/raid1/www/Hosts/bankrupt/TCR_Public/080522.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 22, 2008, Vol. 12, No. 121
Headlines
A21 INC: March 31 Balance Sheet Upside-Down by $2.1 Million
ACCELLENT INC: Net Loss Down to $7.7MM in 2008 First Quarter
ALANCO TECH: Net Loss Down 22% to $1,557,900 in 3rd Qtr.
ALOHA AIRLINES: Gets Green Light to Reject Union Agreements
AMERICAN ACHIEVEMENT: Moody Changes Rating Outlook to Stable
AMERICAN HOME: BofA Allowed to Pursue Bid to Sell $584MM Loans
AMERICAN HOME: U.S. Trustee Objects to Hiring of Conflicts Counsel
AMERICAN HOME: Argues with Bear Stearns Over Mortgage Certificates
AMR CORP: Cuts Seat Capacity, Retires Planes Amid Economic Woes
AMSCAN HOLDINGS: Posts $2.5 Million Net Loss in 2008 First Quarter
ARROW ELECTRONICS: Moody's Changes Debt Rating Outlook to Stable
ASTORIA GENERATING: S&P Revises Debt Rating Outlook to Negative
ATA AIRLINES: To Set Off Former CEO's Loan Against Payments
ATA AIRLINES: Faces Lawsuits for WARN Act Violations
ATA AIRLINES: ALPA Withdraws Suit Against ATA and Global Aero
AVIS BUDGET: S&P Lifts Rating on $250 Mil. Notes to AAA from BB+
BAG'N BAGGAGE: U.S. Trustee Appoints Creditors Committee Members
BALLANTYNE RE: Market Losses Prompt S&P to Cut Debt Rating to BB
BENITO JUAREZ MUNICIPALITY: Moody's Rates Bank Loans Ba1
BIO-KEY INT'L: March 31 Balance Sheet Upside-Down by $3,271,009
BLUE WATER: Various Entities Object to Disclosure Statement
CEDO PLC: Moody Cuts Notes Rating Due to EDS Share Price Movements
CEDO PLC: Moody Downgrades Notes Issued Under Series 4
CEDO PLC: Moody's Downgrades Notes Issued Under Series 3
CEDO PLC: Moody's Downgrades Notes Issued Under Series 2
CHESAPEAKE ENERGY: Prices $800 Million Offering of Senior Notes
CHESAPEAKE ENERGY: Moody's Puts Ba3 Rating on Pending $800MM Notes
CHESAPEAKE ENERGY: Fitch Assigns 'BB' Rating on $500MM Conv. Notes
CHESAPEAKE ENERGY: S&P Rates Proposed $800MM Senior Notes 'BB'
CIFG: Moody's Downgrades IFS Rating on Possible Capital Shortfall
CITIGROUP COMMERCIAL: S&P Holds 'BB' Rating on Class L Certs.
COMM 2000-C1: Fitch Chips Rating on $10.1MM Certs. to B- from B
CONSTAR INT'L: March 31 Balance Sheet Upside-Down by $81.1 Million
COTT CORP: Moody's Cuts CFR Rating Due to Low Financial Metrics
COVENTREE INC: ABCP Market Crisis Disrupts Biz; To Wind Down
EDUCATION RESOURCES: Panel Wants to Hire Duane Morris as Counsel
EDUCATION RESOURCES: Adds KeyBank National to Creditors Committee
EDUCATION RESOURCES: Gets Final Nod on Goodwin Procter as Counsel
EIRLES TWO SERIES 244: Moody's Cuts Class B Notes Rating to B2
EIRLES TWO SERIES 244: Moody's Junks Rating on Class B Notes
EIRLES TWO 243: Moody's Cuts B2 Note Rating, to Undertake Review
ENERSYS: S&P Assigns 'BB' Rating on Proposed $150MM Conv. Notes
EOS AIRLINES: Files Motion to Schedule Auction and Sell Company
EPICEPT CORP: March 31 Balance Sheet Upside-Down by $15,570,000
FORD CREDIT: S&P Assigns 'BB+' Rating on $30.7MM Class D Notes
FRESENIUS SE: Moody's Upgrades Corporate Rating from Ba2 to Ba1
FRONTIER AIRLINES: Obtains Union Ratification on Wage Concessions
GEM SOLUTIONS: Court Confirms Amended Chapter 11 Plan
GENERAL MOTORS: Resumes Malibu Production as Workers OK Contract
GO FIG: Court Converts Bankruptcy to Chapter 7 Liquidation
GT ARCHITECTURE: Case Summary & 87 Largest Unsecured Creditors
HANDLEMAN CO: Reaches Pact With Lenders to Amend Credit Agreements
HERBST GAMING: Moody's Cuts Ratings on Missed Interest Payment
INDALEX HOLDINGS: March 30 Balance Sheet Upside Down by $7.3MM
INNUITY INC: March 31 Balance Sheet Upside Down by $5.4 Million
INPHONIC INC: Disclosure Statement Hearing Set for June 13
INSTITUTUE FOR CANCER: CFO Says He Lied in Probe of $5MM Grant
INTEREP NATIONAL: Can Employ Kroll Zolf as Financial Advisor
IRVINE SENSORS: Posts $3.5 Million Net Loss in Qtr. Ended March 30
J.B POINDEXTER: Moody Affirms Probability of Default Rating at B2
JETBLUE AIRWAYS: Names Joel Peterson and Frank Sica to Board
JP MORGAN MORTGAGE: Fitch Holds 'B-' Rating on $2.7MM Certificates
KENNETH GOOD: Eligible to Get Bankruptcy Relief, Court Rules
KRISPY KREME: Renews Distribution Agreement with BakeMark USA
LANDSOURCE COMMUNITIES: Talks With Lender Group on Restructuring
LEVEL 3: Holds 2008 Annual Meeting of Stockholders
LIBERTY HARBOUR: Moody's Puts Ba1 Ratings Under Review
LODGENET INTERACTIVE: Sees $570,000,000 in 2008 Revenues
LODGENET INTERACTIVE: Board Approves Restricted Stock Adjustment
LUXURY VENTURES: May Begin Solicitation of Votes on Plan
LUXURY VENTURES: Plan Confirmation Hearing to Commence June 12
MEDIACOM BROADBAND: Moody's Puts Ba3 Rating on Planned $300MM Loan
MEDIACOM BROADBAND: S&P Puts 'BB-' Rating on Proposed $300M Loan
MICHAEL BAKER: To Restatement Financial, Delay Results Filing
MICHAEL MEISNER: Files Chapter 11; Own Hedge Fund Goes Belly Up
MXENERGY HOLDINGS: Moody's Puts B3 CFR Under Review
NETBANK INC: Files Disclosure Statement in Florida
NORTH AMERICAN: Moody's Puts Ba1 Rating on $545MM Sr. Facilities
NPS PHARMACEUTICALS: C. Stiller Resigns from Board of Directors
OAKLAND VIEW: U.S. Trustee and Cathay Bank Want Case Dismissed
OAKLAND VIEW: Wants to Hire Malpass as General Counsel
OTC INTERNATIONAL: Can Use Banks' DIP Facility & Cash Collateral
PHOENIX DIVERSIFIED: Investors Gang Up, File Chapter 7 Petition
PLAINS EXPLORATION: S&P Affirms 'BB' Corporate Credit Rating
PLASTECH ENGINEERED: Court Fixes Claims Bar Date at June 30
PLASTECH ENGINEERED: Court OKs June 3 as Plan-Filing Deadline
PLASTECH ENGINEERED: Court OKs Aug. 29 as Lease Decision Deadline
PRO-PHARMACEUTICALS: Receives Amex Non-Compliance Notice
RUTGERS CASUALTY: A.M. Best Lifts IC Rating to bbb- from bb-
SALTON INC: To Acquire Spectrum Brands' Pet Biz for $692MM Cash
SHARPER IMAGE: Committee Can Employ Cooley Godward as Lead Counsel
SOUTH COAST FUNDING: Moody's Cuts Rating on Notes
SPECTRUM BRANDS: Sells Pet Biz to Salton Inc. for $692MM Cash
SS&C TECHNOLOGIES: Earns $3.7 Million in 2008 First Quarter
STANDARD PACIFIC: Board and Stockholders Okay Incentive Programs
STANDARD PACIFIC: Fitch Junks Rating on Senior Subordinated Debt
STEVEN DAVIS: Case Summary & 74 Known Creditors
TELTRONICS INC: March 31 Balance Sheet Upside-Down by $4.7 Million
TRI-ISTHMUS GROUP: March 31 Balance Sheet Upside Down by $2.9 Mil.
TRM CORPORATION: Posts $436,000 Net Loss in 2008 First Quarter
TERENCE DUBORD: Case Summary & 17 Largest Unsecured Creditors
TERRY JACOBSON: Case Summary & Eight Largest Unsecured Creditors
VERILINK CORP: Has Until Aug. 13 to Seek Business Combination
VERILINK CORP: Liquidating Trustee Pursues Preference Claims
VESTA INSURANCE: Computer Science Withdraws Claim for $1,527,528
VESTA INSURANCE: XL Specialty to Pay $800K to Plan Trustee
VISTEON CORP: Transfers Management of Phils. Unit to Interiors
VISTEON CORP: S&P Assigns 'B-' Rating on Proposed $210MM Sr. Notes
VICTOR JAMES: Case Summary & Eight Largest Unsecured Creditors
WEST TRADE FUNDING: Moody's Downgrades Ratings on $625MM Notes
WORLD HEART: March 31 Balance Sheet Upside-Down by $4,542,832
WALTER GALLAGHER: Voluntary Chapter 11 Case Summary
X-RITE INC: Company Not Headed for Bankruptcy; Interim CFO Assures
WILSONS LEATHER: May 3 Balance Sheet Upside Down by $18.7 Million
* California Home Foreclosure Sales Exceed 1,000 in April
* ABI's Sharisa L. Sloan Joins Garden City Group
* Focus Named Finalist For Financial Advisor of the Year Award
* Crowell & Moring Hires Harry Cohen and Rodney Zerbe
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
*********
A21 INC: March 31 Balance Sheet Upside-Down by $2.1 Million
-----------------------------------------------------------
a21 Inc.'s consolidated balance sheet at March 31, 2008, showed
$28.6 million in total assets, $30.2 million in total liabilities,
and $553,000 in minority interest, resulting in $2.1 million total
capital deficit.
The net loss for the first quarter of 2008 was $1.4 million,
compared to a net loss of $962,000 for the same prior year period.
Revenue for the first quarter of 2008 was $5.1 million compared to
$6.1 million for the same prior year period. Total cost of sales
for the first quarter of 2008 were $2.3 million, or 45.0% of
revenues, compared to $2.3 million, or 38.0% of revenues, for the
same prior year period.
First quarter 2008 selling, general, and administrative expenses
of $3.2 million were down approximately $500,000, compared to the
same prior year period. The company attributes the year over year
decrease in SG&A expenses to the company's efficiency improvement
and cost control initiatives. Depreciation and amortization
expense for the first quarter of 2008 was $587,000, compared to
$619,000 for the first quartr of 2007.
John Ferguson, chief executive officer of a21, said, "We remain
focused on positioning a21 in order to best leverage its
strengths. Despite the challenging market conditions, we have
continued to reduce costs and improve organizational efficiency.
We believe that we can leverage our marketing initiatives into
improved performance as we look for market conditions to stabilize
in the near-term."
$15.5 Million Senior Secured Convertible Notes
On Jan. 31, 2008, the company entered into a waiver agreement with
the holders of a majority of the outstanding principal amount of
the Secured Convertible Notes, to waive cash quarterly interest
payments until March 31, 2008.
Instead of paying the interest for such periods in cash, the
agreement provides that the company will settle quarterly interest
payments due in January and April 2008 with new notes in the
aggregate principal amount equal to the interest due, having
substantially the same terms as the original notes.
As of May 15, 2008, the new notes for the unpaid interest due have
not been issued, and the company said it continues to have ongoing
discussions with the noteholders.
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?2c4e
Going Concern Disclaimer
As reported in the Troubled Company Reporter on April 22, 2008,
BDO Seidman LLP, in West Palm Beach, Fla., expressed substantial
doubt about a21 Inc.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the year ended Dec. 31, 2007. The auditing firm pointed to the
company's recurring losses from operations and net capital
deficiency.
About a21 Inc.
a21 Inc. (OTC BB: ATWO) -- http://www.a21group.com/-- is an
online digital content company. a21, through its subsidiary
SuperStock, with offices in Florida, Iowa, and London, aggregates
visual content from photographers, photography agencies, archives,
libraries, and private collections and licenses the visual content
to its customers.
ACCELLENT INC: Net Loss Down to $7.7MM in 2008 First Quarter
------------------------------------------------------------
Accellent Inc. reported a net loss of $7.7 million for the first
quarter ended March 31, 2008, compared with a net loss of
$85.7 million in the corresponding period of 2007. During the
first quarter of 2007 the company completed a goodwill impairment
test resulting in a goodwill impairment charge of $81.1 million,
which amount is reflected in the net loss for that quarter.
Adjusted EBITDA for the first quarter of 2008 was $25.1 million,
or 19.5% of sales, compared to Adjusted EBITDA of $21.9 million,
or 19.6% of sales, in the corresponding period of 2007 and
compared to Adjusted EBITDA of $22.5 million, or 18.5% of sales,
in the fourth quarter of 2007.
"The first quarter of 2008 marked our fifth consecutive quarter of
revenue growth" said Robert Kirby, president and chief executive
officer of Accellent. "Our continued focus to increase value for
our customers helped drive this growth. In addition, we are
benefiting from our efforts to reduce costs throughout our
organization."
Net sales increased 15.7% to $129.0 million in the first quarter
of 2008 compared with $111.5 million in the corresponding period
of 2007. Sales improved sequentially for the fifth consecutive
quarter and increased 6.0% during the first quarter compared to
the fourth quarter of 2007.
Our principal sources of liquidity are our cash flows from
operations and borrowings under our Amended Credit Agreement,
which includes a $75.0 million revolving credit facility and a
seven-year $400.0 million term facility. Additionally, we are
able to borrow up to $100.0 million in additional term loans, with
the approval of participating lenders.
Liquidity and Capital Resources
The company's principal sources of liquidity are its cash flows
from operations and borrowings under its Amended Credit Agreement,
which includes a $75.0 million revolving credit facility and a
seven-year $400.0 million term facility.
At March 31, 2008, the company had $6.9 million of letters of
credit outstanding and $27.0 million of outstanding loans under
its revolving credit facility, each of which reduced the amounts
available for future borrowings and resulting in $41.1 million
available under the revolving credit facility.
At March 31, 2008, the company had total long-term debt, excluding
current maturities, of $716.2 million as compared with
$717.0 million at Dec. 31, 2007.
Balance Sheet
At March 31, 2008, the company's consolidated balance sheet showed
$1.1 billion in total assets, $827.5 million in total liabilities,
and $304.7 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?2c3f
About Accellent Inc.
Headquartered in Wilmington, Mass. Accellent Inc. --
http://www.accellent.com/-- provides fully integrated outsourced
manufacturing and engineering services to the medical device
industry in the cardiology, endoscopy, drug delivery, neurology
and orthopaedic markets.
* * *
As reported in the Troubled Company Reporter on Dec. 12, 2007,
Moody's Investors Service downgraded Accellent Inc.'s corporate
family rating to Caa1 from B3 and assigned a negative outlook. At
the same time, Moody's downgraded these ratings: (i) secured
revolver to B2 (LGD2, 29%) from B1 (LGD2, 29%); (ii) secured term
loan to B2 (LGD2, 29%) from B1 (LGD2, 29%); (iii) sr. subordinated
notes to Caa3 (LGD5, 83%) from Caa2 (LGD5, 83%); (iv) PDR to Caa1
from B3; and speculative grade liquidity rating to SGL-4 from
SGL-3.
ALANCO TECH: Net Loss Down 22% to $1,557,900 in 3rd Qtr.
--------------------------------------------------------
Alanco Technologies Inc. reported a net loss of $1,557,900 for the
third quarter ended March 31, 2008, a decrease of $447,900, or
22.3%, compared to a net loss of $2,005,800 for the second quarter
ended Dec. 31, 2007.
Sales for its third quarter ended March 31, 2008, were $4,167,900,
an increase of $397,700, or 10.5%, compared to sales of $3,770,200
for the previous quarter ended Dec. 31, 2007. The higher sales
was attributed to the company's Wireless Asset Management segment
(StarTrak Systems) which reported a sales increase of $559,600, or
23%, when compared to the prior quarter.
Robert R. Kauffman, Alanco chairman and chief executive officer,
commented, "Our improved third quarter operating results are
indicative of the performance turnaround now well underway. We
anticipate additional significant revenue growth during the fourth
quarter in both our core businesses, StarTrak Systems and TSI
PRISM, resulting in further operating improvement in the final
fiscal year period. Looking forward to the first quarter of our
new fiscal year 2009, beginning July 1, 2008, we expect that
continuing revenue and gross profit gains will result in
completion of our profitability turnaround."
Balance Sheet
At March 31, 2008, the company's consolidated balance sheet showed
$29,715,600 in total assets, $11,034,300 in total liabilities,
$878,300 in preferred stock, and $17,803,000 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?2c41
Going Concern Disclaimer
As reported in the Troubled Company Reporter on Oct. 4, 2007,
Semple, Marchal & Cooper LLP, in Phoenix, Arizona, expressed
substantial doubt about Alanco Technologies Inc.'s ability to
continue as a going concern after auditing the company's
consolidated financial statements for the years ended June 30,
2007, and 2006. The auditing firm reported that the company
incurred significant losses from operations, anticipates
additional losses in fiscal 2008, and has insufficient working
capital as of June 30, 2007, to fund the anticipated losses.
About Alanco Technologies
Headquartered in Scottsdale, Ariz., Alanco Technologies Inc.
(Nasdaq: ALAN) -- http://www.alanco.com/-- is a provider of
wireless tracking and asset management solutions through its
StarTrak Systems and Alanco/TSI PRISM subsidiaries.
ALOHA AIRLINES: Gets Green Light to Reject Union Agreements
-----------------------------------------------------------
The Hon. Lloyd King of the U.S. Bankruptcy Court for the District
of Hawaii granted Dane S. Field -- the interim chapter 7 trustee
appointed to oversee the liquidation of the estates of Aloha
Airlines, Inc., Aloha Airgroup, Inc., and Airgroup Acquisition
Corp. -- authority to reject six collective bargaining agreements
the Debtors entered into with four labor organizations.
In seeking to reject the CBAs, the Chapter 7 Trustee pointed out
that with the conversion of the Debtors' cases, the agreements
have no assignment value to the estates. The Chapter 7 Trustee
noted that rejection of the CBAs by operation of law is
inevitable. Terminating the agreements will quell the continued
depletion of the Debtors' assets, the Chapter 7 Trustee argued.
Aloha's collective bargaining agreements are:
1. Collective Bargaining Agreement, dated January 1, 2003,
with the Air Line Pilots Association, International, as
amended April 30, 2006, which covers Aloha's pilots;
2. Collective Bargaining Agreement, dated January 1, 2003,
with the Association of Flight Attendants, as amended
April 30, 2006, which covers Aloha's flight attendants;
3. Collective Bargaining Agreement, dated January 1, 2005,
with the International Association of Machinists and
Aerospace Workers, District 141, which covers Aloha's
clerical, office, passenger service, fleet and store
employees;
4. Collective Bargaining Agreement, dated November 7, 2005,
with the International Association of Machinists and
Aerospace Workers, District 142, which covers Aloha's
mechanics;
5. Collective Bargaining Agreement, dated May 1, 2006, with
IAM141, which covers Aloha's contract service employees;
and
6. Collective Bargaining Agreement, dated May 1, 2006, with
the Transport Workers Union of America, which covers
Aloha's dispatchers and crew schedulers.
The Unions represent roughly 3,300 of Aloha's 3,500 employees.
The ALPA and AFA objected to the request.
The IAM and TWU did not oppose the request.
GMAC Commercial Finance, LLC -- the Debtors' prepetition lender,
and which provided postpetition financing to fund the Debtors'
liquidation -- and Saltchuk Resources, Inc. and Aeko Kula, Inc. --
which acquired the Debtors' air cargo assets -- supported the
Chapter 7 Trustee's request.
The pilots said the Chapter 7 Trustee's request raises substantial
issues of a lack of business judgment, bad faith, and a complete
failure to act consistent with the national labor policies that
are relevant to the treatment of collective bargaining agreements
in all bankruptcy proceedings.
The pilots argued that Aloha and the Chapter 7 Trustee have
refused to honor the Job Security and Successorship provisions of
the ALPA CBA, and failed to do so in agreements with Saltchuk.
The pilots said the CBA mandates that the purchaser of Aloha's Air
Cargo Division or other flight operations offer employment to
pilots from the Aloha Airlines, Inc. System Seniority List in
seniority order and otherwise abide by the CBA.
The flight attendants group argued that the Chapter 7 Trustee
offered no reason why AFA's agreement should be treated any
differently than the Debtors' other executory contracts, which are
also subject to deemed rejection under Section 365(d) of the
Bankruptcy Code. The group said the Chapter 7 Trustee should also
be seeking rejection of the Debtors' other contacts at this time.
The flight attendants also demanded that the Chapter 7 Trustee
demonstrate how Aloha's agreements an impediment to the orderly
liquidation of the estates.
The Chapter 7 Trustee asked the Court to reject those objections.
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.
On April 29, the Bankruptcy Court converted the Debtors' cases
into chapter 7 liquidation proceedings. The next day, the United
States Trustee appointed Dane S. Field to serve as chapter 7
trustee for the cases.
AMERICAN ACHIEVEMENT: Moody Changes Rating Outlook to Stable
------------------------------------------------------------
Moody's Investors Service changed American Achievement Group
Holding Corp.'s rating outlook to developing from stable following
the announcement of its strategic acquisition by Herff Jones, a
manufacturer of educational products.
The proposed transaction calls for the holders of the American
Achievement's equity securities to sell all the equity in the
company to Herff Jones and the redemption of the company's 12.75%
Senior PIK Notes due 2012 from its holders. While the secured
credit facilities, senior subordinated and senior discount notes
contain change of control protection, to date, the debt remains in
place.
The outlook will remain development pending the outcome of the
proposed sale. Should the entire capital structure be re-
financed, Moody's would withdraw the company's existing ratings.
If the debt were to remain in place, Moody's would re-evaluate the
company's ratings in light of several factors including the
potential synergies associated with the combination, any increase
in debt from Herff Jones and the diminished junior capital
following the repayment of the senior PIK notes. Should the
transaction fail to close, Moody's existing ratings would likely
remain, including the B3 corporate family rating, and the outlook
would return to stable.
Ratings affirmed:
American Achievement Group Holding Corp.
-- Corporate family rating at B3;
-- Probability-of-default rating at B3;
-- $189 million (current value) senior PIK notes due 2012 at
Caa2 (LGD5, 87%).
AAC Group Holding Corp.
-- $124 million (current value) senior discount notes due
2012 at Caa1 (LGD4, 63%).
American Achievement Corporation
-- $150 million senior subordinated notes due 2012 at B2
(LGD3, 34%);
-- $40 million senior secured revolving credit facility due
2010 at Ba3 (LGD1, 7%);
-- $87 million senior secured term loan due 2011 at Ba3
(LGD1, 7%).
The outlook is changed to developing from stable.
Headquartered in Austin, Texas, American Achievement Corporation
is a leading provider of school-related affinity products and
services. The company holds strong market shares in each of its
product segments - yearbooks, class rings, and graduation
products.
AMERICAN HOME: BofA Allowed to Pursue Bid to Sell $584MM Loans
--------------------------------------------------------------
Bank of America, N.A., as administrative agent for certain
prepetition secured parties in the bankruptcy cases of American
Home Mortgage Investment Corp. and its debtor-affiliates, sought
and obtained permission from the U.S. Bankruptcy Court for the
District of Delaware to file a notice of appeal on May 27, 2008,
from Judge Christopher Sontchi's order denying BofA's request to
lift the stay to sell $584,000,000 of mortgage loans.
Pursuant to Rule 8002(a) of the Federal Rules of Bankruptcy
Procedure, BofA's initial deadline to file the notice was May 5,
2008.
BofA informed the Court that its representatives and the Debtors
are meeting in mid-May to discuss whether a resolution of the
remaining issues that exist between them in the bankruptcy cases
can be reached without further litigation.
BofA maintained that the extension is appropriate while the
parties are attempting to negotiate a resolution of their
remaining issues. It contended that no party would be prejudiced
by the extension.
The Debtors did not object to the extension.
About American Home
Based in Melville, New York, American Home Mortgage Investment
Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a
mortgage real estate investment trust engaged in the business of
investing in mortgage-backed securities and mortgage loans
resulting from the securitization of residential mortgage loans
originated and serviced by its subsidiaries.
American Home Mortgage and seven affiliates filed for chapter 11
protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047
through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite,
Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt &
Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC
acts as the Debtors' claims and noticing agent. The Official
Committee of Unsecured Creditors selected Hahn & Hessen LLP as
its counsel. As of March 31, 2007, American Home Mortgage's
balance sheet showed total assets of $20,553,935,000, total
liabilities of $19,330,191,000.
The U.S. Bankruptcy Court for the District of Delaware extended
the exclusive periods for American Home Mortgage Investors Corp.
and its debtor-affiliates to file a plan of reorganization through
June 2, 2008; and solicit and obtain acceptances for that plan
through July 31, 2008.
(American Home Bankruptcy News, Issue No. 35; Bankruptcy
Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN HOME: U.S. Trustee Objects to Hiring of Conflicts Counsel
------------------------------------------------------------------
Kelly Beaudin Stapleton, United States Trustee for Region 3, asks
the U.S. Bankruptcy Court for the District of Delaware to deny the
request of the Official Committee of Unsecured Creditors in the
bankruptcy cases of American Home Mortgage Investment Corp. and
its debtor-affiliates to retain the Law Offices of Joseph J.
Bodnar, as its special conflicts Delaware counsel.
In addition to its proposed representation of the Creditors
Committee, Bodnar presently represents creditors Greenwich
Capital Financial Products, Inc., Greenwich Capital Markets,
Inc., and Royal Bank of Scotland, PLC, Ms. Stapleton points out.
She contends that the concurrent representation of the Banks and
the Creditors Committee is not permitted under Section 1103(b) of
the Bankruptcy Code.
Specifically, Section 1103(b) prohibits Committee counsel from
simultaneously representing any other entity having an adverse
interest in connection with a case. Hence, Bodnar cannot
simultaneously represent asserted secured creditors and the
Committee at the same time, Ms. Stapleton reasons out.
In several of the proofs of claim they filed against the
bankruptcy estates, the Banks asserted that, in addition to
holding unsecured deficiency claims, they also hold setoff rights
under certain agreements and, by extension, are secured creditors
of one ore more of the Debtors, Ms. Stapleton notes. Hence, she
asks the Court to deny the application.
About American Home
Based in Melville, New York, American Home Mortgage Investment
Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a
mortgage real estate investment trust engaged in the business of
investing in mortgage-backed securities and mortgage loans
resulting from the securitization of residential mortgage loans
originated and serviced by its subsidiaries.
American Home Mortgage and seven affiliates filed for chapter 11
protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047
through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite,
Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt &
Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC
acts as the Debtors' claims and noticing agent. The Official
Committee of Unsecured Creditors selected Hahn & Hessen LLP as
its counsel. As of March 31, 2007, American Home Mortgage's
balance sheet showed total assets of $20,553,935,000, total
liabilities of $19,330,191,000.
The U.S. Bankruptcy Court for the District of Delaware extended
the exclusive periods for American Home Mortgage Investors Corp.
and its debtor-affiliates to file a plan of reorganization through
June 2, 2008; and solicit and obtain acceptances for that plan
through July 31, 2008.
(American Home Bankruptcy News, Issue No. 35; Bankruptcy
Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
AMERICAN HOME: Argues with Bear Stearns Over Mortgage Certificates
------------------------------------------------------------------
U.S. Bank, National Association is a certificate registrar and
certificate paying agent for a series of mortgage-backed
certificates held by Bear Stearns Mortgage Capital Corp., Bear
Stearns & Co. Inc., and Bear Stearns International Limited. The
certificates were issued in connection with a securitization
transaction.
The Bear Stearns Entities assert ownership of the Mortgage
Certificates by virtue of exercising certain remedies in August
2007 under repurchase agreements between American Home Mortgage
Investment Corp., and American Home Mortgage Acceptance, Inc.,
and certain of the Bear Stearns Entities. Under those remedies,
the Bear Entities assert a right to the Mortgage Certificates'
August 2007 principal and interest payments.
The Mortgage Certificates, however, were not registered in the
Bear Stearns Entities' name, which is necessary to make them the
holders of record. The Mortgage Certificates were registered
under AHM Investment, which asserts that it is entitled to the
August Payment.
Eric Lopez Schnabel, Esq., at Dorsey & Whitney (Delaware) LLP, in
Wilmington, Delaware, relates that upon information and belief,
the Mortgage Certificates were sold or pledged by the Debtors to
the Bear Stearns Entities under the terms of certain repurchase
agreements, which meet the "safe harbor" provisions of the
Bankruptcy Code, and entitles the Bear Stearns Entities to
exercise remedies even after the Debtors filed for bankruptcy.
Because U.S. Bank is unable to determine which party is entitled
to the August Payment, it seeks to remit the August Payment due
under the Mortgage Certificates to the proper party, pursuant to
Rule 7022 of the Federal Rules of Bankruptcy Procedure and Rule
22(1) of the Federal Rules of Civil Procedure.
The defendants of the adversary proceeding are the Debtors, the
Bear Stearns Entities, and Strategic Mortgage Opportunities REIT,
Inc.
Mr. Schnabel states that U.S. Bank stands neutral as to the
proper party-in-interest entitled to the August Payment. He
notes that unless the defendants are restrained or enjoined from
prosecuting suits against U.S. Bank, it will be subject to
multiple claims in regard to the August Payment. He discloses
that U.S. Bank is prepared to deposit $1,372,772 into an escrow
account, until a determination can be made as to the proper
claimant of the August Payment.
Accordingly, U.S. Bank asks the U.S. Bankruptcy Court for the
District of Delaware:
-- to require the defendants to interplead all of their claims
under or in respect to the August Payment and litigate
their differences;
-- for instruction to deposit the amount of the August Payment
into an escrow account maintained by U.S. Bank on behalf of
the Court's registry to await a determination of ownership;
-- to determine whether the Debtors or the Bear Stearns
Entities are entitled to the August Payment;
-- to direct the payment to parties, notwithstanding any
provision of law, including any provision of the Bankruptcy
Code;
-- to enjoin each of the defendants from instituting any
action against U.S. Bank relating to or concerning the
August Payment;
-- to relieve and discharge U.S. Bank from all liability
relating to, or concerning the August Payment; and
-- to award U.S. Bank reasonable costs, attorney's fees,
disbursements and allowances incurred in connection with
the Adversary Proceeding.
About American Home
Based in Melville, New York, American Home Mortgage Investment
Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a
mortgage real estate investment trust engaged in the business of
investing in mortgage-backed securities and mortgage loans
resulting from the securitization of residential mortgage loans
originated and serviced by its subsidiaries.
American Home Mortgage and seven affiliates filed for chapter 11
protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047
through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite,
Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt &
Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC
acts as the Debtors' claims and noticing agent. The Official
Committee of Unsecured Creditors selected Hahn & Hessen LLP as
its counsel. As of March 31, 2007, American Home Mortgage's
balance sheet showed total assets of $20,553,935,000, total
liabilities of $19,330,191,000.
The U.S. Bankruptcy Court for the District of Delaware extended
the exclusive periods for American Home Mortgage Investors Corp.
and its debtor-affiliates to file a plan of reorganization through
June 2, 2008; and solicit and obtain acceptances for that plan
through July 31, 2008.
(American Home Bankruptcy News, Issue No. 35; Bankruptcy
Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000).
AMR CORP: Cuts Seat Capacity, Retires Planes Amid Economic Woes
---------------------------------------------------------------
AMR Corporation, the parent company of American Airlines, Inc.,
disclosed significant reductions to its 2008 domestic flight
schedule, including a fourth quarter mainline domestic capacity
reduction of 11% to 12% from the previous year. It also outlined
plans to retire at least 75 mainline and regional aircraft and
unveiled several revenue growth initiatives, as the company
responds to record fuel prices, growing concerns about the economy
and a difficult competitive environment.
"The airline industry as it is constituted was not built to
withstand oil prices at $125 a barrel, and certainly not when
record fuel expenses are coupled with a weak U.S. economy," AMR
Chairman and CEO Gerard Arpey said. "Our company and industry
simply cannot afford to sit by hoping for industry and market
conditions to improve. We must work to overcome our near-term
challenges and to secure our company's long-term future for the
benefit of our shareholders, customers and employees. We must
find ways to cover the cost of providing our services so that we
can remain viable and have the resources to reinvest in our
company for the future. Those goals are central to the actions we
are outlining."
Additional 2008 Capacity Reductions
AMR said it will reduce American Airlines domestic capacity -- or
available seat miles flown -- in the fourth quarter of 2008 by 11%
to 12%, compared to the fourth quarter of 2007. According to its
April 16 guidance, AMR previously expected domestic mainline
capacity in the fourth quarter to decline by 4.6% compared to the
same period in 2007.
In addition, AMR regional affiliate capacity is expected to
decline by 10% to 11% in the fourth quarter compared to fourth
quarter 2007 levels. Previously, regional affiliate capacity in
the fourth quarter was expected to increase by 2.0% from 2007
levels.
AMR continues to assess the impact of the capacity reductions on
specific routes and markets.
Arpey said the capacity reductions aim to significantly reduce
costs as well as create a more sustainable supply-and-demand
balance in the market. In recent years, Arpey added, the industry
has been hurt by some airlines growing faster than conditions
warranted, and that impact has worsened in light of recent
economic trends and soaring fuel prices.
As a result of significantly reduced flying, AMR expects to retire
40 to 45 mainline aircraft from American's fleet, the majority of
which will consist of MD-80s but will also include some Airbus
A300 aircraft. The capacity reductions will also result in the
retirement of 35 to 40 regional jets, as well as a number of
turbo-prop aircraft from AMR's regional affiliate fleet.
The capacity changes will result in workforce reductions at both
American Airlines and American Eagle Airlines and could result in
facility closures or facility consolidation. AMR is assessing the
scope and location-specific impact of any workforce reductions
resulting from the capacity reductions. In addition, AMR is
assessing the impact of these capacity reductions on its overall
cost outlook.
Additional Revenue Initiatives
Beyond the company's ongoing cost-containment efforts, Mr. Arpey
noted that AMR has consistently sought revenue improvements
through fare increases and fuel surcharges. Since AMR released
its first quarter 2008 financial results on April 16, American has
participated in or led 15 fare increases, 14 of which were at
least partially successful.
American introduced a $15 fee for the first checked bag, given the
increasing costs of transporting checked baggage. This fee, which
is effective for tickets purchased on or after June 15, does not
apply to: American's AAdvantage program members who have achieved
AAdvantage Gold, AAdvantage Platinum and AAdvantage Executive
Platinum level; those who have purchased full-fare tickets in the
Economy, Business and First Class cabins; and those with
international itineraries (except to and from Canada and U.S.
territories, such as Puerto Rico and the U.S. Virgin Islands).
American also said that it has increased its fees for certain
other services, ranging from reservation service fees to pet and
oversized bag fees. The increases mostly range from $5 to $50 per
service. The company estimates that new and increased fees
announced this month will generate several hundred million dollars
in incremental annual revenue.
"While we understand that these fees affect customers, we also
believe that our pricing for the services we provide remains
extremely competitive in the industry and continues to offer our
customers ample choice and value," Mr. Arpey said. "The bottom
line is that our revenues, which include ticket sales and fees,
must keep pace with our increasing costs."
As evidence of the crisis caused by soaring fuel prices, Mr. Arpey
cited the U.S. airline industry's first quarter 2008 pre-tax loss
of nearly $2 billion excluding special items and the fact that
eight U.S. airlines have filed for bankruptcy protection this
year, including five that have ceased service. AMR paid
$665 million more for fuel in the first quarter than it would have
paid at prices from the year-ago period. Its first quarter fuel
expense increased by 45% year over year, while its total revenue
increased by 5%. The price of jet fuel has increased by more than
10% since April 16, when AMR expected its 2008 fuel bill would be
well over $6 billion higher than in 2003.
However, Mr. Arpey also noted that AMR has made much progress in
recent years to better prepare it for the current uncertainty. At
the end of the first quarter of 2008, the company's Total Debt,
which it defines as the aggregate of its long-term debt, capital
lease obligations, the principal amount of airport facility tax-
exempt bonds, and the present value of aircraft operating lease
obligations, was $15.2 billion, down more than 25% from the end of
2002. AMR's Net Debt, which it defines as Total Debt less
unrestricted cash and short-term investments, was $10.7 billion at
the end of the first quarter of 2008, down more than 40% from the
end of 2002. AMR also ended the first quarter with $4.9 billion
in cash and short-term investments, including a restricted balance
of $426 million. It had about $2.7 billion in total cash and
short-term investments, including a restricted balance of
$783 million, at the end of 2002.
"Clearly, we have a lot of hard work ahead of us given the
economic realities we face," Mr. Arpey said. "But we have battled
through many challenges throughout our long history, and, with the
continued dedication of our leadership team and our people, I
believe we have the fortitude to continue to do so."
About AMR Corp.
Headquartered in Forth Worth, Texas, AMR Corporation (NYSE:
AMR) operates with its principal subsidiary, American Airlines
Inc. -- http://www.aa.com/-- a worldwide scheduled
passenger
airline. At the end of 2006, American provided scheduled jet
service to about 150 destinations throughout North America, the
Caribbean, Latin America, Europe and Asia. American is also a
scheduled airfreight carrier, providing freight and mail services
to shippers throughout its system.
Its wholly owned subsidiary, AMR Eagle Holding Corp., owns two
regional airlines, American Eagle Airlines Inc. and Executive
Airlines Inc., and does business as "American Eagle." American
Beacon Advisors Inc., a wholly owned subsidiary of AMR, is
responsible for the investment and oversight of assets of AMR's
U.S. employee benefit plans, as well as AMR's short-term
investments.
* * *
As reported in the Troubled Company Reporter on Nov. 30, 2007,
following the announcement by AMR Corp. that it intends to divest
its American Eagle Holding Corp. subsidiary in 2008, Fitch expects
no near-term impact on the debt ratings of AMR and its principal
operating subsidiary, American Airlines Inc. Fitch affirmed both
entities' Issuer Default Ratings at 'B-' on Nov. 13, 2007, while
revising the Rating Outlook for AMR to Positive.
AMSCAN HOLDINGS: Posts $2.5 Million Net Loss in 2008 First Quarter
------------------------------------------------------------------
Amscan Holdings Inc. reported a net loss of $2.5 million, on total
revenues of $330.4 million for the first quarter ended March 31,
2008, compared with a net loss of $4.4 million, on total revenues
of $248.4 million in the same period last year.
Wholesale Segment
Net sales, at wholesale, for the quarter ended March 31, 2008, of
$110.9 million were $2.8 million or 2.6% higher than sales for the
quarter ended March 31, 2007.
Retail Segment
Net retail sales for company-owned stores for the quarter ended
March 31, 2008, of $214.1 million were $78.7 million or 58.2%
higher than net retail sales for the quarter ended March 31, 2007,
reflecting the additional sales of $79.4 million of Factory Card &
Party Outlet Corp. (FCPO) and Party City Franchise Group LLC
(PCFG).
Total Costs and Expenses
Total costs and expenses increased to $321.6 million during the
three months ended March 31, 2008, compared with $241.6 million in
the same period last year.
Cost of sales increased to $214.7 million, or 66.0% of net sales,
during the first three months of 2008, compared to $165.8 million,
or 68.1% of net sales during the same three months ended March 31,
2007.
Selling expenses of $10.7 million for the quarter-ended March 31,
2008, were $200,000 higher than for the quarter ended March 31,
2007, principally due to increases in base compensation and
employee benefits.
Retail operating expenses for the quarter ended March 31, 2008,
totaled $57.9 million, or $23.1 million higher than in the prior
year quarter, principally due to the inclusion of PCFG and FCPO
operating expenses of $22.8 million.
General and administrative expenses of $31.5 million for the
quarter ended March 31, 2008, were $7.4 million higher than the
prior year quarter, primarily due to the inclusion of PCFG and
FCPO expenses of $6.8 million.
Interest Expense
Interest expense of $14.3 million for the three months ended
March 31, 2008, was $200,000 higher than for the three months
ended March 31, 2007, reflecting higher average borrowings due to
the acquisitions made during the fourth quarter of 2007, partially
offset by lower Libo rates and lower margin rates resulting from
the company's May 2007 debt refinancing.
Other Income
Other income, net of $486,000 for the three months ended March 31,
2008, principally consists of the company's share of income from
an unconsolidated balloon distribution joint venture located in
Mexico. This compares with other income of $138,000 during the
same period last year.
Income Tax Benefit
Income tax benefit for the quarters ended March 31, 2008, and
2007, were $1.9 million and $2.7 million, respectively. These
were based upon the estimated consolidated effective income tax
rates of 37.9% and 38.1% for the years ending Dec. 31, 2008, and
2007, respectively. The decrease in the 2008 effective income tax
rate is primarily attributable to a lower average state income tax
rate.
Liquidity and Capital Resources
Required repayments on the company's term debt for the remainder
of the year will be $2.8 million. At March 31, 2008, the company
had $50.3 million of availability remaining on its primary
revolving credit agreement, and PCFG had $14.0 million available
under its separate revolving credit agreement.
At March 31, 2008, the company had $582.2 million in outstanding
long-term obligations, compared to $584.3 million at Dec. 31,
2007.
Balance Sheet
At March 31, 2008, the company's consolidated balance sheet showed
$1.5 billion in total assets, $1.1 billion in total liabilities,
$35.4 million in redeemable common securities, and $371.7 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?2c38
About Amscan Holdings
Headquartered in Elmsford, New York, Amscan Holdings Inc. --
http://www.amscan.com/-- designs, manufactures, contracts for
manufacture and distributes party goods, including paper and
plastic tableware, metallic balloons, accessories, novelties,
gifts and stationery.
The company also operates specialty retail party supply stores in
the United States, and franchises both individual stores and
franchise areas throughout the United States and Puerto Rico,
under the names Party City, Party America, The Paper Factory and
Halloween USA. With the acquisition of Factory Card & Party
Outlet Corporation on Nov. 16, 2007, the company also operates
specialty retail party and social expressions supply stores under
the name Factory Card & Party Outlet.
* * *
As reported by the Troubled Company Reporter on Dec. 12, 2007,
Moody's Investors Service confirmed the ratings on Amscan
Holdings Inc.'s 8.75% senior subordinated notes (2014) at Caa1
(LGD 5, 87%). Moody's also confirmed the ratings on the company's
secured revolving credit facility at Ba3 (LGD 2, 29%), secured
term loan at B1 (LGD 3, 35%), and corporate family rating at B2.
ARROW ELECTRONICS: Moody's Changes Debt Rating Outlook to Stable
----------------------------------------------------------------
Moody's Investors Service affirmed the company's existing senior
long-term debt ratings and changed the outlook to stable from
positive.
The following ratings were affirmed:
Senior Unsecured Notes with various maturities -- Baa3
Shelf registration for senior unsecured, subordinated, and
preferred stock -- (P)Baa3, (P)Ba1 and (P)Ba2, respectively
The outlook change to stable reflects weaker-than-expected
operating cash flows and credit protection measures that are
likely to remain below prior year levels in the softening macro-
environment. It also reflects potentially higher-than-anticipated
debt levels to fund three recent acquisitions (i.e., Achieva Ltd.,
LOGIX, S.A. and ACI Electronics LLC) at a time when operating cash
flows are likely to contract.
Moody's is concerned that recent weakness in high-end server sales
in the company's enterprise computing segment will continue for
most of 2008, resulting in operating margin contraction and
reduced EBITDA levels for the full year, in Moody's opinion. The
change in outlook considers the possibility of further debt-funded
acquisitions given the company's penchant to grow through external
means, which could delay the pace of de-leveraging. It also
incorporates the possibility of a delay in achieving synergies
given the increasing number of acquisitions to be integrated
simultaneously.
When Moody's changed the outlook to positive in March 2007, it was
anticipated that Arrow would "maintain focused on balance sheet
de-leveraging via free cash flow generation targeted towards debt
reduction and/or higher operating cash flow. "Specifically, it
was expected that financial leverage, as measured by debt to
EBITDA (Moody's adjusted), would migrate below 1.9x and operating
margins (Moody's adjusted) would expand above 4.2%. As of the
twelve month period ended March 2008, the company's debt to EBITDA
metric (Moody's adjusted) was 2.0x; and Arrow's operating margin
for the March 2008 quarter was 4.1%.
Arrow stated publicly that it expects continued weakness in server
sales and potential softness in its European components business
in the June quarter. With business conditions expected to remain
subdued, Moody's believes Arrow's financial leverage and operating
margins could deteriorate from current levels, though the stable
outlook assumes that operating margins will remain above 2.5%.
Despite operating margin contraction, Arrow has achieved improved
return on working capital and reduced working capital as a percent
of sales.
Arrow maintains a strong liquidity profile, supported by a solid
cash position, external funding commitments and strong free cash
flow generation. As of March 2008, the company had $392 million of
cash and full access to $1.4 billion of external financing via an
$800 million bank credit facility and a $600 million accounts
receivable securitization program. Free cash flow generation over
the last twleve months was $629 million. Moody's anticipates Arrow
should be able to cover its capital expenditure, working capital
and short-term debt requirements over the next twelve months
through internal cash sources.
Moody's subscribers can find additional information in the Arrow
Credit Opinion published on www.moodys.com.
Arrow Electronics, Inc., headquartered in Melville, NY, is one of
the world's largest distributors of electronic components and
computer products to industrial and commercial customers. Revenues
and EBITDA for the twelve months ended March 31, 2008 were $16.5
billion and $824 million, respectively.
ASTORIA GENERATING: S&P Revises Debt Rating Outlook to Negative
---------------------------------------------------------------
Standard & Poor's Ratings Services revised the outlook on Astoria
Generating Company Acquisitions LLC's debt to negative from
stable.
At the same time, Standard & Poor's affirmed its 'BB-' and 'B'
ratings on the company's first- and second-lien debt,
respectively. In addition, S&P revised the second-lien debt
recovery rating to '4' (indicating the expectation of average
(30%-50%) recovery in the event of a payment default) from '3'.
At the same time, the '1' recovery rating on the first-lien debt
remains unchanged.
"The outlook revision reflects our expectation that financial
performance over the short to intermediate term will be lower than
originally forecasted," said Standard & Poor's credit analyst Mark
Habib. The delayed retirement of the old NYPA Poletti plant to
2010 from 2008 is likely to depress capacity prices in the region.
In addition, capacity hedges with Morgan Stanley for 1,800 MW
expire in April 2009, and could reset as early as May 2008 given
recent changes to New York Independent System Operator's market
rules. Hedges for about 105 MW expired in 2007 along with a heat
rate option contract, none of which have been renewed. With
lower-than-expected operating revenues, the project will have
difficulty meeting its EBITDA leverage covenant ratio, which has a
step-down feature in 2009. Given the probability for a covenant
default, management is pre-funding an equity cure with
distributions in 2008 and 2009.
Although 2007 operating performance has been satisfactory and the
project has been able to amortize debt in line with initial
forecasts, Standard & Poor's believes that Astoria Gen will face
challenges to generate sufficient cash flows in the next two years
to fund distributions and amortize debt as initially forecast.
Moreover the project, mainly comprised of intermediate and peaking
units, is highly dependent on a sustained recovery in capacity
prices to generate sufficient revenues to meet forecasted debt
amortizations.
ATA AIRLINES: To Set Off Former CEO's Loan Against Payments
-----------------------------------------------------------
In 2004, ATA Holdings Inc., and its then president and chief
executive officer, J. George Mikelsons, executed a letter
agreement providing repayment terms for the remaining principal
balance of $653,225 of the loan that the officer availed from the
company.
Following the conclusion of his employment, Mr. Mikelsons
executed a Non-Competition and Confidentiality Agreement,
directing ATA Airlines, Inc., the successor of ATA Holdings, to
pay him $50,000 on a quarterly basis in return for his
acknowledgment and certain agreements. The contract specifically
acknowledges that the loan he owes to ATA Airlines will be netted
against the payments owed to him by the airlines, therefore,
requiring him to make a net quarterly payment for $19,403.
Mr. Mickelson is obliged to make net quarterly payments to ATA
Airlines on July 26 and October 26, 2008, and a final payment on
January 26, 2009, pursuant to the schedule for paying off his
loan.
On behalf of ATA Airlines, Terry Hall, Esq., at Bakers & Daniels,
LLP, in Indianapolis, Indiana, says the loan as well as the
quarterly payment under the Non-Competition and Confidentiality
Agreement are mutual obligations subject to set-off. Any set-off
rights, however, are stayed by operation of the automatic stay,
Ms. Hall adds.
Accordingly, ATA Airlines and Mr. Mikelsons ask the U.S. Bankrupt
Court for the Southern District of Indiana to lift the stay to
allow the set-offs of the loan and quarterly payments to continue.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2 (Bankr. S.D. Ind.
Case No. 08-03675), citing the unexpected cancellation of a key
contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acts as the panel's
financial advisors.
(ATA Airlines Bankruptcy News, Issue No. 81; Bankruptcy Creditors'
Services Inc.
http://bankrupt.com/newsstand/or 215/945-7000).
ATA AIRLINES: Faces Lawsuits for WARN Act Violations
----------------------------------------------------
The Air Line Pilots Association and International Association of
Machinists and AeroSpace Workers, AFL-CIO, and District Lodge,
filed separate lawsuits against ATA Airlines, Inc., and Global
Aero Logistics, Inc., for violations of the Worker Adjustment and
Retraining Notification Act.
ALPA, a labor union serving as the collective bargaining
representative of ATA Airlines' pilots under the Railway Labor
Act, alleged that the airlines violated the WARN Act after it
laid off its employees without 60 days' advance notice.
About 2,230 employees, including 892 pilots, were terminated
after ATA Airlines shutdown its operations on April 3,
2008. The airlines said it could not obtain additional capital
to sustain or restructure its business after a key contract for
its military charter business was canceled.
ALPA sought payment of the equivalent of 60 days' back pay
and other benefits owing to its members under the WARN Act as
well as attorney fees and cost.
The International Association of Machinists and AeroSpace
Workers, AFL-CIO, and District Lodge 142 brought the lawsuit on
behalf of 46 employees who were among those terminated by ATA
Airlines without 60 days' advance notice of termination as
required by the WARN Act.
IAM serves serves as the collective bargaining representative
under the Railway Labor Act for the 46 employees in the fleet
service craft and the stores clerks and tool keepers craft.
Meanwhile, District Lodge acts as an intermediate body within
IAM, which is responsible for representing those employees at
ATA Airlines.
In their complaint, IAM and District Lodge sought payment of the
equivalent of 60 days' wages and other benefits under any
employee benefit plan, including 401(k) contributions and medical
benefits.
ATA Airlines was forced to shut down its business on April 3,
2008, after a key contract for its military charter business was
canceled, making it impossible for the airlines to obtain
additional capital to sustain or restructure its business.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2 (Bankr. S.D. Ind.
Case No. 08-03675), citing the unexpected cancellation of a key
contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acts as the panel's
financial advisors.
(ATA Airlines Bankruptcy News, Issue No. 81; Bankruptcy Creditors'
Services Inc. http://bankrupt.com/newsstand/or 215/945-7000).
ATA AIRLINES: ALPA Withdraws Suit Against ATA and Global Aero
-------------------------------------------------------------
ATA Airlines, Inc., Global Aero Logistics, Inc., and Air Line
Pilots Association sought and obtained a court ruling, approving
their agreement to dismiss a complaint filed by the pilots.
ALPA brought the lawsuit against ATA Airlines and its parent
company to compel them to submit to arbitration by Charles
Feigenbaum. The arbitration is in connection with the two
grievances that ALPA filed against them in February 2008, for
alleged violations of the collective bargaining agreement.
Pursuant to the stipulation, ALPA agreed to withdraw its request
for preliminary injunction, and to dismiss the complaint. The
parties also agreed to set June 2 to 3, 2008, or any dates
available for the arbitration.
About ATA Airlines
Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., is a
diversified passenger airline operating in two principal business
lines -- a low cost carrier providing scheduled passenger service
that leverages a code share agreement with Southwest Airlines; and
a charter operator that focused primarily on providing charter
service to the U.S. government and military. ATA is a wholly
owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned
subsidiary of New ATA Investment, Inc., which in turn, is a wholly
owned subsidiary of Global Aero Logistics Inc. ATA Acquisition
also owns another holding company subsidiary, World Air Holdings,
Inc., which it acquired through merger on August 14, 2007. World
Air Holdings owns and operates two other airlines, North American
Airlines and World Airways.
ATA Airlines and its affiliates filed for chapter 11 protection on
Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868
through 04-19874). The Honorable Basil H. Lorch III confirmed the
Debtors' plan of reorganization on Jan. 31, 2006. The Debtors'
emerged from bankruptcy on Feb. 28, 2006.
Global Aero Logistics acquired certain of ATA's operations after
its first bankruptcy. The remaining ATA affiliates that were not
substantively consolidated in the company's first bankruptcy case
were sold or otherwise liquidated.
ATA Airlines filed for Chapter 22 on April 2 (Bankr. S.D. Ind.
Case No. 08-03675), citing the unexpected cancellation of a key
contract for ATA's military charter business, which made it
impossible for ATA to obtain additional capital to sustain its
operations or restructure the business. ATA discontinued all
operations subsequent to the bankruptcy filing. ATA's Chapter 22
bankruptcy petition lists assets and liabilities each in the range
of $100 million to $500 million.
The Debtor is represented in its Chapter 22 case by Haynes and
Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel.
The United States Trustee for Region 10 appointed five members to
the Official Committee of Unsecured Creditors. Otterbourg,
Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to
the Committee. FTI Consulting, Inc., acts as the panel's
financial advisors.
(ATA Airlines Bankruptcy News, Issue No. 81; Bankruptcy Creditors'
Services Inc.
http://bankrupt.com/newsstand/or 215/945-7000).
AVIS BUDGET: S&P Lifts Rating on $250 Mil. Notes to AAA from BB+
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its rating on Avis
Budget Rental Car Funding LLC's $250 million floating-rate notes
series 2005-2 to 'AAA' from 'BB+'.
The upgrade reflects the replacement of the financial guarantee
insurance provided by Financial Guaranty Insurance Co. (FGIC; 'BB'
insurer financial enhancement rating) with one provided by Assured
Guaranty Corp. (Assured; 'AAA' insurer financial enhancement
rating) to support the timely payment of note interest and the
ultimate payment of note principal on or before the notes'
respective legal final maturity dates. If Assured's financial
position changes, the rating assigned to the respective series of
notes may be adjusted accordingly.
BAG'N BAGGAGE: U.S. Trustee Appoints Creditors Committee Members
----------------------------------------------------------------
William T. Neary, the U.S. Trustee for Region 6, appointed six
creditors to serve on the Official Committee of Unsecured
Creditors in the Chapter 11 Bankruptcy cases of Bag'n Baggage Ltd.
and 900 Corp.
The creditors committee members are:
1) Tumi, Inc.
Attn: Robert Aieloo
1001 Durham Avenue
South Plainfield, NJ 07080
Tel: (908) 222-7739
Fax: (908) 756-6553
2) HP Marketing Corp.
Attn: Robert Salomon
16 Chapin Road
Pine Brook, New Jersey 07058
Tel: (973) 808-9010
Fax: (972) 808-9004
3) Simon Property Group, Inc.
Attn: Donald M. Tucker
225 West Washington Court
Indianapolis, Indiana 46204
Tel: (317) 263-2346
Fax: (317) 263-7901
4) TRG Group
Attn: Becky Pessin
2047 Westport Center Drive
St. Louis, Missouri 63146
Tel: (314) 558-7970
Fax: (973) 808-9004
5) Ferragamo USA, Inc.
Attn: Salomon Legend
700 Castle Road
Secaucus, New Jersey 07094
Tel: (201) 553-6106
Fax: (201) 553-6199
6) Hartmann
Attn: Darlene Smith
1301 West Baddour Parkway
Lebanon, Tennessee 37087
Tel: (615) 453-3244
Fax: (615) 453-3209
7) VF Sportswear-Kipling
Attn: Diego Ortiz
40 West 57th Street, 3rd Floor
New York, NY 10019
Tel: (212) 841-7124
Fax: (336) 379-2373
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.
Headquartered in Dallas, Texas, Bag'n Baggage Ltd. --
http://www.bagnbaggage.com/-- sells traveling luggage and carry-
on bags. The company and its affiliate, 900 Corp., filed for
Chapter 11 protection on May 4, 2008 (Bankr. N.D. Tex. Lead
Case No.08-32096). Carol E. Jendrzey, Esq., Lindsey Doherty
Graham, Esq., and Mark Edward Andrews, Esq., at Cox Smith Matthews
Inc. represent the Debtors in their restructuring efforts. When
the Debtors filed for protection against their creditors, they
listed assets and debts between $10 million and $50 million.
BALLANTYNE RE: Market Losses Prompt S&P to Cut Debt Rating to BB
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its senior debt rating
on Ballantyne Re plc's Class A-1 notes to 'BB' from 'BBB-'. At
the same time, Standard & Poor's said the notes will remain on
CreditWatch with negative implications, where they were placed on
Nov. 21, 2007.
"Standard & Poor's took these actions in response to the asset
reports that indicate continued mark-to-market losses in the
various asset accounts will result in an interest payment trigger
being breached," said Standard & Poor's credit analyst Gary
Martucci.
Standard & Poor's will continue to monitor the developments
related to this latest disclosure and take future ratings actions
as warranted.
BENITO JUAREZ MUNICIPALITY: Moody's Rates Bank Loans Ba1
--------------------------------------------------------
Moody's Investors Service assigned ratings of A1.mx and Ba1 to the
two restructured bank loans of the Municipality of Benito Juarez
(Cancun). The modified loan agreements with the original lenders,
Banobras and Banorte, were signed last month and maintain most of
the original features of the documents signed in December 2005,
with a few modifications including, a reduction in interest rate,
a reduction in the reserve fund and a reduction in the percentage
of federal participaciones pledged by the State of Quintana Roo to
the Alternative Trust for payment on the loans should this support
be necessary.
On the whole, the credit quality of the loans remains at the same
level as the previous loan agreements, in great part due to the
improved credit quality of the issuer which was recently upgraded
to Baa2.mx (Mexico National Scale) and B1 (Global Scale, local
currency) from Ba2.mx/B2.
The authorizing documents for the restructure and the governing
legal agreements remain valid and binding. In addition, the
instruction to TESOFE from the state of Quintana Roo has been duly
modified to reflect changes in the state's pledge of
participaciones to the Alternative Trust.
The loans are being paid through a paying trust (Fideicomiso de
Administración y Pago F/2000855 with Grupo Financiero Santander
Serfin as trustee), which was established in December 2005, to
which the Municipality has pledged the flows and rights to 100% of
both its federal participation revenues as well as the Fortamun
funds. The Fortamun funds are not considered in our cash flows
due to ambiguity as to whether their pledge is valid. The
structure retains the support of the state government as it has
committed a certain portion of its own participaciones for payment
on the loans should the municipality's flow of funds prove
insufficient.
Each loan, in the amount of approximately P268 million, is a
direct obligation of the Municipality of Benito Juarez and is
payable under a distinct loan agreement. These maintain the
original amortization schedule of monthly debt service payments
with final maturity in 2017, and carry a 12% interest rate cap
which remains in effect until December 2010. The loans are also a
contingent obligation of the State of Quintana Roo.
The ratings assigned herein rely on both the Municipality's as
well as the State's credit positions, and the enhancement to that
credit provided by the governing documents. Given that many of the
factors remain the same, only the pertinent changes in the loan
agreements are highlighted below:
- The Municipality's issuer ratings of Baa2.mx (Mexico National
Scale) and B1 (Global Scale, local currency) reflect an
economically strong tax base, based on the vibrant tourism
activity of Cancun, that is capable of providing a healthy amount
of own source revenues. Financial operations continue to be
challenged, but demonstrated positive results in 2007 that are
more reflective of the city's true capacity to generate revenue.
The ratings also take into account a somewhat high debt-to-revenue
ratio which is made manageable by a recent decrease of debt
service requirements.
The State of Quintana Roo's ratings are stable at A1.mx/Ba1 and
the state is able to absorb this payment should it be necessary.
- A significant reduction in the interest rate charged by the
banks will allow for debt service to become more manageable. The
original Banobras loan charged an interest rate of TIIE + 1.46%,
whereas the new agreement imposes a TIIE +0.44% interest rate.
The Banorte loan is reduced from TIIE + 1.3% to TIIE + 0.5%.
Pledged municipal revenues provide a minimum debt service coverage
of 3.3 times, which is considered at or above average for this
type of transaction.
- The state of Quintana Roo has decreased the pledge of its
participation revenues from 8.86% to 6.0%. The growth in
participaciones in the last couple of years has resulted in a
growing amount of participaciones that is pledged for payment and
the reduction will bring back into line the original support that
was being provided by the state. Hence, the reduction in the
state's participation does not have a material effect on the
loans. Together with the municipality's participation revenues,
minimum debt service coverage is 4.6 times.
- The reserve fund has been decreased to two (2) months of debt
service from three (3) months. This decrease represents a weak
point compared to the previous structure, as the reserves cover
possible negative fluctuations in the flow of pledged funds. The
presence of the Alternative Trust would be tapped if the reserves
are utilized, thus protecting the structure in such a situation.
BIO-KEY INT'L: March 31 Balance Sheet Upside-Down by $3,271,009
---------------------------------------------------------------
BIO-key International Inc.'s consolidated balance sheet at
March 31, 2008, showed $12,561,740 in total assets, $8,928,594 in
total liabilities, and $6,904,155 in redeemable convertible
preferred stock, resulting in a $3,271,009 total stockholders'
deficit.
At March 31, 2008, the company's consolidated balance sheet also
showed strained liquidity with $2,951,884 in total current assets
available to pay $8,822,386 in total current liabilities.
BIO-key's net loss was $915,670 for the first quarter ended
March 31, 2008, compared to a net loss of $912,373 for the first
quarter of 2007.
Total revenue from continuing operations for the three months
ended March 31, 2008, was $2,540,418, compared to $2,715,240 in
the same period last year.
Consolidated cash and cash equivalents at March 31, 2008, was
$639,110. In addition, the company held approximately $153,994 in
restricted cash at the conclusion of the first 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?2c42
Going Concern Disclaimer
Carlin, Charron, & Rosen LLP, in Westborough, Mass., expressed
substantial doubt about BIO-key International Inc.'s ability to
continue as a going concern after auditing the company's
consolidated financial statements for the year ended Dec. 31,
2007. The auditing firm pointed to the company's substantial net
losses in recent years, and accumulated deficit at Dec. 31, 2007.
About BIO-key International
Headquartered in Wall, N.J., BIO-key International Inc. (OTC BB:
BKYI) -- http://www.bio-key.com/-- develops and delivers advanced
identification solutions and information services to law
enforcement departments, public safety agencies, government and
private sector customers.
BLUE WATER: Various Entities Object to Disclosure Statement
-----------------------------------------------------------
Citizens Bank; CIT Group/Equipment Financing, Inc., and CIT
Capital USA, Inc.; and IHB, Inc., formerly known as Injectronics,
Inc., lodge objections to the disclosure statement explaining Blue
Water Automotive Systems, Inc., and its debtor affiliates' 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.
The Debtors 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.
(A) Citizens Bank
Citizens Bank, the Debtors' postpetition lender, asserts that the
Disclosure Statement accompanying the Debtors' Joint Plan of
Liquidation does not adequately and properly disclose the status,
priority, and rights related to Citizens Bank's DIP Facility
Claim.
Donald F. Baty, Esq., at Honigman Miller Schwartz and Cohn LLP,
in Detroit, Michigan, notes that the DIP Financing Order makes it
clear that all of the obligations owing to Citizens Bank must be
paid in full upon the sooner of the closing of a sale of
substantially all of the Debtors' assets or on the effective date
of any confirmed plan of reorganization.
Moreover, Mr. Baty says Citizens Bank's entitlement to have its
entire DIP Facility Claim paid in full in cash upon confirmation
of a plan is not dependent on the value of the collateral of the
DIP Facility, as suggested by the Disclosure Statement. While
only the so-called "in-formula" portion of Citizens Bank's loans
was given "superpriority status," all of Citizens Bank's loans
are administrative expense claims and must be paid in full as
part of a plan of reorganization, he asserts.
By virtue of the status given to the DIP Facility Claim in the
Final DIP Order, unless Citizens Bank agrees otherwise or
assurances are given that the DIP Facility Claim will be paid in
full in connection with any sale of the Debtors' assets, accounts
owing by the Debtors' Participating Customers and inventory
related to the customers' production cannot be sold for less
than the values provided for in the Credit Enhancement Agreements
between Citizens Bank and the Participating Customers.
Under the Credit Enhancement Agreement, the Participating
Customers -- General Motors Corp., Chrysler LLC and certain
affiliates, and Ford Motor Company -- are required to pay all
postpetition accounts with set-offs capped at 7% and purchase all
useable and merchantable raw material inventory at Debtors' cost
and finished goods at contract price. Some of the Participating
Customers are required to purchase work in process for the
applicable pro-rated contract price. The Disclosure Statement
should disclose the treatment that must be afforded by the DIP
Facility Claim, Mr. Baty says.
The Bank also finds the provision saying that ". . . the DIP
Facility Claim will be paid in full in cash . . . to the extent
of value of the DIP Facility Collateral and otherwise under the
Ford Guaranty." The Bank says reference on collateral should be
deleted as it does not hold a "Cash Collateral Lien Claim."
The Bank proposes that the Disclosure Statement should provide
that the DIP Loans are secured on a superpriority basis by (i) a
first lien on substantially all of the Debtors' postpetition
assets, excluding tooling, Avoidance Action, and the Debtors'
claim against Sarna Automotive; (ii) a first lien on all
prepetition accounts, inventory, and general intangibles and by
(iii) a second lien on substantially all of the Debtors'
prepetition assets, except for the Excluded Collateral.
Citizens Bank thus asks the Court to condition the approval of
the Disclosure Statement on the Debtors making the proposed
changes.
(B) CIT Entities
CIT Group/Equipment Financing, Inc., and CIT Capital USA, Inc.,
lenders in more than $40,000,000 of secured loans, point out that
the Accommodation Agreements between the Debtors and the
Participating Customers do not require a plan and disclosure
statement, but only a timetable of events leading to a sale of
assets.
There is nothing in the Accommodation Agreements, which dictates
that the sale of assets occur through a plan confirmation, the
CIT Entities assert.
By attempting to force a conventional sale of assets under
Section 363 of the Bankruptcy Code into the mold of a plan and
disclosure statement, the Debtors have not only "placed the cart
before the horse," but are attempting to "send a cart down the
highway before the horse have even been conceived," Theodore B.
Sylwestrzak, Esq., at Dickinson Wright PLLC, in Detroit,
Michigan, asserts.
Mr. Sylwestrzak points out the Disclosure Statement does not
contain a single number, which tells any creditor what it will
receive under the plan under which its vote is being solicited.
He notes that secured creditors, under the Plan, will, at the
Debtors' option, receive one or more of (a) their "Collateral
Value" in Cash, without any disclosure of what that Collateral
Value might be; (b) the same Collateral Value over five or 10
years, at an undisclosed rate of interest; (c) the return of the
Collateral in kind, without any disclosure of which Collateral is
to be kept and which is to be returned; or (d) "such other
treatment as will provide the holder with the indubitable
equivalent of holder's Allowed Secured Claim."
Moreover, the CIT Entities note that the Cash Collateral Lien
will be paid with proceeds of the sale in excess of the In-
Formula Loans. The provision, Mr. Sylwestrzak asserts, ignores
the fact that the assets being sold, other than inventory and
receivables, are subject to other creditors' first priority
liens, including the CIT Lenders' liens.
The CIT Entities reiterate that, as a matter of law, it is the
secured creditors who are supposed to receive the proceeds of a
sale of their collateral, yet the Debtors propose to give the
proceeds to their major customers. "This is another outgrowth of
the Debtors' premature rush into a plan process" and if the
Disclosure Statement were accompanied with numbers, on the basis
of an actual sale, one would readily see that the same dollars
are being spent twice, Mr. Sylwestrzak asserts.
"The Debtors are pushing the Court and the parties into a forced
march via expedited disclosures statement approval and
confirmation hearings for a plan, which proposes to sell an
unspecified portion of their assets at an unknown price and on
yet-to-be developed terms, all so that the Debtors can make
distributions of a type and in amounts that are as yet
undetermined," the CIT Entities assert.
"There is no reason that the Debtors should not proceed in a
normal, straightforward fashion," Mr. Sylwestrzak tells the
Court. If the Debtors' assets are to be sold, the Debtors should
seek as expressly contemplated by the Accommodation Agreements,
to effect the sales under Section 363. If the sales are approved
and occur, the Debtors can then file a plan, if otherwise
appropriate, to distribute the sales proceeds amongst their
creditors, he says.
Mr. Sylwestrzak says the Debtors are not "small business" debtors
and so are not subject to the expedited procedures and
conditional disclosure statements approval process of Rule 3017
of the Federal Rules of Bankruptcy Procedure. The Debtors'
effort to truncate the normal process under the Bankruptcy Code
and Rules is based on a false premise as to the requirements of
the Accommodation Agreements, the CIT Entities assert.
The CIT Entities ask the Court to direct the Debtors to withdraw
the Plan confirmation schedule in favor of a schedule, which
contemplates a Section 363 sale that, if successful, will meet
the deadlines of the Accommodations Agreement.
(C) IHB, Inc.
Representing IHB, Inc., Richard E. Kruger, Esq., at Jaffe Raitt,
Heuer & Weiss, P.C., in Southfield, Michigan, says the Plan is
premised on a sale of the Debtors' assets but fails to identify
any of the material terms and provisions of the proposed sale,
including:
* the putative buyer of the Debtors' assets;
* the purchase price for the Debtors' assets;
* the Debtors' unexpired nonresidential real property leases;
* procedures to resolve disputes over cure amounts;
* procedures concerning the timing and manner of curing
existing arrearanges on real property leases; and
* criteria to assess the putative buyer's offers of adequate
assurance of future performance on unexpired leases and
executory contracts, and related issues that will invariably
arise in connection with the assumption and assignment of
unexpired leases and executory contracts.
IHB asks the Court to deny approval of the Disclosure Statement.
About Blue Water Automotive
Blue Water Automotive Systems, Inc. designs and manufactures
engineered thermoplastic components and assemblies for the
automotive industry. The company's product categories include
airflow management, full interior trim/sub-systems, functional
plastic components, and value-added assemblies. They are
supported by full-service design, program management,
manufacturing and tooling capabilities. With more than 1,400
employees, Blue Water operates eight manufacturing and product
development facilities and has annual revenues of approximately
US$200 million. The company's headquarters and technology
center is located in Marysville, Mich. The company has
operations in Mexico.
In 2005, KPS Special Situations Fund II, L.P., and KPS Special
Situations Fund II(A), L.P., acquired Blue Water Automotive
through a stock purchase transaction. In 2006, the company
acquired the automotive assets and operations of Injectronics,
Inc., a manufacturer of thermoplastic injection molded
components and assemblies. KPS then set about reorganizing the
company. The company implemented a program to improve operating
performance and address its liquidity issues. During 2007, the
company replaced senior management, closed two facilities, and
reduced overhead spending by one third.
Blue Water Automotive and four affiliates filed for chapter 11
bankruptcy protection Feb. 12, 2008, before the United States
Bankruptcy Court Eastern District of Michigan (Detroit) (Case
No. 08-43196). Judy O'Neill, Esq., and Frank DiCastri, Esq., at
Foley & Lardner, LLP, serves as the Debtors' bankruptcy counsel.
Administar Services Group LLC acts as the Debtors' claims,
noticing, and balloting agent. Blue Water's bankruptcy petition
lists assets and liabilities each in the range of US$100 million
to US$500 million.
The Debtors filed their Liquidation Plan on May 9, 2008. The
Court will convene a hearing May 23 to consider approval of the
Disclosure Statement explaining the Plan, for voting purposes.
The Court will hold a hearing June 18, 2008, to consider
confirmation of the Plan. (Blue Water Automotive Bankruptcy
News, Issue No. 16, Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
CEDO PLC: Moody Cuts Notes Rating Due to EDS Share Price Movements
------------------------------------------------------------------
Moody's Investors Service downgrades six classes of notes issued
by CEDO PLC. CEDO PLC is an SPV that issues CDOs of equity
default swaps.
The downgrades are the result of rating migration and equity share
price movements of the underlying portfolio of Equity Default
Swaps. Whilst the transaction is composed of an equal number of
equity default swaps in the risk portfolio (long EDS exposures)
and in the insurance portfolio (short exposures), the downgrades
result from the presence of a higher proportion of US financial
and real-estate entities in the risk portfolio, whose share price
decreased significantly. In addition, the share price of Thomson
SA, a French electronics manufacturer has dropped substantially
since the previous rating action.
As of 12 May 2008, the risk portfolio had three reference entities
- Countrywide Financial Corporation, Centex Corporation and
Thomson SA - which have a share price below their EDS trigger
levels. The insurance portfolio contained none. Five reference
entities with barriers above 85% belonged to the risk portfolio,
while there were two in the insurance portfolio. The average
barrier is 38% in the risk portfolio and 32% in the insurance
portfolio.
The distressed equity events observation period will start on 21
May 2008 and last for three years until May 2011, the maturity of
the transaction.
The rating actions are as follows:
Issuer: CEDO PLC
(1) Series 1 Tranche B EUR 16,500,000 Asset-Backed Deferrable
Fixed Rate Notes due 2011
Current Rating: A1
Prior Rating: Aa2
(2) Series 1 Tranche C EUR 26,500,000 Asset-Backed Deferrable
Fixed Rate Notes due 2011
Current Rating: Ba1
Prior Rating: A3, on review for downgrade
(3) Series 1 Tranche E EUR 2,500,000 Asset-Backed Deferrable Fixed
Rate Notes due 2011
Current Rating: Ba1
Prior Rating: A3, on review for downgrade
(4) Series 1 Tranche F EUR 2,000,000 Asset-Backed Deferrable
Floating Rate Notes due 2011
Current Rating: B2
Prior Rating: Ba3, on review for downgrade
(5) Series 1 Tranche G EUR 15,000,000 Asset-Backed Deferrable
Floating Rate Notes due 2011
Current Rating: A1
Prior Rating Aa2
(6) Series 1 Tranche H EUR 5,000,000 Asset-Backed Deferrable
Floating Rate Notes due 2011
Current Rating: Ba1
CEDO PLC: Moody Downgrades Notes Issued Under Series 4
-------------------------------------------------------
Moody's Investors Service downgraded three classes of notes issued
by CEDO PLC under Series 4. The downgrades are the result of
rating migration and equity share price movements of the
underlying portfolio of Equity Default Swaps.
Whilst the transaction is composed of an equal number of equity
default swaps in the risk portfolio and in the insurance
portfolio, the downgrades result from the presence of a higher
proportion of US financial and real-estate entities in the risk
portfolio, whose share price decreased significantly.
As of 12 May 2008, the risk portfolio had two reference entities -
Countrywide Financial Corporation and MBIA Inc. - which have a
share price below their EDS trigger levels. The insurance
portfolio contained one. Five reference entities with barriers
above 85% belonged to the risk portfolio, while there were none in
the insurance portfolio. The average barrier is 45% in the risk
portfolio and 32% in the insurance portfolio.
The distressed equity events observation period will start in June
2009 and last for three years until May 2012, the maturity of the
transaction, such that no equity event related losses have
occurred at this stage and all tranches still benefit from their
initial subordination levels.
The rating actions are:
Issuer: CEDO PLC
(1) Series 4 Tranche A EUR 73,100,000 Asset-Backed Deferrable
Floating Rate Notes due 2012
Current Rating: Aa3
Prior Rating: Aa1, on review for downgrade
(2) Series 4 Tranche B EUR 90,700,000 Asset-Backed Deferrable
Floating Rate Notes due 2012
Current Rating: Baa2
Prior Rating: A1, on review for downgrade
(3) Series 4 Tranche C EUR 11,200,000 Asset-Backed Deferrable
Floating Rate Notes due 2012
Current Rating: Ba3
Prior Rating: Baa3, on review for downgrade
CEDO PLC: Moody's Downgrades Notes Issued Under Series 3
--------------------------------------------------------
Moody's Investors Service downgraded the Series 3 notes issued by
CEDO PLC. The downgrade is the result of rating migration and
equity share price movements of the underlying portfolio of Equity
Default Swaps.
Whilst the transaction is composed of an equal number of equity
default swaps in the risk portfolio and in the insurance
portfolio, the downgrades result from the presence of a higher
proportion of US financial and real-estate entities in the risk
portfolio, whose share price decreased significantly.
As of 12 May 2008, the risk portfolio had six reference entities -
Countrywide Financial Corporation, MBIA Inc., Mitsubishi UFJ Nicos
Co, Ltd, Centex Corporation, KB Home and Pulte Homes, Inc. - which
have a share price below their EDS trigger levels (those entities
have a barrier or strike above 100%). The insurance portfolio
contained none. Nine reference entities with barriers above 85%
belonged to the risk portfolio, while there were none in the
insurance portfolio. The average barrier is 51% in the risk
portfolio and 31% in the insurance portfolio.
The distressed equity events observation period will start in
December 2008 and lasts for three years until December 2011, the
maturity of the transaction, such that no equity event related
losses have occurred at this stage and the tranche still benefit
from their initial subordination levels.
The rating action is:
Issuer: CEDO PLC
(1) Series 3 Tranche K Non-Principal Protected Asset-Backed Fixed
Rate Notes due 2012
Current Rating: B3
Prior Rating: Ba3, on review for downgrade
CEDO PLC: Moody's Downgrades Notes Issued Under Series 2
--------------------------------------------------------
Moody's Investors Service downgraded eight classes of notes and
two loan facilities issued by CEDO PLC under Series 2. CEDO PLC
Series 2 is an SPV that issues CDOs of equity default swaps.
The downgrades are the result of rating migration and equity share
price movements of the underlying portfolio of Equity Default
Swaps. Whilst the transaction is composed of an equal number of
equity default swaps in the risk portfolio and in the insurance
portfolio, the downgrades results from the presence of a higher
proportion of US financial and real-estate entities in the risk
portfolio, whose share price decreased significantly.
As of 12 May 2008, the risk portfolio had five reference entities
- Countrywide Financial Corporation, MBIA Inc, Centex Corporation,
Pulte Homes Inc. and Mitsubisghi UFJ Nicos Co. Ltd. - which have a
share price below their EDS trigger levels (those entities have a
barrier or strike above 100%). The insurance portfolio contained
none. Eight reference entities with barriers above 85% belonged to
the risk portfolio, while there were none in the insurance
portfolio. The average barrier is 46% in the risk portfolio and
32% in the insurance portfolio.
For all tranches except I, J and K, the distressed equity events
observation period will start in December 2008 and last for three
years until December 2011, the maturity of the transaction, such
that no equity event related losses have occurred at this stage
and all tranches still benefit from their initial subordination
levels. For tranches I and J, the observation period will start
in December 2009 and last two years. For tranche K, the
observation period starts in November 2008 and lasts three years.
The rating actions are:
Issuer: CEDO plc
(1) Series 2 Tranche A Asset-Backed Deferrable Floating Rates
Notes due 2011
Current Rating: Baa1
Prior Rating: Aa1, on review for downgrade
(2) Series 2 Tranche B Asset-Backed Deferrable Floating Rate
Notes Due 2011
Current Rating: Ba2
Prior Rating: A2, on review for downgrade
(3) Series 2 Tranche C Asset-Backed Deferrable Floating Rate
Notes due 2011
Current Rating: B2
Prior Rating: Baa2, on review for downgrade
(4) Series 2 Tranche K Non-Principal Protected Asset-Backed
Fixed Rate Notes due 2011
Current Rating: B2
Prior Rating: Baa3, on review for downgrade
(5) Series 2 Tranche J Asset-Backed Fixed Rate Notes due 2011
Current Rating: B3
Prior Rating: Ba1, on review for downgrade
(6) Series 2 Tranche G Asset-Backed Deferrable Floating Rate
Notes due 2011
Current Rating: B2
Prior Rating: Baa2, on review for downgrade
(7) Series 2 Tranche I Asset-Backed Fixed Rate Notes due 2011
Current Rating: B2
Prior Rating: Baa2, on review for downgrade
(8) Series 2 Tranche H Asset-Backed Floating Rate Notes due
2011
Current Rating: B3
Prior Rating: Baa3, on review for downgrade
(9) Floating Rate Loan Facility in relation to Series 2
Tranche B Asset-Backed Deferrable Floating Rate Notes due
2011
Current Rating: Ba2
Prior Rating: A2, on review for downgrade
(10) Floating Rate Loan Facility in relation to the Series 2
Tranche C Asset-Backed Deferrable Floating Rate Notes due
2011
Current Rating: B2
Prior Rating: Baa2, on review for downgrade
CHESAPEAKE ENERGY: Prices $800 Million Offering of Senior Notes
---------------------------------------------------------------
Chesapeake Energy Corporation priced its public offering of
$800 million aggregate principal amount of senior notes due 2018,
which will carry an interest rate of 7.25% per annum. The senior
notes were priced at 100% of par. Chesapeake expects the issuance
and delivery of the senior notes to occur on May 27, 2008, subject
to customary closing conditions.
Chesapeake intends to use the net proceeds from the offering,
together with proceeds from the concurrent public offering of
contingent convertible senior notes, to fund the redemption of its
7.75% Senior Notes due 2015, to repay outstanding indebtedness
under its revolving credit facility and for general corporate
purposes.
The senior notes were offered pursuant to a registration statement
filed on May 19, 2008, with the U.S. Securities and Exchange
Commission. Chesapeake intends to list the notes on the New York
Stock Exchange after issuance.
Credit Suisse, Banc of America Securities LLC, Deutsche Bank
Securities, Lehman Brothers and RBS Greenwich Capital acted as
joint book-running managers for the senior notes offering.
Copies of the prospectus supplement relating to the offering may
be obtained from:
Credit Suisse Securities LLC
Prospectus Department
One Madison Avenue
New York, NY 10010
Tel 1-800-221-1037
About Chesapeake Energy Corporation
Based in Oklahoma City, Oklahoma, Chesapeake Energy Corporation
(NYSE: CHK) -- http://www.chkenergy.com/-- produces natural gas
in the U.S. The company's operations are focused on exploratory
and developmental drilling and corporate and property acquisitions
in the Mid-Continent, Fort Worth Barnett Shale, Fayetteville
Shale, Permian Basin, Delaware Basin, South Texas, Texas Gulf
Coast, Ark-La-Tex and Appalachian Basin regions of the United
States.
CHESAPEAKE ENERGY: Moody's Puts Ba3 Rating on Pending $800MM Notes
------------------------------------------------------------------
Moody's Investors Service assigned Ba3 (LGD 4; 62%) ratings to
Chesapeake Energy's pending $800 million offering of ten year
senior unsecured notes and $1 billion or more offering of thirty
year contingent convertible senior notes. Moody's also moved the
rating outlook up to stable from negative. Moody's also affirmed
CHK's Ba2 corporate family, Baa3 hedge facility, Ba2 probability
of default, SGL-3 liquidity ratings, and existing Ba3 note ratings
but changed the LGD statistics from LGD 4; 61% to LGD 4; 62%.
Note proceeds will repay secured bank revolver debt and fund the
redemption of CHK's 7.75% notes dud 2015. While net proceeds from
CHK's April 2, 2008 common equity offering and the pending note
offerings will reduce $3.2 billion in March 31, 2008 borrowings by
as much as $2.5 billion under its $3.5 billion secured borrowing
base revolver, the liquidity rating remains SGL-3. CHK will
heavily outspend 2008 and 2009 cash flow. Unless CHK executes
further note or equity offerings or specific asset sales and
monetizations to amply cover cash flow shortfall, future revolver
borrowings would be very heavy.
The move to a stable rating outlook reflects ratings support from
(i) strong year-end 2007 and indicated first quarter 2008 reserve
additions, (ii) the benefit to unhedged production of an expected
continued strong price and pre-capex cash flow environment after
yet another surge in natural gas prices; (iii) continued strong
production trends, (iv) the leverage reduction and liquidity
enhancement from CHK's $1 billion common equity offering in April
2008, (v) potential debt reduction if CHK can execute its
announced intention to sell its largely non-producing Woodford
Shale acreage for well in excess of $1 billion, and (vi) the
potential for CHK's Haynesville shale position to become another
important leg of CHK's production replacement effort.
CHK also continued a pattern of inducing conversion of hybrid
securities with a recent conversion of another series of
convertible preferred stock to common. Moody's assign various
debt weightings to hybrids so their conversion reduces adjusted
debt and leverage.
The negative outlook was assigned in December 2007 when elevated
leverage was expected to continue rising with heavy capital
spending in excess of operating cash flow when the price outlook
was more moderate and liquidity was tightening with definitive
relief expected to be spread out over the ensuing year
The ratings remain restrained by the leveraging pressure and
ongoing heavy front-end capital demands of CHK's impressive but
highly aggressive expansion mode. In Moody's view the greatest
risk CHK faces is the inherent risk of accelerating capital
intensity that would result if production growth is not
commensurate with accelerating heavy capital spending, with high
leverage amplifying the credit impact.
CHK has substantially increased its capital spending targets
again, now targeting 2008 outlays in the range of $7.9 billion to
$8.9 billion and 2009 outlays in the range of $7.6 billion to
$8.6 billion. This exceeds expected 2008 and 2009 operating cash
flow by $3.5 billion to $5.5 billion. While most of the spending
pace arises from a desire to accelerate conversion of unproven
acreage to production, it also appears to be due in part to
comparatively short spending and production deadlines under the
terms of lease acreage acquired by CHK.
To avoid pressuring the outlook or ratings, either (i) realized
cash flow would need to significantly outpace levels currently
expected, (ii) reserve and production growth from the heavy
capital reinvestment rate would need to be sufficient to
substantially grow production and reserves relative to debt
levels, and/or (iii) CHK would need to issue additional equity.
CHK's competitive all-sources reserve replacement costs have
relied heavily on positive reserve revisions, causing Moody's to
remain cautious for the time being on the underlying level of
sustaining reserve replacement costs.
However, the ratings are supported by a strong productive base of
investment grade scale and diversification; a sound reserve life;
supportive reserve replacement costs and organic reserve
replacement; and CHK's recent actions to support its credit
profile, as evidenced by its $1 billion equity offering. Natural
gas focused CHK is the third largest U.S. natural gas producer.
CHK displays multiple core basin diversification and operational
intensity; widely diversified geologic risk; production risk
diversified across more than 35,000 producing wells; and a
comparatively strong production growth trajectory and very large
drilling inventory across the risk spectrum.
CHK believes it holds more than a ten year drilling inventory,
assuming supportive natural gas and oil prices. CHK holds 13.9
million net acres of leasehold interests and its operations span
most of the conventional and unconventional producing regions in
the onshore lower 48 states. CHK holds leading positions in the
Mid-Continent, Fort Worth Barnett Shale, Appalachia, Ark-La-Tex,
Permian and Delaware Basins, the Fayetteville Shale, and the
nascent Haynesville Shale.
After CHK's equity offering, pro-forma leverage on March 31, 2008
proven developed reserves declined modestly to a high $10/PD boe,
versus $10.51/PD boe at year-end 2007, $9.34/PD boe at year-end
2006, and $8.14/boe at year-end 2005. Adjusted debt plus future
FAS 69 capital spending to bring proven non-producing reserves to
production declined modestly to $10.89/boe of total proven
reserves from $11.30/boe at year-end 2007, $10.37/boe at year-end
2006, and $9.03/boe at year-end 2005. Leverage on daily production
declined to $33,475/boe in first quarter 2008 versus $37,300/boe
at year-end 2007.
Chesapeake Energy is headquartered in Oklahoma City, Oklahoma.
CHESAPEAKE ENERGY: Fitch Assigns 'BB' Rating on $500MM Conv. Notes
------------------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating to Chesapeake Energy
Corporation's proposed note offering of $800 million senior notes
and $500 million contingent convertible notes. The Rating Outlook
remains Negative.
Fitch rated Chesapeake's debt as:
-- Issuer Default Rating at 'BB';
-- Senior unsecured debt at 'BB';
-- Senior secured revolving credit facility and hedge facilities
at 'BBB-';
-- Convertible preferred stock at 'B+'.
Chesapeake's Rating Outlook remains Negative primarily as a result
of the company's high leverage as measured by debt/barrels of oil
equivalent which is driven by the company continuing to outspend
operating cash flows. As of March 31, 2008, Fitch calculates debt
at $6.52/boe of proven reserves, representing an increase of
approximately 5.7% compared to year-end 2007 levels. Chesapeake
issued equity on April 2nd of $1.011 billion and continues to move
forward with asset sales, including volumetric production
payments, the recently announced plan to sell leaseholds for
approximately $1.2 billion and the expected sale of the minority
interest in the company's midstream operations. Despite the
increased funding of capital expenditures with equity sales and
proceeds from asset sales, Fitch believe leverage metrics continue
to be under pressure to rise as the company continues to
aggressively outspend operating cash flows.
Chesapeake's ratings continue to be supported by the size and low
risk profile of its oil and gas reserves which now approximate
11.5 trillion cubic feet equivalent. In addition, Chesapeake
continues to post very robust results operationally. Organic
reserve replacement was 391% during the first quarter of 2008 and
Chesapeake's three-year organic reserve replacement rate at year-
end 2007 was 276% at costs of $13.83/boe (however, three-year FD&A
is estimated at $17.51/boe). Both the strong organic reserve
replacement rates and the onshore location of the company's
reserves highlight the low risk nature of the company's reserves.
Bondholders are also protected from near-term declines in
commodity prices as a result of the company's hedging strategy;
however, this protection is mitigated by the company's past
practice of liquidating hedges prior to maturity.
Chesapeake is an Oklahoma City-based company focused on the
exploration, production and development of natural gas. The
company's proved reserves remain predominantly natural gas and are
based 100% in the U.S. Chesapeake's operations are concentrated
primarily in the Mid-Continent, South Texas, the Permian Basin,
and the Appalachia Basin. The company's reserve growth in recent
years reflects the company's aggressive acquisition strategy and
consistent success through the drill-bit.
CHESAPEAKE ENERGY: S&P Rates Proposed $800MM Senior Notes 'BB'
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' rating to
Chesapeake Energy Corp.'s proposed $800 million senior notes due
2018 and $500 million in contingent senior notes due 2038. The
recovery rating is '4', indicating our expectation of average
(30%-50%) recovery in the event of a payment default. The outlook
remains positive.
"We continue to monitor the company's operating performance," said
Standard & Poor's credit analyst David Lundberg, "as well as its
anticipated 2008 and 2009 credit metrics, particularly in light of
our recently revised commodity pricing assumptions, and its
strategy to raise cash through volumetric production payment
transactions and monetized midstream assets."
Proceeds will be used to pay down existing indebtedness, and
credit measures will not change as a result of the proposed
offerings. Pro-forma for its recent equity offering, Oklahoma
City-based Chesapeake Energy had $11 billion of debt and
$1 billion of preferred stock as of March 31, 2008.
CIFG: Moody's Downgrades IFS Rating on Possible Capital Shortfall
-----------------------------------------------------------------
Moody's Investors Service downgraded the insurance financial
strength ratings of CIFG Guaranty, CIFG Europe, and CIFG Assurance
North America, Inc to Ba2, from A1, and kept the ratings under
review with direction uncertain. The rating agency said that the
rating actions reflect the high likelihood that, absent material
developments, the firm will fail minimum regulatory capital
requirements in New York and Bermuda due to expected significant
increases in modeled loss reserves on ABS CDOs. The breach of
such regulatory capital requirements would put the firm in a
precarious position, especially in light of the solvency
provisions embedded in its CDS exposures.
The review with direction uncertain reflects potential changes in
the credit profile of the firm that could occur over the next
couple of months as CIFG attempts to implement capital
strengthening plans.
Moody's ratings on securities that are guaranteed or "wrapped" by
a financial guarantor are generally maintained at a level equal to
the higher of a) the rating of the guarantor or b) the published
underlying rating. However, as CIFG's rating is downgraded below
the investment grade level, and reflecting current rating agency
policy, Moody's will withdraw ratings on CIFG-wrapped securities
for which there is no published underlying rating. Should the
guarantor's rating subsequently move back into the investment
grade range or should the agency subsequently publish the
underlying rating, Moody's would reinstate the rating to the
wrapped instruments. For further information please see Moody's
recently published special comment entitled: Assignment of Wrapped
Ratings When Financial Guarantor Falls Below Investment Grade (May
6, 2008).
Moody's said that CIFG employs a loss reserving approach for its
insured ABS CDOs that uses as inputs the lowest available ratings
of any of three rating agencies on underlying CDO collateral.
With further downgrades of RMBS securities by different rating
agencies occurring since the beginning of the year, Moody's
believes CIFG will experience sizable increases in reserves, and
could breach regulatory capital requirements in the near future.
Moody's noted that the company has failed to meet certain
regulatory filing deadlines in both the US and Bermuda, including
1st quarter 2008 results for CIFG Assurance North America, Inc.
and year-end 2007 financials for CIFG Guaranty.
Moody's believes that the firm's loss reserve methodology may
result in a substantial conservative bias by using the lowest
rating on the underlying exposures of its ABS CDOs given the
material differences in average collateral ratings across rating
agencies. In March, Moody's had estimated CIFG's expected loss on
ABS CDOs at $433 million, and stress losses, consistent with a 21%
cumulative loss on 2006 vintage subprime first liens pools, at
$1.3 billion.
The rating agency added that the expected substantial increase in
loss reserves, despite their potential conservativeness, could
have material adverse effects on the firm's financial condition. A
large part of CIFG's credit exposure was written in Credit Default
Swap (CDS) form, and contains a clause that exposes the firm to
mark to market termination in the event of insolvency. The current
mark to market value of such CDS contracts is a multiple of the
expected economic loss on the exposure (as estimated by Moody's
and CIFG) and well in excess of the firm's claims paying
resources, said Moody's.
A breach of minimum regulatory capital requirement may not, in
itself mean that the firm is insolvent and therefore trigger a
market value termination of the CDS contracts, but it does expose
the firm to possible regulatory actions and other risks that could
trigger such termination given the lack of specificity as to what
would qualify as insolvency under the terms of the contracts,
added the rating agency.
CIFG is pursuing various strategic options, including a
recapitalization or a commutation of its ABS CDO exposures that,
if successful, would essentially remove the risk of market value
termination. The rating agency added, however, that until such a
solution is implemented, CIFG remains exposed to a heightened risk
of extreme financial distress. CIFG's parents, Caisse Nationale
des Caisses d'Epargne Prévoyance and Banque Federale des Banques
Populaires are expected to play a decreasing role in the firm's
future, and Moody's believes it is unlikely that they will provide
significant additional support to their subsidiary beyond their
recent $1.5 billion capital infusion.
Moody's said that the review with direction uncertain reflects the
expectation of material changes to the firm's financial profile
over the next few months. In the unlikely event that a market
value termination of CIFG's CDS exposures is triggered, the firm's
rating would likely fall to the Ca-C range due to the inability of
the firm to fully meet such obligations out of its financial
resources. Under the most likely scenario, where the firm is able
to substantially remove the risk of market value termination, the
ratings could go up, but are likely to remain below investment
grade, reflecting Moody's serious concerns about the insurer's
operational effectiveness and governance. Moody's will continue
to closely monitor the evolving credit profile of CIFG and will
update its opinion as material changes occur.
The following ratings have been changed and kept under review
direction uncertain:
CIFG Guaranty -- insurance financial strength at Ba2, from A1;
CIFG Europe -- insurance financial strength at Ba2, from A1; and
CIFG Assurance North America, Inc. -- insurance financial strength
at Ba2, from A1.
Established in 2001, CIFG has provided financial guarantees to
issuers in the municipal and structured finance markets in the US
and Europe through CIFG Assurance North America, Inc. and CIFG
Europe, though it ceased writing business earlier this year to
conserve capital and to evaluate its strategic alternatives.
Caisse Nationale des Caisses d'Epargne Prévoyance (rated Aa2/P-
1/B-) and Banque Federale des Banques Populaires (rated Aa2/P-
1/B-) recently gained control of CIFG when they invested
approximately $1.5 billion in the financial guarantor, which was
previously owned by their joint venture Natixis (rated Aa2/P-1/C).
CITIGROUP COMMERCIAL: S&P Holds 'BB' Rating on Class L Certs.
-------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its ratings on four
classes of commercial mortgage pass-through certificates from
Citigroup Commercial Mortgage Trust 2004-FL1.
The affirmed ratings reflect S&P's analysis of the remaining loans
in the pool. Class K also benefited from increased credit
enhancement levels resulting from loan payoffs.
As of May 15, 2008, the pool consisted of two floating-rate
interest-only loans with an outstanding in-trust principal balance
of $8.45 million, down from 34 loans with an outstanding balance
of $613.8 million at issuance. The loans are indexed to one-month
LIBOR. The remaining loans have subordinate interests that are
held outside of the trust.
The Jamestown Mall loan has a trust balance of $5.3 million and a
whole-loan balance of $7.0 million. The Jamestown Mall loan is
collaterized by 320,274 sq. ft. of in-line space within a
1.1 million-sq.-ft. regional mall 30 miles west of St. Louis in
Florissant, Missouri. The property was built in 1973 and
renovated in 1998. Shadow anchors at the property include J.C.
Penney (BBB-/Stable/--), Sears (BB/Stable/--), and Macy's (BBB-
/Stable/A-2). Overall occupancy was 67.5% as of Jan. 1, 2008, and
the in-line space was 64.2% occupied. Since issuance, net cash
flow has declined by 17.6% due to lower occupancy and reduced
rents.
The reduced occupancy is a result of one of the anchors,
Dillard's, going dark in September 2006, which negatively affected
the occupancy of the wing in which it was located. The former
Dillard's space is owned by an affiliate of the borrower and
remains dark. The loan is in special servicing and is scheduled
to mature in June 2008 with no extension options remaining.
The Hensley Distribution Center loan has a trust balance of
$3.1 million and a whole-loan balance of $4.1 million. The
collateral consists of a 125,000-sq.-ft. warehouse industrial
property located in Tempe, Arizona. It was built in 1980 and
renovated in 1995. The property was occupied by a single tenant
that vacated its space when the lease expired in March 2008. As a
result of the recent vacancy, Standard & Poor's used a stabilized
approach to derive the ultimate value for the property, taking
into account market rents and vacancy as well as re-tenanting
costs and downtime. The loan was structured with a $1.3 million
leasing reserve that still is available for the lease-up of the
space. The borrower is currently marketing the property for
sale. The loan matures in January 2009 and has no extension
options remaining.
Ratings Affirmed
Citigroup Commercial Mortgage Trust 2004-FL1
Class Rating Credit support
----- ------ ------------
K BBB+ 36.32%
L BB N/A
X-2GMAC AAA N/A
X-3GMAC-MU AAA N/A
N/A -- Not applicable.
COMM 2000-C1: Fitch Chips Rating on $10.1MM Certs. to B- from B
---------------------------------------------------------------
Fitch downgraded these class of COMM 2000-C1 commercial mortgage
pass-through certificates, series 2000-C1, as:
-- $10.1 million class K to 'B-' from 'B'.
Fitch also downgraded the long-term credit rating and lowered the
distressed recovery rating of these class:
-- $7.9 million class L to 'CC/DR4' from 'CCC/DR1'.
In addition, Fitch affirmed these classes:
-- $460.7 million class A-2 at 'AAA';
-- Interest-only class X at 'AAA';
-- $38.2 million class B at 'AAA';
-- $39.3 million class C at 'AAA';
-- $13.5 million class D at 'AAA';
-- $25.8 million class E at 'AAA';
-- $11.2 million class F at 'AA';
-- $27 million class G at 'BBB';
-- $6.7 million class H at 'BB+'; and
-- $6.7 million class J at 'B+'.
The $6.7 million class M and $547,477 class N remain at 'C/DR6'.
The balance of class O has been reduced to zero due to realized
losses. Class A-1 has paid in full.
The rating downgrades are the result of increased loss
expectations on the specially serviced assets. Fitch projected
losses on the specially serviced assets are expected to fully
deplete classes M and N and negatively impact classes K and L.
There are 13 loans (11%) in the pool that have been identified as
Fitch Loans of Concern. These include the specially serviced
loans and loans with low DSCR and occupancies. Currently, there
are four assets (4%) in special servicing. The largest asset
(1.3%) in special servicing is collateralized by a manufactured
housing community in Thetford Township, Michigan. The property's
expenses have increased along with a decrease in occupancy, which
has led to a decline in the debt service coverage ratio.
The second specially serviced loan (1.3%) is secured by a real
estate owned retail property in Cincinnati, Ohio. The asset
became REO on May 8, 2006. The special servicer is currently
marketing the property. Recent values indicate losses upon
liquidation.
The third specially serviced loan is secured by a retail property
in Louisville, Kentucky. The largest tenant, Kroger, has sent
notice of their intent to vacate. As a result, many of the non-
anchor tenants are not renewing their leases. The servicer is
recommending modification of the loan as the borrower has
indicated the need for relief going forward.
The final specially serviced loan is collateralized by a
multifamily property in Detroit, Michigan. The loan transferred
on January 15, 2008 for imminent default. In March, an
acceleration letter went out since the borrower was delinquent for
January, February and March 2008 payments. In April, the Borrower
paid the January payment and is now due for February, March and
April. A receiver will be appointed and foreclosure to start if a
payment plan is not received.
The rating affirmations are due to sufficient credit enhancement.
Although expected losses have increased, senior classes benefit
from paydown and defeasance. As of the April 2008 distribution
date, the pool's balance has been reduced 27.1% to $654.3 million
from $897.9 million at issuance. To date, 36 loans (42.5%) have
defeased, including the largest loan (12.4%) in the pool.
Fitch maintains its shadow rating on Crystal Park One (5.8%).
Crystal Park One is secured by a 416,524 square foot, 11-story
office building located in the Crystal City section of Arlington,
Virginia. Occupancy as of YE2007 is 93.9%, compared to 99.3% at
issuance. Although current occupancy is below the underwritten
occupancy of 99%, leasing activity remains strong and rental rates
of the recently leased space are inline with market rents.
Mortgage coupons for the remaining loans range from 7.16% to
12.50%. Forty-one loans mature in 2008-2009, of which 24 are non-
defeased (27.7%). The weighted average coupon of the maturing
non-defeased loans is 7.99%.
Fitch's Distressed Recovery ratings are designed to estimate
recoveries on a forward-looking basis while taking into account
the time value of money.
CONSTAR INT'L: March 31 Balance Sheet Upside-Down by $81.1 Million
------------------------------------------------------------------
Constar International Inc. disclosed Thursday financial results
for the first quarter ended March 31, 2008.
The company's consolidated balance sheet at March 31, 2008, showed
$488.5 million in total assets and $569.6 million in total
liabilities, resulting in a $81.1 million total stockholders'
deficit.
The company posted a net loss of $7.5 million in the first quarter
of 2008, compared to a net loss of $6.1 million in the first
quarter of 2007.
Consolidated net sales were $213.4 million in the first quarter of
2008 compared to $212.7 million in the first quarter of 2007.
In the U.S., net sales were $169.7 million in the first quarter of
2008 compared to $165.2 million in the first quarter of 2007. The
increase in U.S. net sales was principally driven by the pass-
through of resin costs to customers, along with an increase in
price, offset by a decrease in unit volume.
In Europe, net sales were $43.7 million in the first quarter of
2008 compared to $47.5 million in the first quarter of 2007. The
decrease in European net sales in the first quarter of 2008 was
primarily due to lower unit volume, offset by the pass-through of
resin costs to customers and a positive impact of foreign currency
translations.
"Due to macroeconomic conditions, especially high gasoline prices,
our customers have experienced weak demand in the convenience
store and gas station distribution channels which is where a high
percentage of PET soft drink packaging is sold. This negatively
impacted our soft drink sales in the quarter; however, this
weakness was only slightly worse than what we expected based on
recent declines in the soft drinks market.
"Custom unit volume was up 20.2% compared to the first quarter of
last year and we are continuing to see preference for our
technologies as we engage in development projects with new and
existing customers," said Michael Hoffman, president and chief
executive officer of Constar.
Gross profit, excluding depreciation expense, decreased
$1.0 million, or 5.1%, to $19.2 million in the first quarter of
2008 compared to $20.2 million in the first quarter of 2007.
Gross profit, excluding depreciation expense, as a percentage of
net sales decreased to 9.0% in the first quarter of 2008 from 9.5%
in the first quarter of 2007. The decrease was the result of
lower unit volumes, offset in part by increases in price.
Operating income was $3.1 million in the first quarter of 2008
compared to $3.6 million in the first quarter of 2007.
Interest expense decreased $200,000 million to $9.9 million in the
first quarter of 2008 from $10.1 million in the first quarter of
2007 as a result of lower effective interest rates and lower
average borrowings.
Other expense was $569,000 in the first quarter of 2008 compared
to other income of $368,000 in the first quarter of 2007. The
expense in the first quarter of 2008 primarily resulted from the
negative impact of foreign currency on the translation of intra-
company balances, offset by net royalty income of $200,000.
Free cash flow was positive $731,000 in the first quarter of 2008
compared to negative free cash flow of $15.5 million in the first
quarter of 2007. This improvement in free cash flow was driven by
cash flow from operating activities, principally working capital
improvements, including the timing of disbursements, and lower
capital spending.
Credit Agreement EBITDA excluding restructuring charges in the
first quarter of 2008 decreased by $2.2 million, or 17.4%, to
$10.6 million from $12.9 million in the first quarter of 2007.
Liquidity and Capital Resources
The company's outstanding debt consists of $175.0 million of
Senior Subordinated Notes due Dec. 1, 2012, $220.0 million of
Senior Secured Floating Rate Notes due Feb. 15, 2012, and a
$75.0 million Senior Secured Asset Based Revolving Credit
Facility.
At March 31, 2008, there was $220.0 million outstanding on the
Senior Notes, $175.0 million outstanding on the Subordinated
Notes, $100,000 million outstanding on the Revolver Loan, and
$5.5 million of letters of credit issued under the Revolver Loan.
At March 31, 2008, the total of cash and borrowing availability
under the company's Revolver Loan was $69.2 million.
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?2c3c
About Constar International
Philadelphia-based Constar International Inc. (Nasdaq: CNST) --
http://www.constar.net/-- is a producer of PET (polyethylene
terephthalate) plastic containers for food, soft drinks and water.
The company provides full-service packaging solutions, from
product design and engineering, to ongoing customer support. Its
customers include many of the world's leading branded consumer
products companies.
* * *
Constar International Inc. still carries Moody's Caa2 Senior
Subordinate Debt assigned on Sept. 11, 2006.
COTT CORP: Moody's Cuts CFR Rating Due to Low Financial Metrics
---------------------------------------------------------------
Moody's Investors Service today downgraded the CFR rating of Cott
Corporation to B2 from B1. The outlook is stable. This concludes
the review for downgrade initiated on February 28, 2008. At the
same time Moody's assigned a speculative grade liquidity rating of
SGL-3 reflecting the company's adequate liquidity following the
closing of its new $250 million ABL facility.
The following ratings were lowered:
Cott Corporation:
Corporate Family rating to B2 from B1
Probability of Default Rating to B2 from B1
Cott Beverages, Inc.:
$275 million 8% senior sub notes due 2011 to B3, LGD 5; 72% from
B2, LGD 5; 74%
The following rating was assigned:
Cott Corporation: SGL-3
The downgrade resulted from continued deterioration in the
company's financial metrics as a result of i) a weak carbonated
soft drink market in North America due to the ongoing consumer
shift away from CSDs, ii) increased operating expenses, iii) the
pressure on margins due to high input costs including PET, high
fructose corn syrup and aluminum, and iv) delays in recognizing
financial benefits from restructuring initiatives and product
innovation.
Moody's had previously stated that deterioration in operating
performance that resulted in interest coverage of less than 1
times or Debt to EBITDA above 4.5 times, both per Moody's FM,
could lead to a downgrade. As of March 31, 2008 Cott's EBITA to
interest had fallen to 0.5 times and its leverage had risen to
over 5 times (according to Moody's FM).
Cott's ratings have been pressured by adverse effects on revenues
and margins of increased distribution and manufacturing costs, the
weak CSD market in North America and continued intense competition
from better capitalized competitors, as well as challenges with
one of the aseptic lines in the UK, which resulted in a voluntary
recall. In addition to the above, the company faces other
business challenges such as, historically high input costs,
ongoing transition in the company's leadership, material
weaknesses in financial reporting and the cutback of shelf space
for some of the company's products at WalMart.
To mitigate these pressures, Cott initiated a restructuring plan
in 2005 to reduce its operating costs. There have also been
significant senior level management changes. In late 2007 the
company implemented price increases to offset the rise in
commodity costs which should reap benefits in 2008, and is working
on new product launches through new distribution channels to meet
ongoing customer demand for product innovation and to improve
margins. However, these initiatives have so far failed to produce
results in the form of improvement in operating performance, cash
flow, and credit metrics. Gross margin has fallen from 19.5% in
2004 to 11.7% through LTM March of 08. The company has failed to
turn around performance thus far and is performing at or below the
lower end of Moody's earlier expectations.
At the same time, the B2 corporate family rating and SGL-3
recognize Cott's strong position in the retailer-brands market and
its recently improved liquidity following the closing of its new
$250 million ABL facility. Moody's expects the company to retain
considerable availability under this new asset backed facility
even at times of peak seasonal borrowing needs.
The stable outlook reflects Moody's expectation that performance
will begin to stabilize now that a number of input costs have been
locked in, pricing increases have been implemented and new
distribution initiatives have been launched.
Headquartered in Toronto, Ontario, Cott Corporation is one of the
world's largest retailer-brand soft drink suppliers with a leading
position in take-home carbonate soft drink markets in the US,
Canada, and the UK. Sales for the LTM period ended were $1.7
billion.
Provided that the restructuring plan proposed by the Investors
Committee is implemented on terms that are satisfactory to the
Company having regard to its current rights, obligations and
circumstances, it is expected that the Company will seek an
orderly wind down
COVENTREE INC: ABCP Market Crisis Disrupts Biz; To Wind Down
------------------------------------------------------------
Coventree Inc. disclosed that at its financial results for the
three and six months ended March 31, 2008 have been, and continue
to be, materially adversely affected by the disruption in the
Canadian asset-backed commercial paper market that began on August
13, 2007.
The impact of the Market Disruption on the Company's current and
future financial results is discussed in detail in the
Management's Discussion & Analysis and unaudited Consolidated
Financial Statements for the three and six months ended March 31,
2008, which will be available at http://www.coventree.caand will
be filed on http://www.sedar.com.
Financial Highlights
(1) Results Excluding VIEs (non-GAAP)
Net income excluding VIEs of C$5.9 million and C$9.0 million for
the three and six months ended March 31, 2008 (March 31, 2007 to
C$6.6 million and C$12.7 million)
For the three and six months ended March 31, 2008, Coventree's net
income excluding VIEs was C$5.9 million and C$9.0 million compared
to C$6.6 million and C$12.7 million for the same periods in the
previous year.
Total revenue excluding VIEs for the three and six months ended
March 31, 2008 of C$17.7 million and C$28.7 million decreased
C$3.0 million and C$13.7 million, respectively, from
C$20.7 million and C$42.4 million in the comparable periods last
year as the Company continues to be negatively impacted by the
Market Disruption. Operating expenses for the three and six months
ended March 31, 2008 of C$4.8 million and C$11.2 million decreased
C$9.2 million and C$14.8 million, respectively, compared to the
same periods in the previous year as the Company continues to
implement cost reduction measures.
(2) Results Including VIEs (GAAP)
-- Net income including VIEs is equal to Net income excluding
VIEs for three and six months ended March 31, 2008 (C$5.9
million and C$9.0 million)
(March 31, 2007 - C$115.1 million loss and C$69.9 million
loss)
In prior reporting periods, the Company's consolidated financial
statements included the accounts of the variable interest entities
of which the Company was considered the primary beneficiary in
accordance with generally accepted accounting principles.
As a result of the application filed by the Pan-Canadian Investors
Committee under the Companies' Creditors Arrangement Act on March
17, 2008, the Company concluded that a reconsideration event
occurred on that date. As such, Coventree reassessed its VIEs and
determined that it is no longer the primary beneficiary of the
VIEs, which resulted in the Company no longer being required under
GAAP to consolidate the VIEs as of March 17, 2008. Accordingly,
the VIEs' assets and liabilities are not consolidated after March
17, 2008, and the VIEs' revenue and expenses are consolidated and
included in the Company's statements of operations and cash flows
up to March 16, 2008.
The consolidated net income of the Company under GAAP for the
three and six months ended March 31, 2008 is equal to Net income
excluding VIEs.
Business Outlook
Provided that the restructuring plan proposed by the Investors
Committee is implemented on terms that are satisfactory to the
Company having regard to its current rights, obligations and
circumstances, it is expected that the Company will seek an
orderly wind down of its operations and, in conjunction therewith,
the distribution to shareholders of any remaining funds after
setting aside appropriate amounts to cover the Company's expected
future costs and liabilities, including known contingent and other
related liabilities.
Implementation of the Restructuring Plan is subject to, among
other things, sanction by a final order of the Ontario Superior
Court of Justice under the CCAA filing. The hearing at which such
an order will be considered commenced on May 12, 2008. Coventree
understands that, if the Court issues a final order sanctioning
the Restructuring Plan, parties affected by that order will then
have a period of 21 days within which to appeal that order. If
there are no such appeals, based on discussions with
representatives of the Investors Committee, Coventree expects that
the Restructuring Plan will be implemented several weeks after the
expiration of the relevant appeal period, or on or shortly before
the end of June, 2008.
There can be no assurance that the Restructuring Plan will be
implemented. The Investors Committee has advised that
implementation of the Restructuring Plan is subject to a number of
conditions, including execution of definitive legal documentation,
completion of due diligence, receipt of internal approvals by
dealer bank asset providers and participating Schedule I banks,
receipt of requisite approvals of noteholders and final sanction
by the Court. At the sanction hearing that commenced on May 12,
2008, various noteholders have challenged the fairness and
validity of the releases included in the Restructuring Plan.
Accordingly, there can be no assurance that the plan will be
approved by the Court or, if approved by the Court, that it will
include comprehensive releases in respect of legal claims that
might be asserted against Coventree.
Accordingly, the timing of any orderly wind down of the Company
and the amount and timing of any distribution of funds to
shareholders is currently unknown. As noted above, a number of
factors, some of which are beyond the Company's control, could
affect the timing of a wind down or the amount of funds available
for distribution.
Coventree Inc. -- http://www.coventree.ca/-- is a Canada-
based specialized financial intermediary, which provides
structuring and funding solutions for clients using special
purpose trusts established by the Company and funded by asset-
backed commercial paper (ABCP) and, to a lesser extent, term notes
placed with investors. The Company also provides financial and
administrative services to special purpose trusts sponsored by
third parties and makes investments in other financial services
companies. The Company uses two types of special purpose trusts
(Trusts): Company-sponsored ABCP conduits (Conduits) and other
special purpose vehicles (SPVs). The business segments of the
Company include Coventree Capital & Admin, Coventree Investments
and variable interest entities (VIEs). During the fiscal year
ended September 30, 2006 (fiscal 2006), the Company completed the
acquisition of Efficient Capital Corporation (ECC). As of May 10,
2007, the Company completed the acquisition of Nereus.
EDUCATION RESOURCES: Panel Wants to Hire Duane Morris as Counsel
----------------------------------------------------------------
The Official Committee of Unsecured Creditors in The Education
Resources Institute Inc.'s Chapter 11 case seeks permission from
the U.S. Bankruptcy Court for the District of Massachusetts to
employ Duane Morris LLP, as its bankruptcy counsel, nunc pro tunc
to the Debtor's bankruptcy filing date.
Duane Morris will:
(a) provide legal services to the Committee with respect to the
Committee's powers, duties and role in the Debtor's
Chapter 11 case;
(b) assist the Committee in evaluating the various pleadings
that will be filed by the Debtor and other parties-in-
interest;
(c) investigate the acts, conduct, assets, liabilities, and
financial condition of the Debtor;
(d) assist the Committee in evaluating the Debtor's monthly
operating reports and evaluate and negotiate the
Debtor's or any other party's plan of reorganization and
any associated disclosure statement;
(e) consult with the Debtor and its professionals concerning
administration of the case and development of exit
strategy, disclosure statement and plan;
(f) commence and prosecute any and all necessary and
appropriate actions and proceedings on behalf of the
Committee;
(g) appear in Court in all appropriate matters to advance the
interests of the Committee; and
(h) perform all other legal services for the Committee which
may be necessary and proper in the Debtor's Chapter 11
proceeding.
Duane Morris will be paid according to its customary hourly
rates:
Partners $340 to $831
Counsel $295 to $775
Associates $220 to $510
Legal Assistants $125 to $225
Jeffrey D. Sternklar, Esq. a partner at Duane Morris, will be the
lead attorney. His current hourly billing rate is $570. Duane
Morris will also be reimbursed for any necessary out-of-pocket
expenses.
Mr. Sternklar assures the Court that his firm is a "disinterested
person" as defined in Section 101(14) of the Bankruptcy Code, as
modified by Section 1107(b). He adds that Duane Morris does not
hold any interest adverse to the Debtor's estate and does not
represent any party having an adverse interest in connection with
the Debtor's Chapter 11 case.
About The Education Resources Institute Inc.
Headquartered in Boston, Massachussetts, The Education Resources
Institute Inc. -- http://www.teri.org/-- aka Boston Systems
Resources Inc., Brockton Education Opportunity Center, TERI, TERI
College Access, TERI College Access Centers and TERI Marketing
Services Inc., is a nonprofit organization that promotes
educational opportunities for all through its college access and
loan guarantee activities. Founded in 1985, TERI is a guarantor
of private or non-government student loans with more than $17
billion in outstanding guarantees.
The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr.
D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L.
Martin, Esq. at Goodwin Procter LLP represent the Debtor in its
restructuring efforts. The Debtor's Conflicts Counsel is Craig
and Macauley PC, its financial advisor is Grant Thornton LLP, its
Claims Agent is Epiq Bankruptcy Solutions LLC, its investment
Banker is Citigroup Global Markets Inc., and its Public Relations
& Public Affairs Advisor is Rasky Baerlein Strategic
Communications Inc. When the Debtor filed for protection from its
creditors, it listed estimated assets of more that $1 billion and
estimated debts of $500,000 to $1 billion.
(TERI Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
EDUCATION RESOURCES: Adds KeyBank National to Creditors Committee
-----------------------------------------------------------------
Phoebe Morse, United States Trustee for Region 1, added KeyBank
National Association as member to the Official Committee of
Unsecured Creditors in Chapter 11 case of The Education Resources
Institute Inc.
The Committee is now composed of:
(1) Bank of America
5th Floor, One Federal Street
Boston, MA 02110
Tel (617) 346-2671
Attn: Thomas J. Flanagan
thomas.j.flanagan@bankofamerica.com
(2) US Bank - Student Banking
2751 Shepard Road
St. Paul, MN 55116
Tel (651) 205-2057
Attn: Beth A. Dinndorf
beth.dinndorf@usbank.com
(3) M&T Bank
One M & T Plaza
Buffalo, NY 14203
Tel (716) 842-2301
Attn: Lisa Bertino Beaser
lbeaser@mandbank.com
(4) Nellie Mae
1250 Hancock Street, Suite 205 N
Quincy, MA 02169-4331
Tel (781) 348-4299
Attn: Michael A. Carey, CPA
mcarey@nmefdn.org
(5) Wachovia Securities and Wachovia Capital Markets LLC
301 South College Street, NCO537
Charlotte, NC 28288
Tel. No. (704) 383-1172
Attn: Thomas M. Cambern
tom.cambern@wachovia.com
(6) KeyBank National Association
6th Floor, 4910 Tiedeman Road
Brooklyn, OH 44144
Tel (216) 813-8801
Attn: Krista Neal
KristaNeal@KeyBank.com
Mr. Cambern of Wachovia is the Committee's Chairperson.
Headquartered in Boston, Massachussetts, The Education Resources
Institute Inc. -- http://www.teri.org/-- aka Boston Systems
Resources Inc., Brockton Education Opportunity Center, TERI, TERI
College Access, TERI College Access Centers and TERI Marketing
Services Inc., is a nonprofit organization that promotes
educational opportunities for all through its college access and
loan guarantee activities. Founded in 1985, TERI is a guarantor
of private or non-government student loans with more than $17
billion in outstanding guarantees.
The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr.
D. Mass. Case No.: 08-12540.) Daniel Glosband, Esq., Gina L.
Martin, Esq. at Goodwin Procter LLP represent the Debtor in its
restructuring efforts. The Debtor's Conflicts Counsel is Craig
and Macauley PC, its financial advisor is Grant Thornton LLP, its
Claims Agent is Epiq Bankruptcy Solutions LLC, its investment
Banker is Citigroup Global Markets Inc., and its Public Relations
& Public Affairs Advisor is Rasky Baerlein Strategic
Communications Inc. When the Debtor filed for protection from its
creditors, it listed estimated assets of more than $1 billion and
estimated debts of $500,000 to $1 billion.
(TERI Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
EDUCATION RESOURCES: Gets Final Nod on Goodwin Procter as Counsel
-----------------------------------------------------------------
Judge Henry J. Boroff of U.S. Bankruptcy Court for the District of
Massachusetts authorized The Education Resources Institute Inc.,
on a final basis, to employ Goodwin Procter LLP as its counsel,
effective as of the Debtor's bankruptcy filing.
As reported by the Troubled Company Reporter on April 14, 2008,
Goodwin Procter is expected to:
(a) advise the Debtor concerning actions that it might take to
collect and recover property for the benefit of its
estate;
(b) prepare all necessary and appropriate applications,
motions, draft orders, other pleadings, notices, schedules
and other documents; and review all financial and other
reports filed in the Debtor's Chapter 11 case;
(c) advise the Debtor concerning, and prepare responses to,
applications, motions, other pleadings, notices and other
papers that may be filed and served in Debtor's
bankruptcy proceedings;
(d) assist the Debtor in reviewing, estimating, and resolving
claims asserted against its estate;
(e) advise the Debtor concerning lease and contract
restructurings and executory contract and unexpired lease
assumptions, assignments and rejections, and;
(f) negotiate and prepare on the Debtor's behalf a plan of
reorganization, disclosure statement and all related
agreements and documents; and take necessary action on the
Debtor's behalf to obtain confirmation of the plan, if
any.
The Debtor will pay Goodwin Procter professionals according to
its standard hourly rates of:
Professional Hourly Rate
------------ -----------
Partners $500 to $850
Counsel $325 to $750
Associates $200 to $565
Legal Assistants $55 to $355
Phoebe Morse, U.S. Trustee for Region 1, has asked the Court to
deny approval of the Debtor's application because the Bankruptcy
Code does not permit interim employment of estate professionals.
The U.S. Trustee's counsel, Eric K. Bradford, Esq., said the
Debtor failed to demonstrate that interim employment is necessary
to avoid immediate and irreparable harm under Federal Rules of
Bankruptcy Procedure.
He related that Rule 6003, which became effective on Dec. 1, 2007,
prohibits bankruptcy court from granting employment applications
under Rule 2014, unless interim relief " is necessary to avoid
immediate and irreparable harm. . . ." Bankruptcy Rule 6003,
Mr. Bradford said, was "designed to provide some time for parties-
in-interest in a case to examine carefully the need for and
qualifications of professionals that a trustee or debtor-in-
possession seeks to employ. . . ."
Mr. Bradford told the Court that the U.S. Trustee needs more time
to review the employment application. He said the U.S. Trustee
was not able to examine carefully the Goodwin Procter employment
applications because of the scope of the Debtor's first day
requests.
About The Education Resources Institute Inc.
Headquartered in Boston, Massachussetts, The Education Resources
Institute Inc. -- http://www.teri.org/-- aka Boston Systems
Resources Inc., Brockton Education Opportunity Center, TERI, TERI
College Access, TERI College Access Centers and TERI Marketing
Services Inc., is a nonprofit organization that promotes
educational opportunities for all through its college access and
loan guarantee activities. Founded in 1985, TERI is a guarantor
of private or non-government student loans with more than $17
billion in outstanding guarantees.
The Debtor filed for Chapter 11 petition on April 7, 2008 (Bankr.
D. Mass. Case No.: 08-12540.) The Debtor's Conflicts Counsel is
Craig and Macauley PC, its financial advisor is Grant Thornton
LLP, its Claims Agent is Epiq Bankruptcy Solutions LLC, its
Investment Banker is Citigroup Global Markets Inc., its financial
advisor is FTI Consulting Inc. and its Public Relations & Public
Affairs Advisor is Rasky Baerlein Strategic Communications Inc.
Duane Morris LLP is the proposed counsel for the Official
Committee of Unsecured Creditors. When the Debtor filed for
protection from its creditors, it listed estimated assets of more
than $1 billion and estimated debts of $500,000 to $1 billion.
(TERI Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
EIRLES TWO SERIES 244: Moody's Cuts Class B Notes Rating to B2
--------------------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible downgrade the rating on this note issued by Eirles Two
Limited Series 247:
Class Description: Class B
Prior Rating: Baa1, on review for possible downgrade
Current Rating: B2, on review for possible downgrade
According to Moody's, the rating actions reflect increased
deterioration in the credit quality of the underlying portfolio.
EIRLES TWO SERIES 244: Moody's Junks Rating on Class B Notes
------------------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible downgrade the rating on this note issued by Eirles Two
Limited Series 244:
Class Description: Class B
Prior Rating: Baa3, on review for possible downgrade
Current Rating: Caa1, on review for possible downgrade
According to Moody's, the rating actions reflect increased
deterioration in the credit quality of the underlying portfolio.
EIRLES TWO 243: Moody's Cuts B2 Note Rating, to Undertake Review
----------------------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible downgrade the rating on this note issued by Eirles Two
Limited Series 243:
Class Description: Class B
Prior Rating: Baa1, on review for possible downgrade
Current Rating: B2, on review for possible downgrade
According to Moody's, the rating actions reflect increased
deterioration in the credit quality of the underlying portfolio.
ENERSYS: S&P Assigns 'BB' Rating on Proposed $150MM Conv. Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned EnerSys' proposed
$150 million senior unsecured convertible notes due 2038 a 'BB'
issue-level rating with a recovery rating of '4', indicating an
expectation for average (30%-50%) recovery in the event of a
payment default. At the same time, S&P assigned EnerSys' proposed
$375 million senior secured credit facilities a 'BBB-' bank loan
rating with a recovery rating of '1', indicating an expectation
for very high (90%-100%) recovery in the event of a payment
default. The Reading, Pennsylvania-based battery provider will
use the proceeds principally to refinance existing bank debt. All
other ratings, including the 'BB' corporate credit rating, were
affirmed. The outlook is stable.
"The ratings on EnerSys reflect the company's aggressive financial
risk profile, the industrial battery market's cyclical and
competitive nature, and EnerSys' exposure to volatile lead costs,
which are pressuring margins," said Standard & Poor's credit
analyst Gregoire Buet. "Partially offsetting these risk factors
are the company's leading share in the industrial battery market,
the fair proportion of sales it derives from stable aftermarket
revenues, its good geographic and customer diversity, its
recognized brand names, and its track record in mitigating raw
material cost increases through higher prices."
S&P expect EnerSys to mitigate margin pressure through pricing and
cost-saving actions, and to pursue a disciplined financial policy.
The company's business risk profile and the challenging industry
conditions limit rating upside. S&P could lower the rating if
operating performance deteriorates, if headroom over covenants
becomes limited, or if the company adopts financial policies that
are more aggressive than we currently expect.
EOS AIRLINES: Files Motion to Schedule Auction and Sell Company
---------------------------------------------------------------
Eos Airlines has filed a motion asking the U.S. Bankruptcy Court
for the Southern District of New York to approve a process and
schedule for the auction and sale of the company and its assets.
Eos, the premium class New York to London carrier known for its
operational excellence and uncrowded guest experience, filed a
voluntary petition under Chapter 11 of the U.S. Bankruptcy Code on
April 26, 2008.
Through the auction and sale process, Eos hopes to sell either its
business to a party interested in restarting Eos as a going
concern or all of Eos' most valuable assets to one or more
purchasers. Eos has separately sought Court authority to sell all
assets valued at less than $225,000 on an expedited basis.
Eos has asked the Court to approve bidding procedures and schedule
an auction to approve a successful bid. If approved by the Court
at a hearing scheduled for May 22, 2008, the deadline for
submission of bids for any of the assets of Eos shall be May 30,
2008, with an auction to take place on June 9, 2008. The full
motion, containing details of the procedures and the schedule
leading up to the auction can be found at
http://www.kccllc.net/eosairlines/
Bidding procedures can also be obtained by contacting Robert
Hershan of Alvarez & Marsal at rhershan@alvarezandmarsal.com. Eos
is seeking Court approval to retain Alvarez & Marsal as its
financial advisor. Menzies Corporate Restructuring is acting as
joint administrators in the United Kingdom and Squire Sanders &
Dempsey LLP is serving as bankruptcy counsel.
All court filings and other information can be found at
http://www.eosairlines.com/and at
http://www.kccllc.net/eosairlines
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.
EPICEPT CORP: March 31 Balance Sheet Upside-Down by $15,570,000
---------------------------------------------------------------
EpiCept Corp.'s consolidated balance sheet at March 31, 2008,
showed $6,952,000 in total assets and $22,522,000 in total
liabilities, resulting in a $15,570,000 total stockholders'
deficit.
At March 31, 2008, the company's consolidated balance sheet also
showed strained liquidity with $5,245,000 in total current assets
available to pay $14,202,000 in total current liabilities.
The company reported a net loss of $6,077,000, on revenue of
$49,000, for the first quarter of 2008, compared with a net loss
of $7,674,000, on revenue of $159,000 for the first quarter of
2007.
EpiCept had cash and cash equivalents totaling $4,809,000 as of
March 31, 2008. The company believes its existing cash and cash
equivalents will be sufficient to meet its projected operating and
debt service requirements into June 2008, but it will not be
sufficient to meet its obligations thereafter.
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?2c43
Going Concern Disclaimer
Deloitte & Touche LLP, in Parsippany, N.J., expressed substantial
doubt about EpiCept Corp.'s ability to continue as a going concern
after auditing the company's consolidated financial statements for
the year ended Dec. 31, 2007. The auditng firm pointed to the
company's recurring losses from operations and stockholders'
deficit.
The company disclosed in its Form 10-Q for the first quarter ended
March 31, 2008, that to date it has not generated any meaningful
revenues from the sale of products and may not generate any such
revenues for a number of years, if at all. As a result, the
company has an accumulated deficit of $176,926,000 as of March 31,
2008, and may incur operating losses for a number of years.
About EpiCept Corp.
Based in Tarrytown, N.Y., EpiCept Corporation (Nasdaq and OMX
Nordic Exchange: EPCT) -- http://www.epicept.com/-- is a
specialty pharmaceutical company focused on the development of
pharmaceutical products for the treatment of cancer and pain. The
company's broad portfolio of pharmaceutical product candidates
includes several pain therapies in clinical development and a lead
oncology compound for acute myeloid leukemia with demonstrated
efficacy in a Phase III trial.
FORD CREDIT: S&P Assigns 'BB+' Rating on $30.7MM Class D Notes
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned its ratings to Ford
Credit Auto Owner Trust 2008-2's $1.566 billion asset-backed notes
series 2008-2.
The ratings reflect:
-- The characteristics of the pool being securitized;
-- Credit enhancement in the form of subordination, cash, and
excess spread which is augmented through yield supplement
overcollateralization;
-- Ford Motor Credit Co.'s extensive securitization
performance history;
-- Timely interest and principal payments made under stressed
cash flow modeling scenarios appropriate to the rating
category; and
-- The sound legal structure.
Ratings Assigned
Ford Credit Auto Owner Trust 2008-2
Class Rating Amount
----- ------ ------
A AAA $1,458,300,000
B AA+ $23,000,000
C BBB+ $53,800,000
D BB+ $30,700,000
FRESENIUS SE: Moody's Upgrades Corporate Rating from Ba2 to Ba1
---------------------------------------------------------------
Moody's Investors Service upgraded the Corporate Family Rating of
Fresenius SE to Ba1 from Ba2 and the Senior Unsecured Notes to Ba1
from Ba2. The outlook was changed to stable from positive.
Concurrently, Moody's has also upgraded the Corporate Family
Rating of Fresenius's subsidiary, Fresenius Medical Care AG & Co.
KGaA to Ba1 from Ba2, the Senior Secured Credit Facility to Baa3
from Ba1, the Senior Unsecured Notes to Ba2 from Ba3 and the Trust
Preferreds to Ba3 from B1. The outlook was changed to stable from
positive.
The previous rating action for these issuers was on 16 May 2007,
when Moody's affirmed the ratings for Fresenius and FME and
changed the outlooks to positive.
"The upgrades of the Corporate Family Ratings of Fresenius and FME
from Ba2 to Ba1 reflect the continued improvements in operating
performance evidenced by strengthening profitability levels and
cash flow generation driving a reduction in financial leverage
metrics of both companies more in line with the requirements for
the Ba1 rating category. Moody's expects further improvements in
operating performances given both companies' strategies to benefit
from global growth potential for healthcare services and medical
equipment, considering rising demand levels from the ageing
population, penetration of new markets and the expectation that
adequate reimbursement rates will be preserved" says Christian
Hendker, Moody's lead analyst for Fresenius and FME.
"The rating upgrades are based on an expectation that improvements
in financial leverage will be sustained at both companies.
Currently, the ratings are constrained by the likelihood that
acquisitions and expansion capital expenditures to support these
growth strategies will continue to dilute cash flow generation and
leverage metrics, but today's rating actions reflect management's
commitment to operate within leverage ranges which are
commensurate for the Ba1 rating category over the medium term"
continues Mr. Hendker.
Moody's further notes that Fresenius has a slightly stronger
business profile than FME comprising better geographic and
segmental cash flow diversity. Both company's have similar
profiles of relatively moderate business risk, exacerbated,
however, by expansion strategies, which may be partially financed
by debt.
The upgrade for Fresenius SE to Ba1 was prompted by continuous
improvements in operating performance and financial leverage which
is now in line with the requirements for upward rating pressure as
outlined in Moody's last press release in May 2007, notably an
improvement in CFO to Debt towards the high teens which is
evidenced by CFO to Debt of 18.8% in FYE 2007, and a reduction of
Debt to EBITDA below 3.5x, evidenced by Debt to EBITDA of 3.4x in
fiscal year 2007. Moody's expects these metrics to be broadly
sustained.
The stable rating outlook for Fresenius SE incorporates the
expectation that the company will continue to moderately improve
its operating performance and leverage going forward, in line with
the requirements for the Ba1 rating category, evidenced by range
of 2.75x to 3.5x based on Debt to EBITDA, and 15% to 20% for CFO
to Debt.
The upgrade for FME to Ba1 was prompted by improvements in
operating performance and a reduction of financial leverage, but
in particular considering the expectation that these will be
further enhanced towards the requirements of the Ba1 rating
category to support a solid positioning in the rating category
going forward. FME managed to improve its Debt to EBITDA slightly
below 3.5x, and generated a CFO to Debt of 17.7% which is just in
the high teens as outlined as requirements for positive rating
pressure in Moody's Press Release published in May 2007.
The stable outlook incorporates Moody's expectation that FME will
continue to enhance its leverage more in line with the
requirements of the Ba1 rating category over the medium term,
evidenced by a sustained strengthening in Debt to EBITDA
comfortably below 3.5x and CFO to Debt moving towards 20%. While
the stable rating outlook incorporates Moody's view of the
stability of the dialysis market which supports FME's recurring
cash flow generation basis, the rating remains constrained by the
prospects for a continuation of acquisitions and expansion capex.
Moody's notes that the rating levels for Fresenius' Ba1 Corporate
Family Rating and the Ba1 Corporate Family Rating of its key
subsidiary FME are not directly linked. However, Fresenius'
consolidated operating performance and financial leverage are
highly correlated to FME, given the full consolidation of FME's
financial results (Fresenius SE holds a 36% economic interest in
FME, but as result of FME's legal status as a KGaA, Fresenius has
100% management control of this entity). FME remains fully
controlled and hence fully consolidated by Fresenius SE as long as
Fresenius owns more than 25% of FME. Moody's notes that, although
a change in the consolidation method would affect the group's
consolidated operating performance and cash generation, it would
also result in a reduction in absolute debt levels.
Upgrades:
-- Issuer: Fresenius SE
Corporate Family Rating, Upgraded to Ba1 from Ba2
Probability of Default Rating, Upgraded to Ba1 from Ba2
-- Issuer: Fresenius Finance BV
Senior Unsecured Regular Bond/Debenture, Upgraded to Ba1
(LGD 3, 43%) from Ba2 (LGD 4, 51%)
-- Issuer: Fresenius Medical Care AG & Co. KGaA
Corporate Family Rating, Upgraded to Ba1 from Ba2
Probability of Default Rating, Upgraded to Ba1 from Ba2
Senior Secured Bank Credit Facility, Upgraded to Baa3 (LGD
3, 31%) from Ba1 (LGD 2, 28%)
-- Issuer: Fresenius Medical Care Capital Trust IV
Preferred Stock, Upgraded to Ba3 (LGD 6, 97%) from B1 (LGD
6, 92%)
-- Issuer: Fresenius Medical Care Capital Trust V
Preferred Stock, Upgraded to Ba3 (LGD 6, 97%) from B1 (LGD
6, 92%)
-- Issuer: FMC Finance III S.A.
Senior Unsecured Regular Bond/Debenture, Upgraded to Ba2
(LGD5, 79%) from Ba1 (LGD 5, 74%)
Outlook Actions:
Issuer: Fresenius SE
Outlook, Changed To Stable from Positive
Issuer: Fresenius Finance BV
Outlook, Changed To Stable from Positive
Issuer: Fresenius Medical Care AG & Co. KGaA
Outlook, Changed To Stable from Positive
Issuer: Fresenius Medical Care Capital Trust IV
Outlook, Changed To Stable from Positive
Issuer: Fresenius Medical Care Capital Trust V
Outlook, Changed To Stable from Positive
Issuer: FMC Finance III S.A.
Outlook, Changed To Stable from Positive
Fresenius SE is a global health care company with products and
services for dialysis (through Fresenius Medical Care); healthcare
services (Helios) and facilities management (Vamed); and nutrition
and infusion therapies (Fresenius Kabi). For the fiscal year ended
on 31 December 2007, Fresenius SE generated consolidated sales of
EUR11.4 billion.
Based in Bad Homburg, Germany, Fresenius Medical Care AG & Co.
KGaA is the world's leading provider of dialysis products and
services. For the fiscal year ended 31 December 2007, Fresenius
Medical Care generated net revenues of US$9.7 billion.
FRONTIER AIRLINES: Obtains Union Ratification on Wage Concessions
-----------------------------------------------------------------
Frontier Airlines said that two of its employee unions have
ratified agreements for temporary wage and benefit concessions.
Members of the Frontier Airlines Pilots Association (FAPA), which
represents more than 700 of the airline's pilots, and the
Transportation Workers Union, which represents the airline's
dispatchers, each ratified the tentative agreements that union
leadership had agreed to with Frontier last week. FAPA's support
in particular was overwhelming, with approximately 88% of the
membership votes cast in favor of the proposal.
"On behalf of everyone at Frontier Airlines, I want to thank both
our union leadership and membership for their support during these
challenging times," said Frontier President and CEO Sean Menke.
"This is a key step in helping us continue to negotiate the
Chapter 11 process. I am pleased that our employees understand the
challenges we face and are willing to do their part to make sure
we are successful. Our employees' strong show of support during
this process is encouraging and exemplifies the good relationship
we have always enjoyed with them."
Last week, Frontier asked all of its employees, both represented
and non-represented, to take temporary wage and benefit
concessions to help the airline as it attempts to, among other
things, secure debtor in possession financing. Earlier in the
month, Mr. Menke and other members of the executive management
team also agreed to up to 20% in wage and benefits concessions.
Frontier plans to reexamine the concessions in September based on
the developing financial condition of the company and current
economic conditions.
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
through 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. Epiq Bankruptcy
Solutions serves as the Debtors' notice and claims agent. The
Official Committee of Unsecured Creditors is represented by Wilmer
Cutler Pickering Hale and Dorr LLP.
At Dec. 31, 2007, Frontier Airlines and its subsidiaries' total
assets was $1,126,748,000 and total debts was $933,176,000. The
Debtors have until Aug. 8, 2008, to exclusively file a chapter 11
plan.
GEM SOLUTIONS: Court Confirms Amended Chapter 11 Plan
-----------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware confirmed
the First Amended Chapter 11 Plan of Reorganization of GeM
Solutions Inc., BankruptcyData.com reports.
Overview of the Plan
The Plan provides for the conversion of all outstanding
indebtedness to shares of the Debtor's common stock, $.001 par
value per share, the exchange of all outstanding shares of capital
stock of the Debtors for shares of it New Common Stock, and the
cancellation of all outstanding options, warrants or other rights
to acquire shares of our capital stock.
The Plan further provides for the issuance of an aggregate of
55,000,000 shares of New Common Stock. The Effective Date of the
Plan is conditioned upon:
i) the completion of a foreclosure upon the assets of CompuSven
Inc., a Florida corporation and wholly-owned subsidiary of
the Debtor;
ii) the Order becoming a Final Order under the Bankruptcy Code;
and
iii) the issuance of the shares of New Common Stock and
completion of all other transactions contemplated under the
Plan.
Creditor's Claims
FEQ Gas, LLC, provided $100,000 in loan, which were secured by all
of the Debtor's assets before its bankruptcy filing. FEQ further
provided an additional $110,000 in debtor-in-possession financing
and $75,000 representing the FEQ cash contribution under the Plan.
FEQ's secured claim consisted of the FEQ Note and cash provided to
the Debtor totaled $285,000.
In 2004, Trident Growth Fund, LP, loaned $1.6 million to the
Debtor pursuant to a convertible promissory note secured by all of
our assets. Trident's secured claim was reduced to $300,000 with
the balance of its claim being classified as a general unsecured
claim.
Under the Plan, an aggregate of 49,500,000 -- or 90% of the shares
of new common stock -- will be issued to Trident and FEQ in full
satisfaction of their secured claims as: FEQ will be issued
35,200,000 shares of New Common Stock and Trident will be issued
14,300,000 shares of new Common Stock.
The shares of new common stock, will be distributed to the holders
of allowed general unsecured claims on a pro rata basis based on
the amount of each Allowed General Unsecured Claim. Trident and
FEQ have waived any right to receive and shall not receive any
shares of new common stock with respect to the general unsecured
claims held by them.
Equity Interests
Holders of all issued and outstanding shares of Common Stock and
Series B Convertible Preferred Stock will be issued an aggregate
of 550,000 -- or 1% of the shares of New Common Stock to be issued
under the Plan. Each share of Series B Convertible Preferred
Stock is currently convertible into 100 shares of Common Stock.
At the Plan's effective date, 550,000 shares of new common stock
will be distributed pro rata among the Holders of the outstanding
shares of common stock and series B stock with the Series B Stock
to be treated as if all such shares were converted into Common
Stock at the rate of 100 shares of Common Stock for each share of
Series B Stock.
As a result, for the purpose of allocating the 550,000 shares of
new common stock among the holders of the common stock and series
B. Stock, an aggregate of 55,311,569 shares of Common Stock will
be deemed to be outstanding just prior to the effective date.
A full-text copy of the First Amended Chapter 11 Plan of
Reorganization is available for free at:
http://ResearchArchives.com/t/s?2c50
Headquartered in Naples, Florida, GeM Solutions Inc. --
http://www.compusven.com-- provides Internet monitoring services
including blocking and cleaning electronic mails. The company
filed for Chapter 11 protection on Sept. 20, 2007 (Bankr. Case
No.07-11364). Daniel K. Astin, Esq., at Fox Rothschild LLP,
represents the Debtor. When the Debtor filed for protection
against its creditor, it listed total assets of $1,308,613 and
total debts of $3,967,559.
GENERAL MOTORS: Resumes Malibu Production as Workers OK Contract
----------------------------------------------------------------
All production shifts will return to work at General Motors
Corp.'s assembly factory in Fairfax, Kansas, following the
approval of new labor contract by the plant's United Auto Workers
Local 31 union members, according to the union local's Web site.
Roughly 88% of skilled trades workers and 85% of production
workers voted for the new pact.
As reported in the Troubled Company Reporter on May 8, 2008, more
than a thousand union workers in GM's assembly plant walked off
the their jobs at 9 a.m. on May 5, 2008, after talks on a new
labor deal failed. The automaker and the UAW were in discussions
aimed at continuing plant production of Chevy Malibus and
resolving plant-specific issues such as work rules, seniority, job
selection and the use of outside contractors. The impasse, UAW
representatives insist, is on the automaker's oversight in
awarding jobs at the facility based on seniority. The sticking
point supplements the national contract GM hourly employees
ratified late last year.
WSJ relates that others involved in the labor talks said that the
protests were related to a nearly three-month strike against key
GM supplier American Axle & Manufacturing Holdings Inc.
The agreement between GM and the UAW will end the 18-day old
protest and will allow GM to resume production of its in-demand
Chevrolet Malibu, according to John D. Stoll of The Wall Street
Journal.
Under the new labor pact, 120 new entry-level positions at the
plant will be created beginning September and 30 skilled trade
jobs will be created or retained, David Twiddy of The Associated
Press writes.
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
At March 31, 2008, GM's balance sheet showed total assets of
$145,741,000,000 and total debts of $186,784,000,000, resulting in
a stockholders' deficit of $41,043,000,000. Deficit, at Dec. 31,
2007, and March 31, 2007, was $37,094,000,000 and $4,558,000,000,
respectively.
* * *
As reported in the Troubled Company Reporter on April 28, 2008,
Standard & Poor's Ratings Services said that its 'B' long-term and
'B-3' short-term corporate credit ratings on General Motors Corp.
remain on CreditWatch with negative implications, where they were
placed March 17, 2008. The CreditWatch update follows downgrades
of 49%-owned subsidiaries GMAC LLC (B/Negative/C) and Residential
Capital LLC (CCC+/Watch Neg/C). The rating actions on Residential
Capital LLC and GMAC were triggered by the resignation of the only
independent directors at Residential Capital LLC.
GO FIG: Court Converts Bankruptcy to Chapter 7 Liquidation
----------------------------------------------------------
The Honorable Charles Rendlen III of the U.S. Bankruptcy Court for
the Eastern District of Missouri converted the Chapter 11 cases of
Go Fig. Inc. and its debtor-affiliates to Chapter 7 liquidation
proceedings, the St. Louis Business Journal reports.
According to the report, one of the Debtors' lenders, GE Money
Bank, told the Court in April that since the Debtors have "no
reasonable prospect" to reorganize, and that they didn't continue
their business operations since the collapse last December 2008,
liquidation of the companies would be the best option.
GE Money also told the Court that a Chapter 7 trustee will be able
to determine whether funds have been improperly transferred, the
Journal says.
About Go Fig.
Based in Phoenix, Arizona, Go fig., Inc. -- http://www.fig.com/--
provides medically supervised body-shaping services, operating and
managing 15 centers across the U.S. It employs more than 500
people.
The company and 11 of its affiliates filed for Chapter 11
protection on Jan. 7, 2008 (Bankr. E.D. Mo. Lead Case No. 08-
40116). Spencer P. Desai, Esq., at Capes Sokol Goodman and
Sarachan PC represents the Debtors in their restructuring
efforts. An Official Committee of Unsecured Creditors has been
appointed in the Debtors' cases. When the Debtors filed for
protection from their creditors, they listed estimated assets and
debts of $1 million to $100 million.
GT ARCHITECTURE: Case Summary & 87 Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: GT Architecture Contractors Corp.
7544 Southlake Pkwy.
Jonesboro, GA 30236
Bankruptcy Case No.: 08-69440
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Southside Grading, Inc. 08-69445
American Land Holdings, LLC 08-69463
GT Architecture of Florida, LLC 08-69464
GT Homes, LLC 08-69468
GT Investments of Florida, LLC 08-69470
GT Investments, LLC 08-69471
Lovejoy Crossing, LLC 08-69472
Old Ivey, LLC 08-69473
Southside Land Holdings, Inc. 08-69475
Southside of Florida, LLC 08-69476
Teamon Village, LLC 08-69477
Tussahaw Village, LLC 08-69478
Type of Business: The Debtors construct single-family houses. See
http://www.gtnewhomes.com/
Chapter 11 Petition Date: May 20, 2008
Court: Northern District of Georgia (Atlanta)
Judge: Margaret Murphy
Debtors' Counsel: Michael D. Robl, Esq.
Thomerson, Spears & Robl, LLC
104 Cambridge Ave.
Decatur, GA 30030
Tel: (404) 373-5153
Email: mdrobl@tsrlaw.com
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
A. GT Architecture Contractors Corp's 13 Largest Unsecured
Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
United Community Bank Cornerstone 9 Houses $2,856,250
635 Whitlock Avenue Houses; value of
Marietta, GA 30064 security: $1,477,170
$21,769
First State Bank Tussahaw Village 5 $173,638
2316 Hwy. 155 N.
Mcdonough, GA 30252
Tussahaw Village 9 $169,790
Tussahaw Village 7 $168,419
Tussahaw Village 6 $168,419
Tussahaw Village 8 $167,832
Tussahaw Village 10 $143,545
Southern Community Bank Lee's Ridge Lot 38; $99,184
P.O. Box 142069 value of security:
Fayetteville, GA 30214 $150
Spalding County Tax Commission $35,318
$35,318
City of Union City $67,242
Clayton Co Tax Commissioner $67,242
RBC Centura Finance $41,359
Henry County Tax Commissioner $29,286
Regions Bank $21,834
Armstrong Cabinet $18,813
Residential Construction Spec. $14,644
SunTrust Bank, Atlanta $13,704
Builders Insurance $11,067
B. Southside Grading, Inc's Two Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Caterpillar Financial Cat 330 DL $445,668
P.O. Box 730681
Dallas, TX 75373
Cat 287 B Lr $33,500
$31,000
Cat 287 B Ldr $21,400
First State Bank John Deere Equip. (6) $121,000
2316 Hwy. 155 N. (6)
Mcdonough, GA 30252
John Deere 330 CLC $101,659
$17,000
Landscape Trailer $14,500
2001 Ford F650 $8,511
Horton Trailer $8,273
Massey Ferguson $6,934
Tractor
Horton Trailer $6,817
C. American Land Holdings, LLC's does not have any creditors who
are not insiders.
D. GT Architecture of Florida, LLC's 13 Largest Unsecured
Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Park Avenue Bank Stillwell Estates 28; $811,924
value of security:
$177,990
$11,705
BB&T of Georgia $51,011
Business Loan Center
P.O. Box 580003
Charlotte, NC 28258-0003
Vanguard Bank & Trust $48,557
23 S. John Sims Pkwy.
Valparaiso, FL 32580
Wachovia Mortgage Corp. $42,632
Okaloosa County Tax Collector $35,548
Altura Construction Inc $25,850
A&P Contractors, Inc. $6,000
PowerPlan $2,871
Premier Terminate and Pest $450
Coastal Land Surveying $240
Sprint $134
Solid Waste Haulers of $225
Florida, LLC
Terminix $42
E. GT Homes, LLC's Four Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
RBC Centura Finance Maple Valley H02; $887,190
11011 Richmond Ave., Ste. 850 value of security:
Houston, TX 77042 $132,990
$1,943
Clayton County Tax Commission $4,760
121 S. McDonough St.
Jonesboro, GA 30236
Regions Bank $1,400
Loan Operations-TCL
P.O. Box 5060
Montgomery, AL 36103
United Community Bank $750
Hickory Lane 4 Unknown
F. GT Investments of Florida, LLC's does not have any creditors
who are not insiders.
G. GT Investments, LLC's Six Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bank of North Georgia $16,563
4465 Nelson Brogdon Blvd.
Buford, GA 30518
Heritage Bank-Attn Carla $20,251
203 Keys Ferry St.
Mcdonough, GA 30253
Whitley Engineering $15,840
38 East Main St. N.
Hampton, GA 30228
MJZP Engineer & Consulting, $2,572
Inc.
Warner Architectural $5,625
Westfield Insurance Co. $1,220
H. Lovejoy Crossing, LLC's Seven Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Gamal Tawfik & Galil Tawfik Lovejoy Ph I (13 $409,500
7544 Southlake Pkwy. Lots)
Jonesboro, GA 30236
On-Site Services, Inc. $101,971
133 Trailwood Ln.
Mcdonough, GA 30253
Hall Construction, Inc. $43,831
670 Hall Rd.
Hampton, GA 30228
Clayton County Tax Commission $33,977
Hardrock Drilling & Blasting $9,968
Machine Construction Co. $7,775
Southside Surveying & Planning $4,550
I. Old Ivey, LLC's Three Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
First State Bank Dev. Loan Phase II; $9,028,000
2316 Hwy. 155 N. value of security:
Mcdonough, GA 30252 $2,484,000
Southside Excavating, Inc. $48,450
7544 Southlake Pkwy.
Jonesboro, GA 30236
Clayton County Tax Commission $24,619
121 S. McDonough St.
Jonesboro, GA 30236
J. Southside Land Holdings, Inc's 18 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Southside Excavating, Inc. $1,643,941
7544 Southlake Pkwy.
Jonesboro, GA 30236
Gamal Tawfik & Galil Tawfik Woolsey Estates $354,750
(11 Lots)
Waggoner Place (8 $272,000
Lots)
Lake Dow North $5,000
Clayton County Tax Commission $88,159
121 S. McDonough St.
Jonesboro, GA 30236
On-Site Services, Inc. $85,142
Nancy J. Washington $75,047
Park Avenue Bank $51,800
Bank of Atlanta $35,903
Weissman Nowack Curry & Wilco $30,324
Spalding County Tax Commission $24,216
Henry County Tax Commissioner $20,952
Machine Construction Co. $18,412
MJZP Engineer & Consulting, $15,840
Inc.
Hall Construction, Inc. $14,200
Greg K. Hecht, P.C. $9,378
Turpin, Inc. $6,000
Community Capital Bank $5,323
City of Union City $5,286
City of Griffin $4,595
K. Southside of Florida, LLC's Eight Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Okaloosa County Tax Collector $133,102
101 James Lee Blvd.
Fort Walton Beach, FL 32548
Vanguard Bank & Trust $133,500
23 S. John Sims Pkwy
Valparaiso, FL 32580
Larry M. Jacobs & Associates $4,165
328 East Gadsden St.
Pensacola, FL 32501
Comfort Inn $1,749
United Healthcare of Florida $589
Panama Business Machines, Inc. $169
Pitney Bowes, Inc. $82
Sprint $56
L. Teamon Village, LLC does not have any creditors who are not
insiders.
M. Tussahaw Village, LLC's Three Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Southern Community Bank 237 acres/Tussaha $1,490,986
2970 Bill Gardner Pkwy. Village; value of
Locust Grove, GA 30246 security: $800,000
$14,744
Southside Excavating, Inc. $43,822
7544 Southlake Pkwy.
Jonesboro, GA 30236
Central Georgia EMC $22
P.O. Box 530812
Atlanta, GA 30353
HANDLEMAN CO: Reaches Pact With Lenders to Amend Credit Agreements
------------------------------------------------------------------
Handleman Company, last week said it has entered into a sixth
amendment to its credit agreements that, based on its recently
completed fiscal year 2009 business plan, establishes financial
covenants and reduces the size and cost of its credit facility
without impacting liquidity. The size of the revolving credit
facility has been reduced from $223 million to $163 million,
reflecting Handleman's projections in its fiscal 2009 budget for
significantly lower borrowings.
In its Form 10-Q filed with the Securities and Exchange Commission
on March 11, 2008, Handleman had noted that its current
projections indicate that it will have sufficient cash flow to
support its operations, fund working capital and capital
expenditures, and satisfy debt service requirements through fiscal
2009, if it remains in compliance with its credit agreements and
if its vendors do not significantly change vendor terms.
"Absent a revised longer-term amendment, the Company would not
comply with the terms of its credit agreements beyond May 31,
2008, and the lenders could accelerate repayment of the Company's
debt. If the Company is unable to generate additional funds
through the sale of assets, subsidiaries or securities, or is
unable to secure alternative financing, then its ability to
continue as a going concern would be in doubt."
On May 14, 2008, Handleman Company entered into:
(1) a Sixth Amendment to the Credit and Guaranty Agreement
dated April 30, 2007 among Handleman Company and certain
of it subsidiaries as Guarantors, Handleman Entertainment
Resources L.L.C. and certain other domestic subsidiaries
of Handleman Company as Borrowers, various lenders (SPF
CDOI, LTD., SPCP GROUP, LLC, THERMOPYLAE FUNDING CORP.,
FIELD POINT I, LTD., and FIELD POINT II, LTD), Silver
Point Finance, LLC, as Administrative Agent, Collateral
Agent and Co-Lead Arranger and General Electric Capital
Corporation as Co-Lead Arranger
A full-text copy of this Sixth Amendment is available
for free at http://researcharchives.com/t/s?2c51
(2) a Sixth Amendment to Credit Agreement dated April 30, 2007
among Handleman Company, as Parent Guarantor, and General
Electric Capital Corporation, as Administrative Agent,
Agent and Lender, and GE Capital Markets, Inc., as Lead
Arranger
A full-text copy of this Sixth Amendment is available for
free at http://researcharchives.com/t/s?2c52
Handleman and its lenders agreed that Handleman would have the
right to grant liens in favor of certain trade creditors pursuant
to a trade lien agreement that would be negotiated among
Handleman, its lenders and the trade creditors and governed by an
Trade Lien Intercreditor Agreement.
Handleman and its lenders added or amended a Fixed Charge Coverage
Ratio, Consolidated EBITA, and Minimum Asset Coverage ratios. It
also amended the covenant regarding the maximum consolidated
capital expenditures, license advances, exclusive distribution
costs and software development costs.
The Sixth Amendment requires that Handleman's Consolidated
Adjusted EBITDA should not be less than these amounts:
Consolidated Adjusted
Fiscal Month Ended On or About EBITDA
------------------------------ ---------------------
May 31, 2008 ($1,637,000)
June 30, 2008 ($1,478,000)
July 31, 2008 ($2,445,000)
August 30, 2008 ($383,000)
September 30, 2008 $1,613,000
October 31, 2008 $8,347,000
November 30, 2008 $23,677,000
December 31, 2008 $28,676,000
January 31, 2009 $20,335,000
February 28, 2009 $21,581,000
March 31, 2009 $22,018,000
April 30, 2009 and each Fiscal
Month ended thereafter $23,331,000
Handleman is not also allowed to make or incur any Capital
Expenditures, License Advances, Exclusive Distribution Costs or
Software Development Costs in excess of the lesser of (i) the
Permitted Capital Expenditure Amount, and (ii) these amounts:
Period Amount
------ ------
April 20, 2008 through May 31, 2008 $3,350,000
April 20, 2008 through June 30, 2008 $5,000,000
April 20, 2008 through July 31, 2008 $6,450,000
April 20, 2008 through August 31, 2008 $7,800,000
April 20, 2008 through September 30, 2008 $9,250,000
April 20, 2008 through October 31, 2008 $10,000,000
April 20, 2008 through November 30, 2008 $10,750,000
April 20, 2008 through December 31, 2008 $11,500,000
April 20, 2008 through January 31, 2009 $12,250,000
April 20, 2008 through February 28, 2009 $13,000,000
April 20, 2008 through March 31, 2009 $13,750,000
April 20, 2008 through April 30, 2009 $14,500,000
Any period after April 30, 2009 An amount to be
agreed between
Borrowers & Agents
Handleman is to provide its lenders with a business plan for
fiscal year 2009 for Crave Entertainment Group, Crave
Entertainment, Inc. and SVG Distribution, Inc. by May 15, 2008,
and a Fiscal Year 2010, 2011 and 2012 plan by December 31, 2008
and establish a deposit account in the United Kingdom by
August 31, 2008.
The lenders required a 2% interest rate increase in conjunction
with the lenders marketing the loan for syndication. As a result,
the interest on the Term B loan increased to a minimum of 17.5%
with Base Rate or 15.5% with LIBOR; and the interest on the Term A
loan increased to a minimum of 14.5% with Base Rate or 12.5% with
LIBOR.
The lenders also waived defaults in the provisions:
(i) requiring Handleman to retain an investment banker by
March 31, 2008 for the purpose of exploring strategic
options with respect to specified discrete businesses,
(ii) prohibiting Handleman from maintaining more than
$2,000,000 in Deposit Accounts in the United Kingdom for
more than one Business Day prior to the date hereof,
(iii) requiring Handleman to deliver control agreements to the
Administrative Agent with respect to all Deposit Accounts
maintained by any Credit Party in the United Kingdom by
April 15, 2008, and
(iv) requiring Handleman to provide a Fiscal Plan for 2010,
2011 and 2012 by May 5, 2008.
The Sixth Amendments reduce the aggregate size of the facilities
to $163 million, with Handleman maintaining $113.4 million with
Silver Point Finance LLC and reducing its facility with General
Electric Capital Corporation from $110 million to $50 million. The
reduction in the size of the facilities reduces costs without
reducing liquidity. As of May 14, 2008, Handleman had
$63.3 million in debt outstanding within its credit agreements.
Strategic Options for Crave Entertainment
Handleman also said that, in accordance with a provision in a
previous amendment to its credit agreements, it has retained the
investment banking firm W.Y. Campbell & Company for the purpose of
exploring a sale or other strategic options for its subsidiary
Crave Entertainment Group, Inc. Through its two subsidiaries,
Crave Entertainment, Inc. and SVG Distribution, Inc., Crave is
both a leading full-service distributor of video game software,
hardware, and related accessories and a specialty video game
publisher.
Albert A. Koch, President and Chief Executive Officer of
Handleman, said, "The new amendments to our credit agreements have
been developed with the support of our lenders based on our
recently completed business plan for fiscal 2009. The amended
credit facility will help ensure that we have sufficient liquidity
to operate our business as we continue to take action
to address the rapid and dramatic change under way in the music
industry."
He continued, "In light of the considerable challenges facing
Handleman, we are continuing to focus on controlling costs and
finding other opportunities to leverage our core competencies. We
will also explore strategic alternatives for valuable assets, like
Crave, as part of our ongoing efforts to maximize value for our
stakeholders."
A leader in the high-growth interactive entertainment industry,
Crave is uniquely focused on the value-priced games category
within both its distribution and publishing businesses. Crave
focuses its distribution operations on a broad array of value-
added services, including category management, assortment
planning, promotional planning, merchandising, and full-service
packaging. Crave provides its products and value-added services to
a variety of major resellers including mass merchants, specialty
electronics and video game stores, toy chains, warehouse clubs,
drugstores, supermarkets, and online retailers.
Michael Maas, President and CEO of Crave Entertainment Group,
said, "The Crave management team seeks to expand our leadership as
a value-added video game distributor and specialty publisher. Our
company has built a leading position in the industry and developed
strong relationships with our vendor and customer partners. We
believe Crave has a unique market position and is a valuable and
desirable asset with substantial growth potential."
About Handleman Company
Handleman Company (Pink Sheets: HDLM) is a category manager and
distributor of prerecorded music and console video game hardware,
software and accessories to leading retailers in the United
States, United Kingdom, and Canada. As a category manager, the
Company manages a broad assortment of titles to optimize sales and
inventory productivity in retail stores. Services offered include
product selection, direct-to-store shipments, marketing and in-
store
merchandising.
HERBST GAMING: Moody's Cuts Ratings on Missed Interest Payment
--------------------------------------------------------------
Moody's Investors Service lowered Herbst Gaming, Inc.'s ratings in
response to the company's announcement that it did not make the
May 15, 2008 scheduled interest payment on its 7% senior
subordinated notes due 2014, and that it would not make the June
1, 2008 scheduled interest payment on its 8.125% senior
subordinated notes due 2012.
The downgrade also acknowledges that Herbst is currently in
default under its amended credit agreement. In addition to the
previously disclosed default due to the going concern
qualification from its auditors' report on its December 31, 2007
10-K filing, as of March 31, 2008, the company was not in
compliance with financial ratio covenants of the amended credit
agreement.
This rating action concludes the review process that was initiated
on April 23, 2008. The rating outlook is negative.
Ratings affected:
Corporate family rating to Ca from Caa2
Probability of default rating to Ca from Caa2
Senior secured credit facilities to Caa3 (LGD-3, 34%) from Caa1
(LGD-3, 34%)
Senior subordinated notes to C (LGD-5, 89%) from Ca (LGD-5, 89%)
The negative rating outlook considers that although Herbst has a
30-day grace period in which to make interest payments on its
senior subordinated notes before an event of default would occur
under the senior subordinated note indentures, there is a high
likelihood the company will not make the payments within the
respective grace periods. The negative outlook also recognizes
that while Herbst is actively working towards financial and
strategic alternatives designed to address the deterioration in
its operating results and capital structure, there is no assurance
that it will successfully achieve any such alternative in the near
term.
Herbst Gaming, Inc. is an established slot route operator in
Nevada with over 7,400 slot machines and currently owns and
operates casinos in Nevada, Missouri and Iowa.
INDALEX HOLDINGS: March 30 Balance Sheet Upside Down by $7.3MM
--------------------------------------------------------------
Indalex Holdings Finance, Inc. reported results for the three
months ended March 30, 2008.
For the three months ended March 30, 2008, Adjusted EBITDA
decreased by $7.8 million, to break even. The decline was the
result of a 10% reduction in extrusion shipment volume,
restructuring expenses of $3.7 million, of which $2.8 million was
related to the closure of the Company's Girard and Niles plants,
and operating losses of $2.1 million at the Company's Girard and
Niles plants which were closed during the quarter, partially
offset by a $0.5 million reduction in selling, general and
administrative costs.
For the three months ended March 30, 2008, Indalex used $36.4
million of cash in operations, compared to cash used in operations
of $42.4 million for the three months ended April 1, 2007. The
lower use of cash in operations was primarily due to a reduction
in inventories, partially offset by lower net income, and higher
growth in accounts receivable and other current assets in the
three months ended March 30, 2008 as compared to the three months
ended April 1, 2007. The Company had $107.5 million of borrowings
under its revolving credit facility at March 30, 2008.
Timothy R.J. Stubbs, President and Chief Executive Officer, said:
"We performed solidly, given the state of the market, but our
performance was overshadowed by the significant short-term effect
on EBITDA of our restructuring activities. However, these moves
leave us in a very strong position for the future."
For the three months ended March 30, 2008, net sales were $250.6
million, compared to $291.2 million for the three months ended
April 1, 2007. Extrusion shipment volume fell 10% as a result of
weak market demand, particularly in the Transportation and
Residential Building and Construction end-user markets.
For the three months ended March 30, 2008, the Company's loss from
operations was $9.3 million, compared to a loss from operations of
$2.1 million in the three months ended April 1, 2007. The decline
was the result of a 10% reduction in extrusion shipment volume,
restructuring expenses of $3.7 million, of which $2.8 million was
related to the closure of the Company's Girard and Niles plants,
and operating losses of $2.1 million at the Company's Girard and
Niles plants which were closed during the quarter, partially
offset by an increase in mark-to-market gains on derivatives and a
$0.5 million reduction in selling, general and administrative
costs. For the three months ended March 30, 2008, unit labor costs
were slightly higher, energy costs were flat, and freight costs
were slightly lower as compared to the three months ended April 1,
2007.
For the three months ended March 30, 2008, the Company's net loss
was $16.5 million as compared to a net loss of $6.7 million for
the three months ended April 1, 2007. For the three months ended
March 30, 2008, net interest expense was $7.4 million as compared
to $9.9 million for the three months ended April 1, 2007. The
decrease was due to lower interest expense on Indalex Holding
Corp.'s 11½% second-priority senior secured notes (the "notes")
due 2014, as a result of the repurchase of $71.9 aggregate
principal amount of the notes in June of 2007. Net income for the
three months ended April 1, 2007 reflects equity income from AAG
of $4.9 million.
Shareholders' Deficit
As of March 30, 2008, the company showed strained liquidity with
total current assets of $207.1 million and total current
liabilities of $238.6 million. The company had total assets of
$474.8 million and total liabilities of $482.2 million, resulting
in total stockholders' deficit of $7.3 million.
About Indalex
Indalex Holding Corp., -- http://www.indalex.com/-- a wholly
owned subsidiary of Indalex Holdings Finance Inc., through its
operating subsidiaries Indalex Inc. and Indalex Ltd., with
headquarters in Lincolnshire, Illinois, is the second largest
producer of soft alloy aluminum extrusion products in North
America. The company's aluminum extrusion products are widely used
throughout industrial, commercial, and residential applications
and are customized to meet specific end-user requirements.
The company's North American network includes 12 extrusion
facilities, 33 extrusion presses with circle sizes up to 14
inches, a variety of fabrication and close tolerance capabilities,
three anodizing operations, two billet casting facilities, and six
electrostatic paint lines, including powder coat capability.
INNUITY INC: March 31 Balance Sheet Upside Down by $5.4 Million
---------------------------------------------------------------
Innuity, Inc. reported its financial results for the quarter ended
March 31, 2008.
Summary of Financial Results
Innuity's net loss from continuing operations for the first
quarter of 2008 was $1.0 million, or $0.04 per share, compared to
a net loss of $1.4 million, or $0.06 per share, from continuing
operations during the same period in 2007. Consolidated revenues
from continuing operations for the first quarter of 2008 decreased
to $1.2 million as compared to $1.3 million for the first quarter
of 2007. The reduction of losses resulted from the tightening of
operating costs.
The net loss from both continuing and discontinued operations for
the first quarter of 2008 was $1.2 million, or $0.05 per share,
compared to $1.6 million, or $0.07 per share, for the same period
in 2007. Innuity's adjusted EBITDA from continuing operations was
a negative $460,000 for the first quarter of 2008, representing an
improvement of over $342,000 from adjusted EBITDA from continuing
operations for the first quarter of 2007.
As of March 31, 2008, the company's balance sheet showed total
current assets of $2.2 million and total current liabilities of
$10.2 million, the bulk of which relates to current liabilities
relating to discontinued operations. The company's long-term
liabilities total $178,066. The company had total assets of
$5 million and total stockholders' deficit of $5.4 million. As of
December 31, 2007, the company's total stockholders' deficit was
$4.5 million.
Discussion of Discontinued Operations
On May 2, 2008, Innuity sold substantially all of the assets used
in its In-Store Systems business line that has operated as Jadeon,
Inc. to Radiant Systems, Inc. for $7.0 million. In accordance with
Statement of Financial Accounting Standards (SFAS) No. 144,
"Accounting for Impairment or Disposal of Long-Lived Assets" the
operations of Jadeon, Inc. are presented in Innuity's financial
statements as a discontinued operation.
Part of the proceeds from the sale of Jadeon were used to retire
its $1.0 million 15% secured debt that was payable to Imperium
Master Fund, Ltd. Innuity also paid off $200,000 of notes payable
to a shareholder that were in default. Innuity intends to invest
the remaining proceeds in the growth of its high-margin business
lines and for general corporate purposes.
"We are pleased to have been able to retire our secured debt and
improve our balance sheet with the sale of Jadeon," said John
Wall, Chairman and CEO of Innuity. "I am now eager to turn our
attention to growing our higher margin small business service
offerings during the remainder of 2008."
About Innuity
Headquartered in Redmond, WA, Innuity (OTCBB: INNU) --
http://www.innuity.com/-- is a Software as a Service (SaaS)
company that designs, acquires, and integrates applications to
deliver solutions for small business. Innuity's Internet
technology is based on an affordable, on-demand model that allows
small businesses to simply interact with customers, business
partners and vendors and efficiently manage their businesses.
Innuity delivers its on-demand applications through its Internet
technology platform, Innuity Velocity(TM).
INPHONIC INC: Disclosure Statement Hearing Set for June 13
----------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
will convene a hearing on June 13, 2008, at 11:00 a.m., at 824
Market Street, 6th floor in Courtroom #3 in Wilmington, Delaware,
to consider the adequacy of the Disclosure Statement dated April
14, 2008, describing a Chapter 11 Plan of Liquidation submitted by
Inphonic Inc., its debtor-affiliates and the Official Committee of
Unsecured Creditors. Objections, if any, are due June 6, 2008.
As reported in the Troubled Company Reporter on April 17, 2008,
the Debtors and Committee delivered a Joint Chapter 11 Plan of
Liquidation dated April 14, 2008, and a Disclosure Statement
explaining that plan to the United States Bankruptcy
Court for the District of Delaware.
Overview of the Plan
The Plan provides for the orderly liquidation of the Debtors'
estates, and for the merger of all of their estates and
consolidation of assets and liabilities into SN Liquidation on
the effective date.
Because substantially all of the Debtors' operating assets have
been sold as part of the sale, the Plan further provides for the
creation of litigation trust to administer the Debtors' remaining
assets and assess the value of these assets. Pursuant to the
Plan, eight distinct legal entities are being liquidated.
The remaining assets, among other things, include any causes of
action against the recipients of stock redemption payments and
claims, former directors and officers. These causes of action are
central to the success of the Plan and the distribution of any
value to the general unsecured claim holders.
On Dec. 13, 2008, the Court approved the Debtors' request to sell
substantially all of their assets to Adeptio INPC Funding LLC for
$50,000,000, under an asset purchase agreement dated Nov. 8, 2007.
Treatment of Claims and Interest
Under the Plan, creditors who hold these claims are expected to
get 100% recovery:
-- administrative claim, totaling $1,482,000;
-- priority tax claims; and
-- priority non-tax claims.
Assume Liability Claims will be satisfied by Adeptio INPC pursuant
to the terms of the asset purchase agreement.
After the effective date, holders of Other Secured Claims are
expected to get, either:
i) cash equal to the amount of the allowed claims;
ii) the collateral securing the claims; or
iii) other treatment agreed by the Debtors and holders.
Holder of the Allowed Secured Lender Claims will receive a
$20,000,000 Secured Lender's Deficiency Claim, which entitle the
holder to a pro rata share in the litigation trust interest.
Each Holder of an Allowed General Unsecured Claim will receive its
pro rata share in the ligation trust interest. The Debtors
believe there are a total of approximately $204,964,908 in General
Unsecured Claims.
Intercompany and Equity Claims will be canceled. Holders of these
claims will not receive or retain any property on account of their
claims.
A full-text copy of the Disclosure Statement is available for free
at http://ResearchArchives.com/t/s?2aad
A full-text copy of the Joint Chapter 11 Plan of Liquidation is
available for free at http://ResearchArchives.com/t/s?2aae
About InPhonic Inc.
Headquartered in Washington, DC, InPhonic Inc. (NASDAQ:INPC)--
http://www.inphonic.com/-- provides internet and wireless
services. The company through its wholly owned subsidiary, CAIS
Acquisition II, market broadband and VOIP services. The company
maintained operations centers in Largo, Maryland; Reston,
Virginia; and Great Falls, Virginia.
As reported in Troubled Company Reporter on Feb. 12, 2008, the
Court authorized the Debtors to change their name and the caption
of the bankruptcy case to SN Liquidation, Inc.
The company and its debtor-affiliates filed for Chapter 11
protection on Nov. 8, 2007 (Bankr. D. Del. Case Nos. 07-11666 to
07-11673). Mary E. Augustine, Esq., and Neil B. Glassman, Esq.,
at The Bayard Firm, in Wilmington, Delaware, represent the
Debtors. The Debtors selected BMC Group Inc. as their claims,
noticing and balloting agent. The United States Trustee for
Region 3 appointed five creditors to serve on an Official
Committee of Unsecured Creditors in the Debtors' cases. Kurt F.
Gwynne, Esq., and Robert P. Simons, Esq., at Reed Smith LLP,
represent the Committee.
When the Debtors filed from protection from their creditors,
they listed total assets of $120,916,991 and total debts of
$179,402,834.
INSTITUTUE FOR CANCER: CFO Says He Lied in Probe of $5MM Grant
--------------------------------------------------------------
Roy Victor, the former chief financial officer of the Institute
for Cancer Prevention, admitted to a federal court in New York
that he lied to the Federal Bureau of Investigation concerning the
company's misuse of nearly $5 million in federal grants, The
Journal News (New York) reports.
In a hearing before the Honorable Kenneth Karas of the U.S.
District Court in White Plains, Mr. Victor revealed that he
submitted false financial statements to the U.S. Department of
Health and Human Services, which gave the research institute
federal grants of around $6 million, the Journal News says.
Previously, Mr. Victor insisted, for 18 months, that he was not
guilty of submitting false records to the agency.
However, Mr. Victor told Judge Karas that the fraud he did was not
for personal enrichment. Rather, he said, "I was driven by the
goal of keeping the cancer research going," the Journal News
quotes Mr. Victor as saying.
According to the Journal News, Judge Karas believed Mr. Victor's
testimony and translated that to a sentence below a year and a
half as suggested by federal rules. He took under consideration
Mr. Victor's "good intention" account, charitable activities, and
community support, and sentenced him to home confinement for six
months, and two months of supervised release, relates the Journal
News.
"I think this is an individual who, it needs to be recognized, did
not do any of this out of any personal aggrandizement," Judge
Karas conceded.
Based in New York, the Institute for Cancer Prevention is a non-
profit private research organization devoted to cancer prevention
and control. The Foundation filed for chapter 11 protection on
Sept. 21, 2004 (Bankr. S.D.N.Y. Case No. 04-16148). Alan B.
Miller, Esq., at Weil, Gotshal & Manges, LLP, represents the
Debtor. When the Debtor filed for protection from its creditors,
it listed estimated assets and debts between $1 million and $10
million.
After their Chapter 11 filing, the Foundation captured headlines
as it was forced to shut the doors of its Manhattan office and
upstate research labs after federal investigators alleged that it
had misspent $5.7 million in federal grants. Soon after, Hobart
"Hobie" Truesdell, at Walker Truesdell & Associates, was appointed
as the Chapter 11 trustee in the troubled case and was charged
with cleaning up the mess and trying to provide a recovery to
creditors in a case where a recovery looked unlikely. Young
Conaway Stargatt & Taylor, LLP, represents the Chapter 11 trustee.
INTEREP NATIONAL: Can Employ Kroll Zolf as Financial Advisor
----------------------------------------------------------
The United States Bankruptcy Court for the Southern District of
New York gave Interep National Radio Sales Inc. and its debtor-
affiliates permission to employ Kroll Zolfo Cooper LLC as
financial advisors.
As the Debtors' financial advisor, the firm is expected to:
a) advise and assist the Debtors' management in organizing the
Debtors' resources and activities so as to effectively and
efficiently plan, coordinate and manage the chapter 11
process and communicate with clients, lenders, suppliers,
employees, shareholders and other parties in interest;
b) assist the Debtors' management in designing and implementing
programs to manage or divest assets, improve operations,
reduce costs and restructure as necessary with the objective
of rehabilitating the business;
c) advise the Debtors concerning interfacing with any official
committees, other constituencies and their professionals,
including the preparation of financial and operating
information required by such parties and the Court;
d) advise and assist the Debtors' management in amending the
Debtors' Plan of Reorganization and underlying business
plan, if necessary, including the related assumptions
and rationale, along with other information to be included
in the disclosure statement with respect to the Plan of
Reorganization;
e) advise and assist the Debtors in forecasting, planning,
controlling and other aspects of managing cash, and, if
necessary, obtaining DIP and exit financing;
f) advise the Debtors with respect to resolving disputes and
otherwise managing the claims process;
g) advise and assist the Debtors in negotiating the Plan of
Reorganization with their various creditor and other
constituencies;
h) render expert testimony concerning the feasibility of the
Plan of Reorganization or any other plans of reorganization
and other matters that may arise in the case; and
i) provide such other services as may be required by the
Debtors.
The firm requires a $125,000 retainer to secure payment of its
invoices for professional services rendered. The firm's
professionals compensation rates are:
Designations Hourly Rates
------------ ------------
Managing Directors $695-$775
Professional Staff $200-$665
Support Personnel $45-$225
Salvatore LoBiondo, a managing director of the firm, assures the
Court that the firm does not hold any interest adverse to the
Debtors' estate and is a "disinterested person" as defined in
Section 101(14) of the Bankruptcy Code.
Headquartered in New York, New York, Interep National Radio Sales,
Inc. -- http://www.interep.com/-- are independent sales and
marketing companies that specialize in radio, the Internet,
television and complementary media. With 16 offices across the
U.S., they serve radio and television station clients and
advertisers in all 50 states and beyond. The company and 14 of
its affiliates filed for Chapter 11 protection on March 30, 2008
(Bankr. S.D.N.Y. Lead Case No.08-11079).
Erica M. Ryland, Esq., at Jones Day, represents the Debtors in
their restructuring efforts. No Official Committee has been
appointed in the cases to date. The Debtors selected Kurztman
Carson Consultants LLC as claims, noticing and balloting agent.
As reported in the Troubled Company Report on April 30, 2008, the
Debtors listed total assets of $60,342,770 and total debts of
$145,321,300.
IRVINE SENSORS: Posts $3.5 Million Net Loss in Qtr. Ended March 30
------------------------------------------------------------------
Irvine Sensors Corp. reported a net loss of $3.5 million, on total
revenues of $11.1 million for the second quarter ended March 30,
2008, compared with a net loss of $5.0 million, on total revenues
of $8.0 million in the same period ended April 1, 2007.
Contract research and development revenue increased to
$4.4 million during the three months ended March 30, 2008, from
$3.9 million in the same period ended April 1, 2007.
Product sales increased to $6.7 million during the three months
ended March 31, 2008, from $4.1 million in the same period ended
April 1, 2007. Product sales for the 13-week period ended
March 30, 2008, increased both in terms of absolute dollars and as
a percent of total revenue as compared to the 13-week period ended
April 1, 2007.
The increase in product sales in the current year period is the
net result of substantial increases in the sales of Optex's
products, as well as modest increases in sales of products from
the company's Costa Mesa operation, largely miniaturized camera
products.
Liquidity
At March 30, 2008, the company had cash and cash equivalents of
$1.2 million, a decrease of 15.0%, compared to $1.4 million at
Sept. 30, 2007.
The company believes its government-funded research and
development contract business will continue to provide liquidity
through both gross operating margins and the recovery of indirect
costs as permitted under its government contracts over the next
twelve months. The company also believes that its revenues and
aggregate gross margins from product sales can improve further
over the next twelve months, largely due to the size of the
backlog for Optex's products, provided that the company is able to
improve its working capital in the near future.
At March 30, 2008, the company's funded backlog was approximately
$43.1 million, approximately $36.8 million of which related to
Optex's business.
Balance Sheet
At March 30, 2008, the company's consolidated balance sheet showed
$33.5 million in total assets, $32.8 million in total liabilities,
and $658,300 in total stockholders' equity.
The company's consolidated balance sheet at March 30, 2008, also
showed strained liquidity with $13.3 million in total current
assets available to pay $13.8 million in total current
liabilities.
Full-text copies of the company's consolidated financial
statements for the quarter ended March 31, 2008, are available for
free at http://researcharchives.com/t/s?2c46
Going Concern Disclaimer
As reported in the Troubled Company Reporter on Jan. 24, 2008,
Grant Thornton LLP expressed substantial doubt about Irvine
Sensors Corp.'s ability to continue as a going concern after
auditing the company's financial statements for the year ended
Sept. 30, 2007.
The auditing firm reported that the company incurred net losses
for the years ended Sept. 30, 2007, Oct. 1, 2006 and Oct. 2, 2005,
respectively, and the company has working capital of only
$1,799,100 at Sept. 30, 2007.
About Irvine Sensors
Based in Costa Mesa, Calif., Irvine Sensors Corporation
(Nasdaq: IRSN) -- http://www.irvine-sensors.com/-- is a vision
systems company engaged in the development and sale of
miniaturized infrared and electro-optical cameras, image
processors and stacked chip assemblies, the manufacture and sale
of optical systems and equipment for military applications through
its Optex subsidiary and research and development related to high
density electronics, miniaturized sensors, optical interconnection
technology, high speed network security, image processing and low-
power analog and mixed-signal integrated circuits for diverse
systems applications.
J.B POINDEXTER: Moody Affirms Probability of Default Rating at B2
-----------------------------------------------------------------
Moody's Investors Service affirmed the ratings of J.B. Poindexter
& Co., Inc., including the Corporate Family Rating at B2,
Probability of Default Rating at B2, and $200 million senior notes
at B3. The Speculative Grade Liquidity rating was also affirmed at
SGL-3. The outlook remains negative.
J.B. Poindexter's B2 Corporate Family Rating reflects the
company's continued weak operating performance and resulting high
leverage and low interest coverage. Customer demand for J.B.
Poindexter's products, including truck bodies, pickup truck caps
and tonneau covers, is anticipated to be pressured as a result of
the weak housing environment, slower consumer spending and
elevated oil prices.
The rating also reflects the risks associated with the amount of
management turnover within the company as well as their ability to
successfully execute ongoing operating improvement initiatives.
The B2 considers the company's strong performance within the
company's Specialty Manufacturing Division which has partially
offset weaker performing divisions. Consideration has also been
given to the company's established customer base, strong market
position, the continued expectation of adequate liquidity, as well
as operational improvements which have been implemented.
The negative outlook reflects the absence of tolerance at current
credit statistics for negative variation in the execution of J.B.
Poindexter's business plan, which has been introduced in late
2007. Additionally, the negative outlook incorporates continued
pressure on the company's operating performance as commercial
vehicle orders continue to be reduced due to the weak housing
market and current weak consumer demand.
The following ratings were affirmed:
B2 Corporate Family Rating;
B2 Probability of Default Rating;
B3 (LGD4, 65%) $200 million 8.75% guaranteed senior unsecured
notes due March 2014;
SGL-3 Speculative Grade Liquidity Rating.
Moody's last rating action for J.B. Poindexter was on October 5,
2007.
J.B. Poindexter & Co. Inc., headquartered in Houston, Texas,
manufactures commercial truck bodies for medium-duty trucks,
pickup truck caps and tonneau covers, truck bodies for walk-in
step vans, funeral coaches, limousines and specialized buses,
provides contract manufacturing services for precision metal parts
and machining and casting services, and markets expandable foam
plastics used for packaging, shock absorption, and material
handling products. JB Poindexter's revenue for the year ending
December 31, 2007 was approximately $792 million.
JETBLUE AIRWAYS: Names Joel Peterson and Frank Sica to Board
------------------------------------------------------------
JetBlue Airways elected Joel Peterson to chairman of the board of
directors, and Frank Sica to the position of vice-chairman of the
board.
Mr. Peterson replaces JetBlue founder David Neeleman, who stepped
down as chief executive last year and stated that he would not
stand for re-election as chairman, The Wall Street Journal
relates. Mr. Neeleman has said he plans to start an airline in
Brazil, WSJ adds.
According to WSJ, JetBlue's board asked Mr. Neeleman to step down
and handed operational control of JetBlue over to president and
chief executive officer, Dave Barger.
In a press statement, Mr. Barger stated: "On behalf of the board
and JetBlue's 11,500 crewmembers, I offer our congratulations to
[Mr. Peterson and Mr. Sica], and our deep appreciation of their
long-term service on our board and the profound impact they had in
building JetBlue."
"As chairman, [Mr. Peterson] will help guide our company through
this unprecedented time in our industry. We value his counsel,
experience and leadership greatly," Mr. Barger said.
"Since joining the board in 1999, I have seen the industry change
fundamentally, and I'm proud of the role JetBlue has played in
shaping customer expectations," Mr. Peterson said. "JetBlue's
core strength lies in its crewmembers, and the spirit of service
they bring to every customer interaction. The leadership team
demonstrates the nimble and flexible strength necessary of any
company, and I am honored to serve JetBlue's shareholders as
chairman."
Mr. Peterson served as vice chairman of the board since June 2007,
and has been a member of the board of directors since June 1999.
Mr. Peterson is the founding partner of Peterson Partners LLP, a
private equity capital firm that he founded in 1995.
>From 1973 to 1991, Mr. Peterson served in several positions at
Trammell Crow Company, a commercial real estate service company,
including chief executive officer from 1988 to 1991 and chief
financial officer from 1977 to 1985. Mr. Peterson serves as a
director of Franklin Covey Co. and has taught at the Stanford
Graduate School of Business since 1992.
"[Mr.] Sica's election to vice-chairman solidifies our leadership
continuity of our board, and his expertise in finance and business
operations will continue to serve JetBlue's shareholders well,"
Mr. Barger said. "The election of both [Mr. Peterson] as chairman
and [Mr. Sica] as vice chairman speaks highly with regard to the
importance of succession planning as espoused by our board."
Mr. Sica has been a member of the JetBlue board since
December 1998. Mr. Sica has served as a managing partner at
Tailwind Capital, a private equity firm, since 2006. From 2004 to
2005, Mr. Sica was a senior advisor to Soros Private Funds
Management.
>From 2000 to 2003, Mr. Sica was president of Soros Private Funds
Management LLC, which oversaw the direct real estate and private
equity investment activities of Soros.
In 1998, Mr. Sica joined Soros Fund Management, where he was a
managing director responsible for Soros' private equity
investments. From 1988 to 1998, Mr. Sica was a managing director
in Morgan Stanley's Merchant Banking Division. Mr. Sica serves as
a director of CSG Systems International Inc., Kohl's Corporation
and NorthStar Realty Finance Corporation.
About JetBlue Airways
Based in Forest Hills, New York, JetBlue Airways Corporation
(Nasdaq: JBLU) -- http://www.jetblue.com/-- is a passenger
airline that provides customer service primarily on point-to-point
routes. As of Dec. 31, 2007, the company served 53 destinations
in 21 states, Puerto Rico, Mexico and the Caribbean.
At Dec. 31, 2007, the company's consolidated balance sheeet showed
$5.598 billion in total assets, $4.562 billion in total
liabilities, and $1.036 billion in total stockholders' equity.
* * *
As reported in the Troubled Company Reporter on May 21, 2008,
Moody's Investors Service downgraded the corporate family rating
of JetBlue Airways Corporation to Caa1 from B3, well as the
ratings of its outstanding corporate debt instruments and selected
classes of JetBlue's Enhanced Equipment Trust Certificates. The
rating outlook is negative.
JP MORGAN MORTGAGE: Fitch Holds 'B-' Rating on $2.7MM Certificates
------------------------------------------------------------------
Fitch Ratings affirmed J.P. Morgan Chase Commercial Mortgage
Securities Corp., commercial mortgage pass-through certificates,
series 2004-PNC1, commercial mortgage pass-through certificates
as:
-- $5.6 million class A-1 at 'AAA';
-- $234.6 million class A-1A at 'AAA';
-- $128.3 million class A-2 at 'AAA';
-- $98.0 million class A-3 at 'AAA';
-- $426.2 million class A-4 at 'AAA';
-- Interest-only class X at 'AAA';
-- $28.8 million class B at 'AA';
-- $13.7 million class C at 'AA-';
-- $17.8 million class D at 'A';
-- $11.0 million class E at 'A-';
-- $16.5 million class F at 'BBB+';
-- $11.0 million class G at 'BBB';
-- $20.6 million class H at 'BBB-';
-- $2.7 million class J at 'BB+';
-- $6.9 million class K at 'BB';
-- $4.1 million class L at 'BB-';
-- $5.5 million class M at 'B+';
-- $2.7 million class N at 'B';
-- $2.7 million class P at 'B-'.
Fitch does not rate the $15.1 million class NR certificates.
The rating affirmations are the result of minimal reduction of the
pool collateral balance and stable performance since the last
Fitch rating action. As of the May 2008 distribution date, the
pool has paid down 4.1%, to $1.05 billion from $1.10 billion at
issuance. Seventeen loans (22.5%) have defeased since issuance.
Three loans (4.6%) are currently in special servicing. In total,
12.4% of the pool is considered a Fitch loan of concern.
The largest specially serviced loan, (2.4%), is secured by a
182,322 square foot office in Melville, New York. The principal
of the borrower, which is also a major tenant at the property
(American Home Mortgage, 41.1% of NRA), filed for Chapter 11
bankruptcy. The borrowing entity has not filed Chapter 11 and has
not been consolidated into the bankruptcy filing. The borrower is
keeping the loan payments current. The special servicer is
currently evaluating workout options, including a potential loan
assumption. Losses are not expected at this time.
The second largest specially serviced loan (1.7%) transferred to
special servicing in October 2007 after the owner/operator, MBS
Cos., defaulted on debt service. The loan is secured by a 312-
unit multifamily property located in San Antonio, Texas. The
property is currently listed for sale.
The third largest specially serviced loan (0.65%) is secured by a
216-unit multifamily complex located in Houston, Texas also owned
and operated by MBS Cos. The special servicer is pursuing workout
strategies, including disposition of the asset. Losses are
expected.
The largest loan in the pool, Centro Retail Portfolio (12.8%),
maintains its investment grade shadow rating. The loan is secured
by seven anchored retail properties, 54.1% located in Southern CA,
and 45.9 % in Northern, California. Occupancy as of June 30, 2007
was 93%, consistent with occupancy at issuance (95%).
KENNETH GOOD: Eligible to Get Bankruptcy Relief, Court Rules
------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Texas denied
the request of Hiliard Crews and Crews Yucatan Properties LLC in
Delaware to dismiss the chapter 11 case of Kenneth Marston Good on
grounds that the Debtor is ineligible to receive bankruptcy
relief.
Judge Brenda T. Rhoades found that:
1. the Debtor obtained on April 15, 2008 prior to filing his
petition an individual or group briefing from an approved
nonprofit budget and credit counseling agency that outlined
the opportunities for available credit counseling and
assisted the Debtor in performing a related budget analysis;
2. the briefing complies with 11 U.S.C. Section 109(h);
3. the actions of the credit counseling agency that occurred on
April 16, 2008, were administrative only;
4. it is the date of the counseling and not the date of the
certificate by the credit counseling agency that controls;
and
5. the debtor is therefore eligible to be a debtor under
chapter
11 of the U.S. Bankruptcy Code.
Crews' Contention
Hiliard Crews and Crews Yucatan said, among others, that there was
no copy of a certificate of completion of a credit counseling
attached to the Debtor's exhibit D as required. They added that
the Debtor's exhibit D failed to certify that he had requested
credit counseling services from an approved agency, but was unable
to obtain the services during the five days from the time he made
the request. Hence, they concluded that circumstances existed
which warranted a waiver of the credit counseling requirements.
According to Hiliard Crews and Crews Yucatan, Courts faced with
similar issues have held that the eligibility requirement under
Section 109 are stringent, and the failure to strictly observe the
statutory requirement is a fatal error warranting dismissal of the
bankruptcy case.
Michael P. Coury, Esq., at Farris Bobango & Branan PLC is counsel
to Crews.
Debtor's Response
Mr. Good told the Court that he is an individual debtor in the
case. He said that he is a real estate developer with various
interests in Texas and Mexico and that his interests are both
individually and corporately held.
Mr. Good asserted that because he is an individual, the provisions
of Section 109(h)(1) of the Code apply. He said that he completed
the required bankruptcy counseling course on April 15, 2008, prior
to the filing of the bankruptcy petition. Evidence of the
fulfillment of the statutory requirement and completion of the
bankruptcy counseling course was attached to the petition, Mr.
Good said.
On April 16, Mr. Good said that he received his actual certificate
of counseling signed by Stacy Philips, certified counselor. The
certificate was filed with the Court and assigned Docket No. 4.
However, Mr. Good explained that due to clerical error, the
certificate actually contained incorrect information regarding the
date on which Mr. Good completed the statutorily required
prepetition counseling.
Based on these explanation, Mr. Good moved the Court to deny the
motion to dismiss case filed by Hiliard Crews and Crews Yucatan.
About Kenneth Marston Good
Dallas, Texas-based Kenneth Marston Good is a real estate
developer with interests in real estate properties in Collin and
Denton County, Texas and Tulum, Mexico. Its real estate interests
are held both individually and through its interest in various
corporations and partnerships. The Debtor filed chapter 11
petition on April 15, 2008 (Bankr. E.D. Texas Case No. 08-40955).
Frank J. Wright, Esq., at Wright Ginsberg Brusilow PC represents
the Debtor in its restructuring efforts. The Debtor's schedules
show total assets of $209,273,646 and total liabilities of
$144,293,309.
KRISPY KREME: Renews Distribution Agreement with BakeMark USA
-------------------------------------------------------------
Krispy Kreme Doughnut Corporation, an operating subsidiary of
Krispy Kreme Doughnuts, Inc., entered into an agreement with
BakeMark USA LLC of Pico Rivera, California, pursuant to which
BakeMark will distribute doughnut mix, other ingredients and
supplies to substantially all Krispy Kreme Company-owned and
franchise shops located west of the Mississippi River.
Krispy Kreme plans not to renew the lease for its California
distribution center, which has been distributing mix, ingredients
and supplies to the majority of these locations. Krispy Kreme
currently plans to exit the California facility by Aug. 31, 2008.
Headquartered in Winston-Salem, North Carolina, Kripsy Kreme
Doughnut Corporation, is a retailer and wholesaler of high-quality
doughnuts.
* * *
As reported in the Troubled Company Reporter on Sept. 17, 2007,
Moody's Investors Service lowered Krispy Kreme Doughnut
Corporation's Speculative Grade Liquidity rating to SGL-4 from
SGL-3, indicating weak liquidity. Concurrently Moody's revised
the rating outlook to negative while affirming Krispy Kreme's Caa1
corporate family rating and B3 rating of its $160 million senior
secured credit facilities.
LANDSOURCE COMMUNITIES: Talks With Lender Group on Restructuring
----------------------------------------------------------------
LandSource Communities Development LLC has sought help from its
lender consortium in order to restructure $1.24 billion of its
debt, CNNMoney.com reports.
LandSource has engaged a 100-bank lender group led by Barclays
Capital Inc., which syndicates LandSource's debt. The real estate
developer obtained a default notice on that debt from the lender
group after it was not able to timely meet its payments during
mid-April, says CNNMoney.
LandSource's real estate assets, located in Santa Clarita Valley
in Southern California, were appraised to $2.6 billion during
early 2007. According to CNNMoney, the April payment carried an
additional charge due to the decline of the property's value,
brought about by the country's mortgage crisis.
"It was a remargining payment that was required because the land
was reappraised by the bank group and the land lost value,"
CNNMoney quotes a representative of LandSource.
Based in Miami, Florida, Lennar Corporation (NYSE: LEN and
LEN.B) -- http://www.lennar.com/-- founded in 1954, builds
affordable, move-up and retirement homes primarily under the
Lennar brand name. Lennar's Financial Services segment provides
mortgage financing, title insurance, and closing services for both
buyers of the company's homes and others.
LandSource Communities Development LLC is a partnership that
includes the California Public Employees' Retirement System and
home builder Lennar Corporation. It owns thousands of acres of
land in California, including 15,000 acres north of downtown Los
Angeles.
LEVEL 3: Holds 2008 Annual Meeting of Stockholders
--------------------------------------------------
Level 3 Communications, Inc., held its 2008 Annual Meeting of
Stockholders on May 20, 2008, in Broomfield, Colorado.
At the meeting, the company's stockholders:
* re-elected Walter Scott, Jr., James Q. Crowe, Douglas C. Eby,
Admiral James O. Ellis, Jr., Richard R. Jaros, Robert E.
Julian, Michael J. Mahoney, Arun Netravali, John T. Reed,
Michael B. Yanney and Dr. Albert C. Yates as directors of the
company. All directors will serve a one-year term until the
2009 Annual Meeting of Stockholders.
* approved granting to the company's Board of Directors
discretionary authority to amend in the future the company's
restated certificate of incorporation to implement a reverse
stock split at one of four possible ratios: 1-for-5, 1-for-
10, 1-for-15, and 1-for-20. The company's Board of Directors
has taken no action with respect to a reverse stock split at
this time.
* approved an amendment to the company's restated certificate
of incorporation removing the supermajority voting provisions
therein to permit stockholders to amend Level 3's amended and
restated by-laws and its restated certificate of
incorporation by the affirmative vote of a majority of the
outstanding shares of Level 3 common stock.
* approved the amendment and restatement of Level 3's restated
certificate of incorporation.
Headquartered in Broomfield. Colorado, Level 3 Communications Inc.
(NASDAQ:LVLT) -- http://www.level3.com/-- is engaged in the
communications business. Level 3 is a facilities-based provider
of integrated communications services. As of Dec. 31, 2006, the
company had approximately 73,000 intercity route miles in the
United States and Europe, connecting 16 countries. As of Dec. 31,
2006, the company had metropolitan fiber networks in approximately
125 markets in the United States and Europe, which contain
approximately 25,000 route miles and connect in the aggregate
approximately 6,500 traffic aggregation points and buildings.
During the year ended Dec. 31, 2006, the company acquired Content
Delivery Network services business of SAVVIS Inc., Broadwing
Corporation, TelCove Inc., ICG Communications Inc., Progress
Telecom LLC and Looking Glass Networks Holding Co. Inc. On Sept.
7, 2006, the company sold Software Spectrum Inc. to Insight
Enterprises Inc.
* * *
Moody's Investor's Service assigned these ratings to Level 3
Communications Inc. on June, 2006: 'Caa1' long-term corporate
family rating, 'Caa2' senior unsecured debt rating, 'Caa3'
subordinated debt rating, 'Caa1' probability of default rating and
gave a stable outlook. The rating actions still hold to date.
LIBERTY HARBOUR: Moody's Puts Ba1 Ratings Under Review
-------------------------------------------------------
Moody's Investors Service assigned a long-term rating on these
notes issued by Liberty Harbour CDO Ltd. 2005-1:
(1) Ba1 on review for possible downgrade to the Class A LT-1 Notes
(2) Ba1 on review for possible downgrade to the Class A LT-2 Notes
(3) Ba1 on review for possible downgrade to the Base Liquidity
Advances
Moody's ratings of the Notes address the ultimate cash receipt of
all interest and principal payments required by the Notes'
governing documents, and are based on the expected loss posed to
holders of the Notes relative to the promise of receiving the
present value of such payments. The ratings on the Notes are also
based upon the transaction's legal structure and the
characteristics of the collateral pool.
Liberty Harbour CDO Ltd. 2005-1 is a collateralized debt
obligation backed primarily by a portfolio of structured finance
securities.
LODGENET INTERACTIVE: Sees $570,000,000 in 2008 Revenues
--------------------------------------------------------
In a presentation made to certain of its shareholders, LodgeNet
Interactive Corporation reported that its total per-room revenue
is up 2.2% during the first quarter of 2008, from the first
quarter of 2007 (on a pro-forma basis). The company experienced
increased revenues from hotel services, advertising and other
sales.
LodgeNet says operating costs per room are down 8%, and expects
additional operating synergies coming during the next quarters in
2008.
LodgeNet reaffirmed its financial guidance. LodgeNet anticipate
generating $570,000,000 to $585,000,000 in revenues for 2008; and
$150,000,000 to $160,000,000 in adjusted operating cash flow.
LodgeNet expects posting $28,000,000 to $18,000,000 in net loss,
and a free cash flow of $17,000,000 to $27,000,000 for 2008.
A full-text copy of LodgeNet's presentation is available at no
charge at
http://ResearchArchives.com/t/s?2c54
About LodgeNet Interactive
Based in Sioux Falls, S. Dak., LodgeNet Interactive Corp. (Nasdaq:
LNET) -- http://www.lodgenet.com/-- provides media and
connectivity solutions designed to meet the unique needs of
hospitality, healthcare and other guest-based businesses.
LodgeNet Interactive serves more than 1.9 million hotel rooms
representing 9,900 hotel properties worldwide in addition to
healthcare facilities throughout the United States.
The company's services include: Interactive Television Solutions,
Broadband Internet Solutions, Content Solutions, Professional
Solutions and Advertising Media Solutions. LodgeNet Interactive
Corporation owns and operates businesses under the industry
leading brands: LodgeNet, LodgeNetRX, and The Hotel Networks.
* * *
At Dec. 31, 2007, the company's consolidated balance sheet showed
$693.8 million in total assets, $742.0 million in total
liabilities, resulting in a $48.2 million total stockholders'
deficit.
LODGENET INTERACTIVE: Board Approves Restricted Stock Adjustment
----------------------------------------------------------------
The Board of Directors of the LodgeNet Interactive Corporation
approved an equitable adjustment to the performance target for the
performance-based restricted stock granted to certain officers and
employees in January 2006.
Originally, the performance-based restricted stock grants provided
that the risk of forfeiture with respect to such stock would lapse
and such stock would vest in the event the company attained a
cumulative net income of $1.10 per share during the three-year
period ending Dec. 31, 2008.
In 2007, the company engaged in several strategic transactions
which significantly altered the company's size and capital
structure, namely the acquisition of Stay Online, Inc. and On
Command Corporation, the issuance of 3.05 million shares in
conjunction with financing the purchase of On Command, the
repurchase of the company's 9.50% Senior Subordinated Notes and
the refinancing of the company's debt. Consequently, net income
and net income per share have been impacted in ways that were not
anticipated when the performance-based restricted stock was
originally granted.
The performance-based restricted stock grants authorize the
Board's Compensation Committee to make equitable adjustments to
the performance targets. The Compensation Committee recommended
to the LodgeNet Board that the performance target be equitably
adjusted to be the attainment of $12.04 per share of cumulative
Adjusted Operating Cash Flow less interest during the three-year
period ending Dec. 31, 2008.
The Board determined that such an adjustment would be equitable
and proportionate, in that the $12.04 per share target represents
the cumulative amount of AOCF less interest that would have been
consistent with the cumulative net income of $1.10 per share, had
the effects of the recapitalization and the one-time acquisition
effects been eliminated in the computation of net income.
AOCF is a non-GAAP measure which the company defines as operating
income exclusive of depreciation, amortization, share-based-
compensation and restructuring and integration expenses. The
company believes it is a useful way for it, and its investors, to
measure management performance. The company's method of computing
AOCF may not be comparable to other similarly titled measures of
other companies.
A reconciliation of AOCF to Operating Income is available for free
at http://ResearchArchives.com/t/s?2c4f
Based in Sioux Falls, S. Dak., LodgeNet Interactive Corp. (Nasdaq:
LNET) -- http://www.lodgenet.com/-- provides media and
connectivity solutions designed to meet the unique needs of
hospitality, healthcare and other guest-based businesses.
LodgeNet Interactive serves more than 1.9 million hotel rooms
representing 9,900 hotel properties worldwide in addition to
healthcare facilities throughout the United States.
The company's services include: Interactive Television Solutions,
Broadband Internet Solutions, Content Solutions, Professional
Solutions and Advertising Media Solutions. LodgeNet Interactive
Corporation owns and operates businesses under the industry
leading brands: LodgeNet, LodgeNetRX, and The Hotel Networks.
* * *
At Dec. 31, 2007, the company's consolidated balance sheet showed
$693.8 million in total assets, $742.0 million in total
liabilities, resulting in a $48.2 million total stockholders'
deficit.
LUXURY VENTURES: May Begin Solicitation of Votes on Plan
--------------------------------------------------------
Luxury Ventures LLC obtained permission from the U.S. Bankruptcy
Court for the Middle District of Florida to solicit votes on its
amended plan of reorganization, Ben Fidler of The Deal relates.
Plan Provisions
The Debtor's plan contemplates on pooling $4.2 million in funds
for creditors, The Deal says. KCP Opportunity Fund I LP will
offer the Debtor $500,000 additional capital and Webster Business
Credit Corp. will offer $3.7 million exit financing due April 30,
2012, The Deal reports. From the $3.7 million exit financing, --
$2.5 million revolver and $1.2 million term loan -- the Debtor is
allowed to access the maximum of $1.5 million of the revolver
through Dec. 31, 2008, the report says. The Debtor is set to pay
$200,000 on the term loan on March 31, 2009, The Deal reveals.
The revolving loan carries a base rate plus 200 basis points and
the term loan a base rate plus 250 basis points, the report adds.
KCP, based on court filings, will then hold 40% in the Debtor,
plus closing fee of 3% of its total capital infusion, The Deal
relates. According to the report, Luxury CEO C. Keven Waters and
CFO Patrick Hopper will hold the remaining interest in the Debtor.
The plan also provides incentives for employees, the report says.
About Luxury Ventures
Bonita Springs, Florida-based Luxury Ventures LLC does business as
Henricks Jewelers and sells and retails jewelries. It filed for
chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. M.D. Fla. Case No.
07-11224). Judge Alexander L. Paskay presides the case. Paul J.
Battista, Esq., at Genovese, Joblove & Battista PA represents the
Debtor in its restructuring efforts. When the Debtor filed for
bankruptcy, it listed $1 million to $100 million in assets and
debts.
LUXURY VENTURES: Plan Confirmation Hearing to Commence June 12
--------------------------------------------------------------
The Hon. Alexander Paskay of the U.S. Bankruptcy Court for the
Middle District of Florida gave his thumbs up to Luxury Ventures
LLC's disclosure statement Monday, May 19, 2008, according to The
Deal.
Judge Paskay will conduct a hearing to consider confirmation of
the Debtor's plan on June 12, 2008, the report adds.
About Luxury Ventures
Bonita Springs, Florida-based Luxury Ventures LLC does business as
Henricks Jewelers and sells and retails jewelries. It filed for
chapter 11 bankruptcy on Nov. 19, 2007 (Bankr. M.D. Fla. Case No.
07-11224). Judge Alexander L. Paskay presides the case. Paul J.
Battista, Esq., at Genovese, Joblove & Battista PA represents the
Debtor in its restructuring efforts. When the Debtor filed for
bankruptcy, it listed $1 million to $100 million in assets and
debts.
MEDIACOM BROADBAND: Moody's Puts Ba3 Rating on Planned $300MM Loan
------------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating to Mediacom
Broadband LLC's proposed new $300 million senior secured Term Loan
E. As part of the rating action, Moody's also affirmed the B1
corporate family and probability-of-default ratings for Mediacom
Communications Corporation and the existing ratings at the
Company's wholly-owned subsidiaries, Mediacom Broadband and
Mediacom LLC. The rating outlook remains stable.
Moody's has taken these actions:
Mediacom Communications Corporation
Corporate Family Rating -- Affirmed B1
Probability-of-Default Rating -- Affirmed B1
Speculative Grade Liquidity Rating -- Affirmed SGL-2
Mediacom Broadband LLC
$300MM Sr Sec Term Loan E due 2016 -- Assigned Ba3 (LGD3 --
35%)
$650MMSr Sec Revolving Credit Facility -- Affirmed Ba3 (LGD3
-- 35%)
$300MM Sr Sec Term Loan A -- Affirmed Ba3 (LGD3 -- 35%)
$800MMSr Sec Term Loan D -- Ba3 (LGD3 -- 35%)
$500MM (combined) 8-1/2% Sr Notes -- Affirmed B3 (LGD5 --
88%)
Rating Outlook -- Stable
Mediacom LLC
$400MM Sr Sec Revolving Credit Facility -- Affirmed Ba3 (LGD3
- 35%)
$200MM Sr Sec Term Loan A -- Affirmed Ba3 (LGD3 - 35%)
$650MM Sr Sec Term Loan C -- Affirmed Ba3 (LGD3 - 35%)
$125MM 7-7/8% Sr Notes -- Affirmed B3 (LGD5 - 88%)
$500MM 9-1/2% Sr Notes -- Affirmed B3 (LGD5 - 88%)
Rating Outlook -- Stable
Moody's believes the proposed transaction will not have a
meaningful impact on the Company's credit profile. Net proceeds
will be used to term out most of the current outstanding
borrowings and free-up availability under the existing Mediacom
Broadband revolver. "Although modest improvements in the
company's liquidity and debt maturity profile are noted proforma
for the assumed successful completion of the proposed transaction,
all ratings are being affirmed at current levels as liquidity had
not previously been a rating constraint," noted Moody's Senior
Vice President Russell Solomon.
The B1 corporate family rating continues to be somewhat weakly
positioned, reflecting the Company's high financial leverage and
moderate coverage levels, negative free cash flow and mixed
operating performance, all of which may be further strained by
heightened competition in future periods. These risks continue to
be mitigated by the Company's good liquidity profile (with modest
intermediate-term debt maturities and now renewed large
availability under all committed lines of credit, offset by the
still cash absorptive nature of the business), prospects for
further growth and operating improvements, and moderate perceived
loan-to-value.
For additional information, investors should refer to more
expansive published research that can be found on Moodys.com.
Headquartered in Middletown, New York, Mediacom Communications
Corporation is a domestic multiple system cable operator serving
approximately 1.3 million basic video subscribers in mostly rural
and ex-urban markets.
MEDIACOM BROADBAND: S&P Puts 'BB-' Rating on Proposed $300M Loan
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB-' issue-level
rating and '2' recovery rating to Middletown, New York-based
Mediacom Broadband Group's proposed $300 million incremental term
loan E due 2016. At the same time, S&P affirmed all ratings on
Mediacom Communications Corp. The outlook is stable.
The incremental term loan is being issued under the company's
existing credit facility. The '2' recovery rating indicates
expectations for substantial (70%-90%) recovery in the event of a
payment default. The proceeds are to be used to pay down the
outstanding balance under the existing revolving credit facility
and for general corporate purposes. Mediacom Broadband Group is a
wholly owned subsidiary of cable television provider Mediacom
Communications Corp.
"The ratings on Mediacom reflect a highly leveraged financial
profile and weak operational results, with basic video subscriber
losses and below-industry-average high-speed data and telephony
penetration," said Standard & Poor's credit analyst Naveen Sarma.
"The ratings also reflect significant competitive pressures on
both the video customer base from direct-to-home satellite TV
providers and high-speed data customers from telephone companies,
and rising programming costs," he added.
Partly tempering these factors are the company's position as the
still-dominant provider of pay television services in its markets,
revenue potential from high-speed data, advanced video and
telephony, expectations for limited video competition from the
local telephone operators, and solid liquidity.
"We are concerned about Mediacom's inability to generate
meaningful discretionary cash flow over the medium-term and its
recent operating performance, which continues to trail its peers,"
Mr. Sarma said. "These two factors are significant because the
cable industry is maturing and faces slowing subscriber growth for
advanced services and competition from local telephone companies
deploying their facilities-based video product in some markets."
However, Mediacom's more-rural markets may limit local telephone
competition. Thus, S&P believe a less-aggressive debt balance
would better position Mediacom to compete against The DIRECTV
Group Inc. and DISH Network Corp. and, in the longer term, the
local telephone companies.
MICHAEL BAKER: To Restatement Financial, Delay Results Filing
-------------------------------------------------------------
Michael Baker Corporation filed with the Securities and Exchange
Commission Form 12b-25, advising that the company would be delayed
in reporting its financial results for the first quarter of 2008
while it works to complete the restatement and file the related
reports with the SEC.
In a press statement on Feb. 22, 2008, Michael Baker stated that
it will restate its issued unaudited consolidated financial
statements for the first, second and third quarters of 2007,
because of errors in those financial statements.
The non-cash errors, which were identified by management, were
confined to the company's Energy business segment, and related to
the improper recognition of revenue on domestic managed services
projects during these periods.
The company stated that these errors will reduce the company's
consolidated earnings reported for each of these quarterly
periods. The company's consolidated financial statements for
these quarterly periods could not be relied upon until the
restated consolidated financial statements are filed with the SEC.
The company reached its restatement conclusion based upon the
recommendation of management and the concurrence of the Audit
Committee of the company's board of directors. The audit
committee will also be initiating an independent investigation of
this matter.
The company was evaluating whether a portion of these non-cash
errors will impact its issued audited consolidated financial
statements for the year 2006. At present, the company believes
that the accumulated pre-tax impact of the revenue recognition
errors may entirely, or slightly more than, offset the Energy
segment's reported income from operations before Corporate
overhead for the first nine months of 2007.
Management will also be assessing the effect of the necessary
restatements on the company's internal controls over financial
reporting. Management will not reach a final conclusion regarding
the restatements' effects on internal controls over financial
reporting until the completion of the restatement process.
The company expects to issue preliminary and unaudited financial
information for the first quarter of 2008 compared to the actual
and reported results, prior to any restatement, for the same
period in 2007, on May 27, 2008. The company will be providing
these preliminary results in an effort to keep its shareholders
informed about the performance of the company while it works
to complete the aforementioned restatement.
About Michael Baker Corporation
Based in Moon Township, Pennsylvania, Michael Baker Corporation
(AMEX:BKR) -- http://www.mbakercorp.com/-- provides engineering
and operations and maintenance services for its clients' most
complex challenges. The firm's primary business areas are
aviation, environmental, facilities, geospatial information
technologies, pipelines and utilities, transportation, water and
wastewater, and oil & gas. With more than 4,000 employees in over
50 offices across the United States and internationally, Baker is
focused on creating value by delivering innovative and sustainable
solutions for infrastructure and the environment.
MICHAEL MEISNER: Files Chapter 11; Own Hedge Fund Goes Belly Up
---------------------------------------------------------------
Michael Meisner, principal at Phoenix Diversified Investment
Group, filed a personal Chapter 11 bankruptcy on May 21, Paul
Brinkmann at South Florida Business Journal reports.
Mr. Brinkmann also relates that a group of investors filed an
involuntary petition for chapter 7 bankruptcy against Phoenix
Diversified last week, after learning the fund manager is
insolvent and owes roughly $30,000,000 to more than 200 investors.
Brian Markowitz, of Parkland, and James Nutt and Peter Graynor, of
Fort Lauderdale, signed the petition for bankruptcy, Mr. Brinkmann
relates. The Petitioners are represented by John Bianco, Esq., at
Tripp Scott in Fort Lauderdale.
Mr. Brinkmann relates that Mr. Meisner is facing mounting legal
claims including fraudulent inducement.
Mr. Meisner, through Phoenix, took unsecured loans from
individuals and promised of 3% returns per month, Mr. Brinkmann
relates in a separate report, citing multiple court complaints.
According to Mr. Brinkmann, Mr. Meisner sent investors a letter on
April 22 to allay fears that he was using the fund's money for his
daughter's wedding. South Florida Business Journal says Mr.
Meisner had reserved Donald Trump's Mar-a-Lago Club for the
wedding. Investors, Mr. Brinkmann relates, were concerned about
the lavish expense and whether they were funding it, Mr. Brinkmann
relates, citing the creditors' attorneys.
"I understand that one point of concern is the use of funds for my
own lifestyle," Mr. Meisner wrote, according to Mr. Brinkmann. "I
want to assure you this will not continue as before. The truth is,
I have run out of cash a while ago."
South Florida Business Journal could not reach Mr. Meisner or his
counsel for comment.
Phoenix Diversified Investment Group is a commodities investment
firm based in Boca Raton, Florida. Lewis Freeman, of Lewis B.
Freeman & Partners in Miami, is a court-appointed receiver in the
case against Phoenix Diversified, the report says.
In his personal bankruptcy filing, Mr. Meisner disclosed
$1,000,000 to $10,000,000 in total assets and total liabilities.
Mr. Brinkmann reports that Phoenix and Mr. Meisner are facing,
among others, a lawsuit in federal court by Anthony and Elaine
Petrillo of Fort Lauderdale alleging they suffered $116,000 loss;
and a suit by Jack Oved of Opa-locka in federal court on April 29,
alleging $3,000,000 loss. Similar suits are pending in Broward
and Palm Beach County courts, Mr. Brinkmann says.
Sherri Simpson, Esq., of Fort Lauderdale represents Mr. Meisner in
his personal bankruptcy case. Court record show Meisner has filed
for personal bankruptcy twice before, according to Mr. Brinkmann.
MXENERGY HOLDINGS: Moody's Puts B3 CFR Under Review
---------------------------------------------------
Moody's Investors Service placed the ratings of MxEnergy Holdings
Inc. under review for possible downgrade. Ratings under review
include its B3 Corporate Family Rating, its B3 Probability of
Default rating, and the Caa1 rating (LGD-5, 77%) on its floating
rate senior notes due 2011. In addition, Moody's lowered
MxEnergy's Speculative Grade Liquidity (SGL) rating to SGL-4 from
SGL-3.
The ratings review is prompted by MxEnergy's weak financial
performance during this most recent heating season including
reduced volumes, lower margins, increased operating expenses, and
higher customer acquisition costs. For the last twelve months
(LTM) period ended March 31, 2008, MxEnergy's debt/adjusted EBITDA
less customer acquisition costs was approximately 8.0x, up from
approximately 3.5x for the fiscal year ended June 30, 2007.
Adjusted EBITDA for the LTM period ended March 31, 2008 was
approximately $37.9 million. Given that its fiscal fourth quarter
is typically break-even, MxEnergy's adjusted EBITDA for fiscal
year is likely to be below $40 million, which is roughly
$20 million less than earlier estimates.
MxEnergy's customer acquisition costs also have increased, rising
to $17.5 million for the LTM period ended March 31, 2008, up from
$7.6 million in fiscal 2007. Moody's reduces MxEnergy's EBITDA by
customer acquisition costs because they are seen as a cost of
doing business that is not otherwise captured.
The ratings review, as well as the change in MxEnergy's SGL rating
to SGL-4 from SGL-3, also was prompted by concern regarding
MxEnergy's liquidity as its revolving credit facility expires in
December 2008. It recently negotiated an amendment to the
facility to loosen financial covenant levels for a specified
period of time. MxEnergy relies on its credit facility for
letters of credit that are essential to its operations. While
MxEnergy has not used the facility for cash borrowings, it will
likely need to do so going into the next heating season given
higher commodity prices and lower cash balances.
During the review, Moody's will evaluate the potential for
MxEnergy to improve its performance going forward, its review of
strategic alternatives, and an improvement in its liquidity as
evidenced by an extension of its credit facility (or alternative
arrangements) and prospective compliance with financial covenants.
MxEnergy Holdings Inc. is headquartered in Stamford, Connecticut.
NETBANK INC: Files Disclosure Statement in Florida
--------------------------------------------------
NetBank Inc. delivered to the United States Bankruptcy Court for
the Middle District of Florida a Disclosure Statement dated May
19, 2008, explaining its Chapter 11 Plan of Liquidation.
Overview of the Plan
Under the Plan, all assets of the Debtor will be liquidated and
the proceeds will be paid to creditors.
As of the Plan's effective date, the Debtor estimates assets at
between $7.2 million to $7.9 million exclusive of projected
recoveries from avoidance actions, other causes of action and tax
refunds, if any. Furthermore, the Debtor projects a $7,000,000 in
cash -- including proceeds of its remaining assets real estate and
cash held by MG Reinsurance after its liquidation.
Clifford Zucker at J.H. Cohn LLP in New York, will serve as
liquidating supervisor to wind-down the estate assets and
distribute proceeds to valid creditors of the Debtor.
Treatment of Claims
All administrative claims will be paid in full on the Plan's
effective date.
Holders of allowed secured claims will be satisfied after the
estate received the gross proceeds of any sale. Secured creditors
and their claims are:
i) Iron Mountain -- $34,249, secured by materials stored
in its warehouse;
ii) Dvual County Tax Collector -- $40,676, secured by
personal property; and
iii) Liberty Mutual Insurance Company, secured by letter of
credit.
According to Plan, holders of senior unsecured claims, and
general unsecured claims will be entitled to receive pro rata
share of their respective claims.
Holders of subordinated unsecured claims, Trust Preferred Claims,
and securities claims will not receive any distribution from the
Debtor.
A full-text copy of the Disclosure Statement is available for free
at http://ResearchArchives.com/t/s?2c4a
A full-text copy of the Chapter 11 Plan of Liquidation is
available for free at http://ResearchArchives.com/t/s?2c4b
About NetBank
Headquartered in Jacksonville, Florida, NetBank Inc. --
http://www.netbank.com/-- is a financial holding company of
Netbank, the United States' oldest Internet bank serving retail
and business customers in all 50 states. NetBank Inc. does retail
banking, mortgage banking, business finance, and providing ATM and
merchant processing services.
The company filed for Chapter 11 protection on Sept. 28, 2007
(Bankr. M.D. Fla. Case No. 07-04295). Alan M. Weiss, Esq., at
Holland & Knight LLP. The U.S. Trustee for Region 21 appointed
six creditors to serve on an Official Committee of Unsecured
Creditors of the Debtor's case. Rogers Towers and Kilpatrick
Stockton LLP represent the Committee in this case. As of
Sept. 25, 2007, the Debtor listed total assets at $87,213,942
and total debts at $42,245,857.
NORTH AMERICAN: Moody's Puts Ba1 Rating on $545MM Sr. Facilities
----------------------------------------------------------------
Moody's Investors Service assigned a rating of Ba1 to the
$545 million senior secured credit facilities recently issued by
North American Energy Alliance, LLC. The credit facilities are
comprised of an $85 million 1st lien term loan due 2015; a
$340 million 1st lien delayed draw term loan due 2015; an
$80 million letter of credit facility due 2013; and a $40 million
working capital revolving credit facility due 2013.
In addition, Moody's also assigned a rating of Ba3 to the proposed
$325 million senior unsecured notes due 2016 to be issued by NAEA
to take out a senior unsecured bridge loan of the same amount.
The rating outlook is stable.
NAEA is a special purpose entity formed by Industry Funds
Management Pty Ltd. (Sponsor), an Australian investment management
company. Proceeds from the transaction, along with approximately
$816 million of Sponsor equity, will be used to finance the
acquisition by NAEA of a portfolio of six power projects from
Consolidated Edison Development, a subsidiary of Consolidated
Edison, Inc. The six power generation facilities are located in
two distinct power markets, PJM and ISO-New England. Total
consideration was $1.477 billion plus working capital adjustments
and the assumption of $64 million of one of the asset's project-
level debt.
Proceeds were also used to pre-fund a $10 million operating
reserve and to pay transaction expenses. The aggregate generating
capacity of the six facilities is 1,706 MWs, consisting of three
assets in ISO-New England and three assets in PJM. In ISO -- New
England, the Newington Energy Facility accounts for 525 MWs; the
EMI facilities account for 185 MWs; and the EMI Expansion facility
accounts for 96 MWs. In PJM, the Lakewood Facility accounts for
197 MWs; the Ocean Peaking Facility accounts for 351 MWs; and the
Rock Springs Facility accounts for 352 MWs.
The ratings reflect, among other things, the high proportion of
cash flow that is either contracted or hedged with creditworthy
counterparties and the rapid de-leveraging of the first lien term
facilities. The ratings also reflect the risks related to the
uncertainty of the level of capacity payments received through the
portfolio's participation in the capacity markets in PJM and ISO-
New England as well as the risks associated with the portfolio's
merchant power exposure beyond the tenor of the loans.
The assigned ratings are predicated upon the final structure and
documentation being consistent with Moody's understanding of the
transaction.
North American Energy Alliance, LLC is a special purpose entity
formed by Industry Funds Management Pty Ltd. to acquire six power
generating facilities totaling 1,706MWs in PJM and ISO-New
England.
NPS PHARMACEUTICALS: C. Stiller Resigns from Board of Directors
---------------------------------------------------------------
Calvin R. Stiller, M.D. resigned from the NPS Pharmaceuticals
Inc.'s Board of Directors, effective immediately. Dr. Stiller
informed the company that his resignation was for personal reasons
and not as a result of any disagreement relating to the company's
operations, policies or practices.
Dr. Stiller also informed the company that he will be unavailable
to serve as a director following the company's Annual Meeting of
Stockholders, which is scheduled to be held on May 22, 2008.
Accordingly, Dr. Stiller's name will not be presented for election
at the Annual Meeting of Stockholders and the resulting vacancy on
the company's Board of Directors will be filled by the Board at a
future date.
Based in Bedminster, New Jersey, NPS Pharmaceuticals Inc. (Nasdaq:
NPSP) -- http://www.npsp.com/-- is developing specialty
therapeutics company for gastrointestinal and endocrine disorders
with high unmet medical need. The company is currently advancing
two late-stage programs. Teduglutide, a proprietary analog of
GLP-2, is in Phase 3 clinical development for intestinal failure
associated with short bowel syndrome as GATTEX(TM) and in
preclinical development for gastrointestinal mucositis and
necrotizing enterocolitis.
* * *
As reported Troubled Company Reporter on May 14, 2008, the Audit
Committee of the Board of Directors of NPS Pharmaceuticals, Inc.,
concluded, after consultation with management of the company and a
review of the pertinent facts, that the previously reported
financial statements contained in the company's Annual Report on
Form 10-K for the fiscal year ended Dec. 31, 2007, should not be
relied upon due to an error in the computation of the cash sweep
premium interest expense associated with the Secured 8.0% Notes
due on March 30, 2017. The company detected this error during the
course of the preparation and review of the company's Quarterly
Report on Form 10-Q for the period ended March 31, 2008.
As a result of this error, the company understated accrued
interest expense and retained deficit and overstated income taxes
payable on the Consolidated Balance Sheet as of Dec. 31, 2007.
Also, as a result of the error, the company understated interest
expense and overstated income tax expense on the Consolidated
Statement of Operations for the year ended Dec. 31, 2007. The
company is currently working on restating the financial statements
that were included in its Form 10-K for the year ended Dec. 31,
2007, and will file an amendment on Form 10-K/A to include the
restated financial statements and related disclosures once they
are completed.
NPS Pharmaceuticals Inc.'s consolidated balance sheet at Dec. 31,
2007, showed $231.8 million in total assets and $419.8 million in
total liabilities, resulting in a $188.0 million total
shareholders' deficit.
OAKLAND VIEW: U.S. Trustee and Cathay Bank Want Case Dismissed
--------------------------------------------------------------
The United States Trustee and Cathay Bank moved for the dismissal
of the chapter 11 case of Oakland View LLC in separate motions
filed with the U.S. Bankruptcy Court for the Central District of
California.
The Court will hear the U.S. Trustee's request at 10:00 a.m., on
June 10, 2008, and Cathay Bank's request at 10:00 a.m., on May 29,
2008.
A. U.S. Trustee's Motion
According to the U.S. Trustee, the Debtor is unable to effectuate
a plan and for unreasonable delay which prejudices the rights of
creditors. Hence, the U.S. Trustee asked the Court to dismiss the
chapter 11 case of the Debtor or convert it into a chapter 7
liquidation case.
C. Cathay Bank's Motion
Cathay Bank in California wants the Court to dismiss the Debtor's
case to allow, among others, the bank's foreclosure upon its first
lien position deed of trust with respect to the Debtor's sole
asset. The Debtor has a real property which consists of a 63-lot
(79.29 acre) residential subdivision commonly known as Western
Terminus of Meadstone Road, Forest Park in Santa Clarita,
California.
The bank asserted that the Debtor is a single asset real estate
debtor and has no income from its property or from any other
sources. The bank added that the Debtor's creditors consist of
Cathay Bank, junior lienholders and the County, which is owed real
property taxes of $101,065. Further, the bank said that the
Debtor has filed neither its required schedules or statement of
affairs. Cathay Bank claimed that the case is simply a "face
sheet" bad faith filing by the Debtor.
Cathay Bank related that on or about July 6, 2005, the Debtor
executed a business loan agreement, pursuant to which the bank
will extend $3.3 million to the Debtor. The debt is secured by
all of the Debtor's rights to the property.
On May 26, 2006, the Debtor executed a change in terms agreement,
which among others, reduced the principal amount of the original
debt facility to $3.25 million, and extended the maturity to
Sept. 8, 2006. The maturity of that debt was further extended to
July 8, 2007.
The Debtor defaulted under the terms of the loan by failing to pay
it in full on July 8, 2007. As a result of the default, the bank
filed a complain against the Debtor and its junior lienholders on
March 19, 2008 in Los Angeles County Superior Court.
The bank had its receivership hearing set for April 24, 2008.
But a week before the set hearing, the Debtor filed for bankruptcy
to prevent the bank's appointment of a receiver over the property.
Also, the junior lienholder's foreclosure sale was set for
April 17, 2008, which was avoided by the bankruptcy filing.
As of April 30, 2008, the outstanding principal balance on the
bank loan stood at $3.25 million, plus accrued interest and fees,
totaling $3.58 million.
Michael Gerard Fletcher, Esq., is counsel to Cathay Bank.
About Oakland View
Valencia, California-based Oakland View LLC was established to
purchase and develop a 79.29 acre tract in Vasquez Canyon in Santa
Clarita, California. The property has 63 lots suitable for
residential development. The company filed chapter 11 on April
16, 2008 (Bankr. C.D. Calif. Case No. 08-12383) after it
encountered financial problems and issues with its lenders. Judge
Kathleen Thompson presides the case. T. Edward Malpass, Esq.,
represents the Debtor in its restructuring efforts. The Debtor
listed assets between $10 million and $50 million and debts
between $1 million and $10 million when it filed for bankruptcy.
OAKLAND VIEW: Wants to Hire Malpass as General Counsel
------------------------------------------------------
Oakland View LLC sought authority from the U.S. Bankruptcy Court
for the Central District of California to employ the Law Offices
of T. Edward Malpass as its general reorganization counsel.
The firm, among others, will advise Oakland View regarding its
powers and duties as a debtor-in-possession in the continued
management and operation of its affairs and property and perform
other services required in the case.
Mr. Malpass' hourly rate is at $400. The Debtor has paid $10,000
retainer to the firm.
The Debtor assured the Court that the firm has no interest
materially adverse to the interests of Oakland View or parties-in-
interest in the case.
Valencia, California-based Oakland View LLC was established to
purchase and develop a 79.29 acre tract in Vasquez Canyon in Santa
Clarita, California. The property has 63 lots suitable for
residential development. The company filed chapter 11 on April
16, 2008 (Bankr. C.D. Calif. Case No. 08-12383) after it
encountered financial problems and issues with its lenders. Judge
Kathleen Thompson presides the case. The Debtor listed assets
between $10 million and $50 million and debts between $1 million
and $10 million when it filed for bankruptcy.
OTC INTERNATIONAL: Can Use Banks' DIP Facility & Cash Collateral
----------------------------------------------------------------
The Hon. Arthur J. Gonzalez of the United States Bankruptcy Court
for the Southern District of New York authorized OTC International
Ltd. to access, on a final basis, up to $4,045,000 in debtor-in-
possession financing under a revolving credit loan from Sovereign
Bank and ABN AMRO Bank N.V., as lenders, pursuant to a term loan
agreement dated April 3, 2008.
Judge Gonzalez also authorized the Debtor to use up to $4,240,000
in cash collateral until June 27, 2008.
The Debtor owed at least $43,000,000 from the lenders, which
consists of (i) $24,725,000 from Sovereign and (ii) $18,275,000
from ABN AMRO.
Under the loan agreement, the DIP facility will terminate and
become due by May 31, 2008. The facility will bear interest at
Prime rate plus 1.75%.
The Debtor will use the funds to (i) pay all accrued unpaid fees
and expenses incurred by the professional advisors to the Debtor,
and (ii) finance working capital and other general corporate
purposes.
The DIP lien is subject to a carve-out for payment to professional
advisors to the Debtor, any statutory committee appointed in this
case, Chapter 7 Trustee, clerk of the Bankruptcy Court and United
States Trustee. There is a $750,000 carve-out for payment to
professionals retained by the committee. There is also a $25,000
carve-out for fees and expenses incurred by a Chapter 7 Trustee.
The DIP lien contains customary and appropriate events of default.
To secure its DIP obligations, the lenders are entitled to a
superpriority administrative claims against the Debtor with
priority over any and all administrative expenses.
A full-text copy of the Cash Collateral Budget is available for
free at http://ResearchArchives.com/t/s?2c44
A full-text copy of the Term Loan Agreement dated April 3, 2008 is
available for free at http://ResearchArchives.com/t/s?2c45
About OTC International
Long Island City, New York, OTC International, Ltd. --
http://www.otcinternational.com/-- manufactures jewelry and
precious metal, specializing in diamonds, gold, silver, gemstones,
cameos, and watches. The company filed for Chapter 11 protection
on April 3, 2008 (Bankr. S.D.N.Y. Case No. 08-11181). Ian R.
Winters, Esq., and Patrick J. Orr, Esq., at Klestadt & Winters
LLP, represent the Debtor in its restructuring efforts. The
Debtor selected The Garden City Group Inc. as claims and noticing
agent. The U.S. Trustee for Region 2 appointed creditors to serve
on an Official Committee of Unsecured Creditors.
The Debtor's summary of schedules listed total assets of
$16,362,907 and total debts of $74,024,680. All assets are listed
at net book value excluding metal inventory on consigment of
$29,261,970.
PHOENIX DIVERSIFIED: Investors Gang Up, File Chapter 7 Petition
---------------------------------------------------------------
Paul Brinkmann at South Florida Business Journal reports that a
group of investors filed an involuntary petition for chapter 7
bankruptcy against Phoenix Diversified Investment Group last week,
after learning the fund manager is insolvent and owes roughly
$30,000,000 to more than 200 investors.
Brian Markowitz, of Parkland, and James Nutt and Peter Graynor, of
Fort Lauderdale, signed the petition for bankruptcy, Mr. Brinkmann
relates. The Petitioners are represented by John Bianco, Esq., at
Tripp Scott in Fort Lauderdale.
Michael Meisner, principal at Phoenix Diversified, filed a
personal Chapter 11 bankruptcy on May 21. Mr. Brinkmann relates
that Mr. Meisner is facing mounting legal claims including
fraudulent inducement.
Mr. Meisner, through Phoenix, took unsecured loans from
individuals and promised of 3% returns per month, Mr. Brinkmann
relates in a separate report, citing multiple court complaints.
According to Mr. Brinkmann, Mr. Meisner sent investors a letter on
April 22 to allay fears that he was using the fund's money for his
daughter's wedding. South Florida Business Journal says Mr.
Meisner had reserved Donald Trump's Mar-a-Lago Club for the
wedding. Investors, Mr. Brinkmann relates, were concerned about
the lavish expense and whether they were funding it, Mr. Brinkmann
relates, citing the creditors' attorneys.
"I understand that one point of concern is the use of funds for my
own lifestyle," Mr. Meisner wrote, according to Mr. Brinkmann. "I
want to assure you this will not continue as before. The truth is,
I have run out of cash a while ago."
South Florida Business Journal could not reach Mr. Meisner or his
counsel for comment.
In his personal bankruptcy filing, Mr. Meisner disclosed
$1,000,000 to $10,000,000 in total assets and total liabilities.
Mr. Brinkmann reports that Phoenix and Mr. Meisner are facing,
among others, a lawsuit in federal court by Anthony and Elaine
Petrillo of Fort Lauderdale alleging they suffered $116,000 loss;
and a suit by Jack Oved of Opa-locka in federal court on April 29,
alleging $3,000,000 loss. Similar suits are pending in Broward
and Palm Beach County courts, Mr. Brinkmann says.
Sherri Simpson, Esq., of Fort Lauderdale represents Mr. Meisner in
his personal bankruptcy case. Court record show Meisner has filed
for personal bankruptcy twice before, according to Mr. Brinkmann.
Phoenix Diversified Investment Group is a commodities investment
firm based in Boca Raton, Florida. Lewis Freeman, of Lewis B.
Freeman & Partners in Miami, is a court-appointed receiver in the
case against Phoenix Diversified, the report says.
PLAINS EXPLORATION: S&P Affirms 'BB' Corporate Credit Rating
------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BB' corporate
credit rating on Houston-based independent oil and gas firm Plains
Exploration & Production Co. At the same time, S&P raised its
issue-level rating on PXP's existing senior unsecured debt to 'BB'
from 'BB-' and assigned its 'BB' rating to $300 million in new
senior notes due 2018. Proceeds from the offering will be used to
refinance outstanding bank debt. S&P expect leverage metrics for
PXP to remain largely unchanged after the transaction. The
outlook is stable.
"The upgrade of PXP's unsecured issue ratings reflects what we see
as improved recovery prospects for the company's unsecured issues
in light of our revised long-term pricing assumptions for crude
oil and natural gas," said Standard & Poor's credit analyst
Jeffrey Morrison.
PLASTECH ENGINEERED: Court Fixes Claims Bar Date at June 30
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
set:
a) June 30, 2008, at 5:00 p.m., as the general bar date
within which certain proofs of claim against Plastech
Engineered Products Inc. and its debtor-affiliates must be
filed;
b) June 30, 2008, at 5:00 p.m., as the initial
administrative bar date within which administrative claim
requests against the Debtors must be filed; and
c) July 30, 2008, at 5:00 p.m., as the governmental bar date.
The Court also gave the Debtors authority to establish procedures
for the notice of the bar dates.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000)
PLASTECH ENGINEERED: Court OKs June 3 as Plan-Filing Deadline
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
approved an agreement between Plastech Engineered Products Inc.
and its debtor-affiliates, and Goldman Sachs Credit Partners L.P.,
the Official Committee of Unsecured Creditors, and Chrysler LLC,
which extends the Debtors' exclusive period to file one or more
plans of reorganization through June 3, 2008.
The Court also approved the agreement between the parties to
extend the Debtors' exclusive solicitation period to obtain
acceptances for any reorganization plans up to Aug. 4, 2008.
As agreed, the Debtors may ask the Court to extend the plan period
or the plan soliciation period before their respective dates.
As reported in the Troubled Company Reporter on May 19, 2008, the
Creditors Committee asked the Court to deny extension of the
exclusivity period beyond 30 days, saying that prolonged
extensions could hinder the progress of the negotiations
concerning the proposed sale of the Debtors' interiors and under
hood business and could jeopardize the intrinsic value of the
Debtors' businesses to the detriment of the Debtors' estates.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000)
PLASTECH ENGINEERED: Court OKs Aug. 29 as Lease Decision Deadline
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Michigan
extended, until Aug. 29, 2008, the period wherein Plastech
Engineered Products Inc. and its debtor-affiliates can assume or
reject unexpired leases on nonresidential real property.
The Debtors operate manufacturing plants and warehouses in
Michigan, Ohio, Illinois, Indiana, Tennessee, Georgia, Kentucky,
Alabama, Texas, Louisiana, and South Carolina. The Debtors also
operate two facilities in Leamington, Canada.
The Debtors told the Court that they are still in the process of
reviewing the unexpired leases and contracts to determine which
leases may yield value to their estates through their assumption
and assignment to other interested third parties. Until the
Debtors have had the opportunity to complete a thorough review of
the Unexpired Leases, however, the Debtors cannot determine
exactly which Unexpired Leases should be assumed, assigned, or
rejected, they asserted.
The period for assuming or rejecting unexpired leases of
nonresidential real property expires on May 31, 2008. As of
April 25, the Debtors have not yet rejected any unexpired leases
of non-residential real property.
The requested extension will provide the Debtors and their
advisors the opportunity to analyze the Debtors' financial
circumstances and restructuring options and develop a business
plan and a strategy for exit from bankruptcy that will maximize
the return to parties in interest, the Debtors said.
* * *
However, with respect to General Harmon, LLC's lease, the Court
extends the lease decision deadline through June 2, 2008, as
agreed by the Debtors and General Harmon. If General Harmon's
objection is overruled at the hearing on June 2, the parties
agree to extend that deadline through August 29, 2008.
Lessor 4741 Talon Court, LLC, has withdrawn without prejudice,
its limited objection to the Debtors' request to extend the lease
decision period.
About Plastech Engineered
Based in Dearborn, Michigan, Plastech Engineered Products, Inc. --
http://www.plastecheng.com/-- is full-service automotive
supplier of interior, exterior and underhood components. It
designs and manufactures blow-molded and injection-molded plastic
products primarily for the automotive industry. Plastech's
products include automotive interior trim, underhood components,
bumper and other exterior components, and cockpit modules.
Plastech's major customers are General Motors, Ford Motor Company,
and Toyota, as well as Johnson Controls, Inc.
Plastech is a privately held company and is the largest family-
owned company in the state of Michigan. The company is certified
as a Minority Business Enterprise by the state of Michigan.
Plastech maintains more than 35 manufacturing facilities in the
midwestern and southern United States. The company's products are
sold through an in-house sales force.
The company and eight of its affiliates filed for Chapter 11
protection on Feb. 1, 2008 (Bankr. E.D. Mich. Lead Case No. 08-
42417). Gregg M. Galardi, Esq., at Skadden Arps Slate Meagher &
Flom LLP, and Deborah L. Fish, Esq., at Allard & Fish, P.C.,
represent the Debtors in their restructuring efforts. The Debtors
chose Jones Day as their special corporate and litigation counsel.
Lazard Freres & Co. LLC serves as the Debtors' investment bankers,
while Conway, MacKenzie & Dunleavy provide financial advisory
services. The Debtors also employed Donlin, Recano & Company as
their claims and noticing agent.
An Official Committee of Unsecured Creditors has been appointed in
the Debtors' cases.
As of Dec. 31, 2006, the company's books and records
reflected assets totaling $729,000,000 and total liabilities of
$695,000,000. (Plastech Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/
or 215/945-7000)
PRO-PHARMACEUTICALS: Receives Amex Non-Compliance Notice
--------------------------------------------------------
Pro-Pharmaceuticals, Inc. (Amex: PRW), a developer of first-in-
class, carbohydrate-based targeted therapeutic compounds to treat
cancer and liver fibrosis, today announced the American Stock
Exchange notified the Company that it does not meet a continued
listing standard because it has less than $4 million in
stockholders' equity and has sustained losses from continuing
operations and/or net losses in three of its four most recent
fiscal years as set forth in Section 1003(a)(ii) of the Amex
Company Guide. The Company intends to file by June 13, 2008 a
revised plan with the Amex to regain compliance with this
standard.
The Company filed its original plan following an Amex notice in
June 2007 that it did not meet a minimum stockholders' equity
requirement of $2 million. The Amex in September 2007 accepted the
Company's initial plan and granted an extension until October 13,
2008 to regain compliance with the continued listing standards,
subject to periodic review by Amex during the extension period.
Failure to make progress consistent with the plan or to regain
compliance by the end of the extension period could result in the
Company being de-listed from the Amex.
The audit report on the financial statements of the Company
contained a going concern qualification in its Form 10-K Annual
Report for the year ended December 31, 2007.
"The Company is working on a number of financing options to meet
the Amex requirements and will include them in our plan to the
AMEX," said Theodore Zucconi, Ph.D., President, Pro-
Pharmaceuticals. "Our goal is to meet the Amex requirement by
October. The platforms for oncology and fibrosis drugs enable us
to pursue multiple funding sources."
About Pro-Pharmaceuticals
Pro-Pharmaceuticals -- http://www.pro-pharmaceuticals.com/-- is a
clinical stage company engaged in the discovery, development and
commercialization of carbohydrate-based, target therapeutic
compounds for advanced treatment of cancer, liver, microbial and
inflammatory diseases. The Company's initial focus is the
development of carbohydrate polymers to treat cancer patients.
DAVANAT(R), the Company's lead product candidate, is a
polysaccharide drug whose mechanism of action is based upon
binding to lectins on the cell surface. This form of target
therapy may allow for higher doses of chemotherapy administration
with no increase in toxicity. The Company's technology is also
being used to develop new chemical entities to treat serious
diseases such as liver and kidney fibrosis. The Company is
headquartered in Newton, Mass.
RUTGERS CASUALTY: A.M. Best Lifts IC Rating to bbb- from bb-
------------------------------------------------------------
A.M. Best Co. has affirmed the financial strength rating of
B+(Good) and issuer credit ratings of "bbb-" of American European
Insurance Group and its member, American European Insurance
Company formerly known as Merchants Insurance Company of New
Hampshire, Inc.
Concurrently, A.M. Best has upgraded the FSR to B+(Good) from B-
(Fair) and ICR to "bbb-" from "bb-" of Rutgers Casualty Insurance
Company, following the inclusion of the company in the American
European Insurance Group. A.M. Best also has withdrawn the FSR of
B-(Fair) and ICR of "bb-" of Rutgers Casualty Insurance Group.
These rating withdrawals are due to Rutgers Casualty being
included in American European Insurance Group. All companies are
headquartered in Cherry Hill, New Jersey. The outlook for all
ratings is stable.
The rating affirmations of American European Insurance Group are
based on its favorable capitalization, moderate operating
profitability and regional market knowledge. These positive
rating factors are partially offset by significant execution risk
in the management and integration of American European on a going
forward basis, following its March 30, 2007 purchase by American
European Group, Inc.
The rating upgrades of Rutgers Casualty are based on its improved
risk-adjusted capitalization and operating performance, following
the completion of its pooling agreement with American European,
retroactive to Jan. 1, 2008. Based on the completion of the
pooling agreement, Rutgers Casualty has become a member of
American European Insurance Group and receives the group ratings
along with American European.
SALTON INC: To Acquire Spectrum Brands' Pet Biz for $692MM Cash
---------------------------------------------------------------
Salton Inc. entered into a definitive agreement to acquire United
Pet Group, the Global Pet Business of Spectrum Brands Inc., for
approximately $692.5 million in cash plus additional consideration
in the form of $98 million of Spectrum's Variable Rate Toggle
Senior Subordinated Notes due 2013 and $124.5 million of
Spectrum's Senior Subordinated Notes due Feb. 1, 2015.
The amount is subject to customary adjustments, including for
working capital, indebtedness and seller transaction expenses.
Salton expects to finance the transaction with an equity
investment provided by Harbinger Capital Partners Master Fund I,
Ltd. and Harbinger Capital Partners Special Situations Fund L.P.,
the controlling stockholders of Salton.
As part of the investment, Harbinger Capital Partners will
contribute the Spectrum notes to Salton. Salton has also received
a financing commitment for credit facilities totaling
$325 million, though the acquisition of United Pet Group is not
contingent on any financing requirement.
UPG is a marketer and manufacturer of a variety of leading branded
pet supplies for fish, dogs, cats, birds and other small domestic
animals. UPG has a line of consumer and commercial aquatics
products, including integrated aquarium kits, standalone tanks and
stands, filtration systems, heaters, pumps, and other equipment,
fish food and water treatment products. Its largest aquatics
brands are Tetra(R), Marineland(R), Whisper(R), Jungle(R) and
Instant Ocean(R).
UPG also sells a variety of specialty pet products, including dog
and cat treats, small animal food and treats, clean up and
training aid products, health and grooming aids, and bedding
products. Its largest specialty pet brands include 8in1(R),
Dingo(R), Firstrax(R), Nature's Miracle(R) and Wild Harvest(R).
The business has grown consistently in years and posted revenues
of $563 million in the year ended Sept. 30, 2007. Salton expects
to integrate its existing LitterMaid(R) self-cleaning cat litter
box business into UPG, strengthening its position as one of the
largest U.S. companies engaged in the supply of specialty pet
products and providing it with a strong growth platform in that
market.
John A. Heil, co-chief operating officer and president, Global Pet
Supplies of Spectrum Brands, will continue to lead UPG under
Salton's ownership. UPG will operate as a standalone business
with dedicated sales and marketing, and research and development.
"Over the past five months, we have successfully integrated the
Salton and Applica businesses, and we are now ready to take the
next step in enhancing our range of product offerings and market
reach," Terry L. Polistina, president and chief executive officer
of Salton, said. "The addition of the United Pet Group
establishes Salton as one of the leading providers of specialty
pet supplies."
"UPG is well positioned for continued success with strong market
positions, diversified product offerings and established customer
relationships," Mr. Polistina said. "We believe there are many
opportunities to continue to leverage our core competency in
electronics within the specialty pet business using UPG's brands
and global distribution channels.
"We expect to realize considerable revenue synergies, as our
LitterMaid(R) business will benefit from UPG's geographic reach,"
Mr. Polistina added. "This acquisition is another step towards
our goal of becoming a preeminent global provider of high quality,
innovative consumer products in multiple categories, brands and
price points."
"We are delighted to support the company as it pursues a very
exciting growth initiative in an attractive business segment,"
David M. Maura, chairman of Salton and a vice president and
director of Investments of Harbinger Capital Partners, said.
"[Mr. Polistina] and his team have done a great job transforming
Salton and Applica into a world-class growth platform."
"In the 2007 calendar year, the company grew cash flow from
operations by approximately $37 million and outstanding debt
decreased by $150 million prior to the merger of Salton and
Applica in December 2007," Mr. Maura stated. "Subsequently, the
management team integrated Salton and Applica in an impressively
quick five months, realizing significant synergies that will drive
solid EBITDA generation for 2008.
"Salton is now ready to take the next step forward, and United Pet
Group will strengthen the Company, given its leading position in
the high margin pet supply sector," Mr. Maura continued. "I am
confident that Salton will realize revenue synergies, while also
maintaining UPG's distinct competitive strengths in customer
relationships and distribution, among other areas. Harbinger
Capital Partners is proud to partner with Salton's management team
to build the business and we look forward to a successful future."
Completion of the transaction, which is expected in the summer of
2008, is subject to Hart-Scott-Rodino approval and customary
closing conditions.
Paul Weiss Rifkind, Wharton & Garrison LLP and SJ Berwin LLP are
acting as legal advisors and Credit Suisse and Centerview Partners
LLC are acting as financial advisors to Salton in connection with
the acquisition.
Akin Gump Strauss Hauer & Feld LLP acted as legal advisor and Duff
& Phelps acted as financial advisor to the Independent Committee
of Salton's board of directors that negotiated the terms of the
Harbinger Capital Partners equity investment.
About Spectrum Brands
Headquartered in Atlanta, Georgia, Spectrum Brands Inc. (NYSE:
SPC) -- http://www.spectrumbrands.com/-- is a supplier of
consumer batteries, lawn and garden care products, specialty pet
supplies, shaving and grooming products, household insect control
products, personal care products and portable lighting.
About Salton Inc.
Headquartered in Lake Forest, Illinois, Salton Inc. (NYSE:SFP) --
http://www.saltoninc.com/-- designs, markets and distributes
branded, high-quality small appliances, home decor and personal
care products. Its product mix includes a range of small kitchen
and home appliances, electronics for the home, time products,
lighting products, picture frames and personal care and wellness
products.
* * *
Moody's Investors Service placed Salton Inc.'s long term corporate
family and probability of default ratings at 'Caa2' in November
2006. The ratings still hold to date with a negative outlook.
SHARPER IMAGE: Committee Can Employ Cooley Godward as Lead Counsel
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved an
application by the Official Committee of Unsecured Creditors in
the bankruptcy case of The Sharper Image Corp. to retain Cooley
Godward Kronish LLP as its lead counsel, nunc pro tunc to the
Debtor's bankruptcy filing.
As reported by the Troubled Company Reporter on April 29, 2008,
Steven D. Sass, co-chairperson of the Creditors Committee,
related that the Creditors Committee selected Cooley Godward
because the attorneys in the bankruptcy group at the firm have
significant experience representing creditors' committees in
retail Chapter 11 cases throughout the country.
As the Creditors Committee's lead counsel, Cooley Godward will:
(a) attend the meetings of the Creditors Committee;
(b) review financial information furnished by the Debtor to
the Creditors Committee;
(c) negotiate the budget and the use of cash collateral;
(d) review and investigate the liens of purported secured
parties;
(e) confer with the Debtor's management and counsel;
(f) coordinate efforts to sell assets of the Debtor in a
manner that maximizes the value for unsecured creditors;
(g) review the Debtor's schedules, statement of affairs and
business plan;
(h) advise the Creditors Committee as to the ramifications
regarding all of the Debtor's activities and motions
before this Court;
(i) file appropriate pleadings on behalf of the Creditors
Committee;
(j) review and analyze the Debtor's financial advisor's work
product and reports to the Creditors Committee;
(k) provide the Creditors Committee with legal advice in
relation to the case;
(l) prepare various applications and memoranda of law
submitted to the Court for consideration and handle all
other matters relating to the representation of the
Creditors Committee that may arise;
(m) assist the Creditors Committee in negotiations with the
Debtor and other parties in interest on an exit strategy
for this case; and
(n) perform other legal services for the Creditors Committee
as may be necessary or proper in this proceeding.
Seven Cooley Godward professionals are expected to have primary
responsibility for providing services to the Creditors Committee:
Professional Hourly Rates
------------ ------------
Lawrence C. Gottlieb $850
Jay R. Indyke $760
Cathy R. Hershcopf $680
Richard S. Kanowitz $680
Brent Weisenberg $525
Seth Van Aalten $470
Brian W. Byun $335
The firm will be reimbursed for reasonable expenses incurred in
rendering services to the Creditors Committee.
Mr. Gottlieb, a partner at Cooley Godward, assured the Court that
his firm is a "disinterested person," as that term is defined in
Section 101(14) of the Bankruptcy Code.
About Sharper Image
Based in San Francisco, California, Sharper Image Corp. --
http://www.sharperimage.com/-- is a multi-channel specialty
retailer. It operates in three principal selling channels: the
Sharper Image specialty stores throughout the U.S., the Sharper
Image catalog and the Internet. The company has operations in
Australia, Brazil and Mexico. In addition, through its Brand
Licensing Division, it is also licensing the Sharper Image brand
to select third parties to allow them to sell Sharper Image
branded products in other channels of distribution.
The company filed for Chapter 11 protection on Feb. 19, 2008
(Bankr. D.D., Case No. 08-10322). Steven K. Kortanek, Esq. at
Womble, Carlyle, Sandridge & Rice, P.L.L.C. represents the
Debtor in its restructuring efforts. An Official Committee of
UnsecuredCreditors has been appointed in the case. Whiteford
Taylor Preston LLC is the Committee's Delaware counsel
When the Debtor filed for bankruptcy, it listed total assets of
US$251,500,000 and total debts of US$199,000,000. (Sharper Image
Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
SOUTH COAST FUNDING: Moody's Cuts Rating on Notes
-------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible downgrade the ratings on the following notes issued by
South Coast Funding IV Ltd.:
Class Description: Class C Mezzanine Secured Floating Rate Notes
Due 2038
Prior Rating: Baa3, on review for possible downgrade
Current Rating: B2, on review for possible downgrade
Additionally, Moody's downgraded the following notes:
Class Description: 35,000 Preference Shares (U.S.$35,000,000
Aggregate Liquidation Preference)
Prior Rating: Caa2, on review for possible downgrade
Current Rating: Ca
According to Moody's, the rating actions reflect increased
deterioration in the credit quality of the structured finance
securities.
SPECTRUM BRANDS: Sells Pet Biz to Salton Inc. for $692MM Cash
-------------------------------------------------------------
Spectrum Brands signed a definitive agreement with Salton Inc. and
its subsidiary, Applica Pet Products LLC, for the sale of its
Global Pet Business for $692.5 million in cash and an aggregate
principal amount of the company's subordinated debt securities
equal to $222.5 million less an amount equal to accrued and unpaid
interest on such subordinated debt securities since the dates of
the last interest payments thereon, which, depending on when the
closing occurs, could be an amount of up to approximately
$6.5 million.
Under and subject to the terms of the agreement, Salton will pay
the company $692.5 million of the purchase price in cash and will
surrender a principal amount of the company's Variable Rate Toggle
Senior Subordinated Notes due 2013, also referred to as PIK Notes,
equal to $98 million less an amount equal to accrued and unpaid
interest, and a principal amount of the company's 7-3/8% Senior
Subordinated Notes due 2015 equal to $124.5 million less an amount
equal to accrued and unpaid interest.
Additionally, the agreement between the parties provides that if
the adjusted EBITDA derived from the 2007 audited financial
statements of the Global Pet Business is more than $3 million less
than $92.9 million, the purchase price will be reduced by a
multiple of 10 times the incremental difference. These audited
segment level results are required to be delivered to Salton prior
to the close of the sale.
The company does not believe, based on available information, that
any purchase price adjustment related to the audited adjusted
EBITDA will be required. In addition, the purchase price is
subject to adjustment for changes in working capital prior to
closing and certain expenses incurred in connection with the sale.
In the event of any purchase price increase as a result of such
adjustments, the proportion of the purchase price that is paid in
cash may be increased. Funding for the transaction will be
provided by an equity investment to Salton provided by Harbinger
Capital Partners Master Fund I Ltd. and Harbinger Capital Partners
Special Situations Fund L.P., the controlling stockholders of
Salton.
Consistent with its communicated strategies, the company will
apply the net cash proceeds from the sale to pay down a portion of
its ABL facility and other senior bank facilities in accordance
with the company's debt agreements.
"The sale of our Global Pet Supply business for a full and fair
value is a critical step toward achieving one of our key
priorities, improving the overall capital structure of this
company," Kent Hussey, chief executive officer, said. "We
estimate that this transaction will decrease our total leverage
ratio of approximately 8.5 as of March 30, 2008 to approximately
7.8 on a pro forma basis and will provide greater flexibility to
our remaining core businesses."
"Additonally, we estimate that this transaction will decrease our
senior leverage ratio from approximately 5.0 as of March 30, 2008,
to approximately 4.0 on a pro forma basis," Mr. Hussey said. "The
company also estimates that its annualized cash interest expense
will be reduced by approximately $70 million as a result of this
transaction."
Subject to approval of its senior lenders and certain regulatory
and other statutory notices and filings, the company expects the
transaction to close by the end of August 2008.
Sutherland acted as legal advisor to the company and Skadden Arps
Slate Meagher Flom LLP also provided certain legal advice to the
company in connection with the transaction. Goldman, Sachs & Co.
is acting as the company's financial advisor.
About Salton Inc.
Headquartered in Lake Forest, Illinois, Salton Inc. (NYSE:SFP) --
http://www.saltoninc.com/-- designs, markets and distributes
branded, high-quality small appliances, home decor and personal
care products. Its product mix includes a range of small kitchen
and home appliances, electronics for the home, time products,
lighting products, picture frames and personal care and wellness
products.
About Spectrum Brands
Headquartered in Atlanta, Georgia, Spectrum Brands Inc. (NYSE:
SPC) -- http://www.spectrumbrands.com/-- is a supplier of
consumer batteries, lawn and garden care products, specialty pet
supplies, shaving and grooming products, household insect control
products, personal care products and portable lighting.
* * *
As reported in the Troubled company Reporter on April 16, 2008,
Standard & Poor's Ratings Services revised its outlook on Atlanta,
Georgia-based Spectrum Brands Inc. to developing from negative.
At the same time, Standard & Poor's affirmed all of its ratings on
Spectrum Brands, including the company's 'CCC+' corporate credit
rating.
SS&C TECHNOLOGIES: Earns $3.7 Million in 2008 First Quarter
-----------------------------------------------------------
SS&C Technologies Inc. reported net income of $3.7 million for the
first quarter ended March 31, 2008, compared with a net loss of
$173,000 in the same period last year.
Revenues for the three months ended March 31, 2008, were
$68.5 million, as compared to $55.9 million in the same period in
2007. Revenues for businesses and products that the company has
owned for at least 12 months, or organic revenues, increased
21.0%, accounting for $11.5 million of the increase and was driven
by increased demand of $8.5 million for the company's software-
enabled services.
Maintenance revenues, professional services revenues and software
license revenues increased $1.4 million, $1.1 million and
$500,000, respectively. The company's March 2007 acquisition of
Northport accounted for the remaining $1.1 million increase in
revenues.
Revenue growth in the three months ended March 31, 2008 includes
the favorable impact from foreign currency translation of
$2.0 million resulting from the weakness of the U.S. dollar
relative to currencies such as the Canadian dollar, the Australian
dollar, the euro and the British pound.
The total cost of revenues was $34.9 million and $29.4 million for
the three months ended March 31, 2008, and 2007, respectively.
The gross margin increased to 49.0% for the three months ended
March 31, 2008, from 47.0% for the comparable period in 2007.
The total cost of revenues increase was mainly due to cost
increases of $4.4 million to support the company's revenue growth,
primarily in software-enabled services revenues. Additionally,
the acquisition of Northport added costs of $700,000, and
amortization expense and stock-based compensation expense
increased by $300,000 and $100,000, respectively.
Total operating expenses were $17.8 million and $15.4 million for
the three months ended March 31, 2008, and 2007, respectively.
The increase in total operating expenses was primarily due to an
increase of $1.9 million in organic costs to support the growth in
organic revenues. The company's acquisition of Northport added
$100,000 in costs, and stock-based compensation increased
$400,000. Total operating expenses as a percentage of total
revenues decreased to 26.0% for the three months ended March 31,
2008, from 28.0% for the three months ended March 31, 2007.
Net interest expense for the three months ended March 31, 2008,
and 2007, was $10.4 million and $11.4 million, respectively, and
primarily related to interest expense on debt outstanding under
the company's senior credit facility and 11 3/4% senior
subordinated notes due 2013. T he decrease in interest expense is
due to a decrease in outstanding debt and lower average interest
rates for the period.
Provision for income taxes was $1.9 million for the three months
ended March 31, 2008, compared to income tax benefit of $74,000 in
the same period in 2007.
Liquidity and Capital Resources
The company had cash and cash equivalents of $25.6 million at
March 31, 2008, an increase of $6.4 million from $19.2 million at
Dec. 31, 2007.
At March 31, 2008, the company had total debt of $431.0 million,
including $226.0 million of variable rate debt, as compared to
total debt of $443.0 million at Dec. 31, 2007.
Balance Sheet
At March 31, 2008, the company's consolidated balance sheet showed
$1.2 billion in total assets, $576.2 million in total liabilities,
and $609.2 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?2c3d
About SS&C Technologies
Headquartered in Windsor, Conn., SS&C Technologies Inc. --
http://www.ssctech.com/-- delivers investment and financial
management software and related services focused exclusively on
the financial services industry.
* * *
Todate SS&C Technologies Inc. still carries Moody's Investors
Service's "Caa1" senior subordinate rating assigned on Oct. 25,
2005.
STANDARD PACIFIC: Board and Stockholders Okay Incentive Programs
----------------------------------------------------------------
The Board of Directors of Standard Pacific Corp. established a
bonus compensation program for Jeffrey V. Peterson, the company's
Chairman, Chief Executive Officer and President. Pursuant to the
terms of the program, Mr. Peterson will be eligible to receive a
discretionary cash bonus based upon the Compensation Committee's
subjective evaluation of his achievement of his 2008 principal
objectives. The discretionary bonus will be subject to a cap
equal to two times Mr. Peterson's base salary.
2008 Equity Incentive Plan
The company's stockholders approved the Standard Pacific Corp.
2008 Equity Incentive Plan. The purpose of the 2008 Plan is to
enable the company and its subsidiaries to attract, retain and
motivate their directors, officers, employees and service
providers, and to further align the interests of such persons with
those of the stockholders of the company by providing for or
increasing the proprietary interest of such persons in the
company.
Any person who is a current or prospective officer or employee of
the company or its subsidiaries, and any director of the company
or other service provider retained to provide consulting, advisory
or other services to the company or its subsidiaries, is eligible
to be considered for the grant of awards under the 2008 Plan. The
maximum number of shares of common stock of the company that may
be issued pursuant to awards granted under the 2008 Plan will be
2,638,278 (subject to adjustments to prevent dilution), plus any
shares subject to outstanding awards under prior plans as of March
21, 2008 that on or after such date cease for any reason to be
subject to such awards (other than by reason of exercise or
settlement of the awards to the extent they are exercised for or
settled in vested and nonforfeitable shares).
The 2008 Plan is administered by a committee of the Board of
Directors consisting of two or more directors, each of whom is
non-employee director. The 2008 Plan authorizes the administrator
to grant awards to eligible participants in the form of incentive
and nonqualified stock options, stock appreciation rights,
restricted stock and restricted stock units, any of which may be
performance-based, and for incentive bonuses, which may be paid in
cash or stock or a combination thereof.
Unless the administrator provides for a shorter period, the
maximum term of an option granted under the 2008 Plan, including
any Incentive Stock Options, will be 7 years from the date of its
grant, except that Incentive Stock Options granted to an
individual who, at the time the option is granted to such
individual, owns more than 10% of the combined voting power of all
classes of stock of the company will have a term no greater than 5
years from the date of grant. Options granted under the 2008 Plan
will vest according to a schedule determined by the administrator,
provided however, that no option, other than non-employee director
options, may first become exercisable within one year from the
date of grant, other than upon the death or disability of a
participant or a change of control of the company. The aggregate
number of shares subject to awards granted under the 2008 Plan
during any calendar year to any one participant shall not exceed
600,000.
An incentive bonus award is an award which confers upon the
participant the opportunity to earn a future payment tied to the
level of achievement with respect to one or more performance
criteria established for a specified performance period of not
less than one year or, for incentive bonus awards settled solely
in cash, not less than one calendar quarter. The maximum amount
payable pursuant to an incentive bonus award granted under the
2008 Plan for any fiscal year to any participant that is intended
to satisfy the requirements for "performance based compensation"
under Section 162(m) cannot exceed $10,000,000.
Restricted stock is an award or issuance of shares of common stock
of the company the grant, issuance, retention, vesting and/or
transferability of which is subject during specified periods of
time to such conditions (including continued employment or
performance conditions) and terms as the administrator deems
appropriate. Restricted stock units are awards denominated in
units of shares of common stock of the company under which the
issuance of shares is subject to such conditions (including
continued employment or performance conditions) and terms as the
administrator deems appropriate. An award with a vesting schedule
that is not at least partially based on performance criteria
cannot vest in less than thirty-six months, and an award with a
vesting schedule that is at least partially performance-based
cannot vest in less than twelve months from the date of grant,
except for incentive stock awarded to non-employee directors and
in the case of the death or disability of a participant or a
change of control of the company.
A stock appreciation right is an award pursuant to which a
participant may be entitled to receive the amount, if any, by
which the fair market value of the common stock of the company on
the date of exercise exceeds a measurement value. The measurement
value of a stock appreciation right must equal or exceed the fair
market value of a share of common stock of the company on the date
of the grant. The grant, retention, vesting and transferability
of the stock appreciation right is subject during specified
periods of time to such conditions and terms as the administrator
of the 2008 Plan deems appropriate. The vesting of an award will
be over a period of not less than one year, except for stock
appreciation rights awarded to non-employee directors and in the
case of death or disability of a participant or a change of
control of the company. The stock appreciation right may be paid
in cash or shares of common stock of the company or a combination
of the two, in the discretion of the administrator.
About Standard Pacific
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.
Covenant Noncompliance Waiver
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.
Below Investment Grade Ratings
As reported in the Troubled Company Reporter on May 20, 2008,
Standard & Poor's Ratings Services lowered its corporate credit
and senior unsecured debt ratings on Standard Pacific Corp. to
'B-' from 'B+'. At the same time, S&P lowered the subordinated
debt rating to 'CCC' from 'B-' and placed all ratings on the
company on CreditWatch with negative implications. These actions
affect approximately $1.3 billion of unsecured notes.
As reported in the Troubled Company Reporter on May 15, 2008,
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.
STANDARD PACIFIC: Fitch Junks Rating on Senior Subordinated Debt
----------------------------------------------------------------
Fitch Ratings has downgraded Standard Pacific Corp.'s ratings as:
-- Issuer Default Rating to 'B-' from 'B+';
-- Senior unsecured to 'B-/RR4' from 'B+/RR4';
-- Unsecured borrowings under its bank revolving credit facility
to 'B-/RR4' from 'B+/RR4';
-- Senior subordinated debt to 'CCC/RR6' from 'B-/RR6'.
Fitch has also rated the secured borrowings under the company's
revolving credit facility 'BB-/RR1.'
Standard Pacific's ratings have also been placed on Rating Watch
Negative.
Fitch's Recovery Rating of '1' on the secured advances under
Standard Pacific's revolving credit facility indicates outstanding
(90%-100%) recovery prospects for holders of this debt issue. The
'RR4' on Standard Pacific's unsecured notes and the unsecured
advances under its revolving credit facility indicate average
(30%-50%) recovery prospects for holders of these debt issues.
Standard Pacific's exposure to claims made pursuant to performance
bonds and joint venture (debt and the possibility that a portion
of these contingent liabilities would have a claim against the
company's assets were considered in determining the recovery for
the unsecured debt holders. The 'RR6' on Standard Pacific's
senior subordinated notes indicate poor recovery prospects
(0%-10%) in a default scenario. Fitch applied a liquidation value
analysis for these RRs.
The downgrade reflects the current difficult U.S. housing
environment (especially in Standard Pacific's key California and
Florida markets), current and expected negative trends in Standard
Pacific's operating margins and meaningful deterioration in credit
metrics. Furthermore, Standard Pacific's liquidity may be
negatively impacted by credit enhancements provided by the company
to its unconsolidated JVs, which may require re-margining
contributions if the underlying collateral securing the debt of
these JVs falls in value.
The Rating Watch Negative reflects Standard Pacific's exposure to
liquidity risk given ongoing negotiations with its bank group
regarding modifications to its credit agreements. At the end of
the first quarter, Standard Pacific was not in compliance with the
consolidated tangible net worth and leverage covenants contained
in its bank credit agreements. The company sought and received a
waiver from March 2008 to mid-May and then received an extension
of the waiver to Aug. 14, 2008 and expanded the scope of the
proposed amendments.
In exchange for the waiver extension and the expanded scope,
Standard Pacific agreed to collateralize new advances made under
the revolving credit facility, reduce the revolving credit
facility commitment from $700 million to $500 million, and not
borrow under the facility when its cash position exceeds
$300 million. While Standard Pacific's bond indentures limit the
amount of secured indebtedness, the company is able to use certain
carve-outs (permitted liens) to secure revolver advances going
forward.
Standard Pacific and its JV partners generally provide credit
enhancements in connection with JV borrowings in the form of loan-
to-value maintenance agreements. During the three months ended
March 31, 2008, Standard Pacific made one loan remargin payment in
the amount of $15.7 million. At March 31, 2008, approximately
$352.2 million of its unconsolidated JV borrowings were subject to
these credit enhancements. Standard Pacific is solely responsible
for $69.3 million and the company is jointly and severally
responsible for $282.9 million of debt.
Under the provision of its most restrictive bond indenture,
Standard Pacific is currently prohibited from making restricted
payments, which include investments in JVs. However, investments
in JVs may continue to be made from funds held in its unrestricted
subsidiaries. Based on current estimated funding requirements and
assuming that the company is successful in unwinding the JVs that
have been targeted for termination and in extending certain JV
maturities, the company believes that the funds in its
unrestricted subsidiaries are sufficient to fund its JV
obligations for the foreseeable future.
Subsequent to March 31, 2008, the company purchased and/or unwound
two JVs with total assets and debt as of March 31, 2008 totaling
approximately $143.1 million and $61.4 million, respectively.
Management also said that it is targeting to unwind three other
JVs. Since these unwindings are essentially acquisition of JV
assets, these are not considered restricted payments and are not
prohibited under the bond indentures.
While the company has generated substantial cash flow from
operations during the past six quarters, Standard Pacific's
liquidity may be somewhat constrained as the company directs some
of its cash to potential JV remargining contributions as well as
targeted termination of certain JV partnerships.
To provide the company with flexibility to respond to
unanticipated JV capital needs, Standard Pacific is currently
evaluating a number of alternatives for reducing JV investment
obligations and enhancing the company's ability to make restricted
payments. These alternatives include: modifying JV cash flows to
reduce peak capital requirements; accelerating land purchases from
land development JVs to reduce JV capital requirements; exiting a
JV by buying out a partner's interest or selling its interest;
increasing JV distributions; obtaining noteholder consent to
modify the restricted payments covenant; and raising equity. To
help position the company to weather the current housing downturn,
management is also exploring alternative financial and strategic
alternatives, including sale of additional non-core assets, a
merger or business combination or the sale of the company.
Future ratings and Outlooks will be influenced by broad housing
market trends as well as company specific activity, such as land
and development spending, general inventory levels, speculative
inventory activity, gross and net new order activity, debt levels
and free cash flow trends and uses.
STEVEN DAVIS: Case Summary & 74 Known Creditors
-----------------------------------------------
Debtors: Steven Michael Davis, II, and Belinda Yvette Davis
800 Weybridge Lane
Keller, TX 76248
Bankruptcy Case No.: 08-32164
Type of Business: The Debtors does business as Davis Real Estate
Services and Investment.
Chapter 11 Petition Date: May 5, 2008
Court: Northern District of Texas (Dallas)
Judge: Harlin DeWayne Hale
Debtors' Counsel: Joyce W. Lindauer, Esq.
Law Office of Joyce W. Lindauer
8140 Walnut Hill Lane, Suite 301
Dallas, TX 75231
Tel: (972) 503-4033
Fax: (972) 503-4034
Total Assets: $3,702,133
Total Debts: $4,421,192
Debtor's 74 Known Creditors:
Entity
------
Alexandra Meadows HOA
c/o PCMC Processing Center
P.O. Box 60908
Phoenix, AZ 85082-0908
AmTrust Bank
P O Box 790376
St. Louis, MO 63179-0376
ASC
P.O. Box 60768
Los Angeles, CA 90060-0768
Associa Principal Mgmt. Group
P.O Box 60518
Phoenix, AZ 85082-0518
Attorney General of Texas
Bankruptcy Division
P.O. Box 12548
Austin, TX 78711-2548
Aurora Loan Services
P.O. Box 78111
Phoenix, AZ 85062-8111
Bank of America
P.O. Box 15719
Wilmington, DE 19886-5719
Barbara Acosta
205 Crescent Ridge
Fort Worth, TX 76140
Barrett Burke Wilson
Castle Daffin & Frappier
15000 Surveyor Blvd., Suite 100
Addison, TX 75001
Basswood Park HOA
c/o PCMC Processing Center
P.O. Box 60908
Phoenix, AZ 85082-0908
Beneficial
P.O. Box 4153-K
Carol Stream, IL 60197-4153
Blake Meadows HOA
c/o PCMC Processing Center
P.O. Box 60908
Phoenix, AZ 85082-0908
Capital One
P.O. Box 650007
Dallas, TX 75265
Carissa Gonzalez
6545 Regina
Fort Worth, TX 76131
Carla Hineslee
312 Crescent Ridge
Fort Worth, TX 76140
Chase
P.O. Box 94014
Palatine, IL 60094-4014
Christobal and Annie Ortega
9632 Minton
Fort Worth, TX 76108
Codilis & Stawiarski, P.C.
650 N. Sam Houston Parkway East, Suite 450
Houston, Texas 77060
Comptroller of Public Accounts
Bankruptcy Section
P.O. Box 13528
Austin, TX 78711
Countrywide Financial
P.O. Box 650070
Dallas, TX 75265-0070
Cynthia and Keith Bryant
2125 Trina
Fort Worth, TX 76131
David and Julie Preston
13765 Canyon Ranch
Fort Worth, TX 76262
Donald and Debra Thomas
5424 Lavaca
Grand Prairie, TX 75052
Dorado Ranch HOA
c/o PCMC Processing Center
P.O. Box 60908
Phoenix, AZ 85082-0908
EECU
P.O. Box 1777
Fort Worth, Texas 76101-1777
EMC Mortgage Corporation
P.O. Box 660753
Dallas, TX 75266-0753
Ernest Brown and Jennifer Garcia
1032 Lakeview Court
Little Elm, TX 75068
Excel Assoc. Mgmt Processing Center
P.O. Box 62193
Phoenix, AZ 85082-2193
GMAC Mortgage Corporation
Attn: Customer Care
P.O. Box 4622
Waterloo, IA 50704-4622
Green Point Mortgage Funding, Inc.
P.O. Box 79363
City of Industry, CA 91716-9363
Herb and Nicole Saxton
9465 California Oaks Circle
Patterson, CA 95363
Homecomings Financial
P.O. Box 79135
Phoenix, AZ 85062-9135
Internal Revenue Service
P.O. Box 105416
Atlanta, GA 30348-5416
Joe and Angie Ramos
6357 Ferncreek
Fort Worth, TX 76179
Johnnie and Mike Sudderth
2108 Haylee
Fort Worth, TX 76131
Julietta Estrada and Ruperto Perez
6457 Alexandra Meadows
Fort Worth, TX 76131
Kellie Dabbs
7013 Lindentree
Fort Worth, TX 76137
Lake Parks HOA
Laura Fasching
8936 Belvedere
Keller, TX 76248
Lisa Isaacs
7017 Lindentree
Fort Worth, TX 76137
Litton Loan Servicing
P.O. Box 4387
Houston, TX 77210-4387
Lula and Henry Alexander
10836 Hawks Landing
Haslet, TX 76052
Mackie Wolf & Zientz, P.C.
Attorneys at Law
Pacific Center I, Suite 660
14180 North Dallas Parkway
Dallas, TX 75254
Mackie Wolf & Zientz, P.C.
Pacific Center I, Suite 660
14180 North Dallas Parkway
Dallas, Texas 75254
Mami Horton
10832 Hawks Landing
Haslet, TX 76052
Mann & Stevens, P.C.
550 Westcott Street, Suite 560
Houston, TX 77007-9000
Michael and Amber Baxter
267 Meadowside
Keller, TX 76248
Moncor Inc.
dba Moncor Mortgage Bank Cor
15301 Spectrum Drive, #405
Addison, Texas 75001
Monterey Financial Services., Inc.
4095 Avenida De La Plata
Oceanside, CA 92056
Ocwen Federal Bank - FSB
P.O. Box 785056
Orlando, FL 32878-5056
Paul and Jill Eason
10805 Elmhurst
Keller, TX 76248
Residential Credit Solutions, Inc.
P.O. Box 78954
Phoenix, AZ 85062-8954
Riddle & Williams, PC
Regency Plaza
3710 Rawlins St., Suite 1400
Dallas, TX 75219
Rob and Jennifer Vendura
5440 Brazoria
Grand Prairie, TX 75052
Rolynn Navarro
8808 Chapps
Keller, TX 76248
Saxon Mortgage Services
P.O. Box 961105
Fort Worth, TX 76161-0105
Sears
P.O. Box 6937
The Lakes, NV 88901-6937
Shadowbrook North HOA
P.O. Box 693
Keller, TX 76244
Shannon Mann
740 Elizabeth Dr.
Burleson, TX 76028
Sharon Oliver
1125 Red Cloud
Fort Worth, TX 76120
Shirley Rauch
5700 Moonflower Ct.
Fort Worth, TX 76248
SLS
P.O. Box 105219
Atlanta, GA 30348-5219
Stacie and Barry Callahan
1310 McEntire
Keller, TX 76248
Stephanie White
5204 Shiver
Keller, TX 76248
Steve Davis
6412 Geneva
Fort Worth, TX 76131
Suntrust Mortgage
P.O. Box 26149
Richmond, VA 23260-6149
Tarry and Susie Tonning
13856 Sonterra Ranch
Fort Worth, TX 76262
Texas Workforce Commission
101 E. 15th St.
Austin, TX 78778
The Manors at Waterford HOA
9285 Huntington Square Ste. 100
North Richland Hills, TX 76180
Trails of Marine Creek HOA
227 NE Loop 820, Suite 101
Hurst, TX 76053
U.S. Bank N.A.
P.O. Box 2188
Oshkosh, WI 54903-2188
Washington Mutual Card Services
P.O. Box 660487
Dallas, TX 75266-0487
Wells Fargo Auto Finance, Inc.
P.O. Box 29704
Phoenix, AZ 85038-9704
Willis Coves HOA
1800 Preston Park Blvd. #101
Plano, TX 75093
Wilshire Credit Corp.
P.O. Box 7195
Pasadena, CA 91109-7195
TELTRONICS INC: March 31 Balance Sheet Upside-Down by $4.7 Million
------------------------------------------------------------------
Teltronics Inc.'s consolidated balance sheet at March 31, 2008,
showed $15.4 million in total assets and $20.1 million in total
liabilities, resulting in a $4.7 million total stockholders'
deficit
At March 31, 2008, the company's consolidated balance sheet also
showed strained liquidity with $13.5 million in total current
liabilities available to pay $14.5 million in total current
liabilities.
The company reported net income of $87,000, on net sales of
$8.3 million, for the first quarter ended March 31, 2008, compared
with a net loss of $1.0 million, on net sales of $9.6 million, in
the corresponding period last year.
Net sales decreased $1.2 million or 13.0% for the three month
period ended March 31, 2008, as compared to the same period in
2007. The overall decrease in net sales for the three month
period ended March 31, 2008, was primarily the result of reduced
sales in the Intelligent Systems Management market, Telident and
the Contract Manufacturing market, offset with increases in the
20-20(TM) market and other miscellaneous markets.
Gross profit margin for the three month periods ended March 31,
2008 and 2007 was 33.7% and 36.6%, respectively. The decrease in
gross profit percentage was primarily driven by sales mix,
manufacturing variances and project management.
Operating expenses were $3.8 million for the three month period
ended March 31, 2008, as compared to $4.1 million for the same
period in 2007.
On Jan. 18, 2008, the company sold certain of its assets related
to the Telident 911 Solutions line of products to Amcom Software
Inc. for a purchase price of $1.75 million and the assumption by
Amcom of certain liabilities. The company recognized a gain of
$1.4 million as of March 31, 2008, from this disposal.
As of March 31, 2008, the company had cash and cash equivalents of
$633,000 as compared to $1.1 million as of Dec. 31, 2007. Working
capital deficiency was $1.0 million as of March 31, 2008, compared
to a $116,000 excess as of Dec. 31, 2007.
Full-text copies of the company's consolidated financial
statements for the quarter ended March 31, 2008, are available for
free at http://researcharchives.com/t/s?2c47
About Teltronics Inc.
Headquartered in Sarasota, Florida, Teltronics Inc. (OTC BB:
TELT) -- http://www.teltronics.com/-- designs, develops,
installs, manufactures and markets electronic hardware and
application software products, and engages in electronic
manufacturing services primarily in the telecommunication
industry.
The company focuses on three major telecommunications markets.
The first is the monitoring of alarms from PBXs, voice mail
systems and data networks.
The second telecommunications market is in the Digital Switching
Systems arena which involves providing telephone switches to Small
and Medium Business Markets as well as advanced Automatic Call
Distribution. The company's premier product in this market is the
20-20(TM) switching system.
The third telecommunications market is VoIP.
TRI-ISTHMUS GROUP: March 31 Balance Sheet Upside Down by $2.9 Mil.
------------------------------------------------------------------
Tri-Isthmus Group, Inc. reported financial results for the quarter
ended March 31, 2008, the second quarter of its fiscal year.
Revenues in Q2 2008 were $6.5 million, an increase of
approximately 620% from $0.9 million in the comparable quarter a
year earlier. Revenues in Q2 2008 increased approximately 38%
sequentially from $4.7 million in Q1 2008. TIGroup's revenues for
the first six months of FY 2008 were $11.3 million, an increase of
approximately 600% from $1.6 million in the comparable period a
year ago. Ending dates of the company's comparable periods differ
due to a previously announced change in fiscal year end.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) from medical operations, which is comprised of the
operations of RHA and the Del Mar ambulatory surgical center,
totaled $0.5 million in Q2 2008 and $0.9 million for the first six
months of FY 2008. Cash and cash equivalents at the end of Q2 2008
totaled $7.7 million, an increase of $7.0 million from the
beginning of the fiscal year.
As of March 31, 2008, the company's balance sheet showed total
assets of $23.1 million, total liabilities of $11 million,
minority interest of $2.5 million, total non-redeemable preferred
stock of $191,000, total redeemable stock of $12.2 million, and
total shareholders' deficit of $2.9 million.
Recent Highlights
* Achieved significant increases in second quarter and
six-month revenues, EBITDA and adjusted EBITDA on both a
year over year and sequential basis;
* Increased annualized revenue run rate to approximately
$26 million at quarter end;
* Realized significant organic revenue growth at the company's
RHA facilities in Oklahoma;
* Subsequent to quarter end, closed on the acquisition of
Southern Plains Medical Center (SPMC), increasing the
current expected annual revenue run rate to more than
approximately $35 million;
* Including SPMC, TIGroup's total assets are now approximately
$30 million, total consolidated debt is approximately
$9.5 million and estimated cash on hand is approximately
$7 million;
* Raised approximately $8.2 million in gross proceeds of
equity in the form of preferred stock during the quarter,
bringing total growth capital raised in the previous six
months to over approximately $10 million;
* Repaid $1.65 million in debt to original bridge financing
partners in full and on schedule, and effectively converted
that debt into equity as those investors reinvested all
loaned amounts into preferred shares of the company;
* Announced key strategic partnerships with AccessCare
Dialysis, PHNS Inc. and Financial Resource Group, LLC (FRG);
and
* Continued to add to an already strong pipeline of potential
new acquisitions and transactions.
TIGroup Chairman and CEO David Hirschhorn said, "We continued to
show strong growth in the second fiscal quarter and realized
significant improvements across our operations. We anticipate this
momentum will continue throughout 2008 and beyond, most notably
due to the recent acquisition of Southern Plains Medical Center.
Our focus continues to be on improving the operations of our
hospitals through accelerated organic growth and more effective
cost controls. In addition, we intend to continue improving our
equipment and facilities as we increase our recruitment of
successful physicians. We remain committed to improving
shareholder value by executing our current strategy, driving
improvements throughout our existing hospital portfolio,
integrating Southern Plains and pursuing additional acquisitions."
Dennis Smith, CFO of TIGroup, said, "Our operational results are
improving significantly. Adjusted EBITDA, which excludes the non-
cash beneficial conversion feature of preferred dividends and
minority interest, increased by $0.9 million in the first six
months of FY 2008 compared to the similar period a year ago. We
are confident we can leverage selling, general and administrative
expenses across all facilities as the year unfolds, particularly
with the assistance of our partners FRG and PHNS. Together we are
emphasizing improved receivables management, increasing our
collections capabilities with payors and better leveraging our
facilities to maximize the cash the company generates. We're
pleased with the initial revenues we are generating from our
assets and believe we are making significant progress on
increasing their financial efficiency."
About Tri-Isthmus Group, Inc.
Tri-Isthmus Group, Inc. (TIGroup) (Pink Sheets:TISG) --
http://www.tig3.com/-- is a financial solutions provider focused
on healthcare services operations designed to deliver quality
healthcare outside of traditional urban hospital settings. The
company is building a portfolio of interests in ambulatory
surgical centers, rural hospitals, surgical hospitals and other
centers operating in partnership with physicians.
TRM CORPORATION: Posts $436,000 Net Loss in 2008 First Quarter
--------------------------------------------------------------
TRM Corporation reported a net loss from continuing operations of
$436,000 for the first quarter ended March 31, 2008, as compared
to a net loss from continuing operations of $7.7 million in the
first quarter of 2007 and compared to a net loss from continuing
operations of $797,000 in the fourth quarter of 2007.
For the first quarter of 2007 EBITDA from continuing operations
was a loss of $2.9 million compared to EBITDA OF $521,000 in the
first quarter of 2008.
Richard Stern, president and chief executive officer of TRM
Corporation, stated "This will be the last quarter in which we
announce our results without the impact of the Access to Money
acquisition. We are pleased that our restructuring strategy and
focus on operating efficiency has produced positive results.
"During this quarter we experienced a 5.0% year over year
improvement in our gross margin and also produced $521,000 in
EBITDA. In addition, we significantly reduced our operating loss
from $7.7 million in the first quarter 2007 to $436,000 this
quarter. We are confident that continued focus and diligence will
capture additional operating efficiencies and further enhance our
financial performance."
In the first quarter of 2008, net sales were $7.4 million compared
to $8.6 million in the first quarter of 2007. On a sequential
basis, net sales were $7.4 million compared to $7.9 million in
the fourth quarter of 2007. Net sales performance reflects fewer
transactions compared to previous quarters, mainly due to the
decrease in the average number of transacting ATMs as well as a
slight decline in the average withdrawal per ATM per month.
Cost of sales in the first quarter of 2008 decreased 20.2% to
$4.7 million from $5.9 million in the first quarter of 2007, and
decreased 11.3% from $5.3 million in the fourth quarter of 2007.
In the first quarter of 2008, gross profit margin improved
sequentially to 37.0% from 33.0% in the fourth quarter of 2007.
In the first quarter of 2008, selling, general and administrative
expense decreased by $2.4 million to $2.9 million from
$5.3 million in the first quarter of 2007. As a percentage of
sales, selling, general and administrative expenses decreased to
16.1% in the first quarter 2008 as compared to 23.2% in the
comparable quarter of 2007.
The $2.4 million reduction in selling, general and administrative
expenses is primarily attributed to a $911,000 decrease in labor
costs as staff was reduced to approximately 39 employees by the
end of the quarter, a $738,000 reduction in outsourced services
due to termination of a major serving agreement and a decrease of
$585,000 in legal, accounting and consulting expenses.
TRM Corporation had cash and restricted cash of $7.6 million at
March 31, 2008, compared to $6.9 million at Dec. 31, 2007.
Recent Developments
On April 18, 2008, the company borrowed $11.0 million under the
Lampe Loan Facility at an interest rate of 13.0% payable
semiannually and due in 2011. Proceeds from this loan were used
primarily to pay off the remaining balance of the company's GSO
term loan and $1.0 million previously borrowed from a lender in
February 2008, and to pay a $2.5 million settlement to eFunds and
the cash portion of the company's acquisition of Access To Money.
In addition, the company issued warrants to the lender to purchase
an aggregate of 12,500,000 shares of the company's common stock.
On April 18, 2008, the company acquired Access To Money, one of
the nation's largest independent ATM deployer with approximately
4,248 transacting ATMs for $4.2 million in cash, 3.6 million
shares of common stock valued at $955,535 and a note payable to
the owner for approximately $9.8 million.
Mr. Stern commented, "We continue to make substantial progress to
improving our operations and financial stability as evidenced by
our accomplishments. During 2008 we have been successful in
gaining a new full placement customer with multiple high
transacting locations, raising over $11.0 million in new capital,
and completing a major acquisition which enhances our competitive
position for future growth. We view these achievements as another
step toward improved financial performance. Our goal is to remain
focused on generating revenues, integrating the operations of our
acquisition, and improving our efficiencies."
Balance Sheet
At March 31, 2008, the company's consolidated balance sheet showed
$97.8 million in total assets, $82.5 million in total liabilities,
$1.5 million in minority interest, and $13.8 million in total
stockholders' equity.
The company's consolidated balance sheet at March 31, 2008, also
showed strained liquidity with $75.8 million in total current
assets available to pay $76.6 million in total current
liabilities.
Full-text copies of the company's consolidated financial
statements for the quarter ended March 31, 2008, are available for
free at http://researcharchives.com/t/s?2c3e
Going Concern Disclaimer
McGladrey & Pullen LLP, in Blue Bell, Pa., expressed substantial
doubt about TRM Corp.'s ability to continue as a going concern
after auditing the company's considated financial statements for
the year ended Dec. 31, 2007. The auditing firm reported that the
incurred net losses in 2006 and 2007 of approximately
$120.0 million and $8.0 million, respectively.
The auditing firm added that it is uncertain if 2008 operations
will generate sufficient cash to enable the company to comply with
the covenants of the company's loan agreements and to pay its
obligations on an ongoing basis. In addition, the auditing firm
said that a default under the company's financing agreement with
GSO Origination Funding Partners LP may render the debt callable
and trigger the cross-default provision in TRM Inventory Funding
Trust's Loan and Servicing Agreement.
After borrowing $11.0 million under the Lampe Loan Facility in
April 2008 and the repayment of the remaining balance with GSO,
the company has eliminated its position of default that could have
triggered additional cross defaults raising questions about its
ability to continue as a going concern.
About TRM Corporation
Headquartered in Portland, Ore., TRM Corporation (OTC: TRMM)
-- http://www.trm.com/-- is a consumer services company that
provides convenience ATM services in high-traffic consumer
environments. TRM operates the second largest non-bank ATM
network in the United States.
TERENCE DUBORD: Case Summary & 17 Largest Unsecured Creditors
-------------------------------------------------------------
Debtors: Terence Richard DuBord and Christie Anne DuBord
728 Palomino Drive
Pleasanton, CA 94566
Bankruptcy Case No.: 08-42132
Type of Business: The Debtors own Truck & Auto Parts, LLC.
Chapter 11 Petition Date: April 30, 2008
Court: Northern District of California (Oakland)
Judge: Edward D. Jellen
Debtor's Counsel: Chris D. Kuhner, Esq.
Kornfield, Paul, Nyberg and Kuhner PC
1999 Harrison Street, #2675
Oakland, CA 94612
Tel: (510) 763-1000
Fax: (510) 273-8669
Total Assets: $1,765,597
Total Debts: $2,279,016
Debtor's 17 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Main Auto Parts, Inc. Judgment $796,562
Richard L. Dubord
Agent for Service
550 San Miguel Court
Pleasanton, CA 94566
Fraudulent Unknown
Transfer Suit
Bank of America Location: 728 $447,300
Attn: Bankruptcy Department Palomino Drive,
475 Crosspoint Parkway Pleasanton, Calif.
Getzville, NY 14068 Value of Security:
$416,897
The Castleman Law Firm PC Legal fees $182,643
5870 Stoneridge Road, Suite 207
Pleasanton, CA 94588
Citibank Credit Card $38,831
Credit Card $36,204
WFNNB/Medchoice Charge Account $15,684
WFNNB/Cosmeticredit Charge Account $8,144
Chase Credit Card $3,483
Valleycare Health System $3,402
Capital 1 Bank Credit Card $2,031
American Medical Response $1,382
WFNNB/Newport News Charge Account $1,098
Victoria's Secret Charge Account $1,040
Ladco Leasing Visa Machine $665
Pleasanton Emergency Med Group $430
MCYDSNB Charge Account $131
Bank of the West Garnishment $25
TERRY JACOBSON: Case Summary & Eight Largest Unsecured Creditors
----------------------------------------------------------------
Debtors: Terry Douglas Jacobson and Regina Lee Jacobson
223 Jasmine Avenue
Corona Del Mar, CA 92625
Bankruptcy Case No.: 08-12314
Type of Business: The Debtors are doing business as Jacobson
Properties LLC, which owns properties in
Wisconsin.
Chapter 11 Petition Date: April 30, 2008
Court: Central District of California (Santa Ana)
Judge: Theodor Albert
Debtors' Counsel: James C. Bastian, Jr., Esq.
Shulman Hodges & Bastian LLP
26632 Towne Centre Drive, #300
Foothill Ranch, CA 92610-2808
Tel: (949) 340-3400
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
Debtor's Eight Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Anchor Bank FSB Judgment $3,908,080
25 West Main Street
Madison, WI 53703
Northwestern Bank Judgment $994,316
202 North Bridge Street
Chippewa Falls, WI 54729
M&I Marshall & Ilsley Bank Personal guarantee $956,511
500 Main Street to loans to
Menomonie, WI 54751 Jacobson Properties
LLC. Loans are
secured by real
Property owned by
Jacobson Properties
LLC located at
1331 Wilson Street,
Menomonie, Wis.;
400 18th Avenue,
Menomonie, Wis.;
E9337 Highway 85,
Rock Falls, Wis.;
716 Race Street,
Boyceville, Wis.;
3127-3129 Runway,
Eau Claire, Wis.;
2520 Ricky Lane,
Menomonie, Wis.;
E4546 Country
Road C, Downsville,
Wis.; 403 4th
Avenue, Durand,
Wis.; 809 Prospect
Street, Durand,
Wis.; 336 Prairie
Avenue, Mondovi,
Wis.; and 1901-1903
5th Avenue,
Bloomer, Wis.
Combined Secured
Value: $1,365,700
Johnson Bank Judgment $577,467
207 Pine Avenue W
Menomonie, WI 54751
Flagstar Bank FSB Personal guarantee $527,087
5151 Corporate Drive related to loans to
Troy, MI 48098 Jacobson Properties
LLC. The loan is
Secured by real
Property owned by
Jacobson Properties
LLC located at
N6014 Dorwin Mills
Road, Durand, Wis.
Value of Security:
$200,000
Main Street Bank Personal guarantee $340,000
25 West Main Street related to loans to
Madison, WI 53703 Properties Jacobson
LLC. Loan is
Secured by real
Property owned by
Properties Jacobson
LLC located at
Orchard Beach
Shores Development,
Rice Lake, Wis.
Michael Poirier Judgment $32,014
114 North Duncan Road
Bloomer, WI 54724
Wells Fargo Card Services Credit Card $8,684
P.O. Box 30086
Los Angeles, CA 90030-0086
VERILINK CORP: Has Until Aug. 13 to Seek Business Combination
-------------------------------------------------------------
Verilink Corporation received on May 13, 2008, notification from
Darryl S. Laddin, the liquidating trustee under its confirmed plan
of reorganization, that the Company was granted a three-month
extension to complete a business combination with another company.
The Company was unable to meet the May 13, 2008 deadline due to
delinquent reports with the U.S. Securities and Exchange
Commission.
The Company is in the process of working with its auditors at
Malone & Bailey, PC, to file the delinquent reports, James
Ditanna, Verilink's president, said.
According to Mr. Ditanna, failure to complete a business
combination by August 13, 2008, may result in the Company's stock
being deemed worthless.
"There are no assurances that the liquidating trustee will grant
an extension beyond the August 13, 2008, deadline," Mr. Ditanna
said. "Even if the Trustee grants an additional three-month
extension, the Company may not be able to merge before the
extension deadline. As a result of the Company's failure to enter
a business combination within the deadline will result in
[shareholders] owning valueless stock."
Verilink and its subsidiary Larscom Incorporated filed on April 9,
2006, voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code before the United States Bankruptcy Court for the
Northern District of Alabama (Case Nos. 06-50866 and 06-80567).
On December 7, 2006, the Company submitted a Second Amended Joint
Plan of Reorganization to the Court for consideration. On January
31, 2007, the Court issued an order confirming the Second Amended
Joint Plan of Reorganization in its entirety.
The Plan provided for the orderly liquidation of the Company's
assets to provide a distribution to its creditors. The Plan
provides for the creation of a Liquidating Trust to transfer all
remaining assets for liquidation, administration and distribution
in accordance with the Plan. The assets transferred to the
Liquidating Trust include, without limitation, all Causes of
Action that the Debtors had or had power to assert immediately
prior to the Order Confirming the Plan.
The primary sources of funding for the Plan were:
-- the sale of substantially all of the Company's assets,
including license rights,
-- the consummation of a Restructuring Transaction between
the Company and Venture Fund I, Inc., whereby Venture
Fund I, Inc. provided a $40,000 DIP Loan to the Company,
as approved by the Court on September 28, 2006, and
-- a contribution by IACE Investments Two, Inc., that
provided $90,000 to the Liquidating Trust.
On June 6, 2006, the Debtors entered into an Asset Purchase
Agreement with SCS Fund L.P., a Georgia limited partnership. The
Bankruptcy Court approved the Agreement on June 9, 2006. Pursuant
to the terms of the Asset Purchase Agreement, the Company agreed
to sell to the Purchaser substantially all of the Debtors' assets.
In a separate regulatory filing, Mr. Ditanna relates the Plan sold
control of Verilink to IACE Investments Two. Control of Verilink
by IACE Investments Two took place on January 31, 2007.
The Plan was deemed effective January 31, 2007.
If a Business Combination is achieved within six months of the
Plan effective date -- or up to one year from the Effective Date
if the Debtors seek an extension -- the Reorganized Verilink will
receive a discharge of its debts.
The Bankruptcy Court ordered the deadlines set forth in the Plan
to be completed by May 13, 2008. The Order authorized the
Liquidating Trustee to extend the May 13, 2008 deadline for an
additional three-month period, until August 13, without requiring
further permission from the Court.
According to Mr. Ditanna, since June 2006 until the present, the
Company has been inactive and can be deemed to be a so-called
"shell" company, whose only purpose at this time is to determine
and implement a new business purpose. The Company has no or
nominal operations and with no or nominal assets or assets
consisting solely of cash and cash equivalents.
"As a shell company, our sole purpose at this time is to locate
and consummate a merger or acquisition with a private entity," Mr.
Ditanna says.
IACE Investments Two, Inc., is a Nevada corporation. IACE
Investments Two, Inc. is owned 100% by John Heskett. Mr. Heskett
is an attorney licensed to practice in the state of Oklahoma. His
areas of specialty include securities, investments, and estate
planning. Mr. Heskett previously advised companies, as well as
has controlled companies, which have made investments in public
companies with little or no business, with an emphasis toward a
Business Combination, similar to that outlined in the Plan. Mr.
Heskett does not own a controlling interest in any entity that is
presently known as a candidate for the Business Combination.
On May 2, 2008, the Company issued 25,000,000 shares of restricted
New Common Stock to IACE Investments Two. The issuance of the New
Common Stock is exempt from registration under the Securities Act
of 1933, as a private placement. The New Common Stock will be
restricted as to transfer and will bear a restrictive legend
reflecting its restricted nature. As a result of the issuance,
IACE Investments Two will be the holder of 80% of the outstanding
shares of the Company, and will have significant influence over
all matters requiring approval by the Company's shareholders. The
securities issued to IACE Investments Two are to be held in trust
until the Reorganized Company has filed with the SEC all reports
and statements necessary in connection with the Business
Combination.
Venture Fund I, Inc. is owned 100% by Ruth Shepley, a private
individual unrelated to any of the former or current directors,
officers, or substantial creditors of the Debtors. Neither Ms.
Shepley nor Venture Fund I, Inc. own a controlling interest in any
entity that is anticipated to be a candidate for a Business
Combination with Verilink.
Pursuant to the terms of the DIP Loan and Plan, Verilink's Board
of Directors issued 1,000,000 shares of the New Common Stock and
5,000,000 warrants to Venture Fund I, Inc., for providing the DIP
Loan. The warrants are exercisable by Venture Fund I, Inc. for
5,000,000 non-assessable shares of common stock, $0.001 par value
at any time on or prior to November 30, 2016, upon payment by
Venture Fund I, Inc., of the purchase price of $25.00 per share.
The securities issued to Venture Fund I, Inc. are to be held in
trust until the Reorganized Company has filed with the SEC all
reports and statements necessary in connection with the Business
Combination.
The Debtors disclosed to the Bankruptcy Court $37,221,000 in total
assets and $23,913,000 in total debts.
VERILINK CORP: Liquidating Trustee Pursues Preference Claims
------------------------------------------------------------
Darryl S. Laddin, as Trustee for the Liquidating Trust of the
estates of Verilink Corporation and Larscom Incorporated, filed in
April 2008, roughly 26 preference actions seeking to recover
several hundred thousand dollars from entities that received
payments from the Debtors within the 90-day period prior to their
bankruptcy filing, according to a status report the Trustee
delivered to the U.S. Bankruptcy Court for the Northern District
of Alabama.
Each of the preference actions has status hearings scheduled for
May 28, 2008. The defendants include certain of the largest
unsecured creditors scheduled by the Debtors, including HRH of
Alabama, Inc., Leigh Belden, Timothy R. Anderson, and MicroRam
Electronics, Inc.
The Liquidating Trustee, working with its financial advisor and
counsel, also has reviewed and analyzed hundreds of prepetition
payments made to dozens of vendors for possible preference claims.
He pursued three major preference actions that had been filed by
the Debtors, and settled each of those actions for a net recovery
to the Trust of several hundred thousand dollars.
The Liquidating Trustee also disclosed the assets and liabilities
of the Trust as of April 30, 2008, and the receipts and
disbursements of the Trust for February 13, 2007, to April 30,
2008. Pursuant to the report, the Trust has $305,365 and $11,933
in separate accounts at Bank of America. The Trust owes $13,693
to Powell Goldstein LLP and $1,421 to Heard & Associates LLC.
The report also indicates that, as of April 21, 2008, the
Liquidating Trustee has reviewed, analyzed and, where appropriate
filed objections to more than 200 filed and scheduled claims
against the Debtors' estates, which totaled more than $12,000,000.
The Liquidating Trustee has since resolved virtually all of the
objections and reduced the allowed claim amounts to approximately
$7.5 million.
The Liquidating Trustee has extensively reviewed public and non-
public documents involving the actions of officers and directors
of Verilink in connection with various pre-petition activities.
The Liquidating Trustee retained outside counsel to investigate
and pursue those claims. On April 7, the Liquidating Trustee
filed a complaint with the Bankruptcy Court commencing an action
against certain officers and directors of Verilink.
The Liquidating Trustee also has worked with its outside
accounting firm to prepare and file necessary tax returns and
resolve and terminate the Debtors' 401k administration
obligations. It also has worked closely with the purchaser of the
Debtors' corporate shell under the confirmed plan of
reorganization to move towards a successful merger with a private
entity to yield potentially hundreds of thousand of additional
dollars of value to the Trust.
The Liquidating Trustee has negotiated a successful resolution of
potentially complex litigation against Metropolitan Life Insurance
Company, which, if approved by the Court, would among other things
reduce MetLife's claim from $737,883 to $90,769.
The Liquidating Trustee has obtained refunds and is in the process
of seeking additional refunds due Verilink and certain of its
affiliates from various state taxing authorities in the United
States and certain government agencies in the United Kingdom. It
also has responded to numerous requests for information from
creditors, government agencies, and various other third parties
regarding Verilink, the confirmed plan of reorganization, and the
status of the Trust.
About Verilink Corp.
Verilink and its subsidiary Larscom Incorporated filed on April 9,
2006, voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code before the United States Bankruptcy Court for the
Northern District of Alabama (Case Nos. 06-50866 and 06-80567).
On December 7, 2006, the Company submitted a Second Amended Joint
Plan of Reorganization to the Court for consideration. On January
31, 2007, the Court issued an order confirming the Plan in its
entirety. The Plan was deemed effective January 31, 2007.
The Plan provided for the orderly liquidation of the Company's
assets to provide a distribution to its creditors. The Plan
provides for the creation of a Liquidating Trust to transfer all
remaining assets for liquidation, administration and distribution
in accordance with the Plan. The assets transferred to the
Liquidating Trust include, without limitation, all Causes of
Action that the Debtors had or had power to assert immediately
prior to the Order confirming the Plan.
Since June 2006 until the present, Verilink has been inactive and
can be deemed to be a so-called "shell" company, whose sole
purpose is to locate and consummate a merger or acquisition with a
private entity. The Company has no or nominal operations and with
no or nominal assets or assets consisting solely of cash and cash
equivalents.
Darryl S. Laddin, the liquidating trustee under the confirmed plan
of reorganization, has granted the Company a three-month extension
to complete a business combination. The Company was unable to
meet its original May 13, 2008 deadline due to delinquent reports
with the U.S. Securities and Exchange Commission. If a Business
Combination is achieved within the deadline, Reorganized Verilink
will receive a discharge of its debts.
J. Hayden Kepner, Jr., Esq., at Arnal Golden Gregory LLP, in
Atlanta, Georgia, represents the Liquidating Trustee.
The Debtors disclosed to the Bankruptcy Court $37,221,000 in total
assets and $23,913,000 in total debts.
VESTA INSURANCE: Computer Science Withdraws Claim for $1,527,528
----------------------------------------------------------------
To resolve their dispute, Florida Select Insurance Agency, Inc.,
and Computer Sciences Corporation stipulate that CSC's Claim
No. 6 for $1,527,528, is withdrawn with prejudice.
To the extent the U.S. Bankruptcy Court for the Northern District
of Alabama obtained (i) in personam, jurisdiction over CSC; or
(ii) subject matter jurisdiction with respect to any claims that
Florida Select may assert against CSC relating to Claim No. 6, the
Court will retain the claims in personam jurisdiction, but only to
the extent that it existed immediately prior to the entry of an
order approving the stipulation.
To the extent that the filing of Claim No. 6 waived CSC's right
to a trial by jury, the Claim withdrawal will not reinstate any
right to a trial by jury.
CSC reserves all rights to raise any other objections, defenses
or counterclaims with respect to any claim brought by the Debtor
against CSC.
CSC's withdrawal of the Claim does not affect any other rights or
remedies that CSC may have with respect to any amounts owed to it
as against parties other than the Debtor.
VESTA INSURANCE: XL Specialty to Pay $800K to Plan Trustee
----------------------------------------------------------
Judge Thomas B. Bennett of the U.S. Bankruptcy Court for the
Northern District of Alabama approved the Settlement Agreement by
and among Lloyd T. Whitaker, in his capacity as Plan Trustee for
Vesta Insurance Group, XL Specialty Insurance Company, and certain
of the Debtors' directors and officers.
In light of the Court-approved Stipulation, the Clerk of Court
notified parties-in-interest that on April 28, 2008, the
Adversary Proceeding filed by XL against the Vesta Plan Trustee
and D&O has been dismissed with prejudice without further Court
Order.
The Settlement provides, among other things, that:
(a) without an admission of liability, XL will pay $800,000 to
the Plan Trustee, on behalf of Vesta's estate;
(b) XL's insurance policy extension will be deemed to have
remained in place and in full force and effect through
December 31, 2007; and
(c) the Plan Trustee will waive and release all claims he has
against McGriff Sibels & Williams, Inc., who acted as
Vesta's insurance broker in obtaining the XL Insurance
Policy and Extension, and Darren Sonderman, an employee at
McGriff who was directly involved in Vesta's procurement
of the Policy Extension;
(d) the Plan Trustee, XL and the D&O mutually waive and
release all claims they have against each other relating
to allegations of breach of fiduciary duties of Ehney A.
Camp III, Norman W. Gayle, David W. Lacefield, and other
Vesta D&Os.
Essentially, the Settlement results in the recovery of almost
two-thirds of the amount of the extension premium without the
need for further litigation and the attendant costs and risks.
About Vesta Insurance
Headquartered in Birmingham, Alabama, Vesta Insurance Group, Inc.
(Other OTC: VTAI.PK) -- http://www.vesta.com/-- is a holding
company for a group of insurance companies that primarily offer
property insurance in targeted states.
Wyatt R. Haskell, Luther S. Pate, UV, and Costa Brava Partnership
III, L.P., filed an involuntary chapter 7 petition against the
company on July 18, 2006 (Bankr. N.D. Ala. Case No. 06-02517).
The case was converted to a voluntary chapter 11 case on Aug. 8,
2006 (Bankr. N.D. Ala. Case No. 06-02517). Eric W. Anderson,
Esq., at Parker Hudson Rainer & Dobbs, LLP, represents the Debtor.
R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker,
LLC, represents the petitioning creditors. In its schedules of
assets and liabilities, Vesta listed $14,919,938 in total assets
and $214,278,847 in total liabilities.
J. Gordon Gaines Inc. is a Vesta Insurance-owned unit that
manages the company's numerous insurance subsidiaries and employs
the headquarters workers. The company filed for chapter 11
protection on Aug. 7, 2006 (Bankr. N.D. Ala. Case No. 06-02808).
Eric W. Anderson, Esq., at Parker Hudson Rainer & Dobbs, LLP,
represent the Debtor in its restructuring efforts. In its
schedules of assets and liabilities, Gaines listed $19,818,094 in
total assets and $16,046,237 in total liabilities.
On Aug. 1, 2006, the District Court of Travis County, Texas
entered an order appointing the Texas Commissioner of Insurance
as Liquidator of Vesta Insurance's Texas-domiciled subsidiaries:
Vesta Fire Insurance Corporation; The Shelby Insurance Company;
Shelby Casualty Insurance Corporation; Texas Select Lloyds
Insurance Company; and Select Insurance Services, Inc.
Florida Select Insurance Agency Inc., an affiliate, filed for
chapter 11 protection on April 24, 2007 (Bankr. N.D. Ala. Case No.
07-01849). Rufus Dorsey, IV, Esq., at Parker Hudson Rainer &
Dobbs LLP, represents Florida Select. FSIA's exclusive period to
file a plan of reorganization expired Dec. 20, 2007. (Vesta
Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
VISTEON CORP: Transfers Management of Phils. Unit to Interiors
--------------------------------------------------------------
During the first quarter of 2008, Visteon Corporation assigned the
overall management responsibility for certain of its Philippines
manufacturing operations and mobile electronics operations to the
Company's existing Interiors and Electronics operating segments.
Those operations were previously included in the Company's Other
operating segment.
In connection with the revised segment presentation, the Company
updated information that appeared in its Annual Report on Form
10-K for the fiscal year ended December 31, 2007:
-- Consent of Independent Registered Public Accounting Firm,
a full-text copy of which is available at:
http://ResearchArchives.com/t/s?2c55
-- Part II, Item 7: Management's Discussion and Analysis of
Financial Condition and Results of Operations, a full-text
copy of which is available at:
http://ResearchArchives.com/t/s?2c56
-- Consolidated Financial Statements of the Company and Notes
thereto, included in Part II, Item 8, a full-text copy of
which is available at:
http://ResearchArchives.com/t/s?2c57
Visteon clarified that updated information does not reflect events
occurring after February 22, 2008, the date the Annual Report was
filed on Form 10-K.
Based in Van Buren Township, Michigan, Visteon Corp. (NYSE: VC) --
http://www.visteon.com/-- is a global automotive supplier that
designs, engineers and manufactures innovative climate, interior,
electronic, and lighting products for vehicle manufacturers, and
also provides a range of products and services to aftermarket
customers. The company's other corporate offices are in Shanghai,
China; and Kerpen, Germany. The company has facilities in 26
countries and employs approximately 43,000 people.
Visteon Corporation's balance sheet at March 31, 2008, showed
total assets of $7.2 billion and total liabilities of $7.3 billion
resulting in a total shareholders' deficit of about $136 million.
* * *
To date, Visteon Corp. holds Moody's Investors Service's Caa2
senior unsecured debt rating, and Fitch Ratings Services' CC
senior unsecured debt rating and CCC long-term issuer default
rating.
VISTEON CORP: S&P Assigns 'B-' Rating on Proposed $210MM Sr. Notes
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' issue-level
rating and '5' recovery rating to Visteon Corp.'s proposed
issuance of as much as $210 million in senior unsecured notes due
2016. The 'B-' issue-level rating is one notch below the
corporate credit rating on the company, and the '5' recovery
rating indicates the expectation for modest (10%-30%) recovery in
the event of a payment default.
Visteon will use the proceeds from the new notes, along with
existing cash, to repay as much as $344 million of its
$550 million senior unsecured notes due in 2010. Visteon plans a
tender offer for the 2010 notes. The issuance of new notes is
contingent on the tendering of at least $300 million of 2010 notes
to the company.
Van Buren Township, Michigan-based Visteon had total debt of about
$2.8 billion as of March 31, 2008, and underfunded employee
benefit liabilities of about $985 million. The outlook is
negative.
"The ratings on Visteon, including the 'B' corporate credit
rating, reflect the company's negative cash flow resulting from
declining vehicle production in North America, its highly
leveraged balance sheet, continued pressure from high raw-material
prices, and a costly and wide-ranging operational restructuring,"
said Standard & Poor's credit analyst Robert Schulz.
Visteon will have difficulty restructuring poorly performing
operations while continuing to diversify its customer base amid
intense competition and a difficult sales environment in 2008.
S&P could lower the rating in 2008 if industry challenges,
restructuring delays, or reduced customer production prevent
Visteon from making progress toward generating pretax profits and
positive free cash flow. Well into 2009, S&P could revise the
outlook to stable if the company achieves stronger performance and
credit measures, with a more balanced business mix, because of
successful restructuring and customer diversification efforts.
VICTOR JAMES: Case Summary & Eight Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Victor Lamarr James
4243 Tulane Avenue
Long Beach, CA 90808
Bankruptcy Case No.: 08-15027
Chapter 11 Petition Date: April 16, 2008
Court: Central District of California (Los Angeles)
Judge: Richard M. Neiter
Debtor's Counsel: Charles Shamash, Esq.
Cacerres & Shamash, LLP
8383 Wilshire Boulevard, Suite 1010
Beverly Hills, CA 90211
Tel: (323) 852-1600
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
Debtor's Eight Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Bank Of America Auto Car Loan $41,158
P.O. Box 45224 Value of Collateral:
Jacksonville, FL 32232-5224 $30,000
Housing Authority General Debt $7,872
City of Long Beach
Community Development
Attn: Royce Bell
521 East Fourth Street
Long Beach, CA 90802
U.S. Department Of Education Student Loan $1,237
P.O. Box 4169
Greenville, TX 75403-4169
Attn: GC Services
P.O. Box 27323
Knoxville, TN 37927
Applied Bank Credit Card $979
Home Depot Credit Services Bank loan $712
Rewards Zone Program Bank loan $438
Master Card
HSBC Credit Card $399
HSBC Card Services Credit Card $313
WEST TRADE FUNDING: Moody's Downgrades Ratings on $625MM Notes
--------------------------------------------------------------
Moody's Investors Service downgraded and placed on review for
possible further downgrade the ratings on the following notes
issued by West Trade Funding CDO III Ltd.
Class Description: U.S. $1,500,000,000 Class A-1 First Priority
Senior Floating Rate Delayed Draw Notes Due 2053
Prior Rating: Aaa
Current Rating: Ba3, on review for possible downgrade
Class Description: U.S. $625,000,000 Class A-2 Second Priority
Senior Floating Rate Notes Due 2053
Prior Rating: Aaa, on review for possible downgrade
Current Rating: B1, on review for possible downgrade
Additionally, Moody's downgraded the following notes:
Class Description: U.S. $125,000,000 Class A-3 Third Priority
Senior Floating Rate Notes Due 2053
Prior Rating: A3, on review for possible downgrade
Current Rating: Ca
Class Description: U.S. $155,000,000 Class A-4 Fourth Priority
Senior Floating Rate Notes Due 2053
Prior Rating: Baa3, on review for possible downgrade
Current Rating: Ca
Class Description: U.S. $27,000,000 Class B Fifth Priority Senior
Floating Rate Notes Due 2053
Prior Rating: Ba1, on review for possible downgrade
Current Rating: Ca
Class Description: U.S. $10,000,000 Class C Sixth Priority Senior
Floating Rate Notes Due 2053
Prior Rating: Ba1, on review for possible downgrade
Current Rating: Ca
Class Description: U.S. $25,000,000 Class D Seventh Priority
Senior Deferrable Floating Rate Notes Due 2053
Prior Rating: B1, on review for possible downgrade
Current Rating: C
Class Description: U.S. $25,000,000 Class E Eighth Priority
Mezzanine Deferrable Floating Rate Notes Due 2053
Prior Rating: B3, on review for possible downgrade
Current Rating: C
According to Moody's, the rating actions reflect increased
deterioration in the credit quality of the structured finance
securities.
WORLD HEART: March 31 Balance Sheet Upside-Down by $4,542,832
-------------------------------------------------------------
World Heart Corp.'s consolidated balance sheet at March 31, 2008,
showed $3,332,961 in total assets and $7,875,793 in total
liabilities, resulting in a $4,542,832 total stockholders'
deficit.
The company's consolidated balance sheet at March 31, 2008, also
showed strained liquidity with $2,067,703 in total current assets
available to pay $7,875,793 in total current liabilities.
The company reported a net loss of $11,477,698, on revenue of
$635,996, for the first quarter ended March 31, 2008, compared
with a net loss of $3,429,988, on revenue of $847,715, in the
corresponding period of 2007.
The sale of Novacor LVAS implant kits and related peripheral
equipment and services accounts for all of World Heart's revenues.
The company primarily sells its products directly, except for a
few countries where it sells through distributors.
The decrease in revenue primarily reflects the decrease in average
price per implant kit to $64,000 during the first quarter of 2008,
from $73,000 during the first quarter of 2007.
Full-text copies of the company's consolidated financial
statements for the quarter ended March 31, 2008, are available for
free at http://researcharchives.com/t/s?2c48
Going Concern
As reported in the Troubled Company Reporter on April 4, 2008,
Burr, Pilger & Mayer LLP, in San Francisco, expressed substantial
doubt about World Heart Corporation's ability to continue as a
going concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditor pointed
to the company's recurring losses.
The company said it expects to continue to generate operating
losses at least through 2008 and 2009.
About World Heart
World Heart Corp. (TSX: WHT) -- http://www.worldheart.com/-- is a
developer of mechanical circulatory support systems. The company
is headquartered in Oakland, Calif. with additional facilities in
Salt Lake City, and Herkenbosch, Netherlands. WorldHeart's
registered office is Ottawa, Ontario, Canada.
WALTER GALLAGHER: Voluntary Chapter 11 Case Summary
---------------------------------------------------
Debtor: Walter L. Gallagher
11 Abby Court
Robbinsville, NJ 08691
Bankruptcy Case No.: 08-18282
Chapter 11 Petition Date: May 5, 2008
Court: District of New Jersey (Trenton)
Judge: Michael B. Kaplan
Debtor's Counsel: Frank Armenante, Esq.
Malsbury & Armenante
12 N. Main Street
P.O. Box 157
Allentown, NJ 08501
Tel: (609) 259-7944
Fax: (609) 259-7082
Total Assets: $1 million to $10 million
Total Debts: $1 million to $10 million
The Debtor did not file a list of his 20 largest unsecured
creditors.
X-RITE INC: Company Not Headed for Bankruptcy; Interim CFO Assures
------------------------------------------------------------------
X-Rite Inc. Interim Chief Financial Officer Dave Rawden clarified
with The Grand Rapids Press that the company is not on a path to
bankruptcy.
"We're not contemplating bankruptcy. . . [W]e're here to maximize
value for shareholders," the Grand Rapids Press quotes Mr. Rawden
as saying. The comments came as a response to an article
published by the Press last Saturday suggesting the possibility of
bankruptcy, and the article's highlight on the company's struggles
with its loan payments and lenders.
Still, the Press notes that it is uncertain how X-Rite will be
able to remedy its financial worries absent bankruptcy protection.
As reported in the Troubled Company Reporter on April 7, 2008,
Standard & Poor's Ratings Services placed X-Rite Inc.'s ratings,
including the 'B+' corporate credit rating on CreditWatch
with negative implications following the company's announcement
that it was not in compliance with certain covenants in its
secured credit facilities.
X-Rite attributed the covenant violations to depressed revenues,
resulting from generally weaker economic conditions, and specific
market softness, leading to depressed profitability. The company
has expanded its previously announced cost cutting program,
including head count reductions and other operating cost
reductions.
As reported in the Troubled Company Reporter on May 12, 2008, the
company also reported an operating loss of $2 million and a net
loss of $16.8 million for the first quarter ended March 29, 2008,
compared to operating income of $5 million and net income of $7.8
million in the same period of the prior year.
In addition, the Press relates that the company already lost 90
percent of its share value since the third quarter of last year.
"If this were to happen and the company were liquidated or
reorganized after payment to the company's creditors, there may
not be sufficient assets remaining for any distribution to the
company's stockholders," the Press says, citing the company in its
filings with the U.S. Securities and Exchange Commission.
Dave Rawden recently replaced Lynn J. Lyall as the company CFO.
Based in Grand Rapids, Michigan, X-Rite (Nasdaq: XRIT) --
http://www.xrite.com/-- is the world's largest provider of color-
measurement solutions, offering hardware, software, color
standards and services for the verification and communication of
color data. The company serves a range of industries, including
imaging and media, industrial color and appearance, retail color
matching, and medical. X-Rite serves customers in more than 100
countries from its offices in Europe, Asia and the Americas.
* * *
As reported in the Troubled Company Reporter on May 15, 2008,
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.
WILSONS LEATHER: May 3 Balance Sheet Upside Down by $18.7 Million
-----------------------------------------------------------------
Wilsons The Leather Experts Inc. reported results for the quarter
ended May 3, 2008. Net sales decreased 14.0% to $36.4 million
compared to $42.4 million for the same period last year. Sales
related to the 163 stores that closed during the first quarter of
2008 are reported as discontinued operations.
Comparable store sales for the first quarter ended May 3, 2008
decreased 8.8% compared to a decrease of 20.8% in the same period
last year.
Wilsons Leather reported a loss from continuing operations for the
2008 first quarter of $13.4 million, or $0.38 per basic and
diluted share. This compares to a loss from continuing operations
for the 2007 first quarter of $15.3 million, or $0.39 per basic
and diluted share. The 2008 first quarter loss from discontinued
operations was $9.0 million, or $0.22 per basic and diluted share,
and includes a charge for future estimated lease obligations of
$5.3 million for the discontinued stores. This compares to a loss
from discontinued operations for the 2007 first quarter of $5.9
million, or $0.15 per basic and diluted share. Net loss available
to common shareholders for the 2008 first quarter was $23.7
million, or $0.60 per basic and diluted share, and includes a
preferred stock dividend of $1.4 million to determine net loss
attributable to common shareholders. This compares to a net loss
available to common shareholders during the 2007 first quarter of
$21.3 million, or $0.54 per basic and diluted share.
The Company saw some improvement in the performance of its go-
forward operations during the quarter. Comparable store sales
results improved each month during the quarter and were positive
during the month of April. First quarter 2008 comparable store
sales results for malls were down 27.1%, outlets were down 1.4%,
men's was down 21.7%, women's was down 27.1% and accessories were
up 7.8%. Across all channels, handbag comparable store sales
results were up 28.1%. The Company believes that the first quarter
results indicate that the strategic shift toward a predominantly
accessories based assortment is headed in the right direction.
As of May 3, 2008, the company's balance sheet showed total assets
of $64.7 million, total liabilities of $43.2 million, preferred
stock of $40.2 million, and total common shareholders' deficit of
$18.7 million.
The Company continues to face many challenges and will need to
successfully mitigate these challenges in order to convert its go-
forward mall stores into an accessories concept. The Company needs
to successfully exit all of the lease obligations in the stores
that were recently closed, raise capital and lessen some of the
current restrictions in its credit agreement.
About Wilsons Leather
Wilsons Leather (NASDAQ: WLSN) is a leading specialty retailer of
leather outerwear, accessories and apparel in the United States.
* California Home Foreclosure Sales Exceed 1,000 in April
---------------------------------------------------------
The state of California saw more than 1,000 foreclosed homes being
auctioned off last month, the Pacific Business News (Honolulu)
reports.
For the first time in California's history, home auctions exceeded
that figure, as lenders have added foreclosed homes in their
inventory "1.36 times faster than they can sell them", relates
Pacific News.
County figures for home auctions on April 2008 were up by more
than 200 percent compared to figures on April 2007. Notices of
default in April rose to 44,101 filings, while trustee sale
notices also rose to 7.8 percent to 29,892 filings, according to
Pacific News.
In addition, foreclosures sales in April rose to 44 percent
compared with March. Most of these sales did not receive any
bids.
"We expected a significant increase in auction sales based on
previous default patterns. . . [U]nfortunately the continued
increase in defaults tell us that the worst is still ahead,"
Pacific News quotes Sean O'Toole, ForeclosureRadar founder, as
saying.
* ABI's Sharisa L. Sloan Joins Garden City Group
------------------------------------------------
Sharisa L. Sloan, formerly the Director of Marketing at the
American Bankruptcy Institute, has joined The Garden City Group,
Inc. as a Bankruptcy Services Consultant.
Ms. Sloan can be reached by phone at 202-299-4676 and by e-mail at
sharisa.sloan@gardencitygroup.com.
The Garden City Group, Inc. -- http://www.gardencitygroup.com--
provides legal administration services for class action
settlement, Chapter 11 business reorganization and legal noticing
programs. It has more than 400 employees in 11 offices coast-to-
coast
* Focus Named Finalist For Financial Advisor of the Year Award
--------------------------------------------------------------
Focus Management Group has been selected as a Finalist for the
Financial Restructuring Advisor of the Year award, to be presented
at the Third Annual M&A Advisor Middle Market Financing Awards.
The M&A Advisor's awards program recognizes financing firms,
investment banks, law firms, financial restructuring advisors and
private equity groups for their outstanding achievements in the
middle market financing industry.
The winners will be announced at an awards gala dinner on June 9,
2008 at the Drake Hotel in Chicago, Illinois.
"Focus Management Group is very proud to be recognized once again
by the M&A Advisor for our accomplishments in the middle market
restructuring industry," said J. Tim Pruban, President of Focus
Management Group.
"Our diverse experience in financial restructurings, combined
with our team of seasoned, multi-disciplined professionals who are
the very best in their respective fields, have enabled us to
consistently provide the services that our clients need to
maximize their performance and preserve stakeholder value."
About Focus Management
Focus Management Group -- http://www.focusmg.com/-- offers
nationwide capabilities in turnaround management, business
restructuring and asset recovery. Headquartered in Tampa, FL,
with offices in Atlanta, Chicago, Greenwich, Los Angeles and
Nashville, Focus Management Group provides turn-key support to
stakeholders including secured lenders and equity sponsors. The
Company provides a comprehensive array of services including
turnaround management, interim management, operational analysis
and process improvement, case management services, bank and
creditor negotiation, asset recovery, recapitalization services
and special situation investment banking for distressed companies.
Focus Management Group has significant expertise in the insolvency
arena. FOCUS Professionals have served debtors, creditors, and
unsecured stakeholders in their efforts to accomplish the best
outcome.
Over the past decade, Focus Management Group has successfully
assisted hundreds of clients operating in diverse industries,
guiding them to maximize performance or asset recovery. Adverse
situations are Focus Management Group's forte - finding winning
compromises in a timely manner when faced with the most
discouraging of circumstances is what separates Focus Management
Group from the competition.
* Crowell & Moring Hires Harry Cohen and Rodney Zerbe
-----------------------------------------------------
Crowell & Moring LLP's Insurance and Reinsurance Group has gained
two lawyers in the firm's New York office. The new lawyers are
partner Harry P. Cohen, who joins from Cadwalader Wickersham &
Taft LLP, and counsel Rodney M. Zerbe, who joins from Dechert LLP.
"Our new team members add highly-focused, seasoned experience in
the areas of reinsurance and brokerage litigation," Clifford B.
Hendler, co-chair of Crowell & Moring's Insurance and Reinsurance
Group, said. "Crowell & Moring is committed to maintaining and
growing a first class Insurance and Reinsurance practice, and our
growth in New York is an example of the long-term view we take
toward supporting the needs of our clients."
Mr. Cohen offers clients more than 20 years of experience handling
reinsurance disputes. He has handled dozens of multi-million
dollar arbitrations and litigations covering the full range of
reinsurance issues, well as issues arising under the Federal
Arbitration Act.
In addition to his reinsurance work, Mr. Cohen has also handled
direct insurance defense cases, coverage disputes, and disputes
between insurance companies and their agents in the property,
casualty, life, accident, and health areas. Mr. Cohen is a
graduate of State University of New York at Stony Brook and
Boston University School of Law.
"Our attorneys have known and worked across the table from Harry
for many years," William C. O'Neill, who heads Crowell & Moring's
reinsurance practice, said. "He is highly regarded by the
reinsurance bar and brings our practice greater depth and
experience in the area of sophisticated dispute resolution."
Mr. Zerbe has more than 20 years of extensive experience in the
litigation of commercial matters, with a concentration in the
representation of insurance brokers and reinsurance intermediaries
in breach of contract, negligence, and professional malpractice
actions and in the litigation of insurance coverage disputes.
His practice also focuses on the litigation of Rule 10b-5 and
other federal securities law claims, state derivative litigation,
shareholder derivative claims, accountants' liability and
partnership disputes, civil RICO, distressed debt recovery, unfair
trade practice litigation, bankruptcy litigation, and domestic and
international arbitration of commercial disputes before the
American Arbitration Association, ARIAS, and the International
Chamber of Commerce.
Mr. Zerbe is a graduate of Bucknell University and Northwestern
University School of Law.
Crowell & Moring LLP's Insurance and Reinsurance Group also
concentrates on coverage litigation and client counseling and
negotiations in a number areas, including property and casualty,
bankruptcy, errors and omissions, directors and officers, health
care, and legislative matters.
The group represents more than 20 different insurance companies
from more than a dozen different insurance carrier groups in a
wide range of matters. It has been ranked in Chambers USA by
clients and peers as a leading practice, and many of the group's
partners have been individually recognized for their experience
and client service.
About Crowell & Moring LLP
Headquartered in Washington, D.C., Crowell & Moring LLP --
http://www.crowell.com/-- is an international law firm with more
than 400 lawyers practicing in litigation, antitrust, government
contracts, corporate, intellectual property and more than 40 other
practice areas. More than two-thirds of the firm's lawyers
regularly litigate disputes on behalf of domestic and
international corporations, start-up businesses, and individuals.
Crowell & Moring's extensive client work ranges from advising
on one of the world's largest telecommunications mergers to
representing governments and corporations on international
arbitration matters. The firm also has offices in California, New
York, London, and Brussels.
* 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 Terry Lee Coffman, II
Bankr. D. Md. Case No. 08-16549
Chapter 11 Petition filed May 12, 2008
Filed as Pro Se
In Re Brent E. Reed
fdba J.R. Mining, Inc.
Bankr. E.D. Ky. Case No. 08-60631
Chapter 11 Petition filed May 14, 2008
See http://bankrupt.com/misc/kyeb08-60631.pdf
In Re Fitz Co., Inc.
dba Fitzy's Pub
Bankr. D. Mass. Case No. 08-13505
Chapter 11 Petition filed May 14, 2008
See http://bankrupt.com/misc/mab08-13505.pdf
In Re Harinder M. Singh
Bankr. D. Mass. Case No. 08-13521
Chapter 11 Petition filed May 14, 2008
See http://bankrupt.com/misc/mab08-13521.pdf
In Re Carolina East Cardiology, PC
Bankr. E.D. N.C. Case No. 08-03293
Chapter 11 Petition filed May 14, 2008
See http://bankrupt.com/misc/nceb08-03293.pdf
In Re SB&T Corp.
dba Red Rock West Saloon
Bankr. S.D. N.Y. Case No. 08-11824
Chapter 11 Petition filed May 14, 2008
See http://bankrupt.com/misc/nysb08-11824.pdf
In Re All In SDS, LLC
ta Agrave Grill & Cantina
Bankr. E.D. Penn. Case No. 08-13146
Chapter 11 Petition filed May 14, 2008
See http://bankrupt.com/misc/paeb08-13146.pdf
In Re The Chalets, LLC
Bankr. M.D. Fla. Case No. 08-02726
Chapter 11 Petition filed May 14, 2008
Filed as Pro Se
In Re Good Apple Development Corp.
Bankr. M.D. Fla. Case No. 08-02725
Chapter 11 Petition filed May 14, 2008
Filed as Pro Se
In Re 18TH Court Business Center, LLC
Bankr. M.D. Fla. Case No. 08-02724
Chapter 11 Petition filed May 14, 2008
Filed as Pro Se
In Re Innovative Hydraulic Designs, Inc.
dba Edwards Engineering Corp. of Texas
Bankr. S.D. Tex. Case No. 08-33129
Chapter 11 Petition filed May 14, 2008
See http://bankrupt.com/misc/txsb08-33129.pdf
In Re Pro-Optics Eyewear Corp.
dba Site for Sore Eyes
Bankr. N.D. Calif. Case No. 08-52486
Chapter 11 Petition filed May 15, 2008
See http://bankrupt.com/misc/canb08-52486.pdf
In Re Elias Radiology Associates, P.A.
Bankr. S.D. Fla. Case No. 08-16306
Chapter 11 Petition filed May 15, 2008
See http://bankrupt.com/misc/flsb08-16306.pdf
In Re GEM Management Co., Inc.
Bankr. E.D. Mich. Case No. 08-21459
Chapter 11 Petition filed May 15, 2008
See http://bankrupt.com/misc/mieb08-21459.pdf
In Re Trinity Electrical Contracting Co., Inc.
Bankr. W.D. Okla. Case No. 08-11981
Chapter 11 Petition filed May 15, 2008
See http://bankrupt.com/misc/okwb08-11981.pdf
In Re Chari Farmer-Ogogo
aka Chari F. Ogogo
Bankr. E.D. Calif. Case No. 08-26433
Chapter 11 Petition filed May 15, 2008
Filed as Pro Se
In Re Shakoori & Son, LLC
Bankr. D. R.I. Case No. 08-11415
Chapter 11 Petition filed May 15, 2008
Filed as Pro Se
In Re Alan Vernon Stansfield
Bankr. N.D. Ala. Case No. 08-40983
Chapter 11 Petition filed May 16, 2008
See http://bankrupt.com/misc/alnb08-40983.pdf
In Re San Pedro Mexican Grill, Inc.
Bankr. N.D. Ala. Case No. 08-40989
Chapter 11 Petition filed May 16, 2008
See http://bankrupt.com/misc/alnb08-40989.pdf
In Re Martin J. Smith
Bankr. N.D. Ala. Case No. 08-81504
Chapter 11 Petition filed May 16, 2008
See http://bankrupt.com/misc/alnb08-81504.pdf
In Re S.J. Williams
Bankr. M.D. Fla. Case No. 08-07002
Chapter 11 Petition filed May 16, 2008
See http://bankrupt.com/misc/flmb08-07002.pdf
In Re DSR Electric, Inc.
Bankr. N.D. Ga. Case No. 08-69229
Chapter 11 Petition filed May 16, 2008
See http://bankrupt.com/misc/ganb08-69229.pdf
In Re What If, Inc.
Bankr. N.D. Ill. Case No. 08-12483
Chapter 11 Petition filed May 16, 2008
See http://bankrupt.com/misc/ilnb08-12483.pdf
In Re Timothy F. Haarmann
dba Technical Partners
dba The Computer Guys
Bankr. S.D. Ill. Case No. 08-60262
Chapter 11 Petition filed May 16, 2008
See http://bankrupt.com/misc/ilsb08-60262.pdf
In Re CMB Bardstown, Inc.
Bankr. W.D. Ky. Case No. 08-32059
Chapter 11 Petition filed May 16, 2008
See http://bankrupt.com/misc/kywb08-32059.pdf
In Re Absolute Machining, Inc.
Bankr. W.D. Mo. Case No. 08-41949
Chapter 11 Petition filed May 16, 2008
See http://bankrupt.com/misc/mowb08-41949.pdf
In Re Regional Fireproofing, Inc.
Bankr. D. N.J. Case No. 08-19190
Chapter 11 Petition filed May 16, 2008
See http://bankrupt.com/misc/njb08-19190.pdf
In Re Rozier Associates
dba Clinton Street Pizza & 6 Pack
Bankr. W.D. Penn. Case No. 08-70535
Chapter 11 Petition filed May 16, 2008
See http://bankrupt.com/misc/pawb08-70535.pdf
In Re JRB Foods, Inc.
Bankr. N.D. Tex. Case No. 08-32370
Chapter 11 Petition filed May 16, 2008
Filed as Pro Se
In Re Infinity Logistics Management, L.P.
Bankr. N.D. Tex. Case No. 08-42231
Chapter 11 Petition filed May 16, 2008
txnb08-42231.pdf
In Re Wet Willy's, LLC
Bankr. D. Mass. Case No. 08-13630
Chapter 11 Petition filed May 18, 2008
See http://bankrupt.com/misc/mab08-13630.pdf
In Re Higher Praise Outreach Ministries, Inc.
Bankr. D. Md. Case No. 08-16776
Chapter 11 Petition filed May 18, 2008
See http://bankrupt.com/misc/mab08-16776.pdf
In Re Preparatory Calif. Science Academy, Inc.
dba Calif. Preparatory Academy
Bankr. C.D. Calif. Case No. 08-12713
Chapter 11 Petition filed May 19, 2008
See http://bankrupt.com/misc/cacb08-12713.pdf
In Re Steven L. Collins
Bankr. N.D. Calif. Case No. 08-42476
Chapter 11 Petition filed May 19, 2008
See http://bankrupt.com/misc/canb08-42476.pdf
In Re Royal Floors, Inc.
dba Royal Rug & Tile
Bankr. M.D. Fla. Case No. 08-07088
Chapter 11 Petition filed May 19, 2008
See http://bankrupt.com/misc/flmb08-07088.pdf
In Re C.C.E. Technologies, Inc.
Bankr. S.D. Ill. Case No. 08-60265
Chapter 11 Petition filed May 19, 2008
See http://bankrupt.com/misc/ilsb08-60265.pdf
In Re Woodcrest, L.L.C.
Bankr. E.D. Mich. Case No. 08-21490
Chapter 11 Petition filed May 19, 2008
See http://bankrupt.com/misc/mieb08-21490.pdf
In Re Olen Anthony Henry
Bankr. N.D. Calif. Case No. 08-42483
Chapter 11 Petition filed May 19, 2008
Filed as Pro Se
In Re Nevessrotsap Federal, Inc.
Bankr. D. Conn. Case No. 08-50418
Chapter 11 Petition filed May 19, 2008
Filed as Pro Se
In Re James Franklin Bailey
Bankr. D. Mass. Case No. 08-13644
Chapter 11 Petition filed May 19, 2008
Filed as Pro Se
In Re Srotsapneves-Nls, Inc.
Bankr. D. Conn. Case No. 08-50419
Chapter 11 Petition filed May 19, 2008
Filed as Pro Se
In Re Richard Pierce Duffee
Bankr. D. Mass. Case No. 08-13646
Chapter 11 Petition filed May 19, 2008
Filed as Pro Se
In Re Patrick Eugene Smith
dba Smith Properties
Bankr. M.D. Tenn. Case No. 08-04213
Chapter 11 Petition filed May 19, 2008
See http://bankrupt.com/misc/tnmb08-04213.pdf
In Re Blessed Trinity Missionary Baptist Church
Bankr. W.D. Tenn. Case No. 08-24826
Chapter 11 Petition filed May 19, 2008
See http://bankrupt.com/misc/tnwb08-24826.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, 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-
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*** End of Transmission ***