/raid1/www/Hosts/bankrupt/TCR_Public/081030.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, October 30, 2008, Vol. 12, No. 259
Headlines
3900 LC: Asks Court's Okay to Employ Matthew L. Johnson as Counsel
ACACIA CDO: Moody's Slashes $21.8MM Notes Rating to Caa2 from A3
ABS CORPORATION: Worsening Performance Cues Moody's to Cut Ratings
ACUSPHERE INC: Has Until December 31 to Comply with NASDAQ Rule
ACUSPHERE INC: $20-Mill. Financing from Cephalon to Close Nov. 3
AIRTRAN HOLDINGS: Posts $107.1MM Net Loss for Third Quarter 2008
ALTIUS IV: Moody's Trims' Reviews Ratings on Three Note Classes
ARIAD PHARMACEUTICALS: SVP Keane Has Options to Buy 80,000 Shares
ARIAD PHARMACEUTICALS: Unveils Deforolimus Pre-Clinical Data
ARIAD PHARMACEUTICALS: Unveils Kinase Inhibitor Preclinical Data
ATHILON CAPITAL: Moody's Trims Three Debt Ratings to 'Ba1'
AVISTAR COMMUNICATIONS: Grants $50,000 Bonus to CEO Simon Moss
AYRESOME CDO: Moody's Cuts Ratings on Credit Quality Deterioration
BANKERS OF RUPTCY: U.S. Trustee Sets 341(a) Meeting for Nov. 24
BEAR STEARNS: Moody's Cuts Underlying Rating to 'Ca' from 'Caa3'
BEAR STEARNS: S&P Junks Rating on Class Q Certificates
BEAR STEARNS: S&P Trims Ratings on 17 Classes of Certificates
BERNOULLI HIGH: Moody's Slashes Two Notes Ratings to 'Ca'
BIOMETRX INC: Names Frank Santamoreno to Board of Directors
BLOCKBUSTER INC: To Publish Third Quarter Results November 6
BLOCKBUSTER INC: William Sams Discloses 5% Equity Stake
BOSCOV'S DEPARTMENT: Extends Sale Process; Hearing Set for Nov. 5
BOYD GAMING: S&P Puts Ratings Under Neg. Watch on Weak 3Q Results
BRICK BREWING: TSX Places Common Shares Under Delisting Review
BROOKE CORP: Case Summary & 19 Largest Unsecured Creditors
BROOKE CORP: Files For Chapter 11 Bankruptcy in Kansas
BSML INC: Marc Applebaum Quits as Chief Financial Officer
CAJUN FUNDING: Moody's Keeps 'B2' Ratings; Outlook Remains Stable
CAMBER 5: Moody's Cuts Three Notes Ratings; Keeps Under Review
CHC HELICOPTER: Moody's Withdraws Ratings After Notes Redemption
CHENIERE ENERGY: Paulson & Co et al. Disclose 14.6% Equity Stake
CHEROKEE INTERNATIONAL: Sells European Units to Eric Bowers
CHINA HEALTH: Ji Guang Wang Quits as President and Director
CHRISTO BARDIS: Files Schedules of Assets and Debts
CHRISTO BARDIS: To Employ Meegan Hanschu as Bankruptcy Counsel
CHRYSLER AUTOMOTIVE: Moody's Cuts Ratings; Reviews for Likely Cut
CHRYSLER FINANCIAL: Moody's Chips CF Rating to 'B3' from 'B2
CIFG GUARANTY: Moody's Cuts IFS Rtngs to 'B3'; Keeps Under Review
CNA FINANCIAL: Moody's Affirms '(P)Ba2' Preferred Stock Ratings
COMMERCE PARK: Won't Pursue Rehabilitation; Court Dismisses Case
COMPLETE PRODUCTION: Moody's Reviews Ratings for Possible Cuts
COMSTOCK RESOURCES: S&P Cuts $175MM Unsecured Notes Rating to 'B'
COOPER-STANDARD: Moody's Affirms CF and PD Ratings at 'B2'
CONCENTRA INC: Moody's Holds Ratings; Changes Outlook to Negative
CORNERSTONE MINISTRIES: Court Set October 31 as Claims Bar Date
CREDIT AND REPACKAGED: Moody's Cuts Ratings on Poor Credit Quality
CSFB HEAT: Moody's Cuts Ratings on 191 Tranches from 19 RMBS
CSFB HOME: Moody's Lowers Ratings on 13 Classes of Certificates
CWHEQ REVOLVING: Moody's Lowers Certificates Ratings on 17 Classes
CYBERDEFENDER CORP: Wants 6.1MM Common Shares Registered
C-BASS MORTGAGE: Moody's Takes Rating Actions on Certain Certs.
DANA HOLDING: North American SUV Market Erosion Cues Moody's Cut
DAVIS SQUARE: Moody's Trims, Reviews Ratings on Four Note Classes
DELTA AIR: Completes Merger with Northwest Airlines
DMR CLN: Moody's Downgrades Rating to 'Ba2' from 'Aa3'
DTN INC: Moody's Lifts Ratings on Strengthening Credit Profile
DUNDEE 2007-1: Poor Credit Quality Cues Moody's to Cut Rtng to B1
EMISPHERE TECHN: Misses NASDAQ's $35M Market Value Threshold
EMMIS COMMS: Moody's Junks CF & PD Rtngs on Operational Challenges
EPICOR SOFTWARE: Board Fears Elliott Merger Can Lead to Bankruptcy
EPIX PHARMACEUTICALS: Terminates 23% of Workforce to Cut Cost
FIRST FRANKLIN: Moody's Cuts Cert. Ratings on Poor Performance
FORD MOTOR: Credit Unit Gets Access to Fed Commercial Paper Plan
FORT DEARBORN: Moody's Junks Ratings on Three Classes of Notes
GENERAL MOTORS: 3rd Qtr Vehicle Sales Down 11.4% to 2.1 Million
GMAC LLC: Wants Access to $700-Bil. Gov't Financial Rescue Plan
GMAC LLC: To Get Gov't Help to Access Commercial Credit Markets
GENERAL MOTORS: Seeks Refinancing, Buyer for Renaissance Towers
GREENPOINT MORTGAGE: Moody's Cuts Certificates Rtngs on 22 Classes
GUAM GOVERNMENT: S&P Lifts GO Bonds Rating to 'B+' from 'B'
HEALTHSOUTH CORPORATION: Reaffirms Full Year 2008 Guidance
HEALTHSOUTH CORPORATION: To Receive $100MM in UBS Suit Settlement
HEARTLAND AUTOMOTIVE: Court Extends Plan Filing Period to Nov. 14
HEXION SPECIALTY: Huntsman Shareholders Commit $217 Million Cash
HEXION SPECIALTY: Sues Credit Suisse & Deutsche for $6.5B Loan
HOSPITAL PARTNERS: U.S. Trustee Forms Three-Member Creditor Panel
HOSPITAL PARTNERS: Gets Final OK to Use $2.25MM NEA DIP Facility
HOVNANIAN ENTERPRISES: Moody's Rates $250MM Secured Notes 'B3'
HOVNANIAN ENTERPRISES: Unveils Private Debt Exchange Offer
HUNTSMAN CORP: Hexion Specialty Sues Credit Suisse & Deutsche
IESI CORP: Moody's Holds 'B1' Rating; Changes Outlook to Negative
INSMED INC: Has Until March 20, 2009 to Comply with NASDAQ Rule
INTERSTATE BAKERIES: Seven Entities Balk at Disclosure Statement
INTERSTATE BAKERIES: Court OKs Plan Funding Commitment Contracts
IRVINE SENSORS: Looney Claims Accelerated Earnout Payment
ISCHUS CDO: Moody's Junks Ratings on $28MM Class A-2 Notes
ISTANA HIGH: Moody's Lowers Ratings on Five Classes of Notes
KENT FUNDING: Moody's Junks $15MM Class A-2 Notes Ratings
KRISPY KREME: Amends Form S-3 to Delay Share Registration
LANCELOT INVESTORS: Seek Bankruptcy Amid $1.5-Bil. Petters Loss
LANDSOURCE COMMUNITIES: Barclays Proposes Selling Mare Island
LEVEL 3 COMMS: Posts $4 MM Net Loss for Quarter Ended September 30
LEVITT & SONS: Wants $1.1MM Property Sale to Easlan Capital OK'd
LEVITT & SONS: Wachovia Balks at Exclusivity Periods Extension
LONG BEACH: Moody's Cuts Three Certificates Ratings to 'Ca'
MEDICOR LTD: Taps Epiq Bankruptcy as Claims Agent
MERRILL LYNCH: Moody's Lowers Ratings on 44 Certificate Classes
MGM MIRAGE: Earns $61.28 Million for Quarter Ended September 30
MGM MIRAGE: Halts Two Casino Projects Due to Credit Crunch
MONROE HARBOR: Moody's Reviews Notes Ratings for Possible Cuts
MONTEREY CDO: Moody's Chips Two Notes Ratings to 'B3' from 'Aa2'
MORGAN STANLEY: Moody's Chips $6MM Notes Rating to Ba1 from Baa2
MORGAN STANLEY: Moody's Cuts Ratings on 39 Cert. Transactions
MPC CORPORATION: Recurring Losses Cues NYSE A. to Delist Stocks
MPF CORP: Taps Thommessen as Norwegian Counsel
MPF CORP: Taps Vinson & Elkins as Attorneys
NANOGEN INC: Has Until Feb. 26 to Comply with NASDAQ Listing Rules
NATIONAL BEDDING: Moody's Holds All Rtngs; Revises Outlook to Neg.
NORTH COVE: Moody's Trims Ratings on Five Classes of Notes to 'C'
NORTHWEST AIRLINES: Completes Merger with Delta Air Lines
NOMURA ASSET: Moody's Downgrades Ratings on 54 Classes of Certs.
NUTRITIONAL SOURCING: Court Wants Class Distributions Clarified
OWENS CORNING: Posts $810MM Net Loss in Third Quarter 2008
OWNIT MORTGAGE: Moody's Chips Ratings on Three Certificates
PACIFIC LIFESTYLE: Seeks Court OK to Sell Homes; Merger Questioned
PEBBLE CREEK: S&P Withdraws All Ratings After Loan Full Payment
PIERRE FOODS: Committee Taps Garden City as Communication Agent
PIERRE FOODS: Wins Court OK to Get Votes on Restructuring Plan
PILGRIM'S PRIDE: Moody's Cuts Rtngs After $25.7MM Payment Default
PILGRIM'S PRIDE: Will Use Grace Period for Nov. 3 Interest Payment
PULTE HOMES: Posts $280.4 Million Net Loss for Q3 Ended Sept. 30
P&F INDUSTRIES: Nasdaq Extends Compliance Period to April 20
RENAISSANCE HOME: Moody's Lowers Ratings on 99 Certificate Classes
ROCKVILLE CDO: Moody's Chips Four Notes Ratings to 'C'
SALLY BEAUTY: Board of Directors Amends Bylaws
SALS 2007-3: Moody's Junks $20MM Notes Rating to Caa3 from Ba2
SCIENS CFO: Moody's Junks Ratings on Two Classes of Notes
SHEARIN FAMILY: Seeks Another RBC Loan to Keep Condominium Project
SMART & FINAL: Moody's Confirms 'B2' CF and PD Ratings
SMITHFIELD FOODS: Moody's Confirms Ratings After Beef Biz Sale
SOUNDVIEW HOME: Moody's Trims Ratings on 20 Certificate Classes
SPARE BACKUP: Names Robert Binkele to Board of Directors
SPECTRUM BRANDS: NYSE Transitions Share Trading from Floor to Arca
STEVE AND BARRY'S: Plan Filing Period Extended until March 6
STEVE AND BARRY'S: Court Moves Lease Decision Period to Feb. 4
STEVE & BARRY'S: Harold Kahn Joins as CEO, Leaves Wet Seal Board
STRATA TRUST: Moody's Lowers $30MM Notes Rating to 'Ba2' from 'A3'
S & A RESTAURANT: To Vacate Plano HQ; Trustee to Sell Assets
STRUCTURED ASSET: Moody's Lowers Ratings on 70 Certificate Classes
THORNBURG MORTGAGE: Faces Class Suit on Preferred Stock Series
TIERRA ALTA: Moody's Lowers Notes Ratings, Reviews for Likely Cut
TIERS(R) BLUESIERRA: Moody's Cuts $5MM Notes Rtng to Ba3 from Aa3
TIERS(R) BLUESIERRA: Moody's Slashes $15MM Notes Rating to 'Caa1'
TIERS(R) BLUESIERRA: Moody's Trims $10MM Notes Rtng to B2 from Aa2
TIERS(R) HAWAII: Moody's Slashes $25MM Certs. Rating to 'Caa2'
TIERS VERMONT: Moody's Junks $15MM Floating Rate Certificates
TOT-BOT INC: Court Converts Case to Chapter 7 Liquidation
TOXIN ALERT: Won't File Financial Report; Likely Default
TROPICANA ENT: NJ CCC Suspends Casino Sale until October 29
TROPICANA ENT: NJ Court to Consider License Appeal on November 17
TULLY'S COFFEE: Extends Northrim Credit Facility to December 15
TULLY'S COFFEE: Marc Evanger Quits as Director
USG CORPORATION: Reports $125MM Net Loss for 9 Months of 2008
UNIVISION COMMUNICATIONS: S&P Cuts Issue-Level Debt Rating to 'B-'
VANGUARD HEALTH: Moody's Revises Outlook to Stable from Negative
VERASUN ENERGY: Idles Ethanol Facility in Linden, Indiana
WASHINGTON MUTUAL: Wants Unsold Securities Deregistered
WELLS FARGO: Issues Stock to Treasury for $25 Bln. Bail-Out
WESTAFF INC: Sorensen Trust et al. Discloses 9.4% Equity Stake
WORKSTREAM INC: Nasdaq to Consider Stocks Delisting Appeal Today
X-RITE INC: Completes $155MM Financing, Issues 28 Million Shares
* Feldman, Wise, Williams Join Gibson Dunn as N.Y. Partners
* Gibson Dunn-NY Business Restructuring Group Adds Three Partners
* S&P Lowers Ratings on 33 Cert. Classes from 10 RMBS Transactions
* Turnaround Advisors Have Work But Lacked Options to Save Firms
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
*********
3900 LC: Asks Court's Okay to Employ Matthew L. Johnson as Counsel
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3900, LC asks the U.S. Bankruptcy Court for the District of Nevada
for authority to employ Matthew L. Johnson & Associates, P.C., as
its counsel.
As the Debtor's counsel, Matthew L. Johnson & Associates will:
a) institute, prosecute, or defend any lawsuits, adversary
proceedings, or contested matters arising out of this
bankruptcy proceeding in which the Debtor may be a party;
b) assist in the recovery and obtaining necessary Court approval
for recovery and liquidation of estate assets, and to assist
in protecting and preserving the same where necessary;
c) assist in determining the priorities and status of claims and
in filing objections thereto where necessary;
d) if applicable, assist in preparation of a disclosure
statement and Chapter 11 plan; and
e) advise the Debtor and perform all other legal services for
the Debtor which may be or become necessary in this
bankruptcy proceeding.
Matthew L. Johnson, Esq., a shareholder at Matthew L. Johnson &
Associates, P.C., assures the Court that his firm does not hold or
represent any interest adverse to the Debtor or its estate, and
that the firm is a "disinterested person" within the meaning of
the United States Bankruptcy Code.
Mr. Johnson adds that the firm received a retainer from the Debtor
totalling $15,000 which amount will be applied as payment for
services rendered during the pre-bankruptcy proceedings, and to be
rendered in contemplation of or in connection with the Debtor's
bankruptcy case.
As compensation for their services, the law firm's professionals
currently bill:
Partners $300 per hour
Associates $195 per hour
Paralegals/Law Clerks $135 per hour
Based in Las Vegas, 3900, LLC also known as Michael's Plaza, filed
for Chapter 11 relief on Oct. 17, 2008 (Bankr. D. Nev. 08-22163).
When the Debtor filed for protection from its creditors, it listed
assets of $10 million to $50 million, and debts of $1 million to
$10 million.
ACACIA CDO: Moody's Slashes $21.8MM Notes Rating to Caa2 from A3
----------------------------------------------------------------
Moody's Investors Service has downgraded the ratings on four
classes of notes issued by Acacia CDO 9, Ltd., and left two of
these ratings on review for possible downgrade. The notes
affected by the rating action are:
Class Description: $235,000,000 Class A First Priority Senior
Secured Floating Rate Notes due 2046
-- Prior Rating: Aa3, on review for possible downgrade
-- Current Rating: Ba1, on review for possible downgrade
-- Prior Rating Action Date: July 17, 2008
Class Description: $21,800,000 Class B Second Priority Senior
Secured Floating Rate Notes due 2046
-- Prior Rating: A3, on review for possible downgrade
-- Current Rating: Caa2, on review for possible downgrade
-- Prior Rating Action Date: July 17, 2008
Class Description: $9,000,000 Class C Third Priority Mezzanine
Secured Floating Rate Deferrable Interest Notes due 2046
-- Prior Rating: Ba1, on review for possible downgrade
-- Current Rating: C
-- Prior Rating Action Date: July 17, 2008
Class Description: $12,000,000 Class D Fourth Priority Mezzanine
Secured Floating Rate Deferrable Interest Notes due 2046
-- Prior Rating: B2, on review for possible downgrade
-- Current Rating: C
-- Prior Rating Action Date: July 17, 2008
According to Moody's, these rating actions are as a result of the
continued deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
ABS CORPORATION: Worsening Performance Cues Moody's to Cut Ratings
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Moody's Investors Service has downgraded 2 certificates from a
transaction issued by ABS Corporation Home Equity Loan Asset-
Backed Notes, Series 2005-1. The transaction is backed by second
lien loans. The certificates were downgraded because the bonds'
credit enhancement levels, including excess spread and
subordination were low compared to the current projected loss
numbers at the previous rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second
collateral. Substantial pool losses of over the last few months
have eroded credit enhancement available to the mezzanine and
senior certificates. Despite the large amount of write-offs due
to losses, delinquency pipelines have remained high as borrowers
continue to default.
Moody's also has publishes the underlying rating on the following
insured note. The rating of this insured note was previously
derived from public ratings on non-sequential pari passu or more
junior uninsured tranches of the same deals.
The underlying rating reflects the intrinsic credit quality of the
note in the absence of the guarantee. The ratings on securities
that are guaranteed or "wrapped" by a financial guarantor is the
higher of a) the rating of the guarantor or b) the published
underlying rating. The current ratings on the below notes are
consistent with Moody's practice of rating insured securities at
the higher of the guarantor's insurance financial strength rating
and any underlying rating that is public.
Issuer: Lehman ABS Corporation Home Equity Loan Asset-Backed
Notes, Series 2005-1
Class Description: Class A
-- Current Rating: Aa3 on review for possible downgrade
Financial Guarantor: AMBAC Assurance Corporation (Aa3, on review
for possible downgrade)
-- Underlying Rating: Ba2
-- Cl. M-1, Downgraded to Ca from Ba1
-- Cl. M-2, Downgraded to C from Ba3
ACUSPHERE INC: Has Until December 31 to Comply with NASDAQ Rule
---------------------------------------------------------------
Acusphere, Inc. disclosed in a Securities and Exchange Commission
filing that on Oct. 27, 2008 it had received a letter from The
Nasdaq Stock Market LLC stating that, effective at the open of
business on Wednesday, Oct. 29, 2008, the listing of the company's
common stock will be transferred from the Nasdaq Global Market to
the Nasdaq Capital Market.
This listing transfer is part of the company's plan of compliance
as presented to the Nasdaq Hearings Panel in September 2008 in
connection with the company's appeal of the Nasdaq Global Market
delisting notice it received on July 14, 2008.
The company failed to meet NASDAQ's minimum bid price requirement
of $1.00 pursuant to Marketplace Rule 4450(a)(5) and NASDAQ's
$10.0 million minimum stockholders' equity requirement pursuant to
Marketplace Rule 4450(a)(3) for continued listing on the Nasdaq
Global Market.
Once Acusphere's common stock is transferred to the Nasdaq Capital
Market, it will have until Dec. 31, 2008, to show at least
$2.5 million in stockholders' equity or demonstrate compliance
with one of the alternative listing criteria, including $35.0
million in market value of listed securities for a minimum of ten
consecutive trading days. Acusphere has until April 17, 2009, to
evidence a closing bid price of $1.00 or more for a minimum of ten
consecutive trading days. If Acusphere does not satisfy these
requirements within these periods of time, its common stock may be
delisted from NASDAQ.
The company's common stock will continue to trade under the symbol
"ACUS." NASDAQ operates both the Nasdaq Global Market and the
Nasdaq Capital Market. All companies listed on the Nasdaq Capital
Market must meet certain financial requirements and adhere to
similar corporate governance standards as companies listed on the
Nasdaq Global Market.
Headquartered in Watertown, Massachusetts, Acusphere Inc. (NASDAQ:
ACUS) -- http://www.acusphere.com-- is a specialty pharmaceutical
company that develops new drugs and improved formulations of
existing drugs using its proprietary microsphere technology. The
company are focused on developing proprietary drugs that can
offer significant benefits such as improved safety and efficacy,
increased patient compliance, greater ease of use, expanded
indications or reduced cost.
Its lead product candidate, Imagify for Injectable Suspension, is
a cardiovascular drug for the detection of coronary artery
disease. Imagify is designed to enable ultrasound to compete more
effectively with nuclear stress testing, the leading procedure for
detecting coronary artery disease.
Going Concern Doubt
Deloitte & Touche LLP in Boston raised substantial doubt about
the ability of Acusphere Inc. to continue as a going concern after
it audited the company's financial statements for the year ended
Dec. 31, 2007. The auditor pointed to the company's recurring
losses from operations, negative cash flows from operations, and
the projected funding needed to sustain its operations.
As of June 30, 2008, the company had cash and equivalents of
$12.0 million, current liabilities of $21.1 million and
stockholders' deficit of $0.8 million. During the six months
ended June 30, 2008, the Company incurred a net loss available to
common stockholders of $25.6 million. During the six months ended
June 30, 2008, operating activities used approximately
$10.4 million of cash. Given the Company's results from
operations, current forecasts, and financial position as of
June 30, 2008, the company will require significant additional
funds in order to fund operations through and beyond the fourth
quarter of 2008.
These conditions raise substantial doubt about the company's
ability to continue as a going concern. The accompanying
financial statements have been prepared on the basis of a going
concern assumption and do not reflect any adjustments that might
result from the outcome of this uncertainty.
ACUSPHERE INC: $20-Mill. Financing from Cephalon to Close Nov. 3
-----------------------------------------------------------------
Acusphere, Inc. disclosed in a Securities and Exchange Commission
filing that its definitive agreement with Cephalon Inc. is
expected to close November 3, 2008.
As reported by the Troubled Company Reporter, Acusphere announced
the signing of a definitive agreement with Cephalon to provide $20
million in upfront financing by purchasing a $15 million senior
secured convertible note and by paying a $5 million upfront fee
for an exclusive worldwide license to AI-525, a preclinical-stage
injectable formulation of celecoxib using Acusphere's proprietary
Hydrophobic Drug Delivery System technology.
The senior secured convertible note will be issued pursuant to a
Note Purchase Agreement between the company and Cephalon, which
provides for customary representations and warranties and
covenants regarding the conduct of the company's business for so
long as the senior secured convertible note remains outstanding or
Cephalon holds at least 25% or more of the company's outstanding
voting securities. The company has also granted Cephalon
preemptive rights during the Restricted Period. In addition, from
and after the conversion of the senior secured convertible note
and for so long as Cephalon holds at least 25% or more of the
company's outstanding voting securities, Cephalon will have the
right to designate that number of directors to the company's board
of directors that is proportional to its equity interest, provided
that any future transaction between the company and Cephalon must
be approved by a committee of directors consisting entirely of
directors that are independent of Cephalon.
In connection with the Cephalon Transaction, the company has
agreed to license all intellectual property of the company
relating to celecoxib, a development stage drug candidate based on
the company's Hydrophobic Drug Delivery System(TM), in exchange
for an upfront cash payment of $5 million, a milestone payment of
$15 million upon the company's receipt from the FDA of final
approval of the first New Drug Application or NDA prepared by the
company with respect to celecoxib for any indication, and certain
royalty payments based on future sales by Cephalon of celecoxib.
The term of this license agreement extends until the expiration of
the last of the patent rights licensed under the agreement.
In connection with the Cephalon Transaction, the company will
issue to Cephalon a senior secured convertible note in the
principal amount of $15 million. The Note includes an annual
interest rate of 8.0% and is payable annually over three years in
cash or shares of the company's common stock at the company's
election. The Note is secured by certain assets of the company,
including all of the company's intellectual property, pursuant to
the terms of a Pledge and Security Agreement with Cephalon. The
Note is subject to acceleration and an increased interest rate
upon the happening of customary events of default, including the
failure to make timely payments of principal and interest.
The Note is convertible at Cephalon's option any time prior to the
first anniversary of the closing date into one of these:
(i) the greater of
(A) the number of shares of the company's common stock
equal to $15 million divided by 90% of the average
closing price of the company's common stock during
the 10-day trading period prior to the signing of the
Note Purchase Agreement, and
(B) the number of shares of the company's common stock
equal to 51% of the company's outstanding common
stock on a fully-diluted basis on the date of
conversion of the Note;
(ii) the right to enter into an exclusive license to all
intellectual property rights of Acusphere relating to
Imagify(TM) (Perflubutane Polymer Microspheres) for
Injectable Suspension to use, distribute and sell Imagify
for all current and future indications including coronary
heart disease, in a worldwide territory, excluding those
European countries for which Nycomed Danmark ApS has
rights pursuant to that certain Collaboration, License
and Supply Agreement dated as of July 6, 2004, as
amended, or
(iii) the satisfaction of Cephalon's obligation to pay the
company the $15 million milestone payment for approval of
celecoxib by the US Food and Drug Administrationfor any
indication pursuant to the celecoxib license agreement.
In connection with the possible conversion of the Note
into shares of the company's common stock, the company
has also entered into a registration rights agreement
with Cephalon pursuant to which the company has agreed to
register for resale shares of the company's common stock
held by Cephalon.
If Cephalon elects to convert the Note into the right to enter
into the Imagify License, the company is entitled to a $40 million
regulatory milestone payment upon final FDA approval of the first
NDA for Imagify for the detection of coronary artery disease and
certain royalty payments based on future sales by Cephalon of
Imagify. The term of the Imagify License would extend until the
expiration of the last of the patent rights licensed under the
agreement.
Headquartered in Watertown, Massachusetts, Acusphere Inc. (NASDAQ:
ACUS) -- http://www.acusphere.com-- is a specialty pharmaceutical
company that develops new drugs and improved formulations of
existing drugs using its proprietary microsphere technology. The
company are focused on developing proprietary drugs that can
offer significant benefits such as improved safety and efficacy,
increased patient compliance, greater ease of use, expanded
indications or reduced cost.
Its lead product candidate, Imagify for Injectable Suspension, is
a cardiovascular drug for the detection of coronary artery
disease. Imagify is designed to enable ultrasound to compete more
effectively with nuclear stress testing, the leading procedure for
detecting coronary artery disease.
Going Concern Doubt
Deloitte & Touche LLP in Boston raised substantial doubt about
the ability of Acusphere Inc. to continue as a going concern after
it audited the company's financial statements for the year ended
Dec. 31, 2007. The auditor pointed to the company's recurring
losses from operations, negative cash flows from operations, and
the projected funding needed to sustain its operations.
As of June 30, 2008, the company had cash and equivalents of
$12.0 million, current liabilities of $21.1 million and
stockholders' deficit of $0.8 million. During the six months
ended June 30, 2008, the company incurred a net loss available to
common stockholders of $25.6 million. During the six months ended
June 30, 2008, operating activities used $10.4 million of cash.
Given the company's results from operations, current forecasts,
and financial position as of June 30, 2008, the company will
require significant additional funds in order to fund operations
through and beyond the fourth quarter of 2008.
These conditions raise substantial doubt about the company's
ability to continue as a going concern. The accompanying
financial statements have been prepared on the basis of a going
concern assumption and do not reflect any adjustments that might
result from the outcome of this uncertainty.
AIRTRAN HOLDINGS: Posts $107.1MM Net Loss for Third Quarter 2008
----------------------------------------------------------------
AirTran Holdings, Inc., the parent company of AirTran Airways,
Inc., today reported a net loss of $107.1 million, or $0.91 per
diluted share for the third quarter 2008, which included non-
operating losses related to our fuel hedging program of
$41.5 million, which was comprised of $55.5 million of unrealized
losses and $14.0 million of realized gains.
During the same quarter of 2007, AirTran reported net income of
$10.6 million or $0.11 per diluted share. Fuel costs -- which
represented over 50% of AirTran's expenses for the quarter and
rose to historically high levels -- contributed significantly to
AirTran's third quarter loss. As of Sept. 30, 2008, AirTran had
$318.1 million of unrestricted cash and investments. In addition,
as of Sept. 30, 2008, AirTran had $84.2 million of restricted
cash.
Non-fuel unit costs continued to decline in the third quarter to
5.88 cents further strengthening AirTran's cost advantage relative
to the industry. For fuel, the average economic cost per gallon
increased 63.1% to $3.67 as compared to $2.25 in the third quarter
of 2007. Total fuel expense for the quarter was $363.9 million,
up $149.0 million from the prior year.
Revenues for the third quarter grew 10.6% to $673.3 million.
Third quarter traffic rose by 9.4% on a 3.6% increase in capacity,
resulting in an all-time quarterly record load factor of 84.6%, a
4.5-point increase over 2007. Unit revenues in the third quarter
were up 5.6% to 10.21 cents per available seat mile (ASM).
"Although AirTran Airways posted record third quarter revenues,
unprecedented fuel costs were a major challenge for our industry,"
said Bob Fornaro, AirTran Airways' chairman, president, and chief
executive officer. "While we are extremely disappointed with our
financial performance this quarter, we are taking dramatic steps
to better position the airline competitively and to restore
profitability. These steps include trimming capacity, continuing
to sell B-737s, reducing capital commitments and keeping costs
low. Finally, our first-rate AirTran Airways Crew Members deserve
special recognition for delivering our all-time best third quarter
operating performance at 78.6% on-time arrivals all while serving
record numbers of AirTran customers."
AirTran reduced capacity in September by nearly 10% and our unit
revenue grew over 13% despite the travel disruptions caused by an
active tropical storm season in the Southeastern United States and
a weakening economic climate. AirTran is planning for capacity to
be down 6 to 7% during the fourth quarter of 2008. In addition,
the Company is currently targeting a 3 to 7% capacity reduction in
2009.
About AirTran Holdings
Headquartered in Orlando Florida, AirTran Holdings Inc. (NYSE:
AAI) -- http://www.airtran.com/-- a Fortune 1000 company, is
the parent company of AirTran Airways Inc., which offers more than
700 daily flights to 56 U.S. destinations.
* * *
The Troubled Company Reporter said on Aug. 29, 2008, that Standard
& Poor's Ratings Services has lowered its ratings on AirTran
Holdings Inc., including the corporate credit rating, which it
lowered to 'CCC+' from 'B-'. At the same time, S&P removed the
ratings from CreditWatch, where they had been placed with negative
implications on May 22, 2008. The outlook is stable.
ALTIUS IV: Moody's Trims' Reviews Ratings on Three Note Classes
---------------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade the ratings of the three classes of notes
issued by Altius IV Funding, Ltd.:
Class Description: $644,850,000 Class A-1F Floating Rate Notes Due
2042
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: June 9, 2008
-- Current Rating: Ba2, on review for possible downgrade
Class Description: $300,000 Class A-1V Floating Rate Notes Due
2042
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: June 9, 2008
-- Current Rating: Caa2, on review for possible downgrade
Class Description: $644,850,000 Class A-1B Floating Rate Notes Due
2042
-- Prior Rating: B1, on review for possible downgrade
-- Prior Rating Date: June 9, 2008
-- Current Rating: Caa3, on review for possible downgrade
Additionally, Moody's has downgraded the ratings of the two
classes of notes:
Class Description: $50,000,000 Class A-2a Floating Rate Notes Due
2042
-- Prior Rating: B2, on review for possible downgrade
-- Prior Rating Date: June 9, 2008
-- Current Rating: Ca
Class Description: $55,000,000 Class A-2b Floating Rate Notes Due
2042
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: June 9, 2008
-- Current Rating: Ca
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
ARIAD PHARMACEUTICALS: SVP Keane Has Options to Buy 80,000 Shares
-----------------------------------------------------------------
Raymond T. Keane disclosed in a Securities and Exchange Commission
filing that he has employee stock options to buy 80,000 shares of
ARIAD Pharmaceuticals Inc.'s common stock at exercise price of
$2.39 until June 12, 2018.
Mr. Keane has assumed all responsibilities of Laurie A. Allen, who
stepped down as the company's Senior Vice President, Chief Legal
Officer and Secretary, effective Oct. 15, 2008.
Headquartered in Cambridge, Mass., ARIAD Pharmaceuticals Inc.
(Nasdaq: ARIA) -- http://www.ariad.com/-- is engaged in the
discovery and development of breakthrough medicines to treat
cancer by regulating cell signaling with small molecules. ARIAD
has a global partnership with Merck & Co. Inc. to develop and
commercialize deforolimus, ARIAD's lead cancer product candidate,
which is in Phase 3 clinical development.
At June 30, 2008, the company's consolidated balance sheet showed
$82.0 million in total assets and $121.1 million in total
liabilities, resulting in a $39.1 million total stockholders'
deficit.
ARIAD PHARMACEUTICALS: Unveils Deforolimus Pre-Clinical Data
------------------------------------------------------------
ARIAD Pharmaceuticals, Inc., disclosed in a Securities and
Exchange Commission filing that it has presented the preclinical
data on the investigational mTOR inhibitor, deforolimus, alone or
in combination with the anti-androgen agent, bicalutamide, in
models of prostate cancer.
This investigational study shows that the combination inhibits the
growth of prostate cancer cell lines in various model systems.
The data were presented at the EORTC-NCI-AACR (ENA) symposium on
"Molecular Targets and Cancer Therapeutics" held in Geneva,
Switzerland this week and provide the scientific rationale for an
ongoing Phase 2 clinical trial examining the same combination in
patients with advanced prostate cancer.
Preclinical studies showed that the combination of deforolimus and
bicalutamide had anti-tumor activity in an established prostate
cancer model. Together, these agents were also found to inhibit
the mTOR and androgen receptor signaling pathways in prostate
cancer cells. Prostate specific antigen (PSA) levels are
controlled by the androgen receptor pathway and may be used as an
indicator of prostate tumor cell proliferation. In this study,
PSA levels decreased following treatment with deforolimus and
bicalutamide.
"These results provide support for the study of deforolimus in
combination with bicalutamide in patients with advanced prostate
cancer," stated Timothy Clackson, Ph.D., senior vice president and
chief scientific officer of ARIAD. "Based partly on these data,
we are working with our partner, Merck & Co., Inc., to advance the
ongoing Phase 2 clinical trial that tests this combination in
prostate cancer patients."
In this preclinical study, deforolimus alone was shown to inhibit
proliferation of multiple prostate cancer cell lines. Deforolimus
is a potent inhibitor of mTOR, a master switch that regulates cell
growth and division. Communication between mTOR and the androgen
receptor pathway has been implicated in progression of prostate
cancer from androgen-dependence to androgen-independence.
Consistent with this hypothesis, the combination of deforolimus
and bicalutamide blocked the growth of prostate cancer cells in
both cell culture and mouse models.
"Androgen-deprivation, or hormone therapy in prostate cancer
patients, is often successful initially, but most patients see
their cancer progress, highlighting the need for alternative or
combination therapies," added Clackson. "The apparent role of the
mTOR pathway in this progression provides a strong, scientific
rationale for the combination of deforolimus and bicalutamide,
validated by our new preclinical data."
Other Data Presented
In addition to this preclinical study, ARIAD also presented data
from its Phase 1 clinical trial evaluating the pharmacodynamic
profile of oral deforolimus when administered in multiple dosing
schedules. These data supported the dosing regimen being
evaluated in the Phase 3 SUCCEED clinical trial of deforolimus in
patients with metastatic soft-tissue and bone sarcomas.
Additionally, data on the molecular profiling of blood cells from
a Phase 1b study of deforolimus in patients with advanced solid
tumors were presented at the meeting.
Headquartered in Cambridge, Mass., ARIAD Pharmaceuticals Inc.
(Nasdaq: ARIA) -- http://www.ariad.com/-- is engaged in the
discovery and development of breakthrough medicines to treat
cancer by regulating cell signaling with small molecules. ARIAD
has a global partnership with Merck & Co. Inc. to develop and
commercialize deforolimus, ARIAD's lead cancer product candidate,
which is in Phase 3 clinical development.
At June 30, 2008, the company's consolidated balance sheet showed
$82.0 million in total assets and $121.1 million in total
liabilities, resulting in a $39.1 million total stockholders'
deficit.
ARIAD PHARMACEUTICALS: Unveils Kinase Inhibitor Preclinical Data
----------------------------------------------------------------
ARIAD Pharmaceuticals, Inc. disclosed in a Securities and Exchange
Commission filing that it has presented, for the first time,
results of studies on its investigational, multi-targeted kinase
inhibitor -- AP24534 -- showing anti-tumor activity in preclinical
cancer models. These data were released at the EORTC-NCI-AACR
(ENA) symposium on "Molecular Targets and Cancer Therapeutics"
held in Geneva, Switzerland.
AP24534 demonstrated potent inhibition of selected kinase targets
that control tumor growth and angiogenesis, notably all four
receptors for fibroblast growth factors (FGFRs). The product
candidate also inhibits the receptors for vascular endothelial
growth factors (VEGFR), and angiopoietin (Tie-2) and, to a lesser
degree, platelet-derived growth factor (PDGFR). Activity against
all four receptor families is a distinguishing feature of AP24534
that was not seen with the other multi-targeted kinase inhibitors
tested. In vivo mechanistic studies also demonstrated the potent,
anti-tumor activity of the product candidate in mouse models of
colon cancer and melanoma.
"These data demonstrate for the first time the preclinical
activity of AP24534 against a variety of tumor growth and
angiogenesis targets," said Timothy Clackson, Ph.D., senior vice
president and chief scientific officer of ARIAD. "The data
highlight the potential for AP24534 to treat solid tumors based on
its unique profile. Our dose-escalating Phase 1 clinical trial of
AP24534, also an inhibitor of Bcr-Abl and Flt3, is progressing in
patients with hematological malignancies, and we look forward to
advancing AP24534 into clinical development for selected solid
tumors as well."
Data from the in vivo studies presented show a number of key
characteristics of AP24534 activity in solid tumors:
* Potent inhibition of new blood vessel formation in
angiogenesis assays;
* Statistically significant inhibition of tumor growth with
daily oral doses as low as 5 mg/kg and nearly complete
inhibition of growth observed at higher doses. An
intermittent, twice weekly dosing schedule was also
efficacious; and
* Anti-tumor activity at relatively low blood levels,
suggesting that anti-angiogenesis accounts for much of the
activity in these cancer models.
ARIAD plans to advance the clinical development of AP24534 in
patients with solid tumors and expects to initiate Phase 2
clinical trials based on its assessment of the clinical data from
the ongoing Phase 1 study of AP24534 in patients with
hematological malignancies, as well as these reported preclinical
data.
About AP24534
ARIAD's second oncology product candidate, AP24534, is an
investigational oral multi-targeted tyrosine kinase inhibitor that
has broad potential applications in cancer. In preclinical
studies, AP24534 has demonstrated potent inhibition of kinase
targets associated with drug-resistant chronic myeloid leukemia
and acute myeloid leukemia, as well as proliferation and
angiogenesis in multiple solid tumors. In addition to an ongoing
Phase 1 clinical study in hematological malignancies, further
clinical development in patients with solid tumors is expected to
begin in 2009.
Headquartered in Cambridge, Mass., ARIAD Pharmaceuticals Inc.
(Nasdaq: ARIA) -- http://www.ariad.com/-- is engaged in the
discovery and development of breakthrough medicines to treat
cancer by regulating cell signaling with small molecules. ARIAD
has a global partnership with Merck & Co. Inc. to develop and
commercialize deforolimus, ARIAD's lead cancer product candidate,
which is in Phase 3 clinical development.
At June 30, 2008, the company's consolidated balance sheet showed
$82.0 million in total assets and $121.1 million in total
liabilities, resulting in a $39.1 million total stockholders'
deficit.
ATHILON CAPITAL: Moody's Trims Three Debt Ratings to 'Ba1'
----------------------------------------------------------
Moody's Investors Service has downgraded the debt ratings
associated with Athilon Capital Corp. as:
$62,500,000 Senior Subordinated Deferrable Interest Notes-Series A
-- Current Rating: A1, on review for downgrade
-- Former Rating: Aaa, on review for downgrade
$62,500,000 Senior Subordinated Deferrable Interest Notes-Series B
-- Current Rating: A1, on review for downgrade
-- Former Rating: Aaa, on review for downgrade
$62,500,000 Senior Subordinated Deferrable Interest Notes-Series C
-- Current Rating: A1, on review for downgrade
-- Former Rating: Aaa, on review for downgrade
$62,500,000 Senior Subordinated Deferrable Interest Notes-Series D
-- Current Rating: A1, on review for downgrade
-- Former Rating: Aaa, on review for downgrade
$100,000,000 Senior Subordinated Deferrable Interest Notes, Series
E
-- Current Rating: A1, on review for downgrade
-- Former Rating: Aaa, on review for downgrade
$75,000,000 Subordinated Deferrable Interest Notes, Series A
-- Current Rating: Ba1, on review for downgrade
-- Former Rating: Aa2, on review for downgrade
$75,000,000 Subordinated Deferrable Interest Notes, Series B
-- Current Rating: Ba1, on review for downgrade
-- Former Rating: Aa2, on review for downgrade
$50,000,000 Subordinated Deferrable Interest Notes, Series C
-- Current Rating: Ba1, on review for downgrade
-- Former Rating: Aa2, on review for downgrade
According to Moody's, the negative rating actions were the result
of the deterioration in the credit quality of two asset-backed
collateral debt obligations against which Athilon Asset Acceptance
Corp., a subsidiary of Capital Corp., has written credit
protection. Moody's will continue to monitor the credit quality
of Athilon's portfolio, including the ABS CDOs.
The last rating action was taken on July 9, 2008 when the
counterparty rating of AAA Corp. and the counterparty and debt
ratings of Capital Corp. were placed on review for possible
downgrade. The counterparty rating for AAA Corp. and the
counterparty rating for Capital Corp. are not affected by the
rating action and each continues to be rated Aaa, on review for
possible downgrade.
AVISTAR COMMUNICATIONS: Grants $50,000 Bonus to CEO Simon Moss
--------------------------------------------------------------
Avistar Communications Corporation disclosed in a Securities and
Exchange Commission filing that its Board of Directors, on
Oct. 17, 2008, elected to grant Chief Executive Officer Simon Moss
a bonus of $50,000 in recognition of his contributions for the
year to date.
On April 16, 2008, the Compensation Committee of the Board of
Directors approved this 2008 bonus structure for Mr. Moss:
-- target bonus for 2008 was established as $200,000, payable
in quarterly installments based on the achievement of
certain financial performance targets.
-- eligibility to participate in a broad-based discretionary
bonus pool that will be available to all employees of
Avistar upon achievement of certain adjusted EBIDTA and cash
balance targets as of Dec. 31, 2008.
While the performance targets set by the Board have not been fully
met at this time, the Board has determined that if the approved
bonus plan parameters are met prior to year end, the $50,000
payment will be deducted from any bonus that is subsequently
earned. In any case, Mr. Moss will receive no less than $50,000
in total bonus payments for 2008.
About Avistar Communications
Headquartered in San Mateo, California, Avistar Communications
Corporation (Nasdaq: AVSR) -- http://www.avistar.com/-- holds a
portfolio of 80 patents for inventions in video and network
technology and licenses IP to videoconferencing, rich-media
services, public networking and related industries. Current
licensees include Sony Corporation, Sony Computer Entertainment
Inc. (SCEI), Polycom Inc., Tandberg ASA, Radvision Ltd. and
Emblaze-VCON.
The Troubled Company Reporter reported on July 28, 2008, that at
June 30, 2008, the company's consolidated balance sheet showed
$10.2 million in total assets and $25.0 million in total
liabilities, resulting in a $14.8 million stockholders' deficit.
The company's consolidated balance sheet at June 30, 2008, also
showed strained liquidity with $9.0 million in total current
assets available to pay $16.0 million in total current
liabilities. The company reported a net loss of $1.6 million for
the second quarter ended June 30, 2008, as compared to net income
of $388,000 in the same period last year.
AYRESOME CDO: Moody's Cuts Ratings on Credit Quality Deterioration
------------------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade the ratings of the four classes of notes issued
by Ayresome CDO I, Ltd.:
Class Description: $206,925,000 Class A-1a Floating Rate Secured
Notes Due 2045
-- Prior Rating: Aaa
-- Current Rating: Baa3, on review for possible downgrade
-- Prior Rating Action Date: 12/27/2005
Class Description: $37,625,000 Class A-1b Floating Rate Secured
Notes Due 2045
-- Prior Rating: Aaa
-- Current Rating: Caa1, on review for possible downgrade
-- Prior Rating Action Date: 12/27/2005
Class Description: $71,950,000 Class A-2 Floating Rate Secured
Notes Due 2045
-- Prior Rating: A3, on review for possible downgrade
-- Current Rating: Caa3, on review for possible downgrade
-- Prior Rating Action Date: 4/23/2008
Class Description: $20,000,000 Class A-3 Floating Rate Secured
Notes Due 2045
-- Prior Rating: A1, on review for possible downgrade
-- Current Rating: Caa1, on review for possible downgrade
-- Prior Rating Action Date: 4/23/2008
Additionally, Moody's has downgraded the ratings of the three
classes of notes:
Class Description: $26,250,000 Class B Floating Rate Secured Notes
Due 2045
-- Prior Rating: Ba1, on review for possible downgrade
-- Current Rating: Ca
-- Prior Rating Action Date: 4/23/2008
Class Description: $7,500,000 Class C Deferrable Interest Floating
Rate Secured Notes Due 2045
-- Prior Rating: Caa2, on review for possible downgrade
-- Current Rating: C
-- Prior Rating Action Date: 4/23/2008
Class Description: $9,250,000 Class D Deferrable Interest Floating
Rate Secured Notes Due 2045
-- Prior Rating: Ca
-- Current Rating: C
-- Prior Rating Action Date: 4/23/2008
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
BANKERS OF RUPTCY: U.S. Trustee Sets 341(a) Meeting for Nov. 24
---------------------------------------------------------------
Peter C. Anderson, the United States Trustee for Region 16, will
convene a meeting of creditors of Bankers of Ruptcy Hypothecaters
& Wholesales a U B O, at 10:30 a.m., on Nov. 24, 2008, at the
office of the United States Trustee, Room 2610, 725 S. Figueroa
St., in Los Angeles, California.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Based in Los Angeles, Bankers of Ruptcy Hypothecaters &
Wholesalers a U B O is an unincorporated business organization
engaged as pecuniary emancipators. The company filed for Chapter
11 relief on Oct. 16, 2008 (Bankr. C.D. Calif. Case No. 08-27335).
Benjamin B. Wasson, Esq., represents the Debtor as counsel. When
the Debtor filed for protection from its creditors, it listed
assets of $100 million to $500 million, and debts of
$10 million to $50 million.
BEAR STEARNS: Moody's Cuts Underlying Rating to 'Ca' from 'Caa3'
----------------------------------------------------------------
Moody's Investors Service takes action on Class III-A certificate
issued by Bear Stearns Second Lien Trust 2007-1. The rating on
the security that is guaranteed or "wrapped" by a financial
guarantor is the higher of a) the rating of the guarantor or b)
the published underlying rating.
The underlying rating reflect the intrinsic credit quality of the
note in the absence of the guarantee. The current rating is
consistent with Moody's practice of rating insured security at the
higher of the guarantor's insurance financial strength rating and
any underlying rating that is public.
Issuer: Bear Stearns Second Lien Trust 2007-1
Class Description: III-A
-- Current Rating: Aa3 on review for possible downgrade
Financial Guarantor: Ambac Assurance Corporation (Aa3, review for
possible downgrade)
-- Underlying Rating: Downgraded to Ca from Caa3
BEAR STEARNS: S&P Junks Rating on Class Q Certificates
------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on the class
Q commercial mortgage pass-through certificates from Bear Stearns
Commercial Mortgage Securities Trust 2007-PWR17. Concurrently,
S&P affirmed its ratings on 25 other classes from this series.
The downgrade reflects S&P's concerns about six loans
($36.2 million) with reported low debt service coverage and one
loan ($9.9 million) that S&P projects will have a low DSC once the
property's anchor tenant, Steve & Barry's, vacates the property.
The affirmed ratings reflect credit enhancement levels that
provide adequate support through various stress scenarios.
There are 29 loans ($345.9 million) in the pool that have reported
a low DSC, and S&P considers six of them to be credit concerns.
The 29 loans are secured by a variety of property types and have
an average balance of $11.9 million; these loans have experienced
a weighted average decline in DSC of 43% since issuance. The six
loans that are credit concerns are secured by a variety of office,
retail, lodging, and industrial properties and have experienced a
combination of declining occupancy and higher operating expenses
since issuance. The remaining loans are in various stages of
lease-up or renovation, and S&P expects the net cash flow
available for debt service to improve in the future.
In addition to the loans described above, the Hillcrest Shopping
Center loan ($9.9 million) is secured by a retail property with a
Steve & Barry's store as its anchor. The master servicer has
confirmed that Steve & Barry's will close this location. Without
Steve & Barry's rental payments, the loan's projected DSC will
fall below 1.0x.
As of the Oct. 14, 2008, remittance report, the collateral pool
consisted of 265 loans with an aggregate trust balance of
$3.25 billion, compared with the same number of loans totaling
$3.26 billion at issuance. The master servicers, Wells Fargo
Commercial Mortgage Servicing and Prudential Asset Resources,
reported financial information for 92% of the pool; 78% of the
information was year-end 2007 data, and 13% was interim-2008 data.
Standard & Poor's calculated a weighted average DSC of 1.29x for
the pool, compared with 1.33x at issuance. No loans are
delinquent or with the special servicer, and the trust has not
experienced any losses to date.
The top 10 loans have an aggregate outstanding balance of
$1.19 billion (37%). Excluding the 1101 New York Avenue and 346
Madison Avenue loans, Standard & Poor's calculated a weighted
average DSC of 1.35x, up from 1.33x at issuance. Standard &
Poor's reviewed property inspections provided by the master
servicers for seven of the top 10 loan exposures, four of which
are secured by multiple properties. One hundred properties were
characterized as "good," four as "excellent," and one as "fair."
The following loans had credit characteristics consistent with
those of investment-grade obligations: North Los Altos Shopping
Center, Miramar Commercial Center, The Ventura Shopping Center,
2400 Grand Avenue, Rudgate West, Pleasant View Apartments,
Woodcreek Estates, Brandicorp Ground Leases, and Silver Diner
Falls Church.
The master servicers reported a watchlist of 30 loans
($270 million, 8.3%). The largest loan on the watchlist is the
Hilton Garden Inn - Cupertino ($25 million, 0.8%). The loan is
secured by a 165-room, limited-service hotel built in 1997 in
Cupertino, California. The loan was placed on the watchlist after
the property received an unacceptable rating from Hilton, which,
if not remedied, could result in the termination of the franchise
agreement. The borrower has since changed the property management
company, and the hotel is scheduled to be inspected again in
December of this year. The reported DSC was 2.17x and average
daily occupancy was 74% as of March 31, 2008.
Standard & Poor's has identified seven properties with a total
balance of $302.8 million (9%) in areas affected by Hurricane Ike,
including the second-largest loan, Bank of America Center (7%).
The master servicers notified S&P that five properties ($60.9
million) experienced minimal damage. The Bank of America property
suffered some damage but appears to be sufficiently covered by
insurance. S&P will continue to evaluate information on these
properties as it becomes available.
Standard & Poor's stressed the loans on the watchlist and the
other loans with credit issues as part of its analysis. The
resultant credit enhancement levels support the lowered and
affirmed ratings.
Rating Lowered
Bear Stearns Commercial Mortgage Securities Trust 2007-PWR17
Commercial mortgage pass-through certificates series 2007-PWR17
Rating
------
Class To From Credit enhancement
----- -- ---- ------------------
Q CCC+ B- 1.38%
Ratings Affirmed
Bear Stearns Commercial Mortgage Securities Trust 2007-PWR17
Commercial mortgage pass-through certificates series 2007-PWR17
Class Rating Credit enhancement
----- ------ ------------------
A-1 AAA 30.11%
A-2 AAA 30.11%
A-3 AAA 30.11%
A-AB AAA 30.11%
A-4 AAA 30.11%
A-1A AAA 30.11%
A-M AAA 20.07%
A-MFL AAA 20.07%
A-J AAA 11.79%
B AA+ 10.91%
C AA 9.52%
D AA- 8.78%
E A+ 8.15%
F A 7.28%
G A- 6.27%
H BBB+ 5.14%
J BBB 4.14%
K BBB- 3.14%
L BB+ 2.76%
M BB 2.38%
N BB- 2.01%
O B+ 1.76%
P B 1.63%
X-1 AAA N/A
X-2 AAA N/A
N/A -- Not applicable.
BEAR STEARNS: S&P Trims Ratings on 17 Classes of Certificates
-------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 17
classes of asset-backed certificates issued by Bear Stearns Asset
Backed Securities I Trust 2006-HE6. Concurrently, S&P affirmed
its 'AAA' ratings on six classes and its 'AA+' rating on one class
from this transaction.
The downgrades reflect S&P's opinion that projected credit support
for the affected classes is insufficient to maintain the previous
ratings, given its current projected losses of 19.83% for
structure group one and 17.85% for structure group two. As of the
September 2008 remittance period, cumulative realized losses were
6.24% for group one and 6.57% for group two. Losses have outpaced
excess interest over the past three months by approximately 5.7x
for group one and 3.6x for group two.
As a result, overcollateralization has been depleted for both
structure groups, and classes I-M-10 and II-M-10 are currently
taking principal write-downs. Excess spread and subordination are
the only forms of credit enhancement remaining to support this
deal.
As of the September 2008 remittance period, severe delinquencies
for group one totaled 33.61% of the current pool balance and total
delinquencies were 45.60% of the current pool balance for this
group. During the same time period, severe delinquencies for
group two were 38.33% of the current balance and total
delinquencies were 51.55%. The remaining pool factors are 55.06%
and 57.14% for groups one and two, respectively.
The affirmations reflect sufficient credit enhancement available
to support the current ratings.
The collateral consists primarily of a pool of subprime, first-
and second-lien, fixed- and adjustable-rate mortgage loans.
Ratings Lowered
Bear Stearns Asset Backed Securities I Trust 2006-HE6
Asset-backed certificates
Rating
------
Class To From
----- -- ----
I-M-1 A AA+
I-M-2 B AA
I-M-3 B- AA-
I-M-4 CCC A+
I-M-5 CCC BB
I-M-6 CC B
I-M-7 CC B
I-M-8 CC CCC
I-M-9 CC CCC
II-M-2 BBB AA
II-M-3 B AA-
II-M-4 B- A+
II-M-5 CCC A
II-M-6 CC A-
II-M-7 CC BBB
II-M-8 CC BB
II-M-9 CC B
Ratings Affirmed
Bear Stearns Asset Backed Securities I Trust 2006-HE6
Asset-backed certificates
Class Rating
----- ------
I-A-1 AAA
I-A-2 AAA
I-A-3 AAA
II-A-1 AAA
II-A-2 AAA
II-A-3 AAA
II-M-1 AA+
BERNOULLI HIGH: Moody's Slashes Two Notes Ratings to 'Ca'
---------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade the ratings of the two classes of notes issued
by Bernoulli High Grade CDO I, Ltd.:
Class Description: Class A1-A First Priority Senior Secured
Floating Rate Notes
-- Prior Rating: Baa3, on review for possible downgrade
-- Current Rating: B3, on review for possible downgrade
-- Prior Rating Action Date: 6/9/2008
Class Description: Class A-1B First Priority Senior Secured
Floating Rate Notes
-- Prior Rating: Aaa, on review for possible downgrade
-- Current Rating: Baa3, on review for possible downgrade
-- Prior Rating Action Date: 6/9/2008
Additionally, Moody's has downgraded the ratings of these four
classes of notes:
Class Description: Class A-2 Second Priority Senior Secured
Floating Rate Notes
-- Prior Rating: Ba3, on review for possible downgrade
-- Current Rating: Ca
-- Prior Rating Action Date: 6/9/2008
Class Description: Class B Third Priority Senior Secured Floating
Rate Notes
-- Prior Rating: B3, on review for possible downgrade
-- Current Rating: Ca
-- Prior Rating Action Date: 6/9/2008
Class Description: Class C Fourth Priority Deferrable Secured
Floating Rate Notes
-- Prior Rating: Ca
-- Current Rating: C
-- Prior Rating Action Date: 6/9/2008
Class Description: Class D Fifth Priority Mezzanine Deferrable
Secured Floating Rate Notes
-- Prior Rating: Ca
-- Current Rating: C
-- Prior Rating Action Date: 6/9/2008
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
BIOMETRX INC: Names Frank Santamoreno to Board of Directors
-----------------------------------------------------------
bioMETRX, Inc. disclosed in a Securities and Exchange Commission
filing that on Oct. 21, 2008, it elected Frank Santamoreno to the
company's Board of Directors effective immediately. In connection
with this election, the company issued Mr. Santamoreno 250,000
shares of its common stock.
Mr. Santamoreno has been engaged in the in the Security and
Protection Industry for over 20 years. Mr. Santamoreno is the
President of Security Experts, Consulting & Design, LLC a security
consulting firm whose clients include several Fortune 500
companies, providing consulting services in critical security
issues, including but not limited to, architecting and designing
comprehensive security solutions, integrating security/access
control, IP surveillance systems, visitor management systems.
Mr. Santamoreno has been a keynote speaker at a number of security
industry conferences.
About bioMETRX Inc.
Headquartered in Jericho, New York, bioMETRX Inc. (OTC BB: BMRX)
-- http://www.biometrx.net/-- through its wholly owned
subsidiaries, designs, develops, engineers and markets biometrics-
based products for the consumer home security, consumer
electronics, medical records and medical products markets.
BioMETRX Inc.'s consolidated balance sheet at June 30, 2008,
showed $1,670,523 in total assets and $4,613,364 in total
liabilities, resulting in a $2,942,841 stockholders' deficit.
Going Concern Doubt
Wolinetz, Lafazan & Company, P.C., in Rockville Centre, New York,
expressed substantial doubt about BioMetrx Inc.'s ability to
continue as a going concern after auditing the company's financial
statements for the year ended Dec. 31, 2007. The auditing frim
reported that the company's operations have generated recurring
losses and cash flow deficiencies for the years ended Dec. 31,
2007, and 2006. In addition, the auditing firm said that as of
Dec. 31, 2007, the company has a significant working capital
deficit and stockholders' deficit.
BLOCKBUSTER INC: To Publish Third Quarter Results November 6
------------------------------------------------------------
Blockbuster Inc. disclosed in a Securities and Exchange Commission
filing that it will release its third quarter 2008 financial
results on Thursday, Nov. 6, 2008, after the close of the U.S.
financial markets.
The company will also host a conference call at 4:30 p.m. Eastern
Standard Time to review its third quarter results.
In addition to reiterating its full-year 2008 adjusted EBITDA
guidance, the company also expressed comfort with third quarter
2008 analyst estimates. Contributing to the third quarter
results, domestic same-store revenues increased 5.1% with domestic
same-store rental revenues up 0.8%.
"As a result of the initiatives we have put in place, the company
delivered its third sequential quarter of positive domestic same-
store sales, an especially significant achievement in today's
retail environment. We are also reiterating our previously
announced full-year 2008 adjusted EBITDA guidance," said Jim
Keyes, Blockbuster Chairman and CEO. "Blockbuster's core rental
offering provides customers with an excellent value, which is
especially important in these challenging times. We believe this
consumer value, along with the steps we are taking to control
costs and transform Blockbuster into a multi-channel provider of
entertainment, positions us well for both the near- and long-
term."
About Blockbuster Inc.
Based in Dallas, Texas, Blockbuster Inc. (NYSE: BBI,
BBI.B) -- http://www.blockbuster.com/-- is a leading global
provider of in-home movie and game entertainment, with over
7,800 stores throughout the Americas, Europe, Asia and
Australia. The company maintains operations in Brazil, Mexico,
Denmark, Italy, Taiwan, and Australia.
At Jan. 6, 2008, the company's total debt, including capital
lease obligations was US$757.8 million compared with
US$984.2 million in Dec. 31, 2006.
* * *
In August 2008, Moody's Investors Service downgraded Blockbuster
Inc.'s probability of default rating to Caa1 from B3. The
company's Caa1 corporate family rating, Caa2 senior subordinated
note rating, and SGL-4 speculative grade liquidity rating were
affirmed. At the same time, Moody's raised the company's secured
bank facilities to B1 from B3. Moody's said that the outlook
remains negative.
In December 2007, Fitch Ratings affirmed Blockbuster Inc.'s
long-term Issuer Default Rating at 'CCC' and the senior
subordinated notes at 'CC/RR6'. Fitch said that the rating
outlook is stable.
BLOCKBUSTER INC: William Sams Discloses 5% Equity Stake
-------------------------------------------------------
William M. Sams disclosed in a Securities and Exchange Commission
filing that he may be deemed to beneficially own 3,600,000 shares
of Blockbuster Inc.'s Class B common stock, representing 5% of the
outstanding shares of Class B common stock.
Marlin Sams Fund, L.P., Marlin Sams GenPar, LLC, Gladwyne Marlin
GenPar, LLC, Suzanne Present, and Michael Solomon disclosed that
they may be deemed to beneficially own 1,400,000 shares of
Blockbuster Inc.'s Class B common stock, representing 1.9% of the
outstanding shares of Class B common stock.
Candice McCurdy and Chad McCurdy disclosed that they may be deemed
to beneficially own 100,000 shares of Blockbuster Inc.'s common
stock, representing 0.1% of the outstanding shares of Class B
common stock.
About Blockbuster Inc.
Based in Dallas, Texas, Blockbuster Inc. (NYSE: BBI,
BBI.B) -- http://www.blockbuster.com/-- is a leading global
provider of in-home movie and game entertainment, with over
7,800 stores throughout the Americas, Europe, Asia and
Australia. The company maintains operations in Brazil, Mexico,
Denmark, Italy, Taiwan, and Australia.
At Jan. 6, 2008, the company's total debt, including capital
lease obligations, was US$757.8 million compared with
US$984.2 million in Dec. 31, 2006.
* * *
In August 2008, Moody's Investors Service downgraded Blockbuster
Inc.'s probability of default rating to Caa1 from B3. The
company's Caa1 corporate family rating, Caa2 senior subordinated
note rating, and SGL-4 speculative grade liquidity rating were
affirmed. At the same time, Moody's raised the company's secured
bank facilities to B1 from B3. Moody's said that the outlook
remains negative.
In December 2007, Fitch Ratings affirmed Blockbuster Inc.'s
long-term Issuer Default Rating at 'CCC' and the senior
subordinated notes at 'CC/RR6'. Fitch said that the rating
outlook is stable.
BOSCOV'S DEPARTMENT: Extends Sale Process; Hearing Set for Nov. 5
-----------------------------------------------------------------
Boscov's Department Store LLC has extended the court-supervised
sale process related to the sale of the company's assets. A
hearing on the sale has been set for Nov. 5, 2008, before Judge
Kevin Gross.
Despite the current financial environment, the sale process
continues to move forward. It is business-as-usual in Boscov's
stores, with the company continuing to receive new merchandise
daily in preparation for the holiday season.
Boscov's entered into an Asset Purchase Agreement with Versa
Capital Management, Inc., a Philadelphia-based private equity
investment firm, pursuant to which the Boscov's business would
continue to operate as a going concern post-closing. In early
October, Versa was designated by the bankruptcy court as the
'Stalking Horse' bidder in the auction process for the company's
assets.
About Boscov's Department Store
Reading, Pennsylvania-based Boscov's Department Store, LLC --
http://www.boscovs.com/-- operates about 50 department stores
that anchor malls mainly in Pennsylvania and five other mid-
Atlantic states. It employs about 10,000 workers. Boscov's
increased its store count by 25% with its purchase of about 10
stores from Macy's, Inc. (formerly Federated Department Stores) in
2006. The stores sell men's, women's, and children's apparel,
shoes, and accessories, as well as jewelry, cosmetics, housewares,
appliances, toys, and sporting goods. It also operates an online
store. Boscov's was founded by Solomon Boscov in 1911 and is
owned by the families of Albert Boscov and Edwin Lakin.
Boscov's filed to reorganize under Chapter 11 on Aug. 4, 2008, in
the U.S. Bankruptcy Court for the District of Delaware.
BOYD GAMING: S&P Puts Ratings Under Neg. Watch on Weak 3Q Results
-----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Boyd
Gaming Corp., including the 'BB' corporate credit rating, on
CreditWatch with negative implications.
"The CreditWatch listing stems from weaker-than-expected operating
results for the third quarter as weak economic conditions continue
to pressure consumer discretionary spending," said Standard &
Poor's credit analyst Ben Bubeck. "Boyd's net revenues and
adjusted EBITDA for the quarter decreased by approximately 13% and
30%, respectively."
In resolving the CreditWatch listing, S&P will reassess its
expectations for operating performance given deteriorating
economic conditions, and it will discuss with management its near-
term operating strategies.
BRICK BREWING: TSX Places Common Shares Under Delisting Review
--------------------------------------------------------------
The Toronto Stock Exchange is reviewing the commons shares of
Brick Brewing Co. with respect to meeting the continued listing
requirements of TSX. The company has been granted 120 days in
which to regain compliance with these requirements, pursuant to
the Remedial Review Process.
In three months ended July 31, 2008, the company recorded net
earnings of $1,000 on $19,447,000 of gross revenues, compared to
net earnings of $283,000 on $22,009,000 during the same period in
2007. Earnings per share were $0 for three months ended July 31,
2008, compared with $0.01 during the same period last year.
The company, as well as the bottled beer industry, has been facing
declining beer volumes during the past year. The, company,
however, said it is implementing a number of marketing and selling
strategies to seek competitiveness of its products.
Headquartered in Waterloo, Ontario, Brick Brewing Co. (CA: BRB)
-- http://www.brickbeer.com/-- produces, sells, markets and
distributes bottled and draft premium beer under the J.R. Brickman
and Waterloo brand names, mainstream beer under the Red Cap,
Formosa and Red Baron brand names and value beer under the Laker
brand name. The company had assets of $37,529,904 and
shareholders' equity of $25,561,519 as of July 31, 2008.
BROOKE CORP: Case Summary & 19 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Brooke Corporation
8500 College Boulevard
Overland Park, KS 66210
Tel: (913) 383-9700
Bankruptcy Case No.: 08-22786
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Brooke Capital Corporation 08-22789
Type of Business: The Debtors operate an insurance agency and
finance company. The company owns 81% of Brooke
Capital. The majority of the company's stock
was owned by Brooke Holding Inc., which, in
turn was owned by the Orr Family. A creditor of
the family, First United Bank of Chicago, was
foreclosed on the BHI stock. The company's
revenues are are generated from sales
commissions on the sales of property and
casualty insurance policies, consulting, lending
and brokerage services.
See: http://www.brookebanker.com
Chapter 11 Petition Date: October 28, 2008
Court: District of Kansas (Kansas City)
Judge: Dale L. Somers
Debtor's Counsel: Angela R Markley, Esq.
angela.markley@brookeagent.com
The Debtors' in-house counsel
8500 College Boulevard
Overland Park, KS 66210
Tel: (913) 266-4529
Fax: (913) 339-6328
Chapter 11 Trustee: Albert Riederer
Chapter 11 Trustee's Counsel: Benjamin F. Mann, Esq.
benjamin.mann@huschblackwell.com
John J. Cruciani, Esq.
john.cruciani@huschblackwell.com
Michael D. Fielding, Esq.
michael.fielding@huschblackwell.com
Kathryn B. Bussing, Esq.
kathryn.bussing@huschblackwell.com
Husch Blackwell Sanders LLP
P. O. Box 419777
4801 Main Street, Suite 1000
Kansas City, MO 64141-6777
Tel: (816) 983-8000
Fax: (816) 983-8080
Total Assets: $512,855,000
Total Debts: $447,382,000
The Debtor's Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
RKC Financial $6,700,000
Roger Cunningham, Ste. 840
12720 Hillcrest Rd
Dallas, TX 75230
Tel: (479) 756-8748
Low Cost Insurance $2,500,000
Amy S. Kong, Pres
11715 Shoshone Ave
Granada Hills, CA 91344
Tel: (818) 701-3700
Insurance Xpress $1,500,000
Hallberg Ins Agency, Inc.
William Hallberg
6640 S. CIC
Bedford, IL 60638
Tel: (866) 974-8325
TMP Direction Marketing $1,056,260
P.O. Box 90362
Chicago, IL 60696-0362
Tel: (800) 526-3718
CB&S $777,757
Addison Low Cost $593,612
Seraphein Beyn $524,690
2319 J. Street
Sacramento, CA 95816
Tel: (916) 441-7911
Addison York Ins Brokers Ltd. $455,000
10333 Southport Rd SW, Suite 355
Calgary, AB T2W 3X6
Tel: (403) 278-8811
Hill Insurance Assoc. Inc $437,500
Douglas Brown
2322 N. Cirby Way
Roseville, CA 95661
Tel: (916) 783-0000
Ghanem Ins. Serv. $400,000
Ibrahim H. Ghanem
1550 S. Westridge Rd
West Covina, CA 90640
Tel: (626) 332-5700
Fausto Bucheli $386,172
916-485-0700
Staples $333,023
P.O. BOX 83689
Chicago, IL 60696
Duncan & Stoker Ins. Mktg. $305,965
19629 Natalie Way
Redding, CA 96003
Klein Family Living Trust $271,907
5025 Moccasin Court
Antioch, CA 94531
Excess Space Retail Svcs Inc. $262,330
One Hollow Lane, Suite 112
Lake Success, NY 11042
Lodewyk, Nesen & McKim Inc $250,000
893 Mill Street
Alma, MI 48801
ADP Inc $175,000
Fulbright & Jaworski LLP $200,480
Gateway Svcs of Columbus $202,026
Michael Galatioto $197,625
BROOKE CORP: Files For Chapter 11 Bankruptcy in Kansas
------------------------------------------------------
Brooke Corporation, together with its affiliate, Brooke Capital
Corporation, filed a voluntary petition under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy
Court for the District of Kansas.
On Sept. 11, 2008, The Bank of New York Mellon, as trustee under a
certain indenture providing for the issuance of notes, filed a
complaint against the company to the Hon. John W. Lundstrum of the
United States District Court for the District of Kansas over
alleged fraud, conversion and breaches of various agreements
between the parties.
According to Bloomberg News, the company and Chief Executive
Officer Robert Orr allegedly misappropriated millions of dollars
pledged to noteholders and destroyed evidence to conceal their
actions. The company used fake record keeping system, the report
says. BONY said as much as $75 million in involved in the case,
the report notes.
BONY also alleged that the company formed "special purpose
bankruptcy remote limited liability company," which sold loans,
Bloomberg says. Fifth Third Bank and Bayerische Hypo-und
Vereinsbank AG of Germany purchased notes, the report adds.
The company disclosed in a regulatory filing with the Securities
and Exchange Commission that most of its officers have resigned
including Mr. Orr, John Allen, Joe Barnes and Mitchell Holthus,
as directors. The company selected David Zeglis as director and
chairman of the compant, and Carl Baranowski as president, chief
executive officer and secretary.
The Chapter 11 Trustee, Albert Riederer, asks the Court for
authority to obtain up to $1 million in postpetition financing
from New Brooke Limited, LLC, secured by a lien on all assets of
the company. The facility will accrue interest at 10% per annum.
The company listed $512,855,000 in total assets and $447,382,000
in total debts. The company owes $17,529,347 to its unsecured
creditors including, among others, (i) RKC Financial owing
$6,700,000; (ii) Low Cost Insurance owing $2,500,000; (iii)
Insurance Xpress owing $1,500,000; and (iv) TMP Direction
Marketing owing $1,056,260. The company reported $10,083,000 net
loss on total operating revenues of $31,821,000 for the three
months ended June 20, 2008, compared to $2,706,000 net income on
total operating revenues of $55,154,000 for the same period a year
ago.
The company says that its wholly-owned subsidiary Generation Bank
fka Brooke Savings Bank did not file for protection and it will
remain open and conduct business. The deposit of the banks'
customers will continue to be insured by the Federal Deposit
Insurance Corporation.
Trim Creek LLC owns 44.26%, or 6,425,949 shares, of the company
stock.
Husch Blackwell Sanders LLP in Kansas City, Missouri, represents
the Chapter 11 Trustee.
Angela R. Markley, Esq., the company's in-house counsel,
represents the company.
A full-text copy of New Brooke Limted LLC's financing term sheet
is available for free at:
http://ResearchArchives.com/t/s?3453
A full-text copy of Brooke Corp.'s Quarterly Report for the period
ended June 20, 2008, is available for free at:
http://ResearchArchives.com/t/s?3454
Headquartered in Kansas, Brooke Corp. (NASDAQ: BXXX) --
http://www.brookebanker.com-- is an insurance agency and finance
company. The company owns 81% of Brooke Capital. The majority of
the company's stock was owned by Brooke Holding Inc., which, in
turn was owned by the Orr Family. A creditor of the family, First
United Bank of Chicago, was foreclosed on the BHI stock. The
company's revenues are are generated from sales commissions on the
sales of property and casualty insurance policies, consulting,
lending and brokerage services.
BSML INC: Marc Applebaum Quits as Chief Financial Officer
---------------------------------------------------------
BSML Inc. disclosed in a Securities and Exchange Commission filing
that effective Oct. 18, 2008, Marc P. Applebaum resigned as chief
financial officer and director.
As of the same date, the company had not yet hired a new Chief
Financial Officer or appointed a new director.
Based in Walnut Creek, California, BSML Inc. (NasdaqCM: BSML) --
http://www.britesmile.com/-- markets teeth whitening technology
and manages BriteSmile Professional Teeth Whitening Centers.
BSML Inc.'s consolidated balance sheet at June 28, 2008, showed
$5.8 million in total assets and $8.2 million in total
liabilities, resulting in a $2.4 million stockholders' deficit.
At June 28, 2008, the company's consolidated balance sheet also
showed strained liquidity with $1.8 million in total current
assets available to pay $7.5 million in total current liabilities.
The company reported a net loss of $695,000 for the second quarter
ended June 28, 2008, compared with a net loss of $704,000 in the
same period ended June 30, 2007.
Going Concern Doubt
Stonefield Josephson Inc., in Los Angeles, California, expressed
substantial doubt about BSML Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Dec. 29, 2007.
To date, the company has yet to achieve profitability. The
company had an accumulated deficit of $177.9 million and working
capital deficiency of $5.7 million as of June 28, 2008. The
company's net loss and net cash used by operating activities were
$1.3 million and $5.0 million, respectively, for the twenty-six
weeks ended June 28, 2008. At June 28, 2008, the company had
$243,000 in unrestricted cash and cash equivalents. The company
is not certain if its cash will be sufficient to maintain
operations of the continuing company at least through the next
year due to the uncertainty of the company's ability to generate
positive cash flow from the Centers business operations.
CAJUN FUNDING: Moody's Keeps 'B2' Ratings; Outlook Remains Stable
-----------------------------------------------------------------
Moody's Investors Service upgraded Cajun Funding Corp's
Speculative Grade Liquidity rating to SGL-2 from SGL-3, indicating
its expected good liquidity profile for the next twelve months.
Cajun's other ratings, including its B2 Corporate Family Rating,
B2 rating of the 2nd lien senior secured notes and stable outlook
remain unchanged.
The upgrade of the SGL reflects Cajun's good liquidity profile,
underpinned by its solid cash flow generation which is expected to
continue to sufficiently cover its working capital, capital
expenditure and debt service needs in the next twelve months,
despite the overall challenging operating environment for
restaurants. Although the company is relatively well positioned
in the Quick Service Restaurant sub-sector of the US restaurant
industry, it has not been impervious to the negative impact from
the economic downturn as consumers are cutting back on spending at
restaurants in general.
However, the company has been so far successful in maintaining its
customer base by adhering to its value strategy, and has generated
consistently positive same store sales over the past year. In
addition, the company selectively increased its menu prices and
proactively managed down its SG&A such as redundant overhead
expenses to minimize the impact from the escalating commodity
input cost and labor cost. As a result, Cajun's free cash flow
has been positive year to date, resulting in improved financial
flexibility after a modest pre-payment of its funded debt and
increase in cash balance.
The SGL-2 also anticipates the company will likely maintain ample
availability under its $20 million revolving credit facility and
remain in compliance with the financial covenants under the credit
agreements in the coming year. The rating also recognizes that
Cajun's assets are pledged to the 1st lien credit facility and the
2nd lien notes, leaving limited alternative sources of liquidity.
Moody's last rating action on Cajun was issued on June 19, 2006
when its B2 CFR was affirmed with stable outlook, and the last
credit opinion was updated on Oct 25, 2007.
Cajun Funding Corp., headquartered in Atlanta, Georgia, is the
special purpose financing entity for Cajun Operating Company,
Inc., the developer and operator of Church's Chicken restaurants.
Church's is a leading chicken quick-service restaurant chain
located in 31 states, Washington D.C., Puerto Rico and 13 foreign
countries. As of July 13, 2008, Cajun operated 258 and franchised
1,352 Church's restaurants with domestic locations largely
concentrated in the South and Southwest. Revenues for the last
twelve months ended July 13, 2008 were approximately $284 million.
CAMBER 5: Moody's Cuts Three Notes Ratings; Keeps Under Review
--------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of three
classes of notes issued by Camber 5, Ltd., and left on review for
possible further downgrade the ratings of one of these classes.
The notes affected by the rating action are:
Class Description: $344,000,000 Class A-1 Floating Rate Senior
Secured Notes Due 2045
-- Prior Rating: A1, on review for possible downgrade
-- Prior Rating Date: 6/4/2008
-- Current Rating: Caa3, on review for possible downgrade
Class Description: $23,000,000 Class A-2 Floating Rate Senior
Secured Notes Due 2045
-- Prior Rating: B1, on review for possible downgrade
-- Prior Rating Date: 6/4/2008
-- Current Rating: Ca
Class Description: $67,000,000 Class A-3 Floating Rate Senior
Secured Notes Due 2045
-- Prior Rating: Caa2, on review for possible downgrade
-- Prior Rating Date: 6/4/2008
-- Current Rating: C
The rating downgrade actions reflect deterioration in the credit
quality of the underlying portfolio, as well as the occurrence, as
reported by the Trustee on July 31, 2008, of an event of default
that occurs when the Class A Principal Coverage Ratio was less
than 100%, as described in Section 5.1(h) of the Indenture dated
December 20,2005.
Camber 5, Ltd. is a collateralized debt obligation backed
primarily by a portfolio of structured finance securities.
As provided in Article V of the Indenture during the occurrence
and continuance of an Event of Default, holders of certain Notes
may be entitled to direct the Trustee to take particular actions
with respect to the Collateral Debt Securities and the Notes.
The rating downgrades taken reflect the increased expected loss
associated with each tranche. Losses are attributed to diminished
credit quality on the underlying portfolio. The severity of
losses of certain tranches may be different, however, depending on
the timing and choice of remedy to be pursued following the event
of default. Because of this uncertainty, the ratings assigned to
the Class A-1 Notes remain on review for possible further action.
CHC HELICOPTER: Moody's Withdraws Ratings After Notes Redemption
----------------------------------------------------------------
Moody's Investors Service has withdrawn the ratings for CHC
Helicopter Corporation following the redemption of substantially
all of its rated 7-3/8% senior subordinated notes due 2014. The
notes were purchased and cancelled by the company in conjunction
with First Reserve Corporation's acquisition of CHC last month.
CHC has no rated debt at this time.
The ratings being withdrawn are the Ba3 Corporate Family Rating,
the Ba3 Probability of Default Rating and the B1 (LGD5, 72%)
rating on the $400 million senior subordinated notes due 2014.
Moody's last rating action on CHC dates from February 22, 2008, at
which time Moody's placed the company's ratings on review for
possible downgrade following the announcement of First Reserve's
acquisition of CHC.
CHC is headquartered in Vancouver, British Columbia, Canada. It
is one of the world's largest providers of helicopter services to
the offshore exploration and production industry, with operations
in over 30 countries.
CHENIERE ENERGY: Paulson & Co et al. Disclose 14.6% Equity Stake
----------------------------------------------------------------
Paulson & Co. Inc., Paulson Partners L.P., Paulson Partners
Enhanced, L.P., Paulson International Ltd., Paulson Advantage
Select Ltd., Paulson Advantage Master Ltd., Paulson Advantage Plus
Master Ltd., Paulson Enhanced Ltd. and John Paulson disclosed in a
Securities and Exchange Commission filing that they may be deemed
to collectively and beneficially own 7,400,000 shares of Cheniere
Energy Inc.'s common stock, representing 14.6% of the shares
issued and outstanding.
Paulson Partners L.P. disclosed that it may be deemed to
beneficially own 276,939 shares of Cheniere Energy Inc.'s common
stock, representing 0.5% of the shares issued and outstanding.
Paulson Partners Enhanced L.P. disclosed that it may be deemed to
beneficially own 400,242 shares of Cheniere Energy Inc.'s common
stock, representing 0.8% of the shares issued and outstanding.
Paulson International Ltd. disclosed that it may be deemed to
beneficially own 1,011,912 shares of Cheniere Energy Inc.'s common
stock, representing 2.0% of the shares issued and outstanding.
Paulson Advantage Select Ltd. disclosed that it may be deemed
beneficially own 11,837 shares of Cheniere Energy Inc.'s common
stock, representing less than 0.1% of the shares issued and
outstanding.
Paulson Advantage Master Ltd. disclosed that it may be deemed to
beneficially own 685,636 shares of Cheniere Energy Inc.'s common
stock, representing 1.4% of the shares issued and outstanding.
Paulson Advantage Plus Master Ltd. it may be deemed to
beneficially own 1,905,694 shares of Cheniere Energy Inc.'s common
stock, representing 3.8% of the shares issued and outstanding.
Paulson Enhanced Ltd. disclosed that it may be deemed to
beneficially own 2,542,698 shares of Cheniere Energy Inc.'s common
stock, representing 5.0% of the shares issued and outstanding.
About Cheniere Energy
Based in Houston, Texas, Cheniere Energy Inc. (AMEX: LNG) --
http://www.cheniere.com/-- is developing a network of three LNG
receiving terminals and related natural gas pipelines along the
Gulf Coast of the United States. Cheniere is pursuing related
business opportunities both upstream and downstream of the
terminals. Cheniere is also the founder and holds a 30.0% limited
partner interest in a fourth LNG receiving terminal.
Cheniere Energy Inc.'s consolidated balance sheet at Dec. 31,
2007, showed $2.96 billion in total assets and $3.26 billion in
total liabilities, resulting in a $302.1 million total
stockholders' deficit.
The Troubled Company Reporter reported on Aug. 15, 2008, that
Standard & Poor's Ratings Services affirmed its 'CCC+' corporate
credit rating on Cheniere Energy Inc. and its 'B+' senior secured
rating on subsidiary Sabine Pass LNG L.P. The outlook remains
negative. The company had about $2.85 billion of total debt
outstanding as of June 30, 2008. The affirmation followed the
company's announcement that it is about to complete a
$250 million convertible security financing to replace the
$95 million bridge loan and provide additional funds.
CHEROKEE INTERNATIONAL: Sells European Units to Eric Bowers
-----------------------------------------------------------
Cherokee International Corporation disclosed in a Securities and
Exchange Commission filing that on Oct. 18, 2008, pursuant to an
Agreement for the Sale and Purchase of All of the Issued and
Outstanding Shares of Cherokee SPRL, Cherokee Netherlands II B.V.,
a subsidiary of the company, sold all of the issued and
outstanding shares of Cherokee Europe SPRL, a private limited
liability company incorporated under Belgian law, and all of the
issued and outstanding shares of Cherokee Europe SCA, a
partnership limited by shares incorporated under Belgian law to
Eric Brouwers, acting in his own name or in the name of a company
in the process of incorporation under Belgian law.
Mr. Brouwers was the general manager of Cherokee's European
operations prior to the sale. Mr. Brouwers paid nominal
consideration for the shares of the Companies, in exchange for his
agreement to purchase the shares without representations or
warranties from, and without recourse to, the Seller. The terms
of the transaction were determined in arm's-length negotiations by
the parties.
Based in Tustin, California, Cherokee International Corp.
(NASDAQ:CHRK) -- http://www.cherokeellc.com/-- is a designer
and manufacturer of a range of switch mode power supplies for
original equipment manufacturers in the telecommunications,
networking, high-end workstations and other electronic equipment
industries. The company has offices and manufacturing plants in
Tustin and Irvine, California, Wavre, Belgium, Bombay, India,
Guadalajara, Mexico, and Penang, Malaysia.
Going Concern Doubt
Mayer Hoffman McCann P.C. in Orange County, California, expressed
substantial doubt about the company's ability to continue as a
going concern after auditing the consolidated financial statements
of Cherokee International Corporation and subsidiaries as of
Dec. 30, 2007, and Dec. 31, 2006. The company's management
anticipates that there will be insufficient cash balances
available to repay the outstanding debt at its maturity.
On Nov. 1, 2008, the US$46.6 million aggregate principal amount
outstanding under the company's 5.25% Senior Notes will become due
and payable. The company does not expect to have sufficient cash
available at the time of maturity to repay this indebtedness and
are currently working on a variety of possible alternatives to
satisfy this obligation. The company also cannot be certain that
it will have sufficient assets or cash flow available to support
refinancing these notes at current market rates or on terms that
are satisfactory to the company. If the company is unable to
refinance on terms satisfactory to it, it may be forced to
refinance on terms that are materially less favorable, seek funds
through other means such as a sale of some of assets, or otherwise
significantly alter its operating plan, any of which could have a
material adverse effect on its business, financial condition and
results of operation. These circumstances create substantial
doubt about the company's ability to continue as a going concern.
CHINA HEALTH: Ji Guang Wang Quits as President and Director
-----------------------------------------------------------
China Health Resource, Inc. disclosed in a Securities and Exchange
Commission filing that during a special meeting of the Board of
Directors on Oct. 20, 2008, Ji Guang Wang resigned as the
company's President and Director with immediate effect. Mr. Ji
Guang Wang informed the Board that his health could no longer
allow him to devote the time that would be required of him as
CHRI's President and director.
At the same special meeting, Ying Zhong resigned from CHRI as its
Chief Financial Officer for personal reasons, also with immediate
effect. There were no disputes or disagreements between the Board
and either of Mr. Wang or Ms. Zhong that led to the resignations.
In light of the resignations, the Board agreed to appoint
Mr. Jiayin Wang as its President and a director, filling the seat
on the Board that was previously held by Mr. Ji Guang Wang,
effective immediately.
Mr. Jiayin Wang, 55, is Mr. Ji Guang Wang's father. He is the
founder, President and Chairman of the Board of Directors of
Sichuan YinFa Resource Development Co. Ltd., an affiliate of CHRI,
since 2001. Mr. Wang has been the People's Senator of Suining
City since 1995 and the Chairman of Sichuan Province DAR
Association since 2001. Mr. Wang received Excellent Entrepreneur
of Sichuan Province in 2004, National Entrepreneur Star Award in
2001 and 2004, Entrepreneur Star of Sichuan Province in 2001 and
2004 and Top Ten Entrepreneur Star of Suining City in 2005.
Mr. Wang will serve a three-year term as the President and a
director of CHRI, and will receive an annual salary of RMB200,000,
or approximately $29,265.
Also at the same special Board meeting, the Board agreed to
appoint Yi Zhou as its Chief Financial Officer and a director of
CHRI, filling the seat on the Board that was previously held by
Ms. Ying Zhong, effective immediately.
Mr. Yi Zhou, 41, has been a Certified Public Accountant in China
since 1999. Mr. Zhou has over ten years of financial and
accounting working experience. He worked as Chief Financial
Officer for HongFei Real Estate Co. Ltd. from 1999 to 2004, and as
Chief Financial Officer for BeiXing Co. Ltd. from 2004 to 2007.
Both companies are public listed companies in China and the Board
considers that Mr. Zhou's public company experience will be
valuable as CHRI continues to grow. Mr. Zhou graduated from
University of Finance and Economics in China, with a degree in
Financial Accounting. Mr. Zhou will serve a one-year term as the
Chief Financial Officer and a director of CHRI, and will receive
an annual salary of RBM80,000, or approximately $11,706, based
upon the RMB Rate.
Going Concern Disclaimer
Lake & Associates, CPA's LLC, in Boca Raton, Fla., expressed
substantial doubt about China Health Resource Inc.'s ability to
continue as a going concern after auditing the company's
consolidated financial statements for the year ended Dec. 31,
2007. The auditing firm reported that the company has suffered
recurring losses and has yet to generate an internal cash flow.
China Health Resource Inc. reported a net loss of $66,482, on zero
sales, for the first quarter ended March 31, 2008, compared with a
net loss of $152,726, on sales of $188,949, in the same period
last year.
At March 31, 2008, the company's consolidated balance sheet showed
$3,956,284 in total assets, $1,016,925 in total liabilities, and
$2,939,359 in total stockholders' equity.
About China Health
Headquartered in Si Chuan Province, P.R. China, China Health
Resource Inc. fka. Voice Diary Inc. (OTC BB: CHRI) -- was
incorporated in the State of Delaware on Feb. 26, 2002. Through
its wholly owned subsidary, Yin Fa, the company operates as a
pharmaceutical company focused on developing and commercializing
the Dahurian Angelica Root, one of the more popular traditional
Chinese medicines. Dahurian Angelica Root is a popular herb
employed extensively as an ingredient in food, medicine and
cosmetics.
CHRISTO BARDIS: Files Schedules of Assets and Debts
---------------------------------------------------
Christo and Sara Bardis delivered to the U.S. Bankruptcy Court for
the Eastern District of California their schedules of assets and
liabilities, disclosing:
Schedule Total Assets Total Debts
-------- ------------ -----------
A. Real Property $3,624,400
B. Personal Property $39,501,871
C. Property Claimed As Exempt -
D. Creditors Holding Secured Claims $12,019,583
E. Creditors Holding Unsecured $4,434,279
Priority Claims
F. Creditors Holding Unsecured
Nonpriority Claims $844,372,043
------------ ------------
$43,126,171 $860,825,905
Real estate broker Christo Bardis filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the Eastern District of California,
Sacramento, on October 15, 2008 (Case No. 08-34878). Mr. Bardis
is co-founder of homebuilder Reynen & Bardis Communities.
Partner John D. Reynen filed for bankruptcy on April 23, 2008, in
Sacramento (Case No. 08-25145) to avert Bank of the West's
foreclosure of his personal property securing a $26 million loan.
Messrs. Reynen and Bardis guaranteed at least $740 million used by
their company that was obtained from several creditors but failed
to repay the loan, according to the Troubled Company Reporter on
April 25, 2008.
Mr. Bardis owes as much as $582,593,701 in loans to his unsecured
creditors including, among others, Wells Fargo Bank owed
$81,082,143; Indymac Bank owed $70,233,564; Comerica owed
$52,235,143. He listed assets between $10 million and
$50 million, and debt between $100 million and $500 million in his
filing.
Mr. Reynen disclosed in its filing assets between $50 million and
$100 million, and debts between $500 million and $100 million. He
owes $286,616,222 to his unsecured creditors including Lennar
Rennaissance Inc. asserting $47,000,000 in trade debt; Wells Fargo
asserting $29,387,928 in bank loan; and Indymac Bank asserting
$26,833,087 in bank loan.
Howard S. Nevins, Esq., at Hefner, Stark & Marols, LLP, in
Sacramento, California, represents Mr. Reynen.
Both cases are assigned to the Hon. Christopher M. Klein.
CHRISTO BARDIS: To Employ Meegan Hanschu as Bankruptcy Counsel
--------------------------------------------------------------
Christo and Sara Bardis seek permission from the U.S. Bankruptcy
Court for the Eastern District of California to employ Meegan,
Hanschu & Kassenbrock as their bankruptcy lawyers, effective
October 15, 2008.
The Bardises tell the Court that Meegan Hanschu attorneys are
familiar with their pending chapter 11 case.
Meegan Hanschu has represented the interest of Christo Bardis,
Reynen & Bardis Communities, Reynen & Bardis Construction, Reynen
& Bardis Land Investments, LLC and other vaious entities for which
RBLI or another R&B entity serves as the general partner or
managing member, in various litigation matters, including state
court action lawsuits commenced by Indymac Bank, FSB, River City
Bank, William M. Niemi, individually and as trustee of the William
and Beth Niemi 1985 Familyu Revocable Trust, Guaranty Bank and
JPMorgan Chase Bank, N.A., against certain of the various R&B
entities. All of the lawsuits are based primarily on claims
asserted by creditors for payment on loans allegedly made. To the
extent Mr. Bardis is a defendant, the actions will be stayed
against Mr. Bardis.
The Debtors propose to pay the firm at these hourly rates:
David M. Meegan $400 per hour
Anthony Asebedo $300 per hour
Peter J. Pullen $300 per hour
Paraprofessionals $125 per hour
In October 2007, the Debtors paid Meegan Hanschu a $10,000 fee
deposit, as payment for the firm's prepetition services related to
general financial issues provided to the Debtors. In February
2008, the firm received two payments from Reynen & Bardis
Communities aggregating roughly $20,000. In March, the firm got a
$250,000 fee deposit from KCB Investments, LLC, which was
guaranteed payment of the Bardis fees and costs. Of that amount,
$179,732 remains currently held in the firm's trust account.
Meegan Hanschu seeks to apply the funds held in trust for its
prepetition fees and costs, including the chapter 11 filing fee,
totaling $6,530.
Mr. Meegan, Esq., a partner at Meegan Hanschu, attests that his
firm is "disinterested" and does not hold or represent an interest
adverse to the estate.
Real estate broker Christo Bardis filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the Eastern District of California,
Sacramento, on October 15, 2008 (Case No. 08-34878). Mr. Bardis
is co-founder of homebuilder Reynen & Bardis Communities.
Partner John D. Reynen filed for bankruptcy on April 23, 2008, in
Sacramento (Case No. 08-25145) to avert Bank of the West's
foreclosure of his personal property securing a $26 million loan.
Messrs. Reynen and Bardis guaranteed at least $740 million used by
their company that was obtained from several creditors but failed
to repay the loan, according to the Troubled Company Reporter on
April 25, 2008.
Mr. Bardis owes as much as $582,593,701 in loans to his unsecured
creditors including, among others, Wells Fargo Bank owed
$81,082,143; Indymac Bank owed $70,233,564; Comerica owed
$52,235,143. He listed assets between $10 million and
$50 million, and debt between $100 million and $500 million in his
filing.
Mr. Reynen disclosed in its filing assets between $50 million and
$100 million, and debts between $500 million and $100 million. He
owes $286,616,222 to his unsecured creditors including Lennar
Rennaissance Inc. asserting $47,000,000 in trade debt; Wells Fargo
asserting $29,387,928 in bank loan; and Indymac Bank asserting
$26,833,087 in bank loan.
Howard S. Nevins, Esq., at Hefner, Stark & Marols, LLP, in
Sacramento, California, represents Mr. Reynen.
Both cases are assigned to the Hon. Christopher M. Klein.
CHRYSLER AUTOMOTIVE: Moody's Cuts Ratings; Reviews for Likely Cut
-----------------------------------------------------------------
Moody's Investors Service lowered the Corporate Family Rating and
Probability of Default ratings of Chrysler Automotive, LLC to Caa2
from Caa1. The rating is on review for further possible
downgrade. Moody's also lowered the rating of DaimlerChrysler
Financial Services Americas LLC to B3 from B2, and is reviewing
the rating for possible downgrade.
The downgrade of the Chrysler rating reflects the increased
pressure on the company's liquidity position due to the
precipitous decline in US automotive demand and the likelihood
that shipment levels will remain depressed through 2009. Chrysler
also faces the longer term challenge of being highly dependent on
the truck and SUV segments as market demand shifts toward smaller
vehicles. Moreover, its new product pipeline through 2010 will
not materially increase its position in the small vehicle segment.
Finally, Chrysler remains disadvantaged by having only a minimal
position in markets outside of the US.
As a result of the near-term fall off in demand in the US,
Chrysler's ability to cover all cash requirements through 2009 may
come under stress. These cash requirements include: the need to
maintain a minimal level of cash approximating 5% to 6% of sales
to cover day-to-day operating and working capital requirements, an
operating cash burn that will widen due to the fall off in demand,
and expenditures that might accompany any restructuring
initiatives. Beyond this near-term liquidity challenge, Chrysler
must also contend with the longer-term issue of accessing product
that will grow its presence in the small vehicle category.
Addressing this issue may require the expansion of joint-venture
and cooperative arrangements with other manufacturers.
Moody's review is focusing on Chrysler's ability to maintain
adequate liquidity through 2009 and to contend with its longer-
term need to build a more competitive portfolio of vehicles in the
car and crossover segments.
Downgrades:
Issuer: Chrysler Automotive, LLC
-- Probability of Default Rating, Downgraded to Caa2 from Caa1
-- Corporate Family Rating, Downgraded to Caa2 from Caa1
-- Senior Secured Bank Credit Facility, Downgraded to a range of
B3, LGD4, 59% from a range of B2, LGD4, 58%
Issuer: Detroit (City of) MI, Local Dev. Fin. Auth.
-- Senior Unsecured Revenue Bonds, Downgraded to Caa2 from A3 to
reflect Chrysler Automotive guarantee
All ratings remain under review for possible downgrade.
Chrysler Automotive, LLC is headquartered in Auburn Hills,
Michigan.
CHRYSLER FINANCIAL: Moody's Chips CF Rating to 'B3' from 'B2
------------------------------------------------------------
Moody's Investors Service downgraded the corporate family rating
of DCFS USA LLC -- Chrysler Financial -- to B3 from B2 and
continued a review for further possible downgrade.
The downgrade and review reflect the operating weaknesses of
Chrysler Financial's auto manufacturing affiliate, Chrysler LLC,
which was separately downgraded with continuing review for
possible further downgrade. Chrysler Financial's downgrade is
also based upon deteriorating expectations for the firm's stand-
alone performance.
Moody's said that Chrysler Financial's ratings are linked to those
of Chrysler, due to its business concentrations with the firm and
their common ownership by Chrysler Holdings. Changes in buyer
preferences toward more fuel-efficient cars has had the dual
effect of reducing sales levels for new trucks and SUV's and
weakening their values in the used car markets. Higher loss
severity associated with the weak used car market has been the
basis for Chrysler Financial's asset quality deterioration to
date. However, protracted economic weakness and higher
unemployment are likely to challenge Chrysler Financial's loan
delinquency and default statistics. The combination of elevated
loss severity and higher trending loan defaults indicates the
potential for a more pronounced slide in asset quality that could
weigh on profitability in coming periods.
Chrysler Financial's downgrade also considers its financial
flexibility, which would be pressured by sustained capital market
contractions. Chrysler Financial's liquidity profile is not
burdened by unsecured debt maturities because all funding since
the date of the firm's acquisition by Cerberus is matched to
specific assets. However, ongoing funding capacity is dependent
upon the annual renewal of its private securitization facilities,
which creates uncertainty regarding the firm's future operating
prospects.
Chrysler Financial's other primary source of funding, its secured
bank loans and revolving credit facility, mature in 2012 and 2013.
Chrysler Financial has little cash cushion and essentially all of
its earning assets are encumbered, which limits the firm's
flexibility. Given the status of the capital markets, it could be
challenging for Chrysler Financial to develop liquidity
alternatives. Higher costs associated with Chrysler Financial's
funding are expected to also narrow the firm's profit margins.
Moody's review of Chrysler Financial's ratings will focus on the
effect of Chrysler's operating challenges on Chrysler Financial's
asset quality and profitability. Moody's will also assess
management and owner strategies for ensuring adequate liquidity
and manageable asset quality.
Ratings affected by Moody's rating action include:
DCFS USA LLC:
-- Corporate Family Rating: from B2 to B3, on review for
possible downgrade
-- Sr. Secured Revolving Credit Facility: from B2 to B3, on
review for possible downgrade
-- Sr. Secured Term Loan B: from B2 to B3, on review for
possible downgrade
-- Sr. Secured Second Lien Term Loan: from B3 to Caa1, on review
for possible downgrade
DCFS USA LLC, headquartered in Farmington Hills, Michigan, is
engaged in consumer and commercial auto finance.
CIFG GUARANTY: Moody's Cuts IFS Rtngs to 'B3'; Keeps Under Review
-----------------------------------------------------------------
Moody's Investors Service has downgraded the insurance financial
strength ratings of CIFG Guaranty, CIFG Europe, and CIFG Assurance
North America, Inc to B3, from Ba2, and continues its ratings
review with direction uncertain.
Moody's commented that the rating actions reflect its expectation
of substantially higher mortgage-related losses arising from
CIFG's insured portfolio, as well as the possibility that certain
troubled exposures could be commuted. CIFG and its parents have
entered into a nonbinding memorandum of understanding with
approximately 75% of CIFG's CDS counterparties regarding the
commutation of approximately $12 billion of ABS CDOs and certain
CRE CDOs. The financial guarantor indicated that it expects the
contemplated commutation transaction to close before the end of
2008.
Separately, CIFG has also reached a definitive agreement to
reinsure approximately $13 billion of US municipal risks with
Assured Guaranty (Aaa under review for possible downgrade); the
deal is still subject to some closing conditions. Moody's said
that if CIFG is able to reach a favorable settlement and complete
the announced transactions, remaining CIFG policyholders would
likely benefit from an improved credit profile at the company.
CIFG's insurance financial strength rating remains on review with
direction uncertain to reflect the wide range of potential
outcomes resulting from the firm's restructuring initiatives.
Moody's believes that the terms of the troubled CDO commutation
may have some elements that are typically associated with a
distressed exchange, though such a determination is ultimately a
matter of judgment.
Moody's ratings on securities that are guaranteed or "wrapped" by
a financial guarantor are generally maintained at a level equal to
the higher of a) the rating of the guarantor, or b) the published
underlying rating. In accordance with current rating agency
policy, following Moody's May 20, 2008 rating action on CIFG which
lowered its rating to below the investment grade level, Moody's
withdrew ratings on CIFG-wrapped securities for which there was no
published underlying rating. Should the guarantor's rating
subsequently move back into the investment grade range or should
the agency subsequently publish the associated underlying rating,
Moody's would reinstate previously withdrawn ratings on those
wrapped instruments. For further information please see Moody's
special comment entitled: Assignment of Wrapped Ratings When
Financial Guarantor Falls Below Investment Grade (May, 2008).
Regarding CIFG's insured portfolio, Moody's expects further stress
on the company's risk-adjusted capital position in light of
continued deterioration in housing fundamentals and the related
implications on the company's mortgage-related exposures. Higher
expected mortgage default rates and severity were reflected in
upward revisions to Moody's lifetime loss estimates for certain
recent vintage residential mortgage-backed securities announced in
September.
Moody's said that, as part of its review of CIFG's insurance
financial strength rating, it will further refine its assessment
of the guarantor's mortgage-related exposures and other insured
transactions. The ratings review will also focus on the effect of
the US municipal reinsurance transaction and execution of
agreements relating to the commutation of ABS CDO exposures. To
the extent CIFG is able to commute these exposures at a reasonable
price, CIFG's insurance financial strength rating would probably
be upgraded, but any upward rating revision would likely result in
a non-investment grade rating given the continued heightened risks
with respect to CIFG's remaining mortgage-related exposures and,
in Moody's opinion, uncertainty about the medium to long term
strategy of the group given its impaired franchise.
Conversely, CIFG's inability to adequately mitigate the potential
for further losses on these contracts through negotiated
settlements within a reasonable timeframe could result in a
confirmation of the rating or a further downgrade, depending on
Moody's view of capital adequacy at the firm at the conclusion of
Moody's ratings review.
List of Rating Actions
These ratings have been downgraded and remain under review with
direction uncertain:
* CIFG Guaranty -- insurance financial strength at B3, from Ba2;
* CIFG Europe -- insurance financial strength at B3, from Ba2;
and
* CIFG Assurance North America, Inc. -- insurance financial
strength at B3, from Ba2.
Established in 2001, CIFG has provided financial guarantees to
issuers in the municipal and structured finance markets in the US
and Europe through CIFG Assurance North America, Inc. and CIFG
Europe, though it ceased writing business earlier this year to
conserve capital and to evaluate its strategic alternatives.
Caisse Nationale des Caisses d'Epargne Pr‚voyance (rated Aa3/P-
1/C+) and Banque Federale des Banques Populaires (rated Aa3/P-
1/C+) recently gained control of CIFG when they invested
approximately $1.5 billion in the financial guarantor, which was
previously owned by their joint venture Natixis (rated Aa3/P-1/C).
CNA FINANCIAL: Moody's Affirms '(P)Ba2' Preferred Stock Ratings
---------------------------------------------------------------
Moody's Investors Service has affirmed its Baa3 senior debt rating
on CNA Financial Corp., Inc. and the A3 insurance financial
strength ratings on Continental Casualty Company and members of
its property/casualty insurance intercompany pool. The outlook
for the ratings remains stable.
According to Moody's, the ratings affirmation follows the
announcement by CNA of a significant decline in its reported
equity capitalization during the third quarter and Loews' stated
plan to recapitalize CNA Financial through the purchase of
$1.25 billion of perpetual preferred shares, carrying a dividend
of 10%. CNA Financial also announced that it has suspended its
common shareholders' dividend until further notice.
The decline in CNA's shareholders' equity reflects a combination
of net realized investment losses (approximately $650 mil. pre-tax
during the third quarter), unrealized investment losses
(approximately $3.3 billion as of September 30, 2008) and, to a
lesser degree, underwriting losses associated with Hurricanes Ike,
Gustav and Dolly. Because much of the unrealized mark-to-market
investment loss position is associated with investment-grade
municipal, corporate and structured positions, Moody's believes
that the ultimate economic loss potential in these positions is
likely to be significantly less than current market values
suggest.
Moody's noted that the preferred shares will heighten CNA's
financial leverage on an interim basis beyond the expectation
level for the company's Current Ratings given the shares'
significant debt-like characteristics. The offering will also
adversely impact the company's fixed charge coverage measures,
given the 10% dividend on the instruments. However, the stable
outlook reflects Moody's expectation that these metrics will
improve over the medium-term, as well as Moody's expectation of
continued parental support from Loews.
Moreover, Moody's noted that CNA Financial maintains a strong
holding company liquidity position, with approximately
$700 million in cash and liquid investments, a position that is
supported by the pre-funding of a debt maturity due in the fourth
quarter of 2008, and by the company's decision to suspend its
common dividend, which CNA recently began to pay to its
shareholders in 2007.
Furthermore, the rating firm noted that it considers the sizing of
the preferred share offering to be commensurate with the likely
impact on Continental Casualty's statutory capitalization -- which
does not reflect unrealized loss positions on investment-grade
credits -- and which, it noted, should stabilize the company's
risk-adjusted capital adequacy and underwriting leverage.
CNA's ratings reflect the group's leadership position in many
major commercial and specialty property/casualty insurance lines
in the U.S., its adequate capitalization, a generally improved
profitability and operational leverage profile in recent years,
and the historically supportive parentage of Loews. These
strengths remain tempered by a history in past market down-cycles
of weak and volatile operating results, exposures to asbestos and
environmental liabilities as well as to natural and manmade
catastrophes, and potential volatility arising from claim reserve
variability and reinsurance counterparty credit risks.
Moody's noted that a combination of the following factors could
lead to a rating upgrade: sustained improvement in operating
profitability; sustained financial leverage profile; earnings
coverage of interest on debt and preferred dividends in excess of
5x on a sustained basis; annual adverse reserve development less
than 2.5% of total reserves; and sustained improvement through the
cycle of a strong risk-adjusted capital profile.
Furthermore, an upgrade of Loews Corporation could result in an
upgrade of CNA Financial Corp.'s debt ratings. Conversely,
factors that could lead to a downgrade include the following:
sustained adjusted financial leverage in excess of 25%; a
significant downgrade of Loews Corporation; annual catastrophe
losses exceeding 15% of shareholders' equity; earnings coverage of
interest on debt and preferred dividends below 2x; annual adverse
reserve development in excess of 5% of total reserves.
The rating agency added that the spread between the A3 insurance
financial strength rating of Continental Casualty Company and
members of its intercompany reinsurance pool, and CNA Financial
Corporation's Baa3 senior debt rating is 3 notches, which is
standard notching for US-based insurance groups.
Moody's most recent rating action on CNA Financial Corp. was on
November 2, 2007 when the rating firm affirmed its Baa3 senior
debt rating for CNA, and the A3 insurance financial strength
ratings on Continental Casualty Company and members of its
intercompany reinsurance pool.
These ratings have been affirmed with a stable outlook:
CNA Financial Corporation: senior unsecured debt at Baa3;
provisional rating for senior debt at (P)Baa3; provisional rating
for subordinated debt at (P)Ba1; preferred stock at Ba2;
provisional rating for preferred stock at (P)Ba2;
The Continental Corporation - senior debt at Baa3;
CNA Financial Capital I, II and III: provisional rating for
subordinated debt at (P)Ba1.
Insurance financial strength ratings at A3 for members of CNA's
Continental Casualty Company intercompany reinsurance pool:
American Casualty Company of Reading, Pennsylvania;
Columbia Casualty Company;
Continental Casualty Company;
Continental Insurance Company of New Jersey;
Continental Insurance Company;
National Fire Insurance Company of Hartford;
Transportation Insurance Company;
Valley Forge Insurance Company.
CNA Financial Corporation is engaged through its subsidiaries in
commercial and specialty property and casualty insurance. For the
nine months ended September 30, 2008 CNA Financial Corporation
reported net earned premiums for property/casualty insurance
operations of $4.9 billion and net income of $37 million. As of
September 30, 2008, shareholders' equity was $7.7 billion.
Moody's insurance financial strength ratings are opinions of the
ability of insurance companies to repay senior policyholder claims
and obligations.
COMMERCE PARK: Won't Pursue Rehabilitation; Court Dismisses Case
----------------------------------------------------------------
At the behest of Commerce Park II, LLC, Judge Ben T. Barry of the
United States Bankruptcy Court for the Western District of
Arkansas entered an order dismissing Commerce's chapter 11 case.
Laurie W. Harrison, Esq., in Fayetteville, Arkansas, says there is
no reasonable likelihood of rehabilitation by the Debtor.
According to Ms. Harrison, the Motion to Dismiss was "not brought
for any improper purpose."
The Debtor will submit to the United States Trustee's Office all
outstanding fees before submitting the order of dismissal.
The U.S. Trustee and the attorney for Chambers Bank of North
Arkansas are in agreement with the dismissal.
Fayetteville, Arkansas-based Commerce Park II, LLC, is a real
estate leasing company. Commerce Park filed for Chapter 11
bankruptcy protection on Oct. 14 (Bankr. W.D. Ark. Case No.
08-74138). Laurie W. Harrison, Esq., represents the Debtor.
When the Debtor filed for bankruptcy, it listed assets of
$10 million to $50 million and debts of $10 million to $50
million.
Commerce Park is controlled by Ben Israel. Mr. Israel and his
Dixie Management & Investment Limited Partnership filed separate
petitions on Sept. 29 asking for Chapter 11 bankruptcy protection.
Fayetteville attorney Derrick Davidson filed the voluntary
petitions on behalf of Mr. Israel and his wife Nancy Kaye Israel
and Dixie Management.
COMPLETE PRODUCTION: Moody's Reviews Ratings for Possible Cuts
--------------------------------------------------------------
Moody's Investors Service placed the ratings of Complete
Production Services, Inc. on review for possible upgrade. The
ratings under review are Complete's B1 Corporate Family Rating and
Probability of Default Rating and the B2 (LGD 4, 67%) rating on
the company's $650 million senior unsecured notes due 2016. This
rating action is prompted by sustained improvements in Complete's
credit metrics and the slower pace of acquisition activity
exhibited over the last two years. Moody's anticipates this
review will be completed before year-end and could result in a
one-notch upgrade.
"Complete's successful integration to date of the company's past
acquisitions, the apparent durability of its market position and
reduced debt levels are indicative of a higher credit rating,"
commented Pete Speer, Moody's Vice-President. "Moody's ratings
review will focus on the company's 2009 forecast and financial
policies for balancing acquisition opportunities, leverage and
liquidity in a slower environment for oilfield services."
Moody's last rating action on Complete dates from March 23, 2007,
at which time Moody's withdrew the rating on Complete's bank
facility.
Complete Production Services, Inc., headquartered in Houston,
Texas, is a provider of oilfield services and products to oil and
gas exploration and production companies.
COMSTOCK RESOURCES: S&P Cuts $175MM Unsecured Notes Rating to 'B'
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its issue-level rating
on Comstock Resources Inc.'s $175 million senior unsecured notes
to 'B' from 'B+'. S&P also revised the recovery rating on
Comstock's notes to '6', which indicates that lenders can expect
negligible recovery in the event of a payment default, from '5'.
At the same time, S&P affirmed the issue-level rating on Stone
Energy Corp.'s subordinated notes at 'B+'. The recovery rating is
unchanged at '3', which indicates that lenders can expect
meaningful recovery in the event of a payment default. S&P
removed both issue-level ratings from CreditWatch, where it placed
them with negative implications on May 1, 2008.
"The rating actions follows Comstock's completion of the sale of
its 49.5% owned subsidiary, Bois d'Arc Energy Inc., to Stone for a
combination of cash and a 13% ownership interest in Stone," said
Standard & Poor's credit analyst Amy Eddy.
COOPER-STANDARD: Moody's Affirms CF and PD Ratings at 'B2'
----------------------------------------------------------
Moody's Investors Service affirmed the B2 Corporate Family and
Probability of Default Ratings of Cooper-Standard Automotive Inc.,
the Ba2 rating of the existing senior secured bank credit
facilities, the B3 rating of the guaranteed senior unsecured
notes, and the Caa1 rating of the guaranteed senior subordinated
notes. The Speculative Grade Liquidity Rating was lowered to SGL-
3. The rating outlook was changed to negative from stable.
The change in outlook to negative reflects the continuing stress
within the US automotive sector, largely driven by the likely
decline in vehicle shipments from 16.2 million units in 2007 to
levels that will approximate 13 million in 2008 and 2009.
Additional pressure will result from the eroding financial
condition of the North American operations of the Detroit-3 (which
accounts for 35% of Cooper's sales), softening automotive demand
in Europe, and ongoing volatility in the financial markets.
The affirmation of the B2 corporate family rating incorporates
Cooper-Standards historic ability to generate free cash flow
during past periods of stress within the sector by implementing
successful restructuring initiatives. Moody's also believes that
the company will have adequate liquidity over the next 12 months.
For the LTM period ending June 30, 2008, Cooper-Standard's
EBIT/interest expense was approximately 1.4x, total Debt/EBITDA
was approximately 4.4x, and free cash flow was $34 million. As of
June 30, 2008 the company had $32 million of cash on its balance
sheet and an additional $92 million of borrowing capacity under
its revolving credit facility, net of letters of credit.
The SGL-3 Speculative Grade Liquidity rating reflects Moody's
expectation that the company will maintain adequate liquidity over
the next 12 months. Free cash flow is expected to approximate
break-even levels. The revolving credit facility is expected to
be used for nominal seasonal working capital swings. Covenant
cushion under the leverage test is expected to be sufficient over
the near-term. There are limited avenues of alternate liquidity
as essentially all the company's assets are pledged under the
credit facilities.
Ratings affirmed:
-- B2 Corporate Family Rating
-- B2 Probability of Default Rating
-- Ba2 (LGD2, 20%) for the senior secured credit agreement for
borrowers Cooper-Standard and Cooper-Standard Canada to
consisting of:
-- guaranteed senior secured revolving credit (US$ denominated)
at Cooper-Standard, due December 2010;
-- guaranteed senior secured revolving credit (US$ or C$
denominated) at Cooper-Standard Canada, due December 2010;
-- guaranteed senior secured term loan A (C$ denominated) at
Cooper-Standard Canada, due December 2010;
-- guaranteed senior secured term loan B (US$ denominated) at
Cooper-Standard Canada, maturing December 2011;
-- guaranteed senior secured term loan C (US$ denominated) at
Cooper-Standard, maturing December 2011;
-- guaranteed senior secured term loan D (US$ and Euro
denominated) at Cooper-Standard, maturing December 2011;
-- guaranteed senior secured add-on USD87MM equivalent add-on
term loan
-- B3 (LGD4 58%) for the guaranteed senior unsecured notes
maturing December 2012;
-- Caa1 (LGD5 85%) for the guaranteed senior subordinated
unsecured notes maturing December 2014
Ratings lowered:
-- Speculative Grade Liquidity rating of Cooper-Standard to
SGL-3 from SGL-2
The last rating action was on July 18, 2007 when ratings were
assigned the company's incremental bank facilities.
Future events that could improve Cooper-Standard's outlook include
the stabilization or improvement in industry conditions, or
operational improvements resulting in margin performance that
maintains leverage consistently under 4.0x or EBIT/interest
coverage above 1.6x
Future events that could result in pressure on Cooper-Standard's
ratings include the inability to offset reductions in OEM
production and ongoing customer price concessions through
restructuring actions and cost savings programs, lost market
share, insufficient availability under the revolving credit
facility, additional announcements of material acquisitions, or a
dividend payment to the shareholders. Consideration for lower
ratings could arise if any combination of these factors were to
increase leverage over 6x, or EBIT/interest approaching 1x.
Cooper-Standard Automotive, Inc., headquartered in Novi, Michigan,
is a portfolio company of The Cypress Group and Goldman Sachs
Capital Partners. It is a leading global manufacturer of fluid
handling systems (approximately 53% of revenues); and body
sealing, and noise, vibration, and harshness control systems
(approximately 47%) for automotive vehicles. The company sells
about 80% of its products directly to automotive original
equipment manufacturers. Annual revenues in 2007 were
approximately $2.5 billion.
CONCENTRA INC: Moody's Holds Ratings; Changes Outlook to Negative
-----------------------------------------------------------------
Moody's Investors Service changed the outlook for Concentra Inc.
to negative from stable, citing weaker than anticipated credit
metrics and the potential for further deterioration if the
employment environment weakens significantly in 2009. Concentra's
operating performance has been pressured by the extent and
duration of the slump in construction and other physical labor-
related employment and its direct effects on the company's core
workers compensation business.
Moody's believes that, as several sectors are impacted by the
economic slowdown, these issues could be exacerbated by lower
volumes in pre-employment drug screening, and other non-injury
related services. Moody's is further concerned about the
possibility that, in a slower economic environment, fewer
workplace injuries will be reported and treated. The change in
outlook also reflects the potential for partial or complete loss
of access to the revolver in 2009, following step downs in the
company's total leverage covenant on March 31, 2009. Concentra's
long-term ratings were affirmed.
The ratings are constrained by high financial and operating
leverage, the company's relatively limited scale and scope of
operations and performance below Moody's expectations since the
separation of the network services business in June 2007. The
ratings reflect Moody's expectation of limited free cash flow
generation in 2009 despite substantive reductions in costs and
capital expenditures. The ratings are supported by the company's
geographic diversity and broad customer base as well as relatively
strong profitability, with EBITDA margins expected to remain in
the 14%-15% range in part due to cost cutting initiatives.
Moody's took these rating actions:
-- Affirmed the B2 Corporate Family Rating;
-- Affirmed the B2 Probability of Default Rating;
-- Affirmed the B1 (LGD 3, 34%) ratings on the $75 million
senior secured revolver and $330 million Senior Secured Term
Loan B;
-- Affirmed the Caa1 (LGD 5, 85%) rating on the $155 million
Second Lien PIK Toggle Term Loan C;
-- Changed the outlook to negative from stable.
Concentra Inc., based in Addison, Texas, is the largest provider
of employer-focused health services through 320 primary care
centers located across 40 states. The company provides treatment
for workplace injuries, physical therapy, physical examinations,
urgent care and pre-employment drug screenings. Concentra also
provides bill review and case management services to the auto
injury market through its Auto Injury Solutions unit. The company
had revenues of about $837 million in the twelve months ended
June 30, 2008.
CORNERSTONE MINISTRIES: Court Set October 31 as Claims Bar Date
---------------------------------------------------------------
The United States Bankruptcy Court for the Northern District of
Georgia established Oct. 31, 2008, as deadlines for creditors of
Cornerstone Ministries Investments Inc. to file proofs of claim.
Creditors and governmental units, excluding the Debtor's
bondholders, are required to submit a written proof of claim they
asserted against the Debtor that arose before Feb. 10, 2008, to:
BMC Group Inc.
444 N. Nash Street
El Segundo, California 90245
About Cornerstone Ministries
Headquartered in Cumming, Georgia, Cornerstone Ministries
Investments Inc. -- http://www.cmiatlanta.com/-- is engaged in
financing the acquisition and development of facilities for use by
churches, faith-based or non-profit organizations and for-profit
organizations. The company offers development, construction,
bridge and interim loans, usually due within one to three years.
The company makes loans to four distinct groups of borrowers,
including churches, senior housing facilities, family housing
development projects and daycare/faith-based schools.
The company filed for Chapter 11 protection on Feb. 10, 2008 (N.D.
Ga. Case No. 08-20355). J. Robert Williamson, Esq., at Scroggins
and Williamson, represents the Debtor. The Debtor selected BMC
Group Inc. as claims, noticing and balloting agent. As of
March 1, 2008, the Debtors' summary of schedules showed
$187,661,169 in total assets and $178,586,731 in total debts.
On Sept. 8, 2008, the Court extended the Debtor's exclusive
periods to (i) file a Chapter 11 plan until Dec. 7, 2008, and
solicit acceptances of that plan until Feb. 5, 2008.
CREDIT AND REPACKAGED: Moody's Cuts Ratings on Poor Credit Quality
------------------------------------------------------------------
Moody's Investors Service has downgraded its ratings of Credit and
Repackaged Securities Limited Series 2006-15 & 17:
Class Description: $20,000,000 Single Tranche Notes Due
December 20, 2016 (2006-15)
-- Prior Rating: Ba1
-- Prior Rating Date: 10/02/2008
-- Current Rating: Ba2
Class Description: $5,700,000 Single Tranche Notes Due
December 20, 2016 (2006-17)
-- Prior Rating: Caa1
-- Prior Rating Date: 10/02/2008
-- Current Rating: Caa2
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008 and
Washington Mutual Inc., which was seized by federal regulators on
September 25, 2008 and subsequently virtually all of its assets
were sold to JPMorgan Chase.
CSFB HEAT: Moody's Cuts Ratings on 191 Tranches from 19 RMBS
------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 191
tranches from 19 subprime RMBS transactions issued by CSFB HEAT.
The collateral backing these transactions consists primarily of
first-lien, fixed and adjustable-rate, subprime residential
mortgage loans.
These actions follow and are as a result of Moody's September 18th
2008 announcement that it had updated its loss projections on
first-lien subprime RMBS.
Complete rating actions are:
Issuer: CSFB Home Equity Asset Trust 2005-6
-- Cl. M-5, Downgraded to Baa1 from A2
-- Cl. M-6, Downgraded to B1 from Baa2
-- Cl. M-7, Downgraded to Caa3 from Ba3
-- Cl. M-8, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2005-7
-- Cl. M-2, Downgraded to Aa3 from Aa2
-- Cl. M-3, Downgraded to A3 from A1
-- Cl. M-4, Downgraded to Baa3 from Baa1
-- Cl. M-5, Downgraded to B3 from Ba2
-- Cl. M-6, Downgraded to Ca from B3
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2005-8
-- Cl. M-2, Downgraded to A1 from Aa2
-- Cl. M-3, Downgraded to Baa1 from A1
-- Cl. M-4, Downgraded to Ba2 from Baa1
-- Cl. M-5, Downgraded to Caa2 from Ba2
-- Cl. M-6, Downgraded to C from B2
-- Cl. M-7, Downgraded to C from B3
-- Cl. M-8, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2005-9
-- Cl. M-1, Downgraded to Aa3 from Aa1
-- Cl. M-2, Downgraded to Baa1 from Aa2
-- Cl. M-3, Downgraded to Ba3 from A1
-- Cl. M-4, Downgraded to Caa2 from Baa1
-- Cl. M-5, Downgraded to C from Ba1
-- Cl. M-6, Downgraded to C from B2
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2006-2
-- Cl. 2-A-4, Downgraded to A2 from Aaa
-- Cl. M-1, Downgraded to Baa3 from A3
-- Cl. M-2, Downgraded to Caa1 from B2
-- Cl. M-3, Downgraded to Ca from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. M-7, Downgraded to C from Caa3
-- Cl. M-8, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2006-3
-- Cl. 2-A-4, Downgraded to Aa1 from Aaa
-- Cl. M-1, Downgraded to A2 from Aa1
-- Cl. M-2, Downgraded to Ba1 from Aa2
-- Cl. M-3, Downgraded to B2 from Aa3
-- Cl. M-4, Downgraded to Caa3 from A1
-- Cl. M-5, Downgraded to C from Baa1
-- Cl. M-6, Downgraded to C from Ba3
-- Cl. M-7, Downgraded to C from B3
-- Cl. M-8, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2006-4
-- Cl. 1-A-1, Downgraded to A1 from Aaa
-- Cl. 2-A-3, Downgraded to Aa2 from Aaa
-- Cl. 2-A-4, Downgraded to Baa2 from Aaa
-- Cl. M-1, Downgraded to B1 from Aa1
-- Cl. M-2, Downgraded to Ca from Aa3
-- Cl. M-3, Downgraded to C from Baa2
-- Cl. M-4, Downgraded to C from B1
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from B3
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2006-5
-- Cl. 1-A-1, Downgraded to Aa3 from Aaa
-- Cl. 2-A-3, Downgraded to Baa1 from Aaa
-- Cl. 2-A-4, Downgraded to Ba1 from Aaa
-- Cl. M-1, Downgraded to B3 from A1
-- Cl. M-2, Downgraded to Ca from Ba3
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. M-7, Downgraded to C from Caa3
-- Cl. M-8, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2006-6
-- Cl. 1-A-1, Downgraded to Baa1 from Aa2
-- Cl. 2-A-3, Downgraded to Ba1 from Aa2
-- Cl. 2-A-4, Downgraded to B2 from A2
-- Cl. M-1, Downgraded to Ca from Ba2
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. M-7, Downgraded to C from Caa3
-- Cl. M-8, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2006-7
-- Cl. 1-A-1, Downgraded to Ba2 from A2
-- Cl. 2-A-2, Downgraded to A1 from Aa2
-- Cl. 2-A-3, Downgraded to Ba3 from Aa3
-- Cl. 2-A-4, Downgraded to Caa2 from A3
-- Cl. M-1, Downgraded to C from Ba3
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. M-7, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2006-8
-- Cl. 1-A-1, Downgraded to B2 from Aa1
-- Cl. 2-A-2, Downgraded to Baa1 from Aa3
-- Cl. 2-A-3, Downgraded to Caa1 from A3
-- Cl. 2-A-4, Downgraded to Ca from Baa1
-- Cl. M-1, Downgraded to C from B1
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. M-7, Downgraded to C from Ca
-- Cl. M-8, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2007-1
-- Cl. 1-A-1, Downgraded to B2 from Aa2
-- Cl. 2-A-2, Downgraded to Ba2 from Aa3
-- Cl. 2-A-3, Downgraded to Ca from Baa1
-- Cl. 2-A-4, Downgraded to Ca from Baa2
-- Cl. M-1, Downgraded to C from B1
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from B3
-- Cl. M-4, Downgraded to C from Caa1
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. M-6, Downgraded to C from Caa3
-- Cl. M-7, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2007-2
-- Cl. 1-A-1, Downgraded to Ba3 from Aaa
-- Cl. 2-A-2, Downgraded to Ba1 from Aa1
-- Cl. 2-A-3, Downgraded to Caa2 from Aa3
-- Cl. 2-A-4, Downgraded to Ca from A2
-- Cl. M-1, Downgraded to C from Ba1
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. M-7, Downgraded to C from Caa3
-- Cl. M-8, Downgraded to C from Ca
-- Cl. M-9, Downgraded to C from Ca
Issuer: CSFB Home Equity Asset Trust 2007-3
-- Cl. 1-A-1, Downgraded to Baa1 from Aaa
-- Cl. 2-A-2, Downgraded to Baa1 from Aaa
-- Cl. 2-A-3, Downgraded to Ba2 from Aaa
-- Cl. 2-A-4, Downgraded to B2 from Aaa
-- Cl. M-1, Downgraded to Caa2 from Aa1
-- Cl. M-2, Downgraded to C from Baa1
-- Cl. M-3, Downgraded to C from Baa3
-- Cl. M-4, Downgraded to C from Ba2
-- Cl. M-5, Downgraded to C from B1
-- Cl. M-6, Downgraded to C from B2
-- Cl. M-7, Downgraded to C from B3
-- Cl. M-8, Downgraded to C from Caa1
-- Cl. M-9, Downgraded to C from Caa3
Issuer: CSFB Home Equity Pass-Through Certificates, Series 2005-1
-- Cl. M-1, Downgraded to A2 from Aa1
-- Cl. M-2, Downgraded to Baa2 from Aa2
-- Cl. M-3, Downgraded to Ba1 from Aa3
-- Cl. M-4, Downgraded to B2 from A3
-- Cl. M-5, Downgraded to Caa2 from Baa1
-- Cl. M-6, Downgraded to Caa3 from Baa3
-- Cl. M-7, Downgraded to Ca from Ba2
-- Cl. B-1, Downgraded to Ca from B1
-- Cl. B-2, Downgraded to Ca from B3
Issuer: CSFB Home Equity Pass-Through Certificates, Series 2005-2
-- Cl. M-1, Downgraded to A2 from Aa1
-- Cl. M-2, Downgraded to Baa2 from Aa2
-- Cl. M-3, Downgraded to Ba1 from Aa3
-- Cl. M-4, Downgraded to B1 from A1
-- Cl. M-5, Downgraded to B3 from A2
-- Cl. M-6, Downgraded to Caa1 from A3
-- Cl. B-1, Downgraded to Caa3 from Baa1
-- Cl. B-2, Downgraded to Ca from Baa2
-- Cl. B-3, Downgraded to Ca from Baa3
-- Cl. B-4, Downgraded to Ca from Ba1
Issuer: CSFB Home Equity Pass-Through Certificates, Series 2005-3
-- Cl. M-5, Downgraded to Baa1 from A2
-- Cl. M-6, Downgraded to Ba3 from A3
-- Cl. B-1, Downgraded to Caa3 from Baa1
-- Cl. B-2, Downgraded to C from Baa2
-- Cl. B-3, Downgraded to C from Baa3
-- Cl. B-4, Downgraded to C from Ba1
Issuer: CSFB Home Equity Pass-Through Certificates, Series 2005-4
-- Cl. M-5, Downgraded to A3 from A2
-- Cl. M-6, Downgraded to Baa3 from A3
-- Cl. M-7, Downgraded to B1 from Ba1
-- Cl. B-1, Downgraded to Ca from B3
-- Cl. B-2, Downgraded to C from Caa2
-- Cl. B-3, Downgraded to C from Caa3
Issuer: CSFB Home Equity Pass-Through Certificates, Series 2005-5
-- Cl. M-3, Downgraded to A1 from Aa3
-- Cl. M-4, Downgraded to Baa2 from A1
-- Cl. M-5, Downgraded to B2 from Baa1
-- Cl. M-6, Downgraded to Ca from B1
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Caa3
-- Cl. B-3, Downgraded to C from Ca
CSFB HOME: Moody's Lowers Ratings on 13 Classes of Certificates
---------------------------------------------------------------
Moody's Investors Service has downgraded 13 certificates issued by
CSFB Home Equity Mortgage Trust. The transactions are backed by
second lien loans. The certificates were downgraded because the
bonds' credit enhancement levels, including excess spread and
subordination were too low compared to the current projected loss
numbers at the previous rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second and home
equity line of credit collateral. Substantial pool losses of over
the last few months have eroded credit enhancement available to
the mezzanine and senior certificates. Despite the large amount
of write-offs due to losses, delinquency pipelines have remained
high as borrowers continue to default.
Moody's Investors Service also takes action on certain insured
notes. The ratings on securities that are guaranteed or "wrapped"
by a financial guarantor is the higher of a) the rating of the
guarantor or b) the published underlying rating.
The underlying ratings reflect the intrinsic credit quality of the
notes in the absence of the guarantee. The current ratings on the
below notes are consistent with Moody's practice of rating insured
securities at the higher of the guarantor's insurance financial
strength rating and any underlying rating that is public.
Issuer: CSFB Home Equity Mortgage Trust 2005-HF1
-- Cl. A-1, Downgraded to Ba2 from Aaa
-- Cl. A-2B, Downgraded to Ba2 from Aaa
-- Cl. A-3B, Downgraded to Ba2 from Aaa
-- Cl. G, Downgraded to Ba2 from Aaa
-- Cl. M-1, Downgraded to Caa2 from Aa1
-- Cl. M-2, Downgraded to C from Aa2
-- Cl. M-3, Downgraded to C from A2
-- Cl. M-4, Downgraded to C from A3
-- Cl. M-5, Downgraded to C from Baa2
-- Cl. M-6, Downgraded to C from Ba2
-- Cl. M-7, Downgraded to C from Caa1
-- Cl. M-8, Downgraded to C from Caa2
-- Cl. M-9, Downgraded to C from Ca
Issuer: CSFB Home Equity Mortgage Trust 2007-2
Class Description: Cl. 1A-1
-- Current Rating: A2 on review for possible downgrade
Financial Guarantor: MBIA Insurance Corporation (A2, review for
possible downgrade)
-- Underlying Rating: Downgraded to Caa3 from Caa2
Class Description: Cl. 2A-1A
-- Current Rating: A2 on review for possible downgrade
Financial Guarantor: MBIA Insurance Corporation (A2, review for
possible downgrade)
-- Underlying Rating: Downgraded to Caa3 from Caa2
Class Description: Cl. 2A-2
-- Current Rating: A2 on review for possible downgrade
Financial Guarantor: MBIA Insurance Corporation (A2, review for
possible downgrade)
-- Underlying Rating: Downgraded to Caa3 from Caa2
Class Description: Cl. 2A-3
-- Current Rating: A2 on review for possible downgrade
Financial Guarantor: MBIA Insurance Corporation (A2, review for
possible downgrade)
-- Underlying Rating: Downgraded to Caa3 from Caa2
Class Description: Cl. 2A-4
-- Current Rating: A2 on review for possible downgrade
Financial Guarantor: MBIA Insurance Corporation (A2, review for
possible downgrade)
-- Underlying Rating: Downgraded to Caa3 from Caa2
Class Description: Cl. 2A-1F
-- Current Rating: A2 on review for possible downgrade
Financial Guarantor: MBIA Insurance Corporation (A2, review for
possible downgrade)
-- Underlying Rating: Downgraded to Caa3 from Caa2
CWHEQ REVOLVING: Moody's Lowers Certificates Ratings on 17 Classes
------------------------------------------------------------------
Moody's Investors Service has downgraded 17 certificates issued by
CWHEQ Revolving Home Equity Loan Trust. The transactions are
backed by second lien loans. The certificates were downgraded
because the bonds' credit enhancement levels, including excess
spread and subordination were too low compared to the current
projected loss numbers at the previous rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second
collateral. Substantial pool losses of over the last few months
have eroded credit enhancement available to the mezzanine and
senior certificates. Despite the large amount of write-offs due
to losses, delinquency pipelines have remained high as borrowers
continue to default.
Issuer: CWHEQ Revolving Home Equity Loan Trust, 2007-G
-- Cl. A, Downgraded to Baa1 from Aa2
-- Cl. M-1, Downgraded to Baa3 from Aa3
-- Cl. M-2, Downgraded to Ba1 from A1
-- Cl. M-3, Downgraded to Ba3 from A2
-- Cl. M-4, Downgraded to B1 from A3
-- Cl. M-5, Downgraded to B3 from Baa1
-- Cl. M-6, Downgraded to Ca from Baa2
-- Cl. M-7, Downgraded to C from Baa3
-- Cl. M-8, Downgraded to C from Ba1
-- Cl. B, Downgraded to C from Ba2
Issuer: CWHEQ Revolving Home Equity Loan Trust, Series 2006-A
-- Cl. A, Downgraded to Caa2 from Aaa
-- Cl. M-1, Downgraded to C from A2
-- Cl. M-2, Downgraded to C from Baa1
-- Cl. M-3, Downgraded to C from Baa3
-- Cl. M-4, Downgraded to C from Ba3
-- Cl. M-5, Downgraded to C from B2
-- Cl. M-6, Downgraded to C from Caa3
CYBERDEFENDER CORP: Wants 6.1MM Common Shares Registered
--------------------------------------------------------
CyberDefender Corp. has filed with the Securities and Exchange
Commission a Form 8-A to register certain classes of securities
pursuant to Section 12(g) of the Securities Exchange Act of 1934.
The securities to be registered are:
-- 3,013,478 common stock, no par value per share, to be issued
upon exercise of warrants at maximum offer price of $1
apiece;
-- 3,013,478 common stock, no par value per share, to be issued
upon conversion of 10% secured convertible debentures, at
maximum offer price of $1 apiece; and
-- 50,000 Common Stock, no par value per share, at maximum
offer price of $1 apiece.
About CyberDefender Corp.
Headquartered in Los Angeles, CyberDefender Corp. (OTC BB: CYDE) -
-- http://www.cyberdefender.com/-- is an Internet security
software company. The company's Internet security technology
offers the earliest possible detection and most aggressive defense
against Internet security attacks. CyberDefender uses a secure
client-to-client distributed network, enabling protection that the
company believes is unparalleled in speed and flexibility.
CyberDefender's balance sheet as of showed $1,244,343 in total
assets, $6,060,859 in total liabilities, resulting to $4,816,516
in shareholders' deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $995,910 in total current assets
available to pay $4,355,023 in total current liabilities.
The company posted $2,034,433 in net losses on $742,862 in net
revenues for the second quarter ended 2008.
Going Concern Doubt
KMJ Corbin & Company LLP, in Irvine, California, expressed
substantial doubt about Cyberdefender Corp.'s ability to continue
as a going concern after auditing the company's financial
statements for the year ended Dec. 31, 2007. The auditing firm
reported that the Company has recurring losses from operations
and has not generated significant revenues to cover costs to date.
C-BASS MORTGAGE: Moody's Takes Rating Actions on Certain Certs.
---------------------------------------------------------------
Moody's Investors Service takes action on certain insured
certificates issued by C-BASS Mortgage Loan Asset-Backed
Certificates. The ratings on securities that are guaranteed or
"wrapped" by a financial guarantor is the higher of a) the rating
of the guarantor or b) the published underlying rating.
The underlying ratings reflect the intrinsic credit quality of the
notes in the absence of the guarantee. The current ratings on the
below notes are consistent with Moody's practice of rating insured
securities at the higher of the guarantor's insurance financial
strength rating and any underlying rating that is public.
Issuer: C-BASS Mortgage Loan Asset-Backed Certificates, Series
2007-SL1
Class Description: A-1
-- Current Rating: Caa1, rating on review with direction
uncertain
Financial Guarantor: Syncora Guarantee Inc. (Caa1, rating on
review with direction uncertain)
-- Underlying Rating: Downgraded to Ca from Caa1
Class Description: A-2
-- Current Rating: Caa1, rating on review with direction
uncertain
Financial Guarantor: Syncora Guarantee Inc. (Caa1, rating on
review with direction uncertain)
-- Underlying Rating: Downgraded to Ca from Caa1
DANA HOLDING: North American SUV Market Erosion Cues Moody's Cut
----------------------------------------------------------------
Moody's Investors Service has lowered the ratings of the Dana
Holding Corporation Corporate Family Rating and Probability of
Default Rating to B2 from B1. Moody's also lowered the ratings on
the company's senior secured term loan and senior secured asset
based revolving credit facility to B1 and Ba3, respectively. The
ratings were placed under review for further downgrade. The
Speculative Grade Liquidity Rating was also lowered to SGL-3 from
SGL-2.
The downgrade results from the continued erosion in the North
American market for SUVs and light trucks, and the expected
pressure on the company's credit metrics for the second half of
2008 and into 2009. These pressures include the significant
reduction in North American production volumes, the demand shift
away from SUVs and light trucks, the impact of high raw material
costs, and the deteriorating economic conditions facing the
company's European operations. The Detroit-3 represent about 28%
of revenues while Europe represents about 31% of revenues.
The downgrade also reflects Moody's concerns that these operating
pressures could severely limit Dana's ability to meet lender
financial covenant tests coming into effect at year-end 2008.
Moody's review is focusing on Dana ability to adjust its cost
structure in response to the reduced production levels in 2009,
and to maintain adequate liquidity over the next twelve months.
The Speculative Grade Liquidity Rating of SGL-3 reflects Moody's
expectation that the deterioration of industry conditions could
result in negative free cash flow over the next twelve months.
The company maintained significant cash balances at June 30, 2008
of $1.2 billion, and had approximately $383 million of
availability under its $650 million asset based revolving credit,
net of letters of credit.
However, eroding automotive demand is likely to pressure the
company's ability to meet covenant compliance tests under the term
loan that come into effect on December 31, 2008, Failure to meet
these tests, which includes an interest coverage test and a
leverage test, could lead to an event of default under the term
loan and eventual termination of availability under the ABL.
Alternative liquidity is limited as all of the company's domestic
assets and 66% of the equity of the non-domestic subsidiaries
secure the revolving credit and term-loan.
Ratings lowered and under review:
-- Corporate Family Rating to B2 from B1;
-- Probability of Default Rating, to B2 from B1
-- $650 million senior secured asset based revolving credit
facility, to Ba3 (LGD3, 32%) from Ba2 (LGD2, 29%)
-- $1.430 billion senior secured term loan, to B1 (LGD3 35%)
from Ba3 (LGD3, 35%);
-- The Speculative Grade Liquidity Rating is lowered to SGL-3
from SGL-2
The last rating action for Dana Holding Corporation was on
February 14, 2008 when the ratings were assigned.
Dana is a world leader in the supply of axles; driveshafts; and
structural, sealing, and thermal management products. The
company's customer base includes virtually every major vehicle and
engine manufacturer in the global automotive, commercial vehicle,
and off-highway markets, which collectively produce more than 65
million vehicles annually. The company employs approximately
32,000 people in 26 countries.
DAVIS SQUARE: Moody's Trims, Reviews Ratings on Four Note Classes
-----------------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade the ratings of the four classes of notes issued
by Davis Square Funding V, Ltd.:
Class Description: Up to $1,740,000,000 Class A-1-a Floating Rate
Notes Due 2040
-- Prior Rating: Aa2, on review for possible downgrade
-- Current Rating: Baa3, on review for possible downgrade
-- Prior Rating Action Date: 5/23/2008
Class Description: Up to $1,740,000,000 Class A-1-b Floating Rate
Notes Due 2040
-- Prior Rating: Aa2, on review for possible downgrade
-- Current Rating: Baa3, on review for possible downgrade
-- Prior Rating Action Date: 5/23/2008
Class Description: $80,000,000 Class A-2 Floating Rate Notes Due
2040
-- Prior Rating: A1, on review for possible downgrade
-- Current Rating: Caa1, on review for possible downgrade
-- Prior Rating Action Date: 5/23/2008
Class Description: $96,000,000 Class B Floating Rate Notes
-- Prior Rating: Baa3, on review for possible downgrade
-- Current Rating: Caa3, on review for possible downgrade
-- Prior Rating Action Date: 5/23/2008
Additionally, Moody's has downgraded the ratings of the three
classes of notes:
Class Description: $40,000,000 Class C Deferrable Floating Rate
Notes Due 2040
-- Prior Rating: Caa3, on review for possible downgrade
-- Current Rating: C
-- Prior Rating Action Date: 5/23/2008
Class Description: $17,000,000 Class D Floating Rate Notes Due
2040
-- Prior Rating: Ca
-- Current Rating: C
-- Prior Rating Action Date: 5/23/2008
Class Description: $17,000,000 Class E Floating Rate Notes Due
2040
-- Prior Rating: Ca
-- Current Rating: C
-- Prior Rating Action Date: 5/23/2008
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
DELTA AIR: Completes Merger with Northwest Airlines
---------------------------------------------------
Delta Air Lines, Inc. and Northwest Airlines, Inc. merged on
October 29, 2008, creating a premier global airline with service
to nearly all of the world's major travel markets, according to a
press statement.
The statement says the new airline, called Delta and headquartered
in Atlanta, will begin its first day as a combined company with a
commitment to delivering excellent service to customers in 66
countries and more than 375 worldwide cities -- more than any
other airline; with a dedicated base of approximately 75,000
worldwide employees; and with a best-in-class cost structure and
strong liquidity balance that better positions the company to
adapt to the weakening global economy.
"The airline industry faces a very difficult economic environment
around the world and this merger gives Delta increased flexibility
to adapt to the economic challenges ahead," said Delta CEO Richard
Anderson. "With much of the work to bring our airlines together
well under way, the new Delta will be at the front of the pack in
achieving the benefits of consolidation and is well positioned to
navigate the tough waters ahead in a difficult economy."
With the completion of the merger, Northwest Airlines is now a
wholly owned subsidiary of Delta. Customers should continue to
check-in and do business directly with the airline operating their
flight just as they did before the merger. Delta will continue
operation of the airlines' separate Web sites, www.delta.com and
www.nwa.com, as well as the two airlines' reservations systems and
loyalty programs.
The statement further notes that the two airlines will be
integrated through a process with customer benefits rolled out
over the next 12-24 months, including:
* The addition of Delta's code to nearly all of the Northwest
system by the end of 2008, creating thousands of additional
connecting opportunities.
* Immediate complimentary upgrade reciprocity for elite members
of both airlines' loyalty programs, with airport lounge
reciprocity continuing as usual.
* The launch of a fully consolidated worldwide flight schedule in
advance of summer 2009;
* The introduction of elements of Delta's brand throughout the
Northwest system beginning in spring 2009, including Delta's
popular Richard Tyler designer uniforms, Delta's livery,
"signature cocktails," enhanced in-flight entertainment and
other onboard amenities.
* The consolidation of the Delta and Northwest loyalty programs,
ultimately including the ability to combine miles from SkyMiles
and WorldPerks accounts at a one-to-one ratio.
* The full integration of Delta and Northwest Web sites, kiosks,
and customer-facing technology to ensure a consistent worldwide
travel experience.
Delta has already invested significant resources to ensure a
seamless transition for customers, including receiving clearance
from the Federal Aviation Administration (FAA) of the airline's
plan to achieve a Single Operating Certificate over the next 14-16
months; adding extra staffing and technology at check-in counters
and kiosks to provide added customer assistance beginning Oct. 29;
and posting complete merger information at www.delta.com and
www.nwa.com to provide customers added assistance.
Employees Share in Success of Combined company
As a result of the merger, employees will share in the success of
the new company through an expanded ownership share in the
combined company. In the coming days, Delta will distribute an
equity stake to substantially all U.S.-based employees with
international employees participating through cash payments in
lieu of stock.
"Ensuring our employees are able to share in the benefits of the
merger from the beginning is a prime example of the Delta
Difference," Mr. Anderson said. "By sharing ownership with Delta's
people, we are not only recognizing the critical role employees
will play in successfully integrating two customer-focused
companies, we are also making good on a longstanding commitment
that our employees will share in the success of the company."
Delta also has completed other key steps to ensure that employees
benefit from the merger and are protected as the two companies'
workforces are combined. Specifically, Delta:
* Completed an unprecedented agreement with the Delta and
Northwest units of the Air Line Pilots Association, Intl.
(ALPA) on a joint contract that unifies both pilot groups under
one pilot working agreement effective tomorrow. Additionally,
the two pilot groups have agreed to a collaborative process
that will achieve a combined seniority list;
* Committed that no frontline employees will be involuntarily
furloughed as a result of the merger and that no hubs will be
closed; and
* Implemented a seniority protection policy that ensures that
frontline employees of both airlines will be provided seniority
protection through a fair-and-equitable process.
Financial footing strengthened
According to the statement, the closing of the Delta-Northwest
merger brings together two of the industry's most financially
secure airlines to produce a best-in-class cost structure and an
industry-leading balance sheet. The transaction is expected to
generate $2 billion or more in annual revenue and cost synergies
from more effective aircraft utilization, a more comprehensive and
diversified route system, and cost synergies from reduced overhead
and improved operational efficiency. The company expects to incur
one-time cash costs not exceeding $600 million to integrate the
two airlines.
As approved by both companies' stockholders earlier this year,
Northwest stockholders will receive 1.25 Delta shares for each
Northwest share they own. Based on Delta's closing stock price on
Oct. 29, 2008, this exchange ratio is the equivalent of $9.99 per
Northwest common share.
"In today's economic climate, this merger makes even more sense
because we can capture $2 billion in annual synergies and build
the foundation for profitable growth through improved revenues, a
best-in-class cost structure and a strong liquidity position,"
said Edward Bastian, Delta's president and chief financial
officer, and the new CEO and president of NWA. "As we have
proven, this is a different type of merger for the industry thanks
to the complementary nature of the two airlines and the caliber of
the people who will make this the most successful merger in
airline history," Mr. Bastian continued.
DOJ Approval
Delta closed the merger after receiving notice from the United
States Department of Justice that it would not challenge the
merger after reviewing its competitive impact. Justice officials
cited the likelihood of "substantial and credible efficiencies"
without harming consumers or competition, Reuters said. The
Justice Department also said consumers should benefit from savings
on expenses for airport operations, technology, and suppliers, The
Associated Press added.
The decision caps a six-month Justice Department investigation.
Earlier this year, the merger received clearance from the European
Commission.
New BOD
Delta also announced the members of its new Board of Directors,
effective immediately. Delta Chairman of the Board Daniel Carp
remains chairman while Northwest Chairman Roy Bostock becomes vice
chairman. Other directors will include seven from Delta's Board -
- Richard Anderson, John S. Brinzo, Eugene I. Davis, David R.
Goode, Paula Rosput Reynolds, Kenneth C. Rogers, and Kenneth B.
Woodrow, and four from Northwest's Board -- John M. Engler, Mickey
P. Foret, Rodney E. Slater and former Northwest CEO Douglas
Steenland. Delta had previously announced the structure of its new
Board during the merger announcement last spring.
With its acquisition of Northwest Airlines, Delta Air Lines is now
the world's largest airline. Delta's marketing alliances allow
customers to earn and redeem either SkyMiles or WorldPerks on more
than 16,000 daily flights offered by SkyTeam and other partners.
According the the company statement, Delta and its 75,000
worldwide employees are reshaping the aviation industry as the
only U.S. airline to offer a full global network.
"There are global corporations but no global airlines. The race
to become the first truly global airline has an incredible reward
to it," said consultant Darryl Jenkins, according to Reuters. "The
revenue potential is something that we have not seen yet. That's
the synergy that will make this very lucrative."
Calyon Securities analyst Ray Neidl noted that while airline
mergers "never initially work out as planned," the Delta-
Northwest consolidation appears to be clear for completion as many
details have already been dealt with, reports AP. He added that
many of the snags like pilot integration, labor and technology
have already been addressed, so the merger should run fairly
smoothly.
The biggest challenge, Mr. Neidl said, is getting the two cultures
-- management and labor -- of each airline to work together from
the beginning," AP reports.
Machinists Respond to DOJ's NWA/Delta Ruling
"After eight years of disastrous economic decisions by the Bush
Administration, this comes as no surprise. It is another
opportunity for executives to stuff their pockets at the expense
of working-class Americans," the International Association of
Machinists and Aerospace Workers (IAM) General Vice President
Robert Roach, Jr., said in response to the Department of Justice's
approval of the Northwest Airlines-Delta Airlines merger.
Mr. Roach said Delta and Northwest management have separately
bankrupted their individual airlines. Together, they will have
more than $28.8 billion in combined debt and $15.6 billion in
unfunded pension liabilities that could be forced onto the
American taxpayer if the airline defaults.
"The Machinists Union will fight to ensure that workers at the
combined airline will be protected by the guarantees that can only
be found in a union contract. The days when Delta could ride
roughshod over their employees is coming to an end. Delta is
creating the world's largest airline. The Machinists Union will
make it the world's largest unionized airline," added Mr. Roach.
The Machinists Union is the largest airline union in North America
and represents 12,500 Northwest Airlines ground employees.
About Northwest Airlines
Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/--
is the world's fourth largest airline with hubs at Detroit,
Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about
1,400 daily departures. Northwest is a member of SkyTeam, an
airline alliance that offers customers one of the world's most
extensive global networks. Northwest and its travel partners
serve more than 1000 cities in excess of 160 countries on six
continents. Northwest and its travel partners serve more than
1000 cities in excess of 160 countries on six continents,
including Italy, Spain, Japan, China, Venezuela and Argentina.
The company and 12 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce
R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader,
Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq.,
at Cadwalader, Wickersham & Taft LLP in Washington, represent the
Debtors in their restructuring efforts. The Official Committee
of Unsecured Creditors has retained 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, the
Debtors filed an amended plan and disclosure statement. The Court
approved the adequacy of the Debtors' amended disclosure statement
on March 26, 2007. On May 21, 2007, the Court confirmed the
Debtors' amended plan. That amended plan took effect May 31,
2007.
* * *
As reported in the Troubled Company Reporter on July 29, 2008,
Standard & Poor's Ratings Services lowered its ratings on
Northwest Airlines Corp. and subsidiary Northwest Airlines Inc.
(both rated B/Negative/--), including lowering the long-term
corporate credit ratings on both entities to 'B' from 'B+', and
removed the ratings from CreditWatch, where they had been placed
with negative implications April 15, 2008. The outlook is
negative.
The downgrade reflects expected losses and reduced or negative
operating cash flow caused by high fuel prices. S&P also lowered
our ratings on enhanced equipment trust certificates, in some
cases by more than one notch.
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).
DMR CLN: Moody's Downgrades Rating to 'Ba2' from 'Aa3'
------------------------------------------------------
Moody's Investors Service has downgraded its rating on UBS $24MM
DMR CLN Series 3832:
Class Description: UBS $24MM DMR CLN, Series 3832
-- Prior Rating: Aa3
-- Prior Rating Date: 6/30/2008
-- Current Rating: Ba2
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on Sept. 25,
2008 and subsequently virtually all of its assets were sold to
JPMorgan Chase, Fannie Mae and Freddie Mac, which were placed into
the conservatorship of the U.S. government on September 8, 2008
and two Icelandic banks, specifically Kaupthing Bank hf and
Landsbanki Islands hf.
DTN INC: Moody's Lifts Ratings on Strengthening Credit Profile
--------------------------------------------------------------
Moody's Investors Service upgraded the corporate family rating of
DTN, Inc. to B1 from B2, the rating on its senior secured bank
facility to B1 from B2, and its probability of default rating to
B2 from B3. The upgrade reflects the company's strengthening
credit profile, supported by management's longer track record of
improved performance and commitment to debt repayment.
Performance over the past several years illustrates the stability
of the company's subscription based business, and Moody's
anticipates continued modest organic growth and maintenance of
EBITDA margins in the mid 30% range. Moody's also changed the
outlook to stable from positive.
On September 15, 2008, Telvent GIT, S.A. (Telvent, unrated by
Moody's) announced plans to acquire DTN for $445 million. Telvent
intends to fund the acquisition with a combination of debt at
Telvent and equity, and the transaction is not expected to
increase leverage at DTN. DTN lenders have waived the change of
control language in the credit agreement in exchange for an
increase in pricing, and DTN's growing free cash flow can absorb
this higher debt service with no material negative impact to its
credit profile, in Moody's view. The new ownership raises the
potential for some management distraction, but Moody's does not
foresee a significant negative impact.
The stable outlook incorporates expectations for continued
positive free cash flow and leverage below 4 times debt-to-EBITDA.
DTN, Inc.
-- Corporate Family Rating, Upgraded to B1 from B2
-- Probability of Default Rating, Upgraded to B2 from B3
-- Senior Secured Bank Credit Facility, Upgraded to B1, LGD3,
32%, from B2, LGD3, 33%
-- Outlook, Changed To Stable From Positive
In March 2007, Moody's affirmed DTN's corporate family rating (B2
at that time) and changed the outlook to positive from stable.
DTN's B1 corporate family rating reflects lack of scale, moderate
leverage, and some competitive pressure, especially from free
information on the Internet. Furthermore, DTN has some exposure
to cyclical advertising, and this business has fallen short of
expectations, but represents less than 10% of total revenue. The
company's recurring revenue stream, high retention rate, and
diversified base of blue chip agricultural and energy subscribers
lend predictability and stability. Its strong EBITDA margins and
the capacity to generate positive free cash flow also support the
ratings.
Headquartered in Omaha, Nebraska, DTN, Inc. (formerly known as
Data Transmission Network Corporation) provides real-time
information to agriculture, refined fuels, commodities trading and
weather impacted businesses. Its annual revenue is approximately
$175 million.
DUNDEE 2007-1: Poor Credit Quality Cues Moody's to Cut Rtng to B1
-----------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the notes
issued by Dundee 2007-1 Notes Segregated Portfolio Series 45:
Class Description: $20,000,000 Dundee 2007-1 Notes due December
2015, Series 45
-- Prior Rating: A1
-- Prior Rating Date: June 16, 2008
-- Current Rating: B1
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on Sept. 25,
2008 and subsequently virtually all of its assets were sold to
JPMorgan Chase, and an Icelandic bank, specifically Glitnir Banki
hf.
EMISPHERE TECHN: Misses NASDAQ's $35M Market Value Threshold
------------------------------------------------------------
Emisphere Technologies, Inc. received a letter from the NASDAQ
Stock Market advising that, for the last 10 consecutive trading
days, the company's market value of listed securities had been
below the minimum $35,000,000 requirement for continued inclusion
on The NASDAQ Capital Market pursuant to NASDAQ Marketplace Rule
4310(c)(3)(B).
In the NASDAQ Letter, NASDAQ advised that, in accordance with
NASDAQ Marketplace Rule 4310(c)(8)(C), the company will be
provided thirty calendar days, or until Nov. 20, 2008, to regain
compliance with NASDAQ Marketplace Rule 4310(c)(3)(B). The
NASDAQ Staff may determine that the company has regained
compliance with NASDAQ Marketplace Rule 4310(c)(3)(B) if, at any
time before Nov. 20, 2008, the market value of the company's
listed securities is $35,000,000 or more for a minimum of
10 consecutive business days. If the company does not regain
compliance by Nov. 20, 2008, NASDAQ will provide the company with
written notification that the company's common stock will be
delisted from the NASDAQ Capital Market. At that time, the
company may appeal the determination by the NASDAQ Staff to
delist its common stock to a Listing Qualifications Panel.
The company is considering actions that may allow it to regain
compliance with the NASDAQ continued listing standards and
maintain its NASDAQ listing. If the company is unsuccessful in
maintaining its NASDAQ listing, then the company may pursue
listing and trading of the company's common stock on another
securities exchange or association with different listing
standards than NASDAQ.
About Emisphere Technologies
Based in Cedar Knolls, New Jersey, Emisphere Technologies Inc.,
(NasdaqGM: EMIS) -- http://www.emisphere.com/-- is a
biopharmaceutical company that focuses on a unique and improved
delivery of therapeutic molecules using its eligen(R) technology.
These molecules and compounds could be currently available or are
under development. The molecules are usually delivered by
injection; in many cases, their benefits are limited due to poor
bioavailability, slow on-set of action or variable absorption. The
eligen(R) technology can be applied to the oral route of
administration as well other delivery pathways, like buccal,
rectal, inhalation, intra-vaginal or transdermal.
As reported in the Troubled Company Reporter on Oct 3, 2008,
Emisphere Technologies Inc.'s consolidated balance sheet at
June 30, 2008, showed $20.2 million in total assets and
$44.8 million in total liabilities, resulting in a $24.6 million
in stockholders' deficit.
* * *
PricewaterhouseCoopers LLP expressed substantial doubt about
Emisphere Technologies Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
reported that the company has experienced sustained operating
losses, has limited capital resources, and has significant future
commitments.
The company has limited capital resources and operations to date
have been funded primarily with the proceeds from collaborative
research agreements, public and private equity and debt financings
and income earned on investments.
EMMIS COMMS: Moody's Junks CF & PD Rtngs on Operational Challenges
------------------------------------------------------------------
Moody's Investors Service downgraded Emmis Communications
Corporation's Corporate Family Rating to Caa1 from B2, its
probability-of-default rating to Caa2 from B2 and its Series A
cumulative convertible preferred stock to Ca from Caa1. In
addition, Moody's downgraded Emmis's speculative grade liquidity
rating to SGL-4 from SGL-3. Moody's also downgraded Emmis
Operating Company's secured bank credit facilities ($145 million
revolver due 2012 and $455 million tranche B term loan due 2013)
to Caa1 from B2. The rating outlook is negative. This concludes
Moody's review initiated on October 15, 2008.
The rating downgrades reflect Moody's concerns regarding continued
internal operating challenges at Emmis' New York and Los Angeles
stations and Moody's belief that Emmis' credit metrics will likely
deteriorate in the face of a further slowdown in the economy.
Moody's expects radio broadcast revenues, which are highly reliant
on cyclical advertising, to come under increasing pressure due to
the slowdown in consumer spending, its impact on corporate
profits, and the resulting cutbacks in advertising and marketing
budgets by several industries. Moody's believes that Emmis'
revenue and cash flow could deteriorate such that debt-to-EBITDA
leverage exceeds 10x, free cash flow turns negative and other
credit metrics weaken considerably.
The SGL-4 rating specifically reflects Moody's concerns that the
company's ability to remain in compliance with its financial
maintenance covenants is highly uncertain when the leverage
covenant steps down in May 2009, despite the company's recent
efforts to manage costs at the operating company to help maintain
covenant compliance.
The negative outlook reflects Moody's concerns regarding Emmis'
ability to maintain covenant compliance. While Emmis had a
significant cash balance of $68 million at 8/31/2008, expected
negative free cash flow will erode some of this liquidity. In
addition, a potential remedy of covenant problems could involve a
significant step-up in pricing, thereby further pressuring the
company's cash flow. In the current credit environment, Moody's
deems less likely the prospect of the company's bank group merely
waiving the projected technical covenant default while dividend
payments on the preferred stock continue to get paid and exposure
to undrawn revolving credit facility commitments remains minimal.
Rather, it is increasingly likely that exposure will be
immediately curtailed at the first opportunity, particularly if
cash balances remain, in an effort to preserve value. In
consideration of this, Moody's has reverted to an above-average
(65%) mean family recovery expecation in a restructuring scenario,
the impact of which partially mitigates the severity of rating
downgrades for the bank debt in particular, as further evidenced
in reduced LGD rates on the rated securities.
Moody's has taken these rating actions:
Emmis Communications Corporation
* Corporate Family Rating -- downgraded to Caa1 from B2
* Probability-of-default rating -- downgraded to Caa2 from B2
* Series A cumulative convertible preferred -- downgraded to Ca
(LGD 6, 96%) from Caa1 (LGD 6, 99%)
* Speculative grade liquidity rating -- downgraded to SGL-4 from
SGL-3
* Outlook -- Revised to Negative from Review for possible
downgrade
Emmis Operating Company
* $145 million revolver due 2012 -- downgraded to Caa1
(LGD 3, 33%) from B2 (LGD 4, 50%)
* $455 million tranche B term loan due 2013 -- downgraded to
Caa1 (LGD 3, 33%) from B2 (LGD 4, 50%)
* Outlook -- Revised to Negative from Review for possible
downgrade
Emmis' rating reflects the company's high debt-to-EBITDA leverage
of 8.1x and Moody's expectation that leverage will increase over
the next twelve to eighteen months as cash flow continues to
deteriorate due to the cyclical downturn in the industry. The
rating also incorporates Emmis' significant revenue concentration
in New York and Los Angeles, continued weak station operating
performance vis-…-vis the markets as well as revenue pressure on
the markets themselves and the maturity and inherent cyclicality
of the radio industry.
Emmis' rating is supported by its large-market presence and growth
of its international radio operations, which offer revenue and
cash flow diversification benefits to the company.
Emmis Communications Corporation, headquartered in Indianapolis,
Indiana, is a diversified media firm with radio broadcasting and
magazine publishing operations. Emmis owns 21 FM and 2 AM radio
stations in the U.S. Emmis also owns a radio network,
international radio stations and regional and specialty magazines.
EPICOR SOFTWARE: Board Fears Elliott Merger Can Lead to Bankruptcy
------------------------------------------------------------------
Epicor Software Corporation's board of directors has unanimously
determined that Elliott Associates, L.P.'s $9.50 per share cash
offer is not in the best interests of Epicor and its stockholders.
The board came to this determination after reviewing Elliott
Associates' unsolicited conditional tender offer with the
assistance of its outside financial and legal advisors.
Accordingly, the board recommends that stockholders reject the
offer and not tender any of their shares.
"The board believes the offer made by Elliott Associates is
highly conditional, opportunistic and would deprive stockholders
from benefiting from the value associated with Epicor's current
and planned retail and ERP business software solutions, including
Epicor 9 which will become generally available during the fourth
quarter," Tom Kelly, president and CEO of Epicor, said.
"In making its determination, the board took into account the
numerous and subjective conditions attached to Elliott
Associates' offer which leads to questions regarding the
seriousness of their offer and whether they intend to follow
through," Mr. Kelly continued. "We believe the successful
execution of Epicor's business plan, including its product
strategy and roadmap, would provide greater value to stockholders
than that provided by the offer. We expect Epicor 9 to be an
ERP solution of choice for every one of the focused vertical
markets Epicor serves. Based on historical license growth after
significant product releases, the company expects Epicor 9 to
provide excellent near and long-term opportunities for license
growth acceleration into current and new markets we plan to
address well as generate migration and upgrade license sale
opportunities into our installed base of more than 20,000
customers worldwide. After careful review, the board
unanimously recommends that stockholders reject the Elliott
Associates offer and not tender their shares."
Reasons for the Board's Recommendation
The offer is highly conditional and therefore may be illusory.
The effect of the offer's numerous and subjective conditions is
that the offer may be illusory and Epicor's stockholders cannot be
assured that Elliott Associates will consummate the offer,
resulting in what amounts to an option to purchase the company
that can be exercised in Elliott Associates' sole discretion after
causing substantial disruption to the company's business.
The offer contains more than 40 conditions and sub-conditions of
which at least 11 are subjective and in Elliott Associates' sole
discretion. At least two of the objective conditions have already
been violated: since the commencement of the offer, (i) the Dow
Jones Industrial Average, the Standard and Poor's Index of 500
Industrial Companies and the NASDAQ-100 Index have declined by
more than 10%, and (ii) the company disclosed on Oct. 16, 2008,
that the board approved amended and restated bylaws on Oct. 13,
2008.
In addition, some conditions restrict the company's ability to
manage its business in the ordinary course. With respect to the
Section 203 Condition and the Rights Condition, the board has no
current intention to take the actions necessary to satisfy those
conditions.
The timing of the offer is opportunistic. The offer was
opportunistically timed on the verge of a new Epicor product
release (Epicor 9) and at a time when Epicor has not yet fully
achieved the expected market opportunities from its acquisition
of NSB Retail Systems. The company has a roadmap of products
planned over the next 18-24 months, including the launch of Epicor
9 in the fourth quarter of 2008 and continuing enhancements in
support of existing customers, which the company believes will
further establish Epicor as a leader in the midmarket and generate
growth for the company in new license, consulting and maintenance
revenue, and the offer deprives the Epicor stockholders from
benefiting from the value associated with these developments.
The offer is disruptive to the company's business, including its
customers and key employees. The unsolicited nature of the offer
and the uncertainty surrounding the offer are and will continue to
be disruptive to the company's customer and employee bases.
Uncertainty surrounding future ownership and management could
result in customer attrition and the inability to market new
products to customers. The company is reliant on key personnel
and highly specialized employees and many key employees may pursue
other employment opportunities given the uncertainty surrounding
the company's future and their employment with the company.
The company has a stand-alone plan which, when achieved, would
provide greater value to Epicor's stockholders than the offer.
The board believes that the company has a stand-alone plan and
strategy, including product strategy and product roadmap, which,
when achieved, would provide greater value to stockholders than
that provided by the offer, subject to the risks inherent in the
plan, and taking into account (i) historical financial performance
of the company, (ii) historical performance of the company's stock
price and related trading multiples, (iii) current worldwide
macro-economic and market conditions; (iv) the company's strong
recurring stream of maintenance revenue; its installed base of
over 20,000 customers and historically high renewal rates; (v) the
highly conditional and illusory nature of the offer and ongoing
disruptions in the company's business since the offer was
commenced, which are expected to continue. The offer was
commenced during a time of unprecedented market volatility and
dislocation, which has negatively affected the company's stock
price.
The offer was commenced on Oct. 15, 2008, during a time of
unprecedented market volatility and dislocation, and this
volatility and dislocation has continued during the pendency of
the offer and may continue into the future. This market
volatility and dislocation has negatively affected the company's
Common Stock price, notwithstanding the strength of the company's
core business drivers. Since Oct. 1, 2008, the company's Common
Stock has closed between a high of $8.93 and low of $6.08. In
particular, the significant market events have occurred since
Oct. 1, 2008:
-- The Dow Jones Industrial Average, the Standard & Poor's
500 and the NASDAQ 100 Composite declined by 14.2%, 14.4%
and 15.0%, during the two week period preceding the
commencement of the offer.
-- Moreover, the Dow, S&P and Nasdaq have declined by an
additional 10.0%, 12.2% and 12.8%, respectively, during the
period from when the offer was commenced and Oct. 24,
2008. Each decline, because it was in excess of 10% has
violated a condition of the offer as stipulated by Elliott
Associates.
-- In total, between Oct. 1, 2008 and Oct. 24, 2008, the Dow,
S&P and Nasdaq have declined by 22.8%, 24.8% and 25.8%.
-- Another general measure of the volatility of the equity
markets, the CBOE Volatility Index, closed at 79.1 on
Oct. 24, 2008, the highest closing level in the recorded
history of the index. During the period from
Oct. 1, 2008, to Oct. 24, 2008, the VIX average closing
price level was 59.3, more than 3 times the average closing
level of 19.2 for the period from Jan. 2, 1990, to
Sept. 30, 2008.
The offer price is significantly below historical averages of
Epicor's stock price. The offer was commenced when Epicor stock
was trading at a substantial discount to Epicor's historical
trading prices. Elliott Associates commenced the offer on
Oct. 15, 2008, at a time of market volatility and dislocation and
when the company was trading at close to its five-year low.
Moreover, the $9.50 offer price reflects a significant discount
to the company's 52-week closing price high of $13.41 and its
three-year average closing stock price of $11.93 and is below
its one-year average closing price of $9.61, respectively, as of
Oct. 15, 2008 (the date of the commencement of the offer).
The earnings multiple represented by the offer is below select
transactions. The price-to-next twelve months earnings multiple
represented by the offer is below the low, mean and high price-
to-next twelve months earnings multiples represented by select
enterprise software transactions between $200 million and
$2 billion since September 2005.
The consideration offered by Elliott Associates is taxable. The
offer price would generally be taxable to Epicor stockholders.
The offer poses significant risks to Epicor's stockholders because
there is no evidence that Elliott Associates has the intent or
ability to complete the offer, the subsequent merger or finance
Epicor's outstanding debt obligations.
Elliott Associates has not made public or provided any
information about its financial condition to support its claim
that it has sufficient funds in the amount of approximately
$950 million to complete the offer, subsequent acquisition of the
remaining non-tendering shares and to repay Epicor's debt
obligations which may be accelerated upon consummation of the
offer. Upon consummation of the offer, the lenders under
Epicor's credit agreement have the right to declare Epicor's
debt obligations in the amount of $109 million immediately due
and payable and holders of Epicor's convertible notes in the
amount of $230 million would have the right to require Epicor
to repurchase all of the outstanding convertible notes at par
value, plus accrued and unpaid interest, in accordance with the
indenture governing the convertible notes. If these debt
obligations are not repaid or refinanced, which may be difficult
in light of the current extreme disruption of the credit markets,
Epicor would be insolvent, posing significant risks for non-
tendering stockholders. Among other things, a second step merger
may not occur for several months or at all during which time the
company's stock may be illiquid or have no value and the company
could face bankruptcy.
Based on the foregoing, the board concluded that the offer is not
in the best interests of the company and its stockholders and to
recommend that Epicor's stockholders reject the offer.
Wilson Sonsini Goodrich & Rosati is acting as legal advisor and
UBS Investment Bank is acting as financial advisor to Epicor.
A full-text copy of the basis for the board's unanimous decision
is available for free at http://ResearchArchives.com/t/s?344d
About Epicor Software
Headquartered in Irvine, California, Epicor Software Corporation
(Nasdaq: EPIC) -- http://www.epicor.com/-- provides integrated
enterprise resource planning, customer relationship management,
supply chain management and professional services automation
software solutions to the midmarket and divisions of the Global
1000 companies. Founded in 1984, Epicor serves over 20,000
customers in more than 140 countries, providing solutions in
over 30 languages. Epicor offers a comprehensive range of
services with its solutions, providing a single point of
accountability to promote rapid return on investment and low
total cost of ownership.
EPIX PHARMACEUTICALS: Terminates 23% of Workforce to Cut Cost
-------------------------------------------------------------
EPIX Pharmaceuticals, Inc. disclosed in a Securities and Exchange
Commission filing that on Oct. 23, 2008, it notified employees
representing approximately 23% of the workforce of their
termination, effective immediately, under a plan of termination
pursuant to which charges will be incurred under FASB Statement of
Financial Accounting Standards No. 146 "Accounting For Costs
Associated With Exit or Disposal Activities."
The Reduction in Force, which was approved by the company's
Compensation Committee on Oct. 17, 2008, was initiated in
connection with the company's efforts to reduce its cost structure
and narrow the current focus of its research and development
efforts.
The company estimates that the charges to be recorded in the
fourth quarter of 2008 in connection with the Reduction in Force
will be approximately $0.3 million for cash payments of one-time
employee termination benefits, including severance, and other
benefits.
About EPIX Pharmaceuticals
Headquartered in Lexington, Mass., EPIX Pharmaceuticals Inc.
(NasdaqGM: EPIX) -- http://www.epixmed.com/-- is a
biopharmaceutical company focused on discovering and developing
novel therapeutics through the use of its proprietary and highly
efficient in silico drug discovery platform. The company has a
pipeline of internally-discovered drug candidates currently in
clinical development to treat diseases of the central nervous
system and lung conditions. EPIX also has collaborations with
leading organizations, including GlaxoSmithKline, Amgen, Cystic
Fibrosis Foundation Therapeutics, and Bayer Schering Pharma AG,
Germany.
The Troubled Company Reporter reported on Aug. 27, 2008, that at
June 30, 2008, the company's balance sheet showed total assets of
$63.6 million and total liabilities of $139.2 million, resulting
in a stockholders' deficit of $75.6 million. Net loss for the
second quarter ended June 30, 2008 was $2.3 million, compared with
$18.0 million for the quarter ended June 30, 2007.
FIRST FRANKLIN: Moody's Cuts Cert. Ratings on Poor Performance
--------------------------------------------------------------
Moody's Investors Service has downgraded certificates issued by
FFMLT. The transactions are backed by second lien loans. The
certificates were downgraded because the bonds' credit enhancement
levels, including excess spread and subordination were too low
compared to the current projected loss numbers at the previous
rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second
collateral. Substantial pool losses of over the last few months
have eroded credit enhancement available to the mezzanine and
senior certificates. Despite the large amount of write-offs due
to losses, delinquency pipelines have remained high as borrowers
continue to default.
Moody's Investors Service also takes action on certain insured
notes. The ratings on securities that are guaranteed or "wrapped"
by a financial guarantor is the higher of a) the rating of the
guarantor or b) the published underlying rating.
The underlying ratings reflect the intrinsic credit quality of the
notes in the absence of the guarantee. The current ratings on the
below notes are consistent with Moody's practice of rating insured
securities at the higher of the guarantor's insurance financial
strength rating and any underlying rating that is public.
Issuer: FFMLT 2007-FFB-SS, Mortgage Pass-Through Certificates,
Series 2007-FFB-SS
Class Description: A
-- Current Rating: Downgraded to B3 from A2
Financial Guarantor: Syncora Guarantee Inc. (Caa1, on review
direction uncertain)
-- Underlying Rating: Downgraded to B3 from A2
-- Cl. M-1, Downgraded to C from Ba2
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from Caa2
-- Cl. M-4, Downgraded to C from Ca
Issuer: First Franklin Mortgage Loan Trust 2007-FFC
Class Description: A-1
-- Current Rating: Aa3 on review for possible downgrade
Financial Guarantor: Ambac Assurance Corporation (Aa3, review for
possible downgrade)
-- Underlying Rating: Downgraded to Ca from B2
Class Description: A-2A
-- Current Rating: Aa3 on review for possible downgrade
Financial Guarantor: Ambac Assurance Corporation (Aa3, review for
possible downgrade)
-- Underlying Rating: Downgraded to Caa3 from B2
Class Description: A-2B
-- Current Rating: Aa3 on review for possible downgrade
Financial Guarantor: Ambac Assurance Corporation (Aa3, review for
possible downgrade)
-- Underlying Rating: Downgraded to C from B2
FORD MOTOR: Credit Unit Gets Access to Fed Commercial Paper Plan
----------------------------------------------------------------
Ford Motor Co.'s Ford Motor Credit said it was granted access to
the U.S. Federal Reserve's new program to help cash-strapped firms
meet their short-term funding needs, Sharon Terlep and Aparajita
Saha-Bubna at The Wall Street Journal report.
WSJ quoted Ford Motor Credit's spokesperson Merdith Libbey as
saying, "We have registered for the federal commercial paper
program, and it is available for us to use if we choose to do so."
Ford Credit, WSJ states, reported a pretax loss of $334 million in
the second quarter 2008, compared to a profit of
$105 million in 2007.
About Ford Motor Co.
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. In
Europe, the company maintains a presence in Sweden, and the United
Kingdom. The company also distributes its brands in various
Latin-American regions, including Argentina and Brazil.
* * *
As reported in the Troubled Company Reporter on Oct. 10, 2008,
Fitch Ratings downgraded the Issuer Default Rating of Ford Motor
Company and Ford Motor Credit Company by one notch to 'CCC' from
'B-'.
FORT DEARBORN: Moody's Junks Ratings on Three Classes of Notes
--------------------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible downgrade the ratings of the three classes of notes
issued by Fort Dearborn CDO I, Ltd.:
Class Description: $305,000,000 Class A-1LA Investor Swap
-- Prior Rating: Aaa
-- Prior Rating Date: August 12, 2005
-- Current Rating: Aa2, on review for possible downgrade
Class Description: $16,500,000 Class X Notes Due September 2012
-- Prior Rating: Aaa
-- Prior Rating Date: August 12, 2005
-- Current Rating: Baa1, on review for possible downgrade
Class Description: $82,000,000 Class A-1LB Floating Rate Notes Due
September 2040
-- Prior Rating: A3, on review for possible downgrade
-- Prior Rating Date: June 4, 2008
-- Current Rating: Caa2, on review for possible downgrade
Additionally, Moody's has downgraded the ratings of the three
classes of notes:
Class Description: $34,000,000 Class A-2L Floating Rate Notes Due
September 2040
-- Prior Rating: Ba2, on review for possible downgrade
-- Prior Rating Date: June 4, 2008
-- Current Rating: C
Class Description: $22,000,000 Class A-3L Floating Rate Notes Due
September 2040
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: June 4, 2008
-- Current Rating: C
Class Description: $25,000,000 Class B-1L Floating Rate Notes Due
September 2040
-- Prior Rating: Caa3, on review for possible downgrade
-- Prior Rating Date: June 4, 2008
-- Current Rating: C
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
GENERAL MOTORS: 3rd Qtr Vehicle Sales Down 11.4% to 2.1 Million
----------------------------------------------------------------
General Motors Corp. said Oct. 29 that it sold more than 2.1
million vehicles globally during the third quarter of 2008, down
11.4% year over year. GM said that its latest results reflect
continuing economic pressures in the U.S. market, which pushed
North America sales down 18.9%, and growing pressure in Europe,
where sales were down 12.3%.
Bloomberg News notes that GM is poised to end a 77-year run as the
world's largest automaker, as Michigan-based automaker's latest
results pushed GM's 9-month total to 6.66 million units compared
with 7.05 million for Toyota City, Japan-based Toyota.
GM has not yet disclosed third quarter earnings and revenues.
General Motors sold 2.29 million vehicles in the second quarter,
but that level of sales resulted to a net loss of $15.5 billion on
$38.2 billion of revenues. According to GM, losses in that
quarter were driven by volume declines -- global vehicle sales
were down 5% year over year, while North American sales slid 20%.
"The recent challenges in the global financial markets, including
credit tightening and the drop in commodity prices, have
negatively impacted market demand. However, our sales performance
shows that we are continuing to take advantage of new emerging
market opportunities and are meeting customer needs with fuel-
efficient products that offer compelling design and great value,"
Jonathan Browning, vice president, global sales, service and
marketing, said Oct. 29.
"The last quarter has seen unprecedented turmoil in the financial
markets in many places around the world as credit has become
harder to obtain," GM's chief sales analyst, Mike DiGiovanni, said
at a conference call, according to Bloomberg.
General Motors and Chrysler LLC are currently in talks about a
merger. Cerberus Capital Management LP, which co-owns GMAC with
General Motors Corp. and largest shareholder of Chrysler, supports
the merger and has sought to exchange most of its Chrysler
holdings for a larger share of GMAC.
Citing people involved in the GM-Chrysler talks, The Wall Street
Journal stated that GM and Chrysler estimate that a combined
entity would need $10 billion in new equity for layoffs, plant
shutdowns, integration of GM and Chrysler, and to provide
liquidity.
Chrysler and GM, as well as the third of the Michigan Big 3, Ford
Motor Company, have been under pressure to stem losses amid an
industry-wide slump in sales. GM, however, has noted increase
sales by Chevrolet in emerging markets, and record sales in two
regions. However, according to Mr. DiGiovanni, in emerging
markets "there was not quite enough volume in the third quarter to
offset the weakness in North America."
"Our sales performance during the third quarter saw increases by
Chevrolet outside North America and Wuling and GM Daewoo
regionally," Mr. Browning has said.
Chevrolet sales in Asia Pacific, the industry's second-largest
region, grew 5.3% compared with the third quarter a year ago.
Chevrolet sales in China (up 4.3 percent) and India (up 4.9
percent) powered much of this growth. The Wuling brand continued
strong growth in China with sales up 21.9 percent in the third
quarter compared to the same period a year ago.
In the Latin America, Africa and Middle East region -- a
traditional Chevrolet stronghold -- sales grew 3.4% compared with
the third quarter 2007. Chevrolet accounted for 90% of GM's third
quarter sales in the region.
Chevrolet sales in Europe also contributed to the brand's solid
third-quarter results, growing 2.7%. Chevrolet is seeing strong
growth in emerging markets including Eastern Europe. Chevrolet
was up 6.2% for the first nine months of the year in Russia. In
addition, Opel sales in Russia increased by 39 percent, while Saab
increased 90.4 percent.
Chevrolet sales in North America were down 16.6%; however, GM
added production capacity to satisfy the strong demand for the
all-new Malibu sedan.
Sales of Cadillac outside of the United States grew 10.7% in the
third quarter, supported by strong growth of the brand in Latin
America, Africa and Middle East (up 10 percent) and Asia Pacific
(up 39.2 percent). Cadillac sales in Europe were down 9.3%. In
North America, Cadillac sales declined about 28 percent, largely
reflecting the negative impact of the financing environment in the
luxury vehicle market.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
At June 30, 2008, the company's balance sheet showed total assets
of US$136.0 billion, total liabilities of US$191.6 billion, and
total stockholders' deficit of US$56.9 billion. For the quarter
ended June 30, 2008, the company reported a net loss of
US$15.4 billion over net sales and revenue of US$38.1 billion,
compared to a net income of US$891.0 million over net sales and
revenue of US$46.6 billion for the same period last year.
GMAC LLC: Wants Access to $700-Bil. Gov't Financial Rescue Plan
---------------------------------------------------------------
GMAC LLC wants to become a bank holding company to gain access to
the government's $700 billion financial bailout plan, Damian
Paletta and John D. Stoll at The Wall Street Journal report,
citing people familiar with the talks.
WSJ relates that Cerberus Capital Management LP, which co-owns
GMAC with General Motors Corp., has been in talks with the Federal
Reserve for more than a month. Cerberus Capital is also
negotiating for a merger between GM and Chrysler LLC, which it
controls.
According to WSJ, Cerberus Capital has sought to exchange most of
its Chrysler holdings for a larger share of GMAC. Cerberus
Capital now controls 51% of GMAC.
Citing sources, WSJ states that the GM-Chrysler negotiations seem
to be being structured to ensure Cerberus and GM can take
advantage of financial bailout programs offered by the Treasury
Department and the Federal Reserve.
For a bank registration for GMAC, GM may need to transfer at least
50% of its ownership in GMAC to Cerberus so that GM no longer
owned more than 24.9% of the voting shares, and won't have a
controlling interest in GMAC under federal law, WSJ states.
WSJ reports that GMAC, as a bank holding company, could get equity
injections from the Treasury Department's capital purchase
program. The report says that the Federal Deposit Insurance Corp.
could temporarily guarantee GMAC's debt. According to the report,
GMAC could gain some flexibility in funding its operations and it
could access the Fed's discount window for inexpensive, short-term
emergency loans.
People familiar with the talks said that Cerberus Capital could
merge GMAC and Chrysler Financial, Chrysler's lending arm, and
place them under the control of the bank holding company, WSJ
relates.
GMAC's plan to become a bank holding company would need approval
from several government agencies, WSJ states.
WSJ quoted Gil Schwartz -- a former Fed attorney and a partner at
Schwartz & Ballen LLP -- as saying, "You want to be a regulated
entity now, because it provides confidence to the market that
you've got the Fed providing oversight and you have the ability to
qualify for a broader range of programs."
According to WSJ, GMAC has an industrial bank chartered in Utah
that doesn't have the full powers of a commercial bank, which had
$32 billion of assets and $17 billion of deposits as of June 30,
2008. That industrial bank, says WSJ, could be converted into a
commercial bank or a national bank if it gets the regulators'
approval. Cerberus Capital might have to form several bank
holding companies within its own structure to control the new bank
holding company, WSJ reports.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- a unit of Cerberus Capital
Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R)
brand vehicles and products. The company has dealers worldwide,
including Canada, Mexico, U.S., Germany, France, U.K., Argentina,
Brazil, Venezuela, China, Japan and Australia.
* * *
As reported in the Troubled Company Reporter on Aug. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings on Chrysler
LLC, including the corporate credit rating, to 'CCC+' from 'B-'.
On July 31, 2008, TCR said that Fitch Ratings downgraded the
Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The
Rating Outlook is Negative. The downgrade reflects Chrysler's
restricted access to economic retail financing for its vehicles,
which is expected to result in a further step-down in retail
volumes. Lack of competitive financing is also expected to result
in more costly subvention payments and other forms of sales
incentives. Fitch is also concerned with the state of the
securitization market and the ability of the automakers to access
this market on an economic basis over the near term, given the
steep drop in residual values, higher default rates, higher loss
severity being experienced and jittery capital market.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
At June 30, 2008, the company's balance sheet showed total assets
of US$136.0 billion, total liabilities of
US$191.6 billion, and total stockholders' deficit of US$56.9
billion. For the quarter ended June 30, 2008, the company
reported a net loss of US$15.4 billion over net sales and revenue
of US$38.1 billion, compared to a net income of US$891.0 million
over net sales and revenue of US$46.6 billion for the same period
last year.
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
GMAC LLC: To Get Gov't Help to Access Commercial Credit Markets
---------------------------------------------------------------
Sharon Terlep and Aparajita Saha-Bubna at The Wall Street Journal
report that the government will help GMAC LLC's GMAC Financial
Services access the locked-down commercial credit markets.
According to WSJ, a GMAC spokesperson Gina Proia said on Tuesday
that the firm was recently granted access to new short-term
funding facility that the Federal Reserve created to help ease the
ongoing credit crisis. The report quoted Ms. Proia as saying, "We
did apply and we were approved to participate."
About GMAC LLC
GMAC LLC -- http://www.gmacfs.com/-- formerly General Motors
Acceptance Corporation, is a global, diversified financial
services company that operates in approximately 40 countries in
automotive finance, real estate finance, insurance and other
commercial businesses. GMAC was established in 1919 and employs
approximately 26,700 people worldwide.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
Cerberus Capital Management LP led a group of investors that
bought a 51% stake in GMAC LLC from General Motors Corp. in
December 2006 for $14 billion.
GENERAL MOTORS: Seeks Refinancing, Buyer for Renaissance Towers
---------------------------------------------------------------
Maura Webber Sadovi at The Wall Street Journal reports that
General Motors Corp. is seeking a buyer for its Renaissance Center
towers in Detroit.
According to WSJ, GM spokesperson Dan Flores said that the company
wants to unlock its equity in the five Renaissance Center towers,
which has millions of square feet of office space, GM's
headquarters, movie theaters, and a hotel.
Citing Mr. Flores, WSJ relates that GM has asked a city pension
fund to refinance the property and is alternatively considering
finding an interested investor to buy it from whom the company
would then lease space. The Retirement Systems of the City of
Detroit, Walter Stampor, said that the board of the Police and
Fire Retirement System won't pursue GM's refinancing proposal, WSJ
reports.
GM spent about $626 million to pay off its debt on the property,
WSJ states, citing Mr. Flores.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
GM Europe is based in Zurich, Switzerland, while General Motors
Latin America, Africa and Middle East is headquartered in
Miramar, Florida.
At June 30, 2008, the company's balance sheet showed total assets
of US$136.0 billion, total liabilities of US$191.6 billion, and
total stockholders' deficit of US$56.9 billion. For the quarter
ended June 30, 2008, the company reported a net loss of
US$15.4 billion over net sales and revenue of US$38.1 billion,
compared to a net income of US$891.0 million over net sales and
revenue of US$46.6 billion for the same period last year.
GREENPOINT MORTGAGE: Moody's Cuts Certificates Rtngs on 22 Classes
------------------------------------------------------------------
Moody's Investors Service has downgraded 22 certificates issued by
Greenpoint Mortgage Funding Trust. The transactions are backed by
second lien loans. The certificates were downgraded because the
bonds' credit enhancement levels, including excess spread and
subordination were too low compared to the current projected loss
numbers at the previous rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second and home
equity line of credit collateral. Substantial pool losses of over
the last few months have eroded credit enhancement available to
the mezzanine and senior certificates. Despite the large amount
of write-offs due to losses, delinquency pipelines have remained
high as borrowers continue to default.
Moody's Investors Service also takes action on certain insured
notes. The ratings on securities that are guaranteed or "wrapped"
by a financial guarantor is the higher of a) the rating of the
guarantor or b) the published underlying rating.
The underlying ratings reflect the intrinsic credit quality of the
notes in the absence of the guarantee. The current ratings on the
below notes are consistent with Moody's practice of rating insured
securities at the higher of the guarantor's insurance financial
strength rating and any underlying rating that is public.
Issuer: Greenpoint Mortgage Funding Trust 2005-HE1
-- Cl. M-6, Downgraded to C from Baa2
-- Cl. M-7, Downgraded to C from Baa3
-- Cl. M-8, Downgraded to C from Ba1
Issuer: Greenpoint Mortgage Funding Trust 2005-HE2
-- Cl. M-1, Downgraded to Baa2 from Aa3
-- Cl. M-2, Downgraded to Caa3 from A3
-- Cl. M-3, Downgraded to C from Baa2
-- Cl. B-1, Downgraded to C from Caa1
Issuer: Greenpoint Mortgage Funding Trust 2005-HE3
Class Description: Cl. A
-- Current Rating: Aa3 review for possible downgrade
Financial Guarantor: Ambac Assurance Corporation (Aa3, review for
possible downgrade)
-- Underlying Rating: Downgraded to Caa3 from Ba3
-- Cl. M1, Downgraded to C from B3
-- Cl. M2, Downgraded to C from Ca
Issuer: Greenpoint Mortgage Funding Trust 2005-HE4
-- Cl. IA-1, Downgraded to Baa3 from Aaa
-- Cl. IIA-1a, Downgraded to Baa2 from Aaa
-- Cl. IIA-1b, Downgraded to Baa1 from Aaa
-- Cl. IIA-3c, Downgraded to Baa1 from Aaa
-- Cl. IIA-4c, Downgraded to Baa3 from Aaa
-- Cl. M-1, Downgraded to Ba2 from Aa1
-- Cl. M-2, Downgraded to Caa2 from Aa2
-- Cl. M-3, Downgraded to C from Aa3
-- Cl. M-4, Downgraded to C from A3
-- Cl. M-5, Downgraded to C from Baa2
-- Cl. M-6, Downgraded to C from Ba1
-- Cl. M-7, Downgraded to C from B1
-- Cl. M-8, Downgraded to C from Caa3
GUAM GOVERNMENT: S&P Lifts GO Bonds Rating to 'B+' from 'B'
-----------------------------------------------------------
Standard & Poor's Ratings Services raised its standard long-term
rating on the government of Guam's existing general obligation
bonds to 'B+' from 'B'. The outlook is stable.
The upgrade is based on the general government's improved
financial performance, which is the direct result of greater
political consensus to enhance revenues and control expenditure
growth. It is also based on the general government more fully
addressing the unfunded long-term liabilities on Guam's balance
sheet.
Guam's full faith and credit pledge secures the bonds. Management
is expected to sell an additional $271.6 million in legislature-
authorized GO bonds later in fiscal 2009. The bond package was
authorized as part of a deficit financing and fiscal recovery
package approved in the fiscal 2009 budget.
The government's financial position has begun to stabilize after a
decade-long deterioration. Fiscal 2007 audited results showed a
$14 million general fund surplus, primarily because general fund
revenues were $19 million better than budgeted. This is in large
part due to mid-year budget revisions by Gov. Felix Camacho and
the legislature. The unreserved general fund balance is still a
massive negative $510.1 million, however, but reflective of
continued improvement in financial controls and reporting; fiscal
2007 marked the first-ever financial audit with an unqualified
opinion, as well as the third consecutive time the audit has been
completed on a timely basis.
Management is projecting it will make further progress in fiscal
2008, with another $20 million surplus, and the political
leadership was eventually able to pass a budget on time for fiscal
2009 which was structurally balanced and included authorization
for funding some of the identified long-term liabilities with GO
debt. Expenditure control over the Guam Public School System,
about one-third of general fund expenditures, was returned to
the executive branch after years of direct legislature control.
Guam has a long history of structural imbalance and large
accumulated deficits that will take years to reduce, but the
rating level currently reflects those risks.
The rating action affects approximately $236.7 million of existing
GO debt as of Sept. 30, 2007.
HEALTHSOUTH CORPORATION: Reaffirms Full Year 2008 Guidance
----------------------------------------------------------
HealthSouth Corporation is reaffirming its full year 2008 guidance
and the continued strength of its business fundamentals, which the
company believes remain sound.
In addition, HealthSouth notes that:
-- it has paid down approximately $208 million in debt year to
date through Oct. 27, 2008, and debt reduction will remain a
top priority;
-- it was in compliance with its covenants at the end of the
third quarter of 2008;
-- only $53 million was drawn on the company's $400 million
revolver as of Oct. 27, 2008.
HealthSouth is not initiating a new practice of announcing results
to the markets before the quarterly earnings release. The company
is taking this unusual step because it believes it is important to
reassure its equity and bond holders that the fundamentals of its
business remain sound.
The company will host an investor conference call at 9:30 a.m.
Eastern Time on Wednesday, Nov. 5, 2008, to discuss its results
for the third quarter of 2008 in detail.
On Nov. 10, 2008, the company is hosting an investor day at the
Grand Hyatt in New York, New York. The company plans to provide a
thorough explanation of its business model and outline the value
proposition it believes it offers investors.
About HealthSouth Corp.
Headquartered in Birmingham, Alabama, HealthSouth Corp. (NYSE:
HLS) -- http://www.healthsouth.com/-- provides inpatient
rehabilitation services. Operating in 26 states across the
country and in Puerto Rico, HealthSouth serves more than 250,000
patients annually through its network of inpatient rehabilitation
hospitals, long-term acute care hospitals, outpatient
rehabilitation satellites, and home health agencies.
HealthSouth Corporation 's balance sheet at June 30, 2008, showed
$1.97 billion in total assets, $2.84 billion in total liabilities,
$87.9 million in minority interest in equity of consolidated
affiliates, and $387.4 million in convertible perpetual preferred
stock, resulting in a $1.35 billion total stockholders' deficit.
The company also had $4 billion in accumulated deficit.
The company's consolidated balance sheet at June 30, 2008, also
showed strained liquidity with $678.4 million in total current
assets available to pay $839.8 million in total current
liabilities
HEALTHSOUTH CORPORATION: To Receive $100MM in UBS Suit Settlement
-----------------------------------------------------------------
HealthSouth Corporation disclosed that it has reached an agreement
in principle with derivative stockholder plaintiffs, UBS
Securities, LLC and UBS AG, Stamford Branch, as well as UBS's
insurance carriers, to settle litigation filed by the derivative
plaintiffs on the company's behalf, captioned Tucker v. Scrushy,
in the Circuit Court of Jefferson County, Alabama.
The settlement agreement relates only to UBS and does not affect
the Company's claims against Richard Scrushy and the other
defendants in the Tucker action, or against the Company's former
independent auditors Ernst & Young.
The settlement agreement is subject to approval of the Court, and
HealthSouth estimates that the process for approval will take
approximately 60 days.
Under the settlement, HealthSouth will receive $100 million in
cash and a release of all claims by UBS including the release and
satisfaction of a judgment in favor of UBS, which is currently on
appeal before the U.S. Court of Appeals for the Second Circuit.
HealthSouth will be obligated to pay the reasonable fees of the
derivative plaintiffs' attorneys to be approved by the Court.
After deducting all of the Company's costs and expenses in
connection with the Tucker litigation, HealthSouth, pursuant to
the previously disclosed settlement agreements in the consolidated
federal securities litigation, will pay 25% of the net proceeds,
to plaintiffs in the federal securities litigation. The balance of
the proceeds will be used by HealthSouth to reduce long-term debt.
"This settlement represents another milestone in HealthSouth's
recovery of damages sustained by the Company under prior
management," said John Whittington, Executive Vice President,
General Counsel and Corporate Secretary. "HealthSouth and the
derivative plaintiffs intend to diligently and vigorously pursue
the claims against the remaining defendants including Scrushy and
Ernst & Young."
About HealthSouth Corp.
Headquartered in Birmingham, Alabama, HealthSouth Corp. (NYSE:
HLS) -- http://www.healthsouth.com/-- provides inpatient
rehabilitation services. Operating in 26 states across the
country and in Puerto Rico, HealthSouth serves more than 250,000
patients annually through its network of inpatient rehabilitation
hospitals, long-term acute care hospitals, outpatient
rehabilitation satellites, and home health agencies.
HealthSouth Corporation's balance sheet at June 30, 2008, showed
$1.97 billion in total assets, $2.84 billion in total liabilities,
$87.9 million in minority interest in equity of consolidated
affiliates, and $387.4 million in convertible perpetual preferred
stock, resulting in a $1.35 billion total stockholders' deficit.
The company also had $4 billion in accumulated deficit.
The company's consolidated balance sheet at June 30, 2008, also
showed strained liquidity with $678.4 million in total current
assets available to pay $839.8 million in total current
liabilities
HEARTLAND AUTOMOTIVE: Court Extends Plan Filing Period to Nov. 14
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas has
entered its Fifth Stipulated Order extending Heartland Automotive
Holdings, Inc., and its affiliated debtors' exclusive periods to:
a) propose a plan of reorganization to Nov. 14, 2008;
b) solicit acceptances to the said plan of reorganization to
Jan. 13, 2009.
The Debtors told the Court that it was ready to file their
proposed plan of reorganization with the Court prior to Oct. 29,
2008, the expiration period pursuant to the Fourth Stipulated
Order. The Official Committee of Unsecured Creditors, however,
told the Court that it requested the Debtors to delay briefly
filing the plan to allow, among other things, the Committee to
discuss plan of reorganization issues with the Debtors and the
other constituents in the bankruptcy case.
The Committee told the Court that the extension will not prejudice
the legitimate interest of creditors and other parties-in-interest
and will afford the Committee a meaningful opportunity to pursue a
consensual plan of reorganization, all as contemplated by Chapter
11 of the Bankruptcy Code.
About Heartland Automotive
Based in Omaha, Nebraska, Heartland Automotive Holdings Inc. --
http://www.heartlandjiffylube.com/-- and its debtor-affiliates
are franchisees of Jiffy Lube International Inc. since 1980. The
Debtors operate 438 quick-oil-change stores in 20 states across
the Eastern, Midwestern and Western U.S. They employed in excess
of 4,000 employees.
The company and its nine affiliates filed for Chapter 11
protection on Jan. 7, 2008 (Bank. N.D. Tex. Lead Case No.
08-40057). Thomas E. Lauria, Esq., Patrick Mohan, Esq., Gerard
Uzzi, Esq., Lisa Thompson, Esq., at White & Case LLP, and Jeff P.
Prostok, Esq., at Forshey & Prostok, LLP, represent the Debtors in
their restructuring efforts. The Debtors selected Epiq Bankruptcy
Solutions LLC as claims, noticing and balloting agent. The U.S.
Trustee for Region 6 appointed seven creditors to serve on an
Official Committee of Unsecured Creditors on these cases. The
Committee selected Cadwalader, Wickersham & Taft LLP, and Munsch,
Hardt, Kopf & Harr, PC as co-counsel.
As of Nov. 29, 2007, the Debtors' financial statements reflected
assets totaling about $334 million and liabilities totaling about
$396
million.
HEXION SPECIALTY: Huntsman Shareholders Commit $217 Million Cash
----------------------------------------------------------------
Hexion Specialty Chemicals, Inc., disclosed in a Securities and
Exchange Commission filing that certain stockholders of Huntsman
Corporation have agreed to make an additional cash commitment to
Huntsman of approximately $217 million, conditioned upon the
closing of the Huntsman Hexion merger.
Together with the other commitments announced by Huntsman on
Sept. 11, 2008, or received by Huntsman subsequent to that date,
these additional commitments raise the total amount of committed
payments from Huntsman stockholders to approximately $677 million.
Hexion also announced that investment funds managed by affiliates
of Apollo Management, L.P., have agreed to make an additional cash
equity investment of $210 million in Hexion. Together with the
$540 million cash equity investment announced by Hexion on Oct. 9,
2008, investment funds managed by affiliates of Apollo Management,
L.P. have now agreed to make an aggregate cash equity investment
of $750 million in Hexion. The new cash equity investment is not
required by any contractual obligation of Hexion or Apollo, and is
conditioned upon closing of the merger and the funding of the
Huntsman stockholder commitments noted above.
About Hexion Specialty
Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. --
http://www.hexionchem.com/-- is a producer of thermosetting
resins, or thermosets. Thermosets are a critical ingredient in
virtually all paints, coatings, glues and other adhesives produced
for consumer or industrial uses. Hexion Specialty Chemicals is
controlled by an affiliate of Apollo Management L.P.
Hexion Specialty Chemicals Inc.'s balance sheet at June 30, 2008,
showed total assets of $3.9 billion and total liabilities of
$5.4 billion, resulting in a shareholders' deficit of
$1.5 billion.
HEXION SPECIALTY: Sues Credit Suisse & Deutsche for $6.5B Loan
--------------------------------------------------------------
Peter Lattman at The Wall Street Journal reports that Hexion
Specialty Chemicals, Inc., filed on Wednesday a lawsuit against
Credit Suisse Group and Deutsche Bank AG for refusing to fund the
company's $6.5 billion purchase of chemicals maker Huntsman Corp.
As reported in the Troubled Company Reporter on Oct. 29, 2008,
Hexion Specialty received correspondence from counsel to
affiliates of Credit Suisse and Deutsche Bank stating that the
banks don't believe that the solvency opinion of American
Appraisal Associates and the solvency certificate of Huntsman
Corporation's Chief Financial Officer meet the condition of the
commitment letter. The banks said that as a result, they won't
fund the proposed closing of the merger.
WSJ states that Credit Suisse & Deutsche Bank stand to suffer
billions of dollars in losses if they back the transaction, and
they would have to resell bonds and loans at a significant
discount into a deteriorating debt market.
The lawsuit may result in a negotiated settlement with a deal at a
price lower than the original $28 a share, WSJ relates, citing
people familiar with the situation.
About Huntsman
Headquartered in Salt Lake City, Utah, Huntsman Corporation
(NYSE: HUN) -- http://www.huntsman.com/-- is a manufacturer of
differentiated chemical products and inorganic chemical
products. The company operates in four segments: Polyurethanes,
Materials and Effects, Performance Products and Pigments. Its
products are used in a range of applications, including those in
the adhesives, aerospace, automotive, construction products,
durable and non-durable consumer products, electronics, medical,
packaging, paints and coatings, power generation, refining,
synthetic fiber, textile chemicals and dye industries. Its Latin
American operations are in Argentina, Brazil, Chile, Colombia,
Guatemala, Panama and Mexico.
At March 31, 2008, the company's consolidated balance sheet
showed US$8.68 billion in total assets, US$6.71 billion in total
liabilities, US$32.1 million in minority interests, and US$1.94
billion in total stockholders' equity.
* * *
As reported by the Troubled Company Reporter on Oct. 3, 2008,
Standard & Poor's Ratings Services said that its ratings on
Huntsman Corp. and Hexion Specialty Chemicals Inc. remain on
CreditWatch with negative implications, where they were placed on
July 5, 2007. The initial CreditWatch placement followed the
announcement of Hexion's proposed debt-financed acquisition of
Huntsman in a transaction valued at more than US$10 billion,
including assumed debt.
In June 2008, S&P said that its ratings on Huntsman Corp. (BB-
/Watch Neg/--) remain on CreditWatch with negative implications,
where they were placed on July 5, 2007.
As reported in the Troubled Company Reporter on Oct. 6, 2008,
Huntsman Corp. (Huntsman - Ba3 Corporate Family Rating - Rating
Under Review For Downgrade) issued a press release on Sept. 29,
2008 announcing the decision of the Delaware Court of Chancery to
enter judgment in favor of Huntsman denying all declarations
sought by Apollo Management, L.P. and Hexion Specialty Chemicals,
Inc., in their suit requesting that the Court excuse Hexion from
its obligation to consummate the pending transaction.
About Hexion Specialty
Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. --
http://www.hexionchem.com/-- is a producer of thermosetting
resins, or thermosets. Thermosets are a critical ingredient in
virtually all paints, coatings, glues and other adhesives produced
for consumer or industrial uses. Hexion Specialty Chemicals is
controlled by an affiliate of Apollo Management L.P.
Hexion Specialty Chemicals Inc.'s balance sheet at June 30, 2008,
showed total assets of $3.9 billion and total liabilities of $5.4
billion, resulting in a shareholders' deficit of
$1.5 billion.
HOSPITAL PARTNERS: U.S. Trustee Forms Three-Member Creditor Panel
-----------------------------------------------------------------
Roberta A. DeAngelis, the U.S. Trustee for Region 3, appointed
three creditors to serve on an Official Committee of Unsecured
Creditors for the Chapter 11 case of Hospital Partners of
America Corp.
The creditors committee members are:
1. Hitachi Capital America Corp.
Attn: James M. Giaimo
800 Connecticut Ave.,
Norwalk, CT 06854
Tel: (203) 956-3250
Fax: (203) 956-3050
2. Medistar Corporation
Attn: Paul Edward Tapscott
7670 Woodway, Suite 160
Houston, TX 77063
Tel: (713) 266-8990
Fax: (713) 977-7177
3. Oscar J. Barahona, Sr., and
Maria C. Medina
c/o Frederick B. Rosner, Esq.
Duane Morris LLP, 1100 Market Street, Suite 1200
Wilmington, DE 19801
Tel: (302) 657-4900
Fax: (302) 657-4901
Headquartered in Charlotte, North Carolina, Hospital Partners of
America, Inc. -- http://www.hospitalpartners.com/-- develops and
manages hospitals. The company and its affiliates filed for
Chapter 11 bankruptcy protection on Sept. 24, 2008 (Bankr. D. Del.
Case No. 08-12180). Curtis A. Hehn, Esq., Laura Davis Jones,
Esq., and Michael Seidl, Esq., at Pachulski Stang Ziehl Young
Jones, represent the Debtor in its restructuring efforts.
Kurtzman Carson Consultants LLC is the Claims Agent. Moore & Van
Allen PLLC is the Debtors' corporate and litigation counsel. The
Debtors listed assets of $100 million to $500 million and debts of
$100 million to $500 million.
HOSPITAL PARTNERS: Gets Final OK to Use $2.25MM NEA DIP Facility
----------------------------------------------------------------
The Hon. Brendan L. Shannon of the United States Bankruptcy Court
for the District of Delaware authorized Hospital Partners of
America Inc. to obtain, on a final basis, up to $2.25 million in
post petition financing under a credit agreement with New
Enterprises Associates 10, Limited Partnership, as lender.
New Enterprises is the company's largest equity holder.
According to the Troubled Company Reporter on Oct. 3, 2008, the
Court authorized the Debtor to access $1.7 million in financing on
the interim.
The proceeds of the loan will be used to pay, among other things,
(i) compensation to the Debtors' employees, and (ii) other costs
and expenses of maintaining their corporate headquarters in
Charlotte, North Carolina. Absent the DIP financing, the Debtor
will be unable to continue providing management services to its
operating hospital entities, and cause immediate irreparable harm
to the value of its investments in its operating hospital
entities.
The facility will accrue interest at 10% per annum, payable in
arrears on the last business day of each month.
The DIP agreement will expire by Nov. 15, 2008, or in the event of
default. Furthermore, the agreement contains customary and
appropriate events of default -- including failure of the Court to
enter a final order allowing the Debtor to repay and replace the
full amount outstanding to the lender under a prepetition
agreement.
The lender will be granted priority over and all administrative
expenses pursuant to Section 364(c)(1) of the Bankruptcy Code to
secure the Debtor's DIP obligation.
The DIP facility is subject to $125,000 carve-out for payment to
professional advisors employed by the Debtor and any committee.
A full-text copy of the credit agreement between the Debtor and
the lender is available for free at:
http://ResearchArchives.com/t/s?3452
Headquartered in Charlotte, North Carolina, Hospital Partners of
America, Inc. -- http://www.hospitalpartners.com/-- develops and
manages hospitals. The company and its affiliates filed for
Chapter 11 bankruptcy protection on Sept. 24, 2008 (Bankr. D. Del.
Case No. 08-12180). Curtis A. Hehn, Esq., Laura Davis Jones,
Esq., and Michael Seidl, Esq., at Pachulski Stang Ziehl Young
Jones, represent the Debtor in its restructuring efforts.
Kurtzman Carson Consultants LLC is the Claims Agent. Moore & Van
Allen PLLC is the Debtors' corporate and litigation counsel. The
Debtors listed assets of $100 million to $500 million and debts of
$100 million to $500 million.
HOVNANIAN ENTERPRISES: Moody's Rates $250MM Secured Notes 'B3'
--------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to K. Hovnanian
Enterprises, Inc.'s proposed $250 million senior secured third
lien notes, due 2017. At the same time, Moody's affirmed the
company's existing ratings, including the corporate family rating
of B3, second lien notes rating of Ba3, senior unsecured notes
rating of Caa1, senior subordinated debt rating of Caa2, and
preferred stock rating of Caa3. The speculative grade liquidity
assessment was also affirmed at SGL-2. The ratings outlook
remains negative.
The proposed $250 million third lien notes are to be exchanged for
the company's current senior unsecured notes. The total book
value of the company's senior unsecured notes is $1.515 billion.
However, since the notes are selling at steep discounts, the
company is anticipating to exchange approximately 40% of the face
value, or approximately $600 million, of the notes for
$250 million of third lien notes. The transaction is viewed by
Moody's as an opportunistic refinancing and not a distressed
exchange, in part because it is not required to stave off looming
default.
If successful, the transaction will improve debt-to-
capitalization. According to Moody's calculations, and adjusting
for Moody's standard analytical adjustments, the company's debt to
capitalization at July 31, 2008 stood at approximately 79%. If
the company is successful in its proposed transaction, its pro
forma debt to capitalization will decrease to approximately 69%.
Hovnanian's B3 corporate family rating reflects the company's
ongoing losses, high debt leverage, and weak operating
performance. The company's comfortable liquidity position, in
part characterized by $677 million cash, partially mitigates near
term credit risks. The company's loose covenants also mitigate
risk of a technical default. The company's position as a leading
homebuilder, widespread geographic, product, and price point
diversification also support the rating.
The negative outlook reflects the risk that weak consumer
confidence, disruptions in mortgage finance, high vacancy rates,
and falling home values will continue to exert pressure on the
company's performance and metrics.
These rating actions were taken:
-- Rating of B3 (LGD3, 45%) assigned to the proposed $250
million senior secured third lien notes due 2017;
-- Corporate family rating affirmed at B3;
-- Probability of default rating affirmed at B3;
-- Senior secured second lien notes, due 2013, rating affirmed
at Ba3. LGD assessment changed to LGD2, 24% from LGD2, 21%;
-- Senior unsecured notes ratings affirmed at Caa1. LGD
assessment changed to LGD5, 71% from LGD4, 64%;
-- Senior subordinated notes ratings affirmed at Caa2. LGD
assessment changed to LGD6, 93% from LGD6, 94%;
-- Preferred stock rating affirmed at Caa3, LGD6, 97%.
-- Speculative grade liquidity assessment affirmed at SGL-2.
All of K. Hovnanian Enterprise's debt is guaranteed by its parent
company, Hovnanian Enterprises, Inc., and its restricted operating
subsidiaries.
Upon the close of the transaction, Moody's will revisit the
company's capital structure to determine if there is any effect on
the company's ratings and LGD assessments.
Established in 1959 and headquartered in Red Bank, New Jersey,
Hovnanian Enterprises, Inc. designs, constructs and markets
single-family detached homes and attached condominium apartments
and townhouses. Homebuilding revenues and consolidated net income
for the trailing twelve months ended July 31, 2008 were
$3.9 billion and -$1,141 million, respectively.
HOVNANIAN ENTERPRISES: Unveils Private Debt Exchange Offer
----------------------------------------------------------
Hovnanian Enterprises, Inc. disclosed in a Securities and Exchange
Commission filing the commencement of a private offer to exchange
senior notes in a private placement for new 18.0% Senior Secured
Notes due 2017 to be issued by K. Hovnanian Enterprises, Inc., a
wholly owned subsidiary of the company, and to be guaranteed by
the company and substantially all of its subsidiaries.
The New Secured Notes will be secured on a third-priority lien
basis by substantially all the assets owned by the company and
guarantors of the New Secured Notes to the extent such assets
secure obligations under the Company's Revolving Credit Agreement,
second-priority secured notes and certain other permitted
indebtedness.
K. Hovnanian Ent. Outstanding Total Consideration if
Senior Notes Principal Amt Tender Occurs Prior to or
to be Exchanged (millions) on the Early Tender Date
--------------- ------------ ------------------------
8% Senior Notes $100 47.0% of original
due 2012 principal amount
CUSIP No. 442488AL6
6-1/2% Sr Notes $215 40.0% of original
due 2014 principal amount
CUSIP No. 442488AQ5
6-3/8% Sr Notes $100 40.0% of original
due 2014 principal amount
CUSIP No. 442488AS1
6-1/4% Sr Notes $200 40.5% of original
due 2015 principal amount
CUSIP No. 442488AU6
7-1/2% Sr Notes $300 41.0% of original
due 2016 principal amount
CUSIP No. 442488AZ5
6-1/4% Sr Notes $300 41.5% of original
due 2016 principal amount
CUSIP No. 442488AY8
8-5/8% Sr Notes $250 42.0% of original
due 2017 principal amount
CUSIP No. 442488BA9
K. Hovnanian Ent. Total Consideration if Acceptance
Senior Notes Tender Occurs After the Priority
to be Exchanged Early Tender Date Level
--------------- ----------------------- ----------
8% Senior Notes 46.5% of original 1
due 2012 principal amount
CUSIP No. 442488AL6
6-1/2% Sr Notes 39.5% of original 1
due 2014 principal amount
CUSIP No. 442488AQ5
6-3/8% Sr Notes 39.5% of original 1
due 2014 principal amount
CUSIP No. 442488AS1
6-1/4% Sr Notes 40.0% of original 2
due 2015 principal amount
CUSIP No. 442488AU6
7-1/2% Sr Notes 40.5% of original 3
due 2016 principal amount
CUSIP No. 442488AZ5
6-1/4% Sr Notes 41.0% of original 4
due 2016 principal amount
CUSIP No. 442488AY8
8-5/8% Sr Notes 41.5% of original 5
due 2017 principal amount
CUSIP No. 442488BA9
K. Hovnanian is offering to exchange properly tendered and
accepted Senior Notes listed such that the principal amount of New
Secured Notes issued in the exchange offer shall not exceed
$250.0 million. The aggregate principal amount of each issue of
Senior Notes that is exchanged for New Secured Notes in the
exchange offer will be determined in accordance with the
"Acceptance Priority Level" set, with Level 1 being the highest
priority.
After K. Hovnanian has accepted all Senior Notes properly tendered
(and not validly withdrawn) having a higher Acceptance Priority
Level than a particular issue of Senior Notes, if the remaining
portion of the Maximum Tender Amount is adequate to accept for
exchange some but not all of that particular issue of Senior
Notes, then K. Hovnanian will prorate the amount of Senior Notes
of such issue that will be accepted for exchange based on the
aggregate principal amount tendered of such issue and the Maximum
Tender Amount remaining. Even if 100% of the 8% 2012 Notes, the
61/2% 2014 Notes and 63/8% 2014 Notes are properly tendered (and
not validly withdrawn) the 8% 2012 Notes, the 61/2% 2014 Notes and
63/8% 2014 Notes will not be subject to proration due to the size
of the Maximum Tender Amount. The exchange offer is not
conditioned on a minimum principal amount of Senior Notes being
tendered or the issuance of a minimum principal amount of New
Secured Notes.
The exchange offer will expire at Midnight, New York City time, on
Nov. 24, 2008, unless extended or earlier terminated. Holders of
Senior Notes that properly tender and do not validly withdraw
their Senior Notes prior to or on the Early Tender Date, which is
5:00 p.m., New York City time, on Nov. 7, 2008, unless extended,
and whose Senior Notes are accepted for exchange will receive the
applicable Total Consideration set.
Holders of Senior Notes who properly tender their Senior Notes
after the Early Tender Date and on or before the Expiration Date
and whose Senior Notes are accepted for exchange will receive the
applicable Exchange Consideration. In addition, accrued interest
up to, but not including, the settlement date will be paid in cash
on all properly tendered and accepted Senior Notes.
About Hovnanian Enterprises
Hovnanian Enterprises Inc. (NYSE: HOV) -- http://www.khov.com/--
founded in 1959 by Kevork S. Hovnanian, chairman, is headquartered
in Red Bank, New Jersey. The company is one of the nation's
largest homebuilders with operations in Arizona, California,
Delaware, Florida, Georgia, Illinois, Kentucky, Maryland,
Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio,
Pennsylvania, South Carolina, Texas, Virginia and West Virginia.
Hovnanian Enterprises, Inc. is a member of the Public Home
Builders Council of America (PHBCA) -- http://www.phbca.org/-- a
nonprofit group devoted to improving understanding of the business
practices of America's largest publicly-traded home building
companies, the competitive advantages they bring to the home
building market, and their commitment to creating value for their
home buyers and stockholders. The PHBCA's 14 member companies
build one out of every five homes in the United States.
At April 30, 2008, the company's consolidated balance sheet showed
$3.96 billion in total assets, $3.07 billion in total liabilities,
$38.6 million in minority interest from inventory not owned,
$1.4 million in minority interest from consolidated joint
ventures, and $850.2 million in total stockholders' equity.
* * *
As reported in the Troubled Company Reporter on June 12, 2008,
Fitch Ratings affirmed Hovnanian Enterprises Inc.'s 'B-' Issuer
Default, 'CCC/RR6' Senior subordinated notes, and 'CCC-/RR6'
Series A perpetual preferred stock ratings. HOV's Rating Outlook
remains Negative.
HUNTSMAN CORP: Hexion Specialty Sues Credit Suisse & Deutsche
-------------------------------------------------------------
Peter Lattman at The Wall Street Journal reports that Hexion
Specialty Chemicals, Inc., filed on Wednesday a lawsuit against
Credit Suisse Group and Deutsche Bank AG for refusing to fund the
company's $6.5 billion purchase of chemicals maker Huntsman Corp.
As reported in the Troubled Company Reporter on Oct. 29, 2008,
Hexion Specialty received correspondence from counsel to
affiliates of Credit Suisse and Deutsche Bank stating that the
banks don't believe that the solvency opinion of American
Appraisal Associates and the solvency certificate of Huntsman
Corporation's Chief Financial Officer meet the condition of the
commitment letter. The banks said that as a result, they won't
fund the proposed closing of the merger.
WSJ states that Credit Suisse & Deutsche Bank stand to suffer
billions of dollars in losses if they back the transaction, and
they would have to resell bonds and loans at a significant
discount into a deteriorating debt market.
The lawsuit may result in a negotiated settlement with a deal at a
price lower than the original $28 a share, WSJ relates, citing
people familiar with the situation.
About Hexion Specialty
Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. --
http://www.hexionchem.com/-- is a producer of thermosetting
resins, or thermosets. Thermosets are a critical ingredient in
virtually all paints, coatings, glues and other adhesives produced
for consumer or industrial uses. Hexion Specialty Chemicals is
controlled by an affiliate of Apollo Management L.P.
Hexion Specialty Chemicals Inc.'s balance sheet at June 30, 2008,
showed total assets of $3.9 billion and total liabilities of $5.4
billion, resulting in a shareholders' deficit of
$1.5 billion.
About Huntsman
Headquartered in Salt Lake City, Utah, Huntsman Corporation
(NYSE: HUN) -- http://www.huntsman.com/-- is a manufacturer of
differentiated chemical products and inorganic chemical
products. The company operates in four segments: Polyurethanes,
Materials and Effects, Performance Products and Pigments. Its
products are used in a range of applications, including those in
the adhesives, aerospace, automotive, construction products,
durable and non-durable consumer products, electronics, medical,
packaging, paints and coatings, power generation, refining,
synthetic fiber, textile chemicals and dye industries. Its Latin
American operations are in Argentina, Brazil, Chile, Colombia,
Guatemala, Panama and Mexico.
At March 31, 2008, the company's consolidated balance sheet
showed US$8.68 billion in total assets, US$6.71 billion in total
liabilities, US$32.1 million in minority interests, and US$1.94
billion in total stockholders' equity.
* * *
As reported by the Troubled Company Reporter on Oct. 3, 2008,
Standard & Poor's Ratings Services said that its ratings on
Huntsman Corp. and Hexion Specialty Chemicals Inc. remain on
CreditWatch with negative implications, where they were placed on
July 5, 2007. The initial CreditWatch placement followed the
announcement of Hexion's proposed debt-financed acquisition of
Huntsman in a transaction valued at more than US$10 billion,
including assumed debt.
In June 2008, S&P said that its ratings on Huntsman Corp. (BB-
/Watch Neg/--) remain on CreditWatch with negative implications,
where they were placed on July 5, 2007.
As reported in the Troubled Company Reporter on Oct. 6, 2008,
Huntsman Corp. (Huntsman - Ba3 Corporate Family Rating - Rating
Under Review For Downgrade) issued a press release on Sept. 29,
2008 announcing the decision of the Delaware Court of Chancery to
enter judgment in favor of Huntsman denying all declarations
sought by Apollo Management, L.P. and Hexion Specialty Chemicals,
Inc., in their suit requesting that the Court excuse Hexion from
its obligation to consummate the pending transaction.
IESI CORP: Moody's Holds 'B1' Rating; Changes Outlook to Negative
-----------------------------------------------------------------
Moody's Investors Service affirmed the B1 corporate family,
probability of default and senior secured debt ratings of IESI
Corporation and changed the outlook to negative.
The negative outlook reflects the expected erosion of the current
modest cushion with the leverage covenant of the senior secured
credit facility. The permitted maximum Debt to EBITDA ratio steps
down at March 31, 2009, to 4.0 times, about the level which the
company's operations are currently producing. Moody's believes
the potential exists for a breach of the leverage covenant at the
March 31, 2009 measurement date unless IESI can sufficiently
reduce debt to ensure compliance, or obtain relief from the lower
maximum level. There is also the potential of declining
collection and disposal volumes and, or the loss of the ability to
maintain core price increases near recent levels that could result
from a further, broader weakening of U.S. economic activity, which
could pressure EBITDA generation.
The ratings affirmation considers leverage and cash-based coverage
of interest measures that are indicative of B1-rated corporate
families, and that have been maintained while executing an
acquisitive growth strategy. Moody's also expects an improving
free cash flow profile because of meaningfully lower dividend
distributions to its parent, BFI Canada Ltd, and lower capital
expenditures in 2009 because of above run-rate investment levels
in 2008. The expectation of lower dividends follows BFIC's
October 2008 conversion to a corporation from an income fund
pursuant to a plan of arrangement under Canadian Corporations Law,
which will result in a lower payout ratio and a reduced need for
cash from its U.S. subsidiary.
The B1 corporate family rating reflects the expectation that
IESI's current collection operations and disposal asset base
should produce a level of funds from operations that covers debt
service obligations with meaningful cushion. The ratings benefit
from the solid waste sector's typical resistance to recessionary
pressures, IESI's ability to achieve price increases that help
offset the combination of weaker volumes and cost inflation,
particularly for fuel, and it's relatively low exposure to
construction and demolition waste volumes. IESI achieves an
EBITDA margin that is competitive with those of its larger
industry peers, although its EBIT margin is relatively weak,
leading to weak EBIT to Interest coverage which constrains the
ratings. Liquidity is adequate.
The ratings could be downgraded if IESI is unable to maintain
access to its revolver or to demonstrate the ability to maintain a
level of covenant cushion that assures access to the full amount
of committed availability, without resorting to obtaining waivers
or amendments of the credit agreement's terms. An unexpected
decline in margins such that FFO + Interest to Interest was to
fall below 3.0 times or Debt to EBITDA was to approach 4.5 times
could also result in a downgrade as could the inability to
generate positive free cash flow. The outlook could be returned
to stable if IESI was to demonstrate the ability to maintain
adequate cushion with financial covenants such that access to the
revolver will be assured over the credit agreement's remaining
term. Additionally, EBIT to Interest that approaches 2.0 times,
Debt to EBITDA that approaches 3.7 times or sustained positive
free cash flow that approaches 3.0% of Debt could also lead to a
stable outlook.
Issuer: IESI Corporation
Outlook Actions:
-- Outlook, Changed To Negative From Stable
Loss Given Default Assessments:
-- Senior Secured Bank Credit Facility, Changed to LGD3, 45%
from LGD3, 46%
IESI Waste Corporation, based in Fort Worth, Texas, is a
vertically integrated provider of non-hazardous solid waste
management services, serving ten southern and northeastern U.S.
states.
INSMED INC: Has Until March 20, 2009 to Comply with NASDAQ Rule
---------------------------------------------------------------
Insmed Incorporated disclosed in a Securities and Exchange
Commission filing that on on Oct. 21, 2008, it received a letter
from NASDAQ informing the company that the exception granted in
the previously issued Panel Decision relating to the company's bid
price deficiency, which required it to demonstrate compliance with
NASDAQ's Minimum Bid Price Rule by evidencing a closing bid price
for Insmed's common stock of $1.00 or more for a minimum of ten
consecutive business days by Dec. 15, 2008, is extended to
March 20, 2009.
The company also disclosed, that as a result of the extension the
Special Meeting of Shareholders planned for Nov. 24, 2008, seeking
shareholder approval of a reverse split, should the Company need
it, has been postponed until further notice.
About Insmed
Insmed Incorporated, (NasdaqCM: INSM) -- http://www.insmed.com --
a biopharmaceutical company, develops and commercializes drugs to
treat metabolic diseases, endocrine disorders, and oncology. Its
lead product candidate IPLEX, a recombinant protein product
candidate, is in Phase II clinical trials for the treatment of
myotonic muscular dystrophy, the common form of adult-onset
muscular dystrophy. The company has license and collaborative
agreements with Fujisawa Pharmaceutical Co., Ltd. to use IGF-I
therapy for the treatment of extreme or severe insulin resistant
diabetes; and a license to Pharmacia AB's portfolio of regulatory
filings pertaining to rhIGF. Insmed was founded in 1999 and is
headquartered in Richmond, Virginia.
Going Concern Doubt
Richmond, Virginia-based Ernst & Young LLP raised substantial
doubt about the ability of Insmed Incorporated to continue as a
going concern after it audited the company's financial statements
for the year ended Dec. 31, 2007. The auditor pointed to the
company's recurring operating losses and negative cash flows from
operations.
The company said that its ability to continue as a going concern
is dependent upon its ability to take advantage of raising capital
through securities offerings, debt financing, and partnerships and
use these sources of capital to fund operations. Management is
focusing on raising capital through any one or more of these
options.
INTERSTATE BAKERIES: Seven Entities Balk at Disclosure Statement
----------------------------------------------------------------
Various entities filed with the U.S. Bankruptcy Court for the
Western District of Missouri their objection to Interstate
Bakeries Corporation and its debtor-affiliates' Disclosure
Statement.
A. Massachusetts Department of Revenue Objection:
The Massachusetts Department of Revenue states that the
Disclosure Statement is offered in support of a Plan of
Reorganization that does not treat unsecured priority tax claims
in accordance with Section 11269(a)(9)(c) of the Bankruptcy Code,
and thus, cannot be confirmed.
MDOR Commissioner Navjeet K. Bal relates that the Plan proposes
to entitle Allowed Priority Tax claimholders "to receive equal
cash payments on the last business day of every three-month
period following the Effective Date of the Plan, over a period
not exceeding six years after the assessment of the tax on which
the claim is based, totaling the principal amount of the Claim
plus simple interest on any outstanding balance from the
effective Date calculated at the interest rate available on 90-
Day U.S. Treasuries on the Effective Date."
Furthermore, Ms. Bal says that the Plan provides in general that
any disputed claim will not accrue interest, and no interest will
be paid on it from the Effective Date to the allowance of the
Claim. However, she continues, the Plan does not provide for the
treatment of priority tax claims that are in the same
circumstance.
B. U.S. Bank National Association Objection:
U.S. Bank National Association is the Indenture Trustee under the
terms of an Indenture dated as of Aug. 12, 2004, which it
entered into with Interstate Bakeries Corporation, as issuer, and
Interstate Brands Corporation, IBC Sales Corporation, IBC
Services, LLC, IBC Trucking, LLC and Baker's Inn Quality Baked
Goods, LLC, as subsidiary guarantors for the issuance of the 6%
Senior Convertible Notes due Aug. 15, 2014.
Mark T. Benedict, Esq., at Husch Blackwell Sanders LLP, in
Kansas City, Missouri, relates that U.S. Bank reserves its
rights to object to the approval of the Disclosure Statement,
because it fails to contain adequate information.
"Upon the filing of an Amended Plan and Amended Disclosure
Statement setting forth adequate information about the
Intercreditor Settlement, [U.S. Bank] hopes to withdraw this
Objection," Mr. Benedict tells the Court.
Furthermore, U.S. Bank reserves its rights to object to any
modifications of the Disclosure Statement.
C. The Official Committee of Unsecured Creditors Objection:
The Official Committee of Unsecured Creditors contends that the
Disclosure Statement does not provide "adequate information"
pursuant to Section 1125(a) of the Bankruptcy Code that will allow
creditors to decide whether to accept the proposed Plan.
D. UAW Local 2828 Objection:
UAW Local 2828, International Union, United Automobile, Aerospace
& Agricultural Implement Workers of America requests that the
Disclosure Statement accurately reflect the current state of its
negotiations with the Debtors.
According to Joseph J. Vitale, Esq., at Cohen, Weiss and Simon
LLP, in New York, IBC's Joint Plan of Reorganization depends, in
part, upon the request by Ripplewood Holdings L.L.C., as one of
the lenders, for the Debtors to secure certain changes in the
various collective bargaining agreements governing the Debtors'
employees, including their CBAs with the UAW.
Mr. Vitale says, the Disclosure Statement acknowledges the
Debtors' need to negotiate changes to the CBAs, but fails to
sufficiently state the status of the Debtors and the Union's
efforts.
E. The State Water Resources Control Board Objection:
The State Water Resources Control Board and the California
Regional Water Quality Control Board, Central Valley Region,
maintain that the Disclosure Statement "does not include adequate
information concerning the Debtors' environmental liabilities or
obligations" within the Region.
State Deputy Attorney General Marilyn H. Levin tells the Court
that, pursuant to the Porter-Cologne Water Quality Control Act,
the Central Valley Regional Board regulates water quality within
the Region. The California State Water Resources Control Board
is primarily responsible for the coordination and control of
water quality within the Central Valley Region.
F. Automotive Rentals, Inc Objection:
Automotive Rentals, Inc. is a party to a lease agreement dated
Jan. 4, 1990, with Interstate Bakeries Corporation, under
which IBC leases certain vehicles from ARI.
ARI contends that the Disclosure Statement fails to provide
adequate information as required by Section 1125 of the
Bankruptcy Code.
Richard A. Aguilar, Esq., at McGlinchey Stafford, PLLC, in New
Orleans, Louisiana, points out that the Disclosure Statement is
"deficient" because it does not disclose, explain or provide:
-- certain exhibits and appendices contained in the Plan,
through which ARI will determine the treatment of its Lease
with the Debtors, and sufficiency of the information;
-- the "Enterprise Value of the Reorganized Debtors" as
referred to in their valuation section, which is important
in determining whether the Plan is capturing the
appropriate value of the businesses and assets of the
Debtors;
-- copies of the commitment letter and the term loan facility
commitment documents concerning the Debtors' Plan funding
agreements with certain lenders, and a description of the
Series A, B and C Warrants, which will assist creditors in
deciding on the Plan that essentially (i) sells the Debtors
to investors, and (ii) transfers a portion of the ownership
of the Debtors to certain secured creditors;
-- a description of the Cure that the Debtors propose to pay
in connection with any lease or executory contract that
they will assume pursuant to the Plan, so that lessors have
an indication of the amount of Cure that is proposed by the
Debtors prior to the Confirmation Date; and
-- whether the provision concerning the "Surrender of
Securities and Instruments" is applicable to lessors like
ARI.
G. Sun-Maid Growers of California Objection:
Sun-Maid Growers of California alleges that the Disclosure
Statement fails to provide Sun-Maid with adequate information with
respect to the Debtors' intentions regarding any Sun-Maid
executory contracts.
John J. Cruciani, Esq., at Blackwell Sanders LLP, in Kansas City,
Missouri, relates that the Debtors and Sun-Maid are parties to
one or more executory contracts, certain of which have been
modified or terminated.
For these reasons, the parties ask the Court to deny approval of
the Disclosure Statement.
About IBC
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh-baked
bread and sweet goods, under various national brand names,
including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and
Drake's(R). Currently, IBC employs more than 25,000 people and
operates 45 bakeries, as well as approximately 800 distribution
centers and approximately 800 bakery outlets throughout the
country.
The company and eight of its subsidiaries and affiliates filed for
chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6% senior subordinated convertible notes due Aug. 15, 2014) in
total debts.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 5, 2007. Their exclusive period to file a chapter 11 plan
expired on Nov. 8, 2007. On Jan. 25, 2008, the Debtors filed
their First Amended Plan and Disclosure Statement. On Jan. 30,
2008, the Debtors received court approval of the first amended
Disclosure Statement. IBC did not receive any qualifying
alternative proposals for funding its plan of reorganization in
accordance with the court-approved alternative proposal
procedures. As a result, no auction was held on Jan. 22, 2008, as
would have been required under those procedures.
The Debtors, on Oct. 4, 2008, filed another Plan of
Reorganization, which contemplates IBC's emergence from Chapter 11
as a stand-alone company. The filing of the Plan was made in
connection with the plan funding commitments, on Sept. 12, 2008,
from an affiliate of Ripplewood Holdings L.L.C. and from
Silver Point Finance, LLC, and Monarch Master Funding Ltd.
(Interstate Bakeries Bankruptcy News, Issue No. 114; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
INTERSTATE BAKERIES: Court OKs Plan Funding Commitment Contracts
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Missouri
authorized, on Oct. 22, 2008, Interstate Bakeries Corporation and
its debtor-affiliates to enter into, execute, deliver, perform
under, consummate and implement the Investment Agreement with IBC
Investors I, LLC, dated as of Sept. 26, 2008.
IBC Investors is an affiliate of Ripplewood Holdings L.L.C.,
which, pursuant to an equity commitment letter, will commit a
cash infusion of $130,000,000, as an investment to be made in
Reorganized IBC in connection with the confirmation and
consummation of a Chapter 11 plan of reorganization.
The Court authorized the Debtors to pay administrative expense
claims, particularly (i) 50% of the Investors Equity Commitment
Fee and 50% of the Investors Debt Commitment Fee, and (ii) the
costs and expenses under the Equity Commitment Fee Letter,
whether or not the transactions contemplated in the Equity
Commitment Letter is consummated. The amounts paid will be non-
refundable, Judge Venters ruled.
Pursuant to the Investment Agreement, IBC Investors agrees, on
the Plan Effective Date, to, among other things:
(a) invest $44,200,000 in cash in the Reorganized IBC in
exchange for 17% of New Common Stock; and
(b) purchase $85,800,000 in new fourth lien convertible
secured notes, which will be issued by the Reorganized
Company and will be convertible into New Common Stock,
representing 33% of the New Common Stock.
Under the Investment Agreement, IBC Investors will receive Series
A Warrants with a strike price of $12.50 and representing 15% of
the New Common Stock on a fully-diluted basis, as calculated as
of the Effective Date.
The Debtors will use the $130,000,000 of proceeds from the
transactions contemplated by the Agreement, along with proceeds
from the debt financing facilities contemplated by the Equity
Commitment Letter and the Investment Agreement, to (i) repay all
claims under the Second Amended Debtor-in-Possession Facility;
(ii) make other payments required to be made on the effective
date of a Plan, and (iii) conduct their post-reorganization
operations.
Judge Venters also authorized the Debtors to amend, modify or
supplement the Investment Agreement -- among others, as defined
in the Equity Commitment Letter -- without further Court order,
as may be necessary to implement the terms of a settlement
reached among the Debtors, the Official Committee of Unsecured
Creditors, certain of the Senior Secured Creditors and other
parties-in-interest.
To recall, the Debtors reached an agreement with general
unsecured claimants and equity interest holders under which the
Company and Ripplewood Holdings "agreed to give the unsecured
creditors some cash and pay up to $890,000 in their expenses,
plus other considerations," in exchange for their agreement to
support the Plan. Initially, the two Classes would not receive
any distribution under the Plan.
The Plan also contemplates that the Senior Secured Creditors will
convert their funded prepetition Debt, pursuant to the Plan, into
(i) $147,000,000 of new third lien notes; and (ii) $85,800,000 of
New Convertible Debt convertible into New Common Stock,
representing 33% of the New Common Stock.
A full-text copy of the Investment Agreement is available for
free at http://ResearchArchives.com/t/s?344f
Prior to the Court's approval of the Investment Agreement, the
Debtors were authorized to enter into the revolving loan or ABL
Facility Commitment Letter with General Electric Capital
Corporation and GE Capital Markets, Inc., for $125,000,000, and
the a term loan commitment letter with Silver Point and Monarch
Master Funding Ltd., for a commitment of $339,000,000.
Hence, subsequent to the approval of the Investment Agreement,
the Debtors will be provided with an aggregate of $594,000,000 in
investment facility, which is hinged upon their emergence from
the Chapter 11 cases.
About IBC
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh-baked
bread and sweet goods, under various national brand names,
including Wonder(R), Baker's Inn(R), Merita(R), Hostess(R) and
Drake's(R). Currently, IBC employs more than 25,000 people and
operates 45 bakeries, as well as approximately 800 distribution
centers and approximately 800 bakery outlets throughout the
country.
The company and eight of its subsidiaries and affiliates filed for
chapter 11 protection on Sept. 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors
in their restructuring efforts. When the Debtors filed for
protection from their creditors, they listed $1,626,425,000 in
total assets and $1,321,713,000 (excluding the $100,000,000 issue
of 6% senior subordinated convertible notes due Aug. 15, 2014) in
total debts.
The Debtors' filed their Chapter 11 Plan and Disclosure Statement
on Nov. 5, 2007. Their exclusive period to file a chapter 11 plan
expired on November 8, 2007. On Jan. 25, 2008, the Debtors filed
their First Amended Plan and Disclosure Statement. On Jan. 30,
2008, the Debtors received court approval of the first amended
Disclosure Statement. IBC did not receive any qualifying
alternative proposals for funding its plan of reorganization in
accordance with the court-approved alternative proposal
procedures. As a result, no auction was held on Jan. 22, 2008, as
would have been required under those procedures.
The Debtors, on Oct. 4, 2008, filed another Plan of
Reorganization, which contemplates IBC's emergence from Chapter 11
as a stand-alone company. The filing of the Plan was made in
connection with the plan funding commitments, on Sept. 12,
2008, from an affiliate of Ripplewood Holdings L.L.C. and from
Silver Point Finance, LLC, and Monarch Master Funding Ltd.
(Interstate Bakeries Bankruptcy News, Issue No. 114; Bankruptcy
Creditors' Service Inc., http://bankrupt.com/newsstand/or
215/945-7000)
IRVINE SENSORS: Looney Claims Accelerated Earnout Payment
---------------------------------------------------------
Irvine Sensors Corporation disclosed in a Securities and Exchange
Commission filing that on on Oct. 17, 2008, it received a notice
from Timothy Looney purporting to accelerate payment of the
balance of the earnout consideration under the Stock Purchase
Agreement dated Dec. 30, 2005, as amended, with Mr. Looney as a
result of the recent public UCC foreclosure sale of all the assets
of Optex Systems, Inc., a wholly owned subsidiary of the company.
Mr. Looney alleges that the balance of the earnout consideration
that is due and payable is $3.9 million. While the company does
not agree with Mr. Looney's allegations, there can be no assurance
that Mr. Looney's allegations will not be successful.
About Irvine Sensors
Based in Costa Mesa, Calif., Irvine Sensors Corporation
(Nasdaq: IRSN) -- http://www.irvine-sensors.com/-- is a vision
systems company engaged in the development and sale of
miniaturized infrared and electro-optical cameras, image
processors and stacked chip assemblies, the manufacture and sale
of optical systems and equipment for military applications through
its Optex subsidiary and research and development related to high
density electronics, miniaturized sensors, optical interconnection
technology, high speed network security, image processing and low-
power analog and mixed-signal integrated circuits for diverse
systems applications.
Going Concern Doubt
The company generated net losses in fiscal 2005, fiscal 2006,
fiscal 2007 and the 39 weeks ended June 29, 2008. At June 29,
2008, the company's accumulated deficit was $156,444,700.
The company said it engaged an investment banking firm in June
2008 to assist it in raising additional capital. Failure to
successfully raise capital would have a material and adverse
effect on the company's financial condition, which may result in
defaults under its loan and preferred stock instruments. The
company said these conditions create substantial doubt about its
ability to continue as a going concern.
Balance Sheet
At June 29, 2008, the company's consolidated balance sheet showed
$31,519,400 in total assets, $28,794,000 in total liabilities, and
$2,725,400 in total stockholders' equity.
The company's consolidated balance sheet at June 29, 2008, also
showed strained liquidity with $12,104,000 in total current assets
available to pay $12,667,800 in total current liabilities. The
decline in working capital was substantially due to the
reclassification of the $2.0 million debt owed by Optex Systems
Inc., a wholly owned subsidiary, to TWL Group, LP, an entity owned
by Timothy Looney, that is due upon the earlier of Feb. 27, 2009,
or sixty days after all debt to the company's senior lenders is
refinanced or retired in full.
ISCHUS CDO: Moody's Junks Ratings on $28MM Class A-2 Notes
----------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade the ratings of the three classes of notes
issued by Ischus CDO II, Ltd.:
Class Description: $214,000,000 Class A-1A First Priority Senior
Secured Floating Rate Notes Due 2040
-- Prior Rating: Aaa
-- Current Rating: B2, on review for possible downgrade
-- Prior Rating Action Date: 8/26/2005
Class Description: $50,000,000 Class A-1B First Priority Senior
Secured Floating Rate Delayed Draw Notes Due 2040
-- Prior Rating: Aaa
-- Current Rating: B2, on review for possible downgrade
-- Prior Rating Action Date: 8/26/2005
Class Description: $28,000,000 Class A-2 Second Priority Senior
Secured Floating Rate Notes Due 2040
-- Prior Rating: Aaa, on review for possible downgrade
-- Current Rating: Caa3, on review for possible downgrade
-- Prior Rating Action Date: 4/30/2008
Additionally, Moody's has downgraded the ratings of the three
classes of notes:
Class Description: $55,000,000 Class B Third Priority Senior
Secured Floating Rate Notes Due 2040Prior Rating: Aa2, on review
for possible downgrade
-- Prior Rating: Aa2, on review for possible downgrade
-- Current Rating: Ca
-- Prior Rating Action Date: 4/30/2008
Class Description: $11,000,000 Class C Fourth Priority Senior
Secured Deferrable Floating Rate Notes Due 2040
-- Prior Rating: A2, on review for possible downgrade
-- Current Rating: C
-- Prior Rating Action Date: 4/30/2008
Class Description: $18,000,000 Class D Mezzanine Secured
Deferrable Floating Rate Notes Due 2040
-- Prior Rating: Baa2, on review for possible downgrade
-- Current Rating: C
-- Prior Rating Action Date: 4/30/2008
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
ISTANA HIGH: Moody's Lowers Ratings on Five Classes of Notes
------------------------------------------------------------
Moody's Investors Service has downgraded ratings of five classes
of notes issued by Istana High Grade ABS CDO I, Ltd., and left on
review for possible further downgrade the ratings of one of these
classes. The notes affected by the rating action are:
Class Description: $600,000,000 Class A-1 First Priority Delayed
Draw Floating Rate Notes Due 2048
-- Prior Rating: A2, on review for possible downgrade
-- Prior Rating Date: 5/23/2008
-- Current Rating: Caa2, on review for possible downgrade
Class Description: $250,000,000 Class A-2 Second Priority Floating
Rate Notes Due 2048
-- Prior Rating: Caa2, on review for possible downgrade
-- Prior Rating Date: 5/23/2008
-- Current Rating: C
Class Description: $50,000,000 Class A-3 Third Priority Floating
Rate Notes Due 2048
-- Prior Rating: Ca
--Prior Rating Date: 5/23/2008
-- Current Rating: C
Class Description: $50,000,000 Class A-4 Fourth Priority Floating
Rate Notes Due 2048
-- Prior Rating: Ca
-- Prior Rating Date: 5/23/2008
-- Current Rating: C
Class Description: $21,500,000 Class B Fifth Priority Floating
Rate Notes Due 2048
-- Prior Rating: Ca
-- Prior Rating Date: 5/23/2008
-- Current Rating: C
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
KENT FUNDING: Moody's Junks $15MM Class A-2 Notes Ratings
---------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade the ratings of the three classes of notes
issued by Kent Funding, Ltd.:
Class Description: Funding Notes
-- Prior Rating: Aaa
-- Current Rating: Ba1, on review for possible downgrade
-- Prior Rating Action Date: 5/20/2008
Class Description: $60,000,000 Class A-1 Floating Rate Notes Due
2040
-- Prior Rating: Aaa
-- Current Rating: Ba1, on review for possible downgrade
-- Prior Rating Action Date: 6/30/2005
Class Description: $15,000,000 Class A-2 Floating Rate Notes Due
2040
-- Prior Rating: Aa2
-- Current Rating: Caa3, on review for possible downgrade
-- Prior Rating Action Date: 6/30/2005
Moody's has also downgraded the ratings of these class of notes:
Class Description: $18,500,000 Class B Floating Rate Subordinate
Notes Due 2040
-- Prior Rating: Caa3, on review for possible downgrade
-- Current Rating: C
-- Prior Rating Action Date: 4/16/2008
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
KRISPY KREME: Amends Form S-3 to Delay Share Registration
---------------------------------------------------------
Krispy Kreme Doughnuts Inc. has filed with the Securities and
Exchange Commission an amendment to its Registration Statement No.
333-152944, relating to the proposed issuance of up to 4,296,523
shares of the company's common stock, no par value, which are
issuable upon the exercise of 4,296,523 warrants issued pursuant
to a warrant agreement with American Stock Transfer & Trust
Company.
The company amends the Registration Statement on such date or
dates as may be necessary to delay its effective date until it
files a further amendment which specifically states that the
statement becomes effective in accordance with the Securities Act
of 1933 or until the statement becomes effective on such date as
the Commission may determine.
About Krispy Kreme
Headquartered in Winston-Salem, North Carolina, Krispy Kreme
Doughnuts Inc. (NYSE: KKD) -- http://www.KrispyKreme.com/--
is a retailer and wholesaler of doughnuts. The company's
principal business, which began in 1937, is owning and franchising
Krispy Kreme doughnut stores where over 20 varieties of doughnuts
are made, sold and distributed and where a broad array of coffees
and other beverages are offered.
As of Aug. 3, 2008, there were 494 Krispy Kreme stores operated
systemwide in the United States, Australia, Canada, Hong Kong,
Indonesia, Japan, Kuwait, Mexico, the Philippines, Puerto Rico,
Qatar, Saudi Arabia, South Korea, the United Arab Emirates and the
United Kingdom, of which 100 were owned by the company and 394
were owned by franchisees. Of the 494 stores, 286 were factory
stores and 208 were satellites; 234 stores were located in the
United States and 260 were located in other countries.
* * *
Standard & Poor's placed Krispy Kreme Doughnuts Inc.'s long term
foreign and local issuer credit ratings at 'B-' in September 2007.
The ratings still hold to date with a negative outlook.
LANCELOT INVESTORS: Seek Bankruptcy Amid $1.5-Bil. Petters Loss
---------------------------------------------------------------
Erik Larson of Bloomberg News reports that five hedge funds and 14
affiliates of Lancelot Investment Management, LLC, filed for
Chapter 7 bankruptcy protection on Oct. 20, 2008, with the U.S.
Bankruptcy Court for the Northern District of Illinois (Lead Case
No. 08-28225), blaming a $1.5 billion loss in the collapse of
Petters Group Worldwide, LLC, which is run by Thomas Petters who
is charged with fraud.
The funds were taken over by a government-appointed trustee, who
will oversee liquidation of the assets, according to the report.
Lancelot Investment was sued in state court in Chicago this month
by investors and a Royal Bank of Scotland Group Plc unit over
claims it failed to confirm purchase orders and the existence of
inventory that served as collateral for loans to Petters Group,
according to the report. Investors in two of the funds are
demanding $500 million in damages in one suit, according to the
report. The Royal Bank of Scotland unit is seeking at least $50
million in another, according to the report.
The bankruptcy filing puts those cases on hold, according to the
report.
LANDSOURCE COMMUNITIES: Barclays Proposes Selling Mare Island
-------------------------------------------------------------
Jessica A. York at Times-Herald reports that Barclays Bank, the
major backer for LandSource Communities Development LLC, has
presented to the U.S. Bankruptcy Court for the District of
Delaware a proposal to auction the company's Mare Island property.
According to Times-Herald, Barclays' proposal was aimed at getting
LandSource Communities out of bankruptcy. The report says that
Barclays agreed to supply LandSource Communities and its
affiliates with operating capital through June 2008.
Times-Herald quoted Vallejo's Assistant City Manager/Community
Development Director Craig Whittom as saying, "If there is a sale
of the property, that would be . . . it's not clear whether that
would have any impact on our agreement and the development of the
property. It's still relatively early in the bankruptcy process,
and it's uncertain whether that strategy will be acceptable to the
court."
Times-Herald states that development agreements the city has with
LandSource Communities' Lennar Mare Island are associated with the
property, and would likely stay in place, regardless of the owner,
unless the Court ruled otherwise. The report says that Lennar
Mare Island has a master developer status for about 650 acres on
Mare Island, and has been charged with preparing property for
development in the past decade. According to the report, Lennar
Mare Island retains ownership of 1,100 lots planned for
residential development and millions of square feet for potential
industrial and commercial development.
Times-Herald reports that Lennar Mare Island spokesperson Jason
Keadjian said that LandSource Communities' bankruptcy hasn't
affected the island's environmental cleanup, and money for the
cleanup remains in a separate fund that the Navy set up. Mr.
Keadjian also said that other land preparation and development is
also ongoing, Times-Herald relates.
A hearing on Barclays' proposal is set for Nov. 5, Times-Herald
states.
About LandSource Communities
LandSource Communities Development LLC, which operates in Arizona,
California, Florida, New Jersey, Nevada and Texas, is involved in
the planning and development of master planned communities and
transforming undeveloped land into ready-to-build home sites and
commercial properties. With the exception of one development
project in Marina del Rey, California, LandSource does not build
homes or commercial properties.
LandSource and 20 of its affiliates filed for chapter 11
bankruptcy protection before the U.S. Bankruptcy Court for the
District of Delaware on June 8, 2008 (Lead Case No. 08-11111).
The Debtors are represented by Marcia Goldstein, Esq., at Weil
Gotshal & Manges in New York, and Mark D. Collins, Esq., at
Richards Layton & Finger in Wilmington, Delaware. Lazard Freres &
Co. acts as the Debtors' financial advisors, and Kurtzmann Carson
Consultants serves as the Debtors' notice and claims agent.
According to the Troubled Company Reporter on May 22, 2008,
LandSource sought help from its lender consortium to restructure
$1.24 billion of its debt. LandSource engaged a 100-bank lender
group led by Barclays Capital Inc., which syndicates LandSource's
debt. LandSource had received a default notice on that debt from
the lender group after it was not able to timely meet its payments
during mid-April. However, LandSource failed to reach an
agreement with its lenders on a plan to modify and restructure its
debt, forcing it to seek protection from creditors.
(LandSource Bankruptcy News, Issue No. 15;
http://bankrupt.com/newsstand/or 215/945-7000).
LEVEL 3 COMMS: Posts $4 MM Net Loss for Quarter Ended September 30
------------------------------------------------------------------
Level 3 Communications Inc. posted $4 million in net losses on
$902 million in net revenues for the third quarter ended Sept. 30,
2008, compared with $23 million in net profit on $765 million in
net revenues for same period ended Sept. 30, 2007.
The company posted $19 million in net losses on $2.58 billion in
net revenues for the nine months ended Sept. 30, 2008, compared
with $22 million in net profit on $2.1 billion in net revenues for
same period ended Sept. 30, 2007.
Level 3's balance sheet as of Sept. 30, 2008, showed $6.08 billion
in total assets, $4.1 billion in total liabilities, and
$1.28 million in shareholders' equity.
Full-text copy of the Level 3's financial results for the third
quarter and nine months ended Sept. 30, 2008, is available free of
charge at: http://researcharchives.com/t/s?3448
About Level 3 Communications
Headquartered in Broomfield. Colorado, Level 3 Communications Inc.
(Nasdaq: LVLT) -- http://www.level3.com/-- is a provider of
fiber-based communications services. Level 3 offers a portfolio
of metro and long haul services over an end-to-end fiber network,
including transport, data, Internet, content delivery and voice.
* * *
Moody's Investor's Service assigned these ratings to Level 3
Communications Inc. in June 2006: 'Caa1' long-term corporate
family rating, 'Caa2' senior unsecured debt rating, 'Caa3'
subordinated debt rating, 'Caa1' probability of default rating and
gave a stable outlook. The rating actions still hold to date.
LEVITT & SONS: Wants $1.1MM Property Sale to Easlan Capital OK'd
---------------------------------------------------------------
The Wachovia Debtors and their chief administrator Soneet R.
Kapila ask the United States Bankruptcy Court for the Southern
District of Florida to conditionally authorize the sale of a
certain parcel of property to Easlan Capital of Atlanta, Inc.,
for $1,100,000, subject to higher or better offers.
Levitt and Sons of Hall County, LLC, owns Seasons on Lake Lanier,
a planned community in Gainesville, Georgia, consisting
primarily of single family homes. The Development also includes
15-2/3 acres of property that LAS Hall County has designated for
commercial use.
The Commercial Property is separated from the residential portion
of the Development by a distance of at least 700 feet and by
large ravines and stormwater management facilities. The
Commercial Property is oriented toward the commercially developed
intersection of Browns Bridge Road and McEver Road.
According to Leslie Gern Cloyd, Esq., at Berger Singerman, P.A.,
in Fort Lauderdale, Florida, the Wachovia Debtors began marketing
the Commercial Property before the Petition Date. Easlan is
offering $1,100,000 for 10 acres of the Commercial Property.
Ms. Cloyd tells the Court that Easlan's offer has been the best
offer made as of Oct. 10, 2008.
The Wachovia Debtors and Mr. Kapila have determined that a sale
of the Parcel to Easlan, subject to better or higher offers, is
in the best interest of the Wachovia Debtors' estates and
creditors, because it would maximize the asset value and reduce
the outstanding balance under the DIP Financing Agreement.
The sale of the Parcel will not disrupt the development of the
residential community at Seasons on Lake Lanier, Ms. Cloyd
assures the Court.
LAS Hall County and Easlan originally entered into an agreement
for the purchase Agreement for the 10-acre Parcel for
$1.8 million in mid-2008. However, in September 2008, Easlan said
it cannot move forward with the sale. The parties have entered
into a Second Amended and Restated Purchase and Sale Agreement,
effective Sept. 25, 2008, according to Ms. Cloyd.
The material terms of the Amended Purchase Agreement are:
(a) The assets to be sold and transferred to Easlan include
(i) LAS Hall County's fee simple interest in the Parcel,
(ii) appurtenances pertaining to the Parcel, (iii) any
rights of LAS Hall County to surveys, plans, plats, soil
tests, and engineering studies, among other things, and
(iv) any improvements located on the Parcel.
(b) The net aggregate purchase price for the Parcel is
$1,100,000. Easlan has paid $50,000 in escrow as an
earnest money deposit. At closing, the total deposit will
be delivered to LAS Hall County by the escrow agent and
will be credited against the Purchase Price.
(c) The Parcel and related assets will be transferred, free
and clear of any liens, claims, interests, and
encumbrances other than certain "acceptable exceptions."
(d) LAS Hall County has until Nov. 6, 2008, to obtain entry of a
sales procedures order, and until Nov. 9, 2008, to obtain a
final sale order from the Court.
(e) Easlan or the ultimate purchaser of the Parcel will have
no later than Nov. 14, 2008, to close the sale.
A full-text copy of the LAS Hall County/Easlan Second Amended and
Restated Purchase Agreement is available for free at:
http://ResearchArchives.com/t/s?344e
Sales Procedures
To govern the submission of competing bids for all or a portion
of the Parcel and for the conduct of the auction and sale, the
Debtors and Mr. Kapila propose uniform sale procedures. An
auction will be conducted on these terms and conditions:
(a) Any party desiring to review information with respect to
the Parcel or the Commercial Property in order to
participate as a bidder will execute and deliver a
confidentiality agreement.
(b) Any party desiring to purchase the Parcel or any and all
portions of the Commercial Property will deliver to the
Chief Administrator's counsel by two business days before
the auction a bid package to be considered a "Qualified
Bidder."
(c) To be considered a Qualified Bidder, the bid package must
contain:
* $50,000 cash deposit to be deposited in the trust
account of the Chief Administrator's counsel,
* proof acceptable to the Chief Administrator that the
bidder has the financial ability to consummate the
proposed transaction in a cash sale if its bid were
accepted,
* a proposed written purchase contract, with the Competing
Agreement stating with specificity the assets to be
acquired, and
* a computer-generated redline showing the differences
between Easlan's Purchase Agreement and the Competing
Agreement.
(d) The Chief Administrator will identify at the auction all
Qualified Bidders who timely submitted written bids. Only
those bidders will be entitled to bid at the auction,
unless Wachovia Bank National Association or the Chief
Administrator determines otherwise.
(e) The initial opening bid at the auction is $1,100,000. A
competing bid must be at least $100,000 higher in value
than the Initial Opening Bid.
(f) Bids, as modified by a Qualified Bidder at the auction,
will remain open and irrevocable through the conclusion of
the auction. Acceptance of the successful bid will be
subject to entry of a Court order authorizing the Debtor
to consummate the sale.
(g) Both the Successful Bid and the second highest bid, as
determined by the Chief Administrator, will remain open
and irrevocable for a period of 17 calendar days after the
entry of a final sale order.
(h) If bidders that bid on mutually exclusive portions of the
Commercial Property are determined to be the best bids,
there may be multiple Successful Bidders and multiple
First Alternates.
(i) All deposits, except those of the Successful Bidder and
the First Alternate, will be returned to each failed
bidder. No interest will be due. The deposit of the
First Alternate will be returned after the closing of the
sale to the Successful Bidder.
(j) If no Qualified Bid is received, no auction will be held.
The Initial Opening Bid of Easlan will be deemed the
Successful Bid.
The auction will be held at the offices of Burr & Forman LLP, in
Atlanta, Georgia, on a date to be specified.
Ms. Cloyd clarifies that the purchaser of the Commercial Property
or any portion of it will not inherit or succeed to the
obligations of LAS Hall County or its affiliates, nor will the
purchaser have any successor liability of any type whatsoever.
LAS Hall County also proposes to entitle Easlan to a $50,000
break-up fee in the event the Chief Administrator sells the
Property to any other entity.
In the event Easlan is not the Successful Bidder at the auction,
it will submit to the counsel for the Wachovia Debtors, the Chief
Administrator, and the Official Committee of Unsecured Creditors,
as well as to the assistant United States Trustee, evidence
supporting costs incurred for which Easlan seeks a break-up fee,
according to Ms. Cloyd.
All sales proceeds, other than applicable closing costs and any
break-up fee, will be paid at closing to Wachovia Bank to be
applied in accordance with the Court's DIP Financing Order.
The Debtors ask the Court to approve the proposed sales
procedures, bid protections, and break-up fee for Easlan. They
also ask the Court to set a hearing date for the approval of the
sale.
About Levitt and Sons
Headquartered in Fort Lauderdale, Florida, Levitt and Sons LLC --
http://www.levittandsons.com/-- is the homebuilding subsidiary of
Levitt Corporation (NYSE:LEV). Levitt Corp. --
http://www.levittcorporation.com/-- together with its
subsidiaries, operates as a homebuilding and real estate
development company in the southeastern United States. The
company operates in two divisions, homebuilding and land. The
homebuilding division primarily develops single and multi-family
homes for adults and families in Florida, Georgia, Tennessee, and
South Carolina. The land division engages in the development of
master-planned communities in Florida and South Carolina.
Levitt and Sons LLC and 38 of its homebuilding affiliates filed
for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead
Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at
Berger Singerman, P.A., represent the Debtors in their
restructuring efforts. The Debtors chose AP Services, LLC as
their crisis managers, and Kurtzman Carson Consultants, LLC as
their claims and noticing agent. Levitt Corp., the parent
company, is not included in the bankruptcy filing.
The Debtors have filed a Chapter 11 joint plan of liquidation.
(Levitt and Sons Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000).
LEVITT & SONS: Wachovia Balks at Exclusivity Periods Extension
--------------------------------------------------------------
On behalf of Wachovia Bank, National Association, Robert N.
Gilbert, Esq., at Carlton Fields, P.A., in West Palm Beach,
Florida, asserts that several factors weigh against a further
extension of Levitt and Sons LLC, and its debtor-affiliates'
exclusivity periods.
The United States Bankruptcy Court for the Southern District of
Florida has not approved, and has indicated that it will not
approve in its current form, the Debtors' Disclosure Statement.
The Debtors now seek to extend through Jan. 31, 2009, their
Exclusive Solicitation Period.
Mr. Gilbert contends that the Debtors have already sought and
received three extensions of exclusivity and are no closer to
confirming a plan than they were six months ago. The Debtors'
creditors should not be further prejudiced by an additional
extension of exclusivity, he emphasizes, especially given that
the Debtors have been in bankruptcy for almost a year, he
asserts.
Absent exclusivity, Mr. Gilbert points out, competitive plans may
be submitted that would ultimately help both the Debtors and the
creditors on a going forward basis.
Moreover, Mr. Gilbert cites, the Debtors' current extension
request specifies no deadline for filing an amended plan. He
notes that if an amended Plan is not filed by early November 2008,
there is no way that the Debtors can solicit acceptances and
confirm their Plan before the expiration of the requested Jan. 31,
2009 deadline.
Wachovia Bank thus asks the Court to deny the Debtors' extension
request.
Mr. Gilbert says that by denying the Debtors' request, the Court
increases the odds that a plan will be confirmed by Jan. 31,
2009, whether it is the Debtors' Plan or a competing creditor's
plan.
The Court is set to convene a hearing on Nov. 3, 2008, to consider
the Debtors' request.
About Levitt and Sons
Headquartered in Fort Lauderdale, Florida, Levitt and Sons LLC --
http://www.levittandsons.com/-- is the homebuilding subsidiary of
Levitt Corporation (NYSE:LEV). Levitt Corp. --
http://www.levittcorporation.com/-- together with its
subsidiaries, operates as a homebuilding and real estate
development company in the southeastern United States. The
company operates in two divisions, homebuilding and land. The
homebuilding division primarily develops single and multi-family
homes for adults and families in Florida, Georgia, Tennessee, and
South Carolina. The land division engages in the development of
master-planned communities in Florida and South Carolina.
Levitt and Sons LLC and 38 of its homebuilding affiliates filed
for Chapter 11 protection on Nov. 9, 2007 (Bankr. S.D. Fla. Lead
Case No. 07-19845). Paul Singerman, Esq. and Jordi Guso, Esq., at
Berger Singerman, P.A., represent the Debtors in their
restructuring efforts. The Debtors chose AP Services, LLC as
their crisis managers, and Kurtzman Carson Consultants, LLC as
their claims and noticing agent. Levitt Corp., the parent
company, is not included in the bankruptcy filing.
The Debtors have filed a Chapter 11 joint plan of liquidation.
(Levitt and Sons Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service Inc.; http://bankrupt.com/newsstand/or
215/945-7000).
LONG BEACH: Moody's Cuts Three Certificates Ratings to 'Ca'
-----------------------------------------------------------
Moody's Investors Service has downgraded 3 certificates from a
transaction issued by Long Beach Mortgage Loan Trust. The
transaction is backed by second lien loans. The certificates were
downgraded because the bonds' credit enhancement levels, including
excess spread and subordination were low compared to the current
projected loss numbers at the previous rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second
collateral. Substantial pool losses of over the last few months
have eroded credit enhancement available to the mezzanine and
senior certificates. Despite the large amount of write-offs due
to losses, delinquency pipelines have remained high as borrowers
continue to default.
Issuer: Long Beach Mortgage Loan Trust 2006-A
-- Cl. A-1, Downgraded to Ca from Caa2
-- Cl. A-2, Downgraded to Ca from Caa3
-- Cl. A-3, Downgraded to Ca from Caa3
MEDICOR LTD: Taps Epiq Bankruptcy as Claims Agent
-------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware authorized
MediCor Ltd. and its debtor-affiliates to employ Epiq Bankruptcy
Solutions LLC as their claims, noticing and balloting agent.
The Debtors also ask the Court to direct The Trumbull Group to
provide Epiq Bankruptcy all documents to facilitate the transition
of services to Epiq Bankruptcy. In 2007, the Debtors retained
Trumbull Group as their claims agent.
The firm will:
a) prepare and serve required notice in these Chapter 11 cases
including:
-- notices of objections to claims;
-- notices of hearings on a disclosure statement and
confirmation of a Chapter 11 plan; and
-- other miscellaneous notices as the Debtors may deem
necessary or appropriate for an orderly administration
of these Chapter 11 cases;
b) assist with the publication of required notices, as
necessary;
c) prepare for filing with the Clerk's office an affidavit of
services that includes (i) a copy of the notice served, (ii)
an alphabetical list of persons on whom the notice was
served along with their addresses and (iii) the date and
manner of service;
d) maintain copies of all proofs of claim and proofs of interest
filed in these cases;
e) maintain official claims registers in these cases by
docketing all proofs of claim and proofs of interest in a
claim database that includes the following information for
each claims or interest asserted:
-- name and address of the claimant of interest holder and
any agent;
-- date the proof of claim or proof of interest was received
by the firm or the Court;
-- claim number assigned to the proof of claim or proof of
interest; and
-- asserted amount and classification of the claim;
f) implement necessary security measures to ensure the
completeness and integrity of the claims registers;
g) transmit to the Clerk's office a copy of the claims registers
on a monthly basis, unless requested by the Clerk's office on
a more or less frequent basis;
h) maintain an up-to-date mailing list for all entities that
have filed proofs of claim or proofs of interest and make the
list available to the Clerk's office or any party in interest
upon request;
i) provide access to the public for examination of copies of the
proofs of claim or proofs of interest filed in these cases
without charge during regular business hours;
j) create and maintain a public access website setting for
pertinent case information and allowing access to certain
documents filed in the Debtors' Chapter 11 cases;
k) record all transfers of claims under Bankruptcy Rule 3001)e)
and provide notice of the transfers to the extent required by
Bankruptcy Rule 3001(e);
l) comply with applicable federal, state, municipal and local
statutes, ordinances, rules, regulations, orders and other
requirements;
m) provide temporary employees, who are not past or present
employees of the Debtors, to process claims, as necesary;
n) promptly comply with further conditions and requirements as
as the Clerk's office or the Court claims, as necessary;
o) provide other claims processing, noticing, balloting and
related administrative services as may be requested from
time to time by the Debtors; and
p) transport all original documents in proper format, as
provided by the Clerk's office, to the Federal Archives.
The firm's professionals and their compensation rates are:
Designations Hourly Rates
------------ ------------
Senior Consultant $265
Senior Case Manager $202-$247
Case Manager (Level 2) $166-$198
IT Programming Consultant $126-$171
Case Manager (Level 1) $122-$157
Clerk $36-$54
To the best of the Debtors' knowledge, the firm does not hold
any interest adverse to the Debtors' estates and their creditors,
and is a "disinterested person" as defined in Section 101(14) of
the Bankruptcy Code.
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.
MERRILL LYNCH: Moody's Lowers Ratings on 44 Certificate Classes
---------------------------------------------------------------
Moody's Investors Service has downgraded 44 certificates from
transactions issued by Merrill Lynch Mortgage Investors Trust.
The transactions are backed by second lien loans. The
certificates were downgraded because the bonds' credit enhancement
levels, including excess spread and subordination were too low
compared to the current projected loss numbers at the previous
rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second and home
equity line of credit collateral. Substantial pool losses of over
the last few months have eroded credit enhancement available to
the mezzanine and senior certificates. Despite the large amount
of write-offs due to losses, delinquency pipelines have remained
high as borrowers continue to default.
Issuer: Merrill Lynch Mortgage Investors Trust Series 2005-SL1
-- Cl. B-1, Downgraded to Baa2 from Aa3
-- Cl. B-2, Downgraded to B1 from Baa1
-- Cl. B-3, Downgraded to Ca from Baa2
-- Cl. B-4, Downgraded to C from B3
Issuer: Merrill Lynch Mortgage Investors Trust 2005-SL2
-- Cl. M-2, Downgraded to Caa3 from Aa2
-- Cl. B-1, Downgraded to C from B1
-- Cl. B-2, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust Series 2005-SL3
-- Cl. A-1, Downgraded to Ba1 from Aaa
-- Cl. A-2B, Downgraded to Ba1 from Aaa
-- Cl. M-1, Downgraded to Ca from Aa2
-- Cl. M-2, Downgraded to C from B1
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2005-NCA
-- Cl. M-2, Downgraded to Ba3 from A2
-- Cl. B-1, Downgraded to Ca from Baa1
-- Cl. B-2, Downgraded to C from Baa2
-- Cl. B-3, Downgraded to C from Caa2
Issuer: Merrill Lynch Mortgage Investors Trust Series 2005-NCB
-- Cl. A-1B, Downgraded to Baa1 from Aaa
-- Cl. M-1, Downgraded to Caa1 from Aa2
-- Cl. M-2, Downgraded to C from Ba1
-- Cl. B-1, Downgraded to C from Caa2
-- Cl. B-2, Downgraded to C from Ca
Issuer: Merrill Lynch Mortgage Investors Trust 2006-SL1
-- Cl. A, Downgraded to B2 from Aaa
-- Cl. M-1, Downgraded to C from A3
-- Cl. M-2, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa3
Issuer: Merrill Lynch Mortgage Investors Trust 2006-SL2
-- Cl. A, Downgraded to Ca from Baa3
-- Cl. G, Downgraded to Ca from Baa3
-- Cl. M-1, Downgraded to C from B3
-- Cl. M-2, Downgraded to C from Caa1
-- Cl. M-3, Downgraded to C from Caa2
-- Cl. M-4, Downgraded to C from Caa3
Issuer: Merrill Lynch Mortgage Investors Trust, Series 2007-SL1
-- Cl. A-1, Downgraded to Ca from B3
-- Cl. A-2, Downgraded to C from Caa1
-- Cl. M-1, Downgraded to C from Ca
Issuer: Merrill Lynch First Franklin Mortgage Loan Trust, Series
2007-A
-- Cl. A-1, Downgraded to Baa1 from Aaa
-- Cl. A-2, Downgraded to Ba2 from Aaa
-- Cl. A-3, Downgraded to Caa1 from Aaa
-- Cl. M-1, Downgraded to C from Aa3
-- Cl. M-2, Downgraded to C from Baa1
-- Cl. M-3, Downgraded to C from Ba3
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Ca
MGM MIRAGE: Earns $61.28 Million for Quarter Ended September 30
---------------------------------------------------------------
MGM Mirage and its subsidiaries posted $61.28 million in net
profit on $1.79 billion in net revenues for the third quarter
ended Sept. 30, 2008, compared with $183.86 million in net profit
on $1.9 billion in net revenues for the same period ended Sept.
30, 2007.
MGM Mirage and its subsidiaries posted $292.73 million in net
profit on $5.58 billion in net revenues for the nine months ended
Sept. 30, 2008, compared with $529.77 million in net profit on
$5.76 billion in net revenues for the same period ended Sept. 30,
2007.
The company's consolidated balance sheet as of Sept. 30, 2008
showed $23.39 billion in total assets, $18.25 million in total
liabilities, and $5.14 billion in shareholders' equity.
Results for the 2008 quarter included a non-cash write-down of $30
million, or $0.07 per diluted share, related to the 36-hole Primm
Valley Golf Club and underlying land. Results for the third
quarter of 2007 included $135 million, or $0.30 per diluted share,
of income related to insurance proceeds received for Hurricane
Katrina.
Financial Position
In September 2008, the company entered into an amendment to its
$7.0 billion senior credit facility. The amendment increases the
maximum total leverage ratio, modifies drawn and undrawn pricing
levels as well as revises certain definitions and limitations on
secured indebtedness. Available borrowing capacity under the
company's senior credit facility was $1.2 billion as of Sept. 30,
2008.
In early October, CityCenter successfully completed the first
phase of its financing by securing a $1.8 billion senior bank
credit facility. CityCenter has received additional signed
commitment letters totaling in excess of $500 million, and the
company and Dubai World continue to work with lenders to obtain
additional financing, up to a total of $3.0 billion, for
CityCenter. During the third quarter, the company and Dubai World
each provided CityCenter with additional loans of $300 million to
fund construction.
"Securing $1.8 billion of financing at CityCenter and amending our
$7.0 billion senior credit facility provide the company with
significant additional financial flexibility," said Executive Vice
President and Chief Financial Officer of MGM MIRAGE, Dan D'Arrigo.
"We intend to further access the capital markets, and aggressively
manage our liquidity and financial position."
Third quarter capital investments totaled $181 million, which
included $73 million for room and suite remodel projects,
primarily at The Mirage and TI; and $19 million for projects
related to CityCenter, including the people mover connecting
Bellagio, CityCenter, and Monte Carlo, as well as expenditures for
Monte Carlo's share of a new parking garage. The remaining $89
million was for other capital expenditures, including various new
and upgraded amenities at the company's resorts.
Full-text copy of MGM Mirage's consolidated third quarter results
is available free of charge at:
http://researcharchives.com/t/s?3455
Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) --
http://www.mgmmirage.com/-- is a hotel and gaming company. It
owns and operates 17 properties located in Nevada, Mississippi
and Michigan, and has investments in three other properties in
Nevada, New Jersey and Illinois.
* * *
As reported in the Troubled Company Reporter on Oct. 9, 2008,
Tamara Audi at The Wall Street Journal reports that MGM Mirage
needs to raise about $1.2 billion to complete the financing of its
CityCenter project in Las Vegas.
As reported in the Troubled Company Reporter on Oct. 7, 2008, MGM
Mirage said that CityCenter, its joint development project with
Dubai World, completed the first phase of its $3.0 billion
financing package by securing a $1.8 billion senior bank credit
facility. The facility matures in April 2013 and is expected to
be increased to a total amount of $3.0 billion as additional
commitments are received. CityCenter has received additional
signed commitment letters totaling in excess of $500 million,
which commitments are expected to be added to the facility once
completed. MGM Mirage and Dubai World continue to work with
additional lenders and will seek the remaining commitment amounts
through a syndication process beginning on Oct. 7, 2008. The
gross project budget consists of $9.3 billion of construction
costs (including capitalized interest), $1.7 billion of land, $0.2
billion of preopening expenses, and $0.1 billion of intangible
assets. CityCenter is scheduled to be completed in December 2009.
According to WSJ, MGM Mirage is working to secure 41.2 billion in
financing to round out the $3 billion needed to complete the
project. Jim Murren, MGM Mirage's chief operating officer and
president, said that he hopes to have the remaining funds
committed by Oct. 31, WSJ says.
As reported in the Troubled Company Reporter on Sept. 5, 2008,
Standard & Poor's Ratings Services revised its rating outlook on
Las Vegas-based MGM MIRAGE to negative from stable. Ratings on
the company, including the 'BB' corporate credit rating, were
affirmed.
As reported in the Troubled Company Reporter on Aug. 12, 2008,
Fitch Ratings has affirmed MGM MIRAGE's ratings and revised its
Outlook to Negative from Stable as: Issuer Default Rating 'BB';
Senior credit facility 'BB'; Senior notes 'BB'; and Senior
subordinated notes 'B+'.
MGM MIRAGE: Halts Two Casino Projects Due to Credit Crunch
----------------------------------------------------------
John Kell at The Wall Street Journal reports that MGM Mirage said
it was suspending its casino projects in Las Vegas and Atlantic
City because of the credit crunch.
According to WSJ, MGM Mirage's Chairperson and CEO Terry Lanni
said that the company has done predevelopment work on the MGM
Grand Atlantic City, but the company will suspend development
until the economy and capital markets "are sufficiently improved."
Design and preconstruction work on MGM Mirage's Las Vegas joint
venture with Kerzner International and Istithmar has also been
suspended, the report says, citing Mr. Lanni.
The credit crunch, says WSJ, has limited the ability of gaming
companies to continue to borrow to construct grander resorts.
Some of those firms are now in danger of violating covenants on
lending agreements, WSJ reports.
CityCenter Project
WSJ relates that MGM Mirage has been facing difficulties in
securing financing for its $11 billion CityCenter project on the
Las Vegas Strip. Angela Pruitt at Dow Jones Newswires relates
that MGM Mirage is mulling a facility with joint venture partner
Dubai World, aimed at helping potential buyers of condo units at
its $11 billion CityCenter resort, slated to be completed in 2009.
Citing MGM Mirage's president and chief operating officer Jim
Murren, Dow Jones reports that over 60% -- $1.7 billion -- of the
CityCenter condos have been sold. According to the report, Mr.
Murren said that "condo sales aren't a necessary financing
component for CityCenter and doesn't factor in the company's
ability to raise capital." The report quoted Deutsche Bank
Securities analyst Bill Lerner as saying, "The unit sales are
important for...return on invested capital, but I think they can
finance CityCenter with zero residential sales."
According to Dow Jones, the CityCenter project includes a 4,000-
room casino resort and about 2,650 luxury condominium and
hotel/condominium units.
Dow Jones states that Mr. Murren said that MGM has strong
relationships in the banking community and that many banks have
owned or acquired mortgage companies through consolidation in the
financial market. Citing Mr. Murren, the report says that Dubai
World has their own mortgage company, which has been effective in
their ability to sell residential real estate in the Emirate.
Mr. Lerner, according to Dow Jones, said that Dubai World would
attempt to get licensed as a mortgage lender in Nevada and
potentially write mortgages at CityCenter. Mr. Lerner said that
MGM Mirage is working on other financing programs to help buyers
close their contracted units, Dow Jones relates. Any financing
assistance will be for condos falling lower on the high-end scale,
the report states, citing Mr. Murren.
Offering of Five-Year Senior Secured Notes
Citing KDP Investment Advisors, Michael Aneiro at Dow Jones
reports that MGM Mirage is in the market with an offering of five-
year senior secured notes. According to the report, KDP
Investment said that the deal is being run by underwriters led by
Banc of America Securities and that proceeds of the deal will be
used for general corporate purposes and for paying down MGM
Mirage's $7 billion credit facility.
Dow Jones states that a market participant said that the offering
would be "benchmark-sized," around $1 billion, with the notes
being noncallable for 2.5 years.
About MGM Mirage
Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) --
http://www.mgmmirage.com/-- is a hotel and gaming company. It
owns and operates 17 properties located in Nevada, Mississippi
and Michigan, and has investments in three other properties in
Nevada, New Jersey and Illinois.
* * *
As reported in the Troubled Company Reporter on Oct. 9, 2008,
Tamara Audi at The Wall Street Journal reports that MGM Mirage
needs to raise about $1.2 billion to complete the financing of its
CityCenter project in Las Vegas.
As reported in the Troubled Company Reporter on Oct. 7, 2008, MGM
Mirage said that CityCenter, its joint development project with
Dubai World, completed the first phase of its $3.0 billion
financing package by securing a $1.8 billion senior bank credit
facility. The facility matures in April 2013 and is expected to
be increased to a total amount of $3.0 billion as additional
commitments are received. CityCenter has received additional
signed commitment letters totaling in excess of $500 million,
which commitments are expected to be added to the facility once
completed. MGM Mirage and Dubai World continue to work with
additional lenders and will seek the remaining commitment amounts
through a syndication process beginning on Oct. 7, 2008. The
gross project budget consists of $9.3 billion of construction
costs (including capitalized interest),
$1.7 billion of land, $0.2 billion of preopening expenses, and
$0.1 billion of intangible assets. CityCenter is scheduled to be
completed in December 2009.
According to WSJ, MGM Mirage is working to secure 41.2 billion in
financing to round out the $3 billion needed to complete the
project. Jim Murren, MGM Mirage's chief operating officer and
president, said that he hopes to have the remaining funds
committed by Oct. 31, WSJ says.
As reported in the Troubled Company Reporter on Sept. 5, 2008,
Standard & Poor's Ratings Services revised its rating outlook on
Las Vegas-based MGM MIRAGE to negative from stable. Ratings on
the company, including the 'BB' corporate credit rating, were
affirmed.
As reported in the Troubled Company Reporter on Oct. 27, 2008,
Fitch Ratings downgraded MGM Mirage's issuer default ratings to
'BB-' from 'BB'. Moody's also downgraded its ratings on MGM
Mirage's senior credit facility and senior notes to 'BB-' from
'BB'.
MONROE HARBOR: Moody's Reviews Notes Ratings for Possible Cuts
--------------------------------------------------------------
Moody's Investors Service downgraded and left on review for
possible downgrade the ratings of the three classes of notes
issued by Monroe Harbor CDO 2005-1 Ltd.:
Class Description: $970,000,000 Class A-1A Floating Rate Notes Due
2040
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 6/9/2008
-- Current Rating: Ba1, on review for possible downgrade
Class Description: $352,000,000 Class A-1B Floating Rate Notes Due
2040
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 6/9/2008
-- Current Rating: Ba1, on review for possible downgrade
Class Description: $73,500,000 Class A-2 Floating Rate Notes Due
2040
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: 6/9/2008
-- Current Rating: Caa3, on review for possible downgrade
Additionally, Moody's has downgraded the three classes of notes:
Class Description: $29,500,000 Class B Floating Rate Notes Due
2040
-- Prior Rating: Aa2, on review for possible downgrade
-- Prior Rating Date: 6/9/2008
-- Current Rating: Ca
Class Description: $67,000,000 Class C Floating Rate Notes Due
2040
-- Prior Rating: Caa3, on review for possible downgrade
-- Prior Rating Date: 6/9/2008
-- Current Rating: C
Class Description: $11,917,150 aggregate face amount of Principal
Protected Trust Certificates due December 2040
-- Prior Rating: A2
-- Prior Rating Date: August 18, 2005
-- Current Rating: Caa2
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
MONTEREY CDO: Moody's Chips Two Notes Ratings to 'B3' from 'Aa2'
----------------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade the two classes of notes issued by Monterey
CDO, Ltd.:
Class Description: $240,000,000 Class A-1A First Priority Senior
Secured Floating Rate Delayed Draw Notes Due September 2042
-- Prior Rating: Aa2, on review for possible downgrade
-- Prior Rating Date: 6/9/2008
-- Current Rating: B3, on review for possible downgrade
Class Description: $560,000,000 Class A-1B First Priority Senior
Secured Floating Rate Notes Due September 2042
-- Prior Rating: Aa2, on review for possible downgrade
-- Prior Rating Date: 6/9/2008
-- Current Rating: B3, on review for possible downgrade
Additionally, Moody's has downgraded the two classes of notes:
Class Description: $80,000,000 Class A-2 Second Priority Senior
Secured Floating Rate Notes Due September 2042
-- Prior Rating: Ba1, on review for possible downgrade
-- Prior Rating Date: 6/9/2008
-- Current Rating: Ca
Class Description: $51,000,000 Class A-3 Third Priority Senior
Secured Floating Rate Notes Due September 2042
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: 6/9/2008
-- Current Rating: Ca
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
MORGAN STANLEY: Moody's Chips $6MM Notes Rating to Ba1 from Baa2
----------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the notes
issued by Morgan Stanley ACES SPC, Series 2005-9:
Class Description: $6,000,000 Secured Fixed Rate Notes due 2015
-- Prior Rating: Baa2
-- Prior Rating Date: 7/8/2008
-- Current Rating: Ba1
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to
Washington Mutual Inc., which was seized by federal regulators on
September 25, 2008 and subsequently virtually all of its assets
were sold to JPMorgan Chase, and Fannie Mae, which was placed into
the conservatorship of the U.S. government on September 8, 2008.
MORGAN STANLEY: Moody's Cuts Ratings on 39 Cert. Transactions
-------------------------------------------------------------
Moody's Investors Service has downgraded 39 certificates from
transactions issued by Morgan Stanley Mortgage Loan Trust. The
transactions are backed by second lien loans. The certificates
were downgraded because the bonds' credit enhancement levels,
including excess spread and subordination were low compared to the
current projected loss numbers at the previous rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second
collateral. Substantial pool losses of over the last few months
have eroded credit enhancement available to the mezzanine and
senior certificates. Despite the large amount of write-offs due
to losses, delinquency pipelines have remained high as borrowers
continue to default.
Moody's has also published the underlying rating on the following
insured note. The rating of this insured note was previously
derived from public ratings on non-sequential pari passu or more
junior uninsured tranches of the same deal.
The underlying ratings reflect the intrinsic credit quality of the
notes in the absence of the guarantee. The ratings on securities
that are guaranteed or "wrapped" by a financial guarantor is the
higher of a) the rating of the guarantor or b) the published
underlying rating. The current ratings on the below notes are
consistent with Moody's practice of rating insured securities at
the higher of the guarantor's insurance financial strength rating
and any underlying rating that is public.
Issuer: Morgan Stanley Mortgage Loan Trust 2005-8SL
-- Cl. A-1, Downgraded to Ba3 from Aaa
-- Cl. A-2b, Downgraded to Ba3 from Aaa
-- Cl. M-1, Downgraded to Ca from Aa1
-- Cl. M-2, Downgraded to C from A2
-- Cl. M-3, Downgraded to C from Ba1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from Caa1
-- Cl. M-6, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Ca
Issuer: Morgan Stanley Mortgage Loan Trust 2006-10SL
-- Cl. A-1, Downgraded to Ca from Baa3
-- Cl. M-1, Downgraded to C from Caa1
-- Cl. M-2, Downgraded to C from Ca
Issuer: Morgan Stanley Mortgage Loan Trust 2006-14SL
-- Cl. A-1, Downgraded to Caa2 from A3
-- Cl. M-1, Downgraded to C from Ba1
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from Caa1
-- Cl. M-4, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
Issuer: Morgan Stanley Mortgage Loan Trust 2006-4SL
-- Cl. A-1, Downgraded to Caa2 from A3
-- Cl. M-1, Downgraded to C from B2
-- Cl. M-2, Downgraded to C from Caa3
-- Cl. M-3, Downgraded to C from Ca
Issuer: Morgan Stanley Mortgage Loan Trust 2007-4SL
-- Cl. A, Downgraded to Ca from A3
-- Cl. M-1, Downgraded to C from Ba1
-- Cl. M-2, Downgraded to C from Ba3
-- Cl. M-3, Downgraded to C from B3
-- Cl. M-4, Downgraded to C from Caa1
-- Cl. M-5, Downgraded to C from Caa2
-- Cl. B-1, Downgraded to C from Caa3
-- Cl. B-2, Downgraded to C from Ca
-- Cl. B-3, Downgraded to C from Ca
Issuer: Morgan Stanley Mortgage Loan Trust 2007-9SL
Class Description: Cl. A
-- Current Rating: A2, on review for possible downgrade
Financial Guarantor: MBIA Insurance Corporation (A2, on review for
possible downgrade)
-- Underlying Rating: Ca
-- Cl. M-1, Downgraded to C from Ba1
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B3
-- Cl. B-1, Downgraded to C from Caa1
-- Cl. B-2, Downgraded to C from Caa2
-- Cl. B-3, Downgraded to C from Caa3
-- Cl. B-4, Downgraded to C from Ca
MPC CORPORATION: Recurring Losses Cues NYSE A. to Delist Stocks
---------------------------------------------------------------
MPC Corporation was notified by the NYSE Alternext US LLC fka
American Stock Exchange that it intends to strike the Common Stock
and Warrants of MPC from the Exchange by filing a delisting
application with the Securities and Exchange Commission.
On May 8, 2008, the American Stock Exchange notified MPC that
the company was not in compliance with Section 1003(a) (i) of
the AMEX Company Guide, in that the company's stockholder equity
had fallen below $2 million dollars and that MPC had sustained
losses from continuing operations or net losses in two of its
three most recent fiscal years. MPC responded by submitting a
plan for achieving compliance, which was accepted by AMEX on
June 27, 2008. At that time, MPC was granted an extension until
Nov. 9, 2009, to regain compliance with listing standards,
subject to periodic review of progress.
The decision by the Exchange to file the delisting application
was based on its review of publicly available information well
as information provided to the Exchange by MPC. In a letter to
MPC, the Exchange cited the company's failure to make progress
consistent with its submitted plan, further citing that the plan
no longer demonstrated MPC's ability to regain compliance under
Section 1003(a) (i) of the Company Guide.
Additionally, the Exchange concluded that MPC is not under
compliance with other continued listing standards related to
1) the company's overall financial condition and its ability to
continue operations; 2) the low share price of its stock; and
3) the decline of its aggregate market capitalization.
MPC Corporation (AMEX: MPZ) -- http://www.mpccorp.com/-- a U.S.
PC vendor since 1991, provides enterprise IT hardware
solutions to mid-size businesses, government agencies and
education organizations. With its October 2007 acquisition of
Gateway's Professional business, MPC Corporation became the
only top-10 U.S. PC vendor focused exclusively on the
$43 billion Professional PC market.
MPF CORP: Taps Thommessen as Norwegian Counsel
----------------------------------------------
MPF Corp and its debtor-affiliates ask the United States
Bankruptcy Court for the Southern District of Texas for permission
to employ Thommessen Krefting Greve Lund as advokatfirma as
special Norwegian counsel.
The firm will:
a) provide legal advice on Norwegian and international law
issues arising out of the substantial cost overruns on the
Debtors' project including advising the Debtors on M&A
efforts and on other efforts related to the sale of
assets;
b) consult with the Debtors on issues that arise in maintaining
relationships with existing creditors; and
c) coordinate as necessary with the Debtors' United States and
Bermuda counsel with respect to their Chapter 11 cases.
The firm's professionals and their compensation rates are:
Designations Hourly Rates
------------ ------------
Partners $387-$501
Senior Associates $272-$372
Associates $157-$287
Professionals Designations
------------- ------------
Jorgen Lund Partner
Siri Wennevik Partner
Otto Beyer Senior Associate
Mads Haavardsholm Associate
To the best of the Debtors' knowledge, the firm does not hold any
interest adverse to the Debtors' estates and is a "disinterested
person" as defined in Section 101(14) of the Bankruptcy Code.
About MPF Corp.
Headquartered in Bermuda, MPF Corp. Ltd. -- http://www.mpf-
corp.com/ -- engages in deep water oil and gas exploration. The
company was established on April 25, 2006. The company and debtor-
affiliate MPF Holding US LLC filed separate petitions for Chapter
11 relief on Sept. 24, 2008 (Bankr. S.D. Tex. Case Nos. 08-36086
and 08-36084). MPF-01 followed on Sept. 25, 2008.
D. Bobbitt Noel, Jr., Esq. at Vinson & Elkins LLP, represents the
Debtors as counsel. When the Debtors filed for protection from
creditors, they listed assets of $100 million to $500 million, and
the same range of debts.
The Bermuda Proceedings and the Chapter 11 cases in the U.S. run
as parallel proceedings, which is coordinated to effectuate the
Debtors' goal of providing for a restructuring of their businesses
or sale of assets as may be in the best interests of their estates
and creditors.
The Debtors are in possession of their properties and continue to
operate and manage their businesses as debtors-in-possession.
Due to the size and complexity of the Debtors' businesses, and
their prepetition focus on restructuring their financial affairs
to avoid Chapter 11 filings, the Debtors failed to complete the
drafting of the Schedules and Statements, and do not anticipate
having the Schedules and Statements ready for filing within the
15-day period.
MPF CORP: Taps Vinson & Elkins as Attorneys
-------------------------------------------
MPF Corp. and its debtor-affiliates ask the United States
Bankruptcy Court for the Southern District of Texas for authority
to employ Vinson & Elkins LLP as its attorneys.
The firm will:
a) take all necessary or appropriate actions to protect and
preserve the Debtors' estate including the prosecution of
actions on the Debtors' behalf, the defense of any actions
commenced against the Debtors, the negotiation of disputes
in which the Debtors are involved, and the preparation of
objections to claims filed against the Debtors' estate;
b) prepare on behalf of the Debtors all appropriate motions,
applications, answers, orders, reports, and other papers in
connection with the administration of the Debtors' estates;
c) take all necessary actions in connection with a Chapter 11
plan and related disclosure statements and all related
documents, as well as further actions as may be required in
connection with the administration of the Debtors' estates;
and
d) perform all other legal services in connection with these
cases.
The firm's professional and their compensation rates are:
Designations Hourly Rates
------------ ------------
Senior Partner $695
Junior Paraprofessional $195
To the best of the Debtors' knowledge, the firm is a
"disinterested person" as defined in Section 101(14) of the
Bankruptcy Code.
About MPF Corp.
Headquartered in Bermuda, MPF Corp. Ltd. -- http://www.mpf-
corp.com/ -- engages in deep water oil and gas exploration. The
company was established on April 25, 2006. The company and debtor-
affiliate MPF Holding US LLC filed separate petitions for Chapter
11 relief on Sept. 24, 2008 (Bankr. S.D. Tex. Case Nos. 08-36086
and 08-36084). MPF-01 followed on Sept. 25, 2008.
D. Bobbitt Noel, Jr., Esq. at Vinson & Elkins LLP, represents the
Debtors as counsel. When the Debtors filed for protection from
creditors, they listed assets of $100 million to $500 million, and
the same range of debts.
The Bermuda Proceedings and the Chapter 11 cases in the U.S. run
as parallel proceedings, which is coordinated to effectuate the
Debtors' goal of providing for a restructuring of their businesses
or sale of assets as may be in the best interests of their estates
and creditors.
The Debtors are in possession of their properties and continue to
operate and manage their businesses as debtors-in-possession.
Due to the size and complexity of the Debtors' businesses, and
their prepetition focus on restructuring their financial affairs
to avoid Chapter 11 filings, the Debtors failed to complete the
drafting of the Schedules and Statements, and do not anticipate
having the Schedules and Statements ready for filing within the
15-day period.
NANOGEN INC: Has Until Feb. 26 to Comply with NASDAQ Listing Rules
------------------------------------------------------------------
Nanogen Inc. disclosed in a Securities and Exchange Commission
filing that on Oct. 16, 2008, NASDAQ Stock Market filed an
immediately effective rule change to suspend enforcement of its
$1.00 minimum bid price requirement for listed companies through
Jan. 16, 2009.
The company said in previous disclosures that is not in compliance
of the minimum bid price requirement and has until the end of
November 2008 to regain compliance of such requirement.
As a result of the rule change, on Oct. 22, 2008, NASDAQ notified
the company that the Company will have until Feb. 26, 2009, to
regain compliance of the minimum bid price requirement.
The company can regain compliance, either during the suspension or
during the compliance period resuming after the suspension, by
achieving a $1.00 closing bid price for a minimum of 10
consecutive trading days.
About Nanogen Inc.
San Diego, California-based Nanogen Inc. (NASDAQ: NGEN) --
http://www.nanogen.com/-- provides advanced diagnostic products.
As of March 16, 2007, the company was developing several product
lines that directly target specific markets within the advanced
diagnostics field. Its diagnostic technologies focus on the
identification of the nucleic acid sequences, gene variations and
gene expressions associated with both genetic conditions and
infectious diseases. Nanogen has four categories of advanced
diagnostic technologies: molecular testing platforms molecular
reagents point-of-care tests and advanced genetic markers. On
Feb. 6, 2006, Nanogen acquired the rapid cardiac immunoassay
point-of-care test business of Spectral Diagnostics Inc. The
acquired products include rapid tests for levels of CKMB,
Myoglobin and Troponin, all of which are frequently used in
cardiac care. On May 1, 2006, it completed the acquisition of the
diagnostics division of Amplimedical S.P.A.
Going Concern Doubt
Ernst & Young LLP, in San Diego, California, expressed substantial
doubt about Nanogen Inc.'s ability to continue as a going concern
after it audited the company's consolidated financial statements
ended Dec. 31, 2007 and 2006 (restated). The auditing firm
pointed to the company's recurring operating losses, working
capital deficit and accumulated deficit of $400.6 million as of
Dec. 31, 2007.
The company has incurred net losses of $30.1 million in the six
months ending June 30, 2008, $33.9 million, $46.7 million, and
$104.8 million for the years ended December 31, 2007, 2006 and
2005, and have an accumulated deficit of $430.7 million as of
June 30, 2008. Based on its operating plan, the company's
existing working capital is not sufficient to meet the cash
requirements to fund its planned operating expenses, capital
expenditures, and working capital requirements through Dec. 31,
2008 without additional sources of cash and/or the deferral,
reduction or elimination of significant planned expenditures.
These factors raise substantial doubt about our ability to
continue as a going concern. The accompanying consolidated
financial statements have been prepared assuming that we will
continue as a going concern. This basis of accounting contemplates
the recovery of the Company's assets and the satisfaction of
liabilities in the normal course of business.
NATIONAL BEDDING: Moody's Holds All Rtngs; Revises Outlook to Neg.
------------------------------------------------------------------
Moody's Investors Service affirmed all of National Bedding's (dba
Serta) ratings, but revised the outlook to negative based on
Moody's expectations that the company's operating performance will
weaken due to the ongoing deterioration in discretionary consumer
spending as well as the company's reduced financial flexibility.
"Moody's believes that the deepening housing market and credit
markets crises will lead to the continuing contraction in
discretionary consumer spending over the next few quarters
resulting in weaker operating performance" said Kevin Cassidy,
Senior Credit Officer at Moody's Investors Service. In addition,
Moody's believes that Serta's moderating operating performance
will prevent it from having full access to its revolver. However,
unlike its peers, who must comply with their covenants every
quarter, Serta is only required to comply with its covenants if it
were to draw down more than $30 million under its revolver. While
Moody's does not expect the company to use its revolver, the lack
of full access to this additional source of liquidity reduces
Serta's financial flexibility.
The ratings would likely be downgraded if the company starts
consuming cash or if its financial leverage increases by more than
a full turn from its current level, which is between 6x and 7x.
The outlook could be stabilized if the company's operating
performance improves enough to comply with the covenants and
enables it to have full access to its revolver, while at the same
time reducing financial leverage.
Ratings affirmed/assessments revised:
-- Corporate family rating at B2;
-- Probability of default rating at B2;
-- $400 million senior secured 1st lien term loan at B1
(LGD 3, 32% from LGD 3, 34%);
-- $50 million senior secured revolving credit at B1 (LGD 3, 32%
from LGD 3, 34%);
-- $210 million senior secured second lien at Caa1 (LGD 5, 83%
from LGD 5, 84%)
National Bedding Company, based in Hoffman Estates, Illinois, is a
major manufacturer of mattresses under the Serta brand name. Net
sales in the twelve months ended June 2008 approximated $800
million. On February 9, 2007, which was the date of the last
rating action, Moody's Investors Service assigned a B1 to National
Bedding's senior secured first lien facility and a Caa1 rating to
Serta's senior secured 2nd lien facility. At the same time,
Moody's downgraded Serta's corporate family rating and probability
of default rating to B2.
NORTH COVE: Moody's Trims Ratings on Five Classes of Notes to 'C'
-----------------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade the ratings of the class of notes issued by
North Cove CDO III, Ltd.:
Class Description: Unfunded supersenior tranche
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: April 10, 2008
-- Current Rating: Caa2, on review for possible downgrade
Additionally, Moody's has downgraded the ratings of the five
classes of notes:
Class Description: $132,000,000 Class A First Priority Senior
Secured Floating Rate Notes Due 2045
-- Prior Rating: A2, on review for possible downgrade
-- Prior Rating Date: April 24, 2008
-- Current Rating: C
Class Description: $74,000,000 Class B Second Priority Senior
Secured Floating Rate Notes Due 2045
-- Prior Rating: Baa3, on review for possible downgrade
-- Prior Rating Date: April 24, 2008
-- Current Rating: C
Class Description: $44,000,000 Class C Third Priority Senior
Secured Floating Rate Notes Due 2045
-- Prior Rating: B1, on review for possible downgrade
-- Prior Rating Date: April 24, 2008
-- Current Rating: C
Class Description: $27,000,000 Class D Fourth Priority Senior
Secured Floating Rate Notes Due 2045
-- Prior Rating: Ca
-- Prior Rating Date: April 10, 2008
-- Current Rating: C
Class Description: $11,000,000 Class E Fifth Priority Secured
Floating Rate Notes Due 2045
-- Prior Rating: Ca
-- Prior Rating Date: April 10, 2008
-- Current Rating: C
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
NORTHWEST AIRLINES: Completes Merger with Delta Air Lines
---------------------------------------------------------
Delta Air Lines, Inc. and Northwest Airlines, Inc. merged on
October 29, 2008, creating a premier global airline with service
to nearly all of the world's major travel markets, according to a
company statement.
The statement says the new airline, called Delta and headquartered
in Atlanta, will begin its first day as a combined company with a
commitment to delivering excellent service to customers in 66
countries and more than 375 worldwide cities -- more than any
other airline; with a dedicated base of approximately 75,000
worldwide employees; and with a best-in-class cost structure and
strong liquidity balance that better positions the company to
adapt to the weakening global economy.
"The airline industry faces a very difficult economic environment
around the world and this merger gives Delta increased flexibility
to adapt to the economic challenges ahead," said Delta CEO Richard
Anderson. "With much of the work to bring our airlines together
well under way, the new Delta will be at the front of the pack in
achieving the benefits of consolidation and is well positioned to
navigate the tough waters ahead in a difficult economy."
With the completion of the merger, Northwest Airlines is now a
wholly owned subsidiary of Delta. Customers should continue to
check-in and do business directly with the airline operating their
flight just as they did before the merger. Delta will continue
operation of the airlines' separate Web sites, www.delta.com and
www.nwa.com, as well as the two airlines' reservations systems and
loyalty programs.
The statement further notes that the two airlines will be
integrated through a process with customer benefits rolled out
over the next 12-24 months, including:
* The addition of Delta's code to nearly all of the Northwest
system by the end of 2008, creating thousands of additional
connecting opportunities.
* Immediate complimentary upgrade reciprocity for elite members
of both airlines' loyalty programs, with airport lounge
reciprocity continuing as usual.
* The launch of a fully consolidated worldwide flight schedule in
advance of summer 2009;
* The introduction of elements of Delta's brand throughout the
Northwest system beginning in spring 2009, including Delta's
popular Richard Tyler designer uniforms, Delta's livery,
"signature cocktails," enhanced in-flight entertainment and
other onboard amenities.
* The consolidation of the Delta and Northwest loyalty programs,
ultimately including the ability to combine miles from SkyMiles
and WorldPerks accounts at a one-to-one ratio.
* The full integration of Delta and Northwest Web sites, kiosks,
and customer-facing technology to ensure a consistent worldwide
travel experience.
Delta has already invested significant resources to ensure a
seamless transition for customers, including receiving clearance
from the Federal Aviation Administration (FAA) of the airline's
plan to achieve a Single Operating Certificate over the next 14-16
months; adding extra staffing and technology at check-in counters
and kiosks to provide added customer assistance beginning Oct. 29;
and posting complete merger information at www.delta.com and
www.nwa.com to provide customers added assistance.
Employees Share in Success of Combined company
As a result of the merger, employees will share in the success of
the new company through an expanded ownership share in the
combined company. In the coming days, Delta will distribute an
equity stake to substantially all U.S.-based employees with
international employees participating through cash payments in
lieu of stock.
"Ensuring our employees are able to share in the benefits of the
merger from the beginning is a prime example of the Delta
Difference," Mr. Anderson said. "By sharing ownership with Delta's
people, we are not only recognizing the critical role employees
will play in successfully integrating two customer-focused
companies, we are also making good on a longstanding commitment
that our employees will share in the success of the company."
Delta also has completed other key steps to ensure that employees
benefit from the merger and are protected as the two companies'
workforces are combined. Specifically, Delta:
* Completed an unprecedented agreement with the Delta and
Northwest units of the Air Line Pilots Association, Intl.
(ALPA) on a joint contract that unifies both pilot groups under
one pilot working agreement effective tomorrow. Additionally,
the two pilot groups have agreed to a collaborative process
that will achieve a combined seniority list;
* Committed that no frontline employees will be involuntarily
furloughed as a result of the merger and that no hubs will be
closed; and
* Implemented a seniority protection policy that ensures that
frontline employees of both airlines will be provided seniority
protection through a fair-and-equitable process.
Financial footing strengthened
According to the statement, the closing of the Delta-Northwest
merger brings together two of the industry's most financially
secure airlines to produce a best-in-class cost structure and an
industry-leading balance sheet. The transaction is expected to
generate $2 billion or more in annual revenue and cost synergies
from more effective aircraft utilization, a more comprehensive and
diversified route system, and cost synergies from reduced overhead
and improved operational efficiency. The company expects to incur
one-time cash costs not exceeding $600 million to integrate the
two airlines.
As approved by both companies' stockholders earlier this year,
Northwest stockholders will receive 1.25 Delta shares for each
Northwest share they own. Based on Delta's closing stock price on
Oct. 29, 2008, this exchange ratio is the equivalent of $9.99 per
Northwest common share.
"In today's economic climate, this merger makes even more sense
because we can capture $2 billion in annual synergies and build
the foundation for profitable growth through improved revenues, a
best-in-class cost structure and a strong liquidity position,"
said Edward Bastian, Delta's president and chief financial
officer, and the new CEO and president of NWA. "As we have
proven, this is a different type of merger for the industry thanks
to the complementary nature of the two airlines and the caliber of
the people who will make this the most successful merger in
airline history," Mr. Bastian continued.
DOJ Approval
Delta closed the merger after receiving notice from the United
States Department of Justice that it would not challenge the
merger after reviewing its competitive impact. Justice officials
cited the likelihood of "substantial and credible efficiencies"
without harming consumers or competition, Reuters said. The
Justice Department also said consumers should benefit from savings
on expenses for airport operations, technology, and suppliers, The
Associated Press added.
The decision caps a six-month Justice Department investigation.
Earlier this year, the merger received clearance from the European
Commission.
New BOD
Delta also announced the members of its new Board of Directors,
effective immediately. Delta Chairman of the Board Daniel Carp
remains chairman while Northwest Chairman Roy Bostock becomes vice
chairman. Other directors will include seven from Delta's Board -
- Richard Anderson, John S. Brinzo, Eugene I. Davis, David R.
Goode, Paula Rosput Reynolds, Kenneth C. Rogers, and Kenneth B.
Woodrow, and four from Northwest's Board -- John M. Engler, Mickey
P. Foret, Rodney E. Slater and former Northwest CEO Douglas
Steenland. Delta had previously announced the structure of its new
Board during the merger announcement last spring.
With its acquisition of Northwest Airlines, Delta Air Lines is now
the world's largest airline. Delta's marketing alliances allow
customers to earn and redeem either SkyMiles or WorldPerks on more
than 16,000 daily flights offered by SkyTeam and other partners.
According the the company statement, Delta and its 75,000
worldwide employees are reshaping the aviation industry as the
only U.S. airline to offer a full global network.
"There are global corporations but no global airlines. The race
to become the first truly global airline has an incredible reward
to it," said consultant Darryl Jenkins, according to Reuters. "The
revenue potential is something that we have not seen yet. That's
the synergy that will make this very lucrative."
Calyon Securities analyst Ray Neidl noted that while airline
mergers "never initially work out as planned," the Delta-
Northwest consolidation appears to be clear for completion as many
details have already been dealt with, reports AP. He added that
many of the snags like pilot integration, labor and technology
have already been addressed, so the merger should run fairly
smoothly.
The biggest challenge, Mr. Neidl said, is getting the two cultures
-- management and labor -- of each airline to work together from
the beginning," AP reports.
Machinists Respond to DOJ's NWA/Delta Ruling
"After eight years of disastrous economic decisions by the Bush
Administration, this comes as no surprise. It is another
opportunity for executives to stuff their pockets at the expense
of working-class Americans," the International Association of
Machinists and Aerospace Workers (IAM) General Vice President
Robert Roach, Jr., said in response to the Department of Justice's
approval of the Northwest Airlines-Delta Airlines merger.
Mr. Roach said Delta and Northwest management have separately
bankrupt their individual airlines. Together, they will have more
than $28.8 billion in combined debt and $15.6 billion in unfunded
pension liabilities that could be forced onto the American
taxpayer if the airline defaults.
"The Machinists Union will fight to ensure that workers at the
combined airline will be protected by the guarantees that can only
be found in a union contract. The days when Delta could ride
roughshod over their employees is coming to an end. Delta is
creating the world's largest airline. The Machinists Union will
make it the world's largest unionized airline," added Mr. Roach.
The Machinists Union is the largest airline union in North America
and represents 12,500 Northwest Airlines ground employees.
About Delta Air
Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE: DAL) --
http://www.delta.com/-- is the world's second-largest airline
in terms of passengers carried and the leading U.S. carrier
across the Atlantic, offering daily flights to 328 destinations
in 56 countries on Delta, Song, Delta Shuttle, the Delta
Connection carriers and its worldwide partners. Delta flies to
Argentina, Australia and the United Kingdom, among others.
The company and 18 affiliates filed for chapter 11 protection on
Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall
S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors
in their restructuring efforts. Timothy R. Coleman at The
Blackstone Group L.P. provides the Debtors with financial advice.
Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump
Strauss Hauer & Feld LLP, provide the Official Committee of
Unsecured Creditors with legal advice. John McKenna, Jr., at
Houlihan Lokey Howard & Zukin Capital and James S. Feltman at
Mesirow Financial Consulting, LLC, serve as the Committee's
financial advisors.
The Debtors filed a chapter 11 plan of reorganization and
disclosure statement explaining that plan on Dec. 19, 2007.
On Jan. 19, 2007, they filed revisions to the plan and disclosure
statement, and submitted further revisions to the plan on Feb. 2,
2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure
statement. In April 25, 2007, the Court confirmed the Debtors'
plan. That plan became effective on April 30, 2007. The Court
entered a final decree closing 17 cases on Sept. 26, 2007.
* * *
As reported in the Troubled Company Reporter on July 29, 2008,
Standard & Poor's Ratings Services lowered its ratings on
Northwest Airlines Corp. and subsidiary Northwest Airlines Inc.
(both rated B/Negative/--), including lowering the long-term
corporate credit ratings on both entities to 'B' from 'B+', and
removed the ratings from CreditWatch, where they had been placed
with negative implications April 15, 2008. The outlook is
negative.
The downgrade reflects expected losses and reduced or negative
operating cash flow caused by high fuel prices. S&P also lowered
our ratings on enhanced equipment trust certificates, in some
cases by more than one notch.
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, the
Debtors filed an amended plan and disclosure statement. The Court
approved the adequacy of the Debtors' amended disclosure statement
on March 26, 2007. On May 21, 2007, the Court confirmed the
Debtors' amended plan. That amended plan took effect May 31,
2007.
(Northwest Airlines Bankruptcy News; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
NOMURA ASSET: Moody's Downgrades Ratings on 54 Classes of Certs.
----------------------------------------------------------------
Moody's Investors Service has downgraded 54 certificates from
transactions issued by Nomura Asset Acceptance Corporation. The
transactions are backed by second lien loans. The certificates
were downgraded because the bonds' credit enhancement levels,
including excess spread and subordination were low compared to the
current projected loss numbers at the previous rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second
collateral. Substantial pool losses of over the last few months
have eroded credit enhancement available to the mezzanine and
senior certificates. Despite the large amount of write-offs due
to losses, delinquency pipelines have remained high as borrowers
continue to default.
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2005-S1
-- Cl. M-1, Downgraded to Ba1 from Aa2
-- Cl. M-2, Downgraded to Ca from A2
-- Cl. B-1, Downgraded to C from B2
-- Cl. B-2, Downgraded to C from Ca
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2005-S2
-- Cl. M-1, Downgraded to B1 from Aaa
-- Cl. M-2, Downgraded to C from A2
-- Cl. B-1, Downgraded to C from Caa1
-- Cl. B-2, Downgraded to C from Ca
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2005-S3
-- Cl. A-2, Downgraded to Ba1 from Aaa
-- Cl. A-3, Downgraded to Ba1 from Aaa
-- Cl. M-1, Downgraded to Ca from A1
-- Cl. M-2, Downgraded to C from Caa1
-- Cl. B-1, Downgraded to C from Ca
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2005-S4
-- Cl. A-1, Downgraded to Baa1 from Aaa
-- Cl. A-2, Downgraded to Caa3 from Aaa
-- Cl. A-3, Downgraded to Caa2 from Aaa
-- Cl. M-1, Downgraded to C from A2
-- Cl. M-2, Downgraded to C from Ba3
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa3
-- Cl. M-6, Downgraded to C from Ca
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-S1
-- Cl. A-1, Downgraded to Baa1 from Aaa
-- Cl. A-2, Downgraded to Caa3 from Aaa
-- Cl. A-3, Downgraded to Caa2 from Aaa
-- Cl. M-1, Downgraded to C from Baa2
-- Cl. M-2, Downgraded to C from B1
-- Cl. M-3, Downgraded to C from B2
-- Cl. M-4, Downgraded to C from B3
-- Cl. M-5, Downgraded to C from Caa3
-- Cl. M-6, Downgraded to C from Ca
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-S2
-- Cl. A-1, Downgraded to Ca from Baa3
-- Cl. A-2, Downgraded to C from Ba3
-- Cl. A-3, Downgraded to C from Ba3
-- Cl. M-1, Downgraded to C from Caa1
-- Cl. M-2, Downgraded to C from Caa3
-- Cl. M-3, Downgraded to C from Ca
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-S3
-- Cl. A-1, Downgraded to Ca from Ba3
-- Cl. M-1, Downgraded to C from Caa1
-- Cl. M-2, Downgraded to C from Caa3
-- Cl. M-3, Downgraded to C from Ca
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-S4
-- Cl. A-1, Downgraded to Ca from Ba3
-- Cl. M-1, Downgraded to C from Caa1
-- Cl. M-2, Downgraded to C from Caa2
-- Cl. M-3, Downgraded to C from Caa3
-- Cl. M-4, Downgraded to C from Ca
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2006-S5
-- Cl. A, Downgraded to Ca from B3
-- Cl. M-1, Downgraded to C from Caa3
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2007-S1
-- Cl. A, Downgraded to Ca from Ba1
-- Cl. M-1, Downgraded to C from B2
-- Cl. M-2, Downgraded to C from Caa2
-- Cl. M-3, Downgraded to C from Ca
-- Cl. M-4, Downgraded to C from Ca
Issuer: Nomura Asset Acceptance Corporation, Alternative Loan
Trust, Series 2007-S2
-- Cl. M-4, Downgraded to C from Ca
NUTRITIONAL SOURCING: Court Wants Class Distributions Clarified
---------------------------------------------------------------
The Hon. Peter J. Walsh of the U.S. Bankruptcy Court for the
District of Delaware is seeking clarification on the distributions
of the proposed joint Chapter 11 plan of liquidation of
Nutritional Sourcing Corporation and its debtor-affiliates to the
various classes of claims in connection with the post confirmation
briefing.
Judge Walsh requires the Debtors to disclose:
a) the amount of cash and the estimated value of other assets
presently owned by each of the Debtors;
b) the amount, if any, of particular Debtors' property that
will be transferred to any other Debtor under the plan,
identifying each Debtors and explaining the reason for
the transfers; and
c) the amount of the property of each of the Debtors will be
distributed to each of their respective classes of claims.
"The Plan does not embody a substantive consolidation," Judge
Walsh says. "We effectively have three plan, one for Nutritional
Sourcing, Pueblo International LLC, and FLBN LLC," he says. "This
makes for a rather complicated plan as evidence by the fact that
there are six separate class of claims that will receive a
distribution," he continued.
The Court, in effect, attempts to find out exactly where the
property resides, where it will be transferred, and where it will
end up when the proposed plan is fully consummated.
On Sept. 14, 2008, the Court approved the adequacy of the Debtors'
disclosure statement explaining their joint liquidation plan
within meaning of Section 1125 of the U.S. Bankruptcy Code. The
confirmation hearing was adjourned on Nov. 18, 2008. It was
originally set on Oct. 14, 2008.
The plan provides separate treatments for the Debtors because
their estate are not being substantively consolidated. The
Debtors remind the creditors that they may be paid only out of the
estate in which they have a claim.
The terms of the Plan represent the settlement, among other
things:
i) of several of the largest claims against the Debtors'
estates -- including a $1,125,000 claim of Pension Benefit
Guaranty Corporation, holders of senior secured notes and
the Debtors' two executive officers, and
ii) resolution of certain issues that have been disputed
throughout the case, the amount of the FLBN intercompany
claims that should be classified as a Pueblo trade claim and
the bonus to be paid to Debtors' two executive officers.
In 2006, the Debtors conducted an auction for the sale of
substantially all of their grocery stores and their distribution
center. During the action, PS Acquisition Inc. made a
$139,000,000 offer for the Debtors' assets topping Pueblo and
Supermercados Econo Inc.'s $89,750,000 bid. The Court approved
the sale on Sept. 25, 2007. The sale closed on Oct. 31, 2008.
The sale generated about $32,181,628 in proceeds. The proceeds
were net of, among other things:
-- repayment of all obligations owed to the lender of
$101,200,000;
-- break-up fee and expense reimbursement for Pueblo and
Supermercados of $4,200,000;
-- paid and escrowed cure amounts for assumed contracts and
leases;
-- other fees and expenses, and
-- the addition to the purchase price for inventory of
$4,876,643.
Treatment of Interests and Claims
A. Nutritional Sourcing Inc.
Type
Class of Claims Treatment
----- --------- ---------
1C other priority claims unimpaired
2B senior secured note claims impaired
3C other secured claims unimpaired
4D general unsecured claims impaired
5C penalty and subordinated impaired
claims
6C equity securities interests impaired
Holders of Class 4D general unsecured claims, totaling
$17 million, will not receive any distribution on account of their
allowed unsecured claims.
B. Pueblo International LLC
Type
Class of Claims Treatment
----- --------- ---------
1A other priority claims unimpaired
2A mirror loan claims impaired
3A other secured claims unimpaired
4A trade claims impaired
4B general unsecured claims impaired
5A penalty and subordinated impaired
claims
6A equity securities interests impaired
Holders of Class 4B general unsecured claims, totaling
$79.22 million, will receive their pro rata share of the net
proceeds of the Pueblo liquidation trust assets. Holders are
expected to recover 13.2% under the plan.
C. FLBN LLC
Type
Class of Claims Treatment
----- --------- ---------
1B other priority claims unimpaired
3B other secured claims unimpaired
4C general unsecured claims impaired
5B penalty and subordinated impaired
claims
6B equity securities interests impaired
Holders of Class 4C general unsecured claims, totaling
$32.9 million, will receive their pro rata share of the assets in
FLBN's chapter 11 estate. Holders are expected to recover 25.1%
under the plan.
Holders of Class 2B, 4A, 4B and 4C claims are entitled to vote for
the plan.
A full-text copy of the Debtors' and Panel's disclosure statement
is available for free at http://ResearchArchives.com/t/s?308a
About Nutritional Sourcing
Based in Pompano, Florida, Nutritional Sourcing Corp., fdba Pueblo
Xtra International, Inc. -- http://www.puebloxtra.com/-- owns and
operates supermarkets and video rental shops in Puerto Rico and
the US Virgin Islands. The company and two affiliates, Pueblo
International, L.L.C., and F.L.B.N., L.L.C., filed for chapter 11
protection on Aug. 3, 2007 (Bankr. D. Del. Case Nos. 07-11038
through 07-11040). Kay Scholer LLC represents the Debtors in
their restructuring efforts. Pepper Hamilton LLP serves as their
Delaware counsel. The U.S. Trustee for Region 3 appointed eight
creditors to serve on an Official Committee of Unsecured
Creditors. Skadden, Arps, Slate, Meagher & Flom LLP represent
the Official Committee of Unsecured Creditors. The company has
disclosed $130.8 million in assets and debt totaling $266.5
million with the Court.
OWENS CORNING: Posts $810MM Net Loss in Third Quarter 2008
----------------------------------------------------------
Owens Corning reported financial results for three and nine month
ended Sept. 30, 2008.
Net loss for three month ended Sept. 30, 2008, was $810.0 million
compared to net earnings of $112.0 million for the same period in
the previous year.
The company reported that consolidated net sales increased
28% to $1.6 billion during the third quarter, compared with
$1.3 billion in the third quarter of 2007. Third-quarter sales
were up due to strong performance in the Roofing and Asphalt and
Composites businesses.
For nine-month ended Sept. 30, 2008, the company reported net
loss of $794.0 million compared to net earnings of $142.0 million
for the same period in the previous year.
The company believes its U.S. operations will have sufficient
profitability during the remaining tax-loss carryforward period
to realize substantially all of the economic value of the net
operating losses before they expire.
Other Financial Items
-- During the first quarter of 2007, Owens Corning reported
a share buy-back program under which the company was
authorized to repurchase up to 5% of Owens Corning's
outstanding common stock. During the third quarter, the
company repurchased 1.9 million shares at an average price
of $22.23 per share. For the nine-month period ending
Sept. 30, 2008, the company repurchased 2.9 million shares
at an average price of $22.70 per share. On Sept. 30, 2008,
the company had 128.8 million shares outstanding and
approximately 3.6 million shares remaining available for
repurchase under the current program.
-- As part of the operational integration of its composites
acquisition, Owens Corning sold precious metals during the
third quarter of 2008 that resulted in a net gain of
$26.0 million. The sales were part of the company's ongoing
program to reduce its operational requirements for certain
precious metals and to use the proceeds to acquire other
precious metals in order to reduce metal lease obligations.
-- At the end of the third quarter of 2008, Owens Corning had
net debt of approximately $2.0 billion, comprised of
$2.1 billion of short- and long-term debt and cash-on-hand
of $76 million. Net debt is currently expected to be at
about last year's level of $1.9 billion at year's end.
-- Owens Corning's federal tax net operating loss
carryforward, resulting from the distribution of cash and
stock to settle its prior Chapter 11 case in 2006, was
$3.0 billion at the end of the third quarter of 2008. The
company's U.S. cash tax rate is now expected to be less than
2% for at least the next 10 to 15 years.
-- During the third quarter of 2008, depreciation and
amortization totaled $84.0 million. Owens Corning estimates
that depreciation and amortization from continuing
operations will total approximately $315 million in 2008.
At Sept. 30, 2008, the company's balance sheet showed total
assets of $7.3 billion, total liabilities of $4.2 billion and
shareholders' equity of approximately $3.1 billion.
About Owens Corning
Headquartered in Toledo, Ohio, Owens Corning fka Owens Corning
(Reorganized) Inc. (NYSE: OC) -- http://www.owenscorning.com/--
is a producer of residential and commercial building materials and
glass fiber reinforcements, and other similar materials for
composite systems. The company has operations in 26 countries.
The company filed for chapter 11 protection on Oct. 5, 2000
(Bankr. D. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at
Saul Ewing LLP, represented the Debtors. Elihu Inselbuch, Esq.,
at Caplin & Drysdale, Chartered, represented the Official
Committee of Asbestos Creditors. James J. McMonagle served as the
Legal Representative for Future Claimants until June 20, 2007.
Mr. McMonagle was replaced by Michael J. Crames. Mr. Crames
served as Mr. McMonagle's counsel until July 2005, when he retired
from the law firm Kaye Scholer LLP.
On Sept. 28, 2006, the Honorable John P. Fullam, Sr., of the U.S.
District Court for the Eastern District of Pennsylvania affirmed
the order of Honorable Judith Fitzgerald of the U.S. Bankruptcy
Court for the District of Delaware confirming Owens Corning's
Sixth Amended Plan of Reorganization. The Plan took effect on
Oct. 31, 2006, marking the company's emergence from Chapter 11.
Reorganized Owens sought on July 25, 2008, from the Delaware
Bankruptcy Court a final decree closing the Chapter 11 cases of 17
of its affiliates. Only the Chapter 11 case of Owens Corning
Sales, LLC, formerly known as Owens Corning, under Case No.
00-03837 will remain open. The Court is set to rule on the
request on Sept. 3.
(Owens Corning Bankruptcy News; Bankruptcy Creditors' Service
Inc.; http://bankrupt.com/newsstand/or 215/945-7000)
OWNIT MORTGAGE: Moody's Chips Ratings on Three Certificates
-----------------------------------------------------------
Moody's Investors Service has downgraded 3 certificates issued by
Ownit Mortgage Trust 2006-OT1. The transaction is backed by
second lien loans. The certificates were downgraded because the
bonds' credit enhancement levels, including excess spread and
subordination were too low compared to the current projected loss
numbers at the previous rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second.
Substantial pool losses of over the last few months have eroded
credit enhancement available to the mezzanine and senior
certificates. Despite the large amount of write-offs due to
losses, delinquency pipelines have remained high as borrowers
continue to default.
Moody's Investors Service also takes action on certain insured
notes. The ratings on securities that are guaranteed or "wrapped"
by a financial guarantor is the higher of a) the rating of the
guarantor or b) the published underlying rating.
The underlying ratings reflect the intrinsic credit quality of the
notes in the absence of the guarantee. The current ratings on the
below notes are consistent with Moody's practice of rating insured
securities at the higher of the guarantor's insurance financial
strength rating and any underlying rating that is public.
Issuer: Ownit Mortgage Trust 2006-OT1
Class Description: Cl. A-1
-- Current Rating: Aa3 on review for possible downgrade
Financial Guarantor: Ambac Assurance Corporation (Aa3, on review
for possible downgrade)
-- Underlying Rating: Downgraded to Ca from Baa2
Class Description: Cl. A-2
-- Current Rating: Aa3 on review for possible downgrade
Financial Guarantor: Ambac Assurance Corporation (Aa3, on review
for possible downgrade)
-- Underlying Rating: Downgraded to C from B2
-- Cl. M-1, Downgraded to C from Caa2
-- Cl. M-2, Downgraded to C from Ca
-- Cl. M-3, Downgraded to C from Ca
PACIFIC LIFESTYLE: Seeks Court OK to Sell Homes; Merger Questioned
------------------------------------------------------------------
Pacific Lifestyle Homes, Inc., seeks permission from the U.S.
Bankruptcy Court for the Western District of Washington in Tacoma
to continue to ink contracts or close on existing contracts for
the construction and sale of homes.
PLHI constructs about 250 homes per year. As of Oct. 16, 2008,
when it filed for bankruptcy protection, PLHI had nine communities
under construction, comprising 284 lots in the aggregate. The
Debtor also had 16 individual lots, some with houses and some raw
lands outside of their developments. As of the Petition Date,
PLHI had reached agreement with prospective buyers for 14 home
sales in Oregon and Washington.
PLHI owes $52,300,000 to numerous lenders, including Bank of
America, N.A.; KeyBank National Association, West Coast Bank and
others, who generally possess a lien on lots, improvement and
other properties of the Debtor. To alleviate the concerns of its
lenders, the Debtor has proposed minimum sales prices for each
home. The document containing the minimum prices was filed with
the Court under seal.
According to Steven M. Hedgberg, Esq., at Perkins Coie LLP, in
Portland, Oregon, the Debtor's ability to sell homes to customers
requires sales free and clear of liens, in order to satisfy
customers and title insurers.
Mr. Hedgberg adds that continuation of the Debtor's home-
constructing, home-marketing and home-selling activities is
critical to the Debtor's reorganization efforts. "Establishing
procedures for the payment of lien claims facilitates these goals
by enabling Debtor to continue a seamless homebuilding and home
selling operation without disruption."
KeyBank National Association, one of the Debtor's creditors, and
owed in excess of $20,546,956 for various loans secured by deeds
of trust in real estate in both Oregon and Washington, says that
while it agrees that allowing existing purchase agreement to close
may make practical sense, it questions whether the Court has
authority to authorize the sales given that some of the properties
are owned by PLHI's subsidiaries. KeyBank consents to the sale on
the condition that it be paid the net proceeds of sale on lots
where it holds liens. KeyBank also said it has serious concerns
regarding the bona fides of this bankruptcy filing and the
feasibility of a chapter 11 rehabilitation and reorganization of
PLHI.
The U.S. Trustee asserts that an expedited hearing on the proposal
-- at a time when a statutory committee of creditors has not yet
been formed -- is not warranted. Robert D. Miller, acting United
States Trustee, as well as KeyBank, has noticed that PLHI consists
of 30 entities merged into one on Oct. 15, a day before its
bankruptcy filing. By causing the merger, the Debtor effected the
substantive consolidation of 30 entities that, according to the
U.S. Trustee, do not share common property or debt. According to
Mr. Miller, the Debtor's prepetition conduct begs for scrutiny,
and its present proposals before the Court raise "more questions
than they answer". The Trustee also said that a creditors'
committee, once it is formed, will address, (i) issues of
potential unfairness to creditors and dilution of claims as a
consequence of the merger, (ii) $15 million in insider
receivables, as well as several million dollars paid in the last
year to CEO Kevin Wann and his entities as creditors.
Based in Vancouver, Washington, Pacific Lifestyle Homes, Inc.
claims to be one of the largest homebuilders in Southwest
Washington and Northern Oregon. The company filed for Chapter 11
relief on Oct. 16, 2008 (Bankr. W.D. Wash. 08-45328). Steven M.
Hedberg, Esq., at Perkins Coie LLP represents the Debtor as
counsel. When the Debtor filed for protection from its creditors,
it listed assets of $50 million to $100 million, and debts of $50
million to $100 million.
PEBBLE CREEK: S&P Withdraws All Ratings After Loan Full Payment
---------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on all
rated classes issued by Pebble Creek LCDO 2007-2 Ltd., following
the full payment of principal and interest to all rated classes on
the Oct. 15, 2008, final payment date. Pebble Creek LCDO 2007-2
Ltd. is a hybrid collateralized debt obligation transaction
referencing primarily corporate loans.
Because the class A (not rated) and B notes were unfunded at close
and remained unfunded on the final payment date, no principal
proceeds were required to pay down these notes, and all principal
proceeds were allocated to the principal paydown of the class C,
D, and E notes. The proceeds from the liquidation of the eligible
investments were sufficient to pay down the class C, D, and E
notes in full.
S&P previously placed the ratings on all classes on CreditWatch
with negative implications due to their exposure to various Lehman
Bros. entities. The CreditWatch placements followed recent rating
actions on several Lehman Bros. entities.
Ratings Withdrawn
Pebble Creek LCDO 2007-2 Ltd.
Class To From
----- -- ----
B NR AAA/Watch Neg
C NR BBB+/Watch Neg
D NR BB+/Watch Neg
E NR B-/Watch Neg
NR -- Not rated.
PIERRE FOODS: Committee Taps Garden City as Communication Agent
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of Pierre Foods Inc.
and its debtor-affiliates ask the United States Bankruptcy Court
for the District of Delaware for permission to employ The Garden
City Group Inc. as its communication agent.
The firm will:
a) establish and maintain an internet-accessed website;
b) distribute case updates via electronic mail for creditors
that have registered for this service on the Committee's
website; and
c) establish and maintain a telephone number and electronic mail
address for creditors to submit questions and comments.
Papers filed with the Court did not disclose the firm's
professionals compensation rates.
To the best of the Debtors' knowledge, the firm is a
"disinterested person" as defined in Section 101(14) of the U.S.
Bankruptcy Code.
About Pierre Foods
Based in Cincinnati, Ohio, Pierre Foods, Inc. --
http://www.pierrefoods.com-- manufactures and sells ready-to-cook
and pre-cook products. The company and and 13 of its affiliates
filed for Chapter 11 protection on July 15, 2008 (Bankr. D. Del.
Lead Case No. 08-11469). Jonathan S. Henes, Esq., and Lisa G.
Laukitis, Esq., at Kirkland & Ellis; and Daniel J. DeFranceschi,
Esq., and Paul N. Heath, Esq., at Richards, Layton & Finger P.A.,
represent the Debtors in their restructuring efforts. The Debtors
selected Kurtzman Carson Consultants LLC as their claims agent.
The United States Trustee for Region 3 appointed creditors to
serve on an Official Committee of Unsecured Creditors. The
Committee selected Michael S. Stamer, Esq., at Akin Gump Strauss
Hauer & Feld LLP, in New York, and James R. Savin, Esq., at Akin
Gump's Washington, D.C. office, as counsel. Oaktree Capital
Management, the Debtors' DIP lender and which is serving as plan
sponser, is represented by Van C. Durrer, II, Esq., at Skadden
Arps, Slate Meagher & Flom LLP, in Los Angeles, California.
Wachovia Bank, N.A., the administrative agent under the Debtors'
June 2004 credit agreement, is represented by Gregory Bray, Wsq.,
and Haig Mark Maghakian, Esq., at Milbank Tweed Hadley McCloy LLP.
PIERRE FOODS: Wins Court OK to Get Votes on Restructuring Plan
--------------------------------------------------------------
The United States Bankruptcy Court for the District of Delaware
approved the Disclosure Statement filed in connection with Pierre
Foods, Inc. proposed Plan of Reorganization and authorized
Pierre to begin soliciting votes on the Plan. Pierre's
confirmation hearing, at which the Bankruptcy Court will
consider approval of the Plan, has been scheduled for Dec. 10,
2008 at 9:30 am Eastern Time.
On Sept. 30, 2008, the Plan is supported by funds managed by
Oaktree Capital Management L.P., the company's single largest
creditor, and Pierre's Official Committee of Unsecured Creditors.
Oaktree supplied the company's debtor-in-possession credit
facility, and upon confirmation of the Plan, funds managed by
Oaktree will become the majority owner of Pierre.
The company stated, "We are pleased that the Court has authorized
the solicitation of votes on the consensual Plan of
Reorganization. Everyone at Pierre can be proud of what has been
accomplished in a very short amount of time. Pierre is poised to
emerge from Chapter 11 as a stronger company, with a solid balance
sheet, that is well prepared to operate throughout the current
economic cycle and beyond. The company is excited about its new
sponsorship with Oaktree and appreciates the unwavering dedication
and loyalty shown by its employees, customers and vendors
throughout the restructuring process."
Pierre will shortly begin the process of soliciting votes for the
Plan from eligible claim holders. The company expects to emerge
from Chapter 11 shortly after the December 10 confirmation
hearing. At emergence, Pierre's consolidated debt will be
approximately $141 million, as compared to approximately
$367 million of debt at the time of its Chapter 11 filing.
About Pierre Foods
Based in Cincinnati, Ohio, Pierre Foods, Inc. --
http://www.pierrefoods.com-- manufactures and sells ready-to-cook
and pre-cook products. The company and and 13 of its affiliates
filed for Chapter 11 protection on July 15, 2008 (Bankr. D. Del.
Lead Case No. 08-11469). Jonathan S. Henes, Esq., and Lisa G.
Laukitis, Esq., at Kirkland & Ellis; and Daniel J. DeFranceschi,
Esq., and Paul N. Heath, Esq., at Richards, Layton & Finger P.A.,
represent the Debtors in their restructuring efforts. The Debtors
selected Kurtzman Carson Consultants LLC as their claims agent.
The United States Trustee for Region 3 appointed creditors to
serve on an Official Committee of Unsecured Creditors. The
Committee selected Michael S. Stamer, Esq., at Akin Gump Strauss
Hauer & Feld LLP, in New York, and James R. Savin, Esq., at Akin
Gump's Washington, D.C. office, as counsel. Oaktree Capital
Management, the Debtors' DIP lender and which is serving as plan
sponser, is represented by Van C. Durrer, II, Esq., at Skadden
Arps, Slate Meagher & Flom LLP, in Los Angeles, California.
Wachovia Bank, N.A., the administrative agent under the Debtors'
June 2004 credit agreement, is represented by Gregory Bray, Wsq.,
and Haig Mark Maghakian, Esq., at Milbank Tweed Hadley McCloy LLP.
PILGRIM'S PRIDE: Moody's Cuts Rtngs After $25.7MM Payment Default
-----------------------------------------------------------------
Moody's Investors Service lowered Pilgrim's Pride Corporation's
ratings, including the company's probability of default rating to
Caa2 from B2, following Pilgrim's Pride's announcement that it
will not pay $25.7 million of interest on its 7-5/8% Senior Notes
and its 8-3/8% Senior Subordinated Notes when due on November 3,
2008 but will go into the thirty day grace period. The rating
outlook is negative. This rating action concludes the review for
possible downgrade that originally began on September 3, 2008.
Moody's previous rating action, on September 25, 2008, was to
lower Pilgrim's Pride's ratings and continue the review for
possible downgrade.
Ratings lowered:
-- Corporate family rating to Caa1 from B2
-- Probability of default rating to Caa2 from B2
-- $400 million 7.625% senior notes due 2015 to Caa3 (LGD4, 67%)
from Caa1 (LGD5, 84%)
-- $250 million senior subordinated notes due in 2017 and
$5.1 million (original $100 million) senior subordinated
notes due 2013 to Caa3 (LGD5,83%) from Caa1 (LGD6, 94%)
Pilgrim's Pride has received a one-month extension of a temporary
covenant waiver from October 28, 2008 to November 26, 2008. The
company's extended bank waivers require that it engage a chief
restructuring officer. Unless otherwise approved by the lenders,
Pilgrim's Pride will maintain $35 million aggregate undrawn
availability under the $550 million CoBank revolving credit
agreement and the $300 million Bank of Montreal revolving credit
facility; for the Bank of Montreal RC, the amount of aggregate
undrawn availability is $75 million.
The ratings downgrade is based on the absence of a permanent
amendment of the bank agreement and Moody's concern that Pilgrim's
Pride's liquidity will be constrained in the near term until its
bank agreements are permanently amended and its bond interest
payments made.
The higher LGD ratings reflect Moody's expectation that recovery
would be slightly better than average in a default scenario given
the nature of the company's assets and the amount of potential
excess collateral.
The negative rating outlook incorporates the pressing near term
need to bolster operating liquidity and make the interest payment
on the two bonds before the expiration of the grace period.
Moody's notes the annualized benefit of current feed grain costs,
relative to conditions in late July, is approximately $1.1
billion.
Headquartered in Pittsburg, Texas, Pilgrim's Pride Corporation is
the world's largest chicken company. Sales for the twelve months
ended June 28, 2008 were approximately $8.6 billion.
PILGRIM'S PRIDE: Will Use Grace Period for Nov. 3 Interest Payment
-----------------------------------------------------------------
Pilgrim's Pride Corporation intends to exercise its 30-day grace
period in making the $25.7 million interest payment due Nov. 3,
2008, on its 7-5/8% Senior Notes and 8-3/8% Senior Subordinated
Notes.
Pilgrim's Pride also disclosed that it has reached an agreement
with its lenders to extend the temporary waiver under its credit
facilities through Nov. 26, 2008. Lenders have also agreed to
provide continued liquidity under credit facilities during this
same period in accordance with the terms of the waiver agreements.
The company and its advisors have been working on a comprehensive
business plan that addresses the financial and operational
challenges currently facing Pilgrim's Pride and the chicken
industry. The company related that the extension provides
Pilgrim's Pride with flexibility while it continues to evaluate
its opportunities to refinance and recapitalize its business.
The company is working toward a solution to improve its long-term
liquidity and position itself to capitalize on its strategic
advantages.
The company stated, "We have made significant progress in
developing an appropriate and effective strategic response to
the issues facing Pilgrim's Pride and we look forward to
executing against that plan. Lenders have been constructive and
supportive throughout this challenging period and we believe that
like us, they are encouraged by recent industry egg set data and
the continued decline in grain and other feed ingredient prices,
which if sustained should bode well for our company and the
industry as a whole. In fact, the annualized benefit of the
current feed ingredient prices relative to those that existed at
the time of the company's third fiscal quarter conference call
held on July 29, 2008; is approximately $1.1 billion. We look
forward to working with all of our stakeholders throughout this
process."
A full-text copy of the terms and conditions of the waivers is
available for free at http://ResearchArchives.com/t/s?3451
The company has retained Lazard as its investment banker to
provide strategic advice regarding refinancing and
recapitalization opportunities and Bain Corporate Renewal Group to
work with management on a range of strategic issues and
operational improvements.
About Pilgrim's Pride
Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation
(NYSE: PPC) -- http://www.pilgrimspride.com/-- produces,
distributes and markets poultry processed products through
retailers, foodservice distributors and restaurants in the U.S.,
Mexico and in Puerto Rico. Pilgrim's Pride employs about 40,000
people and has major operations in Texas, Alabama, Arkansas,
Georgia, Kentucky, Louisiana, North Carolina, Pennsylvania,
Tennessee, Virginia, West Virginia, Mexico and Puerto Rico, with
other facilities in Arizona, Florida, Iowa, Mississippi and Utah.
* * *
As reported in the Troubled Company Reporter on Sept. 29, 2008,
Standard & Poor's Ratings Services lowered its ratings on
Pilgrim's Pride Corp., including its corporate credit rating to
'CCC+' from 'BB-'. In addition, S&P revised the CreditWatch
implications to developing from negative.
Moody's Investors Service lowered the ratings of Pilgrim's Pride
Corporation, including: (i) corporate family rating to B2 from
B1; (ii) probability of default rating to B2 from B1; (iii)
$400 million 7.625% senior notes due 2015 to Caa1 from B3 and
(iv) $250 million senior subordinated notes due in 2017 and
$5.1 million (original $100 million) senior subordinated notes
due 2013 to Caa1 from B3.
PULTE HOMES: Posts $280.4 Million Net Loss for Q3 Ended Sept. 30
----------------------------------------------------------------
Pulte Homes Inc. disclosed in a Securities and Exchange Commission
filing its results for its third quarter ended Sept. 30, 2008.
For the quarter, Pulte reported a net loss of $280.4 million, or
$1.11 per share, compared with a $787.9 million net loss for the
prior year third quarter, or $3.12 per share. The third quarter
2008 net loss included $266.6 million of pre-tax charges related
to inventory impairments and other land-related charges.
Impairments and land-related charges for the prior year quarter
were $842 million. Consolidated revenues for the quarter were $1.6
billion, a decline of 37% from prior year revenues of $2.5
billion.
"The homebuilding operating environment significantly worsened
during the third quarter of 2008," said Richard J. Dugas, Jr.,
President and CEO of Pulte Homes. "The industry continues to be
plagued by tighter mortgage availability, a growing number of
foreclosures, and a historically high supply of unsold homes. In
the third quarter of 2008, uncertainty and volatility in the
capital markets, higher unemployment, and a weaker economy
provided further downward pressure on the housing market. These
factors caused buyer confidence to decline even more during the
period, as many potential home buyers remain on the sidelines.
"As this industry downturn persists, Pulte remains focused on its
goals of cash generation, reducing its overall cost structure, and
managing its inventory levels," Mr. Dugas continued. "The company
generated positive cash flow, ending the quarter with a $1.2
billion cash balance and no debt outstanding under its revolving
credit facility. Pulte remains well-positioned to capitalize on
opportunities once stability in the housing sector begins to
materialize."
Third Quarter Results
Revenues from homebuilding settlements in the third quarter
decreased 37% to $1.5 billion, compared with $2.4 billion in last
year's third quarter. The change in revenue for the quarter
reflects a 28% decrease in closings to 5,377 homes, and a 13%
decrease in average selling price to $281,000.
Third quarter homebuilding pre-tax loss was $302 million, compared
with a $1.1 billion pre-tax loss for the prior year quarter.
Homebuilding SG&A expense decreased $44.6 million, or 19%,
compared with the prior year quarter. During the third quarter of
2008, the company recorded $266.6 million of impairments and land-
related charges, including $250.3 million related to land
impairments, $15.9 million of impairments of land held for sale
and $1.4 million related to the company's investment in
unconsolidated joint ventures. For the prior year quarter, these
impairments and land-related charges totaled $842 million. In
addition, goodwill impairments of $336 million were recorded
during the prior year quarter.
Net new home orders for the third quarter were 3,008 homes, a
decline of 34% from the prior year third quarter. Pulte Homes'
ending backlog as of Sept. 30, 2008 was valued at $1.7 billion
(5,885 homes), compared with a value of $4.1 billion (12,042
homes) at the end of last year's third quarter. At the end of the
third quarter 2008, the company's debt-to-capitalization ratio was
49.9%, and on a net debt-to-capitalization basis was 38.5%.
The company's financial services operations reported pre-tax
income of $10.1 million for the third quarter 2008, compared with
$12.9 million of pre-tax income for the prior year's quarter.
This decrease in third quarter 2008 pre-tax income was primarily
due to a 37% decline in mortgage loans originated during the
quarter compared with the prior year quarter. This was partially
offset by a shift in the mix of mortgage loans closed toward more
profitable agency-backed products. The mortgage capture rate for
the quarter was 93%, compared with 92% for the same quarter last
year.
Nine Month Results
For the nine months ended Sept. 30, 2008, Pulte' net loss was
$1.1 billion, or $4.48 per share, compared with a $1.4 billion, or
$5.48 per share, net loss for the prior year period. Consolidated
revenues for the period were $4.6 billion, down 27% from
$6.4 billion for the first nine months of last year.
Revenues from homebuilding settlements for the period were
$4.5 billion, down 27% from the prior year. Lower revenues for the
period resulted from an 11% decrease in average selling price to
$287,000, combined with a 17% decrease in the number of homes
closed to 15,548.
Homebuilding pre-tax loss for the period was $1.2 billion,
compared with a $2.1 billion pre-tax loss for the prior year
period. Homebuilding SG&A expense decreased $241.9 million, or
30%, compared with the prior year period. During the first nine
months of 2008, the company recorded $1.2 billion of impairments
and land-related charges, including $1 billion related to land
impairments, $19.4 million associated with the write-off of land
deposits and pre-acquisition costs, $125.1 million of impairments
of land held for sale, and $3.1 million related to the company's
investment in unconsolidated joint ventures. For the prior year
period, these impairments and land-related charges totaled $1.7
billion. Homebuilding pre-tax loss for the prior year period also
includes goodwill impairment of $336 million and a pre-tax
restructuring charge of approximately $47 million.
For the first nine months of 2008, the pre-tax income for Pulte's
financial services operations was $35.9 million compared with
$32.7 million in the prior year. The positive shift in the mix of
mortgage loans toward more profitable agency-backed products was a
significant reason for this increase in income, offsetting the 32%
decrease in mortgage loans originated during the period.
Fourth Quarter 2008 Guidance
"Due to the high degree of uncertainty and volatility, coupled
with a lack of visibility surrounding the housing industry and the
overall economy, we are not providing earnings guidance for the
fourth quarter of 2008," said Mr. Dugas. "We are targeting a cash
position by the end of 2008 of $1.6 billion to $1.8 billion."
About Pulte Homes
Based in Bloomfield Hills, Michigan, Pulte Homes Inc. (NYSE: PHM)
-- http://www.pulte.com/-- is one of America's home building
companies with operations in 50 markets and 26 states. During its
58-year history, the company has delivered more than 500,000 new
homes. Pulte Mortgage LLC is also a nationwide lender offering
Pulte customers a wide variety of loan products and superior
service.
The company has been reporting consecutive quarters of losses
beginning Dec. 31, 2006.
* * *
As reported in the Troubled company Reporter on June 11, 2008,
Moody's Investors Service lowered all of the ratings of Pulte
Homes, Inc., including its corporate family rating to Ba2 from Ba1
and the ratings on its various issues of senior unsecured notes to
Ba2 from Ba1. At the same time, a speculative grade liquidity
rating of SGL-2 was assigned. The outlook remains negative.
P&F INDUSTRIES: Nasdaq Extends Compliance Period to April 20
------------------------------------------------------------
P&F Industries, Inc., received a letter from The NASDAQ Stock
Market providing notice that, for 30 consecutive trading days,
P&F's common stock had not maintained a minimum market value of
publicly held shares of $5 million as required for continued
inclusion on The NASDAQ Global Market by Marketplace Rule
4450(a)(2). For NASDAQ purposes, MVPHS is the market value of
P&F's publicly held shares, which is calculated by subtracting all
shares held by officers, directors or beneficial owners of 10% or
more of the total shares outstanding. The Notification has no
effect on the listing of P&F's securities at this time.
In the Notification, NASDAQ noted that the prior several weeks
had been marked by unprecedented turmoil in domestic and world
financial markets and that given these extraordinary market
conditions, NASDAQ determined to suspend enforcement of the MVPHS
requirements for all of its listed companies, including P&F,
through Friday, Jan. 16, 2009. Consistent with market
conditions and its determination, the Notification included notice
that on Oct. 16, 2008, NASDAQ had filed an immediately effective
rule change with the Securities and Exchange Commission to
suspend its MVPHS requirements among other measures. The
Notification noted that NASDAQ will reinstate the MVPHS rules
on Monday, Jan. 19, 2009, and the first relevant trade date under
the reinstated rules will be Tuesday, Jan. 20, 2009.
After the reinstatement of the MVPHS rules, NASDAQ will provide
P&F 90 calendar days from Jan. 20, 2009, or until April 20, 2009,
to regain compliance with the rules. If, at any time before
April 20, 2009, the MVPHS is at least $5 million for a minimum of
10 consecutive business days, NASDAQ will provide written
notification that P&F has achieved compliance with Marketplace
Rule 4450(a)(2) and P&F's shares will continue to trade on The
NASDAQ Global Market. If P&F does not regain compliance by
April 20, 2009, the NASDAQ Staff will provide written
notification that P&F's securities will be delisted. At that
time, P&F may appeal the delisting determination to a Listings
Qualifications Panel. Alternatively, P&F may apply to transfer
its securities to the NASDAQ Capital Market if it satisfies the
requirements for continued inclusion in that market.
"Unfortunately, the trading price of P&F's common stock, along
with the securities of many other companies, has been at
extremely low levels recently, due in part to the severe financial
conditions affecting a number of economic sectors," Richard
Horowitz, P&F's chairman of the board, chief executive officer
and President, stated. "Should our stock price not recover to
the level that would allow us to satisfy this NASDAQ market
value rule in sufficient time, we plan to apply for listing on
the NASDAQ Capital Market. We believe that P&F presently meets
the requirements for the NASDAQ Capital Market, although there
can be no assurance that we will continue to do so. We further
believe that listing on the NASDAQ Capital Market should not
significantly impact P&F or our common stock values going
forward."
About P&F Industries, Inc.
Headquartered in Melville, New York, P&F Industries, Inc.
(NASDAQ:PFIN) -- http://www.pfina.com/-- through its two wholly
owned operating subsidiaries, Continental Tool Group, Inc. and
Countrywide Hardware, Inc., manufactures and imports air-powered
tools sold principally to the industrial, retail and automotive
markets, and various residential hardware such as staircase
components, kitchen and bath hardware, fencing hardware and door
and window hardware. P&F's products are sold under their own
trademarks, well as under the private labels of major
manufacturers and retailers.
RENAISSANCE HOME: Moody's Lowers Ratings on 99 Certificate Classes
------------------------------------------------------------------
Moody's Investors Service has downgraded the ratings of 99
tranches from 11 subprime RMBS transactions issued by Renaissance.
Additionally, four ratings were confirmed after previously being
on review for possible further downgrade. The collateral backing
these transactions consists primarily of first-lien, fixed and
adjustable-rate, subprime residential mortgage loans.
These actions follow and are as a result of Moody's September 18th
2008 announcement that it had updated its loss projections on
first-lien subprime RMBS.
Complete rating actions are:
Issuer: Renaissance Home Equity Loan Trust 2005-1
-- Cl. M-3, Downgraded to A1 from Aa3
-- Cl. M-4, Downgraded to A2 from A1
-- Cl. M-5, Downgraded to Baa1 from A2
-- Cl. M-6, Downgraded to Baa2 from A3
-- Cl. M-7, Downgraded to Baa3 from Baa1
-- Cl. M-8, Downgraded to Ba3 from Ba1
-- Cl. M-9, Downgraded to Ca from Ba3
Issuer: Renaissance Home Equity Loan Trust 2005-2
-- Cl. M-3, Downgraded to A2 from Aa3
-- Cl. M-4, Downgraded to Baa2 from A1
-- Cl. M-5, Downgraded to Baa3 from A2
-- Cl. M-6, Downgraded to Ba3 from A3
-- Cl. M-7, Downgraded to B2 from Baa1
-- Cl. M-8, Downgraded to Ca from Ba1
-- Cl. M-9, Downgraded to Ca from Ba3
Issuer: Renaissance Home Equity Loan Trust 2005-3
-- Cl. M-8, Confirmed at B2
-- Cl. M-9, Downgraded to Ca from Caa1
Issuer: Renaissance Home Equity Loan Trust 2005-4
-- Cl. M-4, Downgraded to A2 from A1
-- Cl. M-5, Downgraded to Baa2 from A2
-- Cl. M-6, Downgraded to Ba1 from Baa2
-- Cl. M-7, Downgraded to B2 from Ba2
-- Cl. M-8, Downgraded to Caa2 from B1
-- Cl. M-9, Downgraded to C from B2
Issuer: Renaissance Home Equity Loan Trust 2006-1
-- Cl. M-2, Downgraded to Aa3 from Aa2
-- Cl. M-3, Downgraded to A3 from Aa3
-- Cl. M-4, Downgraded to Baa2 from A2
-- Cl. M-7, Downgraded to Caa2 from B2
-- Cl. M-8, Downgraded to C from B3
-- Cl. M-9, Downgraded to C from Caa1
-- Cl. M-10, Downgraded to C from Caa2
Issuer: Renaissance Home Equity Loan Trust 2006-2
-- Cl. M-1, Downgraded to Aa3 from Aa1
-- Cl. M-2, Downgraded to A3 from Aa2
-- Cl. M-3, Downgraded to Baa2 from A2
-- Cl. M-4, Downgraded to Ba1 from Baa2
-- Cl. M-5, Downgraded to B2 from B1
-- Cl. M-6, Downgraded to Ca from B1
-- Cl. M-7, Downgraded to C from B2
-- Cl. M-8, Downgraded to C from B3
-- Cl. M-9, Downgraded to C from Caa1
-- Cl. M-10, Downgraded to C from Caa2
Issuer: Renaissance Home Equity Loan Trust 2006-3
-- Cl. AF-5, Downgraded to Aa1 from Aaa
-- Cl. AV-2, Downgraded to Aa1 from Aaa
-- Cl. AV-3, Downgraded to Aa3 from Aaa
-- Cl. M-3, Confirmed at B1
-- Cl. M-4, Downgraded to B3 from B2
-- Cl. M-5, Downgraded to Ca from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. M-7, Downgraded to C from Caa2
-- Cl. M-8, Downgraded to C from Caa3
-- Cl. M-9, Downgraded to C from Caa3
Issuer: Renaissance Home Equity Loan Trust 2006-4
-- Cl. AF-4, Downgraded to Aa2 from Aaa
-- Cl. AF-5, Downgraded to A1 from Aaa
-- Cl. AF-6, Downgraded to Aa3 from Aaa
-- Cl. AV-2, Downgraded to A3 from Aaa
-- Cl. AV-3, Downgraded to Baa1 from Aaa
-- Cl. M-1, Downgraded to Ba1 from Aa3
-- Cl. M-2, Downgraded to B3 from Baa3
-- Cl. M-3, Downgraded to Caa2 from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. M-7, Downgraded to C from Caa2
-- Cl. M-8, Downgraded to C from Caa3
-- Cl. M-9, Downgraded to C from Caa3
Issuer: Renaissance Home Equity Loan Trust 2007-1
-- Cl. AF-3, Downgraded to A1 from Aaa
-- Cl. AF-4, Downgraded to A3 from Aaa
-- Cl. AF-5, Downgraded to Baa1 from Aaa
-- Cl. AF-6, Downgraded to A3 from Aa2
-- Cl. AV-1, Downgraded to Aa2 from Aaa
-- Cl. AV-2, Downgraded to Baa1 from Aaa
-- Cl. AV-3, Downgraded to Baa2 from Aa3
-- Cl. M-1, Downgraded to Ba2 from Baa3
-- Cl. M-2, Downgraded to B3 from B1
-- Cl. M-3, Downgraded to Caa2 from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. M-7, Downgraded to C from Caa2
-- Cl. M-8, Downgraded to C from Ca
Issuer: Renaissance Home Equity Loan Trust 2007-2
-- Cl. AF-3, Downgraded to A1 from Aaa
-- Cl. AF-4, Downgraded to A3 from Aaa
-- Cl. AF-5, Downgraded to Baa1 from Aaa
-- Cl. AF-6, Downgraded to A3 from Aa3
-- Cl. AV-2, Downgraded to Baa1 from Aaa
-- Cl. AV-3, Downgraded to Baa2 from Aa3
-- Cl. M-1, Downgraded to Ba3 from Ba1
-- Cl. M-2, Downgraded to Caa2 from B1
-- Cl. M-3, Downgraded to Caa3 from B1
-- Cl. M-4, Downgraded to C from B2
-- Cl. M-5, Downgraded to C from B3
-- Cl. M-6, Downgraded to C from Caa1
-- Cl. M-7, Downgraded to C from Caa2
-- Cl. M-8, Downgraded to C from Caa3
-- Cl. M-9, Downgraded to C from Ca
Issuer: Renaissance Home Equity Loan Trust 2007-3
-- Cl. AF-2, Confirmed at Aaa
-- Cl. AF-3, Downgraded to Aa2 from Aaa
-- Cl. AF-4, Downgraded to A3 from Aaa
-- Cl. AF-5, Downgraded to Baa1 from Aaa
-- Cl. AF-6, Downgraded to A3 from Aaa
-- Cl. AV-1, Downgraded to A3 from Aaa
-- Cl. AV-2, Downgraded to Baa1 from Aaa
-- Cl. AV-3, Downgraded to Baa2 from Aaa
-- Cl. M-2, Confirmed at B1
-- Cl. M-3, Downgraded to Caa2 from B2
ROCKVILLE CDO: Moody's Chips Four Notes Ratings to 'C'
------------------------------------------------------
Moody's Investors Service has downgraded the ratings of five
classes of notes issued by Rockville CDO I, Ltd., and left on
review for possible further downgrade the rating of one of these
classes of notes as:
Class Description: $680,000,000 Class A-1 First Priority Senior
Secured Floating Rate Delayed Draw Notes due 2048
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: May 5, 2008
-- Current Rating: Caa3, on review for possible downgrade
Class Description: $400,000,000 Class A-2 Second Priority Senior
Secured Floating Rate Notes due 2048
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: May 5, 2008
-- Current Rating: C
Class Description: $65,000,000 Class A-3 Third Priority Senior
Secured Floating Rate Notes due 2048
-- Prior Rating: Ca
-- Prior Rating Date: May 5, 2008
-- Current Rating: C
Class Description: $19,500,000 Class B Fourth Priority Senior
Secured Floating Rate Notes due 2048
-- Prior Rating: Ca
-- Prior Rating Date: May 5, 2008
-- Current Rating: C
Class Description: $5,400,000 Class C Fifth Priority Senior
Secured Floating Rate Notes due 2048
-- Prior Rating: Ca
-- Prior Rating Date: May 5, 2008
-- Current Rating: C
Rockville CDO I, Ltd. is a collateralized debt obligation backed
primarily by a portfolio of structured finance securities. On
April 16, 2008, the transaction experienced an event of default
caused by a failure of the Class A Overcollateralization Ratio to
be greater than or equal to the required amount set forth in
Section 5.1(i) of the Indenture dated October 25, 2006. That
event of default is continuing.
The rating actions taken reflect continuing deterioration in the
credit quality of the underlying portfolio and the increased
expected loss associated with the transaction. Losses are
attributed to diminished credit quality on the underlying
portfolio.
As provided in Article V of the Indenture during the occurrence
and continuance of an Event of Default, the Controlling Class may
be entitled to direct the Trustee to take particular actions with
respect to the Collateral. The severity of losses may depend on
the timing and choice of remedy to be pursued by the Controlling
Class. Because of this uncertainty, the rating of Class A-1
issued by Rockville CDO I, Ltd. is on review for possible further
action.
SALLY BEAUTY: Board of Directors Amends Bylaws
----------------------------------------------
Sally Beauty Holdings, Inc. disclosed in a Securities and Exchange
Commission filing that on and effective Oct. 23, 2008, its Board
of Directors amended and restated its Second Amended and Restated
Bylaws.
Section 1.06 of the company's Second Amended and Restated Bylaws
set forth the procedures for advance notice of stockholder
proposals for other business to be considered at an annual meeting
or special meeting of stockholders.
The company's amended Bylaws now clarify that (1) the advance
notice provisions of Section 1.06 apply to stockholder proposals
relating to nominations for the election of directors by
stockholders and (2) the procedures for advance notice of
nominations for the election of directors and any other business
to be considered at an annual or special meeting of the company is
separate and distinct from the procedures related to requests to
include stockholder proposals in the company's proxy statement
pursuant to Rule 14a-8 of the Securities Exchange Act of 1934.
Additionally, Section 1.06 of the amended Bylaws expands the
information required to be provided by the stockholder making a
proposal, including information about persons controlling, or
acting in concert with, such stockholder and information about any
hedging activities engaged in by them.
Full-text copy of the the Third Amended and Restated Bylaws is
available free of charge at:
http://researcharchives.com/t/s?344a
About Sally Beauty
Based in Denton, Texas, Sally Beauty Holdings Inc. (NYSE: SBH)
-- http://www.sallybeautyholdings.com/-- is an international
specialty retailer and distributor of professional beauty
supplies. Through the Sally Beauty Supply and Beauty Systems
Group businesses, the company sells and distributes through over
3,500 stores, including approximately 200 franchised units,
throughout the United States, the United Kingdom, Canada, Puerto
Rico, Mexico, Japan, Ireland, Spain and Germany.
Beauty Systems Group stores, branded as CosmoProf or Armstrong
McCall stores, along with its outside sales consultants, sell up
to 9,800 professionally branded products including Paul Mitchell,
Wella, Sebastian, Goldwell, and TIGI which are targeted
exclusively for professional and salon use and resale to their
customers.
At June 30, 2008, the company's consolidated balance sheet showed
$1.49 billion in total assets, $2.19 billion in total liabilities,
and $6.1 million in stock options subject to redemption, resulting
in a roughly $701.0 million stockholders' deficit.
SALS 2007-3: Moody's Junks $20MM Notes Rating to Caa3 from Ba2
--------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the notes
issued by SALS 2007-3 (Series 4657):
Class Description: $20,000,000 SALS 2007-3 Notes due June 20, 2017
-- Prior Rating: Ba2
-- Prior Rating Date: 7/8/2008
-- Current Rating: Caa3
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Washington
Mutual Inc., which was seized by federal regulators on Sept. 25,
2008 and subsequently virtually all of its assets were sold to
JPMorgan Chase, Fannie Mae and Freddie Mac, which were placed into
the conservatorship of the U.S. government on September 8, 2008
and an Icelandic bank, specifically Kaupthing Bank hf.
SCIENS CFO: Moody's Junks Ratings on Two Classes of Notes
---------------------------------------------------------
Moody's Investors Service has downgraded the debt securities of
Sciens CFO I Limited:
EUR 121,200,000 Class A Floating Rate Notes due 2014
-- Current Rating: Aa1, on review for downgrade
-- Prior Rating: Aaa, on review for downgrade
EUR 21,000,000 Class B Floating Rate Notes due 2014
-- Current Rating: A3, on review for downgrade
-- Prior Rating: Aa2, on review for downgrade
EUR 13,900,000 Class C Floating Rate Notes due 2014
-- Current Rating: Ba1, on review for downgrade
-- Prior Rating: A1, on review for downgrade
EUR 18,600,000 Class D Floating Rate Notes due 2014
-- Current Rating: Caa1, on review for downgrade
-- Prior Rating: Baa1, on review for downgrade
EUR 7,800,000 Class E Floating Rate Notes due 2014
-- Current Rating: Caa3, on review for downgrade
-- Prior Rating: Ba1, on review for downgrade
Originally rated on 14 December 2006, Sciens CFO I Limited is a
collateralized fund obligation backed by equity interests in a
diversified fund of hedge funds. The fund is managed by SF
Management Ltd.
The affected securities were placed on review for downgrade on 15
October 2008. The rating action reflects severe deterioration in
the level of subordination supporting the affected tranches. The
ratings also reflect continued concern over the vehicle's ability
to liquidate portfolio assets under stressed market conditions.
SHEARIN FAMILY: Seeks Another RBC Loan to Keep Condominium Project
------------------------------------------------------------------
Shearin Family Investments LLC asks the U.S. Bankruptcy Court for
the Eastern District of North Carolina for authority to obtain
postpetition financing from RBC Bank, its pre-petition lender, to
pay the costs and expenses associated with the Debtor's Project, a
waterfront high-rise condominium project in Indian Beach, Carteret
County, North Carolina known as The Nautical Club:
a. to pay to the general contractor its August draw under the
Building Contract for the Debtor's Nautical Club Project in
the amount of $803,903, its September draw under the
Building Contract in the amount of $500,932.88, and its
September draw under the Site Work Contract in the amount of
$44,741.35
b. to pay the premium costs to maintain the builders risk and
excess wind insurance coverage for the Debtor's Nautical Club
Project for four months, in the aggregate amount of $52,336.
The Debtor tells the Court that the Post-Petition Financing will
allow the Debtor to preserve and continue construction of the
Project.
The Debtor further tells the Court that it is unable to obtain
unsecured credit allowable under as an administrative expense
under Sec. 503(b)(1) of the Bankruptcy Code.
RBC is willing to advance certain funds to the Debtor in
connection with the Project, provided RBC's Post-Petition
Financing will be secured by a lien with the same priority as its
First Deed of Trust on RBC's existing collateral pursuant to
Section 364(c) of the Bankruptcy Code.
The terms and conditions of RBC's proposed Post-Petition
Financing, including interest rate, maturity, and events of
default, will be the same terms as are set forth in the Note from
the Debtor to RBC dated Oct. 9, 2007 in the original principal
amount of $12,400,000 with respect to what is described therein as
the "A&D Loan."
Pre-Petition Indebtedness
The Debtor is indebted to RBC pursuant to the terms of five (5)
promissory notes relating to financing for the Project, the total
original principal amount of which is $32,300,000.
The Notes are secured by (i) a Deed of Trust on the Project
property in the amount of $29,300,000 and (ii) a Deed of Trust on
the Project property in the amount of $3,000,000.
As of the Petition Date, the Debtor owed RBC approximately
$29,178,054, plus any amounts advanced with respect to the August
draw under the Building Contract, in principal, interest, and late
fees under the Note.
Based in Rocky Mount, North Carolina, Shearin Family Investments,
LLC owns and operates a condominium resort in Carteret County, in
North Carolina. The company filed for Chapter 11 relief on
Oct. 13, 2008 (Bankr. E.D. N.C. Case No. 08-07082). Trawick H.
Stubbs, Jr., Esq., at Stubbs & Perdue, P.A. represents the Debtor
as counsel. When the Debtor filed for protection from its
creditors, it listed assets of $46,327,546 and debts of
$49,260,007.
SMART & FINAL: Moody's Confirms 'B2' CF and PD Ratings
------------------------------------------------------
Moody's Investors Service confirmed Smart & Final Holdings Corp.'s
corporate family and probability of default ratings at B2.
Moody's also upgraded Smart & Final's asset based lending
agreement to Ba1 from Ba3. The outlook on all ratings is
negative.
The confirmation of Smart & Final's CFR and PDR was prompted by a
review of the company's progress in implementing its strategic and
operating plans following its May, 2007 leveraged buyout by Apollo
Management. Ed Henderson, VP and Senior Analyst at Moody's
stated, "The company's credit metrics, while still weak for its
rating, have improved since the closing of the May, 2007 LBO as
Smart & Final has implemented its strategic plans." Debt to
EBITDA has gone from 9.3 times at December 31, 2007 to 7.3 times
for the twelve months ended June 15, 2008. EBITA margin has
improved from 1.8% to 2.3% during the same period. "Nonetheless,
credit metrics need to improve further for Smart & Final to remain
comfortably positioned within the B2 rating category", Henderson
said.
The upgrade of the asset based lending ABL facility was a result
of a reconsideration of the priority of claim assumptions for some
liabilities within Smart & Final's capital structure in accordance
with Moody's loss given default methodology. The upgrade also
reflects a one notch rating uplift due to the structure of this
asset based loan facility.
The negative outlook reflects Moody's concerns with Smart &
Final's weak debt protection measures and the challenges it will
have in improving metrics to levels more appropriate to its
current rating.
Ratings Confirmed:
-- Corporate family rating at B2
-- Probability of default rating at B2
-- $397 million first lien term loan due 2014 at B2 (LGD 4, 52%)
-- $140 million second lien term loan due 2014 at Caa1
(LGD 5, 86%)
Rating upgraded:
-- $150 million asset based revolving credit facility due 2013
to Ba1 (LGD2, 15%) from Ba3 (LGD1, 09%)
The last rating action on this company was a downgrade of Smart &
Final's corporate family rating to B2 from B1 on June 11, 2008.
Headquartered in Commerce, California, Smart & Final Inc. is a
leading non-membership warehouse and wholesale grocery store chain
specializing in food and foodservice products, as well as daily
household products like paper and packaging, as well as janitorial
equipment and supplies. For the last twelve months ended June 15,
2008 the company generated $2.6 billion in revenue.
SMITHFIELD FOODS: Moody's Confirms Ratings After Beef Biz Sale
--------------------------------------------------------------
Moody's Investors Service confirmed the long-term ratings of
Smithfield Foods, Inc., including the company's corporate family
rating and probability of default rating at B1, concluding the
review for possible downgrade originally begun on June 12, 2008.
This action follows the completion of the sale of Smithfield's
beef business to JBS S.A. for $565 million cash, as had been
anticipated. The rating outlook is negative. The company's
speculative grade liquidity rating was affirmed at SGL-4. Moody's
prior rating action was the October 13, 2008 downgrade of long-
term ratings and the continuation of the review for possible
downgrade.
Ratings confirmed, with LGD % adjusted:
-- Corporate family rating at B1
-- Probability of default rating at B1
-- Senior unsecured debt at B3 (LGD5); LGD % to 81% from 84%
Rating affirmed:
-- Speculative Grade Liquidity Rating at SGL-4
Smithfield sold its beef processing and cattle feeding operation
to JBS S.A. for initial proceeds of $565 million in cash, as had
been anticipated. This considerable inflow has improved financial
flexibility with a significant portion of proceeds applied to debt
reduction. Proceeds to Smithfield from the liquidation of cattle
owned by Smithfield and its Five Rivers operation over the next 12
months are likely to exceed another $150 million, after payment of
Five Rivers' debt.
The negative rating outlook incorporates Moody's expectation that
Smithfield's consolidated operating profitability and cash flow
are likely to remain pressured in the near term, especially now
that the company's business is concentrated in pork. Live hog
prices, though higher, have trailed cash raising costs for
Smithfield for the last four quarters. As a result, the company
has been reporting operating losses in its hog production segment
-- $129 million in the fourth fiscal quarter ended April 27, 2008
and $38.8 million in the quarter ended July 27th.
Smithfield has responded with a plan to reduce its U.S. sow herd
by 4% to 5% which, along with lowered production by competitors,
could result in fewer market hogs in fiscal 2010 and higher
prices. Moody's notes that Smithfield, historically a serial
acquirer, has been free cash flow positive in only one of the last
four fiscal years.
Smithfield's speculative grade liquidity rating of SGL-4 reflects
Moody's expectation that the company will rely on its external
sources of cash in order to cover capital expenditures, working
capital requirements, and scheduled debt maturities until profit
margins and internal cash flow generation strengthen.
Smithfield's $1.3 billion domestic revolving credit expires in
August 2010, and 16% of its Euro 300 million revolving credit
expires in August 2009 and the remaining 84% in August 2010.
The company has improved its liquidity profile recently by issuing
$400 million of senior convertible notes due in June 2013, selling
4.95% of common stock to China's largest national agricultural
trading company for about $122.1 million, and replacing
$150 million of outstandings under an uncommitted line with a
$200 million senior unsecured term loan due in a single payment in
August 2011. Proceeds from these transactions were applied to
reduce or refinance debt, significantly increasing unused
availability under committed credit agreements.
As of September 26, 2008, Smithfield had over $500 million in
committed availability, and the company is no longer reliant on
uncommitted facilities. Current availability is estimated to be
much higher following receipt of beef sale proceeds. The next
material debt maturities are $117 million of subsidiary debt in
February 2009 and a $300 million bond in October 2009. Headroom
under financial covenants will not be abundant until operating
performance improves. International assets are generally
unencumbered, and the company's bank facility permits the
establishment of an accounts receivable facility for up to 5% of
total assets.
Smithfield Foods, Inc., headquartered in Smithfield, Virginia, is
the world's largest pork producer and processor and the fifth
largest US beef processor. Sales for the twelve months ended
July 27, 2008, excluding the revenues of the discontinued beef
business, were approximately $11.9 billion.
SOUNDVIEW HOME: Moody's Trims Ratings on 20 Certificate Classes
---------------------------------------------------------------
Moody's Investors Service has downgraded 20 certificates issued by
Soundview Home Loan Trust. The transactions are backed by second
lien loans. The certificates were downgraded because the bonds'
credit enhancement levels, including excess spread and
subordination were too low compared to the current projected loss
numbers at the previous rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second and home
equity line of credit collateral. Substantial pool losses of over
the last few months have eroded credit enhancement available to
the mezzanine and senior certificates. Despite the large amount
of write-offs due to losses, delinquency pipelines have remained
high as borrowers continue to default.
Issuer: Soundview Home Loan Trust 2005-A
-- Cl. M-2, Downgraded to Baa1 from Aaa
-- Cl. M-3, Downgraded to B1 from Aa1
-- Cl. M-4, Downgraded to C from Aa2
-- Cl. M-5, Downgraded to C from Aa3
-- Cl. M-6, Downgraded to C from A3
-- Cl. M-7, Downgraded to C from Baa1
-- Cl. M-8, Downgraded to C from Baa2
-- Cl. M-9, Downgraded to C from Baa3
Issuer: Soundview Home Loan Trust 2005-B
-- Cl. M-1, Downgraded to Baa2 from Aaa
-- Cl. M-2, Downgraded to B3 from Aaa
-- Cl. M-3, Downgraded to C from Aa1
-- Cl. M-4, Downgraded to C from Aa2
-- Cl. M-5, Downgraded to C from Aa3
-- Cl. M-6, Downgraded to C from A3
-- Cl. M-7, Downgraded to C from Baa1
-- Cl. M-8, Downgraded to C from B3
-- Cl. M-9, Downgraded to C from Caa3
Issuer: Soundview Home Loan Trust 2006-A
-- Cl. A, Downgraded to Ca from Ba2
-- Cl. M-1, Downgraded to C from Caa2
-- Cl. M-2, Downgraded to C from Ca
SPARE BACKUP: Names Robert Binkele to Board of Directors
--------------------------------------------------------
Spare Backup, Inc., disclosed in a Securities and Exchange
Commission filing that it has appointed Robert Binkele to its
Board of Directors, following the resignation of Richard Galterio.
Mr. Galterio resigned to focus on other business obligations.
There was no disagreement between Mr. Galterio and our company
which led to his resignation.
Mr. Binkele, 45, is the CEO of The Estate Planning Team, Inc., a
company he founded in 2002 which provides services to over 2,200
securities advisors, CPA\u2019s, attorneys and other professionals
nationwide with tax strategies, estate planning and pension
planning. Since August 2007 Mr. Binkele has been branch manager
of the Indian Wells branch of JP Turner & Company, LLC, a broker
dealer and member of FINRA. From January 2003 to July 2007 he was
branch manager of the Palm Desert branch of Brookstreet Securities
Corporation and from February 1998 to December 2002 he was branch
manager of the Palm Desert branch of Raymond James Financial
Services, Inc., both broker-dealers and members of FINRA.
Mr. Binkele holds Series 7, Series 63, and Series 24 licenses from
FINRA and holds an insurance agent license. Mr. Binkele graduated
from the University of Utah with a Bachelor of Arts - Family and
Consumer Studies (FCS).
Upon joining the board, the company issued Mr. Binkele non-plan
options five year to purchase 500,000 shares of the company's
common stock with an exercise of $0.13 per share which were valued
at $60,350.
About Spare Backup
Based in Palm Desert, Calif., Spare Backup Inc. (OTC BB: SPBU)
-- http://www.sparebackup.com/-- sells on-line backup solutions
software and services to individuals, business professionals,
small office and home office companies, and small to medium sized
businesses.
Going Concern Doubt
Sherb & Co. LLP, in Boca Raton, Florida, expressed substantial
doubt about Spare Backup Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the years ended Dec. 31, 2007 and 2006.
The auditing firm said that the company had net losses, cash
used in operations and a working capital deficit of $26,084,897,
$8,527,867 and $2,634,060 respectively, for the year ended
Dec. 31, 2007.
The company has generated minimal revenue since its inception on
June 12, 2002, and has incurred net losses of $4,661,963 during
the three months ended June 30, 2008.
Spare Backup Inc.'s consolidated balance sheet at June 30, 2008,
showed $1,480,565 in total assets and $4,944,127 in total
liabilities, resulting in a $3,463,562 stockholders' deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $61,187 in total current assets
available to pay $4,915,218 in total current liabilities.
The company reported a net loss of $4,661,963 on net revenues of
$251,032 for the second quarter ended June 30, 2008, compared with
net income of $2,927,565 on net revenues of $16,429 in the
corresponding period of 2007.
SPECTRUM BRANDS: NYSE Transitions Share Trading from Floor to Arca
------------------------------------------------------------------
Spectrum Brands, Inc. disclosed in a Securities and Exchange
Commission filing that on Oct. 23, 2008, it received notice from
the New York Stock Exchange that its common stock began actively
trading on NYSE Arca, the NYSE's electronic trading platform.
The company's ticker symbol (SPC) has not changed and the company
remains listed on the NYSE. Pursuant to the rules of the NYSE,
trading in the company's stock was automatically transitioned from
the NYSE's floor trading system to NYSE Arca when the company's
stock began trading below $1.05 per share.
The NYSE rules provide that trading will return to trading on the
NYSE's floor trading system if the company's common stock has
traded for at least one trading day at a price or prices that are
at all times above $1.10 per share.
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.
At March 30, 2008, the company's consolidated balance sheet showed
$3.31 billion in total assets and $3.54 million in total
liabilities, resulting in a $232.9 million total stockholders'
deficit.
* * *
As reported in the Troubled Company Reporter on July 22, 2008,
Moody's Investors Service affirmed Spectrum Brands Inc.'s
Corporate family rating at Caa1 and Probability-of-default rating
at Caa2. Spectrum Brands, Inc. disclosed in a Securities and
Exchange Commission filing that on Oct. 23, 2008, it received
notice from the New York Stock Exchange that its common stock
began actively trading on NYSE Arca, the NYSE's electronic trading
platform.
The company's ticker symbol (SPC) has not changed and the company
remains listed on the NYSE. Pursuant to the rules of the NYSE,
trading in the company's stock was automatically transitioned from
the NYSE's floor trading system to NYSE Arca when the company's
stock began trading below $1.05 per share.
The NYSE rules provide that trading will return to trading on the
NYSE's floor trading system if the Company's common stock has
traded for at least one trading day at a price or prices that are
at all times above $1.10 per share.
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.
At March 30, 2008, the company's consolidated balance sheet showed
$3.31 billion in total assets and $3.54 million in total
liabilities, resulting in a $232.9 million total stockholders'
deficit.
* * *
As reported in the Troubled Company Reporter on July 22, 2008,
Moody's Investors Service affirmed Spectrum Brands Inc.'s
Corporate family rating at Caa1 and Probability-of-default rating
at Caa2.
STEVE AND BARRY'S: Plan Filing Period Extended until March 6
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended through and including March 6, 2009, the period within
which Steve and Barry's LLC and its debtor-affiliates can
exclusively file a Chapter 11 plan, and through and including
May 5, 2009, the period within which they may solicit and obtain
acceptances for that plan.
As reported in the Troubled Company Reporter on Oct. 9, 2008,
Counsel for the Debtors, Shai Y. Waisman, Esq., at Weil, Gotshal
& Manges LLP, in New York, informed the Court that the extension
of the Exclusive Periods will increase the likelihood of a
greater distribution to the Debtors' stakeholders by
facilitating an orderly, efficient and cost-effective plan
process for the benefit of all creditors.
Mr. Waisman assured the Court that granting the request will not
harm or prejudice creditors or other parties-in-interest in the
Chapter 11 cases. The Debtors also intend to wind down the
remainder of the estates soon as practicable, he added.
Headquartered in Port Washington, New York, Steve and Barry's LLC
-- http://www.steveandbarrys.com/-- is a national casual
apparel retailer that offers high quality merchandise at low
prices for men, women and children. Founded in 1985, the company
operates 276 anchor and junior anchor shopping center and mall-
based locations throughout the U.S. The discount clothing chain's
brands include the BITTEN(TM) collection, the first-ever apparel
line created by actress and global fashion icon Sarah Jessica
Parker, and the STARBURY(TM) collection of athletic and lifestyle
apparel and sneakers created with NBA (R) star Stephon Marbury.
Steve & Barry's LLC, and 63 affiliates filed separate voluntary
petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead
Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq.,
at Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts.
Diana G. Adams, United States Trustee for Region 2, has appointed
seven members to the Official Committee of Unsecured Creditors in
the Debtors' Chapter 11 cases.
On Aug. 22, 2008, the Debtors obtained permission from the Court
to sell substantially all of their assets for $168 million to a
joint venture by Bay Harbour Management and York Capital, BHY S&B
Holdings, LLC. Under the terms of the purchase agreement,
majority of the Debtors' 276 stores will remain open.
Pursuant to the Purchase Agreement, the Court authorized 51
Debtors to change their corporate names. Lead Debtor Steve &
Barry's Manhattan LLC (Case No. 08-12579) has been changed to
Stone Barn Manhattan LLC. Parent company Steve & Barry's LLC
(Case No. 08-12615) is now known as Steel Bolt LLC.
When the Debtors filed for bankruptcy, they listed $693,492,000 in
total assets and $638,086,000 in total debts.
(Steve and Barry's Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
STEVE AND BARRY'S: Court Moves Lease Decision Period to Feb. 4
--------------------------------------------------------------
Judge Allan L. Gropper of the U.S. Bankruptcy Court for the
Southern District of New York extended to Feb. 4, 2009, the period
within which Steve and Barry's LLC and its debtor-affiliates may
assume or reject nonresidential real estate leases.
The remainder of the objections that were unresolved at the
Oct. 17, 2008, hearing that were adjourned to the Oct. 22, 2008,
hearing, were resolved out of Court. The resolved objections were
those raised by Hauck Holdings Hannibal Mo II, LLC, and Hauck
Holdings Alexandra, LLC; Lanesborough Enterprises NewCo, LLC and
West Manchester Mall LLC; Macerich Company, Gem Realty Capital,
Inc., Northland Plaza, LLC, and Fort Steuben Improvements, LLC;
Glimcher Properties Limited Partnership; CBL Associates
Management, Inc.; Aronov Realty Management and WP Realty; and DBR
& Associates, LLC, Feldman Mall Properties, Inc., Gregory
Greenfield & Associates, Ltd., Jones Lang LaSalle, Inc., The
Woodmont Company, and Triple Five Nevada Development Corporation.
Lanesborough Enterprises NewCo, LLC and West Manchester Mall LLC
have withdrawn their joint objection to the Motion, pursuant to a
notice dated October 10, 2008, subject to their rights and claims
in the Debtors' cases.
Accordingly, Judge Gropper overruled all objections that were not
withdrawn, including that of Westfield, LLC. Westfield has
sought to condition extension of the Debtors' lease decision
period upon the Debtors' payment of their lease obligation to
Westfield. In response, the Debtors said in a document filed
prior to the Court's entry of its order, that all issues related
to build-out stores have been resolved with respect to the lease
period extension request. With respect to complaints on unpaid
leases, the Debtors contended that it is the obligation of BH S&B
Holdings LLC, the purchaser of substantially all of the Debtors
assets, to make payments on those unpaid rent.
Judge Gropper further ruled that the order is without prejudice
to the right of any of the Debtors' lessors to file an appropriate
hearing to consider the basis of time reduction, upon prior notice
to the Debtors, the Official Committee of Unsecured Creditors, the
Purchaser, and the United States Trustee for Region 2.
About Steve and Barry's LLC
Headquartered in Port Washington, New York, Steve and Barry's LLC
-- http://www.steveandbarrys.com/-- is a national casual
apparel retailer that offers high quality merchandise at low
prices for men, women and children. Founded in 1985, the company
operates 276 anchor and junior anchor shopping center and mall-
based locations throughout the U.S. The discount clothing chain's
brands include the BITTEN(TM) collection, the first-ever apparel
line created by actress and global fashion icon Sarah Jessica
Parker, and the STARBURY(TM) collection of athletic and lifestyle
apparel and sneakers created with NBA (R) star Stephon Marbury.
Steve & Barry's LLC, and 63 affiliates filed separate voluntary
petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead
Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq.,
at Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts.
Diana G. Adams, United States Trustee for Region 2, has appointed
seven members to the Official Committee of Unsecured Creditors in
the Debtors' Chapter 11 cases.
On Aug. 22, 2008, the Debtors obtained permission from the Court
to sell substantially all of their assets for $168 million to a
joint venture by Bay Harbour Management and York Capital, BHY S&B
Holdings, LLC. Under the terms of the purchase agreement,
majority of the Debtors' 276 stores will remain open.
Pursuant to the Purchase Agreement, the Court authorized 51
Debtors to change their corporate names. Lead Debtor Steve &
Barry's Manhattan LLC (Case No. 08-12579) has been changed to
Stone Barn Manhattan LLC. Parent company Steve & Barry's LLC
(Case No. 08-12615) is now known as Steel Bolt LLC.
When the Debtors filed for bankruptcy, they listed $693,492,000 in
total assets and $638,086,000 in total debts.
(Steve and Barry's Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
STEVE & BARRY'S: Harold Kahn Joins as CEO, Leaves Wet Seal Board
----------------------------------------------------------------
Steve & Barry's disclosed that Harold "Hal" Kahn, has joined the
company as chief executive officer, effective immediately.
A company statement revealed that Mr. Kahn enjoyed a diverse and
illustrious career in the retail business for 35 years, including
10 years as chairman and CEO of Macy's East, a division of
Macy's, before leaving in 2004 to launch a retail consulting
business. Prior to that, he was CEO of Abraham and Straus,
President of Montgomery Ward, and CEO of Macy's South and Macy's
West. He began his career in the training program at Macy's in
1970.
"I am thrilled about the opportunity to help lead Steve &
Barry's, a retailer I believe offers a value proposition that's
second to none in the marketplace," said Mr. Kahn. "I've been
watching the company closely since it began launching amazing
celebrity collections with Sarah Jessica Parker, Venus Williams,
Amanda Bynes, Laird Hamilton and others. I'm looking forward to
helping guide the company to ensure it reaches its full
potential."
Douglas Teitelbaum, managing principal of investment fund Bay
Harbour Management, which together with York Capital Management
purchased Steve & Barry's out of bankruptcy this summer, said,
"Hiring an extraordinary retail pro to lead Steve & Barry's was
our top priority in the strategic business plan we put together
for getting the company on track to meet our profitability goals
over the long term. We're very fortunate that we were able to
persuade [Mr.] Kahn, one of the genuine greats in the field, to
join the team. I think that's testament to how big an impact
Steve & Barry's can make in retail over the next several years."
* * *
In line with Mr. Kahn's new post at Steve & Barry's, The Wet
Seal, Inc., a specialty retailer to young women, disclosed on
Oct. 23, 2008, Mr. Kahn has resigned from his position as a
member of The Wet Seal's board of directors, effective
immediately.
Alan Siegel, chairman of the board of directors for The Wet Seal,
Inc., commented, "Since joining the Wet Seal board in January
2005, [Mr. Kahn] brought tremendous merchandising insight to
the company as we successfully navigated a turn-around of the Wet
Seal division. Hal has been valuable member of the company's
board, and a trusted advisor to company management, throughout
his tenure of nearly four years. We wish him all the best in
his new leadership role with Steve & Barry's and in all future
endeavors."
About Steve & Barry's
Headquartered in Port Washington, New York, Steve and Barry's LLC
-- http://www.steveandbarrys.com/-- is a national casual
apparel retailer that offers high quality merchandise at low
prices for men, women and children. Founded in 1985, the company
operates 276 anchor and junior anchor shopping center and mall-
based locations throughout the U.S. The discount clothing chain's
brands include the BITTEN(TM) collection, the first-ever apparel
line created by actress and global fashion icon Sarah Jessica
Parker, and the STARBURY(TM) collection of athletic and lifestyle
apparel and sneakers created with NBA (R) star Stephon Marbury.
Steve & Barry's LLC, and 63 affiliates filed separate voluntary
petitions under Chapter 11 on July 9, 2008 (Bankr. S.D. N.Y. Lead
Case No. 08-12579). Lori R. Fife, Esq., and Shai Waisman, Esq.,
at Weil, Gotshal & Manges, LLP, represent the Debtors in their
restructuring efforts.
Diana G. Adams, United States Trustee for Region 2, has appointed
seven members to the Official Committee of Unsecured Creditors in
the Debtors' Chapter 11 cases.
On Aug. 22, 2008, the Debtors obtained permission from the Court
to sell substantially all of their assets for $168 million to a
joint venture by Bay Harbour Management and York Capital, BHY S&B
Holdings, LLC. Under the terms of the purchase agreement,
majority of the Debtors' 276 stores will remain open.
Pursuant to the Purchase Agreement, the Court authorized 51
Debtors to change their corporate names. Lead Debtor Steve &
Barry's Manhattan LLC (Case No. 08-12579) has been changed to
Stone Barn Manhattan LLC. Parent company Steve & Barry's LLC
(Case No. 08-12615) is now known as Steel Bolt LLC.
When the Debtors filed for bankruptcy, they listed $693,492,000 in
total assets and $638,086,000 in total debts.
(Steve and Barry's Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., http://bankrupt.com/newsstand/or
215/945-7000).
STRATA TRUST: Moody's Lowers $30MM Notes Rating to 'Ba2' from 'A3'
------------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the notes
issued by Strata Trust, Series 2006-2:
Class Description: $30,000,000 Floating Rate Notes due June 21,
2013
-- Prior Rating: A3
-- Prior Rating Date: 8/4/2008
-- Current Rating: Ba2
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to
Washington Mutual Inc., which was seized by federal regulators on
September 25, 2008 and subsequently virtually all of its assets
were sold to JPMorgan Chase, and an Icelandic bank, specifically
Kaupthing Bank hf.
S & A RESTAURANT: To Vacate Plano HQ; Trustee to Sell Assets
------------------------------------------------------------
S&A Restaurant Corp., and its affiliated debtors, which shut down
their Bennigan's and Steak & Ale restaurant chains in July, and
which bankrupt estates are now being managed by a Chapter 7
trustee, wants to sell furniture, fixtures and equipment at its
Plano, Texas headquarters, which will be vacated Oct. 31.
Before ceasing operations, S&A and Metromedia Steakhouse Company,
LP, utilized a centralized headquarters location for offices of
managerial and other management staff, located at 6500
International Parkway, Suite 1000, Plano, Texas 75093. After
July 29, MSC, which was not among the S&A entities that filed for
Chapter 7 bankruptcy protection, continued to occupy the Plano
headquarters.
Michelle H. Chow, the Chapter 7 trustee, informed the U.S.
Bankruptcy Court for the Eastern District of Texas, Sherman
Division, that MSC has agreed to pay $60,000 for the FF&E and
certain computer servers located at S&A's former ACS facility in
Dallas, Texas.
Ms. Chow said she has been advised by her auctioneer that the
approximate value of the FF&E is between $50,000 and $70,000,
while the Servers have nominal value.
About S & A Restaurant
Headquartered in Plano, Texas, S & A Restaurant Corp. --
http://www.metrogroup.com,http://www.steakandale.com,
http://www.steakandalerestaurants.com,http://www.bennigans.com/-
- and other affiliated entities operate the Bennigan's Grill &
Tavern, and the Steak & Ale restaurant chains under the Metromedia
Restaurant Group. Bennigan's Grill & Tavern is a chain of more
than 310 pub-themed restaurants offering sandwiches and burgers,
as well as ribs, steaks, and seafood. The Steak & Ale chain
offers a broader menu set in the atmosphere of an 18th century
English country inn. The Metromedia Restaurant Group, a unit of
closely held conglomerate Metromedia Company, is one of the
world's leading multi-concept table-service restaurant groups,
with more than 800 Bennigan's(R), Bennigan's SPORT(TM), Steak and
Ale(R), Ponderosa Steakhouse(R) and Bonanza(TM) Steakhouse
restaurants in the United States and abroad. MRG's annual U.S.
sales are estimated at $1,000,000,000.
S & A Restaurant and 38 of its affiliates filed Chapter 7 petition
under the U.S. Bankruptcy Code on July 29, 2008 (Bankr. E.D. Tex.
Case No. 08-41898). J. Michael Sutherland, Esq. at Carrington
Coleman Sloman & Blumenthal, is the Debtors' counsel. The Debtors
disclosed total scheduled assets of $2,302,057 and total scheduled
liabilities of $159,432,691.
Michelle H. Chow is the Debtors' Chapter 7 bankruptcy trustee.
The lead counsel for the trustee is Kane Russell Coleman & Logan
PC. Mark Ian Agee, Esq., of the law firm Mark Ian Agee, Attorney
at Law, is co-counsel.
(Bennigan's and Steak & Ale Bankruptcy News; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000)
STRUCTURED ASSET: Moody's Lowers Ratings on 70 Certificate Classes
------------------------------------------------------------------
Moody's Investors Service has downgraded 70 certificates from
transactions issued by Structured Asset Securities Corporation.
The transactions are backed by second lien loans. The
certificates were downgraded because the bonds' credit enhancement
levels, including excess spread and subordination were low
compared to the current projected loss numbers at the previous
rating levels.
The actions take into account the continued and worsening
performance of transactions backed by closed-end-second
collateral. Substantial pool losses of over the last few months
have eroded credit enhancement available to the mezzanine and
senior certificates. Despite the large amount of write-offs due
to losses, delinquency pipelines have remained high as borrowers
continue to default.
Issuer: Structured Asset Securities Corp Trust 2005-S2
-- Cl. M2, Downgraded to Baa3 from Aa2
-- Cl. M3, Downgraded to B1 from Aa3
-- Cl. M4, Downgraded to Ca from A1
-- Cl. M5, Downgraded to C from A2
-- Cl. M6, Downgraded to C from A3
-- Cl. M7, Downgraded to C from Ba2
-- Cl. M8, Downgraded to C from B3
-- Cl. M9, Downgraded to C from Caa2
Issuer: Structured Asset Securities Corp Trust 2005-S3
-- Cl. M2, Downgraded to Baa1 from Aaa
-- Cl. M3, Downgraded to B2 from Aa1
-- Cl. M4, Downgraded to Ca from Aa2
-- Cl. M5, Downgraded to C from Aa3
-- Cl. M6, Downgraded to C from A3
-- Cl. M7, Downgraded to C from Baa1
-- Cl. M8, Downgraded to C from B1
-- Cl. M9, Downgraded to C from Caa1
Issuer: Structured Asset Securities Corp Trust 2005-S5
-- Cl. A2, Downgraded to Baa2 from Aaa
-- Cl. M1, Downgraded to B2 from Aa1
-- Cl. M2, Downgraded to C from Aa2
-- Cl. M3, Downgraded to C from Aa3
-- Cl. M4, Downgraded to C from Ba3
-- Cl. M5, Downgraded to C from B3
Issuer: Structured Asset Securities Corp Trust 2005-S6
-- Cl. A2, Downgraded to Ba1 from Aaa
-- Cl. M1, Downgraded to Caa1 from Aa1
-- Cl. M2, Downgraded to C from Aa2
-- Cl. M3, Downgraded to C from Aa3
-- Cl. M4, Downgraded to C from Baa1
-- Cl. M5, Downgraded to C from Ba3
-- Cl. M6, Downgraded to C from B2
-- Cl. M7, Downgraded to C from Caa2
Issuer: Structured Asset Securities Corp Trust 2005-S7
-- Cl. A2, Downgraded to Baa1 from Aaa
-- Cl. M1, Downgraded to Ba1 from Aa1
-- Cl. M2, Downgraded to B3 from A1
-- Cl. M3, Downgraded to C from A3
-- Cl. M4, Downgraded to C from Baa2
-- Cl. M5, Downgraded to C from Ba2
-- Cl. M6, Downgraded to C from B2
-- Cl. M7, Downgraded to C from Caa2
Issuer: Structured Asset Securities Corp Trust 2006-ARS1
-- Cl. A1, Downgraded to C from B1
-- Cl. M1, Downgraded to C from Ca
Issuer: Structured Asset Securities Corp Trust 2006-S1
-- Cl. A1, Downgraded to B1 from Aa1
-- Cl. A2, Downgraded to Ca from A1
-- Cl. M1, Downgraded to C from Ba1
-- Cl. M2, Downgraded to C from Ba3
-- Cl. M3, Downgraded to C from B2
-- Cl. M4, Downgraded to C from Caa1
Issuer: Structured Asset Securities Corp Trust 2006-S2
-- Cl. A2, Downgraded to B3 from Aaa
-- Cl. M1, Downgraded to C from A3
-- Cl. M2, Downgraded to C from Ba3
-- Cl. M3, Downgraded to C from B2
-- Cl. M4, Downgraded to C from B3
-- Cl. M5, Downgraded to C from Caa2
Issuer: Structured Asset Securities Corp Trust 2006-S3
-- Cl. A1, Downgraded to Caa3 from Aaa
-- Cl. M-1, Downgraded to C from Ba1
-- Cl. M-2, Downgraded to C from B2
-- Cl. M-3, Downgraded to C from Caa1
Issuer: Structured Asset Securities Corporation 2005-S1
-- Cl. M2, Downgraded to A1 from Aaa
-- Cl. M3, Downgraded to Baa2 from Aa1
-- Cl. M4, Downgraded to Ca from A1
-- Cl. M5, Downgraded to C from Baa3
-- Cl. M6, Downgraded to C from Ba3
-- Cl. M7, Downgraded to C from Caa1
Issuer: Structured Asset Securities Corporation 2006-S4
-- Cl. A, Downgraded to Ca from Aa3
-- Cl. M1, Downgraded to C from Baa2
-- Cl. M2, Downgraded to C from Ba2
-- Cl. M3, Downgraded to C from B2
-- Cl. M4, Downgraded to C from Caa1
-- Cl. M5, Downgraded to C from Caa2
-- Cl. M6, Downgraded to C from Ca
-- Cl. M7, Downgraded to C from Ca
THORNBURG MORTGAGE: Faces Class Suit on Preferred Stock Series
--------------------------------------------------------------
Thornburg Mortgage, Inc. disclosed that Glancy Binkow & Goldberg
LLP has filed a Class Action lawsuit in the United States
District Court for the District of New Mexico on behalf of a
class consisting of all those persons who tendered shares of
Thornburg Series C, D, E or F Preferred Stock of Thornburg
Mortgage, Inc. pursuant to the Tender Offer launched on July 23,
2008, and the definitive proxy statement filed with the
Securities and Exchange Commission and disseminated to
shareholders.
The complaint charges Thornburg, the company's board of directors,
MP TMAC LLC, MP TMA (Cayman) LLC, and MatlinPatterson LLC dba
MatlinPatterson Global Advisers LLC, with violations of federal
securities laws. The complaint alleges, among other things, that
the Proxy fails to provide shareholders with these material
information:
a) any projections, estimates and information concerning
Thornburg's future business and financial prospects which
would allow shareholders to make an informed decision as
to whether to tender their shares in the Tender Offer;
b) any projections, estimates and information which would
allow shareholders to evaluate any strategic alternative
to the Tender Offer;
c) any projections or estimates which would allow shareholders
to evaluate the impact of a potential bankruptcy on the
company and its preferred shareholders who have the right
to a $25.00 per share liquidation preference;
d) any information regarding the viability of any strategic
alternatives which the board considered and information
relied upon relating to those alternatives;
e) any information concerning the potential or actual
conflicts between and among members of the board, Thornburg
and MatlinPatterson and the other parties to an agreement
with MatlinPatterson, pursuant to which MatlinPatterson
would lend Thornburg approximately $1.35 billion at an
initial interest rate of 18% per annum;
f) any information, analysis, valuation, projections and
estimates prepared by, or opinion rendered by, any
financial advisor at the behest of the board concerning the
Tender Offer, the Agreement, or any strategic alternative
considered by the board.
The complaint further alleges that the Thornburg board has
placed its own self-interest above those of Thornburg's
shareholders by:
a) agreeing to sell 90% of the company to MatlinPatterson in
return for grossly inadequate consideration in the form
of a risk-free loan of approximately $1.3 billion; and
b) launching a coercive tender offer aimed at eliminating the
company's preferred shareholders, simultaneously diluting
and devaluing the common shares held by public
shareholders.
Plaintiff seeks to recover damages on behalf of Class members.
A copy of the complaint is available by contacting Glancy Binkow
& Goldberg LLP at (310) 201-9150 or Toll Free at (888) 773-9224,
and by email at info@glancylaw.com.
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.
* * *
As reported in the Troubled Company Reporter on Oct. 7, 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.
As reported in the Troubled Company Reporter on Oct. 3, 2008,
Standard & Poor's Ratings Services said that its rating on
Thornburg Mortgage Inc. will remain at 'SD' until the company's
preferred exchange offer is finalized. S&P will then evaluate the
viability of Thornburg's business model and its future financial
prospects. S&P believes that if the tender offer is unsuccessful,
funding costs will be too high relative to the company's earnings
generation capacity.
TIERRA ALTA: Moody's Lowers Notes Ratings, Reviews for Likely Cut
-----------------------------------------------------------------
Moody's Investors Service has downgraded and left on review for
possible downgrade the ratings of the class of notes issued by
Tierra Alta Funding I, Ltd.:
Class Description: $2,125,000,000,000 Class F Notes Due 2046
-- Prior Rating: Aaa, on review for possible downgrade
-- Prior Rating Date: May 30,2008
-- Current Rating: Ba2, on review for possible downgrade
Additionally, Moody's downgraded the ratings of these seven
classes of notes:
Class Description: $90,000,000 Class A1 Floating Rate Notes Due
2046
-- Prior Rating: Aa3, on review for possible downgrade
-- Prior Rating Date: May 30,2008
-- Current Rating: Ca
Class Description: $155,000,000 Class A2 Floating Rate Notes Due
2046
-- Prior Rating: Ba1, on review for possible downgrade
-- Prior Rating Date: May 30,2008
-- Current Rating: Ca
Class Description: $47,600,000 Class A3A Floating Rate Notes Due
2046
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: May 30,2008
-- Current Rating: Ca
Class Description: $2,400,000 Class A3B Floating Rate Notes Due
2046
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: May 30,2008
-- Current Rating: Ca
Class Description: 27,900,000 Class B1A Floating Rate Notes Due
2046
-- Prior Rating: Ca
-- Prior Rating Date: May 30,2008
-- Current Rating: C
Class Description: $2,100,000 Class B1B Floating Rate Notes Due
2046
-- Prior Rating: Ca
-- Prior Rating Date: May 30,2008
-- Current Rating: C
Class Description: $6,000,000 Class Q Combination Notes Due 2046
-- Prior Rating: B3, on review for possible downgrade
-- Prior Rating Date: May 30,2008
-- Current Rating: Ca
According to Moody's, these rating actions are as a result of the
deterioration in the credit quality of the transaction's
underlying collateral pool consisting primarily of structured
finance securities.
TIERS(R) BLUESIERRA: Moody's Cuts $5MM Notes Rtng to Ba3 from Aa3
-----------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the
following notes issued by TIERS(R) BlueSierra CSO I Portfolio
Credit Linked Trust, Series 2007-38:
Class Description: $5,000,000 TIERS(R) BlueSierra CSO I Portfolio
Credit Linked Trust, Series 2007-38
-- Prior Rating: Aa3
-- Prior Rating Date: December 4, 2007
-- Current Rating: Ba3
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, and two
Icelandic banks, specifically Kaupthing Bank hf, and Landsbanki
Islands hf.
TIERS(R) BLUESIERRA: Moody's Slashes $15MM Notes Rating to 'Caa1'
-----------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the
following notes issued by TIERS(R) BlueSierra CSO I Portfolio
Credit Linked Trust, Series 2007-36:
Class Description: $15,000,000 TIERS(R) BlueSierra CSO I Portfolio
Credit Linked Trust, Series 2007-36
-- Prior Rating: A2
-- Prior Rating Date: November 16, 2007
-- Current Rating: Caa1
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, and two
Icelandic banks, specifically Kaupthing Bank hf, and Landsbanki
Islands hf.
TIERS(R) BLUESIERRA: Moody's Trims $10MM Notes Rtng to B2 from Aa2
------------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the
following notes issued by TIERS(R) BlueSierra CSO I Portfolio
Credit Linked Trust, Series 2007-35:
Class Description: $10,000,000 TIERS(R) BlueSierra CSO I Portfolio
Credit Linked Trust, Series 2007-35
-- Prior Rating: Aa2
-- Prior Rating Date: November 16, 2007
-- Current Rating: B2
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, and two
Icelandic banks, specifically Kaupthing Bank hf, and Landsbanki
Islands hf.
TIERS(R) HAWAII: Moody's Slashes $25MM Certs. Rating to 'Caa2'
--------------------------------------------------------------
Moody's Investors Service has downgraded its rating on the notes
issued by TIERS(R) Hawaii Floating Rate Credit Linked Trust
Certificates, Series 2007-22:
Class Description: $25,000,000 TIERS(R) Hawaii Floating Rate
Credit Linked Trust Certificates, Series 2007-22
-- Prior Rating: Baa3
-- Prior Rating Date: 8/20/2008
-- Current Rating: Caa2
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Fannie Mae
and Freddie Mac, which were placed into the conservatorship of the
U.S. government on September 8, 2008 and an Icelandic bank,
specifically Kaupthing Bank hf.
TIERS VERMONT: Moody's Junks $15MM Floating Rate Certificates
-------------------------------------------------------------
Moody's Investors Service has downgraded the rating of the notes
issued by TIERS Vermont Floating Rate Credit Linked Trust, Series
2007-23:
Class Description: $15,000,000 TIERS(R) Vermont Floating Rate
Credit Linked Trust Certificates, Series 2007-23
-- Prior Rating: Ba2
-- Prior Rating Date: 9/26/2008
-- Current Rating: Caa1
According to Moody's, the rating action is the result of
deterioration in the credit quality of the transaction's reference
portfolio, which includes but is not limited to exposure to Lehman
Brothers Holdings Inc., which filed for protection under Chapter
11 of the U.S. Bankruptcy Code on September 15, 2008, Fannie Mae
and Freddie Mac, which were placed into the conservatorship of the
U.S. government on September 8, 2008 and an Icelandic bank,
specifically Kaupthing Bank hf.
TOT-BOT INC: Court Converts Case to Chapter 7 Liquidation
---------------------------------------------------------
Jessica Vander Velde at St. Petersburgh Times reports that the
U.S. Bankruptcy Court for the Middle District of Florida has
converted TOT-BOT Inc.'s Chapter 11 case to Chapter 7.
As reported in the Troubled Company Reporter on March 20, 2008,
Tampa, Florida-based TOT-BOT filed for Chapter 11 protection on
March 14, 2008 (Bankr. M. D. Fla. Case No. 08-03359). Buddy D.
Ford, Esq., at Buddy D. Ford PA represented the company in its
restructuring case. The company listed assets of $1,540,026 and
debts of $1,022,200 when it filed for bankruptcy.
St. Petersburgh Times relates that seven locations were listed in
the bankruptcy:
-- Bradenton,
-- Sarasota,
-- Valrico,
-- North and South Tampa,
-- Lutz, and
-- Clearwater.
As a result of the conversion of TOT-BOT's reorganization case to
liquidation, Gymboree Play & Music centers closed, St. Petersburgh
Times reports. Gymboree clothing stores, which are operated by
Gymboree Corp., aren't affected by the activity center closings,
says St. Petersburgh Times.
TOT-BOT had been renting in Lithia Crossings plaza in Valrico
since 2005. According to St. Petersburgh Times, Lithia Crossing
sued TOT-BOT, claiming that it hadn't paid $60,000 in rent since
it filed bankruptcy. TOT-BOT were ordered to leave the plaze in
August.
TOXIN ALERT: Won't File Financial Report; Likely Default
--------------------------------------------------------
Toxin Alert Inc. said it is unable to comply with the requirement
to file its audited financial statements and other material for
the fiscal year ended June 30, 2008, by the statutory deadline of
Oct. 29, 2008, and has requested that a Management Cease Trade
Order be issued by the relevant securities authorities.
The company is in the process of preparing a private placement of
its securities which it anticipates will raise sufficient funds to
enable the audited financial statements to be prepared and filed
within the next 60 days.
The company has experienced cash flow difficulties due to the non-
payment of its invoice to a university in Mississippi for a
contract that was fulfilled in March 2008.
The company intends to satisfy the provisions of the Alternative
Information Guidelines by issuing bi-weekly default status reports
in the form of news releases so long as it remains in default.
The Company said it is not in any insolvency proceedings at the
present time and there is no other material information relating
to the affairs of the company that has not been generally
disclosed.
Headquartered in Toronto, Canada, Toxin Alert Inc. --
http://www.toxinalert.com-- develops diagnostic test for
contaminated food.
TROPICANA ENT: NJ CCC Suspends Casino Sale until October 29
-----------------------------------------------------------
The New Jersey Casino Control Commission put the sale of the
Tropicana Casino and Resort of Atlantic City on hold until
Oct. 29, 2008, to "allow everyone to thrash out legal and
financial issues that overshadow the troubled property,"
pressofAtlanticCity.com reported.
Oct. 29 is the date of the next NJ Commission meeting, PAC noted.
NJ Commission chair Linda M. Kassekert told PAC that "more time is
needed for regulators to consider the issues."
Retired Supreme Court Justice Gary S. Stein, the Court-appointed
conservator of Tropicana Atlantic City, has been directed to
temporarily halt negotiations with the casino's potential bidders,
according to PAC. Cordish Co. is currently the lead bidder for
the Tropicana Atlantic City.
The state appeals court upheld the NJ Commission's decision to
revoke the casino's gaming license. The New Jersey Supreme Court
recently agreed to hear Tropicana Entertainment LLC's appeal.
Tropicana Entertainment said, in a recent press release, that it
could take as long as a year for the Supreme Court to rule on the
appeal.
"[The] full impact of the repercussions from the recent Supreme
Court action on the sale process is unknown," Ms. Kassekert told
PAC.
The NJ Commission will discuss the court's involvement at its
next meeting, PAC reported.
Tropicana Entertainment is seeking to regain control of the
Tropicana Atlantic City. Tropicana Entertainment has argued that
"it has purged elements that [the NJ] Commission found unsuitable
to be licensed," newsday.com said.
About Tropicana Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq., at Richards Layton & Finger, represent the Debtors
in their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in the
case. Capstone Advisory Group LLC is financial advisor to the
Creditors' Committee.
The Court has extended the Debtors' exclusive period to file a
plan through and including Jan. 12, 2009, and to solicit votes
on the plan through and including March 13, 2009.
(Tropicana Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
TROPICANA ENT: NJ Court to Consider License Appeal on November 17
-----------------------------------------------------------------
The New Jersey Supreme Court will hear on Nov. 17, 2008, oral
arguments of Tropicana Entertainment LLC's appeal of the state
regulators' decision to revoke its gaming license to operate the
Tropicana Casino and Resort of Atlantic City, the Las Vegas
Review Journal reports.
The state appeals court upheld the New Jersey Casino Control
Commission's decision not to renew the gaming license of the
Atlantic City Casino.
Tropicana Entertainment is also seeking to regain control of the
Tropicana Atlantic City, which is its largest property based on
size and revenue.
On the plan to regain the Atlantic City Casino, Tropicana
Entertainment chief executive officer Scott C. Butera has pointed
out that Tropicana is a "new company" under new management.
"When you deny a license it is more about the individual than the
company. So the individuals that were involved in the license
denial are no longer part of this company," the Las Vegas Review
Journal quoted Mr. Butera as saying.
William Yung III is no longer a part of the management of
Tropicana, and has "signed away all his rights and is now only a
stakeholder with no input in the company's operations,"
Mr. Butera reiterated.
The sale of the Tropicana Atlantic City has been put on hold
until Oct. 29, 2008, the date of the NJ Commission's next
meeting. Retired Supreme Court Justice Gary S. Stein, the
appointed conservator of the casino, is prohibited from
continuing the sale process until then, the Las Vegas Review
Journal relates.
Nevertheless, Mr. Butera told the Las Vegas Review Journal that
"despite [Tropicana's] efforts to regain control of the Atlantic
City property, the company would support a sale if a fair price
could be reached."
"It has always been our feeling, given the economy, given that
banks are out of business right now, there's no credit market as
we sit here today . . . We always thought it would be hard for
someone to come in and even if they wanted to pay a fair price
get financing, to be able to close on a transaction," the news
source quoted Mr. Butera as saying.
In the meantime, Tropicana Entertainment "will continue to
reinvest in its other properties and look for new growth
opportunities," Mr. Butera said.
Tropicana Formally Petitions for
Control of Atlantic City Casino
Making it abundantly clear that William J. Yung does not and will
not have any influence or control over the company, Tropicana
Entertainment, LLC petitioned the New Jersey Casino Control
Commission to regain operating authority over its casino
and resort in Atlantic City.
According to company CEO Scott C. Butera, Tropicana wants to
run the casino because it believes that there is a better chance
of reversing the property's 48% decline in gross operating
profits if it is integrated with a larger organization with the
financial assets and human resources to invest in its future.
The property has been under the control of a CCC-appointed
conservator since last December.
"We have assembled a strong, highly competent new management
team that is experienced in the Atlantic City market," said
Mr. Butera, who himself holds a New Jersey casino key employee
license. "We want to immediately deploy our managerial and
financial resources to serve the gaming public and provide
tax and employment benefits to the community.
"The need for this action has been made more urgent by the
decision of the New Jersey Supreme Court to hear Tropicana's
appeal to regain its status," Mr. Butera said. "The
conservator's sale process for the property, which we continue to
support as a way to determine the credibility of current
indications of interest, could be delayed for several months, far
too long for the casino to be without the benefit of well-
financed, professional casino management."
The petition asks the CCC to appoint a company co-conservator
of the property and give him the authority to bring the casino
under Tropicana Entertainment's corporate umbrella where it will
have protections afforded under Chapter 11 of the Bankruptcy
Code. Tropicana said it will then install a new management
group at the property and make investments to improve the
casino's business so that it can be either sold at a fair
price or realize its longer term value as a going concern
within Tropicana's current corporate structure.
If the CCC grants the petition, Tropicana will move to file
the appropriate applications for a gaming license and ask the
Commission to convene hearings -- "as soon as practicable" -- to
establish that the newly constituted Tropicana is qualified to
hold a casino license.
The petition asserts that Tropicana qualifies for a New Jersey
license by virtue of the fact that the company has been "utterly
and completely re-formed." Mr. Yung is no longer involved and
neither he nor the senior corporate team he had in place have
any influence or control over the affairs of the company. The
company anticipates that Mr. Yung's interests will be "cancelled
and extinguished" upon consummation of the Chapter 11
reorganization plan. A CCC-appointed co-conservator can
provide oversight and supervision to ensure that any CCC
regulatory concerns with respect to Mr. Yung's interests are
addressed.
"Tropicana is a brand new company," said independent board
member and former CCC Chairman Bradford Smith. "We have a new,
independent board. We have a new team of experienced
professional gaming executives managing our operations. Most
important, we live by a set of business and operating
philosophies that are in keeping with the best practices of a
modern day gaming enterprise."
As evidence of the company's transformation, the petition
notes a series of positive accomplishments on the part of the
new management team. Among them are the separation from
Columbia-Sussex Corporation, the establishment of headquarters
in Las Vegas, arranging debtor in possession financing, and
obtaining the approval of the Nevada Gaming Commission to operate
the company's five casinos in Nevada. It also cites Mr. Butera's
direct involvement in achieving a long-delayed labor agreement
with the culinary union at the Tropicana Las Vegas.
"The issue here obviously involves maximizing value for our
constituents," Mr. Butera said. "But New Jersey and Atlantic
City have a lot at stake, too. Selling the casino at today's
depressed prices could have the unintended consequence of
lowering assessed values and drastically cutting city tax
revenue. Faced with such a shortfall, lawmakers may be forced to
increase individual property taxes to make ends meet.
"Likewise, assuming the sale is delayed until the Supreme Court
rules, the business cannot be allowed to falter," he said. "That,
too, has consequences in terms of employment and overall returns
to the City.
"These are outcomes that we should all work to avert," Mr.
Butera concluded.
About Tropicana Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary
of Tropicana Casinos and Resorts. The company is one of the
largest privately-held gaming entertainment providers in the
United States. Tropicana Entertainment owns eleven casino
properties in eight distinct gaming markets with premier
properties in Las Vegas, Nevada and Atlantic City, New Jersey.
Tropicana Entertainment LLC filed for Chapter 11 protection on
May 5, 2008, (Bankr. D. Del. Case No. 08-10856). Its debtor-
affiliates filed for separate Chapter 11 petitions but with no
case numbers assigned yet. Kirkland & Ellis LLP and Mark D.
Collins, Esq., at Richards Layton & Finger, represent the Debtors
in their restructuring efforts. Their financial advisor is Lazard
Ltd. Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in the
case. Capstone Advisory Group LLC is financial advisor to the
Creditors' Committee.
The Court has extended the Debtors' exclusive period to file a
plan through and including January 12, 2009, and to solicit votes
on the plan through and including March 13, 2009.
(Tropicana Bankruptcy News, Issue No. 20; Bankruptcy Creditors'
Service Inc., http://bankrupt.com/newsstand/or 215/945-7000)
TULLY'S COFFEE: Extends Northrim Credit Facility to December 15
---------------------------------------------------------------
Tully's Coffee Corporation disclosed in a Securities and Exchange
Commission filing that on Oct. 20, 2008, it executed amendments to
its secured credit facility with Northrim Funding Services, a
division of Northrim Bank.
The Northrim Facility provides a credit facility of up to
$6,500,000, subject to the amount of eligible accounts receivable
and inventories.
The extended term of the agreement is Dec. 15, 2008, unless
terminated earlier by either party. Borrowings under this
facility bear interest at the prime rate plus seven percent with a
floor of 12% and a ceiling of 14% during the contract term and are
secured by the company's inventories and the assignment, with
recourse, of the company's accounts receivable.
Fees in the amount of $41,250 were paid to Northrim in relation to
the extension of the Northrim Facility.
About Tully's Coffee
Headquartered in Seattle, Tully's Coffee Corporation --
http://www.tullys.com/-- is a specialty retailer and wholesaler
of fully handcrafted roasted, gourmet coffees.
As reported in the Troubled Company Reporter on Sept. 24, 2008,
Moss Adams LLP of Seattle, Washington, expressed substantial doubt
about Tully's Coffee Corporation's ability to continue as a going
concern after auditing the company's consolidated financial
statements for the periods ended March 30, 2008, and April 1,
2007. The firm reported that the company has incurred recurring
operating losses, an accumulated, and total stockholders' and
working capital deficit.
Tully's Coffee Corporation's consolidated balance sheet at
June 30, 2008, showed $18,918,000 in total assets and $32,342,000
in total liabilities, resulting in a $13,424,000 total
stockholders' deficit.
Tully's Coffee posted $13,909,000 in net losses on $69,077,000 in
net revenues for fiscal year ended June 30, 2008, compared with
$9,754,000 in net losses on $61,882,000 in net revenues for fiscal
year ended April 1, 2007.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $11,309,000 in total current assets
available to pay $28,741,000 in total current liabilities.
TULLY'S COFFEE: Marc Evanger Quits as Director
----------------------------------------------
Tully's Coffee Corporation disclosed in a Securities and Exchange
Commission filing that on Oct. 18, 2008, Marc W. Evanger resigned
as a director. Mr. Evanger served as interim president and chief
executive officer of Tully's from July 2001 through May 2002. Mr.
Evanger has been a director of Tully's since March 1999. Mr.
Evanger will be focusing on his family and other business
ventures.
About Tully's Coffee
Headquartered in Seattle, Tully's Coffee Corporation --
http://www.tullys.com/-- is a specialty retailer and wholesaler
of fully handcrafted roasted, gourmet coffees.
As reported in the Troubled Company Reporter on Sept. 24, 2008,
Moss Adams LLP of Seattle, Washington, expressed substantial doubt
about Tully's Coffee Corporation's ability to continue as a going
concern after auditing the company's consolidated financial
statements for the periods ended March 30, 2008, and April 1,
2007. The firm reported that the company has incurred recurring
operating losses, an accumulated, and total stockholders' and
working capital deficit.
Tully's Coffee Corporation's consolidated balance sheet at
June 30, 2008, showed $18,918,000 in total assets and $32,342,000
in total liabilities, resulting in a $13,424,000 total
stockholders' deficit.
Tully's Coffee posted $13,909,000 in net losses on $69,077,000 in
net revenues for fiscal year ended June 30, 2008, compared with
$9,754,000 in net losses on $61,882,000 in net revenues for fiscal
year ended April 1, 2007.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $11,309,000 in total current assets
available to pay $28,741,000 in total current liabilities.
USG CORPORATION: Reports $125MM Net Loss for 9 Months of 2008
-------------------------------------------------------------
USG Corporation reported third quarter 2008 net sales of
$1.2 billion and a net loss of $40 million. For the same period
a year ago, the corporation reported net sales of $1.3 billion
and net earnings of $7 million.
The corporation's consolidated third quarter 2008 results
included restructuring charges totaling $5 million or $3 million
after-tax related to manufacturing plant shutdowns and the
closure of distribution locations. On an operating segment
basis, the allocation of this charge was approximately $4 million
for North American Gypsum and approximately $1 million for L&W
Supply Corporation. Consolidated third quarter 2008 results also
included $3 million or $2 million after-tax in startup costs for
new manufacturing plants. The corporation's consolidated third
quarter 2007 results included restructuring charges totaling
$3 million or $2 million after-tax and a $4 million pretax charge
or $3 million after-tax to write off deferred financing fees.
For nine months of 2008, the corporation reported net sales of
$3.6 billion and a net loss of $125 million. For the first nine
months of 2007, net sales were $4.0 billion and net earnings were
$104 million.
The corporation's consolidated results for the first nine months
of 2008 included restructuring charges of $30 million or
$19 million after-tax. On an operating segment basis, the
allocation of this charge was approximately $17 million for
North American Gypsum, approximately $6 million for L&W Supply
Corporation, approximately $2 million for Worldwide Ceilings and
approximately $5 million for Corporate. The corporation's
consolidated results for the first nine months of 2008 included
$19 million in start-up costs for new manufacturing plants
within the North American Gypsum segment. The corporation's
consolidated results for the first nine months of 2007 included
restructuring charges totaling $18 million or $11 million after-
tax and charges totaling $14 million or $9 million after-tax to
write off deferred financing fees.
At Sept. 30, 2008, the company's balance sheet showed total
assets of $4.7 billion and total liabilities of $2.7 billion and
stockholders' equity of $2.0 billion.
About USG Corporation
Based in Chicago, Ill., USG Corporation -- http://www.usg.com/--
through its subsidiaries, manufactures and distributes building
materials producing a wide range of products for use in new
residential, new nonresidential and repair and remodel
construction, as well as products used in certain industrial
processes.
The company filed for chapter 11 protection on June 25, 2001
(Bankr. Del. Case No. 01-02094). When the Debtors filed for
protection from their creditors, they listed $3,252,000,000 in
assets and $2,739,000,000 in debts. The Debtors emerged from
bankruptcy protection on June 20, 2006.
* * *
As reported in the Troubled Company Reporter on Feb. 29, 2008,
Moody's Investors Service downgraded the debt ratings of USG to
Ba2 reflecting the ongoing pressure on the company's financial
performance caused by the sharp contraction in the new home
construction market. At the same time a corporate family rating
of Ba2 and a speculative grade rating of SGL-2 were assigned. The
ratings outlook is negative.
As reported by the TCR on Feb. 1, 2008, USG reported fourth
quarter 2007 net sales of $1.2 billion and a net loss of
$28 million.
As reported by the TCR on March 12, 2008, Standard & Poor's
Ratings Services affirmed its ratings for USG Corp., including its
'BB+' corporate credit and senior unsecured debt ratings. All
ratings were removed from CreditWatch, where they were placed with
negative implications on Jan. 30, 2008. The outlook is negative.
UNIVISION COMMUNICATIONS: S&P Cuts Issue-Level Debt Rating to 'B-'
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its issue-level rating
on Univision Communications Inc.'s secured first-lien debt to 'B-'
from 'B'. The recovery rating on this debt was revised to '3',
indicating S&P's expectation of meaningful recovery in the event
of a payment default, from '2'.
The issue-level rating on Univision's second-lien term loan and
senior unsecured notes remains unchanged at 'CCC'. The recovery
rating on this debt also remains unchanged at '6', indicating
S&P's expectation of negligible recovery in the event of a payment
default.
"Our rating revisions on the first-lien debt reflect a
significantly lower enterprise value under our default analysis
than we had previously used," explained Standard & Poor's credit
analyst Heather Goodchild.
S&P revised its emergence EBITDA multiple to 9.0x from 10.8x,
based on its assumption that extended market liquidity
contractions will cause providers of exit financing to mandate a
capital structure with lower debt leverage than S&P has
historically seen. As a result, S&P's default scenario assumes a
smaller number of buyers, which, in conjunction with declining
industry fundamentals for radio stations and TV assets, results in
downward pressure on resale multiples. If the company loses its
exclusive rights to Televisa's programming, which underpins its
dominance in U.S. Spanish-language media, S&P may further lower
the emergence EBITDA multiple significantly.
The corporate credit on Univision remains at 'B-' and the rating
outlook is negative. The rating reflects the company's highly
leveraged capital structure and weak credit metrics since its 2007
LBO; failure to accomplish planned asset sales in a timely manner;
continuing litigation with its main program supplier, Televisa;
and weak trends in TV advertising under economic pressure.
Univision's position as the dominant U.S.-based Spanish-language
TV and radio broadcaster; favorable long-term contracts to
purchase popular TV programming; broadcasting's good margin
potential and discretionary cash flow-generating capability; and
positive trends in Spanish-language population and viewing only
partially offset these factors.
Ratings List
Univision Communications Inc.
Corporate Credit Rating B-/Negative/--
Ratings Revised
To From
-- ----
Univision Communications Inc.
Secured First Lien B- B
Recovery Rating 3 2
VANGUARD HEALTH: Moody's Revises Outlook to Stable from Negative
----------------------------------------------------------------
Moody's Investors Service changed Vanguard Health System Inc.'s
rating outlook to stable from negative. The stable outlook
reflects the company's improved operating performance and
strengthened liquidity profile. Moody's also affirmed the --
Current Ratings, including the B2 Corporate Family Rating assigned
to Vanguard Health Holding I, LLC, the highest level organization
in the corporate structure with rated debt.
Moody's most recent rating action on Vanguard was on October 30,
2007, when the rating outlook was changed to negative from stable
reflecting Moody's expectation of tightening liquidity and
continued pressure on operating results from industry challenges
and difficulties in the company's Chicago market.
The stable outlook reflects operating improvements that have been
evidenced in a continuation of positive price and volume trends
along with effective cost management that have resulted in EBITDA
growth for the year ended June 30, 2008. Additionally, Vanguard's
improved liquidity profile has been characterized by a return to
positive free cash flow and an increase in available cash. The
cash build and improvements in EBITDA are expected to provide
additional cushion in the compliance with the financial covenants
in the company's credit agreement, which become considerably more
restrictive over the next four quarters.
The affirmation of the ratings reflects the expectation that the
company will continue to operate with high financial leverage and
limited interest coverage. Moody's expects that ongoing industry
challenges, such as increasing exposure to bad debt expense and
weak volume trends, combined with an ambitious capital spending
plan, will continue to pressure the company's operating results
and free cash flow making improvement in credit metrics difficult.
Ratings affirmed/LGD assessments revised:
Vanguard Health Holding Company I, LLC and Vanguard Holding
Company I, Inc. (co-issuers):
-- Corporate family rating, B2
-- Probability of Default Rating, B2
-- $216 million senior discount notes, due 2015, from Caa1
(LGD6, 95%) to Caa1 (LGD6, 94%)
Vanguard Health Holding Company II, LLC and Vanguard Holding
Company II, Inc. (co-issuers):
-- $250 million senior secured revolving credit facility, due
2010, from Ba3 (LGD2, 25%) to Ba3 (LGD2, 23%)
-- $795.7 million senior secured term loan, due 2011, from Ba3
(LGD2, 25%) to Ba3 (LGD2, 23%)
-- $575 million 9% senior subordinated notes, due 2014, from
Caa1 (LGD5, 81%) to Caa1 (LGD5, 80%)
Headquartered in Nashville, Tennessee, Vanguard owns and operates
acute care hospitals and complementary outpatient facilities
principally located in urban and suburban markets. As of June 30,
2008, Vanguard operated 15 acute care hospitals in four states.
For the fiscal year ended June 30, 2008, the company generated
approximately $2.8 billion in net revenue.
VERASUN ENERGY: Idles Ethanol Facility in Linden, Indiana
---------------------------------------------------------
VeraSun Energy Corp. has temporarily ceased operation at its
ethanol facility in Linden, Indiana, for unstated reason, Various
sources report.
"We temporarily idled our ethanol production facility in Linden,
Indiana, but expect it to be back in production shortly,"
Bloomberg News quoted company spokesman Mike Lockrem as saying.
According to The Paper of Montgomery County, the facility stopped
receiving corn on Oct. 22, 2008. The plant shutdown is unclear
whether its is short-term or long-term, the report says.
The Linden facility, which has a capacity to produce more than
350,000 tons of distillers grains annually, can process about
$39 million bushels and makes 110 million gallons of ethanol per
year, the company's website says.
On Aug. 12, 2008, the company reported that its total revenues
increased by 499%, to $1 billion for the second quarter 2008,
compared to $170 million for the same period a year ago. EBITDA
for the second quarter increased, to $73 million, compared to
$33 million for the same period a year earlier, the company notes.
"VeraSun exceeded one billion dollars in revenues this quarter,"
said VeraSun CEO Donald L. Endres. "More importantly, our large
scale allowed us to capture $73 million in EBITDA, more than
double last year, in a challenging operating environment."
During the quarter, the company completed the merger with US
BioEnergy effective April 1, adding five facilities and 420
million gallons to operations. The company also completed
construction at its Hankinson, North Dakota, Welcome, Minnesota
and Hartley, Iowa biorefineries, with a combined capacity of 330
million gallons per year.
Upon completion of two additional ethanol production facilities in
Dyersville, Iowa and Janesville, Minnesota, the company expects to
have a capacity of 1.64 billion gallons of ethanol through 16
production facilities by the end of 2008.
About VeraSun Energy Corporation
Headquartered in Brookings, South Dakota, VeraSun Energy
Corporation (NYSE: VSE) -- http://www.verasun.com/and
http://www.VE85.com/-- is a producer of renewable fuel. The
company has three operating ethanol production facilities located
in Aurora, South Dakota, Fort Dodge and Charles City, Iowa. The
company markets E85, a blend of 85% ethanol and 15% gasoline for
use in Flexible Fuel Vehicles, directly to fuel retailers under
the brand VE85(TM). VE85(TM) is available at more than 90 retail
locations.
* * *
According to the Troubled Company Reporter on Sept. 25, 2008,
Standard & Poor's Ratings Services lowered its long-term corporate
credit rating on the company and the rating on its $210 million
senior secured notes due 2012 to 'B-' from 'B+'. S&P also lowered
the rating on the company's $450 million senior unsecured notes
due 2017 to 'CCC' from 'B-'. At the same time, S&P placed the
ratings on CreditWatch with negative implications.
WASHINGTON MUTUAL: Wants Unsold Securities Deregistered
-------------------------------------------------------
Washington Mutual Inc. disclosed in a Securities and Exchange
Commission filing that it has filed Post-Effective Amendment No. 1
to the Registration Statement No. 333-150629, which relates to the
resale by certain selling securityholders up to 605,439,997
shares of the company's common stock and up to 36,642 shares of
Series S Contingent Convertible Perpetual Non-Cumulative Preferred
Stock.
The company is filing the amendment to withdraw from registration
all unsold Securities previously registered for resale under the
Registration Statement.
About Washington Mutual
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank as well as numerous non-bank subsidiaries. The company
operates in four segments: the Retail Banking Group, which
operates a retail bank network of 2,257 stores in California,
Florida, Texas, New York, Washington, Illinois, Oregon, New
Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and
Connecticut; the Card Services Group, which operates a nationwide
credit card lending business; the Commercial Group, which conducts
a multi-family and commercial real estate lending business in
selected markets, and the Home Loans Group, which engages in
nationwide single-family residential real estate lending,
servicing and capital markets activities.
Washington Mutual Bank was taken over Sept. 25 by U.S. government
regulators. The next day, WaMu and its debtor-affiliate, WMI
Investment Corp., filed separate petitions for Chapter 11 relief
(Bankr. D. Del. 08-12229 and 08-12228, respectively). WaMu owns
100% of the equity in WMI Investment. Weil Gotshal & Manges
represents the Debtors as counsel. When WaMu filed for protection
from its creditors, it listed assets of $32,896,605,516 and debts
of $8,167,022,695. WMI Investment listed assets of $500,000,000
to $1,000,000,000 with zero debts.
WELLS FARGO: Issues Stock to Treasury for $25 Bln. Bail-Out
-----------------------------------------------------------
Wells Fargo & Co. has issued to the U.S. Department of the
Treasury 25,000 shares of Wells Fargo's Fixed Rate Cumulative
Perpetual Preferred Stock, Series D without par value. The shares
have a liquidation amount per share equal to $1,000,000, for a
total price of $25 billion. This issuance is part of the Treasury
Department's Troubled Asset Relief Program Capital Purchase
Program, under which the Treasury Department is authorized to use
appropriated funds under the Emergency Economic Stabilization Act
of 2008 to invest in U.S. financial institutions to encourage
financing for U.S. businesses and consumers and to support the
U.S. economy.
The preferred securities pay cumulative dividends of 5% a year for
the first five years and nine percent a year thereafter. Wells
Fargo cannot redeem the preferred securities during the first
three years after issuance except with the proceeds from a
"qualified equity offering." After three years, Wells Fargo can
redeem the preferred securities at par value plus accrued and
unpaid dividends. As part of its purchase of the preferred
securities, the Treasury Department also received warrants to
purchase 110,261,688 shares of Wells Fargo's common stock at an
initial per share exercise price of $34.01. The warrants expire
10 years from the issuance date. Both the preferred securities
and warrants will be accounted for as components of Wells Fargo's
regulatory Tier 1 capital.
Wells Fargo was among the first nine large financial institutions
to participate in the Treasury Department's capital purchase
program. "We believe the Treasury's plan is a positive step
toward providing much needed capital for financial institutions in
the best position to deploy it effectively to stimulate the U.S.
economy and strengthen confidence in the U.S. banking system. The
strength of our franchise, earnings and balance sheet positions us
well to continue lending across all sectors and satisfying all of
our customers' financial needs, which is in the spirit of the
Treasury's plan," Wells Fargo's Chief Financial Officer Howard
Atkins said. As of Sept. 30, 2008, prior to this new capital
investment, Wells Fargo's Tier 1 regulatory capital ratio was
8.5%, one of the strongest among large bank holding companies.
As disclosed when Wells Fargo signed its definitive agreement with
Wachovia Corp., Wells Fargo plans to raise up to
$20 billion of capital, primarily common stock. "The combination
of the market capital and the capital investment from the
government will enable us to finance the Wachovia acquisition, to
continue to build our franchise and gain market share as we've
done throughout the credit crunch and to maintain one of the
strongest balance sheets and highest capital ratios among U.S.
financial services companies," Mr. Atkins said in company's third
quarter earnings recorded statement.
About Wells Fargo
Wells Fargo & Co. is a diversified financial services company with
$622 billion in assets, providing banking, insurance, investments,
mortgage and consumer finance through almost 6,000 stores and the
internet (wellsfargo.com) across North America and
internationally. Wells Fargo Bank, N.A. is the only bank in the
U.S., and one of only two banks worldwide, to have the highest
possible credit rating from both Moody's Investors Service, "Aaa,"
and Standard & Poor's Ratings Services, "AAA."
WESTAFF INC: Sorensen Trust et al. Discloses 9.4% Equity Stake
--------------------------------------------------------------
Sorensen Trust, D. Stephen Sorensen, Shannon P. Sorensen disclosed
in a Securities and Exchange Commission filing that they may be
deemed to beneficially own 1,579,757 shares of Westaff Inc.'s
common stock, representing 9.4% of the shares issued and
outstanding.
About Westaff Inc.
Based in Walnut Creek, California, Westaff Inc. (Nasdaq: WSTF)
-- http://www.westaff.com/-- provides staffing services and
employment opportunities for businesses in global markets.
Westaff annually employs in excess of 125,000 people and services
more than 20,000 client accounts from more than 177 offices
located throughout the United States, Australia and New Zealand.
* * *
The company has incurred operating losses and negative operating
cash flow since the second quarter of fiscal 2007, offset by
slight operating income in the fourth quarter of fiscal 2007. The
company says it it expects to incur additional losses in the
future, particularly because of current soft economic conditions.
In addition, the company is currently in default under the primary
credit facility that it uses to finance its operations. If the
company is unable to obtain a waiver or continued forbearance from
the U.S. Bank National Association on acceptable terms, the
company may be unable to access the funds necessary for its
liquidity requirements or may be unable to obtain letters of
credit under the facility needed for the company to obtain
workers' compensation insurance. In that case, its business and
operating results would be adversely affected.
WORKSTREAM INC: Nasdaq to Consider Stocks Delisting Appeal Today
---------------------------------------------------------------
Workstream Inc. received additional notification from the Nasdaq
Stock Market that it is not in compliance with the requirements
for continued listing set forth in Nasdaq Marketplace Rule
4310(c)(14) because of its failure to file its quarterly report on
Form 10-Q for the fiscal quarter ended Aug. 31, 2008. On
Sept. 17, 2008, Workstream received a notice from Nasdaq stating
that Workstream was not in compliance with the requirements for
continued listing because of its failure to file its annual
report on Form 10-K for the fiscal year ended May 31, 2008.
Workstream filed an appeal of that decision with the Nasdaq
Listing Qualifications Panel on Sept. 23, 2008, requesting
continued listing of its common shares until the Panel's review
and determination. A hearing before the Nasdaq Listing
Qualifications Panel to consider the appeal has been scheduled
for Oct. 30, 2008. In its Oct. 21, 2008 letter, Nasdaq informed
Workstream that the Listing Qualifications Panel would consider
the latest Market Place Rules violation at the hearing on
Oct. 30, 2008. The suspension of trading and delisting remains
stayed pending such appeal.
Headquartered in Ontario, Canada, Workstream, Inc (NASDAQ:WSTM) --
http://www.workstreaminc.com/-- provides on-demand compensation,
performance and talent management solutions and services that
help companies manage the entire employee lifecycle - from
recruitment to retirement. Workstream's TalentCenter provides a
unified view of all Workstream products and services including
Recruitment, Performance, Compensation, Development and
Transition. Access to TalentCenter is offered on a monthly
subscription basis under an on-demand software delivery model
to help companies build high performing workforces, while
controlling costs. With offices across North America, Workstream
services customers including Chevron, The Gap, Home Depot, Kaiser
Permanente, Motorola, Nordstrom, VISA and Wells Fargo.
X-RITE INC: Completes $155MM Financing, Issues 28 Million Shares
----------------------------------------------------------------
X-Rite, Incorporated, completed a $155 million capital raise led
by OEPX, LLC, a Delaware limited liability company managed by One
Equity Partners, and with Sagard Capital Partners, L.P. and
Tinicum Capital Partners II, L.P., Tinicum Capital Partners II
Parallel Fund, L.P. and Tinicum Capital Partners II Executive Fund
L.L.C.
Proceeds from the capital raise will be used to repay
indebtedness under its First and Second Lien Credit Agreements,
settle amounts payable by the company pursuant to certain
interest rate swap agreements, prepay certain amounts outstanding
between the company and Fifth Third Bank, well as fund ongoing
operations.
"Having completed this financing initiative, the amendments to
the First and Second Lien Credit Agreements have become effective
and we now have the necessary resources to continue developing
new and innovative products for our customers related to the
business of color," Thomas J. Vacchiano Jr., chief executive
officer for X-Rite, said. "This capital raise also provides
the company with greater financial flexibility during these
times of increased economic uncertainty to improve shareholder
value and fund on-going operations."
Under the terms of the recapitalization, X-Rite will issue
28,571,429 shares of common stock to OEP, 9,076,667 shares of
common stock to Sagard, and 9,256,667 shares of common stock to
Tinicum.
About X-Rite
X-Rite Incorporated (NASDAQ:XRIT) -- http://www.xrite.com/--
including unit Pantone Inc., develops, manufactures, markets and
supports innovative color solutions through measurement systems,
software, color standards and services. X-Rite serves a range of
industries, including printing, packaging, photography, graphic
design, video, automotive, paints, plastics, textiles, dental and
medical.
* * *
As reported in the Troubled Company Reporter on Aug. 27, 2008,
Standard & Poor's Ratings Services revised its CreditWatch on X-
Rite Inc. to positive from developing.
On Aug. 20, 2008, X-Rite Inc. (CCC+/Watch Pos/--) announced that
it had signed a forbearance and new lender agreement and investor
agreements that include a plan to substantially reduce debt,
primarily through the issuance of $155 million in common equity to
new and certain existing shareholders. The agreement also
provides the company with access to up to $10 million on its
revolving credit agreement.
* Feldman, Wise, Williams Join Gibson Dunn as N.Y. Partners
-----------------------------------------------------------
David Feldman, Eric Wise and Matthew Williams have joined the
Gibson, Dunn & Crutcher LLP's New York office as partners.
All three joined Gibson Dunn's Business Restructuring and
Reorganization Practice Group, with Feldman taking a leadership
role as Co-Chair of the group.
Messrs. Feldman, Wise and Williams were formerly partners at
Kramer Levin Naftalis & Frankel, where Feldman was the co-head of
the Distressed and Special Situations Lending Group.
"Growing our bankruptcy practice has been a high priority for the
firm for some time, and even more so in light of the current
financial crisis" said Ken Doran, Managing Partner of Gibson Dunn.
"David, Eric and Matt have a very strong reputation in the
bankruptcy and restructuring community in New York and nationally,
and will give us greater depth of experience and expertise in that
area. With their addition, we will be better positioned to serve
our clients in this troubled economy."
"David, Eric and Matthew are extremely well regarded in the hedge
fund and financial institutions community," said Steven Shoemate,
Co-Partner in Charge of the New York office. "Their addition will
complement our New York transactional practices, especially in the
areas of M&A, securities and finance."
"This group has an established practice and a tremendous
reputation in the distressed debt arena and will give Gibson Dunn
a strong foundation in this growing area," said Michael Rosenthal,
Co-Chair of the Business Restructuring and Reorganization Practice
Group.
"We look forward to working with our new colleagues at Gibson
Dunn," said Mr. Feldman. "Gibson Dunn presents us with an
excellent opportunity to continue to expand our practice. It has
a top-tier corporate practice with significant depth not only in
the U.S. but in Europe and other key global markets in the Middle
East and Asia."
A. David Feldman
Mr. Feldman focuses his practice on the representation of
distressed investors, lenders, bondholders and creditor committees
in a variety of bankruptcy cases, restructurings, and distressed
asset and debt transactions.
He regularly represents hedge funds and financial institutions in
connection with the investment of companies in distress, including
the representation of bondholder groups, bank groups, official
creditors committees and equity groups in out-of-court and in-
court restructurings, distressed M&A transactions and distressed
and special situations financing transactions, such as debtor-in-
possession financing, chapter 11 exit financing and rescue
financing.
Mr. Feldman was named by the Investment Dealers' Digest as one of
the Top 40 under 40 Dealmakers of 2007. Prior to joining Gibson
Dunn, Mr. Feldman practiced with Kramer Levin since 1995. Before
that he was a law clerk to Judge William Gindin of the United
States Bankruptcy Court for the District of New Jersey. He is
1993 graduate of the Benjamin N. Cardozo School of Law, cum laude.
B. J. Eric Wise
Mr. Wise represents financial institutions, private equity funds,
hedge funds and corporate borrowers in complex lending and
restructuring transactions. He has significant experience in
distressed M&A and complex special situations financing
transactions, involving financial institutions and corporate
borrowers in second lien and subordinated financings, mezzanine
structures, debtor-in-possession financings, chapter 11 exit
financings, recapitalizations, restructurings, work-outs and
distressed debt purchases and sales.
Mr. Wise has extensive experience leading agent bank
representations in cross-border and multi-currency transactions,
real estate financings, asset based financings, leveraged
acquisition financings and bank and bond/bridge financings.
Before joining Gibson Dunn, Mr. Wise practiced with Kramer Levin
and Weil, Gotshal & Manges. He is a 1995 graduate of University
of Michigan Law School.
C. Matthew Williams
Mr. Williams represents financial institutions, official and ad
hoc committees of creditors and hedge funds inside and outside of
chapter 11 filings in numerous industries, including automotive,
energy, manufacturing and retail sectors. He regularly advises
clients on complex credit documents and complex capital
structures.
Mr. Williams joined Kramer Levin in 1999. Before joining the
firm, he served as law clerk to Judge Francis G. Conrad of the
United Stated Bankruptcy Court for the District of Vermont. He
graduated with high honors from Rutgers University School of Law
in 1998.
About Gibson Dunn
Gibson, Dunn & Crutcher LLP -- http://www.gibsondunn.com/-- is an
international law firm that has more than 800 lawyers and 13
offices, including Los Angeles, New York, Washington, D.C., San
Francisco, Palo Alto, London, Paris, Munich, Brussels, Orange
County, Century City, Dallas and Denver. The firm specializes in
real estate debt and equity finance, development, sales and
acquisitions, land use and environmental issues, leasing, and
workout transactions.
* Gibson Dunn-NY Business Restructuring Group Adds Three Partners
-----------------------------------------------------------------
David Feldman, Eric Wise, and Matthew Williams have joined Gibson,
Dunn & Crutcher LLP's New York office as partners. All three
joined Gibson Dunn's Business Restructuring and Reorganization
Practice Group, with Mr. Feldman taking a leadership role as co-
chair of the group. Messrs. Feldman, Wise and Williams were
partners at Kramer Levin Naftalis & Frankel, where Mr. Feldman was
the co-head of the Distressed and Special Situations Lending
Group.
"Growing our bankruptcy practice has been a high priority for the
firm for some time, and even more so in light of the current
financial crisis" said Ken Doran, managing partner of Gibson Dunn.
"[Messrs. Feldman, Wise and Williams] have a very strong
reputation in the bankruptcy and restructuring community in New
York and nationally, and will give us greater depth of experience
and expertise in that area. With their addition, we will be
better positioned to serve our clients in this troubled economy."
"[Messrs. Feldman, Wise and Williams] are extremely well regarded
in the hedge fund and financial institutions community," said
Steven Shoemate, co-partner in Charge of the New York office.
"Their addition will complement our New York transactional
practices, especially in the areas of M&A, securities and
finance."
"This group has an established practice and a tremendous
reputation in the distressed debt arena and will give Gibson Dunn
a strong foundation in this growing area," Michael Rosenthal,
co-chair of the Business Restructuring and Reorganization Practice
Group, said.
"We look forward to working with our new colleagues at Gibson
Dunn," Mr. Feldman said. "Gibson Dunn presents us with an
excellent opportunity to continue to expand our practice. It has
a top-tier corporate practice with significant depth not only in
the U.S. but in Europe and other key global markets in the Middle
East and Asia."
Mr. Feldman focuses his practice on the representation of
distressed investors, lenders, bondholders and creditor
committees in a variety of bankruptcy cases, restructurings, and
distressed asset and debt transactions.
He regularly represents hedge funds and financial institutions
in connection with the investment of companies in distress,
including the representation of bondholder groups, bank groups,
official creditors committees and equity groups in out-of-court
and in-court restructurings, distressed M&A transactions and
distressed and special situations financing transactions, as
debtor-in-possession financing, chapter 11 exit financing and
rescue financing.
Mr. Feldman was named by the Investment Dealers' Digest as one
of the Top 40 under 40 Dealmakers of 2007. Prior to joining
Gibson Dunn, Mr. Feldman practiced with Kramer Levin since 1995.
Before that he was a law clerk to Judge William Gindin of the
United States Bankruptcy Court for the District of New Jersey.
He is 1993 graduate of the Benjamin N. Cardozo School of Law,
cum laude.
Mr. Wise represents financial institutions, private equity funds,
hedge funds and corporate borrowers in complex lending and
restructuring transactions. He has significant experience in
distressed M&A and complex special situations financing
transactions, involving financial institutions and corporate
borrowers in second lien and subordinated financings, mezzanine
structures, debtor-in-possession financings, chapter 11 exit
financings, recapitalizations, restructurings, work-outs and
distressed debt purchases and sales. He has extensive experience
leading agent bank representations in cross-border and multi-
currency transactions, real estate financings, asset based
financings, leveraged acquisition financings and bank and
bond/bridge financings.
Before joining Gibson Dunn, Mr. Wise practiced with Kramer Levin
and Weil, Gotshal & Manges. He is a 1995 graduate of University
of Michigan Law School.
Mr. Williams represents financial institutions, official and
ad hoc committees of creditors and hedge funds inside and
outside of chapter 11 filings in numerous industries, including
automotive, energy, manufacturing and retail sectors. He
advises clients on complex credit documents and complex capital
structures.
Mr. Williams joined Kramer Levin in 1999. Before joining the
firm, he served as law clerk to Judge Francis G. Conrad of the
United Stated Bankruptcy Court for the District of Vermont. He
graduated with high honors from Rutgers University School of Law
in 1998.
Gibson Dunn's Business Restructuring and Reorganization Practice
is a restructuring group with experience in both domestic and
multinational insolvencies. Members of the Practice Group are
members of the American College of Bankruptcy Lawyers and the
National Bankruptcy Conference and have been listed in the
bankruptcy law section of Best Lawyers in America and Guide to the
World's Leading Insolvency Lawyers.
The Restructuring Practice Group represents and counsels, among
others, creditors, chapter 11 debtors, companies seeking to
restructure obligations out of court or addressing other balance
sheet-related issues, and companies evaluating the benefits in
corporate, litigation, finance, intellectual property, labor and
employment, environmental, mergers and acquisitions, tax and
securities law. The Restructuring Practice Group has restructured
billions of dollars of debt in out-of-court restructurings well
as in complex Chapter 11 cases.
About the Gibson, Dunn & Crutcher LLP
Headquartered in Los Angeles, California, Gibson, Dunn & Crutcher
LLP -- http://www.gibsondunn.com/-- is an international law
firm. Gibson Dunn is positioned in worldwide marketplace with
approximately 950 lawyers and 15 offices, including Los Angeles,
New York, Washington, D.C., London, Paris, Munich, Brussels,
Dubai, Singapore, Orange County, San Francisco, Palo Alto, Century
City, Dallas and Denver.
* S&P Lowers Ratings on 33 Cert. Classes from 10 RMBS Transactions
------------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 33
classes of asset-backed certificates from 10 U.S. subprime
residential mortgage-backed transactions issued by Asset Backed
Funding Corp. Trust, Asset Backed Securities Corp. Home Equity
Loan Trust, Centex Home Equity Loan Trust, Meritage Mortgage Loan
Trust, New Century Home Equity Loan Trust, Soundview Home Loan
Trust, and Structured Asset Investment Loan Trust. The downgraded
transactions were issued between 2003 and 2004. In addition, S&P
affirmed its ratings on the remaining 95 classes from these and
eight other subprime transactions.
The downgrades reflect reduced credit enhancement due to monthly
realized losses, as well as the amount of delinquent loans
currently outstanding relative to the amount of credit support
available. For the downgraded transactions, losses have exceeded
excess interest over the past 12 months, at levels ranging from
1.3x (New Century Home Equity Loan Trust 2004-1) to 2.47x
(Structured Asset Investment Loan Trust 2003-BC9).
Overcollateralization has been completely eroded for ABFC Trust
2004-OPT1 and for Structured Asset Investment Loan Trust's series
2003-BC9 and 2004-5, with subordinate classes in each taking
principal write-downs. Some of the subordinate classes in
Meritage Mortgage Loan Trust 2003-1 also experienced principal
write-downs, but the transaction gained three basis points of
overcollateralization in September.
For the other downgraded transactions, overcollateralization is
between 4 bps (New Century Home Equity Loan Trust 2004-1) and 48
bps (Soundview Home Loan Trust 2004-WMC1) below target. Total
delinquencies, as a percentage of the current pool balances,
ranged from 14.7% (Asset Backed Securities Corp. Home Equity Loan
Trust 2004-HE2) to 27.50% (Soundview Home Loan Trust 2004-WMC1).
S&P is currently projecting losses between 7.39% (Structured Asset
Investment Loan Trust 2003-BC9) and 12.33% (Soundview Home Loan
Trust 2004-WMC1) of each affected transaction's current pool
balance. S&P expects projected losses to significantly erode
current credit support levels. Cumulative losses, total
delinquencies, and severe delinquencies for the affected
transactions are:
Losses And Delinquencies*
Asset Backed Funding Corporation Trust
Series Pool factor Cum. Losses Total del. Sev. del.
------ ----------- ----------- ---------- --------
2004-OPT1 11.12% 1.44% 16.06% 12.72%
Asset Backed Securities Corporation Home Equity Loan Trust
Series Pool factor Cum. Losses Total del. Sev. del.
------ ----------- ----------- ---------- ---------
2004-HE2 12.08% 1.82% 14.71% 11.62%
Centex Home Equity Loan Trust
Series Pool factor Cum. Losses Total del. Sev. del.
------ ----------- ----------- ---------- ---------
2004-C 20.65% 2.36% 20.86% 11.69%
Meritage Mortgage Loan Trust
Series Pool factor Cum. Losses Total del. Sev. del.
------ ----------- ----------- ---------- ---------
2003-1 8.77% 3.77% 22.89% 13.09%
New Century Home Equity Loan Trust
Series Pool factor Cum. Losses Total del. Sev. del.
------ ----------- ----------- ---------- ---------
2004-1 12.18% 1.40% 19.24% 13.36%
Soundview Home Loan Trust
Series Pool factor Cum. Losses Total del. Sev. del.
------ ----------- ----------- ---------- ---------
2004-WMC1 13.32% 2.70% 27.50% 21.39%
Structured Asset Investment Loan Trust
Series Pool factor Cum. Losses Total del. Sev. del.
------ ----------- ----------- ---------- ---------
2003-BC9 8.50% 1.84% 14.97% 10.28%
2004-5 7.23% 1.41% 21.26% 14.85%
2004-6 13.00% 1.36% 15.64% 11.18%
2004-BNC1 12.54% 1.20% 23.14% 17.01%
* As of the September 2008 remittance. Cumulative losses
expressed as a percentage of the original pool balance. Total
and severe delinquencies expressed as a percentage of the
current pool balance.
The 95 affirmations reflect sufficient credit enhancement
available to support the ratings at their current levels.
Subordination, overcollateralization, and excess spread provide
credit support for these transactions. The collateral for these
deals primarily consists of subprime, adjustable- and fixed-rate
mortgage loans secured by first liens on one- to four-family
residential properties.
Rating Actions
ABFC 2004-OPT1 Trust
Series 2004-OPT1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-6 04542BFF4 CCC B
Asset Backed Securities Corporation Home Equity Loan Trust Series
2004-HE2
Series 2004-HE2
Rating
------
Class CUSIP To From
----- ----- -- ----
M4 04541GHZ8 BBB BBB+
M5A 04541GJA1 B BBB
M5B 04541GJG8 B BBB
M6 04541GJB9 CCC BBB-
Centex Home Equity Loan Trust 2004-C
Series 2004-C
Rating
------
Class CUSIP To From
----- ----- -- ----
M-5 152314KV1 A- A
M-6 152314KW9 BBB A-
M-7 152314KX7 BB BBB+
B 152314KY5 B BBB
Meritage Mortgage Loan Trust 2003-1
Series 2003-1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-5 59001FAG6 CCC B-
New Century Home Equity Loan Trust 2004-1
Series 2004-1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-5 64352VFU0 BB BBB
M-6 64352VFV8 CCC BBB-
Soundview Home Loan Trust 2004-WMC1
Series 2004-WMC1
Rating
------
Class CUSIP To From
----- ----- -- ----
M-5 83611MBZ0 A A+
M-6 83611MCA4 BBB A
M-7 83611MCB2 B A-
M-8 83611MCC0 CCC BBB+
M-9 83611MCD8 CCC BBB
M-10 83611MCE6 CC BBB-
Structured Asset Investment Loan Trust 2003-BC9
Series 2003-BC9
Rating
------
Class CUSIP To From
----- ----- -- ----
M3 86358EDM5 CCC BB
Structured Asset Investment Loan Trust 2004-5
Series 2004-5
Rating
------
Class CUSIP To From
----- ----- -- ----
M6 86358EJK3 B A-
M7 86358EJL1 CCC B
M8 86358EJM9 CCC B
Structured Asset Investment Loan Trust 2004-6
Series 2004-6
Rating
------
Class CUSIP To From
----- ----- -- ----
M3 86358EJW7 BBB A-
M4 86358EJX5 B BBB
M5 86358EJY3 CCC B+
M6 86358EJZ0 CCC B
B 86358EKA3 CC CCC
Structured Asset Investment Loan Trust 2004-BNC1
Series 2004-BNC1
Rating
------
Class CUSIP To From
----- ----- -- ----
M2 86358ELB0 A AA-
M3 86358ELC8 BBB A+
M4 86358ELD6 CCC BBB
M5 86358ELE4 CCC BB-
M6 86358ELF1 CCC B
B1 86358ELJ3 CC CCC
Ratings Affirmed
ABFC 2003-WF1 Trust
Series 2003-WF1
Class CUSIP Rating
----- ----- ------
A-2 04542BCD2 AAA
M-1 04542BCE0 AA+
M-2 04542BCF7 A+
M-3 04542BCG5 CCC
M-4 04542BCH3 CCC
ABFC 2004-OPT1 Trust
Series 2004-OPT1
Class CUSIP Rating
----- ----- ------
M-1 04542BFA5 AA
M-2 04542BFB3 A
M-3 04542BFC1 A-
M-4 04542BFD9 BBB+
M-5 04542BFE7 BB
Asset Backed Securities Corporation Home Equity Loan Trust Series
2004-HE2
Series 2004-HE2
Class CUSIP Rating
----- ----- ------
M1 04541GHW5 AA
M2 04541GHX3 A
M3 04541GHY1 A-
Centex Home Equity Loan Trust 2004-C
Series 2004-C
Class CUSIP Rating
----- ----- ------
AF-4 152314KH2 AAA
AF-5 152314KJ8 AAA
AF-6 152314KK5 AAA
M-1 152314KR0 AA+
M-2 152314KS8 AA
M-3 152314KT6 AA-
M-4 152314KU3 A+
Conseco Finance Home Equity Loan Trust 2002-A
Series 2002-A
Class CUSIP Rating
----- ----- ------
A-5 20846QJJ8 AAA
A-IO 20846QJK5 AAA
M-1 20846QJL3 AA
M-2 20846QJM1 A-
B-1 20846QJN9 BBB-
First Matrix RM Trust
Series 2003-A
Class CUSIP Rating
----- ----- ------
A 32082HAB2 AAA
X 32082HAA4 AAA
B 32082HAC0 BBB
HomEq Trust 2001-A
Series 2001-A
Class CUSIP Rating
----- ----- ------
AC 43730PAA9 AAA
MC-1 43730PAB7 AA+
MC-2 43730PAC5 A+
BC 43730PAD3 BBB
MN-1 43730PAF8 AAA
MN-2 43730PAG6 AA+
BN 43730PAH4 A
Meritage Mortgage Loan Trust 2003-1
Series 2003-1
Class CUSIP Rating
----- ----- ------
M-1 59001FAC5 AA
M-2 59001FAD3 A+
M-3 59001FAE1 A
M-4 59001FAF8 BBB
New Century Home Equity Loan Trust 2004-1
Series 2004-1
Class CUSIP Rating
----- ----- ------
M-1 64352VFQ9 AA
M-2 64352VFR7 A
M-3 64352VFS5 A-
M-4 64352VFT3 BBB+
New Century Home Equity Loan Trust 2004-2
Series 2004-2
Class CUSIP Rating
----- ----- ------
A-1 64352VFW6 AAA
A-2 64352VFX4 AAA
A-4 64352VFZ9 AAA
M-1 64352VGA3 AAA
M-2 64352VGB1 AA+
M-3 64352VGC9 AA
M-4 64352VGD7 AA-
M-5 64352VGE5 A
M-6 64352VGF2 A-
M-7 64352VGG0 BBB+
M-8 64352VGH8 BBB
M-9 64352VGJ4 BBB
Soundview Home Equity Loan Trust 2001-2
Series 2001-2
Class CUSIP Rating
----- ----- ------
AF 83611PAP6 AAA
M-1 83611PAR2 AA
M-2 83611PAS0 A
M-3 83611PAT8 BBB
Soundview Home Loan Trust 2003-1
Series 2003-1
Class CUSIP Rating
----- ----- ------
A 83611MAA6 AAA
M-1 83611MAD0 AAA
M-2 83611MAE8 AA+
M-3 83611MAK4 AA-
M-4 83611MAH1 A
M-5 83611MAJ7 BBB
Soundview Home Loan Trust 2003-2
Series 2003-2
Class CUSIP Rating
----- ----- ------
A-2 83611MAQ1 AAA
M-1 83611MAR9 AA
M-2 83611MAS7 A
M-3 83611MAT5 A-
M-4 83611MAU2 BBB+
M-5 83611MAV0 BBB
M-6 83611MAW8 BBB-
B 83611MAM0 BB
Soundview Home Loan Trust 2004-WMC1
Series 2004-WMC1
Class CUSIP Rating
----- ----- ------
M-1 83611MBV9 AA+
M-2 83611MBW7 AA
M-3 83611MBX5 AA
M-4 83611MBY3 AA-
Structured Asset Investment Loan Trust 2003-BC9
Series 2003-BC9
Class CUSIP Rating
----- ----- ------
2-A 86358EDG8 AAA
3-A2 86358EDH6 AAA
3-A3 86358EDS2 AAA
M1 86358EDK9 AA
M2 86358EDL7 A
Structured Asset Investment Loan Trust 2004-5
Series 2004-5
Class CUSIP Rating
----- ----- ------
M2 86358EJF4 AA+
M3 86358EJG2 AA
M4 86358EJH0 AA-
M5 86358EJJ6 A
Structured Asset Investment Loan Trust 2004-6
Series 2004-6
Class CUSIP Rating
----- ----- ------
A3 86358EJS6 AAA
A-SIO 86358EJT4 AAA
M1 86358EJU1 AA
M2 86358EJV9 A
Structured Asset Investment Loan Trust 2004-BNC1
Series 2004-BNC1
Class CUSIP Rating
----- ----- ------
A2 86358EKV7 AAA
A4 86358EKX3 AAA
A5 86358EKY1 AAA
A-SIO 86358EKZ8 AAA
M1 86358ELA2 AA
* Turnaround Advisors Have Work But Lacked Options to Save Firms
----------------------------------------------------------------
As the U.S. economy teetered during the worst financial crisis in
recent history, turnaround consultants and financial advisors
faced an abundance of work but a paucity of options to save
businesses stifled by a credit crunch.
Seven out of 10 respondents to the September 2008 Turnaround
Management Association's annual Trend Watch poll said engagements
and revenue have increased by at least 10% since last year.
About three quarters anticipate further revenue growth in 2009,
with most expecting an increase of up to 25%.
Of the 155 respondents, most (62%) are occupied with struggling
manufacturers, followed by troubled companies in the construction
(46%) and distribution (45%) industries. More than six out of
10 respondents (64%) said companies requesting their services
were in late decline, up from 59% last year. The proportion of
respondents contacted by companies facing certain liquidation
nearly doubled from 15% last year to 28%.
"Our business is active," TMA International board member Bill
Lenhart, CTP (Certified Turnaround Professional) and partner at
BDO Consulting in New York, said. "But the cases are very
short-term and they're typically arriving fait accompli. They
don't involve traditional turnarounds. They're liquidations,
which is not what we want to do."
However, despite the worsening outlook, 38% of the turnaround
professionals reported the highest proportion of their work
involves reorganizing a company with the current owners, and
their most frequent type of engagement, reported by 54%,
involved out-of-court services.
Respondents remain uneasy about the engine that keeps firms
humming: liquidity. Many expressed concern about bank failures
and lack of financing to execute turnarounds, attract buyers of
managed assets and sustain client operations. Weighing nearly
as heavily on respondents are changes in the restructuring
industry, from the sluggish response by private equity firms in
correcting poor performance to the prohibitive expense of
Chapter 11 bankruptcy proceedings.
With international headquarters in Chicago, Turnaround Management
Association -- http://www.turnaround.org-- has 8,300 members in
43 regional chapters comprise a professional community of
turnaround practitioners, attorneys, investors, lenders, venture
capitalists, investment bankers, accountants, appraisers,
liquidators, executive recruiters and consultants.
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
-------------------------------------------------------------
Recent Chapter 11 cases filed with assets and liabilities below
$1,000,000:
In Re H&B Industries, Inc.
Bankr. E.D. Mich. Case No. 08-34273
Chapter 11 Petition filed October 16, 2008
See http://bankrupt.com/misc/mieb08-34273.pdf
In Re Express Corporate Apparel, LLC
Bankr. M.D. Fla. Case No. 08-16603
Chapter 11 Petition filed October 23, 2008
See http://bankrupt.com/misc/flmb08-16603
In Re The Madison, Inc.
Bankr. D. N.J. Case No. 08-30684
Chapter 11 Petition filed October 23, 2008
See http://bankrupt.com/misc/njb08-30684
In Re Bengal Tiger Restaurant Inc.
Bankr. S.D. N.Y. Case No. 08-23559
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/nysb08-23559
In Re Deborah Ziolkowski
dba Manning Carroll and Ziolkowski
Bankr. N.D. Calif. Case No. 08-12253
Chapter 11 Petition filed October 24, 2008
See http://bankrupt.com/misc/canb08-12253
In Re Eric Washington & Renay Washington
Bankr. E.D. Calif. Case No. 08-35603
Chapter 11 Petition filed October 28, 2008
See http://bankrupt.com/misc/caeb08-35603
In Re Florida Shed Company, Inc.
Bankr. M.D. Fla. Case No. 08-16769
Chapter 11 Petition filed October 29, 2008
See http://bankrupt.com/misc/flmb08-16769
In Re Howard Benenson
Bankr. C.D. Calif. Case No. 08-18355
Chapter 11 Petition filed October 29, 2008
See http://bankrupt.com/misc/cacb08-18355
In Re John Stuart Productions, Inc.
Bankr. D. Nevada Case No. 08-22653
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/nvb08-22653
In Re Lear Land Company, LLC
Bankr. C.D. Calif. Case No. 08-12732
Chapter 11 Petition filed October 28, 2008
See http://bankrupt.com/misc/cacb08-12732
In Re Legacy Capital Trading Co., Inc.
Bankr. M.D. Fla. Case No. 08-16613
Chapter 11 Petition filed October 26, 2008
See http://bankrupt.com/misc/flmb08-16613
In Re Leonard Anthony Reynolds & Tracie Nan Reynolds
Bankr. N.D. W. Va. Case No. 08-01708
Chapter 11 Petition filed October 28, 2008
See http://bankrupt.com/misc/wvnb08-01708
In Re Randall Lee Scheets
Bankr. W.D. Wash. Case No. 08-17204
Chapter 11 Petition filed October 29, 2008
See http://bankrupt.com/misc/wawb08-017204
In Re West Coast Properties, LLC
Bankr. M.D. Fla. Case No. 08-16771
Chapter 11 Petition filed October 28, 2008
See http://bankrupt.com/misc/flmb08-16771
In Re Sexton's High Lift Wholesale, Inc.
Bankr. D. N.J. Case No. 08-31098
Chapter 11 Petition filed October 29, 2008
See http://bankrupt.com/misc/njb08-31098
In Re YV Estates LLC
Bankr. C.D. Calif. Case No. 08-16710
Chapter 11 Petition filed October 21, 2008
See http://bankrupt.com/misc/cacb08-16710.pdf
In Re Dee M. L'Archeveque
Bankr. C.D. Calif. Case No. 08-24453
Chapter 11 Petition filed October 21, 2008
See http://bankrupt.com/misc/cacd08-24453.pdf
In Re Image Plus Atlanta, Inc.
Bankr. N.D. Ga. Case No. 08-81213
Chapter 11 Petition filed October 22, 2008
See http://bankrupt.com/misc/ganb08-81213.pdf
In Re Ann R. Nimberg
Bankr. D. N.J. Case No. 08-30637
Chapter 11 Petition filed October 22, 2008
See http://bankrupt.com/misc/njb08-30637.pdf
In Re Warner Health Care, Inc.
Bankr. S.D. Ohio Case No. 08-15828
Chapter 11 Petition filed October 22, 2008
See http://bankrupt.com/misc/ohsb08-15828.pdf
In Re Tequila's Mexican Bar & Grill
Bankr. D. P.R. Case No. 08-07059
Chapter 11 Petition filed October 22, 2008
See http://bankrupt.com/misc/prb08-07059.pdf
In Re Oyedele Dental Corporation
Bankr. N.D. Calif. Case No. 08-56018
Chapter 11 Petition filed October 22, 2008
Filed as Pro Se
In Re 4330 East U.S. 30 Inc.
Bankr. N.D. Ind. Case No. 08-13602
Chapter 11 Petition filed October 22, 2008
Filed as Pro Se
In Re Quality OTR Repair Service Inc.
Bankr. D. Ariz. Case No. 08-14775
Chapter 11 Petition filed October 22, 2008
Filed as Pro Se
In Re William M. Shin
dba BBB Trading
Bankr. W.D. Tex. Case No. 08-31718
Chapter 11 Petition filed October 22, 2008
See http://bankrupt.com/misc/txwb08-31718.pdf
In Re Rushvin, Inc.
Bankr. W.D. Va. Case No. 08-72064
Chapter 11 Petition filed October 22, 2008
See http://bankrupt.com/misc/vawb08-72064.pdf
In Re Koenew, LLC
Bankr. D. Colo. Case No. 08-26749
Chapter 11 Petition filed October 23, 2008
See http://bankrupt.com/misc/cob08-26749.pdf
In Re Sundaze Tanning & Skin Care, LLC
dba Sundaze Tanning
Bankr. M.D. Fla. Case No. 08-16606
Chapter 11 Petition filed October 23, 2008
See http://bankrupt.com/misc/flmb08-16606.pdf
In Re Access Realty Corp.
Bankr. D. Mass. Case No. 08-18010
Chapter 11 Petition filed October 23, 2008
See http://bankrupt.com/misc/mab08-18010.pdf
In Re Physician Diagnostics Sleep Technology
Bankr. N.D. Ohio Case No. 08-35710
Chapter 11 Petition filed October 23, 2008
See http://bankrupt.com/misc/ohnb08-35710.pdf
In Re Furniture Best, Inc. ta Kendal Fine Furniture
Bankr. E.D. Penn. Case No. 08-16956
Chapter 11 Petition filed October 23, 2008
See http://bankrupt.com/misc/paeb08-16956.pdf
In Re Max Curtis Yates
Bankr. N.D. Ga. Case No. 08-81354
Chapter 11 Petition filed October 23, 2008
Filed as Pro Se
In Re Set Free Deliverence Temple, Inc
Bankr. W.D. Okla. Case No. 08-14696
Chapter 11 Petition filed October 23, 2008
Filed as Pro Se
In Re The SWB Development Group,LLC
Bankr. E.D. Ark. Case No. 08-16526
Chapter 11 Petition filed October 23, 2008
Filed as Pro Se
In Re Ultimate Entertainment LLC
Bankr. W.D. Okla. Case No. 08-14674
Chapter 11 Petition filed October 23, 2008
Filed as Pro Se
In Re 507 Land Trust
Bankr. E.D. Wis. Case No. 08-31600
Chapter 11 Petition filed October 23, 2008
Filed as Pro Se
In Re Marjorie's of Park Ridge , Inc
Bankr. N.D. Ill. Case No. 08-28599
Chapter 11 Petition filed October 23, 2008
Filed as Pro Se
In Re Hemingway Holding Corp.
Bankr. D. Conn. Case No. 08-33434
Chapter 11 Petition filed October 23, 2008
Filed as Pro Se
In Re Street Cars Automotive Group, LLC
dba Desire Detailing and Auto SVC
Bankr. M.D. Tenn. Case No. 08-09853
Chapter 11 Petition filed October 23, 2008
See http://bankrupt.com/misc/tnmb08-09853.pdf
In Re Roger Medina
Bankr. N.D. Tex. Case No. 08-44879
Chapter 11 Petition filed October 23, 2008
See http://bankrupt.com/misc/txnb08-44879.pdf
In Re Donald Wesley Dennett
Bankr. D. Utah Case No. 08-27311
Chapter 11 Petition filed October 23, 2008
See http://bankrupt.com/misc/utb08-27311.pdf
In Re American Bethel Corporation
Bankr. W.D. Va. Case No. 08-72079
Chapter 11 Petition filed October 23, 2008
See http://bankrupt.com/misc/vawb08-72079.pdf
In Re Seven Hills, LLC
Bankr. E.D. Ark. Case No. 08-16584
Chapter 11 Petition filed October 24, 2008
See http://bankrupt.com/misc/areb08-16584.pdf
In Re California Elite Realty
Bankr. C.D. Calif. Case No. 08-27838
Chapter 11 Petition filed October 24, 2008
See http://bankrupt.com/misc/cacd08-27838.pdf
In Re Adrian Gerald McDonald Mildred M McDonald
Bankr. W.D. La. Case No. 08-20716
Chapter 11 Petition filed October 24, 2008
See http://bankrupt.com/misc/lawb08-20716.pdf
In Re Wilkes Street Realty Trust Tiffany M. Carr, Trustee
Bankr. D. Mass. Case No. 08-31553
Chapter 11 Petition filed October 24, 2008
See http://bankrupt.com/misc/mab08-31553.pdf
In Re Winstar Investment and Development, LLC
Bankr. D. Md. Case No. 08-23818
Chapter 11 Petition filed October 24, 2008
See http://bankrupt.com/misc/mdb08-23818.pdf
In Re Ronald Augustus Nichols & Sati Angelina Nichols
Bankr. W.D. Mich. Case No. 08-09443
Chapter 11 Petition filed October 24, 2008
See http://bankrupt.com/misc/miwb08-09443.pdf
In Re Charlie A. Padgett & Cheryl D. Padgett
Bankr. W.D. Va. Case No. 08-62541
Chapter 11 Petition filed October 24, 2008
See http://bankrupt.com/misc/vawb08-62541.pdf
In Re James W. Sullivan Kathleen G Sullivan
Bankr. E.D. Wash. Case No. 08-04394
Chapter 11 Petition filed October 24, 2008
See http://bankrupt.com/misc/waeb08-04394.pdf
In Re Camelot Industries, Inc.
Bankr. D. Md. Case No. 08-23950
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/mdb08-23950.pdf
In Re Highland Farm of Peterborough, LLC
Bankr. D. N.H. Case No. 08-13109
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/nhb08-13109.pdf
In Re El Sol Consulting, LLC
Bankr. N.D. Ohio Case No. 08-63585
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/ohnb08-63585.pdf
In Re Mary Ann Petitta
Bankr. W.D. Penn. Case No. 08-27164
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/pawb08-27164.pdf
In Re Juan Ramon Natal-Henriquez
dba Juan R. Natal Henriquez, CPA
& Maria Antonia Vazquez-Berrios
Bankr. D. P.R. Case No. 08-07219
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/prb08-07219.pdf
In Re Lawrence A. Harper
dba Project Health on Wheels, Inc.
Bankr. E.D. Mich. Case No. 08-66178
Chapter 11 Petition filed October 27, 2008
Filed as Pro Se
In Re SFW Enterprises Cookeville, Inc.
dba Cici's Pizza, a Franchisee
Bankr. M.D. Tenn. Case No. 08-09963
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/tnmb08-09963.pdf
In Re SFW Enterprises Gallatin, Inc.
dba Cici's Pizza, a Franchisee
Bankr. M.D. Tenn. Case No. 08-09964
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/tnmb08-09964.pdf
In Re SFW Enterprises Madison, Inc.
dba Cici's Pizza, a Franchisee
Bankr. M.D. Tenn. Case No. 08-09965
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/tnmb08-09965.pdf
In Re SFW Enterprises Nashville, Inc.
dba Cici's Pizza, a Franchisee
Bankr. M.D. Tenn. Case No. 08-09966
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/tnmb08-09966.pdf
In Re Norma Jean Coleman
dba Family Dentistry
dba Jean Coleman DDS
aka Dr. N. Jean Coleman
Bankr. M.D. Tenn. Case No. 08-09988
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/tnmb08-09988.pdf
In Re S & L Trucking, Inc.
Bankr. E.D. Tex. Case No. 08-10550
Chapter 11 Petition filed October 27, 2008
See http://bankrupt.com/misc/txeb08-10550.pdf
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Shimero R. Jainga, Ronald C. Sy, Joel Anthony G. Lopez,
Cecil R. Villacampa, Melanie C. Pador, Ludivino Q. Climaco, Jr.,
Loyda I. Nartatez, Tara Marie A. Martin, Joseph Medel C. Martirez,
Carlo Fernandez, 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
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*** End of Transmission ***