this portfolios performance. However, MBIA has given no credit to remediation or recoveries in its analysis or loss reserving process. Moody's assumptions regarding losses indicate that actual current losses to date for 2006-2007 subprime second liens average 13.8% and 7.1%, respectively. While MBIAs portfolio is experiencing stress and it has a few deals that could ultimately experience cumulative losses greater than 40%, the weighted average cumulative losses to-date on its Closed End Second portfolio equals approximately 3.5%, significantly inside Moody's average loss rates to-date, which demonstrates that there are differences in the subprime second liens that are the subject of Moody's report and prime second lien deals MBIA insures, and therefore differences in ultimate average cumulative loss expectations. MBIA expects that Moody's will take these factors into consideration when it analyzes each of its Home Equity Line of Credit and CES transactions and will provide us the loss assumptions they are using to arrive at expected and stress losses for each transaction. Based on its analysis, MBIA continues to believe that its direct Residential Mortgage Backed Securities expected losses are modestly above Moody's expected losses and significantly less than their stress loss estimates based on their transaction level review in February of 2008. MBIA is not aware of any changes to capital requirements for its deals nor does it believe any is warranted based on deal performance or expected losses. As previously reported, MBIA reported a net loss for the first quarter of 2008 of $2.4 billion, compared with net income of $198.6 million during the same period in 2007. The Wall Street Journal discloses that it is the companys third consecutive quarterly loss. About MBIA Inc. Headquartered in Armonk, New York, MBIA Inc. (NYSE:MBI) -- http://www.mbia.com-- provides financial guarantee insurance, investment management services, and municipal and other servicesto public finance and structured finance clients on a globalbasis. The company conducts its financial guarantee business through its wholly owned subsidiary, MBIA Insurance Corporation and provides investment management products and financial services through its wholly owned subsidiary MBIA Asset Management, LLC. MBIA manages its activities primarily through two principal business operations: insurance and investment management services. In February 2007, MBIA Corp. formed a new subsidiary, MBIA Mexico, S.A. de C.V. During the year ended Dec. 31, 2006, MBIA discontinued its municipal services operations. These operations included MBIA MuniServices Company. On Dec. 5, 2006, the company completed the sale of MBIA MuniServices Company. * * * As reported in the Troubled Company Reporter on March 26, 2008, Fitch Ratings has decided to maintain its Insurer Financial Strength and debt ratings on MBIA Inc. and its subsidiaries for the foreseeable future. Fitch expects to maintain the MBIA ratings as long as Fitch believes that it can maintain a clear, well-supported credit view without access to certain non-public details concerning MBIAs insured portfolio, to which Fitch will no longer have access. As reported in the Troubled Company Reporter on Jan. 21, 2008, Moody's Investors Service placed the Aaa insurance financial strength ratings of MBIA Insurance Corporation and its affiliated insurance operating companies on review for possible downgrade. In the same rating action, Moody's also placed the surplus note rating of MBIA Insurance Corporation (Aa2-rated) and the ratings of the holding company, MBIA, Inc. (senior debt at Aa3), on review for possible downgrade. This rating action reflects Moody's growing concern about the potential volatility in ultimate performance of mortgage and mortgage-related CDO risks, and the corresponding implications for MBIAs risk-adjusted capital adequacy. Prior to this rating action, the rating outlook for MBIA was negative. MESA AIR: Shuts Down Air Midwest Operations Due to Fuel Costs ------------------------------------------------------------- Air Midwest, Inc., a wholly owned subsidiary of Mesa Air Group, Inc. (Nasdaq: MESA), will discontinue all operations including its current scheduled services provided under the Essential Air Service program. The announcement follows the company's January 15, 2008 announcement of the decision to discontinue Air Midwest's operations. The company cites record-high fuel prices, insufficient demand and a difficult operating environment as the main factors in its decision. Air Midwest began filing notices with the Department of Transportation of its intent to terminate EAS beginning over a year ago. "Although we are unable to continue to provide service, Air Midwest plans to cooperate with the DOT and any replacement carriers in the interest of lessening the impact on the communities affected," said Greg Stephens, Air Midwest's President. Air Midwest will shut down based on this schedule: * Effective May 23rd east coast operations serving: Lewisburg, WV DuBois, PA Franklin, PA Athens, GA * Effective May 31st west coast operations serving: Ely, NV Merced, CA Visalia, CA Prescott, AZ Kingman, AZ Farmington, NM * Effective June 30th central operations serving: Columbia, MO Joplin, MO Kirksville, MO Grand Island, NE McCook, NE Little Rock, AR Hot Springs, AR Harrison, AR El Dorado, AR Jonesboro, AR "We are extremely saddened this decision has become necessary; Air Midwest has a long and proud history and has served millions of passengers in its 43 years of operation," said Jonathan Ornstein, CEO of Mesa Air Group. "Unfortunately under the current economic conditions there was no foreseeable way to achieve sustained profitability. Even with subsidies from the DOT, Air Midwest has been unable to sustain profitability for the last several years. While this was an extremely difficult decision, and one that the company worked tirelessly to avoid, we are working diligently to minimize the impact this decision will have on Air Midwest's passengers and employees." Record fuel prices have claimed the lives of other carriers. In April, EOS Airlines, Frontier Airlines, ATA Airlines Inc., and Skybus Airlines Inc. tumbled into bankruptcy. ATA has ceased operations. Aloha Airlines also commenced bankruptcy proceedings in March. Air Midwest, Inc. is a wholly owned subsidiary of Mesa Air Group, Inc., and currently operates 20 Beech 1900D 19-seat airliners serving 27 cities throughout the country. Air Midwest was founded in Wichita, Kansas, in May 1965 by Gary Adamson as Aviation Services, Inc. In 1969, it changed its name to Air Midwest and by 1978 it was operating a fleet of 10 Metroliners. Air Midwest was purchased by Mesa Air Group in 1991. Mesa currently operates 181 aircraft with over 1,000 daily system departures to 150 cities, 38 states, the District of Columbia, Canada, the Bahamas and Mexico. Mesa operates as Delta Connection, US Airways Express and United Express under contractual agreements with Delta Air Lines, US Airways and United Airlines, and independently as Mesa Airlines and go!. In June 2006 Mesa launched inter-island Hawaiian service as go! This operation links Honolulu to the neighbor island airports of Hilo, Kahului, Kona and Lihue. The Company, founded by Larry and Janie Risley in New Mexico in 1982, has approximately 5,000 employees and was awarded Regional Airline of the Year by Air Transport World magazine in 1992 and 2005. Mesa is a member of the Regional Airline Association and Regional Aviation Partners. NATCHEZ HOSPITAL: To be Sold Following Privatization ---------------------------------------------------- The trustees of Natchez Regional Medical Centers obtained approval from the state of Mississippi to sell off the hospital after it is privatized, The Associated Press reports. Based on the report, the sale of the hospital, currently owned by Adams County in Mississippi, is ongoing. Board counsel Walter Brown, Esq., related that the Adams County Board of Supervisors were requested to market the hospital, AP reports. Other changes within the hospital is said to occur, AP quotes CEO Scott Phillips as saying. Mr. Phillips, the report says, disclosed that the hospital is utilizing the chapter 9 proceeding and obtaining short-term borrowings to keep it afloat. According to Mr. Phillips, the hospital requires $2 million to $3 million in interim funding and loses $250,000 to $300,000 every month, AP relates. Natchez Regional Medical Center is owned by Adams County and is located in Natchez, Mississippi. Eilen Schaffer, Esq., of Jackson, Mississippi is the Debtors bankruptcy counsel. The Senate Bill 3186 relating to a chapter 9 bankruptcy filing of Natchez Regional Medical Center was approved by Gov. Haley Barbour. NORTEK INC: S&P Rates Proposed $750MM Senior Secured Notes B ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' issue rating and '2' recovery rating to Nortek Inc.'s proposed $750 million senior secured notes due 2013. The recovery rating indicates that lenders can expect substantial (70%-90%) recovery in the event of a payment default. The ratings are based on preliminary terms and conditions. Proceeds from the notes and $50 million from a new unrated $350 million asset-based revolving credit facility will be used to repay the company's senior secured credit facilities, which had about $755 million outstanding at March 31, 2008, plus fees and expenses. All other ratings on Nortek and its ultimate parent company, NTK Holdings Inc., remain on CreditWatch with negative implications where they were placed on April 21, 2008. "If the proposed refinancing is completed as currently outlined, we would affirm the group's 'B-' corporate credit rating and 'CCC' senior unsecured and subordinated debt ratings and remove them from CreditWatch," said Standard & Poor's credit analyst Pamela Rice. "In addition, we would withdraw the ratings on the existing credit facilities. The outlook would be negative." The anticipated rating actions recognize that the proposed refinancing would help to mitigate S&P's concerns regarding near- term liquidity because of looser financial covenants, and it extends maturities. "Nevertheless," Ms. Rice said, "we expect that Nortek's financial profile will remain weak for at least the next several quarters because of the challenging operating conditions in the company's remodeling and new construction markets. We do not expect any recovery in residential markets before mid-2009, and we believe that the downturn in commercial construction markets will begin to accelerate in late 2008." As a result, the company will need price increases and meaningful cost savings to offset commodity cost inflation and the impact of lower volumes as the downturn continues. In addition, Nortek's cash interest expense will increase substantially as a result of the proposed refinancing at the same time that it faces less cash from operations. "Ms. Rice said, "We could lower the ratings if the refinancing does not occur and the company is unable address its potential covenant position beyond the 2008 second quarter. Nortek used the equity cure under its credit agreement to meet first-quarter 2008 financial covenants, and it may need to do so for the second quarter as well. As a result, we are concerned that it will be difficult for the company to meet covenants that continue to tighten over the next 12 months, given the difficult operating and credit market environment." NORTHWEST AIRLINES: Employees First to Benefit from Merger ---------------------------------------------------------- More than 100,000 employees and retirees of Delta Air Lines, Inc. and Northwest Airlines Corporation will gain reciprocal access to both airlines' worldwide route systems for free, standby travel, effective May 6, 2008, the carriers said in a statement. The enhanced program will allow Delta and Northwest employees and their families to fly for free to more than 390 worldwide destinations in 67 countries. "Non-revenue travel privileges continue to be one of the most popular aspects of airline employees' total compensation and benefits," said Delta chief executive officer Richard Anderson. "With great coordination and partnership between the airlines, we are offering an immediate benefit by extending free travel on each other's flights -- something that has never been offered this quickly following the announcement of a major airline merger," he said. Northwest CEO Doug Steenland added, "We wanted our own employees to be the first to benefit from the Northwest-Delta combination with a travel benefit that is unique in the airline industry. Having immediate access to the combined network will open up a whole new world of travel opportunities, giving both airlines' employees a sample of the benefits our customers will also experience in the new global airline." The addition of enhanced travel privileges is part of previously announced merger-related commitments to Delta and Northwest employees, including: * a significant equity stake for U.S.-based employees of both companies upon closing of the transaction, where international employees will receive a cash payment in lieu of equity; * pay increases that will continue the progression toward industry-standard pay; * no involuntary furloughs of frontline employees as a result of the merger; * seniority protection through a fair and equitable seniority integration process; and * the protection of the existing pension plans for both companies' employees. The enhanced travel program is an early step in the combination of Delta and Northwest that can be achieved in advance of completion of the regulatory review process. Delta and Northwest expect to complete the regulatory review process by the end of 2008. Delta Pilots Vote To Ratify Merger-Related Agreement Delta's pilots began voting on May 1, 2008, on whether to ratify the tentative agreement between Delta management and the Delta pilots union, which will provide certain modifications to Delta's current Pilot Working Agreement, The Atlanta Journal Constitution reports. Ratification of the Agreement will "ease the way" toward Delta's planned merger with Northwest, says the report. Voting by the Delta pilots union's 6,000 members will end on May 14. As previously reported, the proposed deal between Delta and the union grants the pilots: * a 3.5% equity stake in the combined Company; and * annual pay raises of 5% in 2009, and 4% in 2010 to 2012 under an extended contract. According to AJC, the pay raise is in exchange for rule changes giving Delta more flexibility to integrate their flight networks with Northwest's. The Agreement being considered still has the seniority issues outstanding and there are plans "to [work] with the Northwest [pilots union leaders] to resolve them at the earliest opportunity," said Lee Moak, executive committee head of Delta's pilots union, reports AJC. Seniority is a major determinant of pilots' pay levels and work schedules, among other things. During the earlier months of Delta's and Northwest's merger talks, the airlines' pilot unions tried, but failed, to reach an agreement on a joint labor contract and a plan for merging the seniority lists of the unions' 11,000 pilots, AJC says. Northwest's pilot union -- whose members have not been included in the pay raises and equity in the new company that Delta pilots have been promised with -- has vowed to oppose the planned merger, AJC reports. However, The Associated Press says Northwest's pilot group has disclosed that it will meet with pilots from Delta for two days next week to "focus on a joint contract, with seniority issues to come later." Northwest pilots have noted that they oppose the deal with Delta because they were left out, according to the report. Delta To Keep 450 Jobs at Northwest's Chisholm Reservation Center Delta Air Lines officials assured legislators that they will keep thousands of Northwest Airlines jobs in Minnesota after the merger, reports Carissa Wyant of Minneapolis/St. Paul Business Journal. Delta will attempt to retain 450 jobs at Northwest's reservation center in Chisholm, Delta's CEO, Richard Anderson, told members of Congress on Wednesday, according to reports. Ms. Wyant says Mr. Anderson further assured that there will be no job cuts for pilots, trainers, flight attendants, cargo workers and other ground workers. However, since headquarters will shift to Atlanta, there would likely be job losses at Northwest's headquarters, which has about 1,100 employees. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News, Issue No. 97; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News, Issue No. 91; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on April 17, 2008, Moody's Investors Service placed the debt ratings of Delta Air Lines, Inc. ("Delta", corporate family at B2) and Northwest Airlines Corporation ("Northwest", corporate family rating at B1) on review for possible downgrade. The review was prompted by the announcement that the two airlines have agreed to combine in an all-stock transaction with a combined enterprise value of approximately $18 billion. Fitch Ratings has affirmed the debt ratings of Delta Air Lines, Inc. following the announcement that Delta has agreed to merge with Northwest Airlines Corp., subject to approval by the two airlines' shareholders and the U.S. Department of Justice. Delta's ratings were affirmed as: Issuer Default Rating at 'B'; First-lien senior secured credit facilities at 'BB/RR1'; Second- lien secured credit facility (Term Loan B) at 'B/RR4'. The issue ratings apply to $2.5 billion of committed credit facilities. The Rating Outlook for Delta has been revised to Negative from Stable. Standard & Poor's Ratings Services placed its ratings, including the 'B+' long-term corporate credit rating, on Northwest Airlines Corp. on CreditWatch with negative implications, following announcement of a merger agreement with Delta Air Lines Inc. (B/Watch Pos/--). The CreditWatch listing affects enhanced equipment trust certificates with various ratings, excepting those that are insured by a bond insurer. S&P's listing of Northwest ratings on CreditWatch with negative implications and those of Delta on CreditWatch with positive implications implies that S&P foresee a corporate credit rating of either 'B' or 'B+' for the combined entity. NORTHWEST AIRLINES: EVP Neal Cohen to Leave on June 16 ------------------------------------------------------ Northwest Airlines said that Neal Cohen, executive vice president - strategy, international and CEO regional airlines, will leave the Company effective June 16, 2008. Mr. Cohen returned to Northwest in May 2005 as executive vice president and chief financial officer. He played a vital role in leading the Company's restructuring efforts and upon Northwest's emergence from bankruptcy, in June 2007, Cohen was promoted to his current position. Northwest Airlines' President and Chief Executive Officer, Doug Steenland, said, "Neal made tremendous contributions during a critical time for Northwest Airlines. His leadership throughout the restructuring process positioned the Company well during an extremely tumultuous period in the industry. We're grateful that Neal returned to the airline to help guide Northwest through the restructuring process and we wish him the very best in his future endeavors. Discussing his departure, Mr. Cohen said, "Over the past three years, we have worked collaboratively to reposition Northwest and secure its future for the long-term. Having successfully completed the restructuring process, and with the impending merger with Delta, I'm excited about the opportunity to pursue business interests outside of the airline industry that I put on hold when I returned to Northwest. I'm confident that the airline will continue to be an industry leader and am proud to have been a part of its success. Neal Cohen, 48, was executive vice president of finance and chief financial officer for US Airways from April 2002 to April 2004. Prior to US Airways, Cohen served as chief financial officer for various service and financial organizations. He spent nine years with Northwest, from 1991 to 2000, where he held a number of senior positions including senior vice president and treasurer. Prior to joining Northwest, he spent seven years at General Motors' Treasurer's office in New York. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News, Issue No. 92; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on April 17, 2008, Moody's Investors Service placed the debt ratings of Delta Air Lines, Inc. ("Delta", corporate family at B2) and Northwest Airlines Corporation ("Northwest", corporate family rating at B1) on review for possible downgrade. The review was prompted by the announcement that the two airlines have agreed to combine in an all-stock transaction with a combined enterprise value of approximately $18 billion. Fitch Ratings has affirmed the debt ratings of Delta Air Lines, Inc. following the announcement that Delta has agreed to merge with Northwest Airlines Corp., subject to approval by the two airlines' shareholders and the U.S. Department of Justice. Delta's ratings were affirmed as: Issuer Default Rating at 'B'; First-lien senior secured credit facilities at 'BB/RR1'; Second- lien secured credit facility (Term Loan B) at 'B/RR4'. The issue ratings apply to $2.5 billion of committed credit facilities. The Rating Outlook for Delta has been revised to Negative from Stable. Standard & Poor's Ratings Services placed its ratings, including the 'B+' long-term corporate credit rating, on Northwest Airlines Corp. on CreditWatch with negative implications, following announcement of a merger agreement with Delta Air Lines Inc. (B/Watch Pos/--). The CreditWatch listing affects enhanced equipment trust certificates with various ratings, excepting those that are insured by a bond insurer. S&P's listing of Northwest ratings on CreditWatch with negative implications and those of Delta on CreditWatch with positive implications implies that S&P foresee a corporate credit rating of either 'B' or 'B+' for the combined entity. NTK HOLDINGS: Moody's Affirms Caa2 Rating on $403MM Senior Notes ---------------------------------------------------------------- Moody's Investors Service has affirmed NTK Holdings and its subsidiary Nortek's corporate family rating and rated the company's new senior secured notes. The ratings affirmation considers the company's proforma liquidity and cost reduction initiatives. The ratings reflect the expectation that 2009 should be a better year for remodeling and home starts than 2008. The ratings reflect the company's high leverage and generally weak balance sheet. The ratings outlook is negative. These ratings and LGD assessments have been affected: Issuer: NTK Holdings, Inc. -- Corporate Family Rating affirmed at B2, -- $403 million Senior Unsecured Notes, affirmed at Caa2 (LGD6, 94%). Issuer: Nortek, Inc. -- $750 million Senior Secured Notes, due 2013, assigned at B1 (LGD3, 32%), -- $625 million Senior Subordinated Notes, affirmed at Caa1 (LGD5, 78%). Previously at (LGD4, 68%). These rating will be withdrawn upon the close of the transaction: -- $691 million (currently $677 million outstanding) senior secured term loan due 2011 rated Ba3 (LGD2, 19%), -- $200 million senior credit facility due 2010 rated Ba3 (LGD2, 19%). The assignment of the B1 to the company's planned senior secured notes reflects their priority of claim in the company's capital structure. The notes carry a first lien on the company's property plant an equipment and the majority of the company's asset with a few exceptions including accounts receivable, inventory, cash and proceeds and products of certain assets that the company will have a second lien on. The notes second lien on accounts receivable, inventory, and cash is the primary reason why these notes are not notched higher above the CFR. The overall notching is also affected by Moody's estimate of the overall deficiency on total debt caused by in part by the company's high levels of goodwill and intangibles. Nortek's manufacturing facilities are known for their competitive position in various markets including in the HVAC and in the air exchange market. The company also has home entertainment products that are known for producing reasonably high end components. The B3 corporate family rating reflects the company's credit metrics and the expectation that demand will remain weak into 2009 due to the weak new home construction market and also weakness in the home remodeling market. Homeowners' willingness to commit to large projects is likely to deteriorate as long as home equity continues to decline along with home prices. Nortek sells a full range of kitchen extraction fans and also sells air quality systems for the home. The company's music systems are relatively expensive. Demand is currently anticipated to be weak into 2009 and cash flow generation is expected to be in line with the low B rating category. However, the affirmation of the B3 rating reflects improved liquidity as a result of the ABL. The company is anticipated to have around $300 million available under its ABL facility thereby providing a significant boost to Nortek 's liquidity. The company's liquidity is extremely important given Moody's projection that the company may produce negative free cash flow in 2008 and possibly in 2009. The company's weak balance sheet results from a decision in 2005. At the beginning 2005, NTK Holdings issued $250 million in senior discount notes to pay a sizeable dividend (Moody's currently rates the discount notes at Caa2). The company amended its financial covenants in April 2006 in such a manner that it eliminated its acquisition basket, and ability to pay certain dividends. Following the amendment, in May 2006 NTK Holdings borrowed $205 million under a senior unsecured loan facility to pay a cash dividend to shareholders and to help fund deferred compensation payments to management (Moody's does not rate the unsecured loan facility). The negative ratings outlook reflects the belief that the company is still undergoing significant revenue and margin pressure. The rating may decline to the Caa ratings category if liquidity deteriorates, or if new housing starts fall below current expectations and the repair and remodeling market contracts by more than 15% over 2007's level. Additionally, the company's cost cutting initiatives would need to be successful enough so that the company's operating and EBITDA margins do not contract meaningfully in 2008 or 2009 so that free cash flow generation to debt does not fall below a negative 5%. Nortek, Inc., headquartered in Providence, Rhode Island, is a leading diversified manufacturer of innovative, branded, residential and commercial ventilation, HVAC, and home technology convenience and security products. Its products include range hoods and other ventilation products, heating and air conditioning systems, indoor air quality systems, and home technology products. Revenues for the 2007 year were almost $2.4 billion. ORCHID STRUCTURED: Moody's Chips Ratings on Two Note Classes to Ca ------------------------------------------------------------------ Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings on these notes issued by Orchid Structured Finance CDO, Ltd. Class Description: $32,500,000 Class A-2 Floating Rate Term Notes -- Prior Rating: Aa1, on review for possible downgrade -- Current Rating: Baa3, on review for possible downgrade Class Description: $19,375,000 Class B Floating Rate Term Notes -- Prior Rating: Ba2, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $6,250,000 Class C-1 Floating Rate Term Notes -- Prior Rating: Caa3, on review for possible downgrade -- Current Rating: Ca Class Description: $5,000,000 Class C-2 Fixed Rate Term Notes -- Prior Rating: Caa3, 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. PACIFIC LUMBER: BoNY, et al., Challenge Global Settlement --------------------------------------------------------- BankruptcyLaw360 reports that creditors in Pacific Lumber Co.'s bankruptcy case asked the U.S. Bankruptcy Court for the Southern District of Texas to allow for expedited discovery for issues still standing in a proposed global settlement the Debtors entered into on May 1, 2008, with MAXXAM Inc., MAXXAM Group Inc., MAXXAM Group Holdings Inc., Mendocino Redwood Company, LLC, and Marathon Structured Finance Fund L.P., the Debtors' DIP Lender and Agent under the DIP Credit Facility. The creditors, including Bank of New York, argued they needed to make sure the agreement had not been forced upon the Debtors, BankruptcyLaw360 says. As reported by the Troubled Company Reporter on May 8, 2008, The Pacific Lumber Company, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc., sought Judge Richard Schmidt's approval of the settlement. The deal also won the support of the Official Committee of Unsecured Creditors, which is not a signatory to the Settlement. Jack L. Kinzie, Esq., Baker Botts L.L.P., in Dallas, Texas, the Debtors' counsel, clarified the PALCO Debtors are not asking the Court to approve all the terms of the Settlement Agreement, because portions of the Settlement Agreement apply only to non- debtors. The PALCO Debtors believe that the actions they have undertaken under the Settlement are mere exercises of their fiduciary duties; thus, not requiring Court approval. Nevertheless, the PALCO Debtors acknowledge that they need the Court's authority to grant the releases under the Settlement. The Settlement represents a comprehensive approach to the resolution of the issues that separated the major stakeholders in the Debtors' Chapter 11 cases, and helps pave the way for the confirmation of a Plan of Reorganization for the Debtors that preserves jobs, strengthens the reorganized companies, recognizes value in the timberlands, and eliminates years of potential litigation among the settling parties, Mr. Kinzie noted. As part of the Settlement Agreement, Marathon and Mendocino agreed to "greatly improve" their proposed Plan, as reflected in the Marathon/Mendocino Modified First Amended Joint Plan of Reorganization delivered to the Court on May 1, 2008, with Marathon, Mendocino, and the Creditors Committee as plan proponents. After engaging in extensive negotiations with Marathon and Mendocino, the PALCO Debtors now actively support and defend the Marathon/Mendocino Modified First Amended Joint Plan, Mr. Kinzie said. The salient terms of the Global Plan Settlement are: PALCO Debtors' Concessions to: Benefits to PALCO Debtors -------------------------- ---------------------------------- A. Marathon and Mendocino Increase the likelihood of confirmation of the Marathon/ * Global mutual releases Mendocino Plan by: * Support of Marathon/ - eliminating the New Timber Mendocino Plan Notes and removing the tax claims portion of the price * Withdrawal of PALCO adjustment; Alternative Plan - the contribution of * Withdrawal of Support $580 million in cash by for Debtors' Joint Plan Marathon and Mendocino to and Scopac Alternative Newco, and Newco paying the Plan Indenture Trustee $530 million for pro rata distribution among the timber noteholders; - contributing at least $200 million in new equity capital; - preserving jobs and benefits for the Debtors' employees; and - reaffirming the assumption of the PALCO retirement Plan. -------------------------- ---------------------------------- B. MAXXAM Entities (1) Global mutual release including the release of * Global mutual releases claims that exceed $40 million * Support of Marathon/ Mendocino Plan (2) Induce MAXXAM Entities to provide tax indemnification to * Withdrawal of PALCO Marathon and Mendocino, which Alternative Plan was an important factor in Marathon's and Mendocino's * Withdrawal of support decision to make Plan for the Debtors' Joint modifications Plan and Scopac Alternative Plan. -------------------------- ---------------------------------- Marathon also agrees to pay MAXXAM $2.25 million in cash upon the Court's approval of the Settlement Agreement. A full-text copy of the Global Plan Settlement Agreement is available for free at: http://bankrupt.com/misc/PALCO_GlobalPlanSettlementAgrmt.pdf Mr. Kinzie related that the MAXXAM Entities' agreement to indemnify Newco and others for certain tax liabilities is an important feature of the Settlement Agreement. The indemnity enabled Marathon and Mendocino to modify the Marathon/Mendocino Plan to increase the cash distribution to the timber noteholders to $530 million -- subject to adjustment as provided in the Plan -- and to change the form of distribution from cash and New Timber Notes to an "all cash" payment. In order for the MAXXAM Entities to agree to provide the indemnity, they sought certain releases from the PALCO Debtors, Mr. Kinzie related. The PALCO Debtors believe that the MAXXAM Entities would not have agreed to provide the indemnity to Newco without the releases, in which case, the entire settlement may never have happened. The releases granted by the PALCO Debtors are a vital element of consideration in reaching a deal, Mr. Kinzie noted. If the Settlement Motion is approved and the Marathon/Mendocino Plan is confirmed and becomes effective resulting in the MAXXAM Entities receiving a release from the PALCO Debtors, the PALCO Debtors will in return receive a release from the MAXXAM Entities, which results in the elimination of more than $40 million in unsecured claims. "This result avoids significant litigation costs of its own and eliminates the possibility of a significant dilution to the recovery of unsecured creditors," Mr. Kinzie said. No causes of action that belong to Scotia Pacific Company LLC are released under the Settlement Agreement, because Scopac is not a party to the Settlement, according to Mr. Kinzie. The PALCO Debtors, however, reserve their right to amend the Settlement Motion if an agreement with Scopac can be reached prior to any hearing. Although confirmation of the Marathon/Mendocino Plan is not conditioned in any way on the approval of the Settlement Agreement, the Settlement Agreement and the changes resulting in the Marathon/Mendocino Plan were negotiated simultaneously and have greatly streamlined the remaining portion of the confirmation hearings, Mr. Kinzie maintained. About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter & Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007, which was amended on Dec. 20, 2007. Four other parties-in- interest have filed competing plans for the Debtors -- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes; the Official Committee of Unsecured Creditors; Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and Agent under the DIP Credit Facility; and the Heartlands Commission, which represents the tribal members of the Bear River Band of Rohnerville Rancheria and PALCO employees. The Debtors' exclusive plan filing period expired on Feb. 29, 2008. (Scotia/Pacific Lumber Bankruptcy News; http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: BoNY Asserts Claim for Drop in Scopac Collateral ---------------------------------------------------------------- Pursuant to Section 507(b) of the Bankruptcy Code, the Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes, asks the U.S. Bankruptcy Court for the Southern District of Texas to grant it a superpriority administrative expense claim for the diminution of value in its collateral in Scotia Pacific Company LLC's Chapter 11 case. Toby L. Gerber, Esq., at Fulbright & Jaworski LLP, in Houston, Texas, reminds Judge Richard Schmidt that, in its cash collateral request, Scopac has asserted that BoNY was adequately protected because: (1) the value of the growth of Scopac's timber was in excess of Scopac's use of cash collateral; and (2) the value of the timberlands was greater than the amount of BoNY's secured claim. Subsequently, Scopac asked the Court for further use of its cash collateral. According to Mr. Gerber, Scopac neither put on any evidence nor argued that the value of the growth of the timber exceeded its use of cash collateral. Thus, he points out, Scopac's only remaining rationale for permitting the continued use of cash collateral was that the Indenture Trustee was adequately protected because the value of the timberlands was greater than the amount of the Indenture Trustee's secured claim. Mr. Gerber also notes that: -- the Plan of Reorganization proposed by Marathon Structured Finance Fund L.P., the Debtors' DIP Lender and Agent under the DIP Credit Facility, and Mendocino Redwood Company, LLC, contemplates giving BoNY $530 million in cash less a "Class 6 Distribution Adjustment"; -- the Debtors have disclosed they are not pursuing the "Scopac Alternative Plan" under which Scopac had proposed to return at least part of BoNY's collateral. BoNY's Claim on account of the Timber Notes as of the Petition Date was $740 million in principal and interest, according to Mr. Gerber. Thus, if the Marathon/Mendocino Plan were to be confirmed, BoNY would be left with an unsecured deficiency claim of more than $200 million, Mr. Gerber tells Judge Schmidt. "Since Scopac can no longer assert that the value of the timberlands adequately protects the Indenture Trustee's cash collateral, this is a clear failure of adequate protection," he asserts. Mr. Gerber adds that from the Petition Date through the end of March 2008, Scopac has paid out $20 million in professional fees and have otherwise expended BoNY's cash collateral. Had the automatic stay not been continued, BoNY would have been permitted to obtain the return of its collateral and would not have been damaged by Scopac's continued depletion of its cash collateral, Mr. Gerber maintains. Section 507(b) addresses a situation where the debtor-in-possession initially provides protection that turns out to be inadequate, Mr. Gerber explains. In essence, Section 507(b) means that a secured creditor has superpriority for a claim in the amount that the debtor's use of the collateral during the time of the stay diminished the value of the collateral, but only to the extent the diminution is in excess of the adequate protection received. Therefore, under Section 507(b), BoNY is entitled to a superpriority administrative expense claim for the diminution of value in its collateral, Mr. Gerber insists. This includes, he clarifies, a superpriority administrative expense claim for the cash collateral that has been expended by Scopac, including but not limited to more than $20 million in professional fees and other expenses paid by Scopac. Mr. Gerber argues that to the extent the Marathon/Mendocino Plan does not pay administrative expense claims --including BoNY's superpriority administrative expense claim -- in cash in full on the effective date of the plan, the Plan does not comply with Section 1129(a)(9) of the Bankruptcy Code and is not confirmable. About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter & Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007, which was amended on Dec. 20, 2007. Four other parties-in- interest have filed competing plans for the Debtors -- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes; the Official Committee of Unsecured Creditors; Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and Agent under the DIP Credit Facility; and the Heartlands Commission, which represents the tribal members of the Bear River Band of Rohnerville Rancheria and PALCO employees. The Debtors' exclusive plan filing period expired on Feb. 29, 2008. (Scotia/Pacific Lumber Bankruptcy News; http://bankrupt.com/newsstand/or 215/945-7000). PAMPELONNE CDO II: Moody's Junks $1.6 Billion Class S Senior Notes ------------------------------------------------------------------ Moody's Investors Service has downgraded the rating of one class of notes issued by Pampelonne CDO II, Ltd. The note affected by the rating action is as: Class Description: Up to $1,600,000,000 aggregate principal balance of Class S Senior Floating Rate Notes Due 2052 -- Prior Rating: B3, on review with future direction uncertain -- Current Rating: C Pampelonne CDO II, Ltd. is a collateralized debt obligation backed primarily by a portfolio of RMBS securities and CDO securities. The transaction experienced an event of default under the Indenture. 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. In this regard, the majority of the Controlling Class directed the Trustee to proceed with the disposition of the Collateral in accordance with the Indenture. The Trustee notified Moody's that it disposed or terminated all of the Collateral and made a final distribution and applied the proceeds of the liquidation in accordance with applicable provisions of the Indenture on April 7, 2008. The rating actions taken today reflect the changes in severity of loss associated with certain tranches and reflect the final liquidation distribution. PAMPELONNE CDO I: Moody's Junks Rating on $1.06 Bil. Class S Notes ------------------------------------------------------------------ Moody's Investors Service has downgraded the rating of one class of notes issued by Pampelonne CDO I, Ltd. The note affected by the rating action is: Class Description: up to $1,062,500,000 of Class S Notes -- Prior Rating: B3, on review with future direction uncertain -- Current Rating: C Pampelonne CDO I, Ltd. is a collateralized debt obligation backed primarily by a portfolio of structured finance securities. The transaction experienced an event of default under the Indenture that was not subsequently cured or waived. As provided in Article V of the Indenture during the occurrence and continuance of an Event of Default, certain parties to the transaction may be entitled to direct the Trustee to take particular actions with respect to the Collateral Debt Securities and the Notes. In this regard, the majority of the Controlling Class directed the Trustee to sell and liquidate the Collateral consistent with the applicable provisions of the Indenture. The Trustee subsequently notified Moody's that it disposed of all of the Collateral, terminated the Synthetic Assets and distributed the proceeds of the liquidation in accordance with applicable provisions of the Indenture on April 7, 2008. The rating actions taken reflect the changes in severity of loss associated with certain tranches and reflect the final liquidation distribution. PAPPAS TELECASTING: Seeks Leave to Hire Kaye Scholer as Counsel --------------------------------------------------------------- Pappas Telecasting Inc. and its debtor-affiliates asked permission from the U.S. Bankruptcy Court for the District of Delaware to employ Kaye Scholer LLC as counsel. In a separate application, the Debtors also sought the Court's permission to employ Pachulski Stang Ziehl & Jones LLP as co- counsel since pursuant to the Delaware Court's rules, the Debtors are required to retain local counsel. The Debtors told the Court that both firms, Pachulski and Kaye Scholer promised to make every effort to avoid or minimize duplication of services in the cases. Kaye Scholer will, among others, advise the Debtors with respect to their powers, rights and duties as debtors-in-possession in the continued management and operation of their businesses and perform other legal services necessary in the case. The firm charges: Designation Hourly Rate ----------- ----------- Partner $675 - $895 Counsel $660 - $670 Associate $320 - $645 Legal Assistant $225 - $255 Within 90 days preceding the bankruptcy filing, the Debtors paid Kaye Scholer various amounts on account of professional services it rendered in connection with the case. On March 31, 2008, the Debtor paid $150,896; on May 5, 2008, the Debtors paid the amounts $135,926, $93,196, and $44,334; and on May 6, 2008, the amount of $250,000. Kay Scholer also received an advance retainer of $250,000 prior to the bankrutpcy filing. The Debtors told the Court that the Kaye Scholer does not hold any interest materially adverse to the Debtor's estates. About Pappas Telecasting Fresno, California-based Pappas Telecasting, Inc., aka KMPH, aka KMPH-TV, and aka KMPH Fox 26, -- http://www.pappastv.com/-- and its affiliates are broadcasting companies. Founded in 1971, their stations reach over 15% of all U.S. households and over 32% of Hispanic households. Pappas and 21 affiliates filed chapter 11 petition on May 10, 2008 (Bankr. D. Del. Case No. 08-10915 through 08-10936). Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP represents the Debtors in their restructuring efforts. The Debtors listed $100 million to $500 million in assets and debts when they filed for bankruptcy. PAPPAS TELECASTING: Wants to Hire Pachulski Stang as Co-Counsel --------------------------------------------------------------- Pappas Telecasting Inc. and its debtor-affiliates asked permission from the U.S. Bankruptcy Court for the District of Delaware to employ Pachulski Stang Ziehl & Jones LLP. In a separate application, the Debtors also sought the Court's permission to employ Kaye Scholer LLC as counsel. Pachulski will, among others, provide legal advice with respect to the Debtors' powers and duties as debtors-in-possession in the continued operation of their businesses and management of their property. The Debtors told the Court that both firms, Pachulski and Kaye Scholer promised to make every effort to avoid or minimize duplication of services in the cases. Pachulski's hourly rates for its professionals are: Laura Davis Jones, Esq. $775 James E. O'Neill, Esq. $515 Kathleen P. Makowski, Esq. $395 Timothy P. Cairns, Esq. $375 Karina Yee $195 Patricia Cuniff $195 The Debtors paid the firm $64,546 a year prior to the bankruptcy filing in connection with prepetition representation of the Debtors. The Debtors told the Court that Pachulski is a "disinterested person" as defined in Section 101(14) of the U.S. Bankruptcy Code. The firm can be reached at: Pachulski Stang Ziehl & Jones LLP 919 North Market Street, 17th Floor P.O. Box 8705 Wilmington, DE 19899-8705 Tel: (302) 652-4100 Fax: (302) 652-4400 http://www.pszjlaw.com/ About Pappas Telecasting Fresno, California-based Pappas Telecasting, Inc., aka KMPH, aka KMPH-TV, and aka KMPH Fox 26, -- http://www.pappastv.com/-- and its affiliates are broadcasting companies. Founded in 1971, their stations reach over 15% of all U.S. households and over 32% of Hispanic households. Pappas and 21 affiliates filed chapter 11 petition on May 10, 2008 (Bankr. D. Del. Case No. 08-10915 through 08-10936). Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP represents the Debtors in their restructuring efforts. The Debtors listed $100 million to $500 million in assets and debts when they filed for bankruptcy. PARCS-R MASTER: S&P Slashes AA Rating to BB on S. 2007-16 Trust --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on one tranche of variable-rate notes from PARCS-R Master Trust's series 2007-16 and removed it from CreditWatch, where it was placed with negative implications on Feb. 14, 2008. PARCS-R Master Trust 2007-16 is a synthetic collateralized debt obligation transaction. The downgrade of the series 2007-16 variable-rate notes reflects the direct link of the note rating to the rating of its reference obligation, the class M-2S notes issued by RASC Series 2007-KS1 Trust. The rating on the referenced residential mortgage-backed securities notes was lowered to 'BB' from 'AA' on May 12, 2008, and removed from CreditWatch with negative implications. Rating Lowered and Removed from Creditwatch Negative PARCS-R Master Trust 2007-16 variable-rate notes Rating ------ Class To From ----- -- ---- Trust unit BB AA/Watch Neg PORTA SYSTEMS: Signs Debt Restructuring Agreement With Cheyne ------------------------------------------------------------- Porta Systems Corp. (OTC.BB:PYTM) reported operating income for the quarter ended March 31, 2008 of $71,000 compared to operating income of $666,000 for the quarter ended March 31, 2007. The net loss for the quarter ended March 31, 2008, was $537,000, $0.05 per share (basic and diluted), compared to net income of $165,000, $0.02 per share (basic and diluted), which included a loss from discontinued operations of $34,000, for the quarter ended March 31, 2007. There was no loss from discontinued operations for the quarter ended March 31, 2008. As of June 30, 2007, the Company had completely discontinued the operation of its OSS business and wrote off all remaining OSS assets and incurred losses related to the discontinued OSS operations in the amount of $521,000. The OSS operating loss for the quarter ended March 31, 2007 was $34,000. There was no OSS activity for the quarter ended March 31, 2008. Sales were $6,545,000 for the quarter ended March 31, 2008 versus $8,202,000 for the quarter ended March 31, 2007, a decrease of approximately $1,657,000 (20%). Copper Connection/Protection sales were $5,392,000 for the quarter ended March 31, 2008 versus $6,814,000 for the quarter ended March 31, 2007, a decrease of $1,422,000 (20.9%). Substantially all of the decrease in sales for the quarter is the result of a decline in orders from British Telecommunications and its systems integrators for connector products that was partially offset by higher sales of protection modules to British Telecommunications. Signal Processing sales for the quarter ended March 31, 2008 were $1,153,000 versus $1,388,000 for the quarter ended March 31, 2007, a decrease of $235,000 (16.9%). The decline in Signal revenue was primarily due to the failure of the military sector to place orders due to the delay in Congress approval of the U.S. military budget until late 2007. The overall gross margin from continuing operations was 28% for the quarter ended March 31, 2008, compared to 32% for the quarter ended March 31, 2007. The decrease for the quarter is primarily related to excess capacity in Porta Systems' Mexico facility due to lower production levels as compared to the same quarter in 2007. Operating expenses for the quarter ended March 31, 2008 decreased by $239,000 (15.1%) from the same period in 2007. The decrease relates primarily to a decrease in selling expenses primarily due to a reduction in advertising expenses and a reduction in the allowance for bad debt. General and administrative costs decreased primarily due to a reduction of costs associated to the company's negotiations relating to a proposed debt restructuring. Interest expense increased for the first quarter of 2008 from the same period in 2007 by $151,000, primarily related to interest on the company's senior debt under the terms of its extension agreement with its senior debt holder and the additional $1,000,000 loan from its senior lender which the company took in October 2007. Porta Systems does not accrue interest on the entire amount of the senior debt of approximately $24,373,000 under the terms of its agreement with the holder of its senior debt. The company's Copper Connection/Protection business unit operated profitably during the first quarter ended March 31, 2008, with operating income of $447,000. The Signal Processing unit operated profitably during the first quarter, with operating income of $241,000. However, the company's operating income for the March 2008 quarter was $71,000 as a result of corporate overhead and other unallocated expenses of $617,000. Debt Restructuring Agreement On February 7, 2007, Cheyne Special Situations Fund L.P. purchased Porta Systems' senior debt of approximately $23,373,000 from SHF IX, LLC. In October 2007 the Company borrowed an additional $1,000,000 from Cheyne to fund its current operations. Both notes mature on September 1, 2008. If the senior debt holder does not extend the maturity date of the company's obligations or demands payment of all or a significant portion of its obligations due to the senior lender, the company said it will likely seek protection under the bankruptcy laws. On May 8, 2008, the company entered into an agreement with Cheyne pursuant to which Cheyne, the holder of all of its senior debt, as well as the holders of its subordinated notes, agreed to a restructuring of their debt. Cheyne presently holds two notes -- a note in the principal amount of $23,373,000 at March 31, 2008, and a note in the principal amount of $1,000,000, which the company issued in October 2007. Both of these notes mature on September 1, 2008. The holders of the subordinated debt hold notes in the principal amount of $6,144,000, on which there is accrued interest of $7,131,000 at March 31, 2008. Pursuant to the terms of the debt restructure: * Porta Systems' board of directors approved a one-for-11.11 reverse split of the company's common stock. * As part of the debt restructuring, Cheyne would exchange $13,373,000 principal amount of senior debt for 70% of the company's common stock after giving effect to the reverse split. The remaining $10,000,000, plus interest to the closing date on such $10,000,000 principal amount, which is estimated at $1,250,000, will be paid in quarterly installments through March 15, 2015. * The maturity date of the $1,000,000 note will be extended to September 1, 2010. * Until the debt restructuring is complete, Cheyne will have the right to designate two directors to Porta Systems' board. These directors are to be independent directors. * As a condition to the debt restructure, the company entered into agreements with certain creditors to provide for reduced payments of its obligations to them. * The agreement requires the company to obtain the approval of the holders of its subordinated notes to exchange their notes for new notes in the total principal amount of $1,750,000 plus 14% of its common stock. These new notes will bear interest at 10% per annum, are to be amortized based on a 25-year amortization schedule and mature 7-1/2 years after the date of issuance. The company obtained the agreement of more than 95% of the holders of the subordinated notes to these terms. * Pursuant to the restructuring plan, 6% of the common stock is reserved for issuance to senior management and other key employees. "We believe that the implementation of the debt restructuring, which, together with the reverse split, requires stockholder approval, is an important step in our efforts to improve our Companys overall financial health and will significantly improve our balance sheet. We intend to file our proxy material with the SEC within the next week and schedule the stockholders meeting as soon as possible thereafter. However, we recognize that for the debt restructuring to have any long-term positive effect, it will be necessary for us to increase our sales and operate profitably. Ultimately, if we are not able to operate profitably, we would be forced to seek protection under the bankruptcy laws." About Porta Systems Porta Systems Corp.(OTC BB: PYTM.OB) -- http://www.portasystems.com-- develops, designs, manufactures, and markets systems for the connection, protection, testing, and administration of public and private telecommunications lines and networks in the United States and internationally. It offers telecommunications connection equipment and signal processing products. The company's telecommunications connection equipment interconnects copper telephone lines to switching equipment and provides fuse elements that protect telephone equipment and personnel from electrical surges. The company was founded in 1969 and is based in Syosset, New York. The Troubled Company Reporter reported on April 14, 2008, that BDO Seidman, LLP, raised substantial doubt about the ability of Porta Systems Corp. to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditing firm reported that the company has suffered substantial losses from operations in previous years and, as of Dec. 31, 2007, has a stockholders' deficit of $30,527,000 and a working capital deficit of $34,513,000 and is dependent on the continued agreement of the holder of its senior debt to defer the maturity date of such debt. As of Dec. 31, 2007, the company's debt included $24,373,000 of senior debt, as a result of a various extensions, which matures on May 1, 2008; $6,144,000 principal amount of subordinated debt, which matured on July 3, 2001; and $385,000 of 6% Debentures which matured on July 2, 2002. The company was unable to pay the principal ($6,144,000) or accrued interest ($6,900,000) on the subordinated notes or the principal ($385,000) or interest ($183,000) on the 6% Debentures. Accordingly, the senior debt and subordinated debt are classified as current liabilities. POWERMATE HOLDING: Sues Home Depot for $3.6M Contract Breach ------------------------------------------------------------ Powermate Holding Corp. and its debtor-affiliates filed a lawsuit with the United States Bankruptcy Court for the District of Delaware against Home Depot U.S.A. Inc. for breach of contract after Home Depot failed to make a $3,695,798 required payment to the Debtors pursuant to product handling agreements dated Jan. 29, 2003. The agreement requires the Debtors to provide and deliver goods to various regional distribution centers of Home Depot before it transfers the goods to its retail stores. It also calls for Home Depot to submit weekly inventory reports from each of its distribution center to the Debtors. The agreement provides a presumption that Home Depot bought all of the goods removed from its distribution center. The Debtors allege that the Home Depot has removed goods from its distribution center without the Debtors' consent or court approval after the Debtors' bankruptcy filing. The Debtors request Home Depot to return the purchased good valued at $3,695,798. However, Home Depot does not intend to pay for the goods purchased from the Debtors. Home Depot asserts that is is entitled to retain the Debtors' goods as a set-off to alleged warranty and other claims it have against the Debtors that arose before the Debtors filed for Chapter 11 protection. The Debtors contend that Home Depot's move violates the automatic stay by effectuating a postpetition set-off of a prepetition claim without court approval. Home Depot provides home improvement and construction products in the United States, Canada and Mexico. About Powermate Headquartered in Aurora, Illinois, Powermate Holding Corp. -- http://www.powermate.com/-- manufactures portable and home standby generators, air compressors, and pressure washers. The company and two of its affiliates filed for Chapter 11 protection on March 17, 2008 (Bankr. D. Del. Lead Case No.08-10498). Kenneth J. Enos, Esq. and Michael R. Nestor, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors. The U.S. Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Monika J. Machen, Esq., at Sonnenschein Nath Rosenthal LLP, represents the Committee in these cases. When the Debtors filed for protection from their creditors, they listed assets and debt between $50 million and $100 million. POWERMATE CORP: Taps RAS Management as Interim Managers ------------------------------------------------------- Powermate Holding Corp., Powermate Corporation and Powermate International, Inc. have employed RAS Management Advisors, LLC, as interim managers. Pursuant to an engagement letter, Richard A. Sebastiao will serve as Chief Executive Officer of each of the Debtors; and Timothy D. Boates will serve as Vice President of Powermate Holding Corp. and Chief Financial Officer of Powermate International, Inc. and Powermate Corporation. Working collaboratively with the Debtors' pre-existing senior management team, the Debtors' Boards of Directors and the Debtors' other professionals, Mr. Sebastiao, Mr. Boates and other RAS professionals will oversee the daily operations of the Debtors' business, assist the Debtors in evaluating strategic and tactical options through the restructuring process, and serve as the primary officers and fiduciaries of the Debtors' estates. Mr. Boates will also oversee elements of the Debtors' treasury and cash management functions. Prior to the Debtors' bankruptcy filing, RAS' predecessor-in- interest, RAS Management Advisors, Inc., was retained as interim manager by the Debtors. On December 7, 2007, the Debtors' Board of Directors approved an expanded engagement of RAS including the appointment of Mr. Sebastiao and Mr. Boates as officers of the Debtors. RAS will be compensated for providing the services of Mr. Sebastiao and Mr. Boates at $4,250 per day ($425 per hour) and $3,750 per day ($375 per hour). Moreover, RAS will be compensated for providing full-time Temporary Staff at rates of from $2,400 per day ($240 per hour) to $2,900 per day ($290 per hour), depending upon the relative experience of the Temporary Staff used on a project. In addition, RAS will be compensated at the rate of $30 per hour for any clerical support used on this project. RAS is compensated on a daily/hourly rate basis only for the actual time spent by its consultants -- including Mr. Sebastiao and Mr. Boates -- and Temporary Staff in providing services to the Debtors. Prior to the Debtors' bankruptcy filing, RAS received retainers totaling $200,000 from the Debtors in anticipation of future services to be performed. After offsetting its final pre-petition invoice against the retainer received from the Debtors, RAS currently holds a retainer balance of $173,162. Pursuant to the Engagement Letter, RAS will hold the Retainer through the end of its engagement and apply the Retainer to its final bill. Any remaining balance will be refunded to the Debtors. The Debtors have agreed to indemnify, hold harmless and defend RAS and its affiliated parties. RAS has provided interim management or consulting services in a number of large and mid-size bankruptcy restructurings, including In re Quaker Fabric Corporation, Case No. 07-11146 (KG) (Bankr. D. Del. 2007); Arthur D. Little, Inc., Case No. 02-41045 (HJB) (Bankr. D. Ma. 2002); TEU Holdings, Inc., Case No. 00-1098 (RJN) (Bankr. D. Del. 2000); Fulcrum Direct, Inc., Case No. 98-01767 (MFW) (Bankr. D. Del. 1998); and The Wiz, Inc., Case No. 97-B- 48257 (CB) (Bankr. S.D.N.Y. 1997). About Powermate Headquartered in Aurora, Illinois, Powermate Corp. -- http://www.powermate.com/-- manufactures portable and home standby generators, air compressors, and pressure washers. Powermate Holding Corp. is the parent of Powermate Corp. In turn, Powermate Corp. owns 100% of Powermate International Inc. Powermate Corp. operates the companys assets located in the United States. Powermate International has sales employees in Hong Kong and the Philippines. Powermate Holding has no employees or operations. The three companies filed for chapter 11 protection on March 17, 2008 (Bankr. D. Del. Lead Case No.08-10498). Kenneth J. Enos, Esq.. and Michael R. Nestor, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors. The Official Committee of Unsecured Creditors, which has seven creditor members, is represented by Monika J. Machen, Esq., at Sonnenschein Nath Rosenthal LLP. When the Debtors filed for protection from their creditors, they listed estimated assets and debts between $50 million and $100 million. Powermate Holding has two other non-debtor subsidiaries, Powermate Canadian Corp., located in Canada and Powermate S. de R.L. de C.V., which is domiciled in Mexico. POWERMATE CORP: Taps Windham to Collect $1.3M in Receivables ------------------------------------------------------------ Upon filing for bankruptcy, Powermate Holding Corp., Powermate Corporation and Powermate International, Inc., had on their books a substantial amount of outstanding accounts receivable generated in the ordinary course of business from the Debtors' customers. Since their chapter 11 filing, the Debtors have been working in the normal course, with the assistance of RAS Management Advisors, Inc., their interim management, to collect and maximize the value of the receivables for the benefit of their creditors and estates. However, because the Debtors' operations are being discontinued, and they are in the process of liquidating all of their remaining assets, the Debtors no longer have the internal staff capable of undertaking the collection of the AR Claims, which with respect to AR Claims under $50,000 as of the Petition Date, were approximately $1,376,514 in the aggregate. The AR Claims range from approximately $1 to $49,244 and are owed to the Debtors by in excess of 980 parties. Accordingly, the Debtors sought the assistance of Windham Professionals, Inc., to assist them in the collection of the AR Claims. The Debtors will pay Windham a fee of 7% of the sums collected on the outstanding AR Claims. Windham will receive an additional 0.5% -- for an aggregate fee of 7.5% -- if it is able to collect 65% of the AR Claims within 120 days of engagement. Windham will receive an additional 1% -- for an aggregate fee of 8.5% -- if it is able to collect 75% of the AR Claims within 120 days of engagement. The Debtors may terminate the parties' Collection Agreement on 60 days' advance notice, and the fee will be earned on AR Claims collected through 10 days after termination. Windham will have an exclusive right to collect the AR Claims while the Collection Agreement is in effect. Windham's Edward M. Sheehan, III, attests that his agency neither represents nor holds any interest adverse to the Debtors in the matters upon which the Debtors have requested that Windham be employed. About Powermate Headquartered in Aurora, Illinois, Powermate Corp. -- http://www.powermate.com/-- manufactures portable and home standby generators, air compressors, and pressure washers. Powermate Holding Corp. is the parent of Powermate Corp. In turn, Powermate Corp. owns 100% of Powermate International Inc. Powermate Corp. operates the companys assets located in the United States. Powermate International has sales employees in Hong Kong and the Philippines. Powermate Holding has no employees or operations. The three companies filed for chapter 11 protection on March 17, 2008 (Bankr. D. Del. Lead Case No.08-10498). Kenneth J. Enos, Esq.. and Michael R. Nestor, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors. The Official Committee of Unsecured Creditors, which has seven creditor members, is represented by Monika J. Machen, Esq., at Sonnenschein Nath Rosenthal LLP. When the Debtors filed for protection from their creditors, they listed estimated assets and debts between $50 million and $100 million. Powermate Holding has two other non-debtor subsidiaries, Powermate Canadian Corp., located in Canada and Powermate S. de R.L. de C.V., which is domiciled in Mexico. RADNOR HOLDINGS: Expects $57 Mil. Gross Preference Transfers ------------------------------------------------------------ Radnor Holdings Corporation and its debtor-affiliates asked the U.S. Bankruptcy Court for the District of Delaware for permission to employ A.S.K. Financial as their special preference counsel effective as of May 6, 2008. In the motion, the Debtors said they believe that gross transfers to creditors during the 90-day preference period may exceed $57 million. According to the Debtors, A.S.K. will help further their ongoing efforts to develop and implement, as efficiently as possible, a liquidating plan. On Nov. 21, 2006, the Court entered an order approving a sale of substantially all of the Debtors' assets. Since the closing of the sale, the Debtors said that, together with their professional, they have worked to reconcile the liabilities assumed by the buyer and to develop a liquidating plan of reorganization. The Debtors told the Court that A.S.K. will give advice in analyzing their avoidance claims and pursue these actions on behalf of the estates. Particularly, A.S.K. will analyze the Debtors' records to identify avoidable claims, to determine gross transfers, and to evaluate potential defenses that can be raised by each respective vendor or creditor. A.S.K. has the expertise to produce the needed analysis in a matter of a few weeks, the Debtors related. The Debtors said that A.S.K. is an insolvency financial and legal services firm that specializes in the are of preference analysis and collection. The firm, they said, has been in business since 1983 and in that time has analyzed over 100,000 potential avoidance claims and prosecuted over 20,000 of those claims. The Debtors continued that in the last five years, A.S.K. has actively litigated and has been involved in some of the largest cases in the Delaware Court, including Montgomery Ward, Graham Field Healthcare Products, and Bake-Line Group LLC. The Debtors intend to pay A.S.K. on a contingency basis: (i) 15% for all gross cash collections obtained on cases settled prior to the filing of a compliant, (ii) 24% of all collections obtained on cases settled after the filing of a compliant but prior to four weeks before the scheduled trial date or before entry of a judgment, and (iii) 28% of all collections obtained on cases settled the earlier of four weeks before the scheduled trial or the entry of judgment. A.S.K. will be responsible for the legal fees of its local counsel and will not seek reimbursement from the estate for those fees. The Debtors assured the Court that A.S.K. will work cooperatively with other retained professionals to avoid duplicative or competing efforts. They added that the firm does not have an interest materially adverse to the estate or other parties-in- interest. About Radnor Holdings Based in Radnor, Pennsylvania, Radnor Holdings Corporation -- http://www.radnorholdings.com/-- manufactured and distributed a broad line of disposable food service products in the United States, and specialty chemicals worldwide. The Debtor and its affiliates filed for chapter 11 protection on Aug. 21, 2006 (Bankr. D. Del. Lead Case No. 06-10894). Gregg M. Galardi, Esq., Mark L. Desgrosseilliers, Esq., Sarah E. Pierce, Esq., Timothy R. Pohl, Esq., Patrick J. Nash, Jr., Esq., and Rena M. Samole, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represent the Debtors. The U.S. Trustee recently disbanded the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $361,454,000 and total debts of $325,300,000. The confirmation hearing on the Debtors' amended chapter 11 plan is set for June 12, 2008. RAFFLES PLACE: Moody's Junks Ratings on $20 Million Notes --------------------------------------------------------- Moody's Investors Service has downgraded and left on review for possible further downgrade the ratings on these notes issued by Raffles Place Funding, Ltd. Class Description: $35,000,000 Class A-1a Floating Rate Notes Due 2040 -- Prior Rating: Aaa -- Current Rating: A2, on review for possible downgrade Class Description: $25,000,000 Class A-1b Floating Rate Notes Due 2040 -- Prior Rating: Aaa -- Current Rating: Ba3, on review for possible downgrade Class Description: $38,000,000 Class A-2 Floating Rate Notes Due 2040 -- Prior Rating: Aa2 -- Current Rating: B3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $5,000,000 Class B Deferrable Floating Rate Notes Due 2040 -- Prior Rating: A2 -- Current Rating: Ca Class Description: $15,000,000 Class C Deferrable Floating Rate Subordinate Notes Due 2040 -- Prior Rating: Baa3 -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. RATHGIBSON INC: Moody's Cuts Corporate Family Rating to B3 ---------------------------------------------------------- Moody's Investors Service downgraded the corporate family rating of RathGibson, Inc. to B3 from B2, affirmed the B3 senior unsecured note rating in accordance with Moody's loss-given default methodology, and lowered the speculative grade liquidity rating to SGL-3 from SGL-2. The rating outlook is stable. The downgrade of the CFR to B3 reflects a confluence of events resulting in credit metrics that are not representative of a B2 rating. RathGibson's performance has not improved significantly over the last two years despite generally higher overall prices, reasonable strength in several end markets, and two material acquisitions. Simultaneously, pro forma leverage is approaching the 8.0x range given the incremental debt for acquisitions and a payment-in-kind note at the holding company level, and additional revolver borrowings to cover increased working capital needs. Moody's believes the B3 CFR is more appropriate as it considers the risks associated with a small overall size, limited cash flows, and high leverage, which provide the company less flexibility to navigate challenging conditions. Moreover, the B3 reflects the short-term periods of volatility related to raw material costs during which the financial profile and overall liquidity may be severely stressed. These constraints are balanced by RathGibson's leadership position in the relatively small stainless steel tube industry, the breadth of its product offerings, its reputation for quality and service, and its ability to pass through cost increases. The downgrade of the speculative grade liquidity rating to SGL-3 reflects the company's minimal cash balance, limited revolver availability, and lack of visibility regarding near-term raw materials prices and the operating environment. Additional cash consumption over the near-term could exert further pressure on the company's liquidity rating. A summary of the actions follows: -- $200 million senior unsecured notes affirmed at B3 (LGD 3, 45%) -- Downgraded Corporate Family Rating to B3 from B2 -- Downgraded Probability of Default Rating to B3 from B2 -- Downgraded SGL rating to SGL-3 from SGL-2 -- Stable outlook assigned RathGibson is a manufacturer of highly engineered premium stainless steel and alloy welded and seamless tubular products. The company is headquartered in Lincolnshire, Illinois and has operations in Janesville, Wisconsin; North Branch, New Jersey; Clarksville, Arkansas; and Marrero, Louisiana. In fiscal year 2008, RathGibson had approximately $360 million of revenues. RELIANT CHANNELVIEW: Dispute with Equistar Placed Under Mediation ----------------------------------------------------------------- At the direction of the Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware, in lieu of an immediate appointment of a chapter 11 trustee, Equistar Chemicals LP and Reliant Energy Channelview LP's parent, Reliant Energy Inc., participated in a mediation of the disputes between them. The dispute arose in connection with the proposed sale of Reliant Energy Channelview's assets to GIM Channelview Cogeneration LLC. Judge Walrath had appointed the Hon. Brendan Shannon of the Delaware Bankruptcy Court as mediator. The mediation commenced on May 12, 2008. At press time, no information on the results of the mediation has been reported. The results of the mediation is a prerequisite to the Debtors' motion to extend the period in which they can exclusively file a chapter 11 plan. Judge Walrath had directed Equistar and REI to each designate a representative (i) who will participate in good faith and remain in personal attendance until the conclusion of the mediation, and (ii) who will have full and final authority to enter into a binding resolution of the dispute. In addition, Equistar and REI were directed to provide Judge Shannon and each party the name of their representatives no less than 48 hours prior to the mediation. At Judge Shannon's discretion, the Debtors, the Official Committee of Unsecured Creditors, the agent for the Debtor's prepetition lenders and GIM were authorized to participate in the mediation. Committee Says Mediation is Needed The Committee told the Court that after its appointment and retention of its professionals, it was advised by the Debtors and Houlihan Lokey Howard & Zukin, REI's acting investment banker, that the Debtors and REI were marketing Reliant Energy Channelview's co-generation facility. The Committee revealed that the selling parties were expecting to have an agreement of sale signed by mid-October. At that time, the Committee said it was advised that the transaction might be in the form of sale of ownership interests in the entities that own the Debtors, or a sale of the Debtors' assets. The Committee said it was also informed that offers were being developed so that there would be more than enough to pay all of the Debtors' obligations, leaving sale proceeds for equity interests. However, the Committee related that REI and the Debtors were unsuccessful to finalize an agreement with Fortistar LLC. REI and the Debtors then turned to get a deal with Kelson Energy IV LLC. As reported in the Troubled Company Reporter on March 26, 2008, the Debtors were to auction their 830-megawatt Channelview power plant near Houston, Texas, on April 7, 2008, to see if higher and better offers other than Kelson Energy Inc.'s $468 million bid, will surface. Other bids should be in by April 3. Kelson's bid price is enough to pay all creditors 100%, leaving some for the owners. The Debtors claims they owe secured creditors $379 million and unsecured creditors $29 million. The Committee continued that upon the bid deadline and during the auction on April 18, 2008, Fortistar made a $500 million bid, which was declared the highest offer for the assets. During a sale hearing on April 9, the Court ruled that the cash flow participation agreement between the Debtors and Equistar was not severable from the other contracts that were to be assumed by the Debtors to Fortistar pursuant to the asset purchase agreement. The Court ruled that the sale to Fortistar could not be approved. Since then, the Debtors, REI and Equistar have attempted but could not reach a settlement agreement to allow the sale of the assets to Fortistar to continue. Hence, on April 23, 2008, the Debtors asked the Court to appoint a chapter 11 trustee as a result of a potential divergence of interest between the Debtors and REI. The Committee related that it is very concerned about the effect of the case trustee appointment on the case and the creditors. The Committee said it is particularly concerned about the length of time it will take a chapter 11 trustee to act and that delay may have affect Fortistar's willingness to consummate the sale. The Committee also said it is concerned about the costs related to the appointment of the case trustee. Hence, the Committee asked the Court to continue the request for case trustee appointment for two weeks, and order the parties to engage in mediation to resolve the dispute. Equistar Says Case Trustee Appointment is Necessary Equistar told the Court that it joins the request for appointment of case trustee. Equistar said that the appointment is in the best interest of the Debtors' estates and constituents. Equistar admitted that it disputes and does not join in the Debtors' characterization of the sale process, the parties' settlement efforts, and other assertions in the Trustee Motion saying that it is inconsistent with the record of facts in the case. Equistar related that in April 2007, after being threatened by the Debtors of renouncing their contractual obligations and hand the keys of the co-generation facility over to secured lenders, REI commenced the marketing of the Equistar's indirectly held equity interests in the Debtors. Subsequently, the parties settled that dispute and the Debtors committed to pay Equistar $10 million at the closing of the sale. The Court approved that settlement. According to the Equistar, it would like to avoid the costs and delays attendant to the appointment of a chapter 11 trustee but agrees that the appointment of an independent fiduciary is appropriate and necessary to salvage the pending sale to GIM. Equistar alleged that Reliant and its professionals have been inordinately involved in driving the sale process and other aspects of the case, including settlement negotiations with Equistar. Debtors Urges Equistar to be Logical While Equistar supports the appointment of a a chapter 11 trustee, the Debtors told the Court that Equistar (i) raised otherwise irrelevant issue of the parties' settlement discussions, and (ii) affirmatively represented to the Court that its proposals would permit the imperiled GIM sale to go forward, result in the full payment of creditors, fairly compensate Equistar for its rights under the co-generation facility purchase agreement, and provide substantial return to REI. The Debtors continued that they attempted to revive meaningful discussions through a counter-proposal with Equistar but the attempt was dismissed by Equistar as "no offer at all." According to the Debtors, in addition to the $10 million settlement payment, Equistar demanded a substantial "floor" payment at closing and a preponderance of remaining proceeds. The Debtors claimed that it is difficult to confirm Equistar's claim that its proposal will result in the full payment to creditors and provide substantial return to REI. The Debtors claimed that Equistar's proposals would jeopardize the recovery of unsecured creditors and would allow Equistar to arbitrarily determine which unsecured creditors are assured payment. The Debtors urged Equistar to follow a logical path -- allow the GIM sale to proceed and deposit the proceeds in escrow while the lawful and equitable allocation of those proceeds is determined. About Reliant Energy Channelview Based in Houston, Reliant Energy Channelview L.P.-- http://www.reliant.com/-- owns a power plant located near Houston, and is an indirect wholly owned subsidiary of Reliant Energy Inc. The company and its three affiliates, Reliant Energy Channelview (Texas) LLC, Reliant Energy Channelview (Delaware) LLC, and Reliant Energy Services Channelview LLC filed for chapter 11 protection on Aug. 20, 2007 (Bankr. D. Del. Lead Case No. 07-11160). Jason M. Madron, Esq., Lee E. Kaufman, Esq., Mark D. Collins, Esq., Paul Noble Heath, Esq., Richards, Robert J. Stearn Jr., Esq., at Layton & Finger P.A., and Timothy P. Cairns, Pachulski Stang Ziehl & Jones represent the Debtors. The U.S. Trustee for Region 3 appointed an Official Committee of Unsecured Creditors in the Debtors' cases. David B. Stratton, Esq., and Evelyn J. Meltzer, Esq., at Pepper Hamiltion LLP, represent the Committee. When the Debtors filed for protection from their creditors, they listed total assets of $362,000,000 and total debts of $342,000,000. RESIDENTIAL ASSET: Fitch Rates 23 Classes Below Investment Grade ---------------------------------------------------------------- Fitch Ratings has taken the following rating actions on Residential Asset Mortgage Products (RAMP) mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $984.6 million and downgrades total $764.6 million. Additionally, $253.3 million was placed on Rating Watch Negative. RAMP 2003-RP1 -- $7.5 million class M-1 downgraded to 'A+' from 'AA'; -- $13.2 million class M-2 downgraded to 'BB' from 'A'; -- $7.2 million class M-3 downgraded to 'C/DR5' from 'CCC/DR3'. RAMP 2005-RP1 -- $26.9 million class A affirmed at 'AAA'; -- $28.0 million class M-1 affirmed at 'AA+'; -- $22.6 million class M-2 affirmed at 'A+'; -- $11.6 million class M-3 affirmed at 'A-'; -- $5.0 million class M-4 affirmed at 'BBB'; -- $2.5 million class M-5 affirmed at 'BBB'. RAMP 2005-RP2 -- $57.7 million class A affirmed at 'AAA'; -- $23.1 million class M-1 affirmed at 'AA'; -- $18.8 million class M-2 affirmed at 'A'; -- $9.9 million class M-3 downgraded to 'BB+' from 'BBB+'; -- $3.7 million class M-4 downgraded to 'BB' from 'BBB'; -- $4.2 million class M-5 downgraded to 'BB-' from 'BBB-'; -- $3.1 million class M-6 downgraded to 'BB-' from 'BBB-'. RAMP 2006-RP1 -- $2.6 million class A-1 affirmed at 'AAA'; -- $3.0 million class A-1A affirmed at 'AAA'; -- $0.3 million class A-1B affirmed at 'AAA'; -- $73.3 million class A-2 affirmed at 'AAA'; -- $26.0 million class A-3 affirmed at 'AAA'; -- $20.1 million class M-1 downgraded to 'A+' from 'AA'; -- $14.9 million class M-2 downgraded to 'BBB-' from 'A+'; -- $8.7 million class M-3 downgraded to 'BB' from 'BBB+'; -- $2.9 million class M-4 downgraded to 'BB-' from 'BBB-'. RAMP 2006-RP2 -- $114.9 million class A downgraded to 'AA-' from 'AAA'; -- $40.7 million class M-1 downgraded to 'BBB+' from 'AA'; -- $16.1 million class M-2 downgraded to 'BB+' from 'A+'; -- $8.3 million class M-3 downgraded to 'B' from 'A-'; -- $1.9 million class M-4 downgraded to 'C/DR6' from 'BBB+'; -- $2.6 million class M-5 downgraded to 'C/DR6' from 'BBB'. RAMP 2006-RP3 -- $113.3 million class A downgraded to 'AA-' from 'AAA'; -- $28.2 million class M-1 downgraded to 'BBB+' from 'AA'; -- $18.8 million class M-2 downgraded to 'BBB-' from 'A+'; -- $6.8 million class M-3 downgraded to 'BB+' from 'A-'; -- $8.7 million class M-4 downgraded to 'B' from 'BBB+'; -- $4.7 million class M-5 downgraded to 'C/DR6' from 'BBB'. RAMP 2006-RP4 -- $179.8 million class A downgraded to 'AA+' from 'AAA'; -- $32.1 million class M-1 downgraded to 'A-' from 'AA'; -- $17.6 million class M-2 downgraded to 'BBB-' from 'A'; -- $4.6 million class M-3 downgraded to 'BB' from 'BBB+'; -- $3.6 million class M-4 downgraded to 'BB' from 'BBB'; -- $1.8 million class M-5 downgraded to 'BB-' from 'BBB-'. RAMP 2006-RS3 -- $165.5 million class A-2 affirmed at 'AAA'; -- $106.7 million class A-3 rated 'AAA', placed on Rating Watch Negative; -- $146.7 million class A-4 rated 'AAA', placed on Rating Watch Negative; -- $15.4 million class M-1 downgraded to 'A+' from 'AA+'; -- $13.9 million class M-2 downgraded to 'A' from 'AA+'; -- $8.3 million class M-3 downgraded to 'A-' from 'AA'; -- $7.5 million class M-4 downgraded to 'BBB+' from 'AA-'; -- $7.1 million class M-5 downgraded to 'BB-' from 'BBB-'; -- $5.3 million class M-6 downgraded to 'B+' from 'BB+'; -- $3.8 million class M-7 downgraded to 'B+' from 'BB'; -- $3.8 million class M-8 downgraded to 'B+' from 'BB-'; -- $7.5 million class M-9 affirmed at 'B'. RAAC 2007-RP3 -- $210.4 million class A affirmed at 'AAA'; -- $37.8 million class M-1 affirmed at 'AA'; -- $32.0 million class M-2 affirmed at 'A'; -- $11.8 million class M-3 affirmed at 'BBB+'; -- $1.8 million class M-4 affirmed at 'BBB'. RAAC 2007-RP4 -- $157.7 million class A affirmed at 'AAA'; -- $25.5 million class M-1 affirmed at 'AA'; -- $14.8 million class M-2 affirmed at 'A'; -- $16.0 million class M-3 affirmed at 'BBB+'; -- $2.3 million class M-4 affirmed at 'BBB'. RURAL/METRO CORP: Improved Liquidity Cues S&P to Revise Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Scottsdale, Arizona-based medical transport services provider Rural/Metro Corp. to stable from negative. S&P also affirmed the ratings on Rural/Metro, including the 'B' corporate credit rating. The outlook revision reflects the company's improved liquidity and increased headroom under its senior secured credit facility covenants. "The ratings reflect the company's exposure to the ongoing uncertainty of government reimbursement rates, its relatively thin operating margins, high levels of bad debt, and concerns about the sustainability of price increases from its commercial payors," said Standard & Poor's credit analyst Rivka Gertzulin. These issues are only partially mitigated by the company's diverse and long-standing client list and its willingness to repay debt. Rural/Metro is one of the largest commercial providers of medical transport services. The company mainly provides emergency and nonemergency medical transportation services to about 400 communities in 23 states. Rural/Metro generally contracts with government entities, hospitals, nursing homes, and other health care facilities. It also provides fire protection services to residential and commercial property owners. Ambulance services represent about 84% of revenue, with the remaining revenue coming from fire protection services. SALOMON BROS TRUST: S&P Junks Rating on Class K Certificates ------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on three classes of commercial mortgage pass-through certificates from Salomon Bros. Commercial Mortgage Trust 2001-C1. Concurrently, S&P lowered its ratings on two classes and affirmed its ratings on the remaining classes from this transaction. The raised ratings reflect increased credit enhancement levels resulting from a 28% paydown of the pool and the defeasance of $137 million (20%) of the pool's collateral since issuance. The lowered ratings reflect actual credit support erosion and S&P's concerns regarding several assets that are with the special servicer or on the master servicer's watchlist. The affirmed ratings reflect credit enhancement levels that adequately support the ratings through various stress scenarios. As of the April 17, 2008, remittance report, the collateral pool consisted of 153 loans with an aggregate trust balance of $687.9 million, compared with 182 loans with a balance of $952.7 million at issuance. Excluding defeased loans, the master servicer, Midland Loan Services Inc., reported financial information for 97% of the pool. Forty percent of the servicer- reported information was full-year 2006 data, and the remaining is partial or full-year 2007 data. Based on this information, Standard & Poor's calculated a weighted average debt service coverage of 1.43x, up from 1.30x at issuance. There are two loans ($10.8 million, 2%) with the special servicer, CWCapital Asset Management LLC, of which one loan ($3.1 million, 0.5%) is 30-plus- days delinquent. All other loans in the pool are current. To date, the trust has experienced 11 losses totaling $29.8 million, or 3% of the initial pool balance. The top 10 loans secured by real estate have an aggregate outstanding balance of $118.4 million (17.2%) and a weighted average DSC of 1.54x, compared with 1.33x at issuance. The second-, seventh-, eighth- and 10th largest loans appear on the servicer's watchlist due to low DSCs and are discussed below. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 loans and one was characterized as "excellent," while the rest were characterized as "good." Midland reported a watchlist of 28 loans with an aggregate outstanding balance of $132 million (19%). The second-largest loan, Ironwood Apartments ($16.0 million, 2%), is secured by 288- unit multifamily property in Houston Texas, 10 miles west of Houston's central business district. Occupancy remained above 90% for the past three years, but revenue was down due to weak market conditions. As of May 31, 2007, Midland reported a DSC of 0.93x and an occupancy of 91%. The seventh-largest loan, The Corporate Forum, ($9.3 million, 1%), is secured by a 182,858-sq.-ft. suburban office in Atlanta, Georgia While the reported year-end 2006 DSC and occupancy were 1.57x and 100%, respectively, the December 2007 rent roll showed a 57% occupancy rate. S&P project the DSC at this occupancy level to be below 1.0x. The eighth-largest loan, Coral Palm Plaza ($9.1 million, 1%), is secured by a 135,935-sq.-ft. retail property in Coral Springs, Florida. The reported DSC as of year-end 2006 was 1.04x and occupancy was 80%. The 10th-largest loan, Tucker Pointe Townhome ($8.7 million, 1%), is secured by a 141-unit multi-family property in Fargo, North Dakota. The DSC has remained below 1.0x since 2005. For the nine-months ending Sept. 30, 2007, DSC was 0.87x and occupancy was 95%. There are two loans with the special servicer. The first, Crowne Plaza Dayton, has a total exposure of $5.4 million (1%) and is secured by a 283-room full-service hotel in Dayton, Ohio. The loan was transferred to CWCapital in February 2008 due to imminent default. The loan is still current and negotiations are underway for loan modifications and payment relief. Recent appraisal indicates a preliminary value above the current exposure. The second loan with the special servicer, Hilltop Apartments, has a $3.2 million exposure (0.5%) and is secured by a 132-unit multifamily property in Anderson, Indiana. The loan was transferred to the special servicer in January 2008 due to imminent default. The property manager intends to purchase the loan and assume the debt with payment modification. The loan will be returned to Midland if the sale goes through. Standard & Poor's expects a limited loss under this scenario. Standard & Poor's stressed the loans on the watchlist and other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the raised, lowered, and affirmed ratings. Ratings Raised Salomon Bros. Commercial Mortgage Trust 2001-C1 Commercial mortgage pass-through certificates Rating ------ Class To From Credit support ----- -- ---- -------------- C AA+ AA 15.74% D AA A+ 14.01% E A A- 11.94% Ratings Lowered Salomon Bros. Commercial Mortgage Trust 2001-C1 Commercial mortgage pass-through certificates Rating ------ Class To From Credit support ----- -- ---- ------------ K CCC+ B- 1.20% L CCC- CCC 0.16% Ratings Affirmed Salomon Bros. Commercial Mortgage Trust 2001-C1 Commercial mortgage pass-through certificates Class Rating Credit support ----- ------ -------------- A-3 AAA 27.52% B AAA 21.63% F BBB+ 9.86% G BBB 7.78% H BB+ 5.01% J B 2.24% X-1 AAA N/A X-2 AAA N/A N/A - Not applicable. SALT CREEK: Fitch Affirms Class B-6$L Notes' B+ Rating ------------------------------------------------------ Fitch Ratings affirms 13 classes of notes issued by Salt Creek High Yield CSO 2005-1 Ltd (Salt Creek). These affirmations are the result of Fitch's review process and are effective immediately: -- $34,000,000 class A-1$L notes at 'AAA'; -- $20,000,000 class A-2$L notes at 'AA+'; -- $30,000,000 class A-4$L notes at 'AA-'; -- $1,000,000 class A-6$L notes at 'A'; -- $40,000,000 class A-7$L notes at 'A-'; -- $8,000,000 class B-2$L notes at 'BBB'; -- $3,000,000 class B-3$L notes at 'BBB-'; -- $500,000 class B-5$L notes at 'BB-'; -- $2,000,000 class B-6$L notes at 'B+'; -- EUR5,000,000 class A-1EURO notes at 'AAA'; -- EUR 20,000,000 class A-2EURO notes at 'AA+'; -- EUR 3,000,000 class A-6EURO-1 notes at 'A'; -- JPY1,000,000,000 class A-3YL notes at 'AA'. The rating actions reflect Fitch's view on the credit risk of the rated notes following the release of its new Corporate CDO rating Criteria. Key drivers of this transaction's credit strength are: -- Portfolio credit quality of 'B+/B', with 9.3% of the portfolio in the 'CCC' or below rating category, and 51.2% in the 'B' rating category. -- Industry diversification with concentration of 23.3% in the three largest industries, made up of 8.9% in computers & electronics, 7.5% in automobiles and 7.0% in broadcasting & media. The affirmations are the result of stable collateral performance since the last review on September 2006 and sufficient credit enhancement levels on each class of notes. Despite experiencing two credit events since the last review, the subordination amounts have increased slightly due to trading gains. Additionally, with a scheduled maturity of September 2010, the risk horizon of the transaction has decreased as a result of decreased time to maturity. Salt Creek is a synthetic collateralized debt obligation (CDO) that closed on March 30, 2005 and is managed by TCW Asset Management Co. Salt Creek provides investors leveraged access to the credit risk of a portfolio of credit default swaps referencing primarily non-investment grade corporate obligations. Salt Creek gains access to the credit risk of the portfolio via a credit default swap between Salt Creek and Bear Stearns Credit Products Inc., as swap counterparty (guaranteed by Bear Stearns Companies, rated 'F2/A-', Rating Watch Positive by Fitch) and further guaranteed by JPMorgan Chase & Co., rated 'F1+/AA-' by Fitch (as discussed in the release titled, 'Fitch Clarifies Review of Bear Stearns Counterparty Exposure in Global SF Transactions' dated April 1, 2008). SATURNS TRUST: S&P Lowers Ratings on Two Classes of Trust to 'BB' ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on two classes from SATURNS Trust No. 2001-2 and PreferredPLUS Trust Series CZN-1. The downgrades reflect the May 8, 2008, lowering of the rating on the underlying securities, the 7.05% debentures due Oct. 1, 2046, issued by Citizens Communications Co. SATURNS Trust No. 2001-2 and PreferredPLUS Trust Series CZN-1 are pass-through transactions, and the ratings on the certificates issued by those trusts are based solely on the rating assigned to the underlying securities, the 7.05% debentures from Citizens Communications Co. Ratings Lowered SATURNS Trust No. 2001-2 $26 million callable units series 2001-2 Rating ------ Class To From ----- -- ---- Units BB BB+ PreferredPLUS Trust Series CZN-1 $34 million PreferredPLUS 8.375% trust certificates Rating ------ Class To From ----- -- ---- Certs BB BB+ SCIENTIFIC GAMES: Moody's Puts Ba1 Rating on Proposed $850MM Loans ------------------------------------------------------------------ Moody's Investors Service assigned a Ba1 rating to Scientific Games Corporation's proposed $600 million term loan and $250 million revolving credit agreement. Moody's also affirmed the company's Ba2 corporate family and probability of default rating, and Ba3 rating on the existing $200 million senior subordinated debentures. Moody's will withdraw the ratings of the company's existing term loans and revolver when the proposed transaction closes. The rating outlook is stable. The proceeds from the new term loan will be used to refinance outstanding loans under the company's existing term loan and revolver and for general corporate purposes. The obligor under the proposed facilities will be Scientific Games International, Inc., a wholly owned subsidiary of SGC. The Facilities will be secured by all assets and guaranteed by all domestic subsidiaries, as well as by SGC. The rating affirmation reflects SGC's leading position in the faster growing instant ticket segment of the lottery industry, good contract retention rates, and solid growth prospects internationally. SGC has just finished absorbing several acquisitions and consolidating instant ticket plant capacity. Improvement in consolidated operating margins is expected as a result of an improved cost structure along with the new instant ticket contract in China, solid instant ticket growth in the UK and Italy, and a growing installed base of fixed odds and sports betting terminals. Credit concerns include above average leverage for the rating category, a decline in consolidated operating margins over the past few years, spending to support growth initiatives, particularly in China, and a potential slow down in domestic lottery demand due to weak macro-economic conditions. Rating assigned: Scientific Games International, Inc. -- $600 million term loan at Ba1 (LGD 2, 29%) -- $250 million revolving credit facility at Ba1 (LGD 2, 29%) Ratings to be withdrawn: -- $300 million revolver at Ba1 (LGD2, 25%) -- $100 million term loan C at Ba1 (LGD 2, 25%) -- $150 million term loan D at Ba1 (LGD 2, 25%) -- $200 million term loan E at Ba1 (LGD 2, 25%) Scientific Games Corporation is a provider of services, systems, and products to both the instant ticket lottery industry and pari- mutuel wagering industry. The company operates in three business segments: Printed Products, Lottery Systems, and Diversified Gaming. Revenues for the year ended Dec. 31, 2007 were $1.0 billion. SCIENTIFIC GAMES: S&P Holds 'BB' Credit Rating with Stable Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its issue-level and recovery ratings to Scientific Games International Inc.'s proposed $850 million senior secured credit facilities. The loans are rated 'BBB-' (two notches higher than the 'BB' corporate credit rating on parent company Scientific Games Corp.) with a recovery rating of '1', indicating that lenders can expect very high (90% to 100%) recovery in the event of a payment default. At the same time, Standard & Poor's affirmed its existing ratings on Scientific Games Corp., including the 'BB' corporate credit rating. The rating outlook is stable. Proceeds from the proposed credit facilities, which will consist of a draw of approximately $23 million on a $250 million revolving credit facility and a $600 million term loan, will be used to refinance the existing credit facilities. The proposed bank facility is due five years from the close of the transaction, subject to certain requirements addressing the refinancing of and a holders "put" option for the outstanding subordinated debt obligations. "The rating on Scientific Games reflects the highly competitive market conditions in the lottery and pari-mutuel industries, the mature nature and capital intensity of the online lottery industry, and the company's acquisitive growth strategy," said Standard & Poor's credit analyst Ben Bubeck. "Still, Scientific Games maintains a leadership position in the ticket lottery and pari-mutuel gaming industries, which fuels substantial recurring revenue and a stable cash flow base given long-term contracts." The company also has consistently demonstrated credit metrics appropriate for the rating. Scientific Games is the leading integrated supplier of instant tickets, systems, and services to lotteries worldwide, and a leading supplier of fixed odds and interactive sports betting terminals and systems, and wagering systems and services to pari- mutuel operators. SENTINEL MANAGEMENT: CFTC Files Suit Over Fund Misappropriation --------------------------------------------------------------- The Commodity Futures Trading Commission filed a lawsuit against Sentinel Management Group Inc. alleging fraud on the part of the securities broker, Edward Hayes of the CCH Wall Street reports. The suit was filed in the United States District Court for the Northern District of Illinois, reports say. As reported in the Troubled Company Reporter on Aug. 22, 2007, the U.S. Securities and Exchange Commission filed civil fraud charges against the Debtor alleging that Sentinel suffered losses for several months because of undisclosed use of leverage, comingling and misappropriation of clients' securities. The complaint claims that Sentinel's woes are a case of fraud disguised as a casualty of the markets. According to CCH, the Debtor mixed its assets with its clients' funds in order to borrow from the Bank of New York, with the commingled assets used as collateral for the loan. The Debtor used around $444 million of their clients' money for that purpose. Aside from the loan, the Debtor used the mixed assets for other business purposes, says CCH. "Segregation of customer funds is the core customer protection mechanism under the Commodity Exchange Act . . . [I]ts importance cannot be overstated, and any fraud or segregation violations will carry swift and severe repercussions," CCH quotes CFTC director Gregory Mocek as saying. Traders' funds deposited to a futures clearing merchant, notes CCH, must be segregated as a rule of thumb to protect the client from the merchant's bankruptcy and its creditors. CCH says that the Debtor's bankruptcy filing last August 2007 complicated the case, and that the "fate" of its clients and their commingled assets are still unknown. About Sentinel Management Based in Northbrook, Illinois, Sentinel Management Group Inc. -- http://www.sentinelmgi.com/-- is a full service firm offering a variety of security solutions. The company filed a voluntary Chapter 11 petition on Aug. 17, 2007 (Bankr. N.D. Ill. Case No. 07-14987). Ronald Barliant, Esq., Randall Klein, Esq., and Kathryn A. Pamenter, Esq., at Goldberg, Kohn, Bell & Black Rosenbloom & Moritz, Ltd. represent the Debtor. Quinn, Emanuel Urquhart Oliver & Hedges, LLP, represent the Official Committee of Unsecured Creditors. DLA Piper US LLP represents the Committee's co-counsel. When the Debtor sought bankruptcy protection, it listed assets and debts of more than $100 million. On Aug. 28, 2007, the Court approved Frederick Grede as the Debtor's Chapter 11 Trustee. Mr. Grede selected Catherine L. Steege, Esq., Christine L. Childers, Esq., and Vincent E. Lazar, Esq., at Jenner & Block LLP as his counsels. As reported in the Troubled Company Reporter on Dec. 19, 2007, the Court extended, until June 13, 2008, the Debtor's exclusive periods to file a Chapter 11 plan of reorganization and disclosure statement. SHAPES/ARCH HOLDINGS: Unsecured Creditors to Get 14% Under Plan --------------------------------------------------------------- Shapes/Arch Holdings and its debtor-affiliates delivered to the United States Bankruptcy Court for the District of New Jersey a Joint Disclosure Statement dated May 12, 2008, explaining their Second Amended Joint Chapter 11 Plan of Reorganization. The Debtors are seeking Court approval for the proposed bid procedures for the sale of their equity, subject to higher and better offers. Arch Acquisition I LLC serves as the "stalking- horse" bidder. Overview of the Plan The Plan provides for a fair allocation of the Debtors' assets in an orderly manner under the Bankruptcy Code and other applicable law. The Debtors disclose that the Plan reflects a commitment by: a) their lender group -- comprised of The CIT Group/Business Credit, Inc., as agent, JPMorgan Chase Bank N.A., and Textron Financial Corporation -- to provide the Debtors with revolving loans of up to $60 million throughout the chapter 11 proceedings and upon exiting bankruptcy; and b) Arch Acquisition I LLC, an affiliate of Signature Aluminum and H.I.G. Capital Partners, to give $30,000,000 in exit facility. On the plan's effective date, the Official Committee of Unsecured Creditors of the Debtors will appoint a Class 10 liquidation trustee to serve as plan administrator. Treatment of Claims and Interest Type of Estimated Estimated Class Claim Amount Recovery ----- ------- --------- --------- Unclassified Administrative $2,513,606 100% Claims Unclassified Fee Claims $800,000 100% Unclassified Priority Tax $84,667 100% Claims 1 Other Priority $1,514,113 100% Claims 2 Secured Real $747,939 100% Estate Claims 3 Arch DIP Claim $26,700,000 100% 4 CIT Claims $54,600,000 100% 5 Secured Claims $TBD 100% Purchase Money Security Interest 6 Secured Claims of $150,000 100% Warehousemen and Shippers 7 Collateralized 100% Insurance Program Claims 8 Miscellaneous $75,000 100% Secured Claims 9 EPA/NJDEP Claims $350,000 100% 10 General Unsecured $38,121,413 10%-14% Claims 11 Ben Interest NA 0% 12 Class 12 Interest NA 100% Ben LLC holds 100% in membership interest of the Debtors. A full-text copy of the Joint Disclosure Statement is available for free at: http://ResearchArchives.com/t/s?2be3 A full-text copy of the Second Amended Chapter 11 Plan of Reorganization is available for free at: http://ResearchArchives.com/t/s?2be2 About Shapes/Arch Headquartered in Delair, New Jersey, Shapes/Arch Holdings, LLC, produces custom aluminum extrusions for road and rail transportation and commercial and residential construction. The company also manufactures maintenance aluminum fence systems, for residential and commercial use, and above-ground pools. The company and four of its affiliates filed for Chapter 11 protection on March 16, 2008 (Bankr. D. N.J. Lead Case No. 08-14631). Jerrold N. Poslusny, Jr., Esq., at Cozen O'Connor, represents the Debtors in their restructuring efforts. The U.S. Trustee for Region 3 appointed six creditors to serve on an Official Committee of Unsecured Creditors. Halperin Battaglia Raich LLP represents the Committee in these cases. When the Debtors filed for protection from their creditors, they listed assets between $10 million and $50 million and debts between $50 million and $100 million. SHAPES/ARCH HOLDINGS: Wants Bid Procedures for Sale of Equity OK'd ------------------------------------------------------------------ Shapes/Arch Holdings LLC and its debtor-affiliates ask the United States Bankruptcy Court for the District of New Jersey to approve proposed bidding procedures for the sale of the reorganized Debtors' equity under the terms and condition of the second amended Chapter 11 plan of reorganization dated March 12, 2008, subject to better and higher offers. Acquisition I LLC will serve as the "stalking-horse" bidder, wherein 100% of the equity interest in the reorganized Debtors will be transferred to Acquisition in turn for the consideration provided by it under the amended plan. To participate in the auction, all interested bidders are required to submit qualified bids along with a good faith deposit -- which will be held in escrow by the Debtors' counsel -- by June 25, 2008, at 12:00 p.m. The initial overbid will be $6,950,000, comprising: i) a $1,000,000 break-up to Arch Acquisition, ii) $500,000 expense reimbursement, iii) $300,000 contribution by Arch to fund in part the in lieu of termination fee to Arcus ASI Funding LLC and Arcus ASI Inc., and iv) a $150,000 increase to Arch's proposed distribution of $5,000,000 to the general unsecured creditors. An auction will take place at the offices of Cozen O'Connor, 1900 Market Street in Philadelphia, Pennsylvania, on June 27, 2008, at 10:00 a.m. Successive bid is set in increments of at least $150,000. As part of the transaction, a successful bidder must submit the revised amended Plan where it will: i) replace Arch as the plan funder; ii) provide payment in full of Arch DIP claim on the effective date; iii) increase and eliminate the caps on the amount of the allowed claims in other priority, miscellaneous secured and priority tax claim; and iv) increase the class 10 unsecured creditors distribution by at least $150,000. A hearing is set for May 19, 2008, at 2:00 p.m., to consider approval of the Debtors' request. A full-text copy of the proposed bid procedures is available for free at http://ResearchArchives.com/t/s?2be0 About Shapes/Arch Headquartered in Delair, New Jersey, Shapes/Arch Holdings, LLC, produces custom aluminum extrusions for road and rail transportation and commercial and residential construction. The company also manufactures maintenance aluminum fence systems, for residential and commercial use, and above-ground pools. The company and four of its affiliates filed for Chapter 11 protection on March 16, 2008 (Bankr. D. N.J. Lead Case No. 08-14631). Jerrold N. Poslusny, Jr., Esq., at Cozen O'Connor, represents the Debtors in their restructuring efforts. The U.S. Trustee for Region 3 appointed six creditors to serve on an Official Committee of Unsecured Creditors. Halperin Battaglia Raich LLP represents the Committee in this cases. When the Debtors filed for protection against their creditors, they listed assets between $10 million to $50 million and debts between $50 million to $100 million. SHAPES/ARCH HOLDINGS: Disclosure Statement Hearing Set for May 23 ----------------------------------------------------------------- The United States Bankruptcy Court for the District of New Jersey will convene a hearing on May 23, 2008, at 10:00 a.m., to consider the adequacy of the Joint Disclosure Statement dated May 12, 2008, explaining the Second Amended Joint Chapter 11 Plan of Reorganization filed by Shapes/Arch Holdings LLC and its debtor- affiliates. About Shapes/Arch Headquartered in Delair, New Jersey, Shapes/Arch Holdings, LLC, produces custom aluminum extrusions for road and rail transportation and commercial and residential construction. The company also manufactures maintenance aluminum fence systems, for residential and commercial use, and above-ground pools. The company and four of its affiliates filed for Chapter 11 protection on March 16, 2008 (Bankr. D. N.J. Lead Case No. 08-14631). Jerrold N. Poslusny, Jr., Esq., at Cozen O'Connor, represents the Debtors in their restructuring efforts. The U.S. Trustee for Region 3 appointed six creditors to serve on an Official Committee of Unsecured Creditors. Halperin Battaglia Raich LLP represents the Committee in this cases. When the Debtors filed for protection against their creditors, they listed assets between $10 million to $50 million and debts between $50 million to $100 million. SHIPPING PARTNERS: Moody's Junks Senior Secured Debt Rating ----------------------------------------------------------- Moody's Investors Service lowered its debt ratings of U.S. Shipping Partners L.P. -- Corporate Family and Probability of Default, each to Caa3 from Caa1, senior secured to Caa2 from B3 and second lien senior secured to Ca from Caa3. The rating outlook is negative. The ratings were downgraded because Moody's believes that the weak fundamentals currently affecting USS' petroleum and chemical tanker operations are likely to continue into the second half of 2008. Funds from operations are likely to continue to be stressed over the near term because five of the six ITB (integrated tug- barge) vessels are now trading in the spot market. Spot rates have significantly weakened since the beginning of 2008 and decreased demand for cargoes has decreased utilization rates. This will likely challenge USS to maintain compliance with one or more of the financial covenants of the $350 million first lien senior secured credit facility, as USS management disclosed on the company's Q1 2008 earnings call held on May 13, 2008. Moody's also believes that the trading prospects of USS' integrated tug-barge units are limited relative to those of modern, double-hulled vessels, because of the increasing excess capacity of Jones Act tanker tonnage and charterers' preference for modern, double-hulled vessels. Additionally, the planned dry- docking of three of the company's four chemical tankers in the second half of 2008 will result in an about $15 million call on cash at a time when earnings from that fleet will diminish. The revolver may be needed to fund these dry-docks. However, USS might not maintain access to the revolver if it is not able to maintain compliance with the covenants. The Caa3 rating reflects Moody's belief that the probability of default has increased since the previous rating action of Dec. 13, 2007, as USS has been unable to arrange time-charter cover for the ITB fleet and 2008 market conditions, including in the chemical trades, have weakened more than anticipated at that time. Moody's expects earnings and cash flows in sequential quarters to weaken from the levels reported in Q1 2008 because it does not expect a sustained recovery of spot rates over the near term. Significant uncertainty remains about the contributions to earnings and cash flows of ATB's three and four as time charters have yet to be arranged for either of these vessels; or about whether USS will obtain control of the NASSCO products tankers given its weakening credit profile and the high cost of these tankers. Liquidity is weak, notwithstanding the suspension of the distribution to the subordinated unitholders. The negative outlook reflects the uncertainty as to whether USS can maintain compliance with financial covenants to maintain access to the revolver. The ratings could be downgraded further if USS lost access to the revolver, or it became apparent that a negotiated debt restructuring was to occur. The ratings or outlook could be favorably affected if the trading prospects of the ITB fleet unexpectedly improve, such that positive earnings on these vessels would be expected and USS was certain to maintain compliance with the financial covenants of the Credit Facility. U.S. Shipping Partners LP: Downgrades: -- Probability of Default Rating, Downgraded to Caa3 from Caa1 -- Corporate Family Rating, Downgraded to Caa3 from Caa1 -- Senior Secured Bank Credit Facility, Downgraded to Caa2 from B3 -- Senior Secured Regular Bond/Debenture, Downgraded to Ca from Caa3 Outlook Actions: -- Outlook, Changed To Negative From Stable U.S. Shipping Partners L.P., based in Edison, New Jersey, is a leading, U.S. Jones Act qualified, provider of marine transportation of petroleum and petroleum based products. SILVERWING ENERGY: In Breach of Demand Loan Facility Covenant ------------------------------------------------------------- Silverwing Energy Inc. failed to maintain a positive working capital ratio of 1:1 for its revolving demand loan facility and non-revolving acquisition and development demand facility, committing a breach of covenant with a Canadian bank. Consequently, the bank has the right to demand repayment on the entire balance drawn on the facilities. The company's management has informed the bank of the covenant breach. The revolving demand loan facility of $10.7 million bears interest at the bank's prime rate plus 1.25%. The non-revolving acquisition and development demand loan facility of $0.6 million bears interest at the bank's prime rate plus 0.5% and requires monthly principal repayments of $45,000. The non-revolving acquisition and development demand loan facility and revolving operating demand loan facility are secured by a $50.0 million debenture with a floating charge over all fixed assets of the company. These loan facilities are scheduled for review on or before May 31, 2008. Financial Results For the three months ended March 31, 2008, the company recorded a net loss of $1.5 million versus a net loss of $2.9 million a year ago. The reduction in the loss was due to an impairment to oil and gas properties recognized pursuant to the application of the ceiling test during the three months ended March 31, 2007. Silverwing opened the first quarter of 2008 with a working capital deficiency of $14.7 million. Changes in the quarter's working capital involved funds from operations of $1.3 million, net capital disposition of $0.3 million and an unrealized loss on a risk management contract entered into during the period of $0.8 million, thereby leaving the company with a working capital deficit of $14.0 million as at March 31, 2008. The company has budgeted approximately $36 million in 2008 and 2009 to complete and tie-in or abandon a number of previously drilled wells in the Tomahawk area along with the commencement of the Nisku drilling opportunity. This capital program includes a commitment to spend $7.5 million on drilling and completion work with a third party over the next two years. The company intends to raise new capital to meet the stated commitments; however, there is no certainty that the financing activities will be successful. At March 31, 2008, the company's balance sheet showed total assets of $67.3 million, total liabilities of $23.1 million and total shareholders' equity of $44.2 million. About Silverwing Energy Based in Calgary, Canada, Silverwing Energy Inc. (TSX:SVW,SVW.WT) is a crude oil and natural gas exploration and production company. By implementing its strategic plan in key focus areas located throughout the Western Canadian Sedimentary Basin, Silverwing is well positioned to achieve its growth plans for the benefit of its shareholders. SIX FLAGS: March 31 Balance Sheet Upside-Down by $410.6 Million --------------------------------------------------------------- Six Flags Inc. reported on Thursday its operating results for the first quarter ended March 31, 2008. At March 31, 2008, the company's consolidated balance sheet showed $2.9 billion in total assets, $2.6 billion in total liabilities, $14.6 million in deferred income taxes, $414.8 million in redeemable minority interests, and $285.9 million in mandatorily redeemable preferred stock, resulting in a $410.6 million total stockholders' deficit. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $121.3 million in total current assets available to pay $368.7 million in total current liabilities. The company reported a net loss from continuing operations of $149.9 million as compared to a net loss from continuing operations of $161.2 million in the prior-year quarter. The reduced loss reflects increased revenues and the planned reduction of current-year operating expenses, partially offset by reduced minority interest in losses due to the company's purchase of its partner's interest in Six Flags Discovery Kingdom in July of last year. Adjusted EBITDA for the quarter improved $15.0 million to a loss of $53.9 million versus the prior-year quarter loss of $68.9 million. Commenting on the company's first quarter performance, Mark Shapiro, president and chief executive officer of Six Flags Inc., said: "The improvement in our first quarter performance reflects the increasing demand for the high quality, close to home, value proposition Six Flags offers in this tightening economy. With a new attraction in every one of our theme parks, we are poised to deliver a memorable experience for the entire family this summer." Total revenues of $68.2 million increased 35.0% over the prior- year quarter, while total attendance grew by 19.0% to over 1.4 million. Attendance was positively impacted by the timing of Easter, which shifted from the second quarter in 2007 to the first quarter in 2008. The first quarter historically represents up to 5.0% of the company's annual attendance. Revenues for the first quarter also reflected increases in per capita guest spending, which grew $4.52 to $38.95, a 13.0% increase over the per capita guest spending of $34.44 for the first quarter of 2007. Guest spending increases were across the board, reflecting higher admissions, food and beverage, rentals, retail, games, parking and other revenues. Revenue growth was also driven by sponsorship, licensing and other fees, which increased $3.4 million over the prior-year period to $11.4 million for the first quarter. This growth, combined with the increased guest spending, resulted in a 13.0% increase in total revenue per capita to $47.11 in the current quarter from $41.51 in the first quarter of 2007. Mr. Shapiro further stated: "Our strategy is taking hold -- a better guest experience is triggering a higher in-park spend; our high-margin sponsorship and licensing business is healthy, and our cost efficiency strategy is real." As of March 31, 2008, the company had $12.7 million in unrestricted cash and $131.0 million available on its $275.0 million revolving 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?2be7 About Six Flags Headquartered in New York City, Six Flags Inc. (NYSE: SIX) -- http://www.sixflags.com/-- is the world's largest regional theme park company with 21 parks across the United States, Mexico and Canada. * * * As reported by the Troubled Company Reporter on April 25, 2008, Fitch Ratings kept a 'CCC' rating on Six Flags' Senior Unsecured Notes and Preferred Stock. Fitch noted that the company is below breakeven on an interest coverage basis, and leverage is around 13.8 times (x), both of which are very concerning. However, Fitch said, the company's liquidity has been sufficient to cover operating costs in the off-season, invest in its parks and continue to attempt its turnaround in 2008. Fitch also noted that the $300 million PIERs securities come due in April 2009 and represent material refinancing risk. Six Flags Inc. also continues to carry Moody's Investors Service's Caa1 corporate family rating assigned on Nov. 9, 2007. Outlook is Negative. SIX FLAGS: Commences Exchange Offer for $400MM New Senior Notes --------------------------------------------------------------- Six Flags Inc. commenced a private offer to exchange any and all of the notes in a private placement for new 12-1/4% Senior Notes due July 15, 2016. The principal amount of New Notes issued in the exchange will not exceed $400.0 million. The Notes will be issued by Six Flags Operations Inc., its subsidiary, and guaranteed by Six Flags Inc. The Notes available for exchange in this offer include: -- 8-7/8% Senior Notes due 2010 of Six Flags, Inc.; -- 9-3/4% Senior Notes due 2013 of Six Flags, Inc.; and -- 9-5.8% Senior Notes due 2014 of Six Flags, Inc. The exchange offer was made only to qualified institutional buyers and accredited investors inside the United States and to certain non-U.S. investors located outside the United States. The purpose of this private exchange offer is to improve Six Flags' financial flexibility by extending the maturities of its overall indebtedness and its outstanding indebtedness with maturities in 2010. a) Notes to be Exchanged: 8-7/8% Senior Notes due 2010 CUSIP No.: 83001P AD1 Outstanding Principal Amount: $280.30 million b) Notes to be Exchanged: 9-3/4% Senior Notes due 2013 CUSIP No.: 83001P AF6 Outstanding Principal Amount: $374.00 million c) Notes to be Exchanged: 9-5.8% Senior Notes due 2014 CUSIP No.: 83001P AK5 and 83001P AH2 Outstanding Principal Amount: $464.65 million For each $1,000 Principal Amount Exchanged: A) Total Consideration By the Early Tender Date: 1) Principal amount of New 12-1/4% Senior Notes due 2016: 90% of original amount Acceptance Priority Level: 1 2) Principal amount of New 12-1/4% Senior Notes due 2016: 70% of original amount Acceptance Priority Level: 2 3) Principal amount of New 12-1/4% Senior Notes due 2016: 70% of original amount Acceptance Priority Level: 3 B) Exchange Consideration After the Early Tender Date: 1) Principal amount of New 12-1/4% Senior Notes due 2016: 85% of original amount Acceptance Priority Level: 1 2) Principal amount of New 12-1/4% Senior Notes due 2016: 65% of original amount Acceptance Priority Level: 2 3) Principal amount of New 12-1/4% Senior Notes due 2016: 65% of original amount Acceptance Priority Level: 3 Six Flags reserves the right, but is not obligated, to increase the Maximum Tender Amount. The aggregate principal amount of each issue of Notes that are exchanged for New Notes in the exchange offer will be determined in accordance with the Acceptance Priority Level. All 8-7/8% Senior Notes due 2010 will be accepted before any 9-3/4% Senior Notes due 2013 or 9-5.8% Senior Notes due 2014 are accepted, and all 2013 Notes will be accepted before any 2014 Notes are accepted. After all 2010 Notes are accepted, the 2013 Notes will have priority in acceptance and the amount of the 2013 Notes accepted for purchase from each holder tendering such 2013 Notes will be prorated based on the aggregate principal amount of 2013 Notes tendered and the Maximum Tender Amount remaining. No 2014 Notes will be accepted unless all 2013 Notes that are tendered are accepted. Even if 100% of the 2010 Notes are validly tendered and not validly withdrawn the 2010 Notes will not be subject to proration due to the size of the Maximum Tender Amount. The exchange offer will expire at 12:00 midnight, New York City time, on June 11, 2008, unless extended or earlier terminated. Holders of Notes must validly tender and not validly withdraw their Notes on or before the Early Tender Date, which is 5:00 p.m., New York City time, on May 28, 2008, unless extended, to receive the applicable Total Consideration. Holders of Notes who validly tender their Notes after the Early Tender Date and on or before the Expiration Date and whose Notes are accepted for purchase will receive the applicable Exchange Consideration. The consummation of the exchange offer is conditioned upon the satisfaction or waiver of the other conditions set forth in the private offering memorandum dated May 14, 2008, including a requirement that the beneficial holders of approximately 50% of the principal amount of the outstanding 2010 Notes who have agreed to tender their 2010 Notes for exchange in the exchange offer, shall tender such 2010 Notes in the exchange offer in accordance with the terms of their lock-up agreement. The New Notes will be senior unsecured obligations of Six Flags Operations, and will be guaranteed by Six Flags. The New Notes will mature on July 15, 2016, and will bear interest at a rate per annum equal to 12-1/4%. Interest on the New Notes will be payable on January 15 and July 15 of each year, beginning on Jan. 15, 2009. The New Notes have not been and will not be registered under the Securities Act or any state securities laws, may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements, and will therefore be subject to substantial restrictions on transfer. Six Flags' and Six Flags Operations' obligations to accept any Notes tendered and to pay the applicable consideration for them are set forth solely in the Offering Memorandum relating to the exchange offer and the accompanying Letter of Transmittal. Documents relating to the exchange offer will only be distributed to holders of Notes who complete and return a letter of eligibility confirming that they are within the category of eligible holders for this private offer. Holders who desire a copy of the eligibility letter may contact Mackenzie Partners Inc., the information agent for the exchange offer, at (800) 322- 2885. About Six Flags Headquartered in New York City, Six Flags Inc. (NYSE: SIX) -- http://www.sixflags.com/-- is the world's largest regional theme park company with 21 parks across the United States, Mexico and Canada. Founded in 1961, Six Flags has provided world class entertainment for millions of families with cutting edge, record- shattering roller coasters and appointment programming with events like the popular Thursday and Sunday Night Concert Series. Now 47 years strong, Six Flags is recognized as the preeminent thrill innovator while reaching to all demographics -- families, teens, tweens and thrill seekers alike -- with themed attractions based on the Looney Tunes characters, the Justice League of America, skateboarding legend Tony Hawk, The Wiggles and Thomas the Tank Engine. At Dec. 31, 2007, the company's consolidated balance sheet showed $2.945 billion in total assets, $2.497 billion in total liabilities, $415 million in redeemable minority interests, and $285 million in mandatorily redeemable preferred stock, resulting in a $252 million total stockholders' deficit. * * * As reported by the Troubled Company Reporter on April 25, 2008, Fitch Ratings kept a 'CCC' rating on Six Flags' Senior Unsecured Notes and Preferred Stock. Fitch noted that the company is below break-even on an interest coverage basis, and leverage is around 13.8 times (x), both of which are very concerning. However, Fitch said, the company's liquidity has been sufficient to cover operating costs in the off-season, invest in its parks and continue to attempt its turnaround in 2008. Fitch also noted that the $300 million PIERs securities come due in April 2009 and represent material refinancing risk. Six Flags Inc. also continues to carry Moody's Investors Service's Caa1 corporate family rating assigned on Nov. 9, 2007. Outlook is Negative. SKYBUS AIRLINES: Sec. 341 Creditors Meeting Set Today ----------------------------------------------------- The United States Trustee for Region 3 will convene a meeting of creditors in the Chapter 11 case of Skybus Airlines, Inc., on May 15 at 10:00 a.m. The meeting will be held at J. Caleb Boggs Federal Building, 2nd Floor, Room 2112, in Wilmington, Delaware. 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. William K. Harrington, Esq., represents the U.S. Trustee in the Debtors' cases. The U.S. Trustee may be reached at: United States Department of Justice Office of the United States Trustee District of Delaware J. Caleb Boggs Federal Building 844 King Street, Suite 2207, Lockbox 35 Wilmington, Delaware 19801 Tel: (302) 573-6491 Fax: (302) 573-6497 About Skybus Airlines Headquartered in Columbus, Ohio, Skybus Airlines, Inc., -- http://www.skybus.com/-- operates a domestic airline and had destinations in 15 cities in the United States. On April 4, 2008, it ceased its flights opeartions and grounded all of its acircrafts. The company filed for Chapter 11 protection on April 5, 2008 (Bankr. D. Del. Case No.08-10637). Adam G. Landis, Esq., and Matthew B. McGuire, Esq., at Landis Rath & Cobb LLP, represent the Debtor in its restructuring efforts. The U.S. Trustee for Region 3 appointed an Official Committee of Unsecured Creditors in this case. David B. Stratton, Esq., at Pepper Hamilton LLP, represents the Committee. When the Debtor filed for protection against its creditors, it listed assets between $100 million and $500 million and debts between $10 million and $100 million. SKYBUS AIRLINES: Seeks to Employ Smith Gambrell as Lead Counsel --------------------------------------------------------------- Skybus Airlines, Inc., will appear today before the Hon. Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware to seek authority to employ Smith, Gambrell & Russell, LLP, as their general bankruptcy counsel. As counsel, Smith Gambrell will: -- advise the Debtor including, but not limited to, the rights, duties, obligations and remedies of the Debtor as debtor-in- possession, both with regard to its assets and with respect to the claims of its creditors; -- conduct examinations of witnesses, claimants or adverse parties, and prepare and assist in the preparation of pleadings, exhibits, applications reports, accountings , schedules and other administration of the chapter 11 proceedings; -- perform legal services necessary to the Debtor's bankruptcy case including, but not limited to, institution and prosecution of legal proceedings, advice regarding debt restructuring and general legal advice and assistance related to the Chapter 11 case; -- advise the Debtor concerning a Chapter 11 plan; and -- take any and all other actions necessary for the proper preservation and administration of the Debtor's Chapter 11 estate, including, but not limited to, general advice and counsel in connection with its ongoing business operations. Ronald E. Barab, Esq., a partner at Smith Gambrell, attests that his firm does not represent any interest adverse to the Debtor or its estate in matters upon which the firm is to be engaged and is, therefore, "disinterested" within the meaning of Sections 101(14), 327(a) and 1l07(b) of the Bankruptcy Code. Mr. Barab relates that for the past eight years in a wide range of legal matters, the Firm has been engaged in the general representation of Skybus Airlines, and over the past 12 months, the Firm has billed the Debtor $712,622 in the aggregate for fees for professional services rendered and expenses incurred. The amount has been paid in full and in accordance with invoice terms. In addition to those payments, Mr. Barab says, the Debtor paid the Firm, immediately prior to the bankruptcy filing, $400,000 -- of which $89,551 was applied to payment of the then current outstanding invoice, and $40,000 was applied to payment of fees incurred in the preparation of the case, and the remainder of which is being held as a deposit to secure payment of fees and expenses incurred. To contact Smith Gambrell: Ronald E. Barab, Esq. Brian P. Hall, Esq. Jessica A. Rissmiller, Esq. SMITH GAMBRELL & RUSSELL, LLP Promenade II, Suite 3100 1230 Peachtree Street N. Atlanta, GA 30309 Tel: (404) 815-3500 Fax: (404) 815-3509 About Skybus Airlines Headquartered in Columbus, Ohio, Skybus Airlines, Inc. -- http://www.skybus.com/-- operates a domestic airline and had destinations in 15 cities in the United States. On April 4, 2008, it ceased its flights opeartions and grounded all of its acircrafts. The company filed for Chapter 11 protection on April 5, 2008 (Bankr. D. Del. Case No.08-10637). Adam G. Landis, Esq., and Matthew B. McGuire, Esq., at Landis Rath & Cobb LLP, represent the Debtor in its restructuring efforts. The U.S. Trustee for Region 3 appointed an Official Committee of Unsecured Creditors in this case. David B. Stratton, Esq., at Pepper Hamilton LLP, represents the Committee. When the Debtor filed for protection against its creditors, it listed assets between $100 million and $500 million and debts between $10 million and $100 million. SKYBUS AIRLINES: Can Employ Landis Roth as Local Counsel -------------------------------------------------------- The Hon. Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware authorized Skybus Airlines, Inc., to employ Landis Roth & Cobb LLP as its Delaware counsel. Adam G. Landis, Esq., a partner at Landis Roth; Matthew B. McGuire, Esq., and Mona A. Parikh, Esq., associates at the firm will primarily provide representation to the Debtor. Mr. Landis will be paid $550 per hour; Mr. McGuire will get $335 an hour; and Ms. Parikh will receive $240 an hour. Before its bankruptcy filing, the Debtor gave Landis Roth a $100,000 retainer to secure the payment of fees for legal services rendered and expenses incurred by the firm prior to the Petition Date and, to the extent of any unused portion of the Retainer, to secure the payment of the firm's fees and expenses incurred in the chapter 11 case. Adam G. Landis, Esq., attests that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. To contact Landis Roth: Adam G. Landis, Esq. Matthew B. McGuire, Esq. Landis Rath & Cobb LLP 919 Market Street Suite 600 Wilmington, DE 19801 Tel: 302-467-4400 Fax: 302-467-4450 About Skybus Airlines Headquartered in Columbus, Ohio, Skybus Airlines, Inc. -- http://www.skybus.com/-- operates a domestic airline and had destinations in 15 cities in the United States. On April 4, 2008, it ceased its flights opeartions and grounded all of its acircrafts. The company filed for Chapter 11 protection on April 5, 2008 (Bankr. D. Del. Case No.08-10637). Adam G. Landis, Esq., and Matthew B. McGuire, Esq., at Landis Rath & Cobb LLP, represent the Debtor in its restructuring efforts. The U.S. Trustee for Region 3 appointed an Official Committee of Unsecured Creditors in this case. David B. Stratton, Esq., at Pepper Hamilton LLP, represents the Committee. When the Debtor filed for protection against its creditors, it listed assets between $100 million and $500 million and debts between $10 million and $100 million. SOLUTIA INC: Earns $1.4 Billion in First Quarter 2008 ----------------------------------------------------- Solutia Inc. reported net sales of $985 million for the first quarter of 2008, a 40% increase over net sales of $702 million for the same period in 2007. Approximately 29% of this increase is attributable to the consolidation of Flexsys sales beginning on May 1, 2007, following Solutia's acquisition of the remaining 50% share of its former joint venture. On a pro-forma basis, adjusting 2007 first quarter sales to include Flexsys, sales increased 14% over the prior year. Solutia had consolidated net income of $1.4 billion for the first quarter 2008 compared to a loss of $8 million for the same period in 2007. Solutia's results were impacted by reorganization items and certain gains of $1.4 billion after-tax and and losses of $23 million after-tax in 2008 and 2007 respectively. After consideration of these special items in both periods, income was down $11 million from $15 million in the first quarter of 2007 to $4 million in the first quarter of 2008. This decline was the result of a higher percentage of the company's pre-tax earnings from foreign jurisdictions subject to income tax, higher interest costs and increased depreciation and amortization expense. "Despite softness in U.S. automotive and housing markets, our first quarter results reflect strong volume gains across most businesses which demonstrates the improved geographic and end use diversity of the company's portfolio," commented Jeffry Quinn, chairman, president and chief executive officer of Solutia Inc. "While selling prices trailed raw material cost increases in the quarter, in particular in the Integrated Nylon segment, this was not unexpected given the increasing cost profile across the quarter. We are off to a solid start in 2008, and are focused on getting selling prices up over the coming quarters." Fresh Start Accounting Upon emergence from chapter 11 reorganization, Solutia adopted fresh-start accounting, as required by generally accepted accounting principles. This resulted in the company having a new capital structure, a new basis in identifiable assets and liabilities and no retained earnings or accumulated losses as of March 1, 2008. Accordingly, the company's financial information shown for periods prior to March 1, 2008 is not comparable to consolidated financial statements presented on or after March 1, 2008. However, for the readers' convenience the current year results of operations for these two periods of the Predecessor and the Successor have been combined in this news release. As a result of the increased asset values through the application of fresh-start accounting and the implementation of new stock based incentive plans at emergence, 2008 operating earnings include an additional $3 million of non-cash expenses consisting of $2 million additional depreciation and amortization expense and stock compensation expense of $1 million. In addition, reported profitability in all segments was adversely affected by charges resulting from the step-up in basis of the company's inventory in accordance with fresh start accounting in the aggregate amount of $25 million. As of March 31, 2008, the Successor company had total assets of $4.7 billion, total liabilities of $3.7 billion and total stockholders' equity of $1.0 billion. A full-text copy of the company's first quarter results is available for free at http://ResearchArchives.com/t/s?2be4 About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB: SOLUQ) (NYSE: SOA-WI) -- http://www.solutia.com/-- and its subsidiaries, manufactures and sells chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Lead Case No. 03- 17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. Solutia emerged from chapter 11 protection Feb. 28, 2008. (Solutia Bankruptcy News, Issue No. 125; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on March 4, 2008, Standard & Poor's Ratings Services raised its corporate credit rating on Solutia Inc. to 'B+' from 'D', following the company's emergence from bankruptcy on Feb. 28, 2008, and the implementation of its financing plan. The outlook is stable. S&P also affirmed its 'B+' rating and '3' recovery rating on Solutia's proposed senior secured term loan. In addition, S&P assigned its 'B-' rating to Solutia's $400 million unsecured bridge loan facility. S&P also withdrew its 'B-' rating on the proposed $400 million unsecured notes, which have been replaced by the bridge facility in Solutia's capital structure. STANDARD PACIFIC: Barclays Global et al. Declares 10.87% Stake -------------------------------------------------------------- Barclays Global Investors, NA, Barclays Global Fund Advisors, and Barclays Global Investors, Ltd., beneficially own an aggregate of 7,925,897 shares or 10.87% interest in Standard Pacific Corp. common stock. Barclays Global Investors, NA, owns 1,617,516 shares or 2.22% in Standard Pacific. Barclays Global Fund Advisors owns 6,241,775 shares or 8.56% interest in the company. Barclays Global Investors Ltd. owns 66,606 shares or 0.09% in the company. Headquartered in Irvine, California, Standard Pacific Corp. (NYSE:SPF) -- http://www.standardpacifichomes.com/-- operates in many of the largest housing markets in the country with operations in major metropolitan areas in California, Florida, Arizona, the Carolinas, Texas, Colorado and Nevada. The company also provides mortgage financing and title services to its homebuyers through its subsidiaries and joint ventures, Standard Pacific Mortgage Inc., SPH Home Mortgage, Universal Land Title of South Florida and SPH Title. * * * As reported in Troubled Company Reporter on May 14, 2008, Standard Pacific Corp. obtained preliminary consent from its bank group, subject to the group's receipt, review and execution of final documentation, to further extend the waiver until Aug. 14, 2008, and to expand the waiver's scope. The company related that it was not in compliance with the consolidated tangible net worth and leverage covenants contained in its revolving credit facility, $100 million Term Loan A and $225 million Term Loan B as of March 31, 2008. As reported in the Troubled company Reporter on Feb. 19, 2008, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Standard Pacific Corp. to 'B+' from 'BB-'. Additionally, S&P lowered its rating on the company's senior subordinated debt to 'B-' from 'B'. The outlook remains negative. STANDARD PACIFIC: Elevated Debt Prompts Moody's to Chip Ratings --------------------------------------------------------------- Moody's lowered the ratings of Standard Pacific Corp., including its corporate family rating to B2 from B1, its senior unsecured notes to B2 from B1, and its senior subordinated notes to Caa1 from B3. The SGL-3 liquidity assessment was affirmed. The ratings outlook is negative. The downgrades were prompted by the company's elevated debt leverage and lingering uncertainty over the ultimate resolution with its banking group of its covenant breaches. Moody's anticipates that any resolution would likely result, at a minimum, in a downsizing and securing of the revolver and increased interest expense, thereby reducing financial flexibility going forward. In addition, the company's relatively large joint venture exposure, while reduced, remains a continuing risk. The ratings acknowledge that the company continues to generate healthy positive cash flow, thus enabling it to augment liquidity, meet debt service requirements for 2008, and to prefund some of the 2009 debt maturities. The negative outlook reflects Moody's expectation that Standard Pacific's credit metrics may continue to erode as homebuilding industry conditions are expected to remain challenging throughout 2008, with any recovery in 2009 likely to be sluggish, thus prolonging underperformance until early in the next decade. Going forward, the ratings outlook could stabilize if the company were to continue to grow its free cash flow and use the cash to build additional liquidity, pay down maturing debt and reduce its joint venture exposure. The ratings could come under additional pressure if the company were to have difficulty obtaining permanent covenant relief; if cash flow on a trailing twelve month basis were to turn negative; or if projected debt leverage were to exceed 70% on a sustained basis. These rating actions were taken: -- Corporate family rating downgraded to B2 from B1; -- Probability of default rating downgraded to B2 from B1; -- Senior unsecured debt ratings downgraded to B2 (LGD4, 53%) from B1 (LGD3, 48%). -- Senior subordinated debt ratings downgraded to Caa1 (LGD6, 93%) from B3 (LGD6, 94%); -- SGL-3 assessment affirmed. Headquartered in Irvine, California and begun in 1966, Standard Pacific Corp. constructs and sells single-family attached and detached homes, with homebuilding operations located in California, Texas, Arizona, Colorado, Florida, North and South Carolina, and Nevada. Homebuilding revenues and net income for 2007 were approximately $2.6 billion and $(767) million, respectively. TEKNI-PLEX INC: March 28 Balance Sheet Upside-Down by $427 Million ------------------------------------------------------------------ Tekni-Plex Inc.'s consolidated balance sheet at March 28, 2008, showed $620.1 million in total assets and $1.05 billion in total liabilities, resulting in a $427.0 million total stockholders' deficit. At March 28, 2008, the company's consolidated balance sheet also showed strained liquidity with $273.8 million in total current assets available to pay $940.2 million in total current liabilities. The company reported a net loss of $27.4 million for the third quarter ended March 28, 2008, compared with a net loss of $12.2 million in the corresponding period ended March 30, 2007. Net sales decreased to $204.0 million in the third quarter of fiscal 2008 from $211.7 million the same period last year, representing a 3.6% decrease. Net sales in the company's Packaging segment grew 6.5% to $115.5 million in the most recent quarter from $108.4 million in the comparable period of fiscal 2007 primarily due to higher prices for its packaging products. Net sales in the company's Tubing Products segment decreased 19.5% to $49.2 million in fiscal 2008 from $61.2 million in fiscal 2007, due to a 29.0% decrease in sales volume measured in pounds, reflecting both generally soft market demand for the company's garden hose products, as well as a reduction in the company's market share. Other net sales decreased by 6.7% to $39.3 million in fiscal 2008 compared to $42.1 million in the previous year due to a 17.4% decline in volume. The company generated an operating profit of $1.8 million in fiscal 2008 compared with $17.2 million in fiscal 2007. Operating profit declined to 0.9% of net sales in the most recent period compared with 8.1% of net sales in the comparable period of last year. Interest expense decreased to $26.6 million in fiscal 2008 from $27.8 million in fiscal 2007. Loss before income taxes was $26.0 million for fiscal 2008 compared to loss of $10.3 million for fiscal 2007. Income tax expense was $1.4 million for fiscal 2008 compared to $1.8 million for fiscal 2007. Restructuring Agreement The company disclosed that as a result of weaker than anticipated operating results and increased raw material prices, Tekni-Plex has recently been generating less cash flow than it needs to meet its debt service obligations. On Dec. 17, 2007, Tekni-Plex did not make the $20.1 million interest payment due that day on its 12 3/4% Senior Subordinated Notes due 2010. On April 11, 2008, Tekni-Plex entered into a restructuring agreement pursuant to which the company and its domestic subsidiaries, its lenders and noteholders, agreed to negotiate, document and consummate certain transactions to restructure the company. The terms of the restructuring include, among other things, that (i) the senior subordinated notes held by noteholders consenting to the restructuring will be exchanged for 100.0% of the common stock in reorganized Tekni-Plex (the new common stock), subject to dilution by a management incentive plan and exercise of the warrants to purchase new common stock, (ii) the company's Series A preferred stock will be exchanged or redeemed for warrants to purchase new common stock and (iii) the company's existing common stock will be cancelled, redeemed or purchased, and each holder thereof will receive its pro rata share of a cash distribution of $250,000. Upon the consummation of the restructuring, the company's amended and restated credit agreement dated Feb. 14, 2008, among the company, the lenders and issuers party thereto, Citicorp USA, Inc., as Administrative Agent, and General Electric Capital Corporation, as Syndication Agent, will provide for an increase in the maximum availability under that credit facility from $95.0 million to $110.0 million. The obligation of each party to the restructuring agreement to consummate the restructuring expires on June 2, 2008, as last extended. Possible Bankruptcy The company disclosed that if it is unable to consummate the restructuring, or unable timely to consummate, the restructuring as set out above or otherwise prevent the aforementioned events of default, it would likely need to seek to restructure under Chapter 11 of the U.S. Bankruptcy Code. Principal Sources of Liquidity Cash generated from operations plus funds available under the company's asset backed facility are Tekni-Plex's principal sources of liquidity to help it to meet its debt service needs, operating needs, and capital expenditures. As of May 8, 2008, the company had an outstanding balance of $55.0 million under its $95.0 million asset backed credit facility. Availability under this facility is reduced by $10.9 million of letters of credit primarily related to the company's workmen's compensation insurance programs. Full-text copies of the company's consolidated financial statements for the quarter ended March 28, 2008, are available for free at http://researcharchives.com/t/s?2bdc About Tekni-Plex Inc. Headquartered in Coppell, Texas, Tekni-Plex Inc. -- http://www.tekni-plex.com/-- manufactures packaging, packaging products and materials as well as tubing products. The company primarily serves the food, healthcare and consumer markets. It has built leadership positions in its core markets, and focuses on vertically integrated production of highly specialized products. Tekni-Plex has operations in the United States, Europe, China, Argentina and Canada. * * * As reported in the Troubled Company Reporter on Dec. 27, 2007, Moody's Investors Service downgraded the Corporate Family Rating of Tekni-Plex Inc. to Caa3 from Caa1. THERMAL NORTH: S&P Withdraws 'BB-' Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'BB-' corporate credit rating and 'BB' rating on all of Thermal North America Inc.'s secured debt. There is currently no rated debt at the company. TRIGEM COMPUTER: US Court Dismisses Claims Against Toshiba ---------------------------------------------------------- Judge Thomas B. Donovan of the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, dismissed all claims asserted by Il-Hwan Park, foreign representative for TriGem Computer, Inc., against Toshiba Corporation in the Adversary Proceeding. Judge Donovan had approved a settlement agreement between the Foreign Representative and Toshiba on April 11, 2008. Pursuant to the Settlement, after the order approving the Settlement becomes a final order, TriGem will dismiss with prejudice all claims against Toshiba, and each party will bear its own costs. The dismissal of the Toshiba claims will not affect the enforcement of the terms of the Settlement Agreement against Toshiba, and the Court will retain jurisdiction to enforce the terms of the Settlement. The Foreign Representative commenced the Adversary Proceeding against Toshiba, David Packard and John E. Hock to seek permanent injunction of the continuation of a prepetition lawsuit initiated by Toshiba and Messrs. Packard and Hock against TriGem. The prepetition lawsuit, filed in the U.S. District Court for the Central District of California, accused TriGem of allegedly infringing several of Toshiba's patents. Status Report on Packard & Hock Issue In a joint status report, the Foreign Representative and Thomas H. Prouty, Esq., at Ross, Dixon & Bell LLP, in Irvine, California, counsel for Messrs. Packard and Hock, informed the Court that all parties to the Adversary Proceeding have been served with pleadings. All parties have filed and served answers to the complaint and counter-complaints. The Foreign Representative and Mr. Prouty also said that they have met and conferred in compliance with Local Rule 7026-1. The parties were able to tackle and preliminarily agree on some issues. However, not all motions addressed to the pleading in the Adversary Proceeding have been resolved, the parties noted. According to Mr. Prouty, Messrs. Packard and Hock have undertaken to deliver to the Foreign Representative an initial draft of a settlement agreement no later than May 19, 2008. The Foreign Representative and Mr. Prouty further said that they have not requested the Court to schedule any pre-trial conference because they believe that the Adversary Proceeding will either be settled through negotiations or be resolved by summary judgment of the Court. If the settlement fails and the Foreign Representative's summary judgment motion is denied, the parties said they will confer whether they will resolve their disputes through a trial. Charles D. Axelrod, Esq., at Stutman Treister & Glatt, PC, in Los Angeles, California, serves as the Foreign Representative's counsel. About TriGem Computer Headquartered in Ansan City, Kyunggi-Do, Korea, TriGem Computer Inc. -- http://www.trigem.com/-- manufactures desktop PCs, notebook PCs, LCD monitors, printers, scanners, other computer peripherals, and PIDs and supplies over four million PCs a year to clients all over the world. Il-Hwan Park, the Foreign Representative, filed a chapter 15 petition on Nov. 3, 2005 (Bankr. C.D. Calif. Case No. 05-50052). Charles D. Axelrod, Esq., at Stutman Treister & Glatt, P.C., represents the Foreign Representative in the United States. TriGem America Corporation, an affiliate of the Debtor, filed for chapter 11 protection on June 3, 2005 (Bankr. C.D. Calif. Case No. 05-13972). TriGem Texas, Inc., another affiliate of the Debtor, also filed for chapter 11 protection on June 8, 2005 (Bankr. C.D. Calif. Case No. 05-14047). On Sept. 13, 2007, TriGem filed Draft Plan Amendments in Korea and on September 20 filed a Final Plan Amendment. The Korean Court confirmed Trigem's Amended Plan on Oct. 4, 2007. (TriGem Bankruptcy News, Issue No. 16 Bankruptcy Creditors' Service, Inc., 215/945-7000). TRONOX WORLDWIDE: Fitch Downgrades Senior Unsec. Notes to 'B/RR4' ----------------------------------------------------------------- Fitch Ratings has downgraded Tronox Worldwide LLC's (Tronox) $350 million senior unsecured notes due 2012 to 'B/RR4' from 'B+/RR3'. The Rating Outlook is revised to Negative from Stable. In addition, Fitch has affirmed Tronox's Issuer Default Rating (IDR) and its ratings on the senior secured bank facilities. Fitch rates Tronox as: -- IDR at 'B'; -- $250 million senior secured bank revolver at 'BB/RR1'; -- $125 million (at March 31, 2008) senior secured term loan at 'BB'/RR1'; -- $350 million senior unsecured at 'B'/RR4'. The Rating Outlook is Negative. Tronox Worldwide LLC and Tronox Finance Corp. are co-issuers of the senior unsecured notes. The downgrade of the senior unsecured notes reflects Fitch's view that environmental claims would reduce the recovery for senior unsecured creditors in a distressed scenario. The ratings reflect Tronox's market position (12% of world market, third largest producer), geographic reach, and strong customer retention. Growth rate projections for titanium dioxide (TiO2) are modest and tend to track gross domestic product, and competition tends to be on price. In recent periods, margins have been squeezed for TiO2 producers and relief is not expected in the current year. Tronox's availability under the $250 million revolver is constrained by the leverage covenant at March 31, 2008, $92 million was available. The maximum leverage covenant level increases on June 30 but availability will depend on inventory conversion and latest 12 months (LTM) earnings. Debt-to-adjusted EBITDA was 3.43 times (x) at Dec. 31, 2007 and the company has obtained covenant relief from its lenders. First quarter 2008 figures show a decline in earnings from the first quarter of 2007 and $43 million in borrowings under the revolver resulting in Debt-to-LTM adjusted EBITDA of 3.78x. Management has scaled back its capital budget from $65 million to $51 million and intensified its cost cutting efforts. Environmental spend budget has been reduced by an additional $10 million and SG&A costs are to be further reduced by $5 million. Fitch expects Tronox to be marginally cash flow positive during the next 12-18 months with the expectation of a continuation of anemic growth and profitability. Tronox is one of the leading global producers and marketers of titanium dioxide. In addition, Tronox produces electrolytic manganese dioxide, sodium chlorate and boron-based and other specialty chemicals. The company generated Operating EBITDA of $106.2 million on $1.4 billion in sales in 2007. Tronox operates five titanium dioxide facilities in North America, Europe and Australia: -- Hamilton, Mississippi, U.S. -- Savannah, Georgia, U.S. -- Botlek, Netherlands -- Uerdingen, Germany -- Kwinana, Australia TROPICANA ENTERTAINMENT: Gets $100MM Funding Offer from Onex Corp. ------------------------------------------------------------------ Onex Corp. is purportedly interested in extending a $100 million financing for Tropicana Entertainment LLC's operations, The Wall Street Journal reported. Canada-based Onex made an appearance in the first courtroom hearing of the Tropicana bankruptcy case in the U.S. Bankruptcy Court for the District of Delaware, according to the Journal's Peg Brickley. Onex attorney Bruce Bennett told the Court that Tropicana ignored Onex's expression of interest in providing financing to the troubled casino company. Tropicana admitted receipt of several funding offers, but noted that it favored a loan commitment of up to $67 million from Silver Point Capital LP, the Journal related. Tropicana filed for bankruptcy on May 5, 2008. The company is currently pursuing a restructuring of its business as a going concern. Citing the current state of the real estate market, Tropicana President Scott Butera told the Journal, "[t]his is the wrong time in the economy to be a seller." U.S. Bankruptcy Judge Carey for the District of Delaware has authorized Tropicana to utilize, on an interim basis, up to $20,000,000 from Silver Point. The Court, however, has urged the company to hear out Onex's offer before it seeks for final approval of the Silver Point Loan, the Journal related. Organizational Meeting The U.S. Trustee in the Debtors' Chapter 11 cases held an organization meeting on May 14, 2008, at The Double Tree Hotel in Wilmington, Delaware. The meeting was held for the purpose of forming an official committee of unsecured creditors in the Chapter 11 cases of Tropicana Entertainment, LLC, and its 33 debtor affiliates. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada and Atlantic City, New Jersey. Tropicana Entertainment LLC filed for Chapter 11 protection on May 5, 2008, (Bankr. D. Del. Case No. 08-10856) Its debtor- affiliates filed for separate Chapter 11 petitions but with no case numbers assigned yet. Kirkland & Ellis LLP and Mark D. Collins, Esq. at Richards Layton & Finger represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' consolidated financial condition as of Feb. 29, 2008, showed $2,845,847,596 in total assets and $2,429,890,642 in total debts. (Tropicana Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TROPICANA ENTERTAINMENT: Taps Richards Layton as Bankr. Co-Counsel ------------------------------------------------------------------ Tropicana Entertainment LLC and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to employ Richards Layton & Finger P.A. as their bankruptcy co-counsel, nunc pro tunc to May 5, 2008. The firm has extensive experience and knowledge in the field of debtors' and creditors' rights, business reorganizations and liquidations under Chapter 11, William J. Yung, III, Tropicana Entertainment's chief executive officer, tells the Court. Richards Layton will: (a) advise the Debtors of their rights, powers and duties as debtors and debtors-in-possession in the continued operation of their business and management of their properties; (b) take all necessary action to protect and preserve the Debtors' estates; (c) prepare, on behalf of the Debtors, all necessary motions, applications, answers, orders, reports and papers in connection with the administration of the Debtors' estates; (d) pursue approval of confirmation of a plan of reorganization and approval of the corresponding solicitation procedures and disclosure statement; and (e) perform all other necessary legal services in connection with the Debtors' Chapter 11 cases. Mr. Yung informs the Court that Richards Layton has discussed with Kirkland & Ellis, the Debtors' proposed counsel, a division of responsibilities regarding representation of the Debtors; and has made every effort to avoid or minimize duplication of services in the Debtors' Chapter 11 cases. The Debtors will pay the firm its customary hourly rates in effect from time to time. The current standard hourly rates of the Richard Layton principal professionals and paraprofessionals designated to represent the Debtors are: Professional Hourly Rate ------------ ----------- Mark D. Collins $560 Daniel J. DeFranceschi $500 Paul N. Heath $400 Lee E. Kaufman $235 Ann Jerominski $175 The Debtors paid the firm a total retainer of $200,000 in connection with and in contemplation of their Chapter 11 filings. The Debtors propose that the retainer amount paid to Richards Layton and not expended for services prior to bankruptcy filing and disbursements be treated as an evergreen retainer to be held by the firm as security throughout the Debtors' Chapter 11 cases until the firm's fees and expenses are awarded by final order. Mark D. Collins, Esq., a director at Richards Layton, tells the Court that his firm has in the past represented, represents, in matters unrelated to the Debtors' Chapter 11 cases, certain potential parties in interest, including: -- Tropicana Entertainment Holdings, LLC, -- Tropicana Casinos and Resorts, Inc., and affiliates, -- certain affiliates of Tahoe Horizon LLC, -- Bank of America and certain affiliates, -- Barclays Bank PLC and certain affiliates, -- Citibank, N.A., -- Deutsche Bank and certain affiliates, -- Lazard Freres & Co., LLC, -- U.S. Bank National Association, and -- certain affiliates of Bally Gaming Systems. The firm also represents Wilmington Trust Company in a number of corporate, business trust and general litigation matters that are wholly unrelated to the Debtors' Chapter 11 cases, Mr. Collins discloses. Richards Layton will not represent WTC in connection with debentures or in any other respect in the Debtors' bankruptcy cases, he assures the Court. Richards Layton does not hold or represent any interest adverse to the Debtors' estates, Mr. Collins asserts. The firm is a disinterested person, as the term is defined in Section 101(14) of the Bankruptcy Code, he maintains. About Tropicana Entertainment Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC -- http://www.tropicanacasinos.com/-- is an indirect subsidiary of Tropicana Casinos and Resorts. The company is one of the largest privately-held gaming entertainment providers in the United States. Tropicana Entertainment owns eleven casino properties in eight distinct gaming markets with premier properties in Las Vegas, Nevada and Atlantic City, New Jersey. Tropicana Entertainment LLC filed for Chapter 11 protection on May 5, 2008, (Bankr. D. Del. Case No. 08-10856) Its debtor- affiliates filed for separate Chapter 11 petitions but with no case numbers assigned yet. Kirkland & Ellis LLP and Mark D. Collins, Esq. at Richards Layton & Finger represent the Debtors in their restructuring efforts. Their financial advisor is Lazard Ltd. Their notice, claims, and balloting agent is Kurtzman Carson Consultants LLC. The Debtors' consolidated financial condition as of Feb. 29, 2008, showed $2,845,847,596 in total assets and $2,429,890,642 in total debts. (Tropicana Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) TRUMP ENTERTAINMENT: Posts $18.6 Million Net Loss in 2008 1st Qtr. ------------------------------------------------------------------ Trump Entertainment Resorts, Inc. reported on Thursday its results for the three months ended March 31, 2008, and other related news. The company reported a net loss of $18.6 million for the first quarter ended March 31, 2008, compared with a net loss of $8.1 million in the corresponding peiord last year. In making the announcement, Mark Juliano, chief executive officer of the company, said, "Our operating results for the first quarter of 2008 show signs of progress being made through our operating plan, while also pointing to the remaining areas where we must improve our business. "While our results are difficult to compare to 2007 due to the changing competitive landscape in Pennsylvania last year, I believe that we are well on our way towards implementing most of the necessary changes to our business as we prepare to open the new Chairman Tower at the Taj Mahal in September. Furthermore, we are also implementing new strategies to contain additional costs, attract new customers and expand our market share. "January results constituted, by far, the most significant portion of the unfavorable year-over-year comparison as a result of the late-January 2007 opening of a new slot parlor in Pennsylvania. Therefore, the effects of the full array of competition available in Pennsylvania were not reflected in our comparisons until February 2008. In February and March, our gaming revenues were generally in line with our expectations." Net revenues were impacted by increased competition from new gaming facilities in Pennsylvania and New York, the partial smoking ban in Atlantic City effective on April 15, 2007, and the general weakening of the economy. Primarily as a result of these items, net revenues for the quarter ended March 31, 2008 decreased $6.7 million, or 2.9%, principally due to a decrease in gaming revenue of $6.1 million, or 2.5% from first quarter 2007 levels. Income from operations for the quarter ended March 31, 2008, decreased $12.1 million to $7.5 million and EBITDA decreased $10.3 million to $24.6 million from first quarter 2007 levels. The company also disclosed that revenue management initiatives continued to produce positive results as, for the quarter, hotel occupancy improved to 86.0% from 82.0%, revenue per available room (RevPAR) increased 7.6% to $75.77, and cash room revenue increased 6.9% to $7.5 million. Cost savings initiatives continued to produce positive results at the corporate level, while property payroll and related costs increased $600,000 due to regular increases in health benefits and, to a lesser extent, annual pay raises. The company believes that the majority of the available areas for payroll and benefit cost savings have previously been identified and executed, and resulted in $15.0 million in annualized savings during 2007. The company said that the new Taj Mahal hotel tower, The Chairman Tower, remains on schedule and budget. The $255.0 million project is expected to begin a phased opening by Labor Day 2008, and be completed by the conclusion of the year. The company said it also plans to re-open the East Tower casino at the Plaza in June, where there will be 12 electronic poker games, the first in the Atlantic City market, and 11 blackjack tables, both offering a new product for low-limit table game players at limited cost. Corporate & Other Expenses Corporate costs decreased $1.1 million for the quarter, primarily due to lower payroll and related costs, as well as decreased consulting fees and stock-based compensation. These items were partially offset by an increase in legal fees. Capital Structure The company reported that as of March 31, 2008, it had cash of $125.6 million excluding $9.7 million of cash restricted in use primarily to fund construction of the new hotel tower at the Trump Taj Mahal. Total debt had increased by $3.7 million since Dec. 31, 2007, to $1.6 billion at March 31, 2008. Capital expenditures for the quarter ended March 31, 2008, were approximately $51.0 million, consisting of $5.0 million maintenance capital, $7.0 million renovation capital and $39.0 million for the Chairman Tower at Trump Taj Mahal. Capitalized interest during the first quarter of 2008 was $2.4 million compared to $800,000 during the first quarter of 2007. Balance Sheet At March 31, 2008, the company's consolidated balance sheet showed $2.2 billion in total assets, $1.9 billion in total liabilities, $59.2 million in minority interest, and $208.3 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?2be9 About Trump Entertainment Trump Entertainment Resorts Inc. (Nasdaq: TRMP) -- http://www.trumpcasinos/-- owns and operates three casino resort properties: Trump Taj Mahal Casino Resort and Trump Plaza Hotel and Casino, located on the Boardwalk in Atlantic City, New Jersey, and Trump Marina Hotel Casino, located in Atlantic City's Marina District. * * * Trump Entertainment Resorts Inc.'s 8-1/2% Senior Secured Notes due 2015 holds Moody's Investors Service's Caa1 rating and Standard & Poor's Ratings Service's B rating. UAP HOLDING: Completes Acquisition Agreement with Agrium Inc. ------------------------------------------------------------- Agrium Inc. has completed its acquisition of UAP Holding Corp. at a price of $39.00 per share in cash. The tender offer expired at 12:00 midnight, New York City time, on May 2, 2008. Pursuant to the merger agreement, dated Dec. 2, 2007, between Agrium, UAP and Utah Acquisition Co., an indirect subsidiary of Agrium, Utah Acquisition has been merged with and into UAP, with UAP continuing as the surviving corporation and an indirect subsidiary of Agrium. The merger of UAP with Utah Acquisition follows the completion of the tender offer by Agrium U.S. Inc., an indirect subsidiary of Agrium, for all of the issued and outstanding shares of common stock of UAP. As a result of the merger, each share of common stock of UAP issued and outstanding immediately prior to the effective time of the merger has been converted into the right to receive the same $39.00 in cash per share, without interest and less any required withholding taxes, that was paid in the tender offer. With the completion of the merger, UAP's shares of common stock will cease to be traded on the NASDAQ Global Select Market. About Agrium Inc. Headquartered in Alberta, Canada, Agrium Inc. (TSX and NYSE: AGU) -- http://www.agrium.com/-- is a retail supplier of agricultural products and services in both North and South America and a producer and marketer of agricultural nutrients and industrial products. Agrium produces and markets three primary groups of nutrients: nitrogen, phosphate and potash well as controlled release fertilizers and micronutrients. Agrium's strategy is to grow through incremental expansion of its existing operations and acquisitions well as the development, commercialization and marketing of new products and international opportunities. About UAP Headquartered in Greeley, Colorado, UAP Holding Corp. (NASDAQ:UAPH) -- http://www.uap.com/-- is the holding company of UAP Inc., an independent distributor of agricultural and non-crop products in the United States and Canada. UAP Inc. markets a comprehensive line of products, including chemicals, fertilizer, and seed to farmers, commercial growers, and regional dealers. UAP also provides a broad array of value added services, including crop management, biotechnology advisory services, custom fertilizer blending, seed treatment, inventory management, and custom applications of crop inputs. UAP Products maintains a comprehensive network of approximately 370 distribution and storage facilities and three formulation plants, strategically located in major crop-producing areas throughout the United States and Canada. UAP HOLDING: Completed Agrium Deal Cues S&P to Lift Rtng. from BB- ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its long-term corporate credit rating on UAP Holding Corp. and United Agri Products Inc. to 'BBB' from 'BB-' following the completion of Agrium Inc.'s (BBB/Stable/--) acquisition of UAP and its subsidiaries on May 7, 2008. The outlook is stable. The ratings are removed from CreditWatch, where they were placed with positive implications on Dec. 3, 2007. The ratings on UAP and United Agri Products are subsequently withdrawn as the $997.8 million senior secured credit facilities have been fully repaid. WARNACO GROUP: S&P Puts 'BB' Corp. Credit Rating Under Pos. Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' corporate credit rating on Warnaco Group Inc. on CreditWatch with positive implications. This means that the ratings could be raised or affirmed following the resolution of the CreditWatch. Also placed on CreditWatch positive were the 'BBB-' senior secured and 'BB' senior unsecured ratings on Warnaco's wholly owned subsidiary Warnaco Inc. The New York City-based apparel company had about $364 million in debt outstanding at April 5, 2008. "The CreditWatch placement follows the company's earnings announcement for the first fiscal quarter ended April 5, 2008, that indicated a continuation of positive operating momentum for the past several fiscal quarters," said Standard & Poor's credit analyst Susan Ding. For the quarter, revenues rose 21% over the prior-year period, as a result of gains in all of the company's business segments, especially in its worldwide Calvin Klein international division. Correspondingly, the company's gross and operating margins increased by over 230 basis points, as a result of continued benefits from its sourcing and cost saving initiatives. Warnaco's sustained improvement in operating performance has enabled the company to reduce leverage to 2.1x for the fiscal year ended December 2007, from 3.1x a year ago, and steadily improve credit measures. Standard & Poor's will review the company's financial and operating strategies in order to resolve the CreditWatch listing. WARNEX INC: Reports Progress in Restructuring C$11.3M Debentures ---------------------------------------------------------------- Warnex Inc. provided details as to the implementation of an agreement in principle it entered with holders of C$11,345,000 of its outstanding debentures in order to modify the terms and conditions of such debentures. Outstanding Debentures The outstanding debentures are held by five different lenders as: (1) SGF Soquia Inc. holds an aggregate of C$3 million of 12% debentures maturing on July 9, 2008 which were convertible into common shares in the share capital of Warnex on these basis: (i) for the period from July 10, 2003 to December 31, 2004, at a price of $1.75 per Common Share; (ii) for the period from January 1, 2005 to December 31, 2005, at a price of $2.00 per Common Share; (iii) for the period from January 1, 2006 to December 31, 2006, at a price of $4.00 per Common Share; and (iv) for the period from January 1, 2007 to December 31, 2007, at a price of $6.00 per Common Share. (2) SIPAR Inc. holds a C$1.5 million 12% non-convertible debenture maturing on June 2, 2008; (3) Midsummer Investment, Ltd. holds a US$3 million 7% debenture maturing on June 25, 2008 which is convertible into Common Shares at a price of $0.75 per Common Share; (4) Islandia, L.P. holds a USD$1 million 7% debenture maturing on June 25, 2008 which is convertible into Common Shares at a price of $0.75 per Common Share; (5) Crestview Capital Master, LLC holds a USD$1 million 7% debenture maturing on June 25, 2008 which is convertible into Common Shares at a price of $0.75 per Common Share. Outstanding Warrants In addition, the following Lenders also hold these warrants to purchase Common Shares: (1) Sipar holds warrants to purchase an aggregate of 2,000,000 Common Shares at a price of C$0.75 per share at any time on or before October 24, 2011; (2) Midsummer holds warrants to purchase an aggregate of 1,178,237 Common Shares at a price of C$1.17 per share at any time on or before June 25, 2009. (3) Islandia holds warrants to purchase an aggregate of 392,746 Common Shares at a price of C$1.17 per share at any time on or before June 25, 2009. (4) Crestview holds warrants to purchase an aggregate of 392,746 Common Shares at a price of C$1.17 per share at any time on or before June 25, 2009. Amendments Under the terms of the debt restructuring, Warnex and the Lenders have agreed that: -- As regards the SGF Debentures, (a) C$1,000,000 in principal will be converted into 6,666,666 Common Shares at a price of CDN$0.15 per share, (b) C$500,000 in principal will be reimbursed, and (c) the terms of the SGF Debenture in respect of the remaining C$1,500,000 in principal will be amended such that: (i) the conversion price will be reduced to be at prices of C$0.50 and C$0.75, respectively, for each tranche of C$750,000 and (ii) the maturity date will be extended to July 9, 2011. -- As regards the Sipar Debenture, (a) C$500,000 in principal will be converted into 3,333,333 Common Shares at a price of C$0.15 per share, (b) C$500,000 in principal will be reimbursed, and (c) the terms of the Sipar Debenture in respect of the remaining C$500,000 in principal will be amended such that the maturity date will be extended to June 2, 2011. In addition, the Sipar Warrants will be amended in order to reduce their exercise price to C$0.25. -- As regards the Midsummer Debenture, its terms will be amended such that: (i) the currency exchange rate will be established at the time of payment, (ii) the feature permitting the payment of interest through the issuance of Common Shares will be removed, (iii) the conversion price will be reduced to be at prices of C$0.15, C$0.20, C$0.25, C$0.50 and C$0.75, respectively, for each tranche of US$600,000, (iv) the interest rate will be increased to 12%, and (v) the maturity date will be extended to June 25, 2011. In addition, the Midsummer Warrants will be amended in order to reduce their exercise price to C$0.25 and extend their expiry date to June 25, 2011. -- As regards the Islandia Debenture, its terms will be amended such that: (i) the currency exchange rate will be established at the time of payment, (ii) the feature permitting the payment of interest through the issuance of Common Shares will be removed, (iii) the conversion price will be reduced to be at prices of C$0.15, C$0.20, C$0.25, C$0.50 and C$0.75, respectively, for each tranche of US$200,000, (iv) the interest rate will be increased to 12%, and (v) the maturity date will be extended to June 25, 2011. In addition, the Islandia Warrants will be amended in order to reduce their exercise price to CDN$0.25 and extend their expiry date to June 25, 2011. -- As regards the Crestview Debenture, (a) USD$333,334 in principal will be converted into Common Shares at a price of C$0.15 per share, using the currency exchange rate prevailing at the time of conversion, (b) USD$333,333 in principal will be reimbursed, and (c) the terms of the Crestview Debenture in respect of the remaining USD$333,333 in principal will be amended such that: (i) the currency exchange rate will be established at the time of payment, (ii) the convertibility feature will be removed, (iii) the interest rate will be increased to 12% and (iv) the maturity date will be extended to June 25, 2011. In addition, the Crestview Warrants will be amended in order to reduce their exercise price to CDN$0.25. Pursuant to the debt restructuring, approximately 12,243,313 Common Shares will be issued to the Lenders at closing, representing approximately 23.56% of the number of Common Shares issued and outstanding prior giving effect to such issuance, and approximately 21,663,729 additional Common Shares may be issued to the Lenders following the closing upon the conversion of debentures or the exercise of warrants, representing, along with the Common Shares to be issued at Closing, approximately 65.24% of the number of issued and outstanding Common Shares prior to giving effect to all such issuances. The Debt Restructuring will not cause a change of control of Warnex. Except for SGF, none of the Lenders will hold more than 10% of the number of issued and outstanding Common Shares after giving effect to all of the issuances described in the preceding paragraph. In addition to the 9,321,428 Common Shares that it currently holds, SGF may be issued an additional 9,166,666 Common Shares pursuant to the Debt Restructuring, representing, in total, approximately 35.57% of the number of issued and outstanding Common Shares prior to giving effect to all such issuances. About Warnex Inc. Headquartered in Laval, Quebec, Canada, Warnex Inc. -- http://www.warnex.ca-- is a life sciences company devoted to protecting public health by providing laboratory services to the pharmaceutical and healthcare sectors. Warnex's analytical services division provides pharmaceutical and biotechnology companies with a variety of quality control services, including traditional chemistry, chromatography, microbiology, method development and validation, and stability studies. Warnex's bioanalytical services division specializes in bioequivalence and bioavailability studies for clinical trials. Warnex's medical laboratories division focuses on genetic and biochemical testing for the healthcare industry and has extensive expertise in genetic testing for human identification, molecular diagnostics, and pharmacogenetics. WARNEX INC: Enters $4M Financing Agreement with Desjardins Group ---------------------------------------------------------------- Warnex Inc. signed an agreement with Desjardins Group, the largest financial cooperative in Canada, for financing and banking services. As part of the agreement, Warnex will receive financing facilities totaling $4 million, which include a revolving line of credit of $2 million and a term debt of $2 million. "We are excited to partner with Desjardins and are already impressed by their exceptional service," said Mark Busgang, President and CEO of Warnex. "This agreement is one of the elements of our strategy to restructure our balance sheet in 2008 to better position us for future growth opportunities. This is being done in conjunction with the previously announced restructuring of our debentures." The proceeds of this financing will be used to repay certain debentures and the existing term debt with National Bank of Canada, as well as for general working capital purposes. About Warnex Inc. Headquartered in Laval, Quebec, Canada, Warnex Inc. -- http://www.warnex.ca-- is a life sciences company devoted to protecting public health by providing laboratory services to the pharmaceutical and healthcare sectors. Warnex's analytical services division provides pharmaceutical and biotechnology companies with a variety of quality control services, including traditional chemistry, chromatography, microbiology, method development and validation, and stability studies. Warnex's bioanalytical services division specializes in bioequivalence and bioavailability studies for clinical trials. Warnex's medical laboratories division focuses on genetic and biochemical testing for the healthcare industry and has extensive expertise in genetic testing for human identification, molecular diagnostics, and pharmacogenetics. WESTMORELAND COAL: March 31 Balance Sheet Upside-Down by $177.8 MM ------------------------------------------------------------------ Westmoreland Coal Company reported on Friday financial results for the first quarter ended March 31, 2008. At March 31, 2008, the company's consolidated balance sheet showed $783.2 million in total assets and $961.0 million in total liabilities, resulting in a $177.8 million total stockholders' deficit. The company's consolidated balance sheet at March 31, 2008, also showed strained liquidity with $140.0 million in total current assets available to pay $224.6 million in total current liabilities. The company reported a net loss of $11.1 million on revenues of $131.6 million for the quarter ended March 31, 2008, compared to net income of $7.7 million on revenues of $125.1 million for the quarter ended March 31, 2007. Results during the first quarter of 2008 was negatively impacted by $7.7 million of interest expense attributable to the beneficial conversion feature of the company's new convertible notes, a $1.3 million loss on extinguishment of debt resulting from its ROVA debt refinancing, and a $600,000 restructuring charge. Results for the first quarter of 2007 was favorably impacted by a $5.8 million gain plus $600,000 of interest income from the Combined Benefit Fund settlement, a $5.6 million gain on the sale of a coal royalty interest, offset by $800,000 of expense from the Absaloka mining contract buyout. Operating income for the first quarter of 2008 was $2.3 million, compared to operating income for first quarter 2007 of $12.1 million. "We are pleased with the results of our first quarter, especially when you consider the significant positive events that affected the 2007 quarter," said Keith E. Alessi, Westmoreland director and chief executive officer. "On an apples-to-apples basis we saw an improvement in operations across the board. We are beginning to see the positive effects of our sharpened focus, standardization of operations, and reduced overhead as compared to our operations a year ago. "The charges associated with our financing activities were necessary in order to put us in a position of enhanced liquidity and financial flexibility. We hope to finalize a refinancing of our mining operations during the quarter ending June 30, 2008. If we are successful in doing so there will be some additional financing charges." Coal Segment Tons of coal sold increased by approximately 0.2 million tons in the first quarter of 2008 from the first quarter of 2007. First quarter 2008 coal revenues increased to $108.3 million, a 5.0% increase over the prior year period. This overall increase was due to an overall 3.0% increase in pricing as a result of contract renewals. Coal operations operating income was $8.0 million in 2008 compared to $8.4 million in 2007, as increases in revenues were offset by higher mining and fuel costs, as well as increases in depreciation and depletion over the prior year period. Power For the first quarter 2008 and 2007, the company's 230 MW Roanoke Valley power plant, or ROVA, produced 436,000 and 427,000 MW hours, respectively, and achieved average capacity factors of 95.0% and 94.0%, respectively. Power revenues in the first quarter of 2008 increased to $23.2 million, or an increase of approximately $1.3 million from the first quarter 2007, as a result of the increase in MW hours sold and price increases which resulted from changes in cost indices. Power operations operating income was $5.5 million in 2008 compared to $5.0 million in 2007. Heritage Costs Heritage costs in first quarter 2008 increased by $4.8 million from the first quarter of 2007, however, first quarter 2007 benefited from a $5.8 million settlement reached with the Combined Benefit Fund. Excluding the impact of this settlement, first quarter 2008 heritage costs decreased by $1.0 million from the first quarter of 2007, reflecting the impact of new black lung actuarial projections and favorable investment performance in the trust we established to pay our black lung expenses. Corporate Corporate selling and administrative expenses decreased by $900,000 in the first quarter of 2008 compared to the first quarter of 2007 as a result of reduced labor and other targeted cost reductions. The company also took a $600,000 restructuring charge during the first quarter 2008 as the company continued execution of its restructuring plan. Interest Expense and Loss on Extinguishment of Debt Interest expense was $13.6 million for the first quarter 2008 compared to $6.5 million in the first quarter 2007. The increase was driven by the $7.7 million of interest expense attributable to the issuance of the company's convertible notes with a beneficial conversion feature (reflecting a conversion price lower than the fair market value of the company's common stock at issuance). This increase was partially offset by reduced interest expense from lower debt levels. The company also recorded $1.3 million of loss on the extinguishment of debt associated with the ROVA debt refinancing during the first quarter 2008. Cash Flow from Operations Cash provided by operating activities was $14.4 million for the first quarter of 2008 compared to $19.3 million for the first quarter of 2007. First quarter 2007's operating cash flow benefited from $3.5 million in proceeds and interest income received on the Combined Benefit Fund settlement during the quarter. The company's 2008 operating cash flow benefited from improvements in both its power and mining operations, which was offset in part by increases in accounts receivable due to the timing of first quarter invoicing. Liquidity The company said that in the first quarter of 2008, it took two significant steps to improve its liquidity. On March 4, 2008, the company completed the sale of $15.0 million in senior secured convertible notes to an existing shareholder. Additionally, on March 17, 2008, the company's Westmoreland Partners subsidiary completed a refinancing of ROVA's debt with Prudential. The refinancing paid off all outstanding bank borrowings, bond borrowings, and the ROVA acquisition loan and eliminated the need for the irrevocable letters of credit, which supported the bond borrowings. The company has also engaged a large bank to assist in refinancing the debt at Westmoreland Mining with the goal of better matching debt amortization with cash flow from the mines. The company said that it hopes to complete the refinancing of its mining debt during the second quarter of 2008. 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?2bda About Westmoreland Coal Headquartered in Colorado Springs, Colo., Westmoreland Coal Company (AMEX: WLB) -- http://www.westmoreland.com/-- is the oldest independent coal company in the United States. The company mines coal, which is used to produce electric power, and the company owns power-generating plants. The company's coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its current power operations include ownership and operation of the two-unit ROVA coal-fired power plant in North Carolina. WILSONS LEATHER: Gets Nasdaq Deficiency Notice for Noncompliance ---------------------------------------------------------------- Wilsons The Leather Experts Inc. received notification from The Nasdaq Stock Market stating that, for the last 30 consecutive trading days, the company's common stock has not maintained a minimum market value of publicly held shares of $5.0 million as required for continued inclusion by Marketplace Rule 4450(a)(2). In accordance with Marketplace Rule 4450(e)(1), the company was provided 90 calendar days, or until July 30, 2008, to regain compliance with the minimum market value requirement. To meet the minimum requirement, the market value of the company's publicly held shares must maintain a minimum market value of $5.0 million or greater for a minimum of ten consecutive trading days. If compliance with the Market Value Rule cannot be demonstrated by July 30, 2008, Nasdaq will provide written notification to the company that its securities will be delisted. At that time, the company will be permitted to appeal Nasdaq's determination to a Listing Qualifications Panel. The company intends to monitor the market value of its listed securities and consider available options if its common stock does not trade at a level likely to result in the company regaining compliance with the minimum market value of publicly held shares requirement by July 30, 2008. About Wilsons Leather Headquartered in Brooklyn Park, Minnesota, Wilsons The Leather Experts Inc. (NASDAQ:WLSN) -- http://www.wilsonsleather.com/-- is a specialty retailer of leather outerwear, accessories and apparel in the United States. As of May 3, 2008, Wilsons Leather operated 228 stores located in 39 states, including 100 mall stores, 114 outlet stores and 14 airport stores. The company reported a net loss of $77.5 million for the year ended Feb. 28, 2008, as compared to $33.1 million in 2006. * * * As reported in the Troubled Company Reporter on Feb. 18, 2008, Wilsons The Leather Experts Inc. would embark on a strategy aimed at reducing its mall store base, aggressive cost cutting initiatives, and the launch of a new accessories store concept. As part of this initiative, the company planned to close up to 160 mall locations that do not fit its go forward strategy. In this process, approximately 938 store-related positions will be affected. Wilsons Leather Outlet Division will not be affected by this new mall store initiative. The company will also eliminate 64 positions at its corporate headquarters, overseas offices and distribution center in Brooklyn Park, Minnesota. X-RITE INC: Sustainability Concerns Prompt Moody's to Junk Ratings ------------------------------------------------------------------ Moody's Investors Service lowered X-Rite, Inc.'s corporate family rating to Caa1 from B2. Moody's also lowered the rating on the company's first lien senior secured credit facilities to B3 from B1 and the rating on the second lien term loan to Caa3 from Caa1. All ratings remain under review for possible downgrade. As part of this action, Moody's also affirmed the company's SGL-4 speculative grade liquidity rating. The downgrade reflects Moody's concern over X-Rite's ability to execute on its OEM sales initiatives given that design wins have been slower than expected (which is partly due to a soft economy). The downgrade also reflects Moody's concern over the sustainability of X-Rite's capital structure in light of softening demand from its key OEM customers, weakening consumer economies in the U.S. and Europe that pressure the retail business unit as well as a generally uncertain macroeconomic environment and the ongoing integrations of Amazys and Pantone. Moody's notes that the company's cash conversion cycle has slowed over the past few years, although recognizing that this is partly a function of recent acquisition activity. Nevertheless, the company has recently taken steps to improve its working capital management, including extending its payable days with certain vendors. X-Rite was not in compliance with the covenants governing its first and second lien credit facilities as of the March 2008 quarter (specifically, the company violated the leverage covenant under the first lien credit facilities while it experienced a technical default under the second lien term loan). Additionally, X-Rite must address a $12.1 million obligation arising from Goldman Sachs Capital Markets' termination of the swap agreement with the company. The company has yet to secure a forbearance agreement, which requires majority approval of both first and second lien lenders. Given recent challenges, the company publicly announced that it has engaged RBC Capital Markets as its financial advisor. Moody's review will continue to focus on the status of X-Rite's negotiations with its first lien and second lien lenders, and Goldman Sachs Capital Markets, and its ability to secure a timely forbearance agreement and/or amendment. The review will also focus on the status of the Pantone and Amazys integrations as well as an assessment of the company's operating performance, the potential cost savings associated with its expanded cost reduction plan, business strategy, and liquidity. The affirmation of the SGL-4 speculative grade liquidity rating incorporates the recent covenant violations, the restricted access to the revolving credit facility, and the likelihood that softening demand levels and a weak economic environment will pressure the company's cash flows. These ratings were downgraded: -- Corporate family rating, to Caa1 from B2; -- Probability-of-default rating, to Caa1 from B2; -- $40 million senior secured revolving credit facility due 2012, to B3 (LGD3, 36%) from B1 (LGD3, 35%); -- $270 million first lien senior secured term loan due 2012, to B3 (LGD3, 36%) from B1 (LGD3, 35%); -- $105 million second lien senior secured term loan due 2013, to Caa3 (LGD5, 87%) from Caa1 (LGD5, 87%). X-Rite, Inc., headquartered in Grand Rapids, Michigan, is the world's largest provider of color measurement systems offering hardware, software, and support solutions that ensure color accuracy. The company reported sales of approximately $240 million through the twelve months ended March 29, 2008. * Moody's Says Regional Casinos Can Profit Despite Weak Economy --------------------------------------------------------------- The weakening U.S. economy presents an opening for regional casinos to capture market share at the expense of Las Vegas and Atlantic City, says Moody's Investors Service. The regional players have been spending billions of dollars to build fancy "Las Vegas style" facilities and amenities, says Moody's, thus offering gaming customers more choices than ever before. Budget-conscious travelers may opt for less-expensive trips to regional gaming markets closer to home, exposing them to the new developments. "While it remains to be seen whether a lasting shift in gambler behavior will occur, the investments regional casinos are making could permanently shift the playing field for U.S. casino operators," says Moody's Senior Vice-President Keith Foley. "Even when the economy improves, travelers might decide the fancy place closer to home is a fine substitute for the traditional gambling meccas." Although this trend would have positive ratings implications for regional-market operators as it increases traffic, length of stay and share of travelers' budgets, it could carry negative ratings implications for companies with significant exposure to the Las Vegas and Atlantic City markets, less geographic diversification or fewer financial resources to match rivals' investments in non- gaming amenities, says Moody's. It is not yet clear that Las Vegas and Atlantic City are bearing the brunt of economic weakness in the U.S., as casino gaming revenues have declined this year in the regional markets as well as the two main gaming centers, Moody's says. Moody's special comment on regional casinos is part of our ongoing commentary on how U.S. economic weakness is affecting the operating performance and ratings of gaming issuers. It is a follow-up to its March 2008 report, "Economic Slowdown Hits U.S. Gaming Sector." The full title of this Moody's Special Comment is "Regional casinos' big break: Slowing U.S. economy a change to showcase new facilities, challenge gaming meccas." * Moody's Sees Higher Demand for Biz-Oriented Trustees in Schools ----------------------------------------------------------------- The trend in governance at U.S. public universities toward a stronger role for diversified business-oriented boards of trustees will likely grow stronger as state governments face new financial pressures from a weakening economy and slowing tax revenues, according to a new report from Moody's Investors Service. "The credit implications of this shift in favor of governance capable of leading increasingly market-driven and complex public institutions have generally been positive as many public university ratings have been upgraded in recent years as they built market and financial strength independent of state taxing power," said Moody's John Nelson, a public finance team managing director and an author of the report. He said officials in many states are likely to make difficult budgetary decisions to reduce funding for public universities, which is consistent with a long-established trend of shifting costs towards students and private donors as state governments struggle with funding many competing priorities. "The responsibilities of public university boards of trustees are changing to reflect how public colleges and universities have become increasingly complex organizations that must cope with competitive market conditions," said Nelson. "Boards in many states now oversee quasi-independent, highly competitive universities that generate the majority of their revenues from non-state sources while retaining a strong public mandate." Nevertheless, according to report co-author Kimberly Tuby, new policy and funding challenges can easily arise in a variety of areas, including tuition affordability, financial aid, governance oversight, operating independence, employee compensation, economic development, labor force training and financial management. "Current models for oversight and board composition will likely need to evolve as universities develop new governance processes that reflect their new dynamism while also advancing public policy goals shared with their sponsoring state governments," said Tuby, a Moody's analyst and associate vice president. The report offers examples of effective boards, including that of the University System of New Hampshire (rated A1), which has enhanced flexibility in decision making as a result of its tuition-setting authority, its own treasury management, and its receipt of state support in the form of block grants rather than line item appropriations. "We think the credit profile of the New Hampshire system will continue to benefit from its strong board oversight and its healthy relationship with the state, especially as the market- oriented focus has been crucial in light of the system's relatively high number of out-of-state students and the modest state funding," said Tuby. The University of Illinois (highest rating of Aa3, with a positive outlook) is another example of a pro-active board that has been successful at garnering external support, obtaining more budgetary freedom for the university to manage its own tuition revenue and strategically expand the university. * Moody's Changes the Outlook for US Restaurant Sector to Negative ------------------------------------------------------------------ Moody's Investors Service changed its Industry Sector Outlook for the U.S. restaurant sector to negative from stable. This outlook expresses Moody's expectations for the fundamental credit conditions in the industry over the next 12 to 18 months. The change in outlook to negative reflects our view that weakening economic conditions and an escalating cost environment facing both consumers and restaurant companies alike outweigh favorable demographic trends over the near to intermediate term. "Over the past several months the negative trend associated with a financially stressed consumer, historically high commodity and energy prices, and escalating labor costs continue to gain momentum and will not likely abate over the near term. As a result, we believe the majority of U.S. restaurants will be challenged in their ability to raise menu prices to help mitigate margin pressures without negatively impacting consumer traffic, profit margins, and cash flow. We feel that this trend will likely continue over the next 12 months," said restaurant analyst Bill Fahy, VP/Senior Analyst at Moody's. However, despite these challenges Moody's believes favorable life style and demographic trends should continue to bode well for the demand side of the U.S. Restaurant sector and help drive customer traffic over the longer term. * Moody's Takes Negative Rating Actions on 839 Second Lien RMBS --------------------------------------------------------------- Moody's Investors Service took negative rating actions on 839 second lien residential mortgage backed securities in the period March 31 through May 6, 2008. Moody's downgraded 819 securities, with a total value at issuance of $29.1 billion, and left 165 securities with an issuance value of $17.4 billion on review for possible further downgrade. It also placed an additional 20 tranches ($0.83 billion issuance value) on review for possible downgrade. Of the affected securities, 206 ($2.9 billion) were issued in 2005, 466 ($22.5 billion) in 2006, and 167 ($4.5 billion) in 2007. Seventy-two of the securities ($6.7 billion) were rated Aaa at the time of these ratings actions. The rating actions were part of Moody's most recent rating review of second lien RMBS, which make up 5.0% of the subprime RMBS that Moody's has rated since 2005. The pools of second lien loans backing these securities immediately showed much higher delinquencies than did those of earlier vintages, and losses have followed quickly. Moody's now expects 2005 vintage subprime second lien loan pools to lose 17% on average, 2006 vintage pools to lose 42% on average, and 2007 pools to lose 45% on average. Moody's recent rating actions reflect these higher loan loss projections. Moody's expects loan loss levels on individual transactions to vary significantly, however, based on the quarter of origination as well as the specifics of the deal and issuer. Moody's average loan loss expectations increase consistently with the quarter of origination, from an average loss projection of about 10% for Q1 2005 pools to about 51% for Q3 2007 pools. Moody's will continue to examine the ratings on each deal of the 2005-2007 subprime second lien vintages and will announce further rating changes on an ongoing basis. * Moody's Says Consumer Finance Industry's Outlook is Negative -------------------------------------------------------------- The US consumer finance industry's outlook -- which expresses the likely fundamental credit conditions over the next year and one- half -- is negative, Moody's Investors Service concludes in its latest report. The industry comprises credit card issuers, auto finance companies, branch-based consumer finance firms, and education finance companies. According to one of the report's authors, Vice President/Senior Analyst Curt Beaudouin, the outlook for the consumer finance industry is premised on "our expectation that the US economy will experience a relatively mild recession during the first half of 2008." "Even though the outlook for conditions in the industry is negative," the analyst explains, "the outlook for a number of individual companies' ratings is stable. This may be attributable to parental support and/or the fact that the trends that are the basis for the negative industry outlook may already be incorporated into the ratings of specific issuers." "However," he adds, "there is the risk that the downturn may be more severe than currently projected -- a risk hinging on a number of variables, including stabilization of the financial system and credit markets, improvement in the housing industry, and the direction of energy prices." "In such a case," Mr. Beaudouin says, "it is possible that more individual company outlooks or ratings may be affected." In the credit card segment, Mr. Beaudouin points out that "asset quality is deteriorating as the economy weakens and as profitability is pressured by increased provisioning. Industry players are responding with tightened credit, pricing increases, and more rigorous expense management." He does note, however, that the issuers are likely to do more business as more people go back to financing purchases with their credit cards than by taking out home equity lines, etc., as home values fall and as lending standards tighten. "The auto loan segment is facing increased frequency of default," the analyst says, "combined with greater loss severity." "Not only are people more likely to fall behind on their car loans," he explains, "but if it gets to the point of repossession, the lender's ultimate recovery will be negatively affected by the currently softer prices at vehicle auctions." In addition, Mr. Beaudouin points to slumping vehicle sales, as well as to credit- crunch-induced challenges to cost and availability of funding, as additional factors that are now pressuring profitability, originations volumes, and receivables growth. Branch-based consumer finance refers to those companies engaged in multiple segments of the consumer finance business. These companies have extensive retail branch networks, where consumers can come to transact their business. The outlook for this sector is also negative. "Profitability for branch-based consumer finance firms is expected to remain at depressed levels because of higher loss provisioning, negative carry on nonperforming assets, and the disappearance of mortgage-banking revenues," according to Senior Vice President Blaine Frantz. Within the industry, he is seeing a heightened management focus on cost controls and achievement of increased scale economies. The final sector of the consumer finance industry is education finance, whose outlook is also negative. The combination of federal legislation (College Cost Reduction and Access Act of 2007, "CCRAA") and the ongoing credit crunch have both severely pressured profitability and lending volumes for FFELP Stafford and PLUS loans. "Moreover," Mr. Beaudouin states, "FFELP consolidation loans are unprofitable in current circumstances, and lenders -- including industry leader SLM Corp. -- are pulling out." He believes that prospects for the private education-loan product are diminished because of asset quality deterioration and also because of credit- crunch-induced funding pressures, especially in securitization markets. The industry outlook concludes by discussing liquidity and by emphasizing the contingent funding plans of consumer finance companies as an area of ongoing analytical focus: "With recent market developments serving as a reminder of the swiftness and force with which market liquidity events can strike, the depth, breadth and resiliency of these plans will be an ever more critical component of finance companies' financial policies and strategies, and Moody's analytical approach to such companies." The report is titled "US Consumer Finance Outlook" * Moody's Sees Tighter Underwriting Standards for Loans in CMBS --------------------------------------------------------------- The loans in commercial mortgage-backed securities transactions are displaying tighter underwriting standards, says Moody's Investors Service in its 2008 first quarter review of US commercial real estate finance. Volume, however, has plunged, and Moody's is lowering its outlook for 2008 CMBS issuance to $35 billion. Moody's says the final tally for traditional conduit issuance for the year could be less than $35 billion, but expects balance- sheet-driven transactions by financial institutions to take up some slack. US CMBS issuance hit a record $230 billion in 2007. Late in 2007, Moody's said that 2008 volumes would be dropping, but estimated total issuance at $100 billion for the year. "It may be several years before the CMBS market again sees conduit volumes in excess of $100 billion," says Moody's Managing Director Nick Levidy. "In retrospect, perhaps US CMBS should be viewed as a $50 billion to $100 billion per year business that spiked to $200 billion during a credit bubble rather than a $200 billion business having an off year." "Notwithstanding our reduced issuance outlook, we believe that CMBS has the potential to re-group around a smaller base and position itself for future growth," says Levidy. Meanwhile, Moody's says conduit loan underwriting has improved on several counts. For example, loans closed year-to-date 2008 had Moody's loan-to-values below the 100% mark, a level not seen since early 2005. * S&P Says Retail Sales for April Drops 0.2% Month Over Month ------------------------------------------------------------- Retail sales for April 2008 fell 0.2% month over month, down from the 0.2% gain in March and below the market's expectation of a 0.1% decrease, according to an article published by Standard & Poor's. The report, titled "U.S. Credit Comment: Retail Sales Decline On Auto Retrenchment," says that year-over-year growth was flat at 2% in April. "Automotive sales remain weak, as higher gas prices have consumers postponing purchases and trading down from bigger, often higher margin vehicles, to smaller ones," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "The retail industry is beginning to see narrowing profit margins due to increasing costs, and weaker demand is likely because home prices are falling and fuel and food costs are rising. Moreover, credit metrics for the retail and restaurant sector continue to weaken, with almost 36% of all rated entities with either a negative outlook or on CreditWatch with negative implications. There have been 13 downgrades through April, up from six for the comparable period in 2007." * S&P Comments on Credit Quality of Not-for-Profit Hospitals ------------------------------------------------------------ The ability or inability to invest sufficiently in capital improvements, including new medical technology, while maintaining at least an adequate financial profile, will be a key differentiator for credit quality among not-for-profit hospitals for the next several years, according to a report, "Costly Medical Technology May Add A Further Wedge Between Not-For-Profit Hospital Credits," published by Standard & Poor's Ratings Services. "The credit quality gap continues to widen as some providers fall farther behind while others keep attracting more patients and physicians due to their high-tech equipment, modern facilities, and information technology systems," said credit analyst Cynthia Keller Macdonald. * S&P Says Falling Home Prices Create a Wide Swath of Problems -------------------------------------------------------------- In a recent report, Standard & Poor's Ratings Services detailed its loss severity assumptions in U.S. subprime residential mortgage-backed securities. "Falling home prices create a wide swath of problems, one of the most pressing being rising foreclosure rates," said Standard & Poor's credit analyst Francis Parisi, a managing director in the Structured Finance Ratings Group. "And when a foreclosed home sells for less than what the borrower owed to the mortgage lender, the lender suffers a loss." The amount of that loss is known as the loss severity, Parisi said, and includes the costs to foreclose and liquidate a home securing a defaulted mortgage, as well as any decline in property value. Standard & Poor's current ratings on the 2006 U.S.subprime RMBS vintage reflect, in part, an assumed loss severity of 45%. * Chapter 11 Cases with Assets & Liabilities Below $1,000,000 ------------------------------------------------------------- Recent Chapter 11 cases filed with assets and liabilities below $1,000,000: In Re Slater Corp. Bankr. S.D. Fla. Case No. 08-15723 Chapter 11 Petition filed May 5, 2008 See http://bankrupt.com/misc/flsb08-15723.pdf In Re Andrew I. Torres Bankr. D. Ariz. Case No. 08-05220 Chapter 11 Petition filed May 6, 2008 See http://bankrupt.com/misc/azb08-05220.pdf In Re Sandra Brown dba Ace Holdings Bankr. D. Md. Case No. 08-16274 Chapter 11 Petition filed May 6, 2008 Filed as Pro Se In Re Pollard Properties, LLC Bankr. N.D. Ala. Case No. 08-81386 Chapter 11 Petition filed May 7, 2008 See http://bankrupt.com/misc/alnb08-81386.pdf In Re Tony Pollard Builders, Inc. Bankr. N.D. Ala. Case No. 08-81387 Chapter 11 Petition filed May 7, 2008 See http://bankrupt.com/misc/alnb08-81387.pdf In Re Urban City Dough, Inc. Bankr. S.D. N.Y. Case No. 08-11708 Chapter 11 Petition filed May 7, 2008 See http://bankrupt.com/misc/nysb08-11708.pdf In Re Urban City Dough, Inc. Bankr. S.D. N.Y. Case No. 08-11708 Chapter 11 Petition filed May 7, 2008 See http://bankrupt.com/misc/nysb08-11708.pdf In Re Inner City Dough, Inc. Bankr. S.D. N.Y. Case No. 08-11718 Chapter 11 Petition filed May 7, 2008 See http://bankrupt.com/misc/nysb08-11718.pdf In Re Nasser Aboabdo Bankr. C.D. Calif. Case No. 08-12470 Chapter 11 Petition filed May 7, 2008 Filed as Pro Se In Re The Landings on Simpson Bankr. N.D. Ga. Case No. 08-68791 Chapter 11 Petition filed May 7, 2008 Filed as Pro Se In Re Digital Gas, Inc. Bankr. E.D. Mich. Case No. 08-51221 Chapter 11 Petition filed May 7, 2008 Filed as Pro Se In Re E.&K. Trucking, Inc. Bankr. S.D. Ala. Case No. 08-11623 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/alsb08-11623.pdf In Re Mark Salustro Bankr. D. Ariz. Case No. 08-05314 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/azb08-05314.pdf In Re Luigino, Inc. Bankr. D.C. Case No. 08-00316 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/dcb08-00316.pdf In Re Frank Robert Cook Bankr. D.C. Case No. 08-00317 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/dcb08-00317.pdf In Re American Portable Toilets, Inc. Bankr. S.D. Fla. Case No. 08-15927 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/flsb08-15927.pdf In Re Centurymacs, Inc. Bankr. D. Md. Case No. 08-16381 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/mdb08-16381.pdf In Re House of Living Bread Church, Inc. Bankr. E.D. Mo. Case No. 08-43323 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/moeb08-43323.pdf In Re The Seed of Abraham Learning Centers, Inc. Bankr. E.D. N.C. Case No. 08-03151 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/nceb08-03151.pdf In Re Nancy Jean Fischer Bankr. D. N.M. Case No. 08-11468 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/nmb08-11468.pdf In Re Cary's Oyster House, LLC Bankr. E.D. Penn. Case No. 08-13029 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/paeb08-13029.pdf In Re Muniz Investment Corp. dba La Plaza Cafe Bankr. D. P.R. Case No. 08-02961 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/prb08-02961.pdf In Re Viking Management, LLC Bankr. D. Mass. Case No. 08-41452 Chapter 11 Petition filed May 8, 2008 Filed as Pro Se In Re American Health and Human Services, Inc. Bankr. E.D. N.C. Case No. 08-03135 Chapter 11 Petition filed May 8, 2008 Filed as Pro Se In Re South Seas Holding, LLC Bankr. N.D. Calif. Case No. 08-42276 Chapter 11 Petition filed May 8, 2008 Filed as Pro Se In Re Eric L. Krauss, DVM, PC Bankr. W.D. Va. Case No. 08-70843 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/vawb08-70843.pdf In Re Jared Peter Smidt Bankr. W.D. Wash. Case No. 08-42106 Chapter 11 Petition filed May 8, 2008 See http://bankrupt.com/misc/wawb08-42106.pdf In Re David Allen Troup Bankr. N.D. Ala. Case No. 08-40942 Chapter 11 Petition filed May 9, 2008 See http://bankrupt.com/misc/alnb08-40942.pdf In Re Angelica M. Ortiz Bankr. D. Ariz. Case No. 08-05384 Chapter 11 Petition filed May 9, 2008 See http://bankrupt.com/misc/azb08-05384.pdf In Re Hunan Holdings, LLC Bankr. D. Ariz. Case No. 08-05387 Chapter 11 Petition filed May 9, 2008 See http://bankrupt.com/misc/azb08-05387.pdf In Re Regal Transport, Inc. Bankr. E.D. Calif. Case No. 08-12672 Chapter 11 Petition filed May 9, 2008 See http://bankrupt.com/misc/caeb08-12672.pdf In Re Lincoln Capital Investments, Inc. Bankr. N.D. Calif. Case No. 08-30803 Chapter 11 Petition filed May 9, 2008 See http://bankrupt.com/misc/canb08-30803.pdf In Re Rhino Partners Restaurants, Inc. aka Mellow Mushroom Pizza Bakers Bankr. S.D. Ind. Case No. 08-05420 Chapter 11 Petition filed May 9, 2008 See http://bankrupt.com/misc/insb08-05420.pdf In Re M&M Mercantile, Inc. Bankr. E.D. Mich. Case No. 08-31951 Chapter 11 Petition filed May 9, 2008 See http://bankrupt.com/misc/mieb08-31951.pdf In Re Triad Trucking, LLC Bankr. M.D. N.C. Case No. 08-10705 Chapter 11 Petition filed May 9, 2008 See http://bankrupt.com/misc/ncmb08-10705.pdf In Re First Baptist Church of Hicks Addition Bankr. W.D. Okla. Case No. 08-11908 Chapter 11 Petition filed May 9, 2008 See http://bankrupt.com/misc/okwb08-11908.pdf In Re Sobhani Center for Inner Peace Bankr. W.D. Wash. Case No. 08-42130 Chapter 11 Petition filed May 9, 2008 Filed as Pro Se In Re Ryan A. Nassbridges Bankr. C.D. Calif. Case No. 08-12510 Chapter 11 Petition filed May 9, 2008 Filed as Pro Se In Re Saratoga Expansion, LLC Bankr. D. Utah Case No. 08-23003 Chapter 11 Petition filed May 9, 2008 Filed as Pro Se In Re Jimmy Randal Koczka dba J&K Irrigation and Landscape Bankr. W.D. Tex. Case No. 08-60492 Chapter 11 Petition filed May 9, 2008 See http://bankrupt.com/misc/txwb08-60492.pdf In Re Paramount Group, Inc. of Nevada aka Paramount Group, Inc. Bankr. C.D. Calif. Case No. 08-16541 Chapter 11 Petition filed May 12, 2008 See http://bankrupt.com/misc/cacb08-16541.pdf In Re New Pee Wee Muldoons Bar & Grill, Inc. Bankr. N.D. Calif. Case No. 08-42361 Chapter 11 Petition filed May 12, 2008 See http://bankrupt.com/misc/canb08-42361.pdf In Re Tuscany Italian Grill, Inc. Bankr. S.D. Ind. Case No. 08-05477 Chapter 11 Petition filed May 12, 2008 See http://bankrupt.com/misc/insb08-05477.pdf In Re Jean J. Gilles aka Jean Jean Gilles Bankr. D. Mass. Case No. 08-13441 Chapter 11 Petition filed May 12, 2008 See http://bankrupt.com/misc/mab08-13441.pdf In Re Stephanie Bowling aka Stephanie Weiland aka Stephanie Weiland Bowling Bankr. D. Md. Case No. 08-16535 Chapter 11 Petition filed May 12, 2008 See http://bankrupt.com/misc/mdb08-16535.pdf In Re AVRICO, Inc. dba Foothills Market & Grill Bankr. M.D. N.C. Case No. 08-50804 Chapter 11 Petition filed May 12, 2008 See http://bankrupt.com/misc/ncmb08-50804.pdf In Re Margaret Rose Limited, LLC Bankr. N.D. N.Y. Case No. 08-61127 Chapter 11 Petition filed May 12, 2008 See http://bankrupt.com/misc/nysb08-61127.pdf In Re Juana Torres Bankr. C.D. Calif. Case No. 08-13043 Chapter 11 Petition filed May 12, 2008 Filed as Pro Se In Re James Eleopoulos Bankr. C.D. Calif. Case No. 08-16482 Chapter 11 Petition filed May 12, 2008 Filed as Pro Se In Re Kim L. (Harper) Scarmozzino Bankr. D. Ariz. Case No. 08-05479 Chapter 11 Petition filed May 12, 2008 Filed as Pro Se In Re Guaranteed Results Advertising, LLC Bankr. D. Md. Case No. 08-16523 Chapter 11 Petition filed May 12, 2008 Filed as Pro Se In Re Dilip Vallabhbhai Patel dba Gokul LLC Bankr. M.D. Ala. Case No. 08-30852 Chapter 11 Petition filed May 13, 2008 See http://bankrupt.com/misc/almb08-30852.pdf In Re Pedro Moreno Bankr. S.D. Fla. Case No. 08-16143 Chapter 11 Petition filed May 13, 2008 See http://bankrupt.com/misc/flsb08-16143.pdf In Re Hofmann Properties, Inc. dba LIL Munchkins 24hr Childcare Bankr. S.D. Ill. Case No. 08-31021 Chapter 11 Petition filed May 13, 2008 See http://bankrupt.com/misc/ilsb08-31021.pdf In Re First Call Relocation, Inc. Bankr. S.D. Ind. Case No. 08-05545 Chapter 11 Petition filed May 13, 2008 See http://bankrupt.com/misc/insb08-05545.pdf In Re Dr. Glenn Krieger & Associates, P.L.L.C. Bankr. E.D. Mich. Case No. 08-51742 Chapter 11 Petition filed May 13, 2008 See http://bankrupt.com/misc/mieb08-51742.pdf In Re C&M Bonding, Inc. Bankr. W.D. Mo. Case No. 08-60838 Chapter 11 Petition filed May 13, 2008 See http://bankrupt.com/misc/mowb08-60838.pdf In Re New Millenium Restaurants, Inc. Bankr. D. Nev. Case No. 08-14838 Chapter 11 Petition filed May 13, 2008 See http://bankrupt.com/misc/nvb08-14838.pdf In Re William Davis Ferebee Bankr. C.D. Calif. Case No. 08-15504 Chapter 11 Petition filed May 13, 2008 Filed as Pro Se In Re Tenex, LLC ta Express Shoppee Bankr. W.D. Va. Case No. 08-70880 Chapter 11 Petition filed May 13, 2008 See http://bankrupt.com/misc/vawb08-70880.pdf In Re Thomas H. Nonemacher dba Nonemacher Dairy Bankr. W.D. Wis. Case No. 08-12389 Chapter 11 Petition filed May 13, 2008 See http://bankrupt.com/misc/wiwb08-12389.pdf ********* 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 ***