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/raid1/www/Hosts/bankrupt/TCR_Public/080714.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, July 14, 2008, Vol. 12, No. 166 Headlines ACCESS PHARMA: Agrees to Merge with MacroChem Corp. ADASON GROUP: Case Summary & 20 Largest Unsecured Creditors ADELPHIA COMMS: Inks Stipulation Resolving $18 Mil. ARH Claims ADELPHIA COMMS: Court OKs $480 Mil. in Professional Fees & Costs ADVANCED CELL: Sells $1,200,000 Unsecured Convertible Note to JMJ AMERICAN HOME: To Sell $26.86MM Unencumbered Non-Performing Loans ASARCO LLC: Court Allows EPA to Do Repairs in Leadville Mine ASARCO LLC: Judiciary Panel Members Want Careful Study on Vedanta ASARCO LLC: Strikes CBA in Relation to Sterlite Acquisition ASHLAND INC: Agrees to Acquire Hercules Inc. for $3.3 Billion ASHLAND INC: Merger Agreement Cues Moody's Review of Ba1 Rating BAPTIST HEALTH: Moody's Renews Watchlist on Ba2-Rated Debt BLUEGREEN CORP: Secures $30MM Line of Credit from Wells Fargo Arm BOWNE & CO: Acquires Manhattan-Based Capital Systems for $13MM BRUNSWICK: Deteriorating Marine Industry Cues Moody's Ratings Cut BUFFETS HOLDINGS: Units Want to Reject 129 Restaurant Leases CATHOLIC CHURCH: Davenport's Case to Remain Open, Court Rules CATHOLIC CHURCH: Davenport Files Report on Non-Monetary Activities CATHOLIC CHURCH: Court to Hear Fairbanks-Continental Feud CATHOLIC CHURCH: 140 Fairbank Claimants Retain Manly & Stewart CATHOLIC CHURCH: Final Order Closing Spokane's Case to be Amended CATHOLIC CHURCH: Court Set July 18 as Portland's Brief Deadline CATHOLIC CHURCH: Tucson's Capital Campaign Yields $31,200,000 CELLU TISSUE: S&P Holds 'B' Rating After Notes Upsize to $222MM CHARYS HOLDING: Wants Exclusive Plan Filing Extended Until Aug. 4 CITYSCAPE HOME: Moody's Assigns Underlying Rating of B3 to Notes CLAIRE'S STORES: Zimmermann Resigns as President for North America COLONIAL DESIGN: Voluntary Chapter 11 Case Summary CONTINENTAL AIRLINES: Posts $58MM Pretax Charge for Capacity Cuts DELTA AIR: Workers Ask Congress to Limit Oil Speculation DISTRIBUTED ENERGY: U.S. Trustee Forms 3-Member Creditors Panel DISTRIBUTED ENERGY: Files Schedules of Assets and Liabilities FANNIE MAE: Fed OKs Lending Plan; Treasury to Up Credit Line FORD MOTOR: Names Ken Czubay as Head of U.S. Sales and Marketing FREDDIE MAC: Fed OKs Lending Plan; Treasury to Up Credit Line GAVILON GROUP: Sold to Ospraie Fund for $2.8 Billion GAVILON GROUP: Moody's Puts Ba3 Rating After ConAgra Deal GREEKTOWN CASINO: Committee Taps Clark Hill as Bankruptcy Counsel GREEKTOWN CASINO: Wants to Employ Kurtzman Carson as Claims Agent GREY WOLF: Precision to Offer $10/Share if Basic Merger Fails HERCULES INC: Inks $3.3 Billion Merger Agreement with Ashland Inc. HERCULES INC: Merger Agreement Cues Moody's Review of Ba2 Rating H.J. HEINZ: Moody's Assigns Ba1 Rating on Preferred Stock INDYMAC BANCORP: OTS Closes Bank, Transfers Operations to FDIC INDYMAC BANCORP: Banking Industry on "Solid Footing," FDIC Says JIM PALMER: Potential Buyer Reiterates Plan to Acquire Parent JOHNSTON SHIELD: Case Summary & 20 Largest Unsecured Creditors JOSEPH CAGNO: Case Summary & 20 Largest Unsecured Creditors JPMORGAN RV: Poor Performance Cues S&P to Chip Notes Rating to BB+ LINENS N THINGS: AMEX Wants Stay Lifted to End Merchant Agreement LINENS N THINGS: Says 87 Underperforming Stores Should be Closed LINENS N THINGS: Court Approves Cole Schotz as Committee Counsel LINENS N THINGS: Court Approves Increase in Insurance Caps LINENS N THINGS: Pickering Wants Stay Lifted to End Lease LION INC: Obtains Shareholders Nod to Sell Assets for $525K Cash M/I HOMES: Moody's Cuts B1 Corporate Family Rating; Outlook Neg. MASTR ASSET: S&P Puts Default Ratings on 12 Certificate Classes MEDICOR LTD: Has Until September 30 to File Chapter 11 Plan MELBOURNE-UNIV. APARTMENTS: Case Summary & 15 Unsecured Creditors MERGE HEALTHCARE: Dismisses KPMG LLP as Public Accounting Firm MERGE HEALTHCARE: Complies with Nasdaq Minimum Bid Price Protocol MIDWEST AIR: Pilots Predict Bankruptcy After Labor Talks Fail NATIONAL R.V.: Has Until August 26 to File Chapter 11 Plan NETBANK INC: Judge Funk Approves Amended Disclosure Statement NEXCEN BRANDS: Completes Purchase of Bill Blass' Couture Business NORTHLAKE CDO: Moody's Cuts & Places on Review Notes' Ratings NORTH MIAMI LAND: Auction of Interest in BLIA Set July 14 NV TELEVISION: Moody's Assigns Corporate Family Rating of B3 PACE PRODUCT: Case Summary & 14 Largest Unsecured Creditors PARK CAPITAL: Owner Depletes Investors' Money; Attempts Suicide PETRA CRE: Fitch Puts $32.5MM 'B' Notes Rating Under Neg. Watch PILGRIM'S PRIDE: Moody's Cuts Ratings to B1; Outlook is Stable PROGRESSIVE MOLDED: US Trustee Wants Cases Converted to Chapter 7 PROGRESSIVE MOLDED: Wants Manufacturing Business to be Liquidated PROGRESSIVE MOLDED: Gets Green Light to Wind-Down Business PROGRESSIVE MOLDED: Court Orders Restraint to Canadian Employees QUALITY WAY: Case Summary & 20 Largest Unsecured Creditors QUEBECOR WORLD: Judge Peck Modifies Management Incentive Plan QUEBECOR WORLD: Wants Five More KPMG Retention Letters Approved QUEBECOR WORLD: Printing Agreement with Dex Extended to 2015 QUEBECOR WORLD: Receives Conversion Notices for Series 5 Shares RELIANT ENERGY: Has Until August 19 to File Chapter 11 Plan REPUBLIC AIRWAYS: To Slash 500 Jobs Due to Contract Reductions ROPER INDUSTRIES: S&P Lifts $500MM Shelf Rating to BBB- from BB+ SENSATA TECHNOLOGIES: Moody's Cuts Ratings, Junks Senior Notes SINGLETON COLES: Case Summary & 20 Largest Unsecured Creditors SLATE CDO: Portfolio Credit Quality Slide Cues Fitch's Neg. Watch SPECTRUM BRANDS: Bares Supplemental Info on Pet Biz Sold to Salton THORNBURG MORTGAGE: Parties Approve Changes to Financing Terms TRIBUNE CO: DBRS Confirms 'B(low)' Issuer Rating VESTA INSURANCE: Gaines Trustee Allowed to Transfer Claim Records VIASYSTEMS INC: Stable Operating Trends Cue S&P's Positive Outlook VICTORY MEMORIAL: Judge Craig Approves Disclosure Statement WACHOVIA BANK: S&P Junks Rating on Class RC Certificates WHITEHAWK CDO: Moody's Withdraws Ratings, Junks Rating on Class C ZVUE CORP: Inks 3-Month Standstill Pact with YA Global Investments * S&P Says More Job Losses in June Hint Weakness in Labor Markets * S&P: Negative Credit Trend Continues for Midstream Energy Cos. * S&P: Three More Global Entities Moved to Speculative-Grade Slot * S&P: Credit Markets Woe May Alter Students' Ability to Pay Loan * S&P: Dull Economic Environment Pressures Leveraged Chem. Cos. * S&P Says Miss. Economic Base Expands Due to 1992 Gambling Law * S&P Cuts Ratngs on Certain Tranches from Various Aircraft Trusts * Most Commercial Property Post "Yellow Scores" in Moody's Report * Moody's Says FDA's Initiatives Might Strain Medical Device Cos. * FDIC Says Banking Industry on "Solid Footing" Amid IndyMac Fall * 3 DLA Piper Lawyers Join McKenna Long's Washington Office * BOND PRICING: For the Week of July 7 to July 11, 2008 ********* ACCESS PHARMA: Agrees to Merge with MacroChem Corp. --------------------------------------------------- Access Pharmaceuticals Inc. will be acquired by MacroChem Corporation through the issuance of 2.5 million shares of Access Pharmaceuticals' common stock. The acquisition is expected to close in the third quarter of 2008. MacroChem's product portfolio includes two clinical stage oncology products, 4-thio Ara-C, which is a nucleoside analogue licensed from Southern Research Institute and sodium phenylbutyrate, which is licensed from the NIH and is partnered with Access Pharmaceuticals. "The acquisition of MacroChem brings multiple late-stage clinical drug candidates into the Access pipeline, some of which are further along than Access' current assets," Jeffrey B. Davis, Access' President and CEO, stated. "We are currently active in partnering and out-licensing discussions, and MacroChem's dermatology assets will be added to that partnering effort." "The oncology assets are highly synergistic with the oncology development efforts ongoing at Access, and we look forward to the opportunity to move them along and monetize those assets through additional partnering activities," Mr. Davis added. "With the precarious state of the financial markets adding further challenges for microcap biopharmaceutical companies, we believe the strategic combination with Access is a very positive step forward for the continued development of MacroChem's product candidates," Robert J. DeLuccia, Chairman of MacroChem Corporation, stated. "We are pleased to work with Access to assure an orderly transition and believe that this is the best strategy currently available to maximize value for our shareholders." About MacroChem Corporation Headquartered in Massachusetts, MacroChem Corporation (OTC:MACM) -- http://www.macrochem.com/-- is a specialty pharmaceutical company that develops and seeks to commercialize pharmaceutical products. The company's portfolio of product candidates includes products based on its drug delivery technologies SEPA, MacroDerm and DermaPass. About Access Pharmaceuticals Headquartered in Dallas, Texas, Access Pharmaceuticals Inc. (OTC BB: ACCP.OB) -- http://accesspharma.com/-- is an emerging biopharmaceutical company developing products for use in the treatment of cancer, the supportive care of cancer, and other disease states. The company's product for the management of oral mucositis, MuGard(TM) has received marketing clearance by the FDA as a device. The company's lead clinical development program for the drug candidate ProLindac(TM) is in Phase II clinical testing. Access also has advanced drug delivery technologies including Cobalamin(TM) mediated oral drug delivery and targeted delivery. At March 31, 2008, Access Pharmaceuticals reported total assets of $7.3 million and total liabilities of $8.7 million, resulting in a total stockholders' deficit of $1.4 million. Going Concern Doubt On March 31, 2008, Whitley Penn LLP, in Dallas, expressed substantial doubt about Access Pharmaceuticals Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007 and 2006. The auditing firm pointed to the company's recurring losses from operations, negative cash flows from operating activities and an accumulated deficit. ADASON GROUP: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: The Adason Group, LLC 1745 Phoenix Blvd., Ste. 240 Atlanta, GA 30349 Bankruptcy Case No.: 08-72984 Type of Business: The Debtor provides advertising and consulting services for a variety of industries. Chapter 11 Petition Date: July 8, 2008 Court: Northern District of Georgia (Atlanta) Judge: James Massey Debtor's Counsel: Michael D. Robl, Esq. Thomerson, Spears & Robl, LLC 104 Cambridge Ave. Decatur, GA 30030 Tel: (404) 373-5153 Email: mdrobl@tsrlaw.com http://www.tsrlaw.com/ Total Assets: $16,000 Total Debts: $2,778,978 A list of the Debtor's largest unsecured creditors is available for free at http://bankrupt.com/misc/ganb08-72984.pdf ADELPHIA COMMS: Inks Stipulation Resolving $18 Mil. ARH Claims -------------------------------------------------------------- Affiliate Relations Holdings, Inc., filed these claims against Adelphia Communications Corporation and its debtor-affiliates: Claim No. Basis for the Claim Claim Amount --------- ------------------- ------------ 19581 Arising out of the rejection $18,812,086, of an affiliation agreement plus between Adelphia Communications unliquidated Corp. and ARH's predecessor amounts from -in-interest, Affiliate Sales ACC as alleged and Marketing, Inc. dated contract rejection damages 19830 Alleging that ARH paid Unliquidated commissions to ACC in excess of the amount earned by ACC under the Affiliation Agreement ACOM, meanwhile, asserted a claim against ARH for the non-payment of commissions allegedly due for July 2006 pursuant to the Affiliation Agreement. The Debtors subsequently objected to the ARH Claims. To resolve their claim dispute, the Debtors and ARH entered into a stipulation, approved by the U.S. Bankruptcy Court for the Southern District of New York, which provides that: a) The ARH Rejection Claim will be reduced to $10,250,000 as an allowed ACOM Other Secured Claim. b) The ARH Administrative Claim will be allowed for $400,000 as an administrative priority claim against ACOM. c) The ACOM Commission Claim will be allowed for $900,000. d) The ARH Administrative Claim will be paid by offsetting it against the ACOM Commission Claim, resulting to $500,000 as the net ACOM Commission Claim. e) The Net Commission Claim will be paid by reducing the initial cash distribution otherwise due to ARH with respect to the Allowed Rejection Claim by $500,000. f) The Claim Objections will be withdrawn with prejudice and the ARH Administrative and the ACOM Commission Claims will be deemed satisfied as a result of the offsets. g) ARH will receive a distribution on its Rejection Claim in: (i) cash; (ii) registered, unrestricted shares of Time Warner Cable Class A Common Stock; and (iii) CVV units from the Adelphia Recovery Trust, all free and clear of liens, claims and encumbrances upon the Court's final approval of the Stipulation. h) In no event will the initial distribution of cash and instructions by ACOM to its transfer agent to issue the TWC Stock be made no later than five days from the Final Approval Order. The CVV units will be distributed on the next available subsequent distribution date. i) The parties will exchange mutual releases. About Adelphia Comms Based in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television company. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, Internet access and other advanced services over its broadband networks. The company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the Debtors in their restructuring efforts. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates' chapter 11 cases. The Bankruptcy Court confirmed the Debtors' Modified Fifth Amended Joint Chapter 11 Plan of Reorganization on Jan. 5, 2007. That plan became effective on Feb. 13, 2007. (Adelphia Bankruptcy News, Issue No. 188; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADELPHIA COMMS: Court OKs $480 Mil. in Professional Fees & Costs ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York directs Adelphia Communications Corp. and its debtor-affiliates to pay $480,786,953 in final fees and expenses to these professionals for services rendered during the Debtors' bankruptcy cases: A. Debtors' Professionals Professional Fee Period Allowed Fees Allowed Expenses ------------ ---------- ------------ ---------------- Pricewaterhouse- 06/26/2002- $138,243,790 $7,696,607 Coopers LLC 02/13/2007 Wilkie Farr & 06/25/2002- 96,621,892 6,929,839 Gallagher LLP 02/12/2007 Kasowitz Benson 06/25/2002- 51,115,151 2,881,699 Torres Friedman 07/10/2002 LLP Bragar Wexler & 08/20/2002- 23,737,554 584,046 Morgenstern LLP 02/13/2007 LEGC, LLC 08/01/2003- 21,305,247 784,341 02/13/2007 Lazard Freres & 06/25/2002- 19,437,167 1,233,593 Co. LLP 02/13/2007 Sullivan & 06/11/2004- 12,300,554 123,890 Cromwell LLP 02/13/2007 Covington & 06/10/2002 11,874,338 492,236 Burling 02/13/2007 Jefferson 01/01/2004- 11,440,035 1,425,034 Wells Int'l. Inc. 02/13/2007 Cole Raywid & 05/01/2003- 7,018,474 311,370 Braverman LLP 12/31/2006 Klehr Harrison 07/19/2004- 5,910,863 651,786 Harvey Branzburg 02/13/2007 & Ellers LLP Munger Tolles 04/27/2004- 4,120,374 134,596 & Olson LLP 02/12/2007 Holme Roberts 05/01/2004- 3,902,750 70,602 & Owen LLP 02/13/2007 Sherman & Howard 02/01/2004- 2,668,010 106,481 02/12/2007 Genetelli 12/01/2003- 2,620,608 6,743 Consulting Grp. 02/13/2007 Davis Wright & 06/01/2003- 2,537,605 90,540 Tremaine 02/13/2007 Chicago 07/24/2006- 2,249,995 144,257 Partners 02/13/2007 Duff & Phelps LLC 01/11/2003- 2,099,259 11,647 02/13/2007 Holland & 11/01/2004- 1,993,304 247,220 Knight LLP 02/13/2007 Tauber & 07/01/2005- 1,888,565 36,747 Balser P.C. 02/12/2007 Focused 03/01/2004- 1,746,562 0 Business 02/13/2007 Solutions, Inc. Bond & Pecaro, 08/01/2003- 1,575,039 12,135 Inc. 02/13/2007 BDO Seidman LLP 07/14/2003- 1,454,430 28,724 02/13/2007 Collective 11/04/2002- 1,086,643 112,356 Infrastructure 10/31/2004 Technology, Inc. TMNG Strategy 07/19/2004- 888,722 19,677 08/25/2006 Fisher Sweetbaum 10/01/2005- 744,363 17,458 Levin & Sands 02/13/2007 Grubb & Ellis 02/04/2003- 424,860 104,101 02/13/2007 Spencer Stuart 03/01/2003- 312,000 14,782 02/13/2007 Dow Lohnes & 08/01/2002- 239,767 239,767 Albertson PLLC 02/28/2006 Bird Marella 09/01/2003- 236,491 5,670 Boxer Wolpert 02/13/2007 Nessim Drooks & Lincenberg, APC Kasowitz Benson 06/10/2002- 159,606 14,596 Torres Friedman 07/10/2002 LLP Heidrick & 11/10/2003- 77,095 21,875 Struggles 05/19/2004 Ernst & Young 11/01/2003- 88,000 4,408 LLP 02/29/2004 Jon Flinker 08/01/2003- 67,826 2,992 09/01/2004 Dreier LLP 09/01/2006- 30,581 404 02/31/2007 James Martin 09/01/2006- 19,200 1,049 02/13/2007 B. Official Committee of Unsecured Creditors' professionals Professional Fee Period Allowed Fees Allowed Expenses ------------ ---------- ------------ ---------------- Greenhill & 07/16/2002- $14,485,714 $101,563 Co., LLC 02/13/2007 Klee Tuchin 06/25/2002- 2,578,525 166,792 Bogdanoff & 02/13/2007 Stern LLP Weiser LLP 03/01/2005- 2,431,144 10,850 02/13/2007 Neilson Elggren 08/01/2002- 1,990,795 144,404 LLP 10/31/2005 Quest Turnaround 08/22/2003- 466,363 643,295 Advisors LLC 02/13/2007 Fisher & Phillips 06/01/2006- 134,355 8,907 02/13/2007 Hogan & Hartson LLP 07/01/2006- 60,362 625 02/13/2007 LECG, LLC 11/01/2005- 24,962 821 02/13/2007 C. Equity Committee's Professionals Professional Fee Period Allowed Fees Allowed Expenses ------------ ---------- ------------ ---------------- Hewitt & 06/10/2002- $327,310 $4,680 Associates, 02/13/2007 LLC Geoffrey P. 02/01/2003- 56,133 0 Miller 02/12/2007 D. Counsel to certain employees of the Debtors Professional Fee Period Allowed Fees Allowed Expenses ------------ ---------- ------------ ---------------- O'Melveny & 06/25/2002- $336,846 $12,519 Myers 02/13/2007 The Court also authorized the Reorganized Debtors to pay $383,354 in the aggregate to these professionals as the amounts not previously paid of the fees and expenses pursuant to the holdback payment list: Professional Amount ------------ --------- BDO Seidman $11,293 Bird Marella 3,586 Bond & Pecaro 8,588 Chicago Partners 47,223 Cole Raywid 41,795 Collective Infrastructure 11,545 Davis Wright - Dow Lohnes 235 Dreier 566 Ernst & Young - Genetelli Consulting 31,065 Greenhill 139,714 Grubb & Ellis - James Martin 384 John Flinker 1,962 Lazard 3,837 LECG 789 Neilson Elggren 1,928 Sullivan & Cromwell 79,362 About Adelphia Comms Based in Coudersport, Pennsylvania, Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is a cable television company. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, Internet access and other advanced services over its broadband networks. The company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the Debtors in their restructuring efforts. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates' chapter 11 cases. The Bankruptcy Court confirmed the Debtors' Modified Fifth Amended Joint Chapter 11 Plan of Reorganization on Jan. 5, 2007. That plan became effective on Feb. 13, 2007. (Adelphia Bankruptcy News, Issue No. 188; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ADVANCED CELL: Sells $1,200,000 Unsecured Convertible Note to JMJ ----------------------------------------------------------------- Effective Feb. 15, 2008, in exchange for $1,000,000 in the form of a Secured & Collateralized Promissory Note issued by JMJ Financial to Advanced Cell Technology, Inc., the company issued and sold an unsecured convertible note to JMJ Financial in the aggregate principal amount of $1,200,000 or so much as may be paid towards the balance of the JMJ Note. The ACT Note bears interest at the rate of 10% per annum, and is due by Feb. 15, 2010. At any time following the effective date of the ACT Note, the holder may at its election convert all or part of the ACT Note plus accrued interest into shares of the company's common stock at the conversion rate of the lesser of: (a) $0.38 per share, or (b) 80% of the average of the three lowest trade prices in the 20 trading days prior to the conversion. In connection with the issuance of the ACT Note, the company entered into a Collateral and Security Agreement, dated Feb. 15, 2008, with JMJ Financial pursuant to which JMJ Financial granted the company a security interest in certain of its assets securing the JMJ Note. The company has drawn down and received these amounts under the ACT Note: * March 17, 2008 - $60,000 for a net purchase price of $50,000 (reflecting a 16.66% original issue discount) * June 17, 2008 - $60,000 for a net purchase price of $50,000 (reflecting a 16.66% original issue discount) Pursuant to the Use of Proceeds Agreement entered into in connection with the issuance of the ACT Note, the company is required to use the proceeds from the note solely for research and development dedicated to adult stem cell research. Financial Errors In mid-May 2008, the company discovered that certain financial statements of the company did not properly account for discounts and deferred issuance costs on convertible debentures issued in 2005, 2006 and 2007. On June 24, 2008, the company's management and the Audit Committee of its Board of Directors determined that the consolidated balance sheets, consolidated statements of stockholders' deficit and related notes to consolidated financial statements included in the consolidated financial statements and information contained in the company's Form 10-KSB filed with the Securities and Exchange Commission on April 18, 2008, for the year ended Dec. 31, 2007, and the company's Quarterly Reports on Form 10-QSB for the quarterly periods ended March 31, 2007, June 20, 2007, and September 30, 2007 should no longer be relied upon as a result of such accounting errors. The company incorrectly amortized discounts and deferred issuance costs over periods longer than the weighted average life of the instruments with the result that the discounts and debt issuance costs should have been charged to interest expense more rapidly than reported. The company also incorrectly calculated the weighted average shares used in calculating basic and diluted earnings per share for the twelve month period ended December 31, 2007. The actual weighted average shares were approximately 20.2 million higher than reported. The company's current auditor, Singer Lewak Greenbaum & Goldstein LLP, has not yet reviewed the matters, and has indicated that it will do so following review by the auditor of the Company who was engaged at the time the error occurred. The company will restate its consolidated financial statements for the affected period and amend all periodic reports filed during the affected period. AMERICAN HOME: To Sell $26.86MM Unencumbered Non-Performing Loans ----------------------------------------------------------------- American Home Mortgage Investment Corp. and its debtor-affiliates had named Beltway Capital LLC and Lehman Capital as the successful bidders for certain non-performing loans subject to security interests held by Bank of America, N.A., and J.P. Morgan Chase Bank, N.A. The winning bidders have agreed to pay over 40% of the unpaid principal balance of those loans. Moreover, the Debtors withdrew their request to auction off more than 80 unencumbered mortgage loans, with an aggregate unpaid balance of approximately $24,000,000, which non-performing loans are subject to liens by AH Mortgage Acquisition Co., Inc. The Debtors, however, have subsequently determined that selling the Unencumbered Non-Performing Loans to Beltway pursuant to the terms of the proposed "Loan Sale and Interim Servicing Agreement" is in the best interest of the bankruptcy estates. Thus, they propose to pool and sell 82 Unencumbered Non-Performing Loans with an aggregate UPB of $26,860,066 as of May 31, 2008, to Beltway for a purchase price which will be determined on a loan by loan basis. Pursuant to Sections 105(a) and 363 of the Bankruptcy Code, and Rules 2002 and 6004 of the Federal Rules of Bankruptcy Procedure, the Debtors ask the U.S. Bankruptcy Court for the District of Delaware to: (i) authorize the private sale of the Unencumbered Non- Performing Loans to Beltway, or to another party submitting a higher or better offer, free and clear of liens, claims, encumbrances, and other interests; and (ii) approve the terms of the Loan Sale and Interim Servicing Agreement. In their efforts to sell the loans, the Debtors have previously contacted parties known to have an interest in purchasing the Non-Performing Loans. Information relevant to the Non-Performing Loans was also posted on the Debtors' Intralinks Web site, access to which was made available within 24 hours to any potential bidder upon execution of a Non-Disclosure Agreement. James L. Patton, Jr., Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, contends that the private sale of the Unencumbered Non-Performing Loans to Beltway is appropriate because based on the previous marketing process of the loans, Beltway's offer is superior to what the Debtors would obtain through a formal auction process. The Debtors believe that their bankruptcy estates and creditors would benefit from the approval of the Beltway Sale without the added costs associated with a public auction, at which the Debtors are not guaranteed the commitment of Beltway to purchase the Unencumbered Non-Performing Loans at all, much less at the price to be provided through the Sale Agreement. The key terms of the Sale Agreement are: (a) The Debtors agree to sell, and the purchaser agrees to purchase on a servicing released basis, all of the right, title and interest of the Debtors in and to the Unencumbered Non-Performing Loans, and the REO Property in the mortgage loan package; (b) The purchase price based on a blended rate for each Unencumbered Non-Performing Loan and each REO Property will be 40.25%, multiplied by its Stated Principal Balance. The actual Purchase Price will be calculated based on the Purchase Price Percentage applicable to each loan multiplied by its Stated Principal Balance; (c) The Closing Date will be July 18, 2008; (d) The parties acknowledge that the Debtors have not delivered the required documents with a lost note affidavit. The Debtors acknowledge that missing required documents would be grounds for the Purchaser to refuse to purchase a mortgage loan. The Purchaser, however, agrees to purchase each withdrawn loan, despite the Debtors' failure to provide the required documents, provided that the Purchase Price for each Withdrawn Loan will be held in escrow by the Debtors pending delivery of the Required Documents to Purchaser; (e) On the Closing Date, the amount payable by Purchaser will be reduced by an amount equal to a certain Purchase Price Adjustment, if any; and (f) The Debtors make no representations or warranties with respect to any matter relating to the Unencumbered Non- Performing Loans or REO Property. Accordingly, the Purchaser will accept the loans and REO Property "AS IS" and "WHERE IS". The Debtors further propose that the deadline for submitting competing bids will be on July 14, 2008. If a timely Competing Bid is received, the Debtors will conduct an auction on July 16, 2008 at 10:00 a.m., Eastern Time, at the offices of their lead counsel, Young Conaway Stargatt & Taylor, LLP, at 1000 West Street, 17th Floor, in Wilmington, Delaware 19899. The Debtors reserve the right to (i) determine at their discretion, which Competing Bid or offer is the highest or best offer, and (ii) reject, at any time prior to the approval of an offer, any offer that the Debtors deems to be inadequate or insufficient, among other reasons. The Debtors will have no obligation to accept or submit for Court approval any bid or offer presented at the Auction. At the Debtors' behest, the Court will consider the request on July 17, 2008, at 2:00 p.m., Eastern Time. Objection deadline is on July 14. About American Home Based in Melville, New York, American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- is a mortgage real estate investment trust engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. American Home Mortgage and seven affiliates filed for chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as its counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000, total liabilities of $19,330,191,000. (American Home Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASARCO LLC: Court Allows EPA to Do Repairs in Leadville Mine ------------------------------------------------------------ ASARCO LC and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of Texas to enter into a limited access agreement with the U.S. Government, acting through the Environmental Protection Agency, that would provide EPA with limited access to conduct certain work related to the Leadville Mine Drainage Tunnel, in Lake County, Colorado. Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas, relates that water levels in the mining works and rocks surrounding the Leadville Site were rising. The officials and citizens of the town of Leadville and Lake County were concerned regarding the possibility of a catastrophic release of water from the tunnel. To alleviate those concerns, EPA has requested that ASARCO grant access to several parcels of land situated in Lake County. EPA proposes to reduce water levels by (i) drilling a well shaft on the Properties to connect to Site and installing pumps to discharge water out of the Site; and (ii) constructing a pipeline that will cross over the Properties and will convey water from the extraction well to a water treatment plant operated by the Bureau of Reclamation. Pursuant to the Agreement, ASARCO will grant EPA access to the Properties for: (a) conducting site investigations to determine the feasibility and design for construction of a well to extract water from the Site for purposes of conveying water to the Bureau of Reclamation or the Site's water treatment plant for treatment; (b) drilling, developing, completing, pumping and abandoning one groundwater well on the Olathe Placer Claim to extract water from the Site for purposes of conveying water to the water treatment plant; (c) clearing and grubbing sufficient land to pour a concrete drill pad and to provide enough space for the drilling on the Olathe Placer Claim; and (d) installing a buried conveyance pipeline from the constructed well to the LMDT water treatment plant. ASARCO and EPA agreed that EPA will conduct all work with due care at no expense to ASARCO, and to take all precautions to avoid damage other than ordinary wear and tear, to the property and to gates, roads, fences and facilities. ASARCO or its representatives will not be liable to EPA or its representatives for any loss, injury or damage suffered by EPA. EPA will require its contractors who work on the property to secure workers' compensation insurance, commercial general insurance in the duration of the work, and to name ASARCO as an additional insured on the policies. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). ASARCO and its debtor-affiliates have until Aug. 1, 2008 to file a plan of reorganization. (ASARCO Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASARCO LLC: Judiciary Panel Members Want Careful Study on Vedanta ----------------------------------------------------------------- Two leading U.S. House Judiciary Committee members -- Rep. John Conyers, Jr., chairman of the House Judiciary Committee and Rep. Lamar Smith, ranking member of the House Judiciary Committee -- asked U.S. Attorney General Michael B. Mukasey to have the U.S. Department of Justice focus its attention on the environmental records of Vedanta Resources plc, Sterlite Industries Ltd., and other companies seeking to gain control of U.S. copper miner ASARCO. In a letter to Attorney General Mukasey, Conyers and Smith explain: "We understand that ASARCO is associated with approximately 100 Superfund sites in the United States. The media have reported that ASARCO agreed with the Environmental Protection Agency in 2003 to set up a $100 million trust fund to help pay the company's environmental cleanup costs. It is estimated that ASARCO's Superfund liabilities may range up to $1 billion. Recently, ASARCO's board of directors accepted a $2.6 billion purchase offer from Sterlite Industries (USA) Ltd. to buy substantially all of the debtor's principal assets, subject to approval by the U.S. Bankruptcy Court. We understand that these assets include ASARCO's facilities in Texas and Arizona. Sterlite USA will also assume certain of the debtor's liabilities. The obligations of Sterlite USA under the purchase and sale agreement are guaranteed by Sterlite Industries (India) Ltd. Prior to the ASARCO board's acceptance of Sterlite USA's offer, the bankruptcy court issued an order requiring the board to consider 'any bidder's and its affiliates' history of compliance or noncompliance with environmental regulations.' Sterlite USA's affiliate, Vedanta, however, is alleged to have a poor environmental record outside the United States. There assertedly have been 'numerous reports that raise serious questions about Vedanta's history of compliance with EHS -- environmental, health and safety -- laws and regulations.' We are not aware of whether bidders who competed with Sterling USA before ASARCO's board and their affiliates have environmental records better than, similar to, or worse than Vedanta's. Further, we understand that environmental concerns are implicated, not only by what entity assumes control of ASARCO's assets, but by such other factors as delays in the resolution of ASARCO's Chapter 11 case and delays in plan distributions. Thus, Vedanta's environmental record is not the only environmental factor that the Department confronts as it conducts its representation of the United States in the ASARCO bankruptcy. We expect the Department to consider appropriately all of the environmental considerations posed by ASARCO's case. Based on recent events in the matter, however, we are not yet sure that the Department is adequately doing so. For example, at a recent hearing held in the ASARCO case before the United States Bankruptcy Court, in which the Sterlite USA and Vedanta issues were presented, an attorney for the Justice Department explained that 'the environmental laws are less strict abroad so we think they're of limited value in determining what the record of compliance would be in the United States." He added, 'and given the disparity in the bids we think that it was not a dispositive disqualifying factor.' This statement may reflect an attempt to summarize the Department's efforts to assess all of the relevant environmental factors, but we cannot be sure. Given the considerable federal liabilities associated with ASARCO based on its involvement with contaminated sites, and in light of the above, we believe that Vedanta's environmental track record overseas, as well as all relevant environmental factors bearing on the ASARCO bankruptcy, should be carefully studied before the Department adopts a final position on whether Sterlite USA or any other bidder should be allowed to acquire ASARCO's assets in the United States. In addition, we ask that you explain in writing the Department's policy with respect to assessing the bona fides of a potential bidder that may present environmental concerns. In particular, we would like to know whether it is the Department's policy to take into consideration factors beyond the cash value of an offer and the potential bidder's environmental track record in the United States and abroad before offering Department support for the consummation of a sale." As reported in the Troubled Company Reporter on July 9, 2008, the Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas approved, on a final basis, the bidding procedures governing the auction of substantially all of ASARCO LLC and its debtor-affiliates' assets to Sterlite Industries Ltd., or to any entity who'll submit a better or higher bid. Sterlite has offered $2,600,000,000 for the Debtors' assets. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). ASARCO and its debtor-affiliates have until Aug. 1, 2008 to file a plan of reorganization. (ASARCO Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASARCO LLC: Strikes CBA in Relation to Sterlite Acquisition ----------------------------------------------------------- The unions representing the workers of ASARCO LLC and its debtor- affiliates, and Sterlite Industries (India) Limited, a subsidiary of Vedanta Resources plc and a party to an agreement to acquire substantially all assets of ASARCO, jointly disclosed that they have reached agreement on the terms of the collective bargaining agreement that would go into effect once the proposed acquisition is approved by the bankruptcy court overseeing ASARCO's chapter 11 case. "We regard our employees as a vitally important part of our business and are extremely happy to have concluded a mutually satisfactory agreement with ASARCO's representatives," said Anil Agarwal, Chairman of Sterlite. "We look forward to working with the unions and ASARCO's highly-skilled employees. Sterlite is also pleased that it has been granted bid protections by the bankruptcy judge, which represents another important milestone in the acquisition process." "The unions are pleased that an agreement has been reached with Sterlite. We believe that Sterlite, with its strong experience in the copper business, will strengthen ASARCO's operations for the long term benefit of all stakeholders, including its employees," said Terry Bonds, Chairman of the ASARCO Union Negotiating Committee. The new collective bargaining agreement, which fully retains all existing worker benefits, contains terms that are designed to ensure that ASARCO's operations will be improved and made more competitive. There are also strong commitments to ensure that Sterlite invests in and operates all of ASARCO's existing operations. The parties have also agreed that the term of the current agreement expiring in 2010 will be extended by three years to 2013. "This reflects the confidence and commitment of Sterlite and bodes well for the long term growth of ASARCO," expressed Mr. Joseph Lapinsky, CEO & President of ASARCO. In another development advancing Sterlite's proposed acquisition, the bankruptcy judge presiding over ASARCO's chapter 11 case approved the bid protections contemplated by the Purchase and Sale Agreement with ASARCO, which includes, among other things, a break-up fee of $52 million be payable to Sterlite under certain circumstances. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/ -- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services And investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006 (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). ASARCO and its debtor-affiliates have until Aug. 1, 2008 to file a plan of reorganization. (ASARCO Bankruptcy News, Issue No. 76; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ASHLAND INC: Agrees to Acquire Hercules Inc. for $3.3 Billion ------------------------------------------------------------- Ashland Inc. and Hercules Inc. entered into a definitive merger agreement under which Ashland would acquire all of the outstanding shares of Hercules for $18.600 per share in cash and 0.093 of a share of Ashland common stock for each share of Hercules common stock. The total transaction value is approximately $3.3 billion, or $23.010 per Hercules share based on Ashland's July 10 closing stock price and including $0.7 billion of net assumed debt. The merger is conditioned upon, among other things, the approval of Hercules' shareholders, the receipt of regulatory approvals and other customary closing conditions. Assuming the satisfaction of these conditions, the transaction is expected to close by the end of calendar 2008. The cash portion of the consideration will be funded through a combination of cash on hand and committed debt financing from Bank of America and Scotia Capital, subject to customary terms and conditions. Ashland plans to use the cash flows of the combined organization to pay down debt with a goal of attaining investment-grade credit ratings within two to four years after closing the transaction. Under the terms of the definitive merger agreement, Hercules would be required to pay Ashland a fee of $77.5 million under certain circumstances including if Hercules terminates the merger agreement to accept a superior offer, and Ashland would be required to pay Hercules a fee in the same amount if the transaction is not completed due to a failure to obtain financing at the time the conditions to the merger have been satisfied. Upon the transaction's close, Ashland is expected to have pro forma combined revenue for the 12 months ended March 31, 2008, of more than $10 billion, including approximately $3.5 billion generated outside North America. For the same period, Ashland expected to generate earnings before interest, taxes, depreciation and amortization or EBITDA of $365 million excluding certain items, while Hercules reported ongoing EBITDA of $392 million excluding certain items. Specialty chemicals, which on a pro forma basis represents approximately 75% of total EBITDA, will serve as Ashland's platform for future growth. "The acquisition of Hercules fulfills our objective to become a leading specialty chemicals company," James J. O'Brien, Ashland chairman and chief executive officer, said. "It creates a defined core for Ashland composed of three specialty chemical businesses with strong market positions and promising growth potential: specialty additives and ingredients, paper and water technologies, and specialty resins." "In addition, we expect our financial profile to be enhanced significantly through reduced earnings volatility, improved profitability and stronger cash flow generation." Mr. O'Brien said. "We are enthusiastic about the opportunity to combine Hercules with Ashland," Craig A. Rogerson, Hercules president and CEO, said. "Our companies share proud and similar histories of nearly 100 years of innovation, dedication and service. Hercules shareholders will receive a significant premium over the current trading price for their shares and, through their ownership of Ashland shares, the opportunity to participate in the upside potential of the combined company. We look forward to working with Ashland to bring these two great companies together." The companies stated that in specialty additives and ingredients, Hercules' Aqualon business is one of the most recognized and admired specialty chemical brands in the world and brings Ashland a significant market position in rheology modifiers, which alter the physical properties of water-based systems. These additives are used across a range of industries to make everything from adhesives and paints to foods, pharmaceuticals and personal care products. Nearly all of Aqualon's additive products are water soluble polymers derived from renewable materials. The combined company is expected to generate, on a pro forma basis, approximately one-third of EBITDA from bio-based or renewable chemistries. "We will combine the paper and water businesses of each company to create one paper and water technologies business with annual revenue of $2 billion," Mr. O'Brien said. "In particular, Hercules' leadership position in pulp and paper technologies bolsters our participation in one of the world's largest water treatment markets. The combined businesses will provide the scale to leverage opportunities in other key water treatment markets including municipal, industrial and marine. "The third business within our new core - specialty resins - is one where Ashland has long enjoyed a strong reputation for innovation and service. Mr. O'Brien added. "A broader international footprint will offer the specialty resins business expanded growth opportunities in key building and construction markets, including infrastructure and wind energy. In addition, our Distribution and Valvoline businesses provide complementary capabilities and share similar markets with the specialty chemical businesses. Ashland expected to realize annualized run-rate cost savings of at least $50 million by the third year following the transaction's close by eliminating redundancies and capturing operational efficiencies. In the first year after the transaction's close, while the combination is dilutive to earnings per share on a reported basis, it is expected to be significantly accretive to Ashland's earnings per share excluding merger costs and noncash depreciation and amortization charges resulting from the transaction. "We are extremely impressed with the quality of the Hercules people and we look forward to welcoming them into the Ashland family," Mr. O'Brien continued. "Our companies share a common desire to live up to our own high expectations, and those of our customers, shareholders and the communities in which we operate." "We are also very pleased that John Panichella, president of Hercules' Aqualon Group, and Paul Raymond, president of Hercules' Paper Technologies and Ventures Group, have agreed to join Ashland after the close of the transaction, reporting directly to me," Mr. O'Brien related. "In addition, we expect to maintain a significant presence in Wilmington, Delaware, where Hercules is headquartered." "An integration team with members from both organizations will determine how best to utilize the strengths and scale of the combined company worldwide," Mr. O'Brien concluded. "We will work with the Hercules team to ensure a smooth transition." Citigroup Global Markets Inc. acted as financial advisor and Squire Sanders & Dempsey LLP acted as legal counsel to Ashland. Credit Suisse Securities LLC acted as financial advisor and Wachtell Lipton Rosen & Katz acted as legal counsel to Hercules. About Hercules Incorporated Based in Wilmington, Delaware, Hercules Incorporated (NYSE: HPC) -- http://www.herc.com/-- is a manufacturer and marketer of specialty chemicals and related services for a range of business, consumer and industrial applications. The products of Hercules are functional and process chemicals used by the paper industry to improve paper and paperboard performance and manufacturing process; water-soluble polymers, and specialty resins. The markets served by Hercules include pulp and paper; paints and adhesives; construction materials; food, pharmaceutical and personal care, and industrial specialties, including oilfield and general industrial. About Ashland Inc. Headquartered in Covington, Kentucky, Ashland Inc. (NYSE:ASH) -- http://www.ashland.com/-- is a diversified chemical company that consists of four wholly owned divisions: Ashland Performance Materials, Ashland Distribution, Valvoline and Ashland Water Technologies. ASHLAND INC: Merger Agreement Cues Moody's Review of Ba1 Rating --------------------------------------------------------------- Moody's Investors Service placed the corporate family, probability of default and debt ratings of Ashland Inc., which have a Ba1 corporate family rating, under review for a possible downgrade. This rating action follows the company's statement that it has entered into an agreement to purchase Hercules Incorporated (Ba1 corporate family rating) in a transaction valued at approximately $3.3 billion or $23.01 per Hercules share based on Ashland's July 10th closing stock price and including $0.7 billion of net assumed debt. Under the terms of the agreement, Ashland will acquire all of the outstanding stock of Hercules, paying $18.60 in cash and 0.093 shares of Ashland common stock for each common share of Hercules. The merger is subject to the approval of Hercules' shareholders as well as regulatory approvals and other customary closing conditions. Moody's expects the cash portion of the consideration will be financed using a combination of new debt ($2.2 billion) and existing cash balances ($0.7 billion). Ashland had cash and available-for-sale securities (including $254 million of auction rate securities) totaling $1.175 billion as of March 31, 2008. Ashland's LGD assessments are not under review and these assessments and point estimates are subject to change as a function of the new capital structure of the merged entities. While Ashland has almost no debt currently, the acquisition will result in Ashland taking on a material amount of debt that will put the current Ba1 corporate family rating under negative pressure and would likely result in a one notch downgrade in the corporate family rating to Ba2, provided there is no change in the purchase price and other deal and financing terms, as disclosed, and assuming no material changes to the outlook for the merged company's raw material costs and end markets. On Review for Possible Downgrade: Issuer: Ashland Inc. -- Corporate Family Rating, Placed on Review for Possible Downgrade, currently Ba1 -- Probability of Default Rating, Placed on Review for Possible Downgrade, currently Ba1 -- Senior Unsecured Medium-Term Note Program, Placed on Review for Possible Downgrade, currently Ba1 -- 6.86% Senior Unsecured Medium Term Notes due May 1, 2009 -- 7.72% Senior Unsecured Medium Term Notes due July 15, 2013 -- 8.38% Senior Unsecured Medium Term Notes due April 1, 2015 -- Senior Unsecured Regular Bond/Debenture, Placed on Review for Possible Downgrade, currently Ba1 -- 8.8% Senior Unsecured Debentures due Nov. 15, 2012 Moody's rating review will consider the nature and structure of the acquisition financing, as well as focus on the strategic benefits of the transaction, potential synergies, the cash flow anticipated from the combined businesses, the combined company's financial flexibility and liquidity, and how management's long- term plans will impact the company's credit measures. Headquartered in Covington, Kentucky, Ashland, Inc. is a distributor of chemicals and plastics, a manufacturer of specialty chemicals with a focus on performance materials and water technologies and, through its Valvoline brand, a marketer of premium-branded automotive and commercial lubricants. The Hercules acquisition fits with Ashland's stated strategic interest in expanding its specialty chemicals businesses after the divestiture of its minority interest in Marathon Ashland Petroleum and the Ashland Paving and Construction business in 2005 and 2006, respectively. On July 1, 2008, the company purchased the pressure-sensitive adhesive business and the atmospheric emulsions business from Air Products for $92 million. Ashland Inc. and Sud-Chemie AG disclosed in June 2008 their intention to form a new 50/50 global joint venture to serve foundries that will include Ashland's Casting Solutions business group, the foundry-related businesses of Sud-Chemie and Ashland- Sudchemie-Kernfest GmbH. Ashland had revenues of $8.0 billion for the LTM ended March 31, 2008. BAPTIST HEALTH: Moody's Renews Watchlist on Ba2-Rated Debt ---------------------------------------------------------- Moody's Investors Service renewed the Watchlist with uncertain direction for Baptist Health System of East Tennessee Obligated Group's Ba2 rating assigned to $135 million of outstanding debt issued by the Health, Educational and Housing Facilities Board of the County of Knox, Tennessee. The negative pressures affecting the rating center around the deteriorating financial performance and financial position of BHSET. The positive factors for the rating center around the recent merger with Catholic Healthcare Partners, the redemption of the Series 1996 bonds in March, and the potential for future financial support from CHP and operational improvement as a result of the merger. Management continues to evaluating possible ways to integrate Baptist's debt into CHP's capital structure. RATED DEBT (debt outstanding as of May 31, 2008) -- Series 2002 ($135.0 million outstanding), rated Ba2 BLUEGREEN CORP: Secures $30MM Line of Credit from Wells Fargo Arm ----------------------------------------------------------------- Bluegreen Corporation renewed its $30 million revolving line of credit with Wells Fargo Foothill, part of Wells Fargo & Company. Bluegreen(R) will pledge certain receivables generated by its Bluegreen Resorts and Bluegreen Communities business segments to secure borrowings under the facility. The borrowing period under the facility ends on Dec. 31, 2009, and the facility matures on Dec. 31, 2010. "We are pleased to continue our relationship with Wells Fargo Foothill," John M. Maloney Jr., president and chief executive officer, commented. "This facility provides Bluegreen with additional liquidity to advance and support our operations." Headquartered in Boca Raton, Florida, Bluegreen Corporation (NYSE: BXG) -- http://www.bluegreencorp.com/-- provides Colorful Places to Live and Play(R) through two principal operating divisions. With over 170,000 owners, Bluegreen Resorts markets a flexible, real estate-based vacation ownership plan that provides access to over 40 resorts and an exchange network of over 3,700 resorts and other vacation experiences such as cruises and hotel stays. Bluegreen Communities has sold over 55,000 planned residential and golf community homesites in 32 states since 1985. Founded in 1966, Bluegreen employs over 6,000 associates. * * * As reported in the Troubled Company Reporter on May 20, 2008, Moody's assigned a Caa1 rating to Bluegreen Corporation's $20 million senior unsecured line of credit. Additionally, the ratings outlook was revised to negative from stable. Concurrently, Moody's affirmed the company's B2 Corporate family rating and B2 probability of default rating. BOWNE & CO: Acquires Manhattan-Based Capital Systems for $13MM -------------------------------------------------------------- Bowne & Co., Inc., a shareholder and marketing communications service, completed the acquisition of the U.S.-based assets and operating business of Capital Systems, Inc., a provider of financial communications based in midtown Manhattan. Bowne & Co. acquired Capital Systems for approximately $13 million. This transaction, which was originally disclosed on June 26, 2008, is expected to be accretive to the company's 2008 results. As a result of this transaction, Bowne & Co. is gaining an office in midtown Manhattan in addition to its current facility in lower Manhattan, and expects to expand its leadership position in the New York market. Capital Systems, Inc. specializes in the creation, filing and distribution of time-sensitive financial communications by providing document production services, including composition, filing, printing, distribution and electronic access. With 2007 revenue of approximately $48 million, Capital Systems enables Bowne & Co to further extend its reach into its key existing verticals: investment management, compliance reporting and capital markets services. Capital Systems provides mutual fund quarterly and annual reporting and disclosure documents, such as SEC filings, proxies and 10-Ks, as well as capital markets services for equity offerings, debt deals, securitizations, and mergers and acquisitions. Acquisitions History In April 2008, Bowne & Co acquired the digital print business of Rapid Solutions Group, a subsidiary of Janus Capital Group Inc. In February 2008, the company acquired GCom2 Solutions, Inc., a provider of software products addressing reporting and shareholder communication needs of Bowne & Co. About Bowne & Co., Inc Headquartered in New York, New York, Bowne & Co., Inc. (NYSE: BNE) �- http://www.bowne.com� provides services to help companies produce and manage their investor communications, including regulatory and compliance documents, and also markets business communications, personalized statements, enrollment books and sales and marketing collateral. Bowne & Co operates through two segments: Financial Communications and Marketing & Business Communications. As reported by the Trouble Company Reporter on July 11, 2008, Standard & Poor's Ratings Services raised its corporate credit and issue-level ratings on 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[ and Co]'s business profile, taking into account recent acquisitions[...]" Michael Listner, Standard & Poor's credit analyst, said. BRUNSWICK: Deteriorating Marine Industry Cues Moody's Ratings Cut ----------------------------------------------------------------- Moody's Investors Service downgraded the long-term ratings on Brunswick to Baa3 from Baa2 due to the continuing deterioration of the U.S. marine industry, which Moody's expect to continue into the foreseeable future, and Moody's expectation of moderating growth in the international marine industry. At the same time, Brunswick's commercial paper rating was downgraded to Prime-3 from Prime-2. These rating actions conclude a review for possible downgrade initiated on July 2, 2008. The outlook is negative. "The downgrade reflects our view that the downturn in the marine market will continue into the foreseeable future, and is worse than our previous expectations, as consumer spending continues to deteriorate due to the ongoing credit market and housing market crises as well as high energy and food costs," Kevin Cassidy, senior credit officer at Moody's Investors Service, said. While Moody's believe that Brunswick will continue to take appropriate and difficult steps to protect its credit metrics and liquidity, the marine downturn has expanded into previously strong markets such as high end yachts and certain pockets outside the US. Moody's believes that the company may be tight in its revolving credit agreement leverage covenant (3x debt/EBITDA) in early 2009 as a result of its restructurings, although we believe that the company will likely be able to amend this covenant. Moody's also feel that the company will likely be able to refinance its $250 million of notes due in July 2009, assuming the credit markets do not deteriorate significantly. Assuming the company is able to obtain a waiver for its covenant and is able to refinance its upcoming maturity, Moody's believe the company has adequate liquidity over the next 12 to 18 months based on targeted cash balances of around $300 to $400 million, access to an undrawn unsecured $650 million revolving credit facility, lack of share repurchases and a modest dividend just below $55 million. If the company is not able to refinance its notes, Moody's believe that the company would likely be able to repay the notes through revolver borrowings, although its liquidity position would then be clearly weakened. The negative rating outlook reflects Moody's expectation that the US marine market will continue to be weak in the intermediate term and that such weakness will likely also persist in select international markets resulting in the likelihood of lower earnings and revenue over the next few quarters. Despite Brunswick's improved cost structure from past restructuring efforts, moderation of its production and increased geographical diversification, if the weak marine market continues for a more prolonged period, the company's profitability and operating cash flow may no longer represent the characteristics of a Baa3 consumer durable company. Brunswick's Baa3 rating reflects the fact that its performance is not expected to significantly improve in the near term and a $700 million total revenue decrease to around $5 billion is a possibility. However, even with this significant reduction, in order to maintain its investment grade rating the company needs to amend the financial covenant in its revolving credit facility and maintain certain credit measures. In particular, retained cash flow/net adjusted debt below 25% or free cash flow/adjusted debt in the mid single digits would pressure the ratings as would operating margins, excluding restructuring charges, in the low single digits or EBITA/Interest coverage lower than 2x. Ratings downgraded include: -- Senior unsecured notes to Baa3 from Baa2; -- Senior shelf to (P) Baa3 from (P) Baa2; -- Preferred shelf to (P) Ba2 from (P) Ba1; -- Commercial Paper to Prime-3 from Prime-2 Headquartered in Lake Forest, Illinois, Brunswick manufactures marine engines, pleasure boats, bowling capital equipment and fitness equipment, and operates retail bowling centers. Sales in the 12 months ended March 2008 approximated $5.6 billion. BUFFETS HOLDINGS: Units Want to Reject 129 Restaurant Leases ------------------------------------------------------------ Buffets Holdings, Inc., reported that several of its subsidiaries filed motions with the U.S. Bankruptcy Court for the District of Delaware seeking authority to reject a master land and building lease for 129 of the company's restaurants. The motion also seeks the court's permission to close 127 of these locations by the end of August 2008. Two restaurants covered by the master lease have previously been closed. The company has already successfully concluded lease negotiations with landlords for its other restaurant locations. The company has sought modifications to the onerous master lease from various affiliates of Fortress Investment Group LLC, the holders of the master lease, which would permit some or all of the 127 restaurants to remain open. While those negotiations have not been productive, the company continues to explore a consensual resolution. A court hearing for the lease rejection motion has been scheduled for July 30, 2008. In its motion, the company describes a number of issues with the master lease, including above-market rents, mandatory annual rent increases of 2% or more, and other onerous provisions that provide little recourse when units perform poorly. All but seven of the restaurants covered by the master lease in question operate under the Ryan's or Fire Mountain brand names. The 127 restaurants collectively have approximately 7,500 full and part-time employees. About Buffets Holdings Headquartered in Eagan, Minnesota, Buffets Holdings Inc. -- http://www.buffet.com/-- is the parent company of Buffets, Inc., which operates 626 restaurants in 39 states, comprised of 615 steak-buffet restaurants and eleven Tahoe Joe's Famous Steakhouse restaurants, and franchises sixteen steak-buffet restaurants in six states. The restaurants are principally operated under the Old Country Buffet, HomeTown Buffet, Ryan's and Fire Mountain brands. Buffets, Inc. employs approximately 37,000 team members and serves approximately 200 million customers annually. The company and all of its subsidiaries filed Chapter 11 protection on Jan. 22, 2008 (Bankr. D. Del. Case Nos. 08-10141 to 08-10158). Joseph M. Barry, Esq., and Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as claims and balloting agent. The U.S Trustee for Region 3 appointed seven creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Otterbourg Steindler Houston & Rosen PC as counsel. The Debtors' balance sheet as of Sept. 19, 2007, showed total assets of $963,538,000 and total liabilities of $1,156,262,000. As reported in the Troubled Company Reporter on Feb. 26, 2008, the Court granted on February 22, 2008, final approval of the Debtors' debtor-in-possession credit facility, consisting of $85 million of new funding and $200 million carried over from the company's prepetition credit facility. CATHOLIC CHURCH: Davenport's Case to Remain Open, Court Rules ------------------------------------------------------------- Judge Lee Jackwig of the U.S. Bankruptcy Court for the Southern District of Iowa has granted the Diocese of Davenport's request to issue a final decree to the extent that the request is meant to certify the finality of the May 1, 2008 confirmation order, and to provide notice of the June 9, 2008 effective date. Judge Jackwig, however, denied, without prejudice, Davenport's request to the extent it seeks entry of a final decree closing the Chapter 11 case. "That is, in addition to pending and yet to be filed applications for compensation upon which this Court must rule, the case is not ready to be closed because the Debtor is required to file reports on or about May 1, 2009, May 1, 2010 and May 1, 2011 regarding compliance with the Non-Monetary Undertakings by the Catholic Entities as provided in Article 24 of the Plan," Judge Jackwig said. If the Court finds a report is satisfactory, the Court will approve the report, says Judge Jackwig. However, if a report is not satisfactory, the Court will schedule a hearing to address the matter. Judge Jackwig maintained that if and when the Court approves the third annual report, the Court will include in its order a date by which the Reorganized Debtor will file a request for final decree. The Troubled Company Reporter related on June 25, 2008, that pursuant to the Diocese of Davenport's confirmed second amended plan of reorganization, the reorganized debtor asked the Court to issue a final decree (i) closing its bankruptcy case, and (ii) continuing the Reorganized Debtor's obligations under the Plan, including its non-monetary undertakings. Richard A. Davidson, Esq., at Lane & Waterman LLP, in Davenport, Iowa, had argued that the plan has been effective since June 9, 2008, and has been substantially consummated. About Diocese of Davenport The Diocese of Davenport in Iowa filed for chapter 11 protection (Bankr. S.D. Ia. Case No. 06-02229) on Oct. 10, 2006. Richard A. Davidson, Esq., at Lane & Waterman LLP, represents the Davenport Diocese in its restructuring efforts. Hamid R. Rafatjoo, Esq., and Gillian M. Brown, Esq., at Pachulski Stang Zhiel Young Jones & Weintraub LLP represent the Official Committee of Unsecured Creditors. In its schedules of assets and liabilities, the Davenport Diocese reported $4,492,809 in assets and $1,650,439 in liabilities. The Court approved on April 3, 2008, the Diocese of Davenport's second amended disclosure statement explaining its joint plan of reorganization. The Committee is a proponent to the plan, which was confirmed on April 30, 2008. (Catholic Church Bankruptcy News, Issue No. 128; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Davenport Files Report on Non-Monetary Activities ------------------------------------------------------------------ In compliance with its confirmed second amended plan of reorganization, the Diocese of Davenport issued a progress report on its non-monetary undertakings as of June 30, 2008. According to The Catholic Messenger, which published the report on July 3, 2008: (1) With respect the public release of the names of additional perpetrators, the Diocesan Review Board is reviewing cases in detail, including an investigation by an independent private investigator, to finalize the list. The process is expected to be completed by the fall of 2008; (2) When the review of the cases is completed, the list of the names of all known perpetrators will be posted on the Diocesan Web site; (3) Bishop Amos is in the process of scheduling visits to the parishes, where abuse occurred or where perpetrators served, which will begin in August 2008. A calendar of visits will be provided in The Catholic Messenger one month in advance; (4) The Diocese has provided contact information for the victim assistance coordinator for several years, and will continue to provide the information; (6) With respect to the Diocese's requirement to publish in The Catholic Messenger a statement urging abused persons to contact law enforcement, the victim assistance coordinator, or health care professional to report abuse, the Diocese said it has provided the information for several years, and will continue to provide the information; (7) With regards the bishop's obligation to support a complete elimination of all criminal statues of limitations for child sexual abuse, the Diocese says the the process is ongoing. At the current time, the legislature is not in session; (8) The Diocese has not received any requests from tort claimants to speak in a parish, where the abuse occurred; (9) The Diocese has not received any requests from tort claimants to publish stories of their abuse in The Catholic Messenger; (10) The Diocese is no longer referring to the tort claims or tort claimants as "alleged"; (11) Bishop Amos has sent letters of apology, when requested, and will continue the process; (12) All confidentiality agreements involving sex abuse have been terminated; (13) The Diocese has provided outreach programs for survivors of abuse for several years, and will continue to provide this in the future; (14) The Diocese is continuing to provide safe environment programs to clergy, staff, parents and children. To date, thousands of people have been trained; (15) The Diocese has clarified a whistle blower policy in the Policies Relating to Sexuality and Personal Behavior, which can be found at: http://ResearchArchives.com/t/s?2f66 (16) With respect the bishop and all priests' requirement to make a written statement that they have not abused any minor nor have knowledge of any abuse, written statements will be collected in August 2008; (17) Plaques stating that abuse will not be tolerated have been posted in all Diocesan schools; and (18) The Diocese has sent a report to the Apostolic Nuncio for action regarding Bishop Lawrence Soens. Mr. Soens was predominantly accused of abusing boys while working at Regina High School in Iowa City. The Diocese's officials have declined to comment on the content of the Soens Report, says the Quad-City Times. Craig Levien, Esq., counsel for certain claimants, also questioned the timeline with respect to the posting of the list of perpetrators, which he said was supposed to be done within a month after the Effective Date. "I get calls weekly from survivors asking that the names be released," Mr. Levien told the Quad-City Times. "If there are on-going investigations, that can be released as it comes available. It was high on these people's priority list to have the names released. Further delay is unacceptable," he added. About Diocese of Davenport The Diocese of Davenport in Iowa filed for chapter 11 protection (Bankr. S.D. Ia. Case No. 06-02229) on Oct. 10, 2006. Richard A. Davidson, Esq., at Lane & Waterman LLP, represents the Davenport Diocese in its restructuring efforts. Hamid R. Rafatjoo, Esq., and Gillian M. Brown, Esq., at Pachulski Stang Zhiel Young Jones & Weintraub LLP represent the Official Committee of Unsecured Creditors. In its schedules of assets and liabilities, the Davenport Diocese reported $4,492,809 in assets and $1,650,439 in liabilities. The Court approved on April 3, 2008, the Diocese of Davenport's second amended disclosure statement explaining its joint plan of reorganization. The Committee is a proponent to the plan, which was confirmed on April 30, 2008. (Catholic Church Bankruptcy News, Issue No. 128; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Court to Hear Fairbanks-Continental Feud --------------------------------------------------------- The U.S. Bankruptcy Court for the District of Alaska lifted the automatic stay for the limited purpose of allowing the U.S. District Court for the District of Alaska to hear oral argument on, and enter a decision regarding, the cross motions for summary judgment in the pending litigation entitled Continental Insurance Company vs. Catholic Bishop of Northern Alaska. Coverage Action Argument The Troubled Company Reporter said on June 25, 2008, that Continental had asked the Court to lift the automatic stay for the limited purpose of allowing oral argument in a Coverage Action to be heard on the cross-motions for summary judgment, and to allow the District Court to issue its ruling. Since January 2006, Continental and the Catholic Bishop of Northern Alaska have been involved in a litigation seeking a judicial declaration concerning any duty Continental may have to defend or indemnify the Diocese for liability arising from claims asserted in Alaska courts by individuals alleging abuse by priests affiliated with the Diocese. In response to the objection filed by the Catholic Bishop of Northern Alaska, Continental told the Court that its request seeks only limited relief -- that is to allow argument and ruling on its coverage action's cross-motions for summary judgment that were fully briefed prior to the filing of the Chapter 11 case. Brad E. Ambarian, Esq., at Lane Powell PC, in Anchorage, Alaska, contended that despite the Diocese's efforts to recast the Coverage Action as a prepetition collection action, no relief is sought to pursue any prepetition claim against the Diocese. He said there is not one mention or reference to any "claim," which Continental seeks to enforce in its memorandum supporting the request for summary judgment. He added that no allegation in the complaint is made about collecting any claim from the Diocese except for a one-line provision in Continental's prayer for relief, which requests an order requiring the Diocese to reimburse Continental for any sums it has paid for defense costs pursuant to its reservation of rights. Many bankruptcy cases are materially affected by disputes over significant assets, like a contract right, Mr. Ambarian related. However, he asserted, that does not mean the Coverage Action is automatically transmuted into a core proceeding, or that some possible objection to a claim that has not yet been filed would transform it into a core proceeding. Judge MacDonald's Memo In his 9-page memorandum opinion, Judge Donald MacDonald IV held that the Coverage Action is a non-core, related proceeding under Section 157(c) of the Judiciary and Judicial Procedures Code. "Absent consent of all parties to the case, a bankruptcy court's determinations on non-core matters are subject to de novo review by the district court," Judge MacDonald said. Because Continental does not consent to the Bankruptcy Court's jurisdiction, Judge MacDonald ruled that the Bankruptcy Court would be required to submit proposed findings of fact and conclusions of law to the District Court, which would enter a final judgment after a de novo review. "Because the [Coverage Action] is a non-core proceeding, I feel it is appropriate to grant limited relief from stay so that the District Court can hear and determine the pending cross motions," Judge MacDonald stated. "I would be limited by [Section] 157(c) to preparing proposed findings of fact and conclusions of law in the [Coverage Action], which would then be referred back to the District Court for a de novo review and entry of final judgment," he continued. Judge MacDonald further held that the Coverage Action, which was filed to determine whether a contract of insurance exists, must be resolved first before Continental could even consider whether or not to file a claim in the bankruptcy case, and before the Diocese can negotiate, in any meaningful fashion, a plan of reorganization. "And while one of the purposes of the automatic stay is to preserve a level the playing field between the debtor and its creditors during the pendency of plan negotiations, it is not appropriate to use the stay as a shield to postpone determination of an issue which will help define both the extent of the debtor's assets and the magnitude of its liability," Judge MacDonald ruled. Hence, the Coverage Action should be permitted to go forward so the issue of insurance coverage can be determined, he added. About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA -- http://www.cbna.info/-- filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules show total assets of $13,316,864 and total liabilities of $1,838,719. The church's plans to file its bankruptcy plan and disclosure statement on July 15, 2008. Its exclusive plan filing period expires on Jan. 15, 2009. (Catholic Church Bankruptcy News, Issue No. 128; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: 140 Fairbank Claimants Retain Manly & Stewart -------------------------------------------------------------- Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, John C. Manly, Esq., at Manly & Stewart, in Newport Beach, California, informs the U.S. Bankruptcy Court for the District of Alaska that his firm has been retained by 140 survivors of childhood sexual abuse inflicted by agents of the Catholic Bishop of Northern Alaska, and for most of whom Manly & Stewart is counsel of record in state court lawsuits against the Diocese. As of June 24, 2008, Manly & Stewart represents these claimants, who have pending lawsuits at the U.S. District Court for the District of Alaska: District Court Doe pseudonyms Case Number -------------- ----------- John Doe 2 - 7, and 9 - 22 4BE-03-177 CI John Doe 23 & 24, 26 & 27 4BE-07-326 CI James Doe 1 - 57, 59 - 61, Jean 4BE-04-322 CI Doe 1 & 2, and Janet Doe 1 - 3 Jack Doe 1 - 10, and 4BE-04-369 CI Jackie Doe 1 and 2 John Doe 1 - 4 and Jane Doe 1 4BE-06-273 CI Jane D. Doe 4BE-07-328 CI Jane E. Doe and Jane F. Doe 3AN-07-11176 CI June Doe 1 and 2 4BE-05-290 CI June Doe 4 4BE-07-344 CI Jake Doe 1 4BE-06-45 CI Jimmy Doe 1 and 2 4FA-06-2510 CI Jennifer Doe 1 4BE-07-340 CI Jana Doe 2 4BE-05-354 CI Jenny Doe 4 4BE-06-330 CI Jane Doe 2 2NO-04-83 CI Jane Doe 3 2NO-05-56 CI Jane Doe 4 2NO-05-84 CI Jane Doe 5 2BA-06-139 CI Mr. Manly says the claims of the abuse claimants are unliquidated, and the abuse perpetrated against the claimants began more than one year prior to the filing of the Diocese's Chapter 11 petition. He further notes that each of the claimants either has signed, or is in the process of negotiating contingency fee retention agreements with Manly & Stewart. Manly & Stewart has not received any compensation for its work in representing the claimants in the bankruptcy proceeding, Mr. Manly tells the Bankruptcy Court. He assures Judge MacDonald that neither his firm, nor its individual partners possess any claims or interests in the Diocese, except to the extent of any future payments resulting from the contingent fee agreements with individual claimants. About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA -- http://www.cbna.info/-- filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules show total assets of $13,316,864 and total liabilities of $1,838,719. The church's plans to file its bankruptcy plan and disclosure statement on July 15, 2008. Its exclusive plan filing period expires on Jan. 15, 2009. (Catholic Church Bankruptcy News, Issue No. 128; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Final Order Closing Spokane's Case to be Amended ----------------------------------------------------------------- The Diocese of Spokane's Plan Trustee, Gloria Z. Nagler, Esq., notified parties-in-interest that an amended order granting the Reorganized Debtor's request for final decree closing the bankruptcy case will be filed with the U.S. Bankruptcy Court for the Eastern District of Washington at Spokane, without further notice unless a written objection is filed. Ms. Nagler said the proposed Amended Order is intended to clarify the effect of the closing of the case upon the continued operation of the Plan Trust, and administration of the Trust by the Plan Trustee. She further noted that the proposed Amended Order is in accordance with the Diocese's confirmed Plan of Reorganization, specifically regarding the jurisdiction of the Court subsequent to closing of the case, and regarding the finality of the Tort Claims Reviewer's determinations, and the Plan Trustee's estimates and allocation of Plan Trust Funds. The Proposed Amended Order provides that: 1. The Order previously entered by the Court Closing the Case is amended to clarify that, with the exception of Allowed Future Tort Claims�Extended and Allowed Future Tort Claims� Initial, all other Claims which had not been allowed as of May 12, 2008, will not be considered or allowed after May 12, 2008. 2. The Plan Trustee is authorized to distribute funds to the Claimants and maintain reserves for potential taxes, professional fees and indemnity-related matters, without maintaining any reserves for additional Claims which were not allowed as of May 12, 2008, and which do not qualify as Future Tort Claims. These additional Claims will not be funded from the reserves created by the Plan Trustee. 3. The Court, without re-opening the Case, holds continuing jurisdiction over matters related to the Plan Trust Agreement including requests for determination of tax liability under Section 505 of the Bankruptcy Code, pursuant to the Plan. Deadline for filing objections to the proposed Amended Order is July 18, 2008. Plan Trustee Wants Spokane's Case Reopened On June 11, 2008, the Troubled Company Reporter said that Ms. Nagler had asked the Court to reopen the Diocese's bankruptcy case, which was closed pursuant to a final decree entered by Judge Patricia C. Williams on May 12, 2008. Ms. Nagler said she is aware of at least four late claimants, who have consulted with the Tort Claims Reviewer regarding evaluation and allowance of their possible claims against the Diocese. The Plan Trustee told the Court that she intends to pay all remaining funds in the Plant Trust, subject to reserves for administrative fees and expenses, to the existing allowed claimants pursuant to the terms of the confirmed Plan of Reorganization. The distribution, however, would leave no funds for payment of late claims, even if those claims are subsequently allowed, she said. About The Diocese of Spokane The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. The Diocese of Spokane, the Tort Claimants Committee, the Future Claims Representative, and the Executive Committee of the Association of Parishes delivered an Amended Plan of Reorganization, and a Disclosure Statement describing that Plan to the Court on Feb. 1, 2007. The Honorable Patricia C. Williams approved the disclosure statement on March 8, 2007. On April 24, 2007, the Court confirmed Spokane's second amended joint plan. That plan is effective May 31, 2007. (Catholic Church Bankruptcy News, Issue No. 128; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CATHOLIC CHURCH: Court Set July 18 as Portland's Brief Deadline --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Oregon granted a request of the Archdiocese of Portland in Oregon to extend from June 30, 2008, to July 18, 2008, the deadline for the Debtor to file a brief on the request by Erin Elson, Esq., regarding issues pertaining to the protective order issued by the Court on Jan. 14, 2005. Ms. Olson had told the Court that the Archdiocese of Portland in Oregon filed a request that largely ignores the procedure stipulated in 2005. Ms. Olson noted that the protective order, which shields the documents of those who have been accused of abusing minors, allows the removal of protection of the Documents unless the Archdiocese asks, and the Court rules, not to release the Documents. The Archdiocese, instead, seeks an entirely new procedure, Ms. Olson had related. If the Court is not inclined to adopt the Archdiocese's proposed new procedure, Ms. Olson had asked the Court to consider the Archdiocese's alternative requests. She had pointed out that the request to preserve the status quo of the Protective Order with respect to the Documents, is the only alternative request that actually complies with the terms of the Protective Order. Ms. Olson agreed that the Archdiocese may have until July 18, 2008, to submit its brief, but opposes any extension beyond that date, Margaret Hoffman, Esq., at Schwabe, Williamson & Wyatt, P.C., informed Judge Elizabeth L. Perris. Mt. Angel and Friars Have Limited Standing in Dispute Judge Perris ruled that the Franciscan Friars of California, Franciscan Friars of Oregon, Inc., and Mt. Angel Abbey's standing "to participate in the pending dispute over the release of documents concerning clergy accused of sexual misconduct with minors is limited to documents originating with those religious orders." "To the extent individual accused clergy or their estates wish to assert objections with respect to documents identified for release, living clergy must appear individually or through counsel, and deceased clergy must appear through duly appointed personal representatives or their counsel," Judge Perris said. About Archdiocese of Portland The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. The Court approved the Debtor's disclosure statement explaining its Second Amended Joint Plan of Reorganization on Feb. 27, 2007. On April 17, 2007, the Court confirmed Portland's 3rd Amended Plan. On Sept. 28, 2007, the Court entered a final decree closing Portland's case. The case was subsequently reopened at Ms. Olson's request of further case administration. The Hon. Elizabeth L. Perris reopened the bankruptcy case of the Archdiocese of Portland in Oregon for further administration. Erin K. Olson, Esq., at the Law Office of Erin Olson, P.C., previously asked the Court to reopen the case to resolve certain issues, including her request to unseal, and file in redacted form, the documents and accompanying exhibits filed as Docket Nos. 4765 and 4766 in the bankruptcy case. (Catholic Church Bankruptcy News, Issue No. 128; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Tucson's Capital Campaign Yields $31,200,000 ------------------------------------------------------------- The Diocese of Tucson launched a capital campaign entitled "Our Faith, Our Hope, Our Future," to collect $28,000,000 to buy new land for parishes and schools, help retired priests, and strengthen Catholic schools and religious-education programs, among other purposes. Stephanie Innes of the Arizona Daily Star reports that despite the sluggish economy, the Diocese was able to raise $31,200,000, and counting, in its first-ever Capital Campaign. Diocesan officials are hoping for another $9,000,000 from the Diocese's 46 parishes, which has just began participating in the fundraising efforts. The Daily Star says that the average pledge is $3,200. Some individuals and families, however, gave more than $1,000,000. "We were surprised," said the campaign's executive director, Thomas Q. Smith. "I attribute it to a couple of things. One is that it's never been done before in this diocese, so people didn't feel like, 'Oh boy, here we go again.'" Mr. Smith noted that the other factor is Bishop Gerald F. Kicanas' charisma and enthusiasm for it. "People have now had some time with the bishop, and they trust him." "He makes so many visits around the diocese doing confirmations, pastoral visits, and holds his town meetings at parishes whenever there's a pastoral change. People have had a chance to get to know him," Mr. Smith told the Daily Star. The Capital Campaign, which is separately registered as a non- profit corporation with a board of directors co-chaired by Tucson auto dealer Jim Click and Bishop Kicanas, replaced this year's Annual Catholic Appeal, and asked parishioners for pledges over a three- to five-year period. According to the Daily Star, the funds raised will be spent on several projects with these estimates: (a) $7,000,000 for buying land for future parishes, schools and new church buildings; (b) $4,000,000 for increasing retirement benefits for Diocesan priests; (c) $5,600,000 for assisting parishes with expansion, maintenance and ministry needs; (d) $4,000,000 for the enhancement for Catholic schools and parish religious-education programs; (e) $3,400,000 for operating the 26 ministries and charities that normally are funded by the Annual Catholic Appeal. There was no appeal in 2008; (f) $3,000,000 for expanding Catholic Community Services' social-service programs; and (g) $1,000,000 for the interior renovation of St. Augustine Cathedral. About the Diocese of Tucson The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. Tucson's Third Amended and Restated Plan of Reorganization became effective on Sept. 20, 2005. (Catholic Church Bankruptcy News, Issue No. 128; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) CELLU TISSUE: S&P Holds 'B' Rating After Notes Upsize to $222MM --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its issue and recovery ratings on Cellu Tissue Holdings Inc.'s senior secured notes, following the announcement that the company upsized its 9.75% senior secured notes to $222 million from $182 million. The notes are rated 'B', the same as the corporate credit rating on Cellu Tissue, with a recovery rating of '4', indicating S&P's expectation for average recovery (30% to 50%) in the event of a payment default. The company issued the notes under the existing indenture dated March 12, 2004. Cellu Tissue used proceeds from the notes along with an equity investment by its controlling shareholder, Weston Presidio, to finance the acquisition of Atlantic Paper & Foil Corp. As previously stated in Standard & Poor's bulletin published on RatingsDirect on July 7, 2008, the acquisition has no impact on the ratings or outlook of Cellu Tissue. Ratings List Cellu Tissue Holdings Inc. Corporate credit rating B/Stable/-- Senior Secured $222 million senior secured notes due 2010 B Recovery rating 4 CHARYS HOLDING: Wants Exclusive Plan Filing Extended Until Aug. 4 ----------------------------------------------------------------- Charys Holding Company Inc. and Crochet & Borel Services Inc. ask the U.S. Bankruptcy Court for the District of Delaware to extend until Aug. 4, 2008, the exclusive period within which the Debtors may file a Chapter 11 plan. The Debtors also ask the Court to extend the exclusive solicitation period until Oct. 3, 2008. The exclusive period to file a Chapter 11 plan will expire on July 15, 2008, and the exclusive period to solicit acceptances of that plan will expire on Sept. 10, 2008. The Court will consider the Debtors' motion on Aug. 18, 2008, 11:00 a.m. at 824 Market Street, 6th Floor, Courtroom No. 1, Wilmington, Delaware. Objections, if any, are due Aug. 11, 2008, 4:00 p.m. The Debtors had said that the extension of time will provide sufficient time to negotiate, propose, confirm and consummate a consensual Chapter 11 plan. The Debtors said they have made significant progress during their Chapter 11 bankruptcy cases. They have reached agreements with majority of their creditors and are in the process of finalizing the agreements, which will be included into the Chapter 11 plan. About Charys Holding Headquartered in Atlanta, Georgia, Charys Holding Co., Inc., -- http://www.charys.com/-- provide remediation & reconstruction and wireless communications & data infrastructure. The company and its Crochet & Borel Services, Inc. subsidiary filed for Chapter 11 protection on Feb. 14, 2008 (Bankr. Del. Case No.08- 10289). Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. The U.S. Trustee for Region 3 appointed five creditors to serve on an Official Committee of Unsecured Creditors. The Committee selected Morris Nichols Arsht & Tunnell LLP as Delaware co-counsel. When the Debtors filed for protection from their creditors, it listed total assets of $245,000,000 and total debts of $255,000,000. CITYSCAPE HOME: Moody's Assigns Underlying Rating of B3 to Notes ---------------------------------------------------------------- Moody's Investors Service published the underlying rating on the Class A-5 Notes issued by Cityscape Home Equity Loan Trust 1996-2, and guaranteed by Financial Security Assurance Inc. (Aaa). The Current Rating is Aaa. The Underlying Rating is B3. The underlying rating reflect the intrinsic credit quality of the notes in the absence of the guarantee. The current rating on the following notes is consistent with Moody's practice of rating insured securities at the higher of the guarantor's insurance financial strength rating or any underlying rating that is public. CLAIRE'S STORES: Zimmermann Resigns as President for North America ------------------------------------------------------------------ Claire's Stores, Inc. disclosed that John A. Zimmermann resigned as President of Claire's North America, effective July 7, 2008, for personal reasons. Starting as an executive trainee in 1981 with John Wanamaker, the Philadelphia, Pennsylvania-based department store, Mr. Zimmermann went on to hold senior merchandising and executive positions with retail chains that included Federated Department Stores, The Children's Place and Bon Marche, Carter Hawley Hale's The Broadway Stores and Contempo Casuals, as well as Bradlees. At Zale Corp., as a Corporate Senior Vice President and President of Zale Canada Company, he led a successful turnaround of the company. In his most recent Zale assignment as President, North America, a 990-store $1.4 billion jewelry retailer with units in the U.S., Canada and Puerto Rico, he addressed challenging issues that embraced merchandising, sales, marketing and operational improvement. Headquartered in Pembroke Pines, Florida, Claire's Stores Inc. (NYSE: CLE) -- http://www.clairestores.com/-- is a specialty retailer of value-priced jewelry and accessories for girls and young women through its two store concepts: Claire's and Icing. While the latter operates only in North America, Claire's operates worldwide. As of May 3, 2008, Claire's Stores, Inc. operated 3,053 stores in North America and Europe. Claire's Stores Inc. also operates through its subsidiary, Claire's Nippon Co. Ltd., 201 stores in Japan as a 50:50 joint venture with AEON Co. Ltd. The company also franchises 169 stores in the Middle East, Turkey, Russia, South Africa, Poland and Guatemala. * * * As reported in the Troubled Company Reporter on May 6, 2008, Standard & Poor's Ratings Services lowered its corporate credit rating on Claire's Stores Inc. to 'B-' from 'B'. At the same time, S&P lowered the ratings on the company's $1.65 billion senior secured credit facilities to 'B' from 'B+', its $600 million senior unsecured notes to 'CCC+' from 'B-', and its $335 million senior subordinated notes to 'CCC' from 'CCC+'. The outlook is negative. COLONIAL DESIGN: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Colonial Design, Inc. P.O. Box 1513 Corinth, MS 38834 Bankruptcy Case No.: 08-12657 Type of Business: The Debtor manufactures miscellaneous products and merchandises including gifts and novelties. Chapter 11 Petition Date: July 9, 2008 Court: Northern District of Mississippi (Aberdeen) Debtor's Counsel: Craig M. Geno, Esq. E-mail: cmgeno@harrisgeno.com Harris Jernigan & Geno, PLLC P.O. Box 3380 Ridgeland, MS 39158-3380 Tel: (601) 427-0048 Estimated Assets: $500,000 to $1 million Estimated Debts: $1 million to $10 million The Debtor did not file a list of its largest unsecured creditors. CONTINENTAL AIRLINES: Posts $58MM Pretax Charge for Capacity Cuts ----------------------------------------------------------------- Continental Airlines, Inc. recorded a number of special items during the second quarter of 2008. The special gains (losses) are: (in millions) Operating special charge (pretax) $(58) Non-operating items (pretax): Gain on sale of COPA stock 78 Write down of student loan-related auction rate securities (29) Total non-operating gains 49 Income taxes: Special tax credit 28 Tax effect of special items 3 Total special items (after tax) $22 The Wall Street Journal's Kathy Shwiff reports that the pretax charge is in relation to the airline company's capacity reductions slated for September this year. As disclosed in the Troubled Company Reporter on June 6, 2008, Continental disclosed, in a letter and employee bulletin, significant reductions in flying and staffing that are necessary for the company to further adjust to today's extremely high cost of fuel. These actions are among many steps Continental is taking to respond to record-high fuel prices as the industry faces its worst crisis since 9/11. The price of Gulf Coast jet fuel closed on June 4 at $151.26 -- about 75% higher than what it was a year ago. At that price and at its current capacity, its fuel expense this year would be $2.3 billion more than it was last year. That increase alone amounts to about $50,000 per employee. Starting in September, at the conclusion of the peak summer season, Continental will reduce its flights, with fourth quarter domestic mainline departures to be down 16% year-over-year. This will result in a reduction of domestic mainline capacity (available seat miles, or ASMs) by 11% in the fourth quarter, compared to the same period last year. As a result of the capacity reductions, Continental will need fewer co-workers worldwide to support the reduced flight schedule. About 3,000 positions, including management positions, will be eliminated through voluntary and involuntary separations, with the majority expected to be through voluntary programs. The company will offer voluntary programs in an effort to reduce the number of co-workers who will be furloughed or involuntarily terminated due to the capacity cuts. Continental Airlines Inc. (NYSE: CAL) -- http://continental.com/ -- is the world's fifth largest airline. Continental, together with Continental Express and Continental Connection, has more than 2,900 daily departures throughout the Americas, Europe and Asia, serving 144 domestic and 139 international destinations. More than 500 additional points are served via SkyTeam alliance airlines. With more than 45,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with Continental Express, carries approximately 69 million passengers per year. * * * The Troubled Company Reporter said May 21, 2008, that Moody's Investors Service affirmed the B2 Corporate Family Rating of Continental Airlines, Inc. as well as the ratings of its outstanding corporate debt instruments and selected classes of Continental's Enhanced Equipment Trust Certificates. The Speculative Grade Liquidity rating was lowered to SGL-3 from SGL- 2. The outlook has been changed to negative from stable. As reported by the Troubled Company Reporter on April 22, 2008, Standard & Poor's Ratings Services revised its rating outlook on Continental Airlines Inc. (B/Negative/B-3) to negative from stable. S&P also placed its ratings on selected enhanced equipment trust certificates that are secured by regional jets on CreditWatch with negative implications. As reported in the Troubled Company Reporter on Dec. 27, 2007, Fitch Ratings affirmed Continental Airlines 'B-' issuer default rating with a stable outlook. DELTA AIR: Workers Ask Congress to Limit Oil Speculation -------------------------------------------------------- For the past two weeks, employees at Delta Air Lines Inc. and Northwest Airlines Corporation have together sent more than 20,000 messages to Congressional leaders, urging them to pass legislation that will limit rampant oil speculation. Northwest and Delta also joined 10 other airlines -- which are part of broad business, labor and consumer coalition -- in sending e-mail messages to frequent flier databases, asking customers to join them in fighting the high cost of fuel. Since the email campaign was 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/ NWA Spurs Campaign to Lower Fuel Prices NWA 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] result 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] result 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. 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). 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). DISTRIBUTED ENERGY: U.S. Trustee Forms 3-Member Creditors Panel --------------------------------------------------------------- Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed three creditors to serve on the Official Committee of Unsecured Creditors for Distributed Energy Systems Corp. and Northern Power Systems, Inc. The creditors committee members are: 1) Delstar Energie Inc. Attn: Sebastian Callegher 12885 Jean Grou Montreal, Quebec, H1A 3N6 Tel: (514) 642-8220 Fax: (514) 498-9559 2) Chloride France SA Attn: Frederic Chara 30 Avenue Montgocfier Chassieu, France Tel: 33-4-78-40-1356 Fax: 33-78-90-3791 3) Valley Power Systems, Inc. Attn: Jonathan Trott 425 S. Hacienda Boulevard City of Industry, CA 91745 Tel: (626) 934-6211 Fax: (626) 934-6200 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 Distributed Energy Based in Wallingford, Connecticut, Distributed Energy Systems (Nasdaq: DESC) -- http://www.distributed-energy.com/-- through its subsidiaries, engages in the design, development, manufacture, and sale of on-site hydrogen gas delivery systems worldwide. Distributed Energy Systems Corp. and its wholly owned subsidiary, Northern Power systems Inc., filed for Chapter 11 bankruptcy protection on May 4, 2008 (Bankr. D. Del. Lead Case No. 08-11101). Robert S. Brady, Esq. and Robert F. Poppiti, Jr., at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims agent. DISTRIBUTED ENERGY: Files Schedules of Assets and Liabilities ------------------------------------------------------------- Distributed Energy Systems Corp. and Northern Power Systems, Inc., delivered to the United States Bankruptcy Court for the District of Delaware their schedules of assets and liabilities disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $ 1,737,150 B. Personal Property 17,856,237 C. Property Claimed as Exempt D. Creditors Holding $38,957,087 Secured Claims E. Creditors Holding 438,434 Unsecured Priority Claims F. Creditors Holding 4,163,192 Unsecured Nonpriority Claims ----------- ----------- TOTAL $19,593,387 $43,558,713 About Distributed Energy Based in Wallingford, Connecticut, Distributed Energy Systems (Nasdaq: DESC) -- http://www.distributed-energy.com/-- through its subsidiaries, engages in the design, development, manufacture, and sale of on-site hydrogen gas delivery systems worldwide. Distributed Energy Systems Corp. and its wholly owned subsidiary, Northern Power systems Inc., filed for Chapter 11 bankruptcy protection on May 4, 2008 (Bankr. D. Del. Lead Case No. 08-11101). Robert S. Brady, Esq. and Robert F. Poppiti, Jr., at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Debtors selected Epiq Bankruptcy Solutions LLC as their claims agent. FANNIE MAE: Fed OKs Lending Plan; Treasury to Up Credit Line ------------------------------------------------------------ The Board of Governors of the Federal Reserve System granted the Federal Reserve Bank of New York on Sunday authority to lend to Fannie Mae and Freddie Mac should such lending prove necessary. Any lending would be at the primary credit rate and collateralized by U.S. government and federal agency securities. The authorization is intended to supplement the Treasury's existing lending authority and to help ensure the ability of Fannie Mae and Freddie Mac to promote the availability of home mortgage credit during a period of stress in financial markets. The Wall Street Journal's James R. Hagerty, Deborah Solomon and Sudeep Reddy report that the United States Treasury said it plans to seek approval from Congress for a temporary increase in a long- standing Treasury line of credit for Fannie and Freddie. Treasury's 3-Part Plan In a statement on Sunday, Treasury Secretary Henry M. Paulson, Jr. said that he has consulted in recent days with the Federal Reserve, the Office of Federal Housing Enterprise Oversight, the Securities and Exchange Commission, Congressional leaders of both parties and with the two companies to develop a three-part plan for immediate action: 1. As a liquidity backstop, the plan includes a temporary increase in the line of credit Fannie and Freddie have with Treasury. Treasury would determine the terms and conditions for accessing the line of credit and the amount to be drawn. 2. To ensure Fannie and Freddie have access to sufficient capital to continue to serve their mission, the plan includes temporary authority for Treasury to purchase equity in either of the two GSEs if needed. Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer. 3. To protect the financial system from systemic risk going forward, the plan strengthens the GSE regulatory reform legislation currently moving through Congress by giving the Federal Reserve a consultative role in the new GSE regulator's process for setting capital requirements and other prudential standards. "The President has asked me to work with Congress to act on this plan immediately," according to Mr. Paulson. Mr. Paulson said, "Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies. Their support for the housing market is particularly important as we work through the current housing correction." "GSE debt is held by financial institutions around the world. Its continued strength is important to maintaining confidence and stability in our financial system and our financial markets. Therefore we must take steps to address the current situation as we move to a stronger regulatory structure." "I look forward to working closely with the Congressional leaders to enact this legislation as soon as possible, as one complete package." The Wall Street Journal notes that Fannie's and Freddie's lines of credit are currently capped at $2,250,000,000 each. The Treasury, the Journal notes, didn't say to what level they would be increased. It's also not clear what role the Fed might play, the Journal adds. New Housing Bill WSJ says the Senate late on Friday passed a housing package that would create a new, stronger regulator for Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. The House passed a similar bill in May, but the process since then has been fraught with unexpected complications, WSJ says. WSJ says the bill could pick up speed now as lawmakers only need to resolve a few differences, and potentially add the changes. Daniel H. Mudd, Fannie Mae's President and CEO, said, "Fannie Mae appreciates [the Federal Reserve and U.S. Treasury] announcements and the expressions of support for the GSEs as shareholder-owned companies that play a critical role in the U.S. housing finance system. We are grateful for the leadership of Secretary Paulson and Chairman Bernanke. We also look forward to working with Treasury, OFHEO and Congress on swift passage of the new legislative proposals, as well as the important initiatives underway to assist homeowners and help restore stability to the housing market. We continue to hold more than adequate capital reserves and maintain access to liquidity from the capital markets. Given the market turmoil, having options to access provisional sources of liquidity if needed will help to strengthen overall confidence in the market. We will continue to do our part to provide liquidity, stability and affordability to the housing market now and in the future." Richard F. Syron, chairman and CEO of Freddie Mac, said, "We are heartened by [the Federal Reserve and U.S. Treasury] announcement and the steps outlined by the U.S. Department of the Treasury and the Federal Reserve Board. This affirmation of the important role of the GSEs, and that we should continue to operate as shareholder-owned companies, should go a long way toward reassuring world markets that Freddie Mac and Fannie Mae will continue to support America's homebuyers and renters. I applaud Secretary Paulson and Chairman Bernanke for their leadership and encourage Congress to act quickly to pass the new legislative proposals." BankruptcyLaw360 says Freddie Mac and Fannie Mae are not likely to be nationalized, according to experts. It has long been assumed that the U.S. government would step in to bail out Fannie Mae and Freddie Mac rather than have them file for bankruptcy, but exactly what steps it would take remain to be seen, according to BankruptcyLaw360. Fannie & Freddie Adequately Capitalized As reported by the Troubled Company Reporter on July 11, 2008, James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight, issued a statement assuring that Fannie Mae and Freddie Mac are adequately capitalized, after the companies' stocks tumbled to the lowest in 17 years in New York trading when: -- 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. Mr. Poole had 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. Lockhart, the TCR related, said Fannie Mae and Freddie Mac have large liquidity portfolios, access to the debt market and more than $1,500,000,000,000 in unpledged assets. Mr. Lockhart added that OFHEO has been monitoring and continues to monitor closely Fannie Mae, Freddie Mac and the mortgage and financial markets. 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. WSJ says Fannie and Freddie own or guarantee about $5,200,000,000,000 of U.S. home mortgages, nearly half of all mortgages outstanding: _________________________________ | | | $3,000,000,000,000 Fannie Mae | |_________________________________| | $2,200,000,000,000 Freddie Mac | |_________________________________| | | | | | $6,000,000,000,000 all others | | | | | |_________________________________| Chuck Greener, Senior Vice President at Fannie Mae, confirmed on Friday the GSE's capital adequacy, pointing out that Fannie Mae raised $7,400,000,000 of additional capital in May, for a total of more than $14,000,000,000 in new capital since November of 2007. "Our capital level is substantially above both our statutory minimum capital and the OFHEO-required 15 percent surplus over minimum capital. In fact, we have more core capital, and a higher surplus over our regulatory requirement, than at any time in this company's history," Mr. Greener said. Mr. Greener also noted that Fannie Mae has access to ample sources of liquidity, including access to the debt markets. The company issued more than $24,000,000,000 in debt last week, including a $3,000,000,000 Benchmark Notes(R) sale that was oversubscribed. "Fannie Mae remains well equipped to fulfill our critical role in the housing finance system, today and in the future. We will provide a full financial update and outlook when we report second- quarter results in early August," Mr. Greener added. Freddie Mac also confirmed Friday that is adequately capitalized. Freddie said it is in the process of finalizing its results, and it estimates that at June 30, 2008, it will have a substantial capital cushion above the 20% mandatory target surplus established by OFHEO and a much greater surplus above the statutory minimum capital requirement. Freddie Mac said in a statement it is not under any mandate to raise capital in the near term. Freddie also noted that there are a number of options to manage its capital position. According to Freddie, the average rate of run-off on its retained portfolio is currently about $10,000,000,000 per month, and not replacing that run-off would free up approximately $250,000,000 of capital per month. Over the course of a year, this would free up approximately $2,500,000,000 to $3,000,000,000 of additional capital if the run-off rate remains constant, Freddie explained. Freddie Mac is also could consider reducing its common stock dividend. Freddie's current annual common stock dividend is roughly $650,000,000. Freddie Mac also indicated that its liquidity position remains strong as a result of the combination of: -- access to the debt markets at attractive spreads; and -- an unencumbered agency MBS portfolio of roughly $550,000,000,000 which could serve as collateral for short-term borrowings. WSJ also notes that Freddie has announced plans to raise $5,500,000,000 by selling common and preferred shares, but it is likely to wait for a calmer market. 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: Names Ken Czubay as Head of U.S. Sales and Marketing ---------------------------------------------------------------- Ford Motor Company disclosed the appointment of veteran auto industry executive and retailer Ken Czubay as vice president of U.S. Sales and Marketing. Mr. Czubay, who has 38 years of automotive experience and served in a variety of management and executive roles at Ford from 1970 to 1983, rejoins the company from his current positions as president of Southeast Toyota Distributors, LLC, executive vice president of parent company JM Family Enterprises, Inc., and president of JM Lexus, the world's largest volume Lexus dealership. Mr. Czubay, 59, joins Ford effective July 16 and will oversee the day-to-day sales and marketing of Ford, Lincoln and Mercury vehicles in the U.S. He will report to Jim Farley, Ford group vice president of Marketing and Communications. "Having worked closely with Ken over the years, I can tell you that he's truly one of the top sales executives in the auto industry with a long track record of success," Mr. Farley said. "Ken knows Ford, he knows the auto industry, and has a deep understanding of dealers and all facets of the retailing side of the business. We are fortunate to be bringing in someone with Ken's unique experience and talent to run U.S. Sales and Marketing." Mr. Czubay's day-to-day leadership of U.S. Sales and Marketing will allow Mr. Farley to work more closely with Derrick Kuzak, Ford group vice president of Global Product Development, to accelerate the company's "One Ford" global product vision. In addition, Mr. Farley will concentrate on enhancing and clarifying the Blue Oval's brand image across all markets and oversee the marketing and communications for a host of new vehicles coming soon to showrooms. In the U.S., Mr. Farley and Mr. Czubay will work together closely on advertising, sales strategies and product introductions. "The addition of Ken Czubay will strengthen Ford's leadership team at a key time for Ford and its dealers," Mark Fields, Ford president of the Americas, said. "With Ken joining Jim Farley and the rest of the team, Ford is well positioned to tackle the current market challenges and flourish in the future with the great new vehicles we are bringing to market." Reporting to Mr. Czubay will be: * John Felice, who becomes general marketing manager, Ford, Lincoln Mercury. Mr. Felice, who had been general market manager for Ford, is adding Lincoln Mercury marketing to his duties. * Randy Ortiz, general sales manager, Ford, Lincoln Mercury; * Kevin Koswick, director, North American Fleet, Lease and Re- marketing Organization; and * David Thomas, who was named to an expanded role of director, North American Order Management and Sales Planning. "I am joining Ford for the chance to work with a group of committed, energized colleagues who are really embracing the challenge of restoring a great American icon," Mr. Czubay said. "Once you have been at Ford, it's always in your blood. I couldn't be more excited to be coming home." Mr. Czubay joined Ford in 1970 as a financial analyst with Ford Motor Credit Company and went on to work in several positions for Ford Division and Lincoln Mercury. In 1983, he joined Nissan North America in California, where he worked in sales and marketing until 1987, when he took a position as an executive with the Suburban Collection, a group of auto dealerships based in Troy, Michigan. In 1990, Mr. Czubay joined Deerfield, Florida-based Southeast Toyota Distributors, the largest independent distributor of Toyota and Scion vehicles in the world, where he has held several executive positions. Born in Hamtramck, Michigan, and raised in the Detroit area, Mr. Czubay graduated from Wayne State University in Detroit with a bachelor's degree in business administration. He and his wife, Jane, have two children. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The company provides financial services through Ford Motor Credit Company. The company has operations in Japan in the Asia Pacific region, through Ford Japan Limited. * * * 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: Fed OKs Lending Plan; Treasury to Up Credit Line ------------------------------------------------------------- The Board of Governors of the Federal Reserve System granted the Federal Reserve Bank of New York on Sunday authority to lend to Fannie Mae and Freddie Mac should such lending prove necessary. Any lending would be at the primary credit rate and collateralized by U.S. government and federal agency securities. The authorization is intended to supplement the Treasury's existing lending authority and to help ensure the ability of Fannie Mae and Freddie Mac to promote the availability of home mortgage credit during a period of stress in financial markets. The Wall Street Journal's James R. Hagerty, Deborah Solomon and Sudeep Reddy report that the United States Treasury said it plans to seek approval from Congress for a temporary increase in a long- standing Treasury line of credit for Fannie and Freddie. Treasury's 3-Part Plan In a statement on Sunday, Treasury Secretary Henry M. Paulson, Jr. said that he has consulted in recent days with the Federal Reserve, the Office of Federal Housing Enterprise Oversight, the Securities and Exchange Commission, Congressional leaders of both parties and with the two companies to develop a three-part plan for immediate action: 1. As a liquidity backstop, the plan includes a temporary increase in the line of credit Fannie and Freddie have with Treasury. Treasury would determine the terms and conditions for accessing the line of credit and the amount to be drawn. 2. To ensure Fannie and Freddie have access to sufficient capital to continue to serve their mission, the plan includes temporary authority for Treasury to purchase equity in either of the two GSEs if needed. Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer. 3. To protect the financial system from systemic risk going forward, the plan strengthens the GSE regulatory reform legislation currently moving through Congress by giving the Federal Reserve a consultative role in the new GSE regulator's process for setting capital requirements and other prudential standards. "The President has asked me to work with Congress to act on this plan immediately," according to Mr. Paulson. Mr. Paulson said, "Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies. Their support for the housing market is particularly important as we work through the current housing correction." "GSE debt is held by financial institutions around the world. Its continued strength is important to maintaining confidence and stability in our financial system and our financial markets. Therefore we must take steps to address the current situation as we move to a stronger regulatory structure." "I look forward to working closely with the Congressional leaders to enact this legislation as soon as possible, as one complete package." The Wall Street Journal notes that Fannie's and Freddie's lines of credit are currently capped at $2,250,000,000 each. The Treasury, the Journal notes, didn't say to what level they would be increased. It's also not clear what role the Fed might play, the Journal adds. New Housing Bill WSJ says the Senate late on Friday passed a housing package that would create a new, stronger regulator for Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. The House passed a similar bill in May, but the process since then has been fraught with unexpected complications, WSJ says. WSJ says the bill could pick up speed now as lawmakers only need to resolve a few differences, and potentially add the changes. Daniel H. Mudd, Fannie Mae's President and CEO, said, "Fannie Mae appreciates [the Federal Reserve and U.S. Treasury] announcements and the expressions of support for the GSEs as shareholder-owned companies that play a critical role in the U.S. housing finance system. We are grateful for the leadership of Secretary Paulson and Chairman Bernanke. We also look forward to working with Treasury, OFHEO and Congress on swift passage of the new legislative proposals, as well as the important initiatives underway to assist homeowners and help restore stability to the housing market. We continue to hold more than adequate capital reserves and maintain access to liquidity from the capital markets. Given the market turmoil, having options to access provisional sources of liquidity if needed will help to strengthen overall confidence in the market. We will continue to do our part to provide liquidity, stability and affordability to the housing market now and in the future." Richard F. Syron, chairman and CEO of Freddie Mac, said, "We are heartened by [the Federal Reserve and U.S. Treasury] announcement and the steps outlined by the U.S. Department of the Treasury and the Federal Reserve Board. This affirmation of the important role of the GSEs, and that we should continue to operate as shareholder-owned companies, should go a long way toward reassuring world markets that Freddie Mac and Fannie Mae will continue to support America's homebuyers and renters. I applaud Secretary Paulson and Chairman Bernanke for their leadership and encourage Congress to act quickly to pass the new legislative proposals." BankruptcyLaw360 says Freddie Mac and Fannie Mae are not likely to be nationalized, according to experts. It has long been assumed that the U.S. government would step in to bail out Fannie Mae and Freddie Mac rather than have them file for bankruptcy, but exactly what steps it would take remain to be seen, according to BankruptcyLaw360. Fannie & Freddie Adequately Capitalized As reported by the Troubled Company Reporter on July 11, 2008, James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight, issued a statement assuring that Fannie Mae and Freddie Mac are adequately capitalized, after the companies' stocks tumbled to the lowest in 17 years in New York trading when: -- 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. Mr. Poole had 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. Lockhart, the TCR related, said Fannie Mae and Freddie Mac have large liquidity portfolios, access to the debt market and more than $1,500,000,000,000 in unpledged assets. Mr. Lockhart added that OFHEO has been monitoring and continues to monitor closely Fannie Mae, Freddie Mac and the mortgage and financial markets. 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. WSJ says Fannie and Freddie own or guarantee about $5,200,000,000,000 of U.S. home mortgages, nearly half of all mortgages outstanding: _________________________________ | | | $3,000,000,000,000 Fannie Mae | |_________________________________| | $2,200,000,000,000 Freddie Mac | |_________________________________| | | | | | $6,000,000,000,000 all others | | | | | |_________________________________| Chuck Greener, Senior Vice President at Fannie Mae, confirmed on Friday the GSE's capital adequacy, pointing out that Fannie Mae raised $7,400,000,000 of additional capital in May, for a total of more than $14,000,000,000 in new capital since November of 2007. "Our capital level is substantially above both our statutory minimum capital and the OFHEO-required 15 percent surplus over minimum capital. In fact, we have more core capital, and a higher surplus over our regulatory requirement, than at any time in this company's history," Mr. Greener said. Mr. Greener also noted that Fannie Mae has access to ample sources of liquidity, including access to the debt markets. The company issued more than $24,000,000,000 in debt last week, including a $3,000,000,000 Benchmark Notes(R) sale that was oversubscribed. "Fannie Mae remains well equipped to fulfill our critical role in the housing finance system, today and in the future. We will provide a full financial update and outlook when we report second- quarter results in early August," Mr. Greener added. Freddie Mac also confirmed Friday that is adequately capitalized. Freddie said it is in the process of finalizing its results, and it estimates that at June 30, 2008, it will have a substantial capital cushion above the 20% mandatory target surplus established by OFHEO and a much greater surplus above the statutory minimum capital requirement. Freddie Mac said in a statement it is not under any mandate to raise capital in the near term. Freddie also noted that there are a number of options to manage its capital position. According to Freddie, the average rate of run-off on its retained portfolio is currently about $10,000,000,000 per month, and not replacing that run-off would free up approximately $250,000,000 of capital per month. Over the course of a year, this would free up approximately $2,500,000,000 to $3,000,000,000 of additional capital if the run-off rate remains constant, Freddie explained. Freddie Mac is also could consider reducing its common stock dividend. Freddie's current annual common stock dividend is roughly $650,000,000. Freddie Mac also indicated that its liquidity position remains strong as a result of the combination of: -- access to the debt markets at attractive spreads; and -- an unencumbered agency MBS portfolio of roughly $550,000,000,000 which could serve as collateral for short-term borrowings. WSJ also notes that Freddie has announced plans to raise $5,500,000,000 by selling common and preferred shares, but it is likely to wait for a calmer market. 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. GAVILON GROUP: Sold to Ospraie Fund for $2.8 Billion ---------------------------------------------------- ConAgra Foods, Inc. completed the sale of its commodity trading and merchandising operations conducted by ConAgra Trade Group. ConAgra Trade Group was sold to an investor group led by Ospraie Special Opportunities Fund, which also includes global growth investor General Atlantic LLC and a private investment fund managed by Soros Fund Management LLC. ConAgra Trade Group was sold for approximately $2.8 billion, net of transaction costs and subject to post-closing adjustments. The final proceeds are higher than originally estimated due to increases in ConAgra Trade Group's book value, reflecting gains and additional working capital. The Ospraie Special Opportunities Fund is an affiliate of Ospraie Management, a leading investment management firm focused exclusively on commodities and basic industries with approximately $9 billion under management. The sold businesses will now operate as The Gavilon Group, LLC. The before tax proceeds from the sale include approximately $2.2 billion of cash, net of transaction costs, and $550 million of payment-in-kind debt securities of a newly created holding company of The Gavilon Group. The weighted average interest rate on the debt securities is 10.82%. The face amount of debt securities received is higher than originally expected due to the greater overall transaction proceeds. ConAgra Foods also received a warrant exercisable for approximately 5% of the issued common equity of a newly created Gavilon holding company. The percentage is slightly lower than originally expected due to contract terms linking the warrant percentage to the investor group's level of equity investment. Ospraie and its co-investors made a greater overall equity investment in the business, reducing the warrant interest but creating what the company believes is a stronger capital structure in relation to the payment-in-kind notes. Although the purchase agreement granted ConAgra Foods the right to a portion of The Gavilon Group's earnings during the remainder of calendar 2008, the maximum earnings threshold in the applicable profit sharing formula was reached prior to closing, removing any future benefit to ConAgra Foods from this provision. Non-cash consideration received, principally the payment-in-kind debt securities, will be recorded at fair value to reflect an appropriate discount based on the features of the securities and current market conditions. Also, ConAgra Foods disclosed that its Board of Directors has authorized a $500 million increase to the company's existing share buyback program. Shares are expected to be repurchased periodically, depending on market conditions, and through open- market or privately negotiated transactions. The Board of Directors has authorized management to engage in an accelerated share repurchase arrangement, yet to be negotiated. ConAgra Foods will discuss its capital allocation plans in detail during its fourth quarter earnings release Thursday, June 26. The specifics of the plans are still being developed, but are expected to include significant application of the after-tax cash proceeds from the transaction toward share repurchases, and the application of a significant amount toward reducing interest bearing debt, primarily commercial paper balances that financed the greater- than-planned working capital balances at ConAgra Trade Group. The company expects most of this activity to be completed in the first half of fiscal 2009 and will update investors on its progress in its regularly scheduled communications. Greg Heckman, formerly president of ConAgra Foods' commercial businesses, is now chief executive of The Gavilon Group which will remain in its current offices in Omaha. The Gavilon Group will conduct grain and byproducts merchandising and fertilizer distribution, as well as agriculture, energy and other commodity trading activities, and risk management services. Rob Sharpe has been named president, Commercial Foods, and will assume responsibility for leading the remaining commercial businesses, operated as the company's Food & Ingredients reporting segment. He will also serve as executive vice president, External Affairs, having served as executive vice president, legal and external affairs. About Ospraie Management, LLC Headquartered in New York City and established in 1999, Ospraie Management, LLC -- http://www.ospraie.com/-- is an investment management firm focused exclusively on commodities and basic industries that manages over $9 billion in assets together with its affiliates. About General Atlantic, LLC Headquartered in Connecticut, General Atalantic, LLC -- www.generalatlantic.com -- is a global growth equity firm providing capital and strategic support for growth companies. Founded in 1980, the company manages approximately $17 billion in capital and has more than 75 investment professionals based in Greenwich, New York, Palo Alto, London, Dusseldorf, Hong Kong, Mumbai and Sao Paulo. About ConAgra Foods, Inc. ConAgra Foods, Inc., (NYSE: CAG) -- http://www.conagrafoods.com-- is a North American packaged food company, serving consumer grocery retailers, as well as restaurants and other foodservice establishments. Popular ConAgra Foods consumer brands include: Banquet, Chef Boyardee, Egg Beaters, Healthy Choice, Hebrew National, Hunt's, Marie Callender's, Orville Redenbacher's, PAM and many others. About The Gavilon Group, LLC The Gavilon Group, LLC -- www.gavilon.com -- provides physical distribution, merchandising and trading across basic inputs and outputs, including grains, feed ingredients, fertilizer and energy products. The company also provides comprehensive logistical and risk-management services to customers in the agriculture and energy markets. GAVILON GROUP: Moody's Puts Ba3 Rating After ConAgra Deal --------------------------------------------------------- Moody's Investors Service assigned a Ba3 corporate family rating to The Gavilon Group, LLC in connection with the $2.6 billion acquisition of the Trading and Merchandizing operations of ConAgra Foods Inc. by a group of investors led by Ospraie Special Opportunities Fund, an affiliate of Ospraie Advisors LP. Moody's also assigned a Ba1 rating to the company's $1.75 billion asset backed revolving credit facility. The sponsors will utilize a portion of the ABL ($450-500 million) along with a $550 million seller note (unsecured debt at Gavilon Intermediate Holdings, LLC, the parent of Gavilon) and $1.72 billion of cash equity to purchase these assets from ConAgra. The ratings outlook is stable; this is a first time rating for Gavilon. Moody's assigned these ratings to: The Gavilon Group, LLC: -- Corporate Family Rating, Ba3 -- Probability of Default Rating, Ba3 -- $1,750 million Secured Asset-based Lending Facility due 2014, Ba1 (LGD 2, 25%) These ratings are subject to the review of the executed documents. The Ba3 corporate family rating reflects the company's modest scale relative to other rated, global companies in the merchandizing and distribution of agricultural commodities, the size of its trading and distribution operations for non- agricultural products, lack of meaningful vertical forward integration, elevated leverage when incorporating its expected use of the credit facility and letters of credit, and the lack of trading history as an independent company owned by a financial firm. However, Moody's believes these negatives are offset by the relatively large equity contribution from the sponsors, unusually strong credit metrics over the past year, an experienced management team, a detailed risk management approach, and incentive compensation for traders that is aligned with the company's risk management objectives. Financial metrics are expected to be stronger than for most other Ba3 CFR companies over the next 12 months (fiscal 2009) due to the substantial increase in many commodity prices and increased price volatility. Hence, the rating outlook is stable. If prices and margins remain elevated relative to historic norms on the merchandizing and distribution business, and the company's risk management policies and procedures effectively limit the negative impact of increased volatility over the next two to three years, there could be upside to the assigned ratings. However, if commodity price volatility increases the variability of earnings and cash flow over time, and financial ratios remain weaker than currently projected, Moody's could reassess the appropriateness of the Ba3 CFR. The ratings incorporate the expectation that the sponsor has the ability, under the ABL facility, to repay the seller note with a senior secured Term Loan B at Gavilon. The Term Loan, if issued, would have a first lien on the fixed assets and a second lien on the working capital. In addition, the ratings assume that the sponsors' cash equity will remain in the business until it has developed a meaningful track record of successfully managing its hedging and trading operations during a period when most of the commodities it distributes are substantially higher than prices experienced over the past decade. Any payment to the sponsors that is not envisioned by the current ABL agreement would likely have a negative impact on the ratings. The senior secured asset-based credit facility is rated Ba1, two notches above the CFR due to a working capital borrowing base formula combined with terms and conditions that provide more onerous restrictions and more timely access to information, if availability declines below $175 million. The rating is tempered by the recent increases in many commodity prices and concern that future volatility may increase relative to historic norms. The $550 million seller note is unsecured and exists at a holding company one level above Gavilon. The Gavilon Group, LLC, headquartered in Omaha, Nebraska, is a global merchandiser and distributor of agricultural commodities, and has a substantial business involved in the trading and distribution of non-agricultural products. Gavilon had gross sales of almost $18 billion for the LTM ending May 25, 2008. GREEKTOWN CASINO: Committee Taps Clark Hill as Bankruptcy Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors in Greektown Casino LLC and its debtor-affiliates' Chapter 11 cases obtained permission from the U.S. Bankruptcy Court for the Eastern District of Michigan to retain Clark Hill Plc as its general counsel. Gent Culver, chairperson of the Committee, says that it selected Clark Hill because of the firm's recognized expertise in business reorganizations and creditors' rights, and its substantial experience in representing unsecured creditors' committees in Chapter 11 cases. As the Committee's general counsel, Clark Hill will: (a) advise and consult with the Committee, and consult with the Debtors and other parties-in-interest concerning: * questions arising from the administration of the Debtors' bankruptcy cases, * the rights and remedies of the Committee and its constituents vis-a-vis the assets of the Debtors' bankruptcy estates and the administration of their Chapter 11 cases, * the formulation of a proposed plan of reorganization, and * the claims and interests of secured and unsecured creditors, equity holders, and other parties in interest in the Debtors' Chapter 11 cases; (b) analyze, appear for, prosecute, defend, and represent the Committee in contested matters and adversary proceedings arising in or related to the Debtors' bankruptcy cases; and (c) generally represent the Committee with respect to the Debtors' Chapter 11 cases and related proceedings, and to assist the Committee with respect to matters under Section 1103 of the Bankruptcy Code. Clark Hill's professionals will be paid at these rates: Professional Hourly Rate ------------ ----------- Members $250 to $560 Senior Attorneys $235 to $325 Associates $160 to $270 Legal Assistants $120 to $190 Robert D. Gordon, Esq., a member of Clark Hill, discloses that he and Joel D. Applebaum, Esq., are the lead professionals of the firm who will render services to the Committee. Mr. Gordon reports that he will charge $425 per hour for his services, while Mr. Applebaum will bill $395 per hour. Mr. Gordon assures the Court that Clark Hill is a "disinterested person," as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. 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). GREEKTOWN CASINO: Wants to Employ Kurtzman Carson as Claims Agent ----------------------------------------------------------------- The proposed counsel for Greektown Casino LLC and its debtor- affiliates, Ryan Heilman, Esq., at Schafer and Weiner, PLLC, in Bloomfield Hills, Michigan, said the Debtors have identified hundreds of entities or persons to which notices must be given, making the employment of an outside claims and noticing agent necessary in the Debtors' bankruptcy cases. The Debtors believe that the noticing and receiving, docketing and maintaining of proofs of claim would impose heavy administrative and other burdens upon the Court and the Office of the Clerk of Court. Mr. Heilman relates that preparing and serving the notices on all of the Debtors' creditors and parties in interest, and docketing and maintaining the large number of proofs of claim that may be filed in their Chapter 11 cases would strain the resources of the Clerk's Office. Thus, the Debtors seek authority from the U.S. Bankruptcy Court for the Eastern District of Michigan to employ and retain Kurtzman Carson Consultants LLC as their claims, noticing and balloting agent. Mr. Heilman notes that Kurtzman is well-qualified to perform claims processing and the various services to the Debtors because the firm specializes in providing data processing services to Chapter 11 debtors in connection with administration and reconciliation of claims, as well as administration of plan balloting. As claims agent, Kurtzman will, among others: (a) prepare and serve required notices in the Debtors' Chapter 11 cases, which include: (1) notice of commencement of the Chapter 11 cases and the initial meeting of creditors pursuant to Section 341(a) of the Bankruptcy Code; (2) notice of the claims bar date, if any; (3) notice of objections to claims; (4) notice of any hearings on a disclosure statement and confirmation of a plan of reorganization; and (5) other miscellaneous notices to any entities, as the Debtors or the Court may deem necessary or appropriate for an orderly administration of their Chapter 11 cases; (b) prepare for filing with the Court a certificate or affidavit of service that includes an alphabetical list of persons to whom the mailing; (c) receive and record proofs of claim and proofs of interest filed; (d) create and maintain official claims registers, including these information for each proof of claim or proof of interest: (1) the name of the Debtor; (2) the name and address of the claimant and any agent, if the proof of claim or proof of interest was filed by an agent; (3) the date received; (4) the claim number assigned; and (5) the asserted amount and classification of the claim; (e) implement necessary security measures to ensure the completeness and integrity of the claims registers; and (f) transmit to the Clerk's Office a copy of the claims registers upon request or at agreed upon intervals. (g) perform other administrative and support services related to noticing, claims, docketing, solicitation and distribution as the Debtors or the Clerk's Office may request. The Debtors further seek the Court's authority to permit Kurtzman to act as a noticing agent for any official committees that will be formed in the Debtors' Chapter 11 cases. In addition, the Debtors propose that any noticing expenses incurred by an official committee to become an obligation of the Debtors' estates. The Debtors will retain Kurtzman pursuant to the compensation rates of the Engagement Agreement dated May 28, 2008, between the Debtors and Kurtzman. The Debtors will pay a $50,000 retainer to Kurtzman for services performed and expenses incurred. The Debtors will also pay Kurtzman for reasonable expenses for transportation, lodging, meals, publications, postage and other third-party charges. If those expenses aggregate more than $10,000 in any month, Kurtzman will require an advance payment from the Debtors. To the best of the Debtors' knowledge, Kurtzman is a "disinterested person" as that term defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b), and does not hold or represent an interest adverse to the Debtors' estates. In a separate filing with the Court, Leslie K. Berg, Esq., in behalf of the Office of the United States Trustee for Region 9, tell Judge Shapero that the U.S. Trustee gives it consent to the Debtors' application to employ Kurtzman. 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. 8; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). GREY WOLF: Precision to Offer $10/Share if Basic Merger Fails ------------------------------------------------------------- Precision Drilling Trust said it will ask Grey Wolf Inc.'s board of directors to reconsider its $10.00 per share buyout offer if Grey Wolf shareholders reject a proposed merger with Basic. Grey Wolf shareholders are set to vote on the merger with Basic Energy Services Inc. on July 15, 2008. Precision said its proposal is fully priced and fair to the Grey Wolf shareholders and provides a superior alternative to a merger with Basic. Grey Wolf has repeatedly spurned Precision's advances, saying the Basic deal is better for shareholders, Bizjournals said. In a press statement, Precision said it continues to believe that the combination of Grey Wolf and Precision represents a long-term value creation strategy for both Precision and Grey Wolf securityholders. In the absence of a determination by the board of directors of Grey Wolf that Precision's proposal is likely to result in a superior proposal to Grey Wolf's shareholders as compared to the alternative offered by the proposed merger with Basic. Precision is unable to engage Grey Wolf in negotiations and discussions in relation to its proposal as Grey Wolf is precluded from doing so under the terms of its merger agreement with Basic. According to Bizjournals, reports from proxy advisory firms are split over the proposed Grey Wolf-Basic Energy merger. RiskMetrics and Glass Lewis recommend Grey Wolf investors vote against the proposed merger with Basic Energy, while Proxy Governance Inc. and Egan-Jones suggest that the Basic Energy deal must be supported by shareholders. About Precision Drilling Trust Precision Drilling Trust (NYSE:PDS and TSX:PD.UN) is an unincorporated open-ended investment trust established under the laws of the Province of Alberta, Canada. About Grey Wolf Headquartered in Houston, Texas, Grey Wolf Inc. (AMEX: GW) -- http://www.gwdrilling.com/-- provides turnkey and contract oil and gas land drilling services in the best natural gas producing regions in the United States with a current drilling rig fleet of 121, which will increase to 123 with the expected addition of two new rigs in 2008. * * * Grey Wolf continues to carry Moody's Investors Service Ba3 corporate family rating which was placed on July 31, 2006. The outlook is stable. HERCULES INC: Inks $3.3 Billion Merger Agreement with Ashland Inc. ------------------------------------------------------------------ Hercules Inc. and Ashland Inc. entered into a definitive merger agreement under which Ashland would acquire all of the outstanding shares of Hercules for $18.600 per share in cash and 0.093 of a share of Ashland common stock for each share of Hercules common stock. The total transaction value is approximately $3.3 billion, or $23.010 per Hercules share based on Ashland's July 10 closing stock price and including $0.7 billion of net assumed debt. The merger is conditioned upon, among other things, the approval of Hercules' shareholders, the receipt of regulatory approvals and other customary closing conditions. Assuming the satisfaction of these conditions, the transaction is expected to close by the end of calendar 2008. The cash portion of the consideration will be funded through a combination of cash on hand and committed debt financing from Bank of America and Scotia Capital, subject to customary terms and conditions. Ashland plans to use the cash flows of the combined organization to pay down debt with a goal of attaining investment-grade credit ratings within two to four years after closing the transaction. Under the terms of the definitive merger agreement, Hercules would be required to pay Ashland a fee of $77.5 million under certain circumstances including if Hercules terminates the merger agreement to accept a superior offer, and Ashland would be required to pay Hercules a fee in the same amount if the transaction is not completed due to a failure to obtain financing at the time the conditions to the merger have been satisfied. Upon the transaction's close, Ashland is expected to have pro forma combined revenue for the 12 months ended March 31, 2008, of more than $10 billion, including approximately $3.5 billion generated outside North America. For the same period, Ashland expected to generate earnings before interest, taxes, depreciation and amortization or EBITDA of $365 million excluding certain items, while Hercules reported ongoing EBITDA of $392 million excluding certain items. Specialty chemicals, which on a pro forma basis represents approximately 75% of total EBITDA, will serve as Ashland's platform for future growth. "The acquisition of Hercules fulfills our objective to become a leading specialty chemicals company," James J. O'Brien, Ashland chairman and chief executive officer, said. "It creates a defined core for Ashland composed of three specialty chemical businesses with strong market positions and promising growth potential: specialty additives and ingredients, paper and water technologies, and specialty resins." "In addition, we expect our financial profile to be enhanced significantly through reduced earnings volatility, improved profitability and stronger cash flow generation." Mr. O'Brien said. "We are enthusiastic about the opportunity to combine Hercules with Ashland," Craig A. Rogerson, Hercules president and CEO, said. "Our companies share proud and similar histories of nearly 100 years of innovation, dedication and service. Hercules shareholders will receive a significant premium over the current trading price for their shares and, through their ownership of Ashland shares, the opportunity to participate in the upside potential of the combined company. We look forward to working with Ashland to bring these two great companies together." The companies stated that in specialty additives and ingredients, Hercules' Aqualon business is one of the most recognized and admired specialty chemical brands in the world and brings Ashland a significant market position in rheology modifiers, which alter the physical properties of water-based systems. These additives are used across a range of industries to make everything from adhesives and paints to foods, pharmaceuticals and personal care products. Nearly all of Aqualon's additive products are water soluble polymers derived from renewable materials. The combined company is expected to generate, on a pro forma basis, approximately one-third of EBITDA from bio-based or renewable chemistries. "We will combine the paper and water businesses of each company to create one paper and water technologies business with annual revenue of $2 billion," Mr. O'Brien said. "In particular, Hercules' leadership position in pulp and paper technologies bolsters our participation in one of the world's largest water treatment markets. The combined businesses will provide the scale to leverage opportunities in other key water treatment markets including municipal, industrial and marine. "The third business within our new core - specialty resins - is one where Ashland has long enjoyed a strong reputation for innovation and service. Mr. O'Brien added. "A broader international footprint will offer the specialty resins business expanded growth opportunities in key building and construction markets, including infrastructure and wind energy. In addition, our Distribution and Valvoline businesses provide complementary capabilities and share similar markets with the specialty chemical businesses. Ashland expected to realize annualized run-rate cost savings of at least $50 million by the third year following the transaction's close by eliminating redundancies and capturing operational efficiencies. In the first year after the transaction's close, while the combination is dilutive to earnings per share on a reported basis, it is expected to be significantly accretive to Ashland's earnings per share excluding merger costs and noncash depreciation and amortization charges resulting from the transaction. "We are extremely impressed with the quality of the Hercules people and we look forward to welcoming them into the Ashland family," Mr. O'Brien continued. "Our companies share a common desire to live up to our own high expectations, and those of our customers, shareholders and the communities in which we operate." "We are also very pleased that John Panichella, president of Hercules' Aqualon Group, and Paul Raymond, president of Hercules' Paper Technologies and Ventures Group, have agreed to join Ashland after the close of the transaction, reporting directly to me," Mr. O'Brien related. "In addition, we expect to maintain a significant presence in Wilmington, Delaware, where Hercules is headquartered." "An integration team with members from both organizations will determine how best to utilize the strengths and scale of the combined company worldwide," Mr. O'Brien concluded. "We will work with the Hercules team to ensure a smooth transition." Citigroup Global Markets Inc. acted as financial advisor and Squire Sanders & Dempsey LLP acted as legal counsel to Ashland. Credit Suisse Securities LLC acted as financial advisor and Wachtell Lipton Rosen & Katz acted as legal counsel to Hercules. About Ashland Inc. Headquartered in Covington, Kentucky, Ashland Inc. (NYSE:ASH) -- http://www.ashland.com/-- is a diversified chemical company that consists of four wholly owned divisions: Ashland Performance Materials, Ashland Distribution, Valvoline and Ashland Water Technologies. About Hercules Incorporated Based in Wilmington, Delaware, Hercules Incorporated (NYSE: HPC) -- http://www.herc.com/-- is a manufacturer and marketer of specialty chemicals and related services for a range of business, consumer and industrial applications. The products of Hercules are functional and process chemicals used by the paper industry to improve paper and paperboard performance and manufacturing process; water-soluble polymers, and specialty resins. The markets served by Hercules include pulp and paper; paints and adhesives; construction materials; food, pharmaceutical and personal care, and industrial specialties, including oilfield and general industrial. HERCULES INC: Merger Agreement Cues Moody's Review of Ba2 Rating ---------------------------------------------------------------- Moody's Investors Service placed the Ba1 corporate family rating and other debt ratings of Hercules, Inc. under review for possible downgrade. The reviews are prompted by the statement that the Boards of Ashland, Inc. and Hercules approved a definitive merger agreement under which Ashland would acquire all of the outstanding shares of Hercules in the form of $18.60 per share in cash and 0.093 of a share of Ashland common stock for each share of Hercules stock. The total transaction value would be approximately $3.3 billion, or $23.01 per Hercules share based on Ashland's July 10 closing stock price and including $0.7 billion of net assumed debt. Ashland will be the surviving entity in the merger. Hercules' LGD assessments are not under review and these assessments and point estimates are subject to change as a function of the new capital structure of the merged entities. Moody's expects all of the Hercules debt to be refinanced as a result of the merger with the exception of the 6.5% junior subordinated deferrable interest debentures due 2029. While Ashland has almost no debt currently, the acquisition will result in the merged companies taking on a material amount of debt that will put the current Ashland Ba1 corporate family rating under negative pressure and would likely result in a one notch downgrade in the corporate family rating to Ba2, provided there is no change in the purchase price and other deal and financing terms, as disclosed, and assuming no material changes to the outlook for the merged companies raw material costs and end markets. Upon the transaction's close, Ashland/Hercules will have pro forma combined revenue for the 12 months ended March 31, 2008, of more than $10 billion and earnings before interest, taxes, depreciation and amortization of $757 million excluding certain items. The merger is conditioned upon, among other things, the approval of Hercules' shareholders, the receipt of regulatory approvals and other customary closing conditions. Assuming the satisfaction of these conditions, the transaction is expected to close by the end of calendar 2008. Moody's rating review will consider the nature and structure of the acquisition financing, as well as focus on the strategic benefits of the transaction, potential synergies, the cash flow anticipated from the combined businesses, the combined company's financial flexibility and liquidity and how management's long-term plans will impact the company's credit measures. Ratings placed on review for possible downgrade: Hercules, Inc. -- Corporate Family Rating, Ba1 -- Probability of Default Rating, Ba1 -- Senior Secured Bank Credit Facility, Baa2, 15% - LGD2 -- Senior Secured Regular Bond/Debenture, Baa2, 15% - LGD2 -- Senior Unsecured Regular Bond/Debenture, Ba1, 62% LGD4 -- Junior Subord. Regular Bond/Debenture, Ba2, 92% - LGD6 -- Subord. Conv./Exch. Bond/Debenture, Ba2, 92% - LGD6 Outlook Actions: -- Outlook, Changed To Rating Under Review From Positive Hercules Incorporated is a global supplier of specialty chemicals and related services for the paper, paint, consumer products, construction materials and energy markets. Hercules operates through two business segments the Paper Technologies and Ventures segment and the Aqualon Group and owns a minority interest in FiberVisions, a maker of polyolefin staple fibers, fibers, and yarn as well as polypropylene fibers for the use in such products as personal care, diapers, and wipes. The company had revenues of $2.2 billion for the LTM ended March 31, 2008. H.J. HEINZ: Moody's Assigns Ba1 Rating on Preferred Stock --------------------------------------------------------- Moody's Investors Service assigned a Baa2 rating to $500 million of five-year senior unsecured notes issued by H.J. Heinz Company and a Ba1 rating to $350 million of series B cumulative preferred stock issued by H.J. Heinz Finance Company. Moody's also affirmed the existing Baa2 long term debt rating, Ba1 preferred stock rating, and Prime-2 short term debt rating of Heinz and its subsidiaries. The rating outlook is stable. The senior notes pay a coupon of 5.35% and mature on July 15, 2013. Heinz intends to use the proceeds from the senior notes primarily to repay outstanding commercial paper and other indebtedness. In the fourth quarter, Heinz issued commercial paper to fund the redemption of $300 million of senior unsecured notes that matured March 15, 2008. The $350 million series B cumulative preferred stock pay an 8% dividend and is mandatorily redeemable on July 15, 2013. The proceeds will be used primarily to refinance the maturing $325 million 6.226% series A cumulative preferred stock due July 15, 2008, and to repay other indebtedness. Following this redemption, Moody's will withdraw the ratings on the series A cumulative preferred stock. Ratings assigned: H.J. Heinz Company -- $500 million senior unsecured notes due 2013 at Baa2 H.J. Heinz Finance Company -- $350 million series B preferred stock at Ba1 Ratings affirmed: H.J. Heinz Company -- Senior unsecured debt at Baa2 H.J. Heinz Finance Company -- Senior unsecured debt at Baa2 under full guarantee of H.J. Heinz Company -- Preferred stock at Ba1 H.J. Heinz Finance UK PLC -- Senior unsecured debt at Baa2 under full guarantee of H.J. Heinz Company H.J. Heinz Company -- Short term debt at Prime-2 H.J. Heinz Finance Company -- Short term debt at Prime-2 under full guarantee of H.J. Heinz Company H.J. Heinz B.V. -- Short term debt at Prime-2 under full guarantee of H.J. Heinz Company H.J. Heinz Finance UK PLC -- Short term debt at Prime-2 under full guarantee of H.J. Heinz Company H.J. Heinz Company of Canada Limited -- Short term debt at Prime-2 under full guarantee of H.J. Heinz Company Headquartered in Pittsburgh, Pennsylvania and founded in 1869, H. J. Heinz Company is a marketer and producer of branded foods in ketchup, condiments, sauces, meals, soups, seafood, snacks and infant foods. Key brands include Heinz� Ketchup, sauces, soups, beans, pasta and infant foods, Ore-Ida� French Fries and roasted potatoes, Boston Market� and Smart Ones� meals and Plasmon� baby food. Heinz's 50 companies have number-one or number-two brands in 200 countries. INDYMAC BANCORP: OTS Closes Bank, Transfers Operations to FDIC -------------------------------------------------------------- The Office of Thrift Supervision closed Friday the $32,000,000,000 IndyMac Bank, F.S.B., headquartered in Pasadena, California, and transferred operations to the Federal Deposit Insurance Corporation. A successor institution, IndyMac Federal Bank, FSB, will open for business Monday and be run by the FDIC. Depositors will have no access to banking services online and by telephone this weekend, but will continue to have access to their funds this weekend by ATM, through other debit card transactions and by writing checks. Online banking and phone banking services will be available again on Monday. The OTS has determined that under the current institution, IndyMac Bank, is unlikely to be able to meet continued depositors' demands in the normal course of business and is therefore in an unsafe and unsound condition. The immediate cause of the closing was a deposit run that began and continued after the public release of a June 26 letter to the OTS and the FDIC from Senator Charles Schumer of New York. The letter expressed concerns about IndyMac's viability. In the following 11 business days, depositors withdrew more than $1,300,000,000 from their accounts. "This institution failed [] due to a liquidity crisis," OTS Director John Reich said. "Although this institution was already in distress, I am troubled by any interference in the regulatory process." Above Normal Withdrawals As reported by the Troubled Company Reporter on July 9, 2008, IndyMac Bancorp Inc. said Tuesday that its banking unit has been experiencing above normal cash withdrawals since Sen. Schumer questioned its ability to survive the housing crisis. Sen. Schumer chairs the Congress's Joint Economic Committee. Reuters' Jonathan Stempel and Jennifer Martinez reported that U.S. regulators are concerned because more than $17,000,000,000 of the bank's deposits carry federal insurance. The FDIC has $52,800,000,000 in its insurance fund to cover bank failures. The FDIC in a statement said IndyMac Bank had total assets of $32,010,000,000 and total deposits of $19,060,000,000 as of March 31, 2008. At the time of closing, FDIC said IndyMac Bank had about $1,000,000,000 of potentially uninsured deposits held by roughly 10,000 depositors. The FDIC will begin contacting customers with uninsured deposits to arrange an appointment with an FDIC claims agent by Monday. Customers can contact the FDIC for an appointment using toll-free number. The FDIC will pay uninsured depositors an advance dividend equal to 50% of the uninsured amount. Based on preliminary analysis, the estimated cost of the resolution to the Deposit Insurance Fund is between $4,000,000,000 and $8,000,000,000. According to the TCR, IndyMac disclosed it was "working with regulators on a new business plan after losing $896 million in the nine months to March 31." Reuters added that IndyMac has set in motion a plan to eliminate 3,800 jobs, or 53% of its workforce, and stop offering most home loans. It has also projected a loss in the second quarter larger than the $184,200,000 loss it posted for January to March. According to the Reuters story, Prospect Mortgage, a Northbrook, Illinois-based affiliate of private equity fund Sterling Partners, said it agreed to buy more than 60 IndyMac retail mortgage branches, which employ 750 people, for an undisclosed price. TheStreet.com adds that "without raising money, which the company said it has been unsuccessful in doing, or selling significant pieces of business, IndyMac will have a difficult time surviving the next several quarters." Also on July 9, the TCR said IndyMac signed an agreement with Prospect Mortgage to sell the majority of its retail mortgage branches. Terms of the transaction were not disclosed. The transaction, the TCR said, encompasses roughly 750 employees along with more than 60 branch offices which will be re-branded as Prospect Mortgage. John Johnston and Ron Bergum will remain in leadership roles with the retail branch group and report to Mark Filler, CEO of Prospect Mortgage. Largest Bank Failure The OTS said in a news statement that IndyMac is the largest OTS- regulated thrift ever to fail and, according to FDIC data, the second largest financial institution to close in U.S. history. IndyMac Bank is the fifth FDIC-insured failure of the year. The last FDIC-insured failure in California was the Southern Pacific Bank, Torrance, on February 7, 2003. The Wall Street Journal's Damian Paletta and David Enrich state that IndyMac is the third-largest bank failure in U.S. history. According to Messrs. Paletta and Enrich, Continental Illinois National Bank & Trust Co., which failed in 1984, topped that list with $40,000,000,000 in assets. American Savings & Loan Association of Stockton, Calif., in 1988, is second. Banks that failed this year, according to FDIC data, are: Bank Name Closing Date --------- ------------ IndyMac Bank, Pasadena, CA July 11, 2008 First Integrity Bank, NA, Staples, MN May 30, 2008 ANB Financial, NA, Bentonville, AR May 9, 2008 Hume Bank, Hume, MO March 7, 2008 July 1, 2008 Douglass National Bank, Kansas City, MO January 25, 2008 The OTS said IndyMac had been in a precarious financial situation that was caused, in part, by an unprecedented stress in the residential real estate market, combined with the evaporation of the non-agency secondary mortgage market in August of 2007. The OTS had significant concerns with the bank's funding strategy, had directed appropriate changes and was finalizing a new set of enforcement actions to address its numerous problems. As a result of an OTS examination that began in January 2008, the OTS deemed IndyMac to be in troubled condition. An overwhelming majority of problem institutions are able to successfully modify their operations and business plans, work closely with their regulator and eventually return to a healthy condition. IndyMac had reacted to market conditions and OTS concerns in November 2007 by changing its operations and business plan to build a foundation for recovery. IndyMac was actively seeking to arrange a significant capital infusion or find a buyer. The recent release of the senator's letter undermined the public confidence essential for a financial institution and took away the time IndyMac needed to pursue a recovery. Receivership With no viable alternatives and insufficient liquidity, IndyMac was placed into receivership. The OTS has appointed the FDIC as conservator of the newly chartered successor institution and will transfer most of the assets and liabilities of IndyMac to the new thrift. The FDIC will operate IndyMac Federal Bank to maximize the value of the institution for a future sale and to maintain banking services in the communities formerly served by IndyMac Bank. Depositors' accounts at IndyMac are insured by the FDIC\u2019s Deposit Insurance Fund up to the statutory limits. Customer questions regarding the institution, including questions about federal deposit insurance coverage, should be directed to the FDIC at 1 (866) 806-5919. This toll-free number will be available during these hours: Friday, July 11 - 3:00 to 9:00 p.m., PDT Saturday, July 12 - 8:00 a.m. to 8:00 p.m., PDT Sunday, July 13 - 8:00 a.m. to 6:00 p.m., PDT Thereafter: 8:00 a.m. to 8:00 p.m., PDT About OTS The Office of Thrift Supervision, an office of the Department of the Treasury, regulates and supervises the nation's thrift industry. OTS's mission is to ensure the safety and soundness of, and compliance with consumer protection laws by, thrift institutions, and to support their role as home mortgage lenders and providers of other community credit and financial services. OTS also oversees the activities and operations of thrift holding companies that own or control thrift institutions. Copies of OTS news releases and other documents are available at the OTS web page at http://www.ots.treas.gov About FDIC Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,494 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. On the Net: http://www.fdic.gov/ About Indymac Bancorp Headquartered in Pasadena, California, IndyMac Bancorp Inc. (NYSE:IMB) -- http://www.indymacbank.com/-- is the holding company for IndyMac Bank FSB, a hybrid thrift/mortgage bank that originates mortgages in all 50 states of the United States. Indymac Bank provides financing for the acquisition, development, and improvement of single-family homes. Indymac also provides financing secured by single-family homes and other banking products to facilitate consumers' personal financial goals. IndyMac specialized in making and selling so-called Alt-A mortgage loans, a category of loans to consumers more credit worthy than subprime borrowers but typically without the complete documentation of income or assets necessary to receive a prime- rate loan. The company facilitates the acquisition, development, and improvement of single-family homes through the electronic mortgage information and transaction system platform that automates underwriting, risk-based pricing and rate locking via the internet at the point of sale. Indymac Bank offers mortgage products and services that are tailored to meet the needs of both consumers and mortgage professionals. Indymac operates through two segments -- mortgage banking and thrift. The company was ranked the ninth-largest U.S. mortgage lender in 2007 in terms of loan volume, The Wall Street Journal says, citing trade publication Inside Mortgage Finance. * * * As reported by the Troubled Company Reporter on July 11, 2008, 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'. "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. On July 9, the TCR said Fitch Ratings downgraded the long-term Issuer Default Ratings of Indymac Bancorp to 'CC' from 'B-'; and the long-term Issuer Default Ratings of Indymac Bank FSB to 'CCC' from 'B'. The downgrade follows IMB's disclosure that, according to its regulators, the bank is no longer 'well capitalized'. Concurrent with this rating action, Fitch has removed all ratings from Rating Watch Negative. The Rating Outlook is Negative for IMB. INDYMAC BANCORP: Banking Industry on "Solid Footing," FDIC Says --------------------------------------------------------------- Sheila C. Bair, chairman of the Federal Deposit Insurance Corporation, said the United States' banking system remains on a solid footing through the guarantees provided by FDIC insurance. Ms. Bair issued the statement after the federal government's seizure of IndyMac Bank, F.S.B. On Friday, the Office of Thrift Supervision closed the $32,000,000,000 IndyMac Bank, headquartered in Pasadena, California, and transferred operations to the FDIC. The FDIC has created IndyMac Federal Bank, FSB, a conservatorship to continue to provide banking services in communities served by the former IndyMac Bank. A story on the seizure of IndyMac Bank appears in today's Troubled Company Reporter. Ms. Bair said, "Over the past weekend, I have seen news reports which have fairly and accurately reported on the conversion of Indy Mac Bank into a conservatorship operated by the FDIC. I have also seen inaccurate and inflammatory reporting which could well cause needless, unnecessary worry and angst among bank depositors throughout the country." IndyMac's conversion has been largely a non-event, according to Ms. Bair, with respect to insured depositors. She explained that the more than 200,000 customers of IndyMac with deposits of $18,000,000,000 are fully protected. "It's important to keep in mind that the small percentage of uninsured are still covered for their insured amounts and half of their uninsured money," Ms. Bair said. "As assets of IndyMac are sold, they may receive even more. They have had continued access to their funds through ATMs, debit cards, and writing checks over the weekend, and on Monday morning, it will be business as usual." "All bank depositors should understand that their insured deposits are safe." The Wall Street Journal's Robin Sidel, David Enrich and Jonathan Karp relate that the seizure of IndyMac Bank is deepening worries among executives, regulators and consumers about the U.S. banking industry, which is in a tightening bind following a long run of prosperity. The Journal says banks and thrifts are struggling against a rising tide of bad loans, and it is becoming increasingly clear that some lenders won't be able to dig their way out. While fewer banks are expected to fail than the 834 that went under from 1990 to 1992, it will likely take several years for battered financial institutions to work through their bad loans and replenish their depleted capital, the Journal says. According to Ms. Bair, IndyMac is only one of 8,494 depository institutions operating throughout the country and represents only 0.2% of banking industry assets. "The overwhelming majority of banks in this country are safe and sound. The chance that your own bank will be taken over by the FDIC is extremely remote. And if that does happen, you will continue to have virtually uninterrupted access to your insured deposits," Ms. Bair said. "All bank depositors should also understand that they can have insurance coverage in excess of the basic limits of $100,000 per institution, with an additional $250,000 per institution for IRAs. For instance, subject to certain conditions, single and joint accounts are separately insured, and revocable trusts generally provide $100,000 of coverage per beneficiary. If you have any questions about whether your deposits are insured, we encourage you to consult with your bank or contact our deposit insurance specialists at 1-877-ASK-FDIC. If you find that you are not fully insured, it may be possible to restructure your accounts to bring your deposits below the insured limits. But first get the facts before making any changes in your accounts or banking relationships." Ms. Bair added that industry-funded reserves are strong and our insurance guarantee is backed by the full faith and credit of the United State Government, and that no bank depositor has ever lost a penny of insured deposits. About FDIC Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,494 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. On the Net: http://www.fdic.gov/ About Indymac Bancorp Headquartered in Pasadena, California, IndyMac Bancorp Inc. (NYSE:IMB) -- http://www.indymacbank.com/-- is the holding company for IndyMac Bank FSB, a hybrid thrift/mortgage bank that originates mortgages in all 50 states of the United States. Indymac Bank provides financing for the acquisition, development, and improvement of single-family homes. Indymac also provides financing secured by single-family homes and other banking products to facilitate consumers' personal financial goals. IndyMac specialized in making and selling so-called Alt-A mortgage loans, a category of loans to consumers more credit worthy than subprime borrowers but typically without the complete documentation of income or assets necessary to receive a prime- rate loan. The company facilitates the acquisition, development, and improvement of single-family homes through the electronic mortgage information and transaction system platform that automates underwriting, risk-based pricing and rate locking via the internet at the point of sale. Indymac Bank offers mortgage products and services that are tailored to meet the needs of both consumers and mortgage professionals. Indymac operates through two segments -- mortgage banking and thrift. The company was ranked the ninth-largest U.S. mortgage lender in 2007 in terms of loan volume, The Wall Street Journal says, citing trade publication Inside Mortgage Finance. * * * As reported by the Troubled Company Reporter on July 11, 2008, 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'. "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. On July 9, the TCR said Fitch Ratings downgraded the long-term Issuer Default Ratings of Indymac Bancorp to 'CC' from 'B-'; and the long-term Issuer Default Ratings of Indymac Bank FSB to 'CCC' from 'B'. The downgrade follows IMB's disclosure that, according to its regulators, the bank is no longer 'well capitalized'. Concurrent with this rating action, Fitch has removed all ratings from Rating Watch Negative. The Rating Outlook is Negative for IMB. JIM PALMER: Potential Buyer Reiterates Plan to Acquire Parent ------------------------------------------------------------- ActionView International Inc., the potential buyer of Jim Palmer Trucking Inc., reiterated its intention to acquire the company, regardless of a Chapter 11 bankruptcy protection filing by entities related to Jim Palmer Trucking. On July 10, 2008, Jim Palmer Equipment Inc. and Jim Palmer Equipment II LLC filed for bankruptcy protection with the United States Bankruptcy Court, District of Montana. It has been reported that Jim Palmer Trucking Inc. will also file for Chapter 11 bankruptcy protection. In a statement, Actionview related that in May 2008, it disclosed a letter of intent to acquire Jim Palmer Trucking. "The financial information we received in our early due diligence on Jim Palmer Trucking does not appear to be consistent with their true financial condition at that time," Steven R. Peacock, ActionView International CEO, commented. "We have been in communication with both the company and its representatives and will continue to monitor the situation as it develops, especially as it relates to the capital that was loaned to Jim Palmer Trucking as part of the proposed acquisition transaction with ActionView International," Mr. Peacock continued. "As we work to protect the interests of the company and its shareholders related to the Jim Palmer Trucking situation, we will turn our attention to alternative acquisition opportunities for ActionView International," Mr. Peacock added. "Our focus is to deliver the best possible acquisition candidate for ActionView shareholders, and we do have additional companies targeted in the event that a transaction with Jim Palmer Trucking did not close," Mr. Peacock stated. "We expect to disclose the next steps in our acquisition strategy soon as possible." The letter of intent between ActionView International and Jim Palmer Trucking Inc. provided the framework for a subsequent anticipated definitive agreement under which ActionView International would acquire all of the issued and outstanding shares of Jim Palmer Trucking in exchange for a majority percentage of ActionView. The details of the proposed share exchange were to be included in the definitive agreement. The letter of intent outlined additional due diligence, audit work and other terms that were to be fulfilled to proceed to definitive agreement and to subsequently effect a close of the transaction. About ActionView International Inc. Based in Vancouver, British Columbia, ActionView International Inc. (OTCBB: AVWI) -- http://www.actionviewinternational.com/-- through ActionView, its wholly owned subsidiary, is engaged in the business of designing, marketing and manufacturing proprietary illuminated, programmable, motion billboard signs for use in airports, mass transit stations, shopping malls, and other high traffic locations to reach people on-the-go with targeted messaging. About Jim Palmer Trucking Headquartered in Missoula, Montana, Jim Palmer Trucking Inc. -- http://www.jimpalmertrucking.com/-- offers truckload transportation of temperature-controlled cargo. The company operates throughout the US from terminals in Missoula, Montana; Salina, Kansas; and Tampa. Jim Palmer Equipment Inc's line of business is truck rental and leasing. JOHNSTON SHIELD: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Johnston Shield, Inc. dba Ideal Automotive Group dba Ideal Suzuki dba Wildcat Mitsubishi dba Ideal Cars dba Ideal Mitsubishi Attn: Franklin D. Dodge Ryan Rapp & Underwood, PLC 3101 N. Central Ave. Ste. 1500 Phoenix, AZ 85012 Tel: (602) 280-1000 Bankruptcy Case No.: 08-08474 Debtor-affiliate filing a separate Chapter 11 petition: Entity Case No. ------ -------- Johnston-Shield Properties, LLC 08-08490 Chapter 11 Petition Date: July 10, 2008 Court: District of Arizona (Phoenix) Judge: Eileen W. Hollowell Debtors' Counsel: Franklin D. Dodge, Esq. Email: tdodge@rwrplc.com Ryan Rapp & Underwood, P.L.C. 3101 N. Central Ave., Ste. 1500 Phoenix, AZ 85012 Tel: (602) 280-1000 Fax: (602) 728-0422 http://www.rwrplc.com/ Johnston Shield, Inc's Financial Condition: Estimated Assets: $1,000,000 to $100,000,000 Estimated Debts: $1,000,000 to $100,000,000 A. A copy of Johnston Shield, Inc.'s list of 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/azb08-08474.pdf A. Johnston-Shield Properties, LLC does not have any creditors who are not insiders. JOSEPH CAGNO: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Joseph Michael Cagno 5206 Nice Court San Jose, CA 95138 Bankruptcy Case No.: 08-53608 Chapter 11 Petition Date: July 9, 2008 Court: Northern District of California (San Jose) Judge: Roger L. Efremsky Debtor's Counsel: Michael W. Malter, Esq. Email: michael@bindermalter.com Law Offices of Binder and Malter 2775 Park Ave. Santa Clara, CA 95050 Tel: (408) 295-1700 http://bindermalter.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A list of the Debtor's largest unsecured creditors is available for free at http://bankrupt.com/misc/canb08-53608.pdf JPMORGAN RV: Poor Performance Cues S&P to Chip Notes Rating to BB+ ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on the class A-2 notes from JPMorgan RV Marine Trust 2004-A to 'BB+' from 'BBB+'. The downgrade reflects the worse-than-expected performance of the underlying recreational vehicle and marine retail installment sale contracts collateralizing this transaction, as displayed in the high levels of losses and delinquencies. As of the June 2008 distribution date, the transaction had a pool factor of 27.7% and experienced cumulative net losses of 6.8%, which is almost on par with our original expected base-case cumulative net losses of 7.0% of the original pool balance. In addition, 2.8% of the current pool balance was 60 days or more past due, and 6.14% of the current pool balance was 30 days or more past due. Although the required total enhancement percentage is at its target of 11% of the current pool balance, it is insufficient to cover expected remaining losses at its current rating level. S&P expect this transaction to experience base-case cumulative remaining net losses of 9.5% of the current principal loan balance. This transaction benefits from an unconditional, irrevocable financial guarantee insurance policy issued by Financial Guaranty Insurance Co., currently rated 'BB/Watch Neg'. The 'BB+' rating is based on the creditworthiness of the underlying RV and marine assets and not on the FGIC guarantee. Standard & Poor's expects that the remaining credit support will be sufficient to support the notes at the lowered rating level. LINENS N THINGS: AMEX Wants Stay Lifted to End Merchant Agreement ----------------------------------------------------------------- In December 30, 2005, American Express Incentive Services, L.L.C., and Debtor LNT Services, Inc., entered into a U.S. Merchant Agreement with LNT Services, pursuant to which, the Debtor became a select participating merchant in certain stored value card programs administered by American Express. In the Card Program, the stored value cards (i) are either pre- paid predenominated or reloadable type "reward cards" that are issued to individuals in rewards or incentive programs, and (ii) can be used at various select retailers participating in the Card Program, including the Debtor's Linens 'N Things stores. Pursuant to the Merchant Agreement, (i) the Debtor is required to pay American Express a 12% commission on the amount of the stored value cards that are redeemed at the Debtor's stores within 30 days upon receipt of an invoice, and (ii) each party will have the option to terminate the agreement at any time without cause, by providing a 90-day notice to the other party. William E. Chipman, Jr., Esq., at Edwards Angell Palmer & Dodge LLP, in Wilmington, Delaware, informs the United States Bankruptcy Court for the District of Delaware that American Express "has every intention of terminating the Merchant Agreement." He asserts that American Express is not seeking to force the Debtor to assume the Merchant Agreement and cure defaults. American Express merely desires to exercise its equal rights under the Merchant Agreement to terminate the agreement without fault of either party to the contract, he explains. Prior to the Petition Date, the Debtor was in breach of the Merchant Agreement by failing to make payment to American Express as required in the Merchant Agreement, Mr. Chipman tells the Court. As of the Petition Date, the Debtor owed American Express $61,564 in earned and unpaid commissions, and $9,400 for advertising sales. He adds that since the Petition Date, the Debtor has continued to accept payments from the stored value cards, but has failed to make payment to American Express. Mr. Chipman contends, among other reasons, that it is not equitable to permit the Debtor to continue to enjoy the benefits of having American Express' cardholding customers directed to the Linens 'N Things stores to redeem the stored value cards, and for the Debtor to benefit by those redemptions, and then fail to compensate American Express as required under the Merchant Agreement. Accordingly, pursuant to Sections 362(d) and 365(d)(2) of the Bankruptcy Code, American Express asks the Court: -- for relief from the automatic stay to allow American Express to terminate the Merchant Agreement; or -- in the alternative, to compel the Debtor to reject the Merchant Agreement. Linens 'N Things has secured a $700 million debtor-in-possession financing from General Electric Capital Corp. The company plans to be out of chapter 11 by the end of the year, on this timetable: 09/14/2008 DIP Facility Deadline for Filing a Chapter 11 Plan 10/14/2008 DIP Facility Deadline for Disclosure Statement Approval 11/18/2008 DIP Facility Deadline for Soliciting Votes on Plan 11/28/2008 DIP Facility Deadline for Entry of a Confirmation Order Linens 'N Things is represented by Richards, Layton & Finger, P.A., and Morgan, Lewis & Bockius LLP. Conway, Del Genio, Gries & Co., LLC serves as the retailer's restructuring advisor until substantial consummation of a chapter 11 plan. Conway Del Genio's Michael F. Gries acts as the Debtors' chief restructuring officer and interim CEO. Kurtzman Carson Consultants LLC acts as the Debtors' claims agent. A Noteholder Committee has been formed and is represented by Kasowitz, Benson, Torres & Friedman LLP, and Pachulski Stang Ziehl & Jones. (Linens 'n Things Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LINENS N THINGS: Says 87 Underperforming Stores Should be Closed ---------------------------------------------------------------- Linens 'n Things and its debtor-affiliates continues to identify underperforming stores they intend to close through additional store closing or similar themed sales. The Debtors believe that around 87 more stores should be closed to maximize their profitability, and ensure a successful reorganization. The Debtors, however, are still in the process of finalizing the list of closing stores. The proposed Store Closing Sales will dramatically reduce their administrative costs associated with the underperforming Closing Stores, are customary in Chapter 11 reorganizations, and are designed to provide the maximum value to the bankruptcy estates, Mark D. Collins, Esq., at Richards, Layton & Finger P.A., in Wilmington, Delaware, tells the United States Bankruptcy Court for the District of Delaware. He adds the proceeds of the Store Closing Sales will benefit the Debtors' estates by reducing the Debtors' secured debt. To maximize the value of the (i) inventory and merchandise to be included in the Store Closing Sales, and (ii) owned furniture, fixtures and equipment in the Closing Stores, the Debtors intend to obtain assistance from certain liquidation firms. Mr. Collins relates that prior to the Petition Date, the Debtors have obtained signed confidentiality agreements from, and provided substantial due diligence materials to, the Liquidation Firms. Through Asset Disposition Advisors, LLC, the Debtors will circulate a "Summary Request for Proposal," together with an Agency Agreement, to each of the Liquidation Firms, and will request that initial bids to act as the Debtors' agent to conduct the Store Closing Sales be submitted by July 21, 2008. The Debtors intend to select and negotiate a "stalking horse" bid from one of the Liquidation Firms' initial bids, and to execute a "stalking horse" agency agreement. In the event that a Stalking Horse Bidder is chosen, the Debtors will seek approval of bid protections for the Stalking Horse Bidder at a hearing scheduled for July 24, 2008. To ensure that the process is thorough and the best price is obtained, and to allow creditors to have input in the process, the Debtors will subject the Stalking Horse Agreement to higher or better offers, and will seek approval to provide the Stalking Horse Bidder with a break-up fee and expense reimbursement. By this motion, the Debtors seek the entry of two orders: (1) a procedures order, which: * approves proposed auction procedures; * sets the time, date, and place of the auction; * approves the form of notice of the Auction and notice of the Store Closing Sales; and * sets a sale hearing on July 30, 2008, at 10:00 a.m.; and (2) an approval order, which: * authorizes the closure of the Closing Stores; * authorizes the Debtors to conduct the Store Closing Sales free and clear of liens; * allows the Debtors to enter into Agency Agreement; and * waives the Debtors' compliance with state and local laws, and lease provisions restricting the Store Closing Sales. Proposed Store Closing Sales The Debtors propose to commence the Store Closing Sales promptly following the Sale Hearing to stem the losses resulting from the continued operation of the Closing Stores. The Debtors also seek authority to enter into an Agency Agreement to allow the Successful Bidder to serve as the Debtors' agent in conducting the Store Closing Sales. The Store Closing Sales should commence immediately so the Closing Stores will not lose money, and will not drain the Debtors' liquidity, Mr. Collins contends. He notes the sooner the Liquidation Assets are liquidated, and the Closing Stores' leases are either sold or rejected, the sooner the strain on the Debtors' liquidity will be mitigated. He points out that delays in the liquidation process could cause the inventory in the Closing Stores to become unbalanced or out of "season", thus, reducing the value of the Merchandise. Proposed Auction Procedures The Debtors ask the Court to approve these Auction Procedures: -- Beginning in July 2008, the Debtors will provide the Liquidation Firms access to various financial data and other relevant information in connection with the Closing Stores; -- Within two business days after Procedures Order's entry, the Debtors will serve the notice on the Auction and Store Closing Sales on certain notice parties, which include official committees, Office of the U.S. Trustee and all Potential Bidders; -- Prior to forming a joint venture between two or more Potential Bidders, the Potential Bidders must obtain prior written approval from the Debtors; -- The Court will hold a subsequent hearing on July 24 to consider approval of bid protections to any identified Stalking Horse Bidder; -- Bid Deadline is on July 21 at 4:00 p.m., Eastern Time; -- Bids must be unconditional and not contingent upon any event. All Bids are irrevocable until seven days after the Sale Hearing; -- A proposed bid must be based on the terms and conditions of the form of Agency Agreement. To the extent the Debtors have entered into a Stalking Horse Agreement, all proposed bids will be based upon the terms and conditions of the Stalking Horse Agreement and will be, at a minimum, for an amount higher than or equal to the sum of the Guaranteed Amount, plus the minimum initial overbid, provided for under the Stalking Horse Agreement; and -- The Auction will be conducted on July 28, 2008 at 11:00 a.m., at the offices of the Debtors' counsel, Richards, Layton & Finger, P.A., at One Rodney Square, 920 North King Street, in Wilmington, Delaware 19801. The Debtors request that the Sale Hearing be held on July 30 at 10:00 a.m., Eastern Time. Objection deadline is on July 23. The Agency Agreement The use of a uniform Agency Agreement, upon which the initial bids, as well as bids at the Auction will be based, will enable the Debtors and other parties-in-interest to easily compare and contrast any differing terms of the Bids made by the Liquidation Firms, Mr. Collins says. Among the material terms of the Agency Agreement are: -- As a guaranty of Agent's performance under the Agency Agreement, the Agent will guarantee that the Debtors will recover a fixed percentage of the cost value of the merchandise included in the sale; -- From the commencement of the sale through its termination, Agent will be unconditionally responsible for all expenses incurred in conducting the sale, which expenses may be funded and paid from the sale proceeds; -- The Agent would receive a fee, calculated based upon a fixed percentage of the Merchandise cost value. The Agent would also be entitled to retain all Sale Proceeds after reimbursement of sale expenses, and payment to the Debtors of any recovery amount, which is the excess amounts from Sale Proceeds that will be shared by the Debtors and the Agent after taking out the Guaranteed Amount, Sale expenses, and the Agent's base fee; -- On the commencement of the sale, the Agent will wire to the Debtors a substantial portion of the estimated Guaranteed Amount, and secure the remaining portion of the estimated Guaranteed Amount with a letter of credit. The Agent will also collateralize its obligation to reimburse the Debtors for sale expenses by posting a letter of credit in an amount equal to three weeks estimated Expenses to be incurred by the Debtors; and -- The Guaranteed Amount was conditioned upon there being an agreed upon minimum amount of Merchandise at cost value included in the Sale. To the extent that the aggregate cost value of the Merchandise is less than the Merchandise Threshold, then the Guaranty Percentage will be adjusted downward in accordance with a mutually agreed upon schedule. The Debtors reserve th right to amend or otherwise change the terms of the Agency Agreement in a manner as the Debtors deem to be in their best interests after consultation with General Electric Capital Corporation, as agent for the prepetition lenders and DIP lender. Under Rules 2002(a) and (c) of the Federal Rules of Bankruptcy Procedure, the Debtors are required to notify their creditors of the Auction and the Sale. Hence, the Debtors ask Judge Christopher Sontchi to approve, and deemed adequate and sufficient, their proposed Store Closing Sales Notice. Linens 'N Things has secured a $700 million debtor-in-possession financing from General Electric Capital Corp. The company plans to be out of chapter 11 by the end of the year, on this timetable: 09/14/2008 DIP Facility Deadline for Filing a Chapter 11 Plan 10/14/2008 DIP Facility Deadline for Disclosure Statement Approval 11/18/2008 DIP Facility Deadline for Soliciting Votes on Plan 11/28/2008 DIP Facility Deadline for Entry of a Confirmation Order Linens 'N Things is represented by Richards, Layton & Finger, P.A., and Morgan, Lewis & Bockius LLP. Conway, Del Genio, Gries & Co., LLC serves as the retailer's restructuring advisor until substantial consummation of a chapter 11 plan. Conway Del Genio's Michael F. Gries acts as the Debtors' chief restructuring officer and interim CEO. Kurtzman Carson Consultants LLC acts as the Debtors' claims agent. A Noteholder Committee has been formed and is represented by Kasowitz, Benson, Torres & Friedman LLP, and Pachulski Stang Ziehl & Jones. (Linens 'n Things Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LINENS N THINGS: Court Approves Cole Schotz as Committee Counsel ---------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware approved the retention of Cole, Schotz, Meisel, Forman & Leonard, P.A., as the Delaware and conflicts counsel of the Official Committee of Unsecured Creditors of Linens 'n Things and its debtor-affiliates in connection with the Debtors' request for postpetition financing. Richard DePaul, executive Committee member, said that Cole Schotz has been selected by the Committee because the members and associates of the firm possess extensive knowledge and considerable expertise in the fields of bankruptcy, insolvency, reorganizations, debtors' and creditors' rights, debt restructuring and corporate reorganizations, among others. Linens 'N Things has secured a $700 million debtor-in-possession financing from General Electric Capital Corp. The company plans to be out of chapter 11 by the end of the year, on this timetable: 09/14/2008 DIP Facility Deadline for Filing a Chapter 11 Plan 10/14/2008 DIP Facility Deadline for Disclosure Statement Approval 11/18/2008 DIP Facility Deadline for Soliciting Votes on Plan 11/28/2008 DIP Facility Deadline for Entry of a Confirmation Order Linens 'N Things is represented by Richards, Layton & Finger, P.A., and Morgan, Lewis & Bockius LLP. Conway, Del Genio, Gries & Co., LLC serves as the retailer's restructuring advisor until substantial consummation of a chapter 11 plan. Conway Del Genio's Michael F. Gries acts as the Debtors' chief restructuring officer and interim CEO. Kurtzman Carson Consultants LLC acts as the Debtors' claims agent. A Noteholder Committee has been formed and is represented by Kasowitz, Benson, Torres & Friedman LLP, and Pachulski Stang Ziehl & Jones. (Linens 'n Things Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LINENS N THINGS: Court Approves Increase in Insurance Caps ---------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware approved the request of Linens 'n Things and its debtor-affiliates to increase the Workers' Compensation Cap from $1,025,000 to $11,925,000, and the General Liability Cap from $75,000 to $350,000. The Debtors initially requested a $1,025,000 cap for workers' compensation policies and $75,000 for general liability insurance policies in order to provide themselves with limited authority to make prepetition payments while they decided if they should allow Insurers to draw down on the Letters of Credit in order to satisfy any prepetition obligations due and owing to Insurers. The Court also authorized the Debtors to continue their (i) Directors and Officers Insurance Policy, along with related excess and run-off coverage, (ii) Employment Practices Insurance program, and (iii) their Fiduciary Liability Insurance program in the ordinary course of business, and to pay prepetition amounts due to the insurance programs up to a maximum of $250,000 in aggregate. The Court further authorized the Debtors to continue their programs on Blanket Crime Insurance, Special Crime Insurance, Foreign Liability Insurance and Marine Cargo Insurance in the ordinary course up to a maximum of $75,000 in aggregate. The Debtors may had to also pay any insurance brokerage fees. Linens 'N Things has secured a $700 million debtor-in-possession financing from General Electric Capital Corp. The company plans to be out of chapter 11 by the end of the year, on this timetable: 09/14/2008 DIP Facility Deadline for Filing a Chapter 11 Plan 10/14/2008 DIP Facility Deadline for Disclosure Statement Approval 11/18/2008 DIP Facility Deadline for Soliciting Votes on Plan 11/28/2008 DIP Facility Deadline for Entry of a Confirmation Order Linens 'N Things is represented by Richards, Layton & Finger, P.A., and Morgan, Lewis & Bockius LLP. Conway, Del Genio, Gries & Co., LLC serves as the retailer's restructuring advisor until substantial consummation of a chapter 11 plan. Conway Del Genio's Michael F. Gries acts as the Debtors' chief restructuring officer and interim CEO. Kurtzman Carson Consultants LLC acts as the Debtors' claims agent. A Noteholder Committee has been formed and is represented by Kasowitz, Benson, Torres & Friedman LLP, and Pachulski Stang Ziehl & Jones. (Linens 'n Things Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LINENS N THINGS: Pickering Wants Stay Lifted to End Lease --------------------------------------------------------- Pickering Commercial Property LLC owns the commercial real property, upon which Linens-n-Things store No. 524 is located, in Issaquah, Washington. Pickering leases the Issaquah Store's space to LNT West, Inc., pursuant to a Lease Agreement dated as of October 3, 1996. The initial term of the Lease runs in 2012. Under the Lease, rent is presently owing in an annual amount of $581,827, and is payable, together with any other charges, in monthly installments due on the first day of each month. While applicable law may have permitted LNT West to continue to occupy the Issaquah Store during the month of May 2008, without actually having made the payment due on May 1, LNT West was unqualifiedly obligated, under Section 365(d)(3) of the Bankruptcy Code, to make the payment due under the Lease on June 1, 2008, asserts Lisa C. McLaughlin, Esq., at Phillips, Goldman & Spence, P.A., in Wilmington, Delaware. Ms. McLaughlin says LNT West did not make the June payment when due, and instead, after a lengthy series of exchanges between the parties, a June-related payment of $51,733 was only received on July 2, which is a full month after the payment was due. She notes that the Debtor has asserted that the delay was due to logistical complications. However, she argues, the payment check is dated June 20, 2008, which is nearly three weeks after the payment was due, and five days after the cure period had expired under the Lease. Aside from the fact that the Debtor did not make the effort to timely pay the June rent, Ms. McLaughlin also points out that the payment, when finally received, did not include a required insurance reimbursement payment of $8,137, despite Pickering's repeated notifications that the amount was due. Moreover, she notes, the Debtor again failed to make the required payment for July. By this motion, Pickering asks the United States Bankruptcy Court for the District of Delaware for relief from the automatic stay to permit it to immediately terminate the Lease, and exercise any other remedies available to it. Under the circumstances, Pickering believes that relief from stay, for "cause," is appropriate to protect Pickering from the Debtor's apparent disregard for its obligation to "timely perform" all of its postpetition "obligations" under the Lease. Alternatively, Pickering asks the Court to modify the stay to permit it to proceed immediately in the future with the exercise of its rights under the Lease, and under applicable non- bankruptcy law, if the Debtor should again fail to timely perform payments or other obligations. "Given what seems to be the [Debtor's] disinclination thus far to make timely payments, this Court should give to Pickering, right now, some comfort, in the form of an order prospectively lifting the automatic stay, that it will be in a position to enforce its contractual rights against the Tenant should the Tenant continue to ignore its post-petition contractual and statutory obligations to Pickering," Ms. McLaughlin argues. Linens 'N Things has secured a $700 million debtor-in-possession financing from General Electric Capital Corp. The company plans to be out of chapter 11 by the end of the year, on this timetable: 09/14/2008 DIP Facility Deadline for Filing a Chapter 11 Plan 10/14/2008 DIP Facility Deadline for Disclosure Statement Approval 11/18/2008 DIP Facility Deadline for Soliciting Votes on Plan 11/28/2008 DIP Facility Deadline for Entry of a Confirmation Order Linens 'N Things is represented by Richards, Layton & Finger, P.A., and Morgan, Lewis & Bockius LLP. Conway, Del Genio, Gries & Co., LLC serves as the retailer's restructuring advisor until substantial consummation of a chapter 11 plan. Conway Del Genio's Michael F. Gries acts as the Debtors' chief restructuring officer and interim CEO. Kurtzman Carson Consultants LLC acts as the Debtors' claims agent. A Noteholder Committee has been formed and is represented by Kasowitz, Benson, Torres & Friedman LLP, and Pachulski Stang Ziehl & Jones. (Linens 'n Things Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) LION INC: Obtains Shareholders Nod to Sell Assets for $525K Cash ---------------------------------------------------------------- LION Inc. shareholders approved the sale of substantially all of the assets of LION to Beanstalk Networks dba OpenClose(R) for $525,000 in cash, pursuant to an asset purchase agreement between Beanstalk Networks Acquisition LLC and LION. On May 12, 2008, LION Inc. entered into an asset purchase agreement with a unit of Beanstalk Networks. Under the terms of the agreement, OpenClose will purchase and continue to operate LION's remaining business segment, which includes the business related to its Precision family of products and its retail websites business. OpenClose will assume all current LION customer agreements. LION's Precision LPX products consists of a loan pricing engine, a database of industry leading lenders' loan programs and pricing information, web enabled tools and other transactional services designed to enable large lenders to originate, price, and lock loans. LION's Precision Access and Precision Lion Broker product suites, which are based on the Precision LPX technology platform, are aimed at medium-sized lenders and individual brokers. Precision Lion Broker gives subscribing brokers access to LION's known, proprietary business-to business Internet portal, LION Broker fks LION Pro. The transaction also includes the assets related to LION's retail website business which designs, develops and hosts retail websites for more than 1,200 mortgage lenders, origination companies, and individual mortgage brokers. As a result of this approval, LION expects that the sale will be consummated shortly in accordance with the terms of the agreement. Also at the meeting, LION's shareholders approved the voluntary dissolution and liquidation of LION pursuant to a plan of complete dissolution and liquidation. LION expects to dissolve and commence the winding-up process soon as practicable after the consummation of the asset sale to Beanstalk. LION expects that trading of its common stock on the OTC Bulletin Board will cease, and that its stock transfer books will be closed, concurrently with dissolution of the company. About LION Inc. Headquartered in Gig Harbour, Washington, LION Inc. (OTCBB:LINN) -- http://www.lionmts.com/-- provides software and services that enable mortgage loan brokers and lenders to increase their productivity in originating single family residential mortgage loans. About OpenClose Solutions Headquartered in West Palm Beach, Florida, OpenClose Solutions -- http://www.openclose.comor http://www.decisionassist.com/-- is in the mortgage software solutions since its inception in 1999. The company's Web-based, end-to-end mortgage lending platform, OpenClose(R), and loan pricing engine and automated underwriting software, DecisionAssist(TM), can be customized to any lender's workflow, business model or terminology. For more information, visit the company's Web sites at. M/I HOMES: Moody's Cuts B1 Corporate Family Rating; Outlook Neg. ---------------------------------------------------------------- Moody's lowered the ratings of M/I Homes, including its corporate family rating, to B2 from B1, senior unsecured notes, to B3 from B1, and preferred stock, to Caa2 from B3. At the same time Moody's assigned a SGL-3 speculative grade liquidity rating. The ratings outlook remains negative. The downgrade was prompted by: -- Moody's expectation that the company's pre-impairment operating earnings will be negative in 2008; -- the relatively large impairment charges taken since the beginning of the housing downturn and the potential for additional impairments; -- the possibility that the company will be unable to reduce costs fast enough relative to its revenue pressure, and -- the company's large exposure to particularly weak markets that may inhibit profitable inventory reduction over the intermediate term. The negative outlook reflects Moody's expectation that the homebuilding market will continue to deteriorate in 2008 and, thus, the company's operating and credit metrics are likely to remain under pressure. The outlook also takes into consideration that M/I Homes derives a significant proportion of its revenues and operating income from markets that are extremely weak including Florida and the Midwest. Debt leverage exceeding 60% could result in a further ratings downgrade. The widened notching of the company's preferred notes rating reflects low expected levels of recovery in a default scenario particularly given the further weakening of the homebuilding business and the potential for a mandatory dividend deferral should losses mount. Additionally, the company's fixed assets are mostly in markets that are likely to undergo significant haircuts in the event of default. The SGL-3 rating reflects the company's average liquidity profile over the next 12 months. The ratings acknowledge the company's historically conservative and disciplined growth strategy and a management that has been proactively pursuing cost reduction opportunities. Going forward, the company's outlook and ratings could stabilize if the company's operating margin improved meaningfully, if headroom under its covenants widened significantly, and if the company were to become strongly free cash flow positive on an LTM basis and on a projected basis from ongoing operations. These rating actions were taken: -- Corporate family rating downgraded to B2 from B1; -- Probability of default rating downgraded to B2 from B1; -- Senior unsecured debt ratings downgraded to B3 (LGD4, 60%) from B1 (LGD4, 51%); -- Preferred stock downgraded to Caa2 (LGD6, 99%) from B3 (LGD6, 94%); -- Speculative Grade Liquidity Rating, assigned SGL-3. Headquartered in Columbus, Ohio and begun in 1976, M/I Homes, Inc. sells homes under the trade names M/I Homes and Showcase Homes, with homebuilding operations located in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Chicago, Illinois; Tampa and Orlando, Florida; Charlotte and Raleigh, North Carolina; and the Virginia and Maryland suburbs of Washington, D.C. Homebuilding revenues for the trailing 12 months ended March 31, 2008 were $956 million. MASTR ASSET: S&P Puts Default Ratings on 12 Certificate Classes --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings to 'D' on 12 classes of mortgage pass-through certificates from MASTR Asset Backed Securities Trust's series 2006-HE1, 2006-HE2, 2006-HE3, 2006-WMC1, 2006-WMC2, 2006-WMC3, 2006-WMC4, and 2006-FRE2. In addition, S&P lowered its rating on class M-9 from series 2006- WMC1 to 'CC' from 'CCC'. The downgrades reflect the deteriorating performance of the collateral pools as monthly net losses continue to significantly outpace monthly excess interest cash flows, resulting in the complete write-down of the overcollateralization for these deals. As of the June 2008 distribution period, cumulative realized losses ranged from 4.71% (series 2006-HE2) to 7.67% (2006-WMC2) of the original principal balances, and total delinquencies ranged from 39.13% (2006-WMC4) to 59.05% (2006-FRE2) of the current principal balances. These transactions have outstanding pool factors ranging from approximately 43.24% (2006-HE1) to 77.22% (2006-WMC4). S&P downgraded the classes because, as of the June 2008 remittance period, the affected classes had incurred realized losses as follows (series; class; realized loss): -- 2006-HE1; M-10; $3,561,881; -- 2006-HE2; M-10; $134,232; -- 2006-HE2; M-11; $3,272,806; -- 2006-HE3; M-9; $1,732,314; -- 2006-HE3; M-10; $1,043,869; -- 2006-WMC1; M-10; $2,948,323; -- 2006-WMC2; M-8; $4,758,952; -- 2006-WMC3; M-7; $3,288,119; -- 2006-WMC4; M-8; $5,795,454; -- 2006-WMC4; M-9; $1,602,364; -- 2006-FRE2; M-9; $1,998,933; and -- 2006-FRE2; M-10; $2,907,847; Subordination, O/C, and excess interest cash flow provide credit support for these deals. The collateral originally consisted of subprime fixed- and adjustable-rate mortgage loans secured by one- to four-family residential properties. Ratings Lowered MASTR Asset Backed Securities Trust Mortgage pass-through certificates Rating ------ Series Class To From ------ ----- -- ---- 2006-HE1 M-10 D CC 2006-HE2 M-10 D CC 2006-HE2 M-11 D CC 2006-HE3 M-9 D CC 2006-HE3 M-10 D CC 2006-WMC1 M-9 CC CCC 2006-WMC1 M-10 D CC 2006-WMC2 M-8 D CC 2006-WMC3 M-7 D CC 2006-WMC4 M-8 D CC 2006-WMC4 M-9 D CC 2006-FRE2 M-9 D CC 2006-FRE2 M-10 D CC MEDICOR LTD: Has Until September 30 to File Chapter 11 Plan ----------------------------------------------------------- The Hon. Mary F. Walrath of the United States Bankruptcy for the District of Delaware extended the exclusive period of MediCor Ltd. and its debtor-affiliates to: a) file a Chapter 11 plan until Sept. 30, 2008, and b) solicit acceptances of that plan until Dec. 1, 2008. After due deliberation, Judge Walrath held that the request for extension is in the best interest of the Debtors and their estates. On May 30, 2008, the Debtor and certain of their non-debtor subsidiaries -- Eurosilicone SAS, Biosil Limited and Nagor Limited -- closed the sale of substantially all of their assets to Global Consolidated Aesthetics (US) Corp., and other related entities for $51.5 million in total. The requested extension will permit the Debtors to complete the consummation of the sale. The proceeds of the sale will pay costs and expenses, claims of creditors and advances made under the Debtors' loan facility, as reported in the Troubled Company Reporter on April 29, 2008. As reported in the TCR on July 9, 2007, the Debtor obtained up to $1.5 million in pospetition financing from its senior secured lender including Silver Oak Capital LLC and HFTP Investment LLC. In February 2008, the Court approved the Debtor's request to increase their DIP facility to $7 million. About MediCor Based in North Las Vegas, Nevada, MediCor Ltd. -- http://www.medicorltd.com/-- manufactures and markets products primarily for aesthetic, plastic and reconstructive surgery and dermatology markets. The company and seven of its affiliates filed for chapter 11 protection on June 29, 2007 (Bankr. D. Del. Case No. 07-10877) to effectuate the orderly marketing and sale of their business. Kenneth A. Rosen, Esq., Jeffrey D. Prol, Esq., and Jeffrey A. Kramer, Esq., at Lowenstein Sandler PC represent the Debtors in their restructuring efforts. Dennis A. Meloro, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP, acts as the Debtors' Delaware counsel. The Debtors engaged Alvarez & Marsal North America LLC as their restructuring advisor. David W. Carickhoff, Jr., Esq., and Jason W. Staib, Esq., at Blank Rome LLP serve as the Official Committee of Unsecured Creditor's counsel. In its schedules of assets and debts filed with the Court, Medicor disclosed total assets of $96,553,019, and total debts of $158,137,507. MELBOURNE-UNIV. APARTMENTS: Case Summary & 15 Unsecured Creditors ----------------------------------------------------------------- Debtor: Melbourne-University Apartments II, LLC 590 W. 84th Street Hialeah, FL 33014 Bankruptcy Case No.: 08-19404 Type of Business: The Debtor is in the real estate business. Chapter 11 Petition Date: July 8, 2008 Court: Southern District of Florida (Miami) Judge: Robert A. Mark Debtor's Counsel: Gary M. Murphree, Esq. Email: jlh@murphree-law.com 142A Beacom Blvd. Miami, FL 33135 Tel: (786) 431-1611 Fax: (786) 431-1612 http://murphree-law.com/ Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A list of the Debtor's largest unsecured creditors is available for free at http://bankrupt.com/misc/flsb08-19404.pdf MERGE HEALTHCARE: Dismisses KPMG LLP as Public Accounting Firm -------------------------------------------------------------- The Audit Committee of the Board of Directors of Merge Healthcare Incorporated dismissed KPMG LLP as the company's independent registered public accounting firm. This action followed a process undertaken by the Audit Committee. During the company's fiscal years ended Dec. 31, 2006 and Dec. 31, 2007, the company has not had any disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to KPMG's satisfaction, would have caused KPMG to make reference in connection with its opinion to the subject matter of the disagreement. In KPMG's report on the company's consolidated financial statements as of and for the fiscal year ended Dec. 31, 2006, KPMG identified material weaknesses in the company's internal control over financial reporting as of Dec. 31, 2006 relating to the Company's control environment, revenue recognition, accounting for income taxes, accounting for business combinations and implementation of a new accounting system. Such material weaknesses caused KPMG to opine that the company had not maintained effective internal control over financial reporting as of Dec. 31, 2006, based on criteria established in Internal Control � Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. In addition, the material weaknesses related to revenue recognition, accounting for income taxes and accounting for business combinations resulted in errors in the company's consolidated financial statements, which required the company to restate its consolidated financial statements as of Dec. 31, 2006 and 2005 and for each of the years in the three-year period ended December 31, 2006 in a Form 10-K/A that the company filed with the Securities Exchange Commission on Dec. 28, 2007. In KPMG's report on the company's consolidated financial statements as of and for the fiscal year ended Dec. 31, 2007, KPMG identified a material weakness related to the Company's accounting for income taxes, which caused KPMG to opine that the company had not maintained effective internal control over financial reporting as of Dec. 31, 2007, based on criteria established in Internal Control � Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. KPMG's report on the company's consolidated financial statements as of and for the fiscal year ended Dec. 31, 2007, noted that the company's financial statements were prepared assuming that the company will continue as a going concern. KPMG stated that, as discussed in Note 1 to the consolidated financial statements, the company suffered recurring losses from operations and negative cash flows that raise substantial doubt about the company's ability to continue as a going concern and noted that the consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. KPMG's report on the company's consolidated financial statements as of and for the year ended Dec. 31, 2006 stated the company adopted the provisions of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, effective January 1, 2006. 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. MERGE HEALTHCARE: Complies with Nasdaq Minimum Bid Price Protocol ----------------------------------------------------------------- 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 April 2, 2008, 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. Securities Purchase Agreement On July 1, 2008, Merge Healthcare Incorporated, certain of its subsidiaries and Merrick RIS, LLC entered into an amendment to that certain Securities Purchase Agreement, dated May 21, 2008, which amendment will become effective if the company's shareholders at the annual meeting scheduled for Aug. 19, 2008 approve a certain proposal appointing the members of the company's Board of Directors. Pursuant to the amendment, the parties agreed to delete Section 4(l) of the Purchase Agreement, which would result in (i) Merrick giving up its contractual right to nominate persons to the company's Board and (ii) Merrick no longer being obligated to vote for the slate of directors nominated by the Company. A full-text copy of the Amendment is available for free at http://ResearchArchives.com/t/s?2f67 About Merge Healthcare 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. MIDWEST AIR: Pilots Predict Bankruptcy After Labor Talks Fail ------------------------------------------------------------- After failing to strike collective bargaining agreement with the management of Midwest Airlines, the carrier's pilots are saying the company is planning to file for bankruptcy, reports say. The pilots say Midwest was not bargaining in good faith, and that the carrier is eyeing a better deal through a bankruptcy filing. Midwest downplayed the accusations, saying the talks are continuing, contrary to what the union says. According to AHN News, a bankruptcy filing would enable Midwest to negotiate new labor contracts with its union, and re-negotiate debt with its lenders and creditors. Pilots say the move will cost them "several millions of dollars" in wages and benefits. As reported by the Troubled Company Reporter on June 27, 2008, Jay Schnedorf, chairman of the Air Line Pilots Association's Midwest chapter, said that Midwest Air Group Inc. plans to reduce its fleet and workforce under a 30-day restructuring in order to prevent a bankruptcy filing. Reports say that the airline is scrambling to raise funds as profits dwindle due to rising fuel prices. Mr. Schnedorf said that about 200 of the 400 Midwest pilots will lose their jobs under the restructuring, the Milwaukee Journal Sentinel reported. About 35 pilots are due for retrenchment next month under a previously disclosed restructuring, Sentinel said. Midwest will also slash half of its 400 flight attendants, Sentinel says, citing Dory Klein, head of of Midwest Association of Flight Attendants. Vaughn Cordle of Airline Forecasts LLC stated that other workers will also be affected by the restructuring, including ground crew, Milwaukee Journal Sentinel reports. About Midwest Air Oak Creek, Wisconsin-based Midwest Air Group Inc. -- http://www.midwestairlines.com/-- is a holding company of Midwest Airlines, Inc. Midwest Airlines operates a passenger jet airline that serves destinations throughout the United States from Milwaukee, Wisconsin and Kansas City, Missouri. Skyway Airlines, Inc., dba Midwest Connect, is a wholly owned subsidiary of Midwest Airlines and serves as the regional airline for the company. Midwest Airlines and Midwest Connect constitute the company's segments. It has three principal product offerings: Midwest Airlines Signature Service, Midwest Airlines Saver Service and Midwest Connect regional service. As of Dec. 31, 2006, Midwest Airlines Signature Service operated in 20 cities in the United States, and Midwest Airlines Saver Service operated in 10 cities. Midwest Connect builds feeder traffic and provides regional scheduled passenger service to cities primarily in the Midwest. Its subsidiaries provide aircraft charter services, transport air freight and mail. The company has a total of more than 3,000 workers. As of Sept. 30, 2007, Midwest Air Group listed total assets of $395,615,000, total liabilities of $331,810,000, and total stockholders' equity of $63,805,000. NATIONAL R.V.: Has Until August 26 to File Chapter 11 Plan ---------------------------------------------------------- The United States Bankruptcy Court for the Central District of California further extended the exclusive periods of National R.V. Holdings Inc. and National R.V. Inc. to: a) file a Chapter 11 plan until Aug. 26, 2008, and b) solicit acceptances of that plan until Oct. 25, 2008. As reported in the Troubled Company Reporter on June 25, 2008, the Debtors said that the are presently drafting a consensual joint Chapter 11 plan that will resolve intercompany claims and allocate assets and liabilities of the Debtors to ensure that the interest of all of the Debtors' creditors are adequately represented. Los Angeles-based Kaye Scholer LLP represents the subcommittee of the Debtors' board of directors to address the intercompany issues. During their Chapter 11 cases, the Debtors have generated roughly $22 million following the liquidation of substantially all of their assets, including the sale of at least 175 recreational vehicles to Dennis Dillon RV LLC for $13.9 million. About National R.V. Headquartered in Perris, California, National R.V. Holdings Inc. (Pink Sheets: NRVH) -- http://www.nrvh.com/-- through its wholly owned subsidiary, National RV Inc., produces motorized recreational vehicles. National RV designs, manufactures and markets Class A gas and diesel motorhomes under model names Surf Side, Sea Breeze, Dolphin, Tropi-Cal, Pacifica and Tradewinds. The companies filed for Chapter 11 protection on Nov. 30, 2007 (Bankr. C.D. Calif. Lead Case No. 07-17937). David Guess, Esq., at Klee Tuchin Bogdanoff & Stern LLP, represents the Debtors in their restructuring efforts. The Debtors selected OMNI Management Group LLC as their claim, notice and balloting agent. The U.S. Trustee of Region 16 appointed seven creditors to serve on an Official Committee of Unsecured Creditors in this case. Pachulski Stang Ziehl & Jones LLP represents the Committee. When the Debtors filed for protection from their creditors, they listed total assets of $54,442,000 and total debts of $30,128,000. NETBANK INC: Judge Funk Approves Amended Disclosure Statement ------------------------------------------------------------- The Hon. Jerry A. Funk of the United States Bankruptcy Court for the Middle District of Florida approved an amended disclosure statement explaining an amended Chapter 11 plan of liquidation filed by NetBank, Inc., on July 9, 2008. He held that the amended disclosure statement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. Judge Funk will convene a hearing on Sept. 10, 2008, at 9:30 a.m., at 300 North Hogan St., 4th floor in Courtroom 4D in Jacksonville, Florida, to consider confirmation of the Debtor's amended liquidation plan. Objections, if any, are due Sept. 2, 2008. Judge Funk also approved the Debtor's proposed procedures for solicitation and tabulation of votes. Deadline for voting on the amended plan is Aug. 29, 2008, at 4:00 p.m. All ballots must be delivered at: NetBank Ballot Processing Center c/o Kurztman Carson Consultants LLC 2335 Alaska Avenue El Segundo, CA 90245 Under the Plan, all assets of the Debtor will be liquidated and the proceeds will be paid to creditors. Katz of GGG Inc., the appointed chief restructuring officer of the Debtor, has partially liquidated the Debtor's assets. As of the Plan's effective date, the Debtor estimates the value of its assets at between $7.2 million and $7.9 million exclusive of projected recoveries from avoidance actions, other causes of action and tax refunds, if any. Furthermore, the Debtor projects a $7,000,000 in cash -- including proceeds of its remaining assets real estate and cash held by MG Reinsurance Company after its liquidation. Clifford Zucker at J.H. Cohn LLP in New York, will serve as liquidating supervisor to wind-down the estate assets and distribute proceeds to creditors. Treatment of Interests and Claims All administrative claims will be paid in full on the Plan's effective date. Holders of allowed secured claims will be satisfied after the estate received the gross proceeds of any sale. Secured creditors and their claims are: i) Iron Mountain -- $34,249, secured by materials stored in its warehouse; ii) Dvual County Tax Collector -- $40,676, secured by personal property; and iii) Liberty Mutual Insurance Company, secured by letter of credit. Holders of senior unsecured claims, and general unsecured claims will be entitled to receive pro rata share of their respective claims. Holders of subordinated unsecured claims, Trust Preferred Claims, and securities claims will not receive any distribution from the Debtor. Holders of existing stock will not retain their interest but will receive distribution based upon the interest held as of the plan's confirmation date, from the proceeds of the liquidation after all valid claims are paid in full. The Debtor has 52.98 million shares outstanding, par value $1, and traded publicly on the "pink sheets." It was originally traded on the NASDAQ but was delisted before the Debtor filed for bankruptcy. A full-text copy of the amended disclosure statement is available for free at http://ResearchArchives.com/t/s?2f62 A full-text copy of the amended Chapter 11 plan of liquidation is available for free at http://ResearchArchives.com/t/s?2f63 About NetBank Headquartered in Jacksonville, Florida, NetBank Inc. -- http://www.netbank.com/-- is a financial holding company of Netbank, the United States' oldest Internet bank serving retail and business customers in all 50 states. NetBank Inc. does retail banking, mortgage banking, business finance, and providing ATM and merchant processing services. The company filed for Chapter 11 protection on Sept. 28, 2007 (Bankr. M.D. Fla. Case No. 07-04295). Alan M. Weiss, Esq., at Holland & Knight LLP. The U.S. Trustee for Region 21 appointed six creditors to serve on an Official Committee of Unsecured Creditors of the Debtor's case. Rogers Towers and Kilpatrick Stockton LLP represent the Committee in this case. As of Sept. 25, 2007, the Debtor listed total assets at $87,213,942 and total debts at $42,245,857. NEXCEN BRANDS: Completes Purchase of Bill Blass' Couture Business ----------------------------------------------------------------- NexCen Brands Inc. disclosed that through its subsidiary NexCen Fixed Asset Company LLC, it completed a purchase agreement with Michael Groveman and Carly Andrews Inc. to acquire Bill Blass Ltd. LLC, which owns and operates the Bill Blass couture business pursuant to a royalty-free license from the company. "Bill Blass continues to be a very important and highly regarded brand in fashion," Robert W. D'Loren, CEO of NexCen Brands, said. "Our acquisition of Bill Blass Couture provides the company with greater control of the future of the overall Bill Blass brand. As we continue to explore strategic alternatives, including the sale of our Bill Blass brand, we believe that owning Bill Blass Couture will maximize the potential sale value of the overall business." The purchase price paid at closing was comprised of nominal consideration and the company's assumption of approximately $425,000 in net liabilities, excluding amounts owed by Bill Blass Couture to the company. The company has been providing financial assistance to the Bill Blass Couture business since the beginning of 2008. In the first quarter of 2008, the company loaned approximately $950,000 to Bill Blass Couture to support marketing expenses. After the closing, the company expects to eliminate Bill Blass Couture's obligations to repay this amount. Additionally, prior to closing, Bill Blass Couture is permitted to pay up to $25,000 to Mr. Groveman from its existing cash reserves in exchange for Mr. Groveman agreeing to provide transitional consulting services to Bill Blass Couture for up to 45 days after closing. As part of the acquisition, Bill Blass Couture terminated its employment agreement with Mr. Groveman and Mr. Groveman was released from his agreement not to compete with the Bill Blass couture business for three years after the company's $54 million acquisition of Bill Blass in February 2007. About Bill Blass Headquartered in New York City, Bill Blass Ltd. LLC -- http://www.billblass.com/-- makes tailored men's and women's clothing. The company also has 30 licenses for items as furniture, eyewear, and accessories. 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. NORTHLAKE CDO: Moody's Cuts & Places on Review Notes' Ratings ------------------------------------------------------------- Moody's Investors Service downgraded and left on review for further possible downgrade the ratings on these notes issued by NorthLake CDO I, Limited: Class Description: $174,000,000 Class I-MM Floating Rate Notes Due 2033 -- Prior Rating: Aa3 -- Current Rating: A2, on review for possible downgrade Class Description: $56,000,000 Class I-A Floating Rate Notes Due 2033 -- Prior Rating: Ba3 -- Current Rating: B3, on review for possible downgrade Moody's has also withdrawn the short-term ratings on these notes: Class Description: $174,000,000 Class I-MM Floating Rate Notes Due 2033 -- Prior Short-term Rating: P-1 -- Current Short-term Rating: WR According to Moody's, the rating actions reflect increased deterioration in the credit quality of the underlying portfolio. Also according to Moody's, the Prime-1 ratings assigned to the Class I-MM Notes were based on the existence of a put agreement provided by a Prime-1 rated third party. The notes have been re-issued but with the put provider as both the investor and the put counterparty. Where the put provider is also the holder of the notes, it is Moody's view that the put agreement ceases to be relevant. Accordingly, Moody's has withdrawn its short-term ratings on these notes. NORTH MIAMI LAND: Auction of Interest in BLIA Set July 14 --------------------------------------------------------- Madeleine LLC will conduct a public auction of a collateral comprised of an undivided 99% limited partnership interest and 100% general partnership interest of North Miami Land Holdings, Ltd. in BLIA Developers Ltd., on July 14, 2008, at 11:00 a.m., EDT, at the offices of Orrick, Herrington & Sutcliffe at 666 Fifth Avenue in New York. North Miami and Madeleine are parties to certain loan and security agreement dated July 6, 2006, and pledge and security agreement dated July 6, 2006. Events of default under the agreements are active. Parties are entitled to an accounting of the unpaid indebtedness secured by the collateral. Madeleine's Chris Shiermbock can be reached at (212) 909-1303. Headquartered in Deerfield Beach, Flordia, North Miami Land Holdings Ltd. is located at 321 E. Hillsboro Boulevard. The company was incorporated on Nov. 27, 2002. NV TELEVISION: Moody's Assigns Corporate Family Rating of B3 ------------------------------------------------------------ Moody's Investors Service assigned a B3 Corporate Family Rating and a B3 Probability of Default Rating to NV Broadcasting, LLC. In addition, Moody's assigned a B1 rating to New Vision's $215 million senior secured first lien credit facilities ($20 million revolver and $195 term loan) and a Caa2 rating to its $100 million senior secured second lien term loan. Moody's also assigned a B1 rating to Parkin Broadcasting, LLC's $45 senior secured first lien credit facilities ($5 million revolver and $40 million term loan). The rating outlook is stable. This is the first time that Moody's has assigned ratings to NV Broadcasting, LLC. Parkin, an independently owned entity, has joint sales and shared service agreements with subsidiaries of NV Television, LLC, the parent of New Vision. In addition, New Vision and Parkin's credit facilities have cross guarantees, cross collateral and cross defaults. NV Television, LLC's financial statements include the accounts of Parkin. Moody's therefore evaluates New Vision and Parkin on a consolidated basis. Ratings/assessments assigned: NV Broadcasting, LLC -- Corporate Family Rating -- B3 -- Probability-of-default rating -- B3 -- $20 million Senior Secured First Lien Revolving Credit Facility -- B1 (LGD 3, 30%) -- $195 million Senior Secured First Lien Term Loan Facility -- B1 (LGD 3, 30%) -- $100 million Senior Secured Second Lien Term Loan Facility -- Caa2 (LGD 5, 80%) The outlook is stable. Parkin Broadcasting, LLC -- $5 million Senior Secured First Lien Revolving Credit Facility -- B1 (LGD 3, 30%) -- $40 million Senior Secured First Lien Term Loan Facility -- B1 (LGD 3, 30%) New Vision's ratings reflect the company's significant debt-to- EBITDA leverage of 10.7x based on pro-forma EBITDA, excluding the make-well contribution, for the trailing 12 months ended March 31, 2008 and incorporating Moody's standard adjustments, modest free cash flow relative to debt, modest scale and weakness in recent operating performance. The ratings also incorporate New Vision's revenue concentration risk, likelihood of future tuck-in acquisitions and the risks related thereto, limited covenant cushion, the inherent cyclicality of the advertising business and the increasing business risk associated with declining broadcast television audience trends and increasing cross-media competition for advertising spending. New Vision's ratings are supported by its considerable presence in the top 100 markets, significant proportion of relatively stable local advertising revenues, diverse network affiliations and potential revenue and cash flow upside from new revenue streams including retransmission consent fees. In addition, Moody's believes that the makewell agreement whereby the equity sponsor contributes 50% of the corporate overhead until leverage falls below 6.0x is a credit positive and benefits the company's cash flow. Headquartered in Los Angeles, California, NV Broadcasting, LLC, owns and operates 12 major affiliated broadcast television stations and two CW and two MyTV affiliated broadcast stations in 8 markets. The company has also disclosed the establishment of KBNZ as the CBS network affiliate serving the Bend,Oregon market. The company's pro-forma 2007 net revenue was approximately $109 million. PACE PRODUCT: Case Summary & 14 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Pace Product Solutions, Inc. 304 E. 78th Street, Apt. 5F New York, NY 10021 Bankruptcy Case No.: 08-12666 Type of Business: The Debtor sells muffler and exhaust systems. Chapter 11 Petition Date: July 10, 2008 Court: Southern District of New York (Manhattan) Debtor's Counsel: Daniel M. Katzner, Esq. Email: danielkatzner@yahoo.com 1025 Longwood Ave. Bronx, NY 10459 Tel: (718) 589-3999 Fax: (718) 893-3647 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million A list of the Debtor's largest unsecured creditors is available for free at http://bankrupt.com/misc/nysb08-12666.pdf PARK CAPITAL: Owner Depletes Investors' Money; Attempts Suicide --------------------------------------------------------------- Michael Jinyong Park, 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, based on the report. The report states that 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 in 1998, Edward Jones fired him, and in 2000, Raymond James Financial also fired him. PETRA CRE: Fitch Puts $32.5MM 'B' Notes Rating Under Neg. Watch --------------------------------------------------------------- Fitch Ratings has placed these seven classes of Petra CRE CDO 2007-1, Ltd./Corp. on Rating Watch Negative: -- $25.5 million class D notes 'A'; -- $22 million class E 'A-'; -- $33 million class F 'BBB+'; -- $20 million class G 'BBB'; -- $26.5 million class H 'BBB-'; -- $42.5 million class J 'BB'; -- $32.5 million class K 'B'. The actions are due to an increase in the percentage of assets of concern to 16.1% from 5.2% at last review, which resulted in failures of the Fitch property value decline stress scenarios for classes D through K. The collateral manager's contribution of $50 million of debt (5.0%) from its subsidiary, Petra Fund REIT Corp., to the collateralized debt obligation portfolio in May 2008 triggered Fitch's review. Despite the pool's credit deterioration from the contributed asset and the declining performance of two mortgage assets (5.9%) within the pool, the Class A-1, A-2, B, and C notes are not placed on RWN because the transaction maintains an adequate reinvestment cushion and passes Fitch's property value decline stress scenarios for the ratings assigned to those respective classes. The asset manager has expressed its intention to substitute collateral such that the portfolio stays within its collateral quality tests and passes Fitch's stress testing scenarios at the existing rating levels. Petra 2007-1 is a revolving commercial real estate cash flow CDO that closed on June 27, 2007. The portfolio is selected and monitored by Petra Capital Management LLC. Petra 2007-1 has a six-year reinvestment period during which, if all reinvestment criteria are satisfied, principal proceeds may be used to invest in substitute collateral. The reinvestment period ends June 2013. Petra 2007-1 became effective on March 23, 2008. As of the June 25, 2008 trustee report, the as-is poolwide expected loss has increased to 39.875% from 36.125% at the effective date. As a result of the aforementioned portfolio changes and based on the current PEL covenant of 44.125%, the CDO has below average reinvestment flexibility with 4.250% of cushion. The higher as-is PEL is attributed to the addition of the Petra REIT debt to the portfolio, the declining performance of a portfolio of casino properties (0.9%), and a multifamily property (5.0%) that had only a partial interest payment by the borrower last month. The Petra REIT debt was the only asset added to the CDO since the effective date. This asset is a floating rate obligation with a spread of 1,100 basis points over 1-month LIBOR. As of April 30, 2008, Petra held 53 real estate positions including one commercial mortgage-backed security. 39 of the positions are loans contributed to the CDO. Of the 14 assets that are not contributed to the CDO, seven assets are pledged to repurchase facilities. Fitch is concerned with the limited number of unencumbered assets held by Petra REIT, four of which are deemed assets of concern by Fitch. These four assets of concern are two B-notes secured by the land at the former Drake Hotel site in Manhattan and the equity in and B-note secured by the Westin Aruba. Further, a significant portion of Petra REIT's cash and cash equivalents are committed to future funding obligations for assets in the CDO. Petra REIT and its affiliates also own the below investment grade notes and preferred shares of this CDO, which presents concentration risk to the pool. Fitch is concerned with the potential conflicts of interest of having debt that is affiliated with the collateral asset manager contributed to the CDO. As such, Fitch assumed 100% expected loss in its CREL Surveyor model and 0% recovery in its corresponding stress test analysis for the Petra REIT debt. Since last review, two CRE loan positions have become loans of concern. One of the B-notes within the CDO is secured by a portfolio of three casino resorts located in Atlantic City, New Jersey and Tunica, Mississippi. This portfolio recently reported a significant decline in operating performance. Fitch has updated its analysis to reflect the portfolio's decreased cash flow and increased volatility. Fitch is also concerned with a whole loan secured by a multifamily property located in Tempe, Arizona. The property, which is undergoing capital improvements, is subject to seasonality issues due to its student tenancy. As such, lease-up is expected to be slow over the summer months. The borrower made only a partial interest payment last month, and is expected to come out-of-pocket in order to make debt service payments until August 2008. The overcollateralization and interest coverage ratios of all classes have remained above their covenants as of the June 2008 trustee report. The Class OC tests have improved since last review, however, the F/G/H OC test result (124.74%) is tight compared to its covenant (120.00%) considering 16.1% of the portfolio consists of Fitch assets of concern. Should the OC ratio decline below 120.00%, interest will be diverted from the below investment grade notes and preferred shares in order to redeem the Class A-1 notes and subordinate classes sequentially until the OC test is satisfied. Any diversion in cash flow from the subordinate notes and preference shares will result in stress to the Petra REIT debt asset. Fitch expects to resolve the Rating Watch Negative status of the class D, E, F, G, H, J, and K notes within 90 days of this action. Resolution will be based on the pool composition at that time. PILGRIM'S PRIDE: Moody's Cuts Ratings to B1; Outlook is Stable -------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Pilgrim's Pride Corporation, including the company's corporate family rating and probability of default rating to B1 from Ba3. The rating outlook is stable. This rating action concludes the review for possible downgrade begun on April 16, 2008. Ratings downgraded: -- Corporate family rating to B1 from Ba3 -- Probability of default rating to B1 from Ba3 -- $400 million 7.625% senior notes due 2015 to B3 (LGD5,84%) from B1 (LGD5,76%) -- $250 million senior subordinated notes due in 2017 and $5.1 million (original $100 million) senior subordinated notes due 2013 to B3 (LGD6,94%) from B2 (LGD6,94%) The downgrade is based on Moody's expectation that margins, cash flow and credit metrics will significantly erode in fiscal 2008 due to high feed grain prices. Before the June run-up in corn prices, Pilgrim's Pride had anticipated that its fiscal 2008 feed grain costs would rise by more than $800 million over the prior fiscal year. This was in addition to 2007's feed grain cost increase of approximately $600 million. In response to this inflationary economic environment, the company announced a 5% reduction in weekly chicken processing during the second half of fiscal 2008 and the closure of 6 of its 13 U.S. distribution centers. Pilgrim's Pride has also achieved synergies of $210 million through March 2008 from the Gold Kist acquisition. These efforts, however, are unlikely to prevent a material reduction in near term operating profitability and cash flow, which combined render key credit metrics for the company to levels more consistent with revised ratings. The downgrades in the debt instruments incorporate the generally larger balance of priority trade payables--which are senior to the senior unsecured debt--now that the company includes the operations of Gold Kist, and Moody's expectation for potentially higher average balances under the company's revolving credit facilities. Liquidity management has been a credit positive. In May 2008, the company sold 7.5 million common shares for net proceeds of approximately $177 million, which was applied to debt reduction, and in April 2008 amended financial covenants through the end of fiscal 2009. Committed multi-year domestic credit facilities include a $550 million revolving credit facility expiring in September 2011, a $300 million revolving credit facility expiring in 2013 and a $300 million receivables securitization facility expiring in 2012. The largest annual long-term debt repayment obligation over the next five years is a manageable $54.7 million in fiscal 2013. Headquartered in Pittsburg, Texas, Pilgrim's Pride Corporation is the world's largest chicken company. Sales for the 12 months ended March 29, 2008 exceeded $8.4 billion. PROGRESSIVE MOLDED: US Trustee Wants Cases Converted to Chapter 7 ----------------------------------------------------------------- Roberta A. DeAngelis, the Acting United States Trustee for Region 3, asks the Court to convert Progressive Molded Products, Inc. and its debtor-affiliates' Chapter 11 cases to Chapter 7. Section 1112(b)(1) of the Bankruptcy Code, as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, expressly provides that, upon request by a party, the Court may convert a Chapter 11 case to Chapter 7 for "cause". Ms. DeAngelis asserts cause exists for the conversion of the cases. She avers the Debtors' estate should be liquidated under Chapter 7 because of the substantial or continuing losses to the estate and the absence of a reasonable likelihood of rehabilitation of the Debtors. The Debtors, Ms. DeAngelis notes, have said they will commence a wind-down of their operations and have indicated that they only have funds available to pay some of their ongoing expenses for a short period. In the absence of operating revenues to support these costs, the liquidation process will cause a continuing loss, Ms. DeAngelis asserts. Although the Debtors possess certain assets to be liquidated in the future, it does not appear if they intend to operate or sell their businesses, she explains. If the Debtors' cases linger in Chapter 11, administrative costs will continue to accrue, Ms. DeAngelis warns. "The Debtors' resources are thin and, if they are not already, the Debtors will be administratively insolvent in the near future. If this case remains in Chapter 11, then the best interests of creditors are not being served." Ms. DeAngelis contends the best alternative is to convert to Chapter 7 now so that a proper and orderly liquidation can be accomplished and the bankruptcy cases can be expeditiously administered without incurring substantial administration costs. The hearing on the U.S. Trustee's proposal has yet to be scheduled. About Progressive Molded Ontario, Canada-based Progressive Molded Products Inc. -- designs and manufactures component parts for General Motors Corp., Ford Motor Company and Chrysler, LLC. Its interior automotive subsystems are used for the "Big Three" automakers' top-selling platforms, including lightweight trucks, SUVs, mini-vans, cross- over vehicles, and passenger cars. The company and three of its affiliates filed for creditor protection under Chapter 11 of the U.S. Bankruptcy Code before the United States Bankruptcy Court for the District of Delaware on June 20, 2008 (Lead Case No. 08-11253). Kelley A. Cornish, Esq. and Brian S. Hermann, Esq. at Paul, Weiss, Rifkind Wharton & Garrison LLP and Pauline K. Morgan, Esq., Joseph M. Barry, Esq., and Donald J. Bowman, Jr., Esq. at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Progressive Molded Products entities also commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on June 20. Sheryl E. Seigel, Esq. and Alex A. Ilchenko, Esq. at Lang Michener LLP are their solicitors. Alex F. Morrison at Ernst & Young, Inc., has been appointed CCAA monitor and Kevin J. Zych, Esq. at Bennett Jones LLP serves as his solicitor. PROGRESSIVE MOLDED: Wants Manufacturing Business to be Liquidated ----------------------------------------------------------------- Progressive Molded Products, Inc. and its debtor-affiliates, say they have no realistic choice but to commence an orderly wind-down of their operations, after major customers General Motors Corp., Ford Motor Company and Chrysler LLC opted to move their business to other suppliers. In 2007, the company generated 90% of its annual sales revenues from GM, Ford and Chrysler. On behalf of the Debtors, Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, relates that with estimated revenue of $540,000,000 in 2008 and historic growth in market share, the Debtors' business was viable but for an unsustainably high prepetition debt load. In order to restructure their balance sheet, the Debtors engaged in negotiations with their principal stakeholders Chapter 11 proceedings and filed for Chapter 11. According to Ms. Morgan, the Debtors' prepetition lenders have been extremely supportive of Progressive's ongoing restructuring efforts. Notwithstanding that the parties have made progress in the negotiations, the Debtors' major customers have opted to move their business elsewhere and have initiated proceedings before the U.S. Bankruptcy Court for the District of Delaware and the Ontario Superior Court of Justice (Commercial List) to remove tooling from the Debtors' facilities. On June 27, 2008, General Motors Corp. and Chrysler Corp. LLC filed separate motions with the Ontario Court seeking modification of the stay of proceedings imposed by the Initial CCAA Order to permit to repossess molds, dies, fixtures used by the Debtors to manufacture component parts. Ford followed suit two days later. The Canadian Court at the June 27 hearing granted limited relief to GM, Ford and Chrysler to obtain access to the Debtors' facilities over the ensuing weekend for purposes of assessing their Tooling in preparation for removing the Tooling in the event the Canadian Court granted the requested stay relief. After negotiations, the Debtors have agreed to terms of a wind- down of their operations and the return of the tooling with GM and Ford, Ms. Morgan relates. In exchange for the return of their tooling, Ford and GM have agreed to: (a) fund a portion of the Debtors' winding-down and other costs in connection with the transitioning of their business; (b) pay all prepetition accounts payable due to the Debtors, subject to certain allowed set-offs and other agreed deductions (including for the transition costs) and holdbacks; (c) pay all postpetition accounts payable due to the Debtors on net 10-day terms, subject to certain allowed set-offs; and (d) purchase all usable and merchantable material and finished goods inventory related to their production. Each of GM and Ford will make separate payments of $2,000,000 to the Debtors to satisfy certain wind-down costs incurred through July 11, 2008. Ford will pay in advance for all incremental costs, above the costs of wind-down, associated with producing parts for Ford through July 31, 2008. GM and Ford will also fund $1,000,000 into escrow to cover any disputes regarding (i) the usability or merchantability of inventory, (ii) the quality of any packaging or (iii) the price to be paid for inventory, packaging, secondary tooling or machinery equipment. Progressive also agreed to work with GM and Ford and permit the use of its operating assets for them to transition their business in an orderly fashion. Progressive will also cooperate with the delivery of any tooling, machinery and equipment owned the Customers. The Senior Prepetition Lenders consent the Debtors' agreements with Ford and GM. About Progressive Molded Ontario, Canada-based Progressive Molded Products Inc. -- designs and manufactures component parts for General Motors Corp., Ford Motor Company and Chrysler, LLC. Its interior automotive subsystems are used for the "Big Three" automakers' top-selling platforms, including lightweight trucks, SUVs, mini-vans, cross- over vehicles, and passenger cars. The company and three of its affiliates filed for creditor protection under Chapter 11 of the U.S. Bankruptcy Code before the United States Bankruptcy Court for the District of Delaware on June 20, 2008 (Lead Case No. 08-11253). Kelley A. Cornish, Esq. and Brian S. Hermann, Esq. at Paul, Weiss, Rifkind Wharton & Garrison LLP and Pauline K. Morgan, Esq., Joseph M. Barry, Esq., and Donald J. Bowman, Jr., Esq. at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Progressive Molded Products entities also commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on June 20. Sheryl E. Seigel, Esq. and Alex A. Ilchenko, Esq. at Lang Michener LLP are their solicitors. Alex F. Morrison at Ernst & Young, Inc., has been appointed CCAA monitor and Kevin J. Zych, Esq. at Bennett Jones LLP serves as his solicitor. PROGRESSIVE MOLDED: Gets Green Light to Wind-Down Business ---------------------------------------------------------- The Honorable Justice Morawetz of the Ontario Superior Court of Justice (Commercial List), and Judge Kevin Carey of the U.S. Bankruptcy Court for the District of Delaware have authorized Progressive Molded Products, Inc., and its affiliates to wind- down their business, in accordance with an agreement reached by the Debtors with General Motors Corp. and Ford Motor Company Judge Morawetz, on June 30, entered an order allowing the Debtors, known as "applicants" in proceedings under The Companies' Creditors Arrangement Act in Canada, to (i) conduct and orderly wind down of their operations, pursuant to the terms of the GM and Ford Term Sheets and (ii) cooperate with their customers to transition certain of their business to other suppliers. The GM and Ford Term Sheets provide for these terms: 1. The Debtors will not purchase raw materials or produce parts for GM (or any customer other than Ford) after July 1, 2008; 2. GM and Ford will be authorized to remove tooling in which they claim ownership and other tangible personal property from the Debtors' facilities; 3. GM and Ford will fund certain wind-down costs of the Debtors until July 11, 2008; and 4. The Debtors will continue to produce parts for Ford after June 30, 2008, provided that Ford pays in advance for all incremental costs (above the costs of wind-down) associated with producing parts for Ford to July 31, 2008. The Ontario Court also authorized the Applicants to sell the tangible personal property and to release the tools located in Canada in accordance with the Term Sheets. Judge Morawetz has ordered the Debtors' CCAA monitor, Ernst & Young, Inc., to supervise the removal of tangible personal property and tooling from the Applicants' facilities in Canada. Judge Morawetz ordered that payments to be paid by the Customers to the Applicants pursuant to the Term Sheets on account of their pre-filing or post-filing accounts receivable will not be sued to pay: (a) the costs of producing parts for Ford; (b) the costs of the Applicants and the Monitor incurred in connection with the inspection of the Applicants' assets by the Customers between June 27 and June 30; and (c) the costs of the removal of tangible personal property and tooling pursuant to the Term Sheets. The Ontario Court ordered that GM and Ford will pay the Inspection Costs and their rights to seek contribution and indemnity, if any, from Chrysler are preserved. Judge Kevin Carey noted that his order approving the Term Sheets and approving the return of tooling is without prejudice to parties to assert an ownership interest in the assets removed, sold or otherwise transferred or to challenge the reasonableness of the consideration paid for the assets sold or transferred. About Progressive Molded Ontario, Canada-based Progressive Molded Products Inc. -- designs and manufactures component parts for General Motors Corp., Ford Motor Company and Chrysler, LLC. Its interior automotive subsystems are used for the "Big Three" automakers' top-selling platforms, including lightweight trucks, SUVs, mini-vans, cross- over vehicles, and passenger cars. The company and three of its affiliates filed for creditor protection under Chapter 11 of the U.S. Bankruptcy Code before the United States Bankruptcy Court for the District of Delaware on June 20, 2008 (Lead Case No. 08-11253). Kelley A. Cornish, Esq. and Brian S. Hermann, Esq. at Paul, Weiss, Rifkind Wharton & Garrison LLP and Pauline K. Morgan, Esq., Joseph M. Barry, Esq., and Donald J. Bowman, Jr., Esq. at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Progressive Molded Products entities also commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on June 20. Sheryl E. Seigel, Esq. and Alex A. Ilchenko, Esq. at Lang Michener LLP are their solicitors. Alex F. Morrison at Ernst & Young, Inc., has been appointed CCAA monitor and Kevin J. Zych, Esq. at Bennett Jones LLP serves as his solicitor. PROGRESSIVE MOLDED: Court Orders Restraint to Canadian Employees ---------------------------------------------------------------- Progressive Moulded Products, Ltd., and its debtor-affiliates, sought and obtained from the Honorable Madame Justice Frank of the Ontario Superior Court of Justice (Commercial List), an order and warrant restraining their employees, their agents, servants and persons acting under their instructions from: (a) impeding, obstructing or delaying the access or egress of any person or vehicle, including cars, trucks, trailers or other vehicle of any kind at any entrance or exit from the premises, or in the vicinity of the premises, or interfering with vehicles on any public roadway attempting to gain access to, or egress from, the premises, by any means; (b) from trespassing onto, or causing damage to any of the premises or property of the Applicants or suppliers, customers, contractors or employees located at the premises; (c) from disturbing, interrupting or attempting to disturb or interrupt the applicant's lawful use and enjoyment of the premises and property; (d) from causing a nuisance within 500 meters of the premises; (e) from intimidating or unlawfully threatening the freedom of the Applicants, their employees, servants, agents, contractors and their customers, and the Monitor; (f) from wrongfully and without lawful authority inducing, counseling or procuring a breach or breaches of contracts and attempting to interfere with the performance of a contract or contracts between the applicants and other persons; and (g) from ordering, aiding abetting, counseling, procuring or encouraging in any matter whatsoever, either directly or indirectly, any persons to commit any prohibited acts aforementioned. The Applicants or Debtors' facilities in Canada are located at: -- 21 Graniteridge Road, Vaughan, Ontario, -- 9010 Keele Street, Vaughan, Ontario, -- 9020 Keele Street, Vaughan, Ontario, -- 9024 Keele Street, Vaughan, Ontario, -- 9030 Keele Street, Vaughan, Ontario, -- 9040 Keele Street, Vaughan, Ontario, -- 3280 Langstaff Road, Vaughan, Ontario, -- 20 Vaughan Valley Blvd., Vaughan, Ontario, -- 370 Caldari Road, Vaughan, Ontario, and -- 61 Royal Group Crescent, Vaughan, Ontario. The Ontario Court has directed York Regional Police, sheriffs or any judicial officers to render all assistance which the Applicants may request for the purpose of enforcing the order and warrant. At the Applicants' behest, the Ontario Court has also directed the Sheriff of the Judicial District of York Region to enforce its order by removing from the premises any person contravening its provisions, subject to the discretion of the police acting reasonably with respect to the timing and means. About Progressive Molded Ontario, Canada-based Progressive Molded Products Inc. -- designs and manufactures component parts for General Motors Corp., Ford Motor Company and Chrysler, LLC. Its interior automotive subsystems are used for the "Big Three" automakers' top-selling platforms, including lightweight trucks, SUVs, mini-vans, cross- over vehicles, and passenger cars. The company and three of its affiliates filed for creditor protection under Chapter 11 of the U.S. Bankruptcy Code before the United States Bankruptcy Court for the District of Delaware on June 20, 2008 (Lead Case No. 08-11253). Kelley A. Cornish, Esq. and Brian S. Hermann, Esq. at Paul, Weiss, Rifkind Wharton & Garrison LLP and Pauline K. Morgan, Esq., Joseph M. Barry, Esq., and Donald J. Bowman, Jr., Esq. at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Progressive Molded Products entities also commenced parallel restructuring proceedings under the Companies' Creditors Arrangement Act before the Ontario Superior Court of Justice (Commercial List) on June 20. Sheryl E. Seigel, Esq. and Alex A. Ilchenko, Esq. at Lang Michener LLP are their solicitors. Alex F. Morrison at Ernst & Young, Inc., has been appointed CCAA monitor and Kevin J. Zych, Esq. at Bennett Jones LLP serves as his solicitor. QUALITY WAY: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Quality Way Products, LLC Brian Mann, Jr. 5346 Ray Rd. Linden, MI 48451 Bankruptcy Case No.: 08-32807 Type of Business: The Debtor is engaged in the manufacture of support columns. See http://www.qualitywayproducts.com/ Chapter 11 Petition Date: July 9, 2008 Court: Eastern District of Michigan (Flint) Judge: Daniel S. Opperman.Flint Debtor's Counsel: Keith A. Schofner, Esq. Email: kaschofner@lambertleser.com 916 Washington Ave., Ste. 309 Bay City, MI 48708 Tel: (989) 893-3518 Fax: (989) 894-2232 http://lambertleser.com/ Total Assets: $200,000 Total Debts: $1,100,000 A list of the Debtor's largest unsecured creditors is available for free at http://bankrupt.com/misc/mieb08-32807.pdf QUEBECOR WORLD: Judge Peck Modifies Management Incentive Plan ------------------------------------------------------------- Judge James M. Peck of the U.S. Bankruptcy Court for the Southern District of New York authorized Quebecor World Inc. and its debtor-affiliates to implement and continue the Management Incentive Compensation Plan and the Plant Based Incentive Plan. Judge Peck, however, modified the MICP to provide that: (a) With respect to the payment of 50% of the enhanced portion of the MICP for 2008 otherwise payable upon meeting the criteria provided in a report by Towers Perrin, which was filed under seal. The amount will only be payable to the participants in the event that Quebecor World, Inc., files its annual financial report for the fiscal year ending Dec. 31, 2008, with the Canadian Securities Regulatory Authorities on March 31, 2009; (b) The 2009 EBITDA targets to be used to determine a participant's award under the 2009 MICP will remain subject to the review and approval of the Official Committee of Unsecured Creditors on July 31, 2008; provided, that, in the event, the Committee fails to approve the 2009 EBITDA targets before July 31, 2008, the targets will be determined by the Court upon subsequent request by the Debtors; and (c) With respect to the payment of the enhanced portion of the MICP for 2009 payable to the participants provided in the Towers Perrin Report, the payment will be made upon the later of (i) Sept 30, 2009, and (ii) the filing of the Debtors' plan of reorganization. "This is an incentive plan construct that has historical resonance in the company. The people to be benefited have expected this in pre-bankruptcy years and have even more of a need to be ensured these incentives will be in place now," Bloomberg News quoted Judge Peck as saying. Judge Peck, according to Bloomberg, determined that the payments proposed by "wouldn't violate a 2005 change in the Bankruptcy Code that was meant to discourage high bonuses to managers who oversaw companies before they filed for bankruptcy." The Debtors estimate that the MICP will cost between $14,000,000 and $41,900,000, and will benefit 250 employees. The PBIP, on the other hand, is estimated to cost $9,600,000, and will affect 340 participants. The Honorable Justice Robert Mongeon of the Quebec Superior Court of Justice, the judge overseeing Quebecor Worlds' reorganization proceedings under the Canadian Companies' Creditors Arrangement Act, also authorized the CCAA Applicants to implement and continue the Incentive Plans. Judge Mongeon rules that tax authorities are not prevented from obtaining information regarding the exact content of the Incentive Plans, the names of the eligible employees, and the payment amount to be made to each employee. Ernst & Young, Inc., the Court-appointed monitor of the CCAA Applicants' proceedings, told Judge Mongeon that it has reviewed the details of the Incentive Plans and believes that the Plans provide reasonable compensation in the Applicants' current situation. Accordingly, the Monitor said it supports the Applicants' request to adopt the Incentive Plans. Motion to Pay $203,403 in Bonuses The Court previously authorized the Debtors to pay their employees for wages and salaries they earned prepetition, and honor other prepetition employee-related obligation, which does not exceed $10,950 per employee. The Debtors have determined that they owe 23 employees bonuses aggregating $203,403, pursuant to the terms and conditions of each of the employees' prepetition employment contracts. Thee payments are owed to the employees as prepetition signing bonuses offered to certain new hires or to employees asked to relocate, Michael J. Canning, Esq., at Arnold & Porter LLP, New York, relates. Accordingly, the Debtors seek the Court's authority to pay the bonuses. Mr. Canning says the Debtors need to pay the bonuses to minimize the personal hardship that the affected employees will suffer if they are not paid when due, and to maintain the morale of the Debtors' workforce by adhering to the payment terms provided for under employment contracts entered into prepetition with the affected employees. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina and the British Virgin Islands. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08- 10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The Debtors have until Sept. 30, 2008, to file a plan of reorganization in the chapter 11 case. The Debtors' CCAA stay has been extended to July 25, 2008. (Quebecor World Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) QUEBECOR WORLD: Wants Five More KPMG Retention Letters Approved --------------------------------------------------------------- Quebecor World Inc. and its debtor-affiliates notified the U.S. Bankruptcy Court for the Southern District of New York that they have recently entered into five additional engagement letters with KPMG LLP (U.S.). The Debtors sought the Court's approval of the additional engagement letters, nunc pro tunc to May 22, 2008. The letters contemplate that, in addition to the tax compliance and consulting services, KPMG US will also provide these services: (a) preparation of a tax opinion letter concerning the deductibility of interest on outstanding indebtedness for U.S. federal income tax purposes taking into account certain refinancing and recapitalization transactions in 2007; (b) preparation of a tax opinion letter concerning the U.S. federal income tax implications with respect to a cross border leasing arrangement; (c) preparation of a tax opinion letter with respect to the 2007 reorganization of the Debtors' "reverse hybrid" financing structure; (d) providing tax advice with respect to the U.S. federal income tax consequences of alternative potential reorganizations of the Debtors' Mexican affiliates; and (e) providing tax consulting services with respect to the U.S. federal income tax consequences of the Debtors' restructuring of a portion of their debts. The Debtors will pay KPMG US based on these hourly rates: Washington National Tax Partner $730 International Corporate Services Partner $715 ICS Tax Managing Director $670 WNT Senior Manager $655 ICS Senior Manager $610 ICS Manager $490 ICS Senior Associate $325 ICS Associate $245 ICS Intern $145 Michael Lawler, a partner at KPMG (US), maintained that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code, and that it does not represent any interest adverse to the Debtors or their estates. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina and the British Virgin Islands. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08- 10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The Debtors have until Sept. 30, 2008, to file a plan of reorganization in the chapter 11 case. The Debtors' CCAA stay has been extended to July 25, 2008. (Quebecor World Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) QUEBECOR WORLD: Printing Agreement with Dex Extended to 2015 ------------------------------------------------------------ Quebecor World Inc. signed an extended and expanded multi-year agreement with Dex Media Inc. Under this expanded agreement Quebecor World will extend by one year to 2015 its existing directory printing agreement covering Dex directories in fourteen Western and Central states. In addition, the contract expands the products to be manufactured by Quebecor World for Dex Media. These value added products offer advertisers creative, nontraditional ways of addressing the end consumer. Incremental sales are forecast at more than $25 million over the term of the agreement. Quebecor World will supply Dex Media from its Loveland, CO. plant and from its network of North American directory facilities. "Dex Media is one of America's leading directory publishers," said Jacques Mallette, President and CEO Quebecor World. "Quebecor World is pleased to expand our relationship with them." Kevin J. Clarke, President of Quebecor World's Publishing Services Group commented, "Dex Media and Quebecor World have worked together successfully for many years. This agreement to produce more of their valued added products is a true win-win opportunity. We are delighted to work together to support such new innovation in the directory marketplace." Assumption of Amended Printing Deal with Dex As reported in The Troubled Company Reporter on July 2, 2008, the Debtors obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to amend and assume an agreement it entered with Dex Media Inc. The TCR on June 24, 2008, said that Debtor Quebecor World (USA) Inc., and Dex Media are parties to a master agreement for printing services, dated March 31, 2005. The printing agreement provides for QWUSA to print telephone directories for Dex through Dec. 31, 2014. Sales volume of the printing agreement was estimated at about $200,000,000, Michael J. Canning, Esq., at Arnold & Porter LLP, in New York, related. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina and the British Virgin Islands. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08- 10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The Debtors have until Sept. 30, 2008, to file a plan of reorganization in the chapter 11 case. The Debtors' CCAA stay has been extended to July 25, 2008. (Quebecor World Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) QUEBECOR WORLD: Receives Conversion Notices for Series 5 Shares --------------------------------------------------------------- Quebecor World Inc. received notices in respect of 744,124 of its remaining 2,507,153 issued and outstanding Series 5 Cumulative Redeemable First Preferred Shares (TSX: IQW.PR.C) requesting conversion into the company's Subordinate Voting Shares (TSX: IQW). In accordance with the provisions governing the Series 5 Preferred Shares, registered holders of the shares are entitled to convert all or any number of their Series 5 Preferred Shares into a number of Subordinate Voting Shares effective as of Sept. 1, 2008, provided the holders gave notice of their intention to convert at least 65 days prior to the Conversion Date. The Series 5 Preferred Shares are convertible into that number of the company's Subordinate Voting Shares determined by dividing C$25.00 together with all accrued and unpaid dividends on the shares up to Aug. 31, 2008 by the greater of (i) C$2.00 and (ii) 95% of the weighted average trading price of the Series 5 Preferred Shares on the Toronto Stock Exchange during the period of 20 trading days ending on Aug. 28, 2008. The next conversion date on which registered holders of the Series 5 Preferred Shares will be entitled to convert all or any number of such shares into Subordinate Voting Shares is Dec. 1, 2008, and notices of conversion in respect thereof must be deposited with the company's transfer agent, Computershare Investor Services Inc., on or before Sept. 26, 2008. About Quebecor World Based in Montreal, Quebec, Quebecor World Inc. (TSX: IQW) (NYSE: IQW), -- http://www.quebecorworldinc.com/-- provides market solutions, including marketing and advertising activities, well as print solutions to retailers, branded goods companies, catalogers and to publishers of magazines, books and other printed media. It has 127 printing and related facilities located in North America, Europe, Latin America and Asia. In the United States, it has 82 facilities in 30 states, and is engaged in the printing of books, magazines, directories, retail inserts, catalogs and direct mail. The company has operations in Mexico, Brazil, Colombia, Chile, Peru, Argentina and the British Virgin Islands. Quebecor World and 53 of its subsidiaries, including those in Canada, filed a petition under the Companies' Creditors Arrangement Act before the Superior Court of Quebec, Commercial Division, in Montreal, Canada, on Jan. 20, 2008. The Honorable Justice Robert Mongeon oversees the CCAA case. Francois-David Pare, Esq., at Ogilvy Renault, LLP, represents the Company in the CCAA case. Ernst & Young Inc. was appointed as Monitor. On Jan. 21, 2008, Quebecor World (USA) Inc., its U.S. subsidiary, along with other U.S. affiliates, filed for chapter 11 bankruptcy on Jan. 21, 2008 (Bankr. S.D.N.Y Lead Case No. 08- 10152). Anthony D. Boccanfuso, Esq., at Arnold & Porter LLP represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Akin Gump Strauss Hauer & Feld LLP. Based in Corby, Northamptonshire, Quebecor World PLC -- http://www.quebecorworldplc.com/-- is the U.K. subsidiary of Quebecor World Inc. that specializes in web offset magazines, catalogues and specialty print products for marketing and advertising campaigns. The company employs around 290 people. Quebecor PLC was placed into administration with Ian Best and David Duggins of Ernst & Young LLP appointed as joint administrators effective Jan. 28, 2008. As of Sept. 30, 2007, Quebecor World's unaudited consolidated balance sheet showed total assets of $5,554,900,000, total liabilities of $3,964,800,000, preferred shares of $175,900,000, and total shareholders' equity of $1,414,200,000. The Debtors have until Sept. 30, 2008, to file a plan of reorganization in the chapter 11 case. The Debtors' CCAA stay has been extended to July 25, 2008. (Quebecor World Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) RELIANT ENERGY: Has Until August 19 to File Chapter 11 Plan ----------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware extended the exclusive periods of Reliant Energy Channelview LP and its debtor-affiliates to: a) file a Chapter 11 plan until Aug. 19, 2008, and b) solicit acceptances of that plan until Oct. 20, 2008. Global Infrastructure Partners and FORTISTAR have completed the purchase of the Channelview cogeneration facility, a 830-megawatt natural gas-fired power plant located in Texas, from affiliates of the Debtors for $500 million plus certain adjustments. Kelson Energy Inc. offered $468 million for the power plant, which was expected to pay all creditors 100%, leaving some for the owners, as reported in the Troubled Company Reporter on March 26, 2008. The requested extension of time will allow the Debtors to complete the consummation of sale of substantially all of their assets. The sale is expected to provide sufficient funds to pay all of their creditors in full and significant recovery for equity. After the closing of the sale, the Debtor will negotiate and formulate a consensual Chapter 11 plan. About Reliant Energy Based in Houston, Reliant Energy Channelview L.P. owns a power plant located near Houston, and is an indirect wholly owned subsidiary of Reliant Energy Inc. -- http://www.reliant.com/-- The company and its three affiliates, Reliant Energy Channelview (Texas) LLC, Reliant Energy Channelview (Delaware) LLC, and Reliant Energy Services Channelview LLC filed for chapter 11 protection on Aug. 20, 2007 (Bankr. D. Del. Lead Case No. 07-11160). Jason M. Madron, Esq., Lee E. Kaufman, Esq., Mark D. Collins, Esq., Paul Noble Heath, Esq., Richards, Robert J. Stearn Jr., Esq., at Layton & Finger P.A., and Timothy P. Cairns, Pachulski Stang Ziehl & Jones represent the Debtors. The U.S. Trustee for Region 3 appointed an Official Committee of Unsecured Creditors in these cases. David B. Stratton, Esq., and Evelyn J. Meltzer, Esq., at Pepper Hamiltion LLP, represent the Committee. When the Debtors filed for protection from their creditors, they listed total assets of $362,000,000 and total debts of $342,000,000. * * * AS reported in the Troubled Company Reporter on June 5, 2008, Standard & Poor's Ratings Services raised the corporate credit rating of Reliant Energy Inc., and its subsidiaries Orion Power Holdings Inc. and Reliant Energy Mid-Atlantic Power Holdings LLC to 'BB-' from 'B'. S&P also raised the rating on Reliant's secured debt facilities, consisting of the $500 million secured revolver, $250 million synthetic LOC facility, and $667 million outstanding senior secured notes, to 'BB+' from 'BB-' and affirmed the recovery rating on these facilities at '1', indicating a very high expectation (90% to 100%) for recovery of principal in a payment default scenario. REPUBLIC AIRWAYS: To Slash 500 Jobs Due to Contract Reductions -------------------------------------------------------------- Republic Airways Holdings said it plans to reduce its workforce by approximately 500 employees or 10% of its total number of employees. This action is in response to changing market conditions and expected reductions in its small jet contract flying. The staff reductions will take place over the next several months. The company believes a portion of the reduction will occur through normal attrition. "These reductions reflect our response to the actions our network partners are taking to reduce the size of their domestic hub operations in light of sustained, high fuel prices," Bryan Bedford, chairman, president and CEO of Republic Airways, said. "The combined impacts of fewer aircraft flying and lower utilization rates on our smaller jet aircraft are leaving us with no choice but to adjust our business to current market conditions," Mr. Bedford added. "We regret having to make this difficult decision and we will continue working hard to grow our business with larger capacity aircraft and get our people back to work as soon as possible." The Wall Street Journal said that United Air Lines Inc.'s decision to end an agreement with them has resulted to the determination of Republic's Chautauqua Airlines Inc. unit to remove seven aircraft by December 2009. WSJ added that Frontier Airlines Inc. has also initiated to scrap its code-sharing agreement with Republic since Frontier bankruptcy filing in April. Its shares fell 1.8% in after-hours trading, they fell 3.8% to close at $7.78 on July 11, WSJ indicated. About Republic Airways Holdings Based in Indianapolis, Indiana, Republic Airways Holdings (NASDAQ: RJET) -- http://www.republicairways.com/-- is an airline holding company that owns Chautauqua Airlines, Republic Airlines and Shuttle America. The airlines offer scheduled passenger service on approximately 1,300 flights daily to 117 cities in 34 states, Canada, Mexico and Jamaica through airline services agreements with six U.S. airlines. All of the airlines' flights are operated under their airline partner brand, such as AmericanConnection, Continental Express, Delta Connection, United Express and US Airways Express. The airlines currently employ approximately 5,000 aviation professionals and operate 227 regional jets. ROPER INDUSTRIES: S&P Lifts $500MM Shelf Rating to BBB- from BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its preliminary senior unsecured rating on Roper Industries Inc.'s (BBB-/Stable/--) $500 million shelf filed under SEC rule 415 on Oct. 24, 2004, to 'BBB-' from 'BB+'. "The action follows Roper's closing on a $1.1 billion unsecured credit facility, consisting of a 2-year $350 million term loan and a five-year $750 million revolving credit facility, which replaced the company's existing secured credit facility that was due in 2009," said Standard & Poor's credit analyst John Sico. The senior unsecured preliminary ratings had been subordinated to the company's secured credit facility. S&P have withdrawn the ratings on the secured credit facility because it has been retired. The ratings on Roper Industries Inc., a diversified manufacturer of industrial products, reflect the company's satisfactory business profile, which is marked by leading positions in profitable niche markets, and by its broad product, end-market, and geographic diversity. However, the company is acquisitive, which exposes it to integration risk. Ratings List Roper Industries Inc. Corporate Credit Rating BBB-/Stable/-- Ratings Withdrawn To From -- ---- Roper Industries Inc. $955 Mil. Term Ln Bank Ln Due 2009 NR BBB- $400 Mil. Revolv. Credit Fac Bank Ln Due 2009 NR BBB- Ratings Raised $500 Mil. Sr Unsecd Shelf BBB- (prelim) BB+ (prelim) SENSATA TECHNOLOGIES: Moody's Cuts Ratings, Junks Senior Notes -------------------------------------------------------------- Moody's Investors Service lowered the ratings of Sensata Technologies B.V. corporate family rating to B3 from B2; probability of default to B3 from B2; senior secured credit facility to B1 from Ba3; senior unsecured notes to Caa1 from B3; and senior subordinated notes to Caa2 from Caa1. These rating actions reflect the company's sustained high leverage levels and modest debt service metrics, and the potential for weaker economic trends to further pressure the company's operating performance over the coming year. The company's speculative grade liquidity rating remains at SGL-2. The outlook is changed to stable from negative. The downgrade of the company's corporate family rating to B3 from B2 reflects the lack of deleveraging as the company continues to face challenging economic environments. Key leverage metrics through the 12 months of March 31, 2008 were: debt/EBITDA near 9.0x times and EBITA/interest of 1.2 times. The high leverage results from the initial acquisition of Sensata by Bain Capital, LLC in April 2006 augmented by a series of debt-financed acquisitions since then. Moody's had expected some level of debt repayment beyond mandatory term loan amortization, which would have partially offset some of the negative impact from foreign exchange translation on the company's euro-denominated debt. The strong euro relative to the U.S. dollar is resulting in higher debt balances on Sensata's consolidated balance sheet adding to the high leverage. This leveraged capital structure could hinder the company's financial flexibility as some of the company's end markets face increasing economic pressures. Additionally, the slowing U.S. economy is negatively impacting the domestic housing market, a key source of revenue for its controls business. While a significant portion of Sensata's business is derived from sensors used on automobiles, the company is less affected by declining auto sales than traditional auto parts suppliers because of the increasing content of electronics on vehicles. These weaknesses are balanced against the company's good liquidity, global presence, and growing exposure to several other end markets including aerospace and telecommunications. The stable outlook reflects Sensata's good liquidity and ability to generate free cash flow as it faces a slowing U.S. economy, which is negatively impacting some of its key end markets. These ratings/assessments were affected by this action: -- Corporate family rating lowered to B3 from B2; -- Probability of default rating lowered to B3 from B2; -- Senior secured credit facility downgraded to B1 (LGD2, 28%) from Ba3 (LGD2, 29%); -- $450 million senior unsecured notes due 2014 downgraded to Caa1 (LGD5, 73%) from B3 (LGD5, 75%); and, -- EUR245 million senior subordinate notes due 2016 downgraded to Caa2 (LGD6, 90%) from Caa1 (LGD6, 91%). -- The company's speculative grade liquidity rating of SGL-2 is unchanged. Headquartered in Attleboro, Massachusetts and incorporated under the laws of The Netherlands, Sensata Technologies B.V. designs and manufactures sensors and electronic controls. Sensata is a global designer, manufacturer, and marketer of customized and engineered sensors and control products. Revenues for the 12 months ended March 31, 2008 totaled about $1.5 billion. SINGLETON COLES: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtors: Singleton Curtis Coles Kymberle Rochelle Coles aka Kymberle Rochelle Kolen-Coles aka Kym Rochelle Kolen-Coles 13403 Marburg Lane Upper Marlboro, MD 20772 Bankruptcy Case No.: 08-18925 Chapter 11 Petition Date: July 9, 2008 Court: District of Maryland (Greenbelt) Judge: Thomas J. Catliota Debtors' Counsel: Brett Weiss, Esq. Email: Brett@BankruptcyLawMaryland.com Brett Weiss P.C. 18200 Littlebrooke Drive Olney, MD 20832 Tel: (301) 924-4400 Fax: (301) 570-3025 http://www.bankruptcylawmaryland.com/ Total Assets: $1,055,501 Total Debts: $1,609,197 A copy of Singleton Curtis Coles and Kymberle Rochelle Coles' petition with a list of its largest unsecured creditors is available for free at: http://bankrupt.com/misc/mdb08-18925.pdf SLATE CDO: Portfolio Credit Quality Slide Cues Fitch's Neg. Watch ----------------------------------------------------------------- Fitch Ratings has placed these classes of Slate CDO 2007-1, Ltd./LLC on Rating Watch Negative: -- $27,800,000 class A3 secured deferrable interest floating- rate notes 'A'; -- $18,000,000 class B1 secured deferrable interest floating- rate notes 'BBB'; -- $13,500,000 class B2 secured deferrable interest floating- rate notes 'BBB-'; -- $11,200,000 class B3 secured deferrable interest floating- rate notes 'BB+'; -- $5,300,000 class C mezzanine deferrable interest floating- rate notes 'BB'. The placement of the classes on Rating Watch Negative reflects the decline in the portfolio credit quality resulting from Fitch's downgrades of 11 tranches from seven CMBS B-Piece Resecuritizations (13.6% of the collateral pool). Slate CDO 2007-1 represents a hybrid collateralized debt obligation transaction that combines the use of synthetic and cash assets, as well as unfunded and funded liabilities. Slate CDO 2007-1 has a $270 million initially unfunded super-senior liquidity facility, and has issued approximately $330 million of funded notes and funded preference shares and has invested in a $600 million portfolio of combined synthetic and cash securities. The portfolio consists of 55% credit default swaps, primarily referencing commercial mortgage-backed securities and CMBS B-Piece Resecuritizations, as well as 45% cash CMBS, commercial real estate CDO cash securities, and cash CMBS B-Piece Resecuritizations. The collateral was selected and is monitored by Petra Capital Management LLC. The initial ratings were based on the quality of the portfolio assets which had a maximum Fitch weighted average rating of 'BBB/BBB-', the credit enhancement provided by support from the preference shares, the excess spread, the reserve account, and the protection incorporated within the structure. After accounting for the downgrades to approximately 13.6% of the collateral, which are CMBS B-Piece Resecuritizations, the asset quality of the portfolio is now 'BBB-/BB+' and no longer supports the ratings for the classes placed on Rating Watch Negative. The ratings of the class A-1SA, A-1SB (together the class A-1S notes), A-1J, and class A-2 notes address the likelihood that investors will receive full and timely payments of interest, as well as the stated balance of principal, by the stated maturity date pursuant to the governing documents. The ratings of the class A3, B1, B2, B3, and C1 notes address the likelihood that investors will receive ultimate interest payments, as well as the stated balance of principal, by the stated maturity date in accordance with the governing documents. Fitch is reviewing its Structured Finance CDO approach and will comment separately on any changes and potential rating impact at a later date. The resolution of this Rating Watch Negative action will reflect the current portfolio as well as the structural features of the transactions and will follow the release of Fitch's revised SF CDO rating criteria. SPECTRUM BRANDS: Bares Supplemental Info on Pet Biz Sold to Salton ------------------------------------------------------------------ In connection with the sale of its global pet business to Salton Inc., Spectrum Brands Inc. is disclosing certain information concerning the pet business. As disclosed in the Troubled Company Reporter on May 22, 2008, Spectrum Brands signed a definitive agreement with Salton and its subsidiary, Applica Pet Products LLC, for the sale of its global pet business for $692.5 million in cash and an aggregate principal amount of the company's subordinated debt securities equal to $222.5 million less an amount equal to accrued and unpaid interest on such subordinated debt securities since the dates of the last interest payments thereon, which, depending on when the closing occurs, could be an amount of up to approximately $6.5 million. A full-text copy of the Supplemental Regulation FD Disclosure of Spectrum Brands, Inc., dated July 1, 2008, is available for free at http://ResearchArchives.com/t/s?2f61 The Troubled Company Reporter reported on July 1, 2008, that Spectrum Brands has not been successful in its attempt to secure the consent of its senior lenders necessary to complete the sale of its pet supply business. The company continues to believe that the sale of its global pet business to Salton Inc. and its subsidiary, Applica Pet, upon the negotiated terms is in the best interests of the company and its shareholders, well as its other constituencies. The definitive purchase agreement continues in full force and effect, and the company intends to comply with its obligations thereunder in order to satisfy the conditions necessary to consummate the sale of its global pet supply business. About Salton Inc. Headquartered in Lake Forest, Illinois, Salton Inc. (NYSE:SFP) -- http://www.saltoninc.com/-- designs, markets and distributes branded, high-quality small appliances, home decor and personal care products. Its product mix includes a range of small kitchen and home appliances, electronics for the home, time products, lighting products, picture frames and personal care and wellness products. About Spectrum Brands Headquartered in Atlanta, Georgia, Spectrum Brands Inc. (NYSE: SPC) -- http://www.spectrumbrands.com/-- is a supplier of consumer batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insect control products, personal care products and portable lighting. * * * As disclosed in the Troubled Company Reporter on May 26, 2008, Moody's Investors Service placed the Caa1 corporate family rating and Caa1 probability of default rating of Spectrum Brands under review following the announcement that Spectrum has entered into a definitive agreement to sell its Global Pet business to Applica Pet Products, a subsidiary of Salton, Inc., for over $900 million. As reported in the TCR on May 23, 2008, following the announcement that Spectrum Brands has signed a definitive agreement with Salton, Inc. for the sale of its Global Pet Business for approximately $692.5 million in cash and an aggregate principal amount of Spectrum's subordinated debt securities equal to $222.5 million, Fitch affirms Spectrum Brands, Inc. ratings as Issuer Default Rating at 'CCC'; $1 billion term loan B at 'B/RR1'; $225 million ABL at 'B/RR1'; EUR350 million term loan at 'B/RR1'; $700 million 7.4% senior sub note at 'CCC-/RR5'; $2.9 million 8.5% senior sub note at 'CCC-/RR5'; and $347 million 11.25% variable rate toggle senior sub note at 'CCC-/RR5'. The Rating Outlook is Negative. Standard & Poor's Ratings Services placed its ratings on Atlanta- based Spectrum Brands Inc., including the 'CCC+' long-term corporate credit rating, on CreditWatch with positive implications. The CreditWatch status indicates that S&P could either raise or affirm the ratings following the completion of its review. Approximately $2.6 billion of debt was outstanding as of March 30, 2008. THORNBURG MORTGAGE: Parties Approve Changes to Financing Terms -------------------------------------------------------------- Thornburg Mortgage Inc. disclosed that a majority of the participants in the principal participation agreement component of company's financing transaction approved an amendment to change the requirement that the tender offer for the preferred stock result in the tender of at least 90% of the aggregate liquidation preference of the company's outstanding preferred stock. On July 1, 2008, Thornburg Mortgage disclosed that a majority of the participants in the company's principal participation agreement approved an extension of the deadline to complete the preferred stock tender offer to Sept. 30, 2008. In addition, holders of approximately 93% of the contributions to the Escrow Agreement established to partially satisfy the cash consideration for the tender offer agreed to retain their funds in escrow until the extended deadline. In addition, the principal participation agreement, the purchase agreement and the Escrow Agreement the company entered into in connection with the March 31, 2008, financing transaction were amended to reflect the extension of the deadline by which the company must successfully complete the tender offer. To complete the tender offer, the company must instead complete a tender of at least 66-2/3% of the aggregate liquidation preference of each series of its outstanding preferred stock. Under the terms of the tender offer, for each share of Thornburg Mortgage Series C, D, E and F Preferred Stock that is validly tendered and accepted upon expiration of the tender offer, the holder will receive $5.00 in cash and approximately 3.5 shares of common stock. Upon the completion of the tender offer, the annual interest rate on the company's Senior Subordinated Secured Notes due 2015 will be lowered from 18% to 12%, resulting in savings of approximately $69 million per year in interest payments until maturity or until the company's senior subordinated secured notes are earlier redeemed or repurchased. Additionally, the completion of the tender offer will result in the termination of the Principal Participation Agreement, thereby allowing the company to retain the monthly principal payments on the mortgage backed securities collateralizing its reverse repurchase agreement borrowings once the Override Agreement terminates in March 2009, after deducting payments due under those reverse repurchase agreements. About Thornburg Mortgage Inc. Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA) -- http://www.thornburgmortgage.com/-- is a single-family residential mortgage lender focused principally on prime and super-prime borrowers seeking jumbo and super-jumbo adjustable- rate mortgages. It originates, acquires, and retains investments in adjustable and variable rate mortgage assets. Its ARM assets comprise of purchased ARM assets and ARM loans, including traditional ARM assets and hybrid ARM assets. At Dec. 31, 2007, the company's consolidated balance sheet showed $36.5 billion in total assets, $34.5 billion in total liabilities, and $2.00 billion in total stockholders' equity. * * * As reported in the Troubled Company Reporter on June 27, 2008, Moody's Investors Service affirmed Ca and C senior debt and preferred stock ratings, respectively of Thornburg Mortgage Inc. Thornburg's Ca debt rating remains under review for possible downgrade. Moody's said that Thornburg's efforts to raise capital to avoid default under its repo agreements have resulted in the reconfiguration of its balance sheet with adverse impact on its debt and preferred equity holders. TRIBUNE CO: DBRS Confirms 'B(low)' Issuer Rating ------------------------------------------------ DBRS has confirmed the Issuer Rating of Tribune Company's at B(low). Additionally, DBRS has assigned recovery ratings to Tribunes specific debt securities and adjusted some of its instrument ratings. The trends on the Issuer Rating and instrument ratings are now Negative. These recovery ratings and the resulting instrument ratings are based on DBRSs new Leveraged Finance Rating Methodology. The rating action follows DBRSs initial rating action on January 10, 2008 that coincided with Tribunes announcement in late December 2007 that it had closed its privatization to its employee stock option program and Sam Zell. The privatization valued Tribunes equity at $8.5 billion, for a total enterprise value of approximately $13.2 billion. DBRS notes that Tribunes Issuer Rating of B(low) is based on a highly leveraged newspaper and broadcasting company that has experienced both structural and cyclical pressure in its newspaper operations in recent years. The Negative trend reflects a continued weakening in its publishing operations, liquidity concerns including a sizable maturity profile over the next three years and some uncertainty on the timing of its asset sales. >From a business-risk perspective, DBRS notes that Tribune continues to experience pressure in its Publishing operations, as a sharp decline in advertising lineage and pricing and ongoing circulation erosion continues to more than offset its cost-cutting initiatives. This has caused further EBITDA pressure in the latest 12 month period, to below $1.1 billion. Under new management, DBRS notes that Tribune in attempting to manage its segments despite some cyclical and structural pressures. In Publishing, the Company is transforming the way it sells advertising and has focused on reducing both its content creation and production costs. In Broadcasting & Entertainment, the company's new management is attempting to drive advertising revenue growth while minimizing the increases in content costs. DBRS expects current trends to continue in Publishing (66% of total EBITDA) while its Broadcast/Entertainment segment should remain relatively stable with election and Olympic advertising benefits in 2008 likely offsetting advertising pressure due to the weakened U.S. economy. DBRS notes that leverage at Tribune is high at 11.13 times net debt-to-EBITDA at March 31, 2008. Furthermore, DBRS notes that the Company has $2.4 billion in debt that matures during the next three years (with $1 billion maturing in 2008) and will need to cut its capex levels in 2008 in order to be free cash flow breakeven. While the Company has announced a sale of its Newsday publication, which will generate $612 million of proceeds, the timing of its other planned asset sales is uncertain. DBRS has estimated that the company could generate $1.3 billion in proceeds in 2008 from the sale of Newsday, the Chicago Cubs and its 25% stake in Comcast SportsNet should these transactions close in a timely fashion. (The Company is also likely to consider other asset sales and has announced it is in the process of establishing an asset-based commercial paper program for around $250 million that will help with liquidity.) While these sales would help to resolve its near-term debt maturities, the loss in EBITDA and pressure on its remaining operations is expected to mitigate significant improvement in its key credit metrics in 2008 and 2009. DBRS has assigned Tribunes Secured Bank Debt a Recovery Rating of RR2 and an instrument rating of B(high), which is two notches above Tribunes B(low) Issuer Rating. This reflects the substantial recovery prospects as a result of (1) overall asset coverage of roughly 79% under a stressed default scenario; (2) a senior guarantee and a pledge of the Companys operating assets and (3) secured leverage of 8.30 times gross debt to EBITDA at March 31, 2008 versus total gross debt to EBITDA of 11.35 times. DBRS notes that while the next three levels of debt may rank differently from a legal perspective in terms of their position in a bankruptcy, DBRSs analysis suggests that even in an optimistic default scenario, all three of the levels would expect to receive negligible repayment, if any. The Unsecured Bridge/Notes, while not secured, benefit from a subordinated guarantee from the operating subsidiaries and have been assigned a Recovery Rating of RR6. This is given the fact that under a stressed default scenario, this debt would expect poor recovery prospects with all of the value pledged to the Secured Bank Debt. As a result, the instrument rating on this debt is CCC, two notches below the Issuer Rating. DBRS has assigned a Recovery Rating of RR6 to Tribunes MTNs and Debentures (roughly $1.4 billion) given their poor prospects for recovery. While this debt is secured by a pledge of the shares of the operating companies of Tribune, this debt does not benefit from a guarantee from these subsidiaries and therefore ranks behind more than $10.5 billion of secured and guaranteed debt. As such, this debt has been assigned an instrument rating of CCC, two notches below the Issuer Rating. Finally, DBRS has assigned a recovery rating of RR6 to Tribunes subordinated debt instruments (PHONES) as these would only be entitled to receive a distribution of assets under a restructuring once payments owed to senior debtors are paid in full. As such, DBRS has assigned an instrument rating of CCC to these securities, two notches below the Issuer Rating. VESTA INSURANCE: Gaines Trustee Allowed to Transfer Claim Records ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Alabama granted Kevin O'Halloran, in his capacity as Plan Trustee for J. Gordon Gaines, Inc.'s Plan of Liquidation, the authority to transfer records of three pending claims against Gaines to Vesta Insurance Group, Inc.: Claimant Claim No. Claim Amount -------- --------- ------------ Crowe Chizek and Company LLC 160 $289,342 Madison Stearns, Inc. 30 82,807 EMB America, LLC 20 46,005 The proposed Claim Transfers, according to Mr. O'Halloran, are without prejudice to the rights of Lloyd Whitaker, the Plan Trustee for Vesta, to object to the Claims on grounds other than the Claims (i) being untimely filed in Vesta's bankruptcy case, or (ii) are rightfully claims against Gaines rather than Vesta. Mr. O'Halloran says Madison Stearns' and Crowe Chizek's Claims were withdrawn from Gaines' bankruptcy case in February 2008; while EMB America agreed to withdraw its Claim, pursuant to an agreement with the Gaines Plan Trustee. Mr. O'Halloran disclosed that the Claimholders have agreed: (a) to the proposed Claim Transfers without prejudice to the rights of Mr. Whitaker to object to the claims on grounds other than certain excluded defenses; and (b) that they have no claims in the Gaines Case. The Claims need only be reflected as of record as pending claims in Vesta's bankruptcy case, Mr. O'Halloran said. 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) VIASYSTEMS INC: Stable Operating Trends Cue S&P's Positive Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on St. Louis-based Viasystems Inc. to positive from stable. The corporate credit rating and the issue-level rating on Viasystems' subordinated notes were affirmed at 'B+'. "The outlook revision follows a period of stable operating trends and low leverage for the rating, combined with the resumption of moderate growth in the business," said Standard & Poor's credit analyst Lucy Patricola. The rating on Viasystems reflects the company's position in the highly fragmented and competitive printed circuit board manufacturing market, volatile end markets, and negative discretionary cash flows resulting from expanded capital spending. These partly are offset by the company's low-cost manufacturing locations, its leading original equipment manufacturer customer base across a number of end markets, and leverage that is low for the rating. Viasystems manufactures PCBs, and, to a lesser extent, is an electronics manufacturing services provider. Trailing 12-month sales were $735 million as of March 31, 2008; $200 million of rated debt is outstanding. Viasystems provides complex, multi-layered boards in low-cost geographies. Still, the majority of Asian-based demand is for lower-technology boards. The company has achieved some diversity in end markets with automotive representing 38% of sales. Telecommunications and computer markets also account for about 38% of sales with the balance sold into emerging PCB markets of Industrial, Instrumentation, Medical, and Consumer. Still, many of these markets are subject to cyclicality. Standard & Poor's believes customer concentration remains a concern, with the top three customers accounting for 43% of revenues as of Dec. 31, 2007. VICTORY MEMORIAL: Judge Craig Approves Disclosure Statement ----------------------------------------------------------- The Hon. Carla A. Craig of the United States Bankruptcy Court for the Eastern District of New York approved a disclosure statement explaining a Chapter 11 plan of reorganization filed by Victory Memorial Hospital and its debtor-affiliates on May 15, 2008. She held that the disclosure statement contains adequate information within the meaning of Section 1125 of the Bankruptcy Code. Judge Craig will convene a hearing on Aug. 14, 2008, at 3:00 p.m., Eastern Time, to consider confirmation of the Debtors' Chapter 11 plan. The hearing will take place at 271 Cadman Plaza East in Brooklyn, New York. Objections, if any, are due Aug. 8, 2008. The Court also approved the procedures the Debtors proposed for the solicitation and tabulation of plan votes. Deadline for voting on the plan is Aug. 8, 2008, at 5:00 p.m., Eastern Time. Overview of the Plan 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. On the Plan's effective date, the Debtors will assign all account receivable valued at $9.5 million to the liquidating trust. The proceeds of the accounts receivables will be available for the liquidating trust for distribution under the Plan. The Plan enables the Debtors to pursue avoidance and other actions in an aggregate amount of at least $14 million. Accordingly, the Debtors will assign to the liquidating trust the exclusive right to commence and to continue the prosecution of all pending avoidance and other actions. Asset Sale The Debtors agree to sell the main campus and acquired business, which consists of their skilled nursing facility and long-term home health program, to Dervaal LLC for $44.9 million. The proceeds of the sale will be used to pay the allowed Dormitory Authority of the State of New York (DASNY) Bond claim at closing of the sale, which is expected to occur by Sept. 30, 2008. The remaining balance of the proceeds will be transferred to the liquidating trust. On June 4, 2008, Dervaal assigned all interests and rights to Sunset LG Realty LLC. Chaim Sieger will serve as operation of SNF and LTHHCP, as part of the deal. At the closing of the sale, St. Jerome Health Services Corporation dba Holy Family Home, who intended to purchase the Debtors' assets for $40 million in cash, will be paid $400,000 break-up fee from the proceeds of the sale. HEAL IV Award New York Department of Health has committed to provide $25 million HEAL IV Award to the Debtors to finance their closure pursuant to the Berger Recommendations that require the closure of the Debtors' acute-care facility by June 30, 2008, and the continuation of their skilled nursing, ambulatory, and home health care programs. The plan classifies interests against and liens in the Debtors in seven classes. The classification of interests and claims are: Treatment of Claims and Interests Type of Estimated Class Claims Treatment Amount ----- ------- --------- --------- unclassified administrative $12,000,000 claims 1 secured tax unimpaired $0 2 DASNY Bond unimpaired $19,776,000 claims 3 secured lender unimpaired $14,105,000 claims 4 other secured unimpaired $5,800,000 claims 5 unsecured unimpaired $200,000 priority claims 6 unsecured impaired $49,696,000 nonpriority claims 7 subordinated impaired $0 claims A full-text copy of the Disclosure Statement is available for free at http://ResearchArchives.com/t/s?2c24 A full-text copy of the Chapter 11 Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?2c25 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. WACHOVIA BANK: S&P Junks Rating on Class RC Certificates -------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on three classes of commercial mortgage pass-through certificates from Wachovia Bank Commercial Mortgage Trust's series 2004-WHALE4. Concurrently, S&P affirmed its 'AAA' rating on class X-1 from the same transaction. The downgrades reflect Standard & Poor's analysis of the remaining loan in the pool. As of the June 16, 2008, remittance report, the trust collateral consisted of one floating-rate, interest-only, mortgage loan indexed to one-month LIBOR. The pooled trust balance has declined 94% since issuance to $65.6 million. The remaining loan in the pool, Ritz-Carlton-New Orleans, has a whole-loan balance of $87.5 million that consists of a pooled trust balance of $65.6 million, a nonpooled trust balance of $2.0 million that provides the sole source of cash flow for the class RC certificate, and a $19.9 million junior participation interest that is held outside the trust. The loan is secured by the fee interest in the 527-room Ritz-Carlton Hotel and the 230- room Iberville Suites, both located in New Orleans, Louisiana. The master servicer, Wachovia Bank N.A., reported a debt service coverage of 2.61x for the 12 months ended Dec. 31, 2007, and 62% occupancy as of April 2008. The servicer's DSC calculation includes approximately $15.9 million in business interruption insurance income. Wachovia does not expect additional BII income. Excluding the BII income, the net cash flow is negative. The collateral properties, which sustained significant damage from Hurricane Katrina, were closed for construction and renovation in late 2005. The Ritz-Carlton Hotel reopened in December 2006, and the Iberville Suites reopened in April 2007. Standard & Poor's revalued the properties using the borrower's operating statements for the trailing-12-months ended April 2008 and 2008 budget. The slow recovery of the New Orleans economy had a negative impact on the hotels' operating performance. S&P's current valuation no longer supports the investment-grade ratings. The loan is scheduled to mature in April 2009 and has no extension options remaining. Ratings Lowered Wachovia Bank Commercial Mortgage Trust Commercial mortgage pass-through certificates series 2004-WHALE4 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ J B BBB+ 48.21% K B- BBB- N/A RC CCC- BB N/A Rating Affirmed Wachovia Bank Commercial Mortgage Trust Commercial mortgage pass-through certificates series 2004-WHALE4 Class Rating Credit enhancement ----- ------ ------------------ X-1 AAA N/A N/A -- Not applicable. WHITEHAWK CDO: Moody's Withdraws Ratings, Junks Rating on Class C ----------------------------------------------------------------- Moody's Investors Service withdrew its short-term ratings on these notes issued by Whitehawk CDO Funding, Ltd.: Class Description: Up to $870,000,000 Class A-1 MM Money Market Floating Rate Notes -- Prior Short-term Rating: P-1 -- Current Short-term Rating: WR According to Moody's, the Prime-1 ratings assigned to the Class A- 1 MM Notes were based on the existence of a put agreement provided by a Prime-1 rated third party. The notes have been re-issued with the put provider as both the investor and the put counterparty. Where the put provider is also the holder of the notes, it is Moody's view that the put agreement ceases to be relevant. Accordingly, Moody's has withdrawn its short-term ratings on these notes. Moody's also downgraded and placed on further possible review for downgrade these notes: Class Description: $67,000,000 Class A-2 Floating Rate Interest Notes Due 203[9] -- Prior Rating: Aaa -- Current Rating: Aa1, on review for possible downgrade Class Description: $35,000,000 Class B Floating Rate Interest Notes Due 203[9] -- Prior Rating: Aa2, on review for possible downgrade -- Current Rating: A3, on review for possible downgrade Class Description: $6,000,000 Class C Floating Rate Deferrable Interest Notes Due 2039 -- Prior Rating: B3, on review for possible downgrade -- Current Rating: Caa2, on review for possible downgrade According to Moody's, the rating actions are the result of deterioration in the credit quality of the transaction's underlying collateral pool, which consists primarily of structured finance securities. ZVUE CORP: Inks 3-Month Standstill Pact with YA Global Investments ------------------------------------------------------------------ ZVUE Corporation reached a three-month standstill agreement with YA Global Investments effective through Sept. 30, 2008. Under terms of the agreement, ZVUE will release $1.50 million of cash held in a restricted escrow account toward partial redemption of the convertible debenture executed Oct. 31, 2007. In consideration of the payment, YA Global will defer the payment of the July, August & September 2008, monthly installment amounts and agree to certain trading restrictions. The $1.50 million payment will be applied first as a reduction of the accrued interest of approximately $260,000 as of July 1, 2008, then as payment of the outstanding principal amount of approximately $1.25 million. In addition to agreeing to defer payments, YA Global agreed that during the standstill period, neither it nor its affiliates will sell shares of the company's common stock: 1) at prices less than $0.30 per share; or 2) in excess of 18% of the aggregate daily trading volume of the common stock, at prices of between $0.30 and $0.50. The agreement provides no limitation on sales of common stock at prices of greater than $0.50 per share. Should YA Global breach the trading limitations, then the trading restriction and payment deferral would be extended for an additional period of one or more months, depending on the extent of such breach. YA Global has also agreed to increase the limit for separate asset-based financing related to the company's product business to $2.50 million from $500,000. About ZVUE Corporation ZVUE Corporation, formerly HandHeld Entertainment Inc. (NASDAQ: ZVUE) -- http://www.zvue.com/-- is a digital entertainment company. Its ZVUE Network is among the companies providing user- generated video online. ZVUE(TM) personal media players are mass- market priced and available for purchase online and in Wal-Mart and InMotion stores throughout the U.S. and online. Going Concern Doubt March 24, 2008, Salberg & Company P.A., in Boca Raton, Florida, expressed substantial doubt about Handheld Entertainment Inc. nka. Zvue Corp.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2007. The auditing firm reported that the company has a net loss of $18,188,833, gross margin of $730,102 and net cash used in operations of $12,156,127 an accumulated deficit of $41,218,007. * S&P Says More Job Losses in June Hint Weakness in Labor Markets ----------------------------------------------------------------- More job losses this June give further indication of the weakness of the labor market, which confirms our belief that the economy is in recession, said Standard & Poor's Senior Economist Beth Ann Bovino in a Web cast. This increased recession risk will also worry the Fed, giving them reason to stay on the sidelines near term. The Federal Reserve is expected to stay on hold for the rest of the year. The Fed will want to see the impact of the tax rebate checks as well as the effect of the 325 basis points in rate cuts they have already made. Because the rebate checks are being spent, S&P expect no more rate cuts. S&P do not expect the Fed to raise rates until it is clear the recession risk is passed. * S&P: Negative Credit Trend Continues for Midstream Energy Cos. ---------------------------------------------------------------- High commodity prices and robust cash margins have helped boost financial performance for U.S. midstream energy companies in the first half of 2008, but the negative credit trend continued, according to a report published by Standard & poor's ratings services titled "Industry Report Card: Despite High Commodity Prices, U.S. Midstream Energy Sector's Credit Retains Negative Trend In First Half." Despite strong earnings, the boon of strong commodity markets raises questions concerning how companies will deploy this incremental cash flow. Massive increases in construction costs (especially steel) are offsetting the profits resulting from higher-than-expected natural gas and crude oil prices. This is raising the risk profile of capital spending programs throughout the sector and dampening return estimates from the numerous capital projects underway. Despite these pressures, more companies are electing to use higher-than-forecast cash flows to repurchase shares or increase dividends to shareholders, which may raise the financial risks at times when overall leverage in the sector is increasing. In the first half, the credit landscape for the midstream sector retained a negative bias, with the ratio of negative rating actions (including outlook, CreditWatch, and rating changes) to positive rating actions declining to 1.5 from the 2.0 ratio observed during the second half of 2007. "Although there were fewer negative rating actions through the first half, the outlook on the sector is becoming more negative as increased capital spending, higher leverage, cost overruns, and negative free cash flow slow balance-sheet improvement in the near term," said Standard & Poor's credit analyst Michael Messer. * S&P: Three More Global Entities Moved to Speculative-Grade Slot ----------------------------------------------------------------- Globally, three more entities moved to speculative-grade territory since S&P's last report, pushing the tally for the year to date to 19, said an article published by Standard & Poor's. The article, which is titled "Global Potential Fallen Angels (Premium)," says the affected rated debt of $67.85 billion is already more than 50% of the total debt $131.29 billion affected all of last year. "The current count of 43 issuers is two fewer than last month's count but is higher than both last July's count as well the trailing-12-month average, "said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. Sectors poised to lead fallen-angel incidence include utilities with seven entities, forest products and building materials with six, and consumer products with five. * S&P: Credit Markets Woe May Alter Students' Ability to Pay Loan ----------------------------------------------------------------- As a particularly high number of students head off to college this fall, there are concerns that problems in the U.S. credit markets might affect students' ability to repay their loans, Standard & Poor's Ratings Services said in a report. "Potential problems include a higher rate of student loan defaults nationwide, students with fair or even good credit records experiencing difficulty in getting private loans, and less-endowed institutions seeing their budgets squeezed," said Standard & Poor's credit analyst Bobbi Gajwani. The student loan market breaks down into two areas: federally guaranteed loans and private loans. The current turmoil has been in the making since last year due to a combination of auction bond market failures, government subsidy cuts, lenders exiting the market, and a weakening economy, specifically the devaluation of home equity. "Heading into the fall, the federal loan program appears to have passed the worst of the crisis as a result of legislative actions, but we expect difficulties to increase in the private loan market," said Ms. Gajwani, in the article, "Watch For Student Loan Disruption In Fall 2008," published on RatingsDirect. * S&P: Dull Economic Environment Pressures Leveraged Chem. Cos. --------------------------------------------------------------- A lackluster economic environment and unrelenting raw material pressures are conspiring to challenge many aggressively leveraged chemical companies, according to an industry report card published titled "North American Chemicals Credit Quality Remains Under Siege." In addition to record-high prices for oil and natural gas, key inputs for this industry, North American chemical companies have been battling weak economic growth in the domestic economy, dismal conditions for end markets such as autos and residential construction, and the risk of margin compression from higher raw material and freight costs. "Although the median rating for the 71 chemical companies we rate has held at 'BB-', negative actions continue to outpace upgrades and the percentage of negative outlooks has increased to a more pessimistic 24% of total coverage," said Standard & Poor's credit analyst Kyle Loughlin. The percentage of issuers with negative outlooks has risen over the recent quarter and suggests a higher risk of additional downgrades. But what is more revealing is that most investment-grade companies are holding up well with only 15% of outlooks pointing negative. In other words, S&P expect many of these companies to continue to record satisfactory operating results this year and to perform in line with rating expectations. This suggests that most of the pressure remains within the speculative-grade area, where negative outlooks are at 31%. These issuers typically have much less flexibility to ride out difficult market conditions, and face intensified pressure from the adversity in the credit markets. * S&P Says Miss. Economic Base Expands Due to 1992 Gambling Law --------------------------------------------------------------- Mississippi's economic base has expanded over the years with an estimated 70,200 jobs created due to the state's legalization of gambling in 1992, according to the report, "State Review: Mississippi," released by Standard & Poor's Ratings Services. "The industry's future in Mississippi, however, had been uncertain due to the extensive damage caused by Katrina and competition from other states; but the state's aggressiveness in calling a special session to address concerns over rebuilding has spurred rapid reconstruction," said Standard & Poor's credit analyst Paul Jasin. The report also discusses the spillover effects of the gaming industry, efforts by state officials to attract new business and improve the educational system, and Mississippi's low wealth and income indicators. * S&P Cuts Ratngs on Certain Tranches from Various Aircraft Trusts ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on selected tranches from various aircraft securitizations issued between 1999 and 2003. The ratings remain on CreditWatch with negative implications. In addition, S&P raised its rating on one class and removed it from CreditWatch positive. Lastly, S&P placed an additional rating on CreditWatch negative. The downgrades primarily reflect the effects of an unprecedented rapid increase in fuel prices, older aircrafts that are less fuel efficient than the current generation of planes, and a slowing global economy. Although the overall global market for aircraft remains fairly good, supported by strong demand from Asia and the Middle East, very high fuel prices are beginning to cut into airline profits, or in some regions (such as North America), cause substantial losses for the airlines. This, in turn, is causing airlines to accelerate retirement of aircraft models first introduced in the 1980s, such as B737 "classics" (B737-300, -400, and -500) and the MD80 series. These models form a substantial portion of the aircrafts in the securitizations S&P reviewed, and it believe future cash flows generated by them could decline further. S&P upgraded class A-2 from Embarcadero Aircraft Securitization Trust's series 2000-1 because it expect this security to be repaid in the near term because of its position in the priority of payments, despite the declining cash flow generated by planes in that securitization. Because the conditions in the airline industry are rapidly changing, Standard & Poor's will continue to monitor the affected transactions and resolve the CreditWatch placements upon further evaluation of market conditions. Ratings Lowered and Remaining on Creditwatch Negative AerCo Ltd. Rating ------ Class To From ----- -- ---- A-3 BBB-/Watch Neg BBB/Watch Neg A-4 A-/Watch Neg A/Watch Neg Aviation Capital Group Trust Series 2000-1 Rating ------ Class To From ----- -- ---- A-1 BB/Watch Neg BBB/Watch Neg B-1 B+/Watch Neg BB-/Watch Neg C-1 B-/Watch Neg B/Watch Neg Aviation Capital Group Trust II Series 2003-1 Rating ------ Class To From ----- -- ---- B-1 BBB+/Watch Neg A/Watch Neg Lease Investment Flight Trust Series 2001-1 Rating ------ Class To From ----- -- ---- A-1 B+/Watch Neg BB+/Watch Neg A-2 B+/Watch Neg BB+/Watch Neg A-3 BBB/Watch Neg A/Watch Neg Aircraft Finance Trust Series 1999-1 Rating ------ Class To From ----- -- ---- A-1 B/Watch Neg B+/Watch Neg Embarcadero Aircraft Securitization Trust Series 2000-1 Rating ------ Class To From ----- -- ---- A-1 B/Watch Neg BB/Watch Neg Rating Raised and Removed from Creditwatch Positive Embarcadero Aircraft Securitization Trust Series 2000-1 Rating ------ Class To From ----- -- ---- A-2 BBB-/Stable BB/Watch Pos Rating Placed on Creditwatch Negative Aircraft Finance Trust Series 1999-1 Rating ------ Class To From ----- -- ---- A-2 BBB+/Watch Neg BBB+/Stable Rating Remaining on Creditwatch Negative Aviation Capital Group Trust Series 2000-1 Rating ------ Class To From ----- -- ---- D-1 CCC/Watch Neg CCC/Watch Neg * Most Commercial Property Post "Yellow Scores" in Moody's Report ----------------------------------------------------------------- All but one of the seven commercial property types measured in Moody's Investors Service Red-Yellow-Green(R) report posted lower scores in the second quarter of 2008, as the real estate markets that support U.S. commercial backed securities continued to soften. All but two property types now have "yellow" scores, indicating that they are neither particularly strong nor weak. Moody's Red-Yellow-Green report scores markets on a scale of 0 (weak) to 100 (strong) and describes them in traffic light colors, with scores of 0-33 identified as red, 34-66 as yellow, and 67-100 as green. Sector by Sector Analysis Neighborhood and community shopping centers continued to show stability last quarter, maintaining a score of 82, one of the two green scores. However, retail is one sector that needs to be watched as a weaker economy combined with rising food and energy prices pressure consumer dollars, which may put strain on some shopping centers, says Moody's. During the first quarter, the multifamily sector lost three points, yet also remained solidly within green territory at 78. Although nearly 75% of all multifamily markets declined in score, 45 of the 60 markets are still green. Offices in central business districts, or CBDs, slipped into yellow territory at 64. Moody's says expected demand growth declined at the same time that supply picked up a bit, leading to a wider supply-demand mismatch. Four of the largest ten markets are green, while the remaining six are yellow. The suburban office sector dropped four points to 38, the weakest score of any sector. Expected demand growth deteriorated further and is now negative, Moody's reports. Two of the top ten markets are red, while the remaining eight are yellow. The industrial sector shed two points this quarter, dropping to a composite score of 64, in yellow territory, as vacancy increased slightly. The report suggests substantial weakening in both the full-service and limited-service hotel sectors in particular. Full service hotels dropped a significant 16 points during the quarter, down from 59 to 43, as limited-service hotels declined 9 points from 62 to 53. Metropolitan Market Analysis The overall commercial real estate composite score for the U.S. is 64, a drop of five points from last quarter. Moody's notes that the two largest markets supporting commercial mortgage backed securities continue to show strength, as New York tied Honolulu for the highest market score at 79 and Los Angeles was next at 75. The scores of the top 10 cities found most frequently in CMBS, based on dollar volume, with the previous quarter's score in parenthesis, are: New York 79 (78), Los Angeles 75 (80), San Francisco 68 (72), Philadelphia 66 (70), Houston 65 (71), Miami 58 (59), Washington DC 55 (60), Atlanta 54 (59), Dallas 51 (54), and Chicago 50 (56). The five best markets in the U.S. are: New York 79 (78), Honolulu 79 (77), Los Angeles 75 (80), Oklahoma City 73 (75), and Long Island, NY 73 (77). The five worst markets in the U.S. are: Jacksonville 30 (27), Phoenix 32 (37), Trenton 38 (43), Las Vegas 38 (48), and Austin 43 (48). * Moody's Says FDA's Initiatives Might Strain Medical Device Cos. ----------------------------------------------------------------- The Food and Drug Administration's postmarket initiatives could create future ratings pressure on medical device companies, depending on what safety issues the new monitoring efforts uncover, says Moody's Investors Service. "The increased scrutiny could lead to greater volatility in sales and profitability for some medical device companies down the road," Diana Lee, Moody's vice president and senior credit officer, said. The initiatives could also lead to a prolonged downturn in credit fundamentals. As part of a broader post-market surveillance program, the FDA introduced the "Sentinel" initiative in May to help monitor the safety of medical devices as well as drugs approved for sale in the U.S. Although products are studied in clinical trials before they enter the market, side effects and safety issues often don't emerge until the products hit the general population. This enhanced data monitoring system�-along with a greater focus on post-market studies�-should help uncover safety issues more quickly. Publicity about safety concerns as well as the immediate access of the public to the information could create "headline" risk and have a disruptive effect on sales of medical devices, Moody's said. "If more negative reports on medical devices emerge, the government's post-market monitoring efforts would be more of a risk than a benefit for the sector over the next several years," Ms. Lee said. Manufacturers of more-technologically advanced devices such as drug-eluting stents could be more vulnerable, especially if they have been the focus of safety concerns in the past, says Moody's. "Because device manufacturers must bear the expense of postmarket studies, we believe that these companies will need to focus on making R&D dollars go further," Ms. Lee said. "If the laboratory or discovery portion of R&D gets squeezed, innovation could suffer and margins would be eroded for companies that do not attempt to offset the cost of post-market studies." Longer term, the effort could promote greater consumer confidence if the FDA is able to uncover safety issues earlier and head off potential problems with medical devices through its postmarket initiatives. * FDIC Says Banking Industry on "Solid Footing" Amid IndyMac Fall ----------------------------------------------------------------- Sheila C. Bair, chairman of the Federal Deposit Insurance Corporation, said the United States' banking system remains on a solid footing through the guarantees provided by FDIC insurance. Ms. Bair issued the statement after the federal government's seizure of IndyMac Bank, F.S.B. On Friday, the Office of Thrift Supervision closed the $32,000,000,000 IndyMac Bank, headquartered in Pasadena, California, and transferred operations to the FDIC. The FDIC has created IndyMac Federal Bank, FSB, a conservatorship to continue to provide banking services in communities served by the former IndyMac Bank. A story on the seizure of IndyMac Bank appears in today's Troubled Company Reporter. Ms. Bair said, "Over the past weekend, I have seen news reports which have fairly and accurately reported on the conversion of Indy Mac Bank into a conservatorship operated by the FDIC. I have also seen inaccurate and inflammatory reporting which could well cause needless, unnecessary worry and angst among bank depositors throughout the country." IndyMac's conversion has been largely a non-event, according to Ms. Bair, with respect to insured depositors. She explained that the more than 200,000 customers of IndyMac with deposits of $18,000,000,000 are fully protected. "It's important to keep in mind that the small percentage of uninsured are still covered for their insured amounts and half of their uninsured money," Ms. Bair said. "As assets of IndyMac are sold, they may receive even more. They have had continued access to their funds through ATMs, debit cards, and writing checks over the weekend, and on Monday morning, it will be business as usual." "All bank depositors should understand that their insured deposits are safe." The Wall Street Journal's Robin Sidel, David Enrich and Jonathan Karp relate that the seizure of IndyMac Bank is deepening worries among executives, regulators and consumers about the U.S. banking industry, which is in a tightening bind following a long run of prosperity. The Journal says banks and thrifts are struggling against a rising tide of bad loans, and it is becoming increasingly clear that some lenders won't be able to dig their way out. While fewer banks are expected to fail than the 834 that went under from 1990 to 1992, it will likely take several years for battered financial institutions to work through their bad loans and replenish their depleted capital, the Journal says. According to Ms. Bair, IndyMac is only one of 8,494 depository institutions operating throughout the country and represents only 0.2% of banking industry assets. The OTS said in a news statement that IndyMac is the largest OTS- regulated thrift ever to fail and, according to FDIC data, the second largest financial institution to close in U.S. history. IndyMac Bank is the fifth FDIC-insured failure of the year. The last FDIC-insured failure in California was the Southern Pacific Bank, Torrance, on February 7, 2003. The Wall Street Journal's Damian Paletta and David Enrich state that IndyMac is the third-largest bank failure in U.S. history. According to Messrs. Paletta and Enrich, Continental Illinois National Bank & Trust Co., which failed in 1984, topped that list with $40,000,000,000 in assets. American Savings & Loan Association of Stockton, Calif., in 1988, is second. Banks that failed this year, according to FDIC data, are: Bank Name Closing Date --------- ------------ IndyMac Bank, Pasadena, CA July 11, 2008 First Integrity Bank, NA, Staples, MN May 30, 2008 ANB Financial, NA, Bentonville, AR May 9, 2008 Hume Bank, Hume, MO March 7, 2008 July 1, 2008 Douglass National Bank, Kansas City, MO January 25, 2008 "The overwhelming majority of banks in this country are safe and sound. The chance that your own bank will be taken over by the FDIC is extremely remote. And if that does happen, you will continue to have virtually uninterrupted access to your insured deposits," Ms. Bair said. "All bank depositors should also understand that they can have insurance coverage in excess of the basic limits of $100,000 per institution, with an additional $250,000 per institution for IRAs. For instance, subject to certain conditions, single and joint accounts are separately insured, and revocable trusts generally provide $100,000 of coverage per beneficiary. If you have any questions about whether your deposits are insured, we encourage you to consult with your bank or contact our deposit insurance specialists at 1-877-ASK-FDIC. If you find that you are not fully insured, it may be possible to restructure your accounts to bring your deposits below the insured limits. But first get the facts before making any changes in your accounts or banking relationships." Ms. Bair added that industry-funded reserves are strong and our insurance guarantee is backed by the full faith and credit of the United State Government, and that no bank depositor has ever lost a penny of insured deposits. About Indymac Bancorp Headquartered in Pasadena, California, IndyMac Bancorp Inc. (NYSE:IMB) -- http://www.indymacbank.com/-- is the holding company for IndyMac Bank FSB, a hybrid thrift/mortgage bank that originates mortgages in all 50 states of the United States. Indymac Bank provides financing for the acquisition, development, and improvement of single-family homes. Indymac also provides financing secured by single-family homes and other banking products to facilitate consumers' personal financial goals. IndyMac specialized in making and selling so-called Alt-A mortgage loans, a category of loans to consumers more credit worthy than subprime borrowers but typically without the complete documentation of income or assets necessary to receive a prime- rate loan. The company facilitates the acquisition, development, and improvement of single-family homes through the electronic mortgage information and transaction system platform that automates underwriting, risk-based pricing and rate locking via the internet at the point of sale. Indymac Bank offers mortgage products and services that are tailored to meet the needs of both consumers and mortgage professionals. Indymac operates through two segments -- mortgage banking and thrift. The company was ranked the ninth-largest U.S. mortgage lender in 2007 in terms of loan volume, The Wall Street Journal says, citing trade publication Inside Mortgage Finance. About FDIC Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,494 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. On the Net: http://www.fdic.gov/ * 3 DLA Piper Lawyers Join McKenna Long's Washington Office ----------------------------------------------------------- McKenna Long & Aldridge LLP (MLA) said John G. McJunkin, Daniel J. Carrigan and J. David Folds have joined the Firm's Bankruptcy practice in the Washington office. The group previously practiced at DLA Piper. "We are pleased to have John, Dan and David join McKenna Long & Aldridge," said Jeff Haidet, MLA Chairman. "With their recognized accomplishments in bankruptcy and commercial litigation cases, John, Dan, and David are a valuable addition to the Firm's national Bankruptcy practice." "Adding bankruptcy expertise to our commercial litigation practice in Washington on the heels of adding it in New York, augments our nationwide presence and allows us to support our clients' needs anywhere in the country," said Tami Azorsky, Co-Chair of the Litigation practice. McJunkin's practice focuses on business bankruptcies and commercial litigation. He works extensively with creditors in protecting their rights during workouts, litigation, foreclosures, and bankruptcy. On behalf of his clients, McJunkin regularly coordinates bankruptcy representation and litigation in jurisdictions across the nation. He received his J.D. from the University of Cincinnati, where he was elected to the Order of the Barristers, and his B.A., summa cum laude, from Hampden -- Sydney College, where he was elected Phi Beta Kappa. "McKenna Long & Aldridge provides a perfect platform to better serve our existing clients," said John McJunkin, one of the new partners. "The geographic scope of the firm will enable us to continue to provide national services to our clients while being able to provide bankruptcy and related commercial litigation assistance to MLA's clients in the Mid-Atlantic region. The depth and breadth of MLA's bankruptcy team was a very important factor in our decision to join the firm." Carrigan has engaged in a diversified practice that has included the representation of creditors and debtors in bankruptcy proceedings, as well as the liquidators, receivers, and rehabilitators of insolvent insurance companies in the investigation and prosecution of civil fraud and other actions. More recently, his practice has focused upon the area of deepening insolvency, and the defense of D&O, legal and consulting malpractice cases arising from corporate failures. He received his J.D. from Georgetown University Law Center and his B.A., cum laude, from Georgetown University, where he was elected Phi Beta Kappa. Folds focuses his practice on business bankruptcies and commercial litigation. He represents financial institutions, landlords, franchisors, trade creditors, purchasers of assets, and other entities in all aspects of bankruptcy proceedings. He also represents international and domestic companies in a wide variety of commercial and contract disputes in state and federal courts. Folds received his J.D. from the University of North Carolina at Chapel Hill, his M.S. from the London School of Economics and Political Science, and his B.A. from University of the South. "It is extremely exciting to add John, David, and Dan to our existing team given the increased demand for our services from our clients," said Gary Marsh, Chair of the Bankruptcy and Creditor's Rights practice at MLA. The Bankruptcy, Creditor's Rights and Insolvency-Related Litigation Group of McKenna Long & Aldridge LLP focuses its practice on the many issues arising out of corporate and business-related insolvencies. The experienced attorneys in the Group are regularly retained to represent Secured Creditors, Trustees, Examiners, Debtors, Committees and other parties-in- interest in large and complex Bankruptcy Cases throughout the United States. The Firm's experience is not limited to any particular industry and has included representations in the real estate, health care, telecommunications manufacturing, technology, securities, construction, retail, financial institutions, and textile areas. * BOND PRICING: For the Week of July 7 to July 11, 2008 ------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- ABC RAIL PRODUCT 10.500% 01/15/04 0 ABC RAIL PRODUCT 10.500% 12/31/04 100 ABITIBI-CONS FIN 7.875% 08/01/09 75 ADVANTA CAP TR 8.990% 12/17/26 68 AIRTRAN HOLDINGS 7.000% 07/01/23 71 ALERIS INTL INC 10.000% 12/15/16 73 ALESCO FINANCIAL 7.625% 05/15/27 59 ALION SCIENCE 10.250% 02/01/15 71 ALLEGIANCE TEL 11.750% 02/15/08 7 ALLEGIANCE TEL 12.875% 05/15/08 7 AM AIRLN EQ TRST 10.680% 03/04/13 65 AM AIRLN PT TRST 7.377% 05/23/19 69 AM AIRLN PT TRST 8.390% 01/02/17 73 AM AIRLN PT TRST 9.730% 09/29/14 72 AMBAC INC 5.950% 12/05/35 49 AMBAC INC 6.150% 02/07/87 26 AMBAC INC 7.500% 05/01/23 66 AMBASSADORS INTL 3.750% 04/15/27 53 AMD 6.000% 05/01/15 71 AMD 6.000% 05/01/15 N.A. AMER & FORGN PWR 5.000% 03/01/30 52 AMER COLOR GRAPH 10.000% 06/15/10 35 AMER TISSUE INC 12.500% 07/15/06 0 AMERICREDIT CORP 0.750% 09/15/11 71 AMERICREDIT CORP 2.125% 09/15/13 67 AMES TRUE TEMPER 10.000% 07/15/12 69 AMR CORP 9.000% 08/01/12 72 AMR CORP 9.000% 09/15/16 67 AMR CORP 9.750% 08/15/21 70 AMR CORP 9.880% 06/15/20 61 AMR CORP 10.000% 04/15/21 65 AMR CORP 10.150% 05/15/20 68 AMR CORP 10.200% 03/15/20 74 ANTIGENICS 5.250% 02/01/25 45 ASHTON WOODS USA 9.500% 10/01/15 57 ASPECT MEDICAL 2.500% 06/15/14 57 ASPECT MEDICAL 2.500% 06/15/14 N.A. ASSURED GUARANTY 6.400% 12/15/66 74 AT HOME CORP 4.750% 12/15/06 0 ATHEROGENICS INC 1.500% 02/01/12 10 ATHEROGENICS INC 4.500% 03/01/11 11 AVENTINE RENEW 10.000% 04/01/17 73 BALLY TOTAL FITN 13.000% 07/15/11 68 BANK NEW ENGLAND 8.750% 04/01/99 7 BANK NEW ENGLAND 9.500% 02/15/96 100 BANK NEW ENGLAND 9.875% 09/15/99 7 BANKUNITED CAP 3.125% 03/01/34 42 BBN CORP 6.000% 04/01/12 0 BEARINGPOINT INC 3.100% 12/15/24 41 BEARINGPOINT INC 4.100% 12/15/24 38 BELL MICROPRODUC 3.750% 03/05/24 70 BON-TON DEPT STR 10.250% 03/15/14 75 BORDEN INC 7.875% 02/15/23 47 BORDEN INC 8.375% 04/15/16 56 BORDEN INC 9.200% 03/15/21 57 BORLAND SOFTWARE 2.750% 02/15/12 69 BOWATER INC 6.500% 06/15/13 66 BOWATER INC 9.375% 12/15/21 69 BOWATER INC 9.500% 10/15/12 63 BRODER BROS CO 11.250% 10/15/10 68 BUDGET GROUP INC 9.125% 04/01/06 0 BUFFALO THUNDER 9.375% 12/15/14 N.A. BUFFETS INC 12.500% 11/01/14 3 BURLINGTON NORTH 3.200% 01/01/45 50 CAPITALSOURCE 3.500% 07/15/34 70 CAPMARK FINL GRP 6.300% 05/10/17 73 CCH I LLC 9.920% 04/01/14 72 CCH I LLC 10.000% 05/15/14 70 CCH I LLC 11.125% 01/15/14 72 CD RADIO INC 8.750% 09/29/09 5 CHARMING SHOPPES 1.125% 05/01/14 64 CHARTER COMM HLD 10.000% 05/15/11 70 CHARTER COMM HLD 11.125% 01/15/11 70 CHARTER COMM HLD 11.750% 05/15/11 67 CHARTER COMM LP 6.500% 10/01/27 60 CHENIERE ENERGY 2.250% 08/01/12 54 CHIC EAST ILL RR 5.000% 01/01/54 61 CHS ELECTRONICS 9.875% 04/15/05 100 CIT GROUP INC 4.950% 02/15/15 70 CIT GROUP INC 5.050% 09/15/14 68 CIT GROUP INC 5.500% 08/15/13 71 CIT GROUP INC 5.800% 12/15/16 68 CIT GROUP INC 5.900% 03/15/22 70 CIT GROUP INC 5.950% 02/15/22 69 CIT GROUP INC 5.950% 09/15/16 69 CIT GROUP INC 6.000% 05/15/22 69 CIT GROUP INC 6.000% 11/15/16 70 CIT GROUP INC 6.050% 09/15/16 70 CIT GROUP INC 6.100% 03/15/67 55 CIT GROUP INC 6.150% 05/15/16 72 CIT GROUP INC 6.150% 09/15/21 68 CIT GROUP INC 6.250% 01/15/13 72 CIT GROUP INC 6.250% 01/15/13 75 CIT GROUP INC 6.250% 09/15/21 68 CIT GROUP INC 6.250% 11/15/17 74 CIT GROUP INC 6.250% 11/15/21 73 CIT GROUP INC 6.500% 03/15/11 72 CITIZENS UTIL CO 7.000% 11/01/25 77 CLAIRE'S STORES 9.250% 06/01/15 68 CLAIRE'S STORES 9.625% 06/01/15 59 CLAIRE'S STORES 10.500% 06/01/17 54 CLEAR CHANNEL 4.900% 05/15/15 63 CLEAR CHANNEL 5.000% 03/15/12 76 CLEAR CHANNEL 5.500% 09/15/14 66 CLEAR CHANNEL 5.500% 12/15/16 60 CLEAR CHANNEL 5.750% 01/15/13 72 CLEAR CHANNEL 6.875% 06/15/18 64 CLEAR CHANNEL 7.250% 10/15/27 59 CMP SUSQUEHANNA 9.875% 05/15/14 72 COGENT COMMUNICA 1.000% 06/15/27 67 COLLINS & AIKMAN 10.750% 12/31/11 0 COLOR TILE INC 10.750% 12/15/01 100 COLUMBIA/HCA 7.050% 12/01/27 78 COLUMBIA/HCA 7.500% 11/15/95 71 COMERICA CAP TR 6.576% 02/20/37 69 COMPUCREDIT 3.625% 05/30/25 50 COMPUCREDIT 5.875% 11/30/35 43 CONEXANT SYSTEMS 4.000% 03/01/26 76 CONSTAR INTL 11.000% 12/01/12 56 CONTL AIRLINES 8.750% 12/01/11 70 COUNTRYWIDE FINL 5.250% 05/11/20 64 COUNTRYWIDE FINL 5.250% 05/27/20 67 COUNTRYWIDE FINL 5.750% 01/24/31 64 COUNTRYWIDE FINL 5.800% 01/27/31 64 COUNTRYWIDE FINL 6.000% 02/08/36 65 COUNTRYWIDE FINL 6.000% 03/16/26 67 COUNTRYWIDE FINL 6.000% 03/23/21 68 COUNTRYWIDE FINL 6.000% 04/06/21 72 COUNTRYWIDE FINL 6.000% 04/13/21 66 COUNTRYWIDE FINL 6.000% 11/14/35 65 COUNTRYWIDE FINL 6.000% 11/22/30 66 COUNTRYWIDE FINL 6.000% 12/14/35 66 COUNTRYWIDE FINL 6.125% 04/26/21 69 COUNTRYWIDE FINL 6.300% 04/28/36 67 COUNTRYWIDE HOME 5.000% 05/16/13 75 COUNTRYWIDE HOME 5.500% 05/16/18 68 COUNTRYWIDE HOME 5.900% 01/24/18 72 COUNTRYWIDE HOME 6.000% 01/24/18 74 COUNTRYWIDE HOME 6.000% 05/16/23 65 COUNTRYWIDE HOME 6.000% 07/23/29 68 COUNTRYWIDE HOME 6.150% 06/25/29 71 COUNTRYWIDE HOME 6.200% 07/16/29 66 CV THERAPEUTICS 3.250% 08/16/13 75 DECODE GENETICS 3.500% 04/15/11 39 DELPHI CORP 6.500% 08/15/13 42 DELPHI CORP 8.250% 10/15/33 10 DELTA AIR LINES 8.000% 12/01/15 57 DELTA AIR LINES 9.875% 04/30/08 N.A. DELTA AIR LINES 10.500% 04/30/16 N.A. DELTA MILLS INC 9.625% 09/01/07 10 DENDREON CORP 4.750% 06/15/14 73 DILLARD DEPT STR 7.750% 05/15/27 80 DILLARD DEPT STR 7.750% 07/15/26 75 DILLARDS INC 7.000% 12/01/28 71 DOWNEY FINANCIAL 6.500% 07/01/14 69 DURA OPERATING 8.625% 04/15/12 11 DURA OPERATING 9.000% 05/01/09 0 EDDIE BAUER HLDG 5.250% 04/01/14 71 EPIX MEDICAL INC 3.000% 06/15/24 61 EQUISTAR CHEMICA 7.550% 02/15/26 71 EVEREST RE HLDGS 6.600% 05/15/37 75 EXODUS COMM INC 4.750% 07/15/08 0 FAMILY GOLF CTRS 5.750% 10/15/04 0 FEDDERS NORTH AM 9.875% 03/01/14 5 FIN SEC ASSUR 6.400% 12/15/66 74 FINLAY FINE JWLY 8.375% 06/01/12 41 FINOVA GROUP 7.500% 11/15/09 12 FIRST DATA CORP 4.500% 06/15/10 74 FIRST DATA CORP 4.700% 08/01/13 50 FIRST DATA CORP 4.850% 10/01/14 48 FIRST DATA CORP 4.950% 06/15/15 49 FIRST DATA CORP 5.625% 11/01/11 74 FIVE STAR QUALIT 3.750% 10/15/26 73 FONTAINEBLEAU LA 10.250% 06/15/15 71 FORD HOLDINGS 9.300% 03/01/30 78 FORD HOLDINGS 9.375% 03/01/20 81 FORD MOTOR CO 6.375% 02/01/29 60 FORD MOTOR CO 6.500% 08/01/18 66 FORD MOTOR CO 6.625% 02/15/28 58 FORD MOTOR CO 6.625% 10/01/28 59 FORD MOTOR CO 7.125% 11/15/25 60 FORD MOTOR CO 7.400% 11/01/46 60 FORD MOTOR CO 7.450% 07/16/31 67 FORD MOTOR CO 7.500% 08/01/26 63 FORD MOTOR CO 7.700% 05/15/97 65 FORD MOTOR CO 7.750% 06/15/43 59 FORD MOTOR CO 8.875% 01/15/22 70 FORD MOTOR CO 8.900% 01/15/32 73 FORD MOTOR CRED 5.650% 01/21/14 74 FORD MOTOR CRED 5.750% 01/21/14 72 FORD MOTOR CRED 5.750% 02/20/14 74 FORD MOTOR CRED 5.750% 02/20/14 75 FORD MOTOR CRED 5.900% 02/20/14 74 FORD MOTOR CRED 6.000% 01/20/15 72 FORD MOTOR CRED 6.000% 01/21/14 73 FORD MOTOR CRED 6.000% 03/20/14 71 FORD MOTOR CRED 6.000% 03/20/14 72 FORD MOTOR CRED 6.000% 03/20/14 74 FORD MOTOR CRED 6.000% 11/20/14 73 FORD MOTOR CRED 6.000% 11/20/14 74 FORD MOTOR CRED 6.050% 02/20/14 76 FORD MOTOR CRED 6.050% 02/20/15 70 FORD MOTOR CRED 6.050% 03/20/14 74 FORD MOTOR CRED 6.050% 04/21/14 70 FORD MOTOR CRED 6.050% 12/22/14 71 FORD MOTOR CRED 6.050% 12/22/14 75 FORD MOTOR CRED 6.100% 02/20/15 71 FORD MOTOR CRED 6.150% 01/20/15 73 FORD MOTOR CRED 6.150% 12/22/14 72 FORD MOTOR CRED 6.200% 03/20/15 69 FORD MOTOR CRED 6.250% 01/20/15 70 FORD MOTOR CRED 6.250% 03/20/15 74 FORD MOTOR CRED 6.250% 04/21/14 68 FORD MOTOR CRED 6.250% 12/20/13 74 FORD MOTOR CRED 6.250% 12/20/13 75 FORD MOTOR CRED 6.300% 05/20/14 73 FORD MOTOR CRED 6.300% 05/20/14 73 FORD MOTOR CRED 6.350% 04/21/14 74 FORD MOTOR CRED 6.500% 03/20/15 71 FORD MOTOR CRED 6.500% 12/20/13 74 FORD MOTOR CRED 6.650% 06/20/14 75 FORD MOTOR CRED 6.650% 10/21/13 75 FORD MOTOR CRED 6.750% 06/20/14 75 FORD MOTOR CRED 6.800% 03/20/15 74 FORD MOTOR CRED 6.800% 06/20/14 71 FORD MOTOR CRED 7.250% 07/20/17 68 FORD MOTOR CRED 7.250% 07/20/17 72 FORD MOTOR CRED 7.350% 09/15/15 75 FORD MOTOR CRED 7.400% 08/21/17 73 FORD MOTOR CRED 7.500% 08/20/32 68 FRANKLIN BANK 4.000% 05/01/27 33 FRONTIER AIRLINE 5.000% 12/15/25 23 GENERAL MOTORS 6.750% 05/01/28 53 GENERAL MOTORS 7.375% 05/23/48 62 GENERAL MOTORS 7.400% 09/01/25 61 GENERAL MOTORS 7.700% 04/15/16 73 GENERAL MOTORS 8.100% 06/15/24 65 GENERAL MOTORS 8.250% 07/15/23 71 GENERAL MOTORS 8.375% 07/15/33 67 GENERAL MOTORS 8.800% 03/01/21 76 GENERAL MOTORS 9.400% 07/15/21 77 GEORGIA GULF CRP 10.750% 10/15/16 70 GLOBAL HEALTH SC 11.000% 05/01/08 0 GLOBALSTAR INC 5.750% 04/01/28 72 GMAC 5.250% 01/15/14 66 GMAC 5.350% 01/15/14 71 GMAC 5.700% 06/15/13 68 GMAC 5.700% 10/15/13 70 GMAC 5.700% 12/15/13 68 GMAC 5.750% 01/15/14 69 GMAC 5.850% 05/15/13 73 GMAC 5.850% 06/15/13 67 GMAC 5.850% 06/15/13 69 GMAC 5.850% 06/15/13 73 GMAC 5.900% 01/15/19 55 GMAC 5.900% 01/15/19 57 GMAC 5.900% 02/15/19 59 GMAC 5.900% 10/15/19 63 GMAC 5.900% 12/15/13 66 GMAC 5.900% 12/15/13 66 GMAC 6.000% 02/15/19 56 GMAC 6.000% 02/15/19 58 GMAC 6.000% 02/15/19 62 GMAC 6.000% 03/15/19 56 GMAC 6.000% 03/15/19 56 GMAC 6.000% 03/15/19 58 GMAC 6.000% 03/15/19 59 GMAC 6.000% 03/15/19 59 GMAC 6.000% 04/15/19 58 GMAC 6.000% 07/15/13 73 GMAC 6.000% 09/15/19 56 GMAC 6.000% 09/15/19 57 GMAC 6.000% 11/15/13 68 GMAC 6.000% 12/15/13 71 GMAC 6.050% 08/15/19 56 GMAC 6.050% 08/15/19 60 GMAC 6.050% 10/15/19 56 GMAC 6.100% 05/15/13 72 GMAC 6.100% 09/15/19 56 GMAC 6.100% 11/15/13 70 GMAC 6.125% 10/15/19 57 GMAC 6.150% 08/15/19 64 GMAC 6.150% 09/15/13 67 GMAC 6.150% 09/15/19 57 GMAC 6.150% 10/15/19 57 GMAC 6.150% 11/15/13 73 GMAC 6.150% 12/15/13 69 GMAC 6.200% 04/15/19 60 GMAC 6.200% 11/15/13 71 GMAC 6.250% 01/15/19 60 GMAC 6.250% 03/15/13 74 GMAC 6.250% 04/15/19 60 GMAC 6.250% 05/15/19 57 GMAC 6.250% 07/15/13 70 GMAC 6.250% 07/15/19 57 GMAC 6.250% 10/15/13 71 GMAC 6.250% 11/15/13 71 GMAC 6.250% 12/15/18 65 GMAC 6.300% 08/15/19 60 GMAC 6.300% 08/15/19 61 GMAC 6.300% 10/15/13 74 GMAC 6.300% 11/15/13 68 GMAC 6.350% 04/15/19 57 GMAC 6.350% 05/15/13 69 GMAC 6.350% 07/15/19 59 GMAC 6.350% 07/15/19 60 GMAC 6.375% 01/15/14 66 GMAC 6.375% 08/01/13 74 GMAC 6.400% 11/15/19 57 GMAC 6.400% 11/15/19 59 GMAC 6.400% 12/15/18 58 GMAC 6.450% 02/15/13 72 GMAC 6.500% 01/15/20 58 GMAC 6.500% 02/15/20 66 GMAC 6.500% 03/15/13 72 GMAC 6.500% 05/15/13 73 GMAC 6.500% 05/15/19 58 GMAC 6.500% 06/15/13 77 GMAC 6.500% 06/15/18 59 GMAC 6.500% 08/15/13 72 GMAC 6.500% 11/15/13 73 GMAC 6.500% 11/15/18 60 GMAC 6.500% 12/15/18 62 GMAC 6.500% 12/15/18 62 GMAC 6.550% 12/15/19 63 GMAC 6.600% 05/15/18 59 GMAC 6.600% 06/15/19 58 GMAC 6.600% 06/15/19 59 GMAC 6.600% 08/15/16 60 GMAC 6.650% 02/15/20 61 GMAC 6.650% 06/15/18 58 GMAC 6.650% 10/15/18 59 GMAC 6.650% 10/15/18 59 GMAC 6.700% 05/15/14 70 GMAC 6.700% 05/15/14 73 GMAC 6.700% 06/15/14 74 GMAC 6.700% 06/15/18 56 GMAC 6.700% 06/15/18 59 GMAC 6.700% 06/15/19 65 GMAC 6.700% 08/15/16 65 GMAC 6.700% 11/15/18 58 GMAC 6.700% 12/15/19 61 GMAC 6.750% 03/15/18 61 GMAC 6.750% 03/15/20 65 GMAC 6.750% 04/15/13 74 GMAC 6.750% 05/15/19 56 GMAC 6.750% 05/15/19 63 GMAC 6.750% 06/15/14 67 GMAC 6.750% 06/15/17 63 GMAC 6.750% 06/15/19 61 GMAC 6.750% 06/15/19 62 GMAC 6.750% 07/15/16 67 GMAC 6.750% 07/15/18 60 GMAC 6.750% 08/15/16 71 GMAC 6.750% 09/15/16 69 GMAC 6.750% 09/15/18 61 GMAC 6.750% 10/15/18 59 GMAC 6.750% 11/15/18 63 GMAC 6.750% 12/01/14 77 GMAC 6.800% 02/15/13 72 GMAC 6.800% 04/15/13 75 GMAC 6.800% 09/15/18 60 GMAC 6.800% 10/15/18 66 GMAC 6.850% 05/15/18 60 GMAC 6.875% 04/15/13 71 GMAC 6.875% 07/15/18 67 GMAC 6.875% 08/15/16 64 GMAC 6.900% 06/15/17 60 GMAC 6.900% 07/15/18 64 GMAC 6.900% 08/15/18 61 GMAC 6.950% 06/15/17 60 GMAC 7.000% 01/15/13 74 GMAC 7.000% 02/15/18 60 GMAC 7.000% 02/15/18 60 GMAC 7.000% 02/15/18 64 GMAC 7.000% 02/15/21 63 GMAC 7.000% 03/15/18 65 GMAC 7.000% 05/15/18 61 GMAC 7.000% 06/15/17 65 GMAC 7.000% 06/15/22 64 GMAC 7.000% 07/15/17 61 GMAC 7.000% 08/15/18 65 GMAC 7.000% 09/15/18 62 GMAC 7.000% 09/15/21 60 GMAC 7.000% 09/15/21 67 GMAC 7.000% 11/15/23 64 GMAC 7.000% 11/15/24 58 GMAC 7.000% 11/15/24 60 GMAC 7.000% 11/15/24 62 GMAC 7.050% 03/15/18 60 GMAC 7.050% 03/15/18 63 GMAC 7.050% 04/15/18 59 GMAC 7.125% 10/15/17 62 GMAC 7.150% 01/15/25 65 GMAC 7.150% 03/15/25 67 GMAC 7.150% 09/15/18 65 GMAC 7.200% 10/15/17 60 GMAC 7.200% 10/15/17 67 GMAC 7.250% 01/15/18 63 GMAC 7.250% 01/15/25 56 GMAC 7.250% 02/15/25 64 GMAC 7.250% 03/15/25 60 GMAC 7.250% 04/15/18 62 GMAC 7.250% 04/15/18 63 GMAC 7.250% 08/15/18 62 GMAC 7.250% 08/15/18 70 GMAC 7.250% 09/15/17 60 GMAC 7.250% 09/15/17 62 GMAC 7.250% 09/15/17 64 GMAC 7.250% 09/15/17 66 GMAC 7.250% 09/15/18 65 GMAC 7.300% 01/15/18 66 GMAC 7.300% 01/15/18 71 GMAC 7.300% 12/15/17 62 GMAC 7.350% 04/15/18 62 GMAC 7.375% 04/15/18 66 GMAC 7.375% 11/15/16 64 GMAC 7.400% 12/15/17 63 GMAC 7.500% 03/15/25 67 GMAC 7.500% 08/15/17 66 GMAC 7.500% 11/15/16 69 GMAC 7.500% 11/15/17 68 GMAC 7.500% 11/15/17 69 GMAC 7.500% 12/15/17 67 GMAC 7.500% 12/15/17 74 GMAC 7.750% 10/15/17 66 GMAC 8.000% 03/15/25 71 GMAC 8.000% 10/15/17 70 GMAC 8.000% 11/15/17 69 GMAC 9.000% 07/15/20 77 GOLDEN BOOKS PUB 10.750% 12/31/04 0 GRANCARE INC 9.375% 09/15/05 0 GULF STATES STL 13.500% 04/15/03 100 HARRAHS OPER CO 5.375% 12/15/13 65 HARRAHS OPER CO 5.625% 06/01/15 58 HARRAHS OPER CO 5.750% 10/01/17 55 HARRAHS OPER CO 6.500% 06/01/16 60 HAWAIIAN TELCOM 9.750% 05/01/13 40 HAWAIIAN TELCOM 12.500% 05/01/15 26 HEADWATERS INC 2.500% 02/01/14 68 HEADWATERS INC 2.500% 02/01/14 71 HERBST GAMING 7.000% 11/15/14 22 HERBST GAMING 8.125% 06/01/12 24 HERCULES INC 6.500% 06/30/29 75 HERTZ CORP 7.000% 01/15/28 75 HILTON HOTELS 7.500% 12/15/17 74 HINES NURSERIES 10.250% 10/01/11 58 HUB INTL HOLDING 10.250% 06/15/15 75 HUMAN GENOME 2.250% 08/15/12 74 HUNTINGTON CAPIT 6.650% 05/15/37 69 IDEARC INC 8.000% 11/15/16 72 INDALEX HOLD 11.500% 02/01/14 55 ION MEDIA 11.000% 07/31/13 24 IRIDIUM LLC/CAP 10.875% 07/15/05 0 IRIDIUM LLC/CAP 11.250% 07/15/05 1 IRIDIUM LLC/CAP 13.000% 07/15/05 1 IRIDIUM LLC/CAP 14.000% 07/15/05 0 ISOLAGEN INC 3.500% 11/01/24 15 JAZZ TECHNOLOGIE 8.000% 12/31/11 69 JB POINDEXTER 8.750% 03/15/14 73 JETBLUE AIRWAYS 3.750% 03/15/35 70 JONES APPAREL 6.125% 11/15/34 70 JPMORGAN CHASE 9.500% 09/29/08 70 JPMORGAN CHASE 10.000% 07/31/08 70 JPMORGAN CHASE 12.000% 07/31/08 36 K HOVNANIAN ENTR 6.250% 01/15/15 69 K HOVNANIAN ENTR 6.250% 01/15/16 68 K HOVNANIAN ENTR 6.375% 12/15/14 69 K HOVNANIAN ENTR 6.500% 01/15/14 69 K HOVNANIAN ENTR 7.500% 05/15/16 69 K HOVNANIAN ENTR 7.750% 05/15/13 67 K HOVNANIAN ENTR 8.875% 04/01/12 76 K MART FUNDING 8.800% 07/01/10 1 KAISER ALUMINUM 12.750% 02/01/03 5 KELLSTROM INDS 5.750% 10/15/02 0 KELLWOOD CO 7.625% 10/15/17 66 KEMET CORP 2.250% 11/15/26 69 KEMET CORP 2.250% 11/15/26 70 KEYSTONE AUTO OP 9.750% 11/01/13 64 KIMBALL HILL INC 10.500% 12/15/12 2 KMART 95-K1 PT 8.990% 07/05/10 N.A. KMART 95-K2 PT 9.780% 01/05/20 N.A. KMART 95-K4 PT 9.350% 01/02/20 0 KNIGHT RIDDER 4.625% 11/01/14 70 KNIGHT RIDDER 5.750% 09/01/17 69 KNIGHT RIDDER 6.875% 03/15/29 64 KNIGHT RIDDER 7.150% 11/01/27 66 KRATON POLYMERS 8.125% 01/15/14 64 LAZYDAYS RV 11.750% 05/15/12 73 LEHMAN BROS HLDG 4.800% 06/24/23 72 LEHMAN BROS HLDG 5.000% 05/28/23 78 LEHMAN BROS HLDG 5.450% 02/22/30 72 LEHMAN BROS HLDG 5.500% 04/15/23 79 LEHMAN BROS HLDG 5.500% 08/02/30 73 LEHMAN BROS HLDG 5.550% 01/25/30 75 LEHMAN BROS HLDG 5.600% 03/02/29 76 LEHMAN BROS HLDG 5.625% 03/15/30 73 LEHMAN BROS HLDG 5.700% 04/13/29 77 LEHMAN BROS HLDG 5.750% 12/16/28 70 LEHMAN BROS HLDG 5.750% 12/23/28 77 LEHMAN CAP VII 5.857% N.A. 72 LEINER HEALTH 11.000% 06/01/12 2 LIBERTY MEDIA 3.250% 03/15/31 67 LIBERTY MEDIA 3.500% 01/15/31 54 LIBERTY MEDIA 3.750% 02/15/30 56 LIBERTY MEDIA 4.000% 11/15/29 56 LIFECARE HOLDING 9.250% 08/15/13 61 LIFETIME BRANDS 4.750% 07/15/11 72 LUCENT TECH 6.500% 01/15/28 76 MAGNA ENTERTAINM 7.250% 12/15/09 51 MAGNA ENTERTAINM 8.550% 06/15/10 53 MAJESTIC STAR 9.750% 01/15/11 34 MANNKIND CORP 3.750% 12/15/13 53 MASONITE CORP 11.000% 04/06/15 67 MBIA INC 6.625% 10/01/28 68 MBIA INC 7.000% 12/15/25 77 MEDIANEWS GROUP 6.375% 04/01/14 46 MEDIANEWS GROUP 6.875% 10/01/13 48 MERIX CORP 4.000% 05/15/13 53 MERRILL LYNCH 8.100% 06/04/09 N.A. MERRILL LYNCH 10.000% 03/06/09 N.A. MERRILL LYNCH 11.000% 04/28/09 N.A. MERRILL LYNCH 12.000% 03/26/10 N.A. METALDYNE CORP 10.000% 11/01/13 56 METALDYNE CORP 11.000% 06/15/12 27 MILLENNIUM AMER 7.625% 11/15/26 58 MISSOURI PAC RR 5.000% 01/01/45 68 MOA HOSPITALITY 8.000% 10/15/07 75 MOMENTIVE PERFOR 11.500% 12/01/16 75 MORGAN STANLEY 10.000% 04/20/09 N.A. MORGAN STANLEY 10.000% 05/20/09 N.A. MORRIS PUBLISH 7.000% 08/01/13 60 MOTOROLA INC 5.220% 10/01/97 54 MOVIE GALLERY 11.000% 05/01/12 30 MRS FIELDS 9.000% 03/15/11 62 NATL FINANCIAL 0.750% 02/01/12 71 NATL STEEL CORP 8.375% 08/01/06 0 NEFF CORP 10.000% 06/01/15 45 NEKTAR THERAPEUT 3.250% 09/28/12 74 NELNET INC 7.400% 09/29/36 67 NETWORK EQUIPMNT 3.750% 12/15/14 66 NEW ORL GRT N RR 5.000% 07/01/32 60 NEW PLAN EXCEL 7.500% 07/30/29 67 NEW PLAN REALTY 6.900% 02/15/28 68 NEW PLAN REALTY 6.900% 02/15/28 68 NEW PLAN REALTY 7.650% 11/02/26 69 NEW PLAN REALTY 7.680% 11/02/26 65 NEW PLAN REALTY 7.970% 08/14/26 68 NEWARK GROUP INC 9.750% 03/15/14 75 NORTEK INC 8.500% 09/01/14 70 NORTH ATL TRADNG 9.250% 03/01/12 62 NORTHERN PAC RY 3.000% 01/01/47 54 NORTHERN PAC RY 3.000% 01/01/47 75 NORTHERN TEL CAP 7.875% 06/15/26 70 NORTHWESTERN CRP 7.960% 12/21/26 4 NORTHWST STL&WIR 9.500% 06/15/01 0 NTK HOLDINGS INC 0.000% 03/01/14 53 NUTRITIONAL SRC 10.125% 08/01/09 13 NUVEEN INVEST 5.500% 09/15/15 73 OAKWOOD HOMES 7.875% 03/01/04 0 OAKWOOD HOMES 8.125% 03/01/09 0 OMNICARE INC 3.250% 12/15/35 72 OSCIENT PHARM 3.500% 04/15/11 41 OSI RESTAURANT 10.000% 06/15/15 70 OUTBOARD MARINE 9.125% 04/15/17 7 OUTBOARD MARINE 10.750% 06/01/08 10 PAC-WEST TELECOM 13.500% 02/01/09 2 PACKAGING DYNAMI 10.000% 05/01/16 67 PALM HARBOR 3.250% 05/15/24 59 PANTRY INC 3.000% 11/15/12 70 PEGASUS SATELLIT 9.750% 12/01/06 0 PEGASUS SATELLIT 12.500% 08/01/07 0 PENHALL INTL 12.000% 08/01/14 75 PIERRE FOODS INC 9.875% 07/15/12 29 PIXELWORKS INC 1.750% 05/15/24 70 PLY GEM INDS 9.000% 02/15/12 66 POPE & TALBOT 8.375% 06/01/13 4 POPE & TALBOT 8.375% 06/01/13 14 PORTOLA PACKAGIN 8.250% 02/01/12 58 POWERWAVE TECH 1.875% 11/15/24 71 POWERWAVE TECH 3.875% 10/01/27 73 POWERWAVE TECH 3.875% 10/01/27 74 PRIMUS TELECOM 3.750% 09/15/10 45 PRIMUS TELECOM 5.000% 06/30/09 61 PRIMUS TELECOM 8.000% 01/15/14 37 PROPEX FABRICS 10.000% 12/01/12 1 QUALITY DISTRIBU 9.000% 11/15/10 65 RADIAN GROUP 5.375% 06/15/15 78 RADIAN GROUP 5.625% 02/15/13 77 RAFAELLA APPAREL 11.250% 06/15/11 53 RAIT FINANCIAL 6.875% 04/15/27 55 REALOGY CORP 10.500% 04/15/14 76 REALOGY CORP 12.375% 04/15/15 55 REALTY INCOME 5.875% 03/15/35 71 REGIONS FIN TR 6.625% 05/15/47 73 RENTECH INC 4.000% 04/15/13 51 RESIDENTIAL CAP 8.000% 02/22/11 48 RESIDENTIAL CAP 8.375% 06/30/10 53 RESIDENTIAL CAP 8.500% 04/17/13 50 RESIDENTIAL CAP 8.500% 06/01/12 54 RESIDENTIAL CAP 8.875% 06/30/15 50 RESTAURANT CO 10.000% 10/01/13 67 RH DONNELLEY 6.875% 01/15/13 67 RH DONNELLEY 6.875% 01/15/13 67 RH DONNELLEY 6.875% 01/15/13 67 RH DONNELLEY 8.875% 01/15/16 65 RH DONNELLEY 8.875% 10/15/17 67 RICKEL HOME CNTR 13.500% 12/15/01 0 RITE AID CORP 6.875% 08/15/13 70 RITE AID CORP 6.875% 12/15/28 53 RITE AID CORP 7.700% 02/15/27 59 RJ TOWER CORP 12.000% 06/01/13 1 ROTECH HEALTHCA 9.500% 04/01/12 78 SEARS ROEBUCK AC 6.500% 12/01/28 75 SEARS ROEBUCK AC 6.750% 01/15/28 77 SEARS ROEBUCK AC 7.000% 06/01/32 68 SEARS ROEBUCK AC 7.500% 10/15/27 71 SERVICEMASTER CO 7.100% 03/01/18 54 SERVICEMASTER CO 7.250% 03/01/38 57 SERVICEMASTER CO 7.450% 08/15/27 48 SIX FLAGS INC 4.500% 05/15/15 56 SIX FLAGS INC 8.875% 02/01/10 88 SIX FLAGS INC 9.625% 06/01/14 60 SIX FLAGS INC 9.750% 04/15/13 65 SLM CORP 4.800% 12/15/28 65 SLM CORP 5.000% 06/15/19 66 SLM CORP 5.000% 06/15/28 74 SLM CORP 5.000% 09/15/15 72 SLM CORP 5.000% 12/15/28 54 SLM CORP 5.050% 03/15/23 59 SLM CORP 5.150% 06/15/19 69 SLM CORP 5.150% 12/15/28 69 SLM CORP 5.190% 04/24/19 68 SLM CORP 5.200% 03/15/28 62 SLM CORP 5.200% 12/15/20 N.A. SLM CORP 5.250% 03/15/19 73 SLM CORP 5.250% 03/15/28 70 SLM CORP 5.250% 06/15/20 66 SLM CORP 5.250% 06/15/28 57 SLM CORP 5.250% 12/15/28 69 SLM CORP 5.300% 09/15/30 63 SLM CORP 5.350% 06/15/25 63 SLM CORP 5.400% 03/15/19 74 SLM CORP 5.400% 03/15/23 73 SLM CORP 5.400% 06/15/30 60 SLM CORP 5.450% 03/15/23 58 SLM CORP 5.450% 03/15/28 72 SLM CORP 5.450% 06/15/28 65 SLM CORP 5.450% 06/15/28 67 SLM CORP 5.450% 12/15/20 72 SLM CORP 5.500% 03/15/19 74 SLM CORP 5.500% 03/15/30 62 SLM CORP 5.500% 03/15/30 64 SLM CORP 5.500% 06/15/19 74 SLM CORP 5.500% 06/15/28 62 SLM CORP 5.500% 06/15/29 63 SLM CORP 5.500% 06/15/29 63 SLM CORP 5.500% 06/15/29 63 SLM CORP 5.500% 09/15/19 62 SLM CORP 5.500% 12/15/30 64 SLM CORP 5.550% 03/15/18 72 SLM CORP 5.550% 06/15/25 65 SLM CORP 5.550% 06/15/28 72 SLM CORP 5.600% 03/15/18 72 SLM CORP 5.600% 03/15/22 68 SLM CORP 5.600% 03/15/24 62 SLM CORP 5.600% 03/15/29 59 SLM CORP 5.600% 03/15/29 64 SLM CORP 5.600% 06/15/18 72 SLM CORP 5.600% 12/15/28 70 SLM CORP 5.600% 12/15/29 57 SLM CORP 5.600% 12/15/29 63 SLM CORP 5.625% 01/25/25 65 SLM CORP 5.625% 08/01/33 73 SLM CORP 5.650% 03/15/18 70 SLM CORP 5.650% 03/15/29 65 SLM CORP 5.650% 03/15/29 74 SLM CORP 5.650% 03/15/30 64 SLM CORP 5.650% 03/15/32 62 SLM CORP 5.650% 06/15/22 69 SLM CORP 5.650% 06/15/22 70 SLM CORP 5.650% 06/15/30 59 SLM CORP 5.650% 09/15/30 65 SLM CORP 5.650% 12/15/29 63 SLM CORP 5.650% 12/15/29 64 SLM CORP 5.650% 12/15/29 66 SLM CORP 5.700% 03/15/29 61 SLM CORP 5.700% 03/15/29 65 SLM CORP 5.700% 03/15/29 66 SLM CORP 5.700% 03/15/30 66 SLM CORP 5.700% 03/15/32 65 SLM CORP 5.700% 06/15/30 63 SLM CORP 5.700% 12/15/29 62 SLM CORP 5.750% 03/15/29 63 SLM CORP 5.750% 03/15/29 65 SLM CORP 5.750% 03/15/29 67 SLM CORP 5.750% 03/15/29 72 SLM CORP 5.750% 03/15/30 64 SLM CORP 5.750% 03/15/30 67 SLM CORP 5.750% 06/15/29 58 SLM CORP 5.750% 06/15/29 65 SLM CORP 5.750% 06/15/32 64 SLM CORP 5.750% 06/15/32 64 SLM CORP 5.750% 09/15/29 63 SLM CORP 5.750% 12/15/29 62 SLM CORP 5.750% 12/15/29 64 SLM CORP 5.750% 12/15/29 64 SLM CORP 5.750% 12/15/29 65 SLM CORP 5.800% 03/15/32 64 SLM CORP 5.800% 03/15/32 66 SLM CORP 5.800% 03/15/32 66 SLM CORP 5.800% 12/15/28 64 SLM CORP 5.850% 03/15/32 58 SLM CORP 5.850% 03/15/32 59 SLM CORP 5.850% 03/15/32 66 SLM CORP 5.850% 06/15/32 66 SLM CORP 5.850% 06/15/32 66 SLM CORP 5.850% 09/15/29 64 SLM CORP 5.850% 09/15/29 66 SLM CORP 5.850% 12/15/31 63 SLM CORP 5.900% 09/15/19 73 SLM CORP 6.000% 03/15/27 68 SLM CORP 6.000% 03/15/29 67 SLM CORP 6.000% 03/15/37 62 SLM CORP 6.000% 03/15/37 66 SLM CORP 6.000% 03/15/37 66 SLM CORP 6.000% 06/15/19 73 SLM CORP 6.000% 06/15/21 69 SLM CORP 6.000% 06/15/21 70 SLM CORP 6.000% 06/15/26 66 SLM CORP 6.000% 06/15/26 68 SLM CORP 6.000% 06/15/29 60 SLM CORP 6.000% 06/15/29 62 SLM CORP 6.000% 06/15/29 67 SLM CORP 6.000% 06/15/31 65 SLM CORP 6.000% 06/15/31 67 SLM CORP 6.000% 09/15/19 74 SLM CORP 6.000% 09/15/19 75 SLM CORP 6.000% 09/15/29 65 SLM CORP 6.000% 09/15/29 66 SLM CORP 6.000% 09/15/29 66 SLM CORP 6.000% 09/15/29 67 SLM CORP 6.000% 09/15/29 67 SLM CORP 6.000% 12/15/26 68 SLM CORP 6.000% 12/15/26 68 SLM CORP 6.000% 12/15/26 75 SLM CORP 6.000% 12/15/28 61 SLM CORP 6.000% 12/15/28 65 SLM CORP 6.000% 12/15/28 70 SLM CORP 6.000% 12/15/31 65 SLM CORP 6.000% 12/15/31 67 SLM CORP 6.000% 12/15/31 67 SLM CORP 6.000% 12/15/31 68 SLM CORP 6.050% 12/15/26 67 SLM CORP 6.050% 12/15/31 67 SLM CORP 6.100% 12/15/31 66 SLM CORP 6.150% 03/10/21 75 SLM CORP 6.150% 06/15/21 68 SLM CORP 6.150% 06/15/21 71 SLM CORP 6.150% 09/15/29 66 SLM CORP 6.150% 09/15/29 68 SLM CORP 6.200% 12/15/31 67 SLM CORP 6.250% 06/15/29 68 SLM CORP 6.250% 06/15/29 68 SLM CORP 6.250% 09/15/29 67 SLM CORP 6.250% 09/15/29 68 SLM CORP 6.250% 09/15/31 68 SLM CORP 6.350% 09/15/31 67 SLM CORP 6.350% 09/15/31 68 SLM CORP 6.400% 09/15/31 62 SLM CORP 6.450% 09/15/31 69 SLM CORP 6.500% 09/15/31 69 SLM CORP 6.850% 07/07/36 73 SPANSION LLC 2.250% 06/15/16 49 SPANSION LLC 11.250% 01/15/16 66 SPECIAL DEVICES 11.375% 12/15/08 N.A. SPECTRUM BRANDS 7.375% 02/01/15 73 SPHERIS INC 11.000% 12/15/12 83 SPINNAKER INDS 10.750% 10/15/06 0 STANDARD PACIFIC 9.250% 04/15/12 78 STANDRD PAC CORP 6.000% 10/01/12 71 STANLEY-MARTIN 9.750% 08/15/15 45 STATION CASINOS 6.500% 02/01/14 63 STATION CASINOS 6.625% 03/15/18 59 STATION CASINOS 6.875% 03/01/16 60 SUNTRUST PFD CAP 5.853% N.A. 74 SWIFT TRANS CO 12.500% 05/15/17 41 TELIGENT INC 11.500% 03/01/08 0 TELIGENT INC 11.500% 12/01/07 0 TENET HEALTHCARE 6.875% 11/15/31 75 THERAVANCE INC 3.000% 01/15/15 76 TIMES MIRROR CO 6.610% 09/15/27 37 TIMES MIRROR CO 7.250% 03/01/13 39 TIMES MIRROR CO 7.250% 11/15/96 32 TIMES MIRROR CO 7.500% 07/01/23 41 TOUSA INC 7.500% 01/15/15 10 TOUSA INC 7.500% 03/15/11 9 TOUSA INC 9.000% 07/01/10 55 TOUSA INC 9.000% 07/01/10 62 TOUSA INC 10.375% 07/01/12 11 TOYS R US 7.375% 10/15/18 78 TRANS-LUX CORP 8.250% 03/01/12 56 TRANSMERIDIAN EX 12.000% 12/15/10 61 TRIBUNE CO 4.875% 08/15/10 62 TRIBUNE CO 5.250% 08/15/15 44 TRUE TEMPER 8.375% 09/15/11 65 TRUMP ENTERTNMNT 8.500% 06/01/15 68 TXU CORP 6.500% 11/15/24 77 TXU CORP 6.550% 11/15/34 75 UAL 1991 TRUST 10.020% 03/22/14 48 UAL 1995 TRUST 9.020% 04/19/12 40 UAL 1995 TRUST 9.560% 10/19/18 45 UAL CORP 4.500% 06/30/21 52 UAL CORP 4.500% 06/30/21 56 UAL CORP 5.000% 02/01/21 50 UNIVERSAL STAND 8.250% 02/01/06 0 US AIR INC 10.750% 01/15/49 0 US AIR INC 10.900% 01/01/49 0 US AIRWAYS GROUP 7.000% 09/30/20 70 VENTURE HLDGS 9.500% 07/01/05 0 VENTURE HLDGS 11.000% 06/01/07 0 VERASUN ENERGY 9.375% 06/01/17 68 VERENIUM CORP 5.500% 04/01/27 41 VERTIS INC 10.875% 06/15/09 46 VESTA INSUR GRP 8.750% 07/15/25 2 VICORP RESTAURNT 10.500% 04/15/11 15 VION PHARM INC 7.750% 02/15/12 53 VIRGIN RIVER CAS 9.000% 01/15/12 72 VISTEON CORP 7.000% 03/10/14 66 WASH MUTUAL PFD 6.534% N.A. 59 WASH MUTUAL PFD 6.665% N.A. 62 WASH MUTUAL PFD 6.895% N.A. 60 WCI COMMUNITIES 4.000% 08/05/23 63 WCI COMMUNITIES 6.625% 03/15/15 41 WCI COMMUNITIES 7.875% 10/01/13 40 WCI COMMUNITIES 9.125% 05/01/12 44 WCI STEEL ACQUIS 8.000% 05/01/16 64 WEBSTER CAPITAL 7.650% 06/15/37 67 WERNER HOLDINGS 10.000% 11/15/07 0 WILLIAM LYON 7.500% 02/15/14 61 WILLIAM LYON 7.625% 12/15/12 57 WILLIAM LYON 10.750% 04/01/13 68 WIMAR OP LLC/FIN 9.625% 12/15/14 56 WINSTAR COMM INC 10.000% 03/15/08 0 WINSTAR COMM INC 14.750% 04/15/10 0 WITCO CORP 6.875% 02/01/26 70 YOUNG BROADCSTNG 8.750% 01/15/14 58 YOUNG BROADCSTNG 10.000% 03/01/11 67 ********* 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 ***