T R O U B L E D C O M P A N Y R E P O R T E R Friday, May 16, 2008, Vol. 12, No. 116 Headlines ABOVE THE SMOKE: Voluntary Chapter 11 Case Summary ABS GLOBAL FINANCE: Fitch Affirms Class E-1 Notes' BB Rating ACXIOM CORP: Posts $58.2 Million Net Loss in First Quarter 2008 AES CORP: Fitch Rates Senior Unsecured Notes 'BB/RR1' AES CORP: Moody's Puts B1 Rating on $600MM Senior Unsecured Notes ALASKA AIR: Moody's Affirms All Ratings; Changes Outlook to Neg. AMERICAN AXLE: UAW Talks Stall Over Health & Unemployment Benefits AMERICAN HOME TRUST: S&P's Affirms 'B' Rating on Class M-5 Notes AMERICAN HOME TRUST: S&P Slashes Rating to 'D' on Cl. II-M-1 Trust AMP'D MOBILE: Files $90,982 Preference Suit Against LetsTalk.Com AMP'D MOBILE: Inks Stipulation Rejecting Westside Medical Lease AMPEX CORP: Judge Sees Appointment of Equity Holders Panel as Moot ASCALADE COMM: Hong Kong Court OKs ACL's Scheme of Arrangement ATHERTON & JENNINGS: Case Summary & Three Largest Unsec. Creditors BEAR STEARNS ABS: Fitch Rates 57 Classes Below Investment Grade BERRY PLASTICS: Posts $29.3MM Net Loss in Quarter Ended March 29 BLOCKBUSTER INC: Earns $45 Million in Quarter ended April 6 BLUE SKY 2: Case Summary & Two Largest Unsecured Creditors BLUE WATER: Files Liquidation Analysis Under Chapter 11 Plan BLUE WATER: Gets Permission to Pay Incentives to Employees BOISE INC: Moody's Lifts Loan Rtng. to B1; Revises Outlook to Pos. BUFFETS HOLDINGS: U.S. Trustee Balks at Employees Incentive Plan BUFFETS HOLDINGS: Court Sets July 21 as Claims Bar Date BUFFETS HOLDINGS: Wants to Limit Bank's Rights to Value Collateral BUFFETS HOLDINGS: Wants Court's Okay to Amend Asset Sale Contract CABLEVISION SYSTEMS: Moody's Rtngs. Unmoved by Pending Acquisition CAPITAL AUTO: S&P Puts 'BB' Rating on $7.915MM Subordinate Notes CDC COMMERCIAL: Moody's Holds B3 Rating on $3.187MM Class P Certs. CENTERSTAGING MUSICAL: Seeks to Hire Lewis Landau as Counsel CENTERSTAGING MUSICAL: Can Employ Biggs & Co. as Accountant CENTERSTAGING MUSICAL: U.S. Trustee Forms Three-Member Committee CHESAPEAKE CORP: Obtains $250MM Replacement Facility from GECC CHESAPEAKE CORP: In Talks to Amend U.K. Pension Recovery Plan CHRYSLER LLC: Reaches Tentative Settlements with CAW Officials CIMAREX ENERGY: S&P Lifts Credit Rating to BB with Stable Outlook CITIGROUP COMMERCIAL: Moody's Affirms Ba1 Rating on Class L Certs. CITIGROUP COMMERCIAL: Moody's Cuts Rating to Caa1 on Class O Cert. CLEAR CHANNEL: Inks Settlement Agreement with CC Media and Lenders CLFX CORP: Full Payment of Debt Cues Moody's to Withdraw Ratings COMM 2007-FL14: Stable Performance Cues Moody's to Hold Ratings CONTINENTAL AIR: Sets Alliance with UAL After Failed Merger COUNTRY-WIDE INSURANCE: A.M. Best Lifts IC Rating to bb- from b CSFB MORTGAGE: Moody's Holds Junked Ratings on Two Cert. Classes CRYOCATH TECHNOLOGIES: March 31 Balance Sheet Upside-Down by $6MM CSFB MANUFACTURED: S&P Cuts Rating on Class B-1 Certificates to B+ CSMC TRUST: S&P Junks Ratings on Seven Cert. Classes CY ORIENTAL: Gets Consent from Lender to File Records Until May 31 EINSTEIN NOAH: Inks Interest Rate Swap Deal with Wells Fargo ENCAP GOLF: Taps Cole Schotz as Bankruptcy Counsel ENERGY PARTNERS: Posts $2.3 Million Net Loss in 2008 First Quarter EPICEPT CORP: Faces Nasdaq Delisting on Depressed Securities Value EPICEPT CORP: Amends Loan & Warrant Pacts with Hercules Technology FLEETWOOD ENTERPRISES: Sells Property to Finance Bond Redemption FOOTSTAR INC: Board Intends to Liquidate Company by End of 2008 GENERAL MOTORS: Reaches Tentative Settlements with CAW Officials GENERAL MOTORS: CAW Balks at Announcement of Windsor Plant Closure GREAT LAKES: A.M. Best Puts bb- IC Rating Under Positive Review HAWAIIAN AIRLINES: Settles Litigation Involving Mesa Air Group HEXION SPECIALTY: March 31 Balance Sheet Upside Down by $1.3 Bil. IDLEAIRE TECH: Files for Chapter 11 Protection in Delaware IDLEAIRE TECHNOLOGIES: Wants to Use $8 Million DIP Facility IDLEAIRE TECHNOLOGIES: Depleting Cash Cues Sale to Investor Group IDLEAIRE TECHNOLOGIES: To Engage Kurtzman Carson as Claims Agent IDLEAIRE TECHNOLOGIES: Taps CRG's Stephen Gray as CRO INTERTAPE POLYMER: Posts $2MM Net Loss in Quarter ended March 31 IRVINE SENSORS: Sells More Than 1% of Shares in Unregistered Deals JABIL CIRCUIT: Moody's Rtng Unmoved by Planned $150MM Notes Add-On JETBLUE AIRWAYS: Fitch Cuts Sr. Unsec. Notes' Rating to CCC-/RR6 JOURNAL REGISTER: Posts $72MM Net Loss in Quarter Ended March 30 JOURNAL REGISTER: Moody's Junks Rating on Likely Covenant Breach JOHN HOWARD: Case Summary & Seven Known Creditors JOHN DALY: Case Summary & Eight Known Creditors KENTUCKY DATA: Moody's Holds B1 CF Rating; Changes Outlook to Pos. LANDING DEVELOPMENT: Section 341(a) Meeting Set for May 20 LEHMAN ABS: S&P Chips 'BB+' Rating on Class M-1 Certs. to 'B-' LEHMAN BROTHERS TRUST: Moody's Affirms Caa1 Rating on Certificates LEVITT AND SONS: Administrator Taps Whelchel & Dunlap as Counsel LEVITT AND SONS: Administrator Wants to Employ VHB as Consultant LINENS N THINGS: Reports 2008 First Quarter Sales Results LINENS N THINGS: Wants to Employ Richards Layton as Counsel LINEN N THINGS: Wants to Employ Gardere as Special Counsel MCKINNEY ZONE: Voluntary Chapter 11 Case Summary MERGE HEALTHCARE: Posts $7.8 Million Net Loss in 2008 1st Quarter MESA AIR: Settles Litigation Involving Hawaiian Airlines MESA AIR: Won't File March 2008 Quarterly Report on Time MESABA AVIATION: Andy Roberts Appointed to Lead Company MESABA AVIATION: Liquidating Trustee Appeals MAC Ruling MICROMET INC: Posts $5.9 Million Net Loss in 2008 First Quarter ML-CFC COMMERCIAL: Moody's Holds B3 Rating on $4.603MM Cl. P Trust MOORE CUSTOM: Case Summary & Four Largest Unsecured Creditors MORGAN STANLEY: Moody's Holds Low-B Ratings on Four Cert. Classes MOULDING FX: Voluntary Chapter 11 Case Summary MTI GLOBAL: Has Until May 31 to Amend Credit Facility with Lender NEW CENTURY: Claimants Buck Plan; Proponents Push for Confirmation NEWPAGE CORP: S&P Holds 'B' Rating and Revises Outlook to Positive NORD RESOURCES: March 31 Balance Sheet Upside-Down by $3 Million NORTH AMERICAN: S&P Rates $545MM First-Lien Facilities BB+ NORTHWEST AIRLNES: Appoints Andy Roberts to Lead Mesaba OMNI FINANCIAL: To Delay Filing Quarterly Report on Form 10-Q PACIFIC LUMBER: Scopac Objects to Marathon/Mendocino, BoNY Plans PACIFIC LUMBER: Lehman Offers $10-Mil. Loan for Scopac, BoNY Says PACIFIC LUMBER: Sierra Pacific Willing to Buy Mills, BoNY Says PARMALAT SPA: 1st Qtr Profit Down on Lesser Legal Settlements PARMALAT SPA: Provides Updates on Legal Actions Against Citigroup PENAMISADE LTD: Case Summary & Four Largest Unsecured Creditors PHLA INC: Case Summary & Five Largest Unsecured Creditors PILGRIM'S PRIDE: Equity Issuance Won't Affect Moody's Ratings PROTECTION ONE: POI Acquisition Declares 46.6% Equity Stake PROTECTION ONE: March 31 Balance Sheet Upside-Down by $45 Million QIS INC: Case Summary & 20 Largest Unsecured Creditors RAAC SERIES: S&P Lowers Ratings on Three Certificate Classes RCS-CHANDLER: Section 341(a) Meeting Slated for May 27 RECKSON OPERATING: Fitch Says Ties To SL Green Factor in Ratings RELIANT CHANNELVIEW: BoNY Balks at Further Use of Cash Collateral RESIDENTIAL FUNDING: Moody's Cuts Rating on Cl. M-5 Loan to Ba2 ROADHOUSE GRILL: To Liquidate, End Leases of Restaurants RUTLAND: Fitch Puts Class B3-LEK Notes' BB Rating on Neg. Watch SANDRIDGE ENERGY: Prices $750 Million Offering of 8% Senior Notes SANDRIDGE ENERGY: Moody's Rates Pending $750MM Note B3 SCRIPPS FRENCH: Case Summary & Seven Largest Unsecured Creditors SENTINEL MANAGEMENT: Files Disclosure Statement in Illinois SENTINEL MANAGEMENT: U.S. Trustee Amends Creditors' Panel Members SHARPER IMAGE: Hilco Joint Venture Named Stalking Horse Bidder SI INTERNATIONAL: S&P Withdraws Ratings at Company's Request SIX FLAGS: Exchange Notes Offer Cues Moody's to Hold Caa1 Rating SKYBUS AIRLINES: U.S. Trustee Appoints 5-Member Creditors Panel SKYBUS AIRLINES: Files Schedules of Assets and Liabilities SMI NEW HOME: Case Summary & 15 Largest Unsecured Creditors SUNCREST LLC: Section 341(a) Meeting Scheduled for May 19 SUPERVALU INC: S&P Puts 'BB+' Rating on Existing $4BB Facilities TRANSMERIDIAN EXPLO: March 31 Balance Sheet Upside-Down by $31MM TRIAD FINANCIAL: Moody's Junks Ratings on Citigroup Deal Amendment TROPICANA ENTERTAINMENT: Wants Lazard Freres as Financial Advisor TROPICANA ENT: Endorses AlixPartners LLP as Restructuring Advisors TROPICANA ENT: Wants to Hire Ernst & Young as Accounting Advisor TRUMP ENTERTAINMENT: Harry Hagerty Joins Board of Directors TW HOTEL: Improving Performance Cues Moody's to Lift Ratings UAL CORP: Sets Pricing Alliance with Continental Airlines UAL CORP: Name and Chicago HG Likely to Remain After USAir Merger US AIRWAYS: Merger Likely to Retain UAL Name and Chicago HG US SHIPPING: S&P Puts 'B-' Rating Under Neg. Watch on Poor Fin'l UTSTARCOM INC: Expects Up to $590MM Revenues in 2008 First Quarter VALERO ENERGY: El Paso Note Assumption Cues S&P to Cut Rating VICORP RESTAURANTS: Panel Taps FTI Consulting as Financial Advisor VICORP RESTAURANTS: Taps Morris Nichols as Conflicts Counsel VICORP RESTAURANTS: Taps Piper Jaffray as Financial Advisor VISTEON CORP: Appoints Donald Stebbins as Chief Executive Officer WARNEX INC: March 31 Balance Sheet Upside-Down by C$1.3 Million WELLMAN INC: Gets Extension on Deadline for Auction Protocol WELLMAN INC: Wants Court to Extend Deadline to Remove Actions * Fitch: Most Subprime-Related Bank Losses Are Already Disclosed * S&P Downgrades Ratings on 169 Classes from 38 RMBS Transactions * S&P Outlines Events that Could Affect Credit Card ABS Ratings * BOOK REVIEW: The First Junk Bond: A Story of Corporate Boom and Bust ********* ABOVE THE SMOKE: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Above The Smoke P.O. Box 771 Gatlinburg, TN 37738 Bankruptcy Case No.: 08-31972 Chapter 11 Petition Date: May 5, 2008 Court: Eastern District of Tennessee (Knoxville) Debtor's Counsel: Edward J. Shultz, Esq. Email: eshultz@ayreslaw.com Ayres & Parkey P.O. Box 23380 Knoxville, TN 37933 Tel: (865) 637-1181 Estimated Assets: Less than $50,000 Estimated Debts: $1 million to $10 million The Debtor does not have any creditors who are not insiders. ABS GLOBAL FINANCE: Fitch Affirms Class E-1 Notes' BB Rating ------------------------------------------------------------ Fitch Ratings has affirmed and removed from Rating Watch Negative (RWN) the class E-1 notes issued by ABS Global Finance Plc (ABS Global), Series 2006-1: -- Class E-1 (USD2 million) notes affirmed at 'BB'; off RWN The notes were placed on RWN on November 15, 2007, due to the level of defaults experienced by the transaction. According to the April 2008 servicer report, the credit enhancement of the notes has been reduced to 0.66% from the original 1% at closing. The notes' credit enhancement comprises the class F-1 notes and the equity tranche, of which the equity tranche has been depleted by 0.34% due to defaults. The affirmation of the notes follows further analysis of the current portfolio, in particular the obligors with the weakest credit profile in the securitised asset pool. Fitch believes that the current levels of credit enhancement are sufficient to protect the class E-1 noteholders against losses that might arise from further defaults, based on the different stressed scenarios that defaults continue to occur until the expected maturity date. The transaction is currently within its revolving period, during which principal collections are used to purchase new eligible receivables. From June 2008, the transaction administrator will perform principal collection tests for each class of the notes, which will measure whether underlying assets can generate sufficient collections to redeem each class of notes at the expected maturity date in December 2008. The tests will be repeated every month from June to December 2008. If the principal collection tests are not met, the revolving period will end and the principal accumulation period will commence. ABS Global is a public limited liability company issuing USD floating-rate notes backed by trade finance loan receivables originated by branches of Citibank, N.A. (Citibank, rated 'AA-' (AA minus)/ 'F1+' with a Negative rating Outlook) in Hong Kong, Singapore and Taiwan. ACXIOM CORP: Posts $58.2 Million Net Loss in First Quarter 2008 --------------------------------------------------------------- Acxiom Corporation (Nasdaq: ACXM) reported its financial results for the fourth quarter and fiscal year end ended March 31, 2008. The company will host an investor day June 17 in New York. Details will be made available on the Acxiom Web site. Revenue for the fourth quarter was $349.8 million compared to $356.4 million in the fourth quarter of fiscal 2007. Operating loss for the quarter was $76.0 million and loss per diluted share was $0.76. The results for the quarter include the impact of $107.2 million of restructuring and other items (of which $104.5 million are included in the loss from operations, with the remainder included in other expense), which contributed to the loss by the equivalent of $0.91 per diluted share. For the 12-month period ended March 31, 2008, revenue totaled $1.384 billion compared to $1.391 billion in the prior year. Income from operations for the 12 month period was $40.2 million compared to $154.1 million a year ago. Loss per diluted share was $0.10 compared to earnings per diluted share of $0.80 in the prior year. The loss per diluted share includes the impact of $84.2 million, or the equivalent of $0.70 per diluted share, of expense from unusual items. For the first quarter of 2008, the company reported a net loss of $58.2 million, compared with net income of $5.7 million in the same period in 2007. As of March 31, 2008, the company's total stockholders' equity was $500.5 million. According to John Meyer, Acxiom Corp. CEO and President, "During my first 90 days I have focused on meeting our customers and our people, rationalizing costs and gaining a deeper understanding of our offerings and value propositions. I have also made a number of leadership and role changes. "We are working to develop strategic and operational plans to help overcome the current challenges we are facing in some industry sectors and to provide a springboard for growth in future years. The initial focus will be on our customers and potential customers, leveraging our capabilities and assets across all industries we serve, and creating a winning market-facing culture. We already have a very strong foundation to do that. I believe in this opportunity now even more than when I was evaluating coming on board." Restatement, Restructuring and Other Items The Company is restating its financial statements for 2007, 2006, and prior years to correct its accounting related to accrued service revenue. The impact of this restatement will be a reduction in net income of $2.4 million in 2006 and $2.9 million in 2007. Accrued revenue, which is reflected in accounts receivable, will be reduced by a total of $52.2 million. Fourth-quarter loss per diluted share of $.76 includes $107.2 million or the equivalent of $0.91 per share in unusual expenses. The major components of the restructuring and other items are: * Gains, losses and other - $74.5 million composed of: -- Restructuring charges - $42.9 million related to headcount reduction, real estate closure, contract termination; -- Closing operations - $13.5 million related to previously acquired operations and the flight department; -- Asset disposal/impairment - $15.0 million, primarily software; -- Other – $3.1 million related to legal, international and other; * IT contract restructuring - $34.0 million reflected as increase in cost of services; * Loss on investment - $2.7 million reflected in Other, net; * Accrued revenue restatement - $.4.0 million increase in revenue. Of the $107.2 million in restructuring and other items, approximately $59.2 million represents balance sheet assets written down that do not require cash outlays. Approximately $48.0 million represents estimated cash payments to be made on obligations primarily related to headcount reductions, real estate and facilities lease terminations and an aircraft lease termination. The $48 million includes obligations of approximately $34 million to be paid in fiscal 2009, with the remainder in future periods. Details of Acxiom’s fourth-quarter results include: * Revenue of $349.8 million compared to $356.4 million in the fourth quarter a year ago; * Loss from operations of $76.0 million compared to income from operations of $28.4 million in the fourth quarter last year; * Loss from operations this quarter included $107.2 million of restructuring and other items; * Loss per diluted share of $0.76 compared to earnings per share of $0.07 in the fourth quarter of fiscal 2008; included in the loss per share of $0.76 is the negative impact of restructuring and other items which was the equivalent of $.91 per diluted share; * Operating cash flow of $90.5 million compared to $76.5 million in the fourth quarter a year ago; * Free cash flow available to equity of $14.7 million compared to $15.4 million a year ago; free cash flow available to equity is a non-GAAP financial measure. Details of Acxiom’s fiscal year results include: * Revenue of $1.38 billion compared to $1.39 billion in the prior year; * Income from operations of $40.2 million in 2008 compared to $154.1 million in fiscal 2007; * Loss per diluted share of $0.10 compared to earnings per diluted share of $0.80 in fiscal 2007; net restructuring and other items for the year were $84.2 million, or the equivalent of $0.70 per diluted share; In addition to the restructuring and other items in the fourth quarter, the company had a benefit of a net gain of $22.9 million comprised of: -- Gains from a merger termination payment and sale of assets of $68.2 million; -- Restructuring costs, transaction costs, retirement and loss on sale of assets of $30.0 million; -- Additional contract impairment in cost of services of $10.0 million; -- Reduction in revenue related to accrued revenue restatement to previous quarters of $5.2 million; * Operating cash flow of $300.3 million compared to $260.0 million in the prior year; * Free cash flow available to equity of $77.5 million compared to $55.2 million a year ago; free cash flow available to equity is a non-GAAP financial measure. Segment information: * Information Services Division: The division develops, sells and delivers industry-tailored solutions globally through the integration of products, services and consulting. Revenue for the quarter was $189.7 million, up 0.8 percent from the fourth quarter of the previous year. For the 12 months ended March 31, 2008, revenue was $741.3 million, up 1.8 percent from the previous year. Operating income for the quarter was $24.1 million, down 7.7 percent from the third quarter of the previous year. For the 12 months just ended, operating income was $97.2 million, down 22.0 percent from the previous 12-month period. * Information Products Division: The division develops and sells all global data products, including InfoBase-X and PersonicX, as well as fraud and risk mitigation products sold in the U.S., including InsightIdentify. It focuses on product development, product lifecycle management, data content management and innovation. Revenue for the quarter was $115.2 million, up 5.2 percent from the fourth quarter of the previous year. For the 12 months ended March 31, 2008, revenue was $431.3 million, up 3.8 percent from the previous year. Operating income for the quarter was $13.1 million, up 45.9 percent from the fourth quarter of the previous year. For the 12 months just ended, operating income was $23.8 million, up 25.7 percent from the previous 12-month period. * Infrastructure Management Division: The division develops and delivers information technology products and services that improve a company’s ability to manage its information technology delivery platform with lower costs and higher efficiencies. Such offerings include traditional IT outsourcing and transformational solutions such as the Acxiom data factory. Revenue for the quarter was $108.2 million, down 8.8 percent from the fourth quarter of the previous year. For the 12 months ended March 31, 2008, revenue was $447.5 million, down 6.1 percent from the previous year. Operating income for the quarter was $8.3 million, down 16.1 percent from the fourth quarter of the previous year. For the 12 months just ended, operating income was $44.3 million, down 10.3 percent from the previous 12-month period. Investor Day The company will be hosting an investor day on June 17 and providing a forecast for fiscal 2009 at that time. Company management will also discuss operations and prospects at the investor day. The event will be held at the NASDAQ facilities in New York and will be web cast. Further information will be made available at http://www.acxiom.com/ Web Link to Financials http://www.acxiom.com/FY08_Q4_Financialsis a link to the detailed financial information. About Acxiom Corporation Headquartered in Little Rock, Arkansas, Acxiom Corporation, (Nasdaq: ACXM) -- http://www.acxiom.com/-- integrates data, services and technology to create and deliver customer and information management solutions for many of the largest, most respected companies in the world. The core components of Acxiom's innovative solutions are Customer Data Integration (CDI) technology, data, database services, IT outsourcing, consulting and analytics, and privacy leadership. Founded in 1969, Acxiom has locations throughout the United States and Europe, and in Australia, China and Canada. * * * As reported in the Troubled Company Reporter on Dec. 17, 2007, Moody's Investors Service confirmed Acxiom's Ba2 corporate family rating and assigned a negative rating outlook, concluding a review for possible downgrade initiated on May 17, 2007, following the company's announcement that it had entered into a definitive agreement to be acquired by Silver Lake and ValueAct Capital for $3 billion. AES CORP: Fitch Rates Senior Unsecured Notes 'BB/RR1' ----------------------------------------------------- Fitch Ratings has assigned a 'BB/RR1' rating to AES Corporation's (AES) $600 million issuance of senior unsecured notes maturing 2020. AES' long-term Issuer Default Rating (IDR) is rated 'B+'. Fitch's rating is based on its expectation that AES will use the proceeds to pay down higher-cost debt. The Rating Outlook is Stable. The ratings of AES reflect the large amount of parent-company recourse debt, the structural subordination of that debt to subsidiary debt, and the reliance on distributions from its subsidiaries for parent company debt service. Offsetting, in part, the company's financial risk is the solid base of cash flow from utility businesses and contracted generation as well as the diversity of cash flow sources. The current Stable Rating Outlook reflects Fitch's expectation that credit metrics will stay within parameters for the current rating. Headquartered in Arlington, Virginia, AES Corporation -- http://www.aes.com/-- a global power company, operates in South America, Europe, Africa, Asia and the Caribbean countries. Generating 44,000 megawatts of electricity through 124 power facilities, the company delivers electricity through 15 distribution companies. Its consolidated revenues totaled $13.6 billion during fiscal year 2007. AES has been in Eastern Europe for over ten years, since it acquired three power plants in Hungary in 1996. Currently, AES has two distribution companies in Ukraine, which serve 1.2 million customers and generation plants in the Czech Republic and Hungary. AES is also the leading company in biomass conversion in Hungary, generating 37% of the nation's total renewable generation in 2004. AES started developing projects in India and Pakistan in 1992 and entered China's market in 1994. In 1996, AES joined with Chinese partners to build Yangcheng, the country's first "coal by wire" power plant, to help fuel China's rapid economic expansion through affordable power. In India, AES successfully participated in the country's first and only generation privatization. AES CORP: Moody's Puts B1 Rating on $600MM Senior Unsecured Notes ----------------------------------------------------------------- Moody's Investors Service has assigned a B1 rating to The AES Corporation's proposed issuance of $600 million senior unsecured notes due 2020. In addition, Moody's has affirmed the ratings of AES, including the company's Corporate Family Rating at B1, its Probability of Default Rating at B1, its senior secured credit facilities at Ba1, its second priority senior secured notes at Ba3, its senior unsecured notes at B1 and its trust preferred securities at B3. The rating outlook for AES is stable. The rating affirmation reflects an expectation that AES will use the proceeds from the proposed offering to refinance a similar amount of recourse debt. The rating affirmation also takes into account the company's concurrent effort to eliminate the financial covenants contained in its second priority senior secured notes. AES's ratings consider the company's high leverage and the structural subordination of its recourse debt to the significant level of non-recourse debt in its consolidated capital structure. Structural constraints are somewhat mitigated by the diversification provided by AES's large number of subsidiaries, their wide geographic distribution and balanced fuel mix, and the significant proportion of the company's cash flows that are subject to stable regulation or long-term contracts. Subsidiary distributions to AES are expected to be approximately $1.1 billion in 2008, similar to 2007 results. Recourse debt however increased approximately 16% or $760 million to $5.6 billion during 2007 as AES borrowed to finance growth. This increase in leverage constrains upward movement in AES's current rating levels over the near-term. The commercial operation of various generating stations currently under construction that are expected to achieve operation in the 2009/2010 timeframe is expected to improve the scale of subsidiary distributions and financial metrics and may be a trigger for upward ratings pressure. Ratings affirmed/LGD assessments revised: The AES Corporation -- Corporate Family Rating -- B1 -- Probability of Default Rating -- B1 -- Senior secured credit facilities -- Ba1 (LGD1, 5%) from (LGD1, 2%) -- Second priority senior secured note -- Ba3 (LGD3, 41%) from (LGD3, 38%) -- Senior unsecured notes -- B1 (LGD4, 56%) from (LGD4, 53%) AES Trust III -- Convertible trust preferred securities -- B3 (LGD6, 95%) from (LGD6, 94%) Rating assigned: The AES Corporation -- $600 million of new senior unsecured notes, B1 (LGD4, 56%) The AES Corporation is a global power company with generation and distribution assets in Europe, Asia, Latin America, Africa and the United States. Its consolidated revenues totaled $13.6 billion during fiscal year 2007. ALASKA AIR: Moody's Affirms All Ratings; Changes Outlook to Neg. ---------------------------------------------------------------- Moody's Investors Service affirmed all debt ratings of Alaska Air Group and its primary subsidiary Alaska Airlines, Inc. -- corporate family rating of B1. The outlook has been changed to negative from stable. The negative outlook reflects Moody's expectation that Alaska will record a net loss and negative cash flow from operations in 2008 due to the impact of materially higher fuel costs and weakening economic conditions which are likely to pressure yields. Although the company has fuel hedges that are meaningfully more beneficial than competitors, Alaska will be challenged to generate positive cash flow from operations if current fuel prices persist. Of greatest concern to Moody's is a deteriorating earnings environment for all airlines, including Alaska, primarily driven by persistently elevated fuel costs. Fuel now represents the largest component of airline's cost structures and expectations are that even if fuel costs moderate somewhat during the latter part of the year, the significant losses incurred in the early part of 2008 will not be offset. Under these conditions, Alaska's credit metrics are likely to worsen despite its actions to control costs which include fuel reduction initiatives such as a new flight planning system to effect more direct routings, single- engine taxi procedures, the use of more ground power at airports, and the installation of winglets which improve fuel efficiency. While likely to weaken by cash use, Alaska's liquidity profile remains adequate. Alaska has a less stressful capital spending plan this year because the majority of scheduled aircraft deliveries are financed and Alaska expects to receive financing on the remaining aircraft. As well, following the completion of fleet transition programs at Alaska Airlines and Horizon Air in 2008, capital spending is expected to decline materially in 2009. Alaska has modest near term debt maturities of approximately $100 million annually through 2012. Although Moody's expects Alaska to use cash in its operations in 2008, Moody's believe liquidity will be adequate due to the availability under an undrawn revolving line of credit. Moody's notes that Alaska remains well in compliance with the financial covenants associated with the revolver. If Alaska is unable to implement offsetting actions to improve its operating performance, such as further cost cutting initiatives, fuel surcharges or fare increases, the ratings could be pressured down. Of particular concern to the rating would be any evidence that sustained cash losses from operations were eroding the company's liquidity profile ore posing any risk to future covenant compliance under the bank facility. Alternatively, the outlook could be stabilized if fuel prices moderate and Alaska is able to resume profitable operations and improve its cash flow metrics. Outlook Actions: Issuer: Alaska Air Group, Inc. -- Outlook, Changed To Negative From Stable Issuer: Alaska Airlines Inc. -- Outlook, Changed To Negative From Stable Alaska Air Group, headquartered in Seattle, Washington, is a holding company for two U.S. passenger airlines, Alaska Airlines Inc. and Horizon Air Industries, Inc. AMERICAN AXLE: UAW Talks Stall Over Health & Unemployment Benefits ------------------------------------------------------------------ The strike called by the International United Auto Workers union at American Axle & Mnufacturing Holdings Inc.'s original U.S. locations continues into its 81th day. Approximately 3,650 associates are represented by the International UAW at these five facilities in Michigan and New York. AAM and the International UAW bargained over the past weekend and made progress on numerous issues. There are very few remaining issues separating the parties from reaching agreement. Negotiations have stalled since late Sunday over two issues: healthcare benefits for actively employed associates and Supplemental Unemployment Benefits. With respect to active healthcare benefits, the International UAW would like to continue a comprehensive plan design that would cost AAM approximately double the rate of its principal UAW-represented competitor suppliers in the U.S. SUB is a benefit not typically offered by automotive suppliers. SUB consists of both direct wage payments and benefit continuation for associates not working due to layoff. None of AAM's principal UAW-represented competitor suppliers have SUB in their labor agreements negotiated with the International UAW. SUB is a contract provision that is driving work out of AAM's original U.S. locations. Paying associates who are not working is an uncompetitive burden that AAM cannot bear if it is to compete successfully in the U.S. market and earn new or replacement business. Both of these benefit programs are major cost drivers that must be addressed in order for AAM to attain a U.S. market competitive labor agreement for the original U.S. locations. AAM is not -- and never has been -- an original equipment manufaturer, the company has indicated. AAM is a Tier 1, Tier 2 and Tier 3 supplier to the automotive industry. In addition to SUB, the International UAW is requesting many other OEM-style contract provisions for the original U.S. locations. These include a $5,000 signing bonus, buy-out incentives up to $140,000 per associate and buydowns that are comparable to agreements previously reached at Delphi and Magna New Process Gear. AAM desires to keep work in the original U.S. locations. AAM is prepared to invest up to $200 million in these facilities to support future product program sourcing if a U.S. market competitive labor agreement is attained with the International UAW. The recent and rapidly accelerating deterioration in the domestic light truck market is having a most severe negative impact on AAM's U.S. operations. While this is unfortunate, it is a market reality that AAM and the International UAW must jointly address. AAM stands ready to continue negotiating with the International UAW to reach an agreement that ends this terribly costly and disruptive strike so that the original U.S. locations can begin earning new and replacement business to sustain future operations. Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE:AXL) -- http://www.aam.com/-- and its wholly owned subsidiary, American Axle & Manufacturing, Inc., manufactures, engineers, designs and validates driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for light trucks, sport utility vehicles and passenger cars. In addition to locations in the United States (in Michigan, New York and Ohio), the company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea and the United Kingdom. * * * As reported in the Troubled Company Reporter on April 4, 2008, Moody's Investors Service placed American Axle & Manufacturing Holdings, Inc.'s Ba3 Corporate Family Rating under review for downgrade. AMERICAN HOME TRUST: S&P's Affirms 'B' Rating on Class M-5 Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on six classes of mortgage-backed notes issued by American Home Mortgage Assets Trust 2007-SD2. As of the April 2008 remittance period, total delinquencies were 87.72% of the current pool balance, while severe delinquencies were 82.22%. These levels are down slightly from the March 2008 remittance period, when total delinquencies were 88.13% of the current pool balance and severe delinquencies were 83.41%. Through the April 2008 remittance period, cumulative realized losses totaled 6.49% of the original pool balance. Despite the level of the delinquency pipeline and the realized losses this transaction has experienced, which S&P believe are consistent with the characteristics of the collateral, S&P affirmed its ratings on the six outstanding classes because its analysis indicates that they have adequate credit support percentages for their current ratings. This deal has a current outstanding pool factor of 79.58% and is 11 months seasoned. Subordination provides credit support for this deal. The pool originally consisted of fixed- and adjustable-rate mortgage loans, a substantial portion of which are in bankruptcy, or foreclosure proceedings, or are otherwise nonperforming. The mortgage loans are secured by first or second liens on one- to four-family residential properties, planned unit developments, condominiums, and manufactured housing. Ratings Affirmed American Home Mortgage Assets Trust 2007-SD2 Mortgage-backed notes series 2007-SD2 Class Rating ----- ------ A AAA M-1 AA M-2 A M-3 BBB M-4 BB M-5 B AMERICAN HOME TRUST: S&P Slashes Rating to 'D' on Cl. II-M-1 Trust ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on classes II-A and II-M-1 from American Home Mortgage Investment Trust 2007-A. S&P downgraded class II-A to 'CCC' from 'AAA' and downgraded class II-M-1 to 'D' from 'AA'. The downgrades reflect the deteriorating performance of the collateral pool as monthly net losses continue to significantly outpace monthly excess interest cash flows, resulting in the complete write-down of the overcollateralization for loan group II. The other subordinate classes from this loan group (classes II-M-2, II-M-3, II-M-4, II-M-5, and II-M-6) have already experienced complete write-downs to their principal balances. During the March 2008 remittance period, the loan group experienced a $6,810,484 realized loss, which resulted in the complete write-down to the principal balances of classes II-M-2, II-M-3, II-M-4, II-M-5, and II-M-6. As a result, Standard & Poor's withdrew its ratings on these classes on May 13, 2008. In addition, class II-M-1 experienced a partial write-down to its principal balance, which caused the class to default. Consequently, S&P have lowered the rating on this class to 'D'. As of the April 2008 remittance period, cumulative losses for loan group II, as a percentage of the original pool balance, totaled 21.86%. Total delinquencies (30-plus days, foreclosures, and REOs) for the loan group II total 21.26%. Subordination and excess spread provide credit support for the affected loan group. The collateral for this loan group primarily consists of closed-end second-lien, adjustable- and fixed-rate mortgage loans secured by one- to four-family residential properties. Ratings Lowered American Home Mortgage Investment Trust 2007-A Rating ------ Class To From ----- -- ---- II-A CCC AAA II-M-1 D AA AMP'D MOBILE: Files $90,982 Preference Suit Against LetsTalk.Com ---------------------------------------------------------------- Amp'd Mobile, Inc., filed a complaint against LetsTalk.Com, Inc., before the United States Bankruptcy Court in the District of Delaware, seeking to recover money with respect to certain transfers. The Debtor also seeks to avoid those Transfers. The Debtor relates that it transacted business with LetsTalk.Com, Inc. prior to the Petition Date. It caused the transfer of certain amounts, totaling $90,982, from a bank account owned by the Debtor to LetsTalk.Com. Accordingly, the Transfer was a transfer of an interest of the Debtor in property, Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP, in Wilmington Delaware, points out. He adds that the Transfer was made to or for the benefit of LetsTalk.com. Also, LetsTalk.com's claim against the Debtor for which the Transfer was made was an antecedent debt. Mr. Yoder also cites that the Transfer was made on or within 90 days before the Petition Date, of which during that time, the Debtor was insolvent, as that term is defined in Section 101(32) of the Bankruptcy Code. The Debtor's debts exceeded the value of all of its property, he avers. Mr. Yoder adds that the Transfer enabled LetsTalk.com to receive more than it would receive if: (a) the Debtor's case was a case under Chapter 7 of the Bankruptcy Code; (b) the transfer had not been made; and (c) the Transferee received payment of its debt to the extent provided by the Bankruptcy Court. Mr. Yoder informs the Court that on December 18, 2007, the Debtor, by their counsel, made written demand on LetsTalk.com for the return of the Transfer. LetsTalk.com, however, has failed or refused to return the Transfer. Mr. Yoder argues that the Transfers are avoidable under Section 547(b) of the Bankruptcy Code and that the property is recoverable from the Transferee pursuant to Section 550 of the Bankruptcy Code. Accordingly, the Debtor ask the Court to: (a) avoid, and allow it, to recover the Transfers; (b) to the extent LetsTalk.com holds a claim against the Debtor or its bankruptcy estate, disallow that claim pursuant to Section 502(d); (c) grant it an award of pre-judgment interest on the value of the Transfer from the date of its demand letter until the entry of judgment; (d) award to it costs and disbursement of expenses it incurred in relation to the Adversary Proceeding. 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: Inks Stipulation Rejecting Westside Medical Lease --------------------------------------------------------------- Amp'd Mobile, Inc., and Westside Medical Park LLC, as landlord, were parties to a certain lease agreement dated March 5, 2007, wherein the Debtor leased office and warehouse space consisting of: -- approximately 70,000 rentable square feet of office space located at 1933 and 1925 S. Bundy Drive, in Los Angeles, California; and -- a portion of approximately 15,000 square feet of space at 1901 S. Bundy Drive, in Los Angeles, California. In a stipulation approved by the U.S. Bankruptcy Court for the District of Delaware, the parties agreed that: (1) The Lease is rejected effective September 30, 2007. (2) Any right to possession of the Premises by or through the Debtor, the estate, or anyone claiming any interest in the Premises, is terminated and forfeited under applicable non-bankruptcy law as of September 30, 2007. (3) The Debtor, the estate, and any person or entity claiming a right to possession under or through the Debtor or otherwise, will immediately quit and deliver possession of the Premises to the Landlord or its authorized agent. (4) The Premises will immediately be delivered to the Landlord and any personal property and furniture, fixtures, and equipment remaining in or on the Premises after September 30, 2007 is deemed abandoned to the Landlord pursuant to Section 554 of the Bankruptcy Code and the Landlord will have limited relief from the automatic stay imposed by Section 362 solely for the purpose of disposing any of the Debtor's personal property remaining in or on the Premises after September 30, 2007, as well as any interior or exterior signage without any liability to the Debtor for violation of the automatic stay. The stay relief will permit the Landlord to serve any notice on the Debtor as is required by the law of the State of California prior to disposing of any of the Debtor's personal property remaining in or on the Premises. (5) The Landlord will also have relief from the automatic stay to set off under Section 553, or otherwise recoup, and apply, the Security Deposit of $259,000 against the general unsecured portion of any claim that it files in the Debtor's bankruptcy case. Provided however, that before recouping or applying the Security Deposit, the Landlord will provide the Debtor, the Secured Lender and the Official Committee of Unsecured Creditors written notice of the intended application, and the Debtor, Secured Lender and Committee will have 10 days to object in writing to that application. If any objection is not resolved, the parties may seek a resolution of the objection from the Court. (6) Modification of the automatic stay permits the Landlord to issue, file, serve, or record any and all notices as may be desirable or necessary under applicable non-bankruptcy law in conjunction with the exercise of its rights and remedies to recover possession of the Premises, terminate the Lease, and to dispose of any personal property remaining on the Premises without any liability whatsoever to the Debtor or any third party. The Landlord does not have relief from the automatic stay to seek and recover any monetary amounts from the Debtor for any reason or to pursue any action against the Debtor based on mechanic's liens or other liens asserted on the Premises. (7) The Landlord will have an allowed $137,410 administrative claim under Section 365(d)(3) and Section 503(b)(1) for June 2007 rent and related charges, which will be paid pari passu with the payment of all other administrative claims in the Debtor's bankruptcy proceeding pursuant to a confirmed plan of liquidation without further need of the Landlord to file an additional administrative expense claim or demand for administrative expense payment. 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: Judge Sees Appointment of Equity Holders Panel as Moot ------------------------------------------------------------------ The Hon. Arthur Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York denied a request to immediately appoint an Official Committee of Equity Holders filed by ValueVest High Concentration Master Fund Ltd., equity security holder and party-in-interest of Ampex Corporation and its debtor-affiliates, Tiffany Kary of Bloomberg News reports. Ms. Kary quotes Judge Gonzalez as saying that the company is insolvent and shareholders are not going to get any distribution in this bankruptcy case. Judge Gonzalez is convinced that the company can no longer pay equity holders, she notes. As reported in the Troubled Company Reporter on May 5, 2008, ValueVest said the Committee is expected to represent and prosecute the interest of shareholders and recover certain of their equity stake in the Debtors. ValueVest argued that the Debtors are not insolvent and there is a substantial likelihood of a meaningful distribution to equity. The Debtors have at least 393 shareholders with Class A common stock outstanding as of March 25, 2008, wherein ValueVest holds 13.4% shares of the Debtors' Class A common stock. About Ampex Corporation Headquartered in Redwood City, California, Ampex Corporation -- http://www.ampex.com-- designs and manufactures data storage products used in defense application to gather images and other date from aircrafts, satellites and submarines. The company and six of its affiliates filed for Chapter 11 protection on March 30, 2008 (Bankr. S.D.N.Y. Lead Case No.08- 11094). Matthew Allen Feldman, Esq., and Rachel C. Strickland, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Systems Bankruptcy Solution as claims, noticing and balloting agent. The U.S. Trustee for Region 2 appointed five creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection against their creditors, they listed total assets of $26,467,000 and total debts of $133,602,000. As of Dec. 31, 2007, Ampex reported a balance sheet data with total assets of $26.46 million, total liabilities of $133.60 million resulting to a total stockholders' deficit of $107.13 million. ASCALADE COMM: Hong Kong Court OKs ACL's Scheme of Arrangement -------------------------------------------------------------- Ascalade Communications Inc. disclosed that the High Court of Hong Kong sanctioned the Scheme of Arrangement filed by Ascalade Communications Limited under Section 166 of the Companies Ordinance (Chapter 32) of Hong Kong, in connection with the on- going legal proceedings filed by Ascalade and Ascalade Technologies Inc. in Canada under the Companies' Creditors Arrangement Act. Ascalade Communications Limited is an indirect subsidiary of the company and is a major operating company in the Ascalade group of companies. The Scheme of Arrangement was approved at a meeting of the creditors of ACL held on May 2, 2008. As an outcome of the court sanctioning the Scheme, Deloitte & Touche Hong Kong have been appointed Scheme Administrators and will oversee management in the orderly wind-up of ACL and sale of the assets located in the Peoples Republic of China. In the Scheme, the Administrator has estimated that proven ACL creditors will potentially receive a dividend of $0.37 for each dollar filed in a claim, there are certain qualifications and warnings which are associated with this realization; as ACL has not yet realized upon its assets and all creditors' claims have not yet been adjudicated. It should be noted that the companies have filed claims against ACL in the Scheme. Subsequent to the sanctioning of the Scheme by the Hong Kong High Court, the company will commence formal marketing of the significant assets located in the PRC, namely the factory, machinery and equipment and raw material inventory. Progress in these marketing efforts will be the subject of future updates. Any recovery in the CCAA for creditors and other stakeholders of the companies, including shareholders, is uncertain and is highly dependent upon a number of factors, including the recovery from the sale of the factory, equipment and inventory in the PRC and the outcome of the Scheme in Hong Kong. In addition, Ascalade is providing this update in accordance with Ontario Securities Commission Policy 57-603 Defaults by Reporting Issuers in Complying with Financial Statement Filing Requirements. In accordance with the OSC Policy, the company confirms that, except as disclosed in press statements dated April 2, 2008, April 9, 2008, and April 29, 2008, issued by the company since its initial default statement dated March 31, 2008: (i) there is no material change to the information set out in its initial default statement filed pursuant to the OSC Policy; (ii) there has been no failure by the company to adhere to the Alternative Information Guidelines set out in the OSC Policy with respect to the financial statement filing default; and (iii) there is no other material information concerning the affairs of the company that has not been generally disclosed. About Ascalade Communications Inc. Based in Richmond, British Columbia, Ascalade Communications Inc. (TSE:ACG) -- http://www.ascalade.com/ -- is an innovative product company that designs, develops and manufactures digital wireless and communication products. The company deliver products by offering its partners and customers complete vertical integration, from product design and development to final production. The company's products include digital cordless phones, Voice over Internet Protocol phones, digital wireless baby monitors and digital wireless conference phones. Ascalade products have been distributed in more than 35 countries and under 80 regional brands. Ascalade also has facilities in Qingyuan, China, Hong Kong and a sales office in Hertfordshire, United Kingdom. On April 29, 2008, Jervis Rodrigues, senior vice-president of Deloitte & Touche Inc., filed separate petitions for protection under Chapter 15 of the U.S. Bankruptcy Code on behalf of Ascalade Communications Inc. and its debtor-affiliate (Bankr. N.D. Ill. Case Nos. 08-10612 and 08-10616). Jeffrey G. Close, Esq. at Chapman and Cutler LLP represents the Petitioner in the Chapter 15 case. Ascalade's financial condition as of September 2007 showed total assets of $99,630,000 and total debts of $40,410,000. ATHERTON & JENNINGS: Case Summary & Three Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Atherton & Jennings 120, LLC 129 West Third St. Tulsa, OK 74103 Bankruptcy Case No.: 08-11031 Chapter 11 Petition Date: May 5, 2008 Court: Northern District of Oklahoma (Tulsa) Judge: Terrence L. Michael Debtor's Counsel: Scott P. Kirtley, Esq. Email: skirtleyattorney@riggsabney.com Riggs, Abney, Neal, Turpen, Orbison 502 West 6th St. Tulsa, OK 74119-1016 Tel: (918) 587-3161 http://www.riggsabney.com/ Total Assets: $1,600,751 Total Debts: $1,545,077 Debtor's Three Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service penalty for unfiled $2,089 Ogden, UT 84201-0038 return Downtown Tulsa Unlimited fees $1,132 321 S. Boston Tulsa, OK 74103 American Electric Power utilities $488 P.O. Box 24421 Canton, OH 44701-4421 BEAR STEARNS ABS: Fitch Rates 57 Classes Below Investment Grade --------------------------------------------------------------- Fitch Ratings has taken these rating actions on Bear Stearns Asset Backed Securities mortgage pass-through certificates. Unless stated otherwise, any bonds that were previously placed on Rating Watch Negative are now removed. Affirmations total $2.2 billion and downgrades total $691.9 million. Additionally, $179.5 million was placed on Rating Watch Negative. BSABS Trust 2002-2 -- $22.7 million class A-1 affirmed at 'AAA'; -- $3.0 million class A-2 affirmed at 'AAA'; -- $3.7 million class M-1 affirmed at 'AA+'; -- $3.3 million class M-2 affirmed at 'A+'; -- $3.9 million class B affirmed at 'BBB'; BSABS Trust 2003-1 -- $54.3 million class A-1 affirmed at 'AAA'; -- $7.1 million class A-2 affirmed at 'AAA'; -- $9.0 million class M-1 affirmed at 'AA'; -- $8.6 million class M-2 affirmed at 'A'; -- $6.6 million class B affirmed at 'BBB'; BSABS Trust 2003-2 TOTAL -- $24.7 million class A-1 affirmed at 'AAA'; -- $15.5 million class A-2 affirmed at 'AAA'; -- $28.6 million class A-3 affirmed at 'AAA'; -- $10.2 million class M-1 affirmed at 'AA'; -- $9.1 million class M-2 downgraded to 'BBB+' from 'A'; -- $8.2 million class B downgraded to 'BB' from 'BBB'; BSABS Trust 2003-3 -- $39.6 million class A-2 affirmed at 'AAA'; -- $7.8 million class M-1 affirmed at 'AA'; -- $7.1 million class M-2 affirmed at 'A'; -- $4.5 million class B affirmed at 'BBB'; BSABS Trust 2003-SD1 -- $45.1 million class A affirmed at 'AAA'; -- $4.7 million class M-1 affirmed at 'AA'; -- $4.2 million class M-2 affirmed at 'A'; -- $3.0 million class B affirmed at 'BBB'; BSABS Trust 2003-SD2 TOTAL -- $4.7 million class I-A affirmed at 'AAA'; -- $11.8 million class II-A affirmed at 'AAA'; -- $6.2 million class III-A affirmed at 'AAA'; -- $3.6 million class B-1 affirmed at 'AA'; -- $3.0 million class B-2 affirmed at 'A'; -- $2.4 million class B-3 affirmed at 'BBB'; BSABS Trust 2003-SD3 -- $44.0 million class A affirmed at 'AAA'; -- $5.3 million class M-1 affirmed at 'AA'; -- $4.5 million class M-2 affirmed at 'A'; -- $3.6 million class B affirmed at 'BBB'; BSABS Trust 2004-1 -- $22.9 million class A-2 affirmed at 'AAA'; -- $17.7 million class M-1 affirmed at 'AA'; -- $5.5 million class M-2 affirmed at 'AA'; -- $2.2 million class M-3 affirmed at 'A'; -- $0.1 million class B-1 affirmed at 'BBB+'; -- $2.3 million class B-2 rated 'BBB-', placed on Rating Watch Negative; Bear Stearns Asset Backed Securities Trust 2004-2 -- $10.4 million class A-1 affirmed at 'AAA'; -- $19.7 million class A-3 affirmed at 'AAA'; -- $11.5 million class A-5 affirmed at 'AAA'; -- $11.3 million class M-1 affirmed at 'AA+'; -- $13.7 million class M-2 affirmed at 'BBB+'; -- $4.6 million class M-3 downgraded to 'B' from 'BB'; -- $1.2 million class B downgraded to 'CCC/DR2' from 'B'; BSABS Trust 2004-SD2 -- $4.4 million class I-A affirmed at 'AAA'; -- $4.0 million class II-A affirmed at 'AAA'; -- $10.2 million class III-A affirmed at 'AAA'; -- $11.1 million class IV-A affirmed at 'AAA'; -- $4.7 million class B-1 affirmed at 'AA'; -- $3.9 million class B-2 affirmed at 'A'; -- $3.3 million class B-3 affirmed at 'BBB'; -- $2.6 million class B-4 affirmed at 'BB-'; -- $1.8 million class B-5 affirmed at 'B'; Bear Stearns Asset Backed Securities Trust 2005-1 -- $4.6 million class A affirmed at 'AAA'; -- $37.7 million class M1 affirmed at 'AA'; -- $18.5 million class M2 downgraded to 'BB-' from 'BBB-'; -- $4.3 million class M3 downgraded to 'B+' from 'BB'; -- $3.9 million class M4 downgraded to 'B+' from 'BB-'; -- $3.0 million class M5 affirmed at 'B'; -- $4.5 million class M6 downgraded to 'C/DR5' from 'CC'; -- $7.4 million class M7 downgraded to 'C/DR6' from 'CC'; Bear Stearns Asset Backed Securities Trust 2005-2 -- $7.2 million class A-2 affirmed at 'AAA'; -- $24.1 million class A-3 affirmed at 'AAA'; -- $34.0 million class M-1 affirmed at 'AA'; -- $17.7 million class M-2 affirmed at 'A'; -- $3.9 million class M-3 affirmed at 'BBB+'; -- $5.8 million class M-4 affirmed at 'BBB-'; -- $3.2 million class M-5 downgraded to 'BB' from 'BBB-'; -- $4.6 million class M-6 downgraded to 'B+' from 'BB'; -- $10.2 million class M-7 downgraded to 'C/DR5' from 'C'; Bear Stearns Asset Backed Securities Trust 2005-3 -- $40.5 million class A-1 affirmed at 'AAA'; -- $23.6 million class A-3 affirmed at 'AAA'; -- $26.1 million class M-1 affirmed at 'AA'; -- $14.8 million class M-2 downgraded to 'BBB' from 'A'; -- $3.4 million class M-3 downgraded to 'BBB-' from 'A-'; -- $3.0 million class M-4 downgraded to 'BB' from 'BBB+'; -- $3.4 million class M-5 downgraded to 'BB' from 'BBB'; -- $2.9 million class M-6 downgraded to 'BB-' from 'BBB-'; -- $5.3 million class M-7 downgraded to 'B+' from 'BB'; Bear Stearns Asset Backed Securities Trust 2005-SD1 Group 1 -- $0.0 million class I-A-1 affirmed at 'AAA'; -- $36.0 million class I-A-2 affirmed at 'AAA'; -- $53.7 million class I-A-3 rated 'AAA', placed on Rating Watch Negative; -- $7.6 million class I-M-1 affirmed at 'AA'; -- $3.8 million class I-M-2 affirmed at 'A'; -- $2.3 million class I-M-3 downgraded to 'BBB+' from 'A-'; -- $2.3 million class I-M-4 downgraded to 'BBB' from 'BBB+'; -- $2.3 million class I-M-5 downgraded to 'BB' from 'BBB'; -- $2.3 million class I-M-6 downgraded to 'BB-' from 'BBB-'; -- $2.3 million class I-B downgraded to 'B' from 'BB'; Bear Stearns Asset Backed Securities Trust 2005-SD1 Group 2 -- $25.3 million class II-A affirmed at 'AAA'; -- $5.9 million class II-M-1 affirmed at 'AA'; -- $3.7 million class II-M-2 affirmed at 'A'; -- $2.5 million class II-M-3 affirmed at 'BBB'; -- $2.0 million class II-B affirmed at 'BBB-'; Bear Stearns Asset Backed Securities, Inc. 2005-SD2 ARM Loans -- $38.1 million class II-A-1 affirmed at 'AAA'; -- $4.3 million class II-A-2 affirmed at 'AAA'; -- $11.5 million class II-M-1 affirmed at 'AA'; -- $5.9 million class II-M-2 downgraded to 'BBB' from 'A'; -- $5.7 million class II-M-3 downgraded to 'BB' from 'BBB'; -- $1.1 million class II-B downgraded to 'BB-' from 'BBB-'; Bear Stearns Asset Backed Securities, Inc. 2005-SD2 FRM Loans -- $3.7 million class I-A-1 affirmed at 'AAA'; -- $20.8 million class I-A-2 affirmed at 'AAA'; -- $61.1 million class I-A-3 affirmed at 'AAA'; -- $10.2 million class I-M-1 affirmed at 'AA'; -- $3.4 million class I-M-2 affirmed at 'A'; -- $2.0 million class I-M-3 affirmed at 'A-'; -- $2.0 million class I-M-4 downgraded to 'BBB' from 'BBB+'; -- $2.0 million class I-M-5 downgraded to 'BB' from 'BBB'; -- $1.0 million class I-M-6 downgraded to 'BB-' from 'BBB-'; -- $2.9 million class I-B downgraded to 'B+' from 'BB'; Bear Stearns Asset Backed Securities 2005-SD3 I LLC Group 1 -- $120.4 million class I-A rated 'AAA', placed on Rating Watch Negative; -- $12.9 million class I-M-1 downgraded to 'A' from 'AA'; -- $6.6 million class I-M-2 downgraded to 'BBB' from 'A'; -- $1.8 million class I-M-3 downgraded to 'BBB-' from 'A-'; -- $1.4 million class I-M-4 downgraded to 'BB+' from 'BBB+'; -- $1.2 million class I-M-5 downgraded to 'BB' from 'BBB'; -- $1.2 million class I-M-6 downgraded to 'BB-' from 'BBB-'; Bear Stearns Asset Backed Securities 2005-SD3 I LLC Group 2 -- $29.7 million class II-A-1 affirmed at 'AAA'; -- $3.3 million class II-A-2 affirmed at 'AAA'; -- $7.8 million class II-M-1 affirmed at 'AA'; -- $3.7 million class II-M-2 affirmed at 'A'; -- $2.5 million class II-M-3 affirmed at 'BBB'; -- $0.6 million class II-M-4 affirmed at 'BBB-'; -- $1.5 million class II-B affirmed at 'BB'; Bear Stearns Asset Backed Securities 2005-SD4 Group I - FRMs -- $87.4 million class I-A-1 downgraded to 'AA' from 'AAA'; -- $36.2 million class I-A-2 downgraded to 'AA' from 'AAA'; -- $7.6 million class I-PO downgraded to 'AA' from 'AAA'; -- $0.0 million class I-X affirmed at 'AAA'; -- $9.0 million class I-B-1 downgraded to 'BBB+' from 'AA'; -- $3.5 million class I-B-2 downgraded to 'BBB-' from 'A'; -- $2.0 million class I-B-3 downgraded to 'BB' from 'BBB'; -- $1.9 million class I-B-4 downgraded to 'B' from 'BB'; -- $1.1 million class I-B-5 downgraded to 'C/DR6' from 'B'; Bear Stearns Asset Backed Securities 2005-SD4 Group II - ARMs -- $55.8 million class II-A-1 affirmed at 'AAA'; -- $6.2 million class II-A-2 affirmed at 'AAA'; -- $11.5 million class II-M-1 affirmed at 'AA'; -- $5.1 million class II-M-2 downgraded to 'BBB-' from 'A'; -- $2.5 million class II-M-3 downgraded to 'BB' from 'BBB'; -- $0.9 million class II-M-4 downgraded to 'BB-' from 'BBB-'; Bear Stearns Asset Backed Securities Trust 2006-SD1 -- $200.4 million class A affirmed at 'AAA'; -- $16.5 million class M-1 affirmed at 'AA'; -- $8.9 million class M-2 downgraded to 'BBB' from 'A'; -- $4.7 million class M-3 downgraded to 'BB' from 'BBB'; -- $1.8 million class M-4 downgraded to 'BB-' from 'BBB-'; Bear Stearns Asset Backed Securities Trust 2006-SD2 Aggregate -- $64.3 million class A-1 affirmed at 'AAA'; -- $70.6 million class A-2 affirmed at 'AAA'; -- $56.8 million class A-3 affirmed at 'AAA'; -- $16.4 million class M-1 affirmed at 'AA'; -- $8.3 million class M-2 affirmed at 'A'; -- $5.7 million class M-3 downgraded to 'BB' from 'BBB'; -- $1.1 million class M-4 downgraded to 'BB-' from 'BBB-'; Bear Stearns Asset Backed Securities Trust 2006-SD3 ARM -- $26.2 million class II-1A-1 downgraded to 'A' from 'AAA'; -- $6.2 million class II-1A-2 downgraded to 'A' from 'AAA'; -- $23.8 million class II-2A-1 downgraded to 'A' from 'AAA'; -- $5.6 million class II-2A-2 downgraded to 'A' from 'AAA'; -- $27.9 million class II-3A-1 downgraded to 'A' from 'AAA'; -- $7.0 million class II-3A-2 downgraded to 'A' from 'AAA'; -- $0.0 million class II-X-1 affirmed at 'AAA'; -- $0.0 million class II-X-2 affirmed at 'AAA'; -- $10.5 million class II-B-1 downgraded to 'BBB+' from 'AA'; -- $5.3 million class II-B-2 downgraded to 'BBB-' from 'A'; -- $2.9 million class II-B-3 downgraded to 'BB' from 'BBB'; -- $1.9 million class II-B-4 downgraded to 'B' from 'BB'; -- $1.5 million class II-B-5 downgraded to 'C/DR6' from 'B'; Bear Stearns Asset Backed Securities Trust 2006-SD3 FRM -- $39.1 million class I-A-1A downgraded to 'A-' from 'AAA'; -- $3.3 million class I-A-1B downgraded to 'A-' from 'AAA'; -- $4.6 million class I-A-1C downgraded to 'A-' from 'AAA'; -- $24.2 million class I-A-2A downgraded to 'A-' from 'AAA'; -- $8.0 million class I-A-2B downgraded to 'A-' from 'AAA'; -- $49.1 million class I-A-3 downgraded to 'A-' from 'AAA'; -- $1.9 million class I-PO downgraded to 'A-' from 'AAA'; -- $0.0 million class I-X affirmed at 'AAA'; -- $8.9 million class I-B-1 downgraded to 'BBB+' from 'AA'; -- $4.3 million class I-B-2 downgraded to 'BBB-' from 'A'; -- $2.8 million class I-B-3 downgraded to 'BB' from 'BBB'; -- $2.7 million class I-B-4 downgraded to 'B' from 'BB'; -- $2.4 million class I-B-5 downgraded to 'DR' from 'B'; Bear Stearns Asset Backed Securities Trust 2006-SD4 -- $50.3 million class 1A-1 affirmed at 'AAA'; -- $18.0 million class 1A-2 affirmed at 'AAA'; -- $17.5 million class 1A-3 affirmed at 'AAA'; -- $45.0 million class 2A-1 affirmed at 'AAA'; -- $7.7 million class 2A-2 affirmed at 'AAA'; -- $34.4 million class 3A-1 affirmed at 'AAA'; -- $5.9 million class 3A-2 affirmed at 'AAA'; -- $14.4 million class B-1 downgraded to 'BBB+' from 'AA'; -- $6.7 million class B-2 downgraded to 'BBB-' from 'A'; -- $3.9 million class B-3 downgraded to 'BB' from 'BBB'; -- $1.8 million class B-4 downgraded to 'B+' from 'BB'; -- $2.7 million class B-5 downgraded to 'B' from 'B'; -- $0.0 million class X-2 affirmed at 'AAA'; Bear Stearns Asset Backed Securities Trust 2006-2 -- $33.9 million class A-1 affirmed at 'AAA'; -- $34.7 million class A-2 affirmed at 'AAA'; -- $9.7 million class A-3 affirmed at 'AAA'; -- $15.6 million class M-1 affirmed at 'AA'; -- $4.4 million class M-2 affirmed at 'AA-'; -- $7.8 million class M-3 affirmed at 'A'; -- $3.5 million class M-4 affirmed at 'A-'; -- $3.4 million class M-5 affirmed at 'BBB+'; -- $3.0 million class M-6 affirmed at 'BBB'; -- $3.0 million class M-7 affirmed at 'BBB-'; Bear Stearns Asset Backed Securities Trust 2007-SD1 ARMs -- $42.4 million class II-1A-1 affirmed at 'AAA'; -- $5.3 million class II-1A-2 affirmed at 'AAA'; -- $31.9 million class II-2A-1 affirmed at 'AAA'; -- $4.0 million class II-2A-2 affirmed at 'AAA'; -- $30.0 million class II-3A-1 affirmed at 'AAA'; -- $3.8 million class II-3A-2 affirmed at 'AAA'; -- $7.8 million class II-B-1 downgraded to 'BBB+' from 'AA'; -- $3.0 million class II-B-2 downgraded to 'BBB-' from 'A'; -- $2.1 million class II-B-3 downgraded to 'BB' from 'BBB'; -- $0.9 million class II-B-4 downgraded to 'B+' from 'BB'; -- $0.7 million class II-B-5 rated 'B', placed on Rating Watch Negative; Bear Stearns Asset Backed Securities Trust 2007-SD1 FRMs -- $35.7 million class I-A-1 affirmed at 'AAA'; -- $23.3 million class I-A-2A affirmed at 'AAA'; -- $2.5 million class I-A-2B affirmed at 'AAA'; -- $26.2 million class I-A-3A affirmed at 'AAA'; -- $2.8 million class I-A-3B affirmed at 'AAA'; -- $1.7 million class I-PO affirmed at 'AAA'; -- $0.0 million class I-X affirmed at 'AAA'; -- $5.3 million class I-B-1 downgraded to 'BBB+' from 'AA'; -- $3.0 million class I-B-2 downgraded to 'BBB-' from 'A'; -- $1.9 million class I-B-3 downgraded to 'BB' from 'BBB'; -- $1.2 million class I-B-4 downgraded to 'B+' from 'BB'; -- $0.8 million class I-B-5 rated 'B', placed on Rating Watch Negative; Bear Stearns Asset Backed Securities Trust 2007-SD2 FRMS -- $30.1 million class I-A-1A affirmed at 'AAA'; -- $1.6 million class I-A-1B affirmed at 'AAA'; -- $22.6 million class I-A-2A affirmed at 'AAA'; -- $1.2 million class I-A-2B affirmed at 'AAA'; -- $45.1 million class I-A-3A affirmed at 'AAA'; -- $2.4 million class I-A-3B affirmed at 'AAA'; -- $1.7 million class I-PO affirmed at 'AAA'; -- $0.0 million class I-X affirmed at 'AAA'; -- $8.1 million class I-B-1 downgraded to 'BBB+' from 'AA'; -- $4.9 million class I-B-2 downgraded to 'BBB-' from 'A'; -- $2.8 million class I-B-3 downgraded to 'BB' from 'BBB'; -- $2.4 million class I-B-4 downgraded to 'B+' from 'BB'; -- $1.5 million class I-B-5 rated 'B', placed on Rating Watch Negative. BERRY PLASTICS: Posts $29.3MM Net Loss in Quarter Ended March 29 ---------------------------------------------------------------- Berry Plastics Corp. reported a net loss of $29.3 million for the second quarter ended March 29, 2008, compared with a net loss of $13.6 million in the corresponding period ended March 31, 2007. Net sales increased 14.0% to $844.3 million for the quarter from $741.6 million for the prior quarter. This $102.7 million increase includes acquisition volume growth of 9.0%. Net sales in the rigid open top business increased from $219.5 million in the prior quarter to $247.9 million in the quarter. Base volume growth in the rigid open top business, excluding net selling price increases, was 5.0% driven primarily by growth in the company's various container product lines and thermoformed drink cups. Net sales in the rigid closed top business increased from $155.2 million in the prior quarter to $211.2 million in the quarter primarily as a result of acquisition volume growth attributed to Captive and MAC totaling $51.0 million for the quarter. The flexible film business net sales increased from $229.2 million in the prior quarter to $257.8 million in the quarter. Acquisition volume growth attributed to Rollpak was $14.3 million for the quarter. Base volume declined, excluding net selling price increases, by 11.0% for the quarter primarily due to softness in the housing market and the company's decision to discontinue historically lower margin business. Net sales in the tapes/coatings business decreased from $137.7 million in the prior quarter to $127.4 million in the quarter primarily driven by softness in the new home construction and automotive markets partially offset by strong volume growth in the corrosion protection business. Gross profit decreased by $9.3 million to $112.4 million for the quarter from $121.7 million for the prior quarter. This decrease is primarily attributed to the timing lag of passing through increased raw material costs to customers as well as $2.4 million of purchase accounting inventory adjustments related to the acquisitions of Captive and MAC partially offset by additional sales volume and productivity improvements in the flexible films and tapes/coatings segments as a result of realizing synergies from the Berry Covalence merger. Total operating expenses increased to $91.2 million, from $84.1 million in the prior quarter, primarily as a results of increases in selling, general and administrative expenses. Net interest expense increased $8.1 million to $67.2 million for the quarter from $59.1 million in the prior quarter primarily as a result of increased borrowings to finance the Captive acquisition. For the quarter, the company recorded an income tax benefit of $16.7 million or an effective tax rate of 36.3%, which is a change of $9.4 million from the income tax benefit of $7.3 million or an effective tax rate of 34.1% in the prior quarter. 26 Weeks Ended March 29, 2008 Net sales increased 11.0% to $1.6 billion billion for the 26 weeks ended March 29, 2008, from $1.4 billion for the same period ended March 31, 2007. This $161.8 million increase includes 6.0% acquisition related volume growth. Gross profit increased by $13.1 million to $221.2 million from $208.1 million for the 26 weeks ended March 31, 2007. This increase is primarily the result of the additional sales volume and productivity improvements in the flexible films and tapes/coatings segments as a result of realizing synergies from the Berry Covalence Merger. Selling, general and administrative expenses increased by $14.0 million to $165.4 million for the 26 weeks ended March 29, 2008, from $151.4 million during the same period of fiscal 2007. Restructuring and impairment charges were $5.2 million primarily as a result of costs incurred associated with the plant consolidations within the flexible films and tapes/coatings segments. Other expenses increased from $7.5 million during the 26 weeks ended March 31, 2007, to $18.9 million for the 26 weeks ended March 29, 2008, primarily as a result of expenses associated with the integration of Old Covalence and the corresponding achievement of synergies. Net interest expense increased $9.7 million to $128.7 million for from $119.0 million in the prior 26 week period primarily as a result of increased borrowings to finance the Captive acquisition. The company recorded an income tax benefit of $36.4 million or an effective tax rate of 37.5%, which is a change of $9.6 million from the income tax benefit of $26.8 million or an effective tax rate of 36.3% in the prior 26-week period. Net loss was $60.6 million for the 26 weeks ended March 29, 2008, compared to a net loss of $44.4 million for the 26 weeks ended March 31, 2007. Liquidity and Capital Resources The company's senior secured credit facilities consist of a $1.2 billion term loan and a $400.0 million asset based revolving line of credit. The term loan matures on April 3, 2015, and the revolving line of credit matures on April 3, 2013. At March 29, 2008, the company had unused borrowing capacity of $243.8 million under the revolving line of credit. The company was in compliance with all covenants at March 29, 2008. At March 29, 2008, the company had outstanding long-term debt of $3.3 billion, compared to $2.7 billion at Sept. 29, 2007. Balance Sheet At March 29, 2008, the company's consolidated balance sheet showed $4.5 billion in total assets, $4.1 billion in total liabilities, and $380.4 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the thirteen weeks ended March 29, 2008, are available for free at http://researcharchives.com/t/s?2c00 About Berry Plastics Headquartered in Evansville, Ind., Berry Plastics Corporation -- http://www.berryplastics.com/-- is a manufacturer and marketer of plastic packaging products. Berry Plastics products include open-top and closed top packaging, polyethylene-based plastic films, industrial tapes, medical specialties, packaging, heat- shrinkable coatings and specialty laminates. * * * As reported in the Troubled Company Reporter on April 16, 2008, Moody's Investors Service affirmed its Caa1 (LGD 4, 63%) rating on each of the company's $225.0 million senior secured second lien FRN due 2014 and $525.0 million senior secured lien notes due 2014, and its Caa2 (LGD 5, 85%) rating on the company's $265.0 million senior subordinated notes due 2016. BLOCKBUSTER INC: Earns $45 Million in Quarter ended April 6 ----------------------------------------------------------- Blockbuster Inc. reported net income of $45.4 million for the first quarter ended April 6, 2008, an improvement of $94.4 million as compared with a net loss of $49.0 million for the first quarter of 2007. Total revenues decreased 5.4% to $1.39 billion for the first quarter of 2008 from $1.47 billion for the first quarter of 2007, as a result of fewer company-operated stores. Domestic same-store revenues increased 2.9% as compared to the first quarter of 2007, reflecting a 920 basis point improvement over the first quarter of 2007. This increase was driven by a 0.4% growth in same-store rental revenues and a 19.7% increase in same-store merchandise sales. International same-store revenues decreased 1.5% from the same period last year, reflecting a 0.9% increase in same-store rental revenues and a 4.9% decline in same-store merchandise sales. Worldwide same-store revenues grew 1.4% from the same period last year. "The significant improvement in our first quarter results demonstrates the underlying strength of our core rental and emerging retail business," Jim Keyes, Blockbuster chairman and CEO, said. "BLOCKBUSTER Total Access(TM), our subscription rental offering, is now profitable and positioned for growth." "Additionally, our stores achieved positive growth in both sales and margin," Mr. Keyes added. "We are particularly pleased that domestic same-store revenues showed an improvement for the first time in five years primarily as a result of several initiatives we have put in place, including an increased availability of top new movies, improved store merchandising and more effective pricing." "Going forward, we are confident we can continue to grow our core business, which will enable us to focus on aggressive development of our digital offerings," Mr. Keyes continued. "Our ability to provide convenient access to both physical and electronic media entertainment will provide Blockbuster a meaningful competitive advantage and allow us to create enhanced shareholder value over the long-term." Liquidity and Capital Resources As of April 6, 2008, no balance was outstanding under the company's revolving credit facility and $406.5 million was outstanding under the term loan portions of its credit facilities. The available borrowing capacity under the revolving credit facility, excluding the $150.0 million reserved for issuance of letters of credit provided for Viacom Inc. at Viacom's expense, and $52.7 million reserved to support other letters of credit, totaled $222.3 million at April 6, 2008. Net cash flows from financing activities increased $56.9 million to $9.1 million of cash used for financing activities during the first quarter of 2008 from $66.0 million of cash used for financing activities during the first quarter of 2007. This change was due to a $56.3 million decrease in net debt repayments. At April 6, 2008, the company has cash and cash equivalents of $137.7 million. Working capital was $77.2 million as compared to $30.7 million at Jan. 6, 2008. At April 6, 2008, the company's balance sheet data showed total assets of $2.6 billion, total liabilities of $1.9 billion and total shareholders' equity of $706.5 million. About Blockbuster Inc. Based in Dallas, Texas, Blockbuster Inc. (NYSE: BBI, BBI.B) -- http://www.blockbuster.com/-- is a leading global provider of in-home movie and game entertainment, with over 7,800 stores throughout the Americas, Europe, Asia and Australia. The company maintains operations in Brazil, Mexico, Denmark, Italy, Taiwan, and Australia. At Jan. 6, 2008, the company's total debt, including capital lease obligations was US$757.8 million compared with US$984.2 million in Dec. 31, 2006. * * * In December 2007, Fitch Ratings affirmed Blockbuster Inc.'s long-term Issuer Default Rating at 'CCC' and the senior subordinated notes at 'CC/RR6'. The rating outlook is stable. BLUE SKY 2: Case Summary & Two Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Blue Sky 2, Inc. aka Old Barn Restaurant 8100 S. Parkside Burbank, IL 60459 Bankruptcy Case No.: 08-12097 Type of Business: The Debtor owns and operates a restaurant. Chapter 11 Petition Date: May 13, 2008 Court: Northern District of Illinois (Chicago) Judge: Eugene R. Wedoff Debtor's Counsel: Karl L. Halperin, Esq. Rosenfield, Kaplan & Halperin 6160 N. Cicero, Ste. 320 Chicago, IL 60646 Tel: (773) 481-2700 Estimated Assets: $100 million to $500 million Estimated Debts: $100 million to $500 million Debtor's Two Largest Known Creditors: Entity Claim Amount ------ ------------ Becker Dairy unknown 4224 W. Chicago Chicago, IL 60651 Anmar Foods, Inc. unknown 2150 W. Carroll Ave. Chicago, IL 60638 BLUE WATER: Files Liquidation Analysis Under Chapter 11 Plan ------------------------------------------------------------ Blue Water Automotive Systems, Inc., and its debtor affiliates delivered to the U.S. Bankruptcy Court for the Eastern District of Michigan a liquidation analysis to assist holders of claims and interests in determining whether they will recover at least as much in the going concern Chapter 11 sale as they would recover in a forced liquidation sale by a Chapter 7 trustee, and subsequently assist them in determining whether to accept or reject their Joint Plan of Liquidation. As reported by the Troubled Company Reporter on May 15, the Debtors' Liquidation Plan provides for the sale of substantially all of their assets in a going concern sale pursuant to Chapter 11 rather than liquidating under Chapter 7 of the Bankruptcy Code. According to John A. Simon, Esq., at Foley & Lardner LLP, in Wilmington, Delaware, the Debtors' going concern sale under their Chapter 11 Plan will provide at least as much of a recovery to holders of Claims or Equity Interests as the holders would receive in a Chapter 7. The Chapter 11 sale will be of substantially all of the Debtors' assets. The Debtors have engaged an investment banker to conduct a sale process, in which the Debtors have invested a substantial amount of time, effort and resources in extensively marketing substantially all of the Debtors' assets for a sale. A sale is expected to close by June 30, 2008. The Sale will preserve the goodwill embedded in the Debtors as a going concern, he says. In contrast, Mr. Simon says a Chapter 7 liquidation would be a forced sale, after the Debtors' operations have ceased. Goodwill would not be preserved in a Chapter 7 liquidation. Moreover, it is unlikely that the assets being sold in the Debtors' current Chapter 11 sale process would be available to be liquidated by a Chapter 7 trustee. Because the Debtors have no equity in their assets in a forced liquidation, in a Chapter 7 liquidation, the Debtors' secured creditors would be entitled to lift the automatic stay to foreclose on their collateral. Therefore, in a Chapter 7, the only assets likely to be subject to administration by the Trustee for the benefit of holders of Claims and Equity Interests would be the Causes of Action, which will otherwise become Creditors Trust assets under the Plan. In addition, in a Chapter 7 proceeding, the trustee is entitled to a percentage of the distributions made by the trustee. The distribution is in addition to the costs and expenses associated with pursuing the Causes of Action. Furthermore, the Chapter 7 trustee's professionals are entitled to be paid ahead of the Allowed Claims and Equity Interests against the Debtors. Mr. Simon says that the analysis of the Best Interests Test under Section 1129(a)(7) is based on a number of assumptions, which are subject to significant business, economic, and competitive uncertainties and contingencies beyond the control of the Debtors and their management. For the purposes of the Liquidation Analysis, assumptions are based on the forced liquidation value of the fixed assets as determined by recent appraisals of the assets. As to current assets, the Liquidation Analysis assumes estimated and unaudited book values of the Debtors assets on April 30, 2008. The analysis is subject to any changes due to the Debtors' continued operation. The book values used were obtained from the Debtors' draft financial statements and accounting records. The values have not been subject to review or audit by an independent accounting firm, Mr. Simon says. Inventories consist primarily of raw materials, work-in-process, and finished goods of Blue Water's products. Inventories do not include tooling inventory. Current inventory is estimated to be approximately $6.5 million. Inventory aged greater than 90 days is estimated to be one-third of total inventory and is estimated to total approximately $2.9 million. Prepaid items, consisting of prepaid maintenance contracts and prepaid finance charges related to prior financings, are estimated to be approximately $1,800,000. Prepaid expenses are estimated to be approximately $3,900,000. The DIP Credit Facility, as of May 9, 2008, totaled $28,700,000. A full-text copy of the Liquidation Analysis is available for free at http://bankrupt.com/misc/bw_liquidationanalysis.pdf Blue Water Automotive Systems, Inc. Balance Sheet As of April 30, 2008 ASSETS: Working Capital and other assets Cash and cash equivalents $1,876,913 Accounts Receivable: Trade 22,715,018 Participating Customers 9,066,573 Non-participating Customers 13,648,445 Tooling 15,178,243 ----------- Net Accounts Receivable $37,893,261 Inventory 6,476,052 Inventory - Aged 2,911,202 Prepaid Items 1,801,760 Other Assets Other current and long term assets 3,919,743 Other Assets - ----------- Total Other Assets $3,919,743 ----------- Total Working Capital Assets $54,878,931 Equipment Surplus - Available to Satisfy the DIP Facility Balance - Less DIP Facility Balance - Working Capital Assets Available for Liquidation Equipment and Real Estate Assets Available for Liquidation by the Chapter 7 Trustee Other Items Chapter 5 Causes of Action 2,337,987 Claims Against Sarnautomotive 1,250,000 Owned Tooling - Estimated Proceeds Available for Liquidation by the Chapter 7 Trustee: Less costs associated with liquidation Chapter 7 Trustee fees - Administrative Expenses - ----------- Total costs associated with liquidation - Net Estimated Proceeds for Liquidation by the Chapter 7 Trustee - Liquidation Analysis Estimated Recovery Rate and Liquidation Value Recovery Value ----------- --------------------- Low High Low High --- ---- ---------- ---------- Working Capital and other assets Cash and cash equivalents 100% 100% $1,876,913 $1,876,913 Accounts Receivable Trade Participating Customers 0% 35% - 3,173,300 Non-participating Customers 10% 45% 1,346,845 6,141,800 Tooling 0% 15% - 2,276,736 --------- --------- Net Accounts Receivable 1,346,845 11,591,836 Inventory 62% 76% 4,036,199 4,907,228 Inventory Aged 5% 10% 145,560 291,120 Prepaid Items 0% 0% - - Other Assets Other current and long term 0% 17% - 665,050 Other Assets 0% 0% - - &n