/raid1/www/Hosts/bankrupt/TCR_Public/081106.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, November 6, 2008, Vol. 12, No. 265
Headlines
1031 TAX GROUP: Nat'l Gas Deposit Found Under Shreveport Property
363 GREENWICH: Case Summary & 20 Largest Unsecured Creditors
ADVANTA CORP: Downgrade Won't Affect Business Card Master Trust
ALITALIA SPA: Files Chap. 15 Petition to Save U.S. Assets
AMBASSADOR INSURANCE: Vermont Gets $205MM in Ambassador Lawsuit
ASARCO LLC: Sterlite Still Bidding, But Bid Slashed by $500MM
ASARCO LLC: Seeks to Sell Perth Amboy Property to PA-PDC
ASARCO LLC: Seeks to Employ Barclays as Financial Advisor
ASHTON WOODS: Moody's Cuts Probability of Default Rating to D
ASIA GLOBAL: Board Chair J. Leper Assumes CEO and CFO Posts
BALLYROCK ABS: S&P Raises Ratings on CDO 2007-1 Ltd.'s 6 Classes
BASELINE OIL: Moody's Withdraws Senior Notes Ratings
BELO CORP: Fitch Downgrades Rating to 'BB'; Outlook Negative
BOMBARDIER INC: DBRS Confirms Debentures Ratings at 'BB'
CANWEST MEDIA: DBRS Places BB Issuer Rating Under Review
CASEY TOOL: Files Chapter 11 Bankruptcy in Illinois
CHESAPEAKE CORP: S&P Cuts Corporate Credit Rating to 'CCC-'
COLONY BEACH: Files Bankruptcy to Stay $12-Million Lawsuit
COREL CORP: Potential Sale Falling Through; S&P Affirms 'B' Rtngs
CROWN CASTLE: Fitch Affirms Class G Notes' Rating at 'BB'
CYBERKINETICS NEURO: To Wind Down Biz.; May File for Bankruptcy
C-BASS 1999-3: Fitch Downgrades 10 Classes
DAYTON SUPERIOR: Extends Private Offer Deadline Until December 1
DECODE GENETICS: Seeks Hearing To Show Plan of Compliance
DOUBLE JJ: BankFirst Will Acquire Most of Firm for $8.65 Mln.
ENERGY FUTURE: S&P Says 'B-' Rating Not Affected by PIK Option
ENTRAVISION COMMS: Moody's Affirms Ba3 CFR; Outlook Negative
ESPRE SOLUTIONS: Peter Ianace Resigns as Chairman of the Board
EXECUTE SPORTS: Grants James R. Arabia Option to Buy Shares
EXECUTE SPORTS: Board Gives Vacated Spot to T. Scott
FEDERAL TRUST: Gets Default Notice From NYSE Alternext Staff
GENERAL CHEMICAL: Parent Must Pay Ontario $20 Mln. for Cleanup
GMAC COMMERCIAL: Fitch Holds $4.8MM Class O Certs. Rating at 'B-'
GMAC LLC: Financial Services Posts $2.5BB Third Quarter Net Loss
HANOVER CAPITAL: Fitch Affirms B Rating on Class B2-V
HEALTH NET: S&P Lowers Ratings to 'BB' from 'BB+'; Outlook Neg
HEXION SPECIALTY: Poor Performance Cues S&P to Cut Rating to 'B-'
HOLIDAY ISLE: Goes Bankrupt After Buyers Fail to Close on Condos
HOME INTERIORS: Wants Court to Appoint Chapter 11 Trustee
HOOP HOLDINGS: Amends Liquidation Plan & Disclosure Statement
HOOP HOLDINGS: Asks Court to Extend Plan Filing Period to Feb. 19
HRP MYRTLE: Hard Rock Wants Sale by Year-End; Seeks to Pay Workers
HYDROGEN CORP: Nasdaq Delists Firm Due to Subsidiary's Bankruptcy
INSMED INC: Net Loss Slides to $2.2MM for Quarter ended Sept. 30
INTERNATIONAL RECTIFIER: S&P Cuts Rating Cut to 'BB-'
INTERSTATE BAKERIES: Sees Net Losses in 3 Years Under New Plan
JOHNSON MEMORIAL: Operating Losses Blamed for Chapter 11 Filing
LBI MEDIA: Moody's Affirms B2 CFR; Outlook Revised to Negative
LB-UBS COMMERCIAL: Fitch Holds Class N Notes' Rating at 'BB-'
LB-UBS COMMERCIAL: S&P Cuts Ratings on 7 Classes of Trust 2007-C2
LOUISIANA-PACIFIC: Moody's Puts Ba2 Ratings on Review
LPL HOLDINGS: S&P Hikes to 'B+' As Financial Profile Improves
MAGNA ENTERTAINMENT: Lincoln Property Axes $16.5 Mil. Sale Deal
NATIONAL CENTURY: Ex-CEO Guilty of Fraud & Money Laundering
NORBORD INC: Moody's Puts Ba2 Ratings Under Review for Downgrade
NORTHEAST BIOFUELS: Moody's Junks Sr. Sec. Rating; Outlook Neg.
OPEN ENERGY: Appoints Three Quercus Trust's Designees to Board
OSHKOSH CORP: Moody's Affirms Ba3 Ratings; Outlook Negative
PENHALL INTERNATIONAL: S&P Affirms 'B' Corp. Credit Rating
PILGRIM'S PRIDE: Faces 5 Lawsuits for Inflating Prices of Stock
PILGRIM'S PRIDE: Lenders to Install Chief Restructuring Officer
PLC SYSTEMS: NSYE Alternext To Delist Common Stock
PREMIUM LOAN: S&P Lowers Ratings on Trust I's C & D Notes
RC2: Moody's Withdraws All Ratings
RODALE INC: Will Lay Off 10% of Work Force
SENSATA TECHNOLOGIES: S&P Lowers Ratings to 'B'; Outlook Negative
SIGNUM VERDE: Fitch Cuts CLP5.3 Billion Notes' Rating to 'BB'
SIMTROL INC: Posts $3.6MM Net Loss for Nine Months ended Sept. 30
SOLUTION TECHNOLOGY: Files For Chapter 11 Bankruptcy in Delaware
SPORTS PUBLISHING: Lists $5.86MM in Debts & $3.65MM in Assets
TENNECO INC: Moody's Affirms B1 Rating; Outlook Negative
TOT-BOT INC: Reopens Units; Gymboree Play Tries to Take Over
TROPICANA ENTERTAINMENT LLC: Lenders to Object to Cash-Less Plan
TWEETER OPCO: Case Summary & 20 Largest Unsecured Creditors
TWEETER OPCO: Will Stop Operating, to Start Closing Headquarters
VALLEJO CITY: Court to Hear Unions CBA Rejections Dec. 2
VALLEJO CITY: Seeks More Service Reductions to Cut Deficit
VALUE CITY: U.S. Trustee Forms Nine-Member Creditors' Committee
VERASUN ENERGY: Seeks $220MM Loan from Noteholders & Agstar
VERASUN ENERGY: Wants Access to Cash Collateral on $490MM Loans
VONAGE HOLDINGS: Completes Refinancing of Senior Convertible Notes
WACHOVIA BANK: S&P Cuts Ratings on 3 2006-WHALE 7 Certs. to BB
WASHINGTON MUTUAL: Nasdaq Delists Securities Today, November 6
WASHINGTON MUTUAL: Terminates Transfer Agent Deal with Mellon
WATER PIK: Moody's Affirms Caa2 Second Lien Term Loan Rating
* Consumer-Based Sectors Face a Frightening Environment, S&P Says
* Financial Covenants Concern of Capital Goods Sector, S&P Says
* Financial Sector Dominates Global Defaults, S&P Finds
* Financial Covenants Concern of Capital Goods Sector, S&P Says
* Fitch Publishes U.S. Auto Lease Special Report
* Fitch Says US Credit Card Losses Could Surpass Historical Peaks
* Fitch Says Pension Funding Needs Achievable for Media Sector
* Fitch: Severe Global Recession Expected in 2009
* October Defaults Come From Nonfinancial Sectors, S&P Says
* Speculative-Grade Sector Bond Indices Rise to Distressed Levels
* S&P Article Looks At D&O Losses' Effect U.S. Insurer Ratings
* S&P Cuts 72 Ratings on 20 U.S. CDO of ABS Transactions
* S&P Provides Loss Projections for 2005 U.S. Alt-A RMBS Deals
* S&P Says 786 Issuers Face Downgrade Risk, A Three-Year High
* S&P Says No Funding Agreement-backed Issuance in October 2008
* S&P Says Q3 Rating Changes in US Public Finance Were Positive
* S&P Sees High Recovery Prospects for Lenders in Oil Sector
* Upgrade Potential Falls to Four-Year Low, S&P Article Says
* 2Qtr Global Project Finance Ratings Remain Stable, S&P Says
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
*********
1031 TAX GROUP: Nat'l Gas Deposit Found Under Shreveport Property
-----------------------------------------------------------------
According to Bill Rochelle of Bloomberg News, a natural gas
deposit was discovered under a property in Shreveport, Louisiana,
in which 1031 Tag Group LLC has an interest.
The Chapter 11 trustee for the estate of 1031 Tax Group wants
access to proceeds from gas production -- estimate to be $30
million to $70 million -- but agreements previously signed might
have assigned rights to those proceeds to one creditor, the rport
added.
As reported by the Troubled Company Reporter Gerard A. McHale, the
Chapter 11 trustee, has lodged an adversary case against several
defendants including former chief executive officer Edward H.
Okun, who is currently incarcerated and awaiting trial after being
accused of misappropriating more than $130 million to fund a
lavish lifestyle. A federal grand jury in Richmond, Virginia,
indicted Mr. Okun on charges of mail fraud, bulk cash smuggling
and making false statements.
The Debtor was a "qualified intermediary" aiding customers to
ditch capital gains taxes by holding proceeds from the sale of
property until a replacement property was bought.
About 1031 Tax Group
Headquartered in Richmond, Virginia, The 1031 Tax Group LLC --
http://www.ixg1031.com/-- is a privately held consolidated group
of qualified intermediaries created to serve real property
exchanges under Section 1031 of the Internal Revenue Code. The
company and 15 of its affiliates filed for Chapter 11 protection
on May 14, 2007 (Bankr. S.D.N.Y. Case No. 07-11447 through
07-11462). Paul Traub, Esq., Norman N. Kinel, Esq., and Steven E.
Fox, Esq., at Dreier LLP, represent the Debtors in their
restructuring efforts. Thomas J. Weber, Esq., Melanie L.
Cyganowski, Esq., and Allen G. Kadish, Esq., at Greenberg Traurig,
LLP, represent the Official Committee of Unsecured Creditors. As
of Sept. 30, 2007, the Debtors had total assets of $164,231,012
and total liabilities of $168,126,294, resulting in a total
stockholders' deficit of $3,895,282.
363 GREENWICH: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Debtor: 363 Greenwich, LLC
dba Devin Tavern
363 Greenwich Street
New York, NY 10013
Bankruptcy Case No.: 08-14247
Chapter 11 Petition Date: October 29, 2008
Court: Southern District of New York (Manhattan)
Judge: James M. Peck
Debtor's Counsel: Gabriel Del Virginia, Esq.
gabriel.delvirginia@verizon.ne
Law Offices of Gabriel Del Virginia
641 Lexington Avenue, 21st Floor
New York, NY 10022
Tel: (212) 371-5478
Fax: (212) 371-0460
Estimated Assets: $1,000,000 to $10,000,000
Estimated Debts: $500,000 to $1,000,000
A list of the Debtor's largest unsecured creditors is available
for free at:
http://bankrupt.com/misc/nysb08-14247
ADVANTA CORP: Downgrade Won't Affect Business Card Master Trust
---------------------------------------------------------------
Standard & Poor's Ratings Services said the downgrade of Advanta
Bank Corp. (Advanta) to 'BB-/Negative/B' from 'BB/Negative/B' does
not, in and of itself, affect the current ratings assigned to the
outstanding classes issued out of the Advanta Business Card Master
Trust.
Advanta Corp.'s ratings was lowered to 'B+' from 'BB-' by S&P on
Oct. 30, 2008.
Our ratings on all classes issued by Advanta Business Card Master
Trust remain on CreditWatch with negative implications, where they
were placed on Sept. 22, 2008, due to deterioration in
performance, as reflected in the rapid acceleration in the charge-
off rate.
ALITALIA SPA: Files Chap. 15 Petition to Save U.S. Assets
---------------------------------------------------------
Italy-based Alitalia-Linee Aeree Italiane, S.p.A., has filed for
Chapter 15 protection with the U.S. Bankruptcy Court for the
Southern District of New York amid competition from low-cost air
carriers, poor management and onerous union obligations.
In its annual report to shareholders, Alitalia said that total
assets were EUR3,593,764,000 (US$4,684,000,000) and debts were
EUR3,212,394,000 ($4,186,000,000) as of December 31, 2007.
Alitalia, however, declared assets of only between US$1,000,000
and US$10,000,000 in its Chapter 15 petition. Prof. Augusto
Fantozzi, the appointed extraordinary administrator, however, says
Alitalia's property in the United States mainly consists of cash
in its operating bank accounts, furniture and fixtures in its
various offices and facilities located throughout the country (but
mostly in New York, New Jersey, Florida, Illinois and California),
and relatively modest amounts of equipment used in its air carrier
and air freight operations. In sum, the value of this property is
approximately US$1,000,000.
Mr. Fantozzi pointed out that to protect Alitalia's estate and
creditors and to keep it flying during this period, seeking relief
under Chapter 15 of the U.S. Bankruptcy Code is necessary. The
Chapter 15 petition, according to Mr. Fantozzi, will ensure the
preservation of the airline's assets in the United States.
Mr. Fantozzi further disclosed that upon information and belief,
similar relief is being sought in other countries where Alitalia
operates.
Kaplan, von Ohlen & Massamillo, LLC serves as Mr. Fantozzi's U.S.
Counsel.
Road to Bankruptcy
Despite a EUR1.4 billion state-backed restructuring in 1997,
Alitalia posted net losses of EUR256 million and EUR907 million in
2000 and 2001 respectively. Alitalia then posted EUR93 million in
net profits in 2002 after a EUR1.4 billion capital injection. The
carrier continued to book annual net losses -- EUR520 million in
2003, EUR813 million in 2004, EUR168 million in 2005, EUR625.6
million in 2006, and EUR494.64 million in 2007.
In the carrier's Chapter 15 petition filed Oct. 29, 2008,
Mr. Fantozzi said the airline's financial difficulties have been
and exacerbated by spiraling fuel prices.
Within the last two years, Mr. Fantozzi stated efforts were made
by Alitalia and the government of Italy to find a strategic
airline partner to purchase the airline or, alternatively, an
investor willing to recapitalize it. As these efforts progressed,
Alitalia attempted to renegotiate its union contracts, a condition
imposed by all would-be strategic partners and potential
investors.
Mr. Fantozzi recalled that in April, one of the purchasers, Air
France/KLM, withdrew its offer to buy Alitalia when it was unable
to reach an agreement with Alitalia's several unions.
Investor Consortium Formed
Following Air France/KLM's withdrawal, a new Italian investor
consortium, Compagnia Aerea Italiana ("CAI"), was formed with the
expectations that it would invest approximately US$1.4 Billion to
buy many of Alitalia's assets and to relaunch a "new" Alitalia.
It likewise, however, initially ran into difficulties in reaching
a suitable agreement with many of Alitalia's unions, Mr. Fantozzi
noted. By late August, 2008, with time running out, it became
apparent to Alitalia's Board that, in the absence of immediate
success in the negotiations with the unions and the resultant
commitment of CAI to purchase its assets and assume its
operations, it would run out of cash, and would need to likely
wind down its operations and liquidate.
Bankruptcy Bill
To ensure continuity of Alitalia's operations, the government of
Italy adopted the Bankruptcy Bill, which is the rough equivalent
of Chapter 11 of the Bankruptcy Code. The bill among other
things, allowed Alitalia to liquidate its assets and lay off
workers as it might deem necessary.
At or about the same time, the government relaxed certain
antitrust laws in order to permit the possibility of a partnership
or strategic alliance between Alitalia and Air One, Italy's second
largest carrier.
Italian Bankruptcy Filing
On Aug. 29, 2008, Alitalia declared insolvency and filed for
commencement of extraordinary administration procedure at the
Tribunal of Rome. Italian Prime Minister Silvio Berlusconi
appointed Mr. Fantozzi as extraordinary commissioner. Under the
Bankruptcy Bill, the Administrator has supplanted the directors
and other management of Alitalia.
Sale to CAI by November 30
In late September, CAI finally reached agreement with all of
Alitalia's major unions. Specifically, CAI agreed to:
-- continue its due diligence to purchase Alitalia's assets,
-- negotiate with appropriate governmental authorities
to acquire flight privileges and authority currently
held by Alitalia,
-- collect funds from its investors (approximately
US$1.4 Billion) needed, and
-- launch a newly created airline.
Mr. Fantozzi said in a Nov. 3 press release that on Oct. 31, CAI
presented an offer to purchase Alitalia and its Alitalia Servizi
S.p.A. in a.s., Alitalia Express S.p.A. in a.s., Alitalia Airport
S.p.A. and Volare S.p.A.
CAI has offered to (i) buy Alitalia's assets, including
shareholder participation in Opodo Ltd; S.I.T.A. inc. Foundation;
S.I.T.A. SC., leases and contracts and (ii) assume certain
liabilities of the Alitalia Group. CAI will also honor tickers
purchased before the agreement.
The statement did not identify the purchase price but said that
the amount due to Alitalia group as well as the ways and terms of
payment will be communicated after the independent expert
estimator -- appointed by the Ministry for Economic
Development -- has delivered the survey.
Requisites of the consummation of the sale, which is expected to
occur Nov. 30, include approval of anti-trust authorities and
European Commission of the purchase.
About Alitalia
Based in Rome, Alitalia S.p.A. -- http://www.alitalia.it/--
provides air travel services for passengers and air transport of
cargo on national, international and inter-continental routes,
including United States, Canada, Japan and Argentina. The Italian
government owns 49.9% of Alitalia.
AMBASSADOR INSURANCE: Vermont Gets $205MM in Ambassador Lawsuit
---------------------------------------------------------------
The State of Vermont has received $205 million in a lawsuit
against accounts for the defunct Ambassador Insurance Co. whose
bankruptcy in 1983 "left about 20,000 people in several states
with outstanding claims".
The announcement brings to a close the state regulators' efforts
to collect from PriceWaterhouseCoopers, the accounting firm for
the defunct insurance company, said Paulette Thabault,
commissioner of the state's Department of Banking, Insurance,
Securities and Health Care Administration.
"Claimants should know that the long wait is nearly over, and that
we expect to be able to fully pay claims by insureds and
policyholders, with interest," Ms. Thabault said.
Ambassador, which was incorporated in Vermont but headquartered in
New Jersey, operated in seven states. It had about 7,000
policyholders in Vermont when it went bankrupt in 1983.
According to the report, claimants already have received 86% of
the money they were owed under settlements reached several years
ago, said Peter Young, a lawyer in Ms. Thabault's department.
Mr. Young added that a portion of the $205 million will go to
guaranty and reinsurance funds.
As reported in the Troubled Company Reporter on Sept. 17, 2008,
the U.S. Court of Appeals for the Third Circuit handed down on
Sept. 9 a ruling upholding a decision made by the U.S. District
Court for the District of New Jersey against PwC in an auditing
malpractice lawsuit brought by Vermont regulators seeking to
recover damages related to the 1983 collapse of Ambassador
Insurance Co.
Vermont officials claimed that Ambassador Insurance's 1981 and
1982 financial statements, audited by Coopers & Lybrand, a
predecessor to PwC, had concealed the company's weakness from
regulators. The jury in New Jersey awarded damages of about
$120 million to the creditors, which then increased to
$183 million with pretrial interest. The jury assigned 40% of the
liability to PwC and 60% to Ambassador Insurer's founder and
president, the late Arnold Chait.
About Ambassador Insurance
Ambassador Insurance Co. was incorporated in Vermont, although it
operated from North Bergen, N.J. Co., which was deemed insolvent
and seized by Vermont's insurance department in 1983.
ASARCO LLC: Sterlite Still Bidding, But Bid Slashed by $500MM
-------------------------------------------------------------
ASARCO LLC, and Sterlite (USA), Inc., and Sterlite Industries
(India), Ltd., agreed to terminate their purchase and sale
agreement, whereby Sterlite previously committed to buy ASARCO's
assets for $2.6 billion and provide an irrevocable $50 million
letter of credit as deposit.
On October 13, 2008, Sterlite informed ASARCO that it could not
and would not close the contemplated sale without significant
price reduction. Subsequently, ASARCO terminated the PSA and
presented a request to ABN AMRO Bank N.V. to draw on the Sterlite
Letter of Credit. ABN AMRO is the issuer of the Sterlite LOC.
At Sterlite's request, the U.S. Bankruptcy Court for the Southern
District of Texas held an emergency hearing, at which Sterlite
took the position that its actions do not constitute anticipatory
repudiation and breach and do not constitute grounds for the PSA
termination under New York laws. ASARCO disagreed, but the Court
declined to address the issue. In addition, Sterlite asked ASARCO
to cancel the LOC draw request.
On October 27, 2008, ASARCO entered into a letter agreement with
Sterlite and ABN AMRO, pursuant to which ASARCO revoked its
drawdown request and Sterlite agreed to either amend the Letter of
Credit or to replace the Letter.
In an agreed order prepared by the parties and signed by Judge
Schmidt, ASARCO is (i) authorized to terminate the PSA effective
as of October 21, 2008, and (ii) released Sterlite from performing
any obligation, duty or covenant under the PSA.
Notwithstanding the parties' reservation of rights, Judge Schmidt
ruled that no further Court order will be required for ASARCO to
draw on the Letter of Credit or the New Letter of Credit. The
Court held that ASARCO's revocation of its draw request will not
affect, waive or operate as a defense to any of its rights,
interests or causes of action brought by ASARCO against Sterlite.
Sterlite's New $2.1B Offer
Sterlite Industries may bid $2.1 billion for the ASARCO assets,
according to sources familiar with the company, the Business
Standard reports. The new Sterlite bid is $500 million lower than
its original bid.
Sterlite has made known its reduced offer to the ASARCO Board,
Business Standard cites unnamed sources as saying. The Board has
not issued a statement on the offer.
To recall, Sterlite asserted that its $2.6 billion original bid
for ASARCO's assets was overvalued considering the global
financial meltdown and falling copper prices.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
The company filed for Chapter 11 protection on Aug. 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When the Debtor filed for protection from its creditors, it listed
$600 million in total assets and $1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former Judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO. Amended versions of
the competing plans have been filed with the Court.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Seeks to Sell Perth Amboy Property to PA-PDC
--------------------------------------------------------
ASARCO LLC disclosed in a motion filed with the U.S. Bankruptcy
Court for the Southern District of Texas that during the
"feasibility period," Emerald Bay Equity chose to terminate the
agreement it entered with the Debtor for the sale of a 67-acre
real property located in the City of Perth Amboy, County of
Middlesex, in New Jersey.
The Feasibility Period refers to the time agreed by both parties
whereby Emerald Bay can investigate whether the present condition
of the Perth Amboy Property is suited for its own purposes.
The Court previously approved the bidding procedures for the
Property in February 2008, and the Feasibility Period extends
through 180 days after the Court entered its Bidding Procedures
Order.
Jack L. Kinzie, Esq., at Baker Botts LLP, in Dallas, Texas, says
the Debtor marketed the Perth Amboy Property in a commercially
reasonable manner to secure the highest and best offer.
Emerald Bay previously offered $19.8 million for the Property and
agreed to assume ASARCO's environmental obligations relating to
the Property, estimated to total $9 million. Emerald Bay,
however, exercised its right to terminate the agreement during the
feasibility period.
PA-PDC Inks Sale Agreement,
But Bid Subject to Market Test
ASARCO now seeks the Court's authority to enter into a Purchase
and Sale Agreement with RLF Perth Amboy Properties LLC and TRC
Companies, Inc., for the sale of the Perth Amboy Property in a
commercially reasonable manner to secure the highest and best
offer.
ASARCO, however, notes that the City of Perth Amboy in 1997
adopted a resolution establishing that the area, including the
Property, is in need of redevelopment. In 2004, the Perth Amboy
Redevelopment Agency entered into a redevelopment agreement with a
designated redeveloper, PA-PDC Perth Amboy, LLC, for the
acquisition and redevelopment of the properties in the designated
zone. If PA-PDC is not able to acquire the Property consensually,
then PARA may file a condemnation action to acquire the Property.
Any legal action to acquire title through condemnation is subject
to defenses the Debtor may have and is now subject to the
automatic stay, Mr. Kinzie points out.
ASARCO, Mr. Kinzie notes, previously entered into an agreement
with Emerald Bay Equity, LLC, for the purchase of the Property,
and obtained Court approval of bidding procedures regarding that
sale by a February 2008 Order. Emerald Bay, however, exercised
its right to terminate the agreement during the feasibility
period.
Although there have been other inquiries concerning the
acquisition of the Property, the redevelopment status has limited
the ability to market the Property, Mr. Kinzie avers.
Under the RLF/TRC Purchase Agreement, RLF Perth Amboy Properties
LLC and TRC Companies, Inc., agree to:
(1) pay ASARCO the greater of $10,000,000 or the Remediation
Reimbursement with non-recourse financing for $5 million,
payable in five equal, annual installments of $1 million,
secured by a mortgage on the real property;
The Remediation Reimbursement refers to the cost of TRC
assuming the Assumed Liabilities and Obligations.
(2) assume certain of ASARCO's liabilities and obligations;
(3) release, defend and indemnify ASARCO for the Assumed
Liabilities and Obligations; and
(4) execute an Administrative Consent Order with the New
Jersey Department of Environmental Protection for
remediation of the Property.
ASARCO will pay the Remediation Reimbursement to TRC at closing.
RLF and TRC have delivered a $250,000,000 earnest money deposit of
$250,000 to ASARCO's escrow agent, General Land Abstract Co., Inc.
To obtain the greatest value for the Property, ASARCO wants to
subject the sale of the Property to higher and better bids.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
The company filed for Chapter 11 protection on Aug. 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When the Debtor filed for protection from its creditors, it listed
$600 million in total assets and $1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former Judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO. Amended versions of
the competing plans have been filed with the Court.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
ASARCO LLC: Seeks to Employ Barclays as Financial Advisor
---------------------------------------------------------
ASARCO LLC seeks the U.S. Bankruptcy Court for the District of
Delaware's authority to employ Barclays Capital, Inc., as
financial advisor and investment banker to the Debtors, effective
as of September 22, 2008.
The parties entered into an engagement letter memorializing the
terms of Barclays Capital's employment. As financial advisor to
the Debtors, Barclays Capital will:
(a) advise and assist the Debtors in formulating a plan of
reorganization and analyzing any proposed plan, including
assisting in the plan negotiation and confirmation process
of a restructuring transaction under Chapter 11 of the
Bankruptcy Code;
(b) provide financial advice and assistance to the Debtors in
structuring any new securities to be issued in a
restructuring transaction;
(c) participate in negotiations among the Debtors, creditors,
unions, suppliers, lessors and other parties-in-interest;
(d) participate in hearings with respect to the matters upon
which Barclays Capital has provided advice; and
(e) provide expert witness testimony concerning any of the
subjects encompassed by the other financial advisor
services.
If requested, Barclays Capital will also perform these additional
services for the compensation as indicated:
(i) With ASARCO's assistance, Barclays Capital will develop
a current valuation of the Debtors' operating assets to
be used in connection with certain litigation and
related litigation-support services.
(ii) Barclays Capital will have earned an additional fee of
$100,000 upon delivery of a final report if the firm or
Lehman Brothers, Inc., is identified to the Court or
opposing counsel as a valuation expert regarding the
current value of ASARCO in the fraudulent transfer
proceeding commenced by (i) ASARCO and AR Sacaton LLC
against Americas Mining Corp., et al., and (ii) ASARCO
against Augusta Resource Corporation, et al.
Nevertheless, Barclays Capital will remain obligated to
testify and assist counsel in evaluating the opponent's
valuation reports.
Barclays Capital will be paid a monthly advisory fee of $250,000,
payable in advance.
Moreover, if (i) a sale transaction of less than all or
substantially all of ASARCO's assets occurs, or (ii) an agreement
is entered into that subsequently results in a partial assets sale
transaction either during Barclays Capital's retention or 12
months after its termination, ASARCO will pay Barclays Capital a
fee equal to 1% of the transaction value. The 1% fee will not
exceed $5,000,000, provided that if more than one sale transaction
occurs, ASARCO, Barclays Capital, and the official committees will
negotiate the ultimate fee payable to Barclays Capital.
If a sale transaction of all of ASARCO's assets occurs or if a
restructuring occurs, Barclays Capital will be paid $5,000,000.
If a liquidity event occurs, the reorganized company will pay the
firm 0.5% of the cash consideration involved in the event.
Barclays Capital will also be entitled to an additional
discretionary fee based on the successful outcome of the Debtors'
reorganization cases.
There will be only one discretionary fee between Barclays Capital
and Lehman, with the fee payable only to Barclays Capital,
provided that Barclays Capital, as assignee to the Lehman account
receivables, will receive full credit for any rights or
entitlement to any discretionary fee that might have accrued for
Lehman's benefit.
Barclays Capital will also be reimbursed for its reasonable and
duly documented out-of-pocket expenses incurred in connection with
its retention.
Gilbert Sanborn, managing director for Barclays Capital's
Restructuring and Finance Group, assures the Court that his firm
does not hold or represent any interest adverse to the Debtors or
their bankruptcy estates. He adds that Barclays Capital is a
"disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code.
* * *
The Court authorizes ASARCO to employ Barclays Capital effective
as of September 22, 2008, on an interim basis.
The Engagement Letter's indemnification provisions are approved,
on a final basis, subject to certain provisions, including that
ASARCO will have no obligation to indemnify Barclays Capital for
any claim or expense that is either judicially determined, or
settled through judicial determination to have arisen from
Barclays Capital's gross negligence.
Judge Schmidt also directs the Debtors to pay Barclays Capital
advisory fees for $75,000 per month through the Court's final
order on the application. The interim compensation will have no
impact on the Debtors' and Barclays Capital's ability to proceed
with their request for, and to obtain approval of, additional
compensation under the terms of the Engagement Letter, the Court
rules.
About ASARCO LLC
Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/--
is an integrated copper mining, smelting and refining company.
Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent.
The company filed for Chapter 11 protection on Aug. 9, 2005
(Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack
L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts
L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq.,
and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth,
P.C., represent the Debtor in its restructuring efforts. Lehman
Brothers Inc. provides the ASARCO with financial advisory services
and investment banking services. Paul M. Singer, Esq., James C.
McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give
legal advice to the Official Committee of Unsecured Creditors and
David J. Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee.
When the Debtor filed for protection from its creditors, it listed
$600 million in total assets and $1 billion in total debts.
The Debtor has five affiliates that filed for chapter 11
protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos.
05-20521 through 05-20525). They are Lac d'Amiante Du Quebec
Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company,
Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L.
Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in
Dallas, Texas, represents the Official Committee of Unsecured
Creditors for the Asbestos Debtors. Former Judge Robert C. Pate
has been appointed as the future claims representative. Details
about their asbestos-driven Chapter 11 filings have appeared in
the Troubled Company Reporter since April 18, 2005.
Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle,
Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-
21346) also filed for chapter 11 protection, and ASARCO has asked
that the three subsidiary cases be jointly administered with its
chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was
converted to a Chapter 7 liquidation proceeding. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee.
ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC,
and ASARCO Exploration Company Inc., filed for Chapter 11
protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774
to 06-20776).
Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta
Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining &
Development Co., Ltd., Peru Mining Exploration & Development Co.,
and Green Hill Cleveland Mining Co. filed for Chapter 11
protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197
to 08-20202).
The Debtors submitted to the Court a joint plan of reorganization
and disclosure statement on July 31, 2008. The plan incorporates
the sale of substantially all of the Debtors' assets to Sterlite
Industries, Ltd., for US$2,600,000,000.
Americas Mining Corporation, an affiliate of Grupo Mexico SAB de
CV, submitted a reorganization plan to retain its equity interest
in ASARCO LLC, by offering full payment to ASARCO's creditors in
connection with ASARCO's Chapter 11 case. AMC would provide up to
US$2.7 billion in cash as well as a US$440 million guarantee to
assure payment of all allowed creditor claims, including payment
of liabilities relating to asbestos and environmental claims.
AMC's plan is premised on the estimation of the approximate
allowed amount of the claims against ASARCO. Amended versions of
the competing plans have been filed with the Court.
Asarco Inc. and AMC are represented by Luc A. Despins, Esq., at
Milbank, Tweed, Hadley & McCloy LLP, in New York.
(ASARCO Bankruptcy News; Bankruptcy Creditors' Service, Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
ASHTON WOODS: Moody's Cuts Probability of Default Rating to D
-------------------------------------------------------------
Moody's Investors Service lowered Ashton Woods USA, LLC.'s
probability of default rating to D and affirmed the company's
corporate family rating at Ca and $125 million subordinated notes
rating at C. Ratings outlook remains negative.
The change in the PDR to D from Ca reflects the default under the
company's 9.5% Senior Subordinated Notes due 2015 as the company
failed to cure the interest payment default under the notes by the
end of the 30-day grace period. The company announced on October
1, 2008, that it will not make the regularly scheduled interest
payment due on October 1, 2008 on its 9.5% Senior Subordinated
Notes due 2015.
The company's speculative grade liquidity rating remains at SGL-4
indicating weak liquidity for the next 12 months, and takes into
consideration internal and external liquidity, covenant
compliance, as well as access to alternative liquidity sources.
The company has little cash on its balance sheet and because of
covenant violations has lost access to its revolver.
These ratings and assessments have been affected:
* Corporate family rating, affirmed at Ca;
* Probability of default rating, changed to D from Ca;
* $125 million senior subordinated notes, affirmed at C
(LGD5, 87%);
* Speculative grade liquidity rating, affirmed at SGL-4.
Begun in 1989, headquartered in Roswell, Georgia, and privately-
owned by six Canadian families, Ashton Woods builds single-family
detached homes, town homes, and stacked-flat condominiums, with
operations in seven U.S. cities. Homebuilding revenues and net
income for the TTM period ended August 31, 2008 were approximately
$389 million and ($118) million, respectively.
ASIA GLOBAL: Board Chair J. Leper Assumes CEO and CFO Posts
-----------------------------------------------------------
Asia Global Holdings Corp. accepted the resignation of Michael Mak
as the company's chief executive officer, chief financial officer
and as a director.
Prior to the acceptance of Mr. Mak's resignation, the board of
directors appointed John Leper, chairman of the board of
directors, as chief executive officer and chief financial officer.
The board also appointed Hin Lee Kwong as secretary and as a
director of the board.
Mr. Leper has been the company's secretary, a member of the board
and vice president contributing in the areas of marketing,
business development, corporate planning and strategy since 2004.
From May 2001 to September 2003, Mr. Leper served as the chief
marketing officer and strategist for Stanford International
Holding Corporation. Mr. Leper was a founding start-up manager of
a U.S. based direct marketing company with yearly revenues now
well over $200 million. Possessing strong creative marketing
skills, uncanny vision and the management ability and experience
to turn concepts into profitable realities, Mr. Leper has been a
very early mover in numerous major industries including online
marketing, television home shopping, direct marketing, digital
media & entertainment and now US-China business ventures.
Mr. Leper was the executive producer and executive manager of
"Lets Go Shopping" the pioneering TV shopping show in the 1980s
which was ahead of the multibillion dollar TV home shopping market
curve. In 1995, Mr. Leper founded and published "Listen to the
Music" the world's first new media/multimedia music magazine.
Mr. Kwong has served as a director of the company's subsidiary
Sino Trade-Intelligent Development Corp. Ltd. Since joining Sino
Trade, Mr. Kwong has been responsible for the overall strategy and
administrative affairs of the company. Prior to joining Sino
Trade, Mr. Kwong served in key management roles in several Hong
Kong and PRC companies specializing in the areas of business
development and marketing. Mr. Kwong served as Production and
Quality Control manager for Outboard Marine Asia Limited for eight
years, managing the company's production facilities.
Mr. Kwong then joined LTK Industrial Limited, an electrical and
power cable manufacturing company, as Product Marketing Manager
and oversaw their production and product management. In 1991,
Mr. Kwong joined SongLam Industrial Limited as business
development manager.
With SongLam, Mr. Kwong's primary responsibility was promotion and
marketing of the company's portfolio of merchandises.
About Asia Global
Incorporated in the State of Nevada, Asia Global Holdings Corp.
(OTC BB: AAGH.OB) -- http://www.asiaglobalholdings.com/-- has a
strong focus on building business in China and other emerging
regions and markets in Asia and worldwide. The company's present
subsidiaries participate in media & advertising, marketing
services and TV entertainment. The company has offices in the
U.S., Hong Kong and China.
Going Concern Doubt
Zhong Yi (Hong Kong) C.P.A. Company Limited expressed substantial
doubt about Asia Global Holdings Corp.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
pointed to Asia Global's substantial losses.
BALLYROCK ABS: S&P Raises Ratings on CDO 2007-1 Ltd.'s 6 Classes
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on the class
A-1a, A-1b, S, A-2, and B notes issued by Ballyrock ABS CDO 2007-1
Ltd., a hybrid collateralized debt obligation (CDO) managed by
Ballyrock Investment Advisors LLC. At the same time, S&P placed
the ratings on CreditWatch developing. S&P also raised its rating
on the class C notes.
The rating actions are the result of developments that have
affected the transaction since the time of the last rating action
in July 2008, at which time S&P lowered the ratings because of
significant deterioration in the credit quality of the assets
referenced in the CDO's credit default swaps.
Ballyrock ABS CDO 2007-1's asset portfolio is backed primarily by
CDS contracts that reference mezzanine tranches of U.S. subprime
residential mortgage-backed securities (RMBS) and other types of
RMBS transactions. Lehman Bros. Special Financing Inc. (LBSF), an
affiliate of Lehman Bros. Holdings Inc. is the CDS counterparty
on Ballyrock ABS CDO 2007-1's underlying CDS.
According to the CDS agreement, Lehman Bros. Holdings Inc.'s
filing for bankruptcy on Sept. 15, 2008, constitutes an event of
default, as the entity guaranteed LBSF's obligations to the CDO.
On Sept. 16, 2008, Ballyrock ABS CDO 2007-1 Ltd. exercised its
right to terminate the CDS agreement, together with all existing
CDS. Subsequently, the guaranteed investment contract (GIC)
account was terminated, and the proceeds are currently held by the
trustee as principal proceeds.
The termination of the CDS contract appears to nullify Ballyrock
ABS CDO 2007-1's exposure to the synthetically referenced assets
in its portfolio. As such, Standard & Poor's believes that the
cash held in the principal proceeds account may be available to
pay down some of the notes on the upcoming Nov. 6 payment date or
subsequent payment dates.
To account for this possibility, S&P revised the CreditWatch
implications to developing. The developing CreditWatch status for
all of the ratings except for the 'CCC' assigned to the class C
notes reflects the uncertainty regarding the timing and amount of
the final payments to the notes.
RATINGS RAISED AND PLACED ON CREDITWATCH DEVELOPING
Ballyrock ABS CDO 2007-1 Ltd.
Rating
Class To From Current balance (mil. $)
----- -- ---- ------------------------
A-1a A/Watch Dev BB/Watch Neg 137.08
A-1b BBB/Watch Dev CCC/Watch Neg 150.00
S BB/Watch Dev B-/Watch Neg 12.75
A-2 BB/Watch Dev CC 56.25
B B/Watch Dev CC 56.25
RATING RAISED
Ballyrock ABS CDO 2007-1 Ltd.
Rating
Class To From Current balance (mil. $)
----- -- ---- ------------------------
C CCC CC 27.50
TRANSACTION INFORMATION
Issuer: Ballyrock ABS CDO 2007-1 Ltd.
Co-issuer: Ballyrock ABS CDO 2007-1 Inc.
Collateral manager: Ballyrock Investment Advisors LLC
Underwriter: Lehman Bros. Inc.
Trustee: Wells Fargo Bank Northwest N.A.
BASELINE OIL: Moody's Withdraws Senior Notes Ratings
----------------------------------------------------
Moody's Investors Service withdrew the ratings of Baseline Oil &
Gas Corp. (Baseline) following the company's announced
restructuring of its $115 million of senior secured notes. On
October 31, 2008, holders of $100 million of the senior secured
notes exchanged those notes for newly issued senior secured notes.
These newly issued notes mature on June 15, 2009, and are not
rated by Moody's.
Since only a small portion of the rated notes remain outstanding,
Moody's has confirmed and withdrawn the following ratings for
Baseline:
* Corporate Family Rating (CFR) -- Caa3
* Probability of Default Rating (PDR) -- D
* Senior secured notes due 2012 -- Caa3 (LGD 3, 40%)
* Speculative Grade Liquidity Rating -- SGL-4
Baseline is an independent exploration and production company
based in Houston, Texas.
BELO CORP: Fitch Downgrades Rating to 'BB'; Outlook Negative
------------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Rating (IDR) and
debt ratings of Belo Corporation:
-- Long-term IDR to 'BB' from 'BB+';
-- Senior unsecured debt to 'BB' from 'BB+';
-- Bank facility to 'BB' from 'BB+'.
The Rating Outlook is Negative.
The rating action reflects continued pressure in local advertising
revenue that will likely remain through 2009, making it unlikely
for the company to de-lever to the 4 times (x) debt-to-EBITDA
range or below over the time frame Fitch previously expected.
Given existing industry trends, Fitch believes the company's
leverage ratio could potentially breach the 5x covenant in the
bank facility over the next four quarters. As defined in the
company's credit agreement leverage and interest coverage were
4.4x and 3.0x, respectively. Fitch is cautious regarding
negotiations with banks in this environment and as such Fitch is
cognizant that it is possible a covenant breach could result in a
request for subsidiary guarantees (or material pricing increases)
on the bank debt as part of a covenant amendment. While the
indenture governing Belo's outstanding bonds has a Limitation on
Mortgages covenant, Fitch does not believe it restricts
subsidiaries from guaranteeing unsecured debt. Such a scenario
could result in notching between the bank debt and bonds.
The ability to secure retransmission fees from the major cable
providers that come up for renewal over the next two years could
contribute to stabilizing the Outlook, as would material reduction
or suspension of the dividend. Management's execution and stated
focus on cost reductions and its exclusive focus on debt repayment
is incorporated into the rating. Excluding hurricane-related one-
time costs, expenses were down 3.4% in the quarter and headcount
was approximately 5% lower. As such, Belo has still been able to
generate strong margins despite a very difficult macro-economic
environment. The company also reduced $42 million in debt in the
quarter (bringing total debt to $1.14 billion) and stated its
intention to continue to dedicate free cashflow toward debt pay-
down for the foreseeable future.
Given the redemption of the $350 million senior notes this week,
Belo does not have any material maturities until its bank facility
comes due June 2011. Fitch estimates the company currently has
approximately $440 million drawn on its $600 million facility
(after taking into account the $350 million redemption). In
addition, the company had $6 million of cash at Sept. 30, 2008.
While core liquidity is materially lower than before the
redemption of the senior notes, Fitch believes the company's
liquidity is sufficient as there are no material working capital
uses and Fitch does not anticipate the company will burn cash in
2009.
The ratings continue to be supported by the company's strong local
presence in the top-50 U.S. markets and top network affiliations.
Fitch continues to believe that there is an overcapacity of
premium-priced media outlets in most mid-to-major markets, and
that ad dollars will continue to flow out of these outlets and
toward emerging media over the next several years. In Fitch's view
the lower rated stations that are unable to sufficiently aggregate
the local market audiences will bear a disproportionate share of
the outflow. Belo maintains strong network affiliations and has a
track record of making investments in its news infrastructure,
which has positioned it to have either the No.1 or No.2 station in
most of its markets. As such, Fitch would also expect the company
to compete more effectively with newspapers and radio for local ad
dollars over the intermediate term.
BOMBARDIER INC: DBRS Confirms Debentures Ratings at 'BB'
--------------------------------------------------------
DBRS assigned Bombardier Inc. an Issuer Rating of BB and confirmed
the company's Senior Unsecured Debentures rating at BB, both with
Stable trends. Pursuant to DBRS's Leveraged Finance Rating
Methodology, a recovery rating of RR4 has been assigned to the
Company's Senior Unsecured Debentures, which corresponds to the BB
rating. BBD's Preferred Shares have been confirmed at Pfd-4 with a
Stable trend. The company has generated steady improvement in its
financial performance in recent years, with earnings growth from
both its aerospace and transportation businesses. Despite the
strengthening in its core credit metrics, BBD's gross debt levels
remain relatively aggressive. In addition, the company's business
is cyclical, and the potential impact of slowing global economic
growth and credit market turmoil on the company is uncertain.
BBD generated steady margin growth in its Aerospace (BA) and
Transportation (BT) divisions in F2008 and fiscal H1 2009.
Strength in business jet demand, namely from emerging markets,
remained the primary source of growth in profitability, but
measurable improvement has also been achieved at BT. Earnings
growth has mainly contributed to the consistent increase in the
Company's operating and free cash flow. BBD's increased cash
generation has resulted in stronger credit ratios, particularly
cash flow coverage, and has contributed to its large liquidity
position. In addition, the Company's backlog is considerable,
which provides a degree of near-term earnings support.
DBRS notes that despite the improvement in operating results, the
rating also incorporates BBD's relatively aggressive leverage
(lease-adjusted debt-to-capital was 60% at July 31, 2008) and
generally high business risk. Aerospace and transportation market
conditions have historically been highly cyclical and competitive,
which has led to volatility in operating results. Business jet
demand is expected to moderate over the coming year, albeit from
very strong levels. Importantly, the current global credit market
issues and slowing global economic growth have created a degree of
uncertainty regarding potential downside to order activity and
cancellations, although the near-term impact should be manageable.
In addition, a measurable rebound in BBD's regional aircraft
business, which appears to have stabilized but remains well below
historical levels, is not expected. Furthermore, the Company has
a large underfunded pension position ($1.2 billion at Jan. 31,
2008), which will continue to require cash contributions. Lastly,
the Company's recent decision to the launch its CSeries aircraft
(targeted for 2013) will increase capex requirements over the next
several years and future demand for this aircraft is uncertain.
CANWEST MEDIA: DBRS Places BB Issuer Rating Under Review
--------------------------------------------------------
DBRS placed its BB Issuer Rating and B (high) Senior Subordinated
Notes ratings of Canwest Media Inc. under Review with Negative
Implications. The rating action reflects DBRS's view that the
current operating environment is likely to pressure the company's
advertising-dependent conventional television business materially,
and could result in pressure on its current debt covenants.
Since DBRS reviewed its ratings of Canwest Media in May 2008, the
advertising market in Canada has deteriorated substantially, and
DBRS expects this will likely have an adverse impact on the
company's ability to sustain stable levels of EBITDA in order to
support existing covenant headroom through fiscal 2009.
Additionally, as a holding company, Canwest Media is dependent on
the remitted cash flows of its non-recourse subsidiaries,
principally Canwest Limited Partnership and TEN Network Holdings
(both are unrated by DBRS). These operations have also come under
pressure, which is likely to continue and accelerate through 2009.
As a result, DBRS expects that this could limit the capacity of
these subsidiaries to distribute sufficient cash flow to maintain
Canwest Media's free cash flow position through the Company's
fiscal year ending Aug. 31, 2009.
DBRS is taking the rating action notwithstanding the CRTC's recent
decision on broadcast signals, which DBRS had viewed as ratings
neutral. DBRS notes, among other things, broadcasters were
granted rights to negotiate fees for non-local "distant" signals -
- they were not granted full fee-for-carriage for local signals.
While mildly supportive, the revenue stream is not expected to be
overly material, although these fees could materialize as early as
2009.
DBRS expects to focus its review on: (1) the performance of
Canwest Media's conventional television operations, including its
ability to improve operating efficiencies in order to withstand a
long and protracted slowdown of advertising spending; (2) the
financial flexibility of the Company under its existing covenants
should a deterioration of advertising spending continue through
2009; and (3) the ability of the Company's non-recourse
subsidiaries to continue to maintain adequate levels of remitted
cash flow in order to support the debt service requirements of
Canwest Media.
DBRS expects to complete its review in the near term, focusing on
the above items. In conducting its review, DBRS will also use its
Leveraged Finance Rating Methodology in considering changes to the
Company's ratings.
CASEY TOOL: Files Chapter 11 Bankruptcy in Illinois
---------------------------------------------------
Casey Tool and Machine Co. Inc. together with two of its
affiliates filed a voluntary petition under Chapter 11 of the
United States Bankruptcy Code in the United States Bankruptcy
Court for the Central District of Illinois blaming a refusal by
National City Business Credit Inc. and National City Bank to stand
by their commitment to provide funding to the company.
Casey Tool said that it engaged with National City over the last
four weeks to substantially pay down its secured debt. At the
behest of National City, the company liquidated certain equipment
and other assets resulting in proceeds in excess of $1.0 million,
which funds were applied to reduce the company's loan balance.
With National City's direct and significant involvement, the
company negotiated a purchase agreement with its largest customer,
Acuity Brands Inc., that resulted in:
i) an up front payment of $4,247,267 on account of certain
previously-purchased inventory; and
ii) a $1,696,023.09 payment on account of certain purchased
inventory to be paid in weekly installments of $224,337
until paid in full.
As a result, the company reduced its debt to National City from
$16,000,000 to $10,300,000, and arranged for National City to
receive an additional $1,696,023 over the next seven weeks.
Unfortunately, the Debtors' faith in National City was misplaced.
As soon as the agreement was finalized, National City ceased
funding, likely recognizing that it was substantially oversecured,
and thus could cease funding and liquidate its collateral base.
The company said its credit was reduced and National City cut off
funding entirely resulting in the company's inability to make its
payroll obligations.
According to Bloomberg News, the company will shut down its plant
in Charleston, Illinois, and lay off 80 workers. But, the
company's plant in Casey with 140 workers will continue to
operate, the report says
"Acuity decided to pull work back to its own facilities and didn't
renew its contract. We are losing a huge amount of business in
our two Illinois facilities" Bloomberg quoted the company's
spokeswoman as saying. The company is not looking for a buyer,
the report notes.
In conjunction with the filing, the company asked the Court to use
cash collateral securing repayment of prepetition loan to National
City to pay payroll, employee benefits, and vendors, in accordance
with the budget.
National City's $10.3 million claim is secured by (i) accounts
receivable valued at approximately $2.6 million; (ii) a note due
from a major customer in the amount of $2 million; (iii) inventory
valued at approximately $1.3 million; (iv) equipment valued at
approximately $4.2 million; (v) real estate valued between
$4.5 and $5 million; and (vi) a note from a certain production for
$1 million.
The company listed asset and debts between $10 million and
$50 million each in its filing. The company owes about $9,135,976
to its unsecured creditors including Consolidated Technology LLP
owing $4,160,000; GS Battery owing $539,644; and BYD America Corp.
owing $513,774.
Bell Boyd & Lloyd LLP represents as the company's general counsel.
The Company is expected to file its plan and disclosure statement
explaining that plan by March 4, 2009.
About Casey Tool
Headquartered in Casey, Illinois, Casey Tool and Machine Co. Inc.
manufactures manufactures residential lighting fixtures, emergency
lighting and accessories, and studio lighting accessories. The
company's affiliates are Consolidated Technology, LLP and ICT
Mexico, Inc.
CHESAPEAKE CORP: S&P Cuts Corporate Credit Rating to 'CCC-'
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Richmond, Va.-based Chesapeake Corp. to 'CCC-' from
'CCC+'.
S&P also lowered its issue-level rating on the company's senior
subordinated debt to 'CC' from 'CCC-'. The recovery rating on the
subordinated debt remains at '6'. These ratings indicate S&P's
expectation for negligible (0% to 10%) recovery in the event of a
payment default.
All ratings were removed from CreditWatch, where they were
initially placed with negative implications on July 2, 2008. The
outlook is negative.
"The downgrade follows the company's announcement that it has
entered into a forbearance agreement with its lenders under the
$250 million senior secured revolving credit facility," said
Standard & Poor's credit analyst Andy Sookram. "The secured
lenders have agreed that they will forbear from exercising their
rights and remedies against the company in respect to existing
financial covenant defaults under the secured credit facility."
The forbearance agreement expires on Dec. 10, 2008, and requires
the company to comply with certain terms and conditions, including
reporting on the status of ongoing financial restructuring plans.
As a consequence of being in default under the senior secured
credit agreement, S&P believes it is likely that secured lenders
will prevent the company from making the Nov. 15, 2008, interest
payment to Sterling-denominated subordinated debt lenders.
The 'CCC-' credit rating reflects S&P's heightened concern
regarding the company's ability to remain a going concern in
absence of a successful recapitalization of its capital structure
given the performance of the industry over the last several
quarters and the tight credit markets.
COLONY BEACH: Files Bankruptcy to Stay $12-Million Lawsuit
----------------------------------------------------------
The Colony Beach & Tennis Club Association Inc. has filed for
bankruptcy to protect the resort's residents from a $12-million
lawsuit filed by the club's management for repairs and upgrades to
the resort, Tom Bayles of the Herald Tribune (Florida) reported
Monday.
The Klauber family filed their lawsuit in April 2007, saying that
without the money the Colony may cease to operate. Colony's
general partner, Murray Klauber, asserts that the resort's
residents owe $14.1 million in repairs, "ones that he went ahead
and paid for along the way when times were better."
The residents, however, say that there is no legal basis for the
resort to request repair and upgrade money from its 232 members,
which are allowed to live in the units for 30 days each year. The
space serves as hotel rooms the other 335 days.
Katie Moulton, president and general manager of the resort, said
Monday that management was blindsided by the owners' actions.
"We were very surprised and also disappointed," Katie Moulton,
president and general manager of the resort, said. "We have had
some ongoing dialogue and were unaware that this was going to
happen."
Ms. Moulton pointed out that the resort, its restaurants, and
shops will remain open despite concerns that the legal dispute
will affect services. "We are maintaining our own," she said.
"We've been able to continue to operate with full services and we
look forward to season."
The case was filed last week at the U.S. Bankruptcy Court for the
Middle District of Florida, according to the Tampa Bay Business
Journal, Florida. Court documents show the association has assets
of between $1 million to $10 million.
COREL CORP: Potential Sale Falling Through; S&P Affirms 'B' Rtngs
-----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' long-term
corporate credit and senior secured debt ratings, on Ottawa-based
packaged software provider Corel Corp. At the same time, S&P
removed the ratings from CreditWatch with negative implications,
where they were placed March 31, 2008. The outlook is stable. At
Aug. 31, Corel had US$159 million of debt outstanding.
"The rating action follows Corel's announcement on Oct. 22 that
discussions with a third party regarding a potential sale of the
company had ceased," said Standard & Poor's credit analyst Madhav
Hari.
At the same time, Corel's board of directors stated that they will
focus on maximizing shareholder value as an independent company.
While the announcement does not preclude the pursuit of additional
pro-shareholder initiatives (including a sale to 69%-owner Vector
Capital Corp.), which would potentially affect the company's
operating strategy and financial policies, Standard & Poor's views
the likelihood of such actions to be small in the near term. As
such, the ratings reflect the company's current business prospects
and existing financial policies.
"The ratings on Corel reflect our view of the company's weak
market position within the highly competitive packaged software
industry; weak pricing power; a limited track record of
profitability; and the short life span of such products in
general," Mr. Hari added.
The ratings also reflect an aggressive financial policy given
Corel's desire to continue seeking additional debt-financed
acquisitions and ownership by private equity sponsor, Vector
Capital. S&P believes these factors are partially offset by
Corel's brand recognition as a viable alternative to globally
dominant packaged software offerings; its large and diverse
installed base; improving product, geographic, and distribution
diversification from recent acquisitions; and a meaningful
proportion of revenues from PC original equipment manufacturers'
(OEM) sales, upgrades, and maintenance contracts.
The stable outlook reflects S&P's view that Corel's credit metrics
will remain strong for the ratings despite some pressure on
revenue and profitability in the next few quarters. Furthermore,
the company should be able to generate healthy discretionary cash
flow from its mature portfolio of productivity, graphics, and
digital media products. While less likely, Standard & Poor's
could consider revising the outlook to positive if Corel generates
positive revenue growth in the next few quarters and discretionary
cash flow exceeds US$30 million. If revenue growth and
profitability weaken materially because of difficult market
conditions, competitive forces, pricing pressures, or shifting
customer (OEM) purchasing behavior, or if the prospect of covenant
violation increases, S&P could revise the outlook to negative.
CROWN CASTLE: Fitch Affirms Class G Notes' Rating at 'BB'
---------------------------------------------------------
Fitch Ratings has affirmed and assigned Rating Outlooks to these
classes of Crown Castle, senior secured tower revenue notes, 2005-
1:
-- $948,460,000 class A-FX at 'AAA'; Outlook Stable;
-- $250,000,000 class A-FL at 'AAA'; Outlook Stable;
-- $233,845,000 class B at 'AA'; Outlook Stable;
-- $233,845,000 class C at 'A'; Outlook Stable;
-- $233,850,000 class D at 'BBB'; Outlook Stable.
Fitch Ratings has also affirmed and assigned Rating Outlooks to
these classes of Crown Castle, senior secured tower revenue notes
Series 2006-1:
-- $453,540,000 class A-FX at 'AAA'; Outlook Stable;
-- $170,000,000 class A-FL at 'AAA'; Outlook Stable;
-- $150,155,000 class B at 'AA'; Outlook Stable;
-- $150,155,000 class C at 'A'; Outlook Stable;
-- $150,150,000 class D at 'BBB'; Outlook Stable;
-- $144,000,000 class E at 'BBB-'; Outlook Stable;
-- $240,000,000 class F at 'BB+'; Outlook Stable;
-- $83,000,000 class G at 'BB'; Outlook Stable.
The affirmations are due to the stable performance of the
collateral. The Rating Outlooks reflect the likely direction of
the rating changes over the next one to two years.
The Crown Castle, series 2005-1 closed on June 8, 2005, and was
secured by 10,578 wireless communication sites. The Crown Castle,
series 2006-1 represents an additional issuance with the
contribution of 949 additional sites.
As of September 2008, the collateral pool included 11,708 wireless
communication sites owned, leased, or managed by the borrower. The
notes issued by both transactions, which are secured by the same
pool, are pari passu among like rated classes. As of the October
2008 distribution date, the aggregate principal balance of the
notes remained unchanged at $3.45 billion since issuance. Notes
from both issuances are interest only for the entire five-year
period.
As part of the review, Fitch analyzed the management report dated
September 30, 2008, that was provided by the servicer, Midland
Loan Services. As of September 30, 2008, aggregate annualized run
rate revenue increased 16.8% to $752.7 million from $644.5 million
at issuance.
The tenant type concentration is stable. As of September 30, 2008,
total revenue contributed by telephony tenants was 94.5% compared
to 95.9% at issuance.
CYBERKINETICS NEURO: To Wind Down Biz.; May File for Bankruptcy
---------------------------------------------------------------
Cyberkinetics Neurotechnology Systems Inc. said in a regulatory
filing with the Securities and Exchange Commission that it plans
to cease operations and may seek bankruptcy protection if efforts
to develop a mutually acceptable wind-down plan with secured
creditor General Electric Capital Corporation fails.
Timothy R. Surgenor, president and chief executive officer, said
the company's existing cash and cash equivalents are only
sufficient to meet its projected operating requirements for
approximately 30 days. The company is in discussion with its
secured creditor to permit it to proceed with an orderly
liquidation, Mr. Surgenor continued.
John P. Donoghue and Nicholas G. Hatsopoulos resigned as members
of the company's Board of Directors on Oct. 30, 2008.
The company's balance sheet at June 30, 2008, showed $3.1 million
in total assets and $2 million in total liabilities resulting in a
$1.1 million stockholders' deficit.
About Cyberkinetics
Foxborough, Mass.-based Cyberkinetics Neurotechnology Systems,
Inc., is a medical device company engaged in the research,
development, manufacture, sale and distribution of novel
implantable products to treat neurological diseases and injuries
of the central nervous system.
C-BASS 1999-3: Fitch Downgrades 10 Classes
------------------------------------------
Fitch Ratings has taken these rating action on C-BASS 1999-3. The
class represents a beneficial ownership interest in separate trust
funds, which include bonds that have been placed on Rating Watch
Negative.
* C-BASS 1999-3
-- Class A downgraded to 'AA' from 'AAA';
-- Class M1 downgraded to 'A-' from 'AA';
-- Class M2 downgraded to 'BBB' from 'A';
-- Class M3 downgraded to 'BBB' from 'A-';
-- Class M4 downgraded to 'BB' from 'BBB';
-- Class M5 downgraded to 'BB+' from 'BBB-';
-- Class B1 downgraded to 'BB-' from 'BB+';
-- Class B2 downgraded to 'CCC/DR1' from 'BB';
-- Class B3 downgraded to 'CC/DR3' from 'BB-';
-- Class B4 downgraded to 'C/DR6' from 'B'.
The rating action was taken as part of Fitch's ongoing
surveillance process of existing transactions.
DAYTON SUPERIOR: Extends Private Offer Deadline Until December 1
----------------------------------------------------------------
Dayton Superior Corporation has extended the exchange expiration
date and granted withdrawal rights for its previously reported
private exchange offer with respect to its 13% Senior Subordinated
Notes due 2009 and concurrent consent solicitation until Dec. 1,
2008, by 11:59 p.m. EST.
The withdrawal expiration date expired on July 25, 2008. The
early consent deadline also expired on July 25, 2008, and has not
been extended.
As of the close of business on Oct. 21, 2008, about $63.7 million
in aggregate principal amount of the 13% Senior Subordinated Notes
due 2009 have been tendered.
The company's balance sheet at Sept. 26, 2008, showed $355 million
in total assets and $446 million in total liabilities resulting in
a $91 million stockholders' deficit.
About Dayton Superior
Based in Ohio, Dayton Superior Corp. (NASDAQ: DSUP) manufactures
and distributes metal accessories and forms used in concrete
construction, as well as metal accessories used in masonry
construction in North America.
* * *
According to the Troubled Company Reporter on Nov. 4, 2008,
Standard & Poor's Ratings Services lowered its ratings on Dayton,
Ohio-based Dayton Superior Corp. The corporate credit rating was
lowered to 'CCC+' from 'B'. The ratings remain on CreditWatch,
where they were placed with negative implications on Aug. 14,
2008.
DECODE GENETICS: Seeks Hearing To Show Plan of Compliance
---------------------------------------------------------
deCODE genetics has requested a hearing before a Nasdaq Listing
Qualifications Panel to present a plan for regaining compliance
with Nasdaq Marketplace Rule 4450(b)(1)(A), which requires a
minimum market value of listed securities of $50 million.
The company received on October 31, 2008, a Staff Determination
Letter from The Nasdaq Stock Market LLC indicating that the
Company had not regained compliance with this rule during the time
period provided by Nasdaq in a previous notice as disclosed in the
Company's press release dated Oct. 6, 2008, and therefore its
Common Stock is subject to delisting from The Nasdaq Global Market
at the opening of business on November 11.
Following the hearing request, the company's common stock will
continue to be listed on The Nasdaq Global Market pending the
conclusion of the hearing process and during any extension period
which may be granted by the Panel. It is expected that the
hearing would be held within 45 days.
The Panel has discretion to grant an extension not to exceed 180
days from the date of the Staff notification for the Company to
regain compliance with applicable listing standards. There can be
no assurance that the Panel will grant the company's request for
continued listing.
Alternatively, the company may apply to transfer its securities to
The Nasdaq Capital Market if it satisfies the continued inclusion
requirements for that market, which include a minimum aggregate
market value of listed securities of $35 million.
The company had 61,848,584 shares of common stock outstanding as
of October 31, 2008, which would result in a market value of
listed securities of $26.6 million based on the closing price of
$0.43 of the Company's common stock on the Nasdaq Global Market on
Nov. 3, 2008.
About deCODE genetics
deCODE genetics Inc. (Nasdaq: DCGN) -- http://www.decode.com/--
operates as a biopharmaceutical company that applies discoveries
in human genetics to develop drugs and diagnostics for common
diseases. The company serves pharmaceutical companies,
biotechnology firms, pharmacogenomics companies, government
institutions, universities, and other research institutions
primarily in the United States, Europe, and internationally. The
company was founded in 1996 and is headquartered in Reykjavik,
Iceland.
deCODE genetics Inc.'s consolidated balance sheet at June 30,
2008, showed $110.6 million in total assets and $297.2 million in
total liabilities, resulting in a $186.8 million total
stockholders' deficit.
DOUBLE JJ: BankFirst Will Acquire Most of Firm for $8.65 Mln.
--------------------------------------------------------------
The largest parcel of the Double JJ Ranch Resort was auctioned off
for $8.65 million to BankFirst of Minnesota, a primary noteholder
of the resort.
The Thoroughbred Golf Club also sold for $1 million and the entire
personal property lot of equipment and animals -- including
horses, dogs, chickens, and cows -- sold for $150,000 to
undisclosed purchasers. Personal condos also sold for smaller
amounts.
A BankFirst spokesperson said that the bank is negotiating with a
potential investor or a single group of investors who can purchase
the entire operation and reopen it as the wild-west themed ranch
and resort.
All purchases are subject to approval by the Hon. Jeffery A.
Hughes of the U.S. Bankruptcy Court for the Western District of
Michigan. A ruling on the purchases was expected on Nov. 5, 2008,
in Grand Rapids, at which point purchasers can take possession of
the property.
Real estate was auctioned first, including separate offerings for
the resort in entirety, the golf course, Thoroughbred condos,
Homestead units and a 56.6-acre piece of property. Personal
property was auctioned second, with the entire lot of animals sold
to one bidder.
With an estimated attendance of thousands, the auction was delayed
1 1/2 hours to allow creditors and Bankruptcy Trustee Thomas A.
Bruinsma time to negotiate for an entirety purchase which would
allow the resort the best possibility of re-opening as an
operating unit.
Hundreds of interested bidders of horses, dogs and other animals
did not have the opportunity to bid since the animals were sold
off in one large tract.
About Double JJ
Double JJ Resort Ranch operates a resort in Rothbury, Michigan.
The Debtor filed for Chapter 11 bankruptcy on July 18, 2008
(Bankr. W.D. Mich. 08-06296). Steven L. Rayman, Esq., at Rayman &
Stone, and Michael S. McElwee, Esq., at Varnum, Riddering, Schmidt
& Howlett, LLP, represents the Debtor as counsel. When the Debtor
filed for protection from its creditors, it listed $0 to $50,000
in total assets, and $0 to $50,000 in total debts.
ENERGY FUTURE: S&P Says 'B-' Rating Not Affected by PIK Option
--------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings and
outlook on Energy Future Holdings Corp. (EFH; B-/Stable/NR) and
subsidiary Texas Competitive Electric Holdings Co. LLC (TCEH) are
not affected following the company's recent decision to elect a
PIK option for its next interest payment date on $4.2 billion in
senior toggle notes. EFH elected the PIK option on its $2.5
billion senior toggle notes due 2017 and TCEH elected the PIK
option on its $1.75 billion senior secured toggle notes due 2016.
The decision will save the company a combined $233 million over
the next six months, and essentially replace the liquidity lost
from Lehman Brothers exposure credit facilities. However,
continued reliance on the PIK option to improve liquidity without
any offsetting debt reduction would increase overall debt costs
and worsen financial metrics and potentially place downward
pressure on the rating.
As of Oct. 14, 2008, consolidated liquidity, excluding Oncor
Electric Delivery Company LLC (BBB+/Stable) and availability under
the TCEH's LOC facility, was about $3.5 billion and will improve
in early November 2008 by another $1.25 billion upon the close of
the sale of about 20% of Oncor to a third party.
ENTRAVISION COMMS: Moody's Affirms Ba3 CFR; Outlook Negative
------------------------------------------------------------
Moody's Investors Service affirmed Entravision Communications
Corporation's Ba3 Corporate Family Rating and B1 Probability of
Default Rating. In addition, Moody's affirmed the Ba3 ratings for
the company's $650 million senior secured credit facilities ($150
million revolver and $500 million term loan facility). The rating
outlook has been revised to negative from stable.
The negative outlook reflects Moody's concerns that the current
economic downturn and pullback in advertising spend will affect
Entravision's revenue and cash flow in the near term despite its
focus on Hispanic audiences (which are expected to have favorable
demographic trends over the medium- to long-term). Additionally,
Moody's expects that Entravision will be challenged to remain in
compliance with its financial maintenance covenants in 2009, its
$117 million cash balance as of 6/30/2008 notwithstanding.
However, Moody's believes that the company may be more likely to
receive a requisite waiver and/or amendment if a covenant
violation were to occur given its all bank debt capital structure
and strong internal liquidity.
Moody's subscribers can find further details in the Entravision
Credit Opinion published on Moodys.com
Moody's has taken these rating actions:
Issuer: Entravision Communications Corporation
* Corporate Family Rating -- affirmed Ba3
* Probability of Default Rating -- affirmed B1
* $150 million senior secured revolving credit facility due
2012 -- affirmed Ba3 (LGD 3, 32%)
* $500 million senior secured term loan facility due 2013 --
affirmed Ba3 (LGD 3, 32%)
* Outlook - Revised to Negative from Stable
Moody's last rating action for Entravision was in September 2005,
when the company was upgraded to Ba3 from B1.
Entravision's Ba3 corporate family rating reflects the company's
5.7x debt-to-EBITDA leverage at 6/30/2008 (incorporating Moody's
standard adjustments) and the sensitivity of its operating
performance to macroeconomic cycles that impact the advertising
environment. Additionally, the rating reflects acquisition risk
associated with the company's strategy of increasing its presence
in existing and new Hispanic markets, and the potential for on-
going shareholder friendly activity. Ratings also incorporate
Entravision's dependence on Univision for television programming
and the corresponding lack of television network diversification.
At the same time, ratings are supported by the company's ample
liquidity, strong operating margins, presence in some of the
highest density and fastest growing Hispanic markets, clustering
strategy and geographic diversity. In addition, Moody's expects
Entravision to benefit over the longer term from favorable
Hispanic demographic trends and growth in advertising spending
that targets this base.
Entravision Communications Corporation is a diversified Spanish-
language media company with television and radio operations.
Entravision owns and operates 51 primary television stations and
is the largest affiliate group of both the Univision television
network and Univision's TeleFutura network. The company also owns
and operates a group of primarily Spanish language radio stations,
consisting of 48 owned and operated stations in 19 U.S. markets.
ESPRE SOLUTIONS: Peter Ianace Resigns as Chairman of the Board
--------------------------------------------------------------
Espre Solutions, Inc., disclosed that Peter Ianace resigned as
the chairman of the board, senior vice president of business
development, and a director of Espre Solutions, effective
Oct. 24, 2008. The company will continue to pay Mr. Ianace's
salary and continue the Mr. Ianace's employee benefits for a
period of thirty days after the date of his resignation.
Headquartered in Plano, Texas, ESPRE Solutions Inc. (OTC: EPRT.PK)
-- http://www.espresolutions.com/-- is a video media services
company and owner of VUELive, a new web-based video distribution
platform that will deliver a suite of video applications to enable
businesses to collaborate visually anytime, anywhere there is a
broadband connection.
Going Concern Doubt
As reported in the Troubled Company Reporter on Oct. 15, 2008, the
company has incurred significant and recurring losses and negative
cash flow from operations.
In the period from inception to June 30, 2008, the company has
transacted a substantial amount of its business with related
parties. The company continues to be dependent on revenues from
these related parties. The achievement of profitability and the
ability to generate cash flows from operations is dependent upon,
among other things, the acceptance of the company's products and
services, competition from other products and the deployment of
video applications by the company's customers.
There is no assurance that management's plan will be successful.
Accordingly, the company believes substantial doubt exists about
its ability to continue as a going concern.
EXECUTE SPORTS: Grants James R. Arabia Option to Buy Shares
-----------------------------------------------------------
Execute Sports Inc. granted James R. Arabia, the company's
president, CEO & CFO, the option to purchase additional shares of
common stock between July 23, 2008, to July 23, 2018.
Additionally, Timothy R. Scott, director of the company, also
disclosed that he may be deemed to beneficially own 500,000 shares
of Execute Sports's common stock.
The company disclosed in its Oct. 8, 2008, filing with the
Securities and Exchange Commission that the number of shares of
its common stock outstanding on March 7, 2008, was 90,446,790.
Headquartered in Torrance, California, Execute Sports Inc. (OTC
BB: EXCS) -- http://www.executesports.com/-- engages in the
design, manufacture, and distribution of water sports products in
North America, Europe, Mexico, Australia, South Africa, the Middle
East, and Asia. Its water sports products include wetsuits, life
vests, rash guards, wakeskates, spray tops, dry tops, and an
assortment of accessories primarily to the wakeboard, wake skate,
water ski, and PWC markets. The company markets its Execute
branded product line through a network of independent dealers in
the United States; and through distributors internationally. It
also sells its products through various online retailers, as well
as through sporting goods stores and outlets, marine dealers, and
independently owned pro shops.
Going Concern Doubt
Bedinger & Company, in Concord, California, expressed substantial
doubt about Execute Sports Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
pointed to the company's recurring losses from operations. In
addition, the company has yet to generate an internal cash flow
from its business operations.
Execute Sports Inc.'s consolidated balance sheet at June 30, 2008,
showed $1,174,024 in total assets and $7,859,871 in total
liabilities, resulting in a $6,685,847 stockholders' deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $746,547 in total current assets
available to pay $3,368,759 in total current liabilities.
The company reported a net loss of $5,063,712 on total net sales
of $1,771,024 for the second quarter ended June 30, 2008, compared
with a net loss of $527,017 on total net sales of $798,037 in the
corresponding period last year.
EXECUTE SPORTS: Board Gives Vacated Spot to T. Scott
----------------------------------------------------
Execute Sports Inc.'s board of directors elected Timothy R. Scott,
PhD as a director of the company to replace Theodore Smith who
resigned on July 28, 2008.
Dr. Scott has served on the board of directors of NatureWell,
Incorporated from September 2001 until May of 2008. From April
1998 to June 2000, Dr. Scott served as a member of the board of
directors of ICH Corporation, and as a member of ICH's
compensation committee. Dr. Scott also serves as president and
senior pastor of a 1,200-member church located in San Diego,
California and formerly hosted a radio talk show called "Dr. Scott
Live."
Dr. Scott received his Ph.D. in theology from Christian University
in 1981, and served as a professor of philosophy and religion at
Pacific International College from 1981 to 1985.
Headquartered in Torrance, California, Execute Sports Inc. (OTC
BB: EXCS) -- http://www.executesports.com/-- engages in the
design, manufacture, and distribution of water sports products in
North America, Europe, Mexico, Australia, South Africa, the Middle
East, and Asia. Its water sports products include wetsuits, life
vests, rash guards, wakeskates, spray tops, dry tops, and an
assortment of accessories primarily to the wakeboard, wake skate,
water ski, and PWC markets. The company markets its Execute
branded product line through a network of independent dealers in
the United States; and through distributors internationally. It
also sells its products through various online retailers, as well
as through sporting goods stores and outlets, marine dealers, and
independently owned pro shops.
Going Concern Doubt
Bedinger & Company, in Concord, California, expressed substantial
doubt about Execute Sports Inc.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the year ended Dec. 31, 2007. The auditing firm
pointed to the company's recurring losses from operations. In
addition, the company has yet to generate an internal cash flow
from its business operations.
Execute Sports Inc.'s consolidated balance sheet at June 30, 2008,
showed $1,174,024 in total assets and $7,859,871 in total
liabilities, resulting in a $6,685,847 stockholders' deficit.
At June 30, 2008, the company's consolidated balance sheet also
showed strained liquidity with $746,547 in total current assets
available to pay $3,368,759 in total current liabilities.
The company reported a net loss of $5,063,712 on total net sales
of $1,771,024 for the second quarter ended June 30, 2008, compared
with a net loss of $527,017 on total net sales of $798,037 in the
corresponding period last year.
FEDERAL TRUST: Gets Default Notice From NYSE Alternext Staff
------------------------------------------------------------
Federal Trust Corporation received notice from the staff of the
NYSE Alternext US indicating its intent to delist the company's
common stock from the Exchange.
The letter indicated that the Company no longer complies with the
Exchange's continued listing standards. Specifically, the company
violated Section 1003(a)(iv) of the NYSE Alternext US LLC Company
Guide.
The letter noted the issues raised by the Cease and Desist Order
that has previously been issued to the company by the Office of
Thrift Supervision, as well as the company's inability to raise
capital by the Sept. 30, 2008 deadline previously established by
the Office of Thrift Supervision.
The Exchange has also determined that the company has become
subject to Section 1002(b) of its guide, which states that the
Exchange will consider removal from listing of a security when, in
the opinion of the Exchange, "it appears that the extent of public
distribution or the aggregate market value of the security has
become so reduced as to make further dealings on the Exchange
inadvisable."
The Company does not intend to appeal the Exchange's intention to
delist its common stock from the Exchange. The Company will seek
to have one or more market makers quote its common stock for
trading through the OTC Bulletin Board or the "Pink Sheets."
About Federal Trust
Federal Trust Corporation, the parent company of Federal Trust
Bank, is a unitary thrift holding company. The company operates
11 full-service offices in Seminole, Orange, Volusia, Lake and
Flagler Counties, Florida.
GENERAL CHEMICAL: Parent Must Pay Ontario $20 Mln. for Cleanup
--------------------------------------------------------------
Monica Wolfson at The Windsor Star reports that bankrupt General
Chemical Canada Ltd.'s U.S. parent, General Chemical Industrial
Products Inc., has been required pay Ontario $20 million to close
and cleanup a contaminated land at its Amherstburg plant.
Robert Fishlock, Esq. -- General Chemical's legal representative -
- said that General Chemical Canada's problems started when its
mining operation of soda ash and calcium chloride became
antiquated, The Windsor Star states. According to the report, the
plant was closed after the firm declared bankruptcy in January
2005. The Ministry of the Environment, says the report, demanded
that General Chemical clean up the property. The issue went to an
environment tribunal in November 2005 and talks to find a
resolution have carried on for almost three years, states the
report.
The Windsor Star relates that General Chemical Canada already gave
the Ministry of Environment some $3.4 million as financial
assurance and as payment for the cleanup of the land. As that
amount wasn't enough General Chemical must add $17 million by
Jan. 30, 2009, the report says. The money would go into a trust
and only be used for site cleanup, the report stats, citing Mario
Faieta, Esq. -- the attorney for the Ministry of Environment.
The Windsor Star quoted Mr. Fishlock as saying, "Financial
assurance was posted, but it was insufficient to close the
facility. My clients have decided to make a generous payment to
the province to do the closure (of the facility)."
General Chemical said that it has no liability in association with
the polluted land, according to The Windsor Star. General
Chemical could have used U.S. courts to fight the Ontario
province, because U.S. case law has established that parent firms
aren't responsible for their subsidiaries' losses, The Windsor
Star says, citing Mr. Fishlock.
Mr. Faieta cited legal costs as one of the reasons that Ontario
settled the case for $20 million, The Windor Star reports. "There
was a risk, uncertainty of litigation. If we were successful, we
anticipated appeals. General Chemical is an American corporation
with no assets in Canada. So we would have been forced to (use
U.S. courts to get payment)," the report quoted Mr. Faieta as
saying.
According to The Windsor Star, Mr. Faieta said that the payment
for the cleanup, which was signed on Friday, doesn't dismiss a
claim that Ontario is pursuing in the bankruptcy court.
Ontario, says The Windsor Star, hopes that once the land is
preserved, the ministry can sell the property to cover costs.
Under the bankruptcy law, Ontario is the first creditor to be paid
when the land is sold.
About General Chemical
East Hanover, New Jersey-based General Chemical Industrial
Products -- http://www.gogenchem.com-- produces soda ash and
calcium chloride. Following the spin-off of its manufacturing and
performance products businesses in April 1999, General Chemical
has become a smaller, more focused company committed to creating
value as a low-cost, high-quality producer of its core industrial
chemicals.
As reported in the Troubled Company Reporter on Jan. 25, 2005,
General Chemical Canada Ltd. voluntarily filed for protection
under the Canadian Companies' Creditors Arrangement Act by Order
of the Ontario Superior Court of Justice (Commercial List) made on
January 19, 2005.
According to PricewaterhouseCoopers Canada, the Interim Receiver
for General Chemical issued its Seventh Report to the Court dated
July 18, 2008, to support the Receiver's motion seeking an order
quashing the Interim Control By-Law enacted by the Corporation of
the Town of Amherstburg as: (a) it is illegal, as it was enacted
beyond the legislative competence of the Town and in bad faith;
(b) it was enacted in contravention of the stay of proceedings
created by the Appointment Order; and (c) it is preventing the
completion of the Receivership Proceedings and is detrimental to
the interest of the creditors of General Chemical Canada.
As reported in the Troubled Company Reporter on April 5, 2004,
General Chemical Industrial Products Inc. completed reorganization
under Chapter 11 of the U.S. Bankruptcy Code in the U.S.
Bankruptcy Court for the District of New Jersey. Its First
Amended Plan of Reorganization, As Modified, which was confirmed
by the Court on March 18, 2004, became effective on March 31,
2004. The company's Chapter 11 filing excluded General Chemical
(Soda Ash) Partners, all U.S. subsidiaries and all non-U.S.
subsidiaries, including General Chemical Canada Ltd.
GMAC COMMERCIAL: Fitch Holds $4.8MM Class O Certs. Rating at 'B-'
-----------------------------------------------------------------
Fitch Ratings upgrades and assigns Rating Outlooks to GMAC
Commercial Mortgage Securities, Inc.'s (GMACCM) commercial
mortgage pass-through certificates, series 2003-C2, as follows:
-- $21 million class F to 'AAA' from 'AA+'; Outlook Stable;
-- $11.3 million class G to 'AA+' from 'AA'; Outlook Stable;
-- $16.1 million class H to 'A+' from 'A'; Outlook Stable;
-- $21 million class J at to 'A-' from 'BBB+'; Outlook Stable;
In addition, Fitch affirms and assigns Rating Outlooks to these
classes:
-- $201.6 million class A-1 at 'AAA'; Outlook Stable;
-- $471.6 million class A-2 at 'AAA'; Outlook Stable;
-- Interest-only class X-1 at 'AAA'; Outlook Stable;
-- Interest-only class X-2 at 'AAA'; Outlook Stable;
-- $40.3 million class B at 'AAA'; Outlook Stable;
-- $16.1 million class C at 'AAA'; Outlook Stable;
-- $30.7 million class D at 'AAA'; Outlook Stable;
-- $16.1 million class E at 'AAA'; Outlook Stable;
-- $8.1 million class K at 'BBB'; Outlook Stable;
-- $8.1 million class L at 'BBB-'; Outlook Stable;
-- $9.7 million class M at 'B+'; Outlook Stable;
-- $4.8 million class N at 'B'; Outlook Stable;
-- $4.8 million class O at 'B-'; Outlook Stable.
Fitch does not rate the $16.8 million class P certificates.
The rating upgrades reflect the increased subordination due to
scheduled amortization and paydown of 7.6% since Fitch's last
rating action. The Rating Outlooks reflect the likely direction of
any rating changes over the next one to two years.
As of the October 2008 distribution date, the pool has paid down
30.4% to $898 million from $1.29 billion at issuance. In total 23
loans (37%) have defeased, including four (16%) of the top 10
loans in the pool. There are currently no specially serviced or
delinquent loans.
Fitch has identified six Fitch loans of concern (5.4%). The
largest Fitch loan of concern (2.2%) is secured by two office
properties in Maryland and a mixed-use and retail property in
Washington D.C., representing a total of 407,753 square feet (sf).
Combined occupancy as of first quarter 2008 was 55%. The loan has
a coupon of 6.6% and matures in 2013.
The second largest Fitch loan of concern (1.4%) is secured by a
162,356 sf retail center in Roseville, MN. According to the
borrower, the property has suffered from an increase in expenses.
The loan's maturity is June 1, 2013 with a rate of 5.2%. No other
Fitch loan of concern represents more than 1.0% of the pool.
Of the three shadow rated loans at issuance, the John Hancock
Tower and the DDR Portfolio have paid in full. The Boulevard Mall
loan (4.9%) is secured by a 1.2 million sf regional mall in Las
Vegas, Nevada, of which 587,170 sf represents collateral. The A
note has been divided into two pari-passu notes, one of which is
included in the trust ($44.2 million). Total occupancy was 98.7%
as of December 2007, up from 92.6% at issuance. The loan, which
matures in 2013, has a coupon of 4.27%. Though collateral
performance has been stable to date, Fitch is concerned about
weakening fundamentals in the Las Vegas retail market as well as
the declining financial condition of the mall's operator and the
loan sponsor, General Growth Properties. Fitch will continue to
monitor the loan.
Only 0.20% of the non-defeased loans are scheduled to mature in
2008 and no loans are scheduled to mature in 2009. The weighted
average coupon for the non-defeased loans is 5.53% and the range
is 4.27% to 6.60%.
GMAC LLC: Financial Services Posts $2.5BB Third Quarter Net Loss
----------------------------------------------------------------
GMAC Financial Services reported a 2008 third quarter net loss of
$2.5 billion, compared to a net loss of $1.6 billion in the third
quarter of 2007.
Results were primarily attributable to a significant loss at
Residential Capital, LLC, as adverse market conditions
domestically and internationally continued to affect the mortgage
business. GMAC's automotive finance operation also experienced
pressure from lower used vehicle prices and weaker consumer and
dealer credit performance. Other items affecting results were
realized losses and valuation adjustments on assets held for sale
and certain other investment securities as a result of illiquidity
in the credit and capital markets. These items were partially
offset by profitable results in the insurance businesses.
"The economic and market conditions created an unrelenting
environment for our business and the financial services sector
overall. Clearly this weighed heavily on financial results in the
third quarter," said GMAC Chief Executive Officer Alvaro G. de
Molina.
Mr. de Molina stated, "In this climate, our primary objective is
to make prudent use of our resources and take the steps needed to
address the reduced access to liquidity. In this regard, we've
limited originations to match funding sources and are streamlining
operations and evaluating opportunities to shed operations that
are not essential to the core business. In addition, we are
pursuing strategies to increase flexibility and access to funding
such as participating in the Federal Reserve's commercial paper
purchase program via our asset-backed credit facility and engaging
in discussions with regulatory authorities regarding bank holding
company status."
Third Quarter Net Income/(Loss)
($ in millions)
Q308 Q307 Change
Global Automotive Finance ($294) $554 ($848)
Insurance 97 117 (20)
ResCap (1,912) (2,261) 349
Other1 (414) (6) (408)
Net Income/(Loss) ($2,523) ($1,596) ($927)
1 -- Includes Commercial Finance operating segment, 21% ownership
of former commercial mortgage unit and other corporate
activities.
Liquidity and Capital
GMAC's consolidated cash and cash equivalents were $13.5 billion
at Sept. 30, 2008, down modestly from the cash and cash
equivalents balance of $14.3 billion at June 30, 2008. Of these
total balances, ResCap's cash and cash equivalents balance was
$6.9 billion at quarter-end, up from $6.6 billion at June 30,
2008. The change in consolidated cash is related to debt
maturities at GMAC in the quarter, which were partially offset by
reduced origination levels.
GMAC Bank assets and deposits continue to grow at a measured rate
with total assets of $32.9 billion at quarter-end, which includes
$8.5 billion of assets at the auto division and $24.4 billion of
assets at the mortgage division. This compares to $31.9 billion
at June 30, 2008. Deposits also increased in the third quarter to
$17.7 billion at Sept. 30, 2008, compared to $16.9 billion at the
end of the second quarter.
GMAC previously disclosed it is in discussions with federal
regulatory authorities regarding, among other things, seeking bank
holding company status under the Bank Holding Company Act of 1956,
as amended. In conjunction with this initiative, GMAC intends to
commence a private offer to exchange a significant amount of
outstanding indebtedness for a reduced principal amount of new
indebtedness. Timing and details should be disclosed in the near
term.
Global Automotive Finance
GMAC's global automotive finance business reported a net loss of
$294 million in the third quarter of 2008, compared to net income
of $554 million in the year-ago period. The decline in
performance was primarily driven by an increase in credit reserves
as a result of the continued deterioration in used vehicle prices,
which affected certain retail balloon contracts. Also affecting
results was an impairment on operating leases related to the truck
vehicle portfolio in Canada, weaker consumer and dealer credit
performance, and valuation adjustments on securitization retained
interests.
New vehicle financing originations for the third quarter of 2008
decreased to $11.3 billion of retail and lease contracts from
$14.5 billion in the third quarter of 2007, due to tighter
underwriting standards and lower industry sales.
Due to the current volatility in the global capital and credit
markets, GMAC has recently taken steps to more closely align auto
financing activities with available funding. Most recently in
October, the company implemented pricing and underwriting
adjustments in the U.S. and select international markets. In
addition, in Asia-Pacific, GMAC announced it would cease retail
and wholesale originations in Australia and New Zealand by the end
of the year. The company also ceased retail originations in seven
European markets as of Nov. 1, 2008.
Credit losses have increased in the third quarter of 2008 to 1.55%
of managed retail assets, versus 1.01% in the third quarter of
2007. The sharp increase is related to higher loss severity in
North America and increased losses in Latin America due to weaker
economic conditions. Delinquencies remained almost flat with the
year-ago period at 2.62%. Increased loan servicing efforts and
tighter underwriting aided in keeping delinquencies from
increasing during this weaker economic environment.
Insurance
GMAC's insurance business recorded net income of $97 million, down
from net income of $117 million in the third quarter of 2007.
Performance reflects slightly lower written premium and a decline
in investment income due to realized losses and an impairment on
Lehman Brothers securities as a result of recent market
volatility.
The insurance investment portfolio was $6.6 billion at Sept. 30,
2008, compared to $7.5 billion at Sept. 30, 2007. The decrease in
the portfolio is related to a dividend payment to GMAC and changes
in the market conditions that have caused the portfolio to have
aggregate unrealized losses.
On Nov. 3, 2008, GMAC agreed to divest its reinsurance business,
GMAC RE, to Maiden Holdings, Ltd. This transaction is part of
GMAC's strategy to pursue opportunities to shed non-core
operations in an effort to preserve capital.
Real Estate Finance
ResCap reported a net loss of $1.9 billion for the third quarter
of 2008, compared to a net loss of $2.3 billion in the year-ago
period. Results are primarily attributable to continued adverse
market conditions, which drove high credit-related provisions and
weak revenue.
During the third quarter, ResCap announced additional actions to
significantly streamline operations, reduce cost and adjust its
lending footprint. These actions included closing all GMAC
Mortgage retail offices, ceasing originations through the
Homecomings wholesale broker channel and further curtailing
business lending and international business activities. In
addition, ResCap entered into an agreement to sell the GMAC Home
Services business to Brookfield Residential Property Services.
ResCap's U.S. residential finance business was negatively affected
by lower mortgage production and a decrease in net servicing fees.
While prime conforming loan production decreased year-over-year
with $6.8 billion in the third quarter of 2008 versus $12.2
billion in the year-ago period, production of higher-margin
government loans increased to $4.1 billion this quarter compared
to $1.4 billion in the third quarter of 2007.
The international mortgage business experienced a net loss in the
third quarter related to weakening consumer credit in key markets
and increased cost of funds. ResCap has currently suspended all
production outside of the U.S. with the exception of Canadian
insured loans. ResCap's international business is now focused on
management of assets in the U.K. and continental Europe. Results
were also negatively affected by unfavorable foreign currency
movements. The business lending operation experienced continued
losses in the third quarter due to high levels of loss provisions
and other impairments related to the current real estate market
conditions.
In the third quarter, GMAC forgave $101.5 million of debt
outstanding under the mortgage servicing rights credit facility
with ResCap as a capital contribution to the mortgage subsidiary.
In addition, GMAC also forgave $95.3 million of outstanding
principal and accrued unpaid interest on ResCap notes held by
GMAC. In October, GMAC forgave additional debt to ensure that
ResCap remained compliant with the tangible net worth covenant.
Adverse market conditions have made it difficult for ResCap to
maintain adequate capital and liquidity levels. As a result,
absent economic support from GMAC, substantial doubt exists
regarding ResCap's ability to continue as a going concern.
Outlook
The global capital and credit markets remain disrupted and general
economic conditions have deteriorated. GMAC's business continues
to be affected by these conditions and has led the company to take
several actions to manage resources during this volatile
environment. These steps include:
-- aligning auto originations with available committed
funding sources in the U.S. and abroad,
-- streamlining operations to suit the current business
plans,
-- growing GMAC Bank within the regulatory guidelines,
-- reducing risk in the balance sheet, and
-- divesting select non-core operations such as GMAC Global
Home Services and GMAC Reinsurance.
GMAC is focused on pursuing strategies to increase flexibility and
access to liquidity with the primary focus of continuing to
support automotive dealers and customers.
Edward Kelly Resigns From Board of Managers
Edward J. Kelly, III, has filed his resignation from the GMAC
Board of Managers effective Oct. 31, 2008. The Board consists of
13 members with six appointed by FIM Holdings LLC, which holds a
majority interest in GMAC and is controlled by Cerberus FIM
Investors, LLC, four appointed by GM, and three independent
directors. Mr. Kelly was one of the six FIM members of the Board.
A replacement has not yet been appointed.
About ResCap
Headquartered in Minneapolis, Minnesota, Residential Capital LLC
-- http://www.rescapholdings.com/-- is the home mortgage unit
of GMAC Financial Services, which is in turn wholly owned by GMAC
LLC.
* * *
As disclosed in the Troubled Company Reporter on June 18, 2008,
Moody's Investors Service assigned ratings of Caa2 and Caa3 to
Residential Capital LLC (ResCap)'s senior secured and junior
secured bonds, respectively. These bonds were issued as part of
ResCap's bond exchange which was completed on June 4, 2008. The
ratings of ResCap's unsecured senior debt and unsecured
subordinate debt were affirmed at Ca and C, respectively. Ratings
are under review for downgrade. Separately the senior unsecured
rating of GMAC LLC was downgraded to B3 from B2 with a negative
outlook.
As disclosed in the Troubled Company Reporter on June 9, 2008,
Fitch Ratings has downgraded Residential Capital LLC's long- and
short-term Issuer Default Ratings to 'D' from 'C' following
completion of the company's distressed debt exchange. Fitch has
also removed ResCap from Rating Watch Negative, where it was
originally placed on May 2.
About GMAC Financial Services
GMAC Financial Services is a global finance company operating in
and servicing North America, South America, Europe and Asia-
Pacific. GMAC Financial specializes in automotive finance, real
estate finance, insurance, commercial finance and online banking.
As of Dec. 31, 2007, the organization had $249 billion in assets
and serviced 15 million customers.
GMAC Financial Services is in turn wholly owned by GMAC LLC.
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.
As reported in the Troubled Company Reporter on Nov. 3, 2008,
Moody's Investors Service downgraded the long-term ratings of GMAC
LLC (senior unsecured to Caa1 from B3) and continued the review
for possible further downgrade.
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 US$14 billion.
HANOVER CAPITAL: Fitch Affirms B Rating on Class B2-V
-----------------------------------------------------
Fitch Ratings has taken these rating actions on Hanover Capital
Trust 2000-A. The classes represent a beneficial ownership
interest in separate trust funds.
-- Class A-V affirmed at 'A';
-- Class M-V affirmed at 'BBB-';
-- Class B1-V affirmed at 'BB';
-- Class B2-V affirmed at 'B'.
The rating action was taken as part of Fitch's ongoing
surveillance process of existing transactions.
HEALTH NET: S&P Lowers Ratings to 'BB' from 'BB+'; Outlook Neg
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its counterparty credit
rating on Health Net Inc. (NYSE:HNT) to 'BB' from 'BB+'.
Standard & Poor's also said that it lowered its counterparty
credit and financial strength ratings on Health Net's core
operating subsidiaries to 'BBB-' from 'BBB' and its ratings on
Health Net's other operating subsidiaries to 'BB+' or 'BB'.
The outlook on all these companies is negative.
The '3' recovery rating on Health Net's $400 million, 6.375%
senior notes due 2017 is unchanged. A '3' recovery rating
indicates a meaningful (50%-70%) recovery in the event of a
payment default.
"The rating actions reflect our view that Health Net's operating
performance has deteriorated to a level more consistent with the
new ratings," noted Standard & Poor's credit analyst Neal
Freedman. The company announced today that its estimated 2008
pretax GAAP operating earnings (which exclude litigation charges,
expense repositioning initiative charges, and realized gains and
losses) would be lower by $150 million-$180 million as a result of
higher-than-expected hospital utilization and unit costs on its
commercial, Medicare, and Medicaid businesses. The revised
expected earnings of $320 million-$350 million on revenues of
$15.0 billion-$15.5 billion result in a return on revenue of 2.1%-
2.3% compared with prior expectations of about 3.3%.
EBITDA interest coverage is expected to be 8x-10x, and debt-
service coverage, which includes the effect of scheduled principal
repayments on the company's $175 million amortizing financing
facility due 2012, is expected to be 4x-6x.
Standard & Poor's believes that Health Net's affiliated
subsidiary, Health Net Federal Services LLC, adds significant
earnings and cash-flow stability through the TRICARE contract.
S&P has factored this earnings and cash-flow stability into S&P's
ratings.
"The negative outlook reflects our concerns regarding possible
further operating performance operating weakness as well as the
potential for a pattern for a continuing pattern of earnings
volatility resulting from material non-operating charges," Mr.
Freedman explained. The challenging economic and operating
environment the health insurance industry is facing exacerbates
these concerns. If Health Net's earnings were to deteriorate
further, S&P could lower the ratings by another notch.
HEXION SPECIALTY: Poor Performance Cues S&P to Cut Rating to 'B-'
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
Columbus, Ohio-based Hexion Specialty Chemicals Inc., including
the corporate credit rating to 'B-' from 'B'. All of the ratings
on Hexion remain on CreditWatch, where they were placed with
negative implications on July 5, 2007.
The ratings on Salt Lake City, Utah-based Huntsman Corp. also
remain on CreditWatch, where they were placed with negative
implications on June 26, 2007.
The initial CreditWatch placement on both companies followed the
announcement of Hexion's proposed debt-financed acquisition of
Huntsman in a transaction valued at more than $10 billion,
including assumed debt.
"The downgrade reflects Hexion's weak financial performance
relative our expectations for the rating, increased litigation
risk, and our growing concerns about the company's operational
performance in an economic downturn," said Standard & Poor's
credit analyst Paul Kurias.
Litigation risk has increased following the State of New York's
denial of Hexion's motion to extend the expiration of a financing
commitment letter by banks, pending the trial of Hexion's claims.
The commitment letter by Credit Suisse and Deutsche Bank addressed
the funding of the Hexion-Huntsman merger. The denial of an
extension diminishes but does not eliminate the prospect of
obtaining funding for the merger, which potentially increases the
risk to Hexion of litigation and damage claims. An earlier ruling
in the Court of Chancery of the State of Delaware related to
Huntsman's lawsuit with Hexion and its owner, Apollo Management
LLC, found Hexion in breach of its obligations under the merger
agreement, although it did not specifically enforce the
consummation of the merger itself. Hexion could also be liable
for a break-up fee of $325 million if the transaction is not
implemented. Given Hexion's already stretched financial profile,
S&P would view the potential addition of any debt related to the
transaction's $325 million break-up fee that could be payable to
Huntsman as burdensome.
HOLIDAY ISLE: Goes Bankrupt After Buyers Fail to Close on Condos
----------------------------------------------------------------
Katherine Sayre at Press-Register reports that Holiday Isle LLC
officials said that more than 50 buyers failed to close on their
condos, resulting in the company's filing for bankruptcy.
Court documents indicate that Holiday Isle filed for Chapter 11
protection in U.S. Bankruptcy Court for the Southern District of
Alabama on Oct. 23, 2008. Paul Wesch of The Mitchell Company in a
news release that Holiday Isle filed for bankruptcy to avoid a
foreclosure sale set for Oct. 24, 2008, by RBC Bank and Sovereign
Bank, the project's construction lenders. According to the news
release, majority of the loan was repaid because many of the pre-
construction buyers who had made down-payments closed on their
property when the building was finished in 2007.
Mr. Wesch said in the news release, "More than 50 original buyers
of units failed or refused to close on their purchases and many
filed lawsuits attempting to recover their 20-percent deposits.
Most of this litigation remains unsolved. Had these buyers closed
as scheduled, the loan to RBC and Sovereign would have been
completely repaid in 2007. In a twist of fate, the refusals to
close brought about the foreclosure, which triggered the Chapter
11 filing, and these defaulting buyers have now become disputed
unsecured creditors of Holiday Isle LLC with all litigation stayed
for the time being."
Company officials, according to a press release, expect to
continue marketing the remaining unsold condos. The Holiday Isle
Condominium Owners Association won't be affected by the bankruptcy
filing, the press release states.
About Holiday Isle
Mobile, Alabama-based Holiday Isle, LLC, is a subsidiary of the
Mobile firm, The Mitchell Company Inc. The 144-unit Holiday Isle
faces the Gulf of Mexico on the west end of the barrier island.
It has amenities like outdoor and indoor pools and a fitness
center. Construction of the seven-story building began in 2005
during a growth spurt of condo developments on the island.
The company filed for Chapter 11 protection on Oct. 23, 2008,
(Bankr. S. D. Ala. Case No. 08-14135). Irvin Grodsky, Esq., at
Irvin Grodsky, P.C., represents the company in its restructuring
effort. The company listed assets of $10 million to $50 million
and debts of $1 million to $10 million.
HOME INTERIORS: Wants Court to Appoint Chapter 11 Trustee
---------------------------------------------------------
Home Interiors & Gifts Inc. and its debtor-affiliates ask the
United States Bankruptcy Court for the Northern District of Texas
to appoint a Chapter 11 Trustee.
The Chapter 11 Trustee is expected to enable the bankruptcy
process to move forward and avoid any delays caused by the
disputes between the Debtors and their creditors.
The Debtors relate the Official Committee of Unsecured Creditors
and non-insider minority prepetiton lenders objected to their
motion to obtain postpetition financing from certain prepetiton
lenders affiliated with Highland Capital Management LLP. The
minority lenders argued that the financing was made in bad faith
because Highland was an insider acting to merely benefit its own
interest while the Committee alleged that some provisions of the
financing agreement favor the prepetition lenders.
According to Andrew E. Jillson, Esq., at Hunton & Williams LLP,
faced with the objections of the Committee and the minority
lenders, the Court denied the Debtors' motion to obtain
postpetition financing.
Furthermore, the Trustee will resolve Committee allegation that
there appears to be some inclination by the Debtors to only work
toward obtaining bids from insiders.
The Debtors remind the Court that they plan to sell their business
as a going concern. The Debtors propose Jan. 15, 2009, to auction
the capital stock of Domistyle Inc. and certain other assets, free
and clear of liens and interests. Howard and Zukin Capital Inc.
was retained by the Debtors as its sales broker.
About Home Interiors
Headquartered in Carrollton, Texas, Home Interiors & Gifts, Inc.
-- http://www.homeinteriors.com/-- manufactures, imports and
distributes indoor and outdoor home decorative accessories. It
was founded by Mary Crowley in 1957. Through its affiliates,
the company has a significant presence in Mexico, Puerto Rico,
and Canada. Annual revenue in 2007 reached $300 million. When
Mary Crowley, died in 1986, her son, Don Carter continued the
business operation nearly debt-free. In a leveraged transaction
in 1998, private equity firm of Hicks, Muse, Tate, and Furst
acquired 66% of the parent company, which resulted in the
imposition of more than $500 million in debt on the Debtors. In
the face of decreased sales and increased debt load, bondholders
canceled their debts in February 2006 in exchange for receiving
most of the outstanding equity of the Debtors.
About 40% of the goods the Debtors sell are now acquired from
manufacturers in China. In the last decade, sales volume in the
U.S. has waned, but the Debtors reported that sales in Mexico
and Puerto Rico significantly increased.
The company and six of its affiliates filed for Chapter 11
protection on April 29, 2008 (Bankr. N.D. Tex. Lead Case No.
08-31961). Andrew Jillson, Esq., Cameron Kinvig, Esq., Robert
McCormick, Esq., and Mike Massad, Esq., at Hunton & Williams, LLP,
represent the Debtors in their restructuring efforts. The U.S.
Trustee for Region 6 has appointed seven creditors to serve on an
Official Committee of Unsecured Creditors. Richard A. Lindenmuth,
at Boulder International LLC, is designated as CRO. Munsch Hardt
Kopf & Harr, PC represents the Committee in these cases. When the
Debtors filed for protection against their creditors, they listed
assets and debts of between $100 million and $500 million each.
HOOP HOLDINGS: Amends Liquidation Plan & Disclosure Statement
-------------------------------------------------------------
On Nov. 3, 2008, Hoop Holdings LLC and its debtor-affiliates filed
with the U.S. Bankruptcy Court for the District of Delaware a
revised Chapter 11 Plan of Liquidation and accompanying Disclosure
Statement resolving all objections to its Chapter 11 Plan of
Liquidation which were filed on Oct. 2, 2008.
The Debtors tell the Court that they and Disney are negotiating
the final adjustments to the purchase price and anticipate filing
a motion to approve the settlement agreement regarding such final
adjusted purchase price and other open issues regarding the Sale
in order to have such settlement agreement approved prior to plan
confirmation.
Plan Summary
The Plan provides for the substantive consolidation of the three
Debtors, the transfers of all of the Estates' assets and
liabilities, including Claims, into the Hoop Liquidating Trust
which will be formed pursuant to the Plan. The Hoop Liquidating
Turst will, among other things, distribute the assets of the
Estates to the Holders of Allowed Claims in accordance with the
Plan.
Projected Distributable Cash
According to an analysis prepared by the Debtors, the Estates'
total Cash is projected to be between $49 million and $52 million
(net of professional fees, costs and expenses associated with
windng down the Debtors' Estates after the Effective Date of the
Plan in aggregate approximate amount of $3.5 millon). Thus, the
projections prepared by the Debtors estimate that the
Distributable Cash in respect of Allowed Claims in Class 3
(General Unsecured Claims) is projected to be between
approximately $23 million to $31 million after the payment of
Prior Claims. The Debtors have leftover assets valued at a cost
of less than $50,000 on hand, which the Debtors intend to
liquidate for the highest possible return.
Classification of Claims/Distributions
Allowed Administrative Claims, including Professional Fee Claims,
will be paid in full and are not classified under the Plan.
Under the Plan, the classification of other Claims and Interests
and their distributions under plan are:
Class Type of Claim Status Voting Rights
----- ------------- ------ -------------
Class 1 Priority Claims Not Impaired Not Entitled to Vote
Class 2 Secured Claims Not Impaired Not Entitled to Vote
Class 3 General Unsecured Impaired Entitled to Vote
Claims
Class 4 Convenience Claims Not Impaired Not Entitled to Vote
or Impaired
by Agreement
Class 5 Interests and Impaired Not Entitled to Vote
Interest Related
Claims
Allowed Priority Claims under Class 1 will be paid in full.
Each holder of an Allowed Secured Claim under Class 2 (other than
WFRF whose secured claims have already been paid in full) will, at
the option of the Liquidating Trustee, either:
(i) have its Claim reinstated and rendered unimpaired in
in accordance with Bankruptcy Code No. 1124(2),
notwithstanding any contractual provision or applicable
non-bankruptcy law that entitles such Holder to demand
or to receive payment of such Claim prior to the stated
maturity of such Claim from and after the occurrence of
a default;
(ii) receive Cash in an amount equal to such Claim, in full and
complete satisfaction of such Claim, on the later of the
initial distribution date under the Plan and the date such
Claim becomes an Allowed Claim, or as soon thereafter as is
practicable; or
(iii) receive the collateral securing its Claim in full and
complete satisfaction of such Claim on the later of the
initial distribution date under the Plan and the date such
Claim becomes as Allowed Claim, or as soon thereafter as is
practicable.
Allowed General Unsecured Claims under Class 3, will, after (i)
payment of the Prior Claims and the Convenience Class Claims and
(ii) retention of amounts needed to pay or reserve for anticipated
amounts of Post-Confirmation Expenses (including, but not limited
to, any taxes imposed on the Hood Liquidating Trust or in respect
of its Assets), will receive a Pro Rata share of all Distributable
Cash. As of Nov. 3, 2008, the Debtors estimate a pro rata
recovery for general unsecured creditors of 25% to 36%.
Convenience Claims under Class 4 include Claims of a single holder
of a type that would otherwise be included in Class 3 that are
either (i) $2,000 or less in the aggregate or (ii) greater than
$2,000 in the aggregate but as to which the holder thereof has
made a Convenience Class Election. The Liquidating Trustee shall
distribute to each Holder of an Allowed Class 4 Claim equal to
100% of the Fact Amount thereof up to a maximum of $2,000 total
payout in full satisfaction of such Claim.
Holders of the Interests or Interest Related Claims under Class 5
shall receive no distribution or dividend based on account of the
interests. Holders of Interests and Interest Related Claims in
Class 5 are conclusively presumed to have rejected the Plan.
As reported by the Troubled Company Reporter on May 2, 2008, Hoop
Holdings LLC, a subsidiary of The Children's Place Retail Stores,
Inc., completed the transition of the Disney Store North America
business and related assets to affiliates of Walt Disney. Walt
Disney took back control of 220 store outlets in North America
from Hoop Holdings.
As reported in the TCR on April 9, under the asset purchase
agreement filed with the U.S. Bankruptcy Court in Delaware, the
purchase price for the Disney Store business and assets will be
roughly $50 million to $55 million, payable to Hoop, for the USA
Acquired Assets, subject to adjustment based on inventory levels
and $4 million, payable to accounts to be specified by TCP
Services, for the assignment of its Pasadena, California
headquarters office lease.
About Hoop Holdings
Headquartered in Secausus, New Jersey, Hoop Holdings LLC owns and
operates gift, novelty, and souvenir shops. The company and two
of its affiliates (Hoop Retail Stores, LLC and Hoop Canada
Holdings, Inc.) filed for Chapter 11 protection on March 27, 2008
(Bankr. D. Del. Lead Case No. 08-10544). Daniel J. DeFranceschi,
Esq., at Richards, Layton & Finger, represents the Debtors in
their restructuring efforts. Gibson Dunn & Crutcher LLP serves as
the Debtors' as special counsel. Traxi LLC provides crisis
management services to the Debtors.
The U.S. Trustee for Region 3 has appointed seven members to the
official committee of unsecured creditors. Pepper Hamilton LLP
serves as the Committee's Delaware counsel.
When the Debtors' filed for protection against their creditors,
they listed assets and debts between $100 million to $500 million.
HOOP HOLDINGS: Asks Court to Extend Plan Filing Period to Feb. 19
-----------------------------------------------------------------
Hoop Holdings, LLC, et al., out of an abundance of caution, ask
the U.S. Bankruptcy Court for the District of Delaware to extend
their exclusive periods to:
a) file a Chapter 11 plan to Feb. 19, 2008;
b) solicIt acceptances of a Chapter 11 plan to April 20, 2008.
On July 15, the Court granted the Debtors a first extension of
their exclusive periods to file a plan and solicit acceptances of
a plan to Oct. 22, 2008, and Dec. 21, 2008, respectively. The
Debtors filed their Chapter 11 plan and related disclosure
statement on Oct. 2, 2008. The Debtors said they are hopeful that
the plan, which was drafted in consultation with and is supported
by the Official Committee of Unsecured Creditors, will be
confirmed.
Because the plan was filed before the current plan filing deadline
on Oct. 22, 2008, but before the confirmation hearing, the Debtors
make the above request out of an abundance of caution.
About Hoop Holdings
Headquartered in Secausus, New Jersey, Hoop Holdings LLC owns and
operates gift, novelty, and souvenir shops. The company and two
of its affiliates (Hoop Retail Stores, LLC and Hoop Canada
Holdings, Inc.) filed for Chapter 11 protection on March 27, 2008
(Bankr. D. Del. Lead Case No. 08-10544). Daniel J. DeFranceschi,
Esq., at Richards, Layton & Finger, represents the Debtors in
their restructuring efforts. Gibson Dunn & Crutcher LLP serves as
the Debtors' as special counsel. Traxi LLC provides crisis
management services to the Debtors.
The U.S. Trustee for Region 3 has appointed seven members to the
official committee of unsecured creditors. Pepper Hamilton LLP
serves as the Committee's Delaware counsel.
When the Debtors' filed for protection against their creditors,
they listed assets and debts between $100 million to $500 million.
HRP MYRTLE: Hard Rock Wants Sale by Year-End; Seeks to Pay Workers
------------------------------------------------------------------
HRP Myrtle Beach Holdings LLC's $400 million Hard Rock Park is
seeking to sell itself by the end of 2008, court documents say.
According to court documents, that HRP Myrtle has also asked the
U.S. Bankruptcy Court for the District of Delaware to allow it to
make severance payments of a total of $223,420 to nine of its top
executives.
"Certain of the debtors management employees have understandably
expressed concern regarding their future employment. The
contractual severance payments, and indeed the severance program
generally, are intended to mitigate these concerns and prevent
employee attrition during this critical period in the debtors
bankruptcy cases," Hard Rock said in court documents.
Citing Hard Rock spokesperson Jim Olecki, Lisa Fleisher at The Sun
News reports that about 75 of 2,000 employees remained at the park
after it declared bankruptcy. Mr. Olecki, according to the
report, said that the park won't reopen next year if it fails to
find a buyer. Court documents indicate that creditors can file
objections on the planned sale until Nov. 13, 2008, and the Court
will rule on the issue on Nov. 20. Mr. Olecki said that Hard Rock
still aims to reopen under new ownership in 2009, The Sun News
states.
Hard Rock said in court filings that the executives are
contractually owed up to $270,835 each, but the law allows them to
potentially receive up to 10 times of what a non-management
employee made. An affidavit from Hard Rock's CEO Steven Goodwin
states that workers not in management got an average severance
payment of $2,483.
Severance Payments for Executives
Chief Creative Officer $270,835
Chief Executive Officer and
Chief Financial officer $270,835
President and Chief Operating Officer $270,835
Senior Vice President and General Counsel $125,000
Senior Vice President of Finance $43,750
Senior Vice President of Park Operations $37,500
Vice President of Human Resources $32,500
Vice President of Park Operations $28,750
Vice President of Revenue Operations $10,834
About HRP Myrtle
Based in Myrtle Beach, South Carolina, HRP Myrtle Beach Holdings,
LLC -- owns and operates Hard Rock Park, a rock-n-roll theme park
in Myrtle Beach, South Carolina, under a long-term license
agreement with Hard Rock Cafe International (USA), Inc. The
company and six of its affiliates filed for Chapter 11 protection
on Sept. 24, 2008 (Bankr. D. Del. Lead Case No. 08-12193). Steven
Goodwin will serve as the Debtors' chief executive officer. The
U.S. Trustee for Region 3 has not appointed creditors to serve on
an Official Committee of Unsecured Creditors. When the Debtors
filed for protection from their creditors, they listed assets and
debts of between $100 million and $500 million each.
HYDROGEN CORP: Nasdaq Delists Firm Due to Subsidiary's Bankruptcy
-----------------------------------------------------------------
HydroGen Corporation received a Nasdaq Staff delisting letter on
Oct. 29, 2008, indicating that the company's securities will be
delisted from The Nasdaq Stock Market in accordance with
Marketplace Rules 4300, 4340(b) and IM 4300, due to the filing of
a voluntary petition for relief under Chapter 11 of the Bankruptcy
Code by the company's wholly-owned subsidiary, HydroGen, L.L.C.
As reported in the Troubled Company Reporter on Oct. 24, 2008,
HydroGen, LLC, filed for Chapter 11 protection on Oct. 22, 2008
(Bankr. S. D. N.Y. Case No. 08-14139). David C. McGrail, Esq., at
the Law Offices of David C. McGrail represents the company in its
restructuring effort. The company listed assets of $1 million to
$10 million and debts of $1 million to $10 million.
Accordingly, if the company does not appeal this decision, the
trading of the company's common stock will be suspended at the
opening of business on Nov. 7, 2008, and a Form 25-NSE will be
filed with the Securities and Exchange Commission, which will
remove the Company's securities from registration and listing on
The Nasdaq Stock Market. The company has determined not to appeal
the Nasdaq Staff decision to delist the company's securities.
The company has been advised that its securities are immediately
eligible for quotation in the Pink Sheets, an electronic quotation
service for securities traded over-the-counter, effective as of
the open of business on Nov. 7, 2008. In addition, the company
intends to request that one of its current market makers file the
necessary application with the Financial Industry Regulatory
Authority to quote the securities and, as a result, the company
anticipates that its securities will be quoted on the Over-the-
Counter Bulletin Board in the near future.
About HydroGen, LLC
New York-based HydroGen, LLC -- http://www.hydrogenllc.net/--
manufactures fuel cell systems and air-cooled phosphoric acid fuel
cell technology. HydroGen Corporation owns 100% of the membership
interest of the Debtor.
About HydroGen Corporation
New York-based HydroGen Corporation -- http://www.hydrogenllc.net/
-- through its wholly owned subsidiary, HydroGen, LLC, designs,
manufactures, markets and distributes fuel cell modules and energy
systems (power plants) using phosphoric acid fuel cells (PAFC).
HydroGen's core technology is a 400 kilowatt (kW) air-cooled, PAFC
module, which comprises four 100 kilowatt stacks within one
pressure vessel. The fuel cell stack technology and configuration
were tested by Westinghouse in over 125,000 hours of stack testing
of different capacities, and over 2,000,000 hours of smaller scale
cell testing. Additionally, HydroGen has conducted over 400,000
hours of small scale testing and over 6,000 hours of stack
testing. In October 2008, HydroGen LLC entered Chapter 11
protection.
INSMED INC: Net Loss Slides to $2.2MM for Quarter ended Sept. 30
----------------------------------------------------------------
Insmed Inc. reported results for the third quarter and nine-months
ended Sept. 30, 2008.
Revenues for the third quarter ended Sept. 30, 2008, were
$4.1 million, up from $1.4 million for the corresponding period in
2007. The increase was attributable to a $1.6 million increase in
cost recovery revenue from the company's EAP to treat patients
with ALS in Italy and the grant receipt of $1.0 million from the
Muscular Dystrophy Association supporting the IPLEX(TM) Phase 2
Myotonic Muscular Dystrophy trial.
The net loss for the third quarter of 2008 was $2.2 million
compared with a net loss of $3.9 million the third quarter of
2007. This $1.7 million reduction was attributable to the
$2.7 million increase in revenues, which was offset by a $438,000
increase in total expenses, a $434,000 increase in net interest
expense and the realization of a $54,000 non-cash loss on
investments.
The $438,000 increase in total expenses was due to a $395,000
increase in research and development and a $43,000 decrease in
selling, general and administrative expenses.
For the nine months ended Sept. 30, 2008, revenues totaled
$8.8 million, up from $5.3 million in the first nine months of
2007. Consistent with the third quarter results, the increase was
attributable to a $4.5 million improvement in cost recovery from
the company's EAP to treat patients with ALS in Italy and the
grant receipt of $1.0 million from the Muscular Dystrophy
Association supporting the IPLEX(TM) MMD trial. This was
partially offset by the absence of license income from Napo and
the revenues lost from our withdrawal of IPLEX(TM) in the short
stature market pursuant to the terms of our settlement agreement
with Genentech Inc. and Tercica Inc., entered into in 2007.
The net loss for the nine months ended Sept. 30, 2008, was
$11.7 million compared to $16.7 million for the first nine months
of 2007. Year-over-year, R&D Expenses increased to $15.8 million
for the first nine months of 2008, from $14.4 million during the
same period last year, reflecting an overall increase in clinical
trial activity for our FOB and IPLEX(TM) programs. SG&A Expenses
fell to $3.7 million for the first nine months of 2008 from
$7.4 million a year earlier due to the elimination of litigation
expenses following the March 2007 settlement and the removal of
commercial expenses associated with our business restructuring
plan.
Interest income for the first nine months of 2008 of $453,000 was
a reduction from the $895,000 earned in the same period of 2007.
Interest expense increased to $983,000 in the most recent nine
month period from $465,000 during the corresponding period of
2007. The same factors effecting the third quarter interest
movements impacted the year to date figures. The $500,000 loss on
investments represents the full write down of the Napo investment
during the first nine months of 2008.
As of Sept. 30, 2008, the company has total cash, cash equivalents
and short-term investments on hand of $5.8 million, compared to
$16.5 million on hand as of Dec. 31, 2007. The
$10.7 million decrease in cash, cash equivalents and short-term
investments primarily reflects the use of $9.1 million for
operating activities and a $1.7 million principal repayment of its
2005 convertible notes, which began on March 1, 2008.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $8.1 million, total liabilities of $7.4 million and
shareholders' equity of about $734,000.
A full-text copy of the company's financial report is available
for free at http://ResearchArchives.com/t/s?348f
About Insmed
Headquartered in Richmond, Virginia, Insmed Incorporated,
(NasdaqCM: INSM) -- http://www.insmed.com -- is a
biopharmaceutical company that 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.
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.
INTERNATIONAL RECTIFIER: S&P Cuts Rating Cut to 'BB-'
-----------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on International Rectifier Corp. to 'BB-' from 'BB'. The
rating was removed from CreditWatch, where it was placed with
negative implications on April 9, 2007, due to an accounting
investigation that prevented the company from filing its financial
statements. The rating outlook is negative.
The rating action follows a review of the company's operating
results after the protracted filing delay. As Vishay
Intertechnology Inc. has withdrawn its acquisition bid, the review
is based on International Rectifier as a stand-alone company.
"The rating downgrade reflects the early turn-around stage of new
management's strategy to return the company to competitive
profitability, a challenging near-term macro-environment, and the
prospect of potentially significant litigation exposure related to
prior management's actions," said Standard & Poor's credit analyst
Lucy Patricola. "The company's good liquidity position and debt-
free balance sheet only partially temper these factors."
International Rectifier is recovering from excess inventories in
its channels and an emphasis on higher-margin business. Ongoing
revenues for the 2008 fiscal year ended June of $925 million were
down 8% from the prior year, though June quarter revenues were off
26%, as the company took significant steps to idle capacity and
reduce internal and channel inventory. Operating margins, which
had been around 15% as of December 2007, declined sharply to 4%
for the March quarter and 10% for June (all ratios are adjusted
for expenses related to the investigation). At the same time,
current management has revised the operating strategies of two of
its businesses -- Power Management Devices (PMD) and Energy
Savings Products (ESP) -- that make up 62% of ongoing 2008
revenues. The lower-margin PMD business had been under-invested
by prior management. The current strategy is to support the R&D
required to restore this business. The ESP business will be
refocused on higher-volume accounts, rather than the smaller, low-
volume account base that had been its target. These efforts
should, over time, realign the product portfolio with the
company's manufacturing base, which is better suited to higher-
volume production and could restore the company to profitability
levels that are consistent with peers'.
The efforts are in early stages and coincide with highly
challenging macro-economic conditions that are likely to result in
lower volumes and demand across International Rectifier's markets
-- many of which are consumer oriented, such as automotive and
white goods. S&P believes that the company's strategy to maintain
a high level of investment in R&D and sales efforts, combined with
the prospect of lower revenues in the near term, will result in
weakening profit measures throughout fiscal 2009.
In the wake of accounting irregularities uncovered during an
extensive investigation by the audit committee of the board,
International Rectifier faces numerous class-action lawsuits, SEC
and Department of Justice investigations, and IRS audits, and is
also in a dispute with Vishay over the April 2007 sale of the
Power Control Business. While not indicative of any outcome, for
the purpose of S&P's credit opinion, S&P believes that the company
has the capability to address these potential obligations at the
'BB-' rating level using excess liquidity and debt capacity,
provided that settlements do not cause debt to EBITDA to exceed
3x.
INTERSTATE BAKERIES: Sees Net Losses in 3 Years Under New Plan
--------------------------------------------------------------
Interstate Bakeries Corporation and eight of its subsidiaries and
affiliates expect to incur losses of $130.7 million, $33.9 million
and $8.9 million in fiscal years 2009 to 2011, but would record
income of $11.8 million and $33.7 million in 2012 and 2013.
Aside from financial projections, the Debtors said in documents
attached to its Oct. 30 amendments to their New Joint Plan of
Reorganization and Disclosure Statement that the enterprise value
of the Reorganized Debtors is estimated to be between
approximately $475 million and $629 million, with a mid-point
estimate of approximately $551 million, as of an assumed Effective
Date of January 11, 2009.
The Debtors, in a liquidation analysis, also said that
claimholders would obtain lesser recovery in a Chapter 7
liquidation. A full-text copy of IBC's Liquidation Analysis is
available for free at:
http://bankrupt.com/misc/IBC_LiquidationAnalysis.pdf.
As previously reported, Judge Venters of the U.S. Bankruptcy Court
for the Western District of Missouri determined on October 30,
2008, that IBC's Disclosure Statement contains adequate
information as required by Section 1125 of the Bankruptcy Code.
The Debtors subsequently filed their Amended Disclosure Statement
and Plan, incorporating additional disclosures to address the
objections of various parties-in-interest in their Chapter 11
cases.
The Court will convene a hearing on December 5, 2008, to consider
confirmation of the Debtors' Amended Plan. Parties have until
December 1 to filed objections to the Plan.
A full-text copy of the IBC's Amended Plan is available for free
at http://bankrupt.com/misc/IBC_AmendedReorgPlan.pdf.
A full-text copy of the IBC's Amended Disclosure Statement is
available for free at:
http://bankrupt.com/misc/IBC_AmendedDisclosureStatement.pdf
Plan Structure
The Amended Plan contemplates, among other things, the resolution
of the outstanding Claims against and Interests in the Debtors
pursuant to Sections 1123, 1129 and 1141 of the Bankruptcy Code.
The Plan further contemplates that holders of Prepetition Lender
Claims will receive a distribution consisting of the New Third
Lien Term Loan, $85,800,000 in aggregate principal amount of the
New Convertible Secured Notes and the Series E Warrants with a
strike price of $0.01 and representing 1.5% of the fully-diluted
equity interests of Reorganized IBC, calculated as of the
effective date of the Plan.
Claims and interests will receive these recoveries under the
Amended Plan:
Estimated Estimated
Class of Claims Claim Amount Recovery
--------------- ------------ ---------
Class 1 Secured Tax Claims $276,119 100%
Class 2 Secured Claims 158,367 100%
Class 3 Other Priority Claims 493,327 100%
Class 5 Workers Compensation Claims 62,000,000 100%
Class 7 Capital Lease Claims 2,575,478 100%
Class 8 Prepetition Lender Claims 451,486,946 50.5%
Class 9 General Unsecured Claims 322,586,327 0%
Class 10 Subordinated Securities 3,000,000 0%
Class 11 Interests in Brands Stock -- 0%
Class 12 Interests in IBC -- 0%
Craig D. Jung, chief executive officer of IBC, disclosed that the
Company's organizational documents will be amended as necessary to
satisfy the provisions of the Plan and the Bankruptcy Code.
Specifically, the Certificate of Incorporation for Reorganized IBC
will authorize 60,000,000 shares of New Common Stock, at $0.01 par
value per share.
On the Effective Date, Reorganized IBC will issue (i) up to
4,420,000 shares of New Common Stock to the Term Loan Facility
Lenders and (ii) 4,420,000 shares of New Common Stock to Equity
Investors.
A summary description of the New Common Stock is available for
free at http://bankrupt.com/misc/IBC_TermsofNewCommonStock.pdf.
A full-text copy of the Restated Certificate of Incorporation of
IBC, is available at no charge at:
http://bankrupt.com/misc/IBC_RestatedCertofIncorporation.pdf
Unexpired Leases and Executory Contracts
The Plan provides for the assumption and reinstatement, as of the
Effective Date, of certain executory contracts and unexpired
leases that were entered into by the Debtors before the Petition
Date.
Lists of IBC's Assumed Unexpired Leases; Executory Contracts and
Insurance Policies to be assumed are available for free at:
http://bankrupt.com/misc/IBC_AssumedUnexpiredLeases.pdf
http://bankrupt.com/misc/IBC_AssumedExecContracts.pdf
http://bankrupt.com/misc/IBC_AssumedInsurancePolicies.pdf
The Order confirming the Plan will constitute an approval of the
Assumptions, pursuant to Section 365(b)(1) of the Bankruptcy Code,
as of the Effective Date, Mr. Jung says.
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)
JOHNSON MEMORIAL: Operating Losses Blamed for Chapter 11 Filing
---------------------------------------------------------------
Johnson Memorial Hospital Inc. along with two of its affiliates
sought relief under Chapter 11 of the United States Bankruptcy
Code in the United States Bankruptcy Court for the District of
Connecticut.
The company filed for protection from its creditors due to
significant operating losses over last seven years as a result of
low reimbursement rates, operating inefficiencies and low census.
The company will continue to operate its hospital and nursing home
to provide health care services.
The company listed assets of less than $50,000 and debts between
$10 million and $50 million in its filing. The company owes about
$11.9 million to its unsecured creditors including Key Government
Finance Inc. owing $5.7 million; National City Healthcare Finance
owing $1.7 million; and Eastern Rehab. Network owing $717,428.
Reid and Riege, P.C., is the company's counsel.
Deadline to appoint a health-care ombudsman is due Dec. 4, 2008.
The company has until March 4, 2009, to file its Chapter 11 plan
and disclosure statement explaining the plan.
About Johnson Memorial
Headquartered Stafford Springs, Connecticut, Johnson Memorial
Hospital Inc. -- http://www.johnsonmemorial.org/-- operates a
niney-two bed, acute care hospital and a surgery center. The
company offers an array of inpatient and outpatient services
including medical and surgical, obstetrics and gynecology,
pediatrics, mental health, intensive/coronary care, oncology,
rehabilitation, and emergency care. The company has more than 620
employees and annual revenue of approximately $70 million.
LBI MEDIA: Moody's Affirms B2 CFR; Outlook Revised to Negative
--------------------------------------------------------------
Moody's Investors Service affirmed LBI Media, Inc.'s B2 Corporate
Family Rating and its Probability of Default Rating. In addition,
Moody's affirmed the Ba2 ratings for LBI's $270 million senior
secured credit facilities ($150 million revolving credit facility
due 2012, $120 million term loan facility due 2012) and the B3
rating for the company's $229 million Senior Subordinated Notes
due 2017. The rating outlook has been revised to negative from
stable.
The negative outlook reflects Moody's concerns that the current
economic downturn and pullback in advertising spend will affect
LBI's revenue and cash flow in the near term despite its focus on
the Hispanic audiences (which are expected to have favorable
demographic trends over the medium- to long-term). While credit
metrics are expected to come under pressure, Moody's expects LBI
to have relatively good liquidity from its $150 million revolving
credit facility (approximately $15.8 million of which was drawn as
of June 30, 2008). Moody's notes the absence of financial
maintenance covenants under LBI's credit facility until June 30,
2009, at which time the company will have to comply with a senior
secured leverage test (initially set at 7.00x).
Moody's subscribers can find further details in the LBI Credit
Opinion published on Moodys.com
Moody's has taken these ratings actions:
LBI Media, Inc.
* Corporate Family Rating -- affirmed B2
* Probability of Default Rating -- affirmed B2
* $150 million Secured Revolver -- affirmed Ba2 (LGD 2, 19%)
* $120 Million Secured Term Loan -- affirmed Ba2 (LGD 2, 19%)
* $229 Million Senior Subordinated Notes due 2017 -- affirmed
B3 (LGD 4, 69%)
* Outlook - Revised to Negative from Stable
Moody's last rating action for LBI was in August 2008, when the
company was downgraded to B2 from B1.
The B2 rating reflects the company's high debt to EBITDA leverage
of 8.6x for the trailing twelve months ended 6/30/2008
(incorporating Moody's standard adjustments and including the
holding company LBI Media Holdings, Inc.'s unrated senior discount
notes), lack of significant geographic diversification and revenue
and cash flow concentration in the Los Angeles market.
Additionally, LBI's ratings reflect weaker than expected operating
performance and credit metrics, its modest scale, and our
expectation that the company will remain acquisitive as it seeks
to expand its current station portfolio in existing and new
markets.
Nonetheless, the company's ratings are supported by its strong
margins, clustering of radio and television stations in the top
Hispanic markets and concentration of local advertising revenues.
In addition, Moody's expects LBI to benefit over the intermediate
to long term from the strong Hispanic demographic trends.
LBI Media, Inc., headquartered in Burbank, CA, is a Spanish-
language broadcasting company that owns 22 radio stations and 5
television stations in Los Angeles (including Riverside-San
Bernardino), Houston, Dallas-Fort Worth, San Diego and Salt Lake
City.
LB-UBS COMMERCIAL: Fitch Holds Class N Notes' Rating at 'BB-'
-------------------------------------------------------------
Fitch Ratings has affirmed and assigned Rating Outlooks to LB-UBS
Commercial Mortgage Trust Commercial Mortgage Pass-Through
Certificates Series 2007-C2:
-- $21 million class A-1 at 'AAA'; Outlook Stable;
-- $447 million class A-2 'AAA'; Outlook Stable;
-- $78 million class A-AB at 'AAA'; Outlook Stable;
-- $1.3 billion class A-3 at 'AAA'; Outlook Stable;
-- $659.5 million class A-1A at 'AAA'; Outlook Stable;
-- $355.4 million class A-M at 'AAA'; Outlook Stable;
-- $315.5 million class A-J at 'AAA'; Outlook Stable;
-- Interest-only class X-CP at 'AAA'; Outlook Stable;
-- Interest-only class X-W at 'AAA'; Outlook Stable;
-- Interest-only class X-CL at 'AAA'; Outlook Stable;
-- $26.7 million class B at 'AA+'; Outlook Stable;
-- $53.3 million class C at 'AA; Outlook Stable;
-- $40 million class D at 'AA-'; Outlook Stable;
-- $13.3 million class E at 'A+'; Outlook Stable;
-- $26.7 million class F at 'A'; Outlook Stable;
-- $35.5 million class G at 'A-'; Outlook Stable;
-- $31.1 million class H at 'BBB+'; Outlook Stable;
-- $35.5 million class J at 'BBB'; Outlook Stable;
-- $40 million class K at 'BBB-'; Outlook Stable;
-- $17.8 million class L at 'BB+'; Outlook Stable;
-- $8.9 million class M at 'BB'; Outlook Stable;
-- $4.4 million class N at 'BB-'; Outlook Stable.
Fitch does not rate these classes: $8.9 million class P, $4.4
million class Q, $ 13.3 million class S and $35.5 million class T.
The rating affirmations reflect minimal paydown and stable
performance since issuance. As of the October 2008 distribution
date, the transaction has paid down by 0.12% to $3.550 billion
from $3.554 billion at issuance. Rating Outlooks reflect the
likely direction of any rating changes over the next one to two
years.
Fitch has identified eight loans of concern (2.2%), three of which
are specially serviced loans (1.2%). Fitch expects losses will be
absorbed by the non-rated class T. The largest loan of concern
(0.7%), which is also specially serviced, is an office property in
Orlando, FL. The loan was transferred to special servicing due to
monetary default.
The second largest loan of concern (0.5%) is a retail property in
Kailua-Kona, HI. The property has suffered from a decline in
occupancy and a drop in tourism affecting releasing.
The third largest loan of concern (0.4%), which is also specially
serviced loan, is a retail property located in Collier Township,
PA. The property has suffered from a decline in occupancy and
tenant bankruptcy.
Seven loans (26.6%) maintain Fitch investment grade shadow
ratings. Fitch reviewed the most recent servicer provided
operating statements: Tishman Speyer DC Portfolio II (11.3%),
Extendicare Portfolio II (2.5%), Homer Building (2.5%), 2445 M
Street (2.4%), 2000 Pennsylvania Avenue (2.4%) and 2100
Pennsylvania Avenue(1.9%).
The largest shadow rated loan is secured by the Tishman Speyer DC
Portfolio II which consists of over 2 million square feet (sf) of
office space in Washington D.C. and Northern Virginia. As of June
30, 2008 occupancy at the properties has decreased to 83% from 93%
at issuance. Year-end (YE) 2007 servicer reported debt service
coverage ratio (DSCR) on net operating income (NOI) was 1.53 times
(x) compared to 2.08x at issuance. At origination, it was expected
that approximately 40% of the leases will expire before 2010.
Fitch continues to monitor the borrower's efforts to lease
upcoming vacancies.
The second and third largest shadow rated loans (3.5% and 2.5%,
respectively) are secured by portfolios of Extendicare healthcare
facilities in various states. The servicer reported weighted-
average DSCR on NOI as of YE 2007 was 2.47x and 2.33x,
respectively compared to 2.77x and 2.33x at issuance.
The largest non-shadow rated loan (11.0%) is secured by an
interest in the Sears tower office building in Chicago, IL.
Occupancy as of YE 2007 was 78%, in-line with issuance.
LB-UBS COMMERCIAL: S&P Cuts Ratings on 7 Classes of Trust 2007-C2
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on seven
classes of commercial mortgage pass-through certificates from LB-
UBS Commercial Mortgage Trust 2007-C2. Concurrently, S&P affirmed
its ratings on the remaining classes from this transaction.
The lowered ratings reflect anticipated credit support erosion
upon the eventual resolution of four assets with the special
servicer. The affirmed ratings reflect credit enhancement levels
that provide adequate support through various stress scenarios.
There are four delinquent loans totaling $62.3 million (2.0%) with
the special servicer, LNR Partners Inc. (LNR). Details of the
specially serviced loans are:
-- The Cornerstone Office Orlando loan ($24 million, 1%) is
secured by a 135,612-sq.-ft. office building built in 1960
in Orlando, Fla., and renovated in 2005. The loan was
transferred to the special servicer in March 2008 due to
payment default and is 90-plus days delinquent. The
special servicer is currently reviewing a forbearance
proposal made by the borrower, who is paying debt service
to bring the loan current. In the meantime, the special
servicer is moving forward with foreclosure. Standard &
Poor's expects a moderate loss upon the liquidation of
this asset should a forbearance agreement not be reached.
-- Collier Town Square ($15.5 million 0.5%) is secured by a
63,706-sq.-ft. anchored retail center built in 2003 in
Collier Township, Pa., 15 miles south of Pittsburgh. The
loan was transferred to the special servicer due to
imminent default after several tenants vacated the
property. Foreclosure was filed in July 2008. A
$3.4 million appraisal reduction amount (ARA) is in effect
based on the most recent appraisal. Standard & Poor's
expects a moderate to significant loss upon the
liquidation of this asset.
-- Sunnyview Apartments ($5.92 million. 0.2%) is secured by a
224-unit multifamily property built in 1974 in Oklahoma
City. The loan was transferred to special servicing in
October 2007 due to imminent default and is now in
foreclosure. A receiver is in place. An ARA totaling
$1.8 million is in effect based on the most recent
appraisal. Standard & Poor's expects a moderate loss upon
the liquidation of this asset.
-- The Coconut Grove loan has an unpaid principal balance of
$16.7 million and was recently transferred to the special
servicer, following the Oct. 20, 2008, remittance report.
The loan was transferred due to imminent default after the
anchor tenant, Hard Rock Cafe, vacated the property, and
additional tenants have vacated as well. The property
cash flow is insufficient to cover the debt service
payments, and the borrower has not paid the difference.
The loan is secured by a 48,696-sq.-ft. retail center
built in 1988 in Kailua-Kona, Hawaii. Standard & Poor's
expects a moderate to significant loss upon the resolution
of this asset.
As of the Oct. 20, remittance report, the collateral pool
consisted of 170 loans with an aggregate balance of $3.55 billion,
compared with 170 loans with a balance of $3.554 billion at
issuance. The master servicer, Wachovia Bank N.A. (Wachovia),
reported financial information for 96% of the pool. Ninety-four
percent of the servicer-provided information was full-year 2007
data and 2% was interim-2008 data. Based on this data, Standard &
Poor's calculated a weighted average debt service coverage (DSC)
of 1.44x for the pool, down from 1.51x at issuance. All of the
loans in the pool are current except for the assets with the
special servicer. To date, the trust has not experienced any
losses.
Eight loans in the pool, totaling $96.7 million (3.0%), have
reported DSCs lower than 1.0x. The loans are secured by a variety
of office, hotel, retail, industrial, and multifamily properties.
The loans have experienced an average decline in DSC of 34% since
issuance. Of the seven loans, Standard & Poor's has credit
concerns with one loan that reported a DSC of 0.72x as of year-end
2007 and subsequently suffered damage from Hurricane Ike. The
remaining seven loans are not credit concerns at this time because
they have sufficient debt service reserves, have low exposures, or
are in various stages of lease-up and S&P expects the net cash
flow available for debt service to improve in the near future.
Wachovia reported a watchlist of 33 loans with an aggregate
outstanding balance of $765 million (15.3%). The two largest
loans that appear on the watchlist are the third- and ninth-
largest loans in the pool. Details are:
-- The Bethany Maryland Portfolio is the largest loan on the
watchlist and the third-largest loan in the pool, with a
trust balance of $185 million and a whole-loan balance of
$217 million. The loan comprises three cross-
collateralized and cross-defaulted loans secured by 1,909
units in three multifamily properties in Baltimore, Md.
The loan appears on the watchlist due to a low DSC. As of
year-end 2007, the DSC was 1.14x and occupancy was 78%.
The property is currently undergoing significant capital
improvements. At issuance, the sponsor provided a
$17.8 million reserve for capital improvements and a
working capital reserve of $2 million. As of October
2008, the reserves were $10.6 million and $534,643,
respectively.
-- The Extendicare Portfolio II is the ninth-largest loan in
the pool, with a trust balance of $90 million. The loan
is secured by 14 skilled nursing facilities comprising
1,528 beds in five states. The loan appears on the
watchlist due to nonpayment of real estate taxes (non-
escrowed loan). The master servicer has since received
confirmation that the taxes have been paid and will remove
the loan from the watchlist. As of year-end 2007 the DSC
was 2.28x.
The top 10 loans have an aggregate outstanding trust balance of
$1.76 billion (50%) and a weighted average DSC of 1.49x, down from
1.64x at issuance. Standard & Poor's reviewed property
inspections provided by the master servicer for four of the assets
underlying the top 10 exposures, and all of the properties were
characterized as "good."
The credit characteristics of the Tishman Speyer DC Portfolio II
(11%), Extendicare Portfolio (3.5%), Extendicare Portfolio II
(2.5%), Homer Building (2.5%), 2445 M Street (2.5%), 2000
Pennsylvania Avenue (2.4%), and 2100 Pennsylvania Avenue (2%)
loans continue to be consistent with those of investment-grade
rated obligations, as the respective values are comparable to
those at issuance.
Standard & Poor's identified 10 collateral properties
($40 million; 1%) in areas affected by Hurricane Ike. Two
properties suffered roof damage, seven reported very minor damage
or no damage, and one property has not responded to the master
servicer's request for information. All of the properties have
business interruption and wind/hail storm insurance. Three of the
10 also have flood insurance. Standard & Poor's will continue to
evaluate these loans and review information as it becomes
available.
Standard & Poor's stressed the loans on the watchlist, along with
other loans with credit issues, as part of its pool analysis. The
resultant credit enhancement levels support the lowered and
affirmed ratings.
RATINGS LOWERED
LB-UBS Commercial Mortgage Trust 2007-C2
Commercial mortgage-pass through certificates
Rating
Class To From Credit enhancement (%)
----- -- ---- ----------------------
K BB+ BBB- 2.63
L BB BB+ 2.13
M BB- BB 1.88
N B+ BB- 1.75
P B B+ 1.50
Q B- B 1.38
S CCC+ B- 1.00
RATINGS AFFIRMED
LB-UBS Commercial Mortgage Trust 2007-C2
Commercial mortgage-pass through certificates
Class Rating Credit enhancement (%)
----- ------ ----------------------
A-1 AAA 30.04
A-2 AAA 30.04
A-AB AAA 30.04
A-3 AAA 30.04
A-1A AAA 30.04
A-M AAA 20.02
A-J AAA 11.14
B AA+ 10.39
C AA 8.89
D AA- 7.76
E A+ 7.38
F A 6.63
G A- 5.63
H BBB+ 4.76
J BBB 3.75
XCP AAA N/A
X-W AAA N/A
XCL AAA N/A
N/A -- Not applicable
LOUISIANA-PACIFIC: Moody's Puts Ba2 Ratings on Review
-----------------------------------------------------
Moody's Investors Service placed Louisiana-Pacific Corporation's
(LP) Ba2 corporate family rating and the company's Ba2 senior
unsecured ratings under review for possible downgrade. The rating
action was prompted by increased uncertainties regarding the
severity and depth of the US housing downturn and the volatile
state of the credit markets. At the same time, LP's speculative
grade liquidity rating was lowered to SGL-3 from SGL-2.
The severe downturn in new residential construction, the reduction
in home repairs and remodeling activities, the impact of tighter
home mortgage standards on housing starts and the over supply of
oriented strandboard (OSB) production capacity has created a weak
pricing environment for the company's principal products. LP has
generated negative free cash flow since the downturn in OSB prices
began in mid 2006. The downgrade in the speculative grade
liquidity rating to SGL-3 reflects the company's reduced cash
position, projected continuing cash burn over the next several
quarters and limited committed external liquidity sources.
Although LP is taking measures to preserve cash, the ongoing cash
needs to fund its operations continue to deplete the company's
liquidity.
Moody's review will focus on the company's ability and timing in
restoring profitability and generating positive free cashflow, the
company's liquidity position, and the company's ability to manage
upcoming debt maturities. The review is expected to be completed
within 90 days.
Downgrades:
Issuer: Louisiana-Pacific Corporation
* Speculative Grade Liquidity Rating, Downgraded to SGL-3 from
SGL-2
On Review for Possible Downgrade:
Issuer: Louisiana-Pacific Corporation
* Corporate Family Rating, Placed on Review for Possible
Downgrade, currently Ba2
* Senior Unsecured Regular Bond/Debenture, Placed on Review
for Possible Downgrade, currently a range of Ba2, LGD4, 58%
* Senior Unsecured Shelf, Placed on Review for Possible
Downgrade, currently (P)Ba2
Assignments:
Issuer: Louisiana-Pacific Corporation
* Probability of Default Rating, Assigned Ba2
Outlook Actions:
Issuer: Louisiana-Pacific Corporation
* Outlook, Changed To Rating Under Review From Negative
Moody's last rating action on LP was on February 27, 2008, when
the Baa3 senior unsecured debt ratings were downgraded to Ba2, and
LP was assigned a Ba2 corporate family rating.
Headquartered in Nashville, Tennessee, Louisiana-Pacific
Corporation is a leading manufacturer and distributor of wood
based building materials, and is North America's largest producer
of OSB. The company has approximately 24% and 15% market share for
OSB and structural panels, respectively.
LPL HOLDINGS: S&P Hikes to 'B+' As Financial Profile Improves
-------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on LPL
Holdings Inc., including raising the counterparty credit rating to
'B+' from 'B'. The outlook is stable.
"Although LPL remains burdened with considerable debt and low
interest coverage, the rating action recognizes the company's
modestly improved financial and business profiles, which we expect
it to maintain at least over the medium term," said Standard &
Poor's credit analyst Robert B. Hoban Jr.
Our ratings on LPL reflect its solid independent adviser
franchise, a retrenchment from its previous acquisition strategy,
and its aggressive financial profile.
LPL's negative consolidated tangible equity is a principal rating
concern because it prevents the company from relying on capital as
a cushion against potential large regulatory fines, civil
litigation, or other operational risks. However, LPL has an
excellent track record on regulatory compliance and has avoided
major litigation and damage to its reputation.
MAGNA ENTERTAINMENT: Lincoln Property Axes $16.5 Mil. Sale Deal
----------------------------------------------------------------
Magna Entertainment Corp. said that its agreement to sell about
489 acres of excess real estate located in Ocala, Florida to
Lincoln Property Company and Orion Investment Properties, Inc. for
$16.5 million cash was terminated by Lincoln Property.
Magna Entertainment still intends to sell the Ocala property and
will re-initiate its marketing efforts.
About Magna Entertainment
Headquartered in Aurora, Ontario, Magna Entertainment Corp.
(Nasdaq: MECA)(TSX: MEC.A) -- http://www.magnaentertainment.com/
-- acquires, develops, owns and operates horse racetracks and
related pari-mutuel wagering operations, including off-track
betting facilities. The company also develops, owns and operates
casinos in conjunction with its racetracks where permitted by law.
Going Concern Doubt
As reported in the Troubled Company Reporter on March 20, 2008,
Ernst & Young LLP in Toronto, Canada, expressed substantial doubt
about Magna Entertainment Corp.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the years Dec. 31, 2007, and 2006. The auditing
firm pointed to the company's recurring operating losses and
working capital deficiency.
The company has incurred net losses of $67.7 million for the six
months ended June 30, 2008, and at June 30, 2008, had an
accumulated deficit of $577.8 million and a working capital
deficiency of $151.1 million. At June 30, 2008, the company had
$229.8 million of debt that matures in the 12-month period ending
June 30, 2009, including amounts owing under its $40.0 million
senior secured revolving credit facility with a Canadian financial
institution, which is scheduled to mature on Aug. 15, 2008,
amounts owing under the amended Bridge Loan, which is scheduled to
mature on Aug. 31, 2008, and its obligation to repay
$100.0 million of indebtedness under the Gulfstream Park project
financings with a subsidiary of MID by Aug. 31, 2008.
NATIONAL CENTURY: Ex-CEO Guilty of Fraud & Money Laundering
-----------------------------------------------------------
Lance K. Poulsen, one of the founders and former CEO of National
Century Financial Enterprises, Inc., was found guilty by a 12-
member jury on all of the charges against him, including one count
each of conspiracy to commit securities fraud, wire fraud,
conspiracy to commit money laundering, three counts of money
laundering, and six counts of securities fraud.
Mr. Poulsen is facing between 30 years to life in prison, the
Bloomberg News reports. Prior to his fraud conviction, Mr.
Poulsen was serving a 10-year sentence after he tried to bribe
Sherry Gibson to have "amnesia" during his trial. Ms. Gibson was
National Century's former employee, has served her term in prison
in connection with NCFE's fraud, and was the U.S. Government's
star witness.
"Ladies and gentlemen, this is a case of staggering fraud,"
federal prosecutor Leo Wise, Esq., was quoted by The Columbus
Dispatch. "It is one of the largest frauds the FBI has ever
investigated. The total is over $2 billion," he told the jurors.
During his fraud trial, which began October 1, 2008, Mr. Poulsen
argued that National Century's governing documents supported his
moves, including allowing executives to make advances, Business
First of Columbus says. He also asserted that National Century
disclosed all transactions to investors.
Mr. Poulsen's counsel also tried pointing their fingers to Ms.
Gibson, who admitted in her guilty plea that she falsified NCFE's
documents. Mr. Wise, however, argued that there was an ever-
growing stack of worthless IOUs piling up behind closed doors at
NCFE, but Mr. Poulsen made sure he was paid. Mr. Wise pointed out
that in three-year period, Mr. Poulsen made almost $8,000,000.
To recall, five other NCFE executives were convicted early this
year on the same fraud issues. Rebecca Parrett, who failed to
show up for a Court appearance still remains at large. James Happ
is scheduled to stand trial in December 2008.
Department of Justice's Statement
WASHINGTON, District of Columbia -- October 31, 2008 -- A federal
jury convicted Lance K. Poulsen, former president, owner and chief
executive officer of National Century Financial Enterprises (NCFE)
of conspiracy, fraud and money laundering, Acting Assistant
Attorney General Matthew Friedrich of the Criminal Division and
U.S. Attorney Gregory G. Lockhart for the Southern District of
Ohio announced. The charges stemmed from a scheme to deceive
investors about the financial health of NCFE that cost investors
more than $2 billion. The company, which was based in Dublin,
Ohio, was one of the largest healthcare finance companies in the
United States until it filed for bankruptcy in November 2002.
The Columbus, Ohio, jury convicted Poulsen, 65, after a four-week
trial on all 12 charged counts contained in a July 2007
superseding indictment, including one count of conspiracy, six
counts of securities fraud, one count of wire fraud, one count of
money laundering conspiracy and three counts of concealment money
laundering.
At trial, witnesses testified that Poulsen engaged in a scheme
from 1995 until the collapse of the company to deceive investors
and rating agencies about the financial health of NCFE and how
investors' money would be used. NCFE bought accounts receivable
from healthcare providers using money NCFE obtained through the
sale of asset-backed notes to institutional investors, including
pension funds, insurance companies and churches.
Evidence at trial showed that NCFE misused investors' money and
made unsecured loans to health care providers, including those
owned in whole or in part by Poulsen and other owners. Former
employees testified that Poulsen and other NCFE executives covered
up the fraud by lying to investors and ratings agencies. The
government presented evidence that Poulsen and others created
investor reports containing fabricated data, and moved money back
and forth between programs, in order to make it appear that NCFE
was in compliance with its own governing documents. Evidence
showed that Poulsen knew the business model NCFE presented to the
investing public differed drastically from the way NCFE did
business within its own walls.
"Today's conviction closes another chapter in the long effort to
bring former NCFE executives to justice for deceiving investors,"
said Acting Assistant Attorney General Matthew Friedrich of the
Criminal Division. "The Department will continue to hold
accountable those corporate executives who misrepresent a
company's financial health and then leave the public to pick up
the pieces."
"Poulsen and others made millions of dollars in unsecured loans to
companies they owned," U.S. Attorney Lockhart said. "Their
actions were designed to hide a financial house of cards from
investors, eventually costing investors $2 billion."
"The IRS, along with our law enforcement partners, will vigorously
pursue corporate officers who victimize their investors and
violate the public trust," said Internal Revenue Service (IRS)
Criminal Investigation Special Agent in Charge Jose A. Gonzalez.
"Today's verdict demonstrates the government's determination to
restore and ensure that trust."
FBI Cincinnati Special Agent in Charge Keith L. Bennett stated,
"The FBI notes that today's convictions are the culmination of a
six year investigation which included the review of millions of
pages of financial documents by federal investigators. The
resolve of this cooperative effort demonstrates that the FBI and
other law enforcement will not permit a few corporate executives
to hijack our financial system for personal gain."
The maximum penalty for each count of concealment money
laundering, money laundering conspiracy and wire fraud is 20 years
in prison and a $500,000 fine. The securities fraud and
conspiracy charges are each punishable by up to five years in
prison and a $250,000 fine. A sentencing date has not been set.
Poulsen, the sixth NCFE executive convicted in connection with the
fraud, has been in custody since he was arrested on Oct. 17, 2007,
on charges of witness tampering. A jury convicted him of
conspiracy, witness tampering and obstruction on March 26, 2008,
and Poulsen was sentenced to ten years in prison on those charges.
On March 13, 2008, five former NCFE executives were found guilty
for their roles in the scheme to defraud investors. Donald H.
Ayers, of Fort Myers, Fla., an NCFE vice chairman, chief operating
officer, director and an owner of the company, was found guilty on
charges of conspiracy, securities fraud and money laundering.
Rebecca S. Parrett, of Carefree, Ariz., an NCFE vice chairman,
secretary, treasurer, director and an owner of the company, was
found guilty on charges of conspiracy, securities fraud, wire
fraud and money laundering. Randolph H. Speer, of Peachtree City,
Ga., NCFE's chief financial officer, was found guilty on charges
of conspiracy, securities fraud, wire fraud and money laundering.
Roger S. Faulkenberry, of Dublin, Ohio, a senior executive
responsible for raising money from investors, was found guilty on
charges of conspiracy, securities fraud, wire fraud and money
laundering. James E. Dierker, of Powell, Ohio, associate director
of marketing and vice president of client development, was found
guilty on charges of conspiracy and money laundering.
The case was prosecuted by Assistant U.S. Attorney Douglas Squires
of the Southern District of Ohio, Senior Litigation Counsel
Kathleen McGovern and Trial Attorneys Leo Wise and N. Nathan
Dimock of the Criminal Division's Fraud Section, with assistance
from Fraud Section Paralegal Specialist Sarah Marberg, FBI Agents
Matt Daly, Ingrid Schmidt and Tad Morris, IRS Special Agents Greg
Ruwe and Mark Bailey, U.S. Postal Inspector Dave Mooney and
Immigration and Customs Enforcement Agent Celeste Koszut.
About National Century Financial
Headquartered in Dublin, Ohio, National Century Financial
Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB
Claims Trust, the Litigation Trust, the VI/XII Collateral Trust,
and the Unencumbered Assets Trust, is in the midst of liquidating
estate assets. The Company filed for Chapter 11 protection on
November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court
confirmed the Debtors' Fourth Amended Plan of Liquidation on April
16, 2004. Paul E. Harner, Esq., at Jones Day, represented
the Debtors.
(National Century Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
NORBORD INC: Moody's Puts Ba2 Ratings Under Review for Downgrade
----------------------------------------------------------------
Moody's Investors Service placed Norbord Inc.'s (Norbord) Ba2
corporate family rating and the Ba2 senior unsecured ratings on
notes of Norbord and Norbord (Delaware) GPI under review for
possible downgrade. The rating action was prompted by increased
uncertainties regarding the impact of the severity and depth of
the US and European housing downturn, the weakening of the global
economy and the volatile state of the credit markets.
Norbord reported weak third quarter 2008 results reflecting the
ongoing weakness in the North American residential housing market
and the recent significant weakness in the UK housing market. The
weak housing markets coupled with the low renovation and
remodeling activity has created a severe slump in demand and
prices for the company's principal product - oriented strand board
(OSB). In addition, the company's financial flexibility is reduced
as its ability to comply with its financial covenants is
uncertain. Based on Moody's evaluation of near-term covenant
compliance, there is only a modest cushion and Norbord may require
covenant relief in order to maintain access to its funding lines.
Moody's review will focus on the company's profitability and
cashflow generation over the medium term, the company's liquidity
position including its ability to remain compliant with its
financial covenants, and the degree of support that the company
can obtain from its 36% owner Brookfield Asset Management. The
review is expected to be completed within 90 days.
On Review for Possible Downgrade:
Issuer: Norbord GP I
* Senior Unsecured Regular Bond/Debenture, Placed on Review
for Possible Downgrade, currently a range of Ba2, LGD4, 52%
Issuer: Norbord Inc.
* Probability of Default Rating, Placed on Review for Possible
Downgrade, currently Ba2
* Corporate Family Rating, Placed on Review for Possible
Downgrade, currently Ba2
* Senior Unsecured Regular Bond/Debenture, Placed on Review
for Possible Downgrade, currently a range of Ba2, LGD4, 52%
Outlook Actions:
Issuer: Norbord GP I
* Outlook, Changed To Rating Under Review From Negative
Issuer: Norbord Inc.
* Outlook, Changed To Rating Under Review From Negative
Moody's last rating action on Norbord was on February 29, 2008
when the senior unsecured ratings were lowered to Ba2 from Ba1.
Headquartered in Toronto, Ontario, Norbord Inc. is a producer of
panel boards, principally OSB, with manufacturing operations in
the United States, Europe and Canada.
NORTHEAST BIOFUELS: Moody's Junks Sr. Sec. Rating; Outlook Neg.
---------------------------------------------------------------
Moody's Investors Service downgraded the senior secured rating of
Northeast Biofuels, LLC, to Caa1 from B2. The outlook is negative.
The affected bank facilities are a $140 million senior secured
term loan due 2013 and a $12 million senior secured working
capital facility due 2011. This concludes the review initiated on
August 28, 2008. The rating outlook is negative.
The downgrade reflects further delays in construction and the
inability of the Northeast Biofuels ethanol plant to reach
Substantial Completion as of October 31, 2008. The plant was
unable to reach this significant construction milestone due to
recurring construction difficulties and the failure to meet
certain performance thresholds. This is the second time
Substantial Completion has been delayed. The new date for
Substantial Completion is scheduled for January 31, 2009 (from
October 31, 2008) and the new date for Completion is May 31, 2009
(from January 31, 2009).
Although the project has a fixed price contract with Lurgi, Inc.,
construction problems could result in increased construction
costs. Also, the multiple construction delays have increased
refinancing risk for the debt, which matures in 2013. The
increased refinancing risk has further been impacted by the higher
interest margin as compensation to the lenders for the
construction delay. A portion of that increase will be payment-in-
kind (PIK) through year end 2009. Moody's expects that the net
result of the construction delays, higher interest terms and weak
crush spread could result in higher debt levels and a shorter
period of time over which the debt has to be repaid prior to its
maturity.
The downgrade also reflects the substantially reduced liquidity
available to the issuer. Lenders and the project's sponsors have
reached an amendment with respect to the terms of the credit
agreement, as they did earlier when construction was delayed. As
part of the most recent amendment negotiations, the Debt Service
Reserve Account was almost fully drawn down, and the funds were
transferred to the Construction Account to be available to
complete construction. As a result, once the project reaches
completion, there is no cushion to meet scheduled debt service
should there be a cash flow shortfall until the debt service
reserve is replenished. In addition, the $12 million working
capital facility has been fully drawn.
The negative outlook incorporates the uncertainty that the Project
will be able to meet the revised construction milestones. Also,
the negative outlook reflects the current reality that corn prices
continue to be high and that ethanol prices continue to be low,
resulting in a much lower than anticipated crush spread for
ethanol producers. If this trend continues, Northeast Biofuels
will have diminished ability to service the higher than expected
level of debt.
Northeast Biofuels, LP, is a limited partnership formed to
develop, own and operate an ethanol facility in Fulton, New York
and is 100% owned by an intermediate holding company, NEB
Holdings, LP which is in turn 85% owned by Permolex International,
L.P. and 15% by other project developers.
OPEN ENERGY: Appoints Three Quercus Trust's Designees to Board
--------------------------------------------------------------
Open Energy Corporation disclosed in its Oct. 31 filing with the
Securities and Exchange commission that it entered into a
securities purchase agreement on Sept. 12, 2008, with The Quercus
Trust. In connection with the September 2008 SPA, the company
agreed to appoint three designees of The Quercus Trust to the
company's board of directors.
The company stated that previously, The Quercus Trust designated
and it appointed David Anthony and Joseph Bartlett to the
company's board of directors. On Oct. 24, 2008, it appointed
Tom Naylor, an additional Quercus designee, to its board of
directors.
Mr. Naylor is the chief technology officer of Advanced Telemetry,
LLC, a position he has held since October 2007. Advanced
Telemetry, LLC designs, manufactures and markets systems to
monitor and reduce energy use in homes and businesses. From March
2002 until October 2007, Mr. Naylor was president of Loudwater
Technologies, LLC.
Based in Solana Beach, California, Open Energy Corporation (OTC
BB: OEGY) -- http://www.openenergycorp.com -- a renewable energy
company, focuses on the development and commercialization of a
portfolio of solar technologies for residential, commercial, and
industrial applications. The company designs, manufactures, and
distributes building-integrated photovoltaic roofing tiles,
roofing membranes, and architectural photovoltaic glass products
under the SolarSave(R) trade name.
* * *
As reported in the Troubled Company Reporter on Sept. 24, 2008,
Squar Milner Peterson Miranda & Williamson LLP, in San Diego
raised substantial doubt about the ability of Open Energy
Corporation to continue as a going concern after it audited the
company's financial statements for the year ended May 31, 2008.
The auditing firm pointed to the company's recurring losses from
operations and working capital deficit.
The company posted a net loss of $34,940,000 on net revenues of
$6,940,000 for the year ended May 31, 2008, as compared with a net
loss of $39,550,000 on net revenues of $4,290,000 in the prior
year.
OSHKOSH CORP: Moody's Affirms Ba3 Ratings; Outlook Negative
-----------------------------------------------------------
Moody's Investors Service affirmed the ratings of Oshkosh
Corporation corporate family and probability of default ratings at
Ba3 and senior secured bank credit facility at Ba3. The company's
speculative grade liquidity rating remains SGL-2. In a related
rating action, Moody's changed Oshkosh's outlook to negative from
stable. This rating action results from the ongoing pressures that
Oshkosh faces due to the continued weakening of the U.S. and
Western European economies and the resulting deterioration in
operating performance on the company's access equipment and
commercial segments.
The Ba3 corporate family rating reflects Moody's view that
Oshkosh's credit metrics have been generally in line with
expectations following the JLG acquisition. This transaction added
about $3.1 billion of debt to the company's balance sheet and
meaningfully increased the company's financial leverage. Through
LTM June 2008, Oshkosh's key credit metrics were: EBITA margin -
10.3% and EBIT/interest expense - 2.8x (all ratios adjusted per
Moody's methodology). While meeting debt service requirements of
its leveraged capital structure, the company must contend with a
number of operating issues during the balance of 2008 and through
2009 including the slowing of the U.S. and Western European
economies which is negatively impacting the construction sectors,
the main driver for access equipment. The company's access
equipment business is experiencing reduced operating income from
lower volumes, higher raw material costs, and adverse product mix.
The company's defense business is also seeing lower margins on
contracts for Department of Defense ("DOD") tactical vehicles. Its
commercial segment is also being affected by softening demand for
its products due to the economic slowdown in North America and
Western Europe.
The rating for the senior secured bank credit facility reflects
both the overall probability of default of the company, to which
Moody's assigns a PDR of Ba3. The Ba3 rating assigned to the $3.25
billion (originally $3.65 billion) first lien senior secured bank
credit facility (rated the same as the corporate family rating)
reflects an LGD 3 (49%) loss given default assessment as this
facility represents the company's entire debt structure.
These ratings and assessments were affirmed by this action:
* Corporate family rating affirmed at Ba3;
* Probability of default rating affirmed at Ba3; and,
* $3.25 billion first lien senior secured bank credit facility
affirmed at Ba3, but its loss given default assessment is
changed to (LGD3, 49%) from (LGD4, 50%).
The company's speculative grade liquidity rating of SGL-2 is
unchanged.
The last rating action was on November 8, 2006, at which time
Moody's assigned a Ba3 corporate family rating to Oshkosh
following its acquisition of JLG Industries, Inc., for
approximately $3.2 billion.
Oshkosh Corporation, headquartered in Oshkosh, WI, is a leading
designer, manufacturer and marketer of access equipment including
aerial work platforms and telehandlers and a broad range of
specialty vehicles and vehicle bodies. Revenues for the FY08
(ended September 30, 2008) totaled about $7.1 billion.
PENHALL INTERNATIONAL: S&P Affirms 'B' Corp. Credit Rating
----------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Penhall
International Corp. to negative from stable. At the same time S&P
affirmed its 'B' corporate credit rating.
"The outlook revision reflects the likelihood that Penhall's
profitability and cash flow protection measures will weaken in the
near term due to further deterioration in the commercial
construction market," said Standard & Poor's credit analyst Sarah
Wyeth.
The ratings on Anaheim, Calif.-based Penhall reflect the company's
modest positions in the small and fragmented niche construction
services market and related equipment rental markets, and its
highly leveraged financial risk profile. Penhall provides
specialized construction and demolition contracting services such
as concrete cutting and highway grinding. While the company has
locations in 19 states and Canada, approximately 40% of its sales
come from projects in California, indicating limited geographic
diversity. The majority of work is dependent on publicly
financed, highway-related projects or commercial construction.
Recently, spending for highway renovation and commercial
construction in California has been delayed and Penhall's
utilization has declined; projects that the company expected to
benefit from the passage of various bond infrastructure incentives
have been slow to be put out for bid. In addition, the overall
nonresidential construction market has also slowed compared with
the past couple of years.
Excluding recent acquisitions, revenue declined slightly in the 12
months ending June 30, 2008. The decline can be attributed to
slowing nonresidential construction markets and pricing pressures.
Penhall's operating performance is mixed at present, but in the
longer term, funding from federal transportation programs
targeting highway and bridge maintenance should continue to
provide a reliable source of business. Penhall has a somewhat
variable cost structure because it hires operators on an as-needed
hourly basis from union and nonunion sources. Also, because of
the type of equipment it maintains, the company can allow its
fleet to age with limited effects on the equipment's useful life.
Penhall is highly leveraged, with total debt to EBITDA (pro forma
for the acquisitions and adjusted for operating leases) at a
little more than 5.8x and funds from operations (FFO) to debt at
less than 5% as of June 30, 2008. Leverage reflects several
factors, including the July 2006 leveraged buyout by Code Hennessy
& Simmons; a dividend recapitalization in March 2007; and funding
for two recent acquisitions: Concrete Barrier Inc. in January 2008
and Concrete Coring Co. two months later. Standard & Poor's
Ratings Services expects total debt to EBITDA to average about 5x
and FFO to total debt about 10% at the current rating level.
Capacity for acquisitions and dividends is limited. Penhall has
publicly discussed the possibility of merging with LVI Services
Inc., another company in the portfolio of Code Hennessey &
Simmons. However, in the current credit market, a
recapitalization is unlikely.
S&P could lower the ratings if cash flow is negative for a period
of time, causing availability under the revolver to approach the
$10 million threshold, when the leverage covenant would apply. In
this scenario, the covenant may not be met. S&P could revise the
outlook to stable if a comfortable liquidity cushion is
maintained, perhaps north of $30 million, and operating
performance stabilizes.
PILGRIM'S PRIDE: Faces 5 Lawsuits for Inflating Prices of Stock
---------------------------------------------------------------
Jeff Waters at Suwannee Democrat reports that five class action
lawsuits have been filed against Pilgrim's Pride Corp. for
violating federal securities laws by allegedly inflating the
prices of its stock.
Citing Coughlin Stoia Geller Rudman and Robbins LLP, Reuters
relates that Pilgrim's Pride has been sued in the U.S. District
Court for the Eastern District of Texas, by investors claiming
that the company misrepresented its financial condition and
concealed its capital problems. According to Reuters, investors
who bought shares between May 5 and Sept. 24 sued Ronald Acaldo
for purchasing the stock during the period.
Coughlin Stoia Geller said in a statement, "Due to defendants'
positive, but false, statements, Pilgrim's Pride's stock closed as
high as $26.85 per share in late May 2008."
Reuters relates that the Pilgrim's Pride knew but did not disclose
that its financial results were "continuing to deteriorate."
Reuters states that Pilgrim's Pride shares traded under $1 on Oct.
30, a day after a research report from CreditSights said there was
a high probability the chicken producer would file for bankruptcy
protection in December.
Pilgrim's Pride's Corporate Communications director Ray Atkinson
sent an e-mail to Suwannee Democrat saying, "We continue to
believe Chapter 11 is not in anyone's best interest, and we are
working extremely hard to develop a long-term solution to improve
our liquidity and capitalize on our strategic advantages. We have
been working diligently with our advisors to develop a
comprehensive business plan that details how we spend money, how
we run our operations, and how we intend to return to
profitability. Our lenders have been constructive and supportive
throughout this period, and the extension of the temporary
covenant waiver provides additional flexibility to explore
opportunities to refinance and recapitalize our business."
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.
PILGRIM'S PRIDE: Lenders to Install Chief Restructuring Officer
---------------------------------------------------------------
Lenders for Pilgrim's Pride Corp. will install a chief
restructuring officer at the company, Matt Andrejczak of
MarketWatch reported last week.
According to the report, the company has been working with
investment advisers at Lazard Ltd. and Bain & Co. to improve its
cash position, either through asset sales or a recapitalization.
As reported in the Troubled Company Reporter on Oct. 30, 2008,
the company reached an agreement with its lenders to temporarily
extend its credit facilities to Nov. 26, 2008.
In a regulatory filing, Pilgrim's Pride lenders, CoBank and BMO
Lending Group, said their temporary waiver "requires the company
to engage a chief restructuring officer within 10 business days
after the company receives a list of candidates for such a
position."
In the same SEC filing, Pilgrim's Pride board disclosed that it
has also amended the company's executive change-in-control
agreements, or golden-parachute deals. The agreements cover
chairman Lonnie Ken Pilgrim, chief executive Clinton Rivers, chief
operating officer Robert Wright, and chief financial officer
Richard A. Cogdill.
"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," Pilgrim's
Pride said in a statement.
Company representative Ray Atkinson said that the hiring of a
chief restructuring officer will allow the company's management
team to focus on the company's business.
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 Oct. 30, 2008,
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 30-day grace period. The rating outlook
is negative.
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.
PLC SYSTEMS: NSYE Alternext To Delist Common Stock
--------------------------------------------------
PLC Systems Inc. received a letter from NYSE Alternext US LLC,
formerly known as the American Stock Exchange, indicating that
NYSE Alternext will delist PLC's common stock if the company does
not submit an appeal by Nov. 5, 2008.
The company does not expect to file such an appeal. The company
expects its common stock to begin to trade on the OTC Bulletin
Board shortly after being delisted from NYSE Alternext. The
company will make a public announcement about the stock symbol it
will be assigned on the OTCBB as soon as it is determined.
As previously reported, the company received a notice of failure
to meet listing qualifications dated Sept. 17, 2008 from the
Listing Qualifications Department staff at the American Stock
Exchange. The notice stated that the company was not in
compliance with Section 1003(a)(ii) of the AMEX Company Guide
because the Company's shareholders' equity was less than
$4,000,000 as of June 30, 2008, and it incurred losses from
continuing operations and net losses in three out of its four
most recent fiscal years.
About PLC Systems
PLC Systems Inc. -- http://www.plcmed.com.-- operates a medical
technology company specializes in cardiac and vascular
technologies.
PREMIUM LOAN: S&P Lowers Ratings on Trust I's C & D Notes
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class C and D notes issued by Premium Loan Trust I Ltd., an
arbitrage high-yield collateralized loan obligation (CLO)
transaction managed by Lehman Bros. Asset Management, and removed
them from CreditWatch with negative implications, where they were
placed on Oct. 29, 2008. At the same time, S&P affirmed the
ratings on the class A, X, and B notes and removed them from
CreditWatch with negative implications, where they were also
placed on Oct. 29, 2008.
The lowered ratings primarily reflect par loss and credit
deterioration in the underlying pool resulting in diminished
credit support available to the class C and D notes. In addition,
due to lower market values, the class A overcollateralization
ratio has fallen below 103%, which triggered an event of default.
Due to the failure of the class A overcollateralization test, all
waterfall payments after administrative expenses are currently
being used to pay down the class A notes, which is causing
subordinate notes to defer. The affirmations of the ratings on
the class A, X, and B notes reflect the existence of adequate
credit to support the ratings at the current levels. The class A
notes have paid down approximately 41.56% of their original
balance, and the class X notes have paid down approximately 45.90%
of their original balance.
Standard & Poor's will continue to monitor the performance of the
transaction to ensure that the ratings continue to reflect the
credit quality of the obligors within the collateral pool and that
the credit enhancement available is sufficient to support the
rated notes.
RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE
Premium Loan Trust I Ltd.
Rating
Class To From Balance (mil. $)
----- -- ---- ----------------
C BBB- BBB/Watch Neg 11.000
D B+ BB/Watch Neg 6.156
RATINGS AFFIRMED AND REMOVED FROM CREDITWATCH NEGATIVE
Premium Loan Trust I Ltd.
Rating
Class To From Balance (mil. $)
----- -- ---- ----------------
A AAA AAA/Watch Neg 125.629
X A+ A+/Watch Neg 8.656
B A A/Watch Neg 10.000
TRANSACTION INFORMATION
Issuer: Premium Loan Trust I Ltd.
Co-issuer: Premium Loan I Corp.
Underwriter: Institutional Credit Partners LLC
Collateral manager: Lehman Bros. Asset Management LLC
Trustee: U.S. Bank N.A.
RC2: Moody's Withdraws All Ratings
----------------------------------
Moody's Investors Service said it withdrew all of its ratings on
RC2 following the closing of the company's new bank facility,
which Moody's will not rate. For further details please refer to
Moody's Withdrawal Policy on Moodys.com.
The following ratings were withdrawn:
* Corporate Family rating of Ba2
* Senior Secured Revolving Credit and Term Loan Facilities
of Ba2
* Probability of Default rating of Ba3
* Speculative Grade Liquidity Rating of SGL-2
RC2 is headquartered in Oak Brook, Illinois.
RODALE INC: Will Lay Off 10% of Work Force
------------------------------------------
Russell Adams at The Wall Street Journal reports that Rodale Inc.
will lay off 111, or 10% of its employees.
The Associated Press relates that Rodale said it will lay off 73
of 700 workers at its eastern Pennsylvania headquarters in Emmaus.
The AP states that Rodale will lay off 38 employees at its New
York City offices, where it employs about 350.
According to WSJ, the layoffs will come largely by outsourcing
functions like information technology, customer service, and
"fulfillment." WSJ relates that Rodale will also eliminate its
corporate sales-and-marketing team and transfer their
responsibilities to teams at each publication. The report says
that editorial positions account for seven of those who will be
laid off and none of those workers are senior-level.
Rodale said that the economic downturn is forcing it to cut costs
through layoffs, The AP states. Spencer Soper of The Morning Call
quoted Rodale President and CEO Steven Pleshette Murphy as saying,
"The current pace of market change compels us to reallocate our
resources swiftly and manage our costs down," said Rodale
President and Chief Executive Officer Steven Pleshette Murphy.
The Morning Call relates that Rodale has sagging advertising
revenues at its magazines, Prevention and Men's Health.
WSJ states that a Rodale spokesperson said that the firm won't
shut down publications or reduce publishing schedules.
About Rodale
Emmaus, Pennsylvania-based Rodale Inc. -- http://www.rodale.com--
has a portfolio of nine magazines focusing on health and wellness.
It is the publisher of "Men's Health," Organic Gardening
(published since 1942), and Runner's World. Its book unit
publishes titles on subjects such as cooking, health, and nature
that it markets through retail and direct marketing channels. The
company has a database of more than 26 million customers. Rodale
also has an international book publishing division based in London
and operates about 20 Web sites (BiggestLoserClub.com,
FrenchWomenDontGetFat.com).
SENSATA TECHNOLOGIES: S&P Lowers Ratings to 'B'; Outlook Negative
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on Sensata
Technologies B.V., including the corporate credit rating to 'B'
from 'B+'. The company had total balance sheet debt of about $2.5
billion at Sept. 30, 2008. The outlook is negative.
"The downgrade reflects the potential for deteriorating credit
measures given weaker prospects in key end markets, particularly
the global automotive industry," said Standard & Poor's credit
analyst Dan Picciotto. To this point, Sensata has maintained good
covenant headroom and the company continues to generate free cash
flow. Still, a sustained downturn in key end markets could reduce
headroom under covenants in time.
The ratings on Attleboro, Mass.-based Sensata reflect its highly
leveraged financial profile, which more than offsets its
satisfactory business profile marked by good geographic
diversification and solid operating margins.
Sensata, formerly a division of Texas Instruments Inc., consists
of two business units that manufacture highly engineered
electronic sensors and controls, generating about $1.5 billion in
revenue. The company's products are sold into mature, cyclical end
markets that expand primarily at GDP-like rates although
electronic sensors have grown faster than underlying end markets.
The company also has a significant exposure to the global
automotive market accounting for more than half of sales. However,
the company's strong market positions (it is the sole or primary
source for most of its customers) as well as good geographic
diversity somewhat mitigate exposure to cyclicality.
Operating performance is likely to be affected by deteriorating
conditions in key end markets. Notably, the global automotive
industry has slowed significantly and overall company revenues
appear likely to decline in 2009. Sensata's controls segment has
been affected by the residential housing downturn, although good
replacement demand has allowed sales to hold up fairly well.
Sensata has maintained its high operating margin (before
depreciation and amortization) of more than 20% and has a
significant proportion of variable costs, which should mitigate
the impact of a sales reduction on margin. The company's global
manufacturing footprint also helps to contain costs.
S&P could lower the ratings if a pronounced economic downturn
results in liquidity concerns, such as a reduction of headroom
under covenants to less than 10%, while business prospects remain
negative. S&P would also lower the ratings if the company displays
meaningfully negative cash flow generation. A revision of the
outlook to stable would require that operating performance
stabilize, cash flow generation continues to be positive, and the
company appears likely to avoid any covenant breach.
SIGNUM VERDE: Fitch Cuts CLP5.3 Billion Notes' Rating to 'BB'
-------------------------------------------------------------
Fitch Ratings has downgraded and placed on Outlook Negative Signum
Verde Limited's, Series 2007-03 notes:
-- CLP5,300,000,000 Chilean Peso (CLP) Fixed Rate Secured
Inflation-linked and Credit-linked to Cemex, S.A.B. de
C.V., Notes Due 2017, to 'BB' from 'BBB-'
The action reflects Fitch's view on the credit risk of the rated
notes following the downgrade of the underlying reference entity,
Cemex, S.A.B. de C.V., Mexico, to 'BB+' from 'BBB-' with a
Negative Rating Outlook on Oct. 31, 2008.
The transaction is designed to provide credit protection on a
reference entity, Cemex, S.A.B. de C.V., Mexico. The credit
protection is arranged through a credit default swap (CDS) between
the issuer and the swap counterparty, Goldman Sachs Capital
Markets, L.P. (guaranteed by Goldman Sachs Group, Inc.; Fitch
rated 'AA-/F1+', Outlook Stable).
The issuance proceeds were used to purchase USD10,144,000
qualified investments in the form of Goldman Sachs Group Inc.
floating rate notes due 2017 (ISIN: XS0316913119), which
collateralized the CDS.
The rating of the notes addresses the likelihood that investors
will receive full and timely payments of interest, as per the
transaction's governing documents, as well as the stated balance
of principal by the legal final maturity date. Payments of
interest and principal will be made in U.S. dollar (USD) amounts
adjusted according to both the prevailing value of the Unidad de
Fomento (UF) and the CLP/USD exchange rate.
The ratings are based upon the credit quality of both the
reference entity and Goldman Sachs Group, Inc., as issuer of the
collateral assets and as guarantor to Goldman Sachs Capital
Markets LP, the swap counterparty, as well as the transaction's
financial structure.
Upon a Mandatory Redemption Event, as defined in the governing
documents, investors may be exposed to the market value risk of
the collateral due to its liquidation prior to maturity, and also
foreign exchange risk upon conversion of the USD-based collateral
proceeds into CLP. In addition, a swap termination payment could
be due from the issuer to the swap counterparty upon early
termination.
SIMTROL INC: Posts $3.6MM Net Loss for Nine Months ended Sept. 30
-----------------------------------------------------------------
Simtrol Inc. reported net loss of $821,740 for three months ended
Sept. 30, 2008, compared to net loss of $1,554,701 for the same
period in the previous year.
For nine months ended Sept. 30, 2008, the company reported net
loss of $3,648,282 compared to net loss of $3,982,557 for the same
period in the previous year.
Liquidity and Capital Resources
As of Sept. 30, 2008, the company has cash and cash equivalents of
$2,034,834. The company requires substantial amounts of capital
to fund operations and the continued development and deployment of
its Device ManagerTM and CuriaxTM product lines.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $2,541,752, total liabilities of $522,996, and shareholders'
equity of $2,018,756.
As of Oct. 28, 2008, the company has 9,411,832 shares of $.001 par
value common stock outstanding.
A full-text copy of the company's financial report is available
for free at http://ResearchArchives.com/t/s?346e
About Simtrol Inc.
Headquartered in Norcross, Georgia, Simtrol Inc. (OTC BB: SMRL)
-- http://www.simtrol.com/- is a developer of software that
manages controllable devices such as display monitors, video
cameras, and medical equipment for diverse markets such as digital
signage, security and surveillance, and healthcare.
Simtrol Inc.'s consolidated balance sheet at March 31, 2008,
showed $1,380,095 in total assets and $1,546,657 in total
liabilities, resulting in a $166,562 total stockholders' deficit.
Going Concern Doubt
Marcum & Kliegman LLP, in New York, expressed substantial doubt
about Simtrol 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 auditng firm reported that the
company has not achieved a sufficient level of revenues to support
its business and has suffered recurring losses from operations.
SOLUTION TECHNOLOGY: Files For Chapter 11 Bankruptcy in Delaware
----------------------------------------------------------------
Solution Technology International Inc. fka NetWorth Technologies
Inc. filed a voluntary petition under Chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court for
the District of Delaware. The company did not disclose events
leading to bankruptcy.
The company asked the Court for authority to obtain up to $783,000
in postpetition financing from Resurgence Partners LLC. The
facility will mature by May 1, 2009, or in the event of default.
The facility will accrue interest at 8% per annum. The loan is
subject to a $150,000 carve-out for payment of statutory fees to
the U.S. Trustee, fees payable to the clerk of the Court, and
allowed fees and expenses of professional retained by the Debtor
and any committee. The lender will be granted a priority over
administrative expenses and secured by liens on the property of
the estate.
A hearing is scheduled today at 3:00 p.m., at 824 Market St., 5th
Fl., Courtroom #4, to consider approval of motion.
The proceeds of the loan will be used to (i) satisfy working
capital and operational needs; (ii) continue to fund payroll; and
(iii) maintain its relationships with customers and certain
vendors and suppliers.
Before it filed for bankruptcy, the company entered into a series
of debt and equity financing agreements with YA Global Investment
LP fka Cornell Capital LP secured by a blanket lien against all of
the company's assets. The agreement was assigned to Resurgence
including:
a) $1 million secured convertible debenture dated April 4,
2006, which carries an interest rate of 8%. The debenture
expired on April 4, 2008, but no default was issued;
b) $400 amended and restated convertible compensation
debenture due April 4, 2008; and
c) $642,041 second amended and restated convertible debenture
dated April 4, 2008.
Furthermore, the secured agreements includes convertible
debentures in the principal amount of $881,757 in the aggregate.
The company listed $353,205 in total assets and $7,328,475 in
total liabilities as of Dec. 31, 2007. The company owes
$1,623,460 to its unsecured creditor including AXA Liabilities
Managers owing $790,976 in loans; New Windsor State Bank owing
$272,869 in loans; and Longview Fund owing $264,294 in loans.
Cede & Co. of New York holds 51.59% interests against the company
while the company's chief executive officer Dan L. Jonson holds
8.88% interests. The company has 801,831 shares of preferred
stock and $179,358,604 shares of common stock.
Donald J. Detweiler, Esq., at Greenberg Traurig LLP, has been
engaged as the company's bankruptcy counsel. Robert Dermluk,
Esq., at Seyfarth Shaw LLP, is the company's local counsel.
The Chapter 11 case is assigned to the Hon. Mary F. Walrath.
The company expects to emerge from bankruptcy after its plan of
reorganization is confirmed.
Headquartered in Mchenry, Maryland, Solution Technology --
http://stius.com/-- International Inc. (OTC:STNL) developes
software called SurSite that provides accurate financial
information to the insurance industries.
SPORTS PUBLISHING: Lists $5.86MM in Debts & $3.65MM in Assets
-------------------------------------------------------------
Don Dodson at The News-Gazette reports that Sports Publishing,
LLC, has listed $5.86 million in liabilities and $3.65 million in
assets in its latest filing in the U.S. Bankruptcy Court for the
Central District of Illinois.
The News-Gazette relates that the Court, at the behest of Sports
Publishing, extended the deadline for the filing of a full list of
creditors with unsecured claims. The report says that Sports
Publishing already identified its 20 largest unsecured creditors,
including:
-- Olympic swimmer Michael Phelps, whom the company owed
$57,578;
-- Sports Illustrated staff writer Brian Cazeneuve, who has
a claim of $49,093;
-- Heathrow Capital LLC, who has a $450,000 claim;
-- InnerWorkings, which tangled with Sports Publishing in
litigation earlier this year before the two companies
withdrew their respective suits, is owed $124,699;
-- Stuart Broeren, whom the company owed
$200,000;
-- Tom Bryan, whom the company owed $100,000;
-- Rudolph Mortimer, who holds a $100,000 claim,
-- Tom Ealy, who holds a $66,000 claim;
-- Michael Ozment, who holds a $50,000 claim;
-- USA Today;
-- the New York Daily News;
-- the Chicago Sun-Times;
-- The Times-Picayune of New Orleans; and
-- the Lawrence (Kansas) Journal-World.
Court documents indicate that Strategic Capital Bank was listed as
the only creditor with a secured claim, totaling about
$1.99 million.
Creditors will meet on Nov. 18, 2008, at 11:00 a.m. in the Federal
Building, 201 North Vermilion Street, Danville, according to The
News-Gazette.
The News-Gazette relates that Sports Publishing listed about 160
equity holders. Sports Publishing said in its court filings that
its gross income totaled $7.38 million in 2006, $6.41 million in
2007, and $2.35 million so far in 2008.
Court documents indicate that Sports Publishing said it leases its
30,000-square-foot building at 804 North Neil Street, C, from
Peter Bannon, and that the lease has about three years left on it.
According to The News-Gazette, Sports Publishing used to have 50
workers in Champaign, but that number fell to 22 by December 2007
and continued to drop this year.
Sports Publishing's President said in a statement that the company
"will be working diligently to emerge strongly from this difficult
situation."
About Sports Publishing
Champaign, Illinois-based Sports Publishing, LLC --
http://www.sportspublishingllc.com-- was founded by Peter Bannon
in 1977. It has published more than 700 titles on college and
pro-sports including "Super Bucs" (about the Super Bowl champion
Tampa Bay Buccaneers), racing book "As They Head for the
Checkers", and college basketball book A Century of Orange and
Blue about University of Illinois basketball. The company also
releases a limited amount of non-sporting books ("Elvis: The King
Remembered, Katrina: The Ruin and Recovery of New Orleans").
Sports Publishing is known for its non-traditional approaches to
distribution (through channels such as sports stores and fund-
raising groups) and to book publishing (placing ads within books).
Sports Publishing filed for Chapter 11 protection on Oct. 15, 2008
(Bankr. C.D. Ill. Case No. 08-91780).
TENNECO INC: Moody's Affirms B1 Rating; Outlook Negative
--------------------------------------------------------
Moody's Investors Service has affirmed the ratings of Tenneco Inc.
Corporate Family Rating, B1; first-lien senior secured credit
facilities, Ba1; senior secured second lien debt, Ba3; senior
unsecured note, B2; and senior subordinated notes, B3. The rating
outlook was changed to Negative from Stable.
The outlook change to negative reflects the continuing degradation
of automotive industry conditions including expected North
American OEM production for 2008 of approximately 13 million units
with production pressures expected to continue in 2009. While
Tenneco's business enjoys significant geographic diversification,
the rating action also considers the expectation for weakening
automotive OEM production in Europe. Also incorporated in
Tenneco's outlook is the financial deterioration of its largest
customers in North America. Approximately 25% of Tenneco's
revenues are to the North American operations of the Big 3 OEMs
and a significant portion of revenue relates to light truck and
SUV platforms.
The affirmation of the B1 corporate family rating incorporates
Tenneco's competitive position in its emissions controls business,
which is expected to partially mitigate automotive supplier
industry pressures as business in this segment gradually grows its
sales to the commercial vehicle market. While the company's
leverage has notably improved over the last several years, global
economic conditions are likely to create additional operating
pressures which will adversely impact the company's credit
metrics. The company recently announced restructuring actions
which include plant closings and headcount reductions to help
mitigate global industry volume pressures. Successful
implementation of these initiatives could help to mitigate the
impact of the weakening business environment. Also benefiting the
ratings is the company's sound liquidity position and lack of
major debt maturities over the near-term.
As of September 30, 2008, Tenneco maintained cash and cash
equivalents of $127 million and availability under its revolving
credit facility of approximately $328 million. The company's
leverage ratio test under the bank credit facilities was 3.27x
compared to a required maximum of 4.0x; and the interest coverage
ratio test was 4.08x compared to a required level of 2.10x. The
company's leverage ratio test steps down to 3.75x in January 2009.
While the company currently maintains sufficient covenant cushion
under its credit facilities, the head room is expected to reduce
in 2009 due to operating performance erosion and tightening
required test levels. Nevertheless, the company is expected to
maintain adequate headroom under its financial covenants.
These ratings were affirmed:
* B1 Corporate Family rating;
* B1 Probability of Default rating;
* B2 (LGD4, 64%) rating for the 8.125% guaranteed senior
unsecured notes due 2015
* Ba3 (LGD3, 31%) rating for the 10.25% guaranteed senior
secured second-lien notes due 2013
* Ba1 (LGD2, 12%) rating for the $550.0 million first lien
senior secured revolving credit facility;
* Ba1 (LGD2, 12%) rating for the $150 million first lien
senior secured term loan A;
* Ba1 (LGD2, 12%) rating for the $130 million first lien
senior secured letter of credit / revolving loan facility;
* B3 (LGD6, 92%) rating for the 8.625% guaranteed senior
subordinated notes due November 2014
The last rating action was on July 3, 2008 when the company's
outlook changed to Stable.
Future events that have potential to drive Tenneco's ratings lower
include additional declines in North American OEM production;
failure to successfully implement the recently announced
restructuring initiatives, the inability to manage working capital
usage resulting in continuing negative free cash flow; or
deteriorating liquidity. Consideration for a lower outlook or
rating could arise if any combination of these factors were to
increase leverage over 5.0x or result in EBIT/Interest coverage
sustained below 1.7x times.
Future events that have potential to stabilize Tenneco's outlook
include: a stabilization of conditions in the North American and
European automotive markets, including increased OEM production
levels; a profitable product mix that would complement the
company's profits from emission control revenues; and higher
levels of free cash flow over the intermediate term resulting in
debt reduction. Consideration for a higher rating could arise if
any combination of these factors were to lead to EBIT/Interest
coverage approaching 2.0x or a reduction in leverage consistently
below 4.0x.
Tenneco, headquartered in Lake Forest, Illinois, is a leading
manufacturer of automotive ride control (approximately 30% of
sales) and emissions control (approximately 70% of sales) products
and systems for both the worldwide original equipment market and
aftermarket. Leading brands include Monroe(R), Rancho(R),
Clevite(R), and Fric Rot ride control products and Walker(R),
Fonos, and Gillet emission control products. Net sales in 2007
were approximately $6.2 billion.
TOT-BOT INC: Reopens Units; Gymboree Play Tries to Take Over
------------------------------------------------------------
Cnewspubs.com reports that Tot Bot Inc. reopened its centers on
Monday after shutting them down last week.
As reported in the Troubled Company Reporter on Oct. 30, 2008, the
U.S. Bankruptcy Court for the Middle District of Florida converted
TOT-BOT's Chapter 11 case to Chapter 7. 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.
As a result of the conversion of TOT-BOT's reorganization case to
liquidation, Gymboree Play & Music centers closed.
Cnewspubs.com relates that Gymboree Play & Music's Vice President
Jill Johnston said that the corporate office is trying to take
over Tot Bot's franchises.
TROPICANA ENTERTAINMENT LLC: Lenders to Object to Cash-Less Plan
----------------------------------------------------------------
According to Bloomberg News, secured lenders of Tropicana
Entertainment LLC say they would oppose any reorganization plan by
the casino operator that won't pay them in cash, in full, when the
plan becomes effective.
Bloomberg notes that early this month Tropicana file a statement,
not a formal reorganization plan, saying it intends to propose a
restructuring paying all secured creditors in full, giving cash
and the new stock to unsecured creditors for their claims, and
regaining control of the casino in Atlantic City.
As reported by the Troubled Company Reporter, Tropicana
Entertainment LLC and its affiliates are working on regaining
control of Tropicana Casino and Resort of Atlantic City.
Tropicana Entertainment Chief Executive Officer Scott C. Butera
told the Associated Press that "the company hopes to convince
state regulators it has purged the elements they found unsuitable
to run a casino, including Kentucky-based Columbia Sussex Corp.
owner William Yung III."
Retired Supreme Court Justice Gary Stein, the casino's state-
appointed conservator, has chosen The Cordish Company as lead
bidder for the Tropicana Atlantic City. Cordish has offered
$700,000,000 in cash and notes, or $575,000,000 in cash, for the
Tropicana Atlantic City. Tropicana Entertainment asserts that the
casino is worth at least $950,000,000.
Tropicana Entertainment has 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," Mr. Butera said.
"We want to immediately deploy our managerial and financial
resources to serve the gaming public and provide tax and
employment benefits to the community.
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
this 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; Bankruptcy Creditors' Service Inc.,
http://bankrupt.com/newsstand/or 215/945-7000)
TWEETER OPCO: Case Summary & 20 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: Tweeter Opco, LLC
aka Hi-Fi Buys; Sound Advice; Tweeter etc; Tweeter;
Showcase Home Entertainment
40 Pequot Way
Canton, MA 02021
Bankruptcy Case No.: 08-12646
Debtor-affiliates filing separate Chapter 11 petitions:
Entity Case No.
------ --------
Tweeter Newco, LLC 08-12647
Tweeter Intellectual Property, LLC 08-12648
Tweeter Tivoli, LLC 08-12649
Type of Business: The Debtors retails mid-to high-end audio and
video consumer electronics products.
According to the Troubled Company Reporter, the
company and seven of its affiliates filed for
chapter 11 Protection on June 11, 2007
(Bankr. D. Del. Lead Case Nos. 07-10787).
See: http://www.tweeter.com/
Chapter 11 Petition Date: November 5, 2008
Court: District of Delaware (Delaware)
Judge: Mary F. Walrath
Debtor's Counsel: Chun I. Jang, Esq.
jang@rlf.com
Cory D. Kandestin, Esq.
kandestin@rlf.com
Mark D. Collins, Esq.
collins@RLF.com
Richards, Layton & Finger, P.A.
920 North King Street
P.O. Box 551
Wilmington, DE 19899
Tel: (302) 651-7700
Fax: (302) 651-7701
Crisis Manager: CRG Partners Group LLC led by
Craig M. Boucher as chief
restructuring officer
Estimated Assets: $50 million to $100 million
Estimated Debts: $50 million to $100 million
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Sony Electronics Inc. trade $1,738,043
One Soney Drive
Park Ridge, NJ 07656
Tel: (201) 930-7131
Fax: (201) 930-7790
Samsung Electronic America trade $865,555
GPC
105 Challenger Road
Ridgefield Park, NJ 07660
Tel: (201) 229-4098
fax: (201) 229-5798
Pioneer Electronics trade debt $554,814
P.O. Box 93655
Chicago, Il 60673
Tel: (310) 952-2693
Fax: (310) 513-7696
Panamax trade debt $315,065
Alpine Electronics trade debt $308,387
Omnimount Systems trade debt $285,614
Panasonic trade debt $276,749
Service Net Solutions LLC trade debt $275,673
Mitsubishi Electronics trade debt $193,411
Martin Logan trade debt $166,025
RR Donnelley Receivable Inc. trade debt $165,098
Audio Plus Services trade debt $135,291
Les Industries JSP Inc. trade debt $131,448
Herman Electronics trade debt $94,978
AudioQuest trade debt $87,000
Becker Designed Inc. trade debt $77,864
Sonos Inc. trade debt $74,827
Martin Furniture trade debt $67,670
MCM Electronics trade debt $61,210
Liberty Wire & Cable Inc. trade debt $54,220
TWEETER OPCO: Will Stop Operating, to Start Closing Headquarters
----------------------------------------------------------------
Tweeter Opco LLC, which purchased the business of Tweeter's
operations during the latter's bankruptcy case, will stop
operating, The Associated Press reports. In July 2007, Tweeter
Home accepted Schultze Asset Management LLC's $38 million bid.
According to The AP, Tweeter Opco said in a letter to the
Massachusetts Executive Office of Labor and Workforce Development
that it is closing its Canton headquarters by Dec. 31, as part of
a "permanent entire company closing."
Tweeter Home Entertainment Group Inc. and seven of its
affiliates filed for chapter 11 Protection on June 11, 2007
(Bankr. D. Del. Case Nos. 07-10787 through 07-10796). Gregg M.
Galardi, Esq., Mark L. Desgrosseilliers, Esq., and Sarah E.
Pierce, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP,
represented the Debtors. Kurtzman Carson Consultants LLC acted as
the Debtors' claims and noticing agent.
According to The Boston Globe, liquidators Hudson Capital Partners
and Tiger Capital have purchased Tweeter Opco, and said that
Hudson Capital's President Jim Schaye confirmed the liquidation.
About Tweeter Home
Based in Canton, Mass., Tweeter Home Entertainment Group Inc.
-- http://www.tweeter.com/-- retails mid-to high-end audio and
video consumer electronics products.
About Tweeter Opco
Tweeter Opco, LLC, retails mid-to high-end audio and video
consumer electronics products. The company filed for Chapter 11
protection on Nov. 5, 2008 (Bankr. D. Delaware Case No. 08-12646).
Chun I. Jang, Esq., and Cory D. Kandestin, Esq., at Richards,
Layton & Finger, P.A., assists the company in its restructuring
effort. The company listed assets of $50 million to $100 million
and debts of $50 million to $100 million.
VALLEJO CITY: Court to Hear Unions CBA Rejections Dec. 2
--------------------------------------------------------
Judge McManus of the U.S. Bankruptcy Court for the Eastern
District of California has set a hearing for December 2, 2008, to
consider the City of Vallejo's request to reject its collective
bargaining agreements with the Vallejo Police Officers'
Association; the International Association of Firefighters, Local
1186; the International Brotherhood of Electrical Workers Local
2376, and the Confidential, Administrative, Managerial and
Professional Association of Vallejo.
Currently, parties-in-interest have until November 3, 2008, to
file objections to the motion.
However, the Debtors, in separate Court-approved stipulations with
the California Public Employees' Retirement System and the Unions,
with for the Confidential, Administrative, Managerial and
Professional Association of Vallejo, agree to extend the objection
deadline to November 7, 2008.
The parties also agree that the Debtor has until November 26,
2008, to file a response to any objections. The parties reserve
their rights to ask for further extensions.
The Mercury News said City and Union officials have committed to
ongoing out-of-court talks regarding the labor contracts before
the next hearing. If the negotiations are successful, court-
overseen contract changes could be avoided, the news agency said.
Detective Mat Mustard, vice president of the police union, as
quoted by the Mercury News, said an agreement is the best outcome.
About the City of Vallejo
Vallejo -- http://www.ci.vallejo.ca.us/GovSite-- is a city in
Solano County. As of the 2000 census, the city had a total
population of 116,760. It is located in the San Francisco Bay
Area on the northern shore of San Pablo Bay.
The City is a charter city organized and exercising governmental
functions under its charter and the laws and constitution of the
state. Its governing body is its City Council.
The City filed for protection under Chapter 9 of the U.S.
Bankruptcy Code on May 23, 2008 (Bankr. E.D. Calif. Case No.
08-26813). Marc A. Levinson, Esq., and Norman C. Hile, Esq., at
Orrick, Herrington & Sutcliffe LLP in Sacramento, California,
represent the City.
According to Vallejo's comprehensive annual report for the year
ended June 30, 2007, the city has $983 million in assets and $358
million in debts. (Vallejo Bankruptcy News; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
VALLEJO CITY: Seeks More Service Reductions to Cut Deficit
----------------------------------------------------------
Vallejo City Manager Joseph M. Tanner and City Finance Director
Robert V. Stout submitted a report with the U.S. Bankruptcy Court
for the Eastern District of California, Sacramento Division, on
October 28, 2008, that discusses on the balance of the City's
general fund and its fiscal condition, in general. The same
report was presented to the City Mayor and Council.
"Vallejo joins other municipalities, states, and Federal agencies,
which are reacting to rapidly deteriorating economic conditions,"
the report stated. Many sources, according to the report, think
California's current year deficit is between $3.0 and $5.0
billion. San Diego, Los Angeles, San Francisco, Oakland, and
Sacramento are all experiencing large revenue losses and are
working to make the reductions necessary to bring their budgets
back into balance.
For Vallejo, the report said its property values and retail sales
declines driven in large part by recent national credit crisis
find the City with a significant drop in General Fund resources
from which to pay for essential services. Despite years of budget
cut-backs, the elimination of more than 23% of the General Fund
workforce since FY 2003-2004, and the protection of the bankruptcy
court, Messrs. Tanner and Stout propose even further service
reductions to rebalance operations with available revenues.
The outlook for FY 2009-2010 remains challenging and uncertain,
Messrs. Tanner and Stout said. The 2008-2009 budget adjustments
include sizable one-time items that do not resolve the City's
ongoing structural fiscal debt. Existing tax revenues are not
expected to recover in the next year, and many expect them to
decline even further, the report said. Staff continues to seek
agreement on labor cost reductions with the City's employee
organizations, either through out-of-court negotiated
modifications to labor agreements or through a court-approved plan
of adjustment.
FY 2007-2008 General Fund Results
Mr. Tanner related that the City realized $83,629,000 in revenues
for the fiscal year 2007-2008, which exceeded the June 6th
projection by about $400,000. Sales taxes, however, fell by
$360,000 from projections, $300,000 of which is attributed to a
one-time correction in the allocation from the county-wide tax
pool. Favorable results were noted in other items, indicating
excess over budget:
-- utilities user taxes by $414,000,
-- transfers from other funds by $188,000, and
-- newly implemented Six Floats/Discovery Kingdom Park
Operations Fee by $264,000.
The report disclosed that total expenditures of $87,344,000 for
the previous fiscal year, along with reserve transactions, are
well in excess of target by $400,000. Moreover, labor costs
overruns were offset by savings in services and supplies.
Total fund balance of $3.5 million, after exclusion of $2.7
million in restricted reserves, leaves $797,000 in available
undesignated surplus, or 1% of annual expenditures. On a cash
basis, the ending cash deficit of $451,000 was financed through a
short-term inter-fund loan from the Risk Management Fund.
FY 2008-2009 Revenue and Expense Update
Vallejo's General Fund revenues have slowed along with the local
housing market over the past two years as revenue related to new
housing development and housing sales have declined in the
transfer tax, excise tax, and permit fee areas.
Projected property taxes of $18,000,000, which represents about a
quarter of the General Fund revenues, are down by $1,100,000 from
the fiscal year's budget. According to the Fund Report, the
County Assessor has initiated across-the board valuation
reductions in specified neighborhoods in the county. The
projected net decline in secured property tax in the General Fund
is 5%, while a composite rate including unsecured taxes, among
others, shows a 7% decrease.
Sales taxes are down by $1,100,000. The fourth quarter of FY
2007-2008 indicated a 19% decrease -- an "alarming" drop from the
same quarter of the prior year's sales taxes, Mr. Tanner said.
Excluding a one-time $300,000 County pool correction, the base
still realized a 10% reduction from the prior year.
The current fiscal year's projected vehicle fees of $10,000,000 is
$481,000 lower from the original FY 2008-2009 budget. The
$10,000,000 projected vehicle fees constitute about 14% of the
total General Fund revenues.
Excise tax, franchise fee, and utility user tax projections have
been updated based on the prior year base. The combined
reductions from the original FY 2008-2009 budget are $343,000.
Business License revenue projection has increased by $200,000 from
the original FY 2008-2009 budget. These revenues are the direct
result of the recent audit efforts by an external auditing firm.
While not popular, they have resulted in new or increased revenues
and compliance with the City's tax ordinance by 259 taxpayers and
$124,000 in additional revenue. The average increase by audited
taxpayer was $478.
Department Revenues, in total, have decreased by $474,000 from the
original FY 2008-2009 budget. Reductions are primarily in
Development Services fees due to reduced new housing permit
activity and in Police grants, fees, and reimbursements due to the
Department's reduced workforce.
The City's original budget had included a $1,000,000 placeholder
for the City's potential risk from impacts from the State Budget
deficit. The state has the power to impact several local agency
revenue sources, and this line item had been intended to mitigate
that risk until the state budget was balanced. The State budget
was balanced with a tax shift from Redevelopment agencies and
through minor adjustment to other city programs like booking fees.
Accordingly, the report said this placeholder has been eliminated
in the current projection. However, the report added, with the
state budget again out of balance, risk of further tax shift in
the General Fund remains. This risk, Mr. Tanner said, will be
absorbed, along with other risks, in the ending balance reserve.
Mr. Tanner said the staff is now projecting total General Fund
revenues of $77.4 million, excluding the State Budget Risk
placeholder, which is $3.2 million less than the original FY 2008-
2009 budget. Removal of the State Budget Risk placeholder has
mitigated this loss to $2.2 million. FY 2008-2009 revenues still
include a one-time $1 million transfer from the Risk Management
Fund that is not sustainable in FY 2009-2010. Total revenues are
now projected at 7% below the prior year. These revenues cannot
sustain even the reduced pendency plan service levels and
operating costs adopted in the 2008-2009 Budget,
Mr. Tannin said.
FY 2008-2009 Program Operating Cost Update
With respect to expenditures, the General Fund, as of October 28,
2008, has realized savings of $485,000 of the $18,000,000 labor
budget. About $200,000 of these savings, Mr. Tanner relates, is
due to attrition, from 124 to 118, in sworn officers in the Police
Department. Fire Department labor cost is $100,000 over budget
due to larger-than-expected holiday leave disbursements in the
first of the quarterly leave bank payouts. Non-safety programs
have realized savings of $385,000. The council proposes to
increase the original $500,000 projected savings from vacancy as
part of the budget reduction plan.
The council proposes a $250,000 funding for a fire training
academy. A $165,000 budget adjustment is proposed to reduce
expected grant interfund reimbursements from a State Department of
Corrections grant.
The City Manager's budget has been reduced by $15,000 for a 10%
furlough of the City Manager and corresponding salary cost
reduction effective January 1, 2009. The Commercial Services
Division budget is proposed to increase by $100,000 to pay 50% of
audit fee on the projected $200,000 increase in business license
revenue. The audit fee, however, is contingent on the realization
of the revenue from business license.
As of October 28, 2008, bankruptcy-related legal costs have
exceeded the $2,000,000 budget. The council proposes an
additional $500,000 into the budget, which it plans to revisit in
February 2009.
A full-text copy of the General Fund Report, schedules, and the
council's resolution for Budget Amendments is available for free
at http://ResearchArchives.com/t/s?348a
About the City of Vallejo
Vallejo -- http://www.ci.vallejo.ca.us/GovSite-- is a city in
Solano County. As of the 2000 census, the city had a total
population of 116,760. It is located in the San Francisco Bay
Area on the northern shore of San Pablo Bay.
The City is a charter city organized and exercising governmental
functions under its charter and the laws and constitution of the
state. Its governing body is its City Council.
The City filed for protection under Chapter 9 of the U.S.
Bankruptcy Code on May 23, 2008 (Bankr. E.D. Calif. Case No.
08-26813). Marc A. Levinson, Esq., and Norman C. Hile, Esq., at
Orrick, Herrington & Sutcliffe LLP in Sacramento, California,
represent the City.
According to Vallejo's comprehensive annual report for the year
ended June 30, 2007, the city has $983 million in assets and $358
million in debts. (Vallejo Bankruptcy News; Bankruptcy Creditors'
Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000).
VALUE CITY: U.S. Trustee Forms Nine-Member Creditors' Committee
---------------------------------------------------------------
Diana G. Adams, the U.S. Trustee for Region 2, appointed nine
creditors to serve on an Official Committee of Unsecured Creditors
for the Chapter 11 cases of Value City Holdings Inc. and its
debtor-affiliates.
The Creditors' Committee members are:
1. National Janitorial Solutions, Inc.
Attention: James H.B. Hoff
14000 Commerce Parkway, Suite C
Mt. Laurel, NJ 08054
Tel: (856) 762-0510 ext. 111
2. Rosenthal & Rosenthal
Attention: Allan Spielman
1370 Broadway
New York, New York 10018
Tel: (212) 356-1438
3. Thor Macomb Mall LLC
c/o Thor Equities
Attention: Michael Schurer
25 West 39 Street th
New York, New York 10018
Tel: (212) 529-5055
4. Kimco Realty Corp.
Attention: Ray Edwards
3333 New Hyde Park Road
New Hyde Park, New York 11047
Tel: (516) 869-2586
5. American Greetings
Attention: Art Tuttle
One American Road
Cleveland, Ohio 44144
Tel: (216) 252-7300
6. Nej, Inc.
Attention: Ed Mascolo
170 Pinesbridge Road
Beacon Falls, Connecticut 06403
Tel: (203) 463-3301
7. Graphic Communications Holdings, Inc.
Attention: Gerald Nonaka
16-B Journey
Aliso Viejo, California 92656-3317
Tel: (949) 215-9388
8. San Malone Enterprises, Inc.
Attention: Lewis Jia
19865 East Harrison Avenue
City of Industry, California 91789
Tel: (909) 594-1112
9. Federal Jeans, Inc.
Attention: Eyal Ben-Yosef
1385 Broadway, 5 Floor th
New York, New York 10018
Tel: (212) 302-5140
Official creditors' committees have the right to employ legal
and accounting professionals and financial advisors, at the
Debtors' expense. They may investigate the Debtors' business and
financial affairs. Importantly, official committees serve as
fiduciaries to the general population of creditors they represent.
Those committees will also attempt to negotiate the terms of a
consensual Chapter 11 plan -- almost always subject to the terms
of strict confidentiality agreements with the Debtors and other
core parties-in-interest. If negotiations break down, the
Committee may ask the Bankruptcy Court to replace management with
an independent trustee. If the Committee concludes reorganization
of the Debtor is impossible, the Committee will urge the
Bankruptcy Court to convert the Chapter 11 cases to a liquidation
proceeding.
About Value City
Headquartered in Columbus, Ohio, Value City Holdings Inc. --
http://www.valuecity.com/-- operates a chain of department stores
in the United States. The company and eight of its affiliates
filed for Chapter 11 protection on Oct. 26, 2008 (Bankr. S.D. N.Y.
Lead Case No. 08-14197). John Longmire, Esq., and Lauren C.
Cohen, Esq., at Willkie Farr & Gallagher LLP, represents the
Debtors' in their restructuring efforts. The company selected
Epiq Bankruptcy Solutions LLC as its claims, noticing and
balloting agent. When the Debtors filed for protection from their
creditors, they listed assets and debts between $100 million and
$500 million each.
VERASUN ENERGY: Seeks $220MM Loan from Noteholders & Agstar
-----------------------------------------------------------
VeraSun Energy Corporation and its subsidiaries ask the U.S.
Bankruptcy Court for the District of Delaware to grant them access
to $220 million of debtor-in-possession financing from certain
holders of notes issued by the Debtors before bankruptcy filing
and Agstar Financial Services.
In the recent weeks, the Debtors, according to their proposed
counsel, Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher &
Flom LLP, in Wilmington, Delaware, have worked tirelessly to
obtain a commitment for debtor-in-possession financing for
additional liquidity needed to maintain ordinary course operations
while value-maximizing strategic alternatives for all of their
stakeholders.
Mr. Chehi relates that since the Debtors' announcement of a
suspended new equity offering on September 16, 2008, the Debtors
have worked relentlessly to raise capital and remedy their
severely handicapped liquidity profile. The Debtors have made
great progress towards securing a long-term financing from a
third-party lender when the Debtors' liquidity situation was
exacerbated on October 28, 2008, by Debtwire.com, publishing an
article detailing the Debtors' liquidity crisis. The Debtors'
remaining liquidity, he says, evaporated before they were able to
reach agreement on the financing.
Unable to fund payroll the week of November 3, 2008, the Debtors
worked diligently to secure postpetition financing. To that end,
as of their bankruptcy filing, the Debtors were actively pursuing
multiple sources of DIP Financing through negotiations with each
of their prepetition lenders, as well as other third party
lenders. Ultimately, the Debtors' efforts were fruitful, as they
have obtained commitments for DIP Financing or consensual use of
cash collateral securing their prepetition indebtedness.
By this motion, the Debtors ask Judge Brendan Linehan Shannon to
approve separate DIP Facilities from:
(1) noteholders -- holders of 9.875% senior secured notes
in the aggregate principal amount of $210 million, due to
mature in 2012 issued by VeraSun in Dec. 2005 -- who will
provide up to $25,000,000 of DIP Financing on an interim
basis and up to $190,000,000 on a final basis, to fund
working capital needs of the Debtors; and
(2) AgStar Financial Services, PCA, who will provide up to
$17,000,000 of DIP Financing on an interim basis and up to
$30,000,000 on a final basis to fund the working capital
needs of the seven U.S. Bioenergy Debtors presently
financed by the AgStar Facilities.
The AgStar Financing will consist of seven separate loan and
security agreements and DIP Financing orders -- one for each
Debtor, on a non-cross collateralized basis.
Terms of the Secured Noteholder Facility
The Secured Noteholders have prepetition liens on the assets of
the VeraSun Debtors -- VeraSun Aurora Corporation; VeraSun
BioDiesel, LLC; VeraSun Charles City, LLC; VeraSun Fort Dodge,
LLC; VeraSun Granite City, LLC; VeraSun Hartley, LLC; VeraSun
Litchfield, LLC; VeraSun Marketing, LLC; VeraSun Reynolds, LLC;
VeraSun Tilton LLC; and VeraSun Welcome, LLC.
The Secured Noteholders Financing will have priority, pursuant to
Section 364(c)(1) of the Bankruptcy Code, over all administrative
expenses of the VeraSun Debtors, subject to carve-outs for
professional fees and expenses. The Financing will be secured,
pursuant to Section 364(d), by perfected first priority senior
priming security interests in and liens on the Collateral that
secures the Senior Secured Notes. The Financing will be used, in
part, to pay or "roll-up" the Senior Secured Notes held by the
participating Secured Noteholders DIP Lenders.
The Facility accrues interest at 16.5% per annum, payable monthly
in arrears. At all times while a default exist, principal,
interest and other amounts will bear interest at a rate per annum
equal to 2.00% in excess of the interest rate.
The Secured Noteholders DIP Lenders will be granted adequate
protection through (i) regular cash payments equal in amount to
their contractual interest at the non-default rate, like payments
to begin after entry of the Secured Noteholders Final Order, and
(ii) silent junior liens on the VeraSun Working Capital
Collateral.
Terms of the AgStar Facility
AgStar is agent under seven separate credit facilities for seven
of the US BioEnergy Debtors. Each facility is secured by liens on
substantially all of the assets of each Debtor-borrower.
The AgStar Facility will have priority over all administrative
expenses of each of the seven US BioEnergy Debtors, subject to the
Carve-Out. The Facility will be secured by perfected first
priority senior priming security interests in and liens on all
assets of the individual Debtor-borrower.
The Interim Facility will mature on the earlier of the entry of
the Final Order or December 10, 2008. The Postpetition Loan will
mature on November 3, 2009. The outstanding principal amount of
the Postpetition Loan will bear interest at the LIBOR Rate plus
700 basis points.
AgStar will be granted adequate protection under each primed
AgStar Facility by (i) regular cash payments in the amount of
their contractual interest at the non-default rate, those payments
to begin after entry of the AgStar Final Order, and by (ii) junior
replacement liens and superpriority claims.
Draft copies of the Secured Noteholders and the AgStar Facilities
are available for free at http://ResearchArchives.com/t/s?3480
In a notice filed with the Court on the Petition Date, the Debtors
said they were still engaged in discussions regarding the most
favorable financing terms they are able to procure. The Debtors
related that one of the key elements and terms of the contemplated
DIP Financings that may be insisted on by the lenders are:
(a) Total interim borrowings under the DIP Financings of up
to $180 million;
(b) Non-consensual use of the Prepetition Secured Lenders'
cash collateral; and
(c) Provisions binding the Debtors, the estate or all
parties-in-interest with respect to the validity,
perfection or amount of the Prepetition Secured Lenders'
liens, or waiver of claims against one or more of the
Prepetition Secured Lenders without affording
parties-in-interest notice in accordance with the
Local Bankruptcy Rules of Delaware;
(d) Provisions granting priming liens without the consent of
one or more of the Prepetition Secured Lenders;
(e) Provisions seeking a waiver of the estate's rights under
Section 506(c) of the Bankruptcy Code;
(f) Provisions granting liens on the Debtors' avoidance
actions, including any claims or causes of action arising
under Sections 544, 545, 547, 548, and 549;
(g) Provisions granting one or more of the Prepetition Secured
Lenders a rollup of part or all of their prepetition
indebtedness;
(h) Provisions for professional fee carve-outs, which provide
disparate treatment for the professionals retained by a
creditors' committee from that provided for the Debtors'
professionals;
(i) Provisions granting adequate protection replacement liens
to one or more of the Prepetition Secured Lenders;
(j) Provisions granting one or more of the Prepetition Secured
Lenders cross-collateralization protection, securing
prepetition debt by postpetition assets on which the
Prepetition Secured Lenders do not otherwise have a lien;
and
(k) Provisions granting one or more of the Prepetition Secured
Lenders an adequate protection package which may include,
among other things, replacement liens and regular cash
interest payments.
The Associated Press reported on Oct. 29, two days before
VeraSun's bankruptcy filing, that the Debtors were lining up
$250,000,000 of financing from Ableco, an arm of New York-based
hedge fund Cerberus Capital Management LP, which loan will fund
its working capital and liquidity needs during the bankruptcy
cases.
About VeraSun Energy Corporation
VeraSun Energy Corp. (VSE), headquartered in Sioux Falls, S.D., is
a leading producer and marketer of ethanol and distillers grains.
Founded in 2001, the company has a fleet of 16 production
facilities in eight states, of which one is still under
construction. VeraSun Energy is scheduled to have an annual
production capacity of approximately 1.64 billion gallons of
ethanol and more than 5 million tons of distillers grains by the
end of 2008.
VeraSun Energy Corporation and 24 subsidiaries filed separate
petitions for Chapter 11 protection on Oct. 31, 2008 (Bankr. D.
Del. Lead Case No. 08-12606). Mark S. Chehi, Esq., Megan E.
Cleghorn, Esq., and Davis Lee Wright, Esq. at Skadden, Arps,
Slate, Meagher & Flom LLP are representing the Debtors in their
jointly administered cases. The Debtors also tapped AlixPartners
LLP as their restructuring advisor, Rotschild Inc. as their
investment banker, and Sitrick & Company as their communications
agent. Kurtzman Carson Consultants LLC is the Debtors' claims and
balloting agent. In its bankruptcy petition, VeraSun listed
$3,452,985,000 in assets and $1,913,214,000 in liabilities as of
June 30, 2008.
VERASUN ENERGY: Wants Access to Cash Collateral on $490MM Loans
-----------------------------------------------------------------
VeraSun Energy Corporation and its subsidiaries ask the U.S.
Bankruptcy Court for the District of Delaware to grant them
authority to use the cash collateral securing their prepetition
indebtedness under:
* a $125,000,000 prepetition revolving credit facility with
UBS Securities LLC and certain of its affiliates;
* a $90,000,000 prepetition term loan facility extended by
Dougherty Funding LLC, to Debtor US Bio Marion, LLC, for
Marion Debtor's use; and
* a $275,000,000 prepetition senior credit facility extended
by several lenders agented by West LB AG, to fund the
working needs of the ASA Debtors.
The Debtors will provide adequate protection to Dougherty by (i)
making postpetition payments in the amounts of contractual
interest at the non-default rate, and (ii) for the amount of and
to secure any diminution in value, grant superpriority claims and
replacement liens on all Marion Debtor assets, including a priming
lien on the assets securing the First National revolver as
consented to by First National.
The Debtors will provide adequate protection to West LB by (i)
making postpetition cash payments to West LB in the amount of
contractual interest at the non-default rate, and (ii) for the
amount of and to secure any diminution in value, grant
superpriority claims and replacement liens on all ASA Debtor
assets.
UBS has a lien on substantially all of the VeraSun Debtors'
working capital assets. The Debtors intend to fund the
postpetition operations of the VeraSun Debtors, in part, through
the use of the UBS Cash Collateral, along with the Secured
Noteholder DIP Facility.
The Debtors will provide adequate protection to UBS by:
-- making postpetition payments equal to interest at the
contractual non-default rate;
-- granting replacement liens on all of the UBS Collateral and
postpetition inventory and receivables of the VeraSun
Debtors, subject to the Carve-Out, to secure any diminution
in value to the UBS Collateral;
-- securing any diminution in the value of the UBS Collateral
with perfected junior security interests in and liens on
the assets of the VeraSun Debtors that are subject to
valid, perfected, and non-avoidable liens (i) in existence
as of the Petition Date or liens in existence on the
Petition Date that are perfected subsequent to the Petition
Date as permitted by Section 546(b) of the Bankruptcy Code,
and (ii) granted to secure the VeraSun DIP Loan, subject to
the Carve-Out.
The Debtors will also grant to UBS a superpriority claim in the
VeraSun Debtors' Chapter 11 cases with priority over all
administrative expenses in the VeraSun Debtors' cases.
About VeraSun Energy Corporation
VeraSun Energy Corp. (VSE), headquartered in Sioux Falls, S.D., is
a leading producer and marketer of ethanol and distillers grains.
Founded in 2001, the company has a fleet of 16 production
facilities in eight states, of which one is still under
construction. VeraSun Energy is scheduled to have an annual
production capacity of approximately 1.64 billion gallons of
ethanol and more than 5 million tons of distillers grains by the
end of 2008.
VeraSun Energy Corporation and 24 subsidiaries filed separate
petitions for Chapter 11 protection on Oct. 31, 2008 (Bankr. D.
Del. Lead Case No. 08-12606). Mark S. Chehi, Esq., Megan E.
Cleghorn, Esq., and Davis Lee Wright, Esq. at Skadden, Arps,
Slate, Meagher & Flom LLP are representing the Debtors in their
jointly administered cases. The Debtors also tapped AlixPartners
LLP as their restructuring advisor, Rotschild Inc. as their
investment banker, and Sitrick & Company as their communications
agent. Kurtzman Carson Consultants LLC is the Debtors' claims and
balloting agent. In its bankruptcy petition, VeraSun listed
$3,452,985,000 in assets and $1,913,214,000 in liabilities as of
June 30, 2008.
VONAGE HOLDINGS: Completes Refinancing of Senior Convertible Notes
------------------------------------------------------------------
Vonage Holdings Corp. has completed the refinancing of its
outstanding 5.0% Senior Unsecured Convertible Notes due 2010.
The company repurchased the old notes pursuant to a tender offer,
which expired on Nov. 3, 2008, New York City time. In order
to repurchase the old notes, the company used net proceeds from a
new financing consisting of a $130.3 million senior secured first
lien credit facility, a $72.0 million senior secured second lien
credit facility and $18.0 million of new senior secured third lien
notes plus cash on hand.
"We are pleased to complete this final step in the refinancing of
our convertible debt," John Rego, Vonage Chief Financial Officer
said. "The financial stability provided from this funding,
coupled with the Company's ability to generate cash from
operations will enable Vonage to invest in future growth."
In accordance with the terms of the tender offer, the company
accepted $253,460,061 aggregate principal amount of old notes,
which represents all of the validly tendered old notes, at a
purchase price of $1,000 for each $1,000 principal amount of old
notes, plus accrued and unpaid interest up to, but not including,
the date of purchase.
In connection with the refinancing, on Nov. 3, 2008, at a
scheduled stockholders meeting, the company obtained stockholder
approval of the potential issuance of shares of common stock upon
conversion of the new senior secured third lien notes among other
things.
The lenders under the first and second lien senior facilities and
the purchasers of the convertible notes are Silver Point Finance,
LLC, certain of its affiliates, other third party lenders and
affiliates of Vonage.
Miller Buckfire & Co., LLC and Shearman & Sterling LLP acted as
financial and legal advisors, respectively, to the Company and
Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal
advisor to Silver Point in connection with the refinancing
transaction. The firm is acting as Dealer Manager and D.F. King &
Co., Inc. is acting as the Information Agent in connection with
the tender offer.
American Stock Transfer & Trust Company, LLC is the Depositary for
the tender offer. The Depositary will promptly commence payment
for the old notes purchased in the tender offer.
About Vonage Holdings
Headquartered in Holmdel, New Jersey, Vonage Holdings Corp.
(NYSE:VG) -- http://www.vonage.com/-- provides broadband
telephone services with nearly 2.6 million subscriber lines. The
company's Residential Premium Unlimited and Small Business
Unlimited calling plans offer consumers unlimited local and long
distance calling, and features like call waiting, call forwarding
and voicemail for a flat monthly rate. Vonage's service is sold
on the web and through national retailers including Best Buy,
Circuit City, Wal-Mart Stores Inc. and Target and is available to
customers in the U.S., Canada and the United Kingdom.
Going Concern Doubt
BDO Seidman, LLP, in Woodbridge, New Jersey, raised substantial
doubt as to Vonage Holdings Corp.'s ability to continue as a going
concern after auditing the company's consolidated financial
statements for the years Dec. 31, 2007, and 2006.
Vonage Holdings's balance sheet at June 30, 2008, showed
$466.1 million in total assets and $551.9 million in total
liabilities, resulting in an $85.8 million stockholders' deficit.
WACHOVIA BANK: S&P Cuts Ratings on 3 2006-WHALE 7 Certs. to BB
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on the
class L commercial mortgage pass-through certificates and the
class WA and CM raked certificates from Wachovia Bank Commercial
Mortgage Trust's series 2006-WHALE 7. At the same time, S&P
affirmed its ratings on 20 other classes from this series.
The downgrades reflect Standard & Poor's analysis of the Westin
Aruba, Broadreach Pool, Colonial Mall Myrtle Beach, and Leestown
Square loans, which together represent 8% of the pooled balance.
Current operating performance for these loans does not meet
Standard & Poor's initial expectations. The other eight loans,
which represent 92% of the pooled certificates, are secured by
collateral that is performing at or close to S&P's initial
expectations.
The affirmed ratings reflect Standard & Poor's analysis of the
remaining loans in the pool, as well as increased credit
enhancement levels resulting from loan payoffs.
Details on the four underperforming loans are:
-- Westin Aruba, the fifth-largest loan in the pool, has a
whole-loan balance of $230.0 million that comprises a $96.7
million senior interest (3.6% of the pooled trust balance), a $3.3
million subordinate nonpooled component that provides the sole
source of cash flow for the WA class raked certificates, and a
$130.0 million nontrust junior participation interest. The loan is
secured by the leasehold interest in a 478-room full-service
resort in Palm Beach, Aruba. The subject property was built in
1975 and renovated in 2006. It offers ocean views and is ranked as
a Four Diamond Resort by AAA. Additionally, the property has a
12,000-sq.-ft. casino and approximately 19,000 sq. ft. of meeting
space. The loan failed to meet its maturity extension requirements
because it did not satisfy the prescribed loan-to-value and debt
service coverage test. The loan has been extended one year to
April 9, 2009, reflecting a modification of some of its terms. It
has two one-year extension options remaining. Year-end 2007
occupancy was 68%. Based on S&P's review of the borrower's 2007
operating statements and its review of the appraisal dated April
2008, Standard & Poor's current valuation is 17% below its level
at issuance. The property is currently performing below S&P's
expectations due to a substantial increase in operating expenses
and a low occupancy rate, which S&P attributes to a weakened
economy and delayed renovation work. There is also ongoing
litigation between the casino tenant and the borrower.
-- Broadreach Pool, the sixth-largest loan in the pool, has a
whole-loan balance of $148.1 million that comprises a $71.5
million senior participation (2.7% of the pooled trust balance), a
$4.2 million subordinate nonpooled component that provides the
sole source of cash flow for the class BP-1 and BP-2 class raked
certificates (not rated), and an $72.3 million nontrust junior
participation interest. The loan is secured by eight Southern
California suburban office properties, one of which is a flex
property, with an aggregate of 914,453 sq. ft. The loan was
originally secured by nine properties; one was released at 115% of
its allocated loan balance. The loan appears on the servicer's
watchlist due to its upcoming maturity. The loan was extended one
year to Aug. 9, 2009, and has two one-year extension options
remaining. Per the servicer the loan will be removed from the
watchlist as of the remittance report dated November 2008.
Occupancy as of June 2008 was 77.9%. Based on Standard & Poor's
review of the borrower's 2007 operating statements and third-party
reports, S&P's current valuation is 9% below its level at
issuance. The properties are currently performing below S&P's
expectations due to low occupancies, which S&P attributes to an
increase in tenant bankruptcies and a weakened economy.
-- Colonial Mall Myrtle Beach, the 11th-largest loan in the
pool, has a whole-loan balance of $50.2 million that comprises a
$35.0 million senior interest (1.3% of the pooled trust balance),
a $1.2 million subordinate nonpooled component that provides the
sole source of cash flow for the class CM raked certificate, and a
$14.0 million nontrust junior participation interest. The loan is
secured by a 523,415-sq.-ft. regional mall in Myrtle Beach, S.C.
The property was constructed in 1968 and most recently renovated
in 2003. Anchors include JC Penney, Belk, and Bass Pro Outdoor
World. Standard & Poor's valuation of net cash flow (NCF) has
declined 18% since issuance due to lower-than-expected rental
income and increased expenses. The subject property was 86.7%
occupied as of June 2008. The loan matures in December 2008 and
has two one-year extension options remaining. The borrower has
recently started conversations with the servicer regarding
extending the loan.
-- Leestown Square, the 12th-largest loan in the pool, has a
whole-loan balance of $31.0 million that comprises a $19.5 million
senior interest (0.7% of the pooled trust balance) and an $11.5
million nontrust junior participation interest. The loan is
secured by three class B government-occupied office buildings
containing 441,649 sq. ft. in Frankfort, Ky., the state capital.
The subject properties were built in 1950 and renovated in 1995.
Standard & Poor's valuation of NCF has declined 34% since issuance
due to large tenant vacancies. The subject was 72% occupied as of
June 2008, which was down from 100% at the cutoff date. The loan
matures in December 2008 with no remaining extension options. The
servicer has been in discussions with the borrower regarding the
pending final maturity.
As of the Oct. 20, 2008, remittance report, pool statistics were:
-- There were 12 loans remaining in the pool.
-- There were mortgages on 14 full-service hotels and 105
limited-service hotels, 12 class B+ office/flex properties, and
one retail property.
-- The payoff of seven loans, as well as the release of five
properties, has reduced the principal trust balance by 8% to
$2.6 billion.
In addition to the loans, Wachovia reported three additional loans
on its watchlist; details of these loans are:
-- The largest loan on the servicer's watchlist and the third-
largest loan in the pool, 1515 Broadway, is on the master
servicer's watchlist due to its upcoming maturity on Nov. 9, 2008.
The servicer has indicated they are in the final stages of
approving the extension, which would extend the loan to Nov. 9,
2009. There will be one one-year extension remaining after the
extension is granted. The loan has a whole-loan balance of
$425.0 million that comprises two pari passu pieces: a $212.5
million senior interest (8% of the pooled trust balance) and a
$212.5 million senior loan that was included in the LBFR 2006-LLF
C5 transaction. The loan is secured by a 53-story class A office
building in New York with an aggregate net rentable area of
approximately 1,715,207 sq. ft.
-- Jameson Inns Pool, the fourth-largest loan in the pool, is
on the master servicer's watchlist due to its upcoming maturity.
The loan has since been extended one year to Aug. 9, 2009, and has
two one-year extension options remaining. Per the servicer, the
loan will be removed from the watchlist as of the remittance
report dated November 2008. The loan has a $172.9 million trust
and whole-loan balance that makes up 6% of the pooled trust
balance. In addition, there is a $160.0 million mezzanine loan
secured by a pledge of the equity interest of the borrower. The
loan is secured by the fee interest in 100 properties, fee and
leasehold interest in one property, and the leasehold interest in
four properties of a pool containing 105 limited-service hotels
and 6,868 rooms. The loan was originally secured by 107
properties; two properties were released in 2007 at 105% of their
respective allocated loan balances.
-- Hyatt Regency Islandia, the 10th-largest loan in the pool,
is on the master servicer's watchlist due to its upcoming maturity
in January 2009. The loan has a $65.5 million whole-loan balance
composed of a $36.6 million senior interest (1.4% of the pooled
trust balance) and a $28.9 million nontrust junior participation
interest. The loan is secured by a 421-room full-service hotel and
186-slip marina in San Diego, Calif. The property recently
underwent a $58.6 million ($136,000 per room) property improvement
plan. Renovations were complete as of March 2008. The loan matures
in January 2009 and has two one-year extension options remaining.
RATINGS LOWERED
Wachovia Bank Commercial Mortgage Trust
Commercial mortgage pass-through certificates series 2006-WHALE 7
Class To From Credit enhancement (%)
----- -- ---- ----------------------
L BB+ BBB- N/A
WA BB+ BBB N/A
CM BB- BB+ N/A
RATINGS AFFIRMED
Wachovia Bank Commercial Mortgage Trust
Commercial mortgage pass-through certificates series 2006-WHALE 7
Class Rating Credit enhancement (%)
----- ------ ----------------------
A-1 AAA 50.45
A-2 AAA 26.37
B AA+ 22.23
C AA 18.25
D AA 15.02
E AA- 11.87
F A+ 8.91
G A 5.90
H A- 3.17
J BBB+ 2.25
K BBB 1.19
X-1A AAA N/A
X-1B AAA N/A
KH-1 BBB- N/A
KH-2 BB+ N/A
BH-1 BBB+ N/A
BH-2 BBB N/A
BH-3 BBB- N/A
BH-4 BB+ N/A
WB BB+ N/A
N/A -- Not applicable
WASHINGTON MUTUAL: Nasdaq Delists Securities Today, November 6
---------------------------------------------------------------
Washington Mutual, Inc., received a Nasdaq Staff Determination
letter notifying the company that, in accordance with Marketplace
Rules 4300, 4340(b), 4450(f) and IM-4300, the Staff of The NASDAQ
Stock Market LLC has determined that the company's Litigation
Tracking Warrants will be delisted from The Nasdaq Stock Market.
In its letter, the Staff stated that unless the company requests
an appeal of this determination by Nov. 4, 2008, trading of the
LTWs will be suspended at the opening of business on Nov. 6, 2008,
and a Form 25-NSE will be filed with the Securities and Exchange
Commission, which will remove the company's securities from
listing and registration on The Nasdaq Stock Market. The
Staff stated in its letter that its determination is based on
company's Chapter 11 bankruptcy filing and associated public
interest concerns raised by it and concerns about the value of the
company's common stock underlying the LTWs. The LTWs were
originally distributed by Dime Bancorp, Inc. and, upon a
triggering event, become exercisable for the company's common
stock. The company does not intend to take any action to appeal
the Staff's determination.
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank 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.
WASHINGTON MUTUAL: Terminates Transfer Agent Deal with Mellon
-------------------------------------------------------------
Washington Mutual, Inc., and WMI Investment Corp. have terminated
the Transfer Agent Agreement dated as of Jan. 3, 2005, with Mellon
Investor Services LLC.
The Debtors related that Mellon Investor will no longer act as
their transfer agent, and will not process any requests to
transfer the Debtor's securities.
On Oct. 28, 2008, the Debtors asked the U.S. Bankruptcy Court for
the District of Delaware to approve Rejection of Transfer
Agreement.
Based in Seattle, Washington, Washington Mutual Inc. --
http://www.wamu.com/-- is a holding company for Washington Mutual
Bank 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.
WATER PIK: Moody's Affirms Caa2 Second Lien Term Loan Rating
------------------------------------------------------------
Moody's Investors Service changed Water Pik, Inc., outlook to
positive from stable and affirmed the B3 corporate family rating.
Moody's also affirmed the B1 rating to Water Pik's first lien
senior secured credit facilities (LGD3, 33%, adjusted) and Caa2
rating to its second lien term loan (LGD5, 84%, adjusted). The
positive outlook reflects the Water Pik's good operating
performance and consequent de-leveraging since assigning the
rating although our view is tempered by the current, very
challenging economic outlook.
Water Pik's B3 corporate family rating reflects its high leverage,
very modest scale, narrow product focus, limited presence at key
mass merchandiser customers, and its relatively short track record
as an independent company. Alternatively, Water Pik's rating is
supported by its leading market positions within replacement
showerheads and certain oral healthcare products, its attractive
operating margins, as well as its good brand recognition.
These ratings were affirmed:
* Corporate family rating at B3;
* Probability-of-default rating at B3;
* $15 million senior secured revolving credit facility due
2013, at B1 (LGD3, 33%, adjusted);
* $62 million first lien senior secured term loan due 2014, at
B1 (LGD3, 33%, adjusted);
* $35 million second lien senior secured term loan due 2014,
at Caa2 (LGD5, 84%, adjusted);
The rating outlook is upgraded to positive.
Headquartered in Fort Collins, Colorado, Water Pik, Inc. sells
dental water jets, power flossers, automatic toothbrushes,
professional dental products, and replacement showerheads through
its oral healthcare and showerhead divisions. The company reported
sales of about $125 million for the twelve months ended June 30,
2008. Moody's assigned Water Pik's initial ratings on May 16,
2007.
* Consumer-Based Sectors Face a Frightening Environment, S&P Says
-----------------------------------------------------------------
The consumer products, media and entertainment, and retail/
restaurants sectors remained most susceptible to economic and
credit-market turbulence as of Oct. 30, 2008, said an article
published by Standard & Poor's.
These sectors consistently have the highest levels of risk among
S&P's lists of distressed companies (defined as speculative-grade-
rated companies with securities trading in excess of 1,000 basis
points above U.S. Treasuries), weakest links (companies rated 'B-'
or lower with either a negative outlook or ratings on CreditWatch
with negative implications), and potential bond downgrades
(investment-grade or speculative-grade-rated companies that have
either a negative outlook or ratings on CreditWatch with negative
implications).
S&P identified 303 companies across these sectors on the basis of
the three criteria, according to the article, titled "Stress In
Corporate America: Frightening Environment For Consumer-Reliant
Sectors (Premium)."
In the month of October, the number of defaults continued to rise
as the aftermath of the September collapses continued to haunt the
stressed sectors. Consumer spending for discretionary purposes
remained inhibited in the wake of rising unemployment, combined
with businesses facing restricted access to funding in the credit
markets.
"Consumer spending accounts for 70% of U.S. GDP, and we expect
consumer spending to rise only 1% in 2008, compared with an
observed growth rate of 2.8% in 2007," said Diane Vazza, head of
Standard & Poor's Global Fixed Income Research Group. "Consumer
products companies have had to face cost pressures, particularly
rising energy and commodities prices in recent months, though they
should experience a reprieve if the current declines in commodity
prices continue."
Of the 303 companies in these three sectors, 14 companies are on
all three lists, while 58 are on more than one list. This
indicates the underlying vulnerability of these entities that
could be exposed in the coming quarters.
* Financial Covenants Concern of Capital Goods Sector, S&P Says
---------------------------------------------------------------
While capital goods companies have generated generally good
operating results so far in 2008, Standard & Poor's Ratings
Services expects the sector to begin to report deteriorating
results due to the global economic slowdown, according to a
commentary published on RatingsDirect. In light of credit market
conditions, S&P's major rating concern is these companies' ability
to maintain adequate liquidity, according to the report, "Capital
Goods Companies And The Credit Crunch: Financial Covenants Are A
Key Concern."
"We are focused specifically on covenant cushion, access to
commercial paper markets, and debt maturity schedules," said
Standard & Poor's credit analyst Dan Picciotto. "Our surveillance
focuses on financial covenants because a covenant violation would
require issuers to negotiate relief with lenders in the midst of
difficult credit market conditions. Investment-grade capital goods
companies generally operate with good covenant headroom and we
don't expect our most highly rated issuers to be in danger of
breaching their financial covenants," the analyst added.
The report notes that the combination of tighter credit markets
and deteriorating economic fundamentals could result in more
downgrades in the capital goods sector over the next 12 months as
indicated by the nearly 2 to 1 ratio of negative versus positive
bias. Still, more than 70% of the 115 rated issuers in the capital
goods sector have ratings that carry a stable outlook, indicating
that most ratings are not likely to change in the near term.
* Financial Sector Dominates Global Defaults, S&P Finds
-------------------------------------------------------
Globally, 28 companies -- 24 public and 4 confidentially rated --
defaulted in the third quarter of 2008, said an article by
Standard & Poor's. This is the largest number of defaults since
the third quarter of 2003 and already five more than the total
number of defaults for all of 2007.
The volume of rated debt affected by third quarter's defaults was
a massive $186.2 billion, dwarfing the $8.15 billion recorded in
all of 2007 and making this the largest defaulting debt amount in
recent memory, according to the report, titled "Quarterly Default
Update And Rating Transitions (Premium)." The vast majority of
this amount stems from the collapse of both Lehman Brothers
Holdings Inc. and Washington Mutual Inc. (along with their various
subsidiaries).
Twenty-four of the defaults in the third quarter of 2008 were
domiciled in the U.S., two came from Europe, and one each was from
Canada and Hong Kong.
Globally, the corporate default rate for speculative-grade-rated
entities moved to 0.75% at the end of third-quarter 2008 from
0.20% during the same period in 2007.
"After hitting record lows in 2007, the pace of defaults has
picked up markedly," said Diane Vazza, head of Standard & Poor's
Global Fixed Income Research Group. "If the pace of defaults set
so far this year is maintained through the remainder of the year,
2008 would have the largest number of defaults, at 88, since
2003."
Of the 24 defaults in the third quarter, seven were financial
institutions:
-- four were from the consumer products sector,
-- three each from leisure time/media and the forest and
building products/homebuilders sectors,
-- two from both transportation and real estate, and
-- one each from insurance, health care/chemicals, and
aerospace/automotive/capital goods/metal.
* Financial Covenants Concern of Capital Goods Sector, S&P Says
---------------------------------------------------------------
While capital goods companies have generated generally good
operating results so far in 2008, Standard & Poor's Ratings
Services expects the sector to begin to report deteriorating
results due to the global economic slowdown, according to a
commentary published on RatingsDirect. In light of credit market
conditions, S&P's major rating concern is these companies' ability
to maintain adequate liquidity, according to the report, "Capital
Goods Companies And The Credit Crunch: Financial Covenants Are A
Key Concern."
"We are focused specifically on covenant cushion, access to
commercial paper markets, and debt maturity schedules," said
Standard & Poor's credit analyst Dan Picciotto. "Our surveillance
focuses on financial covenants because a covenant violation would
require issuers to negotiate relief with lenders in the midst of
difficult credit market conditions. Investment-grade capital goods
companies generally operate with good covenant headroom and we
don't expect our most highly rated issuers to be in danger of
breaching their financial covenants," the analyst added.
The report notes that the combination of tighter credit markets
and deteriorating economic fundamentals could result in more
downgrades in the capital goods sector over the next 12 months as
indicated by the nearly 2 to 1 ratio of negative versus positive
bias. Still, more than 70% of the 115 rated issuers in the capital
goods sector have ratings that carry a stable outlook, indicating
that most ratings are not likely to change in the near term.
* Fitch Publishes U.S. Auto Lease Special Report
------------------------------------------------
Fitch Ratings has posted to its public Web site --
http://www.fitchratings.com-- a special report detailing its
recent review of the rated portfolio of U.S. auto lease asset-
backed securitizations (ABS). The report, titled 'Auto Lease
Transactions Road Tested: A Guide to Analyzing Auto Lease ABS
Performance' is intended to provide an in-depth look into Fitch's
recent evaluation of outstanding auto lease securitizations, and
key assumptions and performance drivers in light of recent
volatility in wholesale vehicle values.
The report can be found under the headings -- Structured Finance
>> ABS >> Special Reports.
* Fitch Says US Credit Card Losses Could Surpass Historical Peaks
-----------------------------------------------------------------
Rising job losses, volatile energy prices, and the absence of
refinancing options like low-rate balance transfers and home
equity loans means a higher proportion of delinquent accounts are
translating into U.S. credit card portfolio losses, according to
Fitch Ratings.
Fitch expects credit metrics will continue to deteriorate in
fourth quarter-2008 and into 2009, with some issuers surpassing
historical loss peaks before 2009 is over. A turn in the cycle
will be heavily dependent upon the duration of an economic
downturn and the severity of the increase in the unemployment
rate.
'Recently announced government-led intervention programs are
expected to ease the funding strain for some large card issuers,
but lenders are expected to remain cautious on portfolio growth in
2008 and 2009,' said Director Meghan Crowe. 'Many issuers have
ramped-up deposit growth and retail funding efforts in recent
months in order to reduce reliance on the ABS markets.'
Fitch expects a greater proportion of maturing ABS debt may be re-
financed on-balance sheet in 2009. Competition for deposits is
expected to intensify as many financial institutions attempt to
shore-up cheaper sources of liquidity. Increased demand for
deposit funding will likely result in pricing pressure over time.
Issuers are expected to remain flexible by closely monitoring
pricing rationalization in the ABS markets.
While asset quality metrics have deteriorated and funding costs
have increased, large credit card issuers have generally
maintained Stable Rating Outlooks, as portfolio risks have been
offset with greater contingent liquidity and higher capital
levels. Fitch anticipates rating pressure will mount over the
remainder of 2008 and into 2009 as economic headwinds negatively
impact consumer credit. Declines in profitability which are not
offset by enhanced liquidity and capitalization could prompt
negative rating actions.
Fitch's report looks at the weakening economic outlook and how it
will negatively impact consumer spending and portfolio asset
quality, thereby putting a damper on credit card issuers in the
upcoming holiday season.
* Fitch Says Pension Funding Needs Achievable for Media Sector
--------------------------------------------------------------
While pension plans of U.S. media & entertainment companies should
face weaker under-funded status heading into next year, most
pension liabilities should remain modest in size relative to cash
flows, according to Fitch Ratings in a new report that analyzes
the pension plans of the media & entertainment sector.
Fitch ran a sensitivity analysis of plan assets based on the
difficult market conditions of the past year. The proforma funded
status is then assessed against cash flows and funding guidelines
mandated by the Pension Protection Act of 2006 (PPA). Some key
conclusions include:
-- Not surprisingly, Fitch expects the under-funded status of
the media & entertainment sector to be materially weaker from a
year earlier, with the median funding level potentially dropping
to below 80% (from 96% at the beginning of the year). Most of the
companies in Fitch's portfolio will be above the initial 65% 'At
Risk' threshold phase-in as mandated by the PPA; however,
substantially all of them could be below the 2011 80% threshold
based on Fitch's assumptions;
-- Despite the weakness in the percent funded status, the
absolute size of most pension liabilities in relation to corporate
cash flows is still relatively modest even after material stresses
to asset returns and cash flows. Based on Fitch's sensitivity
analysis, proforma median annual cash outflows for pension funding
could approach 5% of annual Funds Flow from Operations over the
intermediate term in order for companies to become compliant under
the PPA. This compares to a median of less than 1.5% of annual FFO
at the beginning of the year. At this point, Fitch believes the
majority of companies within the media & entertainment sector will
be able to fully fund their plans over the next seven years
without materially impacting their credit profiles;
-- As presented in corporate financial statements, Fitch
expects CBS Corporation to continue to have the largest absolute
under-funded pension liability in the sector. As previously stated
by Fitch, this does not represent a material credit concern, as a
large portion (approximately $525 million) is related to non-
qualified plans that do not need to be pre-funded in accordance
with the PPA and therefore should not represent incremental cash
outflows over the intermediate term. In addition, Fitch believes
CBS has funding credits that can offset mandatory funding
requirements over the next few years. As such, Fitch expects CBS
to be able to meet its PPA obligations over the next seven years
without materially impacting its credit profile. CBS recently
provided revised downward guidance for 2008, and should there be a
protracted difficult operating and financing environment, Fitch
would expect CBS to reduce or eliminate its $700 million annual
dividend (even if temporarily) in order to lessen any reliance the
company may have on external sources to re-finance $2.5 billion of
debt maturing between in 2010 and 2011;
-- Based on its sensitivity analysis, Fitch expects:
* Six Flags, Inc.,
* The McClatchy Company,
* Hearst-Argyle Television, Inc., and
* Belo Corp.,
to potentially have the highest percent of FFO needed to be
allocated to pension contributions over the intermediate term. Six
Flags' over-leveraged balance sheet and the secular challenges
faced by McClatchy could make it difficult for these firms to meet
PPA requirements based on Fitch's assumptions. Similar to CBS,
outflows for Hearst-Argyle and Belo could be materially more as a
percent of free cash flow after deducting for capital expenditures
and company dividends.
* Fitch: Severe Global Recession Expected in 2009
-------------------------------------------------
In its latest Global Economic Outlook, Fitch Ratings predicts that
the world's major advanced economies -- US, UK, Euro area and
Japan -- will next year experience the steepest decline in GDP
since World War II. In aggregate GDP growth in these countries is
expected to be (minus) -0.8% in 2009, compared to an estimated
1.1% for 2008. Tighter credit conditions, consumer retrenchment
and falling corporate investment are expected to combine to
deliver an unusually synchronised downturn across the advanced
economies.
World GDP will grow by just 1% next year -- the slowest rate since
the early 1990s -- and compared to an average of 3.5% over the
last five years. The combination of recession in developed
countries, lower commodity prices and reduced international
capital flows will result in a sharp slowdown in growth in
emerging markets, though most will avoid outright recession.
The rapid intensification of the global credit crisis in the last
two months and clearer evidence of household retrenchment,
declining corporate investment intentions and falling world trade
growth explain the sharp deterioration in the outlook since
Fitch's previous Global Economic Outlook was published on July 4,
2008. These factors far outweigh the benefits to income growth in
the advanced economies from the decline in commodity prices.
Recession driven by a contraction in the supply of credit is
uncharted territory for the world economy and there are few
historical parallels on which to gauge its possible depth or
length. However, the aggressive expansion of central bank
liquidity provision since early September, in combination with
major fiscal injections into the US and European banking systems
will head off the worst-case scenario of widespread deflation.
Nevertheless, the process of de-leveraging by households and
companies is now underway and this will weigh on spending for some
time. Declining asset prices, rising unemployment and job
uncertainty will result in higher desired household saving rates,
while the deterioration in the cost and availability of household
credit will push the adjustment further and faster. Business
investment is also likely to fall sharply, consistent with its
highly pro-cyclical nature as companies anticipate weak final
demand and face tough borrowing conditions.
The recent widening of the credit crisis to emerging markets
dampens the prospects of companies in the advanced economies
switching sales strategies to the developing world as the US
consumer retrenches. This will also weigh on investment. In
particular, the increasingly likely prospect of a hard landing in
eastern Europe will hit German export growth, which has been a
mainstay of its recent recovery. Fitch also expects growth in
China to slow to just over 7% in 2009, its lowest rate for nearly
two decades. Even so, it expects growth in Brazil, Russia, India
and China (BRICs) overall to be 5.7%, reflecting policy
flexibility, external financial strengths and structural factors.
The decline of inflationary pressures from the commodity markets
is positive news. It will allow the European Central Bank and the
Bank of England to bring down interest rates rapidly, which will
ease the de-leveraging process and help banks' profitability. In
concert, fiscal policy will also cushion the shock to growth as
governments absorb an increasing share of global liquidity through
higher borrowing and inject it back into the economy through tax
cuts or higher spending. Indeed, the macroeconomic policy
response, along with the boost to real incomes from lower
commodity prices, forms an important part of the expectation for
recovery in 2010. This will, however, be to a rate well below that
seen in the last five years, when credit was abundant.
The report, "Global Economic Outlook, November 2008" is available
at the agency's public site, http://www.fitchratings.com/
* October Defaults Come From Nonfinancial Sectors, S&P Says
-----------------------------------------------------------
Despite the lingering effects of the recent financial downturn,
the number of defaults in the U.S. moderated in October, said an
article by Standard & Poor's. Nevertheless, relevant credit
metrics in the U.S. show continued deterioration of credit
quality alongside a prolonged contraction of new issuance and
tightening credit conditions.
The number of corporate defaults in 2008 continued to rise as
expected, with four U.S. defaults in October, bringing the year-
to-date total to 65, according to the article, titled "U.S. Credit
Metrics Monthly: Default Rate Increases Marginally In October."
After the fall of three large financial institutions in September,
all of the defaults in October hail from various nonfinancial
sectors.
The preliminary estimate for the U.S. 12-month-trailing
speculative-grade default rate in October is 2.9% (subject to
revision), roughly in line with 2.7% in September and higher than
the 0.97% reported in December 2007.
"We expect the speculative-grade default rate to escalate to a
mean forecast of 7.6% by September 2009, but it could reach as
high as 9.6% if economic conditions are worse than expected," said
Diane Vazza, head of Standard & Poor's Global Fixed Income
Research Group.
* Speculative-Grade Sector Bond Indices Rise to Distressed Levels
-----------------------------------------------------------------
Spreads have widened to distressed levels for much of the U.S.
high-yield universe, said Standard & Poor's in an article titled
"U.S. Speculative-Grade Spreads Sector Index
Review: An October To Forget (Premium)."
"Deteriorating economic expectations, forced selling in debt
vehicles, and little investor interest in risky assets have pushed
high-yield bond and leveraged loan spreads drastically wider in
October," said Diane Vazza, head of Standard & Poor's Global Fixed
Income Research Group.
Standard & Poor's high-yield bond index hit 1,383 basis points
(bps) on Oct. 31, up from 919 bps at the end of September and 787
bps at the end of August. The spread on the Standard & Poor's
Leveraged Commentary and Data (LCD) and S&P/LSTA Leveraged Loan
Index for all 'BB' and 'B' rated loans hit 1,687 bps on Oct. 24,
up from 971 bps at the end of September and 675 bps at the end of
August.
Investors have seen option-adjusted spreads widen across all
sectors over the past few months. All but one (utilities) of S&P's
15 high-yield sectors are trading above 1,000 bps.
Automotives were outpacing all sectors at 2,220 bps at the end of
October, followed by media and entertainment at 1,910 bps and
industrial finance companies (which include GMAC and Ford Motor
Credit) at 1,845 bps. Contagion has spread to even the strong
sectors such as aerospace and defense and oil and gas, which
experienced a move to 1,096 bps from 590 bps and 1,101 bps from
672 bps, respectively, during the month of October.
* S&P Article Looks At D&O Losses' Effect U.S. Insurer Ratings
--------------------------------------------------------------
The recent disruption in the financial markets has meant lower
investment income for many U.S. property/casualty insurers and
reinsurers. An article published by Standard & Poor's Ratings
Services said that in addition, the stock-market volatility could
vex one part of this sector -- insurers writing directors' and
officers' (D&O) insurance -- in another way. The article, which is
titled "Stock Market Volatility Could Mean Higher Losses For D&O
Insurers," says that growing numbers of class-action lawsuits by
equity investors might mean that these insurers could face higher
losses on this line in the next few years.
How might stock-market volatility affect D&O insurers? Higher
stock-price volatility could increase the potential for investor
losses, which could in turn spark related lawsuits against the
companies. This might then result in more D&O claims made against
insurers. Data show that historically, as stock-market performance
worsened, the number of investor lawsuits has tended
to increase.
Whether or not the number of claims will taper off again depends
largely on how soon the credit markets stabilize and the downward
slide in stock prices abates. Meanwhile, there is evidence that
D&O insurers and reinsurers are now increasing prices (if only for
coverage of financial institutions so far) and retooling their
underwriting approach to better focus on concentrations and
correlation risk. However, although these changes could ultimately
benefit writers, they might not mitigate the losses that are
likely to emerge in 2009 and 2010.
* S&P Cuts 72 Ratings on 20 U.S. CDO of ABS Transactions
--------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on 72
tranches from 20 U.S. cash flow and hybrid collateralized debt
obligation (CDO) transactions. S&P removed 26 of the lowered
ratings from CreditWatch with negative implications. At the same
time, S&P placed two ratings on Reservoir Funding Ltd. on
CreditWatch with negative implications. In addition, S&P withdrew
its rating on one tranche from Saybrook Point CBO II Ltd. The
ratings on 46 of the downgraded tranches are on CreditWatch with
negative implications, indicating a significant likelihood of
further downgrades (see list). The CreditWatch placements
primarily affect transactions for which a significant portion of
the collateral assets currently have ratings on CreditWatch with
negative implications or have significant exposure to assets rated
in the 'CCC' category.
The 72 downgraded U.S. cash flow and hybrid tranches have a total
issuance amount of $13.341 billion. Eleven of the 20 affected
transactions are mezzanine structured finance (SF) CDOs of asset-
backed securities (ABS), which are collateralized in large part by
mezzanine tranches of residential mortgage-backed securities
(RMBS) and other SF securities. Seven of the 20 affected
transactions are high-grade SF CDOs of ABS that were
collateralized at origination primarily by 'AAA' through 'A' rated
tranches of RMBS and other SF securities. The other two
transactions are CDOs of CDOs that were collateralized at
origination primarily by notes from other CDOs, as well as by
tranches from RMBS and other SF transactions. The CDO downgrades
reflect a number of factors, including credit deterioration and
recent negative rating actions on U.S. subprime RMBS.
In addition, Standard & Poor's reviewed the ratings assigned to C-
BASS CBO IX Ltd., LNR CDO 2003-1 Ltd., N-Star Real Estate CDO VII
Ltd., and TIAA Real Estate CDO 2002-1 Ltd. and has left the
ratings at their current levels based on the current credit
support available to the tranches.
To date, S&P has lowered its ratings on 3,996 tranches from 889
U.S. cash flow, hybrid, and synthetic CDO transactions as a result
of stress in the U.S. residential mortgage market and credit
deterioration of U.S. RMBS. In addition, 1,134 ratings from 445
transactions are currently on CreditWatch with negative
implications for the same reasons. In all, S&P has downgraded
$477.838 billion of CDO issuance. Additionally, S&P's ratings on
$11.744 billion of securities have not been lowered but are
currently on CreditWatch with negative implications, indicating a
high likelihood of future downgrades.
RATING ACTIONS
Rating
Transaction Class To From
----------- ----- -- ----
Bayberry Funding Ltd II CCC-/Watch Neg BBB+/Watch Neg
Bayberry Funding Ltd III CC BB+/Watch Neg
Bayberry Funding Ltd IV CC B+/Watch Neg
Bayberry Funding Ltd V CC CCC+/Watch Neg
Bernoulli High Grade A-1A BB+/Watch Neg AA+
CDO II
Broadwick Funding Ltd A-1b CC BB-/Watch Neg
Broadwick Funding Ltd A-2 CC BB-/Watch Neg
Broadwick Funding Ltd B CC CCC-/Watch Neg
Centre Square CDO Ltd A-1 CC CCC/Watch Neg
Charles River CDO I, Ltd. A-1A BB+/Watch Neg BBB/Watch Neg
Charles River CDO I, Ltd. A-1B BB+/Watch Neg BBB/Watch Neg
Charles River CDO I, Ltd. A-2F CCC-/Watch Neg CCC/Watch Neg
Charles River CDO I, Ltd. A-2V CCC-/Watch Neg CCC/Watch Neg
Davis Square Funding II A-1MM-a A-1+/AA/WatchNeg A-1+/AA+/WatchNeg
Davis Square Funding II A-1LT-a AA/Watch Neg AA+/Watch Neg
Davis Square Funding II A-1LT-b AA/Watch Neg AA+/Watch Neg
Davis Square Funding II A-1LT-c AA/Watch Neg AA+/Watch Neg
Davis Square Funding II A-1LT-d AA/Watch Neg AA+/Watch Neg
Davis Square Funding II A-1LT-e AA/Watch Neg AA+/Watch Neg
Davis Square Funding II A-1LT-f AA/Watch Neg AA+/Watch Neg
Davis Square Funding III A-1LT-a AA-/Watch Neg AA/Watch Neg
Davis Square Funding III A-1LT-b-1 AA-/Watch Neg AA/Watch Neg
Davis Square Funding III A-2 B/Watch Neg A-/Watch Neg
Davis Square Funding III B CCC/Watch Neg B-/Watch Neg
Duke Funding HighGrade III A-1A BBB-/Watch Neg A+/Watch Neg
Duke Funding HighGrade III A-1B1 BBB-/Watch Neg A+/Watch Neg
Duke Funding HighGrade III A-1B2 BBB-/Watch Neg A+/Watch Neg
Duke Funding HighGrade III A-2 B-/Watch Neg BBB-/Watch Neg
Duke Funding HighGrade III B-1 CCC-/Watch Neg BB+/Watch Neg
Duke Funding HighGrade III B-2 CCC-/Watch Neg BB+/Watch Neg
Duke Funding HighGrade III C-1 CC B/Watch Neg
Duke Funding HighGrade III C-2 CC CCC-/Watch Neg
E*Trade ABS CDO IV, Ltd. A-1A CC B-/Watch Neg
E*Trade ABS CDO IV, Ltd. A-1B-1 CCC-/Watch Neg BBB-/Watch Neg
E*Trade ABS CDO IV, Ltd. A-1B-2 CC B-/Watch Neg
E*Trade ABS CDO IV, Ltd. A-2 CC CCC-/Watch Neg
Halcyon Securitized A-1a CC BBB-/Watch Neg
Products Investors
ABS CDO II Ltd
Halcyon Securitized A-1b CC B-/Watch Neg
Products Investors
ABS CDO II Ltd
Ischus CDO II Ltd A-1A B-/Watch Neg AA-/Watch Neg
Ischus CDO II Ltd A-1B B-/Watch Neg AA-/Watch Neg
Ischus CDO II Ltd A-2 CC BBB+/Watch Neg
Ischus CDO II Ltd B CC B/Watch Neg
Ischus CDO II Ltd C CC CCC-/Watch Neg
Jupiter High-Grade CDO III A-1NV A/Watch Neg AAA/Watch Neg
Jupiter High-Grade CDO III A-1VA A/Watch Neg AAA/Watch Neg
Jupiter High-Grade CDO III A-1VB A/Watch Neg AAA/Watch Neg
Jupiter High-Grade CDO III A-2 BB-/Watch Neg A+/Watch Neg
Jupiter High-Grade CDO III A-2B BB-/Watch Neg A+/Watch Neg
Jupiter High-Grade CDO III B CCC-/Watch Neg BB/Watch Neg
Jupiter High-Grade CDO III C CC CCC/Watch Neg
Marathon Structured A-1 B/Watch Neg A/Watch Neg
Funding I
Millerton ABS CDO Ltd A-2 BBB/Watch Neg AAA/Watch Neg
Millerton ABS CDO Ltd B CCC/Watch Neg A-/Watch Neg
Millerton ABS CDO Ltd C CC BB/Watch Neg
Reservoir Funding Ltd A-1-NV AAA/Watch Neg AAA
Reservoir Funding Ltd A-1-V AAA/Watch Neg AAA
Reservoir Funding Ltd A-2 B/Watch Neg A+/Watch Neg
Reservoir Funding Ltd B CC CCC+/Watch Neg
Reservoir Funding Ltd C CC CCC-/Watch Neg
Revelstoke CDO I Limited A-2 A+/Watch Neg AAA
Revelstoke CDO I Limited A-3 CCC-/Watch Neg A/Watch Neg
Saybrook Point CBO II A A+/Watch Neg AAA/Watch Neg
Saybrook Point CBO II B-1 BB+/Watch Neg A+/Watch Neg
Saybrook Point CBO II B-2 BB+/Watch Neg A+/Watch Neg
Saybrook Point CBO II C-1 CCC-/Watch Neg BBB/Watch Neg
Saybrook Point CBO II C-2 CCC-/Watch Neg BBB/Watch Neg
Saybrook Point CBO II PrefShare NR BB+/Watch Neg
Squared CDO 2007-1, Ltd. A-1 CC CCC-/Watch Neg
Tourmaline CDO III Ltd A-1a CCC-/Watch Neg B-/Watch Neg
Tourmaline CDO III Ltd A-1b CC B-/Watch Neg
Tourmaline CDO III Ltd A-2 FLT CC CCC+/Watch Neg
Tourmaline CDO III Ltd A-2 FXD CC CCC+/Watch Neg
Tourmaline CDO III Ltd B-1 CC CCC-/Watch Neg
Vermeer Funding Ltd B A+/Watch Neg AA
Vermeer Funding Ltd C CCC-/Watch Neg B
OTHER RATINGS REVIEWED
Transaction Class To
----------- ----- --
Bernoulli High Grade CDO II A-1B CC
Bernoulli High Grade CDO II B CC
Bernoulli High Grade CDO II C CC
Bernoulli High Grade CDO II D CC
Bernoulli High Grade CDO II E CC
Bernoulli High Grade CDO II F CC
Bernoulli High Grade CDO II G CC
Broadwick Funding Ltd S AAA
Broadwick Funding Ltd C CC
Broadwick Funding Ltd D CC
C-BASS CBO IX Ltd. A-1 AAA
C-BASS CBO IX Ltd. A-2 AAA
C-BASS CBO IX Ltd. B AAA
C-BASS CBO IX Ltd. C AA+
C-BASS CBO IX Ltd. D A+
Centre Square CDO Ltd A-2A CC
Centre Square CDO Ltd A-2B CC
Centre Square CDO Ltd A-3 CC
Centre Square CDO Ltd B CC
Centre Square CDO Ltd C CC
Centre Square CDO Ltd D CC
Charles River CDO I, Ltd. B-F CC
Charles River CDO I, Ltd. B-V CC
Charles River CDO I, Ltd. C CC
Charles River CDO I, Ltd. Comb Sec CC
Davis Square Funding II A-1MT-a AA-/Watch Pos
Davis Square Funding II A-1MT-b AA-/Watch Pos
Davis Square Funding II A-1MT-d AA-/Watch Pos
Davis Square Funding II A-1MT-e AA-/Watch Pos
Duke Funding High Grade III D CC
Duke Funding High Grade III Sub Nts CC
E*Trade ABS CDO IV, Ltd. B CC
E*Trade ABS CDO IV, Ltd. C CC
E*Trade ABS CDO IV, Ltd. D CC
E*Trade ABS CDO IV, Ltd. Pref Shrs CC
Halcyon Securitized Products A-2 CC
Investors ABS CDO II Ltd
Halcyon Securitized Products B CC
Investors ABS CDO II Ltd
Halcyon Securitized Products C CC
Investors ABS CDO II Ltd
Halcyon Securitized Products D-1 CC
Investors ABS CDO II Ltd
Halcyon Securitized Products D-2 CC
Investors ABS CDO II Ltd
Halcyon Securitized Products E CC
Investors ABS CDO II Ltd
Ischus CDO II Ltd D CC
LNR CDO 2003-1 Ltd. A AAA
LNR CDO 2003-1 Ltd. B AAA
LNR CDO 2003-1 Ltd. C-FL AA
LNR CDO 2003-1 Ltd. C-FX AA
LNR CDO 2003-1 Ltd. D-FL AA-
LNR CDO 2003-1 Ltd. D-FX AA-
LNR CDO 2003-1 Ltd. E-FL A
LNR CDO 2003-1 Ltd. E-FX A
LNR CDO 2003-1 Ltd. F-FL BBB+
LNR CDO 2003-1 Ltd. F-FX BBB+
LNR CDO 2003-1 Ltd. G BBB
LNR CDO 2003-1 Ltd. H BB+
LNR CDO 2003-1 Ltd. J B+
Millerton ABS CDO Ltd A-1 AAA
N-Star Real Estate CDO VII A-1 AAA
N-Star Real Estate CDO VII A-2 AAA
N-Star Real Estate CDO VII A-3 AAA
N-Star Real Estate CDO VII B AA
N-Star Real Estate CDO VII C A
N-Star Real Estate CDO VII D-FL BBB
N-Star Real Estate CDO VII D-FX BBB
N-Star Real Estate CDO VII E BB
Reservoir Funding Ltd D CC
Revelstoke CDO I Limited A-1 AAA
Revelstoke CDO I Limited B CC
Squared CDO 2007-1, Ltd. A-2a CC
Squared CDO 2007-1, Ltd. A-2b CC
Squared CDO 2007-1, Ltd. B CC
Squared CDO 2007-1, Ltd. C CC
Squared CDO 2007-1, Ltd. Comp Nts AAA
Squared CDO 2007-1, Ltd. D CC
Squared CDO 2007-1, Ltd. E CC
TIAA Real Estate CDO 2002-1 I AAA
TIAA Real Estate CDO 2002-1 II-FL AA
TIAA Real Estate CDO 2002-1 II-FX AA
TIAA Real Estate CDO 2002-1 III BBB+
TIAA Real Estate CDO 2002-1 IV BB+
Tourmaline CDO III Ltd B-2 CC
Tourmaline CDO III Ltd C CC
Tourmaline CDO III Ltd Combo Nts CC
Tourmaline CDO III Ltd D-1 CC
Tourmaline CDO III Ltd D-2 FLT CC
Tourmaline CDO III Ltd D-2 HYB CC
Tourmaline CDO III Ltd D-3 CC
Tourmaline CDO III Ltd E CC
Tourmaline CDO III Ltd PrncPtdNts AA-
Vermeer Funding Ltd A-1 AAA
Vermeer Funding Ltd A-2 AAA
* S&P Provides Loss Projections for 2005 U.S. Alt-A RMBS Deals
--------------------------------------------------------------
Standard & Poor's Ratings Services provided its projected losses,
as a percentage of the original pool balance, for rated U.S.
residential mortgage-backed securities transactions backed by
Alternative-A (Alt-A) collateral issued in 2005. For transactions
backed by fixed and long-reset hybrid (fixed for five years or
more) collateral, S&P is projecting a loss of about 3.85% on the
underlying mortgage collateral. For transactions backed by short-
reset hybrid collateral, S&P is projecting a loss of about 5.65%
on the underlying mortgage collateral. Finally for transactions
backed by negatively amortizing (neg-am) collateral, S&P is
projecting a loss of about 4.25% on the underlying mortgage
collateral.
Our combined projected loss for the entire 2005 U.S. Alt-A RMBS
vintage is about 4.15% on the underlying mortgage collateral.
Depending on transaction-specific structures, and the level of
excess spread available to cover losses, the potential write-down
of bonds will be less.
A key component of S&P's loss projection analysis of U.S. RMBS
transactions is S&P's default curve, which S&P discussed in
"Standard & Poor's Revised Default And Loss Curves For U.S. Alt-A
RMBS Transactions," published on Dec. 19, 2007, on RatingsDirect.
S&P later revised its fixed default curve in "Criteria
Assumptions: Default And Loss Assumptions For U.S. Fixed Alt-A
RMBS Transactions," published Sept. 28, 2008, on RatingsDirect.
These publications describe the forward-looking foreclosure curves
that S&P is using to project defaults and losses in these pools.
S&P differentiates between the first half of 2005 and the second
half of 2005 when applying loss severities. S&P's current loss
severities are:
Cohort First-half 2005 (%) Second-half 2005 (%)
------ ------------------- --------------------
Fixed/long reset 25 34
Short reset 32 35
Neg-am 30 35
S&P continues to incorporate each transaction's current
delinquency (including 60- and 90-day delinquencies), default, and
loss trends in S&P's projections. Specifically, S&P weighs its
view of the impact to credit enhancement of potential losses from
the dollar amount of the 60- and 90-plus-day delinquent loans,
coupled with the losses projected from the curve.
S&P continues to assume that the loans currently classified as
real estate owned (REO) will be liquidated over the next eight
months and that loans in foreclosure will be liquidated over the
next 15 months. S&P forms its estimate of the lifetime projected
losses by adding these losses to the actual losses that the
transactions have experienced to date.
S&P projected the loss expectations on a structure-by- structure
basis. To help identify each deal in the loss table, S&P provided
one CUSIP from each transaction. S&P also provided the original
balance from each structure to help identify the structure to
which the loss projection applied.
* S&P Says 786 Issuers Face Downgrade Risk, A Three-Year High
-------------------------------------------------------------
The number of potential downgrades reached 786 in October 2008,
the highest since September 2005, said an article by Standard &
Poor's. This is an increase of 28 issuers over last month's count.
Potential downgrades are defined as entities that have either a
negative outlook or ratings on CreditWatch with negative
implications across rating categories 'AAA' to 'B-'.
By comparison, the number of potential downgrades in October is
136 more than what was reported in the same period a year ago and
118 more than the average of the past 38 months, according to the
article, titled "Downgrade Potential Across Credit Grades And
Sectors (Premium)." Further, the number of potential downgrades is
more than triple the number of those poised for potential
upgrades, a trend that has progressed for roughly 15 months.
"Despite materialized downgrades, the housing and financial
sectors continue to show the highest downgrade risk, indicative of
further rating actions if credit conditions continue to
deteriorate," said Diane Vazza, head of Standard & Poor's Global
Fixed Income Research Group.
Geographically, the U.S. continues to top the list of potential
bond downgrades, with roughly one-quarter of current ratings
showing downside risk.
By rating designation, 'B' rated companies have the greatest
potential for downgrades, with 148 companies (19% of the total).
Globally, of the 786 issuers at risk for downgrades, 81% are rated
speculative grade ('BB+' or below).
* S&P Says No Funding Agreement-backed Issuance in October 2008
---------------------------------------------------------------
Funding agreement-backed issuance has swung between the two
extremes this year. The first half and the second quarter each had
the highest issuance totals for those respective periods, while
the third quarter had the lowest quarterly issuance total since
2002.
October ended without a single issuance, and S&P has seen nothing
to indicate that issuance will be picking up anytime soon.
Although S&P did expect a decrease in issuances in October, the
total lack of issuance is surprising.
Market participants have told S&P that the precipitous drop in
issuance could be because of several reasons:
-- First, and likely foremost, because of the dislocation in
the credit markets, there has been a lack of debt issuance in
other asset classes, which would leave an issuer of these notes
without a place to invest the proceeds it receives.
-- Funding agreement providers appear to be focused on
preserving capital. Issuance would increase the size of their
balance sheets, potentially making these companies appear more
leveraged, but it would also expose them to credit risk on the
assets purchased.
-- Rates that investors are looking for appear to have widened
more for insurance companies than they have for non insurance-
related obligations.
-- Market participants have told Standard & Poor's that some
insurance companies have been accessing the Federal Home Loan Bank
system as a source of capital for spread lending because it
currently has the lowest cost of funding.
This has been a challenging time for issuers of funding agreement-
backed notes. At this time, it is difficult to estimate when the
market for these investments will open up again, but issuers have
shown resiliency in previous downturns. S&P expects them to return
to the market eventually because over time, this has been a
profitable line of business for the issuers.
* S&P Says Q3 Rating Changes in US Public Finance Were Positive
---------------------------------------------------------------
Credit rating changes in U.S. Public Finance during the third
quarter once again were strongly positive overall, according to an
article published by Standard & Poor's Ratings Services, "Trend Of
U.S. Public Finance Rating Changes In Q3 2008 Remained
Strongly Positive."
The report notes that Standard & Poor's continuing review of U.S.
public finance criteria, which is intended to maintain the
comparability of rating criteria across all sectors, has resulted
in a sustained upgrade trend over the past several years.
"Nevertheless, given the present credit market turmoil and the
worsening economic environment, we believe it is important to
reiterate that rating actions will remain cautious and prudent,"
said Managing Director James Wiemken.
* S&P Sees High Recovery Prospects for Lenders in Oil Sector
------------------------------------------------------------
Corporate default rates have been rising steadily since mid-2007,
and debtholders are increasingly concerned about what their
recovery prospects might be if an issuer defaults. Standard &
Poor's Ratings Services began assigning recovery ratings to the
unsecured debt of speculative-grade issuers earlier this year to
help investors evaluate what their recovery prospects might be in
a default. Oil and gas companies, on average, provide higher
recovery prospects for unsecured creditors compared with other
industries, according to a recent commentary published by Standard
& Poor's.
The article, "Unsecured Lenders In The Oil And Gas Sector Have
Strong Recovery Prospects," published Oct. 28, 2008, on
RatingsDirect, examines the criteria -- including high hydrocarbon
prices -- that underpin the higher recovery ratings on
speculative-grade companies in the oil and gas sector.
"Another reason the oil and gas sector has exhibited comparatively
higher recovery is that speculative-grade oil and gas companies
tend to have more unsecured debt than secured debt in their
capital structure," said Standard & Poor's credit analyst Aniki
Saha-Yannopoulos. "With a limited amount of secured debt ahead of
the unsecured creditors, more value typically remains available to
satisfy unsecured creditors in the sector."
The report also discusses the differentiating factors for varying
recovery prospects between oil and gas subsectors. For example,
companies in the oilfield service sector generally offer better
recovery prospects versus exploration and companies due to lower
debt to capitalization ratios and secured facilities that are not
affected by borrowing bases.
* Upgrade Potential Falls to Four-Year Low, S&P Article Says
------------------------------------------------------------
The number of issuers poised for upgrades fell to 245 this
October, 24 fewer than almost a month ago, said Standard & Poor's
in an article titled "Upgrade Potential Across Credit Grades And
Sectors (Premium)." The number of potential upgrades in October
was the lowest count since S&P started its report in September
2004. On the other hand, potential bond downgrades are at their
highest level in 38 months at 786 entities.
"The drop in upgrade potential is largely attributable to credit
deterioration across the globe," said Diane Vazza, head of
Standard & Poor's Global Fixed Income Research Group, "especially
in the U.S. and Europe, where adverse economic conditions and a
freeze on the credit markets have effectively reduced an upward
trajectory for even well-positioned issuers."
However, there are a few sectors, including metals, mining, and
steel, as well as telecommunications, that are poised to better
weather the current credit storm. Issuers in these sectors have a
positive bias -- defined as the number of entities listed with
either a positive outlook or ratings on CreditWatch with positive
implications -- that exceeds the historical average. This
highlights the likelihood that companies within these sectors have
greater upgrade potential relative to other sectors or at least a
stronger position of stability.
* 2Qtr Global Project Finance Ratings Remain Stable, S&P Says
-------------------------------------------------------------
Project finance around the world continues to show resilience in
the face of current market volatility, according to a report
published by Standard & Poor's Ratings Services on RatingsDirect
titled Industry Report Card: Global Project Finance Ratings Remain
Stable Despite Uncertain Credit Markets.
Of the 237 global project-financed issues Standard & Poor's rates,
69% were investment grade and 73% had stable outlooks. Of the
remaining projects, 35 have negative outlooks, 19 are on
CreditWatch Negative, and seven have positive outlooks,
"Rating actions that we took so far in 2008 on bond insurers that
provided credit enhancements to these entities resulted in an
increased number of project finance rating actions compared with
our last report card in June 2008," said Standard & Poor's credit
analyst Arthur Simonson. "Overall, most projects performed as we
expected and typically benefited from sound long-term contractual
arrangements with stable and predictable revenues," Mr. Simonson
continued. However, there were 17 rating downgrades due to
project-specific operational, financial or parental company
issues, and one due to the downgrade of its insurer. Two rating
upgrades resulted from improved project economics.
The outlook for the project finance market remains good, and S&P
expects the sector to see an increasingly diversified market
looking to fund infrastructure projects using nonrecourse debt.
* 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
at 240/629-3300.
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