/raid1/www/Hosts/bankrupt/TCR_Public/090313.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, March 13, 2009, Vol. 13, No. 71
Headlines
ADVANCED MICRO: Sells $124.7MM in Shares to Abu Dhabi Firm
AFFINION GROUP: Moody's Affirms Corporate Family Rating at 'B2'
AGA MEDICAL: Moody's Reviews 'B2' Corporate Family Rating
AIRTRAN HOLDINGS: Profitable in Q1 2009, Management Says
ALITALIA SPA: EU Endorses Privatization, AirFrance Deal Closes
ALTUS PHARMACEUTICALS: Has Going Concern Qualification
BALLY TOTAL: Can Use Lenders' Cash Collateral Until March 25
BALLY TOTAL: Court Extends Period to Remove Civil Suits to June 1
BALLY TOTAL: Court Issues Final Injunction Order on Utilities
BALLY TOTAL: Seeks July 1 Extension of Lease Decision Deadline
BALLY TOTAL: Seeks July 31 Extension of Plan Filing Deadline
BEARINGPOINT INC: Common Stock Delisted From NYSE Trading
BERNARD L. MADOFF: Pleads Guilty to Ponzi Scheme; Bail Revoked
BRUNO'S SUPERMARKETS: Union Won't Cede to CBA Cancellation
BUILDING SYSTEMS: S&P Puts 'BB' Rating on Negative CreditWatch
CANWEST MEDIA: Lenders Extend Waiver Until April 7; Talks Go On
CHANNEL REINSURANCE: Runoff Prompts S&P's Rating Cut to 'BB+'
CINCINNATI BELL: Dec. 31 Balance Sheet Upside Down by $709MM
CINCINNATI BELL: Gabelli, GAMCO Entities Disclose 6.26% Stake
CLUB AT WATERFORD: Court Denies Sec. Creditor's Dismissal Motion
CONGOLEUM CORP: Files 11th Amendment to Postpetition Financing
COSINE COMMUNICATIONS: Posts 15,000 Net Loss in Yr. Ended Dec. 31
DBO HOLDINGS: Russian Steelmaker Deal Won't Affect S&P Ratings
DEVELOPERS DIVERSIFIED: Moody's Cuts Preferred Stock Rating to Ba1
EAST RIDGE ASSOC: Files for Chapter 11 Bankruptcy Protection
EDGE PETROLEUM: Defers $14 Million Loan Payment to March 17
ENERGY PARTNERS: Moody's Cuts Corporate Family Rating to 'Caa3'
ESTATE FINANCIAL: Asks Court to Approve Settlement with AAFS
FANNIE MAE: Borrowers Can Refinance Through Over 30,000 lenders
FLEETWOOD ENTERPRISES: Chapter 11 Filing Cues S&P's 'D' Rating
FOAMEX INTERNATIONAL: Committee Balks $95 Million MP DIP Facility
FORD MOTOR: Save $500MM/Year Due to Labor Contract Amendment
FREDDIE MAC: Borrowers Must Refinance Through Same Loan Servicer
FRONTIER AIRLINES: Seeks to Sell A318, Lease New A320
GALAXY NUTRITIONAL: Stock Purchase Deal Erases Substantial Doubt
GENERAL MOTORS: Won't Need $2 Billion From Gov't This Month
GENERAL MOTORS: Eyes Over $500MM Savings in Labor Pact Changes
GHOST TOWN: Files for Chapter 11 Bankruptcy Protection
HANA BIOSCIENCES: Receives NASDAQ Notice; Will Request Hearing
HARRIS COUNTY: S&P Downgrades Rating on 1999A Bonds to 'D'
HARRIS INTERACTIVE: Lenders Extend Forbearance Until May 8
HEALTHSOUTH CORP: Affirms 2009 Guidance, Joins Barclays Confab
HERBST GAMING: To Commence Prepack Bankruptcy By March 23
HYDROGEN HYBRID: Working Capital Woes Raises Going Concern Doubt
IDEARC INC: To Default on Covenant; In Talks on Prepack Bankruptcy
IDEARC INC: Dec. 31 Balance Sheet Upside-Down by $8.4 Billion
INCENTRA SOLUTIONS: Section 341(a) Meeting Scheduled for March 31
INTERMET CORP: Seeks to Reject Two Union Contracts
INTERSTATE HOTELS: Faces NYSE Suspension; May Delay Fin'l Report
INTERSTATE HOTELS: Likely Delisting May Cause Going Concern Doubt
JAY HOSTETTER: Wants to Hire Nolan & Heller as Bankruptcy Counsel
LANDAMERICA ASSESSMENT: Files for Chapter 11 Bankruptcy
LEHMAN BROTHERS: Files Schedules & Statement; Total Debts Unknown
JEFFERSON COUNTY: JPMorgan Cancels Interest-Rate Swap Agreements
MEDIACOM COMMUNICATIONS: Columbia Wanger Discloses 11.96% Stake
MERISANT WORLDWIDE: Wants Court to Set June 1 as Claims Bar Date
METROMEDIA STEAKHOUSES: Affiliate Agrees to Loan Extension
MICHAEL VICK: Must Attend Hearing in Virginia, Says Court
MIDWAY GAMES: Postpones Cash Collateral Hearing to April 1
MILACRON INC: Chapter 11 Filing Cues Moody's Rating Cut to 'D'
MINERA ANDES: Macquarie Debt Obligation Raises Going Concern Doubt
MOHAWK INDUSTRIES: S&P Cuts Corporate Credit Rating to 'BB+'
MONACO COACH: Receives Court Nod to Use Cash Collateral
MUZAK HOLDINGS: U.S. Trustee Forms Seven-Member Creditor Panel
N. AMERICAN SCIENTIFIC: Files for Chapter 11, Sells Prostate Unit
N. AMERICAN SCIENTIFIC: Case Summary & 20 Top Unsecured Creditors
NAVISTAR INT'L: Reports $234MM 1st Qtr. Net Income, $1BB Deficit
NAVISTAR INT'L: Jan. 31 Balance Sheet Upside Down by $1.49 Bln.
NEW YORK TIMES: Lenders Betting on Bankruptcy, Gawker.com Says
NORTEL NETWORKS: May Sell 2 Main Units, Reorganization May Fail
NORTHEAST BIOFUELS: Wants Sale Bidding Procedures Approved
OCEAN VILLAGE: U.S. Trustee Sets Creditors Meeting for April 23
OPTI CANADA: S&P Downgrades Corporate Credit Rating to 'B-'
PACIFIC ENERGY: Can Borrow $10.5-Mil. from Existing Lenders
PACIFIC ENERGY: Section 341(a) Meeting Set for April 7
PALM INC: To Remarket 18.5MM Shares Underlying Elevation Units
PEOPLE AGAINST: Can Use Cash Collateral Until March 31
PETER POCKLINGTON: Arrested for Allegedly Concealing Assets
PLIANT CORP: Court Set May 5 as Creditor's Claims Bar Date
POWERMATE CORP: Seeks Third Exclusivity Extension
PROVIDENCE SERVICE: Lenders Reset Covenants for 2008 and 2009
RICHARDSON HOSPITAL: S&P Cuts Rating on $73.227 Mil. Bonds to BB+
REGENT BROADCASTING: Moody's Reviews 'B3' Corporate Family Rating
ROCKLAND COUNTY: Moody's Assigns Ratings on $45 Mil. Tax Notes
ROUNDY'S SUPERMARKETS: S&P Affirms 'B' Corporate Credit Rating
S-TRAN HOLDINGS: Wants Exclusive Filing Period Extended to June 1
SAMSUN LOGIX: Files Chap. 15 Petition in U.S. Court, Reuters Says
SIMMONS BEDDING: Hires Bankruptcy Counsel & Financial Advisers
SINCLAIR BROADCAST: S&P Assigns 'B' Rating on $500 Mil. Shelf
SIX FLAGS: Dec. 31 Balance Sheet Upside Down by $443.8 Million
SIX FLAGS: To Default on $287MM PIERS; Issues Bankruptcy Warning
SIX FLAGS: Hires Bankruptcy Counsel & Financial Advisers
SONICBLUE INC: Pillsbury Pays $10MM to Settle Malpractice Claim
SPECTRUM BRANDS: S&P Withdraws 'D' Corporate Credit Rating
SPORT CHALET: BofA Grants Amendment to Waive Certain Defaults
STANDARD PACIFIC: Inks Release Agreement with Former Executives
SUNWEST MANAGEMENT: District Court Keeps Judge In SEC Action
SUTURA INC: Board Doubts Cash Could Sustain Operation Beyond 2008
SYNTAX-BRILLIAN: Plan Going to Creditors for Vote
TERRA INDUSTRIES: Rejects CF Industries' Latest Bid Proposal
TEXAS STATE: S&P Downgrades Rating on 2002A Housing Bonds to 'D'
TRIBUNE CO: Settles U.S. Trustee's Objection to Lazard Retention
TROPICANA ENTERTAINMENT: LandCo Lenders Present Plan Term Sheet
TROPICANA ENTERTAINMENT: Onex Balks at Extension of Exclusivity
TROPICANA ENTERTAINMENT: Seeks Amendment to DIP Facility
TROPICANA ENTERTAINMENT: Won't Make Payments to Landco Lenders
UNIVERSITY OF FINDLAY: Moody's Affirms 'Ba1' Rating on 1999 Bonds
U.S. SHIPPING: Lenders' Forbearance Expires Today
US CONCRETE: S&P Downgrades Corporate Credit Rating to 'B-'
VICORP RESTAURANTS: No Competing Bids Against Fidelity
WII COMPONENTS: Projected Weak Earnings Cue S&P's Junk Rating
XERIUM TECHNOLOGIES: Dec. 31 Balance Sheet Upside Down by $27.5MM
XERIUM TECHNOLOGIES: Provides Update on NYSE Delisting Issue
VERICHIP CORP: Receives Delisting Notice From Nasdaq
YOUNG BROADCASTING: Section 341(a) Meeting Scheduled for April 3
YOUNG BROADCASTING: Files List of 50 Largest Unsecured Creditors
* Bill Lifting 210-Day Lease Limit Could Be Introduced Next Week
* Firms Eye Trade Credit Insurance to Protect Receivables
* NewOak Capital Appoints Tom McAvity Managing Director
* BOOK REVIEW: Beyond the Quick Fix:
Managing Five Tracks To Organizational Success
*********
ADVANCED MICRO: Sells $124.7MM in Shares to Abu Dhabi Firm
----------------------------------------------------------
Mubadala Development Company PJSC, based in the Emirate of Abu
Dhabi, UAE, and Cayman Islands-based West Coast Hitech L.P. and
West Coast Hitech G.P., Ltd., disclosed in a regulatory filing
with the Securities and Exchange Commission their beneficial
ownership of 107,000,000 shares, or roughly 16%, of Advanced Micro
Devices, Inc., common stock.
The percentage is based on the 666,726,323 AMD shares outstanding
as of February 9, 2009, plus the 58,000,000 shares issued to
Mubadala on March 2, 2009.
On October 6, 2008, West Coast Hitech L.P., an exempted limited
partnership organized under the laws of the Cayman Islands, AMD,
and Advanced Technology Investment Company LLC, a limited
liability company wholly-owned by the Government of the Emirate of
Abu Dhabi, entered into an agreement, as amended pursuant to which
AMD and ATIC agreed to form a U.S. headquartered joint venture to
manufacture leading-edge semiconductor products. Pursuant to the
Agreement, on March 2, 2009, AMD contributed to the Foundry
Company its manufacturing facilities, including two fabrication
facilities in Dresden, Germany, as well as related assets and
intellectual property rights. The Foundry Company assumed roughly
$1.1 billion of AMD's existing debt.
At the Closing, ATIC invested $2.1 billion to purchase its stake
in the Foundry Company, of which ATIC invested $1.4 billion
directly in the new entity and paid the remainder to AMD to
purchase additional shares in the Foundry Company from AMD. ATIC
will not acquire beneficial ownership of any securities of AMD
pursuant to the Agreement.
In addition, under the Agreement, West Coast Hitech paid to AMD at
the Closing $124,700,000 in exchange for 58,000,000 Shares and
warrants to purchase an additional 35,000,000 Shares at an
exercise price of $0.01 per share. The Warrants are exercisable
after the earlier of (a) public ground-breaking of the Foundry
Company's proposed new wafer fabrication facility located in the
State of New York and (b) 24 months from the date of the issuance
of the Warrants. The Warrants have a 10-year term.
Pursuant to the Agreement and at the request of West Coast Hitech,
on March 3 2009, AMD appointed Waleed Ahmed Al Mokarrab Al Muhairi
to AMD's board of directors. For so long as West Coast Hitech
owns 10% of the outstanding common stock of AMD, AMD will cause
its board of directors to nominate a person designated by West
Coast Hitech for election to AMD's board.
West Coast Hitech has also agreed to certain limitations,
following the Closing Date, with respect to the acquisition and
disposition of Shares. West Coast Hitech has agreed that,
following the Closing Date until it -- together with its
affiliates -- beneficially owns less than 10% of the outstanding
shares, it will not dispose of any Shares (other than to
affiliates or permitted transferees) except (i) by a bona fide
pledge or hypothecation in connection with a financing
transaction, (ii) by means of an underwritten public offering
pursuant to an effective registration statement, or (iii) pursuant
to Rule 144.
In addition, West Coast Hitech has agreed that, following the
Closing (i) it will not acquire additional Shares such that it
would own more than 22.5% of the outstanding Shares, and (ii) for
a period of five years, or until West Coast Hitech and its
affiliates' aggregated ownership falls below 10% of the
outstanding Shares, they will not take certain actions as a
shareholder that would influence, or seek to influence, the
control of AMD.
About Advanced Micro
Headquartered in Sunnyvale, California, Advanced Micro Devices
Inc. (NYSE: AMD) -- http://www.amd.com/-- provides innovative
processing solutions in the computing, graphics and consumer
electronics markets.
As of December 27, 2008, the company's balance sheet showed total
assets of $7,675,000,000, total current debts of $2,226,000,000,
deferred income taxes of $91,000,000, long-term debt and capital
lease obligations of $4,702,000,000, other long-term liabilities
of $569,000,000, minority interest in consolidated subsidiaries of
$169,000,000, and total stockholders' deficit of $82,000,000.
* * *
As reported in the Troubled Company Reporter on Aug. 12, 2008,
Fitch Ratings affirmed these ratings on Advanced Micro Devices
Inc.: Issuer Default Rating at 'B-'; Senior unsecured debt at
'CCC/RR6' and Rating Outlook at Negative.
The TCR reported on February 23, 2009, that Moody's Investors
Service said Advanced Micro Device's shareholder approval for its
asset smart strategy does not affect the company's B3 Corporate
Family Rating and negative ratings outlook.
AFFINION GROUP: Moody's Affirms Corporate Family Rating at 'B2'
---------------------------------------------------------------
Moody's Investors Service affirmed the B2 Corporate Family Rating
of Affinion Group Holdings, Inc. and raised the speculative grade
liquidity rating to SGL-1 from SGL-2. The rating outlook is
stable.
The B2 Corporate Family Rating reflects adequate financial
strength metrics for the rating category, significant revenue
concentration with large affinity partners, and concern that a
protracted recession could pressure member pricing or the size of
the customer base. Despite a difficult economic environment,
Affinion's financial performance during 2008 was solid. Affinion
reported significant growth in average revenue per member in the
North American membership and supplemental insured product lines
and strong customer growth in new international membership
programs. The ratings are also supported by the company's leading
market position, long-term relationships with affinity partners
and track record of steady profitability growth.
The upgrade of the speculative grade liquidity rating to SGL-1
from SGL-2 reflects solid projected free cash flow over the next
Moody's quarters, substantial revolver availability and
significant headroom under financial covenants.
Moody's took these rating actions:
Affinion Group Holdings, Inc.
-- Affirmed $350 million senior unsecured term loan due 2012,
Caa1 (to LGD 6, 92% from LGD 6, 91%)
-- Affirmed Corporate Family Rating, B2
-- Affirmed Probability of Default Rating, B2
-- Upgraded Speculative Grade Liquidity Rating to SGL-1 from
SGL-2
Affinion Group, Inc.
-- Affirmed $100 million senior secured revolver due 2011, Ba2
(LGD 2, 16%)
-- Affirmed $655 million senior secured term loan due 2012, Ba2
(LGD 2, 16%)
-- Affirmed $304 million senior unsecured notes due 2013, B2
(LGD 4, 53%)
-- Affirmed $355 million senior subordinated notes due 2015, B3
(LGD 5, 76%)
The last rating action on Affinion was on April 16, 2008 at which
time Moody's affirmed the B2 Corporate Family Rating, raised the
rating on $355 million face amount of senior subordinated notes to
B3 from Caa1, and lowered the speculative grade liquidity rating
to SGL-2 from SGL-1.
Affinion is a leading provider of marketing services and loyalty
programs to many of the largest financial service companies
globally. The company provides credit monitoring and identity-
theft resolution, accidental death and dismemberment insurance,
discount travel services, loyalty programs, various checking
account and credit card enhancement services. Apollo Management
V, L.P. owns 97% of Affinion's common stock.
AGA MEDICAL: Moody's Reviews 'B2' Corporate Family Rating
---------------------------------------------------------
Moody's Investors Service placed the ratings of AGA Medical
Corporation (including the B2 corporate family rating) under
review for possible downgrade.
The review for downgrade is prompted by Moody's concerns about
AGA's liquidity position. In Moody's opinion, working capital
requirements and elevated spending for expansionary activities may
be pressuring liquidity during the current period. Increased
economic uncertainty raises the risk of adverse working capital
trends over the near-term. This, combined with AGA's change in
distribution strategy, heightens Moody's liquidity concern amidst
the reported reduction in AGA's revolving credit commitment to
$15.5 million from $25 million following the bankruptcy of Lehman
Commercial Paper Inc.
The review will focus on the company's liquidity position
(including headroom under covenants) to support its global
operations and on its future operating plans. The ratings could
be pressured if Moody's believes that AGA is unlikely to maintain
adequate liquidity to support operations over the next twelve
months, or if operating and financial performance were expected to
deteriorate to levels inconsistent with the current rating.
Ratings affected by the actions include:
- B2 corporate family rating placed under review for downgrade
- B2 probability of default rating placed under review for
downgrade
- B1 (LGD 3; 42%) senior secured revolving credit facility
rating placed under review for downgrade
- B1 (LGD 3; 42%) senior secured term loan placed under review
for downgrade
The prior rating action was on September 28, 2006, when the senior
secured revolving credit facility and term loan were upgraded to
B1 from B2.
AGA Medical Corporation is a manufacturer of nitinol-based
occlusion devices for the treatment of cardiovascular defects and
peripheral vascular disease. The company had approximately
$164 million in revenues for the twelve months ended September 30,
2008.
AIRTRAN HOLDINGS: Profitable in Q1 2009, Management Says
--------------------------------------------------------
Management of AirTran Holdings, Inc., conducted a presentation at
the Raymond James Institutional Investors Conference on Monday.
According to management, actions taken to mitigate record high oil
has AirTran well positioned to weather current economic
uncertainty, noting that legacy airlines are facing multiple
challenges from degradation in corporate, international, and cargo
businesses.
"Expect AirTran to return to profitability," management said.
Management noted that capacity reductions have mitigated effects
of soft economy. AirTran also reduced debt and capital
requirements -- it repaid more than $220 million in debt
obligations during 2008 and reduced capital requirements by nearly
$1 billion through 2010.
Moreover, the carrier's yields and revenues have improved.
According to management, fourth quarter 2008 yield improvement was
the best in over two years. AirTran had the highest fourth
quarter passenger RASM (unit revenues) since 2000 and highest
total RASM in company history for both fourth quarter and 2008.
AirTran's 2009 hedge portfolio is improved. Management said most
out-of-the-money hedge contracts were unwound in the fourth
quarter of 2008 at higher prices, and hedge losses from unwinds
were recognized in 2008.
Management said track record of profitability will be restored in
the first quarter of 2009. "Expect profits in all quarters of
2009 with fuel at current prices," management said, noting that
2008 was only loss in the last nine years.
A full-text copy of management's presentation slides is available
at no charge at:
http://researcharchives.com/t/s?3a3e
As of December 31, 2008, the company's balance sheet showed total
assets of $2,062,860,000, total liabilities of $1,816,855,000 and
total stockholders' equity of $246,005,000.
A full-text copy of the company's annual report is available for
free at:
http://researcharchives.com/t/s?3979
About AirTran Holdings
Headquartered in Orlando Florida, AirTran Holdings Inc. (NYSE:
AAI) -- http://www.airtran.com/-- a Fortune 1000 company, is
the parent company of AirTran Airways Inc., which offers more than
700 daily flights to 56 U.S. destinations.
* * *
The Troubled Company Reporter said on Aug. 29, 2008, that Standard
& Poor's Ratings Services has lowered its ratings on AirTran
Holdings Inc., including the corporate credit rating, which it
lowered to 'CCC+' from 'B-'. At the same time, S&P removed the
ratings from CreditWatch, where they had been placed with negative
implications on May 22, 2008. The outlook is stable.
ALITALIA SPA: EU Endorses Privatization, AirFrance Deal Closes
--------------------------------------------------------------
Reuters reports Italy's transport commissioner, Antonio Tajani,
said the European Commission has endorsed privatization of flag
carrier Alitalia SpA.
Alitalia, Reuters relates, was formally relaunched in January as a
smaller, regional carrier with fewer staff and a revamped network,
under the ownership of Compagnia Aerea Italiana s.r.l. ("CAI")
investors.
Reuters recalls Alitalia agreed in January to sell a 25 percent
stake to Air France-KLM for EUR323 million (US$410 million).
According to Reuters, throughout the process the European
Commission watched closely to ensure the ailing Italian carrier
received no state aid and was eventually sold at market prices. A
monitoring trustee was selected to check, Reuters says.
Air France-KLM has completed the stake acquisition in Alitalia at
market prices as required by the European Commission,
tradingmarkets.com relates citing ADP News.
"The trustee has confirmed that it was truly the market price, and
the Commission shares that view," Reuters quoted Mr. Tajani as
saying.
Cargo Unit Sale
Bruce Barnard at The Journal of Commerce Online reports the cargo
unit of Alitalia is about to be sold.
The report relates the airline's bankruptcy administrator, Augusto
Fantozzi, said he expects to sign a contract with Alis, the owner
of Cargoitalia, an all-cargo carrier, within a week.
Alis is paying just over $18 million for the former Alitalia
Cargo, but this does not include planes or take off and landing
slots, Mr. Fantozzi said as cited by the Journal.
According to the Journal, Alitalia Cargo's five MD-11 freighters
were grounded in January after CAI declined to buy the
unprofitable freight unit of the former state-controlled carrier.
Alitalia Cargo lost $20 million in 2007, the report says.
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.
As reported in the TCR-Europe on November 7, 2008, Alitalia S.p.A.
filed for Chapter 15 protection with the U.S. Bankruptcy Court in
the Southern District of New York. Italy's national airline
experienced financial difficulties for a number of years caused,
in large measure, by a combination of competition from low-cost
air carriers, poor management and onerous union obligations,
according to papers filed with the court.
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 posted EUR93 million in net
profits in 2002 after a EUR1.4 billion capital injection. The
carrier booked annual net losses of 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 petition filed October 29, 2008, Prof. Augusto Fantozzi,
the appointed administrator, said the airline's financial
difficulties have been and exacerbated by spiraling fuel prices.
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.
ALTUS PHARMACEUTICALS: Has Going Concern Qualification
------------------------------------------------------
Ernst & Young LLP, independent registered public accounting firm
for Altus Pharmaceuticals Inc., said that there is substantial
doubt about the company's ability to continue as a going concern.
E&Y noted that (i) the company has incurred recurring operating
losses and has an accumulated deficit, (ii) the company has said
that its cash and cash equivalents will fund operations into the
fourth quarter of 2009 at which time it will be required to raise
additional capital, find alternative means of financial support,
or both.
Altus' latest annual report on form 10-K shows it has incurred
operating losses for three straight years. It recorded operating
losses of $99,176,000 for 2008, $67,747,000 for 2007, and
$60,00,008,000.
As of Dec. 31, 2008, the company has $64,251,000 in assets and
$27,647,000.
Based in Cambridge, Massachusetts, Altus Pharmaceuticals Inc. is a
developer of oral and injectable protein supplements.
BALLY TOTAL: Can Use Lenders' Cash Collateral Until March 25
------------------------------------------------------------
Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern
District of New York issued another interim order authorizing
Bally Total Fitness Holding Corporation and its debtor-affiliates
to use their lenders' cash collateral from the Petition Date in
accordance with their budget, consisting of a consolidated 13-week
forecast from the period February 27 to
May 22, 2009.
The Cash Collateral may be used through the earlier of (a) the
date a further order is entered granting or denying the Motion and
(b) 11:59 p.m., Eastern Time, on March 25, 2009, the Court ruled.
Specifically, the Cash Collateral may be used during the Specified
Period solely up to the amounts, not to exceed 115% of the amounts
set forth in the Budget on a cumulative, aggregate rolling basis
measured weekly as of the close of business on Friday of each
week. The authorization for the Debtors to use Cash Collateral
will terminate at the expiration of the Specified Period.
In addition, the Court authorized, but not directed, Wells Fargo
Foothill, LLC, as revolving credit agent to the Credit Agreement
among the Debtors, Morgan Stanley Senior Funding, Inc., and the
CIT Group/Business Credit, Inc., to extend, amend, replace, renew
or reissue any Letter of Credit outstanding under the Agreement as
of the Petition Date, provided that:
(i) the aggregate face amount of the sum of Letters of Credit
outstanding after any Amendment does not exceed the
aggregate face amount of the L/Cs outstanding as of the
Petition Date; and
(ii) the Amendment is on substantially the same terms and
conditions as any L/Cs outstanding under the Agreement as
of the Petition Date.
Pursuant to Section 362(a) of the Bankruptcy Code, the Preparation
Secured Creditors are granted:
(1) interest payments for the benefit of the lenders under
the Revolver Facility;
(2) reimbursement of administrative expenses and professional
fees in connection with monitoring the Debtors' use of
Cash Collateral and the Chapter 11 Cases, on a monthly
basis and in accordance with the Budget.
(3) Letter of Credit fees under the Credit Agreement in
connection with L/Cs that have been extended, amended,
replaced, renewed or reissued;
(4) Senior Secured Lenders' Replacement Liens on all of the
Debtors' rights in property acquired postpetition of the
same type as the prepetition collateral; and the
encumbered leases in the same relative priority as the
prepetition liens of the Prepetition Secured Creditors;
(5) Senior Secured Notes Replacement Liens for Senior Secured
Noteholders, or second priority perfected replacement
Liens on all of the Debtors' rights in the Postpetition
Collateral;
(6) Senior Secured Lenders' Real Estate Liens, which provides
for first priority perfected liens on all of the Debtors'
rights in the unencumbered leases in the same relative
priority as the Prepetition Liens; and
(7) Senior Secured Notes Real Estate Liens, or second priority
perfected liens on the Unencumbered Leases.
A full-text copy of Bally II's Sixth Interim Cash Collateral
Order is available for free at:
http://bankrupt.com/misc/BallyII_SixthInterimCashCollOrder.pdf
Judge Lifland will convene a hearing to consider the Debtors' Cash
Collateral Motion, on a final basis, on March 24, 2009.
Objections to the Debtors' request must be filed on or before
March 13.
About Bally Total Fitness
Based in Chicago, Illinois, Bally Total Fitness Holding Corp.
(Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates
fitness centers in the U.S., with over 375 facilities located in
26 states, Mexico, Canada, Korea, China and the Caribbean under
the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs
of Canada (R) brands.
Bally Total and its affiliates filed for Chapter 11 protection
7on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after
obtaining requisite number of votes in favor of their pre-
packaged chapter 11 plan. Joseph Furst, III, Esq. at Latham &
Watkins, L.L.P. represents the Debtors in their restructuring
efforts. As of June 30, 2007, the Debtors had US$408,546,205 in
total assets and US$1,825,941,54627 in total liabilities.
The Debtors filed their Joint Prepackaged Plan & Disclosure
Statement on July 31, 2007. The Court confirmed the Plan in
September 2007. The Plan was declared effective Oct. 1, 2007.
Bally Total Fitness Holding Corp. and its debtor-affiliates and
subsidiaries again filed voluntary petitions under Chapter 11 on
Dec. 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their
counsel is Kenneth H. Eckstein, Esq. at Kramer Levin Naftalis &
Frankel LLP, in New York. As of September 30, 2008, the Company
(including non-debtor affiliates) had consolidated assets totaling
approximately $1.376 billion and recorded consolidated liabilities
totaling approximately $1.538 billion.
Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy
News. The newsletter provides gavel-to-gavel coverage of the
chapter 11 proceedings of Bally Total Fitness Holding Corp. and
its debtor-affiliates (http://bankrupt.com/newsstand/or
215/945-7000)
BALLY TOTAL: Court Extends Period to Remove Civil Suits to June 1
-----------------------------------------------------------------
Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern
District of New York extended the period within which Bally Total
Fitness Holding Corporation and its debtor-affiliates may remove
civil actions and proceedings in state and federal courts pending
on or before the Petition Date, to the later of:
(a) 180 days after the Petition Date or June 1, 2009; or
(b) 30 days after the entry of an order terminating the
automatic stay with respect to the particular Civil Action
sought to be removed.
The Order is without prejudice to (i) any position the Debtors may
take regarding whether Section 362 of the Bankruptcy Code applies
to stay any Actions, and (ii) the Debtors' right to seek from
further extensions of the Removal Period under Rule 9027(a) of the
Federal Rules of Bankruptcy Procedure.
The Debtors have noted that they are continuing to review their
files and records to determine whether they should remove any
claims or civil causes of action. Given the number of civil
actions involved and the complex nature of those actions, the
Debtors require additional time to consider the removal of the
Actions.
Accordingly, extending the Removal Period will permit the Debtors
to timely review and properly evaluate their pending litigation
matters, without prejudice to any counterparty.
About Bally Total Fitness
Based in Chicago, Illinois, Bally Total Fitness Holding Corp.
(Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates
fitness centers in the U.S., with over 375 facilities located in
26 states, Mexico, Canada, Korea, China and the Caribbean under
the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs
of Canada (R) brands.
Bally Total and its affiliates filed for Chapter 11 protection
7on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after
obtaining requisite number of votes in favor of their pre-
packaged chapter 11 plan. Joseph Furst, III, Esq. at Latham &
Watkins, L.L.P. represents the Debtors in their restructuring
efforts. As of June 30, 2007, the Debtors had US$408,546,205 in
total assets and US$1,825,941,54627 in total liabilities.
The Debtors filed their Joint Prepackaged Plan & Disclosure
Statement on July 31, 2007. The Court confirmed the Plan in
September 2007. The Plan was declared effective Oct. 1, 2007.
Bally Total Fitness Holding Corp. and its debtor-affiliates and
subsidiaries again filed voluntary petitions under Chapter 11 on
Dec. 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their
counsel is Kenneth H. Eckstein, Esq. at Kramer Levin Naftalis &
Frankel LLP, in New York. As of September 30, 2008, the Company
(including non-debtor affiliates) had consolidated assets totaling
approximately $1.376 billion and recorded consolidated liabilities
totaling approximately $1.538 billion.
Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy
News. The newsletter provides gavel-to-gavel coverage of the
chapter 11 proceedings of Bally Total Fitness Holding Corp. and
its debtor-affiliates (http://bankrupt.com/newsstand/or
215/945-7000)
BALLY TOTAL: Court Issues Final Injunction Order on Utilities
-------------------------------------------------------------
Judge Burton Lifland of the U.S. Bankruptcy Court for the Southern
District of New York issued a final order in the bankruptcy cases
of Bally Total Fitness Holding Corporation and its debtor-
affiliates, prohibiting roughly 385 providers of, among others,
sewer service, electricity, natural gas and telephone service
under approximately 1,750 separate accounts, from:
* altering, refusing, terminating or discontinuing utility
services to, or discriminating against, the Debtors on
account of outstanding prepetition invoices; or
* requiring additional assurance of payment, other than the
Proposed Adequate Assurance, as a condition to the Debtors
receiving the Utility Services.
The Court entitled the Utility Providers to an Adequate Assurance
Deposit, provided that (i) the request for the Deposit has been
made as of January 5, 2009, (ii) the Utility Provider is not
currently paid in advance for its services, and (iii) the Utility
Provider does not already hold a deposit equal to or greater than
the Adequate Assurance Deposit.
A Utility Provider that does not request an Adequate Assurance
Deposit, or make Additional Assurance Request in accordance with
the Additional Adequate Assurance Procedures by the Request
Deadline, will be deemed to have adequate assurance that is
satisfactory to it within the meaning of Section 366 of the
Bankruptcy Code, and waives any right to seek additional adequate
assurance during the Chapter 11 cases. Similarly, a Utility
Provider's request for, and acceptance of, an Adequate Assurance
Deposit will be deemed an acknowledgment and admission that the
Deposit is satisfactory pursuant to Section 366.
A complete list of the Debtors' Utility Providers with their
Adequate Assurance Deposit is available for free at:
http://bankrupt.com/misc/BallyII_FinalORDUtilityProvidersList.pdf
The Court authorized the Debtors, in their discretion, to amend
the Utility Service List, by adding or deleting any Utility
Provider.
Objections Withdrawn
Pursuant to separate settlements reached with the Debtors, these
Utility Providers have withdrawn their objection to the Utilities
Injunction Motion:
* Owl Energy Resources, Inc.,
* Union Electric Company
* Rochester Gas and Electric Company
* New York Electric and Gas Corporation
* Salt River Project
* Penn Power
* Ohio Edison Company
* The Cleveland Electric Illuminating Company
* Toledo Edison Company
* Jersey Central Power and Light Company
* Duke Energy Ohio, Inc.
* Duke Energy Indiana, Inc.
* Exelon Energy Company
* PECO Energy Company
* The Commonwealth Edison Company
* Consolidated Edison Company of New York, Inc.
* Public Service Electric And Gas Company
* Dominion Virginia Power
* Dominion Peoples
* Dominion East Ohio
* Southern California Edison Company
* Progress Energy Florida
* The Southern Connecticut Gas Company
* Long Island Lighting Company
* KeySpan Gas East Corporation
* Massachusetts Electric Company
* Colonial Gas Company
* National Grid NY
* Boston Gas Company
* Jackson EMC
* Walton EMC
* Southwest Gas Corporation
* Connecticut Light and Power Company
* Yankee Gas Services Company
About Bally Total Fitness
Based in Chicago, Illinois, Bally Total Fitness Holding Corp.
(Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates
fitness centers in the U.S., with over 375 facilities located in
26 states, Mexico, Canada, Korea, China and the Caribbean under
the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs
of Canada (R) brands.
Bally Total and its affiliates filed for Chapter 11 protection
7on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after
obtaining requisite number of votes in favor of their pre-
packaged chapter 11 plan. Joseph Furst, III, Esq. at Latham &
Watkins, L.L.P. represents the Debtors in their restructuring
efforts. As of June 30, 2007, the Debtors had US$408,546,205 in
total assets and US$1,825,941,54627 in total liabilities.
The Debtors filed their Joint Prepackaged Plan & Disclosure
Statement on July 31, 2007. The Court confirmed the Plan in
September 2007. The Plan was declared effective Oct. 1, 2007.
Bally Total Fitness Holding Corp. and its debtor-affiliates and
subsidiaries again filed voluntary petitions under Chapter 11 on
Dec. 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their
counsel is Kenneth H. Eckstein, Esq. at Kramer Levin Naftalis &
Frankel LLP, in New York. As of September 30, 2008, the Company
(including non-debtor affiliates) had consolidated assets totaling
approximately $1.376 billion and recorded consolidated liabilities
totaling approximately $1.538 billion.
Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy
News. The newsletter provides gavel-to-gavel coverage of the
chapter 11 proceedings of Bally Total Fitness Holding Corp. and
its debtor-affiliates (http://bankrupt.com/newsstand/or
215/945-7000)
BALLY TOTAL: Seeks July 1 Extension of Lease Decision Deadline
--------------------------------------------------------------
Section 365(d)(4) of the Bankruptcy Code states that an unexpired
lease of nonresidential real property under which the debtor is
the lessee will be deemed rejected, and the trustee will
immediately surrender that nonresidential real property to the
lessor, if the trustee does not assume or reject the unexpired
lease by the earlier of (i) 120 days after the date that the Court
enters an order authorizing the rejection, or (ii) the date of the
Court's confirmation of a Chapter 11 plan.
However, the court may extend the period prior to the expiration
of the 120-day period, for 90 days upon the motion of the trustee
or lessor for cause.
Bally Total Fitness Holding Corporation and its debtor-affiliates
are parties to approximately 300 unexpired nonresidential real
estate leases with various lessors and sublessors. The Unexpired
Leases, which predominately relate to properties used as fitness
clubs, constitute the bulk of the Debtors' operating locations.
As of March 9, 2009, the Unexpired Leases remain in effect and
have not expired or terminated according to their terms. Thus,
each of the Unexpired Leases is subject to assumption or rejection
under Section 365 of the Bankruptcy Code, on or before April 2,
2009.
Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP,
in New York, explains that the Debtors expect to assume the vast
majority of the Unexpired Leases in connection with their exit
from the Chapter 11 cases.
However, given the number of the Unexpired Leases and the central
role that the locations play in the Debtors' business, the Debtors
require additional time to review each Unexpired Lease
individually to determine if it fits into their optimal
operational and geographic footprint, and negotiate with the
Landlords accordingly, Mr. Eckstein notes.
Consequently, the Debtors ask the U.S. Bankruptcy Court for the
Southern District of New York to grant them a 90-day extension of
the deadline, or until July 1, 2009, to assume or reject the
Unexpired Leases.
Mr. Eckstein avers that absent an extension of the Lease Decision
Period, the Debtors will be forced to assume or reject all of the
Unexpired Leases by the April 2, 2009 deadline. As a result, the
Debtors will risk prematurely and improvidently assuming certain
Unexpired Leases that they may later determine to be burdensome
-- thus creating potential administrative claims. In the same
manner, the Debtors may risk rejecting certain Unexpired Leases
that they may discover as critical to their reorganization
efforts.
Because the Unexpired Leases are critical to the Debtors'
operations, the decision to assume or reject them will be central
to any proposed Chapter 11 plan of reorganization and the
postpetition operation of the Debtors' business.
"The decision to assume or reject the Leases must be made, to the
fullest extent possible, consistent with the strategies and
initiatives being developed as part of the Restructuring Plan,"
Mr. Eckstein tells the Court.
A hearing to consider the Debtors' request is scheduled for
March 24, 2009. Parties-in-interest must file their objections to
the Motion, if any, by March 19.
About Bally Total Fitness
Based in Chicago, Illinois, Bally Total Fitness Holding Corp.
(Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates
fitness centers in the U.S., with over 375 facilities located in
26 states, Mexico, Canada, Korea, China and the Caribbean under
the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs
of Canada (R) brands.
Bally Total and its affiliates filed for Chapter 11 protection
7on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after
obtaining requisite number of votes in favor of their pre-
packaged chapter 11 plan. Joseph Furst, III, Esq. at Latham &
Watkins, L.L.P. represents the Debtors in their restructuring
efforts. As of June 30, 2007, the Debtors had US$408,546,205 in
total assets and US$1,825,941,54627 in total liabilities.
The Debtors filed their Joint Prepackaged Plan & Disclosure
Statement on July 31, 2007. The Court confirmed the Plan in
September 2007. The Plan was declared effective Oct. 1, 2007.
Bally Total Fitness Holding Corp. and its debtor-affiliates and
subsidiaries again filed voluntary petitions under Chapter 11 on
Dec. 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their
counsel is Kenneth H. Eckstein, Esq. at Kramer Levin Naftalis &
Frankel LLP, in New York. As of September 30, 2008, the Company
(including non-debtor affiliates) had consolidated assets totaling
approximately $1.376 billion and recorded consolidated liabilities
totaling approximately $1.538 billion.
Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy
News. The newsletter provides gavel-to-gavel coverage of the
chapter 11 proceedings of Bally Total Fitness Holding Corp. and
its debtor-affiliates (http://bankrupt.com/newsstand/or
215/945-7000)
BALLY TOTAL: Seeks July 31 Extension of Plan Filing Deadline
------------------------------------------------------------
Section 1121(b) of the Bankruptcy Code provides for an initial
period of 120 days after the Petition Date during which a debtor
has the exclusive right to propose and file a Chapter 11 plan of
reorganization. Section 11210(c)(3) of the Bankruptcy Code
provides that, if a debtor files a plan within the 120-day
Exclusive Plan Period, it has a period of 180 days after the
Petition Date to obtain acceptance of that plan, during which time
competing plans may not be filed.
Bally Total Fitness Holding Corporation and its debtor-affiliates'
Exclusive Plan filing period currently expires on April 2, 2009,
and their Exclusive Solicitation Period ends on June 1.
The Exclusive Periods are intended to afford a debtor a full and
fair opportunity to propose a consensual plan and solicit
acceptances of that plan without the deterioration and disruption
that is likely to be caused by the filing of competing plans by
non-debtor parties.
In this regard, the Debtors ask Judge Burton R. Lifland of the
United States Bankruptcy Court for the Southern District of New
York to extend the time within which they may:
(1) file a Chapter 11 plan of reorganization to July 31, 2009;
and
(2) solicit acceptances for that plan to September 9, 2009.
Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP,
in New York, relates that the Debtors have achieved considerable
progress toward their expeditious exit from the Chapter 11 cases.
Among other things, the Debtors have addressed numerous issues
raised by employees, vendors, landlords and other parties-in-
interest, and worked with the Office of the U.S. Trustee to comply
with reporting requirements under the Bankruptcy Code.
The Debtors have also stabilized their business operations and
implemented an extremely successful operational restructuring and
cost savings plan, which enabled them to build significant cash
reserves and operate solely through the use of cash collateral and
without the need for postpetition financing. Most importantly,
Mr. Eckstein says, the Debtors have formulated and presented a
business plan to various constituents for their postpetition and
post-emergence operations, Mr. Eckstein adds.
Mr. Eckstein points out that despite the substantial progress,
numerous issues need to be addressed and require more time to be
resolved. Specifically, the Debtors are currently negotiating
with their prepetition lenders and other parties, and are pursuing
various proposals, with respect to the sponsorship of a Chapter 11
plan. The Debtors are also continuing to evaluate their unexpired
leases and to work on restructuring their operational and
geographic footprint, Mr. Eckstein explains.
In this regard, an extension of the Exclusive Periods will allow
the Debtors to continue finalizing the terms of a Plan, while
simultaneously implementing their cost-cutting restructuring plan,
particularly in connection with their facilities.
Mr. Eckstein assures Judge Lifland that an extension of the
Exclusive Periods will not prejudice any party-in-interest in the
Chapter 11 cases because the Debtors are continuing to meet their
postpetition obligations as they come due. Besides paying their
lease obligations arising under unexpired leases of non-
residential real property, the Debtors' prepetition secured
lenders are adequately protected under the terms of the Court's
orders permitting the use of cash collateral, he says.
The Court will consider approval of the Exclusive Periods
Extension Motion on March 24, 2009. Parties-in-interest must file
their objections to the request, if any, by March 19.
About Bally Total Fitness
Based in Chicago, Illinois, Bally Total Fitness Holding Corp.
(Pink Sheets: BFTH.PK) -- http://www.ballyfitness.com/-- operates
fitness centers in the U.S., with over 375 facilities located in
26 states, Mexico, Canada, Korea, China and the Caribbean under
the Bally Total Fitness(R), Bally Sports Clubs(R) and Sports Clubs
of Canada (R) brands.
Bally Total and its affiliates filed for Chapter 11 protection
7on July 31, 2007 (Bankr. S.D.N.Y. Case No. 07-12396) after
obtaining requisite number of votes in favor of their pre-
packaged chapter 11 plan. Joseph Furst, III, Esq. at Latham &
Watkins, L.L.P. represents the Debtors in their restructuring
efforts. As of June 30, 2007, the Debtors had US$408,546,205 in
total assets and US$1,825,941,54627 in total liabilities.
The Debtors filed their Joint Prepackaged Plan & Disclosure
Statement on July 31, 2007. The Court confirmed the Plan in
September 2007. The Plan was declared effective Oct. 1, 2007.
Bally Total Fitness Holding Corp. and its debtor-affiliates and
subsidiaries again filed voluntary petitions under Chapter 11 on
Dec. 3, 2008 (Bankr. S. D. N. Y., Lead Case No. 08-14818). Their
counsel is Kenneth H. Eckstein, Esq. at Kramer Levin Naftalis &
Frankel LLP, in New York. As of September 30, 2008, the Company
(including non-debtor affiliates) had consolidated assets totaling
approximately $1.376 billion and recorded consolidated liabilities
totaling approximately $1.538 billion.
Bankruptcy Creditors' Service, Inc., publishes Bally Bankruptcy
News. The newsletter provides gavel-to-gavel coverage of the
chapter 11 proceedings of Bally Total Fitness Holding Corp. and
its debtor-affiliates (http://bankrupt.com/newsstand/or
215/945-7000)
BEARINGPOINT INC: Common Stock Delisted From NYSE Trading
---------------------------------------------------------
The New York Stock Exchange Inc. filed Form 25 with the Securities
and Exchange Commission, indicating that, pursuant to 17 CFR
240.12d2-2(b), the Exchange has complied with its rules to strike
BearingPoint Inc.'s common stock from listing on the Exchange.
BearingPoint, Inc. -- http://www.BearingPoint.com-- is currently
one of the world's largest providers of management and technology
consulting services to Global 2000 companies and government
organizations in more than 60 countries worldwide. Based in
McLean, Va., BearingPoint -- a former consulting arm of KPMG LLP
-- has approximately 15,000 employees focusing on the Public
Services, Commercial Services and Financial Services industries.
BearingPoint professionals have built a reputation for knowing
what it takes to help clients achieve their goals, and working
closely with them to get the job done. The company's service
offerings are designed to help clients generate revenue, increase
cost-effectiveness, manage regulatory compliance, integrate
information and transition to "next-generation" technology.
BearingPoint, Inc. fka KPMG Consulting, Inc., together with its
units, filed for Chapter 11 on February 18, 2009 (Bankr. S.D.
N.Y., Case No. 09-10691). Alfredo R. Perez, Esq. at Weil Gotshal
& Manges LLP, has been tapped as counsel. Greenhill & Co., LLC,
and AP Services LLC, have also been tapped as advisors. Davis
Polk & Wardell is special corporate counsel. BearingPoint
disclosed total assets of $1,762,689,000, and debts of
$2,231,839,000 as of Sept. 30, 2008.
Contemporaneous with their bankruptcy petitions, the Debtors filed
a pre-packaged Joint Plan of Reorganization under Chapter to
implement the terms of their agreement with the secured lenders.
Under the Plan, the Debtors propose to exchange general unsecured
claims for equity in the reorganized company. Existing
shareholders are out of the money. The Plan and the explanatory
disclosure statement remain subject to approval by the Bankruptcy
Court.
BERNARD L. MADOFF: Pleads Guilty to Ponzi Scheme; Bail Revoked
--------------------------------------------------------------
Robert Frank, Amir Efrati, Aaron Lucchetti, and Chad Bray at The
Wall Street Journal report that Bernard Madoff has plead guilty to
fraud charges, admitting that he ran a Ponzi scheme and concealed
it from federal authorities and investors for more than a decade.
Mr. Madoff, says WSJ, pleaded guilty to 11 felony counts, after
waiving a grand-jury indictment and criminal trial in hopes of
receiving a more lenient sentence from the court. WSJ notes that
Mr. Madoff faces a maximum sentence of 150 years in prison, but
would likely get about 20 years of imprisonment.
WSJ relates that U.S. District Judge Denny Chin revoked
Mr. Madoff's bail during the Thursday hearing, no longer putting
him under house arrest. WSJ states that Mr. Madoff, after
describing how he managed the global, multibillion-dollar Ponzi
scheme, was directly sent to jail and would be sentenced on June
16, 2009.
According to WSJ, some details conflicted that Mr. Madoff
disclosed conflicted with the prosecutors' claims. Citing Mr.
Madoff, WSJ states that the fraud started in the 1990s. The
report says that prosecutors had believed that the fraud dates
back to at least the 1980s. WSJ relates that Mr. Madoff said that
he felt "compelled" to give institutional investors strong returns
despite the weak stock market and national recession. The report
quoted him as saying, "When I began the Ponzi scheme I believed it
would end shortly and I would be able to extricate myself and my
clients from the scheme. However, this proved difficult and
ultimately impossible."
Ira Sorkin, the attorney for Mr. Madoff, explained during the bail
discussion that his client's wife, Ruth, paid for a security
company to monitor Mr. Madoff at her "own expense," WSJ reports.
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC was a market maker in
U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq
stocks. The firm moved large blocks of stock for institutional
clients by splitting up orders or arranging off-exchange
transactions between parties. It also performed clearing and
settlement services. Clients included brokerages, banks, and
other financial institutions. In addition, Madoff Securities
managed assets for high-net-worth individuals, hedge funds, and
other institutional investors.
The firm is being liquidated in the aftermath of a fraud scandal
involving founder Bernard L. Madoff.
As reported by the Troubled Company Reporter on Dec. 15, 2008, the
Securities and Exchange Commission charged Bernard L. Madoff and
his investment firm, Bernard L. Madoff Investment Securities LLC,
with securities fraud for a multi-billion dollar Ponzi scheme that
he perpetrated on advisory clients of his firm. The estimated
losses from Madoff's fraud were allegedly at least
$50 billion.
Also on Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S.
District Court for the Southern District of New York granted the
application of the Securities Investor Protection Corporation for
a decree adjudicating that the customers of BLMIS are in need of
the protection afforded by the Securities Investor Protection Act
of 1970. Irving H. Picard, Esq., was appointed as trustee for the
liquidation of BLMIS, and Baker & Hostetler LLP was appointed as
counsel.
Mr. Madoff, if found guilty of all counts, would be imprisoned for
150 years, but legal experts expect the actual sentence to be much
lower and would still be an effective life sentence for the 70-
year-old defendant, WSJ notes. Mr. Madoff, WSJ relates, would
also face millions of dollars in possible criminal fines. The
report says that Mr. Madoff has been free on bail since his arrest
on December 11, 2008. There was no plea agreement with Mr. Madoff
in which leniency in sentencing might be recommended, the report
states, citing prosecutors.
BRUNO'S SUPERMARKETS: Union Won't Cede to CBA Cancellation
----------------------------------------------------------
Russell Hubbard at The Birmingham News reports that The United
Food and Commercial Workers International Union said that it won't
void contracts with Bruno's Supermarkets LLC.
As reported by the Troubled Company Reporter on March 11, 2009,
Bruno's Supermarkets filed a motion that is technically described
as a motion to reject the collective bargaining agreements between
Bruno's and the United Food & Commercial Workers. The filing
asked the U.S. Bankruptcy Court for the Northern District of
Alabama to allow Bruno's to make changes to the labor agreements
with its Teammates that would make a sale of some or all of the
company's store locations easier, which would ultimately preserve
jobs.
According to The Birmingham News, the union claimed that Bruno's
Supermarkets is unfairly punishing employees by asking for labor
concessions during bankruptcy.
The labor contract needs to be modified to let a prospective new
owner escape provisions on wages, benefits, and work rules like
overtime scheduling, The Birmingham News states, citing Bruno's
Supermarkets. According to the report, Bruno's Supermarkets said
that prospective buyers have already balked because they don't
want to inherit the union contract.
Citing the union Birmingham Local 1657, The Birmingham News
relates that the 2,600 union workers at Bruno's Supermarkets
didn't cause the financial problems that caused the firm's
bankruptcy. Birmingham Local, according to the report, said that
it shouldn't be required to give up its collective bargaining
rights if Bruno's Supermarkets finds a buyer. Birmingham Local
said in a statement, "We are not going to sign away our future
because some New York restructuring firm says that we should.
They are basically saying trust us, we know what is best for you.
But these are the same Wall Street financial wizards who got us
into this economic mess."
Court documents say that Bruno's Supermarkets, in collaboration
with Wall Street restructuring firm Alvarez & Marsal, has already
identified labor-related cost cuts that would save at least
$6.5 million per year. The Birmingham News that Bruno's
Supermarkets is proposing:
-- reduction of vacation by a week per year for workers with
more than two weeks of vacation per year, saving
$750,000;
-- reduction of guaranteed weekly work hours for full-time
and part-time employees, saving as much as $3 million;
and
-- elimination of company-paid medical insurance for part-
time workers, saving $3.3 million.
According to court documents, the union leaders have provisionally
accepted some proposals, while rejecting others and delaying
comment on still others.
About Bruno's Supermarkets, LLC
Bruno's Supermarkets, LLC, is a privately held company
headquartered in Birmingham, Alabama. Bruno's is the parent
company of the Bruno's, Food World, and FoodMax grocery store
chains, which includes 23 Bruno's, 41 Food World, and 2 FoodMax
locations in Alabama and the Florida panhandle. Founded in
1933, Bruno's has operated as an independent company since 2007
after undergoing several transitions and changes in ownership
starting in 1995.
Bruno's filed voluntary Chapter 11 petitions on Feb. 5, 2009.
Bruno's has retained Alvarez & Marsal, a restructuring and
corporate advisory firm, to assist the company throughout the
restructuring process. Burr & Forman LLP is the Debtor's lead
counsel. Najjar Denaburg, P.C. is its conflicts counsel.
BUILDING SYSTEMS: S&P Puts 'BB' Rating on Negative CreditWatch
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it placed its
ratings, including its 'BB' corporate credit rating, on NCI
Building Systems Inc. on CreditWatch with negative implications.
"The CreditWatch listing reflects our increasing concerns about
the impact that weakening nonresidential construction activity may
have on the company's operating performance over the next several
quarters," said Standard & Poor's credit analyst Thomas Nadramia.
Standard & Poor's expects commercial construction to decline by
about 16% in 2009. As a result, S&P believes NCI may not generate
sufficient free cash flow to fund the $180 million convertible
senior subordinated notes that S&P expects to be exercised at the
first put date of Nov. 15, 2009. Although historically, NCI has
not borrowed on its credit facility, the listing also reflects
heightened liquidity risk regarding the maturity of the company's
credit facility due June 2009. S&P expects the company will have
a refinancing or repayment plan put in place during the next two
months.
In resolving S&P's CreditWatch listing, S&P will monitor the
progress of NCI's plans to refinance or repay its credit facility
due June 2009 and convertible notes callable on November 2009.
CANWEST MEDIA: Lenders Extend Waiver Until April 7; Talks Go On
---------------------------------------------------------------
Canwest Global Communications Corp. said its subsidiary, Canwest
Media Inc. and its senior lenders have agreed to extend the waiver
of certain borrowing conditions until April 7, 2009.
As part of this process, CMI has advised its senior lenders that
it will not make the March 15, 2009 payment of interest of
approximately US$30.4 million on its outstanding 8% senior
subordinated notes. Under the terms of the notes, failure to make
the interest payment does not permit the noteholders to demand
payment of the approximately US$761 million principal amount of
outstanding notes if the interest payment is made on or prior to
April 14, 2009.
CMI has commenced discussions with representatives of an ad hoc
committee of noteholders representing a significant majority
amount of the aggregate principal amount of CMI's 8% senior
subordinated notes. Discussions with representatives of this
group are aimed at allowing sufficient time for a recapitalization
of Canwest that is satisfactory to all of its stakeholders,
including its senior lenders and noteholders.
CMI will continue discussions with its senior lenders and
representatives of the ad hoc committee of noteholders which, if
successful, would extend CMI's access to its credit facility
beyond April 7, 2009, and enable CMI to pursue a recapitalization
transaction.
CMI and a group of financial institution counterparties have
terminated certain currency and interest rate swap agreements
relating to CMI's senior subordinated notes, resulting in net
proceeds to CMI of approximately $105 million, which has been used
to reduce obligations under the senior credit agreement. As a
result, CMI's 8% senior subordinate notes are no longer hedged
against currency fluctuations.
CMI has reduced the principal outstanding under the senior secured
credit facility to approximately $42 million in letters of credit,
has cash-on-hand of approximately $30 million, and has access to a
further $20 million of liquidity through its senior credit
facility. In addition, cash of approximately $20 million has been
placed on deposit by CMI as collateral with its senior lenders.
Based upon current cash flow projections, the Company believes
that it will have sufficient liquidity to enable it to continue to
operate normally through April 7, 2009.
About Canwest Global Communications
Based in Winnipeg, Manitoba, in Canada, Canwest Global
Communications Corp. (TSX: CGS and CGS.A,) --
http://www.canwest.com-- an international media company, is
Canada's largest media company. In addition to owning the Global
Television Network, Canwest is Canada's largest publisher of
English language daily newspapers and owns, operates or holds
substantial interests in conventional television, out-of-home
advertising, specialty cable channels, web sites and radio
stations and networks in Canada, New Zealand, Australia, Turkey,
Indonesia, Singapore, the United Kingdom and the United States.
Canwest Media Inc. is wholly-owned by Canwest Global
Communications Corp. Substantially all of the publicly traded
parent company's operations are held though Canwest.
* * *
As reported by the Troubled Company Reporter on February 25, 2009,
Moody's Investors Service downgraded Canwest Media Inc.'s
corporate family rating and probability of default rating to Caa3
from B3. The corporate family's consolidated speculative grade
liquidity rating remains SGL-4 (indicating poor liquidity) and the
company's ratings outlook remains negative. At the same time,
instrument ratings for Canwest and its two rated affiliates, CW
Media Holdings Inc. and Canwest Limited Partnership were also
downgraded.
The TCR said February 12 that Standard & Poor's Ratings Services
lowered its long-term corporate credit rating on Winnipeg, Man.-
based Canwest Media Inc. to 'CCC' from 'CCC+'. The outlook is
negative. At the same time, S&P lowered the senior secured debt
rating on wholly owned subsidiary Canwest Limited Partnership to
'CCC+' from 'B-'. The recovery rating on Canwest LP's secured
debt is unchanged at '2', indicating an expectation of substantial
(70% - 90%) recovery in the event of a payment default.
CHANNEL REINSURANCE: Runoff Prompts S&P's Rating Cut to 'BB+'
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
counterparty credit, financial strength, and financial enhancement
ratings on Channel Reinsurance Ltd. to 'BB+' from 'AA-'. The
outlook is negative.
Standard & Poor's also said that it subsequently withdrew the
ratings at the company's request.
"The downgrade reflects our view that Channel Re is effectively in
runoff," explained Standard & Poor's credit analyst David Veno.
S&P does not expect that MBIA Insurance Corp. -- its sole source
of business, which itself faces diminished business prospects
given the recent restructuring by MBIA Inc. -- will cede Channel
Re any new business. In addition, Channel Re's 2005-2007 vintage
direct RMBS, CDO of ABS, and other structured exposures are
subject to potential continued adverse loss development, which
could erode capital adequacy. S&P believes the company also faces
the prospects of lower earnings and the runoff of an insured
portfolio that, with time, could become less diverse.
The negative outlook reflected Standard & Poor's view that the
company's 2005-2007 vintage direct RMBS, CDO of ABS, and other
structured exposures are subject to potential continued adverse
loss development that could erode capital adequacy.
CINCINNATI BELL: Dec. 31 Balance Sheet Upside Down by $709MM
------------------------------------------------------------
Cincinnati Bell, Inc., had $2.08 billion in total assets and
$2.78 billion in total liabilities as of December 31, 2008,
resulting in $709.3 million in shareowners' deficit.
As reported by the Troubled Company Reporter on February 10, 2009,
Cincinnati Bell said, for the year, revenue of $1.4 billion
represented an increase of $54 million or 4 percent over 2007.
Operating income was $305 million with net income of $103 million
and earnings per share on a diluted basis of 38 cents. Net income
excluding special items was $107 million or 40 cents per diluted
share, up $11 million or 7 cents per diluted share from 2007 also
excluding special items. Adjusted earnings before interest,
taxes, depreciation and amortization (Adjusted EBITDA) equaled
$480 million, an increase of $7 million or 2 percent from 2007.
For the fourth quarter, revenue of $357 million represented a
decline of 1 percent from a year ago. Operating income was
$88 million, up $48 million from the fourth quarter of 2007 due to
2007 restructuring charges of $38 million and a 2008 operating tax
settlement of $10 million. Net income was $38 million or 15 cents
per diluted share, an increase of $37 million or 16 cents per
share. Excluding special items, net income was $26 million or 10
cents per diluted share, an increase of $3 million or 2 cents per
share from 2007. Adjusted EBITDA in the quarter totaled $121
million, up $3 million or 3 percent from the fourth quarter of
2007.
In its annual report on Form 10-K filed with the Securities and
Exchange Commission, Cincinnati Bell said its primary sources of
cash in 2009 will be cash generated by operations and borrowings
from the revolving credit facility under which the company had
$151.4 million of availability at December 31, 2008. Cash flows
from operations totaled $403.9 million in 2008. These 2008 cash
flows from operations included payments totaling $21.5 million
related to a prepayment from a customer for data center services
and a $10.0 million refund for operating taxes that the company
does not expect to recur in 2009. Additionally, the company
expects interest payments will be reduced by roughly $14 million
as compared to 2008 due to lower debt balances and interest rates,
and has received $10.5 million in early 2009 related to the
termination of certain interest rate swaps by the counterparty.
The company said uses of cash will include repayments and
repurchases of debt and related interest, repurchases of common
shares, dividends on preferred stock, and working capital.
In February 2008, the company's Board of Directors authorized the
repurchase of the company's outstanding common stock in an amount
up to $150 million during the next two years. The company
repurchased $76.8 million of common stock in 2008, which leaves
$73.2 million of common stock that can be repurchased under the
stock buyback program. The company believes the cash generated by
operations and borrowings on its Corporate credit facility are
sufficient to fund its primary uses of cash.
The company also expects to make $288 million of estimated cash
contributions to its qualified pension plans for the years 2009 to
2018, with approximately $6 million expected to be contributed in
2009. The company's estimated cash contributions are based on
current legislation and current actuarial assumptions, which
include consideration of the substantial plan investment losses
incurred during 2008, but do not include consideration of the
actions taken in February 2009 to reduce pension and
postretirement benefits.
As of December 31, 2008, the company had $2.0 billion of
outstanding indebtedness and an accumulated deficit of $3.4
billion. The company incurred a significant amount of indebtedness
and accumulated deficit from the purchase and operation of a
broadband business over the period of 1999 to 2002, which caused
outstanding indebtedness and accumulated deficit to reach their
respective year-end peaks of $2.6 billion and $4.9 billion at
December 31, 2002. This broadband business was sold in 2003.
Cincinnati Bell said the Corporate credit facility financial
covenants require that the company maintain certain leverage,
interest coverage, and fixed charge ratios. The facility also
contains certain covenants which, among other things, limit the
company's ability to incur additional debt or liens, pay
dividends, repurchase company common stock, sell, transfer, lease,
or dispose of assets, and make investments or merge with another
company. If the company were to violate any of its covenants and
were unable to obtain a waiver, it would be considered a default.
If the company were in default under its credit facility, no
additional borrowings under the credit facility would be available
until the default was waived or cured.
The company believes it is in compliance and expects to remain in
compliance with its corporate credit facility covenants, and plans
to refinance the revolving credit facility before it expires in
February 2010.
Cincinnati Bell also notes that various issuances of the company's
public debt, which include the 7-1/4% Senior Notes due 2013, 8-
3/8% Senior Subordinated Notes due 2014, and the 7% Senior Notes
due 2015, contain covenants that, among other things, limit the
company's ability to incur additional debt or liens, pay dividends
or make other restricted payments, sell, transfer, lease, or
dispose of assets and make investments or merge with another
company. Restricted payments include common stock dividends,
repurchase of common stock, and certain other public debt
repayments. The company believes it has sufficient ability under
its public debt indentures to make its intended restricted
payments in 2009. The company also believes it is in compliance
and expects to remain in compliance with its public debt
indentures.
Although the company believes it will be able to refinance its
revolving credit facility, Cincinnati Bell said further severe
disruption in the financial markets could cause the company not to
be able to refinance its revolving credit facility on acceptable
terms. The adverse economic conditions could impair the company's
ability to access credit markets to refinance bonds maturing in
2013.
A full-text copy of Cincinnati Bell's annual report is available
at no charge at:
http://researcharchives.com/t/s?3a3f
About Cincinnati Bell
Headquartered in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE:
CBB) -- http://www.cincinnatibell.com/-- provides integrated
communications solutions-including local, long distance, data,
Internet, and wireless services. In addition, the company
provides office communications systems as well as complex
information technology solutions including data center and managed
services. Cincinnati Bell conducts its operations through three
business segments: Wireline, Wireless, and Technology Solutions.
* * *
As reported in the Troubled Company Reporter dated Aug. 12, 2008,
Fitch Ratings affirmed the company's 'B+' issuer default rating.
CINCINNATI BELL: Gabelli, GAMCO Entities Disclose 6.26% Stake
-------------------------------------------------------------
Mario J. Gabelli and the various entities which he directly or
indirectly controls or for which he acts as chief investment
officer, disclose their beneficial ownership of 14,315,154 shares,
representing 6.26% of the 228,101,155 shares outstanding of
Cincinnati Bell, Inc.
The Gabelli entities engage in various aspects of the securities
business, primarily as investment adviser to various institutional
and individual clients, including registered investment companies
and pension plans, and as general partner of various private
investment partnerships. Certain of these entities may also make
investments for their own accounts.
The entities are GGCP, Inc.; GAMCO Investors, Inc.; Gabelli Funds,
LLC; GAMCO Asset Management Inc.; Teton Advisors, Inc.; Gabelli
Securities, Inc.; Gabelli & Company, Inc.; MJG Associates, Inc.;
Gabelli Foundation, Inc.
About Cincinnati Bell
Headquartered in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE:
CBB) -- http://www.cincinnatibell.com/-- provides integrated
communications solutions-including local, long distance, data,
Internet, and wireless services. In addition, the company
provides office communications systems as well as complex
information technology solutions including data center and managed
services. Cincinnati Bell conducts its operations through three
business segments: Wireline, Wireless, and Technology Solutions.
* * *
As reported in the Troubled Company Reporter dated Aug. 12, 2008,
Fitch Ratings affirmed the company's 'B+' issuer default rating.
CLUB AT WATERFORD: Court Denies Sec. Creditor's Dismissal Motion
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Texas has
denied Stark Master Fund Ltd.'s motion seeking the immediate
dismissal of The Club at Waterford, LP's bankruptcy case.
If no plan of reorganization is confirmed by May 31, 2009, the
Court will hold a hearing no later that June 1, 2009, to decide
whether to (a) dismiss the case at that time; (b) convert the case
to a case under Chapter 7; or (c) appoint a Chapter 7 trustee.
As previously reported, Stark Master Fund Ltd., a secured creditor
of the Debtor, asked the Court to dismiss the Debtor's case or, in
the alternative, determine that the Debtor is subject to Sec.
362(d)(3) of the Bankruptcy Code.
Stark sought dismissal of the case for cause pursuant to Sec.
1112(b) because of the substantial and continuing loss to and
diminution of the estate. In addition, Stark told the Court that
the case should be dismissed because the petition was not filed in
good faith.
As of the Petition Date, the Debtor owed Stark $28,345,295 in
unpaid principal and $1,695,599 in unpaid interest.
Based in Marble Falls, Texas, The Club at Waterford, LP, is a
single real estate debtor. The company filed for bankruptcy
protection on Oct. 6, 2008 (Bankr. W.D. Tex. Case No. 08-11925).
Joseph D. Martinec, Esq., at Martinec, Winn, Vickers & McElroy,
P.C., represents the Debtor as counsel. When the Debtor filed for
protection from its creditors, it listed assets of between
$50 million and $100 million, and debts of between $10 million and
$50 million.
CONGOLEUM CORP: Files 11th Amendment to Postpetition Financing
--------------------------------------------------------------
Congoleum Corporation, et al., ask the U.S. Bankruptcy Court for
the District of New Jersey to approve the eleventh amendment to
the Debtors' postpetition financing agreement with Wachovia Bank,
National Association, successor by merger to Congress Financial
Corporation, pursuant to a Final Order of the Court, which was
approved on February 2, 2004.
Pursuant to the Eleventh Ratification Amendment, which has been
agreed in principle by the Debtors and the Lender:
(a) Lender will waive all the Specified Events of Default
subject to certain conditions as contained in the
Amendment;
(b) the interest rate, as to Prime Rate Loans, will increase to
a rate equal to Prime Rate + 1.75%, provided that on the
occurrence of certain events, including the occurrence of
an Event of Default, the interest rate shall mean the rate
of Prime Rate + 3.75% p.a. as to Prime Rate Loans, at
Lender's option; and
(c) the Minimum EBITDA covenant as set forth in the Eleventh
Ratification Amendment shall be modified.
The Debtors tell the Court that absent the Eleventh Ratification
Amendment, they would be in default under the Financing Agreements
and would not have sufficient available sources of working
capital.
On February 26, 2009, the Court ordered the dismissal of the
Debtors' case effective twenty days from the date of the ruling.
On February 27, 2009, the Court granted the motion of First State
Insurance Company and Twin City Fire Insurance Company for summary
judgment denying confirmation of the Amended Joint Plan of
Reorganization of the Debtors, the Official Asbestos Claimants'
Committee and the Official Committee of Bondholders, dated as of
November 14, 2008.
On February 27, 2009, the Debtors appealed the dismissal order and
the summary judgment order. On March 3, 2009, the Court stayed
the dismissal order to permit the parties to complete the appelate
process. Both appeals are pending as of the March 6, 2009.
A full-text copy of the Eleventh Ratification Amendment, attached
as Exhibit A to the Debtors' motion, is available at:
http://bankrupt.com/misc/Congoleum.11thRatificationAmendment.pdf
About Congoleum
Based in Mercerville, New Jersey, Congoleum Corporation (AMEX:CGM)
-- http://www.congoleum.com/-- manufactures and sells resilient
sheet and tile floor covering products with a wide variety of
product features, designs and colors. The company filed for
chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03-
51524) as a means to resolve claims asserted against it related to
the use of asbestos in its products decades ago.
Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A.
Brennan, Esq., at Pillsbury Winthrop Shaw Pittman LLP, and Paul S.
Hollander, Esq., and James L. DeLuca, Esq., at Okin, Hollander &
DeLuca, LLP, represent the Debtors.
The Asbestos Claimants' Committee is represented by Peter Van N.
Lockwood, Esq., and Ronald Reinsel, Esq., at Caplin & Drysdale,
Chtd. The Bondholders' Committee is represented by Michael S.
Stamer, Esq., and James R. Savin, Esq., at Akin Gump Strauss Hauer
& Feld LLP. Nancy Isaacson, Esq., at Goldstein Isaacson, PC,
represents the Official Committee of Unsecured Creditors.
R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker,
LLC, the Court-appointed Futures Claimants Representative, is
represented by Roger Frankel, Esq., Richard Wyron, Esq., and
Jonathan P. Guy, Esq., at Orrick Herrington & Sutcliffe LLP, and
Stephen B. Ravin, Esq., at Forman Holt Eliades & Ravin LLC.
American Biltrite, Inc. (AMEX: ABL), which owns 55% of Congoleum,
is represented by Matthew Ward, Esq., Mark S. Chehi, Esq.,
Christopher S. Chow, Esq., and Matthew P. Ward, Esq., at Skadden
Arps Slate Meagher & Flom.
Congoleum, together with its bondholders, filed a revised plan of
reorganization on Nov. 20, 2008.
COSINE COMMUNICATIONS: Posts 15,000 Net Loss in Yr. Ended Dec. 31
-----------------------------------------------------------------
CoSine Communications Inc. disclosed in a regulatory filing with
its financial results for the year ended Dec. 31, 2008:
-- at Dec. 31 2008, the company's balance sheet showed total
assets of $23.28 million, total liabilities of $260,000 and
stockholders' equity of $23.02 million.
-- for the year ended 2008, the company posted net loss of
$15,000 compared with net income of $416,000 for the same
period in the previous year.
Liquidity and Capital Resources
Based on its $23.2 million in cash and short term investments at
Dec. 31, 2008, and on its cost reduction activities, the company
believes that it possesses sufficient liquidity and capital
resources to fund its operations and working capital requirements
for at least the next 12 months. However, its restructuring
activities and its new redeployment of assets strategy raise
substantial doubt as to its ability to continue as a going
concern.
Going Concern Doubt
Burr, Pilger & Mayer LLP in Palo Alto, California, expressed
substantial doubt about CoSine Communications Inc.'s ability to
continue as a going concern after auditing the company's
consolidated financial statements for the years ended Dec. 31,
2008, and 2007. The auditors pointed out that the Company's
actions in September 2004 in connection with its ongoing
evaluation of strategic alternatives, to terminate most of its
employees and discontinue production activities in an effort to
conserve cash raise substantial doubt about its ability to
continue as a going concern.
A full-text copy of the 10K filing is available for free at:
http://ResearchArchives.com/t/s?3a35
About CoSine Communications
Based in Redwood City, California, CoSine Communications Inc.
(OTC: COSN.PK) -- http://www.cosinecom.com/-- was founded in 1998
as a global telecommunications equipment supplier to empower
service providers to deliver a compelling portfolio of managed,
network-based IP and broadband services to consumers and business
customers. CoSine ceased its customer service operations
effective Dec. 31, 2006. CoSine's strategic plan is to redeploy
its existing resources to identify and acquire new business
operations.
CoSine's redeployment strategy will involve the acquisition of one
or more operating businesses with existing or prospective taxable
earnings. As of May 16, 2008, no candidates have been identified.
DBO HOLDINGS: Russian Steelmaker Deal Won't Affect S&P Ratings
--------------------------------------------------------------
Standard & Poor's Ratings Services said that its ratings and
outlook on Beachwood, Ohio-based tubular products manufacturer DBO
Holdings Inc. (B+/Stable/--) are unchanged after the announcement
by Russian steelmaker OJSC Novolipetsk Steel (BBB-/Negative/--)
that the company and DBO Holdings have signed a settlement
agreement. The settlement resolves the companies' dispute
concerning NLMK's proposed acquisition of John Maneely Co., which
NLMK terminated in November 2008. The agreement provides for the
full mutual release and discharge by NLMK and DBO from their
claims arising from the transaction. In addition, NLMK agreed to
pay DBO a settlement amount of $234 million within four business
days of signing.
Standard & Poor's expects DBO to receive the funds within the next
several days and expects the company to use the cash to reduce
debt or improve liquidity. S&P expects fiscal 2009 to be a
challenging year for the company because of the weak state of the
steel industry owing to the global economic downturn. S&P now
expect EBITDA to decline to the $150 million to $200 million
range as a result of significantly lower volumes and compressed
margins. In S&P's view, this unexpected cash inflow bolsters the
company's ability to reduce debt sufficiently to maintain its
leverage below 5x, a level S&P considers to be in line with the
rating.
DEVELOPERS DIVERSIFIED: Moody's Cuts Preferred Stock Rating to Ba1
------------------------------------------------------------------
Moody's Investors Service downgraded to Baa3 from Baa2 the senior
unsecured debt rating of Developers Diversified Realty
Corporation. The rating agency also downgraded DDR's preferred
stock rating to Ba1 from Baa3. The rating outlook remains
negative.
According to Moody's, this rating action reflects DDR's pressured
credit statistics. DDR maintains high effective leverage
(approximately 63%), high debt to EBITDA (9.5x) and high levels of
secured debt (24% of gross assets) as of 12/31/08. DDR has also
maintained a fixed charge ratio below 2x. Furthermore, DDR
continues to be very reliant on its line of credit, limiting
liquidity.
The negative outlook reflects the deterioration of DDR's results
over the past year due to a difficult operating environment and a
development pipeline with a sizable amount of leasing required in
a very challenging economic environment. DDR also has exposure to
several tenant bankruptcies/store closings, three of which are in
the REIT's top ten. Moody's expects earnings and credit metrics
will remain pressured over the near term as market conditions for
retailers continue to deteriorate. Moody's does note that
management is making progress and has clearly defined deleveraging
and refinancing goals.
Moody's stated that the ratings continue to reflect positive
attributes, including DDR's geographic diversity, diversified
tenant mix and strong relationships with leading USA retailers.
DDR's experienced management team has demonstrated value-added
skills for repositioning assets and preserving portfolio value,
most notably during previous recessions. Finally, the REIT's core
portfolio continues to exhibit sound operating fundamentals and
low vacancies.
Although DDR has substantially scaled back its developments, and
mitigated most of the pre-leasing exposure, Moody's concludes that
such near term improvements will have a modest effect on its
credit profile. Moody's expects the challenging operating and
credit environment will pressure retailers and will continue to
increase debt refinancing costs. DDR currently has exposure to
manageable bankrupt and troubled retailers such as Mervyns,
Circuit City and Rite Aid. In addition, asset sales will be
challenged as cap rates are expected to continue to rise and
acquisition financing remains scarce.
Moody's believes DDR's liquidity is adequate. As of 4Q08, DDR's
line of credit availability was low at 22%, and unencumbered
assets as a percentage of gross assets was 52%. Positively, DDR
cut its 2009 dividend and will pay 90% of the dividend in stock,
which will generate $300 million of cash flow through year-end
2009. Furthermore, the REIT through its continuous equity program
and its transaction with the Otto family should raise at least
$155 million in equity starting in 4Q08 and continuing through
2009. DDR's near-term maturities are manageable, with less than
8% due annually until 2010. The REIT has significant maturities,
approximately $3.6 billion (including its revolving credit
facility and term loan), coming due in 2011 and 2012.
Moody's stated that a return to stable would be predicated upon
fixed charge remaining consistently at 2x, secured debt over gross
assets not exceeding the mid-20% range and debt to EBITDA at or
below 8x (without principal amortization and without pro rata
consolidation of JVs). A stable outlook would also reflect
adequate liquidity, which implies unencumbered assets at more than
50% of total gross assets and line of credit availability greater
than 40%. A rating downgrade would result from secured debt
reaching 30% (without JVs), coverages that are consistently below
the low 1.8x range (including merchant building gains), with debt
to EBITDA consistently above 9x and any liquidity (including line
of credit availability averaging less than 20%) or debt repayment
challenges. Negative ratings pressure may also occur should more
than 20% of the REIT's total revenues be derived from JVs (defined
as pro-rata JV revenues).
These ratings were downgraded and retain a negative outlook:
* Developers Diversified Realty Corporation -- Senior debt to
Baa3, from Baa2; preferred stock to Ba1, from Baa3; senior
debt shelf to (P)Baa3, from (P)Baa2; preferred stock shelf to
(P)Ba1, from (P)Baa3.
Moody's last rating action with respect to DDR was on November 11,
2008 when Moody's revised the REIT's rating outlook to negative
from stable.
Developers Diversified Realty Corporation is a REIT based in
Cleveland, Ohio, USA. DDR engages in acquiring, developing,
redeveloping, owning, leasing and managing shopping centers, mini-
malls and lifestyle centers. The REIT currently owns or manages
approximately 713 retail operating and development properties in
45 states, plus Puerto Rico, Brazil, Russia and Canada totaling
approximately 157 million square feet. The REIT reported assets
of $9 billion and equity of $2.7 billion as of December 31, 2008.
EAST RIDGE ASSOC: Files for Chapter 11 Bankruptcy Protection
------------------------------------------------------------
Adam Sichko at The Business Review reports that East Ridge
Associates LLC has filed for Chapter 11 bankruptcy protection to
help pay off a $200,000 court judgment owed to developer Edward
Swyer.
Business Review quoted David Brickman, the attorney for East Ridge
Associates founder Steven Noble, as saying, "This has to do with
paying the court judgment, and on what terms. There was a
business deal that went a little sideways, and a divorce that went
a little sideways, and here they are. They're family-now they're
family that's in court." According to The Business Review, Mr.
Noble is the brother-in-law of Mr. Swyer, who is president and CEO
of The Swyer Cos.
Court documents say that Mr. Swyer loaned East Ridge Associates
about $200,000 in September 2007. When the loan wasn't fully paid
off by June 2008, Mr. Swyer filed a lawsuit against East Ridge
Associates, Business Review states.
Mr. Swyer verbally agreed to extend the payment deadline but
refused to sign paperwork formalizing that agreement, Business
Review states, citing Mr. Noble. The report quoted Mr. Noble as
saying, "Mr. Swyer's sister is my wife, and we are having marital
problems. Due to a breakdown of my marriage, Mr. Swyer has, out
of anger and spite, refused to sign the extension agreement."
Business Review says that a state Supreme Court judge in Albany
ruled in favor of Mr. Swyer in October 2008, ordering Mr. Noble to
pay off the $200,000 loan.
Court documents say that East Ridge Associates listed about
$2.6 million in assets, mostly in the value of its Cohoes
properties, and $2.2 million in debts, including a mortgage at
Berkshire Bank and $77,000 it owes to the city of Cohoes. The
Developer East Ridge Associates LLC owns three properties on
Remsen Street in Cohoes and leases office space there to at least
six companies.
EDGE PETROLEUM: Defers $14 Million Loan Payment to March 17
-----------------------------------------------------------
Edge Petroleum Corporation entered into a Consent and Agreement on
March 10, 2009, with Union Bank of California, as administrative
agent and issuing lender under the Fourth Amended and Restated
Credit Agreement, and the other lenders party thereto. The
Agreement provides, among other things, for the extension of the
due date for the first installment to repay the borrowing base
deficiency from March 10, 2009 to March 17, 2009.
Notwithstanding the extension, the Company and the Lenders agreed
that each of the other five equal installment payments required to
eliminate the borrowing base deficiency will be due and payable as
provided for in a previous consent agreement entered into in
February.
Edge Petroleum has said an approximately $114 million borrowing
base deficiency under its Credit Facility due to a redetermination
of the company's borrowing base from $239 million to $125 million.
As a result, and pursuant to the terms of the Credit Facility, the
company elected to prepay the borrowing base deficiency in six
equal monthly installments, with the first
$19 million installment being due on February 9, 2009.
On February 9, 2009, the company entered into a Consent and
Agreement with the Lenders, deferring the payment date of the
first $19 million installment until March 10, 2009, and extending
the due date for each subsequent installment by one month with the
last of the six installment payments to be due on August 10, 2009.
In connection with the February Consent, the company agreed to
prepay $5.0 million of its outstanding advances under the Credit
Facility, in two equal installments. The first $2.5 million
prepayment was paid on February 9, 2009, and the second
$2.5 million prepayment was paid on February 23, 2009, with each
of the prepayments to be applied on a pro rata basis to reduce the
remaining six $19 million deficiency payments.
Edge Petroleum is in continuing discussions with its lenders under
the Credit Facility. There can be no assurance that the company's
discussions with its lenders under the Credit Facility will be
successful or that the company will be able to make any required
installment payments when they become due. Moreover, there can be
no assurance that the company's ongoing efforts to evaluate and
assess its various financial and strategic alternatives -- which
may include the sale of some or all of the company's assets, the
merger or other business combination involving the company,
restructuring of the company's debt or the issuance of additional
equity or debt -- will be successful.
If such efforts are not successful, the company may be required to
seek protection under Chapter 11 of the U.S. Bankruptcy Code.
A full-text copy of the Consent and Agreement, executed March 10,
2009, among Edge Petroleum Corporation, the lenders party thereto
and Union Bank of California, N.A., as administrative agent for
such lenders, is available at no charge at:
http://ResearchArchives.com/t/s?3a3d
The members of the lending consortium are:
* UNION BANK OF CALIFORNIA, N.A., as Administrative Agent,
Issuing Lender, and Lender
* JPMORGAN CHASE BANK, N.A.
* SUNTRUST BANK
* MIZUHO CORPORATE BANK, LTD.
* BNP PARIBAS
* FORTIS CAPITAL CORP.
* THE FROST NATIONAL BANK
* COMPASS BANK
* U.S. BANK NATIONAL ASSOCIATION
* BANK OF SCOTLAND PLC
About Edge Petroleum
Edge Petroleum Corp. (NASDAQ: EPEX)is a Houston-based is an
independent oil and natural gas company engaged in the
exploration, development, acquisition and production of crude oil
and natural gas properties in the United States. At December 31,
2007, the Company's net proved reserves were 163.5 billion cubic
feet equivalent (Bcfe), comprising 116.6 billion cubic feet of
natural gas, 4.8 million barrels of natural gas liquids and
3 million barrels of crude oil and condensate. Natural gas and
natural gas liquids accounted for approximately 89% of those
proved reserves. Approximately 77% of total proved reserves were
developed, as of December 31, 2007, and they were all located
onshore, in the United States. On January 31, 2007, the Company
completed the purchase of certain oil and natural gas properties
located in 13 counties in south and southeast Texas, and other
associated assets from Smith Production Inc. (Smith)
ENERGY PARTNERS: Moody's Cuts Corporate Family Rating to 'Caa3'
---------------------------------------------------------------
Moody's Investors Service downgraded Energy Partners Ltd.
Corporate Family Rating to Caa3 from Caa1. Moody's also
downgraded the company's Probability of Default Rating to Caa3
from Caa1 and its senior unsecured note rating to Ca (LGD4, 64%)
from Caa2 (LGD4, 67%). The ratings have been placed on review for
further possible downgrade.
The downgrade and subsequent review is prompted by Moody's view
that Energy Partners tight liquidity has intensified further.
Energy Partners noncompliance notice from the Minerals Management
Services regarding its failure to meet a $16.7 million cash or
security pledge implies an inability to raise sufficient liquidity
under its bank revolver or by other means. With $43 million of
borrowings outstanding at year end 2008, subsequent borrowings to
fund corporate needs, and a borrowing base vulnerable to reduction
due to much lower natural gas and oil prices, liquidity appears to
be limited.
While Energy Partners borrowing base was reaffirmed at $150
million in December of 2008, a subsequent borrowing base
determination would likely result in significantly reduced
borrowing base. Furthermore, Energy Partners ability to meet its
bank financial covenants is questionable. A significant
percentage of its production was shut-in until late January due to
hurricane related damages to third-party pipelines and average
natural gas and oil price realizations are down substantially from
fourth quarter 2008. In addition, approximately 11% (1,750 Boe/d)
of Energy Partners expected first quarter production remains shut-
in. Further shut-ins could occur if the company does not fulfill
its obligation with the MMS by March 27, 2009.
Accordingly, Energy Partners may require covenant compliance
waivers to prevent a breach of its bank facility EBITDAX leverage
covenants. In that case, it is likely that the banks would
require a borrowing base re-determination.
During the ratings review, Moody's will assess whether Energy
Partners can (i) successfully improve its financial covenant
headroom or obtain the necessary financial covenant waivers, (ii)
maintain a durable and adequate liquidity profile and (iii) the
implications in the event of a balance sheet recapitalization or
other strategic event.
Moody's last rating action on Energy Partners dates from February
28, 2008, at which time Moody's downgraded Energy Partners
Corporate Family Rating to Caa1 with a negative outlook.
Energy Partners, Ltd. is an independent E&P company headquartered
in New Orleans, Louisiana.
* * *
Bloomberg's Bill Rochelle notes that the Caa3 downgrade by Moody's
Investors Service is two pegs lower than the ding issued in
February by Standard & Poor's.
ESTATE FINANCIAL: Asks Court to Approve Settlement with AAFS
------------------------------------------------------------
Thomas P. Jeremiassen, the Chapter 11 trustee for Estate
Financial, Inc., asks the U.S. Bankruptcy Court for authority to
enter into that certain Settlement Agreement and Release, dated
February 20, 2009, between the EFI Trustee and SLOCO Foreclosure
Service, LLC d/b/a All American Foreclosure Servies.
The Settlement Agreement resolves the dispute between AAFS and the
EFI Trustee by allowing AAFS a general, unsecured claim against
EFI for its prepetition services, and obligates AAFS to continue
foreclosure proceedings for the benefit of EFI.
Prior to the initiation of the EFI case, AAFS rendered loan
foreclosure services to EFI in EFI's capacity as loan servicer
with respect to certain loans.
Pursuant to the Settlement Agreement, the EFI Trustee shall pay
AAFS the negotiated amounts indicated in the Agreement only upon
the EFI Trustee's sale or transfer of the property.
About Estate Financial
Five creditors of Paso Robles, California-based Estate Financial
Inc. -- http://www.estatefinancial.com/-- filed an involuntary
Chapter 11 petition against the real estate broker on June 25,
2008 (Bankr. C.D. Calif. Case Number 08-11457). Petitioner Steve
Gardality asserted a claim of $6,269,768. Estate Financial Inc.
consented to the bankruptcy filing on July 16, 2008. Robert B.
Orgel, Esq., at Pachulski Stang Ziehl & Jones LLP, and William C.
Beall, Esq., at Beall and Burkhardt, represent the Debtor as
counsel. A Chapter 11 trustee, Thomas P. Jeremiassen, was
appointed by the Court on July 23, 2008. Brian D. Fittipaldi,
Esq., at the U.S. DOJ/Office of the U.S. Trustee, represents the
Chapter 11 trustee as counsel. Robyn B. Sokol, Esq., and Steven
T. Gubner, Esq., at Ezra Brutzkus & Gubner, represent the Official
Committee of Unsecured Creditors as counsel. In its schedules,
Estate Financial listed total assets of $27,428,550, and total
debts of $7,316,755.
FANNIE MAE: Borrowers Can Refinance Through Over 30,000 lenders
---------------------------------------------------------------
James R. Hagerty at The Wall Street Journal reports that Fannie
Mae said that borrowers with Fannie-backed loans will be able to
seek refinancings under the program from more than 30,000 lenders
nationwide.
Fannie Mae's rival, Freddie Mac, requires borrowers who want to
refinance under the new mortgage-refinancing program to do so
through the companies that service their current loan, WSJ
relates.
WSJ notes that while Fannie Mae is letting borrowers "shop
around," it applies fees on those deemed higher risk that can
total 3% or more of the loan balance for certain borrowers,
compared to Freddie Mac's maximum fee, which is at 0.25%.
About Fannie Mae
The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) --
commonly known as Fannie Mae, is a shareholder-owned U.S.
government-sponsored enterprise. Fannie Mae has a federal charter
and operates in America's secondary mortgage market, providing
mortgage bankers and other lenders funds to lend to home buyers at
low rates.
Fannie Mae was created in 1938, under President Franklin D.
Roosevelt, at a time when millions of families could not become
homeowners, or risked losing their homes, for lack of a consistent
supply of mortgage funds across America. The government
established Fannie Mae to expand the flow of mortgage funds in all
communities, at all times, under all economic conditions, and to
help lower the costs to buy a home.
In 1968, Fannie Mae was re-chartered by the U.S. Congress as a
shareholder-owned company, funded solely with private capital
raised from investors on Wall Street and around the world.
Fannie Mae is the U.S. largest mortgage buyer, according to The
New York Times.
Conservatorship
As reported by the Troubled Company Reporter, the U.S. government
took direct responsibility for Fannie Mae and Freddie Mac, placing
the government sponsored enterprises under conservatorship on
September 7, 2008. James B. Lockhart, director of Federal Housing
Finance Agency, said that Fannie Mae and Freddie Mac share the
critical mission of providing stability and liquidity to the
housing market. Between them, the Enterprises have $5.4 trillion
of guaranteed mortgage-backed securities (MBS) and debt
outstanding, which is equal to the publicly held debt of the
United States. Among the key components of the conservatorship,
the FHFA, as conservator, assumed the power of the Board and
management.
FLEETWOOD ENTERPRISES: Chapter 11 Filing Cues S&P's 'D' Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Fleetwood Enterprises Inc. to 'D' from 'CCC-' following
the company's Chapter 11 filing. Concurrently, S&P lowered its
rating on the company's trust preferred securities to 'D' from
'C'.
On March 10, 2009, Fleetwood filed a voluntary petition for relief
under Chapter 11 of the U.S. Bankruptcy Code. While Riverside,
California-based Fleetwood is a market leader in the recreational
vehicle and factory-built housing industries, both of the
company's end markets are weak. RV shipments fell 33% in 2008 due
to negative consumer sentiment and tight credit. Similarly,
manufactured housing shipments contracted by 14%, extending a
decade-long recession for that industry. As a consequence of
these conditions, as well as previous attempts by the company to
restructure manufacturing operations, Fleetwood's revenues were
40% lower in the 12 months ended Oct. 26, 2008, than in the prior
year. Fleetwood posted an $83 million net loss for the 12-month
period and had a $91 million discretionary cash flow deficit.
Fleetwood intends to close its travel trailer business and will
seek buyers for its motor home and manufactured housing
businesses. Management believes that it has sufficient cash
($23 million on Jan. 25, 2009) to operate these businesses in the
interim, but the company is seeking debtor-in-possession financing
to supplement liquidity. Additionally, the company announced that
it has the right under Chapter 11 to revisit the Dec. 12, 2008,
exchange of $79 million of 5% convertible notes for a new series
of 14% senior secured notes and 11 million common shares. The
right to reconsider the exchange offer expires within 90 days from
the offer's effective date. Standard & Poor's withdrew its rating
on the 5% notes after the exchange offer was completed and after
another $20 million of the original $100 million principal amount
was exchanged for 20 million common shares.
Ratings Lowered
Fleetwood Enterprises Inc.
To From
-- ----
Corporate credit D CCC-/Negative/--
Fleetwood Capital Trust
To From
-- ----
Convertible trust pref'd D C
FOAMEX INTERNATIONAL: Committee Balks $95 Million MP DIP Facility
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Foamex
International Inc. and its debtor-affiliates objects the Debtors'
motion to (i) obtain $95 million in postpetition financing from
a syndicate of financial institution including MatlinPatterson
Global Advisers LLC and Bank of America; and (ii) use cash
collateral securing repayment of secured loans to their lenders
before the United States Bankruptcy Court for the District of
Delaware.
The Committee relates to the Court that the debtor-in-possession
facility is structured as a four-month term loan subject to a
borrowing base that limits the Debtors' actual availability,
through the postpetition use of cash collateral and a "roll-up" of
the their $39 million prepetition revolver obligations with the
lenders. The DIP facility provides the Debtors with no more than
$56 million in "new money" and actually reduces by
$5 million their maximum draw under the rolled-up prepetition
revolver facility, the Committee says.
According to the Committee, the Debtors' DIP request makes it
clear that the lenders will not be obligated to fund the costs of
these chapter 11 cases in exchange for receiving the benefits
provided by chapter 11. The Debtors have entered into the DIP
facility mostly to facilitate the MatlinPatterson Global's credit
bid, initiated by a stalking horse proposal, for the potential
purchase of substantially all of their assets, the Committee
points out. Furthermore, the DIP motion provides that the lenders
will receive a complete waiver of any claims for the surcharge of
their collateral pursuant to section 506(c) of the Bankruptcy
Code, the Committee adds.
The DIP documents and the interim DIP order, the Committee notes,
also contain releases of the lenders and their respective
professionals -- including officers, representatives and attorneys
-- and assigns, from any and all claims and causes of action
related to their prepetition financing to the Debtors, if such
claims are not asserted by the Committee within 60 days from the
date the Committee was formed on Feb. 27, 2009). The proposed
timeline for it to investigate potential claims against the
lenders is completely unreasonable, the Committee asserts.
David B. Stratton, Esq., at Pepper Hamilton LLP, says that the
Committee intends to promptly conduct a review of the loan
documents concerning the validity of the lenders' security
interests. However, the 60 day window to identify all potential
claims against the lenders does not afford the Committee with a
reasonable amount of time to conduct an investigation, Mr.
Stratton says. The Committee requires sufficient time to
determine what claims, if any, the Debtors' estates may hold
against the lenders and related parties. The DIP facility should
not be approved on a final basis unless and until it is modified
to provide the Committee with a reasonable amount of time to
conduct a full investigation of potential claims, he concluded.
A hearing is set for March 16, 2009, at 1:00 p.m. (ET) to consider
approval the Committee's request. Objection, if any, are due
March 11, 2009, by 4:00 p.m.
In addition to the new collateral and the shield against any
potential liability for the costs of these cases, the DIP motion
provides that the lenders will receive over $2 million in facility
fee, upfront fee, fronting Fee and letter of credit fees in
exchange for the postpetition financing, Mr. Stratton says. The
DIP facility contains an improper "make-whole" provision which in
essence guarantees the lenders a break-up fee of approximately
$1.8 million, if the DIP Loans are repaid prior to the stated
maturity in less than four months and MatlinPatterson Global is
not the successful bidder at auction, he notes. Approval of a
beak-up fee is not only pre-mature in these cases, but the
combined fees sought by the lenders with respect to the DIP
facility are an egregious overreach, Mr. Stratton states.
Furthermore, any final DIP order entered by the Court with respect
to the DIP facility must make clear that lenders are not seeking
and not obtaining replacements liens, adequate protection claims
or any other priority-type claims on Chapter 5 causes of action
and the proceeds thereof.
Mr. Straton said, "If the lenders want to take the entire value of
the estates, these cases are not properly in Chapter 11. If the
lenders want to liquidate their collateral through a Chapter 11,
they must be prepared to pay the costs and leave value for
unsecured creditors. The DIP Facility should not be approved
unless it is restructured to provide adequate benefits to the
Debtors' estates and create opportunities for something other than
payment of the DIP Lenders' prepetition debt."
As reported in the Troubled Company Reporter on Feb. 24, 2009, the
Debtors received interim approval to borrow $20 million from a $95
million credit offered by MatlinPatterson Global.
About Foamex International
Foamex International Inc. (FMXL) -- http://www.foamex.com/--
headquartered in Media, PA, produces polyurethane foam-based
solutions and specialty comfort products. The company services
the bedding, furniture, carpet cushion and automotive markets and
also manufactures high-performance polymers for diverse
applications in the industrial, aerospace, defense, electronics
and computer industries.
The company and eight affiliates first filed for chapter 11
protection on September 19, 2005 (Bankr. Del. Case Nos. 05-12685
through 05-12693). On February 2, 2007, the U.S. Bankruptcy Court
for the District of Delaware confirmed the Debtors' Second Amended
Joint Plan of Reorganization. The Plan became effective and the
company emerged from chapter 11 bankruptcy on February 12, 2007.
Foamex missed $7.3 million in interest payments due at the end of
the Jan. 21 grace periods on the Company's $325 million first-lien
term loan and the $47 million second-lien term loan.
On February 18, 2009, Foamex International Inc. and seven
affiliates filed separate voluntary Chapter 11 petitions (Bankr.
D. Del. Lead Case No. 09-10560). The Hon. Kevin J. Carey presides
over the cases. Ira S. Dizengoff, Esq., Phillip M. Abelson, Esq.,
and Brian D. Geldert, Esq., at Akin Gump Strauss Hauer in New
York; and Mark E. Felger, Esq., and Jeffrey R. Waxman, Esq., at
Cozen O'Connor, in Wilmington, Delaware, serve as bankruptcy
counsel. Investment Banker is Houlihan Lokey; accountant is
McGladrey & Pullen LLP, and claims and noticing agent is Epiq
Bankruptcy Solutions LLC. As of September 28, 2008, the Debtors
had $363,821,000 in total assets, and $379,710,000 in total debts.
FORD MOTOR: Save $500MM/Year Due to Labor Contract Amendment
------------------------------------------------------------
Dow Jones Newswires reports that Ford Motor Co. will be able to
save $500 million or more per year with its amended labor contract
with the United Auto Workers.
Citing Ford Motor officials, Jeff Bennett and Sharon Terlep at The
Wall Street Journal relate that the amended agreement could save
the Company as much as $375 million this year and
$500 million or more in subsequent years. The agreement affects
about 42,000 employees, the report says.
According to Dow Jones, Ford Motor's deal with the union involves
cutting down hourly wages to $55 per hour. Citing Ford Motor
global manufacturing chief Joe Hinrichs, Dow Jones states that the
Company's rivals, Toyota Motor Corp. and Honda Motor Co., pay
their workers $48 per hour. WSJ relates that Ford Motor expects
to cut its hourly labor costs to the levels of Toyota Motor and
other foreign rivals with U.S. plants in two years. WSJ reports
that over the next two years, Ford Motor should lower the rate
further as it is allowed to replace retiring employees with new
hires costing about $30 an hour.
Dow Jones says that cost-of-living adjustments and bonuses will be
reduced, while production of the Ford Focus sedan will stop at the
Wayne, Michigan, plant, to be moved to a nearby Michigan assembly
plant.
Dow Jones, citing Mr. Hinrichs, reports that Ford Motor will also
launch a buyout program in April for all workers, though it won't
be as generous as previous offers due to the grim economy.
"The modifications to the 2007 UAW-Ford contract are key enablers
to deliver our product-led transformation. The contract terms
significantly improve our competitiveness and help us to continue
to pursue our restructuring efforts," Dow Jones quoted Mr.
Hinrichs as saying.
The changes will let Ford Motor make up to half of its payments to
the $6.5 billion union health-care fund in the form of common
stock, Dow Jones reports.
Dow Jones relates that Ford Motor shares gained after changes in
the agreement was announced, rising 8% on Wednesday.
About Ford Motor
Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) --
http://www.ford.com/-- manufactures or distributes automobiles in
200 markets across six continents. With about 260,000 employees
and about 100 plants worldwide, the company's core and affiliated
automotive brands include Ford, Jaguar, Land Rover, Lincoln,
Mercury, Volvo, Aston Martin, and Mazda. The company provides
financial services through Ford Motor Credit Company.
The company has operations in Japan in the Asia Pacific region. In
Europe, the company maintains a presence in Sweden, and the United
Kingdom. The company also distributes its brands in various
Latin-American regions, including Argentina and Brazil.
* * *
As reported by the Troubled Company Reporter on March 6, 2009,
Standard & Poor's Ratings Services said it lowered its corporate
credit rating on Ford Motor Co. to 'CC' from 'CCC+'. S&P also
lowered the issue-level ratings on the company's senior secured
term loan, senior unsecured debt, and subordinated debt, while
leaving the issue-level rating on Ford's senior secured revolving
credit facility unchanged. In addition, the counterparty credit
ratings and issue-level ratings on Ford Motor Credit Co. (Ford
Credit) and FCE Bank PLC remain unchanged. The outlooks on Ford
and Ford Credit are negative.
Moody's Investors Service in December 2008 lowered the Corporate
Family Rating and Probability of Default Rating of Ford Motor
Company to Caa3 from Caa1 and lowered the company's Speculative
Grade Liquidity rating to SGL-4 from SGL-3. The outlook is
negative. The downgrade reflects the increased risk that Ford
will have to undertake some form of balance sheet restructuring in
order to achieve the same UAW concessions that General Motors and
Chrysler are likely to achieve as a result of the recently-
approved government bailout loans. Such a balance sheet
restructuring would likely entail a loss for bond holders and
would be viewed by Moody's as a distressed exchange and
consequently treated as a default for analytic purposes.
FREDDIE MAC: Borrowers Must Refinance Through Same Loan Servicer
----------------------------------------------------------------
Borrowers with Freddie Mac-backed loans who want to refinance
under the new mortgage-refinancing program must do so through the
companies that service their current loan, James R. Hagerty at The
Wall Street Journal reports, citing Brad German, a spokesperson
for the government-backed provider of funding for mortgages.
According to WSJ, the refinancing plan is for people who have
little or no equity in their homes and must have loans owned or
guaranteed by Fannie Mae or Freddie Mac. WSJ states that
refinancing under the program is possible up to a maximum of 105%
of the home's current estimated value.
The program, according to WSJ, is offered as part of the
government's foreclosure-prevention plan. WSJ relates that those
who want to benefit from the program can't shop around for the
lowest fees. The report states that loan servicers, typically
owned by lenders, collect monthly payments.
Jack Guttentag, a professor of finance emeritus at the University
of Pennsylvania's Wharton School who operates a mortgage-advice
Web site said that Freddie Mac's restriction puts lenders "in a
position to exploit you" with higher fees, WSJ reports.
It will be faster for borrowers to deal with their loan servicers,
which already have the borrowers' financial information, WSJ says,
citing Mr. German. According to the report, Mr. German said that
Freddie Mac doesn't restrict the fees lenders charge to consumers,
but "it would be a violation of common sense and national purpose
if a servicer saw this as an opportunity to add excessive and
unnecessary fees." WSJ, citing Mr. German, relates that Freddie
Mac isn't applying many of its own usual fees to these
refinancings to lower costs for consumers.
About Freddie Mac
The Federal Home Loan Mortgage Corporation -- (FHLMC) NYSE: FRE --
commonly known as Freddie Mac, is a stockholder-owned government-
sponsored enterprise authorized to make loans and loan guarantees.
Freddie Mac was created in 1970 to provide a continuous and low
cost source of credit to finance America's housing.
Freddie Mac conducts its business primarily by buying mortgages
from lenders, packaging the mortgages into securities and selling
the securities -- guaranteed by Freddie Mac -- to investors.
Mortgage lenders use the proceeds from selling loans to Freddie
Mac to fund new mortgages, constantly replenishing the pool of
funds available for lending to homebuyers and apartment owners.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $804,390 billion and total liabilities of
$818,185 billion, resulting in a stockholders' deficit of
$13,795 billion.
Conservatorship
As reported by the Troubled Company Reporter, the U.S. government
took direct responsibility for Fannie Mae and Freddie Mac, placing
the government sponsored enterprises under conservatorship on
September 7, 2008. James B. Lockhart, director of Federal Housing
Finance Agency, said that Fannie Mae and Freddie Mac share the
critical mission of providing stability and liquidity to the
housing market. Between them, the Enterprises have $5.4 trillion
of guaranteed mortgage-backed securities (MBS) and debt
outstanding, which is equal to the publicly held debt of the
United States. Among the key components of the conservatorship,
the FHFA, as conservator, assumed the power of the Board and
management.
FRONTIER AIRLINES: Seeks to Sell A318, Lease New A320
-----------------------------------------------------
Frontier Airlines Inc. asks the U.S. Bankruptcy Court for the
Southern District of New York in Manhattan for authorization to
sell an Airbus A318 aircraft it owns and replace it with a newly-
leased Airbus A320, Bloomberg's Bill Rochelle
The terms of both transactions are secret, according to the
report.
Frontier Airlines, the report adds, said that the A318 is
"uneconomical." While the sale price isn't disclosed, Frontier
says it will produce an unspecified excess after covering debt on
the aircraft. The replacement is being leased from C.I.T. Leasing
Corp.
The Court will consider approval of the proposals on March 19.
Bill Rochelle notes that of the seven passenger airlines seeking
bankruptcy protection since late 2007, Frontier and Sun Country
Airlines Inc. are the only ones still operating.
As reported by the TCR on March 11, Frontier Airlines and its
affiliates have asked the Bankruptcy Court to authorize them to
enter into, and perform under:
(1) an Amended and Restated DIP Credit Facility among the
Debtors as borrowers, and Republic Airways Holdings, Inc.,
as DIP lender; and
(2) a settlement agreement, as contained in the Term Sheet
among the Debtors, Republic Airways and Republic Airlines,
which provides for the allowance of two unsecured claims
by Republic Airlines, each in the amount of $150,000,000.
The Court permitted the Debtors in September 2008, to obtain a
secured superpriority DIP credit financing of up to $75,000,000 on
a final basis, from a lender group of three major creditors,
consisting of Republic Airways, Credit Suisse Securities (USA)
LLC, and AQR Capital, LLC, with Wells Fargo Bank Northwest,
National Association, as the administrative and collateral agent
for the Lenders. Frontier has received a total of $30 million in
DIP funding from Republic, as well as Credit Suisse Securities and
AQR Capital, in August 2008.
"Republic Airways has offered to step into the shoes of the
Lender Group and provide continued DIP financing through
December 1, 2009, on improved terms as compared to the Existing
DIP Credit Facility, including an additional $10 million
commitment, lower interest rates and a lower fee," Marshall S.
Huebner, Esq., at Davis Polk & Wardwell, in New York, said.
About Frontier Airlines Inc.
Headquartered in Denver, Colorado, Frontier Airlines Inc. --
http://www.frontierairlines.com/-- provides air transportation
for passengers and freight. It operates jet service carriers
linking Denver, Colorado hub to 46 cities coast-to-coast, 8 cities
in Mexico, and 1 city in Canada, as well as provide service from
other non-hub cities, including service from 10 non-hub cities to
Mexico.
Frontier Airlines and its debtor-affiliates filed for Chapter 11
protection on April 10, 2008, (Bankr. S.D. N.Y. Case No.
08-11297 thru 08-11299.) Benjamin S. Kaminetzky, Esq., and Hugh
R. McCullough, Esq., at Davis Polk & Wardwell, represent the
Debtors in their restructuring efforts. Togul, Segal & Segal
LLP is the Debtors' Conflicts Counsel, Faegre & Benson LLP is
the Debtors' Special Counsel, and Kekst and Company is the
Debtors' Communications Advisors.
Bankruptcy Creditors' Service, Inc., publishes Frontier Airlines
Bankruptcy News. The newsletter tracks the Chapter 11 proceedings
of Frontier Airlines Inc. and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
GALAXY NUTRITIONAL: Stock Purchase Deal Erases Substantial Doubt
----------------------------------------------------------------
Galaxy Nutritional Foods, Inc., disclosed in a regulatory filing
with the Securities and Exchange Commission that management does
not believe there is any remaining issue with the Company's
ability to operate as a going concern in the near future.
On Nov. 18, 2008, the Company, Frederick A. DeLuca and Galaxy
Partners, L.L.C., a Minnesota limited liability company entered
into a Stock Purchase Agreement. Pursuant to the Purchase
Agreement, in exchange for the sum of $5 million, Mr. DeLuca sold
to Galaxy Partners his 3,869,842 shares of the Company's common
stock and assigned to Galaxy Partners all of his right, title and
interest in and to the Convertible Note. In connection with the
Purchase Agreement and in accordance with the terms of the
Convertible Note, Galaxy Partners converted all of the outstanding
principal and accrued interest under the Convertible Note totaling
$3,479,447 into 9,941,278 shares of the Company's common stock.
As a result of the Purchase Agreement and conversion of the
Convertible Note into 9,941,278 shares, Galaxy Partners acquired
an aggregate of 13,811,120 shares of the Company's common stock
and consequently became the majority stockholder, owning
approximately 51.1% of the 27,051,294 issued and outstanding
shares of the Company's common stock. As a result of the
conversion of the Convertible Note, the strength of the Company's
balance sheet greatly improved with no further debt obligations
and stockholders' equity greater than $3 million.
The Company also disclosed its financial results for three and
nine months ended Dec. 31, 2008.
At Dec. 31, 2008, the company's balance sheet showed total assets
of 5,525,199, total liabilities of $2,197,693 and stockholders'
equity of $3,327,506.
For three months ended Dec. 31, 2008, the company reported net
income of $224,079 compared with net income of $295,365 for the
same period in the previous year.
For nine months ended Dec. 31, 2008, the company reported net
income of $539,908 compared with net income of $1,106,705 for the
same period in the previous year.
Liquidity and Capital Resources
Effective with the signing of the Purchase Agreement on Nov. 18,
2008, Michael E. Broll entered into an amendment to his employment
agreement with the Company, whereby he would continue as its chief
executive officer and board member through March 31, 2009. Mr.
Broll also serves as its president. In the event the parties do
not enter into a new employment arrangement, then upon receipt of
Mr. Broll's resignation as the Company's CEO and from its board of
directors on March 31, 2009, in consideration of his staying with
the Company during the transition period subsequent to the change
of control in the Company and in recognition of his waiver of his
rights under its 2007 Stay, Severance and Sales Bonus Plan, the
Company will pay Mr. Broll compensation of $20,000 per month for
25 consecutive months beginning on April 1, 2009, less any
applicable federal and state taxes.
In the event that Mr. Broll resigns from the Company on March 31,
2009, the Company will need to seek someone to replace him as CEO.
To date, the coard has not identified a candidate for the
position. In the event of Mr. Broll's resignation, the Company
may need to hire an executive recruitment firm to assist in
finding a suitable candidate for the position and pay a
substantial fee in connection with any placement. In addition,
while the Company anticipates that certain members of its board
may take a greater role in the management and direction of the
Company until a new CEO is hired, the Company may be adversely
impacted if there is a significant period of time without the
services and direction of a top executive officer.
A full-text copy of the Form 10-Q is available for free at:
http://ResearchArchives.com/t/s?3a37
About Galaxy Nutritional
headquartered in Orlando, Florida, Galaxy Nutritional Foods, Inc.
(OTCBB: GXYF) -- http://www.galaxyfoods.com/-- develops and
globally markets plant-based cheese and dairy alternatives, as
well as processed organic cheese and cheese food to grocery and
natural foods retailers, mass merchandisers and foodservice
accounts. Veggie, the leading brand in the grocery cheese
alternative category and the Company's top selling product group,
is primarily merchandised in the produce section and provides
calcium and protein without cholesterol, saturated fat or trans-
fat. Other popular brands include: Rice, Veggy, Vegan, and
Wholesome Valley. Galaxy Nutritional Foods, Inc. is dedicated to
developing nutritious products to meet the taste and dietary needs
of the increasingly health conscious consumer.
Going Concern Doubt
As reported in the Troubled Company Reporter on July 10, 2008,
Orlando-based Cross, Fernandez & Riley, LLP, raised substantial
doubt about the ability of Galaxy Nutritional Foods, Inc., to
continue as a going concern after it audited the company's
financial statements for the year ended March 31, 2008.
The auditor stated that the company may be required to pay its
convertible note and accrued interest thereon on Oct. 19, 2008,
which may leave it with insufficient cash funds to continue
operations.
GENERAL MOTORS: Won't Need $2 Billion From Gov't This Month
-----------------------------------------------------------
Sharon Terlep and Jeff Bennett at The Wall Street Journal report
that General Motors Corp. said on Thursday that it won't need the
$2 billion government infusion it had requested this month.
WSJ relates that GM has received about $13.4 billion in financial
assistance from the U.S. government and has asked for as much as
$16.6 billion more.
According to WSJ, GM said that it has enough cash to keep
operating through the end of March. WSJ notes that GM said that
its cost-cutting moves and spending deferrals in January and
February successfully held off the need for more U.S. funds in
March. Citing GM spokesperson Julie Gibson, the report says that
the company's cash-flow performance this month was better than
expected.
WSJ notes that GM has delayed or canceled some major capital
projects including:
-- development of a new diesel V8 engine,
-- a small-engine factory in Michigan, and
-- capacity increases in emerging markets.
WSJ states that eliminating the engine factory will save GM about
$120 million.
GM, says WSJ, also stopped vehicle production in January to
conserve money as auto sales fell to multidecade lows.
GM Chief Financial Officer Ray Young said in a statement that
delaying the aid request "reflects the acceleration of GM's
companywide cost-reduction efforts as well as proactive deferrals
of spending previously anticipated in January and February."
GM's delay in the need for more financial assistance "doesn't
change our time line or approach" on how to rescue GM and Chrysler
LLC, WSJ reports, citing a government official.
GM, WSJ states, said that it will still need additional government
aid in the following months.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick, Cadillac,
Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and Suzuki brands.
GM's common stock was considered the stock market's bellwether for
many years, hence the saying "What's good for GM is good for
America."
Going Concern Doubt
As reported by the Troubled Company Reporter on March 6, 2009,
Deloitte & Touche LLP, which General Motors Corp.'s Audit
Committee retained to audit the company's consolidated financial
statements and the effectiveness of internal controls, as of and
for the year ended December 31, 2008, said that there is
substantial doubt about the company's ability to continue as a
going concern. Deloitte said the company's recurring losses from
operations, stockholders' deficit and failure to generate
sufficient cash flow to meet the company's obligations and sustain
the its operations raise substantial doubt about the its ability
to continue as a going concern.
For the year ended December 31, 2008, GM posted a net loss of
$30,860,000,000. As of December 31, 2008, GM reported
$91,047,000,000 in total assets, $176,387,000,000 in total
liabilities, and $86,154,000,000 in stockholders' deficit.
* * *
As reported in the Troubled Company Reporter on Nov. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings, including
the corporate credit rating, on General Motors Corp. To 'CCC+'
from 'B-' and removed them from CreditWatch, where they had been
placed with negative implications on Oct. 9, 2008. S&P said that
the outlook is negative.
Fitch Ratings, as reported in the Troubled Company Reporter on
Nov. 11, 2008, placed the Issuer Default Rating of General Motors
on Rating Watch Negative as a result of the Company's rapidly
diminishing liquidity position. Given the current liquidity level
of US$16.2 billion and the pace of negative cash flows, Fitch
expects that GM will require direct federal assistance over the
next quarter and the forbearance of trade creditors in order to
avoid default. With virtually no further access to external
capital and little potential for material asset sales, cash
holdings are expected to shortly reach minimum required operating
levels. Fitch placed these on Rating Watch Negative:
-- Senior secured at 'B/RR1';
-- Senior unsecured at 'CCC-/RR5'.
As reported in the Troubled Company Reporter on June 24, 2008,
DBRS has placed the ratings of General Motors Corp. And General
Motors of Canada Limited Under Review with Negative Implications.
The rating action reflects the structural deterioration of the
company's operations in North America brought on by high oil
prices and a slowing U.S. Economy.
GENERAL MOTORS: Eyes Over $500MM Savings in Labor Pact Changes
--------------------------------------------------------------
General Motors Corp. expects savings of more than that of Ford
Motor Co. once the United Auto Workers agrees to changes in the
labor pact, Jeff Green at Bloomberg News reports, citing people
familiar with the matter.
Dow Jones Newswires reports that Ford Motor Co. will be able to
save $500 million or more per year with its amended labor contract
with the UAW.
According to Bloomberg, union leaders reached a tentative
agreement on contract changes for GM on February 17, 2009,
affecting 62,000 employees. The Company, says Bloomberg, is still
negotiating with the union on a retiree health-care fund.
Bloomberg, citing people familiar with the matter, said that GM's
savings are bigger than Ford Motor's, partly due to additional
work rule changes. The report quoted Clark University labor
professor Gary Chaison as saying, "With a large workforce, even a
small change in rules can make a huge difference in savings. GM
is kind of caught between pleading poverty but showing they are
cutting costs. GM has been very adept in the past at choosing the
best figures that suit their case."
Bloomberg relates that GM needs labor and debt holder concessions
of more than $28.5 billion as part of an agreement with the U.S.
Treasury to keep $13.4 billion in loans. According to the report,
GM is trying to convince the auto task force to free up as much as
$16.6 billion more to keep the Company out of bankruptcy.
The Canadian union said in a statement that GM's proposal to
employees in Canada was accepted on March 11.
Bloomberg states that Ford Motor manufacturing chief Joe Hinrichs
said that he didn't see how GM could realize twice the savings of
his company from its agreement with the UAW. Citing people
familiar with the matter, Bloomberg says that the estimate of GM
savings includes only the contract concessions and not any changes
to the Voluntary Employee Beneficiary Association.
Mr. Chaison said that GM may receive additional savings if it is
getting rules changes Ford Motor had won previously at the local
level, Bloomberg reports.
UAW Vice President Cal Rapson, according to Bloomberg, said that
GM's expected agreement with the union would be similar to the one
makes similar to the one that union members ratified at Ford
Motor. Bloomberg relates that Mr. Rapson said that changes to the
GM contract "in the area of economics, pattern the UAW Ford
agreement," but other parts are "drastically different".
Bloomberg, citing Mr. Rapson, relates that the union won't
schedule a vote on the agreement, or give details, until after the
VEBA accord is set.
About General Motors
Headquartered in Detroit, Michigan, General Motors Corp. (NYSE:
GM) -- http://www.gm.com/-- was founded in 1908. GM employs
about 266,000 people around the world and manufactures cars and
trucks in 35 countries. In 2007, nearly 9.37 million GM cars and
trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar
subsidiary is the industry leader in vehicle safety, security and
information services.
General Motors Latin America, Africa and Middle East, with
headquarters in Miramar, Florida, is one of GM's four regional
business units. GM LAAM employs approximately 37,000 people in
18 countries and has manufacturing facilities in Argentina,
Brazil, Colombia, Ecuador, Egypt, Kenya, South Africa and
Venezuela. GM LAAM markets vehicles under the Buick, Cadillac,
Chevrolet, GMC, Hummer, Isuzu, Opel, Saab and Suzuki brands.
GM's common stock was considered the stock market's bellwether for
many years, hence the saying "What's good for GM is good for
America."
Going Concern Doubt
As reported by the Troubled Company Reporter on March 6, 2009,
Deloitte & Touche LLP, which General Motors Corp.'s Audit
Committee retained to audit the company's consolidated financial
statements and the effectiveness of internal controls, as of and
for the year ended December 31, 2008, said that there is
substantial doubt about the company's ability to continue as a
going concern. Deloitte said the company's recurring losses from
operations, stockholders' deficit and failure to generate
sufficient cash flow to meet the company's obligations and sustain
the its operations raise substantial doubt about the its ability
to continue as a going concern.
For the year ended December 31, 2008, GM posted a net loss of
$30,860,000,000. As of December 31, 2008, GM reported
$91,047,000,000 in total assets, $176,387,000,000 in total
liabilities, and $86,154,000,000 in stockholders' deficit.
* * *
As reported in the Troubled Company Reporter on Nov. 11, 2008,
Standard & Poor's Ratings Services lowered its ratings, including
the corporate credit rating, on General Motors Corp. To 'CCC+'
from 'B-' and removed them from CreditWatch, where they had been
placed with negative implications on Oct. 9, 2008. S&P said that
the outlook is negative.
Fitch Ratings, as reported in the Troubled Company Reporter on
Nov. 11, 2008, placed the Issuer Default Rating of General Motors
on Rating Watch Negative as a result of the Company's rapidly
diminishing liquidity position. Given the current liquidity level
of US$16.2 billion and the pace of negative cash flows, Fitch
expects that GM will require direct federal assistance over the
next quarter and the forbearance of trade creditors in order to
avoid default. With virtually no further access to external
capital and little potential for material asset sales, cash
holdings are expected to shortly reach minimum required operating
levels. Fitch placed these on Rating Watch Negative:
-- Senior secured at 'B/RR1';
-- Senior unsecured at 'CCC-/RR5'.
As reported in the Troubled Company Reporter on June 24, 2008,
DBRS has placed the ratings of General Motors Corp. And General
Motors of Canada Limited Under Review with Negative Implications.
The rating action reflects the structural deterioration of the
company's operations in North America brought on by high oil
prices and a slowing U.S. Economy.
GHOST TOWN: Files for Chapter 11 Bankruptcy Protection
------------------------------------------------------
Rob Landreth at WSPA reports that Ghost Town in the Sky said that
it has filed for Chapter 11 bankruptcy protection.
Ghost Town said in a statement that it had to file for bankruptcy
due to national credit crisis and economic decline, and to address
the financial and operational needs associated with re-opening and
running the park.
WSPA relates that Ghost Town said that it has invested about
$20 million in the park since it reopened in May 2007, after
closing for five years. Ghost Town, according to the report, said
that it paid over $125,000 in sales and amusement tax to North
Carolina and Haywood County since it reopened, but these factors
lead to the Company's collapse:
-- the immensity of the project,
-- the increasing gas prices in 2008, and
-- the shortages in the area.
WSPA quoted Ghost Town President and CEO Steve Shiver as saying,
"The economic uncertainty, coupled with the banking and credit
crisis that has engulfed the nation, has made obtaining a lender
very difficult. It is with this economic impact, preserving our
relationships with vendors and protecting all of our creditors in
mind that we now find no alternative but to file for bankruptcy
protection.... This has been a very hard decision, and we've
exhausted all other alternative actions. This is the only chance
we truly have to pay people back the money we owe. We at least
have a fighting chance to reopen and our decision to file is in
the best interest of all parties involved."
According to WSPA, Ghost Town said that it has failed to secure
the capital financing needed as it had projected to:
-- pay off outstanding debt,
-- restructure short-term debt,
-- complete rides that will help broaden Ghost Town's guest
Appeal,
-- make the park run more efficiently, and
-- prepare for costs associated with operating and marketing
a regional theme park.
Ghost Town said that during the reorganizational process, it will
work on improving its financial status by securing the funding
needed for to complete all of its rides and transportation
methods, WSPA relates.
WSPA reports that Ghost Town wants to reopen for the 2009 season
on May 15. It is selling 2009 Season Passes and Daily Admission
Tickets through its Web site, WSPA states.
About Ghost Town
Located in the Great Smoky Mountains in Maggie Valley, North
Carolina, Ghost Town in the Sky --
http://www.ghosttowninthesky.com-- features staged gunfights,
live music and shows, crafts, and food.
HANA BIOSCIENCES: Receives NASDAQ Notice; Will Request Hearing
--------------------------------------------------------------
Hana Biosciences Inc. received a letter on March 5, 2009, from the
Listing Qualifications Staff of The NASDAQ Stock Market LLC
notifying the company that, based upon its non-compliance with the
$2.5 million stockholders' equity requirement for continued
listing on The NASDAQ Capital Market, as set forth in NASDAQ
Marketplace Rule 4310(c)(3), the company's securities were subject
to delisting from NASDAQ unless the Company requested a hearing
before a NASDAQ Listing Qualifications Panel.
The company will request a hearing before the NASDAQ Panel, which
will stay any action with respect to the Staff Determination. The
company's securities will remain listed on NASDAQ, pending a
decision by the Panel following the hearing. There can be no
assurance that following the hearing the Panel will grant the
company's request for continued listing.
The Staff Determination follows correspondence from NASDAQ dated
November 19, 2008, which was disclosed by the Company on
November 21, 2008, indicating that the Staff was then reviewing
the company's eligibility for continued listing on The NASDAQ
Capital Market.
About Hana Biosciences
Based in South San Francisco, California, Hana Biosciences,
Inc. (HNAB) -- http://www.hanabiosciences.com/-- is a
biopharmaceutical company that develops new, differentiated cancer
therapies designed to improve and enable current standards of
care.
HARRIS COUNTY: S&P Downgrades Rating on 1999A Bonds to 'D'
----------------------------------------------------------
Standard & Poor's Ratings Services lowered its bond rating on
Harris County Housing Finance Corp. (Waterford and Windfern
Apartment Projects), Texas' multifamily senior housing revenue
bonds series 1999A to 'D' from 'CCC'.
According to correspondence with the trustee, Bank of New York
Mellon, the Jan. 1 debt service payment was not made for the
series 1999A bonds.
HARRIS INTERACTIVE: Lenders Extend Forbearance Until May 8
----------------------------------------------------------
Harris Interactive Inc. on March 6, 2009, obtained an extension of
a forbearance agreement from certain lenders under the company's
Credit Agreement, dated as of September 21, 2007, with JPMorgan
Chase Bank, N.A., as Administrative Agent, and the Lenders party
thereto, as amended by Waiver and Amendment Agreement No. 1 to
that Credit Agreement dated as of February 5, 2009, and effective
as of December 31, 2008.
The company initially obtained a 30-day waiver of certain events
of default that occurred due to the company's failure to comply
with the leverage ratio and interest coverage covenants contained
in the Credit Agreement. The 30-day period was intended to
provide time to structure additional amendments to the Credit
Agreement.
The company and the lenders believe that more time will be helpful
in structuring such amendments and have agreed to extend the
waiver period, Harris Interactive said in a March 9 filing with
the Securities and Exchange Commission. Based upon the current
level of cooperation of the lenders, the company expects the
lenders to continue to actively negotiate to have amended credit
facilities in place by the end of the extended waiver period.
Pursuant to the Waiver Extension, the parties agreed to extend the
waiver until the earlier to occur of (i) May 8, 2009, (ii) the
occurrence of any default or event of default under the Credit
Agreement (other than those waived pursuant to the Waiver and
Amendment), and (c) the occurrence of certain material adverse
effects in the business, assets, financial condition or prospects
of the Company or its subsidiaries. In addition, the Waiver
Extension places certain restrictions on prepayments of
intercompany loans, and provides that no revolving loans or
letters of credit will be issued under the Credit Agreement during
the Waiver Period.
Harris Interactive Inc. -- http://www.harrisinteractive.com/--
provides custom market research. Harris Interactive serves
clients globally through our North American, European and Asian
offices and a network of independent market research firms.
HEALTHSOUTH CORP: Affirms 2009 Guidance, Joins Barclays Confab
--------------------------------------------------------------
HealthSouth Corporation was slated to participate in the Barclays
Capital Global Healthcare Conference on March 10 - 11, 2009 at the
Loews Miami Beach Hotel in South Beach, Florida. As part of this
conference, representatives of HealthSouth were scheduled to make
a presentation on March 10, 2009 at 9:30 a.m. EST.
The presentation addressed, among other things, the company's
strategy, objectives, and 2008 financial performance and discussed
industry trends and dynamics.
The company's last investor presentation was made at the J.P.
Morgan Global High Yield & Leveraged Finance Conference on
February 3, 2009, in Miami Beach, Florida.
Representatives of HealthSouth were to share the company's initial
observations on the first quarter of 2009:
* Volume: Discharge growth through February 2009 is in line
with expectations. The first quarter of each year is
normally a seasonally strong quarter.
* Pricing: There has been no significant sequential change in
pricing from the fourth quarter of 2008. Quarter-over-
quarter comparables will show a decline due to the Medicare
pricing roll-back that became effective April 1, 2008, and
will remain in effect through September 30, 2009.
* Expenses: The company has continued to see improvement in
productivity and managing labor costs. An average 3% merit
increase went into effect on October 1, 2008, for non-
management employees. Benefit changes became effective
January 1, 2009.
* Debt Pay Down: Since December 31, 2008, the company has
reduced its total debt outstanding by approximately
$67 million through February 28, 2009. This reduction does
not include the use of any portion of approximately
$60 million in net cash proceeds received as part of a
settlement with UBS.
The company used "same store" comparisons to explain the changes
in certain performance metrics and line items within its financial
statements. Same store comparisons are calculated based on
hospitals open throughout both the full current periods and
throughout the full prior periods presented. These comparisons
include the financial results of market consolidation transactions
in existing markets, as it is difficult to determine, with
precision, the incremental impact of these transactions on the
company's results of operations.
The company also reiterated its guidance for 2009 that was
previously provided during the company's earnings conference call
on February 24, 2009.
A copy of the slide presentation is available at no charge at:
http://researcharchives.com/t/s?3a40
Headquartered in Birmingham, Alabama, HealthSouth Corp. (NYSE:
HLS) -- http://www.healthsouth.com/-- provides inpatient
rehabilitation services. Operating in 26 states across the
country and in Puerto Rico, HealthSouth serves more than 250,000
patients annually through its network of inpatient rehabilitation
hospitals, long-term acute care hospitals, outpatient
rehabilitation satellites, and home health agencies.
HealthSouth had $1.99 billion in total assets, $2.69 billion in
total liabilities, and $1.16 billion in shareholders' deficit.
HealthSouth reported a $181.9 million net income on
$463.8 million in net operating revenues for the three months
ended December 31, 2008, compared to $45.9 million in net loss on
$434.5 million in net operating revenues for the same period in
2007.
HERBST GAMING: To Commence Prepack Bankruptcy By March 23
---------------------------------------------------------
Herbst Gaming, Inc. and certain of its subsidiaries are expected
to file for Chapter 11 bankruptcy protection before the United
States Bankruptcy Court for the District of Nevada by March 23,
2009. Otherwise, its letter agreement with lenders may be
terminated.
As reported by the Troubled Company Reporter yesterday, Herbst and
its affiliates entered into a letter agreement with:
(i) lenders holding, in the aggregate, approximately 68% in
amount of all of the outstanding claims under the
company's Second Amended and Restated Credit Agreement,
dated as of January 3, 2007, as amended;
(ii) Messrs. Edward J. Herbst, Timothy P. Herbst and Troy D.
Herbst, in their capacities as equity holders of the
company; and
(iii) Terrible Herbst, Inc. and certain of its affiliates, in
their capacities as parties to agreements with the company
or the Subsidiary Guarantors.
Pursuant to the Agreement, the parties are contractually obligated
to support the restructuring of the Company and the Subsidiary
Guarantors in accordance with the terms of the Term Sheet included
in the Agreement.
The proposed Restructuring will be implemented pursuant to a joint
plan of reorganization concerning the company and each of the
Subsidiary Guarantors and will principally consist of:
-- A separation of the Company's casino and slot route
businesses into two holding companies.
-- Conversion of all outstanding obligations under the Senior
Credit Facility into debt and equity of the reorganized
companies, with the lenders under the Senior Credit
Facility receiving 100% of the new equity of the
reorganized casino business, and with the casino business
holding company owning 10% of the new equity of the
reorganized slot route business.
-- Termination of all outstanding obligations under the
company's 8-1/8% Senior Subordinated Notes due 2012 and the
company's 7% Senior Subordinated Notes due 2014.
-- Cancellation of 100% of the existing equity in the company,
which is currently held by Messrs. Edward J. Herbst,
Timothy P. Herbst and Troy D. Herbst.
-- Amendments or modifications to, or assumptions and
assignments of, the company's related party agreements, or
new agreements to be entered into, with the THI Parties and
settlements of claims with the THI Parties in connection
with the related party agreements.
-- Receipt by certain of the THI Parties of 90% of the new
equity of the holding company for the slot route business
in exchange for the contribution of a new gaming device
license agreement.
The Plan will, among other things, provide for payment in full of
all trade creditors.
The company is to file a prepackaged plan of reorganization in
form and substance reasonably satisfactory to (i) Consenting
Lenders holding at least two-thirds in amount of the total Claims
held by all Consenting Lenders arising under the Senior Credit
Facility and (ii) the THI Parties and a disclosure statement
discussing the Plan in form and substance reasonably satisfactory
to (i) Required Consenting Lenders and (ii) the THI Parties.
Herbst is required to submit drafts of the Plan and Disclosure
Statement to Milbank, Tweed, Hadley & McCloy LLP, on behalf of the
Consenting Lenders, and to Latham & Watkins LLP on behalf of the
THI Parties.
The company is also required to transfer all of their cash in
Community Bank of Nevada to their account at U.S. Bank, National
Association. The lenders will enter a forbearance agreement with
respect to the Cash that is reasonably acceptable to each such
party.
The Consenting Parties, among other things, agree that interest
payments to be made to the lenders under the Senior Credit
Facility from the effective date of the Agreement through the
Petition Date will consist of:
(i) a payment of interest due under the Senior Credit Facility
on December 1, 2008 ($5,101,752.49);
(ii) a payment of $3.0 million as a portion of interest due
under the Senior Credit Facility on January 1, 2009, and
(iii) a payment in an amount equal to the Debtors' Estimated
Week Ending Cash Balance -- as reflected on the Herbst
Gaming, Inc. Weekly Cash Flow Variance Analysis -- in
excess of $100 million as of the close of business on
March 13, 2009, to be (x) calculated based upon the Herbst
Gaming, Inc. Weekly Cash Flow Variance Analysis (taking
full account of all interest payments and any payments to
the Debtors' restructuring professionals that are expected
to be made prior to the Petition Date), and (y) paid on
Wednesday, March 18, 2009.
Pending the commencement of the Chapter 11 Cases, the company and
the Subsidiary Guarantors will continue to operate in the ordinary
course of business.
A full-text copy of the letter agreement and restructuring term
sheet is available at no charge at:
http://ResearchArchives.com/t/s?3a42
"All of our casinos and the route business are generating positive
EBITDA, even in the current challenging economic environment,"
said Troy Herbst, Chief Executive Officer of Herbst Gaming. "Our
problem is a balance sheet issue; we have more debt than our
operations can support. This agreement with our bank lenders is
designed to resolve our balance sheet problem by restructuring our
debt."
"My brothers and I want to say how pleased we are that we are able
to resolve the company's financial issues in a way that helps to
protect the jobs of our valued employees, ensures that all our
loyal vendors will be paid fully, and that all our casinos and
route operations will continue to function on a 'business as
usual' basis throughout the restructuring process. Neither our
customers or vendors should experience any impact from our planned
financial restructuring and change of ownership of the casino
businesses," Mr. Herbst concluded.
Headquartered in Las Vegas, Nevada, Herbst Gaming Inc. --
http://www.herbstgaming.com/-- is an established casino and slot
route operator that operates casinos located in Nevada, Missouri
and Iowa. The company owns and operates approximately 6,800 slot
machines in its slot route business and is a slot machine operator
in Nevada.
At Sept. 30, 2008, the company's balance sheet showed total assets
of $1,021,956 and total liabilities of $1,241,937, resulting in a
stockholders' deficit of $219,981.
For three months ended Sept. 30, 2008, the company posted net loss
of $22,399 compared with net loss of $28,897 for the same period
in the previous year.
For nine months ended Sept. 30, 2008, the company posted net loss
of $101,252 compared with net loss of $34,115 for the same period
in the previous year.
At Sept. 30, 2008, the company has $110.4 million in cash and cash
equivalents. The company has fully drawn its revolving line of
credit, and the commitments of its lenders have been terminated
under the amended Credit Agreement. As a result of the Notice of
Acceleration, the company is prohibited from making interest or
other payments related to its Subordinated Notes, including the
interest payments that are past due and that are due in November
and December 2008.
HYDROGEN HYBRID: Working Capital Woes Raises Going Concern Doubt
----------------------------------------------------------------
Hydrogen Hybrid Technologies, Inc., disclosed in a regulatory
filing with the Securities and Exchange Commission its financial
results for three months ended Dec. 31, 2008.
For the three months ended Dec. 31, 2008, the Company reported net
income of $38,766 compared with net loss of $19,305 for the same
period in the previous year.
At Dec. 31, 2008, the company's balance sheet showed total assets
of $1,965,874, total liabilities of $1,140,952 and stockholders'
equity $824,922.
Liquidity and Capital Resources
The Company's balance sheet as of Dec. 31, 2008, reflected current
assets of $15,827 and $1,140,952 in current liabilities. This
compared to current assets of $25,380 and $1,397,651 in current
liabilities for the year ending Sept. 30, 2008.
Cash and cash equivalents from inception to date have been
sufficient to provide the operating capital necessary to operate
to date. Notwithstanding, the Company anticipated generating
losses and therefore it may be unable to continue operations in
the future. The Company anticipated it will require additional
capital and it would have to issue debt or equity or enter into a
strategic arrangement with a third party. The Company intended to
raise capital through a private offering. There can be no
assurance that additional capital will be available to the Company
and there can be no assurance that its shares will be quoted on
the Over the Counter Bulletin Board. The Company has no
agreements, arrangements or understandings with any person to
obtain funds through bank loans, lines of credit or any other
sources.
Going Concern Doubt
The Company has not yet established an ongoing source of revenues
sufficient to cover its operating costs and allow it to continue
as a going concern. The ability of the Company to continue as a
going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable. If
the Company is unable to obtain adequate capital, it could be
forced to cease operations.
In order to continue as a going concern, the Company will need,
among other things, additional capital resources. Management's
plan is to obtain the resources for the Company by obtaining
capital from management and significant shareholders sufficient to
meet its minimal operating expenses and seeking equity and debt
financing. However management cannot provide any assurances that
the Company will be successful in accomplishing any of its plans.
A full-text copy of the FORM 10-Q is available for free at:
http://ResearchArchives.com/t/s?3a36
About Hydrogen Hybrid Technologies, Inc.
Headquartered in Otario, Canada, Hydrogen Hybrid Technologies,
Inc. (OTC:HYHY) -- http://www.hydrogenht.com/-- is engaged in the
business of selling and distributing of on-board hydrogen
generating and injections systems for the original equipment
manufacturer, car and light truck markets worldwide. In addition
it holds non-exclusive rights to distribute the product to other
markets, including the heavy goods vehicle market. The on-board
hydrogen generating system technology consists of an on-board
system, which generates hydrogen and oxygen by splitting distilled
water.
IDEARC INC: To Default on Covenant; In Talks on Prepack Bankruptcy
------------------------------------------------------------------
Idearc Inc. reports that based on current forecasts, it
anticipates that it may be noncompliant with its quarterly
leverage ratio covenant sometime in the first half of 2009.
Idearc notes that at December 31, 2008, it was in compliance with
its quarterly leverage ratio covenant.
Idearc also notes that its independent registered public
accounting firm, Ernst & Young LLP, has expressed doubt as to
Idearc's ability to continue as a going concern based on the
company's December 31, 2008 financial statements.
Ernst & Young said in a March 9, 2009 letter to Idearc's board of
directors and shareholders, said, "We also have audited, in
accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets
of Idearc Inc. as of December 31, 2008 and 2007 and the related
consolidated statements of income, stockholders' equity (deficit)
and cash flows for each of the three years in the period ended
December 31, 2008 and our report dated March 9, 2009 expressed an
unqualified opinion thereon that included an explanatory paragraph
regarding Idearc Inc.'s ability to continue as a going concern."
Idearc says it will be noncompliant with a second covenant as a
result of the going concern opinion.
Idearc says noncompliance with the second covenant is considered
an event of default under the senior secured facilities 30 days
following notice of such default from the lenders. Upon an event
of default, absent other potential remedies, the lenders may
declare the total secured debt outstanding to be due and payable
and upon acceleration, the company's unsecured notes would also
become due and payable.
Idearc has evaluated various options for restructuring its
capitalization and debt service obligations to alleviate the
covenant issues and to create a capital structure that will permit
the company to remain a going concern. Idearc and its advisors
have considered various alternatives to strengthen its balance
sheet and financial risk profile. Among these alternatives, the
company is currently considering a restructuring through a "pre-
packaged," "pre-negotiated," or similar plan of reorganization
under federal bankruptcy laws.
In October 2008, the company retained Merrill Lynch & Co. and
Moelis & Company as financial advisors in connection with the
review of alternatives related to its capital structure.
Idearc and its advisors continue to work with representatives of
holders of both the senior secured facilities and the senior
unsecured notes in this regard. If the company is unable to
achieve a "pre-packaged," "pre-negotiated," or similar plan of
reorganization, it would likely be necessary that the company file
for reorganization under federal bankruptcy laws in any event.
"Simply stated, restructuring our capitalization and debt
obligations to a more appropriate level will provide us with the
opportunity to prosper and grow in the years ahead," Scott W.
Klein, chief executive officer of Idearc Inc., said.
"We are dedicated to implementing an appropriate capital structure
to support our new strategic business plans and objectives. A debt
restructuring plan that will strengthen Idearc's financial
condition will position the Company to compete more effectively in
a challenging and rapidly evolving economic environment.
"We would expect the Company to operate as usual throughout the
restructuring process and continue to meet its obligations to
consumers, clients and employees, just as we do now and have done
in the past."
In light of its ongoing review of alternatives for strengthening
its balance sheet and financial risk profile, the company will not
host a conference call for investors this quarter and will not be
providing an update on earnings guidance for 2009.
About Idearc Inc.
Headquartered in Dallas, Texas, Idearc Inc. (NYSE: IAR) --
http://www.idearc.com/-- provides yellow and white page
directories and related advertising products in the United States
and the District of Columbia. Products include print yellow
pages, print white pages, Superpages.com, Switchboard.com and
LocalSearch.com, the company's online local search resources, and
Superpages Mobile, its information directory for wireless
subscribers.
The company is the exclusive official publisher of Verizon print
directories in the markets in which Verizon is currently the
incumbent local exchange carrier. The company uses the Verizon
brand on its print directories in its incumbent markets, as well
as in its expansion markets.
* * *
In February 2009, Moody's Investors Service downgraded Idearc
Inc.'s Corporate Family Rating to Caa2 and its Probability of
Default Rating to Caa3, reflecting concerns that the company may
determine that a complete debt restructuring represents the best
alternative to address its currently challenged capital structure.
Standard & Poor's Ratings Services also lowered its corporate
credit and issue-level ratings on Idearc Inc.; the corporate
credit rating was lowered to 'CCC' from 'B-'. At the same time,
S&P removed these ratings from CreditWatch, where they were placed
with negative implications Oct. 31, 2008. The rating outlook is
negative.
IDEARC INC: Dec. 31 Balance Sheet Upside-Down by $8.4 Billion
-------------------------------------------------------------
Idearc Inc. yesterday announced financial results for the fourth
quarter and year ended December 31, 2008.
The Company reported 2008 net income of $183 million including
impairment charges, a 57.3% decrease compared to the same period
in 2007. On an adjusted basis, 2008 net income was $353 million,
a 27.1% decrease versus the same period in 2007.
The Company reported a fourth quarter net loss of $77 million
including impairment charges. On an adjusted basis, fourth quarter
net income was $74 million, a decrease of 32.7% versus the same
period in 2007.
As of December 31, 2008, the company had $1.8 billion in total
assets and $10.3 billion in total liabilities, including $9.9
billion in current liabilities, resulting in a stockholders'
deficit of $8.4 billion.
"Idearc's fourth quarter financial results are disappointing as we
expected," said Scott W. Klein, chief executive officer of Idearc
Inc. "We are making progress on our transformational and cost-
cutting initiatives. However, the unprecedented economic
challenges this nation is facing are creating never-before-seen
obstacles for our clients and, as a result, for us as well."
For the year ending December 31, 2008, Idearc reported multi-
product revenues of $2,973 million, a 6.8% dive compared to the
same period in 2007. Annual Internet revenue was $300 million, a
5.3% increase compared to the same period in 2007.
The Company reported fourth quarter 2008 multi-product revenues of
$709 million, a 9.9% decrease compared to the same period in 2007.
The Company reported Internet revenue of $77 million in the fourth
quarter, a 2.7% increase compared to the same period in 2007.
The Company reported 2008 earnings before interest, taxes,
depreciation and amortization of $1.0 billion including impairment
charges, a 29.8% decrease compared to the same period in 2007.
Reported 2008 EBITDA margins were 33.8% including impairment
charges, compared to 44.9% in the same period in 2007. On an
adjusted basis, 2008 EBITDA was $1,272 million, a 16.2% decrease
compared to the same period in 2007. Adjusted EBITDA margins were
42.8%, compared to 47.6% in the same period in 2007.
For 2008, the Company reported fourth quarter EBITDA of $48
million including impairment charges, an 85.6% decrease compared
to the same period in 2007. The Company reported EBITDA margins
of 6.8% in the fourth quarter including impairment charges,
compared to 42.3% in the same period in 2007. On an adjusted
basis, fourth quarter EBITDA was $287 million, an 18.0% decrease
compared to the same period in 2007. Adjusted EBITDA margins were
40.5% in the fourth quarter 2008, compared to 44.5% in the same
period in 2007.
Free cash flow for the 12 months ended December 31, 2008 was $307
million based on cash from operating activities of $363 million,
less capital expenditures of $56 million. Multi-product
advertising sales for the fourth quarter declined 12.8% compared
to 2007. On a full year basis, multi-product advertising sales
declined 9.8% compared to 2007.
A full-text copy of Idearc's 2008 annual report is available at no
charge at:
http://researcharchives.com/t/s?3a46
About Idearc Inc.
Headquartered in Dallas, Texas, Idearc Inc. (NYSE: IAR) --
http://www.idearc.com/-- provides yellow and white page
directories and related advertising products in the United States
and the District of Columbia. Products include print yellow
pages, print white pages, Superpages.com, Switchboard.com and
LocalSearch.com, the company's online local search resources, and
Superpages Mobile, its information directory for wireless
subscribers.
The company is the exclusive official publisher of Verizon print
directories in the markets in which Verizon is currently the
incumbent local exchange carrier. The company uses the Verizon
brand on its print directories in its incumbent markets, as well
as in its expansion markets.
* * *
In February 2009, Moody's Investors Service downgraded Idearc
Inc.'s Corporate Family Rating to Caa2 and its Probability of
Default Rating to Caa3, reflecting concerns that the company may
determine that a complete debt restructuring represents the best
alternative to address its currently challenged capital structure.
Standard & Poor's Ratings Services also lowered its corporate
credit and issue-level ratings on Idearc Inc.; the corporate
credit rating was lowered to 'CCC' from 'B-'. At the same time,
S&P removed these ratings from CreditWatch, where they were placed
with negative implications Oct. 31, 2008. The rating outlook is
negative.
INCENTRA SOLUTIONS: Section 341(a) Meeting Scheduled for March 31
-----------------------------------------------------------------
Roberta A. DeAngelis, the United States Trustee for Region 3, will
convene a meeting of creditors of Incentra Solutions Inc. and its
debtor-affiliates on March 31, 2009, at 2:30 p.m., at J. Caleb
Boggs Federal Building, 2nd Floor, Room 2112 in Wilmington,
Delaware.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
About Incentra Solutions
Headquartered in Boulder, Colorado, Incentra Solutions Inc. --
http://www.incentra.com-- provide information technology
services. The company and seven of its affiliates filed for
Chapter 11 protection on February 4, 2009 (Bankr. D. Del. Lead
Case No. 09-10370). Bruce Grohsgal, Esq., at Pachulski, Stang,
Ziehl Young & Jones, represents the Debtors in their restructuring
efforts. Epiq Bankruptcy Solutions LLC serves as the Debtors'
claims agent. Roberta A. DeAngelis, United States Trustee for
Region 3, appointed five creditors to serve on an Official
Committee of Unsecured Creditors. When the Debtors filed for
protection from their creditors, the listed $92,494,615 in total
assets and $80,301,104 in total debt.
INTERMET CORP: Seeks to Reject Two Union Contracts
--------------------------------------------------
Intermet Corp. seeks permission from the U.S. Bankruptcy Court
for the District of Delaware to reject collective bargaining
agreements with two unions in order to cut costs.
Intermet asserts that without the concessions they could gain from
the rejections of the CBAs with the Service Workers International
Union and the Glass, Molders, Pottery, Plastics and Allied Workers
International Union, there will be "no prospects of successfully
reorganizing."
The International Association of Machinists was not covered by the
termination request because it has already agreed to concessions
with the Debtor.
According to Bloomberg's Bill Rochelle, Intermet's motion
describes how the company is in "extreme financial distress" and
prospects for being viable "remain bleak." Whether the assets are
sold as a going concern or Intermet remains a stand-alone
business, the company says it can't survive without relief from
existing union contracts.
About Intermet Corp.
Based in Fort Worth, Texas, Intermet Corp. designs and
manufactures machine precision iron and aluminum castings for the
automotive and industrial markets. The company and its debtor-
affiliates filed for chapter 11 protection on Aug. 12, 2008
(D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878).
Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E.
Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New
York, serve as the Debtors' counsel. James E. O'Neill, Esq.,
Laura Davis Jones, Esq. and Timothy P. Cairns, Esq., at Pachulski
Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the
Debtors' co-counsel. Kurtzman Carson Consultants LLC serves as
the Debtors' claims, notice and balloting agent. An Official
Committee of Unsecured Creditors has been formed in this case.
When the Debtors filed for protection from their creditors, they
listed assets of between $50 million and $100 million and debts of
between $100 million and $500 million.
This is the Debtors' second bankruptcy filing. Intermet Corp.,
along with its debtor-affiliates, filed for Chapter 11 protection
on September 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597
through 04-67614). Salvatore A. Barbatano, Esq., at Foley &
Lardner LLP, represents the Debtors. In their previous bankruptcy
filing, they listed $735,821,000 in total assets and $592,816,000
in total debts. Intermet Corporation emerged from this first
bankruptcy filing in November 2005.
INTERSTATE HOTELS: Faces NYSE Suspension; May Delay Fin'l Report
----------------------------------------------------------------
Interstate Hotels & Resorts received notice from the New York
Stock Exchange that its common stock, under the ticker symbol IHR,
would be suspended from trading prior to the market opening on
March 12, 2009.
According to the March 5, 2009 notice from the NYSE, the
suspension is occurring because Interstate did not meet the
continued listing standard requiring maintenance of a minimum
$15 million market capitalization over a consecutive 30 trading
day period. The company had previously announced on December 2,
2008, that it had failed to maintain the continued listing
standard which requires a $1.00 minimum average closing price over
a consecutive 30 trading day period. While the $1.00 minimum
average requirement allows for a company to have a six-month cure
period, there is no such period available for a failure to meet
the minimum market capitalization requirement.
The company will seek an appeal of the delisting determination as
permitted by the NYSE though there are only limited solutions
available. The company has not yet been notified as to the timing
of the appeal process. Until the appeal is heard, Interstate will
remain listed, but will not trade, on the NYSE.
As notification from the NYSE was received only very recently, the
company is continuing to evaluate the disclosures to be included
in management's discussion and analysis and the consolidated
financial statements and related notes thereto to be included in
its Annual Report on Form 10-K. The company intends to file for a
15-day extension to allow it to file its Annual Report on Form 10-
K with the Securities and Exchange Commission not later than March
31, 2009.
The company had planned to to distribute a press release and hold
a conference call to discuss its fourth-quarter and full-year
results for the year ended December 31, 2008, on March 12, at 10
a.m. Eastern Time.
About Interstate Hotels & Resorts
Based in Arlington, Virginia, Interstate Hotels & Resorts --
http://www.ihrco.com/-- has ownership interests in 57 hotels and
resorts, including seven wholly owned assets. Together with these
properties, the company and its affiliates manage a total of 225
hospitality properties with more than 46,000 rooms in 37 states,
the District of Columbia, Russia, Mexico, Belgium, Canada and
Ireland. Interstate Hotels & Resorts also has contracts to manage
16 to be built hospitality properties with approximately 4,000
rooms.
INTERSTATE HOTELS: Likely Delisting May Cause Going Concern Doubt
-----------------------------------------------------------------
Interstate Hotels & Resorts relates that its senior secured credit
facility agreement requires that the company be listed on the New
York Stock Exchange.
As reported in today's Troubled Company Reporter, the NYSE has
notified the company that its common stock, under the ticker
symbol IHR, would be suspended from trading prior to the market
opening on March 12, 2009.
According to the company, KPMG LLP, its external auditor, has
notified the Audit Committee and management that since
Interstate's potential delisting from the NYSE creates a credit
facility covenant issue, which, if not resolved, could result in
acceleration of the credit facility debt, its auditor report on
the consolidated financial statements for the year ended
December 31, 2008, will include an explanatory paragraph related
to the uncertainty of the company's ability to continue as a going
concern. The company's credit facility also includes a covenant
requiring an audit opinion without exception.
The company is in active discussions with its credit facility
lenders to receive a waiver through June 30, 2009, related to the
covenant requiring listing on the NYSE as well as the covenant
dealing with audit opinions. While there can be no assurances
that the company can obtain the waiver, a waiver of these
covenants only requires a 51 percent vote by the credit facility
lenders.
Thomas F. Hewitt, the company's chief executive officer, stated
that, "Interstate is working quickly to resolve these technical
defaults by the end of March so that it can focus its attention on
an extension of the credit facility, which the company is working
to obtain prior to June 30, 2009."
Bruce A. Riggins, chief financial officer of the company, noted
that, "These technical issues relating to our credit facility do
not impact the individual mortgage notes on our three wholly owned
hotels."
About Interstate Hotels & Resorts
Based in Arlington, Virginia, Interstate Hotels & Resorts --
http://www.ihrco.com/-- has ownership interests in 57 hotels and
resorts, including seven wholly owned assets. Together with these
properties, the company and its affiliates manage a total of 225
hospitality properties with more than 46,000 rooms in 37 states,
the District of Columbia, Russia, Mexico, Belgium, Canada and
Ireland. Interstate Hotels & Resorts also has contracts to manage
16 to be built hospitality properties with approximately 4,000
rooms.
JAY HOSTETTER: Wants to Hire Nolan & Heller as Bankruptcy Counsel
-----------------------------------------------------------------
Jay Hostetter seek authority from the U.S. Bankruptcy Court for
the Northern District of New York to employ Nolan & Heller, LLP,
as counsel.
Nolan & Heller will:
a) advise the Debtor with respect to its powers and duties as
debtor in possession in the continued operation of the
business and management of its property;
b) prepare on behalf of the Debtor necessary applications,
answers, reports, orders and other legal papers;
c) represent the Debtor in litigation;
d) represent the Debtor in various transactional and other
legal matters as may be required or desirable; and
e) perform all legal services for the Debtor.
The hourly rates Nolan & Heller's professionals are:
Partners $255
Senior Associates $215
Associates $190
Nolan & Heller received a retainer of $5,000. The balance of
$3,068 continues to be held in Nolan & Heller's escrow account.
To the best of the Debtor's knowledge, Nolan & Heller is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Jay Hostetter
Headquartered in Albany, New York, Jay Hostetter dba Jay's Mobil
filed for Chapter 11 protection on February 26, 2009, (Bankr. N.D.
NY Case No.: 09-10557) Francis J. Brennan, Esq. at Nolan & Heller,
LLP represents the Debtor in its restructuring efforts. The
Debtor has estimated assets of $1,000,001 to $10,000,000 and
estimated debts of $1,000,001 to $10,000,000.
LANDAMERICA ASSESSMENT: Files for Chapter 11 Bankruptcy
-------------------------------------------------------
Richmond Times-Dispatch reports that LandAmerica Assessment Corp.
has filed for Chapter 11 bankruptcy protection in the U.S.
Bankruptcy Court for the Eastern District of Virginia.
According to Times-Dispatch, the attorneys for LandAmerica
Assessment sought the Hon. Kevin R. Huennekens' permission to sell
its assets for more than $2 million. Judge Huennekens will hold a
hearing on the request on March 24, Times-Dispatch states. Court
documents say that if the sale of the assets to Partner
Engineering & Science isn't completed within 21 days of Friday's
bankruptcy filing, the selling price will decrease by $105,000.
Times-Dispatch notes that no sale would occur if the deal isn't
completed within 45 days.
Times-Dispatch relates that before LandAmerica Assessment filed
for bankruptcy, it projected a negative cash flow between March
and June of $830,000.
LandAmerica Assessment Corp. coordinates construction-cost
analysis, project monitoring, and environmental assessment.
LandAmerica Assessment has offices internationally and in
California, Illinois, Missouri, New Jersey, New York, North
Carolina, Oregon, and Texas.
LEHMAN BROTHERS: Files Schedules & Statement; Total Debts Unknown
-----------------------------------------------------------------
LEHMAN BROTHERS BANKRUPTCY NEWS, published by Bankruptcy
Creditors' Service, Inc., reports that Lehman Brothers Holdings,
Inc., has filed its schedules of assets and liabilities and
statement of financial affairs.
According to the financial documents delivered yesterday to the
U.S. Bankruptcy Court for the Southern District of New York, LBHI
disclosed $214,295,492,378 in total assets. LBHI said its total
liabilities is "undetermined."
Founded in 1850, Lehman Brothers Holdings Inc. --
http://www.lehman.com-- was the fourth largest investment bank in
the United States, offering a full array of financial services in
equity and fixed income sales, trading and research, investment
banking, asset management, private investment management and
private equity. Its worldwide headquarters in New York and
regional headquarters in London and Tokyo are complemented by a
network of offices in North America, Europe, the Middle East,
Latin America and the Asia Pacific region.
Lehman filed for chapter 11 on Sept. 15, 2008 (Bankr. S.D.N.Y.
Case No. 08-13555) after Barclays PLC and Bank of America Corp.
backed out of a deal to acquire the company, and the U.S. Treasury
refused to provide financial support that would have eased out a
sale. Lehman's bankruptcy petition listed
$639 billion in assets and $613 billion in debts, effectively
making the firm's bankruptcy filing the largest in U.S. history.
Several affiliates filed bankruptcy petitions thereafter.
On Sept. 19, 2008, Lehman Brothers, Inc., was placed in
liquidation pursuant to the provisions of the Securities Investor
Protection Act (Case No. 08-CIV-8119). James W. Giddens was
appointed trustee for the SIPA liquidation of the business of LBI.
Lehman Brothers Finance AG, aka Lehman Brothers Finance SA, filed
a petition under Chapter 15 of the U.S. Bankruptcy Code on
February 10, 2009. Lehman Brothers Finance, a subsidiary of
Lehman Brothers Inc., estimated both its assets and liabilities at
more than $1 billion.
LBHI's U.S. bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil,
Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Lehman Brothers International (Europe), the principal UK trading
company in the Lehman group, has been placed into administration,
together with Lehman Brothers Ltd., LB Holdings PLC and LB UK RE
Holdings Ltd. Tony Lomas, Steven Pearson, Dan Schwarzmann and
Mike Jervis, partners at PricewaterhouseCoopers LLP, have been
appointed as joint administrators to wind down the business of LBI
(Europe) on Sept. 15, 2008.
Lehman Brothers Japan Inc. and Lehman Brothers Holdings Japan Inc.
filed for bankruptcy in the Tokyo District Court on
Sept. 16. The two units have combined liabilities of
JPY4 trillion -- US$38 billion. Akio Katsuragi, a former Morgan
Stanley executive, runs Lehman's Japan units.
Lehman Brothers Asia Limited, Lehman Brothers Securities Asia
Limited and Lehman Brothers Futures Asia Limited suspended
operations upon the bankruptcy filing of their U.S. counterparts.
Asset Sales
Barclays Bank Plc has acquired Lehman's North American
investment banking and capital markets operations and supporting
infrastructure for US$1.75 billion. Nomura Holdings Inc., the
largest brokerage house in Japan, on Sept. 22 reached an agreement
to purchased Lehman Brothers Holdings, Inc.'s operations in Europe
and the Middle East less than 24 hours after it reached a deal to
buy Lehman's operations in the Asia Pacific for US$225 million.
Nomura paid only US$2 dollars for Lehman's investment banking and
equities businesses in Europe, but agreed to retain most of
Lehman's employees.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc. and its various
affiliates. (http://bankrupt.com/newsstand/or 215/945-7000)
JEFFERSON COUNTY: JPMorgan Cancels Interest-Rate Swap Agreements
----------------------------------------------------------------
JPMorgan Chase & Co. has canceled its interest-rate swap
agreements with Jefferson County effective March 6, 2009, various
reports say.
William Selway and Martin Z. Braun at Bloomberg News reports that
JPMorgan decided on March 2 to exercise its right to terminate the
deals at a cost to the county of $657 million, according to a
filing by the county. The market value of such trades to JPMorgan
has soared as central banks cut interest rates amid the global
credit crisis, Messrs. Selway and Braun note.
Jefferson County, according to Bloomberg, hasn't made any payments
under the financial contracts since March 2008, when the bank and
other creditors agreed to extend the county's time to pay debts.
Jefferson County has been trying to stave off bankruptcy amid its
debt obligations.
"[JPMorgan's decision] should encourage the Legislature to help,"
Bloomberg quotes Jefferson County Commission President Bettye Fine
Collins as saying.
Jefferson County bought the swaps from JPMorgan and Bear
Stearns Cos. to lower borrowing costs on $3 billion floating-rate
bonds issued to refinance a federally mandated reconstruction of
the county sewer system.
Under the county's swap agreements, Bloomberg relates, Jefferson
County paid banks a fixed rate and received a floating rate pegged
to the London Interbank Offered Rate. That floating rate was
supposed to cover the cost of the county's bonds and leave it
paying only the fixed rate. Bloomberg says the swaps didn't work
when the world financial crisis worsened last year, and that the
county's rates on the adjustable-rate bonds soared as high as 10%
when credit markets seized up and the companies that guaranteed
the bonds lost their AAA credit ratings because of losses on
securities tied to unrelated home loans. Meanwhile, the rate it
received under the swaps fell as central banks moved to slash
lending rates, Bloomberg explains.
Messrs. Selway and Braun say the interest bills were more than the
county could afford. Messrs. Selway and Braun relate the bonds
are repaid from the proceeds of customer sewer payments.
Officials said rates couldn't be raised high enough to meet bond
obligations without overburdening residents, Messrs. Selway and
Braun say.
According to Bloomberg, the termination of the derivative
agreements doesn't require immediate payment by the county, since
it has an agreement with the bank that defers obligations until
April 21. Since April 2008, the county has relied on a series of
reprieves from creditors to put off making full payments on the
sewer bonds and swaps. When the forbearance agreement expires,
the county will be obligated to make any delayed payments and
compensate JPMorgan for the swap cancellation, according to the
county, Bloomberg says.
"The termination locks in the county's losses on the swap
contracts at a time they are valuable to JPMorgan because the
county would pay much more than it received under the deals,"
Messrs. Selway and Braun say.
JPMorgan spokesman Brian Marchiony declined to comment, according
to Messrs. Selway and Braun.
As reported by the Troubled Company Reporter on February 27, 2009,
U.S. District Judge David Proctor gave Jefferson County and its
bond insurers until March 18 to solve the sewer-debt crisis that
pushed the county to the brink of bankruptcy. Judge Proctor,
according to Bloomberg, told Jefferson County and bond insurers,
Syncora Guarantee Inc. and Financial Guaranty Insurance Co., that
both sides needed to make concessions.
The Court has scheduled a March 24 hearing on whether to appoint a
receiver for the county sewer system.
As reported by the TCR on September 18, 2008, Syncora Guarantee
Inc., a wholly owned subsidiary of Syncora Holdings Ltd.,
Financial Guaranty Insurance Company, and The Bank of New York
Mellon, as Trustee for $3.2 billion of Jefferson County Sewer
Revenue Warrants, acting at the direction of the Bond Insurers,
filed a suit against Jefferson County and the County's
Commissioners. The Bond Insurers insure roughly $2.8 billion in
Jefferson County Sewer Revenue Warrants. The suit, which was
filed in the United States District Court for the Northern
District of Alabama, includes a request to the Court to appoint an
independent and qualified receiver tomanage the Jefferson County
Sewer System; consider and implement any appropriate rate
modifications and other sources of revenue; ensure compliance with
applicable laws; assist in achieving an appropriate financial
resolution; and pursue any bona fide claims.
About Jefferson County
Jefferson County has its seat in Birmingham, Alabama. It has a
population of 660,000. It ended its 2006 fiscal year with a
$42.6 million general fund balance, according to Standard &
Poor's. The Birmingham firm of Bradley Arant Rose & White,
represents Jefferson County. Porter, White & Co. in Birmingham is
the county's financial adviser. A bankruptcy by Jefferson County
stands to be the largest municipal bankruptcy in U.S. history. It
could beat the record of $1.7 billion, set by Orange County,
California in 1994.
* * *
As reported by the TCR on Dec. 19, 2008, Standard & Poor's Ratings
Services has kept the ratings on Jefferson County, Alabama's
series 1997A, 2001A, 2003 B-1-A through series 2003 B-1-E, and
series 2003 C-1 through 2003 C-10 sewer system revenue bonds ('C'
underlying rating) on CreditWatch negative due to recent draws
against the system's cash and surety reserves beginning in
September 2008.
"Although the system has made two net system revenue payments to
the trustee in recent months for debt service, it has depleted its
cash reserves and a portion of its surety reserves since September
2008," said Standard & Poor's credit analyst Sussan Corson. The
trustee estimates the system currently has $176 million remaining
in total combined surety reserves with Financial Guaranty
Insurance Co., Syncora Guarantee Inc., and Financial Security
Assurance Inc., which can be applied on a prorata basis to any
parity debt.
MEDIACOM COMMUNICATIONS: Columbia Wanger Discloses 11.96% Stake
---------------------------------------------------------------
Columbia Wanger Asset Management, L.P., disclosed holding
$4,725,000 shares, or roughly 11.96%, of the class A common stock
of MediaCom Communications Corporation.
The shares include those held by Columbia Acorn Trust, a
Massachusetts business trust, that is advised by Columbia Wanger
Asset Management. CAT holds 10.97% of the MediaCom shares.
Based in Middletown, New York, Mediacom Communications Corporation
(Nasdaq: MCCC) -- http://www.mediacomcc.com/-- is a cable
television company focused on serving the smaller cities and towns
in the United States. The company offers a wide array of
broadband products and services, including traditional video
services, digital television, video-on-demand, digital video
recorders, high-definition television, high-speed Internet access
and phone service.
* * *
As disclosed in the Troubled Company Reporter on June 3, 2008,
Fitch Ratings affirmed the 'B' Issuer Default Rating for
Mediacom Communications Corporation and its wholly owned
subsidiaries Mediacom LLC and Mediacom Broadband LLC. In addition
Fitch assigned a 'BB/RR1' rating to Mediacom Broadband LLC's $300
million incremental term loan E. Lastly, Fitch has upgraded
Mediacom LLC's senior unsecured debt to 'B-/RR5' from 'CCC+/RR6'.
Approximately $3.2 billion of debt as of March 31, 2008 is
affected. The Rating Outlook for all of Mediacom's ratings is
Stable.
As reported in the Troubled Company Reporter on March 6, 2008,
Moody's Investors Service affirmed its 'B1' corporate family
rating for Mediacom Communications Corp.. The rating outlook
remains stable.
As of December 31, 2008, the Company's balance sheet showed total
assets of $3,718,989,000 and total liabilities of $4,065,633,000,
resulting in total stockholders' deficit of $346,644,000.
Mediacom received a letter dated March 2, 2009, from The Nasdaq
Stock Market indicating that due to the resignation of Craig S.
Mitchell on February 13, 2009, the company's audit committee now
has only two independent members rather than at least three
independent members as required by the Nasdaq's audit committee
requirements in Marketplace Rule 4350. Nasdaq's rules, however,
allow the company until at least August 12, 2009 to add a third
independent member to the audit committee. Mr. Mitchell resigned
from the Company's Board of Directors under the terms of the
recently completed acquisition by the Company of the shares of its
common stock owned by an affiliate of Morris Communications.
MERISANT WORLDWIDE: Wants Court to Set June 1 as Claims Bar Date
----------------------------------------------------------------
Merisant Worldwide Inc. and its debtor-affiliates ask the United
States Bankruptcy Court for the District of Delaware to set
June 1, 2009, 4:00 p.m., as deadline for creditors to file their
proofs of claim.
The Debtors propose July 8, 2009, at 4:00 p.m., as deadline for
all governmental units to file proofs of claim.
The Debtors seek to set the bar dates to determine the claims
asserted by their creditors in addition to the claims listed in
their schedules. A complete information and status of all claims
are needed in order to complete their restructuring and emerge
from Chapter 11 as soon as possible, the Debtors say.
All proofs of claims must be delivered to:
Merisant Worldwide Inc.
Claims Processing Center
c/o Epiq Bankruptcy Solutions LLC
757 Third Avenue, 3rd Floor
New York, NY 10017
About Merisant Worldwide
Headquartered in Chicago, Illinois, Merisant Worldwide Inc. --
http://www.merisant.com/-- sell low-calorie tabletop sweetener.
The Debtor's brands are Equal(R) and Canderel(R). The Debtor has
principal regional offices in Mexico City, Mexico; Neuchatel,
Switzerland; Paris, France; and Singapore. In addition, the
Debtor owns and operates manufacturing facilities in Manteno,
Illinois, and Zarate, Argentina, and own processing lines that are
operated exclusively for the Debtor at plants located in Bergisch
and Stendal, Germany and Bangkrason, Thailand.
As of March 28, 2008, the Debtor has 20 active direct and indirect
subsidiaries, including five subsidiaries in the United States,
six subsidiaries in Europe, five subsidiaries in Mexico, Central
America and South America, and three subsidiaries in the Asia
Pacific region, including Australia and India. Furthermore, the
Debtor's Swiss subsidiary holds a 50% interest in a joint
venture in the Philippines.
Merisant Worldwide holds 100% interest in Merisant Company.
The company and five of its units filed for Chapter 11 protection
on January 9, 2009 (Bankr. D. Del. Lead Case No. 09-10059).
Sidley Austin LLP represents the Debtors' in their restructuring
efforts. Young, Conaway, Stargatt & Taylor LLP represents the
Debtors' as co-counsel. Blackstone Advisory Services LLP is the
Debtors' financial advisor. Epiq Bankruptcy Solutions, LLC is the
Debtors' Claims and Noticing Agent. Winston & Strawn LLP
represents the Official Committee of Unsecured Creditors as
counsel. Ashby & Geddes, P.A. is the Committee's Delaware
counsel. The Debtors have $331,077,041 in total assets and
$560,742,486 in total debts as of Nov. 30, 2008.
METROMEDIA STEAKHOUSES: Affiliate Agrees to Loan Extension
----------------------------------------------------------
According to Bloomberg's Bill Rochelle, Metromedia Steakhouses Co.
won an extension of the exclusive right for filing a Chapter 11
plan until May 20, Bloomberg's Bill Rochelle said.
As reported yesterday by the Troubled Company Reporter, Metromedia
Steakhouses Co. reached an agreement from affiliate Metromedia Co.
to increase financing to $3.77 million from $3.06 million and
extend the maturity August 18.
Both companies are controlled by John Kluge. Bloomberg notes that
the creditors' committee of Metromedia Steakhouses in February
sued Mr. Kluge, a trust Kluge created and two of his companies,
including Metromedia Co., to recharacterize $225 million in debt
as equity or making Mr. Kluge's claim subordinate to the claims of
creditors.
Plano, Texas-based Metromedia Steakhouses Company, L.P. owned,
operated and franchised family-focused restaurants operating under
the Ponderosa Steakhouse and Bonanza Steakhouse brands
Metromedia and three affiliates filed Chapter 11 petitions on
Oct. 22, 2008 (Bankr. D. Del. Lead Case No. 08-12490). Judge Mary
Walrath handles the case. Bruce Grohsgal, Esq., and Laura Davis
Jones, Esq., at Pachulski, Stang, Ziehl Young & Jones LLP,
represent the Debtors in their chapter 11 cases. In its
bankruptcy petition, Metromedia estimated assets of $1 million to
$10 million and debts of $100 million to $500 million.
MICHAEL VICK: Must Attend Hearing in Virginia, Says Court
---------------------------------------------------------
Larry O'Dell at The Associated Press reports that U.S. Bankruptcy
Judge Frank Santoro has ruled that Michael Vick must attend the
bankruptcy hearing next month, but should pay his own way from the
Kansas prison where he is serving time for his role in a
dogfighting conspiracy.
As reported by the Troubled Company Reporter by March 12, 2009,
the U.S. attorney's office in Alexandria filed an objection to
taking Mr. Vick out of a Kansas prison to testify at his
bankruptcy hearing in Virginia. Judge Santoro said in
February that Mr. Vick must appear at a hearing in Norfolk on
April 2 or be denied of confirmation of his bankruptcy plan.
According to The AP, the U.S. attorney's office in Alexandria,
objected to a proposed court order compelling federal marshals to
pick up Mr. Vick and bring him to Virginia, citing logistical
burdens, security risks, and costs of the temporary transfer.
Citing assistant U.S. Attorney Robert Coulter, The AP relates that
Mr. Vick's transfer would compromise "the integrity of the
corrections system" by temporarily springing him from the federal
penitentiary for his personal affairs. Judge Santoro disagreed
and said that Mr. Vick would probably rather stay put, according
to The AP. The report quoted the judge as saying, "Mr. Vick is
not going to more luxurious accommodations by moving from
Leavenworth to the Newport News lockup," where he will be housed
while in Virginia.
The AP relates that Judge Santoro, after a one-hour hearing,
rejected the government's suggestions that he postpone Mr. Vick's
April 2 bankruptcy confirmation hearing or let Mr. Vick testify
through video hookup from the federal penitentiary at Leavenworth,
Kansas.
Judge Santoro, according to The AP, refused to delay the hearing,
citing the rights of creditors who are owed millions of dollars.
The AP quoted Judge Santoro as saying, "I'm not going to be put in
a position of determining credibility or demeanor over a
television."
Judge Santoro said that the government provided no evidence to
back up the inconvenience and security concerns, but agreed with
the government's claim that the taxpayers shouldn't have to pay
for Mr. Vick's transfer, according to The AP. The report states
that Lawrence Woodward, one of Mr. Vick's criminal attorneys,
presented receipts showing that it would cost about $3,636 to
bring Mr. Vick from Leavenworth to Surry County, Virginia, in
November to plead guilty to state dogfighting charges. That trip
was paid by Mr. Vick, according to the report.
Mr. Vick's attorneys confirmed that their client has been approved
for transfer to home confinement no sooner than May 21, two months
before his scheduled release from federal custody, The AP reports.
About Michael Vick
Michael Dwayne Vick, born June 26, 1980 in Newport News, Virginia,
is a suspended National Football League quarterback under contract
with the Atlanta Falcons team. In 2007, a U.S. federal district
court convicted him and several co-defendants of criminal
conspiracy resulting from felonious dog fighting and sentenced him
to serve a 23 months in prison. He is being held in the United
States Penitentiary at Leavenworth, Kansas.
Mr. Vick is also under indictment for two related Virginia state
felony charges for his role in the dogfighting ring and related
gambling activity. His state trial has been delayed until he is
released from federal prison. He faces a maximum 10-year state
prison term if convicted on both counts.
Mr. Vick filed a chapter 11 petition on July 7, 2008 (Bankr.
E.D. Va. Case No. 08-50775). Dennis T. Lewandowski, Esq., and
Paul K. Campsen, Esq., at Kaufman & Canoles, P.C., represent the
Debtor in his restructuring efforts. Mr. Vick listed assets of
$10 million to $50 million and debts of $10 million to
$50 million.
MIDWAY GAMES: Postpones Cash Collateral Hearing to April 1
----------------------------------------------------------
Midway Games Inc. was scheduled to seek final approval of the use
of its lenders' cash collateral on March 10. However, due to
objections from the newly appointed creditors' committee and
holders of some of the $150 million in convertible notes, Midway
Games has opted to have the hearing moved to April 1 to pave way
for negotiation among parties, Bloomberg's Bill Rochelle said.
The U.S. Bankruptcy Court for the District of Delaware extended
its interim order on the cash collateral, pending the new hearing.
The Objectors balk at the protections Midway proposed for the
secured lender who is also the Debtors' controlling shareholder.
Headquartered in Chicago, Illinois, Midway Games Inc. --
http://www.midway.com-- develops video games and sell them
primarily in North America, Europe, Asia and Australia. The
company and nine of its affiliates filed for Chapter 11 protection
on Feb. 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David
W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and
Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the
Debtors in their restructuring efforts. The Debtors proposed
Lazard as their investment banker, Dewey & LeBoeuf LLP as special
counsel, and Epiq Bankruptcy Solutions LLC as claims agent. The
Debtors' financial condition as of Sept. 30, 2008, showed
$167,523,000 in total assets and $281,033,000 in total debts.
MILACRON INC: Chapter 11 Filing Cues Moody's Rating Cut to 'D'
--------------------------------------------------------------
Moody's Investors Service lowered the Probability of Default
Rating of Milacron Inc. to D after bankruptcy filing.
Concurrently, Moody's lowered the company's corporate family
rating to Ca from Caa2, senior secured notes to Ca from Caa2. The
rating outlook is stable.
The rating actions were prompted by the company's announcement on
March 10, 2009 that it has filed voluntary petitions for
reorganization under Chapter 11 of the U.S. Bankruptcy Code and an
ancillary proceeding in Canada. The ratings also reflect Moody's
opinion that losses to creditors in the various debt classes could
be significant based on a distressed multiple of expected
operating performance.
Subsequent to this rating action, Moody's will withdraw all of the
company's ratings.
These ratings are lowered:
* Probability of Default Rating -- downgraded to D from Caa2
* Corporate Family Rating -- downgraded to Ca from Caa2
* $225 million of 11.5% guaranteed senior secured notes due
2011, to Ca (LGD5, 71%) from Caa2 (LGD3 45%)
The last rating action on Milacron took place on December 20, 2007
when its CFR was downgraded to Caa2 with negative outlook.
Milacron, headquartered in Cincinnati, Ohio, is a leading global
manufacturer and supplier of plastics-processing equipment and
related supplies. Milacron is also one of the largest global
manufacturers of synthetic water-based industrial fluids used in
metalworking applications. The company has major manufacturing
facilities in North America, Europe and Asia. Milacron's annual
revenues approximated $790 million in 2008.
MINERA ANDES: Macquarie Debt Obligation Raises Going Concern Doubt
------------------------------------------------------------------
Minera Andes Inc. disclosed in a 6-K/A filing with the Securities
and Exchange Commission that the Company is negatively affected by
worldwide financial conditions including the material decline in
the price of gold, silver, copper and other base metals, the lack
of public financing, the liquidity crisis caused by sub-prime
mortgages and asset-backed mortgages, and market turmoil and
volatility. These conditions, combined with its current financial
condition could (i) make it difficult or impossible for it to
raise the required financing to pay the cash call of
$11.3 million, satisfy its debt repayment obligation to Macquarie
Bank Limited and maintain its ability to meet its planned growth
and development activities; and (ii) render the Los Azules Project
uneconomic or, if economic, prevent it from accessing the funds
required to develop the project.
In the event the Company do not secure financing, there is doubt
about its ability to continue as a going concern.
The Company's approach to managing the liquidity risk is to
provide reasonable assurance that it can provide sufficient
capital to meet liabilities when due. The Company maintains
sufficient cash in order to meet short term business requirements.
The Company's ability to settle long-term liabilities when due is
dependent on future liquidity from capital sources or positive
cash flows from its projects.
For the three month period ended Sept. 30, 2008, its net loss was
$3.5 million, compared to a net loss of $980,000 for the three
month period ended Sept. 30, 2007, owing in large part to a loss
on its equity investment in MSC, in which it has a 49% interest.
For the nine months ended Sept. 30, 2008, its net income was
$3.7 million compared with a net loss of $2.4 million for the nine
months ended Sept. 30, 2007. The difference of $6.1 million is
attributable to:
-- income on its equity investment in MSC of $9.2 million as
compared to a loss of $1.2 million for the nine months
ended Sept. 30, 2007;
-- an increase in consulting fees of $561,000 in the nine
months ended Sept. 30, 2008, due to the preparation of
technical reports relating to the Los Azules Project and
the San Jose Project;
-- a decrease in office overhead and administrative fees of
$54,000;
-- an increase in wages and benefits of $1,126,000, $968,000
of which was stock-based compensation;
-- a negative foreign exchange difference of $837,000;
-- an increase in interest income of $82,000;
-- an interest expense of $2,094,000, as upon the commencement
of commercial production at the San Jose Project, the
Company ceased capitalizing the interest on its investment
in MSC; and
-- rental of access roads of $123,000 in the nine months ended
Sept. 30, 2008, while no fees were recorded in the nine
months ended Sept. 30, 2007.
Liquidity and Capital Resources
At Sept. 30, 2008, the Company had negative working capital of
$10.3 million. At Sept. 30, 2008, Minera Andes had cash and cash
equivalents of $6.9 million, compared to cash and cash equivalents
of $23.1 million as of Dec. 31, 2007. However, as of Feb. 6,
2009, the Company has cash and cash-equivalents of approximately
$2.5 million.
On Dec. 19, 2008, the Company received formal notice of a cash
call and delays MSC, an Argentinean corporation, to remedy a
working capital deficiency at MSC caused by cost overruns and
delays associated with expansion and development of the San Jos‚
Project (including expansion of the mine and processing facility
and construction of a new electric transmission line). The
Company's share of the cash call is approximately US$11.3 million,
payable on or before February 17, 2009.
A portion of the Macquarie Loan is scheduled to be repaid in
March of 2009. The amount scheduled to be repaid totals
$7,500,000. The remaining outstanding principal under the Bank
Loan is scheduled to be repaid in September 2009. The obligations
to Macquarie under the Macquarie Credit Agreement are secured by,
among other things, all of the assets of the Company.
At Sept. 30, 2008, the Company's accounts payables and accrued
liabilities were $1,406,814 all of which are due for payment
within normal terms of trade which is generally 30 to 60 days.
The Company regularly reviews its receivable balances and follows
up on amounts past due. If sufficient cash not be available to
settle liabilities, the Company also relies on equity, third-party
and related party financing to manage its liquidity and the
settlement of liabilities. The Company has not used any
derivative or other financial instruments to mitigate this risk.
At Sept. 30, 2008, the company's balance sheet, showed total
assets of $132,398,545, total liabilities of $53,639,107 and
shareholders' equity of $78,759,438.
A full-text copy of the REVISED MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS is
available for free at: http://ResearchArchives.com/t/s?3a33
About Minera Andes Inc.
Headquartered in Spokane, Washington, Minera Andes Inc. (TSE:MAI)
-- http://www.minandes.com/-- is engaged in the exploration and
development of mineral properties located in the Republic of
Argentina. The Company's properties and projects consist of
mineral rights and applications for mineral rights covering
approximately 304,221acres (123,133 hectares) in three Argentine
provinces. The lands comprise option to purchase contracts,
exploration and mining agreements and direct interests through the
Company's filings for exploration concessions. A t Dec. 31 2007,
Minera Andes was in the exploration stage, had interests in
properties in three provinces in the Republic of Argentina, and
were commencing production in the San Jose Project in Santa Cruz
province, Smouthern Argentina.
MOHAWK INDUSTRIES: S&P Cuts Corporate Credit Rating to 'BB+'
------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its long-
term corporate credit and senior unsecured debt ratings on
Calhoun, Georgia-based carpet manufacturer Mohawk Industries Inc.
to 'BB+' from 'BBB-'. At the same time, S&P assigned a '4'
recovery rating to Mohawk's senior unsecured debt, indicating the
expectation for average (30%-50%) recovery in the event of a
payment default. The outlook is stable. As of Dec. 31, 2008,
Mohawk had about $1.95 billion of debt.
"The downgrade reflects the company's weakened operating
performance as a result of deteriorating demand across the
company's businesses, and S&P's expectation for a further
weakening in credit measures over the near term," said Standard &
Poor's credit analyst Rick Joy. For the 12 months ended Dec. 31,
2008, sales and EBITDA declined by 10% and 29%, respectively,
versus the previous-year period. S&P estimates adjusted debt to
EBITDA increased to about 3x as of Dec. 31, from 2.4x in the
previous-year period, despite $339 million in debt reduction
during this period.
"We believe demand in the floor covering market in the U.S. and
Europe could decline further over the near term, given weakening
local economies and rapid deterioration in industry fundamentals
over the past few months," he continued.
The company currently operates in a very challenging economic
environment, and credit measures have weakened. Given the current
challenging operating environment, S&P expects Mohawk's operating
results to remain soft over the next one to two years. Despite
this, Standard & Poor's expects Mohawk to maintain a strong
liquidity position and credit measures in line with the revised
rating, including leverage in the 3x-3.5x area. If operating
performance falls below expectations and leverage approaches 4x,
which S&P believes could occur if sales declined by 20% and EBITDA
margins fall by 150 basis points, or if Mohawk demonstrates a more
aggressive financial policy, S&P could revise the outlook to
negative. With S&P's expectation for soft trends for the domestic
and European flooring industry over the next one to two years, S&P
sees limited potential for a positive outlook over the next 12-18
months.
MONACO COACH: Receives Court Nod to Use Cash Collateral
-------------------------------------------------------
Monaco Coach Corp. received authorization from the U.S. Bankruptcy
Court for the District of Delaware to use cash representing
collateral for the secured lenders Bank of America, N.A. and
Ableco Finance LLC while it seeks out a loan.
Bank of America, as agent, is owed $36.8 million on a working
capital loan while Ableco, as agent, is owed $36 million on a term
loan.
Monaco intends to sell the business. Revenue in 2007 was $1.29
billion. For the first 11 months of 2008, sales were $690
million.
According to court documents, Monaco laid out a tentative budget
for the next 12 weeks, in which it estimates spending about
$20.4 million and collecting $65.4 million. Court documents say
that to get through the next three months, Monaco asked the Court
to:
-- for authority to re-establish an incentive program for
dealers and their sales representatives so they can sell
Monaco's existing inventory. Its chief financial officer
Martin Daley estimates that the company owes sales
personnel about $130,000, and estimates it will need to
spend about $65,000 a week going forward. Dealers would
receive an incentive payment against warranty claims that
have accrued, limited to 5% of the price of a coach.
Mr. Daley said the incentive program would make it easier
to sell existing inventory and encourage dealers to buy
new coaches.
-- authorize, but not require, Monaco to continue paying
employee wages and benefits while the Company is in
bankruptcy. Mr. Daley said the Company has 220 employees
on payroll. He estimated back wages and benefits total
about $450,000, and the Company's total weekly payroll is
$300,000. Mr. Daley asked the court to let Monaco to
continue paying reimbursable business expenses, life
insurance and other benefits.
-- allow it to hire certain professionals like lawyers,
Accountants, and consultants, as needed, in connection
with Monaco's ongoing business operations.
-- prohibit utilities, including telephone, gas, electricity,
Web providers and others, from stopping service to the
company. Monaco said that it spends $461,000 a month on
utilities, and it proposed making a "utility deposit"
equal to about half that amount.
-- authorize it to pay sales and use taxes, totaling
$100,000, and regulatory fees, estimated at $30,000.
-- authorize the Company to use cash collected from the
sales of assets like RVs while it is in bankruptcy to
keep the it operating. Monaco would provide protection
to lenders who also have an interest in this cash
collateral.
Mr. Daley explained in court documents the company's current
financial state, how it got there, and what it needs to operate
the business with "minimal disruption." According to court
documents, Mr. Daley listed assets that include:
-- $7 million federal tax refund, which the Company received
the same day it filed for bankruptcy;
-- $108.9 million worth of inventory; and
-- $6.7 million in accounts receivable, from sales that have
been made but not yet paid.
According to The Register-Guard, Monaco owes $36.8 million on a
revolving loan fund and $36 million on a fixed-term loan, both of
which were obtained in November 2008. The report states that a
big potential liability is represented by the value of coaches
that Monaco shipped to dealers, and which the Company could be
required to repurchase if a dealer went out of business or
defaulted on a loan. Monaco estimated the value of the repurchase
obligations at $394.7 million, the report says.
The Register-Guard relates that Monaco said it had negotiated
"forbearance agreements" with lenders, who agreed to withdraw
repurchasing demands and stop making new ones until April 6.
About Monaco Coach
Monaco Coach Corporation (PINKSHEETS: MCOA), a leading national
manufacturer of motorized and towable recreational vehicles, is
ranked as the number one producer of diesel-powered motorhomes.
Dedicated to quality and service, Monaco Coach is a leader in
innovative RVs designed to meet the needs of a broad range of
customers with varied interests and offers products that appeal to
RVers across generations. Headquartered in Coburg, Oregon, with
manufacturing facilities in Oregon and Indiana, the Company offers
a variety of RVs, from entry-level priced towables to custom-made
luxury models under the Monaco, Holiday Rambler, Safari, Beaver,
McKenzie, and R-Vision brand names. The Company operates motor-
home-only resorts in California, Florida, Nevada and Michigan.
Monaco Coach Corporation and its affiliates filed for Chapter 11
on March 5 (Bankr. D. Del. Lead Case No. 09-10750). Laura Davis
Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, was tapped as
counsel. As of September 27, 2008, the Company had $442.1 million
in total assets and $208.8 million in total liabilities.
MUZAK HOLDINGS: U.S. Trustee Forms Seven-Member Creditor Panel
--------------------------------------------------------------
Roberta A. DeAngelis, the United States Trustee for Region 3,
appointed seven creditors to serve on an Official Committee of
Unsecured Creditors of Muzak Holdings LLC and its debtor-
affiliates.
The members of the Committee are:
1) U.S. Bank National Association
Attn: Cynthia Woodward
60 Livingston Avenue
St. Paul, MN 55107
Tel: (651) 495-3907
Fax: (651) 495-8100
2) Wells Fargo Bank, N.A.
Attn: James R. Lewis
458 Broadway, 17th Floor
New York, NY 10006
Tel: (212) 515-5258
Fax: (866) 524-4681
3) Corporate Trust and Loan Agency
Attn: Sandra E. Horwitz
10 E. 40th Street, 14th Floor
New York, NY 10016
Tel: (212) 525-1358
Fax: (212) 525-1366
4) Monarch Alternative Capital LP
Attn: Robert G. Burns
535 Madison Avenue
New York, NY 10022
Tel: (212) 554-1768
5) MFC Global Investment Management (U.S.) LLC
Attn: Dennis F. McCafferty
101 Huntington Avenue
Boston, MA 02199
Tel: (617) 375-1821
Fax: (617) 375-1837
6) Bronwen Mary DuKate
20408 Front Beach Rd.
Panama City Beach, FL 32413
Tel: (850) 234-0557
Fax: (850) 233-0601
7) Dish Network LLC
Attn: Brett Kitei
9601 S. Meridian Blvd.
Englewood, CO 80112
Tel: (303) 723-2290
Fax: (720) 514-8479
Official creditors' committees have the right to employ legal and
accounting professionals and financial advisors, at the Debtor's
expense. They may investigate the Debtor's 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 Muzak Holdings LLC
Headquartered in Fort Mill, South Carolina, Muzak Holdings LLC --
http://www.muzak.com-- creates a variety of music programming
from a catalog of over 2.6 million songs and produces targeted
custom in-store and on-hold messaging. Through its national
service and support network, Muzak designs and installs
professional sound systems, digital signage, drive-thru systems,
commercial television and more. The Company and 14 affiliates
filed for Chapter 11 protection on Feb. 10, 2009 (Bankr, D. Del.,
Lead Case No. 09-10422). Moelis & Company is serving as financial
advisor to the Company. Klehr Harrison Harvey Branzburg & Ellers
has been tapped as local counsel. In its bankruptcy petition, the
Company estimated assets and debts of $100 million to $500
million.
N. AMERICAN SCIENTIFIC: Files for Chapter 11, Sells Prostate Unit
-----------------------------------------------------------------
North American Scientific, Inc. has filed voluntary petitions in
U.S. Bankruptcy Court for the Central District of California for
reorganization under Chapter 11 of the U.S. Bankruptcy Code.
In its filing with the Bankruptcy Court, the Company cited that
its bank, pursuant to its rights under the certain lending
agreements, had reduced the Company's borrowing ability. In
addition, Best Theratronics, Ltd. terminated the Management
Agreement and Asset Purchase Agreement entered into February 11,
2009 and entered into a new Asset Purchase Agreement with the
company providing for the sale of the Company's prostate
brachytherapy product line, which reduced the sale price of the
assets to $2.5 million versus $5 million per the original Asset
Purchase Agreement.
NASM will receive $1.5 million at the closing of the transaction
and the remaining $1 million will be paid in equal installments
over the 12 month period following the closing.
NASM's board of directors has approved the transaction and the
company has petitioned the Court for an expedited process to sell
the Prostate assets.
"This was a very difficult but necessary decision," said John
Rush, President & CEO. "We have been focused on realigning our
Company through the disposition of the prostate brachytherapy
business as a means to fund the clinical release of our ClearPath
breast device. However due to an unforeseen inability to continue
to access funds under our credit facility, and the terminated
management agreement, we are forced to alter our direction with
the goal of achieving the same endpoint. This filing should
relieve the immediate pressure from our creditors, and provide us
the time to complete the sale of the prostate business while we
continue to gain clinical experience with our ClearPath product
line."
North American Scientific expects that Chapter 11 protection will
enable the Company to conduct its business operations as usual in
both the prostate and breast device segments. To that end, NASM is
seeking approval from the court for a variety of First Day Motions
enabling the company to continue managing its operations in the
ordinary course.
As of October 31, 2008, the Debtors had $9.6 million in total
assets and $6.8 million in total liabilities.
About North American Scientific
Based in Chatsworth, California, North American Scientific --
http://www.nasmedical.com/-- is an innovator in radiation therapy
in the fight against cancer. Its products provide physicians with
tools for the treatment of prostate and breast cancer.
About Best Theratronics
Best Theratronics, Ltd. -- http://www.teambest.com/ -- is a
leader in external beam therapy and self-contained irradiator
products. Best Theratronics along with the TeamBest family of
companies manufacture a wide array of radiotherapy products. In
addition to its facilities in Ottawa, Canada; the TeamBest family
of companies has manufacturing facilities in Dijon, France;
Springfield, Virginia; Pittsburgh, Pennsylvania, Bristol, Rhode
Island; Taunton, Massachusetts, Gilberts, Illinois; Nashville,
Tennessee; and Norcross, Georgia.
N. AMERICAN SCIENTIFIC: Case Summary & 20 Top Unsecured Creditors
-----------------------------------------------------------------
Debtor: North American Scientific, Inc.
aka NAS Medical
20200 Sunburst St.
Chatsworth, CA 91311
Bankruptcy Case No.: 09-12675
Type of Business: The Debtor develops cancer treatments.
See:http://www.nasmedical.com/
Chapter 11 Petition Date: March 11, 2009
Court: Central District of California (San Fernando Valley)
Judge: Maureen Tighe
Debtor's Counsel: Marc J. Winthrop, Esq.
pj@winthropcouchot.com
660 Newport Center Dr., Ste. 400
Newport Beach, CA 92660
Tel: (949) 720-4100
Estimated Assets: $1 million to $10 million
Estimated Debts: $1 million to $10 million
A full-text copy of the Debtor's list of 20 largest unsecured
creditors is available for free at:
http://bankrupt.com/misc/califcb09-12675.pdf
The petition was signed by John B. Rush, president.
NAVISTAR INT'L: Reports $234MM 1st Qtr. Net Income, $1BB Deficit
----------------------------------------------------------------
Backed by the performance of its military business and Class 8
truck market share growth, Navistar International Corporation
reported strong first quarter net income in the face of a very
difficult economic environment and amidst the weakest North
America truck market in nearly 35 years.
Navistar International said that net income for the quarter ended
January 31, 2009, including the effects of the previously reported
resolution of its disputes with the Ford Motor Company, totaled
$234 million, equal to $3.27 per diluted share, on
$2.97 billion in net sales and revenues. In the first quarter a
year ago, Navistar reported a net loss of $65 million, equal to
($0.92) per diluted share, on $2.95 billion in net sales and
revenues. Contributing to the first quarter results are the
impacts of the company's settlement with Ford and other related
costs, which were $190 million of profit before tax.
"Building on our successful 2008 performance, we delivered a
profitable first quarter due in part to the strength of our
diversification strategy, increased market share in the heavy
truck segment and our expanding military business," said Daniel C.
Ustian, Navistar chairman, president and chief executive officer.
"By leveraging our core strengths and the strengths of companies
that have become our partners, we are able to maximize our ability
to remain profitable during a third-consecutive year of low truck
volumes."
Manufacturing segment profit was $407 million, including the
impacts of the Ford settlement and other related costs, for the
first quarter ended January 31, 2009, compared with $92 million in
the year-ago period. In the first quarter, revenue for the period
increased slightly from the year-ago period on the strength of the
company's military business and gains in its market share of Class
8 trucks, which has been strengthened by the addition of the
International LoneStar and ProStar to its product offering.
The Company now projects that total truck industry retail sales
volume for Class 6-8 trucks and school buses in the United States
and Canada for the fiscal year ending October 31, 2009, to total
between 210,000 to 225,000 units, down from the previous forecast
of 244,000 to 256,000 units.
Despite the revised forecast of lower industry sales volume,
Navistar reaffirmed that its guidance for net income for its
fiscal year ending October 31, 2009, should be in the range of
$370 million, or $5.10 per diluted share, to $410 million, or
$5.60 per diluted share, excluding the Ford settlement and related
charges. Including results of the Ford settlement, per diluted
share earnings should be in the range of $7.55 to $8.05 per
diluted share.
"We are on target to meet our aggressive goals and will continue
to invest in our products, expand our global footprint and contain
costs in a difficult economy," said Mr. Ustian. "I am optimistic
about our ability to maintain our market leadership positions,
advance our key new product initiatives and be solidly profitable
in fiscal 2009."
One of the key ingredients to Navistar's success for 2010 and
beyond is its emissions strategy -- Exhaust Gas Recirculation
(EGR) technology powered by its MaxxForce engine -- as it is
expected to provide the company with a competitive advantage. "We
anticipate EGR will provide our customers with a simple and
straightforward solution that places the burden of emissions
compliance on the manufacturer, not the customer," Mr. Ustian
said.
"Despite the difficult economic environment we currently are
operating in, we have sufficient liquidity and borrowing capacity
to execute our strategies," Mr. Ustian said.
As of January 31, 2009, the Company reported total assets of
$9,623,000,000, total liabilities of $11,092,000,000, and
stockholders' deficit of $1,473,000,000.
Navistar International Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
January 31
2009 2008
(in millions, except per share data)
Sales and revenues
Sales of manufactured
products, net $ 2,895 $ 2,860
Finance revenues 75 94
Sales and revenues, net 2,970 2,954
Costs and expenses
Costs of products sold 2,323 2,463
Restructuring charges 58 -
Selling, general and
administrative expenses 376 321
Engineering and product
development costs 108 82
Interest expense 93 167
Other income, net (198) (1)
Total costs and expenses 2,760 3,032
Equity in income of
non-consolidated affiliates 17 24
Income (loss) before income tax 227 (54)
Income tax benefit (expense) 7 (11)
Net income (loss) 234 (65)
Basic earnings (loss) per share 3.28 (0.92)
Diluted earnings (loss) per share 3.27 (0.92)
Weighted average shares outstanding
Basic 71.5 70.3
Diluted 71.6 70.3
New Interim Principal Financial Officer
On March 10, 2009, the Board of Directors of the Company appointed
William A. Caton to serve as the interim principal financial
officer of the Company due to a medical leave of absence taken by
the Company's current Chief Financial Officer, Terry M. Endsley.
Mr. Caton currently serves as the Company's Chief Risk Officer
since 2008 and he previously served as the Company's Chief
Financial Officer from 2006 to 2008 and Vice President, Finance
from 2005 to 2006. Prior to these positions, he was employed by
various subsidiaries of Dover Corporation from 1989 to 2005.
About Navistar International
Based in Warrenville, Illinois, Navistar International Corporation
(NYSE: NAV) -- http://www.navistar.com/-- produces
International(R) brand commercial and military vehicles,
MaxxForce(TM) brand diesel engines, IC brand school and commercial
buses, and Workhorse(R) brand chassis for motor homes and step
vans, and is a private label designer and manufacturer of diesel
engines for the pickup truck, van and SUV markets. Navistar is
also a provider of truck and diesel engine parts. Another
affiliate offers financing services.
The TCR reported on June 2, 2008, that Fitch Ratings affirmed and
simultaneously removed from Rating Watch Negative the ratings for
Navistar International Corporation and Navistar Financial Corp. to
reflect progress in filing audited financial statements. The
ratings are:
Navistar International Corp.
-- Issuer Default Rating 'BB-';
-- Senior unsecured bank facility 'BB-'.
Navistar Financial Corp.
-- IDR 'BB-';
-- Senior unsecured bank lines 'BB-'.
The TCR also reported on Feb. 25, 2008 that Standard & Poor's
Ratings Services removed its 'BB-' corporate credit ratings on
Navistar International Corp. and subsidiary Navistar Financial
Corp. from CreditWatch with negative implications, where they were
placed Jan. 17, 2006.
NAVISTAR INT'L: Jan. 31 Balance Sheet Upside Down by $1.49 Bln.
---------------------------------------------------------------
Navistar International Corporation reported $9.62 billion in total
assets and $11.09 billion in total liabilities as of January 31,
2009, resulting in $1.49 billion in stockholders' deficit.
Navistar said net income for the quarter ended January 31, 2009,
totaled $234 million on $2.97 billion in net sales and revenues.
In the first quarter a year ago, Navistar reported a net loss of
$65 million on $2.95 billion in net sales and revenues.
Contributing to the first quarter results are the impacts of the
company's settlement with Ford and other related costs, which were
$190 million of profit before tax.
"Building on our successful 2008 performance, we delivered a
profitable first quarter due in part to the strength of our
diversification strategy, increased market share in the heavy
truck segment and our expanding military business," said Daniel C.
Ustian, Navistar chairman, president and chief executive officer.
"By leveraging our core strengths and the strengths of companies
that have become our partners, we are able to maximize our ability
to remain profitable during a third-consecutive year of low truck
volumes."
Manufacturing segment profit was $407 million, including the
impacts of the Ford settlement and other related costs, for the
first quarter ended January 31, 2009, compared with $92 million in
the year-ago period. In the first quarter, revenue for the period
increased slightly from the year-ago period on the strength of the
company's military business and gains in its market share of Class
8 trucks, which has been strengthened by the addition of the
International(R) LoneStar(R) and ProStar(R) to its product
offering.
The company projects that total truck industry retail sales volume
for Class 6-8 trucks and school buses in the United States and
Canada for the fiscal year ending October 31, 2009, to total
between 210,000 to 225,000 units, down from the previous forecast
of 244,000 to 256,000 units.
Despite the revised forecast of lower industry sales volume,
Navistar reaffirmed that its guidance for net income for its
fiscal year ending October 31, 2009, should be in the range of
$370 million to $410 million, excluding the Ford settlement and
related charges.
"We are on target to meet our aggressive goals and will continue
to invest in our products, expand our global footprint and contain
costs in a difficult economy," said Mr. Ustian. "I am optimistic
about our ability to maintain our market leadership positions,
advance our key new product initiatives and be solidly profitable
in fiscal 2009."
A full-text copy of Navistar's quarterly report is available at no
charge at:
http://researcharchives.com/t/s?3a3b
Based in Warrenville, Illinois, Navistar International Corporation
(NYSE: NAV) -- http://www.navistar.com/-- produces
International(R) brand commercial and military vehicles,
MaxxForce(TM) brand diesel engines, IC brand school and commercial
buses, and Workhorse(R) brand chassis for motor homes and step
vans, and is a private label designer and manufacturer of diesel
engines for the pickup truck, van and SUV markets. Navistar is
also a provider of truck and diesel engine parts. Another
affiliate offers financing services.
The Troubled Company Reporter reported on January 7, 2009, that
Navistar had $10.3 billion in total assets and $11.7 billion in
total liabilities, resulting in $1.4 billion in stockholders'
deficit as of October 31. The company also had $2.3 billion in
accumulated deficit as of October 31.
The TCR reported on June 2, 2008, that Fitch Ratings affirmed and
simultaneously removed from Rating Watch Negative the ratings for
Navistar International Corporation and Navistar Financial Corp. to
reflect progress in filing audited financial statements. The
ratings are:
Navistar International Corp.
-- Issuer Default Rating 'BB-';
-- Senior unsecured bank facility 'BB-'.
Navistar Financial Corp.
-- IDR 'BB-';
-- Senior unsecured bank lines 'BB-'.
The TCR also reported on Feb. 25, 2008 that Standard & Poor's
Ratings Services removed its 'BB-' corporate credit ratings on
Navistar International Corp. and subsidiary Navistar Financial
Corp. from CreditWatch with negative implications, where they were
placed Jan. 17, 2006.
NEW YORK TIMES: Lenders Betting on Bankruptcy, Gawker.com Says
--------------------------------------------------------------
Owen Thomas at Gawker.com reports that loan sharks are betting on
The New York Times Company.
Gawker.com states that while officials at The Times have denied
that the Company would have to file for bankruptcy, the lenders
are cutting deals.
As reported by the Troubled Company Reporter on March 10, 2009,
The Times and investment firm W. P. Carey & Co. LLC entered into a
sale-leaseback transaction for $225 million for part of the space
that the Times owns in its New York headquarters. The purchase
was made by W. P. Carey and two of its publicly-held, non-traded
REIT affiliates, CPA(R):16 - Global and CPA(R):17 - Global.
The Financial Times relates that the $225 million purchase price
was bargain-basement and so was the rent.
About The New York Times
The New York Times Co., a leading media company with 2008 revenues
of $2.9 billion, includes The New York Times, the International
Herald Tribune, The Boston Globe, 16 other daily newspapers, WQXR-
FM and more than 50 Web sites, including NYTimes.com, Boston.com
and About.com. The company was founded in 1896.
* * *
As reported in the Troubled Company Reporter on Dec. 4, 2008, the
NY Times cut its quarterly dividend by 74%, as part of an effort
to conserve cash. The NY Times said that it took steps to lower
debt and increase liquidity, including reevaluating its assets.
The NY Times has laid off employees, merged sections of the NY
Times and Globe to reduce printing costs, and consolidated New
York area printing plants this year.
As reported by the TCR on January 26, 2009, Moody's Investors
Service downgraded The New York Times Company's senior unsecured
rating to Ba3 from Baa3, the commercial paper rating to Not Prime
from Prime-3, and assigned the company a Ba3 Corporate Family
Rating, Ba3 Probability of Default Rating, and SGL-3 speculative-
grade liquidity rating. The commercial paper rating will be
withdrawn. The rating actions conclude the review for downgrade
initiated on October 23, 2008. The rating outlook is negative.
The TCR said January 22 that Standard & Poor's Ratings Services
indicated its rating and outlook on The New York Times Co. (BB-
/Negative/--) are not affected by the company's announcement of a
private financing agreement with Banco Inbursa and Inmobiliaria
Carso for an aggregate amount of $250 million -- $125 million each
-- in senior unsecured notes due 2015 with detachable warrants.
The senior unsecured notes have a coupon of 14.053%, of which the
company may elect to pay 3% in kind, and will rank equally and
ratably on a senior unsecured basis with all senior unsecured
obligations of the company. Carlos Slim Helu and members of his
family own Inmobiliaria Carso (which currently holds 6.9% of the
company's class A shares) and are the main shareholders of Grupo
Financiero Inbursa S.A B. de C.V., which is the parent company of
Banco Inbursa. The New York Times had said proceeds would be used
to pay down existing debt, including its $400 million revolver due
May 2009 (under which a modest amount is currently outstanding).
NORTEL NETWORKS: May Sell 2 Main Units, Reorganization May Fail
---------------------------------------------------------------
Sara Silver and Jeffrey Mccracken at The Wall Street Journal
report that Nortel Networks Corp. is in talks to sell its two main
businesses to its rivals.
According to WSJ, people familiar with the matter said that Nortel
Networks has been able to attract interest in the sale of its core
wireless-equipment business and a separate unit that builds
telecom systems for offices. The two businesses reported $6.7
billion in sales in 2008, says WSJ. The report states that
several rivals also expressed interest in acquiring Nortel
Networks' enterprise unit, which makes communications networks for
corporations.
Citing people familiar with the matter, WSJ relates that Nortel
Networks has negotiated with potential buyers including Avaya Inc.
and Siemens Enterprise Communications. According to the report,
the sources said that Cisco Systems Inc. looked at the unit as
well but is not expected to present a bid. The report states that
Nortel Networks is also is in talks to sell the unit that sells
wireless voice gear to rivals that include Nokia Siemens Networks.
The possible sale is a sign that Nortel Networks could break
itself apart rather than emerge from bankruptcy, says WSJ. The
report quoted a person familiar with the matter as saying, "What
we are finding is that there may be a lot more value by selling
rather than emerging. The Company was surprised by the amount of
interest and the number of calls."
WSJ states that the wireless gear business generates most of
Nortel Networks' cash. Selling it would complicate any plans to
emerge from the bankruptcy process as a standalone company,
according to the report. The bankruptcy-law process, the report
says, requires Nortel Networks to seek the most value for
creditors.
A person close to Nortel Networks said that concluding that the
Company is headed toward liquidation "would be very premature," as
the sale of the two units wouldn't necessarily trigger a
liquidation, WSJ relates. Nortel Networks' board will meet next
week to review the management's business plan for emerging from
bankruptcy proceedings, the report says, citing the source.
WSJ states that Nortel Networks CEO Mike Zafirovski said last week
that the Company was working to develop a plan to restructure
"into a leaner and more competitive company" and would make the
plan public in April or May, after securing the approval of
creditors and court monitors.
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation
(NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next-
generation technologies, for both service provider and enterprise
networks, support multimedia and business-critical applications.
Nortel's technologies are designed to help eliminate today's
barriers to efficiency, speed and performance by simplifying
networks and connecting people to the information they need, when
they need it. Nortel does business in more than 150 countries
around the world. Nortel Networks Limited is the principal direct
operating subsidiary of Nortel Networks Corporation.
Nortel Networks Corp., Nortel Networks Inc. and other affiliated
corporations in Canada sought insolvency protection under the
Companies' Creditors Arrangement Act in the Ontario Superior Court
of Justice (Commercial List). Ernst & Young has been appointed to
serve as monitor and foreign representative of the Canadian Nortel
Group. The Monitor also sought recognition of the CCAA
Proceedings in the Bankruptcy Court under Chapter 15 of the
Bankruptcy Code.
Nortel Networks Inc. and 14 affiliates filed separate Chapter 11
petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138).
Judge Kevin Gross presides over the case. James L. Bromley, Esq.,
at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary
Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll
& Rooney PC, in Wilmington, Delaware, serves as Chapter 15
petitioner's counsel.
Certain of Nortel's European subsidiaries have also made
consequential filings for creditor protection. The Nortel
Companies related in a press release that Nortel Networks UK
Limited and certain subsidiaries of the Nortel group incorporated
in the EMEA region have each obtained an administration order
from the English High Court of Justice under the Insolvency Act
1986. The applications were made by the EMEA Subsidiaries under
the provisions of the European Union's Council Regulation (EC)
No. 1346/2000 on Insolvency Proceedings and on the basis that
each EMEA Subsidiary's centre of main interests is in England.
Under the terms of the orders, representatives of Ernst & Young
LLP have been appointed as administrators of each of the EMEA
Companies and will continue to manage the EMEA Companies and
operate their businesses under the jurisdiction of the English
Court and in accordance with the applicable provisions of the
Insolvency Act.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of September 30, 2008, Nortel Networks Corp. reported
consolidated assets of $11.6 billion and consolidated liabilities
of $11.8 billion. The Nortel Companies' U.S. businesses are
primarily conducted through Nortel Networks Inc., which is the
parent of majority of the U.S. Nortel Companies. As of
September 30, 2008, NNI had assets of about $9 billion and
liabilities of $3.2 billion, which do not include NNI's guarantee
of some or all of the Nortel Companies' about $4.2 billion of
unsecured public debt.
Bankruptcy Creditors' Service, Inc., publishes Nortel Networks
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
and ancillary foreign proceedings undertaken by Nortel Networks
Corp. and its various affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
NORTHEAST BIOFUELS: Wants Sale Bidding Procedures Approved
----------------------------------------------------------
Northeast Biofuels LP and its affiliated debtors ask the Hon.
Margaret M. Cangilos-Ruiz of the United States Bankruptcy Court
for the Northern District of New York to approve proposed bidding
procedures for the sale of substantially all of their assets,
subject to competitive bidding and auction.
The Debtors propose a procedures hearing for the week of March 16,
2009, with a sale hearing to take place on or about April 17,
2009. In addition, the Debtors propose April 1, 2009, as deadline
for interested parties to submit their offer -- including a
deposit of 10% of the initial bid -- for the Debtors' assets and
April 14, 2009, to auction their assets. The proposed time
frames, the Debtors relates, will allow interested parties about
five weeks from their filing of the sale request to conduct due
diligence and submit bids.
The Debtors prepared an asset purchase agreement providing for the
purchase and sale of their assets. The use of a uniform agreement
will enable the Debtors, the steering committee, and the Official
Committee of Unsecured Creditors to compare and contrast the
differing terms of an bids that they may be received before the
bid deadline.
Jeffrey A. Dove, Esq., Menter, Rudin & Trivelpiece, P.C., relates
the Debtors have not selected a "stalking horse" bidder. The
deal contemplates a sale of the Debtor's assets, free and clear of
liens, claims, encumbrances and other interests, Mr. Dove notes.
The agreement contains the following material terms:
a) Purchased Assets: The facility, and all related
additions, fixtures as well as all
equipment and machinery owned by the
Debtors, and the right to pursue the
Lurgi Claims;
b) Assumed Contracts: each bidder is entitled to select the
executor contracts and unexpired
leases that the bidder desires to
acquire;
c) Purchase Price: paid in immediately available funds at
closing;
d) Assumed Liabilities: include "cure" payments under assumed
contracts, post-closing liabilities
under assumed contracts, and section
1146(a) claims that may arise from the
sale, certain employee-related
liabilities and post-closing
liabilities related to or arising from
the purchased assets or the Business;
e) Required Cash
Deposit: 10% of the Initial Bid;
f) Postclosing
Indemnification by
Debtor: none; and
g) Excluded Assets to include all cash, accounts receivable,
and Chapter 5 causes of action.
The Debtors have tap FTI Consulting Inc. to assist them in their
efforts to market their assets.
A full-text copy of the Debtors' asset purchase agreement is
available for free at:
http://ResearchArchives.com/t/s?3a3a
About Northeast Biofuels
Headquartered in Fulton, New York, Northeast Biofuels LP aka
Northeast Biofuels LLC -- http://www.northeastbiofuels.com--
Operate as ethanol plants. The company and two of its affiliates
filed for Chapter 11 protection on January 14, 2009 (Bankr. N.D.
N.Y. Lead Case No. 09-30057). Jeffrey A. Dove, Esq., at Menter,
Rudin & Trivelpiece, P.C., represents the Debtors in their
restructuring efforts. Blank Rome LLP will serve as the Debtors'
counsel. The Debtors proposed FTI Consulting Inc. as their
financial advisor. Diana G. Adams, the United States Trustee for
Region 2, appointed seven creditors to serve on an Official
Committee of Unsecured Creditors. When the Debtors filed for
protection from their creditors, they listed assets and debt
between $100 million to $500 million each.
OCEAN VILLAGE: U.S. Trustee Sets Creditors Meeting for April 23
---------------------------------------------------------------
The U.S. Trustee of Region 16, will convene a meeting of creditors
in Ocean Village LLC and Farm Fresh Ranch Market's Chapter 11
cases on April 23, 2009, at 1:00 p.m., at 411 W Fourth St., Room
1-159, Santa Ana, California.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in San Clemente, California, Ocean Village LLC
operates a grocery stores and supermarkets.
The Debtor and it's debtor affiliate filed for Chapter 11
protection on March 6, 2009, (Bankr. C.D. Calif. Lead Case No.:
09- 11930) William M. Burd, Esq. at Burd & Naylor represents the
Debtors in their restructuring efforts. The Debtors listed
estimated assets of less than $50,000 and estimated debts of
$10 million to $50 million.
OPTI CANADA: S&P Downgrades Corporate Credit Rating to 'B-'
-----------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its long-term
corporate credit rating on Calgary, Alberta-based OPTI Canada Inc.
to 'B-' from 'B+', its first-lien secured rating on OPTI's
C$350 million revolving credit facility to 'B+' from 'BB', and its
second-lien secured rating on the company's US$1 billion and
US$750 million notes to 'B' from 'BB', following a review of the
company's business risk and financial risk profiles. The recovery
rating of '1' on the first-line secured debt is unchanged, but S&P
revised the recovery rating on the second-lien secured debt to '2'
from '1', as a result of OPTI selling 15% of its working interest
in the Long Lake project. At the same time, Standard & Poor's
removed the ratings from CreditWatch with negative implications,
where they were placed Nov. 7, 2008. The outlook is negative.
"The downgrade reflects our expectation that OPTI's fully
leveraged break-even cash cost will exceed C$60 per barrel, which,
combined with current low oil prices, will most likely result in
the company increasing its drawings under its revolver and
reducing its liquidity as it progresses through 2009," said
Standard & Poor's credit analyst Jamie Koutsoukis. "Furthermore,
S&P has concerns regarding the ramp-up of cash flow generation
from the Long Lake project, which is subject to execution risk;
and the possibility OPTI might not comply with its debt to EBITDA
covenant on its bank facility beginning Sept. 30, should revenues
fall short because of production issues," Ms. Koutsoukis added.
In S&P's opinion, the ratings on OPTI reflect the company's high
leverage, expected negative cash flow generation for 2009, and the
Long Lake project's execution risk. S&P believes that somewhat
mitigating these constraints are the above-average reserve life
index of its oil sands leases; an expected stable production
profile, with negligible finding costs; and the forecast
competitive netbacks and reduced natural gas fuel requirements
associated with the patented OrCrude upgrading process.
The negative outlook reflects S&P's expectation that OPTI will not
generate sufficient positive free cash flow in 2009 to meet its
debt and capital expenditure commitments. The outlook also
reflects S&P's expectation that given the company's financial risk
profile, any unscheduled shutdowns or production issues could
materially increase debt levels. Furthermore, there exists
uncertainty regarding OPTI's ability to comply with its Sept. 30
credit facility covenant of first-lien debt to EBITDA remaining
below 2.5x. A further negative ratings action is possible if
operating performance at Long Lake does not ramp up as expected or
if OPTI cannot comply with its financial covenants and obtain an
amendment or waiver to rectify the situation. An outlook
revision to stable would depend on demonstrated sustained
synthetic production at Long Lake, coupled with internal cash
generation that can fund the company's maintenance capital and
debt servicing obligations.
PACIFIC ENERGY: Can Borrow $10.5-Mil. from Existing Lenders
-----------------------------------------------------------
Pacific Energy Resources Ltd., obtained permission from the U.S.
Bankruptcy Court for the District of Delaware to borrow
$10.5 million from a debtor-in-possession facility offered by
existing lenders.
The Debtor will seek final approval of the loan on April 8. It
seeks to access total loans of $40 million.
According to Bloomberg's Bill Rochelle, Pacific Energy owes $452
million to secured creditors who made first- and second-lien loans
enabling acquisition of the properties in 2006 and 2007. The
company owes another $31.7 million on subordinated notes on top of
the equivalent of a $25.2 million secured claim owing to an
affiliate of Chevron Corp., the holder of the majority working
interest and the operator of the California properties.
As reported by yesterday's Troubled Company Reporter, the company
has negotiated a commitment for $40 million in debtor-in-
possession financing. The DIP facility wraps and replaces two of
the company's three asset-based credit facilities and is being
provided by the lenders of the two credit facilities that are
being replaced. About $9.6 million of the DIP loan would be
available on an interim basis, Bill Rochelle said.
The company said that the DIP financing combined with its
operating revenue will provide sufficient liquidity to fund
working capital, meet ongoing obligations and ensure that normal
operations continue without interruption during its restructuring.
The company recorded revenues of $226.2 million in 2008.
Headquartered in Long Beach, California, Pacific Energy Resources
Ltd. -- http://www.pacenergy.com-- engage in the acquisition and
development of oil and gas properties, primarily in the United
States. The company and seven of its affiliates filed for Chapter
11 protection on March 8, 2009 (Bankr. D. Del. Lead Case No. 09-
10785). James E. O'Neill, Esq., Kathleen P. Makowski, Esq., and
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP,
represents the Debtors in their restructuring efforts. The
Debtors proposed Rutan & Tucker LLP as their corporate counsel;
Schully, Roberts, Slattery & Marino as special oil and gas
counsel; Devlin Jensen as Canadian counsel; Zolfo Cooper as
financial advisor; Lazard Freres & Co. LLC and Albrecht &
Associates Inc. as investment bankers; and Omni Management Group
LLC as noticing and claims agent. When the Debtors filed for
protection from their creditors, they listed assets and debts
between $100 million and $500 million each.
PACIFIC ENERGY: Section 341(a) Meeting Set for April 7
------------------------------------------------------
Roberta A. DeAngelis, Acting U.S. Trustee for Region 3, will
convene a meeting of creditors in Pacific Energy Resources Ltd.
and its debtor-affiliates' Chapter 11 cases on April 7, 2009, at
2:00 p.m., at J. Caleb Boggs Federal Building, 5th Floor,
Room 5209, Wilmington, Delaware.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Long Beach, California, Pacific Energy Resources
Ltd. -- http://www.pacenergy.com-- engage in the acquisition and
development of oil and gas properties, primarily in the United
States. The company and seven of its affiliates filed for Chapter
11 protection on March 8, 2009 (Bankr. D. Del. Lead Case No. 09-
10785). James E. O'Neill, Esq., Kathleen P. Makowski, Esq., and
Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP,
represents the Debtors in their restructuring efforts. The
Debtors proposed Rutan & Tucker LLP as their corporate counsel;
Schully, Roberts, Slattery & Marino as special oil and gas
counsel; Devlin Jensen as Canadian counsel; Zolfo Cooper as
financial advisor; Lazard Freres & Co. LLC and Albrecht &
Associates Inc. as investment bankers; and Omni Management Group
LLC as noticing and claims agent. When the Debtors filed for
protection from their creditors, they listed assets and debts
between $100 million and $500 million each.
PALM INC: To Remarket 18.5MM Shares Underlying Elevation Units
--------------------------------------------------------------
Palm, Inc., said, subject to market conditions, that it is
exercising its right to remarket approximately 18.5 million common
shares underlying 49% of the units of Series C preferred stock and
warrants acquired by Elevation Partners in January 2009. In
addition, the underwriters will have the right to purchase an
additional 2.8 million common shares from Palm to cover over-
allotments, if any.
If the remarketing is completed, Palm will receive all net
proceeds in excess of $49 million, the original purchase price of
the units. The proceeds would be used to strengthen Palm's
working capital position and to further bolster the resources Palm
is devoting to the launch of the Palm(R) Pre(TM) and future
product-development efforts.
Elevation Partners, which will recoup the $49 million it
originally paid for the units, expects to use those funds to
purchase shares of Palm's common stock in the offering at the
public offering price.
On November 3, 2008, Palm filed with the Securities and Exchange
Commission a Registration Statement on Form S-3ASR in connection
with the sale from time to time by the company or any selling
security holders of the company of its securities.
A copy of the preliminary prospectus supplement and accompanying
prospectus relating to the offering may be obtained by contacting:
Morgan Stanley & Co. Incorporated
180 Varick Street, Second Floor
New York, New York 10014
Attn: Prospectus Department
-- or by email at:
prospectus@morganstanley.com
-- or J.P. Morgan's prospectus library at:
National Statement Processing
Prospectus Library
4 Chase Metrotech Center, CS Level
Brooklyn, New York 11245
Palm also said it believes it has sufficient cash, cash
equivalents and short-term investments to meet anticipated
operating cash requirements and debt service or repayment
obligations for at least the next 12 months. Although Palm
believes that it can meet liquidity needs for at least the next 12
months, Palm noted it had net losses since the beginning of fiscal
year 2008 and its actual level of losses for the last four fiscal
quarters were unanticipated 12 months ago which have resulted in
decreases in cash, cash equivalents and short-term investment
balances during the last four quarters.
Palm's cash, cash equivalents and short-term investments balance
is expected to be between $215 million and $220 million at the end
of the third quarter of fiscal year 2009, and that it expects to
report revenues for the third quarter of fiscal year 2009 in the
range of $85 million to $90 million. The revenue declines versus
Palm's second quarter of fiscal year 2009 and third quarter of
fiscal year 2008 are the result of reduced demand for its maturing
legacy smartphone products, the challenging economic environment
and later-than-expected shipments of the Treo Pro in the United
States.
Palm expects declining revenues and continued margin pressure from
its legacy product lines in the fourth quarter of fiscal year
2009.
Palm filed a form of Underwriting Agreement in connection with its
plan to remarket 18.5 million shares. A full-text copy of the
Agreement is available at no charge at:
http://ResearchArchives.com/t/s?3a41
About Palm Inc.
Headquartered in Sunnyvale, California, Palm Inc. (Nasdaq:PALM)
-- http://www.palm.com/-- provides mobile computing solutions
worldwide. The company offers Palm Treo smartphones, Palm
LifeDrive mobile managers, and Palm handheld computers, as well as
software, services, and accessories.
* * *
The Troubled Company Reporter said March 6, 2009, that Standard &
Poor's Ratings Services lowered its corporate credit rating on
Palm Inc. to 'CCC' from 'CCC+'. The outlook is negative. The
action reflects significant further declines in revenues and
liquidity, said Standard & Poor's credit analyst Bruce Hyman.
As of November 30, 2008, the company's balance sheet showed total
assets of $660,926,000, total liabilities of $811,503,000, Series
B redeemable convertible preferred stock of $260,496,000,
resulting in total stockholders' deficit of $411,073,000.
PEOPLE AGAINST: Can Use Cash Collateral Until March 31
------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
has granted People Against Drugs Affordable Public Housing Agency
permission, on an interim basis, to continue using Cash
Collateral of the Debtor's prepetition secured lenders, to fund
payroll, satisfy employee obligations, pay suppliers and other
vendors, and meet other on-going business obligations through
March 31, 2008, as set forth in the budgets filed as Exhibits A &
B to the order.
Debtor shall pay $77,263 as adequate protection to Wells Fargo on
March 15, 2009. As additional protection to NexBank, N.A., Debtor
shall pay $2,000 on or before March 15, 2009.
This is the Court's sixth interim order authorizing the use of
Cash Collateral. A final hearing on the Debtor's Motion will be
held on March 31, 2009, at 1:30 p.m.
Full-text copies of the aforementioned budgets are available at:
http://bankrupt.com/misc/ExhibitA:PAD-PreliminaryBudget.pdf
http://bankrupt.com/misc/ExhibitB:March2009ExpenseBudget.pdf
Garland, Texas-based People Against Drugs Affordable Public
Housing Agency -- http://www.peopleagainstdrugs.org/-- was a
nonprofit corporation founded in 1991 to help schools and police
highlight the dangers of drug abuse and to offer "gang-and-
drug free living environments," according to Bloomberg News,
quoting what Texas state officials said in a statement in June.
The company filed for Chapter 11 protection on Sept. 17, 2008
(Bankr. N. D. Tex. Case No. 08-34696). Christina Walton
Stephenson, Esq., Gerrit M. Pronske, Esq., and Rakhee V. Patel,
Esq., at Pronske & Patel, P.C., represent the Debtor as counsel.
In its schedules, the Debtor listed total assets of $12,516,289
and total debts of $12,615,708.
PETER POCKLINGTON: Arrested for Allegedly Concealing Assets
-----------------------------------------------------------
Edvard Pettersson at Bloomberg News reports that authorities have
arrested Peter H. Pocklington in the U.S. for allegedly hiding
assets during his bankruptcy.
U.S. Attorney Thomas O'Brien in Los Angeles said in a statement
that Mr. Pocklington is accused of making false statements and
false oaths when he filed for bankruptcy in August 2008 and faces
as long as 10 years in prison if convicted.
According to court documents, Mr. Pocklington listed
$19.6 million in debts and $2,900 in assets. Citing prosecutors,
Bloomberg relates that the amount Mr. Pocklington disclosed for
his assets caused doubts that he wasn't revealing all his
holdings. The prosecutors, Bloomberg relates, didn't disclose two
bank accounts and the contents of two storage units.
Bloomberg, citing the U.S. attorney's office spokesperson Thom
Mrozek, states that Mr. Pocklington pleaded not guilty at a
hearing in the federal court in Riverside, California, on
March 11. According to the report, Mr. Mrozek said that Mr.
Pocklington will remain in custody until at least March 13, when
U.S. Magistrate Judge Oswald Parada will hold a hearing on the
government's arguments that Pocklington should be held without
bail.
Bloomberg reports that Michael Lusby, the attorney for Mr.
Pocklington, has denied seeing the charges. Mr. Lusby described
the charges as "overblown" and called it a "witch hunt," Bloomberg
relates. "He [Mr. Pocklington] doesn't have any assets. He gave
away all his assets 12 years ago," the report quoted Mr. Lusby as
saying. Mr. Pocklington posted on his Web site that he sold all
his business interests in 1998 and moved to California
Peter H. Pocklington a Canadian businessman who once owned the
Edmonton Oilers hockey team. He lives in Palm Desert, California.
Mr. Pocklington sold in 1998
PLIANT CORP: Court Set May 5 as Creditor's Claims Bar Date
----------------------------------------------------------
The Hon. Mary F. Walrath of the United States Bankruptcy Court
for the United States Bankruptcy Court for the District of
Delaware set May 5, 2009, as a deadline for creditors of Pliant
Corporation and its debtor-affiliates to their file proofs of
claim.
About Pliant Corp.
Headquartered in Schaumburg, Illinois, Pliant Corporation produces
polymer-based films and flexible packaging products for food,
beverage, personal care, medical, agricultural and industrial
applications. The company has operations in Australia, New
Zealand, Germany, and Mexico.
The Debtor and 10 of its affiliates filed for chapter 11
protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No.
06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon
L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway,
Stargatt & Taylor, represented the Debtors in their restructuring
efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as
their Canadian bankruptcy counsel. As of Sept. 30, 2005, the
company had $604,275,000 in total assets and $1,197,438,000 in
total debts. The Debtors emerged from chapter 11 protection on
July 19, 2006.
Pliant Corp. and its affiliates again filed for Chapter 11 after
reaching terms of a pre-packaged restructuring plan. The
voluntary petitions were filed Feb. 11, 2009 (Bank. D. Del. Case
Nos. 09-10443 through 09-10451). The Hon. Mary F. Walrath
presides over the cases. Jessica C.K. Boelter, Esq., at Sidley
Austin LLP, in Chicago, Illinois, and Edmon L. Morton, Esq., at
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP, in
Wilmington, Delaware, provide bankruptcy counsel to the Debtors.
Epiq Bankruptcy Solutions LLC acts as claims and noticing agent.
As of September 30, 2008, the Debtors had $688,611,000 in total
assets and $1,032,631,000 in total debts.
POWERMATE CORP: Seeks Third Exclusivity Extension
-------------------------------------------------
Powermate Corp. is asking for a third extension of the exclusive
right to file a plan, Bloomberg's Bill Rochelle said.
According to Mr. Rochelle, the company said it has exchanged
drafts of plans with the creditors' committee and believes it will
"soon" be able to begin the plan-approval process. He notes,
however, that Powermate indicated in its request that its lawyers
"have not had sufficient time to begin the Chapter 11 plan
process."
The exclusivity motion is set for hearing on April 16.
About Powermate
Headquartered in Aurora, Illinois, Powermate Corp. --
http://www.powermate.com/-- manufactures portable and home
standby generators, air compressors, and pressure washers.
Powermate Holding Corp. is the parent of Powermate Corp. In
turn, Powermate Corp. owns 100% of Powermate International Inc.
Powermate Corp. operates the companys assets located in the
United States. Powermate International has sales employees in
Hong Kong and the Philippines. Powermate Holding has no
employees or operations. Sun Capital Partners bought 95% of
Powermate in 2004.
Powermate Holding has two other non-debtor subsidiaries,
Powermate Canadian Corp., located in Canada and Powermate S. de
R.L. de C.V., which is domiciled in Mexico.
The three companies filed for chapter 11 protection on March 17,
2008 (Bankr. D. Del. Lead Case No.08-10498). Kenneth J. Enos,
Esq.. and Michael R. Nestor, Esq., at Young, Conaway, Stargatt &
Taylor, represent the Debtors. The Official Committee of
Unsecured Creditors, which has seven creditor members, is
represented by Monika J. Machen, Esq., at Sonnenschein Nath
Rosenthal LLP.
On May 23, 2008, the Debtors' summary of schedules posted total
assets of US$60,139,442 and total debts of US$85,700,759.
PROVIDENCE SERVICE: Lenders Reset Covenants for 2008 and 2009
-------------------------------------------------------------
The Providence Service Corporation signed an amended credit
agreement with its senior debt holders related to its
$173 million senior term loan. The agreement is designed to reset
covenant targets for the fourth quarter of 2008 and for 2009.
The amendment provides for a number of covenant calculation
adjustments that reflect certain changes or events since 2007 that
have impacted or may impact the company's business, including the
instability with state payers, the final outcome of a contract
arbitration in Canada, costs forecasted to be incurred in
connection with a proxy election contest that the company expects
to be brought by a dissident stockholder group, acquisition costs,
stock compensation and fees related to the potential sale of
assets.
In connection with the amendment, the company will incur certain
costs and expenses, including but not limited to, an amendment fee
payable to the lenders, and an increase in the LIBOR interest rate
spread from 350 basis points to 650 basis points.
"We are fortunate to have a syndicate that remains supportive of
the Company and is willing to work with us in our changing
business environment, including the economic meltdown that
impacted our business over the summer and fall of 2008," said
Fletcher McCusker, Chairman and CEO. "Within the difficult
lending market we are currently experiencing, this new agreement
is a fair deal for both the Company and its lenders. We are
grateful to CIT Capital Securities who served as lead bank in
negotiating these new terms."
The decision was made to amend the credit agreement, rather than
just negotiate a covenant default waiver for the fourth quarter of
2008, in an effort to facilitate a full year of anticipated
covenant coverage without regard to any potential debt payments
related to the possible sale of assets. Providence was
represented by Skadden, Arps, Slate, Meagher & Flom LLP as special
credit counsel.
Based in Tucson, Arizona, The Providence Service Corporation,
through its owned and managed entities, provides home and
community based social services and non-emergency transportation
services management to government sponsored clients under programs
such as welfare, juvenile justice, Medicaid and corrections.
Providence does not own or operate beds, treatment facilities,
hospitals or group homes, preferring to provide services in the
client's own home or other community setting. The company
provides a range of services through its direct and managed
entities to over 74,000 clients through 870 contracts at September
30, 2008, with an estimated six million individuals eligible to
receive the Company's non-emergency transportation services
related to its LogistiCare operations. Combined, the Company has
a nearly $1 billion book of business including managed entities.
RICHARDSON HOSPITAL: S&P Cuts Rating on $73.227 Mil. Bonds to BB+
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating to 'BB+'
from 'BBB-' on Richardson Hospital Authority, Texas'
$73.227 million series 2004 bonds and $32.355 million series 1998
bonds, issued for Richardson Regional Medical Center. The rating
outlook is now developing.
The lower rating reflects RRMC's continuing negative financial
results, with operating losses through the six-month-interim
period ended November 2008 a sizeable $9.4 million, or a negative
17.3% margin, reducing coverage of maximum annual debt service to
0.1x and a constrained balance sheet, with a November 2008
unrestricted cash-to-debt ratio at 40% and high leverage with
debt to capitalization at 59%. In addition, RRMC is in a
competitive marketplace, with sizeable system-affiliated
competitors surrounding its primary service area.
Factors supporting the 'BB+' rating include RRMC's solid market
share of about 30.7% in its 'AA+' rated primary service area of
Richardson, Texas (about 20 miles northeast of Dallas), which is
experiencing good population growth and possesses a favorable
payor mix. RRMC also opened a new outpatient hospital in October
2008, which is reporting better-than-expected volumes to date.
Good operational liquidity of 130 days' cash on hand at the
six-month-interim period ended November 2008 is an added credit
strength.
The developing outlook reflects the continuing deterioration of
RRMC's operations thus far in fiscal 2009, coming on the heels of
a sizeable operating loss in fiscal 2008. While management
recently signed a memorandum of understanding involving a
potential partnership with Methodist Hospitals of Dallas to help
shore up its financial position and reduce operating losses,
fiscal 2009 will still end with a significant deficit and there is
uncertainty about fiscal 2010 results. The transaction still
needs to go through the due diligence phase and both parties need
to approve definitive agreements on or before May 31, 2009.
"In order to maintain its 'BB+' rating or return to investment
grade, RRMC will have to improve its revenue growth and cash flow
generation, which management forecasts to be a 4% operating margin
or better in fiscal 2010 (assuming the Methodist partnership is in
place), while maintaining or improving current liquidity levels,"
said Standard & Poor's credit analyst Stephen Infranco. "The
encouraging demographic and population growth in RRMC's primary
and secondary service areas, and good operational liquidity,
mitigates some of the operational stress at the current rating
level at the present time," said Mr. Infranco.
If RRMC's operating income does not stabilize and improve to
historical levels of profitability; or if the Methodist
transaction does not occur as expected, a further downgrade is a
possibility over the next one to two years.
RRMC has approximately $103.43 million in long-term debt and notes
payable, secured by a revenue pledge of the medical center.
REGENT BROADCASTING: Moody's Reviews 'B3' Corporate Family Rating
-----------------------------------------------------------------
Moody's Investors Service placed the ratings of Regent
Broadcasting LLC (including its B3 corporate family rating) under
review for possible downgrade, reflecting continued deterioration
in macroeconomic conditions which will likely translate into
meaningfully lower advertising spending, as well as Moody's
expectations that Regent will face challenges complying with its
leverage covenant in the first half of 2009. Regent performed in
line with Moody's expectations for 2008, but Moody's outlook for
2009 broadcasting revenue has worsened since Moody's last action
on Regent in October 2008.
The review will focus on Regent's ability to achieve a bank
amendment that creates a greater cushion of covenant compliance
and provides access to its $75 million revolving credit facility,
as well as the impact of the related costs (both upfront and
ongoing in the form of higher interest) on Regent's ability to
generate free cash flow. Inability to achieve a viable amendment
could result in a multi notch downgrade.
Moody's also affirmed Regent's SGL-4 speculative grade liquidity
rating, which continues to reflect concern over Regent's ability
to comply with tightening financial covenants under its bank
credit facility.
ROCKLAND COUNTY: Moody's Assigns Ratings on $45 Mil. Tax Notes
--------------------------------------------------------------
Moody's Investors Service has assigned MIG 1 ratings to Rockland
County's $45 million Tax Anticipation Notes, 2009 and $40 million
Revenue Anticipation Notes, 2009. Concurrently, Moody's has
downgraded the county's long term general obligation rating to A2
from A1, affecting $315.8 million in outstanding debt. The
downgrade reflects a trend of structurally imbalanced operations
that left the county with narrowed liquidity and a negative fund
equity position as of fiscal 2007; and Moody's expectation that
the county will be challenged to rebuild General Fund reserves to
satisfactory levels, given the severity of the current economic
recession and the county's reliance on economically volatile sales
tax revenues. The A2 long term rating also factors the county's
sizable tax base with above average wealth levels and a below
average debt burden.
The highest quality short term rating additionally reflects
sufficiency of cash to repay the notes at maturity on March 9,
2010 based upon projected cash flows for 2009 and 2010, factoring
relief anticipated from the recently passed federal stimulus
package that will reduce county disbursements for Medicaid during
fiscal 2009 and 2010. The county's cash flow projections
conservatively exclude any impact from the federal stimulus. The
notes are ultimately secured by the county's unlimited property
tax pledge. The TANs are being issued in anticipation of the
collection of real property taxes levied in and for the towns in
the county. RAN proceeds will bridge the timing differences
between cash receipts of sales taxes and state and federal aid and
disbursements.
Satisfactory Coverage Of Note Repayment
The RANs and TANs are both dated March 20, 2009 and mature March
9, 2010. The notes are issued in anticipation of real property
taxes and sales taxes and intergovernmental aid, respectively, and
both notes are additionally secured by the county's general
obligation unlimited tax pledge. Coverage of the March 2010
maturity from operating cash is projected to be satisfactory at
1.4 times based on cash flow assumptions which Moody's believes
are reasonable, although the county's fiscal 2010 budget has not
yet been adopted. The county's cash position is vulnerable given
reliance on economically sensitive sales tax revenues, the
county's largest revenue source, which has underperformed annually
for the past Moody's years (2005-2008); however, Moody's believes
the exclusion of any federal stimulus funding from the cash flow
projections is conservative and supports Moody's expectation that
the county will have sufficient cash on hand to retire the notes
at maturity. The current notes represent 13.2% of total 2009
estimated receipts and 28% and 14.7% of estimated pledged revenues
for the TAN and RAN, respectively. While coverage is
satisfactory, Moody's note that the county's actual 2008 ending
cash balance, at just 3.3% of available receipts (excluding note
proceeds) is indicative of the county's relatively narrow
liquidity position. Cash is projected to improve in fiscal 2009
to 6.2% of receipts, excluding federal stimulus relief.
Trend Of Operating Deficits Strains Financial Position; Further
Decline Anticipated As Of Fiscal 2008
The county's financial position has deteriorated significantly
following operating deficits in fiscal years 2006 and 2007 and a
substantial negative fund balance restatement related to the
write-off of interest and penalty receivables; these were waived
as part of the county's 2007 settlement of a tax appeal filed by
Mirant (Mirant North America LLC senior unsecured rated B1),
formerly the county's largest taxpayer. Moreover, given a three-
year trend of structural imbalance (fiscal 2005 reserve
augmentation achieved through one-time revenue sources), and
further decline anticipated in 2008, Moody's believes the county
will be challenged in the near term to restore liquidity and
reserves to levels satisfactory to offset its reliance on
economically sensitive sales tax revenues, which comprised
approximately 39% of fiscal 2007 operating revenues. Sales tax
revenues have fallen short of budget forecasts annually since
fiscal 2005. Fiscal 2007 ended with an $18.7 million operating
deficit, reflecting the budgeted use of $7 million of reserved
tobacco securitization proceeds to offset debt service
expenditures, as well as negative budget variances related to
sales tax revenues ($4.3 million below budget), penalties and
interest on property taxes ($3.5 million due to Mirant waiver),
and mortgage tax ($2.3 million below budget). Additionally, the
county made a larger than budgeted transfer to the Enterprise
Fund, comprised of mental health and hospital units ($8.9 million
above budget). These losses, along with the $20.1 million
negative restatement of General Fund balance, brought total fund
balance to a narrow $11.3 million (2.6% of revenues) as of fiscal
2007, of which $10.5 million was comprised of reserved tobacco
securitization proceeds. The county's unreserved, undesignated
fund balance deficit worsened to -$33.5 million (-7.6% of
revenues). Fund balance includes an illiquid asset associated
with advances to the mental health and hospital units
($14.7 million); net of this long term receivable, total fund
balance would similarly reflect a deficit. The county's narrow
liquidity is further demonstrated in a projected net cash deficit
(exclusive of cash flow borrowing proceeds) of -$42.3 million, or
-9.6% of revenues.
The county's financial position is expected to have narrowed
further as of fiscal 2008. Operations benefited from the issuance
of $24 million (not budgeted) of tax certiorari settlement bonds
to offset the write-off of receivables related to Mirant
penalties; however, rather than rebuild fund balance, these
proceeds were offset by projected negative revenue variances
related to the budgeted use of $7 million of reserved tobacco
proceeds to fund debt service expenditures; and shortfalls related
to sales tax ($12 million), mortgage tax ($3 million) and
departmental income ($4 million, related to budgeted revenue from
red light cameras that were not authorized by the state and lower
than anticipated revenues from county clerk's fees and the
department of health). Overall, General Fund balance is expected
to decline to $9.8 million, (a narrow 2.1%of revenues, including
$6.8 million remaining tobacco securitization proceeds), based
upon unaudited results. Favorably, the undesignated fund balance
deficit is expected to improve to -$24.2 million (-5.1% of
revenues) reflecting, in part, projected $4 million improvement in
the Enterprise Fund and reduction of the associated General Fund
reserve.
Projected Sales Tax Shortfall For Fiscal 2009; Gap Expected To Be
Funded From Both Recurring And Non-Recurring Sources
The fiscal 2009 budget represents a 3% increase in total
appropriations, reflecting growth in mandated social services
offset by declines in discretionary spending. The budget
appropriated the final $6.8 million of reserved tobacco proceeds,
and included several positive steps towards restoring healthy
operations, including a 9.85% General Fund property tax levy
increase ($5.3 million) and implementation of strict expenditure
controls. Nevertheless, officials project a $23.4 million budget
gap for the current fiscal year, driven by projected shortfalls
related to sales tax (budgeted at essentially the level budgeted
in 2008, currently projected to fall $7 million short of budget),
property tax ($5 million), hospital/mental health subsidy (5.1
million), state aid cuts ($3 million), underperforming interest
income ($1 million) and failure to adopt a budgeted hotel/motel
tax ($2.3 million). This gap is expected to be funded largely
from non-recurring sources, including increased FMAP ($13 million
anticipated in 2009) and intergovernmental transfer revenue ($5
million net to the hospital), and $6 million of bond proceeds to
offset costs associated with an employee retirement incentive.
Additional savings are anticipated from continuation of the
county's hiring freeze (projected savings of $2.4 million),
further restrictions on departmental expenditures ($7.5 million)
and cancellation of planned construction of a new highway garage
($1.7 million). While these steps are expected to offset
anticipated revenue shortfalls and the budgeted appropriation of
reserved tobacco proceeds, Moody's believes that the county will
be challenged to restore fund balance to satisfactory levels over
the near term.
High Wealth Levels Reflect County's Favorable Location; Tax Base
Growth Expected To Moderate
Moody's expects growth in the county's $46 billion tax base will
slow over the near term given the ongoing recession and housing
market downturn. The county's assessable base has grown at a
healthy rate averaging 7% per year over the past five years,
including a substantial 37.7% increase in fiscal 2007, as growth
with revaluation in the Town of Haverstraw (G.O. rated A2) more
than offset the impact of the Mirant tax appeal settlement. Full
valuation increased at an average rate of 7% annually during this
period, driven by market appreciation as well as the impact of
revaluation, although growth slowed to 3.8% in 2008, reflecting
the housing downturn. Located approximately 33 miles northwest of
Manhattan, the county offers easy access to employment
opportunities in New York City (G.O. rated Aa3) as well as
Westchester County (G.O. rated Aaa) and northern New Jersey (G.O.
rated Aa3). Local employers include a number of hospitals and
pharmaceutical companies, including Wyeth-Ayerst (Wyeth Senior
Unsecured rated A3/under review for possible upgrade; 2.1% of full
valuation with 3,130 employees), which was recently acquired by
Pfizer (Pfizer Inc. Senior Unsecured rated Aa2/under review for
possible downgrade). The impact of this acquisition on local
operations is currently uncertain. The November 2008 unemployment
rate of 5.1% remained below state and national figures (5.9% and
6.5%, respectively) for the same time period. Wealth indicators
are above those for the state, with per capita income and median
family income representing 120.1% and 152.5% of the state levels,
respectively. Full value per capita is a healthy $150,096, due in
part to moderate tax base concentration (ten largest taxpayers
comprise 11.6% of full valuation).
Debt Burden Expected To Remain Manageable
Moody's expects the county's debt burden to remain manageable
given moderate borrowing plans and rapid retirement of debt (80%
retired within ten years). The county's direct debt burden is
moderate at 0.7% of full valuation, and increases to an overall
debt burden of 2.6% including the outstanding debt of underlying
entities. Given current economic uncertainty, officials intend to
limit debt issuance in the near term. The county has only fixed
rate general obligation bonds outstanding and is not party to any
swap agreements.
Key Statistics:
* 2000 Population: 286,753
* 2007 Population (est.): 296,483
* 2007 Full Valuation: $46 billion
* Full Value per Capita: $155,019
* Debt Burden: 2.6%
* Payout of principal: 80% in 10 years
* 2007 General Fund balance: $11.3 million (2.6% of revenues)
* 2007 Undesignated General Fund balance: -$33.5 million (-7.6%
of revenues)
* Median Family Income as % of state: 152%
* Per Capita Income as % of state: 120%
* G.O. Debt Outstanding: $315.8 million
The last rating action on Rockland County was on June 19, 2008
when the county's A1 rating was affirmed and a negative outlook
was assigned.
Regent Broadcasting LLC
-- Corporate Family Rating, Placed on Review for Possible
Downgrade, currently B3
-- Probability of Default Rating, Placed on Review for Possible
Downgrade, currently Caa1
-- Senior Secured Bank Credit Facility, Placed on Review for
Possible Downgrade, currently B3, LGD3, 35% (LGD assessment
is not under review, but is subject to change.)
-- Outlook, Changed To Rating Under Review From Stable
-- Affirmed SGL-4 Speculative Grade Liquidity Rating
The last rating action was on October 20, 2008, when the corporate
family of Regent was downgraded to B3 from B2.
Regent Broadcasting LLC owns and operates 62 stations located in
13 markets. Its annual revenue for 2008 was approximately
$95 million.
ROUNDY'S SUPERMARKETS: S&P Affirms 'B' Corporate Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services said it revised the outlook on
Roundy's Supermarkets Inc. to stable from negative. S&P also
affirmed the 'B' corporate credit rating on the company. The
outlook revision reflects the attainment of a more adequate
cushion under its bank facility covenants following a reduction in
debt levels and improved operating performance.
The ratings on Milwaukee based-Roundy's reflect its highly
leveraged capital structure, its participation in the highly
competitive supermarket industry, and its geographic concentration
in Wisconsin and Minnesota.
"In 2008, Roundy's experienced marginal same-store sales growth,"
said Standard & Poor's credit analyst Stella Kapur, "and while
sales increased modestly for the full year, quarterly performance
during the year was inconsistent." The company's operations
underperformed in the second quarter due to increased price
investment and promotional activity but recovered in the fourth
quarter due to a reduction in promotion activity and operating
costs. "Despite this," she continued, "the company ended the year
with only slightly better operating margins, which compare
favorably to industry peers."
S-TRAN HOLDINGS: Wants Exclusive Filing Period Extended to June 1
-----------------------------------------------------------------
S-Tran Holdings Inc., et al., ask the U.S. Bankruptcy Court for
the District of Delaware to extend their exclusive period to file
a plan to June 1, 2009, and their exclusive period to solicit
acceptances of a plan to August 3, 2009.
On April 11, 2008, the Court approved the disclosure statement
explaining the Debtors' First Amended Plan of Liquidation and
fixed the voting procedures associated with approval of the Plan.
A hearing to consider confirmation of the Plan is presently
scheduled for April 8, 2009; however the Debtors have requested a
further continuance of the Confirmation Hearing and an extension
of the deadline to serve solicitation packages to that date that
is approximately 60 days after entry of the Bankruptcy Court's
decision upon the motion for partial summary judgement in the
Protective Insurance Company Litigation or to such time as may be
convenient to the Court. Consequently, the Debtors seek a further
extension of the Exclusive Periods in order to protect their
rights with respect to the Plan, any amendment, and associated
solicitation under the Voting Procedures.
Disposition of the Protective Litigation, as described in the
Disclosure Statement, and pursuit of claims objections to be filed
remain significant contingencies in the Debtors' cases.
Headquartered in Cookeville, Tennessee, S-Tran Holdings, Inc.,
provides common carrier services and specialized in less-than-
truckload shipments and also supplies overnight and second day
service to shippers in 11 states in the Southeast and Midwestern
United States. The company and its debtor-affiliates filed for
Chapter 11 relief on May 13, 2005 (Bankr. D. Del. Case No.
05-11391).
Bruce Grohsgal, Esq., Laura Davis Jones, Esq., Michael
Seidl, Esq., and Sandra G.M. Selzer, Esq., at Pachulski Stang
Ziehl Young & Jones LLP represent the Debtors as counsel.
Christopher A. Ward, Esq., at Polsinelli Shalton Flanigan
Suelthaus, Mary E. Augustine, Esq., at Ciardi, Ciardi & Astin,
P.C., and Steven M. Yoder, Esq., at Potter Anderson & Corroon LLP,
represent the Official Committee of Unsecured Creditors as
counsel. When the Debtors filed for protection from their
creditors, they listed total assets of $22,508,000 and total debts
of $30,891,000.
SAMSUN LOGIX: Files Chap. 15 Petition in U.S. Court, Reuters Says
-----------------------------------------------------------------
A March 11 Reuters report posted on iii.co.uk said based on a
court filing, South Korea's Samsun Logix Corp has filed for
Chapter 15 bankruptcy protection in the U.S. Bankruptcy Court for
the Southern District of New York in Manhattan listing more than
US$100 million in both assets and debts.
Samsun Logix last week was placed under court receivership after
facing a credit crunch, Yonhap News said in a March 11 report
posted on joongangdaily's Web site.
According to Yonhap News, the shipper last year incurred a net
loss of KRW36 billion due to heavy financial costs and recorded
KRW136 billion (US$90 million) in operating income on sales of
KRW2.4 trillion.
Last month, a Forbes report posted on steelguru.co said Samsun
Logix got slammed by the cancellation of a number of contracts by
companies, to which it had sub chartered vessels, causing it to
run short of cash.
SIMMONS BEDDING: Hires Bankruptcy Counsel & Financial Advisers
--------------------------------------------------------------
Simmons Bedding Co. has hired bankruptcy counsel and financial
advisers, Jeffrey McCracken at The Wall Street Journal reports,
citing people familiar with the matter.
The sources, WSJ relates, said that Simmons Bedding hired the law
firm Weil Gotshal & Manges LLP as bankruptcy counsel and the
investment-banking firm Miller Buckfire & Co. to help it
restructure debt.
According to WSJ, the sources said that Simmons Bedding is seeking
for another private-equity fund or investor to put in new debt or
equity either inside or outside bankruptcy. WSJ relates that the
sources said that Simmons Bedding is offering investors a chance
to be a "stalking horse" that funds a plan of reorganization
should Simmons Bedding decided to file for bankruptcy. WSJ quoted
a person familiar with the matter as saying, "All options are
being looked at, and it's not clear what will happen."
WSJ states that Simmons Bedding, which posted a $12.7 million loss
through the first nine months of 2008, said on Wednesday that it
would delay reporting fourth-quarter earnings. According to the
report, Simmons Bedding said that it has obtained an amendment to
its credit agreement to explore "a range of strategic and
financing alternatives to enhance its financial flexibility."
About Simmons Company
Atlanta-based Simmons Company -- http://www.simmons.com/--
through its indirect subsidiary Simmons Bedding Company, is one of
the world's largest mattress manufacturers, manufacturing and
marketing a broad range of products including Beautyrest,
Beautyrest Black, Beautyrest Studio, ComforPedic by Simmons,
Natural Care, Beautyrest Beginnings and Deep Sleep. Simmons
Bedding operates 19 conventional bedding manufacturing facilities
and two juvenile bedding manufacturing facilities across the
United States, Canada, and Puerto Rico. Simmons Bedding also
serves as a key supplier of beds to many of the world's leading
hotel groups and resort properties. Simmons Bedding is committed
to developing superior mattresses and promoting a higher quality
sleep for consumers around the world.
As reported by the Troubled Company Reporter on March 2, 2009,
Moody's Investors Service assigned a limited default rating to
Simmons following the expiration of the 30 day grace period of a
missed interest payment on its $200 million subordinated notes.
The limited default rating is assigned to Simmons' Ca probability
of default rating. All other ratings are affirmed. The outlook
is developing.
SINCLAIR BROADCAST: S&P Assigns 'B' Rating on $500 Mil. Shelf
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its preliminary 'B'
senior unsecured debt and preliminary 'B' subordinated debt
ratings to Sinclair Broadcast Group Inc.'s $500 million Rule 415
shelf registration. Under the shelf, the company may sell debt
securities, preferred stock, common stock, warrants, or a
combination thereof. Any future preferred stock issuance will be
rated in accordance with its terms. The company plans to use the
net proceeds from any issuances for general corporate purposes,
including repayment of indebtedness, redemption or repurchase of
debt, capital expenditures, working capital, and/or acquisitions.
The company may invest funds that are not immediately needed for
these purposes in short-term marketable securities.
The corporate credit rating on Hunt Valley, Maryland-based
Sinclair is 'BB-' and the rating outlook is negative. The rating
reflects the company's financial risk from high debt leverage, its
portfolio of generally lower-ranked stations, its growing
portfolio of real estate and other non-TV assets, TV
broadcasting's vulnerability to economic and election cycles, and
increasing competition from traditional and nontraditional media.
The negative rating outlook reflects S&P's concern that weakening
nonpolitical ad revenue and EBITDA could cause Sinclair's leverage
could rise beyond S&P's comfort level for the current rating early
in 2009.
Ratings List
Sinclair Broadcast Group Inc.
Corporate Credit Rating BB-/Negative/--
Ratings Assigned
$500M Rule 415 shelf
Senior Unsecured B (prelim)
Subordinated B (prelim
SIX FLAGS: Dec. 31 Balance Sheet Upside Down by $443.8 Million
--------------------------------------------------------------
Six Flags, Inc. will host a teleconference for analysts and
investors on March 16, 2008, at 9:00 AM Eastern. The company on
Tuesday announced operating results for the year and quarter ended
December 31, 2008.
Participants in the call will include President and Chief
Executive Officer, Mark Shapiro, and Executive Vice President and
Chief Financial Officer, Jeffrey R. Speed.
The teleconference will be broadcast live to all interested
persons as a listen-only Web cast on
http://investors.sixflags.com/
The Web cast will be archived for one year.
Six Flags reported a net loss of $112.9 million for the year ended
December 31, 2008, compared to a net loss of $253.1 million in
2007.
According to Six Flags, for the year ended December 31, 2008,
total revenues increased $50.5 million, or 5%, to $1.02 billion
from $970.8 million in the prior year. Attendance for the year
was 25.3 million, an increase of 400,000, or 2%, compared to
24.9 million in the prior year. The attendance increase was
driven by increased paid admissions, partially offset by planned
reductions of roughly 500,000 in complimentary and free
promotional attendance.
For the fourth quarter of 2008, total revenues of $118.1 million
increased 5% over the prior-year quarter's $112.3 million, while
total attendance grew 9%, or 300,000. The attendance increase
over the prior-year quarter was primarily due to strong Halloween
and Christmas Holiday seasons, driven by an increased mix of
season pass attendance.
As of December 31, 2008, Six Flags had $3.03 billion in total
assets, including $210.3 million in cash and cash equivalents;
$2.11 billion in total long-term debt, and $2.36 billion in total
debt, excluding $123.1 million in debt at December 31, 2004, which
had been called for prepayment. Six Flags, as of
December 31, also had $414.3 million in redeemable minority
interests; $302.3 million in mandatorily redeemable preferred
stock, represented by Preferred Income Redeemable Shares; and
$443.8 million in stockholders' deficit.
As of December 31, 2008, the company also had $1.5 million
available -- after reduction for outstanding letters of credit of
approximately $29.4 million -- on its $275 million revolving
credit facility.
Mark Shapiro, President and Chief Executive Officer of Six Flags,
Inc., said, "The three-year turnaround for Six Flags required a
great deal of patience. I am proud and grateful that the efforts
and commitment of our workforce -- some 30,000 strong -- resulted
in our best year ever, putting our operations back on solid
footing. The remaining challenge is the inherited balance sheet
and we are in comprehensive dialogue with our lenders to remedy
that issue."
Mr. Shapiro added: "While the economic environment continued to
tighten in the fourth quarter, our business remained resilient.
Six Flags has effectively positioned itself as an affordable
close-to-home entertainment destination for the entire family.
With paid attendance, length of stay and in-park spending
increases in 2008, it is clear that consumer confidence in our
brand and the guest experience has returned."
A full-text copy of Six Flag's 2008 Annual Report is available at
no charge at:
http://ResearchArchives.com/t/s?3a3c
Headquartered in New York City, Six Flags Inc. (NYSE: SIX) --
http://www.sixflags.com/-- is the world's largest regional
theme park company with 21 parks across the United States, Mexico
and Canada. Founded in 1961, Six Flags has provided world class
entertainment for millions of families with cutting edge, record-
shattering roller coasters and appointment programming with events
like the popular Thursday and Sunday Night Concert Series. Now 47
years strong, Six Flags is recognized as the preeminent thrill
innovator while reaching to all demographics -- families, teens,
tweens and thrill seekers alike -- with themed attractions based
on the Looney Tunes characters, the Justice League of America,
skateboarding legend Tony Hawk, The Wiggles and Thomas the Tank
Engine.
* * *
As reported by the Troubled Company Reporter on March 3, 2009,
Fitch Ratings has downgraded Six Flags, Inc. and its subsidiaries
-- Six Flags (Issuer Default Rating to 'CC' from 'CCC'; and Senior
unsecured notes, including the 4.5% convertible notes, to 'C/RR6'
from 'CC/RR6'); Six Flags Operations Inc. (IDR to 'CC' from 'CCC';
and Senior unsecured notes to 'C/RR6' from 'CCC-/RR5'); and Six
Flags Theme Park Inc. (IDR to 'CC' from 'CCC'; and Secured bank
credit facility to 'B-/RR2' from 'B/RR1'). In addition, Fitch
affirms Six Flags' preferred stock at 'C/RR6'.
SIX FLAGS: To Default on $287MM PIERS; Issues Bankruptcy Warning
----------------------------------------------------------------
Six Flags Inc. disclosed that its Preferred Income Equity
Redeemable Shares are required to be redeemed on August 15, 2009,
at which time the company will be required to redeem all of the
PIERS for cash at 100% of the liquidation preference --
$287.5 million -- plus accrued and unpaid dividends --
$31.3 million assuming dividends are accrued and not paid through
the mandatory redemption date.
The company does not expect to have sufficient cash to redeem the
PIERS at their redemption date.
Given the current negative conditions in the economy generally and
the credit markets in particular, Six Flags said there is
substantial uncertainty that it will be able to effect a
refinancing of its debt on or prior to maturity or the PIERS prior
to their mandatory redemption date on August 15, 2009.
"As a result of these factors, there is substantial doubt about
our ability to continue as a going concern unless a successful
restructuring occurs," Six Flags said.
Six Flags said the PIERS redemption is just one component of the
comprehensive restructuring of the balance sheet that the company
is pursuing.
Annual maturities of Six Flags' long-term debt during the next
five years -- assuming maturity of the term loan portion of the
Credit Facility is not accelerated -- are:
2009 $253,970,000
2010 140,931,000
2011 9,388,000
2012 8,628,000
2013 150,941,000
Thereafter 1,802,384,000
--------------
$2,366,242,000
According to Six Flags, if it is unable to refinance or
restructure the PIERS at or prior to the mandatory redemption
date, the failure would constitute a default under its amended and
restated credit facility, which would permit the lenders to
accelerate the obligations. A cross-default would also be
triggered under Six Flags' public debt indentures, which would
likely result in most or all of its long-term debt becoming due
and payable. In that event, Six Flags would be unable to fund
these obligations. Six Flags said such a circumstance could have
a material adverse effect on its operations and the interests of
its creditors and stockholders.
"We are exploring a number of alternatives for the refinancing of
our indebtedness and the PIERS, including a restructuring either
in or out-of-court. We believe the consummation of a successful
restructuring is critical to our continued viability. Any
restructuring will likely be subject to a number of conditions,
many of which will be outside of our control, including the
agreement of our PIERS holders, common stockholders, creditors and
other parties, and may limit our ability to utilize our net
operating loss carry forwards if there is an ownership change,
which is likely," Six Flags said.
"We can make no assurances that any restructuring that we pursue
will be successful, or what the terms thereof would be or what, if
anything, our existing debt and equity holders would receive in
any restructuring, which will depend on our enterprise value,
although we believe that any restructuring would be highly
dilutive to our existing equity holders and certain debt holders.
In addition, we can make no assurances with respect to what the
value of our debt and equity will be following the consummation of
any restructuring."
Six Flags said it may be compelled to seek an in-court solution in
the form of a pre-packaged or pre-arranged filing under the United
States Bankruptcy Code, if the company is unable to successfully
negotiate a timely out-of-court restructuring agreement with its
PIERS holders, common stockholders and creditors. Six Flags said
a bankruptcy filing would likely occur prior to the maturity of
the PIERS or well in advance of that date, if the company
concludes at such time that an out-of-court solution is not
feasible or advantageous.
Headquartered in New York City, Six Flags Inc. (NYSE: SIX) --
http://www.sixflags.com/-- is the world's largest regional
theme park company with 21 parks across the United States, Mexico
and Canada. Founded in 1961, Six Flags has provided world class
entertainment for millions of families with cutting edge, record-
shattering roller coasters and appointment programming with events
like the popular Thursday and Sunday Night Concert Series. Now 47
years strong, Six Flags is recognized as the preeminent thrill
innovator while reaching to all demographics -- families, teens,
tweens and thrill seekers alike -- with themed attractions based
on the Looney Tunes characters, the Justice League of America,
skateboarding legend Tony Hawk, The Wiggles and Thomas the Tank
Engine.
* * *
As reported by the Troubled Company Reporter on March 3, 2009,
Fitch Ratings has downgraded Six Flags, Inc. and its subsidiaries
-- Six Flags (Issuer Default Rating to 'CC' from 'CCC'; and Senior
unsecured notes, including the 4.5% convertible notes, to 'C/RR6'
from 'CC/RR6'); Six Flags Operations Inc. (IDR to 'CC' from 'CCC';
and Senior unsecured notes to 'C/RR6' from 'CCC-/RR5'); and Six
Flags Theme Park Inc. (IDR to 'CC' from 'CCC'; and Secured bank
credit facility to 'B-/RR2' from 'B/RR1'). In addition, Fitch
affirms Six Flags' preferred stock at 'C/RR6'.
SIX FLAGS: Hires Bankruptcy Counsel & Financial Advisers
--------------------------------------------------------
Jeffrey McCracken at The Wall Street Journal reports that Six
Flags Inc., in preparation for a possible Chapter 11 filing, has
hired Paul Hastings Janofsky & Walker as bankruptcy counsel and
investment bank Houlihan Lokey Howard & Zukin to negotiate with
creditors, including its banks, bondholders, and preferred
shareholders.
According to WSJ, Six Flags is trying to negotiate with creditors
so it can dodge bankruptcy. Six Flags said in a securities filing
that it "may be compelled to seek an in-court solution in the form
of a prepackaged or prearranged filing." WSJ quoted Six Flags
Chief Financial Officer as saying, "Our creditors are very
supportive, but obviously there are issues we need to address. We
are trying to accomplish something on a consensual basis. That is
always preferred, but I can't speculate on what the ultimate
resolution will be."
WSJ relates that Six Flags has $2.4 billion in debt -- much of it
accumulated years ago in constructing roller coasters and
expanding abroad -- and about $200 million in cash on hand.
About Six Flags
Six Flags, Inc. is engaged in operating regional theme parks.
During the year ended December 31, 2007, the Company operated 20
parks. In April 2007, the Company sold seven parks. The theme
parks offer thrill rides, water attractions, themed areas,
concerts and shows, restaurants, game venues and retail outlets.
In 2007, the theme parks offered more than 840 rides, including
over 130 roller coasters. On July 31, 2007, the Company acquired
the minority interests in Six Flags Discovery Kingdom. On June 18,
2007, it acquired a 40% interest in a venture that owns dick clark
productions, inc. (DCP).
As reported by the Troubled Company Reporter on March 3, 2009,
Fitch Ratings has downgraded Six Flags, Inc. and its subsidiaries'
Issuer Default Rating to 'CC' from 'CCC'.
SONICBLUE INC: Pillsbury Pays $10MM to Settle Malpractice Claim
---------------------------------------------------------------
Bankruptcy Law360 reports that Pillsbury Winthrop Shaw Pittman LLP
has agreed to pay roughly $10 million to settle a malpractice suit
waged by the former bankruptcy trustee of SonicBlue Inc. The
settlement is subject to approval by Judge Marilyn Morgan of the
U.S. Bankruptcy Court for the Northern District of California.
As reported by the Troubled Company Reporter on April 7, 2008,
Dennis J. Connolly, the appointed Chapter 11 Trustee for SONICblue
and its debtor-affiliates, filed a lawsuit against Pillsbury
Winthrop, accusing Pillsbury Winthrop, counsel to the Debtors
from 1989 to 2007, of failing to:
i) fulfill its ethical obligations to the Debtors, at no time
was the firm "disinterested" as defined in Section 101(14)
of the Bankruptcy Code;
ii) exercise an ordinary degree of professional skill in
representing the Debtors has resulted in significant delay
and harm to creditors in these cases; and
iii) comply with Bankruptcy Rule 2014 and its requirement that
retained professionals provide full and complete disclosure
of their connections to the Debtors.
William Freeman, Esq., and Craig Barbarosh, Esq., partners at the
firm's Orange County office, were terminated when they failed to
disclose a letter promising investors payment even if the Debtors
filed for bankruptcy, according to Law.com.
As a result of the firm's inappropriate employment, the Chapter 11
Trustee says that the Debtors have suffered at least $11,000,000
in damages.
Pillsbury Disqualified as Counsel
As reported in the TCR on April 2, 2007, the Court agreed with the
U.S. Trustee for Region 17 that Pillsbury Winthrop must be
disqualified from its representation in the bankruptcy cases of
the Debtors. In a memorandum decision dated March 26, 2007, the
Court noted that the genesis of the problem arose from the pre-
petition issuance of an opinion letter -- undisclosed by the firm
-- assuring payment to certain bondholders who effectively
controlled the Committee.
The Chapter 11 Trustee sought against Pillsbury:
i) the disallowance and disgorgement of all fees paid to
Pillsbury over the course of these cases, plus interest on
those fees calculated at the applicable rate of interest
from the date of payment;
ii) the disallowance of all contingency fees generated by
Pillsbury over the course of these cases;
iii) an award of compensatory damages for damages caused by
Pillsbury's malpractice and breach of the fiduciary duties
owed to the Debtors, including all costs associated with
the Trustee's investigation including his reasonable
attorneys' fees; and
iv) the imposition of punitive damages against Pillsbury
arising out of Pillsbury's malicious conduct which was
carried out with a willful and conscious disregard of the
rights of the Debtors, the Debtors' estates and the
Debtors' creditors.
A full-text copy of the Adversary Proceeding is available for free
at: http://ResearchArchives.com/t/s?29ea
The firm this month slashed its workforce, Bankruptcy Law360
notes.
SONICblue Inc. and its debtor-affiliates filed for chapter 11
bankruptcy on March 21, 2003, before the U.S. Bankruptcy Court for
the Northern District of California (Lead Case No. 03-51775). The
Debtors employed Pillsbury Winthrop Shaw Pittman LLP formerly
Pillsbury Winthrop LLP as their bankruptcy counsel. Houlihan
Lokey Howard & Zukin Capital served as their financial advisors.
Early into the case, the U.S. Trustee appointed an official
creditors' committee in the case. On Oct. 4, 2007, the Bankruptcy
Court directed the U.S. Trustee to reconstitute the
Initial Creditors' Committee.
The Initial Creditors' Committee retained Levene, Neale, Bender,
Rankin & Brill LLP as bankruptcy counsel; and Alliant Partners, as
financial advisors.
On March 26, 2007, the Bankruptcy Court disqualified Pillsbury as
the Debtors' bankruptcy counsel and ordered the appointment of a
chapter 11 trustee for the Debtors. On April 17, 2007, the Court
granted the U.S. Trustee's request to appoint Dennis J. Connolly,
Esq., as the Chapter 11 Trustee.
The U.S. Trustee appointed on Oct. 23, 2007, a reconstituted
Creditors' Committee -- comprised of Korea Export Insurance
Corporation, Riverside Contracting LLC & Riverside Claims LLC,
Synnex K.K., TLI Holdings, Inc., Michelle Miller, and York Capital
Opportunity Fund. York Capital Opportunity Fund was later
appointed Chair of the Reconstituted Creditors' Committee and
Synnex K.K. subsequently resigned as a member.
Grant T. Stein, Esq., at Alston & Bird LLP in Atlanta, Georgia;
and Cecily A. Dumas, Esq., at Friedman Dumas & Springwater LLP in
San Francisco, California, represented the Chapter 11 Trustee.
Grobstein Horwath served as accountants to the Chapter 11 Trustee.
Aron M. Oliner, Esq., Mikel R. Bistrow, Esq., and Geoffrey A.
Heaton, Esq., at Duane Morris LLP, in San Francisco, represented
the Reconstituted Creditors' Committee.
As reported by the TCR on January 6, 2009, the first amended joint
Chapter 11 plan of liquidation for SONICblue filed by the Chapter
11 trustee and the Reconstituted Committee became effective. The
Plan was confirmed in October 2008. Under the Plan, holders of 7-
3/4% Secured Senior Subordinated Convertible Debentures issued by
SONICblue in 2002 and due in 2005, in an aggregate principal
amount not to exceed $75,000,000, will receive roughly 56% of the
Allowed Amount of their Claims. Trade and other general unsecured
creditors are expected to receive cash equal to roughly 38.0% of
the Allowed Unsecured Claim.
SPECTRUM BRANDS: S&P Withdraws 'D' Corporate Credit Rating
----------------------------------------------------------
Standard & Poor's Ratings Services said that it withdrew its 'D'
corporate credit rating on Spectrum Brands Inc. S&P also withdrew
its '2' recovery rating on the senior secured bank facilities and
'6' recovery rating on the senior subordinated notes.
SPORT CHALET: BofA Grants Amendment to Waive Certain Defaults
-------------------------------------------------------------
Sport Chalet, Inc. and its wholly-owned subsidiary, Sport Chalet
Value Services, LLC, entered into a Third Amendment to Amended and
Restated Loan and Security Agreement dated as of March 2, 2009,
with Bank of America, N.A. as agent for the lenders under that
certain Amended and Restated Loan and Security Agreement, as
amended, dated as of June 20, 2008.
Under the terms of the Third Amendment, (i) the Bank waived an
existing event of default and certain potential defaults by the
Company under the Loan Agreement and amended provisions of the
Loan Agreement relating to those potential defaults, (ii) the
amount the Company can borrow against its borrowing base has been
reduced by approximately 3% to between 61% and 66% of eligible
inventory (varying from month to month), (iii) the interest rate
has been increased from the Bank's prime rate plus 0.5% or LIBOR
plus 2.5% (subject to reduction depending upon the company's
financial performance) to prime rate plus 2.0% or LIBOR plus 4.5%,
at the Company's option, (iv) the Company has agreed to maintain a
minimum monthly EBITDA ranging from -$3.5 million to $5.6 million
depending on the measurement date, and (v) the company has agreed
to continue to retain an acceptable turnaround professional until
specified financial milestones are met. The company's seasonal
revolver limits remain unchanged, so that the credit facility
continues to allow for advances up to $45 million from January 1st
to August 31st and $70 million from September 1st to December
31st, subject to availability based on eligible inventory. The
Loan Agreement expires in June 2012.
Sport Chalet, Inc. (SPCHA) -- http://www.sportchalet.com--
founded in 1959 by Norbert Olberz, operates full service specialty
sporting goods stores in California, Nevada, Arizona and Utah.
The Company offers over 50 services for the serious sports
enthusiast, including backpacking, canyoneering, and kayaking
instruction, custom golf club fitting and repair, snowboard and
ski rental and repair, SCUBA training and certification, SCUBA
boat charters, team sales, racquet stringing, and bicycle tune-up
and repair throughout its 55 locations.
As of September 28, 2008, the Company had $200.0 million in total
assets; $98.6 million in total liabilities, all current; and
$26.0 million in deferred rent.
STANDARD PACIFIC: Inks Release Agreement with Former Executives
---------------------------------------------------------------
In connection with the settlement of various employment-related
claims, including claims for payment of a 2008 bonus and pursuant
to a change in control agreement between Standard Pacific Corp.
and each executive:
-- Clay A. Halvorsen, the company's Executive Vice President,
General Counsel and Secretary; and
-- Andrew H. Parnes, the company's Executive Vice President
and Chief Financial Officer,
resigned from their positions with the company, effective
February 20, 2009 and February 24, 2009, respectively.
The terms of the settlement and release agreement between the
Company and Mr. Halvorsen, which became effective March 5, 2009,
provide, among other things, that, in exchange for a settlement of
claims between the parties, Mr. Halvorsen will receive a lump sum
payment of $1.55 million and reimbursement of up to twenty-four
months of COBRA/Cal-COBRA payments. Mr. Halvorsen will also have
a period of ninety days to exercise any vested stock options. The
$1.55 million payment to Mr. Halvorsen represents approximately
57% of the amount that could be asserted as due under his 2008
bonus arrangement and change in control agreement.
The terms of the settlement and release agreement between the
Company and Mr. Parnes, which became effective March 6, 2009,
provide, among other things, that, in exchange for a settlement of
claims between the parties, Mr. Parnes will receive a lump sum
payment of $2.4 million and reimbursement of up to twenty-four
months of COBRA/Cal-COBRA payments. Mr. Parnes will also have a
period of ninety days to exercise any vested stock options. The
$2.4 million payment to Mr. Parnes represents approximately 57% of
the maximum amount that could be asserted as due under his 2008
bonus arrangement and change in control agreement.
About Standard Pacific Corp.
Headquartered in Irvine, California, Standard Pacific Corp. (NYSE:
SPF) -- http://www.standardpacifichomes.com/-- operates in many
of the largest housing markets in the country with operations in
major metropolitan areas in California, Florida, Arizona, the
Carolinas, Texas, Colorado and Nevada. The company also provides
mortgage financing and title services to its homebuyers through
its subsidiaries and joint ventures, Standard Pacific Mortgage
Inc., SPH Home Mortgage and SPH Title.
* * *
As reported in the Troubled Company Reporter on March 10, 2009,
Moody's Investors Service lowered all of the ratings of Standard
Pacific, including the company's corporate family rating to Caa1
from B2, senior unsecured notes to Caa1 from B2, and senior sub
notes to Caa3 from Caa1. The speculative grade liquidity
assessment was affirmed at SGL-3, and the ratings outlook is
negative.
On March 6, Standard & Poor's Ratings Services lowered its
corporate credit rating on Standard Pacific 'CCC' from 'B-'. S&P
lowered its rating on roughly $1.2 billion of senior unsecured
notes and placed the rating on CreditWatch with negative
implications pending a review of the recovery prospects for senior
unsecured noteholders, which S&P will undertake after the company
releases its fiscal year-end financial statements. S&P also
lowered its rating on $149 million of senior subordinated notes.
The outlook is negative.
SUNWEST MANAGEMENT: District Court Keeps Judge In SEC Action
------------------------------------------------------------
Bankruptcy Law360 reports that Magistrate Judge Thomas M. Coffin
of the U.S. District Court for the District of Oregon denied the
request of the secure lenders to recuse Judge Michael R. Hogan in
the U.S. Securities and Exchange Commission's lawsuit against
nursing home operator Sunwest Management Inc. and former CEO Jon
M. Harder. The Commission has sued Sunwest and Mr. Harder on
account of an alleged $300 million Ponzi scheme.
As reported by the Troubled Company Reporter on March 12, 2009,
lawyers of Sunwest Management's lenders challenged the objectivity
of U.S. District Judge Hogan and demanded that he disqualify
himself in the securities fraud case.
The Oregonian relates that Judge Hogan has also been serving as
mediator in a related case involving Sunwest Management and its
former CEO, Jon Harder, since early February. The Oregonian
states that Mr. Harder stepped down as CEO in December 2008 and
put Sunwest Management in the hands of a corporate restructuring
consultant, before he filed for personal bankruptcy, which led to
Judge Hogan's involvement.
Sunwest Management's creditors want Judge Hogan out of the case
due to his involvement as a mediator in Mr. Harder's bankruptcy
case, according to The Oregonian.
Sunwest Management, says The Oregonian, is based in Salem where
there is no federal court, making the SEC file its complaint in
Eugene. The Oregonian relates that the case was assigned to
Magistrate Judge Thomas Coffin, but lawyers close to the case said
that the SEC asked for a full-fledged judge who had authority to
issue a temporary restraining order. The SEC, The Oregonian
states, sought a temporary restraining order freezing Sunwest
Management's assets and the appointment of a receiver to take
control of the company. The case landed with Judge Hogan, says
the report.
According to The Oregonian, Judge Hogan had learned a lot about
Sunwest Management since the first mediation sessions had started
in February, which lenders considered as enough reason to
disqualify the judge. "Just having access to information that you
might not otherwise have is a problem," the report quoted
University of Washington School of Law professor Allan Kirtley as
saying.
The Oregonian reports that Judge Hogan didn't disqualify himself
from the fraud case and infuriated the lenders when he issued a
ban on any new foreclosures against Sunwest Management's
properties on March 3. Judge Hogan, says the report, made his
order effective until further notice.
"It is strange indeed" that Judge Hogan prohibited foreclosures
when the SEC never requested such a ban, the report states, citing
David Criswell, a Portland lawyer writing for a consortium of
banks.
Salem, Oregon-based Sunwest Management Inc. --
http://www.sunwestmanagement.com/-- manages 275 assisted-living
facilities in 36 states. Sunwest Management was founded in 1991
with a portfolio of three properties: two retirement communities
and one skilled nursing community. It has a network of regional
managers that handles various services from accounting to
operations.
Sunwest Management has put 10 assisted living centers -- two in
Oregon -- into Chapter 11 bankruptcy. Briarwood Retirement and
Assisted Living Community LLC, which owns a retirement center in
Springfield, and Century Fields Retirement and Assisted Living
Community LLC, which owns a center in Lebanon, filed for Chapter
11 on Aug. 19, 2008. On Aug. 17, 2008, eight Sunwest-affiliated
LLCs filed for Chapter 11 bankruptcy protection from creditors in
Tennessee.
As reported by the Troubled Company Reporter on March 9, 2009,
Sunwest Management Inc. might file for Chapter 11 bankruptcy
protection.
SUTURA INC: Board Doubts Cash Could Sustain Operation Beyond 2008
-----------------------------------------------------------------
Sutura, Inc. disclosed in a regulatory filing with the Securities
and Exchange Commission that board of directors and executive
officers of Company did not believe that the Company would be able
to continue as a going concern beyond Dec. 31, 2008.
At the end of October 2008 the board and executive officers of
Company reviewed its operations and cash position and the board
determined that it was unlikely that available cash, less current
liabilities, would be sufficient to sustain operations at current
levels beyond Dec. 31, 2008. The Company sought possible
additional capital infusion in the form of equity or debt;
however, given the current financial markets, the Company believed
that it was highly unlikely that it would be able to obtain
additional financing on acceptable terms, if at all.
Accordingly, the Company began evaluating possible reductions in
its operations to conserve cash and other assets for the benefit
of its shareholders and creditors. On Dec. 12, 2008, the Company
entered into an Asset Purchase Agreement with Nobles Medical
Technologies, Inc., which contemplates the sale of the Company's
assets.
The Company also disclosed that it has amended its Annual Report
on Form 10-KSB for the fiscal year ended Dec. 31, 2007, because
the management determined that the Audited Consolidated Balance
Sheet as of Dec. 31, 2007, must no longer be relied upon because
of errors in those financial statements.
A full-text copy of the FORM 10-KSB/A is available for free at:
http://ResearchArchives.com/t/s?394d
About Sutura, Inc.
Headquartered in Fountain Valley, California, Sutura, Inc.
(OTC:SUTU) -- http://www.sutura.us-- is a medical device company
that has developed a line of minimally invasive vascular suturing
devices to suture vascular structures during open surgery and
catheter-based procedures. The Company manufactures, assembles,
tests and packages its SuperStitch products at its facility in
Fountain Valley, California. Sutura purchases certain components
from various suppliers and relies on single-source suppliers for
certain parts to its devices. Sutura has been selling in the
European market through its direct sales operation in France and
its distribution partners in Italy, Spain Switzerland and
Scandinavia.
SYNTAX-BRILLIAN: Plan Going to Creditors for Vote
-------------------------------------------------
Syntax-Brillian Corp. is expected to send solicitation packages to
creditors in connection with its proposed Chapter 11 liquidating
plan.
According to Bloomberg's Bill Rochelle, the U.S. Bankruptcy Court
for the District of Delaware on March 11 said it will approve the
adequacy of the explanatory disclosure statement, which is the
pre-requisite for the plan voting and confirmation process.
The Plan, Bloomberg relates, sets up liquidating trusts to sell
assets and distribute proceeds to secured and unsecured creditors.
The Debtor says the pre-bankruptcy credit facility amounts to $125
million while unsecured claims eventually will total some
$65 million to $100 million.
Bill Rochelle notes that given the uncertainty about how much will
be collected in lawsuits, the disclosure statement doesn't make a
guess as to how much secured and unsecured creditors might
recover.
Based in Tempe, Arizona, Syntax-Brillian Corporation (Nasdaq:
BRLC) -- http://www.syntaxbrillian.com/-- and its affiliated
debtors, Syntax-Brillian SPE, Inc. and Syntax Groups Corp. design,
develop, and distribute high-definition televisions (HDTVs)
utilizing liquid crystal display (LCD) and, formerly, liquid
crystal (LCoS) technologies. The Debtors sell their HDTVs under
the Olevia brand name. SBC is also the sole shareholder of
Vivitar Corp., a suplier of film cameras and a line of digital
imaging products, including digital cameras.
The Debtors filed separate petitions for Chapter 11 relief on
July 8, 2008 (Bankr. D. Del. Lead Case No. 08-11407). Nancy A.
Mitchell, Esq., Allen G. Kadish, Esq., and John W. Weiss, Esq., at
Greenberg Traurig LLP in New York, represent the Debtors as
counsel. Victoria Counihan, Esq., at Greenburg Traurig LLP in
Wilmington, Delaware, represents the Debtors as Delaware counsel.
Five members compose the Official Committee of Unsecured
Creditors. Pepper Hamilton, LLP represents the Committee as
counsel. Epiq Bankruptcy Solutions, LLC is the Debtors'
balloting, notice, and claims agent.
Syntax-Brillian cut a deal to sell its business assets to Olevia
International Group LLC. On Sept. 10, 2008, OIG told the
Bankruptcy Court that it won't pursue the deal, contending that
the Debtors irreparably breached various covenants and
representations contained in the Purchase Agreement, causing
various Closing Conditions to fail, and rendering it unable to
comply with its obligations under the Purchase Agreement. OIG
also accused the Debtors of violating their sale contract by
losing business from Target Corp., the Debtors' main customer.
The following day, the Debtors filed a lawsuit asking the Court to
compel Olevia International to complete the purchase. On
Oct. 10, the Bankruptcy Court denied OIG's emergency request to
excuse it from its obligations. OIG has taken an appeal of that
order.
When the Debtors filed for protection from their creditors, they
listed total assets of $175,714,000 and total debts of
$259,389,000.
TERRA INDUSTRIES: Rejects CF Industries' Latest Bid Proposal
------------------------------------------------------------
Terra Industries Inc. Chairperson, President, and CEO Stephen R.
Wilson said in a letter to CF Industries Holdings, Inc., that the
Company's Board of Directors, with the assistance of its financial
and legal advisors, has decided to reject CF Industries' bid
proposal for a merger between the two companies.
Mr. Wilson said that the Board has unanimously concluded that the
latest version of CF Industries' proposal continues to counter to
Terra Industries' strategic objectives, substantially undervalues
the Company both absolutely and relative to CF Industries, and
would deliver less value to Terra Industries' shareholders than
would owning the Company on a stand-alone basis.
Credit Suisse Securities (USA) LLC is serving as Terra Industries'
financial advisor, and Cravath, Swaine & Moore LLP and Wachtell,
Lipton, Rosen & Katz are serving as legal counsel to Terra.
MacKenzie Partners, Inc., is serving as proxy solicitor for Terra.
About Terra Industries
Headquartered in Sioux City, Iowa, Terra Industries Inc.
(NYSE:TRA) -- http://www.terraindustries.com/-- is a North
American producer of anhydrous ammonia, UAN solutions, and urea
and a producer of ammonium nitrate in the U.S. and the U.K.
* * *
As reported by The Troubled Company Reporter on January 22, 2009,
Standard & Poor's Ratings Services placed its ratings on Terra
Industries Inc., including its 'BB' corporate credit rating, on
CreditWatch with developing implications.
According to the TCR on January 20, 2009, Moody's Investors
Service affirmed the Ba3 Corporate Family Rating (CFR) rating of
Terra Industries Inc. and also affirmed Terra's B1 senior
unsecured rating.
The TCR reported on January 20, 2009, that Fitch Ratings placed
the Issuer Default Ratings and outstanding debt ratings of Terra
Industries, Inc., and its subsidiaries on Rating Watch Evolving
following an unsolicited offer by CF Industries Holdings, Inc., to
acquire the company. Terra's debt ratings and those of its
subsidiaries are:
Terra Industries
-- IDR - 'BB';
-- Convertible preferred shares - 'BB-'.
Terra Capital
-- IDR - 'BB';
-- Senior unsecured notes - 'BB';
-- Senior secured bank credit - 'BB+'.
Terra Nitrogen, L.P.
-- IDR - 'BB';
-- Senior secured bank credit - 'BB+'.
TEXAS STATE: S&P Downgrades Rating on 2002A Housing Bonds to 'D'
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its standard long-term
rating on Texas State Affordable Housing Corp.'s (American
Opportunity for Housing portfolio) multifamily housing revenue
bonds series 2002A bonds 18 notches to 'D' from 'AA-' and withdrew
its 'C' Standard & Poor's underlying rating.
The bonds were insured by MBIA Insurance Corp. of Illinois (AA-),
and therefore, had a long-term rating of 'AA-' and were on
CreditWatch with developing implications.
"It is our understanding based on an inquiry to MBIA on March 4,
2009, that on Dec. 22, 2008, MBIA and Texas State Affordable
Housing Corp., the issuer, entered into an agreement canceling the
insurance policy," said Standard & Poor's credit analyst Renee
Berson.
Standard & Poor's had not been notified of the cancellation. In
addition, on March 4, 2009, S&P learned and subsequently confirmed
with Wells Fargo Bank N.A., the trustee, that of the $1.3 million
debt service payment on the bonds that was due
March 2, 2009, only $900,000.00 was actually paid on that date.
As a result of the policy cancellation, S&P withdrew its
underlying rating on the bonds (C/Negative). S&P's rating on the
bonds is now based on S&P's evaluation of the credit of the
American Opportunity for Housing portfolio itself which, had there
not been a shortfall in payment, would have been the same as the
underlying rating of C/Negative. Because of the shortfall in
payment, which constitutes an event of default according to the
trust indenture, Standard & Poor's lowered the rating on the bonds
to 'D' from 'AA-'.
TRIBUNE CO: Settles U.S. Trustee's Objection to Lazard Retention
----------------------------------------------------------------
Bankruptcy Law360 reports that Tribune Co. has resolved an
objection filed by the United States Trustee to the Debtors'
request to hire Lazard FrŠres & Co. LLC as their Chapter 11
financial adviser.
The U.S. Bankruptcy Court for the District of Delaware initially
set March 12, 2009, as the date for arguments on Lazard's
employment application, according to The Chicago Tribune.
Bankruptcy Law360 says the Court on Tuesday canceled a hearing on
the objection set for Friday after receiving word from Tribune's
counsel.
Roberta A. DeAngelis, Acting United States Trustee for Region 3,
had argued that Lazard failed to disclose its recent strategic
advisory engagement by the Sun-Times Media Group, Inc.
On behalf of the U.S. Trustee, Joseph J. McMahon, Jr., Esq., trial
attorney of the United States Department of Justice, in
Wilmington, Delaware, said that in February 2008, Lazard was
engaged by the Strategic Alternatives Review Committee of the
Chicago Sun-Times' Board of Directors to assist the company in
its "evaluation of the Company's strategic alternatives to
enhance shareholder value." Additionally, in November 2003,
Lazard was employed by the Chicago Sun-Times, formerly known as
Hollinger International, Inc., in connection with its
restructuring efforts.
"Governing authority provides that negligent or unintentional
failures to disclose are grounds for denial of an employment
request," Mr. McMahon pointed out. "To the extent that Lazard
advised the Chicago Sun-Times postpetition, Lazard may have a
disqualifying conflict of interest or not be a 'disinterested
person' under Section 101(14) of the Bankruptcy Code," he argues.
The Acting U.S. Trustee said it has forwarded an informal
discovery request to the Debtors and Lazard on January 14, 2009,
relating to Lazard's February 2008 engagement by the Chicago Sun-
Times. While the U.S. Trustee received certain documents from
Lazard in response to the request, the response was not complete,
Mr. McMahon said. Furthermore, the U.S. Trustee did not receive
a response to that request from the Debtors, he added.
The Acting U.S. Trustee said Lazard's engagement with the Chicago
Sun-Times and Hollinger are matters that Lazard was obligated to
disclose in connection with the Application.
The Acting U.S. Trustee further asserted that the Court should
decline to insulate the fee structure proposed by the Debtors for
Lazard from subsequent review under Section 330 of the Bankruptcy
Code. The sheer magnitude of the compensation that the Debtors
propose to pay Lazard -- more than $18 million if the engagement
lasts a year and the firm is entitled to a Restructuring or
Disposition Fee -- counsels caution, Ms. DeAngelis asserted.
The size of the Restructuring/Disposition Fee suggests that the
Debtors and Lazard view the firm's engagement as primarily
involving an investment banking role, Mr. McMahon pointed out.
However, the Acting U.S. Trustee complains that it is unclear at
whether Lazard's role in the cases will primarily be that of
investment banker, financial advisor, or some mixture of both
roles.
Lazard Supplements Affidavit
James E. Millstein, managing director of Lazard Freres & Co.,
LLC, in New York, confirmed that his firm has advised Sun-Times
on matters unrelated to the Debtors' bankruptcy cases. He
clarified that, although his firm's engagement by Sun-Times was a
matter of public record, Lazard informed the Debtors of its
experience and expertise in advising media enterprises, including
Sun-Times and others, in interviewing for the current engagement
by the Debtors in late 2008.
Mr. Millstein disclosed that Lazard's work on the Sun-Times
engagement largely ceased in or around September 2008 -- months
before the Petition Date.
About Tribune Co.
Headquartered in Chicago, Illinois, Tribune Company --
http://www.tribune.com/-- is a media company, operating
businesses in publishing, interactive and broadcasting, including
ten daily newspapers and commuter tabloids, 23 television
stations, WGN America, WGN-AM and the Chicago Cubs baseball
team. The company and 110 of its affiliates filed for Chapter 11
protection on December 8, 2008 (Bankr. D. Del. Lead Case No.
08-13141). The Debtors proposed Sidley Austion LLP as their
counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware
counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as
financial advisors; and Epiq Bankruptcy Solutions LLC as claims
agent. As of Dec. 8, 2008, the Debtors have $7,604,195,000 in
total assets and $12,972,541,148 in total debts.
Bankruptcy Creditors' Service, Inc., publishes Tribune
Bankruptcy News. The newsletter tracks the chapter 11 proceeding
undertaken by Tribune Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
TROPICANA ENTERTAINMENT: LandCo Lenders Present Plan Term Sheet
---------------------------------------------------------------
Onex Corporation, H/2 Capital Partners, and Wells Fargo Foothill,
in their capacity as Required LandCo Lenders and members of the
LandCo Steering Committee in the bankruptcy cases of Tropicana
Entertainment LLC and its affiliates, delivered to the U.S.
Bankruptcy Court for the District of Delaware on March 11, 2009, a
recent draft of the Tropicana LandCo Plan Term Sheet.
The Plan Term Sheet prepared by the LandCo Lenders outlines
proposed modifications to the LandCo Plan, including:
-- Distribution to the LandCo Lenders;
-- Structure and capitalization of the New Las Vegas
Enterprise or Reorganized LandCo;
-- Managements and governance of the New Las Vegas Enterprise;
-- Interim operations and development of a business plan; and
-- Certain OpCo warrants.
Among others, under the Plan Term Sheet, Alex Yemenidjian will
take the post of chief executive officer for the Reorganized
LandCo Corporation.
The Term Sheet also provides that the LandCo Steering Committee
will implement a discrete marketing strategy to attempt to sell
the Tropicana Las Vegas assets, if feasible, at a price above
$450 million in cash.
A full-text copy of the LandCo Lender Plan Term Sheet is
available at no charge at:
http://bankrupt.com/misc/Tropi_LandCoPlanTermSheetDraft_031009.pdf
The final version of the LandCo Lender Plan Term Sheet will be
included in the Plan supplement. The LandCo Steering Committee
believes that the draft is in substantially final form. The
Debtors, however, have advised that they have not had the chance
to fully review the document and thus, have not yet agreed to its
inclusion in the Plan Supplement.
As reported by the Troubled Company Reporter, the Delaware
Bankruptcy Court has approved the OpCo and LandCo Debtors'
Disclosure Statements. Tropicana's plans call for its senior
secured debt to be converted to common stock and its unsecured
debt to receive warrants. Tropicana's current common stock and
other equity interests will be eliminated without a distribution.
Feb. 26 Plan Modifications
Before the Court entered the Disclosure Statement Order, Lee E.
Kaufman, Esq., at Richards, Layton & Finger, P.A., in Wilmington,
Delaware, on the Debtors' behalf, summarized the significant
modifications contained in the amended Plans and Disclosure
Statements dated February 26, 2009, of the OpCo Debtors and the
LandCo Debtors.
* Supplemental disclosure on the impact of gaming regulations
on the Debtors' operations and their plans of
reorganization.
* Additional disclosure regarding recent events in Atlantic
City, New Jersey and Evansville, Indiana related to the
Debtors' assets and interests in those jurisdictions.
* Additional disclosure related to the Debtors' efforts to
secure an Exit Facility, the Rights Offering in the OpCo
Debtors' Plan and the newly added Rights Offering in the
LandCo Debtors' Plan, as well as information about the other
securities to be distributed under the plans and related
securities law issues.
* Supplemental disclosure on the Litigation Committee's
Investigation into Insider Causes of Action and the Debtors'
DIP Facility and adequate protection payments to their
prepetition secured lenders.
* Supplemental disclosure to resolve objections to the
Original Plan Documents.
* Modified the distributions in certain classes of creditors.
March 4 & 6 OpCo Plan Modifications
The OpCo Debtors filed further amended versions of their First
Amended Joint Plan of Reorganization, dated March 4, 2009, and
related Disclosure Statement, dated March 4 and 6, 2009. Among
other things, the amendments include a modification of the
values of the range of Claims and Interests for these Classes:
Class Description Treatment of Claim; Recovery
----- ----------- ----------------------------
3 OpCo Credit Facility Pro rata share of the
Secured Claims Reorganized OpCo Common Stock,
OpCo Payment, the Reorganized
OpCo Notes, and the Tropicana
Atlantic City sale proceeds, if
any
Est. Recovery: 100% recovery
Est. Amount: $548,000,000 to
$703,000,000
6 OpCo Credit Facility Pro rata share of the Litigation
Deficiency Claims Trust Proceeds
Est. Recovery: Less than 1%
Est. Amount: $604,000,000 to
$759,000,000
Full-text copies of the Amended Disclosure Statement dated
March 6, 2009, and the Amended Plan dated March 4, 2009,
including exhibits are available at no charge at:
http://bankrupt.com/misc/Tropi_Blacklined1stAmendedOpCoDS_030609.p
df
http://bankrupt.com/misc/Tropi_Blacklined1stAmendedOpCoPlan_030409
.pdf
The OpCo Debtors also delivered to the Court amended and
supplemental exhibits:
(1) Exhibit A: Preliminary Intent to Opt-Out Questionnaire
(2) Exhibit B: Amended form of the Subscription Form
(3) Exhibit C: Amended Solicitation Procedures
(4) Exhibit D: Amended form of the Class 3 OpCo Credit
Facility Secured Claims Ballot
(5) Exhibit E: Amended form of the Class 6 OpCo Credit
Facility Deficiency Claims Ballot
These exhibits can be accessed at no charge at:
http://bankrupt.com/misc/Tropi_AmendedExhibitsOpCoDSMotn.pdf
March 4 & 6 LandCo Plan Modifications
The LandCo Debtors presented to the Court further amended
versions of their First Amended Joint Plan of Reorganization,
dated March 4, 2009, and related Disclosure Statement, dated
March 4 and 6, 2009.
Among other things, the amendments contain additional
disclosures, including certain securities registration exemption,
and updates on certain matters related to the Debtors' Chapter 11
cases, including the status of Tropicana Atlantic City.
Full-text copies of the LandCo Debtors' March 4, 2009 Amended
Plan, and March 6, 2009 Disclosure Statement, are available at no
charge at:
http://bankrupt.com/misc/Tropi_Blacklined1stAmendedLandCoDS_030609
.pdf
http://bankrupt.com/misc/Tropi_Blacklined1stAmendedLandCoPlan_0304
09.pdf
The LandCo Debtors also delivered to the Court amended and
supplemental exhibits:
(1) Exhibit A: Amended form of the Class 3 LandCo Credit
Facility Secured Claims Ballot;
(2) Exhibit B: Amended form of the Class 5 LandCo Credit
Facility Deficiency Ballot;
(3) Exhibit C: Subscription Form; and
(4) Exhibit D: Amended Solicitation Procedures.
These exhibits can be accessed at no charge at:
http://bankrupt.com/misc/Tropi_AmendedExhibitsLandCoDSmotn.pdf
Voting Deadline April 17,
Confirmation Hearing April 27
Creditors entitled to vote on the Plan have until April 17, 2009,
5:00 p.m., Pacific Time, to cast a vote.
Any party who opposes the OpCo or LandCo Plan must send in its
formal written objection no later than April 10, 2009. On
account of discovery received after the Plan Objection Deadline,
further Plan objections must be filed with the Court no later
than April 20.
The Court will commence the confirmation hearings on April 27,
2009. The hearing may be continued from time to time by the
Court or the Debtors without further notice except for an
announcement of the adjourned date made at the confirmation
hearing or by any adjournment of the hearing posted on the
website of the Debtors' noticing agent,
http://www.kccllc.net/tropicana
Tropicana hopes to exit Chapter 11 as early as May 2009 with a
completely revamped ownership and management structure. In
particular, former owner William J. Yung, III, who resigned as CEO
and a Director last year, will have no equity interests and will
hold no positions in the newly constituted companies.
"The Court approval of our disclosure statements means that
we move another step closer to emerging from Chapter 11 and
implementing our business plans," said Tropicana CEO Scott C.
Butera. "The ruling marks the culmination of an intense 10-month
process during which the new Board and senior management team
have worked hard to repair our regulatory and community
relationships and to prepare our people and systems to compete in
a today's challenging entertainment and gaming market."
A full-text copy of the OpCo Disclosure Statement Order is
available for free at:
http://bankrupt.com/misc/Tropi_OrdOpCoDS.pdf
A full-text copy of the LandCo Disclosure Statement Order is
available for free at:
http://bankrupt.com/misc/Tropi_OrdLandCoDS.pdf
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.
Bankruptcy Creditors' Service, Inc., publishes Tropicana
Bankruptcy News. The newsletter tracks the chapter 11
restructuring proceedings commenced by Tropicana Entertainment
LLC and its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
TROPICANA ENTERTAINMENT: Onex Balks at Extension of Exclusivity
---------------------------------------------------------------
Onex Corporation and certain of its affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to deny the request
of Tropicana Entertainment LLC and its affiliates for another
extension of their exclusivity periods.
As reported by the Troubled Company Reporter on March 5, 2009,
Tropicana Entertainment LLC and 26 other debtors; and Tropicana
Las Vegas Holdings, LLC, and six debtor affiliates are asking the
Court to extend their exclusive period to solicit plan
acceptances, to afford them a full and fair "first shot" to have
their plans of reorganization confirmed, to the earlier of:
(a) 10 business days after the date of the entry of orders
either granting or denying confirmation of the separate
plans of reorganization of the OpCo Debtors and the LandCo
Debtors; or
(b) July 17, 2009.
The current Exclusive Solicitation Period deadline is March 13,
2009.
Onex is the beneficial owner of more than 40% of the outstanding
$440,000,000 senior secured LandCo Credit Facility, which is an
obligation of, and secured by all of the assets of, the LandCo
Debtors. Onex is the largest known creditor of the LandCo
estates and will be the largest shareholder of the reorganized
LandCo enterprise, Robert S. Brady, Esq., at Young Conaway
Stargatt & Taylor, LLP, in Wilmington, Delaware, relates.
Onex says it has been actively involved in the negotiation of the
LandCo Plan and has supported the Court's approval of the LandCo
Disclosure Statement. Unfortunately, things have changed for the
worse and Onex is compelled to object to the requested
exclusivity extension so that it and other creditors can file an
alternative plan of reorganization that is not "tainted" by
recently materialized conflicts of interest on the part of the
Debtors' existing management and professionals, according to Mr.
Brady.
Specifically, Mr. Brady tells the Court, just after the
Disclosure Statement hearing, the Debtors' management and
professionals transmitted a term sheet -- apparently prepared by
the LandCo Debtors' counsel several days before the hearing, but
not disseminated until the Disclosure Statement approval was
procured -- which granted to the OpCo Debtors the sole and
exclusive ownership of the name "Tropicana" and other trademarks
and provided for reorganized LandCo license the name and marks
for exorbitant sums of $10,000,000 over five years with
termination fees of up to $3,000,000.
"The proposal is outrageous and unjustified," Mr. Brady asserts.
Among other things, the predecessors of the LandCo Debtors were
the owners and first users of the "Tropicana" marks and have used
them continuously for more than 50 years, and neither the LandCo
Debtors nor their predecessors have ever executed any license or
paid any royalties with respect to the marks, Mr. Brady points
out.
Because the proposal was made by the LandCo Debtors' management
and counsel, the inescapable conclusion is that the LandCo
Debtors' fiduciaries have abdicated their fiduciary duties to the
LandCo Debtors and their creditors, Mr. Brady tells Judge Carey.
Mr. Brady contends that the Exclusivity Motion is an attempt to
use plan exclusivity to advance the interests of the OpCo Debtors
to the detriment of LandCo constituents. He argues that with
continued exclusivity, the LandCo Debtors are able to threaten
further delay -- with ongoing and mounting operational losses and
professional fees continually diminishing the LandCo Lenders'
recovery -- as a means to extract unjustified concessions from
the LandCo Lenders with respect to the Tropicana trademark and
other issues.
Onex says it has proposed that inter-Debtor conflicts, including
the right to the trademark, be left for resolution between the
reorganized LandCo and OpCo entities, with each entity retaining
whatever rights they currently have. However, the Debtors have
not responded to Onex's proposal, according to Mr. Brady.
"Terminating exclusivity will prevent the LandCo Debtors from
using continuation of exclusivity to perpetuate control of the
plan process by persons having irreconcilable conflicts on the
matters that are still unresolved," Mr. Brady says.
The Foothill Group, the beneficial owner of more than 10% of the
outstanding $440,000,000 senior secured LandCo Credit Facility,
joins in the Objection of Onex.
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.
Bankruptcy Creditors' Service, Inc., publishes Tropicana
Bankruptcy News. The newsletter tracks the chapter 11
restructuring proceedings commenced by Tropicana Entertainment
LLC and its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
TROPICANA ENTERTAINMENT: Seeks Amendment to DIP Facility
--------------------------------------------------------
Tropicana Entertainment LLC and 26 other debtors; and Tropicana
Las Vegas Holdings, LLC, and six debtor affiliates ask the U.S.
Bankruptcy Court for the District of Delaware for authority to
enter into a DIP amendment and to pay the related amendment fee.
The Court previously entered a final DIP order on May 30, 2008,
authorizing the Debtors to obtain up to $67,000,000 in
postpetition financing on a superpriority administrative claim
and first priority priming lien basis, pursuant to the terms of
the Senior Secured Superpriority Debtor-in-Possession Credit
Agreement, dated May 5, 2008, as amended, by and among the
Debtors and Silver Point Finance, LLC, as administrative agent,
collateral agent, sole bookrunner, and sole lead arranger.
Silver Point has since then been replaced by The Foothill Group,
Inc.
According to Lee E. Kaufman, Esq., at Richards, Layton & Finger,
P.A., in Wilmington, Delaware, as a direct result of the current
unprecedented economic crisis, which has significantly depressed
consumer demand for casino gaming-related travel and
entertainment, the Debtors' consolidated EBITDA figures for the
trailing three months ending January 31, 2009, was less than the
permitted minimum amount for the period as set forth in the DIP
Credit Agreement. Thus, he tells the Court, the Debtors
initiated a dialogue with the DIP Lenders that resulted in the
waiver and amendment to the DIP Credit Agreement.
The Debtors report that they have recently completed negotiations
with the DIP Lenders on the terms of an agreement to waive any
existing covenant default and to amend the EBITDA covenant to
ensure their compliance under the DIP Credit Agreement on a
going-forward basis in order to avoid unnecessarily derailing the
proceedings to confirm the plans of reorganization they have
filed. In addition to amending the EBITDA covenant, the DIP
Amendment also extends certain deadlines and modifies certain
other requirements. The additional modifications will help
enable the Debtors to maintain focus on their operations,
conserve resources, and afford the Debtors greater flexibility in
running their businesses, Mr. Kaufman maintains.
Mr. Kaufman summarizes the general waivers and modifications to
the DIP Credit Agreement:
(a) The DIP Lenders agree to waive the EBITDA Covenant default
under Section 6.10 of the DIP Credit Agreement for the
period ending January 31, 2009.
(b) The EBITDA Covenants in Section 6.10 of the DIP Credit
Agreement will be adjusted to reflect the Debtors' current
projections and to include EBITDA generated from the
Casino Aztar Evansville operations.
(c) The DIP Lenders changed the requirement to deliver
compliance certificates from quarterly to monthly.
(d) The DIP Lenders changed the requirement to deliver updated
cash flow forecasts from weekly to every other week.
(e) The DIP Lenders gave the Debtors until July 21, 2009, or a
later date as determined by the requisite Lenders, to get
gaming authority approval for the Casino Aztar Evansville.
(f) The Debtors must obtain the prior written consent of the
holders of greater than 66-2/3% of all loans outstanding
and commitments at that time in order to dispose, or seek
to dispose, of Casino Aztar Evansville.
(g) The Debtors agreed to pay an amendment fee of $750,000.
The Debtors believe that the payment of the Amendment Fee, which
was the product of arm's length negotiations undertaken in good
faith, is justified by their Debtors' business judgment.
A full-text copy of the DIP Amendment is available at no charge
at http://bankrupt.com/misc/Tropi_3rdDIPAmendment_2009.pdf
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.
Bankruptcy Creditors' Service, Inc., publishes Tropicana
Bankruptcy News. The newsletter tracks the chapter 11
restructuring proceedings commenced by Tropicana Entertainment
LLC and its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
TROPICANA ENTERTAINMENT: Won't Make Payments to Landco Lenders
--------------------------------------------------------------
Tropicana Entertainment LLC and 26 other debtors; and Tropicana
Las Vegas Holdings, LLC, and six debtor affiliates ask the U.S.
Bankruptcy Court for the District of Delaware for authority to
modify, nunc pro tunc to March 15, 2009, the adequate protection
granted to the lenders under or in connection with a credit
agreement dated January 3, 2007, as amended, among Tropicana Las
Vegas Resort and Casino, LLC, Tropicana Las Vegas Holdings, LLC,
certain lenders, and Wells Fargo Bank, N.A., as successor to
Credit Suisse as administrative agent to the LandCo Lenders.
In particular, the Debtors seek that they not be required to pay
the adequate protection payments from and after March 15, 2009.
The Final Cash Collateral Order dated May 30, 2008, authorized
the Debtors to use the LandCo Lenders' cash collateral subject to
certain adequate protection obligations, including the payment of
certain adequate protection payments, Lee E. Kaufman, Esq., at
Richards, Layton & Finger, P.A., in Wilmington, Delaware,
relates. Accordingly, over the course of their Chapter 11 cases,
the Debtors have continued to make the Adequate Protection
Payments out of the "Segregated Interest Funds" held in a cash
account at Bank of America. Most recently, the Debtors paid the
LandCo Lenders a February 2009 Adequate Protection Payment of
$1,800,000, which does not include payments on account of the
LandCo Agent's fees, Mr. Kaufman informs the Court.
At present, there remains roughly $14,800,000 in the Segregated
Interest Account, and the next Adequate Protection Payment of
approximately $1,500,000 is due March 16, 2009. This also does
not include the LandCo Agent's Fees, according to Mr. Kaufman.
Since the entry of the Final Cash Collateral Order, it has become
apparent that the value of the LandCo Lenders' Collateral does
not exceed their claims under the LandCo Credit Facility, Mr.
Kaufman points out. Consequently, the LandCo Lenders are
undersecured. He notes that the LandCo Debtors' plan of
reorganization and related disclosure statement reflect this
reality.
The Debtors aver that they are moving expeditiously toward the
plan confirmation process and are hopeful that the LandCo Plan
will become effective by June 30, 2009. In the interim, however,
relief from the "onerous" Adequate Protection Payments will
assist the LandCo Debtors in avoiding liquidity issues before
that the anticipated plan effective date by preserving a larger
portion of the remaining amounts in the Segregated Interest
Account for their use, if necessary, Mr. Kaufman asserts.
He adds that the "precipitous decline" in the United States
economy, and in the gaming industry in particular, has hurt the
Debtors' revenues and impaired their liquidity. Mr. Kaufman says
the LandCo Debtors' overall cash position is expected to be
reduced by approximately $2,100,000 between March 1, 2009, and
June 30, 2009, as a result of payment of the LandCo Agent's Fees
and capital expenditures. Continuing the Adequate Protection
Payments is estimated to result in a further $7,400,000 reduction
in the LandCo Debtors' available cash before their anticipated
emergence by the end of June 2009, he tells the Court.
Maintaining the current balance of the Segregated Interest Funds
will increase the available assets upon consummation of the
LandCo Plan, Mr. Kaufman avers. On the contrary, he contends,
continuing the Adequate Protection Payments will squander
substantial estate resources, particularly in light of the fact
that the LandCo Lenders are not entitled to payments of
postpetition interest and are adequately protected against
diminution in the value of their Collateral.
The Debtors also ask the Court to leave the Final Cash Collateral
Order in place, including continuing the LandCo Lenders' other
adequate protection rights and continuing the Debtors' authority
to use the Cash Collateral.
The steering committee for the LandCo Lenders has been informed
of the Debtors' intention to file their Motion to Modify Adequate
Protection, and has indicated that it does not object to the
relief requested and will not seek payment of the March 16, 2009
Adequate Protection Payment, except if the Court denies the
Debtors' request. The LandCo Lenders nevertheless reserve their
rights in respect of valuation and adequate protection, subject
to confirmation of a plan for the LandCo Debtors that is to their
satisfaction. In the event no plan is confirmed, the LandCo
Lenders say they may seek relief inconsistent with the Debtors'
request.
John R. Castellano, a managing director of the Debtors'
restructuring advisors, AlixPartners, LLP, affirmed in a
declaration in support of the Debtors' Motion that "unless the
LandCo Debtors are relieved of the Adequate Protection
[Payments,] the LandCo Debtors' liquidity may be unnecessarily
restrained before the LandCo Plan can be confirmed and become
effective."
Mr. Castellano stated that failure to make the necessary and
prudent expenditures will have a "negative impact on the LandCo
Debtors' assets and will likely prevent the LandCo Debtors from
realizing the increased profitability set forth in the LandCo
Financial Projections, while continuing the capital expenditures
will enhance the LandCo Debtors' ability to remain on course to
maximize the value of their assets under the circumstances."
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.
Bankruptcy Creditors' Service, Inc., publishes Tropicana
Bankruptcy News. The newsletter tracks the chapter 11
restructuring proceedings commenced by Tropicana Entertainment
LLC and its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
UNIVERSITY OF FINDLAY: Moody's Affirms 'Ba1' Rating on 1999 Bonds
-----------------------------------------------------------------
Moody's Investors Service has affirmed the Ba1 rating on the
University of Findlay's outstanding $460,000 Series 1999 bonds,
issued through the Ohio Higher Educational Facility Commission.
The outlook has been revised to negative from stable reflecting
Moody's concerns about the University's liquidity position given
recent investment losses, particularly in light of its debt
structure, which is heavily weighted toward variable rate debt
($18.8 million of pro-forma variable rate debt with a put feature
and an additional $10 million of debt with a fixed rate through
2014 and a variable rate with an annual put feature thereafter).
The University also has debt outstanding under pooled financings
through the Ohio Higher Educational Facility Commission which
carry ratings based on letters of credit from Fifth Third Bank
(rated A1 on review for downgrade). Please see the Rated Debt
section at the end of the report for a detailed listing of the
University's outstanding rated bonds.
Legal Security: The 1999 bonds are collateralized by the
facilities financed by the bonds, including various campus
buildings, a bond fund, and a reserve fund.
Debt Related Derivatives: The University entered into two interest
rate swaps with Fifth Third Bank to hedge the interest rate on its
Series 1998 and 2003 pooled financings. The current outstanding
notional amount is approximately $10 million. The University
plans to refund all of the Series 1998 bonds and a portion of the
Series 2003 bonds during the current fiscal year; however the
swaps remain outstanding in order to hedge the interest rate on
the University's Series 2006 variable rate demand bonds.
Under the swap terms, the University pays a fixed rate of 3.15%
and receives 67% of LIBOR. The swaps extend until September 1,
2016. Additional termination events include: termination of all
commitments by the bank to extend credit to the University and
payment in full of all outstanding obligations to the bank or
supported by the bank, termination of all letters of credit issued
by the bank for the benefit of the University, and the occurrence
and continuance of a default by the University under any agreement
or instrument related to any of the outstanding debt. The
University may avoid early termination of the swap by entering
into a Credit Support Annex with Fifth Third, which would require
it to post collateral equal to 1.25 times its exposure under the
swap agreement. There is no rating trigger for terminations nor
is there currently a collateral posting requirement. As of
12/31/08, the mark-to-market valuation of the swaps was a
liability of $991,097 for the University.
Although the swaps do create the possibility of liquidity risk,
the early termination events are primarily predicated on the
continued relationship of Fifth Third Bank with the University.
At the present time, Moody's believe the likelihood of cessation
of the relationship with the Bank to be minimal, particularly
because of a recent loan from the bank to the University in order
to refund the Series 1998 and a portion of the Series 2003 bonds.
However, Moody's do have concerns about the University's exposure
to Fifth Third Bank, which is its sole letter of credit and swap
provider as well as the provider of an upcoming loan.
Challenges
* Over 40% of the University's pro-forma debt ($18.8 million) is
currently in a variable rate mode with a tender feature. The
University entered into an agreement to borrow $10 million from
Fifth Third Bank that is fixed at a specified rate through
February 28, 2014 and adjusts according to an index every year
thereafter. Under the agreement, the bank has the right to
terminate the agreement with 180 days notice prior to March 1
during any year that the interest rate resets (i.e. beginning
March 1, 2014 and every year thereafter through maturity in
2025), and demand all amounts due and payable. Although the
loan is variable rate, Moody's note it does reduce the amount of
variable rate debt that is in weekly mode, as the loan is
expected to have a fixed interest rate and no tender risk
through February 28, 2014.
* Relatively high concentration of investments in equities and
alternative investments for the size of its endowment portfolio
($21.8 million as of 12/31/08), with approximately 43 percent
invested in international and domestic equities and 49 percent
allocated to alternative investments (all hedge fund of funds
and private equity). The remainder of the University's
endowment is invested in fixed income (8%) and a nominal amount
is in cash. The University's investment return on its endowment
for FY 2008 was -1.6% and losses have been approximately 33% for
fiscal year 2009 to date through 12/31/08, which is higher than
losses reported to us by most of other rated institutions for
this time period. Moody's is concerned about the illiquid
nature of many of the University's investments particularly
given the current economic and investment market environment and
potential demands on the University's liquidity resulting from
its variable rate debt structure. Findlay had limited, although
growing, unrestricted financial resources of $12.1 million as of
FY 2008 as compared to nearly $19 million of pro-forma debt with
a tender feature. As of 12/31/08, the University has over $20
million in its operating accounts (mainly invested in cash,
money market funds, U.S. Treasuries, and Certificates of
Deposit), which reached a low of $3.6 million for the current
fiscal year in July 2008.
* High debt burden as compared to financial resources, with
expendable financial resources of $18.6 million providing a thin
cushion for pro-forma debt and operations of 0.4 times and 0.3
times, respectively as of FY 2008. However, given investment
market volatility since the end of the fiscal year, the
University's resource base has been pressured. Assuming a 40%
decline in financial resources resulting from investment losses
combined with endowment spending, expendable financial resources
would cover pro-forma debt 0.3 times and operations 0.2 times.
Moody's would expect nearly all of the University unrestricted
and expendable liquidity could be reduced by investment losses
on the investment portfolio during the current fiscal year.
* Recent declines in undergraduate full-time equivalent students
after two years of growth. Undergraduate FTE declined nearly 8%
to 3,118 in fall 2008 and declined further in Spring 2009. The
University reports the change in the economic climate as the
primary driver of the enrollment declines. Findlay is also
dependent on international students to drive enrollment growth
in its graduate program, where over 800 of the 1,550 students
(headcount basis) in fall 2008 were from overseas. Moody's
views this as a key risk to the University's credit profile as
enrollment of international students is often not as stable over
time as is enrollment of domestic students, particularly because
their ability to attend school in the U.S. may fluctuate
depending on VISA status and other issues outside of the
University's control.
* Relatively low net tuition per student of $11,525 in FY 2008 as
compared to Moody's median for Baa-rated private universities of
$14,980 in FY 2007. This is a credit challenge as the
University is reliant on student charges for nearly 82% of its
operating revenue base (as calculated by Moody's). Findlay had
a freshman discount rate of approximately 50% in fall 2008 and
is planning on offering some aid to international graduate
students in fall 2009, likely limiting growth in net tuition per
student in the near-term.
Strengths
* Consistently healthy operating surpluses reflecting an
impressive turnaround in operations over the past ten years,
resulting in a 7.1% 3-year average operating margin, by Moody's
calculation, for FY's 2006-2008. The University has made
significant progress since its rating was downgraded to Ba1 in
2002 and it is projecting a surplus for the current fiscal year
(2009).
* Growing financial resource base, with $18.5 million of
expendable financial resources in FY 2008 as compared to
$5.5 million in FY 2002. The growth is particularly noteworthy
as the University has built its balance sheet reserves mainly
through operating surpluses and modest fundraising ($4.8 million
average gift revenue from FY 2006-2008). However, as noted in
the Challenges section, Moody's anticipate that the University's
unrestricted and expendable financial resources could be fully
reduced by the amount of investment losses during the year.
* No additional new money borrowing plans at this time. The
University plans to perform some routine capital maintenance and
renovations to campus buildings using cash from operations and
is in the planning stages of a capital campaign to finance the
construction of a business building.
* Expanded and targeted program offerings in areas such as animal
sciences, pre-veterinary, health sciences, and pharmacy, in
order to compete in the highly concentrated Ohio higher
education landscape.
Recent Developments
The University is planning to refinance its Series 1998 bonds and
a portion of its Series 2003 bonds with a $10 million loan from
Fifth Third Bank through a Master Lease-Purchase and Sublease-
Purchase Agreement. The interest rate on the loan is fixed at a
specified rate through February 28, 2014 and resets every year
thereafter through maturity of the loan in 2025. Under the
Agreement, the bank has the right to terminate the agreement with
180 days notice prior to March 1 during any year that the interest
rate resets (i.e. beginning March 1, 2014 and every year
thereafter through maturity in 2025), and demand all amounts due
and payable, adding liquidity risk.
The University has agreed to several financial covenants in the
Agreement, including two covenants that are also in the letters of
credit with Fifth Third Bank. These covenants are to maintain at
all times both a debt service coverage ratio of at least 1:1 as
well as a ratio of liabilities to unrestricted and temporarily
restricted net assets of less than or equal to 2:1. Further,
under the agreement with Fifth Third for the proposed upcoming
financing, Findlay must also always be in compliance with two of
the three following covenants: to maintain 1) expandable financial
resources (defined as unrestricted net assets) to total debt of at
least 1:1, 2) unrestricted current assets to unearned income of at
least 1:1, and 3) positive return on net assets (excluding
investment income). As of 12/31/08 management reports that the
University was in compliance with its requirements under the
Agreement and is projecting to be in compliance as of the end of
the fiscal year (6/30/09).
The University's Series 1998, 2003, and 2006 variable rate demand
bonds all experienced failed remarketings over the past six
months. The majority of the bonds have been successfully
remarketed. Under the Reimbursement Agreements to the letters of
credit with Fifth Third Bank, Findlay has 180 days to reimburse
the bank for bank bonds in the case of a failed remarketing with
no event of default. During the 180 day period the University is
required to pay a rate equal to the Prime Rate on the bank bonds.
The bank has the option to terminate the letter of credit and
demand immediate repayment of the bonds under certain
circumstances, including breaching the covenants listed in the
preceding paragraph. The University reported that it did not have
to make any accelerated principal payments while the bonds were
held by the bank.
Outlook
The negative outlook reflects Moody's concerns about the
University's liquidity levels, particularly in light of its debt
structure, which is heavily weighted toward variable rate debt
with a tender feature. Moody's concerns are heightened by events
largely outside of the University's control, such as further
investment losses or a deterioration of Fifth Third Bank's credit
profile.
What Could Change the Rating - UP
Growth in unrestricted liquid financial resources without
additional borrowing to provide a better cushion for variable rate
debt and operations; less exposure in the investment portfolio to
illiquid investments and public equities; stabilized enrollment
and growth in domestic undergraduate students to reduce reliance
on growth from international students.
What Could Change the Rating - DOWN
Further decline in unrestricted liquidity or additional borrowing;
further enrollment declines leading to pressure on operating
performance; acceleration of amounts due under the letters of
credit, particularly resulting from deterioration in the credit
profile of the letter of credit provider.
Key Indicators (Fall 2008 enrollment data and FY2008 financial
data):
* Numbers in parenthesis reflect an assumed 40% decline in
financial resources resulting from investment losses combined
with endowment spending
* Total Full-Time Equivalent Enrollment: 4,182
* Selectivity Rate: 67.8%
* Matriculation Rate: 31.9%
* Expendable Financial Resources: $18.5 million ($11.1 million)
* Total Financial Resources: $34.7 million ($20.8 million)
* Total Pro-Forma Direct Debt: $43.9 million
* Expendable Financial Resources-to-Operations: 0.3x (0.2x)
* Expendable Financial Resources-to-Pro-Forma Debt: 0.4x (0.3x)
* Average three-year operating margin: 7.1%
Rated Debt:
* Revenue Refunding Bonds, Series 1999: Ba1
* Variable Rate Demand Revenue Bonds (Pooled Financing 2003
Program Project) and Variable Rate Demand Revenue Bonds (Pooled
Financing 2006 Program Project): A1/P1 on watch for possible
downgrade, based on letter of credit with Fifth Third Bank, Ohio
The last rating action was on August 1, 2007 when the University
of Findlay's rating and outlook were affirmed.
U.S. SHIPPING: Lenders' Forbearance Expires Today
-------------------------------------------------
U.S. Shipping Partners L.P.'s has yet to disclose whether it has
obtained another extension of its forbearance agreements with
lenders.
On March 9, the company disclosed with the Securities and Exchange
Commission that it has reached agreement with its lenders that
effective as of February 27, 2009:
-- the Waiver and Fourth Amendment to Third Amended and
Restated Credit Agreement, dated as of October 20, 2008, to
extend the lenders' waiver of any potential defaults under
the financial covenants in the Partnership's senior credit
agreement for the quarters ended September 30, 2008 and
December 31, 2008 through the earlier of (i) March 13, 2009
and (ii) the date on which the Partnership makes an interest
payment in respect of its senior notes; and
-- the Forbearance Agreement entered into with holders of a
majority-in-interest of the outstanding loans under the
senior credit agreement on December 30, 2008 to extend the
termination date to the earliest to occur of (i) 5:00 p.m.
(Eastern time) on March 13, 2009; (ii) the date on which the
Partnership makes an interest payment in respect of its
senior notes; (iii) the occurrence and continuance of any
event of default other than the Partnership's failure to
make the December 31, 2008 principal and interest payments
under the senior credit facility; and (iv) the failure by
the Partnership to comply with any of the provisions of the
Forbearance Agreement.
Prior to this extension the waiver and the Forbearance Agreement
were to expire on February 27, 2009.
U.S. Shipping said in its March 9 disclosure that in accordance
with the terms of the Forbearance Agreement, it is currently
engaged in good faith negotiations with the administrative agent
and the lenders regarding restructuring and strategic
alternatives. "There can be no assurance that the Partnership's
negotiations with the lenders will be successful, or that the
lenders will not declare all outstanding obligations under the
senior credit agreement to be immediately due and payable and
pursue their rights and remedies under the senior credit agreement
upon termination of the Forbearance Agreement on March 13, 2009."
In a regulatory filing dated February 17, 2009, the Partnership
said it did not make the $6.5 million interest payment due on
February 15, 2009 in respect of its 13% senior secured notes due
2014. Under the terms of the Indenture, dated August 7, 2006,
governing the Notes, the Partnership has a grace period of 30 days
from the payment due date with respect to the interest payment
before the nonpayment becomes an event of default under the
Indenture. There is no right to accelerate the obligations under
the Notes based on the nonpayment unless interest remains unpaid
upon expiration of the grace period. In the event that the
interest payment is not made prior to the expiration of the 30-day
grace period, then the aggregate principal amount of the Notes,
plus the unpaid interest payment and any other amounts due and
owing on the Notes could be declared immediately due and payable
by the Trustee under the Indenture or by holders of 25% or more of
the aggregate principal amount of the Notes.
The rights of the holders of the Notes with respect to the
collateral securing such Notes are substantially limited pursuant
to the terms of the lien-ranking agreements set forth in the
Indenture and in the intercreditor agreement between, among
others, the trustee for the Notes and the collateral agent under
the Partnership's amended and restated credit facility. Under
those lien-ranking agreements, at any time that obligations under
the Senior Credit Agreement that have the benefit of the first
priority liens are outstanding, any actions that may be taken in
respect of the collateral, including the ability to cause the
commencement of enforcement proceedings against the collateral and
to control the conduct of such proceedings, and the approval of
amendments to and waivers of past default under the collateral
documents, will be at the direction of the lenders under the
Senior Credit Agreement and holders of any other obligations
secured by the first priority liens. As a result, the trustee, on
behalf of the holders of the Notes, will not have the ability to
commence, control or direct such actions, even if the rights of
the holders of the Notes are adversely affected.
Failure to make the interest payment on the Notes within the
30-day grace period would also constitute an event of default
under the Partnership's Senior Credit Agreement, which would allow
the lenders thereunder to declare the Partnership's obligations
under the Senior Credit Agreement immediately due and payable and
to exercise their rights and remedies under the Senior Credit
Agreement.
About U.S. Shipping Partners L.P.
U.S. Shipping Partners L.-- http://www.usslp.com/-- provides
long-haul marine transportation services for refined petroleum,
petrochemical and commodity chemical products in the U.S. domestic
"coastwise" trade. Its existing fleet consists of twelve tank
vessels: five integrated tug barge units; one product tanker;
three chemical parcel tankers and three ATBs. U.S. Shipping has
embarked on a capital construction program to build additional
ATBs and, through a joint venture, additional tank vessels that
upon completion will result in U.S. Shipping having one of the
most modern versatile fleets in service.
The Troubled Company Reporter reported on Feb. 2, 2009, that
Standard & Poor's Ratings Services withdrew its 'D' corporate
credit and other ratings on U.S. Shipping Partners L.P.
S&P lowered all ratings on U.S. Shipping to 'D' on Jan. 6, 2009,
after the company's announcement on Jan. 5, 2009, that it was in
default under the terms of its senior credit agreement, after
failing to make principal and interest payments due on Dec. 31,
2008.
US CONCRETE: S&P Downgrades Corporate Credit Rating to 'B-'
-----------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on Houston-based U.S. Concrete Inc. to 'B-
' from 'B'. The outlook is negative. At the same time, S&P
lowered the issue level rating on the company's $285 million
8.375% senior subordinated notes due 2014 to 'CCC+' (one notch
below the corporate credit rating) from 'B-', with a recovery
rating of '5', indicating that lenders can expect modest (10%-30%)
recovery in the event of a default.
"The downgrade reflects U.S. Concrete's weaker-than-expected
fourth-quarter operating results and S&P's expectation that the
difficult operating conditions in the ready-mixed concrete
business will prevail in the next 12 months," said Standard &
Poor's credit analyst Thomas Nadramia.
The challenging business conditions are due to weakening
commercial construction activity, an expected further drop in new
housing starts, and uncertainty regarding near-term infrastructure
spending because of constrained state budgets. As a result, S&P
expects the company's operating performance to continue to suffer,
thus weakening its financial profile to a level that S&P would
consider to be more consistent with a lower rating. Specifically,
S&P expects adjusted total debt to EBITDA to now exceed 8x and
funds from operations to total debt to be below 15% by the end of
2009.
While S&P expects U.S. Concrete to reduce its capital
expenditures, share repurchases, and acquisition activity to
weather the ongoing challenging operating environment, these
measures are not likely to be sufficient to offset the impact of
reduced volumes and profitability. S&P now expects free operating
cash flow to be breakeven for 2009, resulting in the company's
increased reliance on its $150 million asset-based revolving
credit facility, which has limited covenants. Should operating
results be weaker than S&P expects in 2009, availability under the
company's revolving credit facility could become constrained
because of higher borrowings or lower sales volumes that reduce
the borrowing base.
The rating on U.S. Concrete reflects the company's very aggressive
debt leverage, limited geographic diversity, highly competitive
end markets, and participation in a cyclical industry.
VICORP RESTAURANTS: No Competing Bids Against Fidelity
------------------------------------------------------
According to Bill Rochelle of Bloomberg News, Vicorp Restaurants
Inc., receive no additional bids for its assets by the bid
deadline set by the bankruptcy court.
Accordingly, at the sale hearing on March 13, Vicorp will seek
approval from the U.S. Bankruptcy Court for the District of
Delaware to sell its assets to Fidelity National Special
Opportunities Inc. and Newport Global Advisors, both previously
members of the official creditors' committee. Fidelity and
Newport have submitted a joint offer of $59 million in cash for
Vicorp.
Bloomberg relates that the purchase price could cover senior
secured debt, the cost of curing lease arrears, administrative
costs, and professional fees. In addition, Vicorp's creditors
would receive warrants to purchase 10 percent of the common stock
in the buyer.
Headquartered in Denver, Colorado, VICORP Restaurants, Inc. and VI
Acquisition Corp. -- http://www.vicorpinc.com/-- operate family-
dining restaurants under the Village Inn and Bakers Square brands.
The Debtors also operate 3 pie production facilities that produce
pies that are offered in the Debtors' restaurants and are sold to
select third-party customers including supermarkets and other
restaurant chains.
The Debtors filed separate petitions for Chapter 11 relief on
April 3, 2008 (Bankr. D. Del. Lead Case No. 08-10623). Kimberly
Ellen Connolly Lawson, Esq., Kurt F. Gwynne, Esq., and Richard A.
Robinson, Esq., at Reed Smith LLP, Ann C. Cordo, Esq., and Donna
L. Culver, Esq., at Morris Nichols Arsht & Tunnell, and Joseph E.
Cotterman, Esq., at Gallagher & Kennedy, P.A., represent the
Debtors as counsel. The Debtors selected The Garden City
Group, Inc. as their claims agent. Abhilash M. Raval, Esq.,
Dennis Dunne, Esq., and Samuel Khalil, Esq., at Milbank Tweed
Hadley & McCloy LLP, Domenic E. Pacitti, Esq., and Michael W.
Yurkewicz, Esq., at Klehr Harrison Harvey Branzburg & Ellers,
represent the Official Committee of Unsecured Creditors of the
Debtors.
When the Debtors filed for protection from their creditors, they
listed estimated assets of $100 million to $500 million and debts
of $100 million to $500 million.
WII COMPONENTS: Projected Weak Earnings Cue S&P's Junk Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
ratings on WII Components Inc., including its corporate credit
rating to 'CCC+' from 'B-'. At the same time, Standard & Poor's
removed all of the ratings from CreditWatch where they were placed
with negative implications on Sept. 25, 2008. The outlook is
negative.
Standard & Poor's also lowered the issue-level rating on WII's
senior unsecured notes due 2012 to 'CCC+' (the same as the
corporate credit rating) from 'B-'. The recovery rating on the
notes was revised to '4', indicating S&P's expectation of average
(30%-50%) recovery for lenders in the event of a payment default,
from '3'.
"The downgrade reflects our belief that WII's earnings and credit
measures will weaken in 2009 because of bleak prospects for
demand," said Standard & Poor's credit analyst Pamela Rice. "In
our view, remodeling demand for kitchen and bath cabinets could
continue to fall with on-going turmoil in the credit markets and
low consumer confidence. S&P also expect annualized housing
starts to decline by nearly 40% in 2009." In addition, WII's $109
million senior unsecured notes due 2012 must be redeemed,
repurchased, refinanced, or defeased prior to March 31, 2009, or
it will be an event of default under the company's credit
agreement. Although S&P believes WII is negotiating with its sole
lender under the credit facility to waive or delay this
requirement, S&P could lower the ratings if it is unsuccessful in
resolving this issue.
The ratings on WII reflect the company's highly leveraged capital
structure, refinancing risk, and prospects for weak earnings and
cash flow in the next year.
WII is one of the largest manufacturers of solid and engineered
wood components for kitchen and bathroom cabinets in the U.S.
However, sales are concentrated in the depressed residential
construction sector, with the majority going to repair and
remodeling. Given S&P's expectation that U.S. residential
construction activity will remain challenged at least through
2009, S&P is concerned that the company's revenues, which declined
about 18% in the first nine months of 2008 from the prior-year
period, will remain pressured for at least the next year. EBITDA
for the same period declined by about 30% to
$21 million because of the lower volumes and selling prices that
more than offset a decline in material costs. Although WII has
taken measures to reduce costs and improve operational
performance, S&P believes it faces challenging conditions in 2009
that may cause earnings to decline further.
The outlook is negative. S&P expects remodeling demand and
housing starts to worsen in 2009, and therefore, in S&P's view,
reduce the company's earnings and cash flow. S&P could lower the
ratings if WII's liquidity becomes constrained because of a
covenant violation. S&P could also lower the ratings if the
company does not reach an agreement relative to the provision in
the bank agreement requiring it to refinance its existing notes by
March 31, 2009. Although unlikely in the near-term, S&P could
consider a positive rating action in the next year if the company
was able to extend the required refinancing of its senior notes
for more than a year, amend its financial covenants to obtain a
wide cushion, and generate positive free cash flow despite the
ongoing market challenges.
XERIUM TECHNOLOGIES: Dec. 31 Balance Sheet Upside Down by $27.5MM
-----------------------------------------------------------------
Xerium Technologies, Inc., reported results for its fourth quarter
ended December 31, 2008.
Xerium posted a net loss of $4.3 million for the fourth quarter
ended December 31, 2008, on net sales of $149.4 million; compared
to a net loss of $168.0 million for the same period in 2007, on
net sales of $164.2 million. Xerium posted a net income of
$26.5 million for year 2008, on net sales of $638.1 million;
compared to a net loss of $150.2 million in 2007, on net sales of
$615.4 million.
At December 31, 2008, Xerium had $811.5 million in total assets,
including $34.7 million in cash and cash equivalents; and
$839.1 million in total liabilities, including $175.9 million in
total current liabilities, resulting in stockholders' deficit of
$27.5 million.
During the fourth quarter 2008, the company made total debt
payments of roughly $2 million, which, along with currency
effects, reduced total debt by roughly $13 million to
$617 million at December 31, 2008, from $630 million at September
30, 2008.
The company recorded restructuring and impairment expenses of
$10.1 million during the fourth quarter 2008, including (i) a
$7.1 million charge related to the previously announced plan to
cease production at its Huyck Wangner clothing facility in
Geelong, Australia by the end of the first quarter 2009 and to
discontinue construction of its Vietnam clothing facility, (ii)
asset impairment charges in the U.S. of approximately
$1.0 million based upon the company's evaluation under SFAS No.
144, and (iii) an approximately $2.0 million charge related to the
company's streamlining its operating structure and to improve its
long-term competitiveness by closing or transferring production
from certain of its manufacturing facilities and through headcount
reductions.
At December 31, 2008, the company had no borrowings outstanding
under its revolving lines of credit, including the revolving
credit facility under its senior credit facility and lines of
credit in various foreign countries that are used to facilitate
local short-term operating needs. The company had an aggregate of
$45.9 million available for additional borrowings under these
revolving lines of credit at December 31, 2008.
Xerium said capital expenditures in the 2008 fourth quarter were
$9.9 million, compared to $24.5 million in the 2007 fourth
quarter. For the fiscal year ended December 31, 2008, capital
expenditures were $39.0 million, which is lower than its target
range of $44 to $47 million and as compared to $47.9 million for
the fiscal year ended December 31, 2007. The company targets 2009
capital expenditures to be approximately $42 million, as it
completes obligations undertaken as part of its Vietnam
initiative, and that capital expenditures in 2010 will be lower
than those for 2009.
Due to the global economic crisis and the lack of credit
availability that may affect customer demand for products and
their ability to pay their debts, the company assessed the impact
of this crisis on its customers and its industry, and changed its
estimates of net realizable value of receivables and inventories
during the third and fourth quarters of 2008. Two of the
company's major customers, who collectively represent
approximately 5% of 2008 revenues, have experienced recent
financial difficulties. One of them filed for bankruptcy
protection in January 2009 and the other may be facing liquidity
issues and potential credit refinancing during 2009. The company
has fully reserved for amounts due from these customers as of
December 31, 2008; however, decreases in orders from these
customers or future payment problems from these or other customers
could have a material adverse effect on the company's sales and
profitability.
Xerium targets additional restructuring expenses of approximately
$5 million to $6 million during 2009 primarily related to
headcount reductions resulting from the integration of the
regional management structure in North America and similar actions
in Europe.
As a result of the company's decision to freeze benefit pension
accruals under its Pension Plan for U.S. Salaried and Non-Union
Hourly Employees and to no longer sponsor or fund its U.S. retiree
health insurance program to certain retired U.S. employees,
covered dependents, and beneficiaries, Xerium targets a decrease
in its pre-tax pension and post-retirement expense of
approximately $2.8 million annually beginning in 2009, as compared
with that of 2008, based on current estimates and assumptions.
Actual results may differ materially from those indicated due to a
number of factors, including changes in actuarial assumptions used
and actual return on retirement plan assets.
Xerium reduced its workforce by nearly 100 full-time employees in
the 2008 fiscal year and anticipates that approximately 200
additional reductions will be implemented in the first quarter of
2009.
As of December 31, 2008, Xerium was in compliance with all
financial covenants, including covenants requiring compliance with
minimum interest coverage, fixed charge coverage ratios and
maximum leverage ratios and plans to be in compliance of such
covenants through 2009.
Xerium also released an additional $25.2 million in "trapped cash"
during the fourth quarter, having freed $29.6 million in the third
quarter of 2008 and $1.9 million in trapped cash in the second
quarter. The company defines "trapped cash" as the amount of
working capital on its balance sheet that is in excess of 50 days
of outstanding accounts receivable, 6 inventory turns and 48 days
of accounts payable outstanding.
"I am pleased with our very meaningful progress during 2008 on our
continuing journey to reduce our financial leverage, generate cash
and pay down debt," said Stephen Light, President, Chief Executive
Officer and Chairman. "Never has our strategy been more
appropriate to ensuring the financial health of our organization,
as we, along with our industry, face unprecedented challenges. I
believe our successes to date will continue to build momentum even
as we are likely to endure additional stress during 2009, as
reduced demand and excess paper inventories dampen sales
throughout the industry.
About Xerium Technologies
Based on Youngsville, North Carolina, Xerium Technologies Inc.
(NYSE: XRM) -- http://www.xerium.com/-- manufactures and supplies
two types of consumable products used in the production of paper:
clothing and roll covers. With 35 manufacturing facilities in 15
countries around the world, Xerium has approximately 3,700
employees.
* * *
As related in the Troubled Company Reporter on June 5, 2008,
Standard & Poor's Ratings Services affirmed its ratings on Xerium
Technologies Inc., including the 'CCC+' corporate credit rating,
and removed them from CreditWatch, where they were originally
placed with negative implications on March 19, 2008. At the same
time, S&P assigned a positive outlook.
The TCR on June 9, 2008, reported that Moody's Investors Service
revised Xerium Technologies, Inc.'s outlook to positive from
negative, upgraded its speculative grade liquidity rating to
SGL-3 from SGL-4, and upgraded its probability of default rating
to Caa1 from Caa2.
XERIUM TECHNOLOGIES: Provides Update on NYSE Delisting Issue
------------------------------------------------------------
Xerium Technologies, Inc., on December 29, 2008, received
notification from the New York Stock Exchange that it was not in
compliance with two NYSE standards for continued listing of the
company's common stock on the exchange because the average closing
price of the company's common stock was less than $1.00 per share
over a consecutive 30 trading day period, and the company's
average total market capitalization has been less than $75 million
over the same period and its most recently reported stockholders'
equity was less than $75 million. The company has six months from
the date of receipt of the notification from the NYSE to bring its
share price and average share price over $1.00.
On February 12, 2009, the company submitted a plan advising the
NYSE of definitive actions the company has taken, or plans to
take, that would bring it into compliance with the market
capitalization listing standards within 18 months of receipt of
the notice. The company is awaiting the NYSE's decision with
respect to the plan.
On February 26, 2009, the NYSE submitted to the Securities &
Exchange Commission an immediately effective rule filing which
suspends the NYSE's $1.00 minimum price requirement on a temporary
basis, initially through June 30, 2009. This will have the effect
of extending the company's period for regaining compliance with
the $1.00 listing standard.
About Xerium Technologies
Based on Youngsville, North Carolina, Xerium Technologies Inc.
(NYSE: XRM) -- http://www.xerium.com/-- manufactures and supplies
two types of consumable products used in the production of paper:
clothing and roll covers. With 35 manufacturing facilities in 15
countries around the world, Xerium has approximately 3,700
employees.
* * *
As related in the Troubled Company Reporter on June 5, 2008,
Standard & Poor's Ratings Services affirmed its ratings on Xerium
Technologies Inc., including the 'CCC+' corporate credit rating,
and removed them from CreditWatch, where they were originally
placed with negative implications on March 19, 2008. At the same
time, S&P assigned a positive outlook.
The TCR on June 9, 2008, reported that Moody's Investors Service
revised Xerium Technologies, Inc.'s outlook to positive from
negative, upgraded its speculative grade liquidity rating to
SGL-3 from SGL-4, and upgraded its probability of default rating
to Caa1 from Caa2.
Xerium posted a net loss of $4.3 million for the fourth quarter
ended December 31, 2008, on net sales of $149.4 million; compared
to a net loss of $168.0 million for the same period in 2007, on
net sales of $164.2 million. Xerium posted a net income of
$26.5 million for year 2008, on net sales of $638.1 million;
compared to a net loss of $150.2 million in 2007, on net sales of
$615.4 million.
At December 31, 2008, Xerium had $811.5 million in total assets,
including $34.7 million in cash and cash equivalents; and
$839.1 million in total liabilities, including $175.9 million in
total current liabilities, resulting in stockholders' deficit of
$27.5 million.
VERICHIP CORP: Receives Delisting Notice From Nasdaq
----------------------------------------------------
VeriChip Corporation received notice from The Nasdaq Stock Market
on March 5, 2009, indicating that the company has not evidenced
compliance with the $10 million stockholders' equity requirement
for continued listing on The Nasdaq Global Market under
Marketplace Rule 4450(a)(3). The Nasdaq notice also indicates
that the Company currently does not meet the requirements for
continued listing on The Nasdaq Capital Market because its
stockholders' equity at December 31, 2008, of $2.4 million is
below the $2.5 million requirement under Marketplace Rule
4310(c)(3). As a result, the Company's securities are subject to
delisting from the Nasdaq Global Market.
The company intends to appeal the Nasdaq staff's determination and
request an oral hearing before a Nasdaq listing qualifications
panel. Doing so will stay the delisting of the company's common
shares. The company anticipates its hearing will take place
within 30 to 45 days, at which time the company intends to seek a
transfer of its listing to the Nasdaq Capital Market. The company
intends to highlight that it expects to record a substantial
portion of the $4.5 million deferred gain on the sale of its
former Xmark subsidiary in the first half of 2009, which will be
additive to its stockholders' equity. Upon recognition of that
deferred gain, the company expects to meet the stockholders'
equity requirement of The Nasdaq Capital Market.
About VeriChip Corporation
VeriChip Corporation -- http://www.verichipcorp.com/--
headquartered in Delray Beach, Florida, has developed the
VeriMed(TM) Health Link System for rapidly and accurately
identifying people who arrive in an emergency room and are unable
to communicate. This system uses the first human-implantable
passive RFID microchip, cleared for medical use in October 2004 by
the United States Food and Drug Administration. VeriChip's
VeriGreen Energy Corporation division will invest in the clean and
alternative energy sector, to complement its healthcare division.
YOUNG BROADCASTING: Section 341(a) Meeting Scheduled for April 3
----------------------------------------------------------------
The United States Trustee for Region 2 will convene a meeting of
creditors of Young Broadcasting Inc. and its debtor-affiliates on
April 3, 2009, at 11:00 a.m. (prevailing Eastern Time) at the
Office of the United States Trustee for the Southern District of
New York at 80 Broad Street, 4th floor in New York.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
About Young Broadcasting
Young Broadcasting, Inc. -- http://www.youngbroadcasting.com/--
owns 10 television stations and the national television
representation firm, Adam Young Inc. Five stations are affiliated
with the ABC Television Network (WKRN-TV - Nashville, TN, WTEN-TV
- Albany, NY, WRIC-TV - Richmond, VA, WATE-TV - Knoxville, TN, and
WBAY-TV -Green Bay, WI), three are affiliated with the CBS
Television Network (WLNS-TV - Lansing, MI, KLFY-TV - Lafayette, LA
and KELO- TV - Sioux Falls, SD), one is affiliated with the NBC
Television Network (KWQC-TV - Davenport, IA) and one is affiliated
with MyNetwork (KRON-TV - San Francisco, CA). In addition, KELO-
TV-Sioux Falls, SD is also the MyNetwork affiliate in that market
through the use of its digital channel capacity. The Debtor and
its debtor-affiliates filed for Chapter 11 protection on February
13, 2009 (Bankr. S.D. N.Y. Lead Case No.:09-10645). Jo Christine
Reed, Esq. at Sonnenschein Nath & Rosenthal LLP represents the
Debtors in their restructuring efforts. The Debtors proposed UBS
Securities LLC as consultant; Ernst & Young LLP as sccountant;
Epiq Bankruptcy Solutions LLC as claims agent; and David Pauker
chief restructuring officer. The Debtors listed total assets of
$575,600,070 and total debts of $980,425,190.
YOUNG BROADCASTING: Files List of 50 Largest Unsecured Creditors
----------------------------------------------------------------
Young Broadcasting Inc. and its debtor-affiliates filed with the
United States Bankruptcy Court for the District of Delaware a list
of 50 largest unsecured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
U. S. Bank National 10% senior subor. $344,300,000
Association notes due 2011
Attn: Robert C. Butzier
vice president
1 Federal Street
Boston, MA 02110
Tel: (617)603-6430
Fax: (617)603-6640
U. S. Bank National 8 3/4% senior $344,300,000
Association subor. notes due
Attn: Robert C. Butzier 2014
vice president
1 Federal Street
Boston, MA 02110
Tel: (617)603-6430
Fax: (617)603-6640
Kingworld Productions Inc. $6,513,649
P.O. Box 100599
Pasadena, CA 91189
Sutro Tower $1,367,207
P.O. Box 1330
Suisun City, CA 94585
Tel: (415) 681-8850 Ext. 0000
CBS Paramount Domestic TV $1,157,691
Inc.
5555 Melrose Avenue
Hollywood, CA 90038
Warner Bros. $557,900
P.O. Box 70490
Chicago, IL 60673
Tel: (818) 954-5310 Ext. 0000
Mediaspot, Inc. $322,276
Nielsen Media Research Inc. $239,439
Harris Corporation $184,719
Paramount TV Syndication $174,253
Gannaway Web Holdings, LLC $162,967
Baron Services, Inc. $114,081
Air Systems, Inc. $95,811
Buena Vista Television $76,006
NRS Media LLC $66,399
Associated Press $52,377
RF Central $47,119
Eckstein, Summers & Company $41,172
Television Bureau of $40,159
Advertising, Inc.
CBS TV Network Affiliates $37,880
Assn.
Sesac Inc. $36,316
E2V Technologies $33,108
Juma Technologies Corp. $30,462
Broadcast Music/BMI, Inc. $30,030
Weather Central Inc. $28,082
Worldlink $27,905
CNN Newsource Sales, Inc. $27,870
Brown & Saenger $27,288
Securitas Security Svcs USA $26,246
Vitac Corporation $25,275
Marshall Marketing & $22,333
Communications
Music Reports, Inc. $22,166
Decisionmark corp. $22,000
Cbs news $21,069
Metro Networks $18,278
Communications, Inc.
ABC TV Affiliates $17,205
Association
Classified Verticals LLC $14,280
Dell, Inc. $13,648
Universal City Studios $12,999
Productions LLP
Weather Metrics, Inc. $12,900
Electrical Connections $12,727
ASCAP-TV One Lincoln $12,671
Plaza
New Line Cinema $12,083
Corporation
Aheadtek, Inc. $11,858
Lawrence & Schiller $10,831
CDW Direct, LLC $10,395
Community TV Service Inc $10,147
Heartland Video Systems, $9,988
Inc.
Capital Reg Broadcasters $9,821
LLC
AAA Business Supplies $9,812
Rexel $9,249
Larcan USA, Inc. $9,100
About Young Broadcasting
Young Broadcasting, Inc. -- http://www.youngbroadcasting.com/--
owns 10 television stations and the national television
representation firm, Adam Young Inc. Five stations are affiliated
with the ABC Television Network (WKRN-TV - Nashville, TN, WTEN-TV
- Albany, NY, WRIC-TV - Richmond, VA, WATE-TV - Knoxville, TN, and
WBAY-TV -Green Bay, WI), three are affiliated with the CBS
Television Network (WLNS-TV - Lansing, MI, KLFY-TV - Lafayette, LA
and KELO- TV - Sioux Falls, SD), one is affiliated with the NBC
Television Network (KWQC-TV - Davenport, IA) and one is affiliated
with MyNetwork (KRON-TV - San Francisco, CA). In addition, KELO-
TV-Sioux Falls, SD is also the MyNetwork affiliate in that market
through the use of its digital channel capacity. The Debtor and
its debtor-affiliates filed for Chapter 11 protection on February
13, 2009 (Bankr. S.D. N.Y. Lead Case No.:09-10645). Jo Christine
Reed, Esq. at Sonnenschein Nath & Rosenthal LLP represents the
Debtors in their restructuring efforts. The Debtors proposed UBS
Securities LLC as consultant; Ernst & Young LLP as sccountant;
Epiq Bankruptcy Solutions LLC as claims agent; and David Pauker
chief restructuring officer. The Debtors listed total assets of
$575,600,070 and total debts of $980,425,190.
* Bill Lifting 210-Day Lease Limit Could Be Introduced Next Week
----------------------------------------------------------------
Bankruptcy Law360 said that as "pressure is mounting for some of
the 2005 revisions to the bankruptcy code to be rolled back," a
bill seeking changes to the 210-day limit for retailers to decide
on leases could be introduced next week.
As reported in yesterday's Troubled Company Reporter, according to
Bloomberg, U.S. Representative Jerrold Nadler will propose changes
to the bankruptcy code that would lift the 210-day limit for
retailers to decide which stores to keep operating. Those in
favor of an extension or the lifting of the seven-month limit said
the current law forces more companies to consider liquidation as
creditors push for quicker resolutions, as in the case of Circuit
City Stores Inc.
In April 2005, Congress revised the Bankruptcy Code to counter
abuses in the bankruptcy system. The Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005 shortened debtors' time to
decide on whether to assume or reject leases to a mere seven
months, disallowed periodic extensions of the debtors' exclusive
periods to file a plan of reorganization, and limited bonuses to
managers through the key employee retention programs.
"BAPCPA's numerous creditor-friendly amendments and modifications
have profoundly impacted the Chapter 11 process, to the point that
it is nearly impossible for retailers to reorganize, regardless of
the prevailing national and international economic conditions,"
said Lawrence C. Gottlieb, Michael Klein, Ronald R. Sussman, in an
article titled BAPCPA's Effects on Retail Chapter 11s Are
Profound.
BACPCA amended Section 365(d)(4) to require debtors to assume or
reject their real property leases within 120 says of filing,
subject to an additional 90-day court-approved extension.
Extensions beyond this initial 210-day period cannot be granted
without the consent of the landlord, regardless of the size of the
retailer.
According to Bankruptcy Creditors Service, Inc., many retailers
filed for bankruptcy with a prospect for reorganizing, but ended
up closing their stores and liquidating inventory. Retailers
covered by BCSI that were unable to keep their business or sell
their business as a going concern include Circuit City Stores,
Inc., Linens 'n Things, Inc., Mervyn's LLC, Sharper Image and
Levitz.
The counterparties to these leases -- shopping centers, malls and
landlords -- plan to fight any changes to the 210-day rule, Lauren
Coleman-Lochner Bloomberg reported on March 11. The time limit,
added to the bankruptcy code in 2005, is "a firewall to keep one
retail bankruptcy from harming shopping center owners and other
retailers," said Betsy Laird, a Washington-based senior vice
president of the ICSC's global policy office. "The provisions in
2005 were the result of seven or eight years of negotiations."
In addition, the 210-day limit gives landlords flexibility in
filling vacancies, says the New York-based trade group
International Council of Shopping Centers, which wants to the time
limit retained.
Harvey Miller, of Weil, Gotshal & Manges LP, who is scheduled to
testify in the congressional hearings, offered a different view.
Mr. Miller, according to Bloomberg, said that the current law is
"self-defeating" for landlords "because they're going to have a
lot of shopping centers that are not going to have a tenant."
* Firms Eye Trade Credit Insurance to Protect Receivables
---------------------------------------------------------
As the global economy remains in recession, March relates in a
news statement that a growing number of U.S. manufacturers and
distributors are looking for effective ways to protect their
revenue streams. In particular, firms marketing their goods and
services to vulnerable industries or for export are seeking trade
credit insurance to guard against the possibility of a default by
their business partners.
Demand for this coverage has skyrocketed in the past year, and
insurers are now cautious about what they are willing to cover and
what they charge for the coverage.
Marsh, an insurance broker and risk advisor, reports that insurers
not only are being more cautious about the trade credit risks they
are willing to accept, but are declining a significant percentage
of applications for this coverage. As insurers look for ways to
manage their trade credit risk portfolios, many are shying away
from programs aimed primarily at industries severely affected by
the downturn. They are also charging as much as 20% or 30% more
to renew existing policies and demanding larger deductibles and
higher coinsurance.
At the same time, these insurers are focusing greater attention on
smaller and less complex exposures, as well as on programs that
are not focused around troubled industries.
"The shift in focus among insurance companies to more manageable
programs represents a significant opportunity for mid-sized
businesses to purchase this coverage for the first time or to
expand their existing credit insurance programs," said Jim Dezell,
senior vice president of Marsh's Trade Credit Practice. "In this
difficult economy and credit environment, this insurance can
provide significant benefits to a business both in terms of
protecting critical revenue streams and possibly enhancing a
firm's overall credit picture."
In some instances, financial institutions may view insured
receivables more favorably in determining a company's overall
credit profile.
"Trade credit is one of the more versatile insurance coverages,"
Mr. Dezell added. "It can be structured to apply to one major
business partner or to insure an entire book of business in
specific geographic markets. The coverage also can be concentrated
on key accounts or on a business partner involved in a bankruptcy
proceeding."
According to Marsh, businesses seeking to buy credit insurance
must be able to present clearly to insurers how they audit and
review their current exposures, along with how they manage these
risks.
"Being able to demonstrate sound credit management procedures is
also important for discussions with insurers," said Mr. Dezell.
Marsh has 24,000 employees and provides advice and transactional
capabilities to clients in over 100 countries.
Marsh is a unit of Marsh & McLennan Companies, Inc. (MMC), a
global professional services firm with more than 54,000 employees
and annual revenue exceeding $11 billion. MMC also is the parent
company of Guy Carpenter, the risk and reinsurance specialist;
Mercer, the provider of HR and related financial advice and
services; Oliver Wyman, the management consultancy; and Kroll, the
risk consulting firm. MMC's stock (ticker symbol: MMC) is listed
on the New York, Chicago and London stock exchanges. On the Net:
http://www.mmc.com/and http://www.marsh.com/
* NewOak Capital Appoints Tom McAvity Managing Director
-------------------------------------------------------
NewOak Capital announces the appointment of Tom McAvity as
Managing Director to market the firm's advisory, asset-management
and capital markets services to the insurance industry and design
customized solutions for insurers, banks, pension, and endowment
funds.
"Tom brings a great deal of experience in asset management and
risk management in the context of long term asset / liability,
corporate finance, regulatory and accounting. In addition, Tom's
risk management experience combined with his ability to speak the
language of corporate executives is very much needed in today's
environment. We are very excited to have him on our senior
management team," says Ron D'Vari, CEO of NewOak Capital.
"With nearly 40 years of professional experience including 20
years dedicated to the insurance industry, Tom brings NewOak
Capital a unique and valued perspective on the challenges facing
the insurance industry. Our goal is to be a solution provider for
our clients in order to help them navigate through this most
violent storm and Tom will play a role in leading this effort with
respect to the insurance space,"added James Frischling, President
of NewOak Capital.
Mr. McAvity brings extensive experience in managing the portfolios
of insurance companies in the context of their liabilities. His
previous experience includes positions as Executive VP and Chief
Investment Officer with Scottish Re Group Ltd.; VP-Asset-Liability
Management with Allstate Financial; VP-Quantitative Research with
Lincoln Financial Group; VP-Quantitative Research with Alex. Brown
& Sons, Inc.; Senior VP and CFO of B.F. Saul REIT; and Associate
with McKinsey & Company, Inc. He earned his BA magna cum laude
from Yale and his MBA with High Distinction from Harvard Business
School, where he was elected a Baker Scholar and member of the
Century Club. Mr. McAvity has also served as an officer with the
U.S. Air Force.
About NewOak Capital
NewOak Capital is an advisory, asset management and capital
markets firm organized to serve institutions in response to
challenges arising from the global credit markets. It provides
analysis, valuation, restructuring, risk transfer, and management
solutions and services to financial institutions and other
investors to support their portfolio and corporate needs. NewOak
Capital employs 16 senior professionals with an average of 17
years of experience in the fixed-income markets in addition to 17
junior and support staff. It specializes in residential and
commercial mortgage loans and securities, REITs, asset-backed
securities, structured corporate securities (CSOs/CLOs), and
distressed financial companies with exposure. NewOak employs a
differentiated framework, an integrated "see-through" analytics
platform, and a team of experienced professionals with diversified
investment and modeling expertise to provide client solutions.
With the additions of Tom McAvity and David Shimko, NewOak also
provides a deep understanding of the challenges of managing the
future performance of financial institutions.
* BOOK REVIEW: Beyond the Quick Fix:
Managing Five Tracks To Organizational Success
-------------------------------------------------------------
Author: Ralph H. Kilmann
Publisher: Beard Books
Hardcover: 320 pages
Listprice: $34.95
Review by Henry Berry
Every few years, a new approach is offered for unleashing the full
potential of organized efforts. These are the quick fixes to
which the title of this book refers. The jargon of the quick fix
is familiar to any businessperson: decentralization, human
resources, restructuring, mission statement, corporate strategy,
corporate culture, and so on. These terms are all limited in
scope or objective, and some are even irrelevant or misconceived
with regard to the overall well-being and purpose of a
corporation.
With his extensive experience as a corporate consultant, author of
numerous articles, and professor in business studies, Kilmann
recognizes that each new idea for optimum performance and results
is germane to some area of a corporation. However, he also
recognizes that each new idea inevitably falls short in bringing
positive change -- that is, a change that is spread throughout the
corporation and is lasting. At best, when a corporation relies on
an alluring, and sometimes little more than fashionable, idea, it
is a wasteful distraction. At worst, it can skew a corporate
organization and its operations, thereby allowing the
corporation's true problems or weaknesses to grow until they
become ruinous. As the author puts it, "Essentially, it is not
the single approach of culture, strategy, or restructuring that is
inherently ineffective. Rather, each is ineffective only if it is
applied by itself -- as a 'quick fix'."
Kilmann tells corporate leaders how to break the cycle of
embracing a quick fix, discarding it after it proves ineffective,
and then turning to a newer and ostensibly better quick fix that
soon proves to be equally ineffective. For a corporation to break
this self-defeating cycle, the author offers a five-track program.
The five tracks, or elements, of this program are corporate
culture, management skills, team-building, strategy-structure, and
reward system. These elements are interrelated. The virtue of
Kilmann's multidimensional five-track program is that it addresses
a corporation in its entirety, not simply parts of it.
Kilmann's five tracks offer structural and operational aspects of
a corporation that executives and managers will find familiar in
their day-to-day leadership and strategic thinking. Thus, the
author does not introduce any unfamiliar or radical perspectives
or ideas, but rather advises readers on how to get all parts of a
corporation involved in productive change by integrating the five
tracks into "a carefully designed sequence of action: one by one,
each track sets the stage for the next track." Kilmann does more,
though, than bring all significant features of a modern
corporation together in a five-track program and demonstrate the
interrelation of its elements. His singularly pertinent and
useful contribution is providing a sequence of steps to be
implemented with respect to each track so that a corporation
progresses toward its goals in an integrated way.
Beyond the Quick Fix is a manual for implementing and evaluating
the progress of a five-track program for corporate success. The
book should be read by any corporate leader desiring to bring
change to his or her organization.
Ralph H. Kilmann has been connected with the University of
Pittsburgh for 30 years. For a time, he was its George H. Love
Professor of Organization and Management at its Katz Graduate
School of Business. Additionally, he is president of a firm
specializing in quantum transformations.
*********
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.
The Sunday TCR delivers securitization rating news from the week
then-ending.
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. Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa,
Sheryl Joy P. Olano, Carlo Fernandez, Christopher G. Patalinghug,
and Peter A. Chapman, Editors.
Copyright 2009. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $775 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***