/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/080711.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, July 11, 2008, Vol. 12, No. 164 Headlines ALLIED HOLDINGS: Wants to Resolve Death Benefit Plan Dispute AMERICAN COLOR: $1,300,000,000 Funding Ready for Vertis Merger AMERICAN COLOR: Vertis Bares Financial Projections for 2008-2012 AMPEX CORP: Seeks to Extend Plan Confirmation Hearing to Aug. 15 APP PHARMACEUTICALS: S&P Affirms 'BB' Corporate Credit Rating ATTRACTIONS HIPPIQUES: Monitor Lists C$69,042,268 in Liabilities BEAZER HOMES: Board Approves Employee Indemnification Agreement BOWNE & CO: S&P Lifts Corporate Credit Rating to 'BB-' from 'B+' BURLINGTON COAT: Appoints Marc Katz as EVP and Accounting Chief CAMBRIDGE LIFE: Fitch Lifts Financial Strength Rating to 'BBq' CELESTICA INC: Fitch Affirms 'B+' Issuer Default Rating CELLU TISSUE: Moody's Assigns B2 Rating on Senior Secured Notes CENTERPOINT ENERGY: Fitch Holds 'BB+' Trust Preferred Rating CHELSEA PARK: S&P Puts 'BB' Prelim. Rating on $12.37MM Cl. E Notes CHESAPEAKE CORP: Settles Indemnification Claims with Philip Morris CHESAPEAKE ENERGY: S&P Puts 'BB' Credit Rating Under Pos. Watch COMSTOCK HOMEBUILDING: Employs FTI Consulting as Strategic Advisor CRDENTIA CORP: Expands Credit Facility to $7MM, Revises Term Loans AMERICAN COLOR: $1,300,000,000 Funding Ready for Vertis Merger DOMINO'S PIZZA: Glenhill Advisors et al. Disclose 5.3% of Equity ENERGYSOLUTIONS: Moody's Assigns Ba2 Rating on Sr. Credit Facility ENTERPRISE GP: Fitch Holds 'BB-' Issuer Default Rating ENTERPRISE PRODUCTS: Fitch Holds 'BB+' Subordinated Notes Rating ENVIROSOLUTIONS HOLDINGS: S&P Holds Ratings and Removes Neg. Watch EW SCRIPPS: S&P Cuts, Withdraws Rating at Company's Request FANNIE MAE: Adequately Capitalized, OFHEO Director Says FORD MOTOR: China Sales Grow 21% in First Half of 2008 FREDDIE MAC: Adequately Capitalized, OFHEO Director Says G SQUARE: Moody's Junks Ratings on Two Classes of Senior Notes GARY R. MONTEER: Case Summary & 20 Largest Unsecured Creditors GENERAL MOTORS: Has No Thoughts of Bankruptcy, CEO Wagoner Says GENERAL MOTORS: Wants Court to Declare Set-Off & Recoupment Claims GREEKTOWN CASINO: Mich. Gaming Board Gives Final OK to $150MM Loan HAVEN HEALTHCARE: Court Directs Takeover of Homes, Names Receiver HAVEN HEALTHCARE: Allowed to Transfer South Windsor to CCSW HAVEN HEALTHCARE: Credit Bid Sale to Secured Creditors Approved HEXION SPECIALTY: Trial on Merger Feud to Begin September 8 HJ HEINZ: S&P Assigns 'BB+' Rating on Proposed $350MM Pref. Stock HSN INC: Moody's Assigns Ba1 CFR Related to Spin-off Financing HUDSON CANYON: Fitch Withdraws 'CC' Ratings on Three Notes Classes HUNTER FAN: Moody's Cuts B2 Corporate Family Rating to B3 HUNTSMAN CORP: Says Court Will Facilitate Review of Hexion's Acts IAC/INTERACTIVECORP: Extends Offering Consent Deadline to July 23 ICAHN ENTERPRISES: Moody's Cuts Corporate Family Rating to Ba3 IMMUNICON CORP: Panel Taps Schulte Rote as Counsel IMMUNICON CORP: Sec. 341(a) Creditors Meeting Set for July 17 IMMUNICON CORP: Taps Fox Rothschild as Bankruptcy Counsel IMMUNICON CORP: U.S. Trustee Names 3-Member Creditors Panel INDYMAC BANCORP: S&P Cuts Counterparty Credit Rating to 'CCC/C' INTERPUBLIC GROUP: Moody's Changes Outlook, Affirms Ba3 Rating J.P. MORGAN: Moody's Affirms Ratings of 24 Certs.; Three on Low B KEYS FITNESS: Files Chapter 11 Plan and Disclosure Statement KOGER MANAGEMENT: Sells Assets to GHA; Owner Wants Case Converted LAND O'LAKES: Moody's Hikes Corporate Family Rating 1 Notch to Ba1 LEHMAN BROTHERS: Has $2.7BB Loss; Shares Drop on PIMCO Rumor LENNAR CORP: Files Blank Registration Statement with SEC LOUISIANA RIVERBOAT: Has Until September 19 to File Ch. 11 Plan MASONITE INT'L: Says Financial Covenants Non-Compliance Likely MASONITE: Likely Covenant Failure Cues Moody's Review on Ratings MCKINLEY II: Moody's Cuts Notes Ratings on Further Credit Erosion MERGE HEALTHCARE: Regains Compliance with Nasdaq's Bid Price Rule MERRILL LYNCH: Potential Loan Losses Cue Fitch to Put Neg. Watch ML-CFC COMMERCIAL: Moody's Cuts Ratings, Junks Class P Certs. MONTERRA ENTERPRISES: Sec. 341(a) Meeting Set for July 16 MONTERRA ENTERPRISES: Files Schedules of Assets and Liabilities MORGAN STANLEY CAPITAL: Moody's Affirms Low B and C Ratings MORTGAGES LTD: Jennings Replaces Greenberg as Bankruptcy Counsel MORTGAGES LTD: Drafting DIP Agreement with Southwest Value MORTGAGES LTD: 26 Borrowers Resume Payments of Loan NATIONAL DRY CLEANERS: Taps Hilco to Sell Business Assets NATIONAL LIFE: Fitch Lowers Q-IFS Rating to 'BBq' from 'BBBq' NBTY INC: Moody's Rates $300MM Senior Loan Ba1; Outlook is Stable NEXCEN BRANDS: Has Until Jan. 2009 to Comply with Nasdaq Rule NIGHTHAWK RADIOLOGY: S&P Holds B+ Rating; Outlook Now Stable NORTHWESTERN CORP: Court Approves Deal to Settle Claims Litigation NORTHWEST AIRLINES: To Slash 2,500 Frontline & Management Workers NORTHWEST AIRLINES: CEO Spurs Campaign to Lower Fuel Prices NUVOX INC: S&P Lifts Corporate Credit Rating to 'B' from 'B-' OFFICE DEPOT: Tough Biz Conditions Cue Decline in 2nd Qtr Sales PACIFIC LUMBER: Court Confirms Amended Marathon/Mendocino Plan PACIFIC LUMBER: Court Denies BoNY Diminution Claim Against Scopac PACIFIC LUMBER: Withdraws Bid for Approval of Repayment Agreement PARK CAPITAL: Owner Depletes Investors' Money; Attempts Suicide PMI GROUP: Moody's Downgrades Junior Subordinated Debt to Ba1 QUICKSILVER RESOURCES: Moody's Changes Outlook to Stable from Pos. RIDGEVIEW PROFESSIONAL: Case Summary & 26 Largest Creditors RITE AID: Closes $820MM Refinancing Aimed at Funding Tender Offers RMIW LLC: Wants to Hire Tow & Koenig as Bankruptcy Counsel SEALY CORP: Clarifies Info on Supplier, Leases and Wage Policies SIRIUS SATELLITE: Provides Post-XM Merger Financial Guidance STANDARD PACIFIC: Closes First Phase of MatlinPatterson Financing STARDARD PACIFIC: Inks 4th Supplemental Indenture with BoNY Trust SW DALLAS: Secured Creditor Balks at Cash Collateral Use SW DALLAS: Wants to Employ Joyce Lindauer as Bankruptcy Counsel SW DALLAS: Files List of 19 Largest Unsecured Creditors SW DALLAS: Files Schedules of Assets & Liabilities SYNTAX-BRILLIAN: Epiq Bankruptcy Approved as Claims Agent SYNTAX-BRILLIAN: Taps Greenberg Traurig as Counsel SYNTAX-BRILLIAN: Gets Initial Nod to Use Silver's $23MM DIP Loan TANEJA CENTER: Section 341(a) Meeting Scheduled for July 18 TANEJA CENTER: Files Schedules of Assets & Liabilities TEKNI-PLEX INC: Taps Mr. Schafer as Interim CFO; CEO Joins Board TEKNI-PLEX INC: Offers to Buy Back 10.875% Senior Secured Notes TEKOIL & GAS: Section 341(a) Meeting Scheduled for July 24 TEKOIL & GAS: Trustee Appoints Four Members to Creditors Panel TICKETMASTER: Moody's Assigns Corporate Family Rating of Ba2 TICKETMASTER: S&P Rates Proposed $400MM Senior Notes 'BB' TORO ABS: Moody's Cuts Ratings on Floating Rate Notes to C, Ca TRANSMERIDIAN EXPLORATION: Alan Halsey Resigns as COO and VP TRIAD GUARANTY: Fitch Retains Ratings Under Negative Watch UNITED CAPITAL: Hedge Fund Auctioned Off by Deutsche Bank VERSO TECHNOLOGIES: Selects Kelakos as Sales Broker, Consultant VERSO TECHNOLOGIES: Committee Taps Hays as Financial Advisor VERTIS COMM: Obtains $1,300,000,000 Funding for ACG Merger VERTIS INC: Releases Financial Projections for 2008 to 2012 VESTA INSURANCE: Gaines Plan Trustee Moving Assets to Vesta Fire VESTA INSURANCE: Plan Trustee Settles Houlihan's Claim VICTORY MEMORIAL: Sells NY Hospital Campus to Sunset LG for $45MM VULCAN ENERGY: OXY to Buy 10% Interest in General Partner of PAA VULCAN ENERGY: Plains-OPC Deal Cues S&P to Affirm 'BB' Ratings WACHOVIA CORP: Sees Up to $2.8BB After-Tax Loss, Hires New CEO WATERFALL GALLERY: Taps Barron & Newburger as Bankruptcy Counsel WBHR I: Voluntary Chapter 11 Case Summary WHITEHALL JEWELERS: U.S. Trustee Forms 7-Member Creditors Panel WORNICK CO: Emerges From Bankruptcy Under Chapter 11 Protection XM SATELLITE: Sirius Releases Financial Guidance for Combined Biz ZIFF DAVIS: Makes Silent Exit from Bankruptcy Protection ZIFF DAVIS: Parties Dispute Assumption/Rejection of Leases in Plan * Fitch: US Consumer Mags Will Continue to See Lower Circulations * Fitch Changes Outlook on US Health/Managed Care Insurance to Neg * S&P Lowers Ratings on 77 Classes of Certificates from 22 US RMBS * S&P: Current Credit Market Conditions Add Doubt to Refinancing * S&P Says US Airports Must Prepare for Turbulence Ahead * S&P Downgrades Ratings on 109 Tranches from 36 US CDOs * Moody's: Mark-to-Market Losses Won't Truly Indicate Credit Slide * State Bar of California Names Byron Moldo to Business Law Unit * BOOK REVIEW: As We Forgive Our Debtors: Bankruptcy and Consumer Credit in America ********* ALLIED HOLDINGS: Wants to Resolve Death Benefit Plan Dispute ------------------------------------------------------------ Allied Holdings Inc., its debtor-affiliates, and certain life insurance participants, ask the U.S. Bankruptcy Court for the Northern District of Georgia to approve an agreement that dissolves a death benefit plan dispute between the parties. To recall, the Debtors filed in 2006, a motion to terminate retiree benefits including the Allied Systems, Ltd. Employee Death Benefit Plan. Consequently, some retirees asked the Court to appoint an Official Committee of Retirees to act as the authorized representative for the Debtors' non-collective bargaining agreement retirees, survivors and dependents on all matters in the bankruptcy case, particularly participants in the Employee Death Benefit Plan. The Employee Death Benefit Plan dated Nov. 1, 1989, stated that: * each Participant would be entitled to a death benefit, which would vary according to the monthly earnings of each Participant. * Allied Systems could obtain life insurance on the lives of the Participants and that Allied Systems would be the owner and beneficiary of the policies. * it would terminate on the bankruptcy of Allied Systems. Pursuant to the Employee Death Benefit Plan, Allied Systems selected Participants and obtained life insurance policies, each of which insured the life of a Participant, with Allied Systems being the owner and beneficiary of the Life Insurance Policies. When Allied commenced its Chapter 11 case, all of the Participants in the Retiree Death Benefit Plan were retired. The Debtors were reorganized pursuant to a plan of reorganization confirmed by the Court on May 18, 2007. In the confirmation hearing, counsel for the Debtors and Charles Vining, Alfred Hart and Vernon Grimes -- the Appearing Participants -- stipulated that Debtors' Motion to Terminate Retiree Benefits would be determined post-confirmation and would not be based on Section 1114 of the U.S. Bankruptcy Code. At a post-confirmation hearing held Sept. 26, 2007, the Debtors urged that their Motion to Terminate the Employee Death Benefit Plan be granted and the Motion for the appointment of a committee of retired employees be denied. The Debtors argued that the Employee Death Benefit Plan had terminated on the commencement of their Chapter 11 case, as stated in the Death Benefit Plan itself. The Debtors further argued that the Committee Motion should be denied, because it was based on Section 1114, and the Debtors' Motion did not proceed under that Section. The Appearing Participants opposed the Debtors' Motion and asked the Court to grant the Committee Motion. The Appearing Participants argued that (i) Section 1114 governs the Debtors' purported entitlement to terminate the Employee Death Benefit Plan and prevents the proposed termination, (ii) Section 365(e) of the Bankruptcy Code rendered unenforceable any ipso facto contained in the Employee Death Benefit Plan, and (iii) they were entitled to the appointment of a committee to represent their interests in the Debtors' reorganization if the Debtors wanted to terminate the Employee Death Benefit Plan. At the conclusion of the hearing, the Court directed the parties to ascertain whether a consensual resolution could be reached. The Debtors' counsel and Appearing Participants' counsel informed the Court that they would explore a consensual resolution. Accordingly, the Debtors and the Appearing Participants have agreed to compromise and resolve the pending Motions. Thus, the Debtors and the Appearing Participants ask the Court to approve the consensual resolution reached between them. Ezra H. Cohen, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, notes that the Resolution provides: i. for a judicial declaration that the Death Benefit Plan terminated on July 31, 2005; ii. for the denial of the Committee Motion as moot; iii. that the Debtors will adopt the 2008 Employee Death Benefit Plan which offers each Participant living on its effective date a death benefit equal to 50% of the Face Value of the Insurance Policy now insuring the life of the Participant; iv. each living Participant the option of a cash-out, in lieu of participating in the 2008 Death Benefit Plan. The Cash- Out Option offers each living Participant current payment, now, while the Participant is living, of an amount equal to 35% of the Face Value of the Insurance Policy; and v. a death benefit equal to 50% of the Face Amount of the Insurance Policy for each Participant who has died since July 31, 2005, or who may die before exercising the Cash- Out Option and before the effective date of the 2008 Employee Death Benefit Plan. A full-text copy of the supplemental statement of the terms of the consensual resolution between the Debtors and Appearing Participants is available for free at: http://researcharchives.com/t/s?2f5e A full-text copy of the chart showing the amount that each Participant will receive under the Cash-Out Option or as a Death Benefit if the Participant either (1) participates in the 2008 Death Benefit Plan or (2) dies before the effective date of the 2008 Employee Death Benefit Plan and before electing the Cash-Out Option is available for free at: http://researcharchives.com/t/s?2f5f A full-text copy of the Proposed 2008 Employee Death Benefit Plan is available for free at: http://researcharchives.com/t/s?2f60 About Allied Holdings Based in Decatur, Georgia, Allied Holdings Inc. (AMEX: AHI, other OTC: AHIZQ.PK) -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represented the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, served as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provided the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provided financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. On May 11, 2007, the Court confirmed Allied's Second Amended Chapter 11 Plan of Reorganization. Allied emerged from bankruptcy on May 29, 2007. (Allied Holdings Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/or 215/945-7000) * * * As of April 30, 2007, Allied Holdings Inc.'s consolidated balance sheet showed $217,379,000 in total stockholders' deficit resulting from total assets of $309,931,000 and total liabilities of $527,310,000. AMERICAN COLOR: $1,300,000,000 Funding Ready for Vertis Merger -------------------------------------------------------------- Vertis Communications disclosed that in accordance with its plan to merge with American Color Graphics it has secured commitments for: 1. $380,000,000 in debtor-in-possession financing; and 2. $650,000,000 in exit financing. As reported in the Troubled Company Reporter on May 26, 2008, Vertis Inc., dba Vertis Communications, and American Color disclosed merger and comprehensive restructuring plans that will strengthen their finances, expand their North American footprint, and improve the products and services offered to their customers. The companies and the consenting noteholders have entered into restructuring agreements pursuant to which the companies and consenting noteholders have agreed to consummate the restructuring through prepackaged Chapter 11 plans of reorganization for each company in order to more efficiently exchange the notes. Importantly, the restructuring agreements and terms of the prepackaged plans call for all trade creditors, suppliers, customers and employees to receive all amounts owed to them in the ordinary course of business. The companies will launch a formal solicitation of consent for their prepackaged Chapter 11 plans of reorganization from holders of both Vertis Notes and ACG Notes within approximately 20 days. Consents will be due approximately 30 days after the companies launch the solicitation. Upon receiving the consents, the companies would commence prepackaged Chapter 11 proceedings in order to implement their plans and consummate the merger. The proceedings are expected to conclude in late summer. On July 8, Vertis executed: -- a $380,000,000 DIP financing facility commitment letter with GE Commercial Finance; -- a $250,000,000 Senior Secured Revolving Credit exit facility commitment letter with GE; and -- a $400,000,000 exit facility commitment letter with Morgan Stanley Senior Funding Inc., as lead arranger. "These lending commitments from two top institutions reflect the continuing progress with our financial restructuring plan and merger with American Color Graphics," Mike DuBose, chairman and CEO of Vertis, said. "The financing will provide appropriate liquidity during our restructuring and then fund the newly merged company. Not only will we strengthen our role as a marketing and business partner, but we will provide even more opportunities to our valued clients, suppliers and employees." About Vertis Inc. Headquartered in Baltimore, Vertis Inc. dba Vertis Communications -- http://www.vertisinc.com/-- is a provider of print advertising and direct marketing solutions to America's retail and consumer services companies. Vertis' consolidated balance sheets show total assets of $499,562,000 and total debts of $1,415,569,000 resulting in a $916,007,000 stockholders' deficit. Going Concern Doubt Deloitte & Touche LLP, in Baltimore, Maryland, expressed substantial doubt about Vertis Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm said that the company has incurred recurring net losses and is experiencing difficulty in generating sufficient cash flow to meet its obligations and sustain its operations. About American Color Graphics American Color Graphics Inc. -- http://www.americancolor.com/-- is a full service premedia and print companies, with eight print locations across the continent, a TMC facility, six regional premedia centers, photography studios nationwide and a customer managed service sites. Expert in a full range of products such as retail, newspapers, direct mail, catalog, publication, packaging, book, comic, and commercial products, ACG has been an innovative industry leader for over 80 years. The company provides solutions and services as asset management, photography, and digital workflow solutions that improve the effectiveness of advertising and drive revenues for their customers. At Dec. 31, 2007, American Color's consolidated balance sheets reveal total assets of $224,080,000 and total debts of $493,973,000 resulting in a $269,893,000 stockholders' deficit. * * * As reported in the Troubled Company Reporter on June 26, 2008, Standard & Poor's Ratings Services lowered the corporate credit rating on American Color Graphics Inc. to 'D' from 'SD', after the company's failure to make an interest payment due June 15, 2008, on its $280 million 10% senior secured second-priority notes due in 2010. AMERICAN COLOR: Vertis Bares Financial Projections for 2008-2012 ---------------------------------------------------------------- In connection with the Disclosure Statement relating to the Joint Prepackaged Plan of Reorganization of Vertis Holdings, Inc., et al. and the Joint Prepackaged Plan of ACG Holdings, Inc., et al. under Chapter 11 of the Bankruptcy Code, Vertis Inc. disclosed certain projections of financial performance for fiscal years 2008 through 2012. As reported by the Troubled Company Reporter on June 3, 2008, Vertis Inc., American Color Graphics and noteholders entered into restructuring agreements pursuant to which the companies and consenting noteholders have agreed to consummate the restructuring through prepackaged Chapter 11 plans of reorganization for each company in order to more efficiently exchange the notes. Vertis and American Color entered into agreements with an aggregate of approximately 72% of the outstanding principal amount of the 9.75% Senior Secured Second Lien Notes due 2009; 83% of the outstanding principal amount of the 10.875% Senior Notes due 2009; and 75% of the outstanding principal amount of the 13.5% Senior Subordinated Notes due 2009 of Vertis; and the holders of an aggregate of approximately 70% of the outstanding principal amount of the 10% Secured Second Lien Notes due 2010 of American Color; to exchange their bonds for an aggregate of $550 million in new notes and substantially all of the new equity in the combined company. The transaction is also supported by Vertis' principal stockholders and the holders of over 95% of the outstanding principal amount of Vertis Holdings Mezzanine Notes. The agreement on the terms of the consensual financial restructurings would reduce the combined company's debt obligations by approximately $725 million, excluding Vertis Holdings Mezzanine Notes, before transaction fees and expenses. In addition, the more than $240 million in Vertis Holdings Mezzanine Notes will no longer be an obligation of the company after the transaction closes. Financial Projections In connection with the company's efforts to obtain exit financing following the consummation of the Prepackaged Plan, the company has distributed financial projections to potential lenders which vary from the Projections contained in the Disclosure Statement. The company continues to believe that the Projections and their underlying assumptions are reasonable. The Financing Projections were provided with a different purpose than the Projections. The financing projections contain more conservative assumptions in order to facilitate financing terms containing favorable debt covenants, whereas the Projections contain the company's reasonable estimation of its ability to meet its obligations under the Prepackaged Plan. The financing projections reflect the results of a recent review of the Projections. The financing projections reflect a more conservative estimate of new business capture. The financing projections also reflect a more conservative estimate of the impacts of market based pricing pressures on the company. Other, less material, adjustments have also been made. A full-text copy of the Financing Projections is available for free at http://ResearchArchives.com/t/s?2f56 Headquartered in Baltimore, Vertis Inc. dba Vertis Communications -- http://www.vertisinc.com/-- is a provider of print advertising and direct marketing solutions to America's retail and consumer services companies. About American Color Graphics American Color Graphics Inc. -- http://www.americancolor.com/-- is a full service premedia and print companies, with eight print locations across the continent, a TMC facility, six regional premedia centers, photography studios nationwide and a customer managed service sites. Expert in a full range of products such as retail, newspapers, direct mail, catalog, publication, packaging, book, comic, and commercial products, ACG has been an innovative industry leader for over 80 years. The company provides solutions and services as asset management, photography, and digital workflow solutions that improve the effectiveness of advertising and drive revenues for their customers. At Dec. 31, 2007, American Color's consolidated balance sheets reveal total assets of $224,080,000 and total debts of $493,973,000 resulting in a $269,893,000 stockholders' deficit. * * * As reported in the Troubled Company Reporter on June 26, 2008, Standard & Poor's Ratings Services lowered the corporate credit rating on American Color Graphics Inc. to 'D' from 'SD', after the company's failure to make an interest payment due June 15, 2008, on its $280 million 10% senior secured second-priority notes due in 2010. AMPEX CORP: Seeks to Extend Plan Confirmation Hearing to Aug. 15 ---------------------------------------------------------------- Ampex Corporation and certain of its U.S. subsidiaries entered into a Letter Agreement dated June 24, 2008, with certain of their creditors amending the Plan Support Agreement filed with the United States Bankruptcy Court for the Southern District of New York. The letter agreement extends until Aug. 15, 2008, the deadline to hold the confirmation hearing for the Debtors' chapter 11 Plan of Reorganization. There are a number of risks and uncertainties relating to confirmation of the Plan and the bankruptcy process generally. Accordingly, there can be no assurance that the Plan will be confirmed by the extended deadline or that the Debtors will be able to satisfy all of the other conditions of the Plan Support Agreement. The Letter Agreement Amending the Plan Support Agreement is addressed to the Consenting Holders that are Party to the Plan Support Agreement, dated March 30, 2008. The Letter confirms these agreements: 1. Section 8.1(e) of the Plan Support Agreement is hereby amended and restated in its entirety to read as: "a hearing to consider the Confirmation Order has not been scheduled to occur on or before August 15, 2008;" 2. Except as expressly provided herein, the Plan Support Agreement shall continue in full force and effect in accordance with the provisions thereof. A copy of the Plan Support Agreement is available for free at http://ResearchArchives.com/t/s?29d6 Headquartered in Redwood City, California, Ampex Corp. -- http://www.ampex.com/-- (Nasdaq:AMPX) is a licensor of visual information technology. The company has two business segments: Recorders segment and Licensing segment. The Recorders segment primarily includes the sale and service of data acquisition and instrumentation recorders (which record data and images rather than computer information), and to a lesser extent mass data storage products. The Licensing segment involves the licensing of intellectual property to manufacturers of consumer digital video products through their corporate licensing division. On March 30, 2008, Ampex Corp. and six affiliates filed for protection under Chapter 11 of the Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of New York (Case Nos. 08-11094 through 08-11100). Matthew Allen Feldman, Esq., and Rachel C. Strickland, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors in their restructuring efforts. The Debtors have also retained Conway Mackenzie & Dunleavy as their financial advisors. In its schedules of assets and liabilities filed with the Court, Ampex Corp. disclosed total assets of $9,770,089 and total debts of $82,488,054. The Debtors have nine foreign affiliates that are incorporated in seven countries -- one each in the United Kingdom, Japan, Belgium, Colombia and Brazil and two each in Germany and Mexico. With the exception of the affiliates located in the U.K. and Japan, none of the other foreign affiliates conduct meaningful business activity. As of March 30, 2008, none of the foreign affiliates have commenced insolvency proceedings. APP PHARMACEUTICALS: S&P Affirms 'BB' Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Germany- based health-care companies Fresenius SE and its subsidiary Fresenius Medical Care AG & Co. KGaA to negative from positive. At the same time, all ratings, including the 'BB' long-term corporate ratings, were affirmed. In addition, all ratings on APP Pharmaceuticals Inc. were affirmed, including the 'BB' long-term corporate ratings. The outlook on APP is stable. The outlook revision comes after FSE's unexpected proposal to acquire Schaumburg, Illinois-based generic drug maker APP. "The move signals potential downside to the rating quality from a more aggressive financial policy at the FSE level as well as a deterioration in debt protection measures," said Standard & Poor's credit analyst Marketa Horkova. "Although FME's stand-alone credit quality is not directly affected by the transaction, the outlook revision in line with that on FSE is a consequence of our assessment of the relationship with FSE." This includes the significant influence of FSE over FME as well as the substance of their economic relationship. The negative outlook reflects FSE's more aggressive financial policy track record, and in addition, limited visibility on the timing and the size of any future acquisitions. The negative outlook also reflects potential execution risk connected to any potential equity issuance embedded in the transaction, given present capital-market volatility. The ratings could be lowered if the group fails to restore its financial metrics in line with our expectations in 2009 either due to operational underperformance, increased cost of borrowings, unfavorable exchange-rate movements, or higher leverage from add- on acquisitions. S&P would consider revising the outlook to stable if FSE can demonstrate that it can operate within the stated guidelines. A positive rating movement is remote at present because of financial policy limitations. The outlook on FME follows that of FSE and reflects the parent- subsidiary relationship. ATTRACTIONS HIPPIQUES: Monitor Lists C$69,042,268 in Liabilities ---------------------------------------------------------------- RSM Richter Inc., a court-appointed monitor for Attractions Hippiques and its debtor-affiliates, filed a list of the Debtors' secured creditors and their claims, disclosing: Creditor Claim Amount -------- ------------ Sun Life Assurance Company of Canada C$29,526,400 227 King Street South Waterloo, QC M5V 3C5 The Manufactureres Life Insurance Co. C$7,381,600 200 Bloor Street, East Floor NT-4 Toronto, ON M4W 1E5 The Toronto-Dominion Bank C$2,950,000 77 King Street, 18th Floor Royal Trust Tower Toronto, ON M5K 1A2 Industrial Alliance Insurance and Financial C$5,536,200 Services 200 Bay Street North Tower, 21th Floor Toronto, ON M5J 2J5 RBC Dexia Investor Trust C$3,690,800 Trustee, BCE Trust Fund 1000 De La Gauchetiere O.S. 1300 Montreal, QC H3B 5A7 ------------ TOTAL SECURED CLAIMS C$49,085,000 RSM Richter also filed a list of the Debtors' unsecured creditors with a total claim amount of C$19,957,268. The Debtors owe secured and unsecured creditors a total of C$69,042,268. A full-text copy of the monitor's report is available for free at http://ResearchArchives.com/t/s?2f54 About Attractions Hippiques Attractions Hippiques -- http://www.attractionshippiques.com/-- offers clients and partners competitive equine entertainment. On June 26, 2008, several Attraction Hippiques entities obtained protection under the Companies' Creditors Arrangement Act (Canada) pursuant to an order from the Superior Court of Quebec. The Debtors are A.H. (MTL) Inc., A.H. (T.R.) Inc., A.H. (AYL) Inc., A.H. (Que) INC., A.H. Royale Inc., Les Immeubles A.H. (St.- Basile) Inc., Les Immuebles A.H. (Aylmer) Inc., Les Immuebles A.H. (Trois-Rivieres) Inc., A.H.Q. (Gestion) Inc. Includes as Mises- en-Cause are Attractions Hippiques (Montreal) S.E.C., Attractions Hippiques (Trois-Rivieres) S.E.C., Attractions Hippiques (Aylmer) S.E.C., Attractions Hippiques (Quebec) S.E.C. RSM Richter Inc. was appointed by the court as monitor to supervise the Debtors' ongoing operations for an undefined period of time. BEAZER HOMES: Board Approves Employee Indemnification Agreement --------------------------------------------------------------- The Board of Directors of Beazer Homes USA, Inc., approved a form of Indemnification Agreement, pursuant to which the company will agree to provide for the indemnification of and the advancement of expenses to each director or employee party to the Indemnification Agreement and for the continued coverage of the party under the company's directors' and officers' insurance programs. The Board has authorized and directed the company to enter into these agreements with each of the company's executive officers and directors. The a full-text copy of the Indemnification Agreement is available for free at http://ResearchArchives.com/t/s?2f5b Revolving Credit Facility Waiver In addition, on June 30, 2008, the company extended the waiver period under its revolving credit facility, which continues the waiver it received on May 13, 2008. This waiver relaxes, through Aug. 15, 2008, the company's minimum consolidated tangible net worth and maximum leverage ratio requirements under its revolving credit facility. During the term of the waiver, the minimum consolidated tangible net worth will not be less than $700 million and the leverage ratio shall not exceed 2.50 to 1.00. No payments were made in consideration for this extension of the waiver. The company is currently negotiating an amended covenant package with its bank group and expect to enter into an amendment prior to finalizing its financial statements for the fiscal quarter ending June 30, 2008. A full-text copy of the Wavier is available for free at http://ResearchArchives.com/t/s?2f5c Bayne Steps Down as Director Katie J. Bayne, presently a member of the Board of Directors of the company, informed the company on June 29, 2008, that she will not stand for re-election at the annual meeting of stockholders so that she may focus her full attention to the additional responsibilities arising from her recent promotion to Chief Marketing Officer, Coca-Cola North America for The Coca-Cola Company. Mrs. Bayne will continue as a member of the Board of Directors until Aug. 5, 2008, the date of the company's annual meeting of stockholders. As a result of Mrs. Bayne not seeking re-election, the size of the board will be reduced to six members effective Aug. 5, 2008. Amendments to Articles of Bylaws On June 30, 2008, the Board of Directors of the company amended Article XIV of the company's Second Amended and Restated Bylaws. The amendment, which is now reflected in the Third Amended and Restated Bylaws of the company, updated various provisions in the bylaws relating to indemnification and advancement of expenses. The most significant change was to provide for mandatory advancement of expenses for directors and executive officers of the company. Previously, such advancement of expenses was at the discretion of the Board of Directors. A full-text copy of the Third Amended and Restated Bylaws is available for free at http://ResearchArchives.com/t/s?2f5d About Beazer Homes Headquartered in Atlanta, Beazer Homes USA Inc., (NYSE: BZH) -- http://www.beazer.com/-- is a single-family homebuilder with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia. The company also provides mortgage origination and title services to its homebuyers. * * * As disclosed in the Troubled Company Reporter on June 12, 2008 Fitch Ratings downgraded Beazer Homes USA, Inc.'s Issuer Default Rating and other outstanding debt ratings as: IDR to 'B' from 'B+'; Secured revolving credit facility to 'BB-/RR1' from 'BB/RR1'; Senior notes to 'B-/RR5' from 'B/RR5'; Convertible senior notes to 'B-/RR5' from 'B/RR5'; and Junior subordinated debt to 'CCC/RR6' from 'CCC+/RR6'. The TCR said on Feb. 19, 2008, that Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured note ratings on Beazer Homes USA Inc. to 'B' from 'B+'. The ratings remain on CreditWatch, where they were placed with negative implications on Aug. 14, 2007. The TCR reported on May 8, 2008, that Beazer Homes USA Inc. stated in a filing with the Securities and Exchange Commission that it received a default notice from The Bank of New York Trust Company National Association, the trustee under the indenture governing the company's outstanding $103.1 million unsecured junior subordinated notes due July 2036. The notice alleges that the company is in default under the indenture because the company has not provided certain required information, including its annual audited and quarterly unaudited financial statements. BOWNE & CO: S&P Lifts Corporate Credit Rating to 'BB-' from 'B+' ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit and issue-level ratings on New York-based Bowne & Co. Inc. The corporate credit rating was raised to 'BB-' from 'B+'. The rating outlook is stable. "The ratings upgrade reflects a reassessment of Bowne's business profile, taking into account recent acquisitions and management's relatively conservative financial policies," said Standard & Poor's credit analyst Michael Listner. "Bowne's conservative balance sheet management has enabled the company to strengthen its capital structure, and the company has diversified its revenue base in a manner that will allow it to absorb expected deterioration to its credit measures over the intermediate term as a result of depressed volumes in the transaction-based financial printing segment. Despite Bowne's concentration in the competitive financial print business and its exposure to capital markets volatility, the company is expected to maintain credit measures commensurate with a 'BB-' rating." Notwithstanding recent deterioration in operating performance, total lease-adjusted debt to EBITDA was approximately 2.6x as of March 31, 2008, which is good for the 'BB-'rating. Given its expectation for continued softness in the capital markets and an estimated year-over-year decline of approximately 30% in transactional revenue, S&P anticipate that total lease-adjusted debt to EBITDA will be around 3x at the end of 2008. This would provide some flexibility in the company's leverage profile relative to its expectation that leverage remain at less than 4.5x on average. Recently acquired cash flows and announced cost reductions should somewhat offset the expected cash flow declines this year in Bowne's existing businesses. Still, S&P anticipate that aggregate revenue will decline in the low-single-digit percentage area and that EBITDA will decline in the mid-teens percentage area in 2008 year over year. The 'BB-' rating reflects Bowne's concentration in the competitive financial print business and its exposure to the volatility related to transaction-based financial printing volumes, which are subject to changes in capital market activities. Bowne specializes in transaction-based printing for IPOs and mergers and acquisitions, compliance financial printing, mutual fund printing and reporting, digital printing, and marketing communications. Major competitors include R.R. Donnelly & Sons and Merrill Corp. Although volatility is lower for compliance reporting, overall performance of the segment is highly dependent on transaction- based print volumes and capital market activity, which increases the volatility of the company's cash flow base. BURLINGTON COAT: Appoints Marc Katz as EVP and Accounting Chief --------------------------------------------------------------- Marc Katz has been appointed as the Executive Vice President and Chief Accounting Officer of Burlington Coat Factory Warehouse Corporation, effective July 9, 2008. Prior to joining the company, Mr. Katz, age 43, served as Executive Vice President and Chief Financial Officer of A.C. Moore Arts & Crafts, Inc., a specialty retailer of arts, crafts and floral merchandise, from September 2006 to June 27, 2008. >From May 2003 to September 2006, Mr. Katz was Senior Vice President and Chief Information Officer of Foot Locker, Inc., a specialty retailer of athletic footwear, apparel and related items. Mr. Katz served as Vice President and Chief Information Officer of Foot Locker from July 2002 to May 2003. From 1997 to 2002, Mr. Katz served in these capacities at the financial services center of Foot Locker: Vice President and Controller from July 2001 to July 2002; Controller from December 1999 to July 2001; Retail Controller from October 1997 to December 1999; and Director of Inventory Control from June 1997 to October 1997. Prior to his employment with Foot Locker, Mr. Katz served for eight years in various financial positions at The May Department Stores Company, an operator of department store chains. Mr. Katz will serve as the company's Executive Vice President and Chief Accounting Officer until his successor is duly elected and qualified. Employment Agreement Mr. Katz's employment is governed by an employment agreement entered into on June 26, 2008, by and between the company and Mr. Katz, that provides for an initial term of one year and automatically renews for successive one year terms on each anniversary of the Commencement Date unless the company gives notice of non-extension 90 days prior to such anniversary. The Katz Agreement further provides for a minimum annual base salary of $400,000, which base salary may be increased at the discretion of the company's board of directors or a committee or appointee thereof, as well as a repair bonus in the amount of $300,000 to recompense Mr. Katz for bonuses from his prior employer which are being forfeited by reason of Mr. Katz's employment with the company. Forfeiture Repair Bonus The Forfeiture Repair Bonus is payable in two installments: the first installment of $100,000 will be payable within 30 days after the Commencement Date and the second and final installment of $200,000 will be payable three months after the Commencement Date. In the event Mr. Katz's employment with the company is terminated either voluntarily by Mr. Katz or for cause by the company within eighteen months after the date on which Mr. Katz receives an installment of the Forfeiture Repair Bonus, Mr. Katz shall immediately repay such installment to the company. Senior Management Bonus Plan The Katz Agreement also provides that Mr. Katz is eligible to participate in the company's Senior Management Bonus Plan, with a target annual bonus of 50% of Mr. Katz's base salary. If he remains continuously employed by the company through the date of payment thereof (which shall be at the same time as bonus payments are made to other participants in the company's Senior Management Bonus Plan but not later than Aug. 31, 2009), the company shall pay Mr. Katz a bonus in the amount of $200,000 for the company's fiscal year ending May 30, 2009 in lieu of direct participation in the Senior Management Bonus Plan for such fiscal year. For the company's fiscal years ending after May 30, 2009, Mr. Katz will participate in the company's Senior Management Bonus Plan to the same extent as other members of senior management at a comparable level of the company and with the Target Bonus, provided that so long as he remains continuously employed by the Company through the payment date thereof, Mr. Katz's bonus under such bonus plan for the company's fiscal year ending May 29, 2010, will not be less than $80,000. Pursuant to the Katz Agreement, Mr. Katz is entitled to the use of an automobile with an approximate value of $35,000. Further, Mr. Katz is eligible to participate in the company's medical benefit and retirement plans, and is subject to the company's policies with respect to business expense reimbursement, on the same basis as other senior executives. The Katz Agreement also provides that Mr. Katz will be subject to a covenant not to compete and a covenant not to solicit employees, customers, suppliers, licensee, service providers or any other business relation of the Company at all times while employed and for up to one year after his termination of employment, and a covenant not to disclose confidential information during the employment term and at all times thereafter. Upon commencement of employment, Mr. Katz will receive a grant options to purchase up to 10,000 units of the securities of Holdings. A full-text copy of the Katz Agreement is available for free at http://ResearchArchives.com/t/s?2f4d Amendment to the CFO Employment Agreement On June 27, 2008, the company entered into an amendment to that certain employment agreement, dated Aug. 16, 2007, between the company and Todd Weyhrich, the company's Chief Financial Officer. Pursuant to the Amendment, the Weyhrich Agreement has been modified such that, among other things: * Mr. Weyhrich's minimum annual base salary has been increased from $350,000 to $450,000 retroactive to Nov. 3, 2007; * Mr. Weyhrich shall receive a bonus of not less than $212,000 (increased from $140,000), such bonus in lieu of direct participation in the company's Senior Management Bonus Plan for the first year of employment and payable at the same time bonuses are payable to other senior management under the Plan for the company's fiscal year ending May 31, 2008 but in no event later than June 30, 2008. For each fiscal year thereafter, Mr. Weyhrich will participate in the Plan to the same extent as other members of senior management at a comparable level of the company and with a target bonus not less than 50% of the base salary paid to Mr. Weyhrich for the fiscal year of the company to which the bonus relates. * In connection with relocating his personal residence, Mr. Weyhrich will be reimbursed in an amount equal to the lesser of (i) the difference between the selling price of his prior personal residence and the purchase price thereof, and (ii) $175,000 (increased from $75,000); and * The provision in the Weyhrich Agreement prohibiting reimbursement of expenses relating to the Relocation including, without limitation, the Home Loss Protection Amount, prior to Aug. 21, 2008 has been removed. A full-text copy of Weyhrich Amendment is available for free at http://ResearchArchives.com/t/s?2f4e About Burlington Coat Factory Headquartered in Burlington, New Jersey, Burlington Coat Factory Warehouse Corporation, a wholly owned subsidiary of Burlington Coat Factory Investments Holdings, Inc., is a nationwide off-price apparel retailer that operates approximately 384 stores in 44 states under the nameplates of Burlington Coat Factory, Cohoes, MJM, and Baby Depot. * * * As disclosed in the Troubled Company Reporter on May 2, 2008, Fitch Ratings affirmed Burlington Coat Factory Warehouse Corp.'s Issuer Default Rating at 'B-' and the $900 million term loan at 'B/RR3.' In addition, Fitch has taken these rating actions: $800 million asset-based revolver revised to 'B+/RR1' from 'B+/RR2'; $305 million senior unsecured notes downgraded to 'CCC/RR6' from 'CCC+/RR5'; and $99 million senior discount notes downgraded to 'CCC-/RR6' from 'CCC/RR6'. CAMBRIDGE LIFE: Fitch Lifts Financial Strength Rating to 'BBq' -------------------------------------------------------------- Based on statutory financial information through year-end 2007, Fitch Ratings has updated the Quantitative Insurer Financial Strength ratings on these: -- First Health Life & Health Insurance Company (TX)/ 90328 affirmed at 'BBBq' -- Cambridge Life Insurance Company (MO) / 81000 upgraded to 'BBq' from 'Bq'; -- National Life Insurance Company (PR) / 72087 downgraded to 'BBq' from 'BBBq' Q-IFS ratings are generated using a model that utilizes statutory financial statement information that individual companies file with state regulators. The model incorporates "rating logic" that mirrors many aspects of the quantitative analysis that is used to assign traditional IFS ratings. Traditional IFS ratings incorporate both quantitative and qualitative factors and typically involve in-depth discussions with senior management. The Q-IFS ratings incorporate a 'q' subscript to differentiate the ratings from traditional IFS ratings. While recognizing the limitations associated with using a strict quantitative rating approach, Fitch believes that Quantitative IFS ratings will provide a reasonable representation of the life insurance company's stand-alone financial strength and operating profile. CELESTICA INC: Fitch Affirms 'B+' Issuer Default Rating ------------------------------------------------------- Fitch Ratings has affirmed these ratings for Celestica Inc.: -- Issuer Default Rating at 'B+'; -- Senior Secured Credit Facility at 'BB+/RR1'; -- Senior subordinated debt at 'B/RR5'. The Rating Outlook has been revised to Stable from Negative. The ratings affirmation and Stable Outlook reflect these considerations: -- Celestica has significantly improved profitability over the past year, increasing EBITDA margin from a low of 1.7% in 1Q07 (end Mar 2007) to 4% in 1Q08 despite a 7.5% decline in revenue for the latest twelve month period ending March 31, 2008. -- Celestica maintains a conservative balance sheet with $750 mm in long-term debt and $1.1 billion in cash. Fitch estimates leverage (Total Debt / Total Operating EBITDA) as of March 31, 2008, to be 2.7x or 4.3x when adjusted for off- balance sheet debt. This compares to peak leverage of 3.6x or 5.5x on an adjusted basis in 3Q07. -- Fitch believes Celestica has managed to stabilize its top- line following five consecutive quarters of year-over-year declines in revenue although signs of a renewed and sustainable revenue growth trend have yet to materialize. The ratings are supported by these: -- Celestica maintains a conservative capital structure with approximately $400 million in net cash. -- Fitch expects Celestica would generate significant cash from working capital during a downturn, as typical for the EMS industry. -- Fitch believes that a long-term trend of increased outsourcing of manufacturing across multiple economic sectors will benefit the EMS industry in general. -- Celestica remains a leading global EMS provider with a blue chip customer base. Ratings concerns include: -- Execution issues in late 2006 led to material customer attrition and an 8.4% decline in revenue during 2007. Fitch does expect revenue trends to stabilize in 2008. -- Celestica has significant customer concentration risk, although typical for the industry, with the top 10 customers representing approximately 60% of total revenue. -- Generally low operating margins associated with the EMS model which has produced returns on invested capital below the cost of capital for many competitors in recent years, including Celestica. As of March 31, 2008, liquidity was solid with a fully available $300 million secured revolving credit facility which expires April 2009 and $1.1 billion in cash. Celestica also has a $250 million committed accounts receivable securitization facility which it utilizes for additional liquidity. This facility had approximately $50 million of available liquidity as of March 31, 2008, and expires November 2008. Total debt as of March 31, 2008 was approximately $770 million and included primarily $500 million of 7.875% senior subordinated notes due June 2011 and $250 million of 7.625% senior subordinated notes due June 2013. The Recovery Ratings and notching reflect Fitch's recovery expectations under a distressed scenario, as well as Fitch's expectation that the enterprise value of Celestica, and hence recovery rates for its creditors, will be maximized in a restructuring scenario (going concern) rather than a liquidation scenario. In deriving a distressed enterprise value, Fitch applies a 30% discount to Celestica's estimated operating EBITDA of approximately $285 million for the LTM ended March 31, 2008 based on a 3.25x interest coverage covenant included in the company's revolving credit facility agreement. Fitch then applies a 4x distressed EBITDA multiple, which considers Celestica's current multiple and that a stress event would likely lead to multiple contraction. As is standard with Fitch's recovery analysis, the revolver is fully drawn and cash balances fully depleted to reflect a stress event. The 'RR1' is for Celestica's secured bank facility reflects Fitch's belief that 100% recovery is realistic. The 'RR5' is for the senior subordinated debt reflects Fitch's estimate that a recovery of 11%-30% would be achievable. CELLU TISSUE: Moody's Assigns B2 Rating on Senior Secured Notes --------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to the $40 million face value of senior secured notes issued by Cellu Tissue Holdings, Inc. in connection with its acquisition of Atlantic Paper & Foil. Concurrently, Moody's affirmed Cellu Tissue's B2 Corporate Family Rating, B2 Probability of Default Rating, SGL-3 liquidity rating and B2 rating on the existing $182.3 million of senior secured notes. The rating outlook is stable. On July 2, 2008, Cellu Tissue acquired certain assets of AP&F for $68 million. The purchase price was financed with a $6.3 million seller note, $36.9 million ($40 million face value) of senior secured notes ($40 million face value), cash on hand, and an equity contribution from the company's financial sponsor, Weston Presidio. As part of the transaction, Cellu Tissue's senior secured working capital facility was increased from $40 million to $60 million and the company made a $12 million withdrawal on this facility to fund a portion of the acquisition's cash requirements. Pro forma for the transaction, Moody's calculates the company's debt to EBITDA to be 4.7x, including Moody's standard adjustments. Despite rapid growth and strategic expansion in the past two years, Cellu Tissue's B2 CFR remains constrained by the company's relatively small revenue base, limited geographic scale, and the attendant integration and financial risks associated with a largely debt-financed acquisition strategy. However, Moody's views the AP&F transaction as complementing management's initiative of growing the company's converted tissue segment, particularly in the private label retail market that has steadily taken North American market share from branded products. The ratings benefit from recent improvements in profitability, solid credit metrics for the rating category and an adequate liquidity profile. The stable outlook anticipates that Cellu Tissue will successfully integrate the AP&F acquisition while maintaining margins, improving free cash flow and reducing debt. These ratings were assigned to Cellu Tissue Holdings, Inc.: -- $40 million senior secured notes due 2010, B2 (LGD4, 57%) These ratings of Cellu Tissue Holdings, Inc. were affirmed: -- $182.3 million senior secured notes due 2010, B2 (LGD4, 57%) -- Corporate Family Rating, B2 -- Probability of Default Rating, B2 -- Speculative Grade Liquidity Rating, SGL-3 Headquartered in Alpharetta, Georgia, Cellu Tissue manufactures tissue and machine-glazed paper used in health care and consumer products such as diapers, facial and bath tissue, paper towels and food wraps. The company generated pro forma revenues of approximately $510 million in the fiscal year ended Feb. 29, 2008. CENTERPOINT ENERGY: Fitch Holds 'BB+' Trust Preferred Rating ------------------------------------------------------------ Fitch Ratings has affirmed the 'BBB-' Issuer Default Rating and outstanding debt ratings of CenterPoint Energy, Inc. following completion of a periodic review. Fitch has also affirmed the 'BBB' IDR for Centerpoint's subsidiaries. The Rating Outlook is Stable. Approximately $7 billion of debt is affected by the rating actions. CNP's ratings are supported by dividend payments from mostly regulated operations that are favorably located in relatively high growth areas as well as a strong liquidity position. Approximately 85% of consolidated operating income is generated by regulated utilities and pipeline operations. CenterPoint Energy Houston Electric LLC is able to annually recover transmission investments in tariffs for the remaining two years of the base rate freeze and CenterPoint Energy Resources Corp.'s cash flows are expected to increase as a result of interstate pipeline and gas gathering investments. Fitch's primary credit concern for CNP is high consolidated balance sheet leverage. In addition, capital spending is expected to require external funding to supplement cash generation in 2008 as CEHE invests in the TX electric transmission system and CERC completes the Southeast Supply Header interstate pipeline expansion and invests in gas gathering and processing capacity to serve growing gas production. Ratings of CEHE are supported by credit ratios consistent with a 'BBB' lower risk utility as a transmission and distribution utility that has no commodity price risk or provider of last resort obligations. Rating concerns include rising operating costs during a base rate freeze that extends to mid-2010 and regulatory and political risk. While year to date only four small retail electric providers have ceased operations as a result of price spikes in the energy balancing markets that made their power purchases unaffordable, the spikes increase risk that additional REPs will go out of business and lead to growing receivables for CEHE. The high power costs also raise the likelihood that Texas law or regulations may be changed to help consumers manage power bills. Fitch notes that CEHE's largest REP counter-parties, formed when vertically integrated utilities were separated in TX, have mostly hedged expected generation supply needs and are not significantly exposed to recent volatility in the Texas spot energy markets. CERC's ratings are supported by contractual cash flows from interstate pipelines and improving cash flows from regulated gas local distribution utilities. Fitch's rating concerns include the potential for cost over-runs of capital projects and/or disproportionate growth of CERC's higher risk non-regulated operations. The Stable Rating Outlook assumes that the electric and gas utilities and the pipelines will perform well and that operating and maintenance costs will be effectively controlled during the base rate freeze. The Stable Outlook also assumes risk regulated operations will continue to contribute more than 80% of consolidated operating income. Fitch's Outlook incorporates the expectation that capital spending needs will reduce to a level that is funded with internal cash flow beyond 2008. Improvement in leverage and coverage ratios through cash flow growth or other means is the key to any improvement in CNP's current ratings or Outlook. CNP, through its subsidiaries, operates as a public utility company. CEHE provides regulated electric transmission and distribution services to REPs, municipalities, electric cooperatives, and other distribution companies that provide service to approximately two million customers in and around Houston, Texas. CERC owns and operates LDCs that serve 3.2 million customers in six states, 8,200 miles of interstate natural gas pipelines, gas gathering lines, processing and storage facilities, and engages in gas marketing to commercial and industrial customers. Fitch has affirmed these ratings with a Stable Outlook: CenterPoint Energy, Inc. (CNP) -- IDR 'BBB-'; -- Senior unsecured 'BBB-'; -- Trust preferred/Zens 'BB+'; -- Short-term IDR 'F3'; -- Commercial paper 'F3'. CenterPoint Energy Resources Corp. (CERC) -- IDR 'BBB'; -- Senior unsecured 'BBB'; -- Convertible subordinated notes 'BBB-'; -- Short-term IDR 'F2'; -- Commercial paper 'F2'. CenterPoint Energy Houston Electric LLC (CEHE) -- IDR 'BBB'; -- First mortgage bonds 'A-'; -- General mortgage bonds 'BBB+'; -- Unsecured credit Facility 'BBB'; -- Short-term IDR 'F2'. CHELSEA PARK: S&P Puts 'BB' Prelim. Rating on $12.37MM Cl. E Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary ratings to Chelsea Park CLO Ltd./Chelsea Park CLO LLC's $413.1 million floating-rate notes. The preliminary ratings are based on information as of July 9, 2008. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the notes junior to the respective classes, and by the subordinated notes and overcollateralization; -- The cash flow structure, which was subjected to various stresses requested by Standard & Poor's; -- The portfolio manager's experience; and -- The transaction's legal structure, including the issuer's bankruptcy remoteness. Preliminary Ratings Assigned Chelsea Park CLO Ltd./Chelsea Park CLO LLC Class Rating Amount ----- ------ ------ A AAA $344,250,000 B AA $24,520,000 C A $19,800,000 D BBB $12,150,000 E BB $12,370,000 Subordinated notes NR $36,900,000 NR -- Not rated. CHESAPEAKE CORP: Settles Indemnification Claims with Philip Morris ------------------------------------------------------------------ In connection with the company's acquisition of the former Wisconsin Tissue Mills Inc., dba WTM I Company, a commercial and industrial tissue business, from Philip Morris Inc., dba Philip Morris USA, Inc., in 1985, Philip Morris agreed to indemnify WTM and the company for losses relating to breaches of representations and warranties in the acquisition agreement. The company identified PCB contamination in the Fox River in Wisconsin as a basis for a claim for indemnification. Beginning in 1994, Philip Morris has made indemnification payments in excess of $53 million for Fox River losses. In mid-June 2008, Philip Morris asserted a claim that it did not have an indemnification obligation and refused to continue to indemnify WTM and the company for their losses related to the Fox River. That claim was resolved on June 26, 2008, in a settlement in a Consent Decree filed with the Circuit Court of Henrico County, Virginia, by which, among other things: (i) Philip Morris releases its claims for recovery of past indemnification payments; (ii) Philip Morris agrees to cooperate in WTM's recovery under certain general liability insurance policies; and (iii) Philip Morris' maximum liability for future indemnification under the 1985 acquisition agreement is capped to $36 million. The settlement is expected to provide substantial funds to cover the company's reasonably probable costs related to the Fox River matter. Headquartered in Richmond, Virginia, Chesapeake Corporation (NYSE:CSK) -- http://www.cskcorp.com/-- is a supplier of specialty paperboard packaging products in Europe and an international supplier of plastic packaging products to niche end-use markets. Chesapeake has 47 locations in France, Ireland, United Kingdom, North America, China, HongKong, among others and employs approximately 5,500 people. For the quarter ended March 30, 2008, the company reported $1,225,100,000 in total assets and $948,100,000 in total liabilities. * * * As disclosed in the Troubled Company Reporter on July 2, 2008, Moody's Investors Service placed all the credit ratings of Chesapeake Corp. on review for possible downgrade. This rating action follows Chesapeake's statement on June 27, 2008 that the completion of a proposed new credit facility will not be completed prior to the expiration of the commitment letter on July 1, 2008. Chesapeake further disclosed it is reviewing its balance sheet and exploring other alternatives for reducing leverage and improving its capital structure, in addition to the continued pursuit of asset sales to reduce debt. The existing credit facility matures in February 2009 and had an outstanding balance of $185 million as of March 30, 2008. Moody's review for possible downgrade will primarily focus on the company's near-term liquidity pressures. Despite a recent amendment to the existing credit agreement that relaxed financial covenant levels through the end of 2008, Moody's is concerned that Chesapeake may breach its financial covenants at June 30, 2008. Regardless, Moody's estimate that effective availability under the revolver has been significantly diminished due to covenant constraints. Furthermore, an amendment to the current U.K. pension recovery plan has not yet been finalized; unless an amended recovery plan is completed beforehand, Chesapeake is obligated to make a GBP35.6 million supplementary contribution to the plan on July 15, 2008. Moody's placed these ratings of Chesapeake Corporation on review for possible downgrade: $18.75 million 6.375% senior unsecured revenue bonds due 2019, B3 / LGD3 (48%); $31.25 million 6.25% senior unsecured revenue bonds due 2019, B3 / LGD3 (48%); GBP67.1 million 10.375% senior subordinated notes due 2011, Caa1 / LGD5 (72%); EUR100 million 7% senior subordinated eurobonds due 2014, Caa1 / LGD5 (72%); Corporate Family Rating, B2; and Probability of Default Rating, B3. CHESAPEAKE ENERGY: S&P Puts 'BB' Credit Rating Under Pos. Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including the 'BB' corporate credit rating, on oil and gas exploration & production company Chesapeake Energy Corp. on CreditWatch with positive implications. As of March 31, 2008, Oklahoma City-based Chesapeake had $11 billion in debt. "The CreditWatch reflects our increased confidence that the company is managing the financial risks associated with its large capital program in a more prudent manner," said Standard & Poor's credit analyst David Lundberg. Recent and expected actions include: -- The expected common stock offering, which should raise roughly $1.7 billion in cash, assuming the company exercises the over-allotment option. Chesapeake also raised $1 billion in common stock in April; -- Last week's announced joint venture with Plains Exploration & Production Co. Plains paid $1.65 billion for a 20% working interest in Chesapeake's prospective Haynesville acreage and agreed to fund 50% of Chesapeake's future drilling and completion costs (up to an additional $1.65 billion) over several years; -- The expected sale of Chesapeake's Woodford Shale acreage; and -- Management's indication that they will consider additional joint ventures to help fund other emerging resource plays. S&P expect to resolve the CreditWatch within the next 60 days as it gain further clarity on the company's likely near-term capital expenditures and potential cash proceeds. S&P will focus on expected credit ratios over the next two years. In evaluating a potential upgrade to 'BB+', S&P would expect debt to EBITDA in the mid-2x area and FFO to debt above 30% when using its hydrocarbon pricing assumptions. In its ratios, S&P consider the company's hedges and the debt-like elements inherent in its VPPs, asset retirement obligations, and operating leases. If, given the company's revised capital spending plans, it appears that the near-term credit ratios will fare worse than those cited above, S&P will likely affirm the 'BB' corporate credit rating. COMSTOCK HOMEBUILDING: Employs FTI Consulting as Strategic Advisor ------------------------------------------------------------------ Comstock Homebuilding Companies Inc. retained FTI Consulting Inc. as advisor to the company with respect to strategic and financial alternatives in the face of a prolonged real estate downturn. FTI has been engaged to work with the company and its lenders to evaluate operational and financial strategies intended to enhance long-term enterprise value. The terms of the engagement letter that the company entered into on June 24, 2008, with FTI provided, among other things, for Brad Foster of FTI to serve as the company's interim chief restructuring officer. In his role as an officer of the company Mr. Foster will report directly to our chief executive officer. The Engagement Letter also provides for the services of other temporary employees and advisors to support Mr. Foster in his role. In connection with the exploration of available debt restructuring alternatives, the company has elected to cease making certain scheduled interest and principal curtailment payments while it attempts to negotiate modifications or other satisfactory resolutions from its lenders. The subject indebtedness represents a significant number of the company's projects. The failure to make such interest and principal curtailment payments constitutes breaches of the terms of the loan agreements, some of which have reached maturity. If the breaches are not cured prior to the expiration of any applicable grace periods and such matured loans are not extended, then, under the terms of the loan agreements, the lenders may be entitled to charge an increased, or default, rate of interest and declare the principal amount to be immediately due and payable in full. The company anticipates that it may be forced to cease making certain additional scheduled interest or principal curtailment payments in the near future if meaningful concessions are not derived in the on-going negotiations with its lenders. The aggregate amount of the company's and its affiliates' outstanding indebtedness at June 30, 2008, was approximately $157 million, and it is anticipated that scheduled interest or principal curtailment payments will be ceased with respect to up to $94 million of this indebtedness where sufficient interest reserves are not in place. About Comstock Homebuilding Based in Reston, Viginia, Comstock Homebuilding Companies Inc. (NasdaqGM: CHCI) -- http://www.comstockhomebuilding.com-- develops, builds and markets single-family homes, townhouses and condominiums in the Washington D.C., Raleigh, North Carolina and Atlanta, Georgia metropolitan markets. The company also provides certain management and administrative support services to certain related parties. Going Concern Doubt As reported in the Troubled Company Reporter on April 3, 2008, PricewaterhouseCoopers LLP raised substantial doubt about the ability of Comstock Homebuilding Companies, Inc., to continue as a going concern after it audited the company's financial statements for the year ended Dec. 31, 2007. The auditor pointed stated that the company has experienced declining market conditions and has significant debt maturing during 2008. CRDENTIA CORP: Expands Credit Facility to $7MM, Revises Term Loans ------------------------------------------------------------------ Crdentia Corp. expanded its accounts receivable-based revolving credit facility to $7.5 million from $5.2 million and revised and expanded existing term loans, including a new $1.5 million debt investment in the company. Separately, the company also completed a private placement equity offering for aggregate proceeds of $1 million. Proceeds will be used for general working capital purposes. Crdentia signed agreements with Capital TempFunds, a division of Capital Business LLC, to have them take over from ComVest Capital, LLC, a majority of Crdentia's existing accounts receivable-based revolving credit facility and to increase the facility to $7.5 million from $5.2 million. In addition, the term debt in place from ComVest, two tranches of three-year term debt of $2.5 million each, was revised as: (i) the principal payments on Tranche A Note were delayed and amortization will commence in September 2009; (ii) $1.5 million was added to the principal amount of Tranche B to increase the balance to $4 million and Tranche B is now convertible at the option of ComVest upon certain triggering events at the same price of the equity financing. In addition, the original warrant to ComVest to purchase 8,000,000 shares has been redeemed in exchange for a Trance C Note in the amount of $2.4 million thereby retiring this warrant. The expanded revolving credit facility bears interest at the greater of: a) the prime rate of interest quoted in the Wall Street Journal plus 2.0%; or b) 8.5%. The term loans bear interest at 12.5% annually. In addition to the above, Crdentia issued a Common Stock Purchase Warrant to ComVest to purchase up to 525,000 shares of Common Stock of Crdentia with an exercise price of $0.35 per share. The private placement is comprised of 3,333,333 shares of common stock at a price of $0.30 per share and warrants to purchase up to 1,666,667 shares of common stock, for aggregate proceeds of $1,000,000. The Warrants are immediately exercisable and have an exercise price of $0.35 per share with a five-year term. The shares have been issued in a private placement transaction pursuant to Section 4(2) of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "As investors are likely well-aware, the credit market environment is quite challenging, yet the strength of our business allowed Crdentia to complete a favorable transaction for the company, John Kaiser, CEO of Crdentia said. "As we move forward with our previously announced plans to take Crdentia private, we are pleased to have completed these important financing transactions that improve the company's financial flexibility with the addition of substantial working capital and ability to grow our revolver borrowing base as the company grows." "With this added liquidity, we will continue to work aggressively to execute our strategic growth plans to establish Crdentia as a leading full-service supplier of healthcare staffing throughout the Sun Belt region." About Crdentia Corp. Headquatered in Dallas, Texas, Crdentia Corp. (OTCBB: CRDT) -- http://www.crdentia.com/-- is a provider of healthcare staffing services to 1,500 healthcare providers in 49 states. Crdentia provides temporary healthcare staffing comprised of travel and per diem nursing, locum tenens, and allied healthcare staffing. Going Concern Doubt KBA Group LLP, in Dallas, expressed substantial doubt about Crdentia Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm reported that the company has incurred net losses totaling $15.547 million and $16.072 million for the years ended Dec. 31, 2007 and 2006, and has used cash flows from operating activities totaling $5.759 million and $4.095 million for the years ended Dec. 31, 2007 and 2006. Additionally, at Dec. 31, 2007, the company's current liabilities exceeded their current assets by $5.273 million. AMERICAN COLOR: $1,300,000,000 Funding Ready for Vertis Merger -------------------------------------------------------------- Vertis Communications disclosed that in accordance with its plan to merge with American Color Graphics it has secured commitments for: 1. $380,000,000 in debtor-in-possession financing; and 2. $650,000,000 in exit financing. As reported in the Troubled Company Reporter on May 26, 2008, Vertis Inc., dba Vertis Communications, and American Color disclosed merger and comprehensive restructuring plans that will strengthen their finances, expand their North American footprint, and improve the products and services offered to their customers. The companies and the consenting noteholders have entered into restructuring agreements pursuant to which the companies and consenting noteholders have agreed to consummate the restructuring through prepackaged Chapter 11 plans of reorganization for each company in order to more efficiently exchange the notes. Importantly, the restructuring agreements and terms of the prepackaged plans call for all trade creditors, suppliers, customers and employees to receive all amounts owed to them in the ordinary course of business. The companies will launch a formal solicitation of consent for their prepackaged Chapter 11 plans of reorganization from holders of both Vertis Notes and ACG Notes within approximately 20 days. Consents will be due approximately 30 days after the companies launch the solicitation. Upon receiving the consents, the companies would commence prepackaged Chapter 11 proceedings in order to implement their plans and consummate the merger. The proceedings are expected to conclude in late summer. On July 8, Vertis executed: -- a $380,000,000 DIP financing facility commitment letter with GE Commercial Finance; -- a $250,000,000 Senior Secured Revolving Credit exit facility commitment letter with GE; and -- a $400,000,000 exit facility commitment letter with Morgan Stanley Senior Funding Inc., as lead arranger. "These lending commitments from two top institutions reflect the continuing progress with our financial restructuring plan and merger with American Color Graphics," Mike DuBose, chairman and CEO of Vertis, said. "The financing will provide appropriate liquidity during our restructuring and then fund the newly merged company. Not only will we strengthen our role as a marketing and business partner, but we will provide even more opportunities to our valued clients, suppliers and employees." About Vertis Inc. Headquartered in Baltimore, Vertis Inc. dba Vertis Communications -- http://www.vertisinc.com/-- is a provider of print advertising and direct marketing solutions to America's retail and consumer services companies. Vertis' consolidated balance sheets show total assets of $499,562,000 and total debts of $1,415,569,000 resulting in a $916,007,000 stockholders' deficit. Going Concern Doubt Deloitte & Touche LLP, in Baltimore, Maryland, expressed substantial doubt about Vertis Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm said that the company has incurred recurring net losses and is experiencing difficulty in generating sufficient cash flow to meet its obligations and sustain its operations. About American Color Graphics American Color Graphics Inc. -- http://www.americancolor.com/-- is a full service premedia and print companies, with eight print locations across the continent, a TMC facility, six regional premedia centers, photography studios nationwide and a customer managed service sites. Expert in a full range of products such as retail, newspapers, direct mail, catalog, publication, packaging, book, comic, and commercial products, ACG has been an innovative industry leader for over 80 years. The company provides solutions and services as asset management, photography, and digital workflow solutions that improve the effectiveness of advertising and drive revenues for their customers. At Dec. 31, 2007, American Color's consolidated balance sheets reveal total assets of $224,080,000 and total debts of $493,973,000 resulting in a $269,893,000 stockholders' deficit. * * * As reported in the Troubled Company Reporter on June 26, 2008, Standard & Poor's Ratings Services lowered the corporate credit rating on American Color Graphics Inc. to 'D' from 'SD', after the company's failure to make an interest payment due June 15, 2008, on its $280 million 10% senior secured second-priority notes due in 2010. DOMINO'S PIZZA: Glenhill Advisors et al. Disclose 5.3% of Equity ---------------------------------------------------------------- Glenhill Advisors LLC, managing member Glenn J. Krevlin, and Glenhill Capital Management LLC declare 3,100,000 shares in Domino's Pizza Inc., representing 5.3% of the company's 58,276,295 outstanding shares. Headquartered in Ann Arbor, Michigan, Domino's Pizza Inc. (NYSE: DPZ) -- http://www.dominos.com/-- through its primarily franchised system, operates a network of 8,190 franchised and company-owned stores in the U.S. and more than 50 countries. Founded in 1960, the company has more than 500 stores in Mexico. The Domino's Pizza(R) brand, named a Megabrand by Advertising Age magazine, had global retail sales of nearly $5 billion in 2005, comprised of $3.3 billion domestically and $1.7 billion internationally. At March 23, 2008, the company's balance sheet showed a stockholders' deficit of $1,450,551, compared to a deficit of $1,450,139 at Dec. 30, 2007. ENERGYSOLUTIONS: Moody's Assigns Ba2 Rating on Sr. Credit Facility ------------------------------------------------------------------ Moody's Investors Service assigned a Ba2 rating to the existing first lien senior secured credit facility of EnergySolutions, LLC. The corporate family rating and the probability of default rating have each been assigned at Ba3. Moody's also assigned a Speculative Grade Liquidity Rating of SGL-2. The rating outlook is stable. This is the first time Moody's has assigned ratings to EnergySolutions. The Loss Given Default Assessment of the credit facility is 38-LGD3. "The Ba3 CFR reflects Moody's belief that EnergySolutions' formidable market position in its nuclear waste services markets and the recurring revenue nature of the contracted customer base should sustain funds from operations at levels that comfortably cover its debt service obligations beyond the intermediate term." Jonathan Root, Moody's analyst, said. Since 2005, EnergySolutions has transitioned from a mostly disposal-based company that was subject to significant demand volatility, to a diversified service provider with the benefits of reduced demand volatility and much greater scale in exchange for lower operating margins. Good liquidity and the belief that the company's nuclear waste services are only modestly exposed to cyclical downturns in the U.S. economy further support the Ba3 CFR. The relatively low margin nature of the company's management fee- based service model and the potential of fluctuating demand for the company's higher margin disposal services constrain the rating as does the potential of higher debt from ongoing acquisitive growth. The stable outlook reflects the expectation of continuing positive free cash flow generation over the intermediate term that will be applied to de-levering the capital structure. The stable outlook also reflects the meaningful cushions with financial covenants that Moody's expects EnergySolutions to maintain. The outlook could be changed to positive if EnergySolutions sustains Debt to EBITDA below 2.5 times or EBIT to Interest above 3.5 times. The outlook could be changed to negative or the ratings directly downgraded if EBIT to interest approached 2.0 times or if EnergySolutions sustains negative free cash flow. Additional debt-funded acquisitions that interrupted the company's de-levering plans or reduced cushions with required financial covenants could also weigh on the stable outlook. Although not anticipated at this time, the loss of a majority of the sites covered by the existing U.K. reactor management contracts could also lead to a downgrade of the ratings. Assignments: Issuer: EnergySolutions, LLC -- Corporate Family Rating, Assigned Ba3 -- Probability of Default Rating, Assigned Ba3 -- Speculative Grade Liquidity Rating, Assigned SGL-2 -- Senior Secured Bank Credit Facility, Assigned Ba2, 38 - LGD3 -- Outlook of Stable Issuer: Duratek, Inc. -- Senior Secured Bank Credit Facility, Assigned Ba2, 38-LGD3 Headquartered in Salt Lake City, Utah, EnergySolutions offers customers integrated services and solutions including nuclear operations, characterization, decommissioning, decontamination, site closure, transportation, nuclear materials management, processing, recycling, and disposition of nuclear waste, and research and engineering services across the nuclear fuel cycle. ENTERPRISE GP: Fitch Holds 'BB-' Issuer Default Rating ------------------------------------------------------ Fitch Ratings has affirmed the ratings of Enterprise GP Holdings L.P. as: -- Issuer Default Rating 'BB-'; -- Senior secured revolving credit facility 'BB'; -- Senior secured term loans 'BB'. The Rating Outlook is Stable. EPE is a publicly traded partnership holding company with limited partnership and general partnership interests in Enterprise Products Partners L.P. (NYSE: EPD) whose operating company is Enterprise Products Operating LLC (EPO, IDR 'BBB-', Stable Outlook), TEPPCO Partners, L.P. (NYSE: TPP, IDR 'BBB-', Stable Outlook) and Energy Transfer Equity, L.P. (NYSE: ETE, IDR 'BB-', Stable Outlook). ETE owns the GP and a significant percentage of the LP units of Energy Transfer Partners, L.P. (NYSE: ETP, IDR 'BBB-', Stable Outlook). EPD, TPP and ETP are three of the largest publicly traded master limited partnerships, each with a significant presence in the midstream energy sector. Dan Duncan is the Chairman and controlling shareholder of EPCO Holdings, which owns EPE's general partner and 77% of its limited partner units as well as direct limited partner investments in both EPD and TPP. The ratings and Outlook affirmations are based on diverse and growing cash flows from the underlying asset base, the benefits of receiving both LP and GP distributions, management's track record of supporting the credit quality of the entities throughout the EPCO corporate structure and the continued strength of North American energy fundamentals. Additionally, Fitch views the refinancing of approximately $1 billion of short-term debt in August 2007, which extended debt maturities to 2012-2014, and the growth rate of cash distributions received by EPE, as significant positives for the credit. Based on current annualized estimates, the distribution stream has grown by over 22% since 2007 and at an average annual rate of 17% since 2006. The debt at EPE is serviced by cash flows from three sizable, diverse midstream MLPs, including the largest and third largest based on market capitalization. Through these interests, EPE is exposed to every phase of the midstream energy business as well as a sizable propane distribution portfolio. The MLP ratings reflect the strength of each partnership's balance sheet as well as the size, quality and market position of the respective asset bases. Of additional benefit, EPE ultimately receives both LP and GP distributions from the three MLPs. The GP interests also include incentive distribution rights which provide a higher share of distributions than LP units as distribution levels increase. The GP distributions can be substantial but also exhibit higher volatility than the LP units and are, thus, more exposed to the impact of a downturn in market conditions. As such, an across the board distribution cut would disproportionately reduce GP incentive distributions, making the cash flows derived from LP units the least risky. Management has a strong record of supporting the credit quality of each of the partnerships by maintaining modest leverage at the MLP level, reducing the GP incentive split to a maximum of 25% for both EPD and TPP (versus 50% at most other MLPs, including ETP) and the historic use of equity to fund growth including 56% of EPD's capital spending and acquisitions since 1999. The ratings also recognize favorable North American supply and demand energy fundamentals that have supported the cash flows at each of the MLPs and encouraged significant oil and natural gas infrastructure development. While cash flows related to natural gas liquids processing depend on the relationship between crude oil and natural gas prices, the credits benefit from the diversification of the underlying assets which include significant fee-based transportation and storage assets. Additionally, EPD partially mitigates NGL processing margin volatility through an active hedging program designed to lock-in keep-whole and percentage of proceeds contract margins over a 12 to 18 month period. Credit concerns include the lack of operating assets at EPE, the structurally subordinated nature of its debt to the debt at the MLPs, the leverage at EPCO and refinancing risk associated with the 2012 and 2014 debt maturities. EPE's ability to refinance debt in the future could be impaired by deteriorating capital markets conditions. The 'BB' ratings for the senior secured debt highlight the benefit from collateral protection provided by EPE's equity interests in its underlying MLPs. Based on Fitch's calculations of the value to loan ratio, at current market prices creditors would have recovery valuations in excess of 500%. Moreover, under reasonable stress case scenarios Fitch found that above average recoveries for creditors were likely. The one notch separation between the IDR and senior secured ratings reflects the collateral protection while acknowledging that equity interests do not provide the same level of collateral protection as do physical operating assets due to fluctuations in MLP equity values, especially in rising interest rate environments. In calculating its credit metrics for MLP holding companies, Fitch defines EBITDA as cash distributions from affiliates less operating expenses. Fitch estimates Debt/EBITDA to improve to 3.4 times in 2008 from 4.7x in 2007. Additionally, EBITDA interest coverage is expected to improve to 4.3x from 3.1x, respectively. Despite the improvement in credit ratios, positive rating actions are limited by the high amount of leverage at EPE and its parent EPCO, the inherent risks with the holding company structure and the potential volatility of cash distributions from MLPs with large capital programs. Fitch expects a gradual delevering at EPCO but believes the EPE debt will remain a permanent part of its capital structure. Should debt reduction and/or cash flow growth result in Debt/EBITDA ratios of 2.0x to 3.0 times, Fitch would consider upgrading EPE's IDR to 'BB'; a narrowing of the notching with the underlying MLP ratings. Beyond a two notch separation, any further improvement in EPE's ratings would only be the result of positive rating actions at the underlying MLPs. ENTERPRISE PRODUCTS: Fitch Holds 'BB+' Subordinated Notes Rating ---------------------------------------------------------------- Fitch Ratings has affirmed the ratings of Enterprise Products Operating LLC as: -- Issuer Default Rating 'BBB-'; -- Senior unsecured notes 'BBB-'; -- Junior subordinated notes 'BB+'. This action relates to approximately $7.3 billion of debt outstanding at EPO. The Rating Outlook is Stable. EPO is the operating limited partnership of Enterprise Products Partners LP (NYSE:EPD). EPD is a leading publicly traded master limited partnership engaged in pipeline and midstream services for the producers and consumers of natural gas liquids, natural gas, crude oil and petrochemicals. Enterprise GP Holdings L.P. (NYSE:EPE, IDR 'BB-', Stable Outlook) is the publicly traded owner of EPD's general partner and approximately 3.0% of its limited partner interests. Dan Duncan is the Chairman and controlling shareholder of EPCO Holdings, which owns EPE's general partner and 77% of its limited partner units as well as direct limited partner investments in both EPD and TPP. The decision to affirm ratings and maintain a Stable Outlook is based on the quality and diversity of the underlying asset base and resulting cash flow performance, the impact of recently completed projects, EPO's attempts to partially mitigate commodity price risk, and a supportive sponsor. EPO's asset base permeates most major domestic gas producing basins and is complemented by off-shore activities, significant gathering and processing operations and large scale transportation assets. EPO is exposed to nearly every phase of the midstream energy business and has focused expansion plans in high growth production areas including the Piceance Basin, Greater Green River Basin, Barnett Shale and the Gulf of Mexico. Furthermore, EPO has significantly altered the gas processing dynamics in the Rockies through a $2.9 billion capital expansion in that region. The Meeker cryogenic processing facility, the focal point for EPO's Rockies' activities, is located near a major hub for gas production and the origination point for several existing and proposed pipelines including Rockies Express (IDR 'BBB', Stable Outlook). EPO is nearing the end of its previously announced capital program. With the completion of key projects, namely Independence Hub and Trail and the Meeker and Pioneer processing complexes, Fitch expects 2008 funds from operations to grow by approximately 40% versus 2007. These projects account for approximately $500 million of the increase with the potential of greater cash flow improvement from robust processing margins. NGL processing margins are supported by a mix of fee-based, percentage of proceeds and keepwhole contracts. While the contract mix will vary depending on the commodity environment, approximately 25% are riskier keepwhole contracts which are exposed to the changes and volatility in commodity prices. NGL prices and margins fluctuate based on the ratio of crude to natural gas prices. Currently, EPO's cash flows benefit from historically robust processing margins. While there is no guarantee that the markets will sustain high processing margins over the long-term, Fitch believes this risk is partially mitigated in two ways. First, the company balances risk in its processing business with fee based revenues primarily from pipelines and storage assets which are a growing part of the overall business mix. Additionally, EPO manages an active hedging program to lock-in processing margins. It is worthwhile to note that EPO hedges its NGL margins directly using liquid markets that extend approximately 12 to 18 months in the future. The company does not use crude oil future as indirect hedges, which thereby limits the risk of an ineffective hedging strategy. While EPO is subject to volumetric risk, Fitch considers the risk to be modest given the underlying global demand for NGLs. Risks inherent with the MLP structure include the need for capital markets access to fund capital growth due to the obligation to distribute excess cash flow to unit holders and the risk from aggressive growth strategies to fund distribution increases. EPO's management and sponsor (namely Dan Duncan) have demonstrated an ability to manage these risks through financial discipline and sound operational strategies. The company's ownership structure is complicated but it ultimately leads to Dan Duncan who has significant influence over EPCO managed operations including EPO. Past experiences provide some comfort that the business will continue to operate under relatively conservative and sound principals. Historical actions include the reduction of the maximum general partner incentive distribution rights to 25% from 50%, the retention of a significant percentage of distributable cash flow to help fund growth and the partial mitigation of capital markets risk by providing access to equity at various points throughout the organizational structure including EPD, EPE and Duncan Energy Partners (NYSE: DEP). DEP was formed in 2007 and is controlled by EPD through its ownership of the general partner and of nearly 26% of the limited partner units. EPD's financial reporting consolidates DEP but DEP's debt is non-recourse to EPO. Credit positives are partially offset by concerns regarding continued high levels of capital spending in a rising cost environment. Prolonged labor shortages and high material costs for organic growth projects may pressure capital spending especially among the more complicated projects including the Meeker expansion. Additionally, the growing complexity for some EPO's large-scale projects highlights its execution risk as demonstrated by recent unscheduled delays and stoppages at Independence Hub, Meeker and Pioneer. Despite the completion of several large projects, the company targets spending of approximately $1.0 billion-$1.5 billion for growth capital per year. However, it has been typical for growing MLPs to exceed spending targets as new projects become available. EPO recently announced its intent to act as a lead shipper on TransCanada's proposed Pathfinder Pipeline through a joint venture with Quicksilver Gas Services LP. Additionally, the joint venture has the option to purchase up to a 50% interest in Pathfinder which translates into a 40% interest for EPO. Fitch will assess the impact of EPO's potential participation in the construction/ownership of the Pathfinder Pipeline with TransCanada Corp. and Quicksilver Gas Services LP when more information becomes available. In calculating its credit metrics, Fitch adjusts EBITDA to exclude equity earnings and include cash distributions from affiliates and adjusts debt to account for the 75% equity treatment assigned to EPO's $1.25 billion junior subordinated notes. Fitch estimates 2008 Debt/EBITDA of 3.6 times versus 4.0x in 2007. Additionally, EBITDA interest coverage is expected to improve to 5.0x in 2008 from 4.7x in 2007. Further improvement is expected in 2009 as cash flows are projected to increase substantially over the next two years. Growth in EPO's diverse cash flows and the resulting improvement in ratios could result in future positive rating actions. In its rating deliberations, Fitch will assess the impact of cash flow growth versus the nature, funding and timing of future capital projects. ENVIROSOLUTIONS HOLDINGS: S&P Holds Ratings and Removes Neg. Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'CCC+' corporate credit rating on EnviroSolutions Holdings Inc. and removed the rating from CreditWatch with negative implications, where it was placed on March 4, 2008. The outlook is stable. At the same time, the issue-level rating on EnviroSolutions Real Property Holdings Inc.'s $210 million senior secured credit facilities was affirmed at 'B-', and removed from CreditWatch with negative implications. EnviroSolutions Real Property Holdings is a wholly owned subsidiary of EnviroSolutions. As of May 31, 2008, the Manassas, Virginia-based company had about $280 million of total adjusted debt outstanding. "The rating action incorporates the completion of the company's financing related to its investments in landfill and transfer stations, including a $38.5 million contingent payment that was due to the former owners of its Big Run Landfill, located in Ashland, Kentucky," said Standard & Poor's credit analyst Liley Mehta. The financing plan included $30 million in 20% perpetual payable in kind preferred stock by the financial sponsor, Investcorp., $20.5 million second-lien notes issued to the former owners of the Big Run landfill, and $5 million in capital leases. The company had been operating under a waiver and also obtained an amendment to its credit agreement, which loosened financial covenants but reduced the size of its revolving credit facility to $25 million from $40 million, and significantly increased the company's annual interest costs. Moreover, EnviroSolutions' near-term operating results and cash generation remain under pressure as a result of the company's exposure to construction and demolition waste volumes, which could remain weak in the event of a protracted economic downturn. Given the significant interest burden and ongoing capital spending requirements, S&P expect the company to remain free cash flow negative during the next few years, necessitating usage of its cash balance and borrowings under its revolving credit facility. The rating on solid waste management company EnviroSolutions reflect the company's narrow scope of activities, negative free cash flow to fund the development and expansion of acquired landfills, and a highly leveraged financial profile. Favorable overall industry characteristics, the company's decent competitive positions in two densely populated regional markets, and a manageable debt maturity schedule only partially offset these factors. EW SCRIPPS: S&P Cuts, Withdraws Rating at Company's Request ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Cincinnati, Ohio-based E.W. Scripps Co. to 'BB+' from 'A' and removed the rating from CreditWatch, where it was placed with negative implications on Oct. 16, 2007. The rating outlook is stable. Subsequently, S&P withdrew the rating at the company's request. At the same time, S&P withdrew all outstanding ratings on the company's debt, including the 'A-1' commercial paper rating, reflecting the company's redemption of all outstanding commercial paper upon the separation of Scripps Networks Interactive Inc. The downgrade of the long-term rating (prior to its withdrawal) was based on the company's weakened business profile and narrower diversification following the separation of its cable network and interactive media segments into Scripps Networks Interactive Inc. on July 1, 2008. The remaining E.W. Scripps entity consists of the company's newspaper, broadcast TV, and licensing segments. The 'BB+' rating (prior to its withdrawal) reflected the company's less diversified business mix, which is now more reliant on the declining newspaper business and on a relatively small broadcast TV business that is less profitable than its peers. In addition, the company plans to direct a large proportion of free cash flow to shareholder dividends, which could leave minimal discretionary cash flow, especially in non-election years, when the broadcast TV business does not benefit from political ad revenues. Management's track record of maintaining a conservative financial policy and low leverage partly offsets these factors. FANNIE MAE: Adequately Capitalized, OFHEO Director Says ------------------------------------------------------- James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight, said OFHEO has been monitoring and continues to monitor closely Fannie Mae, Freddie Mac and the mortgage and financial markets. Mr. Lockhart said Fannie Mae and Freddie Mac are adequately capitalized, holding capital well in excess of the OFHEO-directed requirement, which exceeds the statutory minimums. "[Fannie Mae and Freddie Mac] have large liquidity portfolios, access to the debt market and over $1.5 trillion in unpledged assets," Mr. Lockhart said. Bloomberg News' Dawn Kopecki reports that Fannie Mae and Freddie Mac own or guarantee about half the $12,000,000,000,000 in U.S. home loans outstanding. Ms. Kopecki, citing Bloomberg data, says Fannie Mae also has $831,000,000,000 in company bonds outstanding, while Freddie Mac has $644,000,000,000. According to Ms. Kopecki, Joshua Rosner, an analyst at Graham Fisher & Co., has said the U.S. government would not support Fannie Mae and Freddie Mac until they have exhausted all options to raise capital, including acceptance of significant shareholder dilution. Mr. Rosner, according to Ms. Kopecki, cited conversations with policy makers. Mr. Rosner told Bloomberg in an interview that "if the government did have to get involved, I would expect equity holders would lose everything." Ms. Kopecki reports that Fannie Mae and Freddie Mac stocks tumbled to the lowest in 17 years in New York trading after: -- former St. Louis Federal Reserve President William Poole said both may need a government bailout; and -- UBS AG analysts cut their price target for Freddie Mac stock. According to Bloomberg, Mr. Poole said: 1. Freddie Mac owed $5,200,000,000 more than its assets were worth in the first quarter, and was insolvent based on fair value accounting measures; and 2. the fair value of Fannie Mae assets fell 66% to $12,200,000,000 and may be negative next quarter. Mr. Poole also added that the companies don't have enough capital to weather the housing slump, Bloomberg says. The UB analyst, Bloomberg relates, said Freddie Mac's declines creates challenges for the company's plan to raise $5,500,000,000. Shares of Fannie Mae and Freddie Mac plunged for the third time in four days on Thursday, according to MarketWatch's Robert Schroeder and Greg Robb. Messrs. Schroeder and Robb report that Fannie Mae slid 13% to $13.36 on Thursday while Freddie Mac shares dropped 22% to $8. Over the past year, Fannie Mae is down about 80% while Freddie Mac is down about 87%. "As one would expect, we are carefully watching the Enterprises' credit and capital positions," according to Mr. Lockhart in a statement. Mr. Lockhart also relates that "[a]t the time of our March 2008 capital agreement with the Enterprises I said: 'OFHEO will remain vigilant in supervising the safe and sound operations of these companies, and will act quickly to address any deficiencies that may arise. Furthermore, we recognize the need to ensure that their capital levels are strong, protecting them from unforeseen risks as the market recovers.'" Bloomberg says Senator John McCain, the presumptive Republican presidential nominee, said the government can't allow Fannie Mae and Freddie Mac to fail. Sen. McCain said the companies are "vital to Americans' ability to own their own homes." Christopher Dodd, U.S. Senate Banking Committee Chairman and a Connecticut Democrat, according to Bloomberg, said Fannie Mae and Freddie Mac won't go under. New York Democrat Senator Charles Schumer, Bloomberg adds, said a collapse is highly unlikely "because the federal lifeline has always been there." According to Mr. Lockhart, "[i]ncluding the $7.4 billion Fannie Mae raised in May in accordance with our March agreement, the Enterprises have raised over $20 billion in capital. They are using it to continue to grow and to play a critical role in the mortgage markets, which we expect them to continue to do. To support their mission, Freddie Mac is committed to raising an additional $5.5 billion, which they will do given appropriate market conditions. At a very difficult time in the market, the Enterprises have the flexibility and sound operations needed to support their mission." About Freddie Mac The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE -- commonly known as Freddie Mac, is a stockholder-owned government- sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and low cost source of credit to finance America's housing. Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. About Fannie Mae The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) -- commonly known as Fannie Mae, is a shareholder-owned U.S. government-sponsored enterprise. Fannie Mae has a federal charter and operates in America's secondary mortgage market, providing mortgage bankers and other lenders funds to lend to home buyers at low rates. Fannie Mae was created in 1938, under President Franklin D. Roosevelt, at a time when millions of families could not become homeowners, or risked losing their homes, for lack of a consistent supply of mortgage funds across America. The government established Fannie Mae to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home. In 1968, Fannie Mae was re-chartered by the U.S. Congress as a shareholder-owned company, funded solely with private capital raised from investors on Wall Street and around the world. Fannie Mae is the U.S. largest mortgage buyer, according to The New York Times. FORD MOTOR: China Sales Grow 21% in First Half of 2008 ------------------------------------------------------ Ford Motor China posted sales of 172,411 units for the first-half of 2008, a 21% increase over the same period last year. First- half sales of Ford brand passenger cars and commercial vehicles reached 103,698 units, a 15% year-over-year increase. "Despite challenging events that had significant impact in China and on the economy as a whole this year, we were still able to achieve healthy growth through the first six months," Robert Graziano, president and CEO of Ford Motor China, said. "In addition to our strong sales, we continued to improve the quality of our products, broaden our brand-building efforts, and expand our aftersales and service network in China." Ford Motor's passenger car joint-venture, Changan Ford Mazda Automobile delivered first-half sales of 116,903 units, a 25% year-over-year increase. According to data released recently by China Passenger Car Association, CFMA kept its Top 10 manufacturers ranking in each of the first five months this year. Jiangling Motors Corporation, Ford Motor's commercial vehicle investment in China, delivered 52,000 units sales for the first half, a 14% growth over last year. This included a 17% year-over- year increase in sales of the popular Ford Transit. The Ford brand line-up produced by CFMA includes Ford Focus, new Ford Mondeo and Ford S-MAX. The Ford Mondeo safety upgrade version, Ford S-MAX 7-seat safety upgrade version and Ford S-MAX 5-seat version were introduced to the market during the second quarter. Ford also continued to expand its sales and service network across China, and now has more than 300 customer support locations covering the entire country. "Ford will launch our new global small car in China, the new Ford Fiesta, in the second half of this year," Mr. Graziano said. "As gasoline prices continue to reach record levels in China, consumers have put more emphasis on fuel efficiency in their vehicle purchase decisions. The new Ford Fiesta is the right product coming to the market at the right time." "With the launch of the new Ford Fiesta, our product offering in China will cover a full range of vehicles from small cars to MPVs to light buses, placing us in an even better position to satisfy Chinese customer needs," Mr. Graziano added. The overall sales volume of 172,133 includes Ford and Volvo brands, plus the locally-produced Mazda 2 and Mazda 3. The sale of Jaguar and Land Rover was completed on June 2, 2008. This report does not include sales data for these two brands. About Ford Motor in China Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles in 200 markets across six continents. With about 245,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Lincoln, Mercury, Volvo and Mazda. The company provides financial services through Ford Motor Credit Company. Ford Motor Company has operations in Japan in the Asia Pacific region, through Ford Japan Limited. Ford's wholly owned subsidiaries, joint ventures and investment in China include Ford Motor (China) Limited, Ford Motor Research & Engineering (Nanjing) Co., Ltd., Ford Automotive Finance (China) Ltd., Changan Ford Mazda Automobile Co., Ltd., Changan Ford Mazda Automobile Co., Ltd. Nanjing Company, Changan Ford Mazda Engine Co., Ltd., and Jiangling Motors Co., Ltd. On the Net: http://www.ford.com.cn * * * As reported in the Troubled Company Reporter on March 28, 2008, Standard & Poor's Ratings Services said that the ratings and outlook on Ford Motor Co. and Ford Motor Credit Co. (both rated B/Stable/B-3) were not affected by Ford's announcement of an agreement to sell its Jaguar and Land Rover units to Tata Motors Ltd. (BB+/Watch Neg/--) for $2.3 billion (before $600 million of pension contributions by Ford for Jaguar-Land Rover). As reported in the Troubled Company Reporter on Feb. 15, 2008, Fitch Ratings affirmed the Issuer Default Ratings of Ford Motor Company and Ford Motor Credit Company at 'B', and maintained the Rating Outlook at Negative. As reported in the Troubled Company Reporter on Nov. 19, 2007, Moody's Investors Service affirmed the long-term ratings of Ford Motor Company (B3 Corporate Family Rating, Ba3 senior secured, Caa1 senior unsecured, and B3 probability of default), but changed the rating outlook to Stable from Negative and raised the company's Speculative Grade Liquidity rating to SGL-1 from SGL-3. Moody's also affirmed Ford Motor Credit Company's B1 senior unsecured rating, and changed the outlook to Stable from Negative. These rating actions follow Ford's announcement of the details of the newly ratified four-year labor agreement with the United Auto Workers. FREDDIE MAC: Adequately Capitalized, OFHEO Director Says -------------------------------------------------------- James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight, said OFHEO has been monitoring and continues to monitor closely Fannie Mae, Freddie Mac and the mortgage and financial markets. Mr. Lockhart said Fannie Mae and Freddie Mac are adequately capitalized, holding capital well in excess of the OFHEO-directed requirement, which exceeds the statutory minimums. "[Fannie Mae and Freddie Mac] have large liquidity portfolios, access to the debt market and over $1.5 trillion in unpledged assets," Mr. Lockhart said. Bloomberg News' Dawn Kopecki reports that Fannie Mae and Freddie Mac own or guarantee about half the $12,000,000,000,000 in U.S. home loans outstanding. Ms. Kopecki, citing Bloomberg data, says Fannie Mae also has $831,000,000,000 in company bonds outstanding, while Freddie Mac has $644,000,000,000. According to Ms. Kopecki, Joshua Rosner, an analyst at Graham Fisher & Co., has said the U.S. government would not support Fannie Mae and Freddie Mac until they have exhausted all options to raise capital, including acceptance of significant shareholder dilution. Mr. Rosner, according to Ms. Kopecki, cited conversations with policy makers. Mr. Rosner told Bloomberg in an interview that "if the government did have to get involved, I would expect equity holders would lose everything." Ms. Kopecki reports that Fannie Mae and Freddie Mac stocks tumbled to the lowest in 17 years in New York trading after: -- former St. Louis Federal Reserve President William Poole said both may need a government bailout; and -- UBS AG analysts cut their price target for Freddie Mac stock. According to Bloomberg, Mr. Poole said: 1. Freddie Mac owed $5,200,000,000 more than its assets were worth in the first quarter, and was insolvent based on fair value accounting measures; and 2. the fair value of Fannie Mae assets fell 66% to $12,200,000,000 and may be negative next quarter. Mr. Poole also added that the companies don't have enough capital to weather the housing slump, Bloomberg says. The UB analyst, Bloomberg relates, said Freddie Mac's declines creates challenges for the company's plan to raise $5,500,000,000. Shares of Fannie Mae and Freddie Mac plunged for the third time in four days on Thursday, according to MarketWatch's Robert Schroeder and Greg Robb. Messrs. Schroeder and Robb report that Fannie Mae slid 13% to $13.36 on Thursday while Freddie Mac shares dropped 22% to $8. Over the past year, Fannie Mae is down about 80% while Freddie Mac is down about 87%. "As one would expect, we are carefully watching the Enterprises' credit and capital positions," according to Mr. Lockhart in a statement. Mr. Lockhart also relates that "[a]t the time of our March 2008 capital agreement with the Enterprises I said: 'OFHEO will remain vigilant in supervising the safe and sound operations of these companies, and will act quickly to address any deficiencies that may arise. Furthermore, we recognize the need to ensure that their capital levels are strong, protecting them from unforeseen risks as the market recovers.'" Bloomberg says Senator John McCain, the presumptive Republican presidential nominee, said the government can't allow Fannie Mae and Freddie Mac to fail. Sen. McCain said the companies are "vital to Americans' ability to own their own homes." Christopher Dodd, U.S. Senate Banking Committee Chairman and a Connecticut Democrat, according to Bloomberg, said Fannie Mae and Freddie Mac won't go under. New York Democrat Senator Charles Schumer, Bloomberg adds, said a collapse is highly unlikely "because the federal lifeline has always been there." According to Mr. Lockhart, "[i]ncluding the $7.4 billion Fannie Mae raised in May in accordance with our March agreement, the Enterprises have raised over $20 billion in capital. They are using it to continue to grow and to play a critical role in the mortgage markets, which we expect them to continue to do. To support their mission, Freddie Mac is committed to raising an additional $5.5 billion, which they will do given appropriate market conditions. At a very difficult time in the market, the Enterprises have the flexibility and sound operations needed to support their mission." About Fannie Mae The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) -- commonly known as Fannie Mae, is a shareholder-owned U.S. government-sponsored enterprise. Fannie Mae has a federal charter and operates in America's secondary mortgage market, providing mortgage bankers and other lenders funds to lend to home buyers at low rates. Fannie Mae was created in 1938, under President Franklin D. Roosevelt, at a time when millions of families could not become homeowners, or risked losing their homes, for lack of a consistent supply of mortgage funds across America. The government established Fannie Mae to expand the flow of mortgage funds in all communities, at all times, under all economic conditions, and to help lower the costs to buy a home. In 1968, Fannie Mae was re-chartered by the U.S. Congress as a shareholder-owned company, funded solely with private capital raised from investors on Wall Street and around the world. Fannie Mae is the U.S. largest mortgage buyer, according to The New York Times. About Freddie Mac The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE -- commonly known as Freddie Mac, is a stockholder-owned government- sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and low cost source of credit to finance America's housing. Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. G SQUARE: Moody's Junks Ratings on Two Classes of Senior Notes -------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible further downgrade the rating on this note issued by G Square Finance 2006-1 Ltd. Class Description: $1,339,750,000 Class A-1 Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: Aaa, on review for possible downgrade -- Current Rating: Baa2, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $55,000,000 Class A-2 Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: A1, on review for possible downgrade -- Current Rating: Ca Class Description: $28,250,000 Class B Senior Secured Floating Rate Notes Due 2051 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: Ca According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. GARY R. MONTEER: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtors: Gary R. Monteer aka Gary Robert Monteer, Jr. Christine L. Monteer aka Chris Monteer 315 S. Aspen Drive Mapleton, UT 84664 Bankruptcy Case No.: 08-24380 Chapter 11 Petition Date: July 8, 2008 Court: District of Utah (Salt Lake City) Judge: William T. Thurman Debtors' Counsel: Anna W. Drake, Esq. Email: annadrake@att.net 175 S. Main Street, Ste. 1250 Salt Lake City, UT 84111 Tel: (801) 328-9792 Fax: (801) 530-5955 Estimated Assets: $50 million to $100 million Estimated Debts: $1 million to $10 million Debtors' 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Fritzi Realty and Bob Tandler Personal guarantee $467,680 3490 California St., Ste. 209 of debt incurred by San Francisco, CA 94118 Lynx & Companies, LLC Barnes Banking Company Personal guarantee $407,676 P.O. Box 207 of debt incurred by Kaysville, UT 84037 Lynx & Companies, LLC BBSB Properties, LC Promissory note $400,000 Far West Loan Personal guarantee $376,000 of debt incurred by Lynx & Companies, LLC GE Capital Personal guarantee $289,366 P.O. Box 31001-0275 of debt incurred by Pasadena, CA 91110-0275 Lynx & Companies, LLC Western Community Bank Personal guarantee $262,351 475 S. State Road of debt incurred by Pleasant Grove, UT 84062-3640 Lynx & Companies, LLC Employer Solutions Group Potential liability $225,733 for debt incurred by Lynx & Companies, LLC Highland Residential, LLC Residential building $600,000 at 215 S. Aspen Drive Mapleton, UT 84664; value of security: $1,400,000; value of senior lien: $985,052 Wells Fargo Equipment Finance Personal guarantee $165,486 of debt incurred by Lynx & Companies, LLC Huntington National Park Personal guarantee $128,844 of debt incurred by Lynx & Companies, LLC BB&T Equipment Finance Personal guarantee $112,273 of debt incurred by Lynx & Companies, LLC Balboa Capital Personal guarantee $96,955 of debt incurred by Lynx & Companies, LLC Plains Capital Leasing Personal guarantee $90,527 of debt incurred by Lynx & Companies, LLC Envision Capital Group Potential liability $88,599 for debt incurred by Lynx & Companies, LLC Engineered Component Solutions Potential liability $88,342 for debt incurred by Lynx & Companies, LLC Vanguard Leasing Personal guarantee $63,854 of debt incurred by Lynx & Companies, LLC Irwin Commercial Finance Personal guarantee $60,058 of debt incurred by Lynx & Companies, LLC DeLage Landen Personal guarantee $57,947 of debt incurred by Lynx & Companies, LLC Parsons, Behle & Latimer Potential liability $56,994 for debt incurred by Lynx & Companies, LLC Zions First National Bank Potential liability $56,348 for debt incurred by Lynx & Companies, LLC GENERAL MOTORS: Has No Thoughts of Bankruptcy, CEO Wagoner Says --------------------------------------------------------------- General Motors Corp. Chief Executive Officer Rick Wagoner, in a speech to the Dallas Chamber of Commerce, said the company has "no thoughts whatsoever" of bankruptcy, Margot Habiby and Jeff Green at Bloomberg News report. Mr. Wagoner, the report relates, said GM's cash will remain "robust" in 2008, and the company would be able to secure additional funds as needed. As reported by the Troubled Company Reporter on July 3, 2008, Merrill Lynch analyst John Murphy said a bankruptcy filing for GM is not impossible "if the market continues to deteriorate and significant incremental capital is not raised." Mr. Murphy, in a research note, said GM will need to raise $15,000,000,000 in capital to fund its operations for the next two years. Mr. Murphy, according to the reports, warned GM is burning through cash faster than investors realize. The next day, the TCR reported, JPMorgan analyst Himanshu Patel said in a conference call that GM is not "in danger of an imminent bankruptcy" and that bankruptcy fears have been overblown. Mr. Patel, however, said GM will need to raise about $10,000,000,000 to weather the downturn in U.S. auto sales, according to an Associated Press report. According to the TCR, Mr. Patel believes GM doesn't need cash immediately, since it has enough to fund what Mr. Patel expects will be an $18,000,000,000 cash burn through 2009. Patel also believes GM will attempt to raise funds and announce further restructuring in the third quarter of 2008. Bloomberg relates that Pete Hastings, a fixed-income analyst at Morgan Keegan & Co., said GM will need capital late in 2009 or early 2010, and "a lot can happen between now and then." Mr. Hastings, according to Bloomberg, said "With GM's liquidity, near- term bankruptcy talk is overdone, so Wagoner is right to dismiss it." "When things like this happen, some of the critics call this the end of the U.S. auto industry as we know it," Bloomberg quotes Mr. Wagoner as saying. "We're taking the tough but necessary actions to keep GM competitive over the long, long term." According to Bloomberg, GM Chief Financial Officer Ray Young said on May 13 that the compay had $24,000,000,000 in cash and marketable securities and access to about $7,000,000,000 in undrawn U.S. loans on March 31. Mr. Young said the amount is at least $6,000,000,000 more than it expected would be needed during a U.S. sales slide, Bloomberg continues. Mr. Wagoner also confirmed that the Hummer is the only one of GM's eight U.S. brands being studied for a possible sale or shutdown, Bloomberg says. According to Mr. Wagoner, the company doesn't have any plans to eliminate more brands, Bloomberg adds. About General Motors Based 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 June 24, 2008, DBRS has placed the ratings of General Motors Corporation and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. economy. Standard & Poor's Ratings Services is placing its corporate credit ratings on the three U.S. automakers, General Motors Corp., Ford Motor Co., and Chrysler LLC, on CreditWatch with negative implications, citing the need to evaluate the financial damage being inflicted by deteriorating U.S. industry conditions--largely as a result of high gasoline prices. Included in the CreditWatch placement are the finance units Ford Motor Credit Co. and DaimlerChrysler Financial Services Americas LLC, as well as GM's 49%-owned finance affiliate GMAC LLC. As related in the Troubled Company Reporter on June 5, 2008, Standard & Poor's Ratings Services said that its ratings on General Motors Corp. (B/Negative/B-3) are not immediately affected by the company's announcement that it will cease production at four North American truck plants over the next two years. These closures are in response to the re-energized shift in consumer demand away from light trucks. GM previously said only one shift was being eliminated at each of the four truck plants. Production is being increased at plants producing small and midsize cars, but the cash contribution margin from these smaller vehicles is far less than that of light trucks. GENERAL MOTORS: Wants Court to Declare Set-Off & Recoupment Claims ------------------------------------------------------------------ General Motors Corporation asks the United States Bankruptcy Court Eastern District of Michigan to declare that it has "allowed set- off and recoupment claims" as defined in the joint Chapter 11 plan of liquidation of Blue Water Automotive Systems Inc. and its debtor affiliates, in an amount to be determined by the Court. As reported in the Troubled Company Reporter on May 26, 2008, the Debtors' Plan contemplates the sale of substantially all of the Debtors' assets and equity interests. The Plan will be effective when: 1. The Court approves the sale of the Business; 2. The Court enters an order confirming the Plan; and 3. The purchaser closes on the sale. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/bw_disclosurestat.pdf A full-text copy of the Plan of Liquidation is available for free at http://bankrupt.com/misc/bw_planofliquidation.pdf The Debtors and the Official Committee of Unsecured Creditors, through a Court-approved stipulation, agreed to lift the automatic stay to allow GM to file an adversary proceeding. Before the Petition Date, GM entered into various contracts and purchase orders with the Debtors for the production of component parts as well as the acquisition of tooling for GM's production of its component parts. According to Daniel W. Linna, Jr., Esq., at Honigman Miller Schwatz and Cohn, LLP, in Detroit, Michigan, the Debtors are the sole source suppliers to GM of the Component Parts. He adds that the Component Parts are essential to GM's manufacturing and assembly operations. Without sufficient quantities of the Component Parts, GM cannot maintain production and an alternate source of supply of the Component Parts is not readily available because the Debtors manufacture the Component Parts using specially manufactured, unique Tooling. The Debtors allege that GM owes them $2,584,430 for a prepetition payable out of their performance of the Purchase Orders. Immediately after the Petition Date, the Debtors were unable to perform under the Purchase Orders and thus were in breach of them, Mr. Linna contends. He adds that the Debtors further incurred breaches of the Purchase Orders when they entered into the Accommodation Agreement with Ford Motor Company. He asserts that the Debtors anticipatorily breached the Purchase Orders by, among others, advising GM that they could not or would not perform their obligations under the Purchase Orders without the financial accommodations, not shipping GM its production requirements of Component Parts, informing GM that they had stopped producing the Component Parts, and by proposing to reject the Purchaser Orders pursuant to their Amended Joint Plan of Liquidation. Mr. Linna says GM's damages to protect its supply of Component Parts and mitigate its damages exceed $4,900,000, which damages include: -- about $2,600,000 in price increases, of which about $1,865,000 has been paid to Debtors as of the date of July 2, 2008; -- about $1,874,736 in damages relating to the Inventory Bank, including $560,983 paid directly to Debtors as Incremental Bank Costs and about $1,313,753 above the applicable Purchase Order price to transport, handle, and store the Inventory Bank; -- about $78,750 of un-recovered Tooling costs paid directly to tool vendors, which amount Debtors were obligated to pay; and -- $435,379 of unrecovered legal and professional fees arising from Debtors' insolvency, bankruptcy filing, and breaches of the Purchase Orders. Mr. Linna adds that GM will incur additional damages if Debtors reject the Purchase Orders as GM will be forced to purchase Component Parts from alternate suppliers at higher prices. GM will also incur additional damages if it is compelled to fund Debtors' wind-down expenses, as provided in the GM Accommodation Agreement. Furthermore, he contends that GM's damages will likely include warranty claims and other ordinary course commercial claims that are not currently liquidated. 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, serve 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 $100 million to $500 million. The Debtors filed their Liquidation Plan on May 9, 2008. The Plan contemplates a sale of substantially all of the Debtors' assets and equity interests, except for a piece of real property located at Yankee Road, in St. Clair, Michigan, on or before June 30, 2008. The Court will hold a hearing June 18, 2008, to consider confirmation of the Plan. (Blue Water Automotive Bankruptcy News, Issue No. 22, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) About General Motors 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 June 24, 2008, DBRS has placed the ratings of General Motors Corporation and General Motors of Canada Limited Under Review with Negative Implications. The rating action reflects the structural deterioration of the company's operations in North America brought on by high oil prices and a slowing U.S. economy. Standard & Poor's Ratings Services is placing its corporate credit ratings on the three U.S. automakers, General Motors Corp., Ford Motor Co., and Chrysler LLC, on CreditWatch with negative implications, citing the need to evaluate the financial damage being inflicted by deteriorating U.S. industry conditions--largely as a result of high gasoline prices. Included in the CreditWatch placement are the finance units Ford Motor Credit Co. and DaimlerChrysler Financial Services Americas LLC, as well as GM's 49%-owned finance affiliate GMAC LLC. As related in the Troubled Company Reporter on June 5, 2008, Standard & Poor's Ratings Services said that its ratings on General Motors Corp. (B/Negative/B-3) are not immediately affected by the company's announcement that it will cease production at four North American truck plants over the next two years. These closures are in response to the re-energized shift in consumer demand away from light trucks. GM previously said only one shift was being eliminated at each of the four truck plants. Production is being increased at plants producing small and midsize cars, but the cash contribution margin from these smaller vehicles is far less than that of light trucks. GREEKTOWN CASINO: Mich. Gaming Board Gives Final OK to $150MM Loan ------------------------------------------------------------------ The Michigan Gaming Control Board has given final approval to the $150,000,000 debtor-in-possession financing for Greektown Casino LLC and its debtor-affiliates to complete a permanent casino construction and hotel expansion. "We want to thank the Michigan Gaming Control Board for their work to review and approve the financing we need to complete construction of our permanent facility," said Greektown Casino Management Board Chairman Tom Miller, who is also a member of the Board of Directors of the Sault Ste. Marie Tribe of Chippewa Indians, owners of the casino. "The federal court's and MGCB's expeditious approval of our final financing plan means we are full speed ahead on the construction of our world-class permanent casino and hotel resort." Greektown Casino remains open for business as usual during the Debtors' Chapter 11 reorganization. Previously, both the U.S. Bankruptcy Court for the Eastern District of Michigan and MGCB had granted interim approval for $51,300,000,000 of the $150,000,000 in DIP financing to fund the hotel and gaming floor expansion. The latest approval will cover costs for the remainder of the casino's 25,000 square foot gaming floor expansion and 400-room hotel. Greektown Casino's expanded gaming floor is scheduled to open in late August 2008, and the hotel is scheduled to open in January 2009. In November 2007, Greektown Casino opened its new attached parking structure, marking the completion of Phase 1 construction work on the new permanent Greektown Casino and hotel. Phase 2 - construction of the casino's new 400-room hotel and expanded gaming floor - is scheduled to be completed in phases in the coming months. The permanent casino and hotel will include a multi-purpose theater, buffet, three restaurants, and 25,000 square feet of additional gaming space. Total investment in the permanent Greektown Casino project will be about $500 million. Located in Detroit's Greektown Entertainment District, Greektown Casino features more than 2,300 slot machines and more than 70 table games in 75,000 square feet of luxurious Mediterranean- themed gaming space. Additional slot machines and table games will become operational when the gaming floor expansion is completed. About Greektown Casino Based in Detroit, Michigan, Greektown Holdings, LLC and its affiliates -- http://www.greektowncasino.com/-- operate world- class casino gaming facilities located in Detroit's historic Greektown district featuring over 75,000 square feet of casino gaming space with more than 2,400 slot machines, over 70 tables games, a 12,500-square foot salon dedicated to high limit gaming and the largest live poker room in the metropolitan Detroit gaming market. Greektown Casino employs approximately 1,971 employees, and estimates that it attracts over 15,800 patrons each day, many of whom make regular visits to its casino complex and related properties. In 2007, Greektown Casino achieved a 25.6% market share of the metropolitan Detroit gaming market. Greektown Casino has also been rated as the "Best Casino in Michigan" and "Best Casino in Detroit" numerous times in annual readers' polls in Detroit's two largest newspapers. The company and seven of its affiliates filed for Chapter 11 protection on May 29, 2008 (Bankr. E.D. Mich. Lead Case No. 08- 53104). Daniel J. Weiner, Esq., Michael E. Baum, Esq., and Ryan D. Heilman, Esq., at Schafer and Weiner PLLC, represent the Debtors in their restructuring efforts. Judy B. Calton, Esq., at Honigman Miller Schwartz and Cohn LLP, represents the Debtors as their special counsel. The Debtors chose Conway MacKenzie & Dunleavy as their financial advisor, and Kurtzman Carson Consultants LLC serves as the Debtors' claims, noticing, and balloting agent. When the Debtor filed for protection from its creditors, it listed consolidated estimated assets and debts of $100 million to $500 million. (Greektown Casino Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). HAVEN HEALTHCARE: Court Directs Takeover of Homes, Names Receiver ----------------------------------------------------------------- The Hon. Albert S. Dabrowski of the U.S. Bankruptcy Court for the District of Connecticut issued an order for a state takeover of certain nursing home facilities owned by Haven Healthcare Management LLC and its debtor-affiliates. At the Debtors' behest, the Court appointed Phyllis A. Belmonte as receiver to manage four remaining nursing homes, various reports say. The receiver will oversee the Debtors' operations until a sale can be closed, reports relate. The four nursing homes are located at Danielson, Windham, Norwich and Waterford in Connecticut, the reports reveal. The Debtors related that they ran out of options. They requested the appointment of a receiver to manage, maintain, and operate their facilities. Haven operates 27 nursing homes and assisted-living centers, most under the Haven Health Center name. A total of 15 centers are in Connecticut; four in Rhode Island, in Coventry, Pawtucket, Warren and the Greenville section of Smithfield; one in Chelsea, Mass.; four in New Hampshire; and three in Vermont. According to AP, the Court allowed the transfer of five nursing homes that are located in Rhode Island, Vermont and New Hampshire to Omega Healthcare Investments Inc. CapitalSource Finance LLC will manage three other nursing homes in Connecticut, and Connecticut Health Facilities Inc. and Nationwide Health Properties Inc. will manage one nursing home each, AP relates. About Omega HealthCare Investors Inc. Based in Timonium, Maryland, Omega HealthCare Investors, Inc. (NYSE:OHI) -- http://www.omegahealthcare.com/-- is a real estate investment trust investing in and providing financing to the long-term care industry. At Sept. 30, 2007, the company owned or held mortgages on 238 SNFs and assisted living facilities with approximately 27,465 beds located in 27 states and operated by 29 third-party healthcare operating companies. About Haven Healthcare Headquartered in Middletown, Connecticut, Haven Healthcare Management LLC -- http://www.havenhealthcare.com/-- provide nursing care to the elderly in New England, Connecticut. The company operates health centers and assisted living facilities. In addition, the company specializes in short-term rehabilitative care and long-term care. The company and 46 of its affiliates filed for chapter 11 protection on Nov. 22, 2007 (Bankr. D. Conn. Lead Case No. 07- 32719). Moses and Singer LLP serves as the Debtors' counsel. Kurtzman Carson Consultants LLC is the Debtors' claims and noticing agent. The U.S. Trustee for Region 2 appointed nine creditors to serve on an Official Committee of Unsecured Creditors in this case. Pepper Hamilton LLP is counsel and Neubert Pepe & Monteith P.C. as its co-counsel to the Creditors Committee. When the Debtors sought protection from their creditors, they listed assets and debts between $1 million to $100 million. The Debtors' consolidated list of 50 largest unsecured creditors showed total claims of more than $20 million. * * * As of Feb. 29, 2008, the Debtors' balance sheet showed total assets of $25,965,631 and total liabilities of $38,597,720 resulting in a $12,632,089 stockholders' deficit. HAVEN HEALTHCARE: Allowed to Transfer South Windsor to CCSW ----------------------------------------------------------- Haven Healthcare Management LLC and its debtor-affiliates obtained approval from the U.S. Bankruptcy Court for the District of Connecticut to enter into a transition agreement with the Continuing Care of South Windsor Inc. and Connecticut Health Facilities Inc. Under the agreement, the Debtors' South Windsor facility will be transfered to CCSW and CHFI. The facility is leased from CCSW. The Debtors said they do no have the ability to continue operations. The Debtors said that their debtor-in-possession lenders refuse to fund the losses at South Windsor any longer. CCSW, lessor, has agreed to take possession of the facility, the Debtors said. According to the Debtors, they have agreed to surrender possession of the facility, including all related business records. The Debtors have agreed to sell their personal property at the facility to CCSW for a nominal amount. About Omega HealthCare Investors Inc. Based in Timonium, Maryland, Omega HealthCare Investors, Inc. (NYSE:OHI) -- http://www.omegahealthcare.com/-- is a real estate investment trust investing in and providing financing to the long-term care industry. At Sept. 30, 2007, the company owned or held mortgages on 238 SNFs and assisted living facilities with approximately 27,465 beds located in 27 states and operated by 29 third-party healthcare operating companies. About Haven Healthcare Headquartered in Middletown, Connecticut, Haven Healthcare Management LLC -- http://www.havenhealthcare.com/-- provide nursing care to the elderly in New England, Connecticut. The company operates health centers and assisted living facilities. In addition, the company specializes in short-term rehabilitative care and long-term care. The company and 46 of its affiliates filed for chapter 11 protection on Nov. 22, 2007 (Bankr. D. Conn. Lead Case No. 07- 32719). Moses and Singer LLP serves as the Debtors' counsel. Kurtzman Carson Consultants LLC is the Debtors' claims and noticing agent. The U.S. Trustee for Region 2 appointed nine creditors to serve on an Official Committee of Unsecured Creditors in this case. Pepper Hamilton LLP is counsel and Neubert Pepe & Monteith P.C. as its co-counsel to the Creditors Committee. When the Debtors sought protection from their creditors, they listed assets and debts between $1 million to $100 million. The Debtors' consolidated list of 50 largest unsecured creditors showed total claims of more than $20 million. * * * As of Feb. 29, 2008, the Debtors' balance sheet showed total assets of $25,965,631 and total liabilities of $38,597,720 resulting in a $12,632,089 stockholders' deficit. HAVEN HEALTHCARE: Credit Bid Sale to Secured Creditors Approved --------------------------------------------------------------- The Hon. Albert S. Dabrowski of the U.S. Bankruptcy Court for the District of Connecticut allowed Haven Healthcare Management LLC and its debtor-affiliates to sell their facilities to secured creditors on a credit basis. The Debtors have related that they neither have the ability nor the funding to continue the operations of their facilities. As of June 27, 2008, the Debtors disclosed that they are in default under a debtor-in-possession facility. Sale of Nursing Homes for $93 Mil. Credit Bid The Troubled Company Reporter stated on July 4, 2008, that Judge Dabrowski considered on July 2, 2008, a request by the Debtors to sell their nursing homes to secured creditors for a $93 million credit bid. At that time, the judge has not decided on the matter. Haven related that the credit bid sale is in the best interest of the estate, court documents showed. Secured creditors CapitalSource, Nationwide Health, and Omega Healthcare had agreed to provide $50 million debtor-in-possession fund for the Debtors until July 7. Haven had said that after July 7, 2008, it has no cash or financing to continue the operation of their assets whose value is deteriorating, court filings also show. Court documents show that after two failed attempts to sell the nursing homes, there is no other option for the Debtors besides the credit bid. Two Sale Efforts Collapse The TCR related on July 1, 2008, that a deal to sell the Haven's nursing homes has collapsed two weeks after it was disclosed, forcing state officials to devise a new plan to operate the chain. State Attorney General Richard Blumenthal, said that Formation Capital LLC of Alpharetta, Georgia, notified the state that it was pulling out of the $85 million deal to take over 15 of Haven's homes in Connecticut and 10 in other New England states. Prior to the sale deal with Formation Capital, the nursing homes were marketed to LifeHouse Retirement Properties Inc. for $105 million, The Deal relates. However, LifeHouse withdrew from the sale set for May 19, 2008, when the state said that its new Medicaid reimbursement rates for Haven residents were lowered, The Deal reports. About Omega HealthCare Investors Inc. Based in Timonium, Maryland, Omega HealthCare Investors, Inc. (NYSE:OHI) -- http://www.omegahealthcare.com/-- is a real estate investment trust investing in and providing financing to the long-term care industry. At Sept. 30, 2007, the company owned or held mortgages on 238 SNFs and assisted living facilities with approximately 27,465 beds located in 27 states and operated by 29 third-party healthcare operating companies. About Haven Healthcare Headquartered in Middletown, Connecticut, Haven Healthcare Management LLC -- http://www.havenhealthcare.com/-- provide nursing care to the elderly in New England, Connecticut. The company operates health centers and assisted living facilities. In addition, the company specializes in short-term rehabilitative care and long-term care. The company and 46 of its affiliates filed for chapter 11 protection on Nov. 22, 2007 (Bankr. D. Conn. Lead Case No. 07- 32719). Moses and Singer LLP serves as the Debtors' counsel. Kurtzman Carson Consultants LLC is the Debtors' claims and noticing agent. The U.S. Trustee for Region 2 appointed nine creditors to serve on an Official Committee of Unsecured Creditors in this case. Pepper Hamilton LLP is counsel and Neubert Pepe & Monteith P.C. as its co-counsel to the Creditors Committee. When the Debtors sought protection from their creditors, they listed assets and debts between $1 million to $100 million. The Debtors' consolidated list of 50 largest unsecured creditors showed total claims of more than $20 million. * * * As of Feb. 29, 2008, the Debtors' balance sheet showed total assets of $25,965,631 and total liabilities of $38,597,720 resulting in a $12,632,089 stockholders' deficit. HEXION SPECIALTY: Trial on Merger Feud to Begin September 8 ----------------------------------------------------------- The Delaware Court of Chancery has granted Huntsman Corporation's request to expedite the Court's review of Hexion Specialty Chemicals Inc.'s efforts to abandon Hexion's pending merger with Huntsman. The trial will begin on Sept. 8, 2008. Huntsman related that the trial scheduled to begin September 8 will address Hexion's allegations that the combined Hexion and Huntsman entity would be insolvent and that there has been a material adverse effect under the merger agreement, neither of which are supported by the facts or the terms of the merger agreement. The Court agreed with Huntsman that it is necessary and appropriate to have a trial that will conclude on or about the end of the second week of September to provide sufficient time to consummate the merger if Huntsman prevails at trial. Huntsman is confident that a trial will reveal that Huntsman has not suffered a material adverse effect, the combined Huntsman- Hexion entity would not be insolvent, and that Hexion is required to proceed with consummating the merger. Huntsman reiterated that the merger agreement has no financing contingency, that it obligated Hexion to use its efforts to obtain required financing, and that Hexion represented to Huntsman in the merger agreement that the proceeds contemplated by the financing would be sufficient to complete the merger. Huntsman stated that despite its public pronouncements to the contrary, Hexion has sought to delay the financing for the merger. At trial, Huntsman also will address the insolvency opinion procured on Hexion's behalf for the purpose of justifying its predetermined course of conduct, well as its claim that Huntsman has suffered a material adverse effect. Huntsman said that its performance has not been different from that of the chemical industry over the same period of time. The alleged changes of which Hexion complained are risks they agreed to accept in the merger agreement and in no way amount to a material adverse effect as defined in the merger agreement. Huntsman is confident that the Delaware Court will support this view. "We are grateful that the Court has agreed to hear our case in an expedited fashion," Peter Huntsman, President and CEO, stated. "We look forward to a swift repudiation of Hexion's misguided allegations and apparently disingenuous rhetoric about their intentions to comply with our merger agreement, all the while continuing to breach the same." "They may view their tactics as business as usual, but we have great faith that our legal system will fully reveal their careless disregard for contracts and hold them accountable, especially in light of their assurance to our board and our family that we have an 'ironclad' agreement," Jon M. Huntsman, Founder and Chairman of Huntsman Corporation, added. Background As reported by the Troubled Company Reporter on July 13, 2007, Huntsman agreed to a definitive merger agreement with Hexion Specialty, pursuant to a transaction with a total value of approximately $10.6 billion, including the assumption of debt. Under the terms of the agreement, Hexion will acquire all of the outstanding common stock of Huntsman for $28 per share in cash. The agreement also provides that the cash price per share to be paid by Hexion will increase at the rate of 8% per annum beginning 270 days from July 12, 2007. Huntsman has terminated the merger agreement with Basell AF believing that the Hexion transaction was a superior proposal. The Hexion deal was unanimously approved by the board of directors of Huntsman. The transaction is subject to customary closing conditions, including regulatory approval in the U.S. and in Europe, well as the approval of Huntsman shareholders. Entities controlled by MatlinPatterson and the Huntsman family and a Huntsman charitable trust, who collectively own approximately 57% of Huntsman's common stock, have agreed to vote in favor of the transaction. The transaction is not subject to a financing condition and commitments have been obtained by Hexion for all necessary debt financing from affiliates of Credit Suisse and Deutsche Bank AG. Hexion will have up to 12 months, subject to a 90 day extension by the Huntsman board under certain circumstances, to close the transaction. Merrill Lynch & Co. and Cowen and Company LLC acted as financial advisors to Huntsman. Vinson & Elkins L.L.P. and Shearman and Sterling LLP acted as legal advisors to Huntsman. Extension of Merger Termination Date On Jan. 29, 2008, the TCR reported that Hexion informed Huntsman that it will exercise its right to extend the termination date by 90 days from April 5 to July 4, 2008. On April 5, 2008, Hexion Specialty Chemicals Inc. exercised an option under its merger agreement with Huntsman Corporation dated as of July 12, 2007, extending the merger agreement termination date by 90 days, to 5:00 p.m. Houston time on July 4, 2008. Hexion's Lawsuit to Cancel Merger On June 19, the TCR reported that Hexion and related entities filed a suit in the Delaware Court of Chancery to cancel the agreement. Hexion said in the suit that it believes that the capital structure agreed to by Huntsman and Hexion for the combined company is no longer viable because of Huntsman's increased net debt and its lower than expected earnings. While both companies individually are solvent, Hexion believes that consummating the merger on the basis of the capital structure agreed to with Huntsman would render the combined company insolvent. Comments and Responses Hexion said that the company and Apollo Management L.P. received a letter from Peter Huntsman, Huntsman Corporation's president and CEO, stating that their actions were inconsistent with the terms of the merger agreement. Huntsman is violating its obligations to Huntsman Corp. by seeking to cancel the transaction, Bloomberg relates according to Mr. Huntsman. Mr. Huntsman reportedly stated that the actions appear to be a blatant attempt to deprive its shareholders of the benefits of the Merger Agreement that was agreed to nearly a year ago. Huntsman's Countersuit Reports say Huntsman has filed a countersuit against Apollo Management and two of its founders in Texas state court, alleging interference with its merger with Hexion Specialty Chemicals, an Apollo company. Huntsman is seeking a jury trial in Texas to determine liability for "actual damages exceeding USD 3 bn, plus exemplary damages," according to Plasteurope (Germany). In response, Hexion said: "It is unfortunate that Huntsman has chosen to file a baseless lawsuit against Apollo and to personally sue two of its principals. Huntsman's Texas suit violates a clear provision of the merger agreement which requires that any litigation be brought exclusively in the State of Delaware. As we alleged in our suit, primarily due to Huntsman's underperformance, we believe that consummating the merger on the basis of the capital structure agreed to with Huntsman would render the combined company insolvent. In fact, Huntsman's suit does not dispute that the combined company would be insolvent. We believe Huntsman's lawsuit is wholly without merit." About Huntsman Corporation Headquartered in Salt Lake City, Utah, Huntsman Corporation (NYSE:HUN) -- http://www.huntsman.com/-- is a manufacturer of differentiated chemical products and inorganic chemical products. The company operates in four segments: Polyurethanes, Materials and Effects, Performance Products and Pigments. Its products are used in a range of applications, including those in the adhesives, aerospace, automotive, construction products, durable and non- durable consumer products, electronics, medical, packaging, paints and coatings, power generation, refining, synthetic fiber, textile chemicals and dye industries. About Hexion Specialty Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. -- http://www.hexionchem.com/-- is a producer of thermosetting resins, or thermosets. Thermosets are a critical ingredient in virtually all paints, coatings, glues and other adhesives produced for consumer or industrial uses. Hexion Specialty Chemicals is controlled by an affiliate of Apollo Management L.P. Hexion Specialty Chemicals Inc.'s balance sheet at March 31, 2008, showed the company had total assets of $4.2 billion and total liabilities of $5.5 billion, resulting in a shareholders' deficit of $1.3 billion. HJ HEINZ: S&P Assigns 'BB+' Rating on Proposed $350MM Pref. Stock ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'BBB' senior unsecured debt rating to Pittsburgh, Pennsylvania-based H.J. Heinz Co.'s Rule 415 shelf registration. The new shelf has an indeterminate aggregate initial offering amount and number of debt securities. At the same time, Standard & Poor's also assigned its 'BBB' rating to the company's proposed $500 million senior unsecured notes due 2013. These notes will be issued under Heinz's new shelf registration for debt securities. Proceeds from this debt issuance will be used for general corporate purposes, including repayment of commercial paper. Standard & Poor's also assigned its 'BB+' rating to subsidiary Heinz Finance Co.'s proposed $350 million voting cumulative preferred stock, Series B, due July 2013. Proceeds from this debt issuance will be used for general corporate purposes, including repayment of commercial paper and indebtedness incurred to redeem the Series A preferred shares of the company. The company has 3,250 shares of Series A preferred shares outstanding, which are required to be redeemed on July 15, 2008, at a redemption price of $100,000 per share, plus accumulated and unpaid dividends. The Series B preferred stock will be issued under Rule 144A and will not be registered under the Securities Act. The ratings on Heinz reflect its broad, strong portfolio of branded products, geographic diversity, and participation in the relatively stable packaged and processed food industry. These factors are offset by credit measures that are at the low end of the rating category medians because of high levels of share repurchases and a legacy of debt-financed acquisitions. Ratings Assigned H.J. Heinz Co. WKSI shelf Prelim. BBB Sr. unsecured debt BBB H.J. Heinz Finance Co. Preferred stock BB+ HSN INC: Moody's Assigns Ba1 CFR Related to Spin-off Financing -------------------------------------------------------------- Moody's Investors Service assigned a Ba1 first time corporate family rating to HSN, Inc. in connection with a financing arranged related to its spin-off from IAC/InterActiveCorp. These ratings are subject to review of final documentation, and assume the financing successfully closes as outlined to Moody's. The rating outlook is stable. First time ratings assigned are: -- Corporate family rating of Ba1 -- Probability of default rating of Ba1 -- $150 million senior secured revolving credit facility at Baa2 (LGD 2, 18%) -- $150 million senior secured term loan facility at Baa2 (LGD 2, 18%) -- $250 million senior unsecured notes at Ba2 (LGD 5, 70%) -- Speculative grade liquidity at SGL-2 The Ba1 corporate family rating of HSN is supported by the strong position of the company in TV retailing, modest scale in terms of revenue, very good liquidity, and strong pro-forma credit metrics. However, the ratings are constrained by the high seasonality of the company and heavy reliance on the fourth quarter holiday season. Also, constraining the ratings is the historically inconsistent merchandising of the company which it is now trying to improve through the recent realignment of its merchandise assortments. Increased competition in the retail sector stemming from the weak economic environment further constrains the ratings. The stable rating outlook incorporates solid position of HSN within its Ba1 rating category and Moody's view that it will maintain strong liquidity. It also incorporates Moody's expectation that the company will refrain from aggressive financial policies. HSN's SGL-2 speculative grade liquidity rating reflects very good liquidity. The company will have a five-year $150 million revolving credit facility which is secured by all of the assets of the company. Moody's expects the company to maintain its solid free cash flow and largely undrawn credit facility. The credit agreement of the company has two financial covenants, a leverage ratio of no more than 2.75 times and an interest coverage ratio of no less than 3 times. Moody's expects that HSN will have ample cushion to comply with all of its financial convents. HSN does not have a solid source of alternative liquidity since its assets are largely encumbered. Headquartered in St. Petersburg, Florida, HSN, Inc. is on of the largest television retailers in the U.S. The company also operates catalog and Internet retailing businesses. HUDSON CANYON: Fitch Withdraws 'CC' Ratings on Three Notes Classes ------------------------------------------------------------------ Fitch Ratings withdraws ratings to Hudson Canyon Funding, Ltd. effective immediately as: -- $47,800,000 class A 'CC' ; -- $22,000,000 class B-1 'CC'; -- $9,300,000 class B-2 'CC'. These classes of notes were terminated in April 2008 as a result of the election of Citibank, N.A., to exercise their right to unwind the transaction after the Net Collateral Value dropped below the Termination Threshold in February 2008. Subsequently, there was an exchange agreement whereby the existing notes in Hudson Canyon were exchanged for junior notes in a new cash flow collateralized loan obligation. Given this termination and exchange, Fitch withdraws its ratings. HUNTER FAN: Moody's Cuts B2 Corporate Family Rating to B3 --------------------------------------------------------- Moody's Investors Service lowered the debt ratings of Hunter Fan Company, including its corporate family rating to B3 from B2. The rating outlook is stable. The downgrade reflects the company's weak credit metrics as a result of soft operating performance, as soft economic conditions and poor weather have resulted in tighter inventory management by large customers going into the spring/summer peak selling season, leading to weaker-than-expected revenue and EBITDA for Hunter Fan. Although ongoing cost cutting efforts have partially offset volume declines, and good working capital management has led to positive free cash flow generation and some debt reduction for the latest 12-month period, Moody's is concerned that it will take longer than expected for performance to improve to levels originally expected. Hunter Fan's B3 CFR reflects the company's weak credit metrics, moderate scale in the home furnishing/small appliance market, and high customer concentration with major home improvement retail chains. These aspects are partly mitigated by the company's leading market position in the branded ceiling fan industry and the well-recognized "Hunter" and "Casablanca" brand names. The stable ratings outlook reflects some tolerance for modest fluctuations in credit statistics, and the expectation that the company will maintain adequate liquidity through modestly positive cash flow generation, adequate covenant headroom, and sufficient availability under its revolving credit facility. If performance deteriorates to a point where debt/EBITDA exceeds 8.0x, free cash flow turns negative, or covenant cushion becomes tenuous, the ratings would likely come under further downward pressure. Conversely, upward rating pressure would stem from improved performance resulting in debt / EBITDA falling below 5.5x. These ratings were downgraded: Hunter Fan Company -- Corporate Family Rating to B3 from B2 -- Probability of Default Rating to B3 from B2 -- First-lien secured term loan to B2 (LGD 3, 38%) from B1 (LGD 3, 38%) -- First-lien secured revolving credit facility to B2 (LGD 3, 38%) from B1 (LGD 3, 38%) -- Second-lien secured term loan to Caa2 (LGD 5, 86%) from Caa1 (LGD 5, 86%) Headquartered in Memphis, Tennessee, Hunter Fan Company designs, engineers, sources and markets ceiling fans and home comfort appliances primarily under the "Hunter" and "Casablanca" brands. HUNTSMAN CORP: Says Court Will Facilitate Review of Hexion's Acts ----------------------------------------------------------------- Huntsman Corporation disclosed that the Delaware Court of Chancery has granted its request to expedite the Court's review of Hexion's efforts to abandon HexionSpecialty Chemicals Inc.'s pending merger with Huntsman. The trial scheduled to begin September 8 will address Hexion's allegations that the combined Hexion and Huntsman entity would be insolvent and that there has been a material adverse effect under the merger agreement, neither of which are supported by the facts or the terms of the merger agreement. The Court agreed with Huntsman that it is necessary and appropriate to have a trial that will conclude on or about the end of the second week of September in order to provide sufficient time to consummate the merger if Huntsman prevails at trial. Huntsman is confident that a trial will reveal that Huntsman has not suffered a material adverse effect, the combined Huntsman- Hexion entity would not be insolvent, and that Hexion is required to proceed with consummating the merger. Huntsman reiterated that the merger agreement has no financing contingency, that it obligated Hexion to use its efforts to obtain required financing, and that Hexion represented to Huntsman in the merger agreement that the proceeds contemplated by the financing would be sufficient to complete the merger. Huntsman stated that despite its public pronouncements to the contrary, Hexion has sought to delay the financing for the merger. At trial, Huntsman also will address the insolvency opinion procured on Hexion's behalf for the purpose of justifying its predetermined course of conduct, well as its claim that Huntsman has suffered a material adverse effect. Huntsman said that its performance has not been different from that of the chemical industry over the same period of time. The alleged changes of which Hexion complained are risks they agreed to accept in the merger agreement and in no way amount to a material adverse effect as defined in the merger agreement. Huntsman is confident that the Delaware Court will support this view. "We are grateful that the Court has agreed to hear our case in an expedited fashion," Peter Huntsman, President and CEO, stated. "We look forward to a swift repudiation of Hexion's misguided allegations and apparently disingenuous rhetoric about their intentions to comply with our merger agreement, all the while continuing to breach the same." "They may view their tactics as business as usual, but we have great faith that our legal system will fully reveal their careless disregard for contracts and hold them accountable, especially in light of their assurance to our board and our family that we have an 'ironclad' agreement," Jon M. Huntsman, Founder and Chairman of Huntsman Corporation, added. Background As reported by the Troubled Company Reporter on July 13, 2007, Huntsman agreed to a definitive merger agreement with Hexion Specialty, pursuant to a transaction with a total value of approximately $10.6 billion, including the assumption of debt. Under the terms of the agreement, Hexion will acquire all of the outstanding common stock of Huntsman for $28 per share in cash. The agreement also provides that the cash price per share to be paid by Hexion will increase at the rate of 8% per annum beginning 270 days from July 12, 2007. Huntsman has terminated the merger agreement with Basell AF believing that the Hexion transaction was a superior proposal. The Hexion deal was unanimously approved by the board of directors of Huntsman. The transaction is subject to customary closing conditions, including regulatory approval in the U.S. and in Europe, well as the approval of Huntsman shareholders. Entities controlled by MatlinPatterson and the Huntsman family and a Huntsman charitable trust, who collectively own approximately 57% of Huntsman's common stock, have agreed to vote in favor of the transaction. The transaction is not subject to a financing condition and commitments have been obtained by Hexion for all necessary debt financing from affiliates of Credit Suisse and Deutsche Bank AG. Hexion will have up to 12 months, subject to a 90 day extension by the Huntsman board under certain circumstances, to close the transaction. Merrill Lynch & Co. and Cowen and Company LLC acted as financial advisors to Huntsman. Vinson & Elkins L.L.P. and Shearman and Sterling LLP acted as legal advisors to Huntsman. Extension of Merger Termination Date On Jan. 29, 2008, the TCR reported that Hexion informed Huntsman that it will exercise its right to extend the termination date by 90 days from April 5 to July 4, 2008. On April 5, 2008, Hexion Specialty Chemicals Inc. exercised an option under its merger agreement with Huntsman Corporation dated as of July 12, 2007, extending the merger agreement termination date by 90 days, to 5:00 p.m. Houston time on July 4, 2008. Hexion's Lawsuit to Cancel Merger On June 19, the TCR reported that Hexion and related entities filed a suit in the Delaware Court of Chancery to cancel the agreement. Hexion said in the suit that it believes that the capital structure agreed to by Huntsman and Hexion for the combined company is no longer viable because of Huntsman's increased net debt and its lower than expected earnings. While both companies individually are solvent, Hexion believes that consummating the merger on the basis of the capital structure agreed to with Huntsman would render the combined company insolvent. Comments and Responses Hexion said that the company and Apollo Management L.P. received a letter from Peter Huntsman, Huntsman Corporation's president and CEO, stating that their actions were inconsistent with the terms of the merger agreement. Huntsman is violating its obligations to Huntsman Corp. by seeking to cancel the transaction, Bloomberg relates according to Mr. Huntsman. Mr. Huntsman reportedly stated that the actions appear to be a blatant attempt to deprive its shareholders of the benefits of the Merger Agreement that was agreed to nearly a year ago. Huntsman's Countersuit Reports say Huntsman has filed a countersuit against Apollo Management and two of its founders in Texas state court, alleging interference with its merger with Hexion Specialty Chemicals, an Apollo company. Huntsman is seeking a jury trial in Texas to determine liability for "actual damages exceeding USD 3 bn, plus exemplary damages," according to Plasteurope (Germany). In response, Hexion said: "It is unfortunate that Huntsman has chosen to file a baseless lawsuit against Apollo and to personally sue two of its principals. Huntsman's Texas suit violates a clear provision of the merger agreement which requires that any litigation be brought exclusively in the State of Delaware. As we alleged in our suit, primarily due to Huntsman's underperformance, we believe that consummating the merger on the basis of the capital structure agreed to with Huntsman would render the combined company insolvent. In fact, Huntsman's suit does not dispute that the combined company would be insolvent. We believe Huntsman's lawsuit is wholly without merit." About Hexion Specialty Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. -- http://www.hexionchem.com/-- is a producer of thermosetting resins, or thermosets. Thermosets are a critical ingredient in virtually all paints, coatings, glues and other adhesives produced for consumer or industrial uses. Hexion Specialty Chemicals is controlled by an affiliate of Apollo Management L.P. About Huntsman Corporation Headquartered in Salt Lake City, Utah, Huntsman Corporation (NYSE:HUN) -- http://www.huntsman.com/-- is a manufacturer of differentiated chemical products and inorganic chemical products. The company operates in four segments: Polyurethanes, Materials and Effects, Performance Products and Pigments. Its products are used in a range of applications, including those in the adhesives, aerospace, automotive, construction products, durable and non- durable consumer products, electronics, medical, packaging, paints and coatings, power generation, refining, synthetic fiber, textile chemicals and dye industries. * * * Moody's Investor Service placed Huntsman Corporation's corporate family rating at Ba3 in June 2007. The rating still holds to date. IAC/INTERACTIVECORP: Extends Offering Consent Deadline to July 23 ----------------------------------------------------------------- IAC/InteractiveCorp disclosed that, in connection with its cash tender offer for any and all of its outstanding 7% Senior Notes due 2013 (CUSIP Nos. 902984AD5 & 902984AC7/ISINs US902984AD51, US902984AC78 & USU9033KAA26) and related consent solicitation to amend the indenture governing the Notes, that it is extending the Consent Time from 5:00 p.m., New York City time, on Wednesday, July 9, 2008, to 5:00 p.m., New York City time, on Wednesday, July 23, 2008. The company is also extending the Expiration Time from Midnight, New York City time, on Wednesday, July 23, 2008, to Midnight, New York City time, on Wednesday, Aug. 6, 2008. IAC also is extending the Price Determination Date from July 9, 2008, to July 23, 2008. Holders who have tendered Notes do not need to re-tender their Notes or take any other action in response to these extensions. Except for the extension of the Consent Time, Expiration Time and Price Determination Date, the tender offer and consent solicitation and the Offer to Purchase and related Letter of Transmittal and Consent remain in full force and effect. The tender offer and consent solicitation are subject to the satisfaction of certain conditions, including: (i) the Minimum Tender Condition, which requires that Notes representing not less than a majority in aggregate principal amount of Notes outstanding be validly tendered prior to the Expiration Time; (ii) the Spin-Off Condition, which requires that all conditions precedent to the proposed spin-offs to IAC's stockholders will have been satisfied or waived by IAC and the distribution of shares of one or more of the companies to be spun-off will have occurred prior to the Expiration Time; and (iii) the Indenture Condition, which requires that the supplemental indenture implementing the proposed amendments will have been executed by the indenture trustee. Although the conditions to the tender offer and consent solicitation include the Spin-Off Condition, consummation of the tender offer and consent solicitation is not a condition precedent to any of the proposed spin-offs. The tender offer will expire at Midnight, New York City time, on Aug. 6, 2008, unless further extended or earlier terminated by IAC. The consent solicitation will expire at 5:00 p.m., New York City time, on July 23, 2008, unless further extended or earlier terminated by IAC. The yield on the Reference Security will be calculated at 2:00 p.m. on July 23, 2008, unless the Price Determination Date is further extended or the tender offer and consent solicitation are earlier terminated by IAC. IAC has retained Morgan Stanley & Co., Incorporated to act as the Dealer Manager for the tender offer and the Solicitation Agent for the consent solicitation. Questions regarding the tender offer and the consent solicitation may be directed to: Morgan Stanley Attn: Liability Management Tel (800) 624-1808 (toll-free) (212) 761-1941 (collect) Requests for documentation may be directed to: MacKenzie Partners Inc. Information Agent Tel (800) 322-2885 (toll-free) (212) 929-5500 (collect) About IAC IAC/InterActiveCorp (Nasdaq: IACI) -- http://iac.com/-- operates a portfolio of specialized and global brands in the sectors: Retailing, which includes the United States and International segments; Services, which includes the Ticketing, Lending, Real Estate, Teleservices and Home Services reporting segments; Media & Advertising, and Membership & Subscriptions, which includes the Vacations, Personals and Discounts reporting segments. * * * As reported in the Troubled Company Reporter on June 16, 2008, Standard & Poor's Ratings Services said that its ratings on IAC/InterActiveCorp, including the 'BB' corporate credit rating, remain on CreditWatch with negative implications, where they were initially placed on Nov. 5, 2007, following IAC's announcement that it planned to divide itself into five publicly traded companies. ICAHN ENTERPRISES: Moody's Cuts Corporate Family Rating to Ba3 -------------------------------------------------------------- Moody's Investors Service has downgraded the corporate family rating of Icahn Enterprises L.P. to Ba3 from Ba2. The ratings on Icahn Enterprises' senior unsecured notes and the company's guaranteed senior unsecured revolving credit facility were affirmed at Ba3 and Ba2, respectively. The outlook on the ratings was changed to negative from stable. Moody's stated that the downgrade of Icahn Enterprises' CFR reflects the risks inherent in the company's business strategy, which has evolved toward a greater emphasis on investment management and the buying and selling of businesses--the latter activity causing very significant earnings volatility. Moody's explained that the alignment of the CFR and the senior unsecured debt ratings incorporates the expectation that the capital structure will continue to consist primarily of senior unsecured debt with a materially smaller component of guaranteed senior unsecured bank debt. The investment management segment of Icahn Enterprises consists of one on-shore and three off-shore, long-short hedge funds that are invested in mostly publicly traded equities. The company, through Mr. Icahn, takes an activist approach with the bulk of its investments in the funds. "Concentrations at both the hedge fund level and with the corporate business segments make Icahn Enterprises susceptible to significant earnings and cash flow volatility. Given current turbulent markets, we believe that the company is more vulnerable to investment risks," Matthew Noll, Moody's VP and senior credit officer, summarized. According to Moody's, Icahn Enterprises manages and separately reports several business segments with the overarching objective of purchasing businesses at reasonably low fair values and ultimately selling them at higher multiples. Moody's commented that although Icahn Enterprises and Mr. Icahn have a demonstrated a successful history of executing this strategy, it presents several significant credit concerns, including considerable earnings volatility risk and key man risk, and it also raises corporate governance concerns associated with related party transactions, as many exchanges have occurred between Icahn Enterprises and Mr. Icahn. The rating agency stated that the downside risk with the corporate buy and sell strategy is that the company may not be able to grow the operating income of its businesses, resulting in either ongoing operating losses and/or an eventual loss on the sale of the business. The current economic slowdown is directly impacting the company's real estate and retail home fashion segments, which may make their potential sales more challenging and/or result in less attractive offers. Turning to the investment management activity, Moody's noted that while leverage in its hedge funds is nominal, the rating agency views them as highly concentrated relative to what it would expect of investment grade hedge funds. Moody's added that these funds are also exposed to greater risk of mark-to-market based revenue declines and limited performance based fees over the short- to intermediate-term in light of the challenging credit and capital markets. Moody's stated that Icahn Enterprises' rating outlook could be returned to stable if the company improves the stability of its earnings streams through higher contributions from recurring management fees from its investment management business, or if EBIT to interest expense coverage from its continuing operations improves to over 3x (currently estimated to be about 2x). The company could be downgraded if non-investment management business segments continue to contribute materially negative operating earnings to the overall business, or if EBIT to interest expense coverage from continuing operations drops to under 1x, or if the company's liquidity profile, as primarily measured by unrestricted cash reserves were to be reduced to under $1 billion for an extended period, with no corresponding reduction in debt. This rating was downgraded with a negative outlook: -- Icahn Enterprises L.P. : corporate family rating to Ba3 from Ba2 These ratings were affirmed with a negative outlook: -- Icahn Enterprises L.P.: senior unsecured debt rating at Ba3; guaranteed senior unsecured revolving credit facility rating at Ba2. The last rating action on Icahn Enterprises was on Aug. 23, 2006 when Moody's assigned a Ba2 rating to the company's guaranteed senior unsecured revolving credit facility and lowered the senior unsecured debt rating to Ba3. Icahn Enterprises L.P. (NYSE: IEP) is a publicly traded partnership that is 92% owned by Carl C. Icahn. The company operates multiple business segments including investment management, metals, real estate and home fashion. The company's investment management business had $7.9 billion in assets under management as of March 31, 2008. Moody's CFR is an opinion regarding a corporate family's ability to honor all of its financial obligations and is assigned to a corporate family as if it had a single class of debt and a single consolidated legal entity structure. IMMUNICON CORP: Panel Taps Schulte Rote as Counsel -------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Immunicon Corp.'s Chapter 11 bankruptcy case seeks authority from the U.S. Bankruptcy Court for the District of Delaware to employ and retain Schulte Rote & Zabel LLP as its counsel, nunc pro tunc to June 23, 2008. Schulte Rote will mainly assist and advise the Committee in its consultations with the Debtors, any other committee, and other parties in interest relative to the overall administration of the Debtor's estate. As compensation for their services, Schulte Rote's professionals bill: Title Hourly Rate ----- ----------- Partners $695 - $895 Special Counsel $625 - $650 Associates $255 - $595 Staff Attorneys $250 - $565 Legal Assistants $105 - $295 To the best of the Committee's knowledge, the partners, counsel, and associates of Schulte Rote are disinterested persons who do not have any connection with, or any adverse interest to the Debtors or its estate. Headquartered in Huntington Valley, Pennsylvania, Immunicon Corporation -- http://www.immunicon.com/-- offers products and services for cell analysis and molecular research. The company filed for Chapter 11 protection on June 11, 2008 (Bankr. D. Del. Case No.08-11178). Sheldon K. Rennie, Esq., at Fox Rothschild LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection against its creditors, it listed total assets of $9,231,264 and total debts of $24,309,838. IMMUNICON CORP: Sec. 341(a) Creditors Meeting Set for July 17 ------------------------------------------------------------- The United States Trustee for Region 3 will convene a meeting of Immunicon Corporation's creditors on July 17, 2008, 2:00 p.m., at the Office of the U.S. Trustee, J. Caleb Boggs Federal Building, 2nd Floor, Room 2112, Wilmington, Delaware. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about his financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Huntington Valley, Pennsylvania, Immunicon Corporation -- http://www.immunicon.com/-- offers products and services for cell analysis and molecular research. The company filed for Chapter 11 protection on June 11, 2008 (Bankr. D. Del. Case No.08-11178). Sheldon K. Rennie, Esq., at Fox Rothschild LLP, represents the Debtor in its restructuring efforts. Schulte Rote & Zabel LLP is the Official Committee of Unsecured Creditors' proposed bankrupcy counsel. When the Debtor filed for protection against its creditors, it listed total assets of $9,231,264 and total debts of $24,309,838. IMMUNICON CORP: Taps Fox Rothschild as Bankruptcy Counsel --------------------------------------------------------- Immunicon Corp. seeks the authority of the U.S. Bankruptcy Court for the District of Delaware to employ Fox Rothschild LLP as its bankruptcy counsel, effective as of the Debtor's bankruptcy filing. Michael G. Menkowitz, Esq., a partner at Fox Rothschild, tells the Court that the firm received a $150,000 retainer from the Debtor and that the firm is now currently holding approximately $49,000 to be applied to prepetition bankruptcy services. In addition, Mr. Menkowitz assures the Court that the Fox Rothschild does not hold or represent any interest adverse to the Debtor or its estate, and that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. As compensation for their services, Fox Rothschild's professionals bill: Professional Hourly Rate ------------ ----------- Scott L. Vernick, Esq. $515 Michael G. Menkowitz, Esq. $510 Bradley S. Rodos, Esq. $450 Magdalena Schardt, Esq. $405 Joshua T. Klein, Esq. $300 Marie Dooley, Esq. $240 Nevena Simidjiyska, Esq. $220 Joseph DiStanislao (Paralegal) $210 Headquartered in Huntington Valley, Pennsylvania, Immunicon Corporation -- http://www.immunicon.com/-- offers products and services for cell analysis and molecular research. The company filed for Chapter 11 protection on June 11, 2008 (Bankr. D. Del. Case No.08-11178). Sheldon K. Rennie, Esq., at Fox Rothschild LLP, represents the Debtor in its restructuring efforts. Schulte Rote & Zabel LLP is the Official Committee of Unsecured Creditors' proposed bankrupcy counsel. When the Debtor filed for protection against its creditors, it listed total assets of $9,231,264 and total debts of $24,309,838. IMMUNICON CORP: U.S. Trustee Names 3-Member Creditors Panel ----------------------------------------------------------- Pursuant to Section 1102(a)(1) of the Bankruptcy Code, Andrew R. Vara, Acting United States Trustee for Region 3, appointed three creditors to the Official Committee of Unsecured Creditors in Immunicon Corporation's Chapter 11 case. The Creditors Committee consists of: (1) SF Capital Partners, Ltd. Attn: Brian H. Davidson c/o Stark Offshore Management LLC 3600 South Lake Drive St. Franchis, WI Tel: (414) 294-7000 Fax: (414) 294-7700 (2) Portside Growth and Opportunity Fund Attn: Jeffrey C. Smith c/o Ramius LLC 599 Lexington Ave. 20th Floor, New York NY 10022 Tel: (212) 845-7955 Fax: (212) 201-4802 (3) Tyco Healtcare Group, L.P. (d/b/a Kendall Healthcare) Attn: Kurt E. Sagar 15 Hampshire Street Mansfield, MA Tel: (508) 261-6063 Fax: (508) 261-6274 Headquartered in Huntington Valley, Pennsylvania, Immunicon Corporation -- http://www.immunicon.com/-- offers products and services for cell analysis and molecular research. The company filed for Chapter 11 protection on June 11, 2008 (Bankr. D. Del. Case No.08-11178). Sheldon K. Rennie, Esq., at Fox Rothschild LLP, represents the Debtor in its restructuring efforts. Schulte Rote & Zabel LLP is the Official Committee of Unsecured Creditors' proposed bankrupcy counsel. When the Debtor filed for protection against its creditors, it listed total assets of $9,231,264 and total debts of $24,309,838. INDYMAC BANCORP: S&P Cuts Counterparty Credit Rating to 'CCC/C' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Indymac Bancorp and its subsidiaries, including lowering the counterparty credit rating on Indymac to 'CCC/C' from 'B/C'. The counterparty credit ratings on both the bank and the holding company remain on CreditWatch with negative implications. "We took this action because we believe that Indymac's weakened financial profile and exposure to deteriorating housing markets leaves its creditworthiness severely impaired," said Standard & Poor's credit analyst Robert B. Hoban, Jr. Indymac's nonperforming assets have grown to very high levels and its continued credit-related losses have eroded capital to the point that the bank no longer meets the regulatory "well- capitalized" standard. This has resulted in increased regulatory scrutiny including Indymac no longer being able to accept brokered deposits. Because brokered deposits represent a material, albeit decreased, component of its funding base, this is likely to lead to the run off of a sizable portion of Indymac's funding base, which will greatly pressure liquidity. Management has also decided to cease originating new loans in an effort to conserve capital and liquidity and reduce operating costs. Although this may achieve management's near-term goals, it also greatly reduces Indymac's franchise, eliminates a source of operating revenue, and will result in further extraordinary charges to reduce staffing levels. These drastic steps denote the high level of stress to Indymac's creditworthiness. Although Indymac's funding profile will benefit somewhat from not having to fund loans held for sale, S&P expect Indymac's liquidity profile to be strained. As of March 31, 2008, NPAs had already risen to $2.1 billion, only slightly less than the company's adjusted total equity plus reserves at that time. Given Indymac's large portion of loans that are in higher-risk product types, vintages, or geographies, S&P expect Indymac to experience continued credit performance deterioration and ultimately higher-than-peer loss severity. S&P are concerned that the size and pace of credit deterioration and increasingly high charge-off levels have greatly impaired the thrift's ability to overcome its still-mounting asset-quality problems. The ratings remain on CreditWatch Negative as an indication of the level of continued downward pressure on the ratings. Changes in Indymac's near-term financial position or our outlook for the housing and mortgage finance markets, and any regulatory actions, will be the determining factors in S&P's ratings on Indymac. Given these concerns, there is little upward momentum to the ratings at this time. Nevertheless, if credit-loss levels abate to the point where the company returns to even a modest level of profitability while maintaining adequate capitalization and liquidity levels, the outlook could return to stable. INTERPUBLIC GROUP: Moody's Changes Outlook, Affirms Ba3 Rating -------------------------------------------------------------- Moody's Investors Service changed the outlook to positive from stable of The Interpublic Group of Companies, Inc. and affirmed the company's Ba3 corporate family rating, its Ba3 debt ratings, and its SGL-1 assessment. The outlook change reflects progress made by the company in its corporate turnaround, including remediation of numerous material internal control weaknesses, reducing leverage, and expanding operating margins. Moody's also anticipates further improvement in IPG's overall credit profile in the intermediate term that includes top-line growth and further margin improvement. In Moody's view, the company has successfully overcome risks associated with its turnaround strategies and with most distractions now behind it, IPG is well-positioned to focus on organic growth and margin expansion driven by better execution by its current management team and competitive product offerings. Despite the risk of pull-back in client spending due to a weak U.S. economy, the positive outlook anticipates the company will continue to benefit from a favorable business environment in international markets (44% of IPG's revenues are from outside the U.S.), a weak U.S. dollar and enhanced focus on cost containment. In addition to geographic diversity, IPG's diverse client base and service offerings coupled with new initiatives undertaken to improve digital capabilities, further contribute to our opinion that the company is on track to achieve the 8.5% - 9% operating margin target announced earlier this year. Liquidity remains strong, with a cash balance of $1.5 billion on March 31, 2008 and access to a mostly unused $750 million 3-year Enhanced Liquidity Facility. While the ELF is not like a traditional bank facility as it has no restrictive covenants, and it does provide the company with improved liquidity above its cash balances. Financial leverage, as measured by debt to EBITDA, was 4.9x as of March 31, 2008, which strongly positions the rating in the Ba3 category, thus providing additional support to the positive outlook. Based on Moody's expectations of stable to improving EBITDA and improved financial flexibility, Moody's anticipates that IPG will reduce leverage to under 4.5x range by the end of 2008. Notwithstanding IPG's encouraging outlook based on positive business prospects, we believe that the company's key financial metrics are lagging behind those of competitors, especially operating margin which needs to get closer to the mid-teens to exhibit investment-grade quality. Moody's recognizes that the company has the potential to eventually return to investment grade status in the coming years but steady improvement in EBITDA and cash flow levels, such that IPG's credit profile is more closely aligned with those of its peers, will be necessary for moving to a higher rating category. Headquartered in New York, The Interpublic Group of Companies, Inc. is among the largest advertising, marketing and corporate communications holding companies in the world. Revenues and EBITDA for the LTM period ended March 31, 2008 were $6.7 billion and $1 billion respectively. J.P. MORGAN: Moody's Affirms Ratings of 24 Certs.; Three on Low B ----------------------------------------------------------------- Moody's Investors Service affirmed the ratings of 24 classes of J.P. Morgan Chase Commercial Securities Trust 2006-CIBC16, Commercial Mortgage Pass-Through Certificates, Series 2006-CIBC16 as: -- Class A-1, $29,407,899, affirmed at Aaa -- Class A-1A, $365,348,977, affirmed at Aaa -- Class A-2, $55,736,000, affirmed at Aaa -- Class A-3FL, $100,000,000, affirmed at Aaa -- Class A-3B, $171,966,000, affirmed at Aaa -- Class A-4, $695,005,000, affirmed at Aaa -- Class A-SB, $74,077,000, affirmed at Aaa -- Class A-M, $214,742,000, affirmed at Aaa -- Class A-J, $169,110,000, affirmed at Aaa -- Class X-1, Notional, affirmed at Aaa -- Class X-2, Notional, affirmed at Aaa -- Class B, $40,264,000, affirmed at Aa2 -- Class C, $16,106,000, affirmed at Aa3 -- Class D, $29,527,000, affirmed at A2 -- Class E, $26,843,000, affirmed at A3 -- Class F, $29,527,000, affirmed at Baa1 -- Class G, $26,483,000, affirmed at Baa2 -- Class H, $24,159,000, affirmed at Baa3 -- Class J, $5,368,000, affirmed at Ba1 -- Class K, $10,737,000 affirmed at Ba2 -- Class L, $8,053,000, affirmed at Ba3 -- Class M, $2,684,000, affirmed at B1 -- Class N, $5,369,000, affirmed at B2 -- Class P, $5,369,000, affirmed at B3 Moody's affirmed the ratings due to overall stable pool performance. As of the June 12, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 0.5% to $2.14 billion from $2.15 billion at securitization. The certificates are collateralized by 121 mortgage loans ranging in size from less than 1.0% to 11.7% of the pool, with the top 10 loans representing 50.8% of the pool. No loans have been liquidated from the pool. Currently there is one loan, representing less than 1.0% of the pool, in special servicing. Moody's is not estimating any losses from this specially serviced loan. Seventeen loans, representing 11.6% of the pool, are on the master servicer's watchlist. The master servicer's watchlist includes loans which meet certain portfolio review guidelines established as part of the Commercial Mortgage Securities Association's monthly reporting package. As part of Moody's ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance. Not all loans on the watchlist are delinquent or have significant issues. Moody's was provided with year-end 2007 operating results for 81.7% of the pool. Moody's loan to value ratio is 103.3% compared to 101.1% at securitization. The top three loan exposures represent 26.7% of the pool. The largest exposure is the RREEF Silicon Valley Office Portfolio Loan ($250.0 million -- 11.7%), which represents a pari passu interest in a $700.0 million loan. The loan is secured by 18 office properties totaling 5.3 million square feet. The properties are located in seven cities located in northern California. Many of the properties have suffered high vacancies due to the loss of high technology tenants. Performance has been stable since securitization. Moody's LTV is 102.8%, the same as at securitization. The second largest exposure is the One & Two Prudential Plazas Loan ($205.0 million -- 9.6%), which represents a 50.0% pari passu interest in a $410.0 million loan. The loan is secured by two Class A office buildings located in downtown Chicago, Illinois. The properties total 2.2 million square feet. The buildings were 89.7% leased as of August 2007, compared to 84.8% at securitization. Major tenants include Peoples Gas Light & Coke, Baker and McKenzie and McGraw Hill, Inc. Performance is in-line with original projections. Moody's LTV is 97.5%, the same as at securitization. The third largest exposure is the Prime Retail Outlets Portfolio Loan ($114.7 million -- 5.4%), which is secured by three outlet centers located in Massachusetts, South Carolina and Georgia. The centers total 781,200 square feet. Performance is in-line with original projections. Moody's LTV is 106.3%, the same as at securitization. KEYS FITNESS: Files Chapter 11 Plan and Disclosure Statement ------------------------------------------------------------ Keys Fitness Products, LP, and Keys Backyard, LP delivered to the United States Bankruptcy Court for the Northern District of Texas a joint Chapter 11 plan of reorganization and a disclosure statement explaining that plan. A hearing is set for Aug. 1, 2008, at 10:30 a.m., to consider the adequacy of the Debtors' disclosure statement. The hearing will take place at 1100 Commerce, 14th Floor in Dallas, Texas. Overview of the Plan Under the plan, all property and assets of the Debtors -- including all of their estate actions, claims, counterclaims, rights, defenses, set-offs and actions in laws -- will be transferred to the reorganized Debtors, free and clear of liens and interests. The plan will enable the Debtors to continue to operate their business operations, and acquire and dispose of their assets free of any restriction under the Bankruptcy Code. On June 9, the Debtors obtained up to $1,800,000 in postpetition financing from Wells Fargo Bank, N.A., with superpriority administrative expense status. The committed $1,800,000 in financing was used to pay overseas vendors for import of inventory. All letters of creditor issued by Wells Fargo have been cash collateralized by fund that serve as JP KFP Acquisition LLC's collateral. Steven C. Jaffe, Miguel Nistal, and Charles W. Moore will be named directors of the reorganized Debtors on the plan's effective date. The plan classifies interests against and claims in the Debtors in seven classes. The classification of interests and claims are: Treatments of Interests and Claims Type Estimated Class of Interests Treatment Amount ----- ------------ --------- --------- unclassified administrative and $1,523,373 priority tax claims 1 other priority unimpaired $77,893 claims 2 secured tax impaired $217,569 claims 3 JP KFP Acquisition impaired $13,231,358 LLC secured claim 4 other secured impaired $1,980 claims against Key Fitness 5 general unsecured claims against: a) Key Fitness impaired $9,313,047 b) Key Backyard impaired $4,467,669 6 subordinated claims against a) Key Fitness impaired $4,851,510 b) Key Backyard impaired $4,015,625 7 interest impaired $0 Classes 2, 3, 4 and 5 against against the Debtors are entitled to vote on the plan. Holders of class 1 other priority claims will receive cash in an amount equal to their allowed claims after the initial distribution date. In the event the allowed claims exceeds the statutory cap applicable to the claim, the excess will treated as Class 5 general unsecured claim. Holders of class 2 secured tax claims for tax year prior to 2008 against the Debtors will receive cash payments equal to their allowed claims in three equal annual installments plus interest from the Debtors' bankruptcy filing until the date the claim is paid in full. On the Plan's effective date, the Debtor shall pay the reasonable fees and expenses of JP KFP incurred during the Chapter 11 Bankruptcy cases. Furthermore, JP KFP's class 3 secured claim will receive in full and all related liens secured the claims: i) all of the Debtors' Cash on hand, which shall be applied on the plan's effective date to the allowed JP KFP's claim and ii) all of the Debtors assets. At the Debtors' option, each holder class 4 of other secured claims will receive: i) the return of the collateral secured the allowed other secured claims after the initial distribution date; ii) equal quarterly installments payments in cash; or iii) other treatment as may be agreed to in writing by the holders and the Debtors. Each holder of class 5 general unsecured claim against Key Fitness will receive a payment in cash in full: i) in an amount equal to 2.5% of the allowed amount of claim, without interest, payable no later than ten 10 days after the initial distribution date; plus ii) in an amount equal to 2.5% of the allowed amount of claim, without interest, payable on March 2, 2009, without interest; plus iii) in an amount equal to 2.5% of the allowed amount of claim, without interest, payable on March 2, 2010, without interest; plus iv) equal to a pro rata share of 20% of excess earnings, if any, on March 1, 2012, but not exceeding 12% of the allowed amount of claim, with the payments being made on a pari passu basis with payments to holders Class 5 claims against Key Backyard under section 5.06(b)(iii) of the plan. Each holder of class 5 general unsecured claim against Key Backyard will receive a payment in cash in full: i) in an amount equal to 2.5% of the allowed amount of claim, without interest, payable no later than ten 10 days after the initial distribution date; plus ii) in an amount equal to 2.5% of the allowed amount of claim, without interest, payable on March 2, 2009, without interest; plus iv) equal to a pro rata share of 20% of excess earnings, if any, on March 1, 2012, but not exceeding 6% of the allowed amount of claim, with the payments being made on a pari passu basis with payments to holders Class 5 claims against Key Fitness under section 5.06(b)(iii) of the plan. Class 6 and 7 will not receive any distribution under the plan. A full-text copy of the disclosure statement is available for free at http://ResearchArchives.com/t/s?2f57 A full-text copy of the Chapter 11 plan of reorganization is available for free at http://ResearchArchives.com/t/s?2f58 Based in Garland, Texas, Keys Fitness Products L.P. -- http://www.keysfitness.com/-- manufactures and sells treadmills, exercise bikes, ellipticals, steppers, home gyms, and other exercise equipment. The company sells its products through more than 3,000 retailers in the U.S., well as stores in more than 30 other countries. Its brand names include CardioMax, Power System HealthTrainer, Ironman, Keys, and Karen Voight. The company and its affiliate, Keys Backyard LP, filed for Chapter 11 protection on April 14, 2008 (Bankr. N.D. Tex. Case No.08- 31790). Patrick J. Neligan, Jr., Esq., at Neligan Foley LLP, represents the Debtors in their restructuring efforts. The U.S. Trustee for Region 6 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Gardere Wynne Sewell, LLP and Pachulski Stang Ziehl and Jones LLP represent the Committee in these cases. In their schedules, the Debtors listed total assets of $11,700,651 and total liabilities of $28,005,883. KOGER MANAGEMENT: Sells Assets to GHA; Owner Wants Case Converted ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Virginia has ordered the liquidation of Koger Management Group Inc., Dan Telvock writes for The Free Lance-Star in Fredericksburg, Virginia. The sale was held in June 2008. Gates, Hudson & Associates Condominium Management acquired the assets of the Debtor for $275,000, The Free-Lance Star reports. The new owner took over 100 accounts from the Debtor, the report adds. Owner Robert Koger, gave his consent by signing the court sale order, which revoked his real estate license, Free-Lance Star says. Mr. Koger wants the chapter 11 case converted to a chapter 7 liquidation proceeding, Free-Lance Stary relates. Lella Amiss E. Pape, Esq., counsel to dozens of homeowners associations managed by the Debtor, commented that a chapter 7 proceeding will result in "pennies on the dollar" for her clients, Free-Lance Star notes. Ms. Pape added that a chapter 11 increases probability of full payout to creditors. Based on the report, about 200 homeowners association asserted claims totaling $10.3 million against the Debtor. The Court is set to hear the case conversion motion of Robert Koger on July 18, 2008, according to The Free-Lance Star. Embezzlement of Funds The Free-Lance Star notes that in 2006, a state headed investigation found former chief financial officer, Jeffrey Koger, as the primary culprit in the embezzlement of hundreds of homeowners association's funds. The Free-Lance Star says that Robert Koger reported the missing funds to the police. Investigation of the case is ongoing, and no charges have been filed, The Free-Lance Star writes. Robert's son, Jeffrey, is presently in prison for attempted murder of a state police, The Free-Lance Star relates. In June 2008, Jeffrey Koger's case was sent to a grand jury for possible indictment, the report adds. About Koger Management Fairfax, Virginia-based Koger Management Group Inc., dba Tri-State Management, -- http://www.kogermanagement.com/-- managed homeowners associations in Virginia for decades. The Debtor filed its chapter 11 petition on July 26, 2007 (Bankr. E.D. Va. Case No. 07-11947). The company is owned by Robert Koger, whose son, Jeffrey Koger, was found as main culprit in the embezzlement of corporate funds. Judge Stephen S. Mitchell presides over the case. Thomas P. Gorman, Esq., at Tyler, Bartl, Gorman & Ramsdell, P.L.C., represents the Debtor in its restructuring efforts. The Debtor listed estimated assets of $1 million to $100 million and estimated debts of $1 million to $100 million when it filed for bankruptcy. LAND O'LAKES: Moody's Hikes Corporate Family Rating 1 Notch to Ba1 ------------------------------------------------------------------ Moody's Investors Service upgraded the corporate family rating and probability of default rating of Land O'Lakes, Inc. to Ba1 from Ba2. The ratings on the second lien debt and a subsidiary's capital securities were also upgraded, and other long term ratings affirmed. The company's speculative grade liquidity rating was lowered to SGL-3 from SGL-2. The rating outlook is stable. Ratings upgrade: -- Corporate family rating to Ba1 from Ba2 -- Probability of default rating to Ba1 from Ba2 -- $175 million 9% senior secured second lien debt to Baa3 (LGD3,34%) from Ba1 (LGD2,29%) Land O'Lakes Capital Trust I -- $191 million 7.45% capital securities to Ba2 (LGD6,95%) from B1 (LGD5,88%) Ratings affirmed; LGD percentages revised -- $225 million senior secured revolving credit at Baa3 (LGD2). LGD% to 22% from 18% -- Senior unsecured notes at Ba2 (LGD4) LGD % to 69% from 57% Rating lowered: Land O'Lakes, Inc. -- Speculative grade liquidity rating to SGL-3 from SGL-2 The upgrade in corporate family rating and probability of default rating reflects Land O' Lakes' improved profit levels, as the company's leading market positions allowed it to successfully pass along higher costs; the continued streamlining of its business portfolio; stability in debt balances, as internal cash flow generation and asset divestitures funded major needs; and strengthened credit metrics that are commensurate with the company's new rating level. The expected loss percentages of each class of rated debt benefited from the upgrade in the probability of default and the greater enterprise value after the crop protection business acquisition; however, the improvement in expected loss was sufficient to raise the ratings only of the second lien debt and the capital securities. The company's SGL-3 rating incorporates Moody's expectation that higher working capital requirements, due to high and rising commodity prices and due to the working capital needs of the recently acquired crop protection business, will require external funding over the near term. Nonetheless, excess availability is expected to be adequate under the company's committed credit facilities--$225 million revolving credit facility expiring in August 2011 and its $400 million receivables securitization facility expiring in September 2011. Moody's anticipates that Land O'Lakes will comply with financial covenants with a comfortable cushion. Land O'Lakes assets are encumbered, limiting alternative sources of liquidity, although it could sell discrete businesses without affecting remaining operations. The company's Ba1 rating is supported by the strength of the Land O' Lakes brand; the cooperative's scale; its strong market positions in dairy, animal feed, seed and agronomy; the broad distribution infrastructure supporting its businesses; and Land O'Lakes' historical liquidity under stress. All of these factors are consistent with an investment grade rating. However, the cooperative's exposure to volatile agricultural and commodity markets, especially dairy and seed, and a business profile that continues to evolve are speculative grade attributes. In addition, Land O' Lakes' ratings take into account the challenges of adapting and executing business strategies under a cooperative ownership structure. Headquartered in Arden Hills, Minnesota, Land O'Lakes, Inc. is an agricultural cooperative focusing on dairy food, animal feed, and agricultural crop inputs. Revenues for the 12-month ended March 31, 2008 were approximately $10 billion. LEHMAN BROTHERS: Has $2.7BB Loss; Shares Drop on PIMCO Rumor ------------------------------------------------------------ Lehman Brothers Holdings Inc. investor Pacific Investment Management Co. insists that it has not sold any Lehman shares it owns, several papers report. The Wall Street Journal's Susan Craig writes that the speculations sparked the drop of Lehman trade share price to as low as 21%, closing 12% lower or $2.44, to $17.30 at the New York Stock Exchange yesterday. According to WSJ, PIMCO manager Bill Gross said in an interview that Pimco hasn't reduced the duration or dollar amount of its Lehman holdings. As disclosed in the Troubled Company Reporter, Lehman Brothers' share price dropped 9.5% or $3.22 to $30.61 on the New York Stock Exchange in June 3, its lowest in five years, following speculations of liquidity problems. However, the firm denied seeking to raise $4 billion in capital, insisting that it has a liquidity of more than $40 billion at the end of the quarter. In fact, it has bought back an unknown number of shares. Lehman treasurer Paolo Tonucci said that the firm borrowed from the Federal Reserve on April 16 to test a lending program established by the government agency after the collapse of The Bear Stearns Companies Inc. However, it never borrowed from the Federal Reserve since then. However, the Associated Press reports that several analysts suggested that Lehman Brothers, the nation's fourth-largest investment bank, appears to be the weakest of Wall Street's biggest firms. According to analyst Richard Bove, government inaction is a factor for Lehman's fall, as well as the lack of inquiry by the Securities and Exchange Commission on rumors started by short sellers of Lehman shares. Financials Lehman Brothers Holdings Inc. released its consolidated financial statements for the quarter ended May 31, 2008, with the SEC. The company reported a net loss of $2,774,000,000, on total revenues of $6,240,000,000. At May 31, 2008, the company's balance sheet total assets of $639,432,000,000, and total liabilities of $613,156,000,000, resulting a $26,276,000,000 stockholders' equity. The company originated approximately $0.5 billion and $2 billion of residential mortgage loans for the three and six months ended May 31, 2008, respectively, compared to the $17 billion and $32 billion for the three and six months ended May 31, 2007, respectively. The company originated approximately $2 billion and $4 billion of commercial mortgage loans for the three and six months ended May 31, 2008, respectively, compared to the $19 billion and $32 billion for the three and six months ended May 31, 2007, respectively. A full-text copy of the company's financial filing is available for free at http://ResearchArchives.com/t/s?2f64 About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- an innovator in global finance, serves the financial needs of corporations, governments and municipalities, institutional clients, and high net worth individuals worldwide. Founded in 1850, Lehman Brothers maintains leadership positions in equity and fixed income sales, trading and research, investment banking, private investment management, asset management and private equity. The firm is headquartered in New York, with regional headquarters in London and Tokyo, and operates in a network of offices around the world. LENNAR CORP: Files Blank Registration Statement with SEC -------------------------------------------------------- Lennar Corporation filed with the Securities and Exchange Commission a prospectus, dated June 25, 2008, to register an indeterminate number of shares of Class A Common Stock, Class B Common Stock, Preferred Stock, Participating Preferred Stock, Depositary Shares, Debt Securities, Warrants, and Units that may be offered from time to time in amounts and at offering prices to be determined. The company's Class A common stock is listed on the New York Stock Exchange under the symbol "LEN" and its Class B common stock is listed under the symbol "LEN.B." Lennar said the debt securities will be issued under either: (a) an indenture dated as of June 25, 2004 with U.S. Bank Trust National Association, as trustee, (b) an indenture dated as of December 31, 1997, with The Bank of New York (as Successor Trustee to J.P. Morgan Trust Company, N.A. and First National Bank of Chicago, N.A.) as trustee, or (c) one or more other indentures with those or other trustees. Lennar's authorized capital stock consists of: -- 300,000,000 shares of Class A common stock, $0.10 par value, -- 90,000,000 shares of Class B common stock, $0.10 par value, -- 100,000,000 shares of participating preferred stock, $0.10 par value, and -- 500,000 shares of preferred stock, $10.00 par value. At February 15, 2008, 129,732,582 shares of Lennar Class A common stock, 31,284,797 shares of Lennar Class B common stock and no shares of participating preferred stock or preferred stock were outstanding. At February 15, 2008, Stuart A. Miller, Lennar's President and Chief Executive Officer, had voting control, through family-owned entities and personal holdings, of Class A and Class B common stock which would entitle Mr. Miller to roughly 48.6% of the combined votes which could be cast by the holders of the company's outstanding Class A and Class B common stock combined. That gives significant influence to Mr. Miller in electing all the company's directors and approving most matters that are presented to the stockholders. The SEC filing notes that Mr. Miller's voting power might discourage someone from making a significant equity investment in the company, even if the company needed the investment to meet obligations and to operate the business. A full-text copy of the Form S-3 registration statement is available at no charge at: http://ResearchArchives.com/t/s?2f65 About Lennar Corp. Based in Miami, Fla., Lennar Corporation (NYSE: LEN and LEN.B) -- http://www.lennar.com/-- builds affordable, move-up and retirement homes primarily under the Lennar brand name. Lennar's Financial Services segment provides primarily mortgage financing, title insurance and closing services for both buyers of the company's homes and others. * * * As reported in the Troubled Company Reporter on June 11, 2008, Moody's Investors Service lowered all of the ratings of Lennar Corporation, including its corporate family rating to Ba3 from Ba1 and the ratings on its various issues of senior unsecured notes to Ba3 from Ba1. At the same time, a speculative grade liquidity rating of SGL-2 was assigned. The ratings outlook remains negative. LOUISIANA RIVERBOAT: Has Until September 19 to File Ch. 11 Plan --------------------------------------------------------------- The United States Bankruptcy Court for the Western District of Louisiana extended the exclusive periods of Louisiana Riverboat Gaming Partnership and its debtor-affiliates to: a) file a Chapter 11 plan until Sept. 19, 2008, and b) solicit acceptances of that plan until Dec. 17, 2008. As reported in the Troubled Company Reporter on June 19, 2008, the requested extension of time will allow the Debtors to complete and provide additional information to their creditors and negotiate with parties-in-interest to achieve a feasible restructuring plan. The Debtors are presently in talks with several parties including the Official Committee of Unsecured Creditors about the potential plan of restructuring. The Debtors together with their financial advisor will schedule a meeting with their second lien lenders, who holds $44.5 million of the $65 million of second lien debt, to review the Debtors' financial and operational status. About Louisiana Riverboat Headquartered in Bossier City, Louisiana, Louisiana Riverboat Gaming Partnership, which does business as Diamond Jacks Casino & Resort, and its debtor-affiliates -- http://www.islecorp.com/-- operate casinos and hotels. The company and five of its affiliates filed for Chapter 11 protection on March 11, 2008 (Bankr. W.D. La. Lead Case No.08-10824). Tristan E. Manthey, Esq. and William H. Patrick, III, Esq., at Heller Draper Hayden Patrick and Horn, represent the Debtors. The Debtors selected Kurtzman Carson Consultants LLC as their claims agent. The U.S. Trustee for Region 5 has not appointed creditors to serve on an Official Committee of Unsecured Creditors. As reported in the Troubled Company Reporter on May 20, 2008, the Debtors' summary of schedules showed total assets of $250,357,475 and total debts of $220,551,127 MASONITE INT'L: Says Financial Covenants Non-Compliance Likely -------------------------------------------------------------- Masonite International Inc. indicated that, based upon a preliminary evaluation of its financial performance for the quarter ended June 30, 2008, it would likely not be in compliance with the financial covenants contained in the company's credit facility. The non-compliance would constitute an event of default under the credit facility. Both financial covenants relate to EBITDA metrics and reflect the challenging conditions in the U.S. housing industry. The company is engaged in negotiations with lenders that are party to the credit facility regarding a potential amendment to the terms of the credit facility, including a waiver of Masonite's non-compliance. There is no assurance that the negotiations with lenders will result in an amendment acceptable to Masonite and to its lenders. The company said it is not cash constrained, with approximately $240 million of cash on hand as of June 30, 2008, and with ample liquidity to fund operations for the foreseeable future. The $240 million of cash on hand reflects the full repayment of the $66.4 million that was outstanding under the company's accounts receivable sales facility at March 31, 2008, well as the completion of the acquisition of 25% of Sacopan Inc. for consideration of approximately $17.0 million. "While we have taken strong steps to right size our business and improve our manufacturing efficiencies, continued volume weakness resulting from the ongoing downturn in the US housing market has compromised our ability to maintain compliance with our financial covenants," Fred Lynch, president and chief executive officer of Masonite, said. "We remain focused on delivering the highest value door products to our customers around the world without disruption while navigating a tough environment industry wide." About Masonite International Corporation Based in Ontario, Canada, Masonite International Corporation -- http://www.masonite.com/-- (TSE:MHM) is a vertically integrated producer, manufacturing key components of doors, including composite molded and veneer door facings, glass door lites and cut stock. The company provides these products to its customers in more than 70 countries around the world. The company is a wholly owned subsidiary of Masonite International Inc. It offers a range of interior and exterior doors. Masonite Canada operates Masonite International's Canadian subsidiaries, well as certain other non- United States subsidiaries. MASONITE: Likely Covenant Failure Cues Moody's Review on Ratings ---------------------------------------------------------------- Moody's Investors Service has placed Masonite on review for possible downgrade. The review reflects concerns that the company will likely not be in compliance with the debt covenants contained in its credit facility. Furthermore, the company's performance remains under significant pressure as a result of the contraction in the new home construction market and in the repair and remodeling market. These debt ratings have been placed under review: -- Corporate family rating, currently rated B3; -- Probability of default rating, currently B3; -- $1,172 million Gtd. Sr. Sec. Term Loan due 2013, currently B2 (LGD3, 33%); -- $350 million Gtd. Sr. Sec. Revolver due 2011, currently B2 (LGD3, 33%). -- Speculative grade liquidity rating, affirmed at SGL-4. The senior secured credit facility is rated one notch higher than the company's CFR to reflect its senior status in the event of bankruptcy. The CFR and the notching consider the company's capital structure and anticipated recovery in the event of default per Moody's LGD rating methodology. The review will focus on the company's ability to effectively negotiate an amendment with the banks, and its business outlook. The company's decision to fully draw its revolver may affect its relationship with its banks. Headquartered in Ontario, Canada, Masonite is a global manufacturer of doors and door components with customers in over 70 countries and manufacturing facilities in 18 countries in North America, Europe, Latin America, Asia and Africa. Revenues for fiscal year 2007 were approximately $2.2 billion. MCKINLEY II: Moody's Cuts Notes Ratings on Further Credit Erosion ----------------------------------------------------------------- Moody's Investors Service downgraded and left on review for possible further downgrade the ratings on these notes issued by McKinley II Funding, Ltd.: Class Description: $71,000,000 Class A-1 Floating Rate Notes Due 2045 -- Prior Rating: A2, on review for possible downgrade -- Current Rating: B1, on review for possible downgrade Class Description: $17,500,000 Class A-2 Floating Rate Notes Due 2045 -- Prior Rating: Ba3, on review for possible downgrade -- Current Rating: Caa3, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $10,000,000 Class A-3A Pass-Through Notes Due 2045 -- Prior Rating: Caa1, on review for possible downgrade -- Current Rating: Ca Class Description: $15,000,000 Class A-3B Pass-Through Notes Due 2045 -- Prior Rating: Caa1, on review for possible downgrade -- Current Rating: Ca Class Description: $16,500,000 Class B Floating Rate Subordinate Notes Due 2045 -- Prior Rating: Ca -- Current Rating: C The rating actions reflect increased deterioration in the credit quality of the underlying portfolio, according to Moody's. MERGE HEALTHCARE: Regains Compliance with Nasdaq's Bid Price Rule ----------------------------------------------------------------- Merge Healthcare Incorporated received notification from the NASDAQ Stock Market that the company had regained compliance with NASDAQ Marketplace Rule 4450(a)(5) and that NASDAQ now considers the matter closed. On April 3, 2008, the company was notified that it was not in compliance with the "Minimum Bid Price Rule" because shares of its common stock had closed at a per share bid price of less than $1.00 for 30 consecutive business days. At that time, in accordance with Marketplace Rule 4450(e)(2), the company was provided with 180 calendar days, or until Sept. 29, 2008, to regain compliance. Since then, the company's common stock maintained a closing bid price at $1.00 or greater for at least 10 consecutive business days. Based in Milwaukee, Wisconsin, Merge Healthcare Incorporated (Nasdaq: MRGE; TSX: MRG) -- http://www.mergehealthcare.com/-- is a developer of medical imaging and clinical software applications and developmental tools. The company develops medical imaging software solutions that support end-to-end business and clinical workflow for radiology department and specialty practices, imaging centers and hospitals. Possible Bankruptcy As reported in the Troubled Company Reporter on May 16, 2008, if adequate funds are not available or are not available on acceptable terms, the company will likely not be able to fund its new teleradiology business, take advantage of unanticipated opportunities, develop or enhance services or products, respond to competitive pressures, or continue as a going concern beyond June 30, 2008, and may have to seek bankruptcy protection. Going Concern Doubt As reported in the Troubled Company Reporter on April 29, 2008, KPMG LLP in Chicago expressed substantial doubt about Merge Healthcare Incorporated'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 negative cash flows. The company says it has generated losses from operations over the past nine consecutive quarters and the company currently has no credit facility. As a result, the company is currently completely dependent on available cash and operating cash flow to meet its capital needs. MERRILL LYNCH: Potential Loan Losses Cue Fitch to Put Neg. Watch ---------------------------------------------------------------- Fitch Ratings places these classes of Merrill Lynch Mortgage Trust, series 2004-KEY2 on Rating Watch Negative: -- $7.0 million class J at 'BB+'; -- $5.6 million class K at 'BB'; -- $4.2 million class L at 'BB-'; -- $2.8 million class M at 'B+'; -- $2.8 million class N at 'B'; -- $5.6 million class P at 'B-'. The Rating Watch Negative placements are due to potential losses from two loans (4.1%) currently in special servicing. The larger specially serviced loan (3.0%) is secured by 32 two-and three-story garden style apartment buildings comprising a total of 640 units, which are located in Ft. Myers, Florida. The loan, which has a current outstanding principal balance of $31.1 million, began amortizing on a 30-year schedule in May 2006. As of Dec. 31, 2007, reported occupancy at the property stood at 58%, down from 94% at issuance. The loan transferred to special servicing on May 2, 2008. Fitch will evaluate the updated appraised value as well as workout strategies when they become available. Also in special servicing is a loan representing 1.0% of the pool, secured by a 120-unit student housing property located in Kalamazoo, Michigan. The property transferred to special servicing in January 2008 following a period of declining occupancy. The borrower consented to appointment of a Receiver and new property management, and the property has subsequently been 92% pre-leased for the upcoming 2008-2009 school year. ML-CFC COMMERCIAL: Moody's Cuts Ratings, Junks Class P Certs. ------------------------------------------------------------- Moody's Investors Service downgraded the ratings of five classes and affirmed 18 classes of ML-CFC Commercial Mortgage Trust 2006- 3, Commercial Mortgage Pass-Through Certificates, Series 2006-3: -- Class A-1, $52,377,348, affirmed at Aaa -- Class A-1A, $342,210,905, affirmed at Aaa -- Class A-2, $163,000,000, affirmed at Aaa -- Class A-3, $34,000,000, affirmed at Aaa -- Class A-4, $971,780,000, affirmed at Aaa -- Class AJ, $190,971,000, affirmed at Aaa -- Class AM, $242,502,000, affirmed at Aaa -- Class A-SB, $118,000,000, affirmed at Aaa -- Class XP, Notional, affirmed at Aaa -- Class XC, Notional, affirmed at Aaa -- Class B, $48,500,000, affirmed at Aa2 -- Class C, $18,188,000, affirmed at Aa3 -- Class D, $48,500,000, affirmed at A2 -- Class E, $21,219,000, affirmed at A3 -- Class F, $36,375,000, affirmed at Baa1 -- Class G, $24,251,000, affirmed at Baa2 -- Class H, $21,219,000, affirmed at Baa3 -- Class J, $12,125,000, affirmed at Ba1 -- Class K, $6,062,000, downgraded to Ba3 from Ba2 -- Class L, $9,094,000, downgraded to B1 from Ba3 -- Class M, $6,063,000, downgraded to B2 from B1 -- Class N, $6,062,000, downgraded to B3 from B2 -- Class P, $3,031,000, downgraded to Caa1 from B3 Moody's downgraded Classes K, L, M, N and P due to a decline in overall pool performance, increased loan to value ratio dispersion and estimated losses. As of the June 12, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 0.7% to $2.41 billion from $2.43 billion at securitization. The certificates are collateralized by 211 mortgage loans ranging in size from less than 1.0% to 10.3% of the pool, with the top 10 loans representing 35.8% of the pool. The pool contains one loan, representing 6.5% of the outstanding balance, with an investment grade underlying rating. The pool has not realized any losses since securitization. Currently three loans, representing 2.2% of the pool, are in special servicing. The specially serviced loans are secured by three Class B multifamily properties located in Texas. The original sponsor of all three loans was Michael B. Smuck, who filed for bankruptcy protection earlier in 2008. All of the loans are 90+ days delinquent. Moody's estimates an aggregate loss of $3.8 million for the specially serviced loans. Twenty-three loans, representing 5.2% of the pool, are on the master servicer's watchlist. The watchlist includes loans which meet certain portfolio review guidelines established as part of the Commercial Mortgage Securities Association's monthly reporting package. As part of Moody's ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance. Not all loans on the watchlist are delinquent or have significant issues. Moody's was provided with partial or year-end 2007 operating results for 77.0% of the pool. Moody's LTV ratio for the conduit component is 106.5% compared to 103.9% at securitization. Based on Moody's analysis, 74.4% of the conduit pool has an LTV ratio in excess of 100.0% compared to 65.7% at securitization. Approximately 8.8% of the conduit pool has an LTV ratio in excess of 120.0% compared to 2.3% at securitization. The loan with an underlying rating is the Stonestown Mall Loan ($155.6 million -- 6.5%), which is secured by the borrower's interest in a 860,500 square foot regional mall and adjacent 56,000 square foot medical office building located in San Francisco, California. The center is anchored by Macy's and Nordstrom, which are not part of the collateral. The property was 92.8% occupied as of March 2008 compared to 98.5% at securitization. The decline in occupancy is due to increased vacancy in the medical office building. Performance has been stable since securitization. Moody's current underlying rating is A3, the same as at securitization. The top three conduit loans represent 19.6% of the pool. The largest loan is the Atrium Hotel Portfolio Loan ($247.2 million-- 10.3%), which is secured by six full service hotels totaling 1,473 guestrooms. The portfolio consists of five hotels which operate under the Embassy Suites franchise and one independent hotel. Performance has improved since securitization. The portfolio's RevPAR for calendar year 2007 was $101.20 compared to $95.73 at securitization. Moody's LTV is 115.0% compared to 119.9% at securitization. The second largest loan is the Wilton Portfolio Pool I Loan ($130.9 million -- 5.4%), which is secured by 45 commercial properties located in and around Richmond, Virginia. The portfolio totals 1.9 million square feet and consists of retail (76.7% of the allocated loan balance), industrial/flex (18.6%) and office (4.7%). The sponsor is an affiliate of the Wilton Companies, a Richmond-based real estate company. Moody's LTV is 100.2%, the same as at securitization. The third largest loan is the Westin Arlington Gateway Loan ($94.0 million -- 3.9%), which is secured by a 336-room full service hotel located in Arlington, Virginia. The hotel was completed in 2006. The hotel's RevPAR for calendar year 2007 was $154.60 compared to Moody's original RevPAR of $157.50. Given the strength of the Arlington hotel market and the hotel's quality amenities, Moody's believes that the stabilized level originally projected at securitization is achievable in the near term. Moody's LTV is 111.3%, the same as at securitization. MONTERRA ENTERPRISES: Sec. 341(a) Meeting Set for July 16 --------------------------------------------------------- The United States Trustee for Region 19 will convene a meeting of Monterra Enterprises, LLC's creditors on July 16, 2008, at 405 South Main Street, Suite 300, Salt Lake City, Utah. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This meeting of creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about his financial affairs and operations that would be of interest to the general body of creditors. Based in St. George, Utah, Monterra Enterprises, LLC filed for Chapter 11 bankruptcy protection on June 6, 2008 (D. Utah Case No. 08-23641). Anna W. Drake, Esq. represents the Debtor as counsel. MONTERRA ENTERPRISES: Files Schedules of Assets and Liabilities --------------------------------------------------------------- Monterra Enterprises, LLC filed with the U.S. Bankruptcy Court for the District of Utah, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $31,650,000 B. Personal Property 205,727 C. Property Claimed as Exempt D. Creditors Holding $33,015M399 Secured Claims E. Creditors Holding Unsecured Priority Claims F. Creditors Holding 3,351,955 Unsecured Non-priority Claims ----------- ----------- TOTAL $31,855,727 $36,367,256 Based in St. George, Utah, Monterra Enterprises, LLC filed for Chapter 11 bankruptcy protection on June 6, 2008 (D. Utah Case No. 08-23641). Anna W. Drake, Esq. represents the Debtor as counsel. MORGAN STANLEY CAPITAL: Moody's Affirms Low B and C Ratings ----------------------------------------------------------- Moody's Investors Service upgraded the ratings of four classes and affirmed nine classes of Morgan Stanley Capital I Inc., Commercial Mortgage Pass-Through Certificates, Series 1999-WF1 as: -- Class A-2, $50,279,817, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $48,425,000, affirmed at Aaa -- Class C, $43,583,000, affirmed at Aaa -- Class D, $9,685,000, affirmed at Aaa -- Class E, $29,056,000, affirmed at Aaa -- Class G, $9,685,000, upgraded to Aaa from Aa3 -- Class H, $19,370,000, upgraded to Aa3 from Baa1 -- Class J, $7,264,000, upgraded to A3 from Ba1 -- Class K, $8,232,000, upgraded to Baa2 from Ba3 -- Class L, $12,107,000, affirmed at B2 -- Class M, $4,842,000, affirmed at B3 -- Class N, $4,843,000, affirmed at Caa2 Moody's upgraded Classes G, H, J and K due to increased credit support from loan payoffs and amortization. As of the June 16, 2008 distribution date, the transaction's aggregate certificate balance has decreased by approximately 71.9% to $272.4 million from $968.5 million at securitization. The Certificates are collateralized by 109 loans ranging in size from less than 1.0% to 9.3% of the pool, with the top 10 loans representing 30.9% of the pool. Twelve loans, representing 11.0% of the pool, have defeased and are collateralized with U.S. Government securities. One loan has been liquidated from the pool, resulting in a realized loss of approximately $615,000. Currently there are no loans in special servicing. Forty-eight loans, representing 35.6% of the pool, are on the master servicer's watchlist. The master servicer's watchlist includes loans which meet certain portfolio review guidelines established as part of the Commercial Mortgage Securities Association's monthly reporting package. As part of Moody's ongoing monitoring of a transaction, Moody's reviews the watchlist to assess which loans have material issues that could impact performance. Not all loans on the watchlist are delinquent or have significant issues. Forty-one loans, representing 28.2% of the pool, are on the watchlist due to near term maturity. Moody's was provided with year-end 2007 operating results for 92.0% of the pool. Moody's loan to value ratio is 61.9% compared to 62.8% at Moody's last full review in January 2007 and 78.5% at securitization. The top three non-defeased loans represent 15.6% of the outstanding pool balance. The largest loan is the Galleria Palms Apartments Loan ($25.3 million -- 9.3%), which is secured by a 568-unit Class A apartment complex located in Tempe, Arizona. As of December 2007, the property was 96.0% occupied, essentially the same as last review. Property performance has improved since securitization. The loan matures October 2008. Moody's LTV is 76.2% compared to 83.9% at last review. The second largest loan is the Ward Office/Retail Portfolio Loan ($10.3 million -- 3.8%), which is secured by three office buildings (118,173 square feet) and two retail properties (33,471 square feet) located approximately 25 miles northeast of Baltimore in Bel Air, Maryland. The loan amortizes on a 20 year schedule and has amortized 31.3% since securitization. The overall occupancy was 93.6% as of December 2007 compared to 99.8% in December 2006. Moody's LTV is 50.4% compared to 56.9% at last review. The third largest loan is the Weatherly Walk Loan ($6.8 million -- 2.5%), which is secured by a 194 unit multifamily complex located in Fayetteville, Georgia. The property was 90.0% occupied as of December 2007 compared to 86.0% in December 2006. The loan matures September 2008. Financial performance has declined due to increased expenses. Moody's LTV is 87.5% compared to 72.2% at last review. MORTGAGES LTD: Jennings Replaces Greenberg as Bankruptcy Counsel ---------------------------------------------------------------- Judge Randolph J. Haines of the U.S. Bankruptcy Court for the District of Arizona took no action on a hearing of the bankruptcy case of Mortgages Ltd. on Wednesday, July 9, 2008, Jan Buchholz Phoenix Business Journal. Business Journal, however, comments that the mood at the courtroom was "dramatically different from last week's hearing" when tensions were imminent. Business Journal adds that the retention of a new legal counsel by the Debtor may have alleviated the tension among the Debtor, its officials, and investors. Carolyn Johnsen, Esq., and Bradley Stevens, Esq., at Jennings, Strouss & Salmon PLC, replaced Todd A. Burgess, Esq., at Greenberg Traurig LLP, as counsel to the Debtor, the report says. Greenberg Traurig was dismissed by the Court last week, Business Journal notes. Ms. Johnsen will be paid $150,000 retainer, according to the report. That retainer will be paid by Southwest Value Partners, an investment firm led by Phoenix Suns managing partner, Robert Sarver, Business Journal quotes Ms. Johnsen as stating. The new counsels told the Court during the hearing that they require more time to prepare motions related to the case, Business Journal writes. Judge Sarah Sharer Curley asked Ms. Johnsen to provide report on the Debtor's sources of money, Business Journal relates. The Court is set to hold a hearing on July 15 to continue discussion of the matters taken up last Wednesday, Business Journal relates. About Mortgages Ltd. Phoenix, Arizona-based Mortgages Ltd. -- http://www.mtgltd.com/-- originates, invests in, sells and services its own short-term real-estate secured loans on properties within the state of Arizona in the US. It underwrites loans for commercial, industrial and residential properties for acquisition, entitlement, development, construction and investment. Mortgages Ltd. was the subject of an involuntary chapter 7 petition dated June 20, 2008, filed by KGM Builders Inc. -- a contractor for Grace Communities, a borrower of the company -- before the U.S. Bankruptcy Court for the District of Arizona. Central & Monroe LLC and Osborn III Partners LLC, divisions of Grace Communities, sought the appointment of an interim trustee for Mortgages Ltd. in the chapter 7 proceeding. Mortgages Ltd. is also facing lawsuits filed by Grace Communities and Rightpath Limited Development Group for its alleged failure to fully fund loans. Mortgages Ltd. denied the charges. It has filed a motion to dismiss the Rightpath suit. The Debtor's case was converted to a chapter 11 proceeding on June 24, 2008 (Bankr. Ariz. Case No. 08-07465). Judge Sarah Sharer Curley presides over the case. Carolyn Johnsen , Esq., at Jennings, Strouss & Salmon PLC, replaced Todd A. Burgess, Esq., at Greenberg Traurig, LLP, in representing the Debtor in its restructuring efforts. As of Dec. 31, 2007, the Debtor had total assets of $358,416,681 and total debts of $350,169,423. MORTGAGES LTD: Drafting DIP Agreement with Southwest Value ---------------------------------------------------------- John Dawson, Esq., at Quarles & Brady LLP, related on Southwest Value Partners' behalf that his client is drafting the terms of a debtor-in-possession fund agreement with Mortgages Ltd., Jan Buchholz of Phoenix Business Journal reveals. The proponents to the agreement propose that objections against the DIP financing should be submitted by July 14, 2008, Business Journal says. About Mortgages Ltd. Phoenix, Arizona-based Mortgages Ltd. -- http://www.mtgltd.com/-- originates, invests in, sells and services its own short-term real-estate secured loans on properties within the state of Arizona in the US. It underwrites loans for commercial, industrial and residential properties for acquisition, entitlement, development, construction and investment. Mortgages Ltd. was the subject of an involuntary chapter 7 petition dated June 20, 2008, filed by KGM Builders Inc. -- a contractor for Grace Communities, a borrower of the company -- before the U.S. Bankruptcy Court for the District of Arizona. Central & Monroe LLC and Osborn III Partners LLC, divisions of Grace Communities, sought the appointment of an interim trustee for Mortgages Ltd. in the chapter 7 proceeding. Mortgages Ltd. is also facing lawsuits filed by Grace Communities and Rightpath Limited Development Group for its alleged failure to fully fund loans. Mortgages Ltd. denied the charges. It has filed a motion to dismiss the Rightpath suit. The Debtor's case was converted to a chapter 11 proceeding on June 24, 2008 (Bankr. Ariz. Case No. 08-07465). Judge Sarah Sharer Curley presides over the case. Carolyn Johnsen , Esq., at Jennings, Strouss & Salmon PLC, replaced Todd A. Burgess, Esq., at Greenberg Traurig, LLP, in representing the Debtor in its restructuring efforts. As of Dec. 31, 2007, the Debtor had total assets of $358,416,681 and total debts of $350,169,423. MORTGAGES LTD: 26 Borrowers Resume Payments of Loan --------------------------------------------------- Cathy Reece, Esq., counsel to Fennemore Craig PC, which represents investors, said that 26 of Mortgages Ltd.'s 71 borrowers have resumed payment of their loans, Jan Buchholz Phoenix Business Journal reports. She said that as borrowers resume payments, investors owed money by the Debtor can receive interest payments once again, Business Journal notes. Ms. Reece and Carolyn Johnsen, Esq., stated that some borrowers to whom the Debtor has provided real estate loans stopped payments after the death of the Debtor's chairman and sole shareholder Scott M. Coles, Business Journal says. Ms. Johnsen, Esq., and Bradley Stevens, Esq., at Jennings, Strouss & Salmon PLC, replaced Todd A. Burgess, Esq., at Greenberg Traurig LLP, as counsel to the Debtor, the report says. Greenberg Traurig was dismissed by the Court last week, Business Journal notes. The Troubled Company Reporter has reported that on June 2, 2008, Mr. Coles was found dead at his home in Phoenix, purportedly he had committed suicide. The company called for a conference call on June 10 with borrowers, investors and business partners to discuss the company's future. Laura Martini has been appointed to serve as interim president. State bank regulators said on June 3 they will send examiners to Mortgages Ltd. to oversee the transition process. RightPath Counsel Comments Chris Reeder, Esq., at Sheppard Mullin Richter & Hampton LLP, counsel to Rightpath Limited Development Group, commented that any news that the Debtor's investors will not be paid because of borrowers' missed payments is incorrect, Business Journal states. According to Mr. Reeder, the Debtor's deals with investors and its deals with borrowers "don't equal out," Business Journal reports. RightPath sued Mortgages Ltd. prior to the death of Mr. Coles asserting that the Debtor didn't fully fund a $120 million loan, Business Journal says. The RightPath case is pending before the Arizona Superior Court. Grace Communities, Business Journal adds, also filed similar claims. Business Journal says that the attorneys of developers, RightPath and Grace, are actively participating in the Debtor's bankruptcy case. About Mortgages Ltd. Phoenix, Arizona-based Mortgages Ltd. -- http://www.mtgltd.com/-- originates, invests in, sells and services its own short-term real-estate secured loans on properties within the state of Arizona in the US. It underwrites loans for commercial, industrial and residential properties for acquisition, entitlement, development, construction and investment. Mortgages Ltd. was the subject of an involuntary chapter 7 petition dated June 20, 2008, filed by KGM Builders Inc. -- a contractor for Grace Communities, a borrower of the company -- before the U.S. Bankruptcy Court for the District of Arizona. Central & Monroe LLC and Osborn III Partners LLC, divisions of Grace Communities, sought the appointment of an interim trustee for Mortgages Ltd. in the chapter 7 proceeding. Mortgages Ltd. is also facing lawsuits filed by Grace Communities and Rightpath Limited Development Group for its alleged failure to fully fund loans. Mortgages Ltd. denied the charges. It has filed a motion to dismiss the Rightpath suit. The Debtor's case was converted to a chapter 11 proceeding on June 24, 2008 (Bankr. Ariz. Case No. 08-07465). Judge Sarah Sharer Curley presides over the case. Carolyn Johnsen , Esq., at Jennings, Strouss & Salmon PLC, replaced Todd A. Burgess, Esq., at Greenberg Traurig, LLP, in representing the Debtor in its restructuring efforts. As of Dec. 31, 2007, the Debtor had total assets of $358,416,681 and total debts of $350,169,423. NATIONAL DRY CLEANERS: Taps Hilco to Sell Business Assets --------------------------------------------------------- National Dry Cleaners Inc. retained Hilco Corporate Finance LLC and Hilco Real Estate LLC to market its business assets. The affiliates of NDCI, which operate dry cleaning operations in south Florida, Kansas City, Indianapolis, Oklahoma City, Savannah, Las Vegas and locations in South Carolina will continue in possession of their respective properties and will continue operating their businesses as debtors in possession during the asset sale process. Hilco Corporate Finance and Hilco Real Estate will jointly assist NDCI in the process of marketing and selling its operations and assets in the various markets in which it operates. "Our mandate from the bankruptcy court is to maximize value for all interested parties by obtaining the highest and best bids for the assets," Craig Morse, managing director of Hilco Corporate Finance, said. "We believe the most probable potential buyers will be regional dry cleaning operators, who are interested in expanding their market share through acquisition," Mr. Morse added. About National Dry Cleaners Inc. Headquartered in Phoenix, Arizona, National Dry Cleaners Inc. -- http://www.alphillips.com/and http://www.pridecleaners.com/-- aka Delia's Cleaners Inc. operates more than 300 dry cleaning stores across the nation. The enterprise employs over 1,500 people. As of June 30, 2008, NDCI operated 231 dry cleaning stores and 6 central dry cleaning and laundry plants in nine states. Of the dry cleaning stores, 164 are drop stores, meaning that the stores do not have dry cleaning or laundry equipment on site, and 67 dry cleaning stores have the necessary equipment to perform dry cleaning and laundry services on-site. The Debtor and its debtor-affiliates filed for separate Chapter 11 protection on July 7, 2008, (Bankr. D. Del. Case No.: 08-11382 to 08-11393) Joel A. Waite, Esq., Joseph M. Barry, Esq., Matthew Barry Lunn, Esq. at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Debtors listed estimated assets of $10 million to $50 million and estimated debts of $10 million to $50 million. NATIONAL LIFE: Fitch Lowers Q-IFS Rating to 'BBq' from 'BBBq' ------------------------------------------------------------- Based on statutory financial information through year-end 2007, Fitch Ratings has updated the Quantitative Insurer Financial Strength ratings on these: -- First Health Life & Health Insurance Company (TX)/ 90328 affirmed at 'BBBq' -- Cambridge Life Insurance Company (MO) / 81000 upgraded to 'BBq' from 'Bq'; -- National Life Insurance Company (PR) / 72087 downgraded to 'BBq' from 'BBBq' Q-IFS ratings are generated using a model that utilizes statutory financial statement information that individual companies file with state regulators. The model incorporates "rating logic" that mirrors many aspects of the quantitative analysis that is used to assign traditional IFS ratings. Traditional IFS ratings incorporate both quantitative and qualitative factors and typically involve in-depth discussions with senior management. The Q-IFS ratings incorporate a 'q' subscript to differentiate the ratings from traditional IFS ratings. While recognizing the limitations associated with using a strict quantitative rating approach, Fitch believes that Quantitative IFS ratings will provide a reasonable representation of the life insurance company's stand-alone financial strength and operating profile. NBTY INC: Moody's Rates $300MM Senior Loan Ba1; Outlook is Stable ----------------------------------------------------------------- Moody's Investors Service assigned a Ba1 to $300 million senior secured term loan of NBTY, Inc. Moody's also changed the company's rating outlook to stable from positive, and lowered its senior subordinated notes to B1 from Ba3. The outlook revision to stable from positive reflects Moody's expectation that as a result of its acquisition of Leiner Health Products, debt to EBITDA will increase to about 3.3 times, making it less likely that the company will be upgraded during the next twelve to eighteen month period. A higher rating would require the company achieve and sustain debt/EBITDA below threee times. Debt/EBITDA was 2.5 times for the latest 12-month period ended March 31, 2008. NBTY's Ba2 corporate family rating considers its solid market position and growth rate, healthy profitability, well known brands, and good liquidity. Key credit concerns include the company's concentration in one product segment, the vitamin, mineral, and nutritional supplements segment, which is viewed by Moody's as facing the potential for sales and earnings volatility owing to industry risks. Although NBTY's credit metrics will continue to be more indicative of a higher rating category, the industry risks associated with segment result in Moody's expecting the company to maintain credit metrics that are strong for its rating category. The downgrade of the senior subordinated notes reflects the additional $300 million of senior secured debt being added ahead of the company's existing senior subordinated notes. The Ba1 rating on the new term loan reflects its superior position in the capital structure. On June 10, 2008, NBTY disclosed that it had entered into an amended and restated asset purchase agreement to purchase substantially all of the assets of Leiner's vitamin division for approximately $371 million plus the assumption of certain liabilities. The assets acquired by NBTY exclude the production facility operated by Leiner which resulted in the Department of Justice investigation and subsequent $10 million fine. The acquisition will be mostly financed with the newly rated $300 million term loan, as well as excess cash and borrowings under the revolver. NBTY, Inc.is a vertically-integrated manufacturer, marketer, and retailer of a line of vitamin, mineral, and nutritional supplements in the United States and internationally. Leiner Health Products manufactures store brand vitamins, minerals, and nutritional supplements. Pro forma for the acquisition of Leiner, total revenues are about $2.5 billion. NEXCEN BRANDS: Has Until Jan. 2009 to Comply with Nasdaq Rule ------------------------------------------------------------- NexCen Brands Inc. received notification from The Nasdaq Stock Market that the company is not in compliance with the continued listing requirement of Nasdaq Marketplace Rule 4450(a)(5) because, for the last 30 consecutive business days, the bid price for the company's common stock had closed below the minimum $1.00 per share requirement. In accordance with Nasdaq Marketplace Rule 4450(e)(2), the company was provided 180 calendar days, or until Jan. 5, 2009, to regain compliance with this minimum requirement. To meet this minimum requirement, the bid price of the company's common stock must close at $1.00 per share or more for a minimum of ten consecutive business days or a longer period of time as Nasdaq may require at its discretion. If compliance cannot be demonstrated by Jan. 5, 2009, Nasdaq will provide written notification to the company that its securities will be delisted. If that occur, the company intends to appeal the staff's determination to delist the company's securities to a Nasdaq Listing Qualifications Panel. The company intends to monitor the bid price of its common stock and consider available options if its common stock does not trade at a level likely to result in the company regaining compliance with Nasdaq's minimum bid price requirement by the applicable deadline. About NexCen Brands Nexcen Brands Inc. (NASDAQ: NEXC) -- http://www.nexcenbrands.com/ -- acquires and manages global brands, generating revenue through licensing and franchising. We currently own and license the Bill Blass and Waverly brands, as well as seven franchised brands. Two franchised brands -- The Athlete's Foot and Shoebox New York -- sell retail footwear and accessories. Five are quick-service restaurants -- Marble Slab Creamery, MaggieMoo's, Pretzel Time, Pretzelmaker, and Great American Cookies. The company licenses and franchises its brands to a network of leading retailers, manufacturers and franchisees that generate $1.3 billion in retail sales in more than 50 countries around the world. The franchisees operate approximately 1,900 franchised stores. Franchisee support and training is provided at NexCen University, a state-of-the-art facility located in Atlanta. * * * A. Substantial Doubt As reported by the Troubled company Reporter on May 21, 2008, based on information that is now known, the company believes that there is substantial doubt about its ability to continue as a going concern, and pending completion of an independent review, that this substantial doubt also may have existed at the time the company filed its 2007 10-K. The audit committee of the company's Board of Directors has retained independent counsel to conduct an independent review of the situation. The company has concluded that its 2007 financial statements should no longer be relied upon and no reliance should be placed upon KPMG's audit report dated March 20, 2008, or its report dated March 20, 2008 on the effectiveness of internal control over financial reporting as of Dec. 31, 2007, as contained in the company's 2007 10-K. B. Strategic Alternative Review NexCen also announced that it is actively exploring all strategic alternatives to enhance its liquidity, including potential capital market transactions, the possible sale of one or more of its businesses, and discussions with the company's lender. In addition, the company will take immediate steps to reduce operating expenses. NIGHTHAWK RADIOLOGY: S&P Holds B+ Rating; Outlook Now Stable ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on teleradiology provider NightHawk Radiology Services Inc. to stable from positive. At the same time, S&P affirmed its ratings on the company, including the 'B+' corporate credit rating. "The outlook revision reflects NightHawk's tempered growth, as well as increased pricing pressure from local competitors," said Standard & Poor's credit analyst Rivka Gertzulin. The speculative-grade rating on Coeur d'Alene, Idaho-based NightHawk reflects the company's narrow business focus in the competitive teleradiology services industry, low barriers to entry in local markets, and indirect reimbursement risk. These risks are offset partially by NightHawk's leading position in its industry, premium brand name, high customer retention rates, high operating margins, and relatively conservative financial risk profile. NORTHWESTERN CORP: Court Approves Deal to Settle Claims Litigation ------------------------------------------------------------------ NorthWestern Corporation, dba NorthWestern Energy, disclosed that the U.S. Bankruptcy Court for the District of Delaware has approved a settlement agreement by and among, inter alia, NorthWestern, Magten Asset Management, Law Debenture Trust Company of New York and the Plan Committee that resolves the litigation related to claims of holders of quarterly income preferred securities in NorthWestern's Chapter 11 bankruptcy case. Under the settlement agreement, Magten, Law Debenture and the holders of the QUIPS, will collectively receive a cash payment of $23 million to be allocated amongst them in accordance with the terms of the settlement agreement. The cash payment will be funded principally by NorthWestern's repurchase of stock held in the disputed claims reserve established under NorthWestern's confirmed Plan of Reorganization. In addition, NorthWestern will receive a reimbursement of previously incurred legal fees and expenses of $4 million under separate agreements for which no Court approval was requested. After the distributions under the settlement agreement have been completed, there will be a supplemental distribution of all of the remaining assets in the disputed claims reserve to unsecured creditors and debt holders in Class 7 and Class 9 under the Plan, other than the holders of the QUIPS. The value of the supplemental distribution to each of these unsecured creditors and debt holders is not presently known. "This settlement resolves the last major claim from our 2003 Chapter 11 bankruptcy case, and we will now be able to put closure on that piece of our past and focus on providing exceptional value for our shareholders in the future," Michael J. Hanson, president and chief executive officer, said. About NorthWestern Energy Based in Sioux Falls, South Dakota, NorthWestern Corporation (Nasdaq: NWEC) -- http://www.northwesternenergy.com/-- is a provider of electricity and natural gas in the Upper Midwest and Northwest, serving approximately 650,000 customers in Montana, South Dakota and Nebraska. The Debtor filed for Chapter 11 petition on Sept. 14, 2003 (Bankr. D. Del. Case No. 03-12872) Scott D. Cousins, Esq., Victoria Watson Counihan, Esq., and William E. Chipman, Jr., Esq., at Greenberg Traurig LLP, and Jesse H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul, Hastings, Janofsky & Walker LLP, represent the Debtor in its restructuring efforts. Kurtzman Carson Consultants LLC serves as the Debtor's notice and claims agent. NorthWestern filed a plan of reorganization and disclosure statement with the U.S. Bankruptcy Court for the District of Delaware. The Court confirmed the Plan on Oct. 8, 2004, and the Court's order was entered on Oct. 20, 2004. On Nov. 1, 2004, NorthWestern's plan of reorganization became effective and the company emerged from Chapter 11. * * * Moody's Investors Service placed NorthWestern Corporation's senior unsecured bank credit facility rating at the Ba2 in December 2007. The ratings still holds to date. NORTHWEST AIRLINES: To Slash 2,500 Frontline & Management Workers ----------------------------------------------------------------- Northwest Airlines Corporation said it will reduce its frontline and management employees by 2,500 as a result of capacity reductions taken to address the unprecedented run-up in oil prices. In addition, NWA will match its competitors and charge fees for the first checked bag and for frequent flier award tickets, and increase the fees for ticket changes. "Our fuel costs have more than doubled in the past year," said Doug Steenland, President and CEO of Northwest Airlines. "In order to manage through this unprecedented fuel challenge, we have to take action to both control costs and increase our revenue." A. Personnel Reductions via Voluntary Programs In June, Northwest announced plans to reduce its system mainline capacity (domestic and international) in the fourth quarter of 2008 by 8.5% to 9.5% versus the fourth quarter of 2007. The Troubled Company Reporter issued a story on that disclosure on June 20, 2008, and quoted Mr. Steenland as saying, "In response to these extraordinary fuel costs, we are taking prudent actions to reduce our capacity and right-size the airline. This will allow us to better match our capacity to customer demand as airfares, by necessity, must increase." As a result of these flight reductions, Northwest said it will reduce its frontline and management personnel by 2,500. All NWA employee groups will be affected by the reduction. The reductions will be first achieved through a variety of voluntary programs including early-out programs, voluntary leaves, work rule modifications and attrition. Furloughs will be employed only if voluntary means fail to achieve the targeted reductions. "These reductions are the direct result of our extraordinary fuel costs and the necessary actions we must take to right-size our airline and eliminate unprofitable flying," said Mr. Steenland. B. Added Fees NWA will also match other competitors by adding fees to offset some of its extraordinary fuel costs. C. Checked Bag Fees NWA is matching several competitors including American Airlines, United Airlines and US Airways, with plans to charge $15 for the customer's first checked bag. The new policy applies to tickets sold on or after July 10, for travel starting August 28, throughout the United States as well as travel between the U.S. and Canada. NWA also charges $25 for a second checked bag and $100 for three or more checked bags. Frequent flier elites are exempt from the policy, along with full-fare coach passengers. D. WorldPerks(R) Award Tickets NWA is also matching competitors by implementing a service fee for award tickets. For WorldPerks(R) Award tickets issued in North America on or after Sept. 15, 2008, NWA will charge $25 for domestic tickets, $50 for Trans-Atlantic tickets, and $100 for Trans-Pacific travel. Mr. Steenland noted, "This is a temporary service fee to partially offset our fuel costs. As fuel comes down, we will re-visit this decision." E. Ticket Change Fees NWA also followed moves by American, United, Continental and US Airways to increase fees for ticket changes. Starting July 9, the fee for domestic non-refundable ticket changes will increase from $100 to $150. International ticket change fees will increase by an additional $50 to $150 per ticket, depending on class of service and other restrictions. F. Revenue Gains; Cost Containment Mr. Steenland said, "In addition to helping offset our extraordinary fuel prices, these fee increases also better align our costs with providing these services." He concluded, "We expect these three incremental revenue enhancing measures to generate $250 million to $300 million a year, which will help ease the burden of these record high oil prices." About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NORTHWEST AIRLINES: CEO Spurs Campaign to Lower Fuel Prices ----------------------------------------------------------- Northwest Airlines Corporation President and CEO Doug Steenland criticized financial speculation in light of the rapid run-up in oil prices in the final hour of trading and said, "If anybody needed any further evidence that the oil markets are being directly influenced and affected by financial speculation, [the current situation] ends that debate." He added, "With no single event occurring that would cause supply to decrease or demand for oil to increase, the price in the last 20 minutes of trading went up about $5 a barrel as a result of financial players, near the close of trading, coming into the market and driving up price." Mr. Steenland, who is also the Chairman of the Board of the Air Transport Association, recently testified in Congress on this issue, and added, "[The current situation] is the poster child of why Congress needs to take immediate action to change the law and stop these abuses from adversely affecting the U.S. economy and consumers." Over the last year, the price of crude oil has more than doubled. To help fix these unprecedented oil challenges, Mr. Steenland favors increasing domestic supply, further oil exploration in the United States, investing in alternative energy sources, and conservation. Workers Urge Congress to Mitigate Oil Speculation For past the two weeks, Northwest and Delta Air Lines employees have together sent more than 20,000 messages to Congressional leaders, urging them to pass legislation that will limit this rampant oil speculation. Northwest and Delta also joined 10 other airlines -- which are part of broad business, labor and consumer coalition -- in emailing their frequent flier databases, asking customers to join them in fighting the high cost of fuel. Since the email campaign launched yesterday, 300,000 emails have already been sent by customers to Members of Congress. The letter-writing campaign is at: http://www.StopOilSpeculationNow.com/ About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. (Delta Air Lines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Airlines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NUVOX INC: S&P Lifts Corporate Credit Rating to 'B' from 'B-' ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Greenville, South Carolina-based competitive local exchange carrier NuVox Inc. and related subsidiaries, including the company's corporate credit rating, which was raised to 'B' from 'B-'. The outlook is stable. S&P also raised the senior secured rating on NuVox Inc.'s NuVox Transition Subsidiary Inc. and Gabriel Communications Finance Co. to 'B-' from 'CCC+' and kept the recovery rating at '5'. As of March 31, 2008, the company had about $275 million of funded debt outstanding. "The upgrade reflects NuVox's demonstrated ability over the past year to generate ongoing net free cash flow after capital expenditures," said Standard & Poor's credit analyst Catherine Cosentino, "and maintain a moderate financial profile for its rating." OFFICE DEPOT: Tough Biz Conditions Cue Decline in 2nd Qtr Sales --------------------------------------------------------------- Office Depot, Inc. disclosed that it continued to be negatively impacted by the challenging economic environment in the second quarter of 2008. As a result of pressure from weakening business conditions in the second quarter, North American Retail same store sales decreased nearly 10% versus the prior year and total company sales were down slightly. The company anticipates its EBIT margin to have declined for the second quarter by 200 basis points more than the 200 to 250 basis point decline indicated on a year-over-year basis as sales trends worsened late in the quarter. Office Depot said it is disappointed with these preliminary results driven by a very difficult business environment, but it continues to press ahead with the implementation of its strategic plans and margin expansion initiatives. While the company anticipates the economic environment to be difficult over the balance of the year, it expects its profit margins to improve sequentially in the third and fourth quarters. On July 30, 2008, Office Depot is scheduled to release earnings for the second quarter 2008 fiscal period ending June 28, and host a webcast to discuss earnings at 9:00 a.m. Eastern Time. Office Depot observes a quiet period which commenced June 28, 2008, and extends to the date on which it releases earnings, during which period the company does not have discussions with the investment community. About Office Depot Headquartered in Delray Beach Florida, Office Depot Inc. (NYSE:ODP) -- http://www1.officedepot.com/-- provides office products and services to its customers through more than 1,600 worldwide retail stores, a sales force, catalogs and an e-commerce operation. The company provides office products and services to customers in many countries, and sells to customers directly or through affiliates in 44 countries. * * * As reported by the Troubled Company Reporter on July 10, 2008, Standard & Poor's Ratings Services placed its 'BB+' corporate credit and other issue ratings on Delray Beach, Florida-based Office Depot Inc. on CreditWatch with negative implications. "This action follows the [statement] that the company projects a continued decline of sales and earnings in the second quarter of 2008," Mark Salierno, Standard & Poor's credit analyst, said, "driven by weakness in the company's North American Retail segment." Office Depot indicated that same-store sales during the quarter declined 10% from the prior year, and that EBIT margins were 200 to 250 basis points weaker than anticipated. PACIFIC LUMBER: Court Confirms Amended Marathon/Mendocino Plan -------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, confirmed on July 8, 2008, the Modified First Amended Joint Plan of Reorganization With Technical Modifications for the Debtors proposed by Marathon Structured Finance Fund L.P., Mendocino Redwood Company, LLC, and the Official Committee of Unsecured Creditors. Judge Richard Schmidt concluded that the Marathon/Mendocino Plan is compliant in all respects with the statutory requirements under Section 1129 of the Bankruptcy Code: A. The Marathon/Mendocino Plan complies with the applicable provisions of the Bankruptcy Code, thereby satisfying Section 1129(a)(1). In accordance with Sections 1122 and 1123(a) of the Bankruptcy Code, each Claim in each class under the Marathon/Mendocino Plan is substantially similar to the other claims or interests in that Class. Reasonable business reasons exist for separately classifying Classes 7, 8, and 9, to reflect the different legal rights of the Claimholders. Furthermore, the Class 8 Scopac Trade Claimholders have a different stake in the future viability of the ongoing business than do the Claimants in Class 9 -- primarily the unsecured deficiency claim of the Noteholders. The Marathon/Mendocino Plan specifies unimpaired classes of claims, specifies the treatment of impaired classes of claims, and does not discriminate treatment of the various claim or equity holders, and thus complies with the requirements of Section 1123(a) of the Bankruptcy Code. The Marathon/Mendocino Plan and its Supplements provide adequate and proper means for implementation, satisfying Section 1123(a)(5). On the Effective Date, the Debtors will be formed into two reorganized entities: -- Newco, which is now known as Humboldt Redwood Company LLC; and -- Townco, now known as Town of Scotia Company, LLC. The Marathon/Mendocino Plan requires the Reorganized Entities' organizational documents to prohibit the issuance of non-voting equity securities. The Marathon/Mendocino Plan appropriately distributes a 100% equity interest in Townco to Marathon, 85% of the equity interest in Newco to Mendocino, and a 15% equity interest in Newco to Marathon. None of the equity securities will have a preference over another Class with respect to dividends, therefore complying with Section 1123(a)(6). The Marathon/Mendocino Plan contains provisions with respect to the manner of appointment of the directors and officers of the Reorganized Entities that are consistent with the interests of creditors, equity security holders and public policy in accordance with Section 1123(a)(7). Moreover, the Marathon/Mendocino Plan reflects the date it was filed with the Court, and identifies the entities submitting it as Plan Proponents. B. Pursuant to Section 1129(a)(2), the Marathon/Mendocino Plan complies with the applicable provisions of the Bankruptcy Code. Specifically, the Plan has complied with Sections 1125 and 1126, the Federal Rules of Bankruptcy Procedure, and the Disclosure Statement Order in transmitting the Plan, the Disclosure Statement, the Ballots or Notice of Non-Voting Status, as the case may be, and related documents in soliciting and tabulating votes on the Plan. C. The Marathon/Mendocino Plan Proponents have proposed the Amended Joint Plan in good faith and not by any means forbidden by law, with the legitimate and honest purpose of maximizing the value of the Debtors' estates and to effectuate a successful reorganization of the Debtors, thereby satisfying Section 1129(a)(3). D. Any payment made or to be made by any of the Debtors for services, for costs and expenses in, or in connection with their Chapter 11 proceedings, has been approved by, or is subject to the approval of, the Bankruptcy Court as reasonable, thereby satisfying Section 1129(a)(4). E. The Marathon/Mendocino Plan complies with Section 1129(a)(5). The Disclosure Statement and the Marathon/Mendocino Plan Supplement properly identify all individuals who will serve after confirmation of the Plan as a director or officer of Newco or Townco, provide that no insiders, including existing officers and directors, will be employed or retained by Newco or Townco, and that their appointment to office is consistent with the interest of creditors and equity security holders and public policy. F. Section 1129(a)(6) is satisfied because the Marathon/Mendocino Plan does not provide for any change in rates over which a governmental regulatory commission has jurisdiction. G. The liquidation value set forth in testimony of Ricard LaMont and Jeffrey Johnston during the Confirmation Hearing, as well as the liquidation analysis attached to the Disclosure Statement, and the other evidence adduced at the Confirmation Hearing establish that the requirements of Section 1129(a)(7) of the Bankruptcy Code are satisfied with respect to (i) Classes 6 and 9 because the value of the distributions to creditors in Classes 6 and 9 is not less than the amount that Claimholders would receive or retain if the Debtors were liquidated under Chapter 7, and (ii) with respect to Classes 10, 11, and 12 because Claimholders in Classes 10 and 11 and Interests under Class 12 are not receiving any distribution under the Marathon/Mendocino Plan and would not receive or retain any value in a Chapter 7 case. H. Section 1129(a)(8) is satisfied with respect to Classes 1 and 2 as these claims are not impaired and are conclusively presumed to have accepted the Marathon/Mendocino Plan. Classes 3,4,5,7 and 8 are impaired but have voted to accept the Plan. Section 1129(a)(8) has not been satisfied with respect to (i) Classes 6 and 9 -- which have voted to reject the Marathon/Mendocino Plan, and (ii) Class 10, 11 and 12 which will not receive any property under the Plan and, therefore, are deemed to have rejected the Plan pursuant to Section 1126(g). However, the Marathon/Mendocino Plan is confirmable because it satisfies Section 1129(b) of the Bankruptcy Code with respect to the Rejecting Classes. The Marathon/Mendocino Plan satisfies the cramdown requirements of the Bankruptcy Code. I. The Marathon/Mendocino Plan requires that all Allowed Administrative Expense Claims and Priority Claims will be paid in accordance with Section 1129(a)(9) of the Bankruptcy Code, including any Professional Compensation Claims, thereby satisfying the requirements of Section 1129(a)(9)(C). J. Classes 3, 4, 5, 7 and 8, each of which is Impaired and entitled to vote on the Marathon/Mendocino Plan, have voted to accept the Plan, without including any acceptance of the Marathon/Mendocino Plan by any insider as the term is defined in Section 101(31) of the Bankruptcy Code, thereby satisfying Section 1129(a)(10) of the Bankruptcy Code. K. The Marathon/Mendocino Plan is feasible as required by Section 1129(a)(11) of the Bankruptcy Code because: (a) it is not likely to be followed by liquidation or the need for further financial reorganization; (b) it requires compliance with all non-bankruptcy environmental laws with regard to the regulatory approvals of ownership and operation; and (c) it provides for the assumption of all Environmental Obligations. L. All fees payable under Section 1930 of the Judiciary Procedures Code as determined by the Court on the Confirmation Date, have been paid or will be paid for each quarter on or before the Effective Date, and the Reorganized Entities will continue to pay the fees as they become due from the Effective Date through the closing of the Chapter 11 cases, thus, satisfying the requirements of Section 1129(a)(12). Fees payable after the Effective Date will be paid by the Litigation Trustee in accordance with the Litigation Trust Agreement. M. Section 1129(a)(13) of the Bankruptcy Code is satisfied by the Marathon/Mendocino Plan because pursuant to the Plan Supplement, all benefit plans in effect on the Effective Date will be treated as though they are executory contracts that are assumed under the Marathon/Mendocino Plan, and the Debtors' obligations under the agreements and programs will survive the Effective Date. Moreover, on the Effective Date, the Reorganized Entities will be deemed to have assumed the Debtors' Pension Plan, and will continue to satisfy the minimum funding standards, and administer the Debtors' Pension Plan in accordance with its terms and the provisions of Employee Retirement Income Security Act of 1974. Prior to the confirmation order, The Bank of New York, N.S., as Indenture Trustee for the Timber Noteholders, announced that it will appeal any confirmation issued by the Court in connection with the Marathon/Mendocino Plan. Judge Schmidt, accordingly, stayed the effectiveness of the Confirmation Order until July 18, 2008, to allow parties a reasonable opportunity to seek an extension of the stay. However, the stay is expressly conditioned on BoNY, filing (i) a notice of appeal and (ii) a motion for stay pending appeal, by no later than July 9, Central Time, at 5:00 p.m. All objections raised with respect to the Marathon/Mendocino Plan including without limitation in any memorandum of law in support of the BoNY Plan or other previously filed competing plan, that have not been withdrawn, waived or resolved, are overruled on the merits, the Court held. All of the Debtors' assets -- other than the PLC Litigation Trust Assets and SPC Litigation Trust Assets -- will be transferred to the Reorganized Entities, upon the occurrence of the Effective Date, free and clear of all claims, liens, charges, other encumbrances and interests other than those preserved in the Marathon/Mendocino Plan. However, during the period from the Confirmation Date through and until the Effective Date, the Debtors will continue to operate as debtors-in-possession in the ordinary course, consistent with past practice, subject to the supervision of the Court and pursuant to the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. The exit financing liens will be secured by first priority perfected liens on all existing Timberlands and certain personal property -- tangible and intangible -- of Newco and its existing and future subsidiaries. The security interests and liens granted pursuant to, or in connection with, the Exit Financing will constitute, as of the Effective Date, legal, valid and duly perfected first priority liens and security interests in and to the Collateral. Treatment of Allowed Class 6 Claims Holders of Allowed Scopac Timber Note Secured Claims, having failed to elect the application of Section 1111 (b)(2) of the Bankruptcy Code will be provided, on the Distribution Date, in full satisfaction, release and discharge of and in exchange for the Claims, an initial cash distribution on the Effective Date, not less than $513.6 million to be paid to BoNY as Indenture Trustee. Environmental Obligations The Debtors, the Plan Proponents, the Reorganized Entities -- Newco or Townco -- or any other Entity will comply with all prepetition, current, ongoing, executory, and future environmental obligation, in the ordinary course of business, and in a manner as is required under applicable non-bankruptcy law. Each Environmental Obligation will (i) survive the Effective Date of the Marathon/Mendocino Plan as if the Debtors' Chapter 11 cases had not been commenced, (ii) not be discharged under Section 1141 (d) of the Bankruptcy Code, and (iii) not otherwise be adversely affected by the Debtors' bankruptcy proceedings. Nothing in the Marathon/Mendocino Plan and the Confirmation Order: -- authorizes any transfer of any property covered by the Debtors' permits or the Habitat Conservation Plan and Implementation Agreement for the Habitat Conservation Plan; -- impairs or adversely affects in any way the State and Federal Wildlife Agencies' interest in a Certificate of Deposit issued by Bank of America, N.A., for at least $2,509,580; and -- affects the rights of the defendants in the Headwaters Litigation to enforce any order issued by the court in the Headwaters Litigation against the Debtors, the Reorganized Entities, BoNY on behalf of the Timber Noteholders, or the SPC Litigation Trust. Resolution of Confirmation Objections With respect to the Humboldt County Objection, which has been resolved at the Confirmation Hearing, the Plan Proponents agree that Humboldt County will receive payment of Cash on the Distribution Date, for an amount equal to the unpaid portion of the Allowed Secured Tax Claim plus postpetition interest. As for the CNA Insurance Objection, nothing in the Marathon/Mendocino Plan will in any way impair or impact parties' rights and obligations, including without limitation, any rights to set-off or recoupment, under the insurance policies with respect to the workers' compensation programs described in the Plan. After the Confirmation Hearing, the Marathon/Mendocino Plan Proponents conveyed that they were ready to pay $513.6 million to the Timber Noteholders, as soon as the Effective Date was cleared of any stays, The Eureka Reporter discloses. "We have every intention of consummating our plan if the court confirms it," Marathon attorney David Neier told the courtroom, according to the paper. The Court resolved at the Confirmation Hearing the fate of an ongoing litigation commenced by the Pacific Lumber Company against the state of California and and several State agencies, for an alleged breach of the Headwaters Agreement, the Eureka Reporter relates. The Headwaters Litigation caught a great deal of attention during the Confirmation Hearings, as the Noteholders attempted to gain control of the potential source of harvesting revenue from Mendocino, which will inherit the lawsuit, the paper elaborates. Counsel for the Noteholders insisted that because Scotia Pacific Company, LLC defaulted on its loans for $200 million more than the Noteholders are slated to receive under the Plan, they were entitled to manage the litigation to recoup any possible settlements, the Eureka Reporter notes. Mendocino subsequently agreed to transfer Scopac's portion of the Headwaters Litigation to an independent trust, the paper says. A full-text copy of Part I of the Confirmation Order is available for free at: http://bankrupt.com/misc/PALCO_ConfirmationOrderI.pdf A full-text copy of Part II of the Confirmation Order is available for free at: http://bankrupt.com/misc/PALCO_ConfirmationOrderII.pdf About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter & Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007, which was amended on Dec. 20, 2007. Four other parties-in- interest have filed competing plans for the Debtors -- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes; the Official Committee of Unsecured Creditors; Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and Agent under the DIP Credit Facility; and the Heartlands Commission, which represents the tribal members of the Bear River Band of Rohnerville Rancheria and PALCO employees. The Debtors' exclusive plan filing period expired on Feb. 29, 2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 65; http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: Court Denies BoNY Diminution Claim Against Scopac ----------------------------------------------------------------- After finding sufficient cause, Judge Richard Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas denied the request filed by The Bank of New York, N.S., as Indenture Trustee for the Timber Noteholders, for a superpriority administrative expense claim for the diminution of value in its collateral in Scotia Pacific Company LLC's Chapter 11 case. Judge Schmidt said at the July 7, 2008 hearing that he believes the value of the Scopac Timberlands remained more or less the same during the 18-month proceeding. "There was no evidence that the property had declined in value," The Eureka Reporter quoted Judge Schmidt, as saying. As reported by the Troubled Company Reporter on July 8, 2008, the Times-Standard said Pacific Lumber's confirmation trial hit a snag when Scotia Pacific Company LLC's largest creditor, the Timber Noteholders, demanded that they are entitled to a roughly $170,000,000 "superpriority claim," as a result of a purported reduction in their collateral in the assets of Scopac since the company's bankruptcy filing in January 2007. The Noteholders, by virtue of the Timber Notes issued by Scopac, hold a lien on the Scopac timberlands as collateral for a $700,000,000 loan. According to the Noteholders, the $510,000,000 payment which Marathon/Mendocino contemplates paying them under the Plan does not include the diminution of the value of their collateral, the Eureka Reporter said. The Eureka Reporter related that the Noteholders' counsel claimed that the decrease in the value of the timberlands and loss of the Noteholders' other cash assets total to about $200,000,000. Counsel for Marathon Structured Finance Fund L.P. and Mendocino Redwood Company, LLC, argued that the Diminution Claim is not legal. Nevertheless, the Court stayed the Administrative Claim Order until July 18, 2008, to allow parties a reasonable opportunity to seek an extension of the stay. However, the stay is expressly conditioned on BoNY, filing (i) a notice of appeal and (ii) a motion for stay pending appeal, by no later than July 9, Central Time, at 5:00 p.m. The Court rendered as moot a request filed by Marathon and Mendocino to compel BoNY to disgorge attorneys' fees and expenses or offset them against any allowed Superpriority Claim. At the July 7 hearing, Judge Schmidt allowed another administrative claim by BoNY for $513,600,000 related to Scopac's obligations to the Noteholders. About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter & Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007, which was amended on Dec. 20, 2007. Four other parties-in- interest have filed competing plans for the Debtors -- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes; the Official Committee of Unsecured Creditors; Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and Agent under the DIP Credit Facility; and the Heartlands Commission, which represents the tribal members of the Bear River Band of Rohnerville Rancheria and PALCO employees. The Debtors' exclusive plan filing period expired on Feb. 29, 2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 65; http://bankrupt.com/newsstand/or 215/945-7000). PACIFIC LUMBER: Withdraws Bid for Approval of Repayment Agreement ----------------------------------------------------------------- The Pacific Lumber Company and Scotia Pacific Company LLC had sought the Court's approval of a repayment agreement wherein PALCO and Scopac resolved unpaid log purchases by PALCO from Scopac in January 2008, and certain related debts owed by Scopac to PALCO. PALCO and Scopac notified the Court on June 27, 2008, that they were withdrawing their Motion. Rather than seek to resolve their dispute through the Repayment Agreement, PALCO and Scopac have instead elected to treat their individual claims as administrative expense claims, pursuant to Section 503(b) of the Bankruptcy Court. PALCO and Scopac reserve all of their individual rights, remedies and defenses in connection with the administrative expense claims contemplated, including but not limited to any rights of offset or recoupment. About Pacific Lumber Based in Oakland, California, The Pacific Lumber Company -- http://www.palco.com/-- and its subsidiaries operate in several principal areas of the forest products industry, including the growing and harvesting of redwood and Douglas-fir timber, the milling of logs into lumber and the manufacture of lumber into a variety of finished products. Scotia Pacific Company LLC, Scotia Development LLC, Britt Lumber Co., Inc., Salmon Creek LLC and Scotia Inn Inc. are wholly owned subsidiaries of Pacific Lumber. Scotia Pacific, Pacific Lumber's largest operating subsidiary, was established in 1993, in conjunction with a securitization transaction pursuant to which the vast majority of Pacific Lumber's timberlands were transferred to Scotia Pacific, and Scotia Pacific issued Timber Collateralized Notes secured by substantially all of Scotia Pacific's assets, including the timberlands. Pacific Lumber, Scotia Pacific, and four other subsidiaries filed for chapter 11 protection on Jan. 18, 2007 (Bankr. S.D. Tex. Case Nos. 07-20027 through 07-20032). Jack L. Kinzie, Esq., at Baker Botts LLP, is Pacific Lumber's lead counsel. Nathaniel Peter Holzer, Esq., Harlin C. Womble, Jr., Esq., and Shelby A. Jordan, Esq., at Jordan Hyden Womble Culbreth & Holzer PC, is Pacific Lumber's co-counsel. Kathryn A. Coleman, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP, acts as Scotia Pacific's lead counsel. Kyung S. Lee, Esq., Esq., at Diamond McCarthy LLP is Scotia Pacific's co-counsel, replacing Porter & Hedges LLP. John D. Fiero, Esq., at Pachulski Stang Ziehl & Jones LLP, represents the Official Committee of Unsecured Creditors. When Pacific Lumber filed for protection from its creditors, it listed estimated assets and debts of more than $100 million. Scotia Pacific listed total assets of $932,000,000 and total debts of $765,978,335. The Debtors filed their Joint Plan of Reorganization on Sept. 30, 2007, which was amended on Dec. 20, 2007. Four other parties-in- interest have filed competing plans for the Debtors -- The Bank of New York Trust Company, N.A., as Indenture Trustee for the Timber Notes; the Official Committee of Unsecured Creditors; Marathon Structured Finance Fund L.P, the Debtors' DIP Lender and Agent under the DIP Credit Facility; and the Heartlands Commission, which represents the tribal members of the Bear River Band of Rohnerville Rancheria and PALCO employees. The Debtors' exclusive plan filing period expired on Feb. 29, 2008. (Scotia/Pacific Lumber Bankruptcy News, Issue No. 65; http://bankrupt.com/newsstand/or 215/945-7000). PARK CAPITAL: Owner Depletes Investors' Money; Attempts Suicide --------------------------------------------------------------- Michael Jinyong Park, 41, owner of Park Capital Management Group, tried to commit suicide a week after telling investors in a letter that their funds are gone, Naomi Snyder at Tennessean reports. Mr. Park is currently under treatment at Vanderbilt University Medical Center, Tennessean says. The stockbroker, found Wednesday at his Davidson County home with a cut to his wrist and a stab wound to his abdomen, was rushed to the hospital, the report says. According to the report, at a time when the stock market was failing, investors were promised a 20% annual return by "the seemingly smart and successful stockbroker who rides a Mercedes and a Porsche." Michael Siriyutwatana, 37 and owner Royal Thai restaurants in Nashville, had entrusted his retirement fund to Mr. Park, Tennessean notes. Mr. Siriyutwatana said that Mr. Park was friendly and charismatic. The stockbroker also assured him that his money were invested on stock options. Mr. Siriyutwatana received regular account statements from real brokerage, 1st Discount Brokerage, Tennessean says. Mr. Siriyutwatana also issued checks to Park Capital, which isn't listed at The Financial Industry Regulatory Authority, Tennessean states. In his letter, Mr. Park informed investors that their account with Park Capital "has no current liquid value," Tennessean relates. Mr. Park apologized to his investors and said that funds with 1st Discount is still available, Tennessean notes. He added that he intends to talk to them and explain. Tennessean says that both Mr. Park and 1st Discount were unavailable to comment on the news. The Vanderbilt hospital refused to give update on the stockbroker's condition. John McLemore, Esq., Mr. Park's counsel, said that he probably will request for the suspension of his client's bankruptcy case due to the suicide attempt, Tennessean says. Will Cheek III, Esq., and Bill Norton, Esq., were asked to represent various investors who are owed from $40,000 to more than $1 million, Tennessean notes. Michael Jinyong Park, together with his wife and two children, lives at 133 Woodward Hills Place in Brentwood, Tennessee, on a $1.7 million home. He owns Park Capital Management Group. He currently faces various complaints with the FINRA. He was barred from selling securities in 2000 after being accused of violating securities laws. FINRA said that Mr. Park was fired from Edward Jones in 1998, and from Raymond James Financial in 2000. PMI GROUP: Moody's Downgrades Junior Subordinated Debt to Ba1 ------------------------------------------------------------- Moody's Investors Service has downgraded to A3 from Aa2 the insurance financial strength ratings of The PMI Group's US mortgage insurance subsidiaries, including PMI Mortgage Insurance Co. and PMI Insurance Co., and has downgraded to A3 from Aa3 the IFS ratings of PMI Mortgage Insurance Company Limited, and PMI Guaranty Co., a provider of credit enhancement products. Moody's also downgraded The PMI Group's senior debt to Baa3 from A1 and junior subordinated debt to Ba1 from A2. The rating outlook for these companies is negative. Moody's also downgraded to Aa3 from Aa2 the IFS rating of PMI Mortgage Insurance Ltd., which remains under review for possible downgrade. The rating actions conclude reviews for possible downgrade that were initiated on Jan. 31, 2008, and reflect the deterioration in MIC's capital adequacy and medium term profitability prospects, the firm's limited financial flexibility, and potential capital remediation strategies. The rating agency said that, while US mortgage insurance demand and new business quality have both improved in recent months, performance of MIC's exposures originated prior to 2008 has eroded capitalization and those exposures remain vulnerable to further economic deterioration. Moody's said that the performance of MIC's insured portfolio has deteriorated meaningfully across all segments of its primary book, but the rate of deterioration is more pronounced for MIC's sizable Alt A, variable rate and interest only exposures. The rating downgrade to A3 reflects Moody's view that MIC's higher than industry average delinquency statistics and risk-to-capital ratio positions the company's capital adequacy at the lower end of the range for those mortgage insurers that continue to write new business. Moody's said that franchise strength and the ability to withstand cyclical downturns are key factors in its analysis of a mortgage insurer's business and financial profile. Mortgage insurers derive a substantial portion of their franchise strength from the value that they provide to government-sponsored enterprises involved in residential mortgage finance by allowing them to participate in the high-loan-to-value portion of the mortgage market. MIC insures 13% of the conforming loan market and is a significant counterparty to the GSEs. Moody's said that MIC and other mortgage insurers are poised to benefit from the GSEs' increasing penetration of the mortgage origination market, resulting in higher new business volume, improving underwriting criteria and greater pricing power. Fannie Mae and Freddie Mac recently modified their minimum guideline requirements for mortgage insurers, including the elimination of rating triggers, and Freddie Mac confirmed MIC's designation as an approved "Type 1" insurer, allowing the firm to continue to write new GSE-eligible business. Moody's said that MIC's ability to retain its status as a Type 1 insurer will be an important rating consideration for the company going forward. In evaluating capital adequacy, Moody's has segmented the insured portfolio by vintage, delivery channel (flow, bulk, pool) and borrower quality. Portfolio loss estimates were derived using a stochastic simulation model which applies estimates of expected and stress losses for each strata of risk. The model also incorporates the impact of projected premiums on the insured portfolio, as well as the benefit of reinsurance provided by mortgage lender captives and through other third-party reinsurance arrangements. Capital resources were then compared to the present value of projected net losses using a standard benchmark for capital adequacy at a range of rating levels. Moody's also considered the company's capital position relative to regulatory capital requirements. For MIC's mortgage insurance portfolio overall, capitalization is considered adequate to support the revised rating, and the company is currently within regulatory limits. According to Moody's, the downgrade of PMI Europe and PMI Guaranty reflect the uncertainty of business prospects for these entities, offset by explicit support provided by MIC. The downgrade of PMI Australia's rating to Aa3 takes into account the reduced benefit of the support provided from MIC after due consideration of the strength of its business franchise. The review of PMI Australia's rating for possible downgrade will focus on the company's ability to execute capital strengthening initiatives to stabilize its capital position and regulatory capital cushion. The downgrade of The PMI Group's senior debt rating to Baa3 reflects its subordination to the policyholders of the insurance operating companies, as well as the group's reduced financial flexibility. The PMI Group has drawn $200 million of its bank credit facility, and holding company liquidity is currently sufficient to meet fixed charge obligations over the medium term, including the upcoming $45 million debt maturity in November, 2008. The company's bank credit facility comes due in 2011. The negative rating outlook reflects the potential for further adverse development within the group's insured portfolio and its diminished ability to economically address potential capital shortfalls should markets continue to worsen. Moody's downgraded these ratings and changed the rating outlook to negative: -- PMI Mortgage Insurance Co. -- insurance financial strength to A3 from Aa2 -- PMI Insurance Co. -- insurance financial strength to A3 from Aa2 -- PMI Mortgage Insurance Company Limited (PMI Europe) -- insurance financial strength to A3 from Aa3 -- PMI Guaranty Co. -- insurance financial strength to A3 from Aa3 -- The PMI Group, Inc. -- senior debt to Baa3 from A1; junior subordinated debt to Ba1 from A2; provisional senior debt to (P)Baa3 from (P)A1; provisional subordinate debt to (P)Ba1 from (P)A2; provisional preferred stock to (P)Ba2 from (P)A3. This rating was downgraded and continues to be under review for possible further downgrade: -- PMI Mortgage Insurance Ltd. (PMI Australia) -- insurance financial strength to Aa3 from Aa2 Headquartered in Walnut Creek, California, The PMI Group, Inc. (NYSE: PMI) is the holding company for PMI Mortgage Insurance Co., including its wholly owned subsidiaries and affiliated companies in Australia, Europe and Asia. The PMI Group, Inc. also owns a 50% interest in CMG Mortgage Insurance Co., a 42% interest in FGIC Corporation and a 23.7% interest in RAM Reinsurance Company Ltd. Through its wholly owned subsidiaries and partial interest in affiliated companies, PMI offers residential mortgage insurance and credit enhancement products, financial guaranty insurance, and financial guaranty reinsurance. PMI has operations in Asia, Australia and New Zealand, Europe, and the United States. QUICKSILVER RESOURCES: Moody's Changes Outlook to Stable from Pos. ------------------------------------------------------------------ Moody's Investors Service changed the outlook for Quicksilver Resources Inc. (Ba3 CFR) to stable from positive following the company's statement that it will acquire assets in the Fort Worth Basin (Barnett Shale) for $1.307 billion. The transaction significantly increases Quicksilver Resources' leverage and further concentrates its property base, making an upgrade unlikely over the next 12-18 months. The change in outlook also reflects the unexpected scale of the acquisition, particularly following the recent note offering and the company's ongoing focus on organic growth. Maintenance of the stable outlook will be subject to the company's execution on its plans to meaningfully reduce leverage following the transaction as well as meeting its targets for growth in reserves and production. Quicksilver Resources estimates that the properties to be acquired contain more than 1 Tcf (166.7 MMBoe) of recoverable natural gas resources including approximately 350 Bcf (58.3 MMBoe) of proved reserves, of which approximately 40% are proved developed. Current average daily production for these properties is approximately 45 MMcf/d (7,500 Boe/d). Based on current reserves and production, the purchase price is a very high $22.41/Boe and $174,300/Boe per day. Consideration in the transaction includes $1 billion in cash and $307 million in Quicksilver Resources common stock. The cash portion will be funded with a $700 million 30-month term loan and borrowings of approximately $300 million from Quicksilver Resources' existing credit facility. The recently issued senior unsecured notes will receive the same security as the new term loan. The transaction significantly increases Quicksilver Resources' leverage, particularly in terms of debt relative to proved developed reserves and production. As a result of the transaction, Quicksilver Resources' debt/PD increases to approximately $11.53/Boe from $6.96/Boe prior to the transaction while its debt/average daily production increases to approximately $49,200/Boe per day from $31,400/Boe per day. To retain the stable outlook, Moody's would look for Quicksilver Resources to reduce its debt/PD to less than $9/Boe by the end of 2008 through a combination of debt reduction and reserve additions. While the acquired properties are near Quicksilver Resources' existing position in the Barnett Shale and provide a good strategic fit, the transaction increases the level of Quicksilver Resources' concentration in this one geographic area. It also places a strain on what was already a full program of development on Quicksilver Resources' existing acreage both in the Barnett Shale and in prospective areas elsewhere. Headquartered in Fort Worth, Texas, Quicksilver Resources Inc. RIDGEVIEW PROFESSIONAL: Case Summary & 26 Largest Creditors ----------------------------------------------------------- Lead Debtor: Ridgeview Professional Complex, L.L.C. 1070 Horizon Ridge Parkway, Suite 100 Henderson, NV 89012 Bankruptcy Case No.: 07-17833 Debtor-affiliate filing separate a Chapter 11 petition on July 9, 2008: Entity Case No. ------ -------- BDJ Tuscany I Place, LLC 08-17437 Debtor-affiliate filing separate a Chapter 11 petition on May 28, 2008: Entity Case No. ------ -------- Caritas Plaza, LLC 08-15517 Debtor-affiliate filing separate a Chapter 11 petition on December 21, 2007: Entity Case No. ------ -------- Cantern Corp. 07-18630 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Corinthian Hills, L.L.C. 07-17834 Gobbles, L.L.C. 07-17835 Type of Business: The Debtors own and manages real estate. Chapter 11 Petition Date: November 27, 2007 Court: District of Nevada (Las Vegas) Judge: Bruce A. Markell Debtors' Counsel: Stephen R. Harris, Esq. Belding, Harris & Petroni, Ltd. 417 West Plumb Lane Reno, NV 89509 Tel: (775) 786-7600 Fax: (775) 786-7764 Financial Condition of debtors filing separate Chapter 11 petitions: Estimated Assets Estimated Debts ---------------- --------------- Ridgeview Professional $1 Million to $1 Million to Complex, L.L.C. $100 Million $100 Million Corinthian Hills, L.L.C. $1 Million to $1 Million to $100 Million $100 Million Gobbles, L.L.C. $1 Million to $1 Million to $100 Million $100 Million Financial Condition of debtor filing separate a Chapter 11 petition on December 21, 2007: Total Assets Total Debts ------------ ----------- Cantern Corp. $16,000,155 $9,793,898 Financial Condition of debtor filing separate a Chapter 11 petition on May 28, 2008: Estimated Assets Estimated Debts ---------------- --------------- Caritas Plaza, LLC $10 million to $10 million to $50 million $50 million Financial Condition of debtor filing separate a Chapter 11 petition on July 9, 2008: Total Assets Total Debts ------------ ----------- Cantern Corp. $14,000,131 $13,013,756 A. Ridgeview Professional Complex, LLC's Four Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Reeves Construction Co. goods and services $100,000 1070 Horizon Ridge Parkway, Suite 100 Henderson, NV 89012 Lamb Asphalt goods and services $24,313 2516 Losee Road North Las Vegas, NV 89030 K.J.E. Consulting Engineers, goods and services $23,102 Inc. 4130 Sandhill Avenue, Suite A-15 Las Vegas, NV 89121 Project X goods and services $320 B. Corinthian Hills, LLC's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ John Marchiano, Esq. legal services $10,000 218 Lead Street Henderson, NV 89015 C. Gobbles, LLC's Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ K.J.E. Consulting Engineers, goods and services $11,001 Inc. 4130 Sandhill Avenue, Suite A-15 Las Vegas, NV 89121 Dupont Engineering goods and services $8,475 4420 South Arvile Street, Suite 1 Las Vegas, NV 89103 D. Cantern Corp's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Clark County Treasurer real property $24,584 P.O. Box 551220 taxes 500 S. Grand Central Parkway Las Vegas, NV 89155-1220 Bracewell & Giuliani legal fees $20,000 Marcus Marsden legal fees $18,000 Mark Holland legal fees $13,625 Sheef & Stone legal fees $13,000 Bank of Texas indenture trustee $10,000 services Michelene Bledsoe unknown $7,200 Julie Martinez assigned loan from $5,000 Simms Simms Financial loan $5,000 Mortuary Financial loan $5,000 Barack Ferrazzano, et al legal fees $4,933 Tim Raso director's fees $4,800 Payne, Smith & Jones accounting services $3,057 Delaware Secretary of State tax $2,311 Surety Bank office rent $1,050 Cullen Turner clerical services $680 Moseley & Moseley legal fees $526 Securities Transfer Co. stock handling $450 services E. Caritas Plaza, LLC does not have any creditors that are not insiders. F. BDJ Tuscany I Place, LLC Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Clark County Treasurer property taxes $13,756 500 S. Grand Central Pkwy. P.O. Box 551220 Las Vegas, NV 89155 RITE AID: Closes $820MM Refinancing Aimed at Funding Tender Offers ------------------------------------------------------------------ Rite Aid Corporation completed a refinancing that includes a new $350 million senior secured term loan due 2014, and $470 million of new 10.375% senior secured notes due 2016. The company said it used the proceeds from the refinancing to fund tender offers and consent solicitations of the company's 8.125% senior secured notes due 2010, 9.25% senior notes due 2013 and 7.5% senior secured notes due 2015. "This refinancing gives us greater flexibility to support our business plans in an environment that includes worries about a lengthy recession and continued uncertainty of the capital markets," Mary Sammons, Rite Aid chairman, president and CEO, said. Rite Aid reported that approximately $348.9 million aggregate principal amount of its 8.125% senior secured notes due 2010 (CUSIP 767754BFO), approximately $144.0 million of its 9.25% senior notes due 2013 (CUSIP 767754BH6) and approximately $199.6 million aggregate principal amount of its 7.5% senior secured notes due 2015 (CUSIP 767754BK9) have been tendered and accepted for payment. This represents approximately 96.9% of the outstanding 2010 notes, approximately 95.9% of the outstanding 2013 notes and approximately 99.7% of the outstanding 2015 notes. Rite Aid also delivered notice that it has called for redemption and discharge of all remaining 2015 notes. The proposed amendments to the indentures governing the 2010, 2013 and 2015 notes, which eliminate or modify substantially all restrictive covenants and certain events of default, release the subsidiary guarantees under the 2010, 2013 and the 2015 notes and release all the collateral securing the obligations of the subsidiary guarantors under the 2010 and 2015 notes, became effective upon closing of the tender offer. Consistent with Rite Aid's disclosure that charges from the refinancing could impact net loss, the company revised its net loss and net loss per share guidance for fiscal 2009. The refinancing increases interest expense by approximately $5 million and increases loss due to debt modifications and retirements by approximately $35 million. As a result, the company said it expects the net loss to be between $300 million and $415 million and diluted loss per share to be between $.39 and $.52 per share as compared to previous guidance of a net loss of between $260 million and $375 million or a loss per diluted share of $.34 to $.48. The company said that charges from the refinancing had no impact on its sales, same store sales and adjusted EBITDA guidance. About Rite Aid Corporation Headquartered in Camp Hill, Pennsylvania, Rite Aid Corporation (NYSE: RAD) -- http://www.riteaid.com/-- is a drugstore chain with more than 5,000 stores in 31 states and the District of Columbia. * * * As reported in the Troubled Company Reporter on Jun 10, 2008, Moody's Investors Service assigned a Caa2 (LGD6, 95%) rating to Rite Aid Corporation's new $158 million 8.5% convertible notes and affirmed the company's existing long-term debt rating. At the same time, the company's outlook was revised to negative and its speculative grade liquidity rating was lowered to SGL-4 from SGL-3. RMIW LLC: Wants to Hire Tow & Koenig as Bankruptcy Counsel ---------------------------------------------------------- RMIW LLC, aka RMIW LLC of Texas, asked the U.S. Bankruptcy Court for the Southern District of Texas for authority to employ Tow & Koenig, PLLC as its bankruptcy counsel. Tow & Koenig is expected to, among others, prepare and file schedules and a statement of financial affairs, negotiate with creditors and handle routine motions, file objections, and perform all legal matters that are necessary for the completion of the case. Truman L. Wright agreed to pay Tow & Koenig a $10,000 retainer which will be placed in an account, as required by the U.S. Trustee's office, on behalf of the Debtor. The firm's normal hourly rates is $375 per hour for Julie M. Koenig, Esq., and Rodney Tow, Esq., and $50 to $60 for para professionals. The Debtor said that Tow & Koenig does not have any connections with the debtor, creditors, any other party in interest. The firm can be reached at: Julie M. Koenig, Esq. Tow & Koenig, PLLC 26219 Oak Ridge Drive The Woodlands, Texas 77380 http://www.yourbankruptcylaw.com/ About RMIW LLC Conroe, Texas-based R.M.I.W. LLC, aka R.M.I.W. LLC of Texas, filed its chapter 11 petition on May 23, 2008 (Bankr. S.D. Texas Case No. 08-33284). Judge Jeff Bohm presides over the case. Julie Mitchell Koenig, Esq., at Tow and Koenig PLLC represents the Debtor in its restructuring efforts. The Debtor listed total assets of $60,700,300 and total debts of $7,786,127 when it filed for bankruptcy. SEALY CORP: Clarifies Info on Supplier, Leases and Wage Policies ---------------------------------------------------------------- Sealy Corporation filed with the Securities and Exchange Commission copies of correspondence with the staff of the Commission regarding certain comments the SEC made with respect to the company's: -- Form 10-K for the year ended December 2, 2007; -- Form 10-Q for the quarter ended March 2, 2008; and -- Schedule 14A filed on March 31, 2008 In April 2008, Rufus Decker, the SEC's Accounting Branch Chief, sent a letter to Jeffrey C. Ackerman, Sealy Corp.'s Chief Financial Officer, asking the company to clarify, among other things: -- its dependence on a single supplier for visco-elastic components and whether the company has entered into a supply agreement with the supplier of visco-elastic components; and -- whether the company is not a beneficiary in a variable interest entity at December 2, 2007, and whether it has a significant variable interest in any variable interest entities for which the company determined it is not the primary beneficiary. The SEC staff asked the company to disclose how it accounts for (a) step rent provisions and escalation clauses and (b) capital improvement funding and other lease concessions, which may be present in the company's leases. The SEC staff also asked the company to elaborate in future filings its compensation policy. The SEC staff explained that, from the company's regulatory filings, it appears that increases may be given as necessary to provide base compensation equal to the market median level, or to keep them consistent with an overall salary percentage increase budget applicable to all domestic employees; however the operation of the overall policy is unclear from this disclosure. On behalf of Sealy Corp., Kenneth L. Walker, Esq., the company's Senior Vice President and General Counsel, advised the commission that Sealy has a supply agreement with one of its vendors under which the company purchases both visco-elastic components and foam material used in the production process. Mr. Walker said the company purchases a significant amount of foam materials under the terms of the supply agreement. However, Sealy is not dependent on the supplier as a sole source for foam materials and could obtain the materials from other sources if necessary, Mr. Walker said. Mr. Walker did add that the vendor, which he did not name, represents the company's sole source of visco-elastic components. "Visco-elastic products are considered part of our specialty bedding category. However, our business is not dependent on sales of products using visco-elastic components. For the fiscal year ended December 2, 2007 and the quarter ended March 2, 2008, sales of visco-elastic product represent less than 5% of total domestic sales for the respective periods," Mr. Walker said. Mr. Walker said disclosing the contract as an exhibit to Sealy's Form 10-K filing with the Commission is not warranted. Mr. Walker also noted that Sealy is not a beneficiary in any variable interest entity at December 2, 2007. "[W]e do not have a significant variable interest in any variable interest entity for which we are not the primary beneficiary," he said. Mr. Walker also related that normally, rental on an operating lease will be charged to expense over the lease term as it becomes payable. If rental payments are not made on a straight-line basis, rental expense nevertheless will be recognized on a straight-line basis unless another systematic and rational basis is more representative of the time pattern in which use benefit is derived from the leased property, in which case that basis will be used. According to Mr. Walker, Sealy uses a straight-line basis for recognizing lease expense in these situations as that method is thought to provide the most representative measure of the time pattern over which the benefit from the leased property will occur. Mr. Walker noted that Sealy doesn't have any leases in which there are provisions for capital improvement funding or other lease concessions except for free rent periods. Mr. Walker also shared that Sealy has the option to renew certain plant operating leases, with the longest renewal period extending through 2033. Most of the operating leases provide for increased rent payments through increases in general price levels. He said the company recognizes rent expense in these situations on a straight-line basis over the lease term. Additionally, some of the leases provide for contingent rental payments based on the use of the leased assets or adjustments to future payments based on specified indices. Contingent payments directly related to the use of the assets and future adjustments of payments based on indices are expensed in the period in which the use of the asset occurs and are not included in the schedule of future minimum annual operating lease commitments. Mr. Walker also disclosed that Sealy Corp., Sealy Mattress Corporation -- a 100% owned subsidiary of Sealy -- and each of the subsidiaries of Sealy Mattress Company that guarantee the company's 8.25% Senior Subordinated Notes due in 2014 have fully and unconditionally guaranteed, the obligation to pay the 2014 Notes. Mr. Walker added that Sealy's compensation policy with respect to promotional salary increases from one salary grade to a higher salary grade normally results in a base salary increase of between 7% and 15%. This is intended to make the promoted employee's salary consistent with other company employees in the higher salary grade and market data. About Sealy Corporation Headquartered in Trinity, North Carolina, Sealy Corporation (NYSE: ZZ) -- http://www.sealy.com/-- manufactures and markets a broad range of mattresses and foundations under the Sealy(R), Sealy Posturepedic(R), Stearns & Foster(R), and Bassett(R) brands. Sealy operates 26 plants in North America. According to the Troubled Company Reporter on May 6, 2008, Sealy Corp.'s balance sheet at March 2, 2008, showed total assets of $1.0 billion and total liabilities of $1.1 billion, resulting in a total shareholders' deficit of about $130.0 million. Sealy Corp.'s board of directors has voted to suspend the company's quarterly dividend to increase the company's financial flexibility and enable it to better allocate its capital and enhance shareholder returns over time. SIRIUS SATELLITE: Provides Post-XM Merger Financial Guidance ------------------------------------------------------------ SIRIUS Satellite Radio Inc. related financial guidance for 2009 assuming the completion of the merger of SIRIUS and XM Satellite Radio Holdings Inc. Based upon the company's preliminary analysis, it announced that: -- Total synergies, net of the costs to achieve such synergies, for the combined company are expected to be approximately $400 million in 2009; -- Adjusted EBITDA for the combined company is expected to be approximately $300 million in 2009. Adjusted EBITDA is net income/(loss) before interest and investment income, interest expense (net of amounts capitalized), depreciation expense, and non-cash stock compensation expense; and -- The combined company is expected to achieve positive free cash flow, before satellite capital expenditures, for the full year 2009. To date, neither SIRIUS nor XM has reported positive adjusted EBITDA or achieved free cash flow for a full year. "The upside potential from this merger is significant," Mel Karmazin, SIRIUS Chief Executive Officer and the previously announced CEO of the combined SIRIUS and XM, said. "In addition, the synergies, adjusted EBITDA and free cash flow are expected to continue to grow in subsequent years, and we look forward to providing more detail of this growth in coming months." As disclosed in the Troubled Company Reporter on June 17, 2008, the closing of the pending merger remains subject to the approval from the Federal Communications Commission and satisfaction of other applicable conditions, including the refinancing of certain XM debt. On March 24, 2008, the U.S. Department of Justice informed SIRIUS and XM that it had ended its investigation into the pending merger, that it had concluded that the merger is not anti-competitive, and that it will allow the transaction to proceed. SIRIUS and XM each obtained stockholder approval for the pending merger in November 2007. The company's financial guidance for total net synergies, adjusted EBITDA and free cash flow assumes, among other things: that the merger will be consummated in the third quarter of 2008; that XM will incur certain incremental interest expense as a result of refinancing certain of its debt; that the combined company will realize certain additional advertising and subscriber revenue synergies as a result of the merger; and that the combined company will achieve cost savings and efficiencies in nearly all aspects of its operations. No assurance can be given that any of these objectives will be met or that the amount of incremental interest at XM will not exceed that anticipated by the company. Furthermore, the company's financial guidance also assumes that the combined company will, following the consummation of the merger, immediately take steps in nearly all operational areas to rationalize its operations and realize the expected synergies in a timely manner, but no assurance can be given that the necessary measures to realize expected synergies will be implemented in a timely manner. When the merger was structured, the parties determined that SIRIUS would be the surviving public parent company and that XM would become a subsidiary of SIRIUS. As a result, the preponderance of XM's existing debt will require refinancing in connection with the merger. Because of the refinancing, the combined company expects XM to incur incremental interest expense as a result of refinancing certain of its debt. Principally as a result of this higher interest expense at XM, among other factors, substantially more of the free cash flow before satellite capital expenditures in 2009 is forecast to be realized at SIRIUS, the parent company, than at XM. In addition, SIRIUS and XM expect to refinance certain debt in 2009 that is scheduled to mature during that year. About XM Satellite Radio Holdings Headquartered in Washington, D.C., XM Satellite Radio Holdings Inc. (Nasdaq: XMSR) -- http://www.xmradio.com/-- is a satellite radio company. The company broadcasts live daily from studios in Washington, DC, New York City, Chicago, Nashville, Toronto and Montreal. The company also provides satellite-delivered entertainment and data services for the automobile market through partnerships with General Motors, Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki and Toyota. At March 31, 2008, the company's consolidated balance sheet showed $1.7 billion in total assets, $2.7 billion in total liabilities, $60.2 million in minority interest, resulting in a $1.1 billion total stockholders' deficit. About SIRIUS Satellite Headquartered in New York, SIRIUS Satellite Radio Inc. (Nasdaq: SIRI) http://www.sirius.com/-- provides satellite radio services in the United States. The company offers over 130 channels to its subscribers 69 channels of 100.0% commercial-free music and 65 channels of sports, news, talk, entertainment, data and weather. Subscribers receive the company's service through SIRIUS radios, which are sold by automakers, consumer electronics retailers, mobile audio dealers and through the company's website. As of March 31, 2008, SIRIUS radios were available as a factory and dealer-installed option in 125 vehicle models and as a dealer only-installed option in 29 vehicle models. As reported in the Troubled Company Reporter on May 14, 2008, the company's balance sheet at March 31, 2008, showed $1.5 billion in total assets and $2.3 billion in total liabilities, resulting in a $839.4 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 6, 2008, Standard & Poor's Ratings Services revised the CreditWatch implications of the ratings on Sirius Satellite Radio Inc. (CCC+/Watch Developing/--) to developing from positive. S&P originally placed the ratings on CreditWatch, with positive implications, on Feb. 20, 2007, based on the company's definitive agreement to an all-stock "merger of equals" with XM Satellite Radio Holdings Inc. (CCC+/Watch Developing/--). STANDARD PACIFIC: Closes First Phase of MatlinPatterson Financing ----------------------------------------------------------------- Standard Pacific Corp. closed the first phase of the $530 million equity commitment from MatlinPatterson Global Advisers LLC. This closing resulted in MatlinPatterson purchasing approximately $381 million of a new series of Standard Pacific senior convertible preferred stock, which, subject to stockholder approval, will be convertible into 125 million shares of Standard Pacific common stock at a conversion price of $3.05 per share. Additionally, MatlinPatterson exchanged $128.5 million of Standard Pacific's senior and subordinated debt for warrants to acquire preferred stock, potentially convertible into 89.4 million shares of Standard Pacific common stock at a common stock equivalent exercise price of $4.10 per share. This closing was contingent upon Standard Pacific amending its bank credit facilities, which has also been successfully completed. As part of the amendment, Standard Pacific reduced its total commitment under the revolving credit facility from $500 million to $395 million, paid down its revolver balance from $90 million to $55 million and its Term Loan A balance from $100 million to $65 million, agreed to make quarterly principal amortization payments of $2.5 million under each of the revolver and Term Loan A and agreed to secure future borrowings. The financial covenants contained in the Revolver and Term Loan A credit facilities were modified to eliminate consolidated tangible net worth, leverage, unsold land and minimum interest coverage covenants, and the borrowing base and limitations on joint venture investments were also eliminated. The amended credit facilities contain a new liquidity test requiring the company to maintain either a minimum ratio of cash flow from operations to consolidated home building interest incurred or a minimum liquidity reserve and also prohibit, subject to various exceptions, the repurchase of capital stock, payment of dividends and the incurrence and early repayment of debt. The financial covenants, including the elimination of the borrowing base, and certain other provisions of the company's $225 million Term Loan B were automatically amended to match those of the Revolver and Term Loan A as of the effective time of the amendment. "With the closing of the first phase of MatlinPatterson's investment, the amendment to our credit facilities, and with a substantial increase in our cash on hand we believe we are well positioned to weather the current housing downturn and to take advantage of new opportunities as they arise," Jeffrey V. Peterson, Standard Pacific's Chairman, CEO and President said. "In addition, we look forward to moving ahead to complete the second phase of the MatlinPatterson transaction, our previously announced $152.5 million ($3.05 per share) transferable rights offering for approximately 50 million shares of common stock, in which stockholders of record will be eligible to participate on a pro-rata ownership basis." MatlinPatterson has agreed to purchase any unsubscribed shares in the rights offering in the form of preferred stock. 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 22, 2008, Fitch Ratings has downgraded Standard Pacific Corp.'s ratings as: (i) issuer default rating to 'B-' from 'B+'; (ii) senior unsecured to 'B-/RR4' from 'B+/RR4'; (iii) unsecured borrowings under its bank revolving credit facility to 'B-/RR4' from 'B+/RR4'; and (iv) senior subordinated debt to 'CCC/RR6' from 'B-/RR6'. 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. STARDARD PACIFIC: Inks 4th Supplemental Indenture with BoNY Trust ----------------------------------------------------------------- Standard Pacific Corp. entered into a fourth supplemental indenture with the guarantors and the Bank of New York Trust Company, N.A., which amends the company's senior subordinated indenture dated April 10, 2002. The fourth supplemental indenture amends certain provisions of the indenture, relating to and governing the terms of the company's 9-1/4% senior subordinated notes due 2012. Such provisions were amended to be consistent with the analogous, less restrictive provisions in the company's fourth supplemental indenture to its senior indenture pursuant to which the company's 7-3/4% senior notes due 2013 were issued. In particular, the bank credit facilities basket of the third supplemental indenture was increased from $450 million to $550 million and the limitations on restricted payments in the third supplemental indenture were amended to be consistent with the senior supplemental indenture. In addition, the definitions of "Consolidated Tangible Net Worth" and "Restricted Investment" contained in the third supplemental indenture were amended to be consistent with the analogous definitions in the senior supplemental indenture. As required by the indenture in order to effect the amendment, the company obtained the written consent of the holders of at least a majority in principal amount of the outstanding Notes. Such consent was provided on May 22, 2008. A full-text copy of the Fourth Supplemental Indenture is available for free at http://ResearchArchives.com/t/s?2f55 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 22, 2008, Fitch Ratings has downgraded Standard Pacific Corp.'s ratings as: (i) issuer default rating to 'B-' from 'B+'; (ii) senior unsecured to 'B-/RR4' from 'B+/RR4'; (iii) unsecured borrowings under its bank revolving credit facility to 'B-/RR4' from 'B+/RR4'; and (iv) senior subordinated debt to 'CCC/RR6' from 'B-/RR6'. 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. SW DALLAS: Secured Creditor Balks at Cash Collateral Use -------------------------------------------------------- SW Dallas L.P. asks permission from the U.S. Bankruptcy Court for the Northern District of Texas to use the cash collateral of its lenders. The Debtor's secured creditors, Madison Capital Realty, Gregory Lahr, and Dory Salem, Esq., claim liens on, among other things, the Debtor's real property and rents. The Debtor specifically borrowed $18,750,000 from Madison, which is secured by first priority liens on the Southwest Center Mall owned by the Debtor. The Debtor tells the Court that it needs immediate use of the cash collateral in order to continue running the business, and in particular, operate the Southwest Center Mall. The Debtor adds that it can adequately protect the interests of the lenders by providing post-petition liens and a priority claim in its Chapter 11 case. Madison Capital Objects Madison Capital relates that, due to a payment default, the Southwest Mall was due for foreclosure on June 3, 2008, a day after the Debtor filed for bankruptcy. Prior to the foreclosure, Madison was advised that a major tenant had left the SW Mall, the security company hired by the Mall had quit or was terminated, that escalators and elevators were in disrepair, and that the IRS had served notice on tenants to pay rent directly to them. Madison complained to the Court that the Debtor was clearly able to pay its loan payments since, despite the problems at the mall, it still incurred monthly operating income. Although Madison does not object to Debtor's use of cash collateral to operate the SW Mall and preserve Madison's collateral, Madison does object to the Debtor's use of cash collateral unless and until adequate protections are put in place to insure that the Mall is properly managed, that cash collateral is adequately secured, and that cash collateral is in fact used to pay operating expenses as set forth in the budget. About SW Dallas Arlington, Texas-based SW Dallas L.P. filed for Chapter 11 protection on June 2, 2008 (Bankr. N.D. Tex. Case No. 08-32706). Joyce W. Lindauer, Esq. represents the Debtor in its restructuring efforts. In its schedules, the Debtor disclosed total assets of $25,006,243 and total debts of $17,996,825. SW DALLAS: Wants to Employ Joyce Lindauer as Bankruptcy Counsel --------------------------------------------------------------- SW Dallas L.P. seeks permission from the U.S. Bankruptcy Court for the Northern District of Texas to employ Joyce W. Lindauer, Esq. as its general bankruptcy counsel. Ms. Lindauer will, among others, assist and advise the Debtor with regard to its duties as debtor-in-possession. Ms. Lindauer tells the Court that she will be paid $250 per hour, while legal assistants will be paid $50 to $75 per hour. Ms. Lindauer assures the Court that she is a disinterested person as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Arlington, Texas-based SW Dallas L.P. filed for Chapter 11 protection on June 2, 2008 (Bankr. N.D. Tex. Case No. 08-32706). When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million, and estimated debts of $1 million to $10 million. SW DALLAS: Files List of 19 Largest Unsecured Creditors ------------------------------------------------------- SW Dallas L.P. delivered to the U.S. Bankruptcy Court for the Northern District of Texas a list of its 19 largest unsecured creditors, disclosing: Entity Nature of Claim Claim Amount ------ --------------- ------------ SUEZ Resources Vendor $538,517 P.O. Box 25237 Lehigh Valley, PA 18002-5237 Reliant Energy Vendor $408,308 P.O. Box 120954 Dallas, TX 75312-0954 Allied Barton Security Services Vendor $120,533 3606 Horizon Drive Kind of Prussia, PA 19406 Hudson Energy Vendor $116,768 Initial Security Vendor $112,603 TXU Vendor $99,223 Carrier Corp. Vendor $67,905 Weiser Security Vendor $55,536 KONE Vendor $42,384 City of Dallas Vendor $37,581 Blackburn Insurance Vendor $14,999 Colony Insurance Company Vendor $13,640 LoneStar Logos & Signs LLC Vendor $10,500 Xencom Facility Management Vendor $9,999 CCP Dallas Vendor $8,952 Waste Management Vendor $8,428 Meadows Collier Reed Cousins Vendor $7,075 AICCO Vendor $5,578 Mister Sweeper Vendor $4,971 Arlington, Texas-based SW Dallas L.P. filed for Chapter 11 protection on June 2, 2008 (Bankr. N.D. Tex. Case No. 08-32706). Joyce W. Lindauer, Esq. represents the Debtor in its restructuring efforts. In its schedules, the Debtor disclosed total assets of $25,006,243 and total debts of $17,996,825. SW DALLAS: Files Schedules of Assets & Liabilities -------------------------------------------------- SW Dallas L.P. filed with the U.S. Bankruptcy Court for the Northern District of Texas, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $25,000,000 B. Personal Property $6,243 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $16,271,668 E. Creditors Holding Unsecured Priority Claims $1,930 F. Creditors Holding Unsecured Non-priority Claims $1,723,226 ----------- ----------- TOTAL $25,006,243 $17,996,825 Arlington, Texas-based SW Dallas L.P. filed for Chapter 11 protection on June 2, 2008 (Bankr. N.D. Tex. Case No. 08-32706). Joyce W. Lindauer, Esq. represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million, and estimated debts of $1 million to $10 million. SYNTAX-BRILLIAN: Epiq Bankruptcy Approved as Claims Agent --------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware gave Syntax-Brillian Corporation and its debtor-affiliates permission to employ Epiq Bankruptcy Solutions, LLC as their balloting, noticing, and claims agent. Epiq Bankruptcy is expected to: a) notify all potential creditors of the filing of the Chapter 11 petitions herein and of the setting of the first meeting of creditors, pursuant to Section 341(a) of the Bankruptcy Code; b) file affidavits of service for all mailing, including a copy of each notice, a list of person to whom such notice was mailed, and the date mailed; c) maintain an official copy of the Debtors' bankruptcy schedules, listing creditors and amounts owed; d) furnish a notice of the last date for the filing of proofs of claim and a form for filing a proof of claim to creditors and parties-in-interest; e) docket all claims filed and maintain the official claims register on behalf of the clerk and provide to the clerk an exact duplicate thereof; f) specify in the claims register for each claim docket (i) the claim number, (ii) the date received, (iii) the name and address of the claimant, (iv) the file amount of the claim, if liquidate, and (v) the allowed amount of the claim; g) record all transfers of claims and provide notices of transfer as required pursuant to Federal Rule of Bankruptcy Procedures 3001(e); h) maintain the official mailing list for entities who have filed proofs of claim; i) mail the Debtors' disclosure statement, plan, ballots and any other related solicitation materials to holders of impaired claims and equity interests; j) receive and tally ballots and respond to inquiries respecting voting procedures and the solicitation of votes on the plan; and k) provide any other distribution services as necessary or required. Papers filed with the Court did not disclose the firm's professionals compensation rates. Daniel C. McElhinney, senior vice president and director of operation of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq:BRLC) -- www.syntaxbrillian.com -- manufactures and markets LCD HDTVs, digital cameras, and consumer electronics products include Olevia(TM) brand high-definition widescreen LCD televisions and Vivitar brand digital still and video cameras. Syntax-Brillian is the sole shareholder of California-based Vivitar Corporation. The company and two of its affiliates -- Syntax-Brillian SPE, Inc., and Syntax Groups Corp. -- filed for Chapter 11 protection on July 8, 2008 (Bankr. D. Delaware Lead Case No.08-11409 through 08-11409. Dennis A. Meloro, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig LLP, represent the Debtors in their restructuring efforts. The U.S. Trustee for Region 3 has yet to appoint creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection against their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. SYNTAX-BRILLIAN: Taps Greenberg Traurig as Counsel -------------------------------------------------- Syntax-Brillian Corporation and its debtor-affiliates ask the United States Bankruptcy Court for the District of Delaware for authority to employ Greenberg Traurig LLP as their counsel. Separately, the Debtors ask the Court to employ FTI Consulting Inc. as their interim chief executive officer. Greenberg Traurig will: a) provide legal advice with respect to the Debtors' powers and duties as debtor-in-possession in the continued operation of their business and management of their property; b) negotiate, draft, and pursue all documentation necessary in the cases as determined in conjunction with the firm; c) prepare on behalf of the Debtors all application, motions, answers, orders, reports, and other legal papers necessary to the administration of the Debtor's estates; d) appear in the Court and protecting the interests of the Debtors before the Court; e) assist with any discussion of the Debtors' assets, by sale or otherwise; f) attend all meetings and negotiate with representative of creditors, the U.S. Trustee, and other parties-in-interest; g) provide legal advice regarding bankruptcy law, corporate law, corporate governance, securities, employment, transactional, international trade, tax labor, and other issues to the Debtors in connection with the Debtors ongoing business operations; and h) perform all other legal services for, and provide all other necessary legal advice to, the Debtors which may be necessary and proper in these Chapter 11 cases. The firm's professionals and their compensation rates are: Professionals Hourly Rates ------------- ------------ Nancy A. Mitchell, Esq. $780 Allen G. Kadish, Esq. $695 Joseph P. Davis, Esq. $660 Jeffrey M. Work, Esq. $650 John W. Weis, Esq. $625 Donald J. Detweiler, Esq. $535 Victoria W. Counihan, Esq. $510 Sandra G.M. Selzer, Esq. $415 Dennis A. Meloro, Esq. $385 Gino G. Tonetti, Esq. $340 Leslie Salcedo, Esq. $245 Elizabeth Thomas $195 Designations Hourly Rates ------------ ------------ shareholders $335-$950 of counsel $320-$800 associates $200-$585 legal Assistants/Paralegals $75-$300 Nancy A. Mitchell, Esq., a shareholder at firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq:BRLC) -- www.syntaxbrillian.com -- manufactures and markets LCD HDTVs, digital cameras, and consumer electronics products include Olevia(TM) brand high-definition widescreen LCD televisions and Vivitar brand digital still and video cameras. Syntax-Brillian is the sole shareholder of California-based Vivitar Corporation. The company and two of its affiliates -- Syntax-Brillian SPE, Inc., and Syntax Groups Corp. -- filed for Chapter 11 protection on July 8, 2008 (Bankr. D. Delaware Lead Case No.08-11409 through 08-11409. The U.S. Trustee for Region 3 has yet to appoint creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection against their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. SYNTAX-BRILLIAN: Gets Initial Nod to Use Silver's $23MM DIP Loan ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Syntax-Brillian Corporation and its debtor-affiliates to obtain, on an interim basis, up to $7,500,000 in postpetition financing from a consortium of financial institutions led by Silver Point Finance LLC, as administrative agent and collateral agent. Silver Point allowed the Debtors to obtain, on a final basis, up to committed $23,000,000 in financing under a DIP credit and guaranty agreement. The facility is expected to mature by Sept. 2, 2008. On Oct. 26, 2007, the Debtors entered into a prepetition agreement with Silver Point to provide financing of up to $250,000,000 in loans in the aggregate. The proceeds of the loans were used to pay an existing credit facility with preferred bank and the outstanding balance owed to CIT Group/Commercial Services, Inc. pursuant to an account receivable factoring agreement dated Nov. 22, 2006. The remaining balance of the proceeds were applied to pay transaction fees and for general working capital -- including the purchase of panel inventory. The factoring agreement was terminated on July 7, 2008. The obligations under the prepetition credit agreement are secured by a first priority blanket lien on substantially all of the Debtors' assets, plus a pledge of all of the capital stock of each of the Debtors' domestic subsidiaries and Vivitar's foreign subsidiaries -- excluding Vivitar Japan Co., Ltd. The obligations are guaranteed by both Vivitar and the Debtors. As reported in the Troubled Company Reporter on July 9, 2008, Vivitar Corporation did not file for bankruptcy. The Debtors said that it has initiated the sale of Vivitar for $60 million to Olevia International Group LLC, the designated stalking-horse bidder. The Court also authorized the Debtors to use Silver Point's cash collateral until Aug. 29, 2008. A full-text copy of the cash flow forecast is available for free at: http://ResearchArchives.com/t/s?2f51 Under the DIP agreement, the facility will incur interest at a per annum rate equal to the great of, either: a) the Base Rate plus 8% and 15.5%; or b) the LIBOR Rate plus 9% and 13.5%. The proceeds of the loans will be used to (i) pay for fees, costs, expenses and other obligations owed to the lenders, (ii) fund ongoing working capital requirements of the Debtors including payments of administrative expenses incurred by professional advisors to the Debtors, and (iii) to pay carve-out expenses. The DIP loan is subject to a carve-out for payment to professional advisors retained by the Debtors or the committee, and fees incurred by the clerk of the Bankruptcy Court and the U.S. Trustee. There is a $200,000 carve-out for payment of fees incurred by professionals advisors to the Debtors and the committee. To secure their DIP obligations, Silver Point will be granted a superpriority administrative expense claims over all administrative expenses of any kind, pursuant to Section 507(b) of the Bankruptcy Code. The DIP agreement contains appropriate and customary events of default. A full-text copy of the DIP Guaranty and Credit Agreement is available for free at: Part One: http://ResearchArchives.com/t/s?2f52 Part Two: http://ResearchArchives.com/t/s?2f53 Headquartered in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq:BRLC) -- www.syntaxbrillian.com -- manufactures and markets LCD HDTVs, digital cameras, and consumer electronics products include Olevia(TM) brand high-definition widescreen LCD televisions and Vivitar brand digital still and video cameras. Syntax-Brillian is the sole shareholder of California-based Vivitar Corporation. The company and two of its affiliates -- Syntax-Brillian SPE, Inc., and Syntax Groups Corp. -- filed for Chapter 11 protection on July 8, 2008 (Bankr. D. Delaware Lead Case No.08-11409 through 08-11409. Dennis A. Meloro, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig LLP, represent the Debtors in their restructuring efforts. The U.S. Trustee for Region 3 has yet to appoint creditors to serve on an Official Committee of Unsecured Creditors. When the Debtors filed for protection against their creditors, they listed total assets of $175,714,000 and total debts of $259,389,000. TANEJA CENTER: Section 341(a) Meeting Scheduled for July 18 ----------------------------------------------------------- The U.S. Trustee for Region 4 will convene a meeting of Taneja Center Inc. and its debtor-affiliates' creditors on July 18, 2008, 11:00 a.m., at the Office of the U.S. Trustee, 115 South Union Street, Suite 208, in Alexandria, Virginia. This is the first meeting of creditors required under Section 341(a) of the U.S. Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Fairfax, Virginia-based Taneja Center, Inc. and its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. E.D. Va. Lead Case No. 08-13292). Bruce W. Henry, Esq., at Henry & O'Donnell P.C., represents the Debtors in their restructuring efforts. TANEJA CENTER: Files Schedules of Assets & Liabilities ------------------------------------------------------ Taneja Center Inc. and its debtor-affiliates filed with the U.S. Bankruptcy Court for the Eastern District of Virginia, its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $20,500,000 B. Personal Property $814 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $15,401,759 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $1,164,371 ----------- ----------- TOTAL $20,500,814 $16,566,131 Fairfax, Virginia-based Taneja Center, Inc. and its affiliates filed for Chapter 11 protection on June 9, 2008 (Bankr. E.D. Va. Lead Case No. 08-13292). Bruce W. Henry, Esq., at Henry & O'Donnell P.C., represents the Debtors in their restructuring efforts. TEKNI-PLEX INC: Taps Mr. Schafer as Interim CFO; CEO Joins Board ---------------------------------------------------------------- The board of directors of Tekni-Plex Inc. appointed Gary Schafer to serve as interim Chief Financial Officer of the company. Mr. Schafer is a Director at AlixPartners, LLP, and has been serving as interim controller for a division of the company since February 2008. AP Services, which provides consulting services to the company, is a subsidiary of AlixPartners. On June 30, 2008, Tekni-Plex entered into an amendment to a letter agreement with AP Services, LLC, dated Dec. 17, 2007. Mr. Schafer performed various services for the company pursuant to the Engagement Letter. Pursuant to the Amended Engagement Letter, Mr. Schafer will serve as interim CFO of the company, effective July 1, 2008. Under the terms of the Amended Engagement Letter, the company will continue to pay AP Services a monthly rate of $133,300 for Mr. Schafer's services as interim CFO. CEO Employment Agreement On June 27, 2008, Paul Young was elected by written consent of the shareholders of the company to serve on the Board. No determination has been made at this time with respect to the committees of the Board to which Mr. Young may be named. The company entered into an employment agreement with Mr. Young, in connection with his services as the company's CEO and as a member of the company's Board of Directors. Mr. Young has served as the company's CEO, since June 1, 2008 and as a member of the Board since June 27, 2008. Under the terms of the Agreement, Mr. Young will be entitled to receive an annual base salary of $500,000 and will be eligible to receive a performance-based annual bonus in a range of 50% to 100% based on achievement of targets set by the Board in consultation with Mr. Young. For the fiscal year ending June 30, 2009, Mr. Young is guaranteed a minimum bonus of $200,000 provided he is not discharged for cause and does not voluntarily quit (except for good reason) during that period. In addition, Mr. Young will be granted stock options pursuant to an incentive stock option plan representing 3.5% of the company's Common Stock at various strike prices. About Tekni-Plex Inc. Based in Coppell, Texas, Tekni-Plex Inc. -- http://www.tekni- plex.com/ -- manufactures packaging, packaging products and materials as well as tubing products. The company primarily serves the food, healthcare and consumer markets. It has built leadership positions in its core markets, and focuses on vertically integrated production of highly specialized products. Tekni-Plex has operations in the United States, Europe, China, Argentina and Canada. Tekni-Plex Inc.'s consolidated balance sheet at March 28, 2008, showed $620.1 million in total assets and $1.05 billion in total liabilities, resulting in a $427.0 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on Dec. 27, 2007, Moody's Investors Service downgraded the Corporate Family Ratings of Tekni-Plex Inc. to Caa3 from Caa1. TEKNI-PLEX INC: Offers to Buy Back 10.875% Senior Secured Notes --------------------------------------------------------------- Tekni-Plex, Inc. commenced a change of control offer to purchase any or all of its 10.875% Senior Secured Notes due 2012 outstanding under the Indenture, dated June 10, 2005, by and among the company, the guarantors and HSBC Bank USA, National Association, as trustee. The company is offering to repurchase the notes at a purchase price in cash equal to 101% of the aggregate principal amount of the notes or portion of notes validly tendered for payment thereof, plus accrued and unpaid interest due through Aug. 22, 2008, upon the terms and subject to the conditions of the offer. The offer will expire at 5:00 p.m., New York City time on Aug. 19, 2008, unless extended by the company in its sole discretion. As of the date of the commencement of the Offer, $150.0 million aggregate principal amount of Notes were outstanding. Recapitalization As of May 30, 2008, the company completed a recapitalization, pursuant to which investment funds managed by affiliates of Oaktree Capital Management L.P. and Avenue Capital Group obtained a controlling interest of over 80% of the outstanding common stock, par value $0.01 per share, in exchange for the surrender of an aggregate principal amount of $246,081,000 of the company's outstanding 12.75% Senior Subordinated Notes due 2010, which constituted a "change of control" under the Indenture. The company is currently engaged in discussions with certain of its stockholders to finance the consideration and its obligations under the Offer. The company also anticipates seeking financing proposals from third parties. If the company is not able to obtain financing, it will not be able to consummate the Offer. The company has provided recipients of the offer with certain unaudited pro forma condensed consolidated financial information regarding the company that gives effect to the recapitalization. A copy of the unaudited pro forma condensed consolidated financial information is available for free at: http://ResearchArchives.com/t/s?2f5a Colorite Inquiry On June 12, 2008, the Board of Directors of the company initiated an internal investigation into allegations raised by a current employee that, for the fiscal years ending 2000 to 2006, the company may have incorrectly recorded certain inventory and accounts receivables in the Colorite Plastics Company, a division of the company. The employee did not raise any allegations concerning the accuracy of Colorite's current inventory and accounts receivables. The Board has retained Paul, Weiss, Rifkind, Wharton & Garrison LLP as legal counsel to lead the investigation and to direct forensic accounting consultants retained to assist in the investigation. On June 26, 2008, the company placed the Chief Financial Officer and the Corporate Controller -- who have been in their respective roles during some or all of the period relevant to the investigation -- on paid leave pending the outcome of the investigation. Other members of management will continue to serve in their current roles, including Paul Young, who has been serving as Chief Executive Officer since June 1, 2008, and James A. Mesterharm of AP Services, LLC and a Managing Director at AlixPartners, LLP, who has been serving as Chief Restructuring Officer since Dec. 17, 2007. Gary E. Schafer, 56, a Director at Alix Partners, who has been serving as interim controller for a division of the company since February 2008, will serve as interim Chief Financial Officer. AP Services, LLC will be providing additional resources to perform the duties of corporate controller in the interim. The company has voluntarily reported these matters to the United States Attorney's Office for the Southern District of New York, and to the Staff of the Northeast Regional Office of the Securities and Exchange Commission. The board also has expanded the scope of the investigation beyond the Colorite division to determine whether any improper accounting practices occurred in other divisions of the company. The company cannot predict at this time whether the investigation will conclude that adjustments to prior periods' financial statements are necessary; to the extent that such adjustments are determined to be necessary, the adjustments could be material to the prior periods' financial statements. The investigation is ongoing and the company cannot estimate at this time when the investigation will conclude. About Tekni-Plex Inc. Based in Coppell, Texas, Tekni-Plex Inc. -- http://www.tekni- plex.com/ -- manufactures packaging, packaging products and materials as well as tubing products. The company primarily serves the food, healthcare and consumer markets. It has built leadership positions in its core markets, and focuses on vertically integrated production of highly specialized products. Tekni-Plex has operations in the United States, Europe, China, Argentina and Canada. Tekni-Plex Inc.'s consolidated balance sheet at March 28, 2008, showed $620.1 million in total assets and $1.05 billion in total liabilities, resulting in a $427.0 million total stockholders' deficit. * * * As reported in the Troubled Company Reporter on Dec. 27, 2007, Moody's Investors Service downgraded the Corporate Family Ratings of Tekni-Plex Inc. to Caa3 from Caa1. TEKOIL & GAS: Section 341(a) Meeting Scheduled for July 24 ---------------------------------------------------------- The U.S. Trustee for Region 7 has reset a meeting of Tekoil & Gas Corporation's creditors on July 24, 2008, 10:00 a.m., at the Office of the U.S. Trustee, Suite 3401, 515 Rusk Avenue, in Houston, Texas. The original meeting was scheduled on July 10, 2008. This is the first meeting of creditors required under Section 341(a) of the U.S. Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Based in Houston, Tekoil & Gas Corporation and its subsidiaries -- http://www.tekoil.com/-- say they are into acquiring, stimulating, rehabilitating and improving the assets of small to medium sized oil and gas properties in North America. Tekoil & Gas owns interests in four oil and gas properties, including the Trinity Bay, Redfish Reef, Fishers Reef, and North Point Bolivar fields located in Galveston Bay, Texas. The company was incorporated in Florida in 2004. The company filed for Chapter 11 protection on June 10, 2008 (Bankr. S.D. Tex. Case No. 08-80270). Patrick J. Neligan, Jr., Esq., at Neligan Foley LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated liabilities of $10 million to $50 million. TEKOIL & GAS: Trustee Appoints Four Members to Creditors Panel -------------------------------------------------------------- Charles F. McVay, the U.S. Trustee for Region 7, appoints four members to the Official Committee of Unsecured Creditors in Tekoil & Gas Corp.'s Chapter 11 cases. The Committee members include: 1) Geophysical Pursuit, Inc. Attn: Jeff Springmeyer 3501 Allen Parkway Houston, TX 77019 Tel: (713) 529-3000 Fax: (713) 529-5805 2) Creel & Associates, Inc. Attn: Harry L. Price 1400 Broadfield Boulevard, Suite 250 Houston, TX 77084-4111 Tel: (281) 752-4400 Fax: (281) 589-6003 3) Fusion Petroleum Technologies Inc. Attn: Trevor J. Parkes 8665 New Trails Drive, Suite 125 The Woodlands, TX 77381-4278 Tel: (281) 363-8530 Fax: (281) 363-4657 4) Baker & Hostetler, LLP Attn: Pamela Gale Johnson Laura Lawton Gee 1000 Louisiana, Suite 2000 Houston, TX 77002 Tel: (713) 646-1324 Fax: (713) 751-1717 Based in Houston, Tekoil & Gas Corporation and its subsidiaries -- http://www.tekoil.com/-- say they are into acquiring, stimulating, rehabilitating and improving the assets of small to medium sized oil and gas properties in North America. Tekoil & Gas owns interests in four oil and gas properties, including the Trinity Bay, Redfish Reef, Fishers Reef, and North Point Bolivar fields located in Galveston Bay, Texas. The company was incorporated in Florida in 2004. The company filed for Chapter 11 protection on June 10, 2008 (Bankr. S.D. Tex. Case No. 08-80270). Patrick J. Neligan, Jr., Esq., at Neligan Foley LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated liabilities of $10 million to $50 million. TICKETMASTER: Moody's Assigns Corporate Family Rating of Ba2 ------------------------------------------------------------ Moody's Investors Service has assigned first time corporate family and probability of default ratings of Ba2 each for Ticketmaster. Concurrently, Moody's assigned Ba1 ratings to Ticketmaster's proposed $100 million Term Loan A, $250 million Term Loan B, and $200 million revolving credit facility, and a Ba3 rating to its proposed $400 million of senior unsecured notes. Moody's also assigned an SGL-1 speculative grade liquidity rating. The rating outlook is stable. On Nov. 5, 2007, IAC disclosed that its Board of Directors had approved the spin-off of Ticketmaster into a separate publicly traded company. The spin-off transaction is expected to be completed by the end of August 2008. The specific instrument ratings assigned incorporate both the PDR and loss given default rates for the individual securities. These are subject to change should the mix of capital at transaction closing change. Ticketmaster's Ba2 rating reflects its leading market position in live entertainment ticketing, globally recognized brand, recurring revenue stream secured by exclusive multi-year contracts, and geographic diversification. The rating is supported by the company's low financial leverage, consistent profitability, and solid operating cash flows driven in part by the company's highly scaleable ticket processing platform and vast distribution network. Although the factors cited in Moody's Global Business Services Industry Rating Methodology map to a Ba1 rating, the actual Ba2 rating is constrained by the potential consolidation and evolution of the ticketing industry distribution chain as illustrated by the expected loss of its largest customer, Live Nation. Other credit challenges include the uncertain status of customer contract renewals, the increasing shift to Internet sales which could commoditize pricing, and the dependence on the highly- competitive resale business to drive a large portion of future revenue growth. The SGL-1 speculative grade liquidity rating reflects Ticketmaster's good internal and external liquidity profile as anticipated over the forward 12-month rating horizon following the spin-off, which includes expected total cash of $468 million (including approximately $339 million of client cash) as of March 31, 2008. The retained cash combined with cash flow from operations should be more than sufficient to fund necessary capital expenditures and working capital requirements. Moody's projects pro-forma 2008 free cash flow to be greater than $150 million. The company will have solid external liquidity in the form of an undrawn $200 million revolving credit facility that matures in 2013. Moody's expects the company to fund any dividend payments and future share repurchases from internal sources such as free cash flow or its cash balance. Moody's also expects the company to be comfortably in and maintain compliance with its two financial covenants, a maximum total leverage test and a minimum fixed charge coverage ratio. The stable rating outlook reflects Moody's expectation the company will generate mid-single digit organic revenue growth through 2008 given its leading market position and deeply-entrenched customer base secured by long term contracts. Despite the challenges of the loss of Live Nation, Moody's expects the company to generate consistent free cash flow which will be used for debt reduction. Ratings/assessments assigned: -- Corporate family rating of Ba2; -- Probability-of-default rating of Ba2; -- $100 million secured Term Loan A facility due 2013 of Ba1 (LGD 2, 24%); -- $250 million secured Term Loan B facility due 2014 of Ba1 (LGD 2, 24%); -- $200 million secured revolving credit facility expires 2013 of Ba1 (LGD 2, 24%); -- $400 million senior unsecured notes due 2016 of Ba3 (LGD 5, 80%); Speculative grade liquidity rating of SGL-1 Headquartered in West Hollywood, California, Ticketmaster is a live entertainment ticketing and marketing company. For the year ended Dec. 31, 2007, revenues and operating income were $1.2 billion and $216 million, respectively. TICKETMASTER: S&P Rates Proposed $400MM Senior Notes 'BB' --------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' corporate credit rating to ticketing provider Ticketmaster. The rating outlook is stable. At the same time, S&P assigned its issue-level and recovery ratings to the company's proposed $550 million senior secured credit facilities, consisting of a $200 million revolving credit facility due 2013, a $100 million term loan A due 2013, and a $250 million term loan B due 2014. This debt was rated 'BBB' with a recovery rating of '1', indicating S&P's expectation for very high (90% to 100%) recovery in the event of a payment default. In addition, S&P assigned Ticketmaster's proposed $400 million senior notes due 2016 an issue-level rating of 'BB' with a recovery rating of '5', indicating its expectation for modest (10%-30%) recovery in the event of a default. Proceeds from the proposed transaction will be used to fund a special dividend to IAC/InterActiveCorp. as part of the spin-off of Ticketmaster from IAC. Pro forma for the transaction (including the senior note offering), total debt outstanding was $750 million as of March 31, 2008. "The 'BB+' rating reflects the long-term risks of increasing industry competitiveness with new entrants (particularly with Live Nation developing an in-house ticketing service) and our expectation of the company remaining acquisitive," said Standard & Poor's credit analyst Andy Liu. "These factors are partially offset by Ticketmaster's dominant position in ticketing services, its revenue earned from multiyear contracts, moderate leverage, good EBITDA margins, and discretionary cash flow." Pro forma for the spin-off, lease-adjusted EBITDA coverage of interest and lease-adjusted total debt to EBITDA were 4.9x and 2.9x, respectively, for the 12 months ended March 31, 2008. S&P expect some EBITDA growth over the longer term, but not a significant improvement in total leverage. The company has been relatively acquisitive, and S&P expect it to continue to make tuck-in acquisitions. S&P believe that Ticketmaster will generate moderate discretionary cash flow, and expect conversion of EBITDA to discretionary cash flow in the range of 35% to 50%. TORO ABS: Moody's Cuts Ratings on Floating Rate Notes to C, Ca -------------------------------------------------------------- Moody's Investors Service downgraded and placed on review for possible further downgrade the ratings on this note issued by Toro ABS CDO II, Ltd. Class Description: $885,000,000 Class A-1 First Priority Senior Secured Floating Rate Delayed Draw Notes Due June 2043 -- Prior Rating: Aa1, on review for possible downgrade -- Current Rating: Ba2, on review for possible downgrade Additionally, Moody's downgraded these notes: Class Description: $56,000,000 Class A-2 Second Priority Senior Secured Floating Rate Notes Due June 2043 -- Prior Rating: B2, on review for possible downgrade -- Current Rating: Ca Class Description: $9,000,000 Class D Fifth Priority Mezzanine Secured Deferrable Floating Rate Notes Due June 2043 -- Prior Rating: Ca -- Current Rating: C Class Description: $10,500,000 Class E Sixth Priority Mezzanine Secured Deferrable Floating Rate Notes Due June 2043 -- Prior Rating: Ca -- Current Rating: C The rating actions reflect increased deterioration in the credit quality of the underlying portfolio, according to Moody's. TRANSMERIDIAN EXPLORATION: Alan Halsey Resigns as COO and VP ------------------------------------------------------------ Alan W. Halsey, vice president and chief operating officer of Transmeridian Exploration Inc., resigned from the company effective June 30, 2008. Mr. Halsey's notice of resignation was given on June 20, 2008, following a notice given on May 20, 2008, by Mr. Halsey of his intent to resign from the company. Alan W. Halsey joined the company in June 2006 as vice president and chief operating officer. Prior to joining the company, Mr. Halsey managed private investments and was an executive with a family owned construction materials enterprise from April 2002 to June 2006. Mr. Halsey has 31 years experience in the international oil and gas industry, including 28 years with units of Chevron and Texaco. >From 2000 until 2002, he served as Chairman and Managing Director of the Texaco Upstream Companies in Nigeria. In this capacity, he was responsible for increasing production and executing Texaco's shallow and deepwater development plans in Nigeria, where Texaco historically had been a shallow water producer. From 1998 to 2000, he was President of Texaco Petroleum Company, Colombia, and, from 1992 to 1998, he served as Deputy General Manager and then General Manager of Texaco's Angola operations. Based in Houston, Transmeridian Exploration Inc. (AMEX: TMY) -- http://www.tmei.com/ -- is an independent energy company established to acquire and develop oil reserves in the Caspian Sea region of the former Soviet Union. The company's primary oil and gas property is the South Alibek Field in the Republic of Kazakhstan covered by License 1557 and the related exploration and production contracts with the government of Kazakhstan. Transmeridian Exploration's consolidated balance sheet at March 31, 2008, showed $402.2 million in total assets, $341.2 million in total liabilities, and $92.5 million in redeemable convertible preferred stock, resulting in a $31.5 million total stockholders' deficit. Going Concern Doubt UHY LLP in Houston raised substantial doubt on Transmeridian's ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm pointed to the company's negative working capital, stockholders' deficit, and operating losses since its inception. The company had a net working capital deficit of approximately $56.2 million and a stockholders' deficit of approximately $31.5 million at March 31, 2008. Approximately 89.0% of the company's accounts payable at March 31, 2008, have been outstanding more than 120 days. TRIAD GUARANTY: Fitch Retains Ratings Under Negative Watch ---------------------------------------------------------- The ratings of Triad Guaranty Inc. and Triad Guaranty Insurance Corporation both remain on Rating Watch Negative by Fitch Ratings, where they were originally placed on Oct. 25, 2007. Fitch currently rates both entities as: Triad Guaranty Inc. -- Long-term Issuer 'CCC'. Triad Guaranty Insurance Corporation -- Insurer Financial Strength 'BB'. Triad's ratings incorporate the full execution of the company's reinsurance facilities. Recently, a third party reinsurance provider notified Triad that it would be terminating a $95 million reinsurance facility on the grounds of a covenant violation. Triad disagrees with the reinsurer's conclusion and, as stipulated by the reinsurance contract, has initiated an arbitration process to settle the dispute. Fitch is not in a position to ascertain the ultimate outcome of the arbitration process, but notes that this reinsurance facility is a significant component of Triad's overall claims-paying resources. If Triad is not able to fully utilize this reinsurance facility or otherwise obtain a materially favorable outcome in the arbitration process it is likely Triad's IFS rating would be downgraded, possibly into the 'B' category. Triad Guaranty is a holding company that provided private mortgage insurance coverage in the United States through Triad, its wholly owned subsidiary. For March 31, 2008, Triad Guaranty reported consolidated assets under Generally Accepted Accounting Principles of $1.1 billion and shareholders' equity of approximately $338 million. UNITED CAPITAL: Hedge Fund Auctioned Off by Deutsche Bank --------------------------------------------------------- Deutsche Bank AG had foreclosed and liquidated its collateral at Horizon Strategy hedge funds, an affiliate of United Capital Markets Inc. founded by John Devaney, Bloomberg News and The New York Times report. The hedge funds had missed margin call from Deutsche Bank, reports say. NY Times relates that the bank had demanded payment of its $90 million loan and proceeded to seize the fund's assets on June 26, 2008. Bloomberg relates that Mr. Devaney issued a letter to clients dated July 9, 2008, stating that the fund's survival and investors' recovery depended on the continued relationship with lenders. Bloomberg and NY Times note that the global market has been hit by financial meltdown spurring particularly from the subprime mortgage industry. NY Times reports that Mr. Devaney incurred personal losses of at least $150 million in 2007 owed to the market collapse. Mr. Devaney also said that he liquidated bonds securing Pershing LLC's credit, Bloomberg notes. Pershing LLC is an affiliate of the Bank of New York Mellon. Pershing loaned Horizon Strategy amounts that exceeded the value of security because the loan was personally guaranteed by United Capital's Mr. Devaney, Bloomberg adds. Based on Mr. Devaney's July 9 letter, equity holders are expected to get nothing from the bond liquidation pointing that Pershing is undersecured, Bloomberg says. Amid the losses, Mr. Devaney maintains that he isn't quitting or retiring, NY Times writes. About United Capital Key Biscayne, Florida-based United Capital Markets Inc. -- http://www.unitedcapital.com/-- is a secondary market maker specializing in trading and sales of structured finance products concentrating in Asset Backed and Mortgage Backed Securities. United Capital Markets was founded in 1999 by native Floridian, John Devaney, its current CEO and head trader. UCM provides the marketplace with liquidity, by acting as a principal buyer of ABS subordinated notes in the secondary marketplace. On a continuous basis, the firm does extensive in house research of several hundred ABS securitizations and provides portfolio pricing for customers. UCM's customers include: Money Managers, Mutual Funds, Insurance Companies, Hedge Funds, CBO Managers, Corporations, and other Dealers. United Capital Markets' ABS Division specializes in subordinated bonds with ratings of "AA" to "C" in various areas including 125 LTV Home Equity, Home Equity, Home Improvement, Manufactured Housing, Equipment Lease, Franchise, Aircraft, Sub Prime Autos, CBO Sectors, and Credit Cards. The Horizon Strategy funds, aka Horizon ABS Fund, managed United Capital's $619 million assets as of March 2007. In July 2007, Horizon suspended payout to investors. During that time, Mr. Devaney denied that his company received margin calls. In September 2007, an undisclosed bank demanded loan repayment and subsequently seized 40% of Horizon's equity. VERSO TECHNOLOGIES: Selects Kelakos as Sales Broker, Consultant --------------------------------------------------------------- Verso Technologies Inc. and its debtor-affiliates asks the U.S. Bankruptcy Court for the Northern District of Georgia for authority to employ George M. Kelakos at Kelakos Advisors LLC as their sales broker and consultant for certain intellectual property assets. On May 13, 2008, the Debtors executed an engagement letter agreement with KAL. The Debtors have chosen KAL because of the firm's substantial expertise in providing strategic advice and sales brokerage services regarding IP assets. KAL is expected to market the Debtors' IP assets and conduct an auction sale process under Section 363 of the U.S. Bankruptcy Code. KAL will be paid a commission of 7.5% at the closing of any sale. The Debtors maintain that the firm does not hold or represent an interest adverse to the estate and that is a disinterested person. The firm can be reached at: George M. Kelakos Kelakos Advisors LLC Two Soundview Drive, Suite 100 Greenwich, CT 06830 About Verso Technologies Headquartered in Atlanta, Georgia, Verso Technologies Inc. (OTC:VRSOQ) -- http://www.verso.com/-- provides telecommunications service in the United States. The company and its affiliates manufacture, deliver, and provide support for hardware, software and service solutions primarily to large wireline, cellular, wireless and satellite carriers. The company and four of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. N.D. Ga Lead Case No.08- 67659). J. Robert Williamson, Esq., at Scroggins and Williamson, represents the Debtors in their restructuring efforts. The Debtors selected Logan and Company Inc. as their claims agent. The Debtors proposed to hire John L. Palmer at NachmanHaysBrownstein Inc. as their chief administration officer. The U.S. Trustee for Region 21 appointed creditors serve on an Official Committee of Unsecured Creditors. Darryl S. Laddin, Esq., at Arnall Golden Gregory LLP, represents the Committee in these cases. When the Debtors filed for protection against their creditors, they listed total assets of $34,263,000 and total debts of $36,657,000. VERSO TECHNOLOGIES: Committee Taps Hays as Financial Advisor ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Verso Technologies Inc. and its debtor-affiliates asks the U.S. Bankruptcy Court for the Northern District of Georgia for authority to engage Hays Financial Consulting LLC as its financial advisor. Hays is expected to render, among others, financial and operational analyses regarding the Debtor, make regular reports to the Committee on key Debtor's financial and operational indies and updates on a Section 363 sale, and other services as the Committee may require. The firm's hourly rates are: Managing Principal/Director $300 to $350 Director $200 to $300 Manager $100 to $250 Senior Associate/Associate $100 to $150 Administrative Staff $50 to $75 The firm has agreed that it will cap its hourly blended rate for its professionals for each calendar month to be the lesser of $290 per hour. The blended rate is calculated by taking the total billable amount for the period and dividing it by the total number of hours expended by the firm's professionals. If the actual blended rate is greater than the cap rate, Hays will still bill at the $290 per hour cap. The Committee related that Hays does not hold or represent an interest adverse to the Debtors' estates or the Committee or other creditors. The firm can be reached at: Christopher J. Tierney Hays Financial Consulting LLC 3343 Peachtree Road, NE Suite 200 Atlanta, Georgia 30312 About Verso Technologies Headquartered in Atlanta, Georgia, Verso Technologies Inc. (OTC:VRSOQ) -- http://www.verso.com/-- provides telecommunications service in the United States. The company and its affiliates manufacture, deliver, and provide support for hardware, software and service solutions primarily to large wireline, cellular, wireless and satellite carriers. The company and four of its affiliates filed for Chapter 11 protection on April 25, 2008 (Bankr. N.D. Ga Lead Case No.08- 67659). J. Robert Williamson, Esq., at Scroggins and Williamson, represents the Debtors in their restructuring efforts. The Debtors selected Logan and Company Inc. as their claims agent. The Debtors proposed to hire John L. Palmer at NachmanHaysBrownstein Inc. as their chief administration officer. The U.S. Trustee for Region 21 appointed creditos serve on an Official Committee of Unsecured Creditors. Darryl S. Laddin, Esq., at Arnall Golden Gregory LLP, represents the Committee in these cases. When the Debtors filed for protection against their creditors, they listed total assets of $34,263,000 and total debts of $36,657,000. VERTIS COMM: Obtains $1,300,000,000 Funding for ACG Merger ---------------------------------------------------------- Vertis Communications disclosed that in accordance with its plan to merge with American Color Graphics it has secured commitments for: 1. $380,000,000 in debtor-in-possession financing; and 2. $650,000,000 in exit financing. As reported in the Troubled Company Reporter on May 26, 2008, Vertis Inc., dba Vertis Communications, and American Color disclosed merger and comprehensive restructuring plans that will strengthen their finances, expand their North American footprint, and improve the products and services offered to their customers. The companies and the consenting noteholders have entered into restructuring agreements pursuant to which the companies and consenting noteholders have agreed to consummate the restructuring through prepackaged Chapter 11 plans of reorganization for each company in order to more efficiently exchange the notes. Importantly, the restructuring agreements and terms of the prepackaged plans call for all trade creditors, suppliers, customers and employees to receive all amounts owed to them in the ordinary course of business. The companies will launch a formal solicitation of consent for their prepackaged Chapter 11 plans of reorganization from holders of both Vertis Notes and ACG Notes within approximately 20 days. Consents will be due approximately 30 days after the companies launch the solicitation. Upon receiving the consents, the companies would commence prepackaged Chapter 11 proceedings in order to implement their plans and consummate the merger. The proceedings are expected to conclude in late summer. On July 8, Vertis executed: -- a $380,000,000 DIP financing facility commitment letter with GE Commercial Finance; -- a $250,000,000 Senior Secured Revolving Credit exit facility commitment letter with GE; and -- a $400,000,000 exit facility commitment letter with Morgan Stanley Senior Funding Inc., as lead arranger. "These lending commitments from two top institutions reflect the continuing progress with our financial restructuring plan and merger with American Color Graphics," Mike DuBose, chairman and CEO of Vertis, said. "The financing will provide appropriate liquidity during our restructuring and then fund the newly merged company. Not only will we strengthen our role as a marketing and business partner, but we will provide even more opportunities to our valued clients, suppliers and employees." About American Color American Color Graphics Inc. -- http://www.americancolor.com/-- is one of North America's largest and most experienced full service premedia and print companies, with eight print locations across the continent, six regional premedia centers, photography studios nationwide and a growing roster of customer managed service sites. The company provides solutions and services such as asset management, photography, and digital workflow solutions that improve the effectiveness of advertising and drive revenues for their customers. About Vertis Inc. Headquartered in Baltimore, Vertis Inc. dba Vertis Communications -- http://www.vertisinc.com/-- is a provider of print advertising and direct marketing solutions to America's retail and consumer services companies. Vertis' consolidated balance sheets show total assets of $499,562,000 and total debts of $1,415,569,000 resulting in a $916,007,000 stockholders' deficit. Going Concern Doubt Deloitte & Touche LLP, in Baltimore, Maryland, expressed substantial doubt about Vertis Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm said that the company has incurred recurring net losses and is experiencing difficulty in generating sufficient cash flow to meet its obligations and sustain its operations. VERTIS INC: Releases Financial Projections for 2008 to 2012 ----------------------------------------------------------- In connection with the Disclosure Statement relating to the Joint Prepackaged Plan of Reorganization of Vertis Holdings, Inc., et al. and the Joint Prepackaged Plan of ACG Holdings, Inc., et al. under Chapter 11 of the Bankruptcy Code, Vertis Inc. disclosed certain projections of financial performance for fiscal years 2008 through 2012. As reported by the Troubled Company Reporter on June 3, 2008, Vertis Inc., American Color Graphics and noteholders entered into restructuring agreements pursuant to which the companies and consenting noteholders have agreed to consummate the restructuring through prepackaged Chapter 11 plans of reorganization for each company in order to more efficiently exchange the notes. Vertis and American Color entered into agreements with an aggregate of approximately 72% of the outstanding principal amount of the 9.75% Senior Secured Second Lien Notes due 2009; 83% of the outstanding principal amount of the 10.875% Senior Notes due 2009; and 75% of the outstanding principal amount of the 13.5% Senior Subordinated Notes due 2009 of Vertis; and the holders of an aggregate of approximately 70% of the outstanding principal amount of the 10% Secured Second Lien Notes due 2010 of American Color; to exchange their bonds for an aggregate of $550 million in new notes and substantially all of the new equity in the combined company. The transaction is also supported by Vertis' principal stockholders and the holders of over 95% of the outstanding principal amount of Vertis Holdings Mezzanine Notes. The agreement on the terms of the consensual financial restructurings would reduce the combined company's debt obligations by approximately $725 million, excluding Vertis Holdings Mezzanine Notes, before transaction fees and expenses. In addition, the more than $240 million in Vertis Holdings Mezzanine Notes will no longer be an obligation of the company after the transaction closes. Financial Projections In connection with the company's efforts to obtain exit financing following the consummation of the Prepackaged Plan, the company has distributed financial projections to potential lenders which vary from the Projections contained in the Disclosure Statement. The company continues to believe that the Projections and their underlying assumptions are reasonable. The Financing Projections were provided with a different purpose than the Projections. The financing projections contain more conservative assumptions in order to facilitate financing terms containing favorable debt covenants, whereas the Projections contain the company's reasonable estimation of its ability to meet its obligations under the Prepackaged Plan. The financing projections reflect the results of a recent review of the Projections. The financing projections reflect a more conservative estimate of new business capture. The financing projections also reflect a more conservative estimate of the impacts of market based pricing pressures on the company. Other, less material, adjustments have also been made. A full-text copy of the Financing Projections is available for free at http://ResearchArchives.com/t/s?2f56 Headquartered in Baltimore, Vertis Inc. dba Vertis Communications -- http://www.vertisinc.com/-- is a provider of print advertising and direct marketing solutions to America's retail and consumer services companies. At Dec. 31, 2007, the company's consolidated balance sheet showed $528.2 million in total assets and $1.403 billion in total liabilities, resulting in a $875.1 million total stockholders' deficit. Going Concern Doubt Deloitte & Touche LLP, in Baltimore, Maryland, expressed substantial doubt about Vertis Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the years ended Dec. 31, 2007, and 2006. The auditing firm said that the company has incurred recurring net losses and is experiencing difficulty in generating sufficient cash flow to meet its obligations and sustain its operations. * * * As reported in the Troubled Company Reporter on May 29, 2008, Moody's Investors Service has affirmed the Ca corporate family rating for Vertis Inc., while changing the probability of default rating to Ca from Ca/LD, after the company's statement of a merger with American Color Graphics Inc. coupled with a comprehensive restructuring plan. VESTA INSURANCE: Gaines Plan Trustee Moving Assets to Vesta Fire ---------------------------------------------------------------- Kevin O'Halloran, Plan Trustee for J. Gordon Gaines, Inc., previously entered into a settlement agreement with Vesta Timber Co., LLC, and Vesta Fire Insurance Corporation and its subsidiaries, resolving all claims and issues under the Texas Receivership Action, which called for the liquidation of the Texas Receivership Entities and resulted to the canceling of policies relating to Vesta Fire and its other subsidiaries. Specifically, the Settlement Agreement requires the Gaines Plan Trustee to transfer to Vesta Fire all of Gaines' right, title, and interest in its assets, excluding: * the cash on hand at Gaines on the Effective Date of the Settlement Agreement and the Settlement Payment received from Prime Tempus, Inc., the appointed as the Special Deputy Receiver for the Texas Receivership Entities; * Gaines's right to recover on the proof of claim it filed against Florida Select Insurance Agency; * any cause of action against Gaines's present or former directors, officers, or professionals: * any Claim asserted by Gaines or on its behalf against any of its present or former officers, directors or professionals; * any preference or fraudulent transfer causes of action available to Gaines under Chapter 5 of the Bankruptcy Code; * any claim filed by Gaines against Hawaii Insurance & Guaranty Company; * the Excluded Vesta Insurance Group, Inc., Claims; * the Tenant Deposit; * any claim filed by Gaines against Florida Select Insurance Company; * amounts to which Gaines is due under the Services Agreement; and * the Contingent Assets. The SDR filed Claim No. 119 for $14,617,006, on behalf of Vesta Fire, and Claim Nos. 121 to 124 for unspecified amounts on behalf of various Texas Receivership Entities against Gaines. In furtherance of the Settlement, the Gaines Plan Trustee seeks the authority of the U.S. Bankruptcy Court for the Northern District of Alabama to: (a) transfer immediately the "Gaines D&O Claims" and the "Gaines Professional Claims" to Vesta Fire upon the Court's final approval of the Settlement; and (b) assign other claims and property related to the Gaines Retained Assets -- including, without limitation, the "HIG Claim," the "FSIA Claim" -- at the Gaines Plan Trustee's discretion, as opposed to receiving and disbursing to the Texas Special Deputy Receiver 100% of the related net recoveries. * * * In separate orders, Judge Thomas B. Bennett allowed Claim No. 119 filed by Vesta Fire against Gaines, as an unsecured claim for $14,617,006, in accordance with, and as limited by, the terms of the Settlement Agreement. These claims filed against Gaines by four Texas Receivership Entities are deemed withdrawn with prejudice: Claimant Claim No. -------- --------- Shelby Casualty Insurance Company 122 Texas Select Lloyds Insurance Company 121 Shelby Insurance Company 123 Vesta Insurance Corporation 124 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. The Court confirmed FSIA's plan on March 24, 2008. (Vesta Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) VESTA INSURANCE: Plan Trustee Settles Houlihan's Claim ------------------------------------------------------ The Plan Trustee for Vesta Insurance Group and Houlihan Lokey Howard & Zukin Capital, Inc., financial advisor to Vesta, reached an agreement that resolves a claim for $218,279. Houlihan Lokey Howard & Zukin Capital, Inc., financial advisor to Vesta Insurance Group for specific sale transactions, filed Claim No. 61 for $218,279 against the Debtors in December 2006. Houlihan asserted that $102,623 of the Claim amount was entitled to priority pursuant to Section 507(a)(3) of the Bankruptcy Code. In October 2007, Lloyd T. Whitaker, in his capacity as Plan Trustee for Vesta, contested the amounts and priority sought in the Claim. Subsequently, Houlihan responded to the Objection, and the Plan Trustee served certain discovery requests upon Houlihan with respect to the Claim. After engaging in discussions, the Plan Trustee and Houlihan ultimately reached an agreement that resolves Claim No. 61. The salient elements of the Settlement Agreement include: (a) the Claim will be allowed as a general unsecured claim for $218,279; (b) no portion of the Claim will be entitled to priority under Section 507(a)(3); and (c) the Plan Trustee will waive and release any and all claims that he may have against Houlihan for liability for receipt by Houlihan of any transfers from the Debtor that may be avoidable under Chapter 5. A full-text copy of the Settlement Agreements is available for free at http://bankrupt.com/misc/Houlihan&PTSettlementPact.pdf The Settlement Agreement, according to the Plan Trustee, resolves the portion of the Claim for which Houlihan sought priority status without the need for further litigation and the attendant costs and risks. Accordingly, the Plan Trustee asks the U.S. Bankruptcy Court for the Northern District of Alabama to approve the Settlement Agreement. 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. The Court confirmed FSIA's plan on March 24, 2008. (Vesta Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) VICTORY MEMORIAL: Sells NY Hospital Campus to Sunset LG for $45MM ----------------------------------------------------------------- Victory Memorial Hospital sold its hospital's main campus in Brooklyn, New York, to Sunset LG Realty LLC for $44.9 million. CIT Group Inc., a commercial finance company, served as the exclusive real estate advisor to both Victory Memorial and its Official Committee of Unsecured Creditors in the sale. As reported by the Troubled Company Reporter on May 20, 2008, Victory Memorial Hospital and its debtor-affiliates delivered to the United States Bankruptcy Court for the Eastern District of New York a disclosure statement explaining their Chapter 11 Plan of Reorganization. The Plan contemplates the liquidation of substantial assets of the Debtors and the payment in full of all allowed secured claims and allowed unsecured priority claims. The sale, approved by the Court, includes the hospital's main campus site and two operating businesses - Victory's 150 bed skilled nursing facility and its 400 patient home health care business. New ownership is arranging for the continued operation of both of these programs, the hospital's clinics and other medical services under new management. CIT said that the transaction, when completed, will be one of the first successful sales and restructurings of medical services at a hospital slated for closure by the Berger Commission, a non- partisan panel created by former New York Governor Pataki and the New York State Legislature to review the regional and local supply of hospital and nursing home beds throughout the State. "This deal is a great example of how financially stressed institutions can effectively monetize real estate assets and restructure services so that business continues and community needs are served," Natalie Wilensky, managing director of CIT Investment Banking Services, Real Estate, said. "We are delighted with the outstanding results the CIT team achieved in leading our sales process," Dr. Vincent Calamia, CEO of Victory Memorial Hospital, said. "Their depth of knowledge and strong relationships within both the real estate and healthcare industries and their skill in navigating a particularly complex and politically charged environment enabled us to find a buyer for Victory Memorial that will ensure continued medical services to the community." About Victory Memorial Based in Brooklyn, New York, Victory Memorial Hospital is a non-profit, full service acute care voluntary hospital with approximately 241 beds and a skilled nursing unit with 150 beds. Victory Hospital provides a full range of medical services with a focus on community care and a program of community outreach to the Brooklyn community. Victory Ambulance Services, Inc. a for-profit subsidiary, provides Victory Hospital with ambulance services. Victory Pharmacy, Inc., a for-profit subsidiary, does not have any employees or assets. The company and its two-subsidiaries filed for chapter 11 protection on Nov. 15, 2006 (Bankr. S.D.N.Y. Case Nos. 06-44387 through 06-44389). Timothy W. Walsh, Esq., and Jeremy R. Johnson, Esq., at DLA Piper US LLP, represent the Debtors. Craig E. Freeman, Esq., and Martin G Bunin, Esq., at Alston & Bird LLP, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed assets and debts between $1 million and $100 million. VULCAN ENERGY: OXY to Buy 10% Interest in General Partner of PAA ---------------------------------------------------------------- Plains All American Pipeline, L.P. disclosed that a wholly owned subsidiary of Occidental Petroleum Corporation, has entered into definitive agreements to acquire an aggregate 10% equity interest in the general partner of PAA directly from the existing owners. Closing is expected to occur within the next 30 to 45 days and is subject to certain customary closing conditions. The purchase price was not disclosed. "OXY is a well respected, large and financially strong energy industry participant and we believe their investment in PAA's general partner is an attractive transaction for PAA," said Greg L. Armstrong, Chairman and CEO of Plains All American. "Over the next several years, we look forward to exploring potential mutually beneficial opportunities with regard to the respective midstream activities of PAA and OXY. In addition, to align OXY's ownership interests with those of PAA's limited partners and help fund PAA's continued growth, OXY has committed to invest in common units in conjunction with PAA's future capital raising efforts." Armstrong stated that all of the current general partner owners will continue to be owners following the closing of the transactions. The sale of certain of the interests is subject to receipt of approvals by lenders to one of the owners. However, to facilitate the certainty of the transaction, other owners have agreed to sell additional interests such that OXY will acquire an aggregate 10% equity interest, even if such lender approvals are not obtained. In either event, the current control positions with respect to the general partner will not be affected as a result of this transaction. Armstrong noted that OXY will have observer rights with respect to the board of directors of PAA's general partner and, under certain circumstances involving changes in PAA's upper-level management, will receive the right to designate an additional director to the board. No near-term change to the board of directors is expected as a result of the transaction. Plains All American Pipeline, L.P. is a publicly traded master limited partnership engaged in the transportation, storage, terminalling and marketing of crude oil, refined products and liquefied petroleum gas and other natural gas related petroleum products. Through its 50% ownership in PAA/Vulcan Gas Storage LLC, the partnership is also engaged in the development and operation of natural gas storage facilities. The Partnership is headquartered in Houston, Texas. Vulcan Energy Corp. owns 54% of the GP interest and 12.4 million limited partner units (roughly 10% of the total LP units) in Plains. VULCAN ENERGY: Plains-OPC Deal Cues S&P to Affirm 'BB' Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed the 'BB' corporate credit rating on Vulcan Energy Corp and the 'BBB-' corporate credit rating on Plains All American L.P. The outlook is stable for both entities. At the same time, S&P affirmed the 'BB' rating on Vulcan's secured term loan due 2011. The recovery rating remains unchanged at '4'. We also affirmed the 'BBB-' rating on Plains' senior unsecured notes. The affirmation follows the announcement that Occidental Petroleum Corp. (A/Stable/A-1) has entered into definitive agreements to acquire a 10% equity interest of the general partner interest in Plains. Vulcan owns 54% of the GP interest and 12.4 million limited partner units (roughly 10% of the total LP units) in Plains. Despite Vulcan's majority ownership, its voting rights are contractually limited on most governance matters. With Occidental's pending acquisition, S&P expect that Vulcan's GP stake could fall to 50.1%, provided that the Vulcan lenders agree to an amendment to allow for the sale. "The rating on Vulcan reflects its complete reliance on upstream distributions from Plains to support its debt service and administrative expenses, as well as the potential volatility associated with these distributions," said Standard & Poor's credit analyst David Lundberg. Plains' distributions have grown steadily, but a disruption in these payments could materially impair Vulcan's ability to service its debt. In particular, incentive distribution rights represent more than half of Vulcan's current EBITDA and would be disproportionately affected if Plains needs to reduce distributions. Vulcan's term loan is non-recourse to Plains. The rating on Plains reflects a satisfactory business risk profile, with stable cash flow provided by the company's network of pipelines and terminals, and a moderately leveraged financial risk profile. Partially offsetting these factors are the risks presented by Plains' volatile marketing segment, the company's acquisitive growth strategy, and the potential strain that volatile crude oil prices could place on the company's liquidity in a stressed scenario. WACHOVIA CORP: Sees Up to $2.8BB After-Tax Loss, Hires New CEO -------------------------------------------------------------- Based on current estimates, Wachovia Corp. expects to report an after-tax loss available to common stockholders of $2,600,000,000 to $2,800,000,000 or $1.23 - $1.33 on a per share basis for the second quarter of 2008, excluding goodwill impairment charges. Wachovia Corp. will announce its second quarter results on July 22, 2008. Wachovia says results were driven by higher provision expense, including $4,200,000,000 pre-tax to build loan loss reserves, $3,300,000,000 of which related to Wachovia's former Pick-a-Pay loan product, higher legal costs, the non-cash SILO charge of $855,000,000 after-tax and modest market disruption losses. Wachovia currently expects to report a Tier One capital ratio of approximately 8.0% and an allowance for loan losses as a percent of loans of approximately 2.2%. Charge-offs for the quarter were approximately $1,300,000,000 or 1.10% of loans on an annualized basis, including approximately $500,000,000 relating to the Pick- a-Pay portfolio and roughly $280,000,000 relating to commercial real estate. Wachovia also currently expects to incur a goodwill impairment charge in the second quarter, the amount of which is still being determined. Although the goodwill impairment charge will further reduce reported GAAP earnings, it will be non-cash in nature and will not affect Wachovia's liquidity or the company's regulatory capital ratios. As part of its announcement of second quarter results, the company will provide additional information about current and future initiatives to rationalize its cost structure and further enhance the capital efficiency of its balance sheet, including reducing its mortgage exposure. Steel on Board On Wednesday, Wachovia's Board of Directors appointed Robert K. Steel, 56, as the company's new Chief Executive Officer, President and member of the Board of Directors, effective immediately. Lanty Smith will continue in his role as Wachovia's Chairman of the Board. All business unit and staff functions will report to Mr. Steel. Mr. Steel most recently served as Under Secretary for Domestic Finance for the U.S. Department of Treasury. Mr. Steel used to work for Goldman Sachs. He joined Goldman Sachs in 1976 and served in the Chicago office until his transfer to London in 1986. He became a partner in 1988. In London, he founded the firm's Equity Capital Markets group for Europe and was involved in privatization and capital raising efforts for European corporations and governments. He later assumed the position as head of Equities for Europe. In 1994, he relocated to New York and served as head of the Equities Division from 1998 to 2001. In 1999, he joined the Management Committee. Mr. Steel retired from Goldman Sachs as a vice chairman in February 2004. Upon his retirement, he assumed the position of advisory director for the firm and then senior director in December 2004. From February 2004 to September 2006, Mr. Steel served as a senior fellow at the Center for Business and Government at the John F. Kennedy School of Government at Harvard University. He chairs Duke University's Board of Trustees and he has previously served on the board of Barclays Bank. As reported by the Troubled Company Reporter on June 5, 2008, Wachovia appointed Lanty Smith as its interim chief executive officer, to succeed Kennedy G. Thompson, who has fired by the board. Forbes' Liz Moyer and Mitchell Martin report that Mr. Steel's appointment "did little to put to rest speculation about the bank's future on Thursday." Forbes reports that Wachovia's shares on Thursday were down 7.2% to $13.26. As of the spring of 2006, the shares traded just below $60, the report notes. Forbes says Mr. Thompsono was fired in June no doubt largely due to his ill-timed, $23,900,000,000 purchase of Golden West Financial and its Pick-a-Pay product in 2006. According to Forbes, Wachovia is worth just $28,400,000,000, even after an $8,100,000,000 capital increase in April 2008. For Sale? According to Forbes, many are speculating that Wachovia is being prepped up for sale, especially given Mr. Steel's Goldman Sachs ties. Mr. Steel, during a conference call introducing himself to investors Thursday, said he would concentrate on the bank's real estate exposure, Forbes reports. Forbes says there are a number of potential acquirers that would be attracted to Wachovia's presence in the Southeast and California, including JPMorgan Chase, Wells Fargo, and Goldman. Chairman Smith, however, called the speculation "silly," according to Forbes. As reported by the Troubled Company Reporter on June 25, 2008, Wachovia hired Goldman to study its troubled portfolios of mortgages. The Wall Street Journal reported that the bank's engagement of Goldman means that it is likely weighing the market value of those loans to eventually sell them. WSJ, citing market observers, said the final price could mean losses for Wachovia which prompted the bank to actually sell the loans. The sale of the portfolios could also have implications for whether Wachovia itself might be acquired, WSJ added. About Wachovia Corporation Based in Charlotte, North Carolina, Wachovia Corporation (NYSE:WB) -- http://www.wachovia.com/-- is one of the nation's diversified financial services companies, with assets of $808.9 billion and market capitalization of $53.8 billion at March 31, 2008. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to customers through 3,300 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending and auto finance businesses. Clients are served in selected corporate and institutional sectors and through more than 40 international offices. Its retail brokerage operations under the Wachovia Securities brand name manage more than $1.1 trillion in client assets through 18,600 registered representatives in 1,500 offices nationwide. Online banking is available at wachovia.com; online brokerage products and services at wachoviasec.com; and investment products and services at evergreeninvestments.com. * * * As reported by the Troubled Company Reporter on April 14, 2008, The Walls Street Journal noted that Wachovia's need for additional capital came two months after it raised $3.5 billion through a preferred-stock sale. According to the report, Wachovia's trouble stemmed from its $25,000,000,000 purchase of Golden West Financial Corp. nearly two years ago. Golden West's loans -- the vast majority of which are adjustable-rate mortgages loans -- were concentrated in California, one of the hardest-hit housing markets in the U.S. Wachovia announced that it lost $350,000,000 in the first quarter due to $2,000,000,000 in asset write-downs and $2,100,000,000 in new provisions against credit losses. Earnings in the same period last year was $2,300,000,000. WATERFALL GALLERY: Taps Barron & Newburger as Bankruptcy Counsel ---------------------------------------------------------------- Waterfall Gallery of Austin L.P. asks authority from the U.S. Bankruptcy Court for the Western District of Texas to employ Barron & Newburger P.C. as their general bankruptcy counsel. Barron & Newburger will, among others, prepare applications and proposed orders to be submitted to the Court, assist the Debtor in preparing a plan of reorganization and disclosure statement, and assist the Debtor in performing its duties under the U.S. Bankruptcy Court. Stephen W. Sather, Esq., an attorney at the firm, tells the Court that the firm's professionals bill these hourly rates: Stephen Sather $350 Barbara Barron $350 Attorneys $200 - $400 Legal Assistants $40 - $90 Mr. Sather assures the Court that the firm does not represent interest adverse to the Debtor's estate. Manor, Texas-based Waterfall Gallery of Austin L.P. filed for Chapter 11 protection on June 2, 2008 (Bankr. W.D. Tex. Case No. 08-11016). When the company filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $10 million to $50 million. WBHR I: Voluntary Chapter 11 Case Summary ----------------------------------------- Debtor: WBHR I, LLC 52 N. Broad St. Woodbury, NJ 08096 Bankruptcy Case No.: 08-22863 Chapter 11 Petition Date: July 9, 2008 Court: District of New Jersey (Camden) Debtor's Counsel: Roger C. Mattson, Esq. Email: rogermattson1@verizon.net 26 Newton Ave. Woodbury, NJ 08096 Tel: (856) 848-4050 Fax: (856) 848-9504 Estimated Assets: $10,000,000 to $50,000,000 Estimated Debts: $1,000,000 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors. WHITEHALL JEWELERS: U.S. Trustee Forms 7-Member Creditors Panel --------------------------------------------------------------- Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed seven creditors to serve on an Official Committee of Unsecured Creditors of Chapter 11 cases of Whitehall Jewelers Holdings Inc. and its debtor-affiliates. The creditors committee members are: 1. SDC Designs LLC Attn: Abhay Javeri 529 Fifth Avenue New York, New York 10017 Tel: (212) 764-7979 Fax: (212) 599-4237 2. Rosy Blue, Inc. Attn: Dipu Mehta Nirav Dalal 529 Fifth Avenue New York, New York 10017 Tel: (212) 687-8838 Fax: (212) 856-9835 3. Leo Schachter Diamonds, LLC Attn: Jay I. W einblatt Eric Austein 579 Fifth Avenue New York, New York 10017 Tel: (212) 981-1887 and (212) 981-1836 Fax: (212) 688-3174 4. Continental Manufacturing, Ltd. c/o Continental Jewelry USA, Inc. Attn: Lawrence Lee 115 W. 30 th Street, Suite 300 New York, New York 10001 Tel: (212) 695-3303 Fax: (212) 695-0997 5. Jewelex New York, Ltd. Attn: Nandini Doshi Atul Kothari 529 Fifth Avenue, 18th Floor New York, New York 10017 Tel: (212) 840-3500 Fax: (212) 840-6077 6. Simon Property Group, Inc. Attn: Ronald M. Tucker 225 W. Washington Street Indianapolis, IN 46204 Tel: (317) 263-2346 Fax: (317) 263-7901 7. General Growth Properties, Inc. Attn: Julie Minnick Bowden 110 N. Wacker Drive Chicago, IL 60606 Tel: (312) 960-2707 Fax: (312) 442-6374 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual Chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtor is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. About Whitehall Jewelers Headquartered in Chicago, Illinois, Whitehall Jewelers Holdings, Inc. -- http://www.whitehalljewellers.com/-- own and operate 375 stores jewelry stores in 39 states. The company operates stores in regional and regional shopping malls under the names Whitehall and Lundstrom. The Debtors' retail stores operate under the names Whitehall (271 locations), Lundstrom (24 locations), Friedman's (56 locations, and Crescent (22 locations). As of June 23, 2008, the Debtors have about 2,852 workers. The company and its affiliates, Whitehall Jewelers Inc., filed for Chapter 11 protection on June 23, 2008 (Bankr. D. Del. Lead Case No. 08-11261). James E. O'Neill, Esq., Kathleen P. Makowski, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones, LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims, noticing and balloting agent. When the Debtors' filed for protection against their creditors, they listed total assets of total assets of $207,100,000 and total debts of $185,400,000. WORNICK CO: Emerges From Bankruptcy Under Chapter 11 Protection --------------------------------------------------------------- The Wornick Company successfully completed its financial restructuring and emerged from Chapter 11. On June 27, 2008, the Hon. J. Vincent Aug, Jr. of the U.S. Bankruptcy Court for the Southern District of Ohio in Cincinnati confirmed Wornick's Amended Joint Plan of Reorganization dated April 4, 2008. The confirmation order approved, among other things, the sale of the equity in the reorganized Wornick to a company owned by the holders of approximately 85% of Wornick's senior secured notes. As reported in the Troubled Company Reporter on June 30, 2008, on Feb. 12, 2008, Wornick entered into an Purchase Agreement with Viren Acquisition Corp. The Purchase Agreement provides for the sale of 100% of the equity of Reorganized Wornick, or substantially all of Wornick's assets to the Purchaser as well the assumption by the Purchaser of certain of Wornick's liabilities pursuant to section 363 of the U.S. Bankruptcy Code. The sale closed [Thurs]day, consummating the plan and marking Wornick's official emergence from Chapter 11. Wornick has also closed on a $35 million exit financing facility which is being provided from certain funds and accounts managed by DDJ Capital Management, LLC. The exit financing includes a $10 million term loan and $25 million in revolving credit facilities. The amended plan classifies claims against and interests in the Debtors in 11 classes. The classification of interests and claims are: Treatment of Interests and Claims Type of Allowed Estimated Claim Treatment Claims Recovery ------- --------- ------- --------- Priority Unimpaired $100,000 100% Tax Claims DIP Financing Unimpaired $35,000,000 100% Claims Other Priority Unimpaired $1,700,000 100% Claims Other Secured Unimpaired -- 100% Claims Prepetition Impaired -- -- Secured Loan Agreement Claims Senior Secured Impaired $140,219,335; 36% Note Claims $125,000,000 in accrued principal plus and $14,219,335 in unpaid prepetition interest accrued interest General Unsec. Unimpaired $1,000,000 100% Claims Unliquidated Unimpaired -- N/A Claims Intercompany Unimpaired -- N/A Claims TWC Note Claims Impaired $38,000,000 0% Subordinated Impaired -- 0% Securities Claims Equity Interests Unimpaired 100% in Surviving Debtors other than Wornick Equity Interests Impaired 0% of Non-Surviving Debtors and Wornick "This is an exciting day for Wornick and all of our employees," said Jon Geisler, President and Chief Executive Officer of The Wornick Company. "We accomplished what we set out to do at the beginning of this process. We reduced our burdensome long-term debt and restored our financial stability. We have made significant improvements to our operations and with a more appropriate level of debt, we can utilize our resources to make the necessary investments to improve and grow our business. "I am particularly proud of the fact that we met our commitment to complete this process as quickly and efficiently as possible," Mr. Geisler said. "We completed a successful restructuring in less than five months, and we did so with minimal impact on our employees, customers and suppliers. Throughout the Chapter 11 case, we paid our suppliers in full on normal terms for all pre- and post-petition goods and services. We maintained all of our customer contracts and continued to provide high quality products and services to our customers without any disruption. We set out to make this restructuring a non-event for our key constituents, and I believe we accomplished that as best we could. "We are very grateful for the support we have received during this process from our employees, suppliers and customers," Mr. Geisler added. " Along with the Board of Directors and the rest of the senior management team, I am committed to rewarding their loyalty by building Wornick into a stronger, more successful company." A full-text copy of the Amended Disclosure Statement is available for free at: http://ResearchArchives.com/t/s?2a80 A full-text copy of the Amended Joint Chapter 11 Plan of Liquidation is available for free at: http://ResearchArchives.com/t/s?2a81 Based in Cincinnati, The Wornick Company -- http://www.wornick.com/-- is a leading supplier of individual and group military field rations to the Department of Defense. In addition the company continues to extend its core capabilities to commercial markets where its customers include, but are not limited to, Kraft Foods, Inc., Gerber Products Company, as well as retail and grocery outlets including Walgreens Co., 7-Eleven, The Kroger Co., Publix Super Markets and Meijer. Wornick specializes in the production, packaging, and distribution of shelf-life, shelf-stable, and frozen foods in flexible pouches and semi-rigid products. The firm's two main lines of business are military rations (approximately 70% of revenues) and co- manufacturing for leading food brands (30%). The company produces both individual (including MRE) and group rations (including Unitized Group Rations-A or UGR-A) for the U.S. military. MREs comprise about 65% of military revenues. The company and and five of its affiliates filed for Chapter 11 protection on Feb. 14, 2008 (Bankr. S.D. Ohio, Case No. 08-10654). Donald W. Mallory, Esq., Kim Martin Lewis , Esq., and Patrick Burns, Esq. at Dinsmore & Shohl LLP represent the Debtors in their restructuring efforts. The Debtor selected Kurtzman Carson Consultants LLC as claims, noticing and balloting agent. An official committee of unsecured creditors has not been appointed in these cases. The company listed between $100 million and $500 million assets and between $100 million and $500 million in debts in its bankruptcy filing. XM SATELLITE: Sirius Releases Financial Guidance for Combined Biz ----------------------------------------------------------------- SIRIUS Satellite Radio Inc. related financial guidance for 2009 assuming the completion of the merger of SIRIUS and XM Satellite Radio Holdings Inc. Based upon the company's preliminary analysis, it announced that: -- Total synergies, net of the costs to achieve such synergies, for the combined company are expected to be approximately $400 million in 2009; -- Adjusted EBITDA for the combined company is expected to be approximately $300 million in 2009. Adjusted EBITDA is net income/(loss) before interest and investment income, interest expense (net of amounts capitalized), depreciation expense, and non-cash stock compensation expense; and -- The combined company is expected to achieve positive free cash flow, before satellite capital expenditures, for the full year 2009. To date, neither SIRIUS nor XM has reported positive adjusted EBITDA or achieved free cash flow for a full year. "The upside potential from this merger is significant," Mel Karmazin, SIRIUS Chief Executive Officer and the previously announced CEO of the combined SIRIUS and XM, said. "In addition, the synergies, adjusted EBITDA and free cash flow are expected to continue to grow in subsequent years, and we look forward to providing more detail of this growth in coming months." As disclosed in the Troubled Company Reporter on June 17, 2008, the closing of the pending merger remains subject to the approval from the Federal Communications Commission and satisfaction of other applicable conditions, including the refinancing of certain XM debt. On March 24, 2008, the U.S. Department of Justice informed SIRIUS and XM that it had ended its investigation into the pending merger, that it had concluded that the merger is not anti-competitive, and that it will allow the transaction to proceed. SIRIUS and XM each obtained stockholder approval for the pending merger in November 2007. The company's financial guidance for total net synergies, adjusted EBITDA and free cash flow assumes, among other things: that the merger will be consummated in the third quarter of 2008; that XM will incur certain incremental interest expense as a result of refinancing certain of its debt; that the combined company will realize certain additional advertising and subscriber revenue synergies as a result of the merger; and that the combined company will achieve cost savings and efficiencies in nearly all aspects of its operations. No assurance can be given that any of these objectives will be met or that the amount of incremental interest at XM will not exceed that anticipated by the company. Furthermore, the company's financial guidance also assumes that the combined company will, following the consummation of the merger, immediately take steps in nearly all operational areas to rationalize its operations and realize the expected synergies in a timely manner, but no assurance can be given that the necessary measures to realize expected synergies will be implemented in a timely manner. When the merger was structured, the parties determined that SIRIUS would be the surviving public parent company and that XM would become a subsidiary of SIRIUS. As a result, the preponderance of XM's existing debt will require refinancing in connection with the merger. Because of the refinancing, the combined company expects XM to incur incremental interest expense as a result of refinancing certain of its debt. Principally as a result of this higher interest expense at XM, among other factors, substantially more of the free cash flow before satellite capital expenditures in 2009 is forecast to be realized at SIRIUS, the parent company, than at XM. In addition, SIRIUS and XM expect to refinance certain debt in 2009 that is scheduled to mature during that year. About SIRIUS Satellite Headquartered in New York, SIRIUS Satellite Radio Inc. (Nasdaq: SIRI) http://www.sirius.com/-- provides satellite radio services in the United States. The company offers over 130 channels to its subscribers 69 channels of 100.0% commercial-free music and 65 channels of sports, news, talk, entertainment, data and weather. Subscribers receive the company's service through SIRIUS radios, which are sold by automakers, consumer electronics retailers, mobile audio dealers and through the company's website. As of March 31, 2008, SIRIUS radios were available as a factory and dealer-installed option in 125 vehicle models and as a dealer only-installed option in 29 vehicle models. As reported in the Troubled Company Reporter on May 14, 2008, the company's balance sheet at March 31, 2008, showed $1.5 billion in total assets and $2.3 billion in total liabilities, resulting in a $839.4 million total stockholders' deficit. About XM Satellite Radio Headquartered in Washington, D.C., XM Satellite Radio Holdings Inc. (Nasdaq: XMSR) -- http://www.xmradio.com/-- is a satellite radio company. The company broadcasts live daily from studios in Washington, DC, New York City, Chicago, Nashville, Toronto and Montreal. The company also provides satellite-delivered entertainment and data services for the automobile market through partnerships with General Motors, Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki and Toyota. At March 31, 2008, the company's consolidated balance sheet showed $1.7 billion in total assets, $2.7 billion in total liabilities, $60.2 million in minority interest, resulting in a $1.1 billion total stockholders' deficit. * * * As reported in the Troubled Company Reporter on March 28, 2008, Standard & Poor's Ratings Services said its ratings on XM Satellite Radio Holdings Inc. and XM atellite Radio Inc. (CCC+/Watch Developing/--) remain on CreditWatch with developing implications, where S&P originally placed them on March 4, 2008, due to S&P's concerns over standalone refinancing risks XM might face if its merger with Sirius Satellite Radio Inc. (CCC+/Watch Developing/--) wasn't approved. ZIFF DAVIS: Makes Silent Exit from Bankruptcy Protection -------------------------------------------------------- Ziff Davis Media Inc., an indirect wholly-owned subsidiary of Ziff Davis Holdings Inc., was expected to emerge from Chapter 11 on July 1, 2008, following the U.S. Bankruptcy Court for the Southern District of New York's confirmation of its Second Amended Joint Chapter 11 Plan Of Reorganization. Ziff Davis and its debtor-affiliates exited from bankruptcy protection on July 1, as scheduled, but forgot to tell anyone, John Blakely of The Deal.com reports. Jason Young, Ziff Davis' chief executive officer, confirmed the July 1 emergence from bankruptcy, but considered the company's June 18 press statement announcing the Plan Confirmation as its official exit announcement, Mr. Blakely elaborates. "We did communicate [our exit] to our customers and vendors," Mr. Young told Mr. Blakely. Mr. Young also conveyed that the Bankruptcy Court's confirmation of Ziff Davis' Chapter 11 Plan, "was the most important part of the bankruptcy," Mr. Blakely discloses. The Deal.com notes that unlike Ziff Davis, bankrupt companies normally make it a point to announce their Chapter 11 exits. The Plan substantially de-leverages Ziff Davis's balance sheet by converting over $428 million in funded indebtedness to (a) new common stock of reorganized Ziff Davis Media and (b) a new note of $57.5 million. The acceptance of the Plan by voting creditors was overwhelming. The Plan provides Ziff Davis with sufficient cash to fund its exit from Chapter 11 as well as its ongoing business plan. This funding will enable the company to finance its Chapter 11 exit obligations as well as ongoing operations for the foreseeable future. Fitch Says Weak U.S. Magazine Trend Will Continue Noting the Chapter 11 filing of Ziff Davis this year, Fitch Ratings expects the circulation and advertising growth of U.S. consumer magazines to continue weakening, The Associated Press reports. However, Fitch believes that the magazine industry is on a better footing than newspapers, the AP adds. "Consumer magazines have been hurt by the difficult economy and the shift to digital media consumption, although not as dramatically as the newspaper industry," the AP quotes Fitch, as saying. "This year, revenue growth has been pressured as publishers struggle to offset circulation and advertising declines with price increases." Citing the latest trend of "lower-quality" and "lower- circulation" magazines in the past years, Fitch forecasts less ventures into the market, due to the difficult process of launchingnew titles, the AP elaborates. Fitch also said that the more popular and larger magazines will likely "streamline available print advertising inventory, the AP says. "If consolidation can be achieved without over-leveraging their balance sheets, Fitch believes the remaining players could benefit from scale through portfolios of top brands in demographics that are attractive to advertisers," the ratings service told AP. About Ziff Davis Media, Inc. Headquartered in New York city, New York, Ziff Davis Media, Inc. -- http://www.ziffdavis.com/-- and its affiliates are integrated media companies serving the technology and videogame markets. They are information services and marketing solutions providers of technology media, including publications, Websites, conferences, events, eSeminars, eNewsletters, custom publishing, list rentals, research and market intelligence. Their US-based media properties reach over 22 million people per month at work, home and play. They operate in three segments: the Consumer Tech Group, which includes PC Magazine and pcmag.com; the Enterprise Group, which includes eWEEK and eweek.com, and the Game Group, which includes Electronic Gaming Monthly and 1up.com. The company and six debtor-affiliates filed for bankruptcy protection on March 5, 2008 (Bankr. S.D.N.Y., Case No. 08-10768). Carey D. Schreiber, Esq. at Winston & Strawn, LLP represents the Debtors in their restructuring efforts. An Official Committee of Unsecured Creditors have been appointed in the case. The Debtors' schedules show total assets of $144,224,155 and total liabilities of $441,406,545. The Court confirmed the Debtors' Second Amended Plan of Reorganization on June 17, 2008. (Ziff Davis Bankruptcy News, Issue No. 16, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstandor 215/945-7000) ZIFF DAVIS: Parties Dispute Assumption/Rejection of Leases in Plan ------------------------------------------------------------------ Two contract counterparties have field objections to the proposed rejection of their leases in connection with the Joint Chapter 11 Plan of Ziff Davis Media Inc. and its debtor-affiliates. A. Westpoint Home Westpoint Home, Inc., is currently a subtenant-in-possession of three subleases: -- the eighth floor at 63 Madison Avenue, New York, pursuant to a third sublease it entered into with BMG Columbia House, Inc. on August 22, 2006 -- the BMG Sublease; -- a portion of the concourse level of the Madison Avenue Building pursuant to a sublease it entered into with Ziff Davis Publishing, Inc., also on August 22 -- the Concourse Sublease; and -- an additional portion of the concourse level of the Madison Avenue Building, pursuant to a sublease it entered into with The Bank of New York, in October 2006 -- the Additional Concourse Sublease. In their Schedules of Rejected Contracts, the Debtors contemplate rejecting: (a) a lease between Ziff Davis Media Inc., as tenant, and 63 Madison Associates, LP, as landlord, for certain space in the Madison Avenue Building -- the Overlease; (b) a lease between Ziff Davis, as sub-landlord, and BoNY, as subtenant, also for certain space in the Madison Avenue Building -- the Prime Lease; and (c) the Concourse Sublease. Representing Westpoint Home, Gerard S. Catalanello, Esq., at Wolfbrock LLP, in New York, argues that each of the Subleases are directly or indirectly derivative of either or both of the Overlease and the Prime Lease, with the exception of the Concourse Sublease which is directly with Ziff Davis Publishing. Mr. Catalanello points out that the Debtors' rejection of the Overlease, the Prime Lease and the Concourse Sublease puts into jeopardy Westpoint Home's interests under the Subleases. In light of the complex interaction between and among all of the leases and interested parties, Westpoint Home is currently exploring all of its options with regard to the Schedules and the Subleases, Mr. Catalanello tells the U.S. Bankruptcy Court for the District of New York. Accordingly, Westpoint submits that it is entitled to all of its rights, claims and protections afforded a lessee, including its rights to retain possession of all of the premises provided for under the Subleases in accordance with Section 365(h) of the Bankruptcy Code. B. Walter Karl Walter Karl, Inc., asks the Court to deny the Debtors' intention to reject a list management agreement it entered into with Ziff Davis on April 1, 2005, pursuant to which Walter Karl agreed to act as list manager for Ziff Davis. Under the List Management Agreement, Walter Karl was compensated for promoting and marketing the List for use by third parties. The initial term of the List Management Agreement was three years. On December 31, 2005, Walter Karl and Ziff Davis amended the List Management Agreement by extending it's term to and through December 31, 2009. The Parties also altered certain budget and revenue provisions of the Agreement. Joel R. Glucksman, Esq., at Scarinci Hollenbeck, in Lyndhurst, New Jersey, relates that the Amendment included a provision that required Walter Karl to pay Ziff Davis a total of $1,500,000 as deficit payment relating to certain budget projections originally included in the List Management Agreement. The Amendment also provided that, should one or more "Specified Events" occur during the extended term of the Agreement, Walter Karl would be entitled to a refund of a portion of the Deficit payment from Ziff Davis. Among others, Specified Events identified in the Amendment included a reduction of 10% or more in the rentable quantities of the List as of the date of the Amendment. According to Mr. Glucksman, since April 2005, Walter Karl's efforts have generated more than $10,000,000 in revenue for Ziff Davis, and continues to generate more than $26,000 per month. Mr. Glucksman argues that the proposed rejection of the List Management Agreement is not in the best interest of the Debtors' estate or its creditors, because it would trigger specified event provisions of the Amendment which will result in a claim for rejection damages by Walter Karl in excess of $600,000. In addition, Mr. Glucksman notes that the rejection will result in the loss of an average ongoing stream of income of more than $26,000 per month for the Reorganized Debtors. Two Parties Object to Cure Amounts Insys Consulting Services, Inc. and Limelight Networks, Inc. tell the Court that the Debtors' proposed cure amounts for the assumption of their executory contracts are not sufficient. Insys Consulting and Limelight Networks inform Judge Burton Lifland that as of the Petition Date, the Debtors were in arrears totaling: -- $129,512, for payment of services Insys Consulting rendered them under the Insys Contract; and -- $251,496 on their payment of invoices delivered for services under the Limelight Contract. Accordingly, Insys Consulting filed a claim against the Debtors for $129,512, and provided supporting documentation for the Claim. The Debtors have acknowledged the amount of the Claim by soliciting Insys Consulting's vote on confirmation of the Debtors' Plan of Reorganization, Leslie S. Barr, Esq., at Windels Marx Lane & Mittendorf LLP, in New York, asserts. No objection has been filed to the Claim, which is deemed allowed under Section 502(a) of the Bankruptcy Code, Insys Consulting contends. According to Insys Consulting, the Debtors' proposed cure amount is only 25% of its Claim amount, which is insufficient to cure the arrears the Debtors owe on the Insys Contract. Christopher H. Bayley, Esq., at Snell & Wilmer LLP, in Phoenix, Arizona, complains that the Debtors' proposed cure amount for $12,250, is insufficient to cure the amounts in arrearage under the Limelight Contract. Accordingly, Insys Consulting and Limelight Network ask the Court to reject the Debtors' proposed cure amounts. About Ziff Davis Media, Inc. Headquartered in New York city, New York, Ziff Davis Media, Inc. -- http://www.ziffdavis.com/-- and its affiliates are integrated media companies serving the technology and videogame markets. They are information services and marketing solutions providers of technology media, including publications, Websites, conferences, events, eSeminars, eNewsletters, custom publishing, list rentals, research and market intelligence. Their US-based media properties reach over 22 million people per month at work, home and play. They operate in three segments: the Consumer Tech Group, which includes PC Magazine and pcmag.com; the Enterprise Group, which includes eWEEK and eweek.com, and the Game Group, which includes Electronic Gaming Monthly and 1up.com. The company and six debtor-affiliates filed for bankruptcy protection on March 5, 2008 (Bankr. S.D.N.Y., Case No. 08-10768). Carey D. Schreiber, Esq. at Winston & Strawn, LLP represents the Debtors in their restructuring efforts. An Official Committee of Unsecured Creditors have been appointed in the case. The Debtors' schedules show total assets of $144,224,155 and total liabilities of $441,406,545. The Court confirmed the Debtors' Second Amended Plan of Reorganization on June 17, 2008. (Ziff Davis Bankruptcy News, Issue No. 16, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstandor 215/945-7000) * Fitch: US Consumer Mags Will Continue to See Lower Circulations ----------------------------------------------------------------- Fitch Ratings believes that the U.S. consumer magazine segment will continue to experience lower circulations and advertising growth opportunities amid the weakening economy and ongoing transition to digital media. The shift toward digital media consumption has had a negative effect on traditional print advertising media. While not as dramatically affected as the newspaper industry, consumer magazines are feeling the adverse impact of the digital transition. Advertisers are consolidating and shifting their advertising budget mix. Revenue growth has stagnated in recent years and has been under pressure in 2008, as publishers struggle to offset circulation pressure and declining advertising page volume in many categories with price increases. As a result of the volume of corporate actions, (including Ziff- Davis Media's election to file a voluntary Chapter 11 petition, U.S. News & World Report's recent announcement that it would cease weekly publication, and announcements this week from Hearst and Conde Nast of the closures of Quick & Simple and Golf for Women, respectively) Fitch has fielded a number of inquires from investors regarding the magazine subsector's prospects. Fitch believes that lower-quality, lower-circulation titles were launched and attracted advertising dollars during the past few years due to ready access to capital and the health of the overall economy. For both cyclical and secular reasons, Fitch anticipates there will be fewer new entrants as the economics of launching new product become unattractive. It is likely that the larger players will seek to rationalize available print advertising inventory. This shake-out could be painful for certain titles and companies. If consolidation can be achieved without over leveraging their balance sheets, Fitch believes the remaining players could benefit from scale through portfolios of top brands in demographics that are attractive to advertisers. * Fitch Changes Outlook on US Health/Managed Care Insurance to Neg ------------------------------------------------------------------ Fitch Ratings has revised its Outlook on the U.S. Health/Managed Care Insurance Sector to Negative from Stable. The announcement reflects Fitch's expectations of lower earnings for the sector for the remainder of 2008 and into 2009. The Negative Outlook implies that Fitch anticipates more downward rating actions relative to positive rating actions over the next 12-18 months. Fitch believes operating performance to date in 2008 indicates that several market participants are either willing to be aggressive in pricing or the improved predictive underwriting capabilities demonstrated over the past decade are not as strong as Fitch previously considered and the agency believes operating results in 2008 reflect integration difficulties, as the sector appears to have intensified consolidation of legacy claims and other administrative IT platforms from several large acquisitions over the past five years. Moreover, many non-profit Blue Cross Blue Shield entities have the ability to price less aggressively due in part to the absence of earnings demands given their non-public ownership. Given the BCBS brand's significant reach across the U.S. health insurance space, pricing trends at the various BCBS operations can have a significant impact on the overall sector's performance, including membership trends and operating margins. 'The sector has demonstrated a greater appetite for debt-financed capital in recent periods, which when combined with the lower operating cash flows associated with the decline in expected earnings, has increased pressure on the sector's capitalization quality and financial flexibility,' said Peter F. Patrino, Managing Director, Fitch Ratings. 'Growing concern over future Medicare funding levels incrementally adds pressure to future earnings expectations. ' Fitch anticipates that the insurers most likely to experience negative rating actions are those with a combination of lowered earnings expectations and higher financial leverage. It is also likely that insurers which report a significant decline in operating margins may also face negative rating pressures. * S&P Lowers Ratings on 77 Classes of Certificates from 22 US RMBS ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on 77 classes of mortgage pass-through certificates from 22 U.S. subprime residential mortgage-backed securities transactions issued by various issuers. Additionally, S&P affirmed its ratings on 235 other classes of certificates from these transactions and 16 additional deals. S&P reviewed a total of 38 deals. The lowered ratings reflect the collateral performance of the affected transactions as of the June 2008 remittance period. Class B3 from Aegis Asset Backed Securities Trust 2004-2 and class B-2 from Morgan Stanley Dean Witter Capital I Inc. Trust 2003-NC2 both experienced principal write-downs during the June 2008 remittance periods, which prompted us to downgrade both classes to 'D'. S&P downgraded the remaining classes due to the current credit support and projected credit enhancement based on the dollar amount of loans currently in the delinquency pipelines of the affected deals. During recent months, these deals have experienced deterioration in credit support and the delinquency pipelines indicate that the pattern of losses could continue. The seasoning of the affected deals ranged from 42 months (GSAMP Trust 2004-OPT) to 64 months (Morgan Stanley Dean Witter Capital I Inc. Trust 2003-NC2) as of the June 2008 distribution period. All of the downgraded deals were issued in 2004 with the exception of Morgan Stanley Dean Witter Capital I Inc. Trust 2003-NC2. Cumulative losses for these deals ranged from 0.54% (Homestar Mortgage Acceptance Corp. 2004-5) to 4.32% (Aegis Asset Backed Securities Trust 2004-3) of the original pool balances as of the June 2008 remittance period. Serious delinquencies (90-plus days, foreclosures, and REOs) for the same deals affected ranged from 6.96% (Homestar Mortgage Acceptance Corp. 2004-5) to 24.94% (Fremont Home Loan Trust 2004-D) of the current pool balances. The 235 affirmations reflect current and projected credit support percentages that are sufficient to support the certificates at their current rating levels as of the June 2008 distribution period. Ratings Lowered Aegis Asset Backed Securities Trust Series 2004-1 Rating ------ Class CUSIP To From ----- ----- -- ---- M2 00764MBE6 BB- BB B1 00764MBG1 CC CCC B2 00764MBH9 CC CCC Aegis Asset Backed Securities Trust Series 2004-2 Rating ------ Class CUSIP To From ----- ----- -- ---- M2 00764MBU0 BBB A M3 00764MBV8 B BB+ B1 00764MBW6 B- B B2 00764MBX4 CC CCC B3 00764MBY2 D CCC Aegis Asset Backed Securities Trust Series 2004-3 Rating ------ Class CUSIP To From ----- ----- -- ---- M2 00764MCG0 BBB- A M3 00764MCH8 B+ A- B1 00764MCJ4 B BBB B2 00764MCK1 CCC B+ B3 00764MCL9 CC B Aegis Asset Backed Securities Trust Series 2004-4 Rating ------ Class CUSIP To From ----- ----- -- ---- M3 00764MCV7 BBB A- B1 00764MCW5 BBB- BBB+ B2 00764MCX3 BB- BBB B3 00764MCY1 B BBB- Fremont Home Loan Trust 2004-2 Series 2004-2 Rating ------ Class CUSIP To From ----- ----- -- ---- B-2 35729PFF2 CC CCC Fremont Home Loan Trust 2004-C Series 2004-C Rating ------ Class CUSIP To From ----- ----- -- ---- M-4 35729PEW6 BBB A+ M-5 35729PEX4 BB A+ M-6 35729PEY2 BB- A M-7 35729PEZ9 B A- M-8 35729PFA3 B- BB M-9 35729PFB1 CCC B Fremont Home Loan Trust 2004-D Series 2004-D Rating ------ Class CUSIP To From ----- ----- -- ---- M5 35729PGG9 BBB A M6 35729PGH7 BB A- M7 35729PGJ3 BB- BBB+ M8 35729PGK0 B BB M9 35729PGL8 CCC B M10 35729PGM6 CC CCC GSAMP Trust 2004-AHL Series 2004-AHL Rating ------ Class CUSIP To From ----- ----- -- ---- B-4 36242DHW6 BB- BBB- GSAMP Trust 2004-NC2 Series 2004-NC2 Rating ------ Class CUSIP To From ----- ----- -- ---- B-3 36242DHH9 BB- BBB- GSAMP Trust 2004-OPT Series 2004-OPT Rating ------ Class CUSIP To From ----- ----- -- ---- M-3 36242DNW9 A- AA- B-1 36242DNX7 BB A+ B-2 36242DNY5 B A B-3 36242DNZ2 B- BBB+ B-4 36242DPA5 CCC BBB Homestar Mortgage Acceptance Corp. Series 2004-5 Rating ------ Class CUSIP To From ----- ----- -- ---- M-6 437690CD0 BBB- BBB+ M-7 437690CE8 B BBB Long Beach Mortgage Loan Trust 2004-2 Series 2004-2 Rating ------ Class CUSIP To From ----- ----- -- ---- B 542514GE8 B BB+ Long Beach Mortgage Loan Trust 2004-4 Series 2004-4 Rating ------ Class CUSIP To From ----- ----- -- ---- M-9 542514JB1 BBB A- M-10 542514JC9 BB BBB+ M-11 542514JD7 B BBB M-12 542514JE5 CCC BBB- B 542514JF2 CC BB+ Long Beach Mortgage Loan Trust 2004-5 Series 2004-5 Rating ------ Class CUSIP To From ----- ----- -- ---- M-6 542514HJ6 BB- BBB M-7 542514HK3 B BBB B-2 542514HM9 CCC BBB- Long Beach Mortgage Loan Trust 2004-6 Series 2004-6 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 542514JN5 BB- BBB+ M-3 542514JP0 B BB M-4 542514JQ8 B- B M-7 542514JU9 CC CCC Morgan Stanley ABS Capital I Inc. Trust 2004-NC6 Series 2004-NC6 Rating ------ Class CUSIP To From ----- ----- -- ---- B-2 61744CEY8 BB BBB B-3 61744CEZ5 B BBB- Morgan Stanley Dean Witter Capital I Inc. Trust 2003-NC2 Series 2003-NC2 Rating ------ Class CUSIP To From ----- ----- -- ---- B-1 61746WB25 CCC B B-2 61746WB33 D CCC Option One Mortgage Loan Trust 2004-3 Series 2004-3 Rating ------ Class CUSIP To From ----- ----- -- ---- M-7 68389FFZ2 BBB A M-8 68389FGA6 BB- A- M-9 68389FGB4 B A- M-10 68389FGC2 B- BBB+ Saxon Asset Securities Trust 2004-1 Series 2004-1 Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 805564PP0 BBB A+ M-3 805564PQ8 BB A M-4 805564PR6 BB- A- B-1 805564PS4 B BBB+ B-2 805564PT2 CCC BBB- Saxon Asset Securities Trust 2004-3 Series 2004-3 Rating ------ Class CUSIP To From ----- ----- -- ---- M-5 805564QZ7 A- A+ M-6 805564RA1 BB A+ B-1 805564RB9 BB- A B-2 805564RC7 B A- B-3 805564RD5 CCC BBB+ Terwin Mortgage Trust 2004-7HE Series TMTS2004-7 Rating ------ Class CUSIP To From ----- ----- -- ---- B-3 881561GD0 BB- BBB- B-2 881561GC2 BB+ BBB Terwin Mortgage Trust 2004-9HE Series 2004-9HE Rating ------ Class CUSIP To From ----- ----- -- ---- M-2 881561KA1 BBB A M-3 881561KB9 BB- A- B-1 881561KC7 B BBB B-2 881561KD5 CCC BB B-3 881561KE3 CC CCC Ratings Affirmed 2003-CB4 Trust Series 2003-CB4 Class CUSIP Rating ----- ----- ------ AF-1 04542BDP4 AAA M-1 04542BDT6 AAA M-2 04542BDU3 AA B-1 04542BDV1 A B-2 04542BDW9 BBB 2003-CB6 Trust Series 2003-CB6 Class CUSIP Rating ----- ----- ------ AF-5 12489WHC1 AAA AF-6 12489WHD9 AAA M-1 12489WHE7 AA+ M-2 12489WHF4 AA- M-3 12489WHG2 A M-4 12489WHH0 BBB+ M-5 12489WHJ6 BBB M-6 12489WHK3 BB+ 2004-CB1 Trust Series 2004-CB1 Class CUSIP Rating ----- ----- ------ AF-1 04542BFH0 AAA M-1 04542BFM9 AA M-2 04542BFN7 A M-3 04542BFP2 A- B-1 04542BFQ0 BBB+ B-2 04542BFR8 BBB B-3 04542BFS6 BBB- B-4 04542BGD8 BB 2004-CB2 Trust Series 2004-CB2 Class CUSIP Rating ----- ----- ------ M-1 12489WHY3 AAA M-2 12489WHZ0 AA- M-3 12489WJA3 A B-1 12489WJB1 BBB+ B-2 12489WJC9 BBB B-3 12489WJD7 BBB- B-4 12489WJE5 BB 2004-CB4 Trust Series 2004-CB4 Class CUSIP Rating ----- ----- ------ A-4 12489WJN5 AAA A-5 12489WJP0 AAA A-6 12489WJQ8 AAA M-1 12489WJR6 AA+ M-2 12489WJS4 A+ M-3 12489WJT2 A B-1 12489WJU9 BBB+ B-2 12489WJV7 BBB B-3 12489WJW5 BBB- B-4 12489WJX3 BB+ 2004-CB5 Trust Series 2004-CB5 Class CUSIP Rating ----- ----- ------ M-1 04542BHY1 AA M-2 04542BHZ8 A+ M-3 04542BJA1 A B-1 04542BJB9 A- B-2 04542BJC7 BBB+ B-3 04542BJD5 BBB- B-4 04542BJE3 BBB- Aegis Asset Backed Securities Trust Series 2004-1 Class CUSIP Rating ----- ----- ------ M1 00764MBD8 AA M3 00764MBF3 B Aegis Asset Backed Securities Trust Series 2004-2 Class CUSIP Rating ----- ----- ------ A1 00764MBN6 AAA A3 00764MBQ9 AAA A5 00764MBS5 AAA M1 00764MBT3 AA Aegis Asset Backed Securities Trust Series 2004-3 Class CUSIP Rating ----- ----- ------ A1 00764MCC9 AAA A2-B 00764MCE5 AAA M1 00764MCF2 AA Aegis Asset Backed Securities Trust Series 2004-4 Class CUSIP Rating ----- ----- ------ A1 00764MCQ8 AAA A2-B 00764MCS4 AAA M1 00764MCT2 AA M2 00764MCU9 A Citigroup Mortgage Loan Trust, Series 2003-CB5 Series 2003-CB5 Class CUSIP Rating ----- ----- ------ M-1 79549AYY9 AAA M-2 79549AYZ6 AA+ M-3 79549AZA0 AA B-1 79549AZB8 A+ B-2 79549AZC6 BBB B-3 79549AZD4 B Citigroup Mortgage Loan Trust, Series 2004-CB7 Series 2004-CB7 Class CUSIP Rating ----- ----- ------ AF-4 17307GLM8 AAA AF-5 17307GLN6 AAA M-1 17307GLP1 AA M-2 17307GLQ9 A M-3 17307GLR7 A- B-1 17307GLS5 BBB+ B-2 17307GLT3 BBB B-3 17307GLU0 BBB- B-4 17307GLV8 BB Fremont Home Loan Trust 2004-2 Series 2004-2 Class CUSIP Rating ----- ----- ------ M-1 35729PED8 AAA M-2 35729PEE6 AA+ M-3 35729PEF3 AA M-4 35729PEG1 A+ M-5 35729PEH9 A M-6 35729PEJ5 A- M-7 35729PEK2 BBB M-8 35729PEL0 BB M-9 35729PEM8 B B-1 CCC Fremont Home Loan Trust 2004-C Series 2004-C Class CUSIP Rating ----- ----- ------ M-1 35729PET3 AA+ M-2 35729PEU0 AA+ M-3 35729PEV8 AA- Fremont Home Loan Trust 2004-D Series 2004-D Class CUSIP Rating ----- ----- ------ M1 35729PGC8 AA+ M2 35729PGD6 AA M3 35729PGE4 AA- M4 35729PGF1 A+ GSAMP Trust 2004-AHL Series 2004-AHL Class CUSIP Rating ----- ----- ------ M-1 36242DHQ9 AA+ M-2 36242DHR7 A+ M-3 36242DHS5 A B-1 36242DHT3 A- B-2 36242DHU0 BBB+ B-3 36242DHV8 BBB GSAMP Trust 2004-AR1 Series 2004-AR1 Class CUSIP Rating ----- ----- ------ A-1A 36228F6J0 AAA GSAMP Trust 2004-NC1 Series 2004-NC1 Class CUSIP Rating ----- ----- ------ M-1 36228FP67 AA M-2 36228FP75 A M-3 36228FP83 A- B-1 36228FP91 BBB+ B-2 36228FQ25 BBB B-3 36228FQ33 BBB- GSAMP Trust 2004-NC2 Series 2004-NC2 Class CUSIP Rating ----- ----- ------ A-1A 36242DGX5 AAA A-1B 36242DGY3 AAA A-2C 36242DHE6 AAA M-1 36242DHA4 AA M-2 36242DHB2 A M-3 36242DHC0 A- B-1 36242DHF3 BBB+ B-2 36242DHG1 BBB GSAMP Trust 2004-OPT Series 2004-OPT Class CUSIP Rating ----- ----- ------ A-1 36242DNQ2 AAA A-4 36242DNT6 AAA M-1 36242DNU3 AA+ M-2 36242DNV1 AA Homestar Mortgage Acceptance Corp. Series 2004-5 Class CUSIP Rating ----- ----- ------ A-1 437690BU3 AAA A-4 437690BX7 AAA M-1 437690BY5 AA+ M-2 437690BZ2 AA M-3 437690CA6 A+ M-4 437690CB4 A M-5 437690CC2 A- Long Beach Mortgage Loan Trust 2004-2 Series 2004-2 Class CUSIP Rating ----- ----- ------ A-1 542514FT6 AAA M1 542514FX7 AA M2 542514FY5 A+ M3 542514FZ2 A M4 542514GA6 A- M5 542514GB4 BBB+ M6 542514GC2 BBB M7 542514GD0 BBB- Long Beach Mortgage Loan Trust 2004-3 Series 2004-3 Class CUSIP Rating ----- ----- ------ A-1 542514GF5 AAA M-1 542514GM0 AA+ M-2 542514GN8 AA M-3 542514GP3 AA- M-4 542514GQ1 A+ M-5 542514GR9 A M-6 542514GS7 A- M-7 542514GT5 BBB+ M-8 542514GU2 BBB M-9 542514GV0 BBB- Long Beach Mortgage Loan Trust 2004-4 Series 2004-4 Class CUSIP Rating ----- ----- ------ 1A-1 542514HN7 AAA M-1 542514HT4 AAA M-2 542514HU1 AA+ M-3 542514HV9 AA+ M-4 542514HW7 AA M-5 542514HX5 AA- M-6 542514HY3 A+ M-7 542514HZ0 A M-8 542514JA3 A- Long Beach Mortgage Loan Trust 2004-5 Series 2004-5 Class CUSIP Rating ----- ----- ------ A-1 542514GW8 AAA A-5 542514HB3 AAA A-6 542514HC1 AAA M-1 542514HD9 AA M-2 542514HE7 A+ M-4 542514HG2 A- M-3 542514HF4 A M-5 542514HH0 BBB+ Long Beach Mortgage Loan Trust 2004-6 Series 2004-6 Class CUSIP Rating ----- ----- ------ I-A2 542514JH8 AAA A-3 542514JL9 AAA M-1 542514JM7 AA+ M-5 542514JR6 CCC M-6 542514JS4 CCC Morgan Stanley ABS Capital I Inc. Trust 2004-NC1 Series 2004-NC1 Class CUSIP Rating ----- ----- ------ M-1 61744CAW6 AA M-2 61744CAX4 A M-3 61744CAY2 A- B-1 61744CAZ9 BBB+ B-2 61744CBA3 BBB B-3 61744CBB1 BBB- Morgan Stanley ABS Capital I Inc. Trust 2004-NC6 Series 2004-NC6 Class CUSIP Rating ----- ----- ------ M-1 61744CEU6 AA M-2 61744CEV4 A M-3 61744CEW2 A- B-1 61744CEX0 BBB+ Morgan Stanley Dean Witter Capital I Inc. Trust 2003-NC2 Series 2003-NC2 Class CUSIP Rating ----- ----- ------ M-1 61746WA75 AA+ M-2 61746WA83 A M-3 61746WA91 BBB Option One Mortgage Loan Trust 2003-6 Series 2003-6 Class CUSIP Rating ----- ----- ------ A-1 68389FED2 AAA A-2 68389FEE0 AAA A-3 68389FEF7 AAA M-1 68389FEG5 AA+ M-2 68389FEH3 AA M-3 68389FEJ9 AA- M-4 68389FEK6 A M-5 68389FEL4 BBB M-6 68389FEM2 BBB- Option One Mortgage Loan Trust 2004-3 Series 2004-3 Class CUSIP Rating ----- ----- ------ A-1 68389FFP4 AAA A-4 68389FFS8 AAA M-1 68389FFT6 AA+ M-2 68389FFU3 AA M-3 68389FFV1 AA M-4 68389FFW9 AA- M-5 68389FFX7 A+ M-6 68389FFY5 A+ Saxon Asset Securities Trust 2003-3 Series 2003-3 Class CUSIP Rating ----- ----- ------ AF-4 805564NZ0 AAA AF-5 805564PA3 AAA AF-6 805564PB1 AAA AV-2 805564PD7 AAA M-1 805564PE5 AA M-2 805564PF2 A M-3 805564PG0 A- M-4 805564PH8 BBB+ M-5 805564PJ4 BBB M-6 805564PK1 BBB- Saxon Asset Securities Trust 2004-1 Series 2004-1 Class CUSIP Rating ----- ----- ------ A 805564PL9 AAA S 805564PU9 AAA M-1 805564PN5 AA+ Saxon Asset Securities Trust 2004-3 Series 2004-3 Class CUSIP Rating ----- ----- ------ A-1A 805564QR5 AAA A-1C 805564RG8 AAA A-4 805564QU8 AAA M-1 805564QV6 AAA M-3 805564QX2 AA+ M-2 805564QW4 AA+ M-4 805564QY0 AA- Terwin Mortgage Trust 2004-7HE Series TMTS2004-7 Class CUSIP Rating ----- ----- ------ A-1 881561FV1 AAA A-3 881561FX7 AAA M-1 881561FY5 AA M-2 881561FZ2 A M-3 881561GA6 A- B-1 881561GB4 BBB+ S 881561GP3 AAA Terwin Mortgage Trust 2004-9HE Series 2004-9HE Class CUSIP Rating ----- ----- ------ A-1 881561JW5 AAA A-3 881561JY1 AAA M-1 881561JZ8 AA Terwin Mortgage Trust Series TMTS 2003-6HE Series 2003-6HE Class CUSIP Rating ----- ----- ------ A-1 881561CE2 AAA A-3 881561CG7 AAA M-1 881561CH5 AA+ M-2 881561CJ1 A+ M-3 881561CK8 BBB M-4 881561CL6 B M-5 881561CM4 CCC Terwin Mortgage Trust, Series TMTS 2003-4HE Series 2003-4HE Class CUSIP Rating ----- ----- ------ A-1 881561BU7 AAA A-3 881561CB8 AAA M-1 881561BV5 AAA M-2 881561BW3 AA+ B 881561BX1 BBB+ R 881561CC6 AAA * S&P: Current Credit Market Conditions Add Doubt to Refinancing ---------------------------------------------------------------- A new report from Standard & Poor's, titled "U.S. Credit Comment: High-Yield Refunding Needs Are Not A Significant Source Of Default Pressure In The Near-Term," states that current credit market conditions have added some uncertainty to the refinancing process, and though most investment-grade firms have not had trouble issuing debt in the current environment, the high-yield market has been much more stringent. "With credit conditions tight, there is a risk that stressed firms may find it hard to roll over or refund debt," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "Based on our sample of 11,548 U.S. corporate bond fixed and floating rate issues as of June 30, 2008, there is only $9.1 billion in speculative-grade bonds maturing in the second half of the year." The light high-yield bond maturity schedule should not be a significant source of default pressure in 2008. * S&P Says US Airports Must Prepare for Turbulence Ahead -------------------------------------------------------- U.S. airports are coming off a smooth ride. Now, they must prepare for the turbulence ahead, says a report published by Standard & Poor's Ratings Services. The commentary, entitled "Ailing Airlines Are Giving U.S. Airports Plenty To Worry About," says that airlines suffering through high energy prices and a weak economy are behind the airports' current problems. In addition, long-term issues include possible regulatory changes, security, and the continual evolution of the modern airline business model. "Except for growth in international traffic at key U.S. hubs, positive trends are difficult to come by as high jet fuel prices take their toll across the entire aviation industry," said Mr. Forsgren. During the next six-to-nine months and barring external shocks, Standard & Poor's views airport credit quality as stable but threatened, with little likelihood of improvement. The conflicting imperatives to continue long-term capital improvements while simultaneously attempting to limit costs for airlines are likely to squeeze financial margins for many airport operators in 2008 and 2009. * S&P Downgrades Ratings on 109 Tranches from 36 US CDOs -------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on 109 tranches from 36 U.S. cash flow and hybrid collateralized debt obligation transactions. S&P removed 66 of the lowered ratings from CreditWatch with negative implications. At the same time, S&P affirmed one 'AAA' rating and removed it from CreditWatch with negative implications. S&P also affirmed one 'AAA' rating that was not previously on CreditWatch. The ratings on 40 of the downgraded tranches remain on CreditWatch with negative implications, indicating a significant likelihood of further downgrades. The CreditWatch placements primarily affect transactions for which a significant portion of the collateral assets currently have ratings on CreditWatch negative or have significant exposure to assets rated in the 'CCC' category. The downgraded tranches have a total issuance amount of $29.291 billion. Nine of the 36 affected transactions are high- grade structured finance CDOs of asset-backed securities, which are CDOs collateralized at origination primarily by 'AAA' through 'A' rated tranches of residential mortgage-backed securities and other SF securities. Twenty-two of the 36 transactions are mezzanine SF CDOs of ABS, which are collateralized in large part by mezzanine tranches of RMBS and other SF securities. The other five transactions are CDO of CDO transactions that were collateralized at origination primarily by notes from other CDOs, as well as by tranches from RMBS and other SF transactions. The CDO downgrades reflect a number of factors, including credit deterioration and recent negative rating actions on U.S. subprime RMBS securities. To date, including the CDO tranches listed below and including actions on both publicly and confidentially rated tranches, S&P have lowered its ratings on 3,423 tranches from 815 U.S. cash flow, hybrid, and synthetic CDO transactions as a result of stress in the U.S. residential mortgage market and credit deterioration of U.S. RMBS. In addition, 1307ratings from 375 transactions are currently on CreditWatch negative for the same reasons. In all, S&P have downgraded $375.502 billion of CDO issuance. Additionally, S&P's ratings on $12.413 billion in securities have not been lowered but are currently on CreditWatch negative, indicating a high likelihood of downgrades. Rating Actions Rating ------ Transaction Class To From ----------- ----- -- ---- 6th Avenue Funding 2006-1 Ltd. X CCC-/Watch Neg BB/Watch Neg 6th Avenue Funding 2006-1 Ltd. A-1A CCC-/Watch Neg BB-/Watch Neg 6th Avenue Funding 2006-1 Ltd. A-1B CCC-/Watch Neg BB-/Watch Neg 6th Avenue Funding 2006-1 Ltd. A-2 CC CCC-/WatchNeg ACA ABS 2007-2 Ltd. X CCC-/Watch Neg CCC+/Watch Neg ACA ABS 2007-2 Ltd. S (VFN) CC CCC-/Watch Neg ACA ABS 2007-2 Ltd. A1M CC CCC-/Watch Neg ACA Aquarius 2006-1 A1-S CCC-/Watch Neg BB/Watch Neg ACA Aquarius 2006-1 A1-J CC CCC-/Watch Neg ACA Aquarius 2006-1 A2 CC CCC-/Watch Neg Armitage ABS CDO Ltd. A-1M CC CCC/Watch Neg Armitage ABS CDO Ltd. A-1Q CC CCC/Watch Neg Aventine Hill CDO I Ltd. X B-/Watch Neg BB-/Watch Neg Aventine Hill CDO I Ltd. A1S CCC/Watch Neg BB-/Watch Neg Aventine Hill CDO I Ltd. A1J CC CCC-/Watch Neg Aventine Hill CDO I Ltd. A2 CC CCC-/Watch Neg BFC Ajax CDO Ltd. A BB+/Watch Neg A-/Watch Neg BFC Ajax CDO Ltd. B BB/Watch Neg BBB+/Watch Neg BFC Ajax CDO Ltd. X B+/Watch Neg BBB+/Watch Neg BFC Ajax CDO Ltd. C CCC+/Watch NegBBB-/Watch Neg BFC Ajax CDO Ltd. D CC B/Watch Neg Bonifacius Ltd. A-1M CCC/Watch Neg BB/Watch Neg Bonifacius Ltd. A-1Q CCC/Watch Neg BB/Watch Neg Bonifacius Ltd. A-1J CC CCC-/Watch Neg Bonifacius Ltd. A-2 CC CCC-/Watch Neg Bonifacius Ltd. A-3 CC CCC-/Watch Neg Bonifacius Ltd. A-4 CC CCC-/Watch Neg Brooklyn Structured Finance CDO A-1S CC B/Watch Neg Brooklyn Structured Finance CDO A-1J CC CCC-/Watch Neg Camber 6 plc A-1 & A-2 CCC-/Watch Neg BB/Watch Neg Camber 6 plc B CC CCC-/Watch Neg Camber 6 plc C CC CCC-/Watch Neg Camber 6 plc mbo Nts CC CCC-/Watch Neg Careel Bay CDO Ltd. A1S CCC-/Watch Neg BB/Watch Neg Careel Bay CDO Ltd. A1J CC CCC-/Watch Neg Careel Bay CDO Ltd. A2 CC CCC-/Watch Neg Cherry Creek CDO I Ltd. A1S B-/Watch Neg BB/Watch Neg Cherry Creek CDO I Ltd. A1J CC CCC-/Watch Neg Cherry Creek CDO I Ltd. A-2 CC CCC-/Watch Neg Duke Funding XIII Ltd. X CCC+/Watch Neg BB+/Watch Neg Duke Funding XIII Ltd. A1S VFN CC CCC+/Watch Neg Duke Funding XIII Ltd. A1J CC CCC-/Watch Neg Glacier Funding CDO II Ltd. A-2 AAA AAA/Watch Neg Glacier Funding CDO II Ltd. B B-/Watch Neg BBB-/Watch Neg Glacier Funding CDO II Ltd. C CC CCC-/Watch Neg GSC ABS Funding 2006-3g Ltd. A-1-a CCC-/Watch NegCCC+/Watch Neg GSC ABS Funding 2006-3g Ltd. A-1-b CC CCC/Watch Neg GSC ABS Funding 2006-3g Ltd. A-1LT CCC-/Watch NegCCC+/Watch Neg GSC ABS Funding 2006-3g Ltd. A-2 CC CCC-/Watch Neg Gulf Stream-Atlantic CDO 2007-1 A-1VF CC B/Watch Neg Gulf Stream-Atlantic CDO 2007-1 A-2 CC CCC-/Watch Neg Hartshorne CDO I Ltd. X CCC-/Watch Neg BB/Watch Neg Hartshorne CDO I Ltd. A-1S CC CCC+/Watch Neg Hartshorne CDO I Ltd. A-1J CC CCC-/Watch Neg Kleros Preferred Funding V PLC A-1 CCC- CCC+/Watch Neg Kleros Preferred Funding V PLC A-2 CC CCC-/Watch Neg Kleros Preferred Fndng VII Ltd A-1 BB-/Watch Neg BBB+/Watch Neg Kleros Preferred Fndng VII Ltd A-2 CC CCC/Watch Neg Kleros Preferred Fndng VII Ltd A-3 CC CCC-/Watch Neg Lancer Funding II Ltd. X CCC-/Watch Neg BB/Watch Neg Lancer Funding II Ltd. A1S CC CCC-/Watch Neg Longport Funding III Ltd. A1-VFN CCC/Watch Neg B+/Watch Neg Longport Funding III Ltd. A2A CC B-/Watch Neg Longport Funding III Ltd. A2B CC CCC+/Watch Neg Longport Funding III Ltd. B CC CCC-/Watch Neg Longridge ABS CDO II Ltd. A1S CC B+/Watch Neg Longridge ABS CDO II Ltd. A1J CC CCC-/Watch Neg Longridge ABS CDO II Ltd. A2S CC CCC-/Watch Neg Longshore CDO Funding 2007-3 A-2 CCC-/Watch Neg CCC/Watch Neg Longshore CDO Funding 2007-3 A-3 CC CCC-/Watch Neg Millstone IV CDO Ltd. A-1A B-/Watch Neg B+/Watch Neg Millstone IV CDO Ltd. A-1B B-/Watch Neg B+/Watch Neg Millstone IV CDO Ltd. A-1C B-/Watch Neg B+/Watch Neg Millstone IV CDO Ltd. A-2 CCC/Watch Neg B-/Watch Neg Neptune CDO IV Ltd. A-1 CCsrb CCCsrb Neptune CDO IV Ltd. X CC BB Preston CDO I Ltd. X CCC-/Watch Neg B+/Watch Neg Preston CDO I Ltd. A1S CC B+/Watch Neg Preston CDO I Ltd. A1J CC CCC-/Watch Neg Preston CDO I Ltd. A2 CC CCC-/Watch Neg Rockbound CDO I Ltd. A-1S Fund CC CCC- Silver Elms CDO II Ltd. A-1M B-/Watch Neg A-/Watch Neg Silver Elms CDO II Ltd. A-1Q B-/Watch Neg A-/Watch Neg Silver Elms CDO II Ltd. A-2 CC BB/Watch Neg Silver Elms CDO II Ltd. A-3 CC CCC+/Watch Neg Silver Marlin CDO I Ltd. A-2 CCC+/Watch Neg BB/Watch Neg Silver Marlin CDO I Ltd. A-3 CC B-/Watch Neg STACK 2005-2 Ltd. A-1 & A-2 B- BB/Watch Neg STACK 2005-2 Ltd. B CC CCC-/Watch Neg STACK 2005-2 Ltd. C CC CCC-/Watch Neg Stack 2007-1 Ltd. A-1A BB/Watch Neg AA-/Watch Neg Stack 2007-1 Ltd. A-2 CC B/Watch Neg Stack 2007-1 Ltd. A-3 CC CCC/Watch Neg Stack 2007-1 Ltd. A-4 CC CCC-/Watch Neg Stack 2007-1 Ltd. A-1B CCC/Watch Neg BBB-/Watch Neg STATIC Residential CDO 2006-C A-1a CC CCC/Watch Neg TABS 2006-6 Ltd. A1S CC CCC-/Watch Neg Tasman CDO Ltd. A1S CCC-/Watch Neg BB-/Watch Neg Tasman CDO Ltd. A1J CC CCC-/Watch Neg Timberwolf I Ltd. S-1 B-/Watch Neg BB/Watch Neg Timberwolf I Ltd. A-1a CCC-/Watch Neg BB/Watch Neg Timberwolf I Ltd. A-1b CC CCC-/Watch Neg Timberwolf I Ltd. A-1c CC CCC-/Watch Neg Timberwolf I Ltd. A-1d CC CCC-/Watch Neg Tricadia CDO 2006-7 Ltd. A-1 Unfd CC CCC-/Watch Neg Tricadia CDO 2006-7 Ltd. A-1 Funded CC CCC-/Watch Neg Tricadia CDO 2006-7 Ltd. A-X CCC-/Watch Neg BB/Watch Neg Vertical ABS CDO 2007-2 Ltd. X CCC-/Watch Neg B/Watch Neg Vertical ABS CDO 2007-2 Ltd. A1S CC CCC+/Watch Neg Vertical ABS CDO 2007-2 Ltd. A1J CC CCC-/Watch Neg Rating Affirmed Transaction Class Rating ----------- ----- ------ Duke Funding XIII Ltd I Combo AAA Other Outstanding Ratings Transaction Class Rating ----------- ----- ------ 6th Avenue Funding 2006-1 Ltd. B CC 6th Avenue Funding 2006-1 Ltd. C CC 6th Avenue Funding 2006-1 Ltd. D CC ACA ABS 2007-2 Ltd. A1J CC ACA ABS 2007-2 Ltd. A2 CC ACA ABS 2007-2 Ltd. A3 CC ACA ABS 2007-2 Ltd. B1 CC ACA ABS 2007-2 Ltd. B2 CC ACA Aquarius 2006-1 A3 CC ACA Aquarius 2006-1 B1 CC ACA Aquarius 2006-1 B2 CC ACA Aquarius 2006-1 B3 CC ACA Aquarius 2006-1 I Sub Nts CC Armitage ABS CDO Ltd. A-2 CC Armitage ABS CDO Ltd. A-3 CC Armitage ABS CDO Ltd. A-4 CC Armitage ABS CDO Ltd. B CC Armitage ABS CDO Ltd. C CC Aventine Hill CDO I Ltd. A3 CC Aventine Hill CDO I Ltd. B1 CC Aventine Hill CDO I Ltd. B2 CC Aventine Hill CDO I Ltd. I Sub Nts CC BFC Ajax CDO Ltd. E CC Bonifacius Ltd. B CC Bonifacius Ltd. C CC Bonifacius Ltd. D CC Brooklyn Structured Finance CDO A-2L CC Brooklyn Structured Finance CDO A-3L CC Brooklyn Structured Finance CDO B CC Brooklyn Structured Finance CDO C CC Camber 6 plc D CC Camber 6 plc E CC Camber 6 plc F CC Careel Bay CDO Ltd. A3 CC Careel Bay CDO Ltd. B CC Careel Bay CDO Ltd. C CC Cherry Creek CDO I Ltd. A-3 CC Cherry Creek CDO I Ltd. B CC Duke Funding XIII Ltd. A2S CC Duke Funding XIII Ltd. A2J CC Duke Funding XIII Ltd. A3 CC Duke Funding XIII Ltd. B1 CC Duke Funding XIII Ltd. B2 CC Duke Funding XIII Ltd. 2 Combo CC Glacier Funding CDO II Ltd. A-1NV AAA Glacier Funding CDO II Ltd. D CC Glacier Funding CDO II Ltd. Pref Shrs CC Glacier Funding CDO II Ltd. A-1V AAA GSC ABS Funding 2006-3g Ltd. B CC GSC ABS Funding 2006-3g Ltd. C CC GSC ABS Funding 2006-3g Ltd. D CC Gulf Stream-Atlantic CDO 2007-1 B CC Gulf Stream-Atlantic CDO 2007-1 C CC Gulf Stream-Atlantic CDO 2007-1 D CC Gulf Stream-Atlantic CDO 2007-1 E CC Gulf Stream-Atlantic CDO 2007-1 F CC Gulf Stream-Atlantic CDO 2007-1 G CC Gulf Stream-Atlantic CDO 2007-1 Sub Notes CC Hartshorne CDO I Ltd. A-2 CC Hartshorne CDO I Ltd. A-3 CC Hartshorne CDO I Ltd. B1 CC Hartshorne CDO I Ltd. B2 CC Hartshorne CDO I Ltd. B3 CC Kleros Preferred Funding V PLC A-3 CC Kleros Preferred Funding V PLC B CC Kleros Preferred Funding V PLC C CC Kleros Preferred Funding V PLC D CC Kleros Preferred Funding V PLC E CC Kleros Preferred Funding VII Ltd. A-4 CC Kleros Preferred Funding VII Ltd. B CC Kleros Preferred Funding VII Ltd. C CC Kleros Preferred Funding VII Ltd. D CC Lancer Funding II Ltd. A1J CC Lancer Funding II Ltd. A2 CC Lancer Funding II Ltd. A3 CC Lancer Funding II Ltd. B CC Longport Funding III Ltd. C CC Longport Funding III Ltd. D CC Longport Funding III Ltd. E CC Longport Funding III Ltd. SubNotes CC Longridge ABS CDO II Ltd. A2J CC Longridge ABS CDO II Ltd. A3S CC Longridge ABS CDO II Ltd. A3J CC Longridge ABS CDO II Ltd. B1 CC Longridge ABS CDO II Ltd. B2 CC Longridge ABS CDO II Ltd. B3 CC Longridge ABS CDO II Ltd. C CC Longshore CDO Funding 2007-3 Ltd. A-1 AA/Watch Neg Longshore CDO Funding 2007-3 Ltd. B CC Longshore CDO Funding 2007-3 Ltd. C CC Longshore CDO Funding 2007-3 Ltd. D CC Millstone IV CDO Ltd. A-3 CC Millstone IV CDO Ltd. B CC Millstone IV CDO Ltd. C-1 CC Millstone IV CDO Ltd. C-2 CC Millstone IV CDO Ltd. D CC Neptune CDO IV Ltd. A-2 CC Neptune CDO IV Ltd. B CC Neptune CDO IV Ltd. C CC Neptune CDO IV Ltd. D CC Neptune CDO IV Ltd. E CC Preston CDO I Ltd. A3 CC Preston CDO I Ltd. B1 CC Preston CDO I Ltd. B2 CC Rockbound CDO I Ltd. A-1J CC Silver Elms CDO II Limited B CC Silver Elms CDO II Limited C CC Silver Elms CDO II Ltd. D CC Silver Marlin CDO I Ltd. A-1 AAA Silver Marlin CDO I Ltd. A-4 CC Silver Marlin CDO I Ltd. B CC Silver Marlin CDO I Ltd. C CC Silver Marlin CDO I Ltd. D CC Silver Marlin CDO I Ltd. E CC Silver Marlin CDO I Ltd. F CC STACK 2005-2 Ltd. D CC STACK 2005-2 Ltd. E CC STACK 2005-2 Ltd. F CC Stack 2007-1 Ltd. B CC Stack 2007-1 Ltd. C CC Stack 2007-1 Ltd. D CC Stack 2007-1 Ltd. E CC STATIC Residential CDO 2006-C Ltd. A-1b CC STATIC Residential CDO 2006-C Ltd. A-2 CC STATIC Residential CDO 2006-C Ltd. B-1 CC STATIC Residential CDO 2006-C Ltd. B-2 CC STATIC Residential CDO 2006-C Ltd. C CC STATIC Residential CDO 2006-C Ltd. D-1a CC STATIC Residential CDO 2006-C Ltd. D-1b CC STATIC Residential CDO 2006-C Ltd. D-2 CC TABS 2006-6 Ltd. A1J CC TABS 2006-6 Ltd. A2 CC TABS 2006-6 Ltd. A3 CC TABS 2006-6 Ltd. B1 CC TABS 2006-6 Ltd. B2 CC TABS 2006-6 Ltd. B3 CC TABS 2006-6 Ltd. C CC TABS 2006-6 Ltd. I Sub Nts CC Tasman CDO Ltd. A2 CC Tasman CDO Ltd. A3 CC Tasman CDO Ltd. B CC Tasman CDO Ltd. C CC Timberwolf I Ltd. S-2 CC Timberwolf I Ltd. A-2 CC Timberwolf I Ltd. B CC Timberwolf I Ltd. C CC Timberwolf I Ltd. D CC Tricadia CDO 2006-7 Ltd. A-2 CC Tricadia CDO 2006-7 Ltd. B CC Tricadia CDO 2006-7 Ltd. C CC Tricadia CDO 2006-7 Ltd. D CC Tricadia CDO 2006-7 Ltd. E CC Tricadia CDO 2006-7 Ltd. F CC Vertical ABS CDO 2007-2 Ltd. A2 CC Vertical ABS CDO 2007-2 Ltd. A3 CC Vertical ABS CDO 2007-2 Ltd. B CC * Moody's: Mark-to-Market Losses Won't Truly Indicate Credit Slide ------------------------------------------------------------------ In a new report, Moody's Investors Service reviews the impact of the financial guarantors' mark-to-market losses relating to Credit Default Swaps. "Our analysis focuses on underlying economics rather than accounting results," Wallace Enman, vice president and the author of the report, said. "Mark-to-market losses recorded for CDS contracts may not represent a true indicator of actual credit deterioration." Over the past several quarters, significant mark-to market losses have been recorded on the CDS contracts of financial guarantors. The magnitude of these mark-to-market charges has raised questions about the nature and degree of exposures, as well as some confusion about how to interpret this information in the context of a guarantor's financial strength. Mr. Enman explains that the claims-paying resources of financial guarantors are not directly affected by mark-to-market charges on derivative contracts. The charges do convey that the market would require an additional premium to insure the same exposures, which may or may not reflect an actual increase in default risk among the reference obligations--the main focus of Moody's analysis. The guarantors have indicated in public disclosures that they believe expected actual credit losses on their insured CDS portfolios will be materially lower than implied by estimated market values. This view is broadly consistent with the analysis performed by Moody's in its modeling of the guarantors' portfolios. Large Marks Can Limit a Monoline's Financial Flexibility "Although mark-to-market hits may not represent actual credit deterioration," the analyst adds, "they can limit a guarantor's financial flexibility by adding to already negative market sentiment." "Large marks can certainly damage a guarantor's business prospects. Clients may choose to avoid additional transactions with certain guarantors," Mr. Enman states. "Significant mark-to- market losses may also dampen investor appetite for a guarantor's debt or equity securities, inhibiting its ability to raise capital in a stress-loss scenario." Over the past few weeks, Moody's downgraded by several notches the ratings of MBIA and Ambac on the basis of such impaired financial flexibility and dampened business prospects, as well as the substantial risk within their portfolio of insured exposures. CDS Contracts Subject to Early Termination Provisions Mr. Enman also notes that CDS contracts of some guarantors contain provisions stipulating that counterparties may request a termination at market value in the event of insolvency of one of the parties. Such terminations could result in significant cash payments being required if a guarantor was deemed insolvent under the terms of a contract. "In such an extreme case" Mr. Enman concludes, "the guarantor would be forced to realize losses that are in excess of currently estimated economic losses, significantly reducing statutory capital and claims-paying resources." Regulators could be expected to play a significant role in determining insolvency; Moody's believes that they would be reluctant to take preemptory action that might have the effect of worsening the financial condition of the insurer and reducing resources available for prospective claimants. The rating agency also notes that the risk of insolvency is low for most rated guarantors because they have regulatory capital cushions well above minimum levels. However, proximity to minimum regulatory capital requirements recently helped to drive Moody's rating actions for FGIC, CIFG, and XL Capital Assurance to below investment-grade. The report does not address the impact that a guarantors' CDS terminations would have on the other parties to the contracts, although another Moody's report, "Credit Default Swaps: Market, Systemic, and Individual Firm Risks in Perspective," on May 2008, cited the failure of a major counterparty as the most significant risk to the CDS market. * State Bar of California Names Byron Moldo to Business Law Unit ---------------------------------------------------------------- Byron Moldo, a partner at Moldo Davidson Fraioli Seror & Sestanovich LLP, was appointed to serve on the Insolvency Law Committee of the Business Law Section of the State Bar of California. In a letter to Moldo from Pamela J. Martinson, Appointments Subcommittee Chair of the Business Law Section Executive Committee, Mr. Moldo was asked to begin his service later this year at the close of the State Bar's annual meeting and conclude his service at the close of the organization's annual meeting in 2011. "It is an honor to have been chosen to serve the State Bar of California in this capacity and I look forward to becoming an integral part of the committee's work," Mr. Moldo said. In the past, Mr. Moldo has spoken at and written for various continuing legal education seminar programs for the State Bar of California. Mr. Moldo was a member of the Personal and Small Business Bankruptcy Law Advisory Commission of the State Bar of California. A legal expert admitted to practice in all state and federal district courts throughout California, the United States Court of Appeals Ninth Circuit, the United States Tax Court and the United States Court of Claims, Mr. Moldo was once the president of the Westwood Bar Association. He is a member of the Los Angeles County Bar Association and a member of the board of directors of the Central District Consumer Bankruptcy Attorneys Association. In addition to practicing in bankruptcy Moldo also serves as a receiver in federal and state court, and as an Assignee for the Benefit of Creditors. With more than 26 years of experience in the practice area of bankruptcy and receivership, representing creditors' committees and secured creditors, Mr. Moldo has seen his fair share of intricate cases-both with businesses and entities, well as individuals. Over the years, many of his cases have involved real estate, consumer electronics, intellectual property, entertainment, telemarketing-with an emphasis on consumer fraud-the Internet, and violations enforced by the Securities and Exchange Commission and Federal Trade Commission by cold callers. Mr. Moldo also represents bankruptcy trustees and receivers. While Mr. Moldo serves the State Bar's committee on a volunteer basis, he will continue to enjoy his thriving practice at his Los Angeles office. About Moldo Davidson Fraioli Seror & Sestanovich LLP Based in Los Angeles, California, Moldo Davidson Fraioli Seror & Sestanovich LL -- http://www.mdfslaw.com/-- specializes in litigation transactions, receivership, bankruptcy, real estate and intellectual property matters. The firm's clients range from mid- sized businesses to multinational corporations, including manufacturers, distributors, inventors, high net-worth individuals, professionals, property owners, high tech and software companies. * BOOK REVIEW: As We Forgive Our Debtors: Bankruptcy and Consumer Credit in America ----------------------------------------------------------------- Authors: Theresa A. Sullivan, Elizabeth Warren and Jay Lawrence Westbrook Publisher: Beard Books Paperback: 370 pages List Price: US$34.95 Order your personal copy at http://www.amazon.com/exec/obidos/ASIN/1893122158/internetbankrupt This book is a major contribution to the study of bankruptcy and to our understanding of debtors and creditors who end up in bankruptcy court. With the sharp increase in bankruptcies over the past decade and an increasingly wide cross-section of occupational distribution represented, the question treated by this study is both a legal and a sociological one. It does not attempt to study the internal workings of bankruptcy, but the authors look outward to the larger population of bankrupt debtors. Using a multi-disciplinary approach, the authors have drawn social and economic portraits of typical debtors against the backdrop of the law and with hard empirical data. ********* 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. Raphael M. Palomino, 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- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***