/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090407.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, April 7, 2009, Vol. 13, No. 96 Headlines 11500 LLC: Section 341(a) Meeting Slated for April 28 in Missouri 155 EAST TROPICANA: Grace Period Ends May 1; Chapter 11 Possible A.T. REYNOLDS: Boreal Closes Deal to Acquire Bankruptcy Assets A&A ASSOCIATES: Files for Chapter 11 Bankruptcy Protection AES CORPORATION: Fitch Affirms 'B+' Issuer Default Rating AES CORPORATION: Fitch Assigns 'BB' Rating on $535 Mil. Notes ALBERT LINDLEY: Case Summary & 19 Largest Unsecured Creditors ANESIVA INC: Ernst & Young Raises Going Concern Doubt ANESIVA INC: Issues 7% Notes Due 2010 to Raise $2.5 Million ARROWHEAD GENERAL: S&P Puts 'B-' Corporate Rating on Neg. Watch ASARCO LLC: Expects 70%-75% Initial Distribution for Creditors ATA AIRLINES: Wins Confirmation of Bankruptcy Exit Plan BANK OF AMERICA: Moody to Review CBP Following 'D' FS Rating BASIN WATER: Must Find Buyer or Investor; May File for Bankruptcy BEARINGPOINT INC: Closed Door Hearing on Deloitte Sale BELLEAIR CONVERSION: Section 341(a) Meeting Slated for May 5 BERMUDA BAY: Case Summary & 12 Largest Unsecured Creditors BERNARD L. MADOFF: J. Ezra Merkin Sued for Lying to Investors BIOPURE CORP: Receives Non-Compliance Notice From NASDAQ BLOOMSOUTH FLOORING: Files for Chapter 11 Bankruptcy Protection BORDERS GROUP: Refocuses on Books to Revitalize Sales BRITISH VITA: To Meet with Creditors for Debt-for-Equity Exchange BSC DEVELOPMENT: Sent to Chapter 11 by Park Lane Catering BUCKHEAD COMMUNITY: Defers Quarterly Interest Payments on TruPS BUCKHEAD COMMUNITY: Not Well Capitalized; "Going Concern" Raised BUFFETS INC: Moody's Assigns 'Caa1' Corporate Family Rating CALIFORNIA STATE: Names L. Chick as $50-Bil Stimulus Fund Watchdog CALPINE CORP: To Pursue Buy Back of $7-Bil. Bankr. Exit Loan CAPA MANUFACTURING: Voluntary Chapter 11 Case Summary CELL THERAPEUTICS: Meets NASDAQ Requirements on Continued Trading CHARLES SILLER: Case Summary & 17 Largest Unsecured Creditors CHILDREN'S MUSEUM: Will File for Chapter 7 Bankruptcy Protection CHRYSLER LLC: Lenders Back Plan to Join Supplier Aid Program CHRYSLER LLC: To Get Continue Getting Parts From Transcast CITIGROUP INC: Consumer Business Chief to Retire After 30 Years COACHMEN INDUSTRIES: Stock Suspended from NYSE Trading CONSECO INC: Lacks Liquidity to Pay Off Debt in Case of Default CPG INTERNATIONAL: S&P Downgrades Issue-Level Ratings to 'B-' EXPRESS ENERGY: S&P Downgrades Corporate Credit Rating to 'CCC' CRUSADER ENERGY: Bankruptcy Filing Cues Default Under Loan Pacts CRUSADER ENERGY: Wants Jefferies & Company as Financial Advisors DIPLOMAT CONSTRUCTION: Case Summary & 4 Largest Unsec. Creditors DM INDUSTRIES: Comerica Loan Okayed on Interim; Sets Quick Sale DM INDUSTRIES: Sampler Auctions Inventory Hydrotherapy Products DM INDUSTRIES: Wants Berger Singerman as Bankruptcy Counsel DRUG FAIR GROUP: Hudson Capital to Conduct GOB Sales at 22 Stores ECONOMIC DEVELOPMENT: Fitch Cuts Outstanding Ratings to 'BB+' FAIRFAX FINANCIAL: Fitch Affirms Senior Debt Rating at 'BB+' FELCOR LODGING: Moody's Downgrades Senior Debt Rating to 'B2' FLEXIBLE PACKAGING: Taps Wigberto Lugo Mende as Bankr. Counsel FORD MOTOR: Investors to Swap $9.9BB in Debt for Cash & Stock FRANKLIN CLO: Fitch Junks Rating on $16 Mil. Class D Notes FRONTIER COMMUNICATIONS: Moody's Puts Ba2 Rating on $300MM Notes FRONTIER COMMUNICATIONS: S&P Assigns 'BB' Unsecured Debt Rating FUSION TELECOM: Rothstein Kass Raises Going Concern Doubt GENERAL MOTORS: March 2009 Total Sales Off 45% From A Year Ago GENERAL MOTORS: Still Hopes for Out-of-Court Restructuring GENERAL MOTORS: Obama Urged to Fire UAW President Ron Gettlefinger GENERAL MOTORS: Korean Unit 'Optimistic' About Aid GENERAL MOTORS: Saab Needs "Serious" Business Plan GENERAL MOTORS: To Get Continue Getting Parts From Transcast GREEN VALLEY: Station Casinos Q4 Issue Cues S&P's Junk Rating HARRAH'S ENTERTAINMENT: CalPERS' $1.7-Billion Bet in Apollo Sours HARTMANN PROPERTIES: Section 341(a) Meeting Slated for April 30 HARVEST OIL: Seeks to Access Macquarie-Wayzata Cash Collateral HERITAGE LAND: Wants Until May 29 to File Schedules & Statements INNERDOORWAY: American Securities & ACI Capital Acquires Firm ION GEOPHYSICAL: Moody's Cuts Corporate Family Rating to 'B3' JEFFERSON COUNTY: Budget Officer Slams Senate Tax Proposal JOHN BAYLESS: Case Summary & 20 Largest Unsecured Creditors KRATON POLYMERS: Buys & Retires $30MM Face Value of $200MM Notes KRATON POLYMERS: 8K Disclosure Prompts S&P's Rating Cut to 'SD' L-3 COMMUNICATIONS: Moody's Affirms 'Ba2' Corporate Family Rating LINENS 'N THINGS: CalPERS' $1.7-Billion Bet in Apollo Sours M W SEWALL: Taps Marcus Clegg as Counsel, U.S. Trustee Objects M W SEWALL: U.S. Trustee Sets Section 341 Meeting for April 30 MAGNA ENTERTAINMENT: Agrees to Hire Chief Restructuring Officer MASSACHUSETTS DEVELOPMENT: S&P Withdraws Rating on Issuer Request MAXXAM INC: Palco Issues Cue Grant Thornton's Going Concern Doubt MERUELO MADDUX: Receives Delisting Notification From Nasdaq MGM MIRAGE: Files Correct Version of 2005 Amended Incentive Plan MGM MIRAGE: Asks CityCenter Lenders to Extend April 13 Waiver MICRON TECHNOLOGY: Posts $751MM Net Loss in Second Quarter 2009 MILLAR WESTERN: Moody's Downgrades Corporate Family Rating to 'B3' MUZAK HOLDINGS: To Emerge From Ch 11 in Tough Spot, Says Miller NATIONAL CENTURY: Credit Suisse's Bid to Dismiss Claims Denied NATURAL RESOURCES: S&P Gives Negative Outlook; Keeps 'BB+' Rating NEW CENTURY FINANCIAL: KPMG Sued by Trustee Over Demise NEW CENTURY: Trustee Wants to Recoup $150MM From Ex-Directors NEXSTAR BROADCASTING: S&P Raises Corporate Credit Rating to 'B-' NORTHSTAR CBO: Fitch Changes Ratings on Class A-3 to 'C/RR6' NY CITY INDUSTRIAL: Moody's Cuts Rating on Bonds to 'Ba2' OMNI JOINT: Case Summary & 20 Largest Unsecured Creditors PACIFIC LUMBER: Plan Issues Cloud Former Parent MAXXAM's Future PANOLAM INDUSTRIES: Gets Lenders' Forbearance Until June 12 PARK AT ASPEN: Case Summary & Two Largest Unsecured Creditors PORTA SYSTEMS: Issues Bankruptcy Warning Citing Slow Demand QIMONDA NA: To Sell Assets Related to Semiconductor Business QUANTUM CORP: $142 Mil. Tender Offer Prompts S&P's Junk Rating RHODES COS: Chapter 11 Filing Cues S&P's Rating Cut to 'D' RITZ CAMERA: Will Close 300 Stores & Sell Merchandise RIVIERA HOLDINGS: Nonpayment of Interest Cues Moody's 'D' Rating SAGE COLLEGES: Moody's Affirms 'Ba2' Rating on 1999 Fixed Bonds SEMGROUP LP: Management Committee Sues CEO Ronan SILICON GRAPHICS: Gets 45-Day Extension to File Schedules SILICON GRAPHICS: Proposes Houlihan Lokey as Financial Advisor SILICON GRAPHICS: Seeks Court Okay to Reject Contracts & Leases SOUTHWEST WATER: Lenders Waive Reporting Requirements 'Til May 31 SPRINT NEXTEL: S&P Gives Negative Outlook; Affirms 'BB' Rating SPX CORPORATION: Fitch Affirms Issuer Default Rating at 'BB+' STANADYNE CORP: S&P Changes Outlook to Negative; Keeps 'B' Rating SWIFT ENERGY: Moody's Downgrades Corporate Family Rating to 'B2' TEAM FINANCIAL: Case Summary & Two Largest Unsecured Creditors TEXAS STATE: S&P Cuts Rating on Mortgage Revenue Bonds to 'D' THORNBURG MORTGAGE: Forbearance Pact Extended to April 30 THORNBURG MORTGAGE: Moody's Downgrades Senior Ratings to 'C' TORREYPINES THERAPEUTICS: Receives NASDAQ Non-Compliance Notice TORREYPINES THERAPEUTICS: Workforce Down to 3; Eyes Asset Sale TPG-AUSTIN PORTFOLIO: S&P Withdraws 'CCC' Corporate Credit Rating TRANSCAST PRECISION: Ordered to Provide Parts to Chrysler & GM TUSCANY PRESERVE: Case Summary & 20 Largest Unsecured Creditors TVI CORPORATION: Wants to Access $19 Million BB&T DIP Facility TVI CORPORATION: Seeks More Time to File Schedules and Statements TVI CORPORATION: Section 341(a) Meeting Set for May 11 in Maryland ULTICOM INC: To Finish Financial Reports' Restatement by October UNITED AIRLINES: Begins Contract Talks with Flight Attendants VALLEY NATIONAL: S&P Puts 'B' Corp. Rating on Developing Watch VIA PHARMACEUTICALS: Receives Non-Compliance Notice From NASDAQ YELLOWSTONE CLUB: Blixseth Taps Deschenes Sullivan as Counsel YOUNG BROADCASTING: Bid Procedures Approved; June 19 Auction Set YOUNG BROADCASTING: Files Schedules of Assets and Liabilities ZOHAR WATERWORKS: Deep in Debt, Files for Chapter 11 Protection ZOUNDS INC: U.S. Trustee Schedules Creditors Meeting on May 5 * Bill Bartmann Organizes Private Equity Fund to Buy Toxic Assets * Blackstone May Raise $3-Bil. In Loans for Struggling Companies * Rep. Jerrold Nadler Proposes Bill to Undo 2005 BAPCPA Changes * South Florida Consumer Bankruptcies Heightens * U.S. Treasury Won't "Go Begging" for Buyers of Its Debt * Sandeep Qusba Joins Simpson Thacher & Bartlett as Partner * Large Companies With Insolvent Balance Sheets ********* 11500 LLC: Section 341(a) Meeting Slated for April 28 in Missouri ----------------------------------------------------------------- The U.S. Trustee for Region 13 will convene a meeting of creditors in 11500, LLC's Chapter 11 case on April 28, 2009, at 2:00 p.m., at US Courthouse, Rm. 2110A, 400 E. 9th St., Kansas City, Missouri. 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. Colorado Springs, Colorado-based 11500, LLC, filed for Chapter 11 protection on March 30, 2009, (Bankr. W. D. Mo. Case No. 09- 41367). Donald G. Scott, Esq., at McDowell Rice Smith & Buchanan represents the Debtor in its restructuring efforts. The Debtor listed assets of $10 million to $50 million and debts of $10 million to $50 million. 155 EAST TROPICANA: Grace Period Ends May 1; Chapter 11 Possible ---------------------------------------------------------------- 155 East Tropicana, LLC's grace period to pay the first interest payment on its 8.75% senior secured notes expires May 1. 155 East didn't make the April 1 payment for the senior notes due 2012. The Company said it will continue normal operations under the direction of its existing management team and will continue to pay employees and honor benefits without interruption or delay. The Company also emphasized that suppliers will be paid in the ordinary course throughout this process. The Company emphasized that it currently has sufficient cash of approximately $8.0 million for operations and reserves, and is generating free cash flow even in the current challenging economic environment. As a result, the Company believes that it has adequate liquidity to fund its operating expenses, including buying goods and services and fulfilling all obligations to its employees during the reorganization process. The Company, however, noted that, "As a result of not making our interest payment on the Notes, the noteholders could declare a default following the expiration of the 30-day grace period provided under the indenture governing the Notes. An event of default under the Notes indenture would allow the lender under the Company's credit facility to declare a default. The Notes indenture and credit facility contain significant restrictions on the Company's operations and failure to comply with any restrictions of the Notes or credit facility by the Company will cause a default, subject to any applicable grace periods, under the Notes indenture and the credit facility." The Company said it expects to enter into discussions with the noteholders and the credit facility lender to attempt to negotiate forbearance agreements pursuant to which they would agree not to declare, for a specified period of time, an event of default under the indenture or the credit facility. The Company has engaged Jefferies & Company, Inc., as their financial advisor to assist with the evaluation of financial and strategic alternatives. In its annual report on Form 10-K filed March 31, the Company warned, "If the Company is not successful in obtaining a forbearance or entering into a transaction to address our liquidity and capital structure, the note holders will have the ability to accelerate repayment of all amounts outstanding under the indenture ($135.7 million at March 31, 2009) and the Credit Facility lender will have the ability to accelerate repayment of all amounts outstanding under the Credit Facility ($14.5 million at March 31, 2009). If either the Notes indebtedness or the Credit Facility indebtedness were to be accelerated upon a default, the Company would be required to refinance or restructure the payments on that debt. The Company cannot assure you that it would be successful in completing a refinancing or restructuring. If the Company were unable to do so, it may determine to seek protection under Chapter 11 of the U.S. Bankruptcy Code." The Company said it had $126,427,251 in assets against debts of $152,686,761 as of Dec. 31, 2008. As of December 31, the Company had $141.4 million in long-term debt. In the first quarter of 2009, it borrowed an additional $3.4 million under its Credit Facility, bringing its debt to $144.8 million at March 3, 2009. A copy of the Annual Report is available for free at: http://researcharchives.com/t/s?3b0f Casinos Feeling the Pain 155 East Tropicana joins a growing list of casino hotel operators that are having difficulty making debt payments due to lower gambling revenues resulting from the economic downturn in the U.S. Herbst Gaming Inc., which operates casinos located in Nevada, Missouri and Iowa, had to obtain forbearance from Wilmington Trust Company and other lenders for $846.8 million in debt, and eventually filed for Chapter 11 on March 22. Herbst has filed a plan that splits the Company's slot machines and casino business, with the Herbst family getting 90% of the slot machines business and the bank lenders getting ownership of all 12 casinos. Trump Entertainment Resorts Inc., owner of three casino hotel properties in Atlantic City, New Jersey, filed for Chapter 11 on February 17 after noteholders refused to grant it additional relief. Station Casinos, Inc., (Assets of $8.88 billion, Debts of $6.37 billion as of Sept. 30, 2008), which owns nine hotel casinos in the Las Vegas area, is preparing a Chapter 11 plan offering the bondholders a combination of secured notes and cash in exchange for their outstanding bonds. Under the plan, senior bondholders would get 50 cents on the dollar while subordinate bondholders would receive 7 cents on the dollar in new notes and 3 cents on the dollar in cash. Affiliates of the Fertitta family and Colony Capital have committed, as part of the restructuring plan, to contribute in the aggregate up to $244 million in cash if an acceptable agreement is reached with all of the Company's lending constituents. Station Casinos is expected to file for chapter 11 by April 15. The plan negotiated with lenders contemplates an exit from bankruptcy by September 30, 2009. According to The Wall Street Journal, MGM Mirage, owner of 17 resort casinos, has hired Weil, Gotshal & Manges LLP to help prepare a possible Chapter 11 filing for its City Center project and to explore other options. MGM Mirage has a $220 million payment due on its City Center project. Lenders have reportedly also hired Mayer Brown LLP. About 155 East 155 East Tropicana, LLC operates the Hooters Casino Hotel located one-half block off the Las Vegas strip, employing a total of 874 people as of December 31, 2008. Following the Company's April 1 missed payment, Standard & Poor's Ratings Services lowered its corporate credit rating on Las Vegas- based 155 East Tropicana to 'D' from 'CCC-'. In addition, S&P lowered the issue-level rating on the company's $130 million 8.75% senior secured notes to 'D'. Following these actions, S&P withdrew its ratings on the Company. Moody's Investors Service said 155 East Tropicana LLC's ratings are not affected by the announcement that the company will not make the April 1, 2009, scheduled interest payment on its 8.75% senior secured notes due 2012. Moody's last rating action for 155 East Tropicana occurred on December 12, 2008, when the company's corporate family rating and probability of default rating were downgraded to Ca from Caa3. A.T. REYNOLDS: Boreal Closes Deal to Acquire Bankruptcy Assets -------------------------------------------------------------- Boreal Water Collection Inc. (PINKSHEETS: BRWC) obtained approval from the U.S. Bankruptcy Court for the Southern District of New York on March 27, 2009, to acquire the spring water business, named Leisure Time Spring Water, based in Kiamesha Lake, NY. A.T. Reynolds & Sons Inc. has been operating under Chapter 11 of the U.S. Bankruptcy Code since December 2008. The transaction was consummated April 3. In exchange for consideration consisting of a combination of cash and assumption of debt, Boreal acquired all of A.T. Reynolds' assets, other than its New York and New Jersey Home and Office Delivery businesses, which A.T. Reynolds sold to a third party. Boreal will focus Leisure Time's resources on the high-end private label bottled water business. Boreal will, however, still bottle the 3, 4 & 5 gallons containers for the buyer of the HOD business, under a separate bottling agreement. About Boreal Water Collection Boreal Water Collection's goal is to become the leading producer of high-end private label bottled water in North America. BOREAL plans to achieve this goal by developing its affiliation with Les Sources Saint-Elie Inc., a Canadian company that has been the leading producer of high-end private label bottled water in Eastern Canada over the last decade. About Saint Elie Les Sources Saint-Elie Inc. produces high-end private label bottled water in Eastern Canada. About A.T. Reynolds & Sons A.T. Reynolds & Sons Inc. has operated its Leisure Time spring water company in Kiamesha Lake for 125 years. Located 90 miles from New York City, the 72,000 square foot Kiamesha Lake facility includes six bottling production lines which will help support the company's sales and distribution to customers in New York City and the rest of the Northeastern United States. A.T. Reynolds & Sons, Inc., dba Leisure Time Spring Water and dba Leisure Time Spring Water, filed for bankruptcy on December 5, 2008 (Bankr. S.D. N.Y. Case No. 08-37739). Judge Cecelia G. Morris presides over the case. Nicholas A. Pascale, Esq., at Tarshis Catania Liberth Mahon Milligram, in Newburgh, New York, serves as the Debtor's bankruptcy counsel. The Debtor disclosed $5,327,072 in total assets and $3,658,682 in total debts when it filed for bankruptcy. A&A ASSOCIATES: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------------- The Morning Call reports that A&A Associates has filed for Chapter 11 bankruptcy protection for the third time in less than two months. The Morning Call relates that A&A's owner, liver Angelus filed the bankruptcy petition less than 15 minutes before the club was to be offered to bidders on April 3 for the $3.5 million owed on its mortgage and taxes. The report says that Carbon County President Judge Roger N. Nanovic postponed the sale for a month. Mr. Angelus, according to The Morning Call, said that A&A remains open and that he will repay all his creditors. According to The Morning Call, A&A listed debts equal to or more than the value of the club and 248-acre property. Mr. Angelus said that he has a letter from a bank that pledged to refinance his debt, The Morning Call states. Philadelphia law firm Ciardi, Ciardi and Astin represents A&A in its restructuring effort, The Morning Call says. The Morning Call reports that Mr. Angelus had filed for Chapter 13 bankruptcy in February 2009, but was objected by Lafayette Ambassador Bank, which holds the club's mortgage. The report states that Lafayette Ambassador claimed that it won a judgment against A&A for $3.2 million in debt, which had $620 per day interest. Lafayette Ambassador said in court documents that A&A's bankruptcy filing was "a scheme merely to delay" the sheriff's sale, which previously was scheduled February 13, 2009. Lafayette Ambassador, according to court documents, also said that A&A owner Oliver Angelus filed for Chapter 7 bankruptcy protection to delay a December 12, 2008, sheriff's sale. According to The Morning Call, Mr. Angelus filed on February 23, 2009, a petition to convert the bankruptcy to Chapter 11, which Judge Robert Opel rejected on March 11, 2009. Oliver Angelus and his son Dante formed A&A Associates to buy the Mahoning Valley Country Club for $3.55 million in 2005. Mr. Angelus opened the club, which was founded in 1927 by Lehigh Coal and Navigation Co. and was private, to the public. AES CORPORATION: Fitch Affirms 'B+' Issuer Default Rating --------------------------------------------------------- Fitch Ratings affirms The AES Corporation's long-term Issuer Default Rating at 'B+' with a Stable Rating Outlook. Fitch also affirms AES' other existing ratings as shown in the ratings list provided at the end of this release. AES' ratings reflect high debt leverage, reliance on subsidiary distributions, and structural subordination of its debt to project level debt. However, the mitigating factors are the diversity and stability of cash flows from subsidiaries engaged in contracted power generation and regulated utility distribution of electricity. The Stable Outlook reflects adequate coverage of parent level expenses and interest from cash flows including additional sources of distributions from new projects, either completed previously or to be completed in coming years, reduction in committed capital investments, and gradual reduction in corporate level recourse debt. Fitch anticipates that the ratio of 2009 and 2010 parent level EBITDA (based on dividends received) to debt service including maturities will be approximately 1.2 times (x). Also, AES recently demonstrated its access to capital markets and successful extension of its bank facility to 2011, assuring adequate liquidity at parent level for 2009 and 2010. AES had $1.4 billion in cash and undrawn bank facilities at the end of 2008. AES has diverse sources of cash flow from its portfolio of investments in the U.S., Western Europe, Africa, Asia, and Latin America. In 2008, AES received approximately 41% of its total distributions from North America region; in addition, AES received 7% of its dividends from renewable projects predominantly in the U.S. Approximately 24% of distributions were from Europe and Africa region, and 21% came from the Latin America region. Fitch expects the proportion of cash flow from the Latin America region will rise considerably due to ongoing investment in new projects including coal plants in Chile. 2008 distributions from the utilities segment of business comprised 18% while 82% came from the power generation segment. Fitch's rating concerns include the greater volatility of the economies of emerging markets and the possibility of devaluations or foreign exchange controls that may reduce AES' ability to repatriate dividends due to further weakening of global economies. Ratings could be adversely affected in the future if AES resumes a more aggressive capital investment and acquisition strategy or initiates a future share buyback program, but management appears focused at present on preserving liquidity. For its recovery analysis, Fitch used an extremely stressed corporate cash flow projection based upon reduced subsidiary distributions to develop a default case and to value AES' portfolio in a default scenario. The case assumed that current cash balances are fully depleted and bank facilities are fully drawn. Asset values provided adequate collateral value to maintain the recovery ratings at 'RR1' for both senior secured and unsecured lenders under Fitch's recovery estimate. Instruments accorded Fitch's 'RR1' Recovery Rating have recovery prospects of over 90%. The estimated recovery of the trust preferred instruments issued by AES Trust III remains consistent with 'RR4', a 31-50% expected recovery. Fitch affirms these ratings with a Stable Outlook: AES Corporation -- Long-term IDR at 'B+'; -- Short-term IDR at 'B'; -- Senior Secured at 'BB+'/RR1; -- Senior Unsecured at 'BB'/RR1. AES Trust III -- Trust Preferred at 'B+'/RR4. AES CORPORATION: Fitch Assigns 'BB' Rating on $535 Mil. Notes ------------------------------------------------------------- Fitch Ratings has assigned its 'BB' rating to The AES Corporation's private placement of $535 million 9.75% senior unsecured notes due April 15, 2016. The new notes are unsecured and rank equally with AES' existing and future unsecured debt. Fitch currently rates AES' Issuer Default Rating 'B+', and the Rating Outlook is Stable. ALBERT LINDLEY: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: The Albert Lindley Lee Memorial Hospital aka A.L. Lee Memorial Hospital 510 South Fourth Street Fulton, NY 13069 Bankruptcy Case No.: 09-30845 Chapter 11 Petition Date: April 3, 2009 Court: Northern District of New York (Syracuse) Judge: Margaret M. Cangilos-Ruiz Debtor's Counsel: Stephen A. Donato, Esq. donatos@bsk.com Bond, Schoeneck & King, PLLC One Lincoln Center Syracuse, NY 13202-1355 Tel: (315) 218-8000 Fax: (315) 218-8100 Total Assets: $17,167,501 Total Debts: $12,281,735 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Pension Benefit Guaranty Underfunded $6,146,098 Corporation amount - defined 1200 K Street, N.W. benefit pension Attn: James Eggeman plan Washington, DC 20006 Medtronic USA, Inc. Trade debt $474,774 127 S. Long Street Buffalo, NY 14221 Atlas Health Care Linen Services $126,068 Services 414 West Taylor Street Syracuse, NY 13202 Sleep Services of America $125,504 Cardinal Health - Syracuse Trade debt $94,668 Division Hospira Worldwide, Inc. Trade debt $80,651 Medical Liability Mutual Trade debt $69,936 Insurance Service Employees Benefit $67,089 Fund Johnson & Johnson Healthcare Trade debt $47,903 System Buffalo Hospital Supply Co. Trade debt $46,545 Inc. Zimmer US, Inc. Services $46,092 Aventis Pasteur $45,828 Onward Healthcare Trade debt $43,902 Continental Nurses Services $43,772 MVP Select Care, Inc. Insurance $41,835 St. Jude Medical S.C., Inc. $40,505 Hess Corporation Services $37,753 National Grid Utility $37,246 Olympus Corporation $33,240 The petition was signed by Dennis A. Casey, executive director. ANESIVA INC: Ernst & Young Raises Going Concern Doubt ----------------------------------------------------- Anesiva, Inc., said its consolidated financial statements for the fiscal year ended December 31, 2008, included in the Company's annual report on Form 10-K filed with the Securities and Exchange Commission on March 25, 2009, contained a going concern qualification from its independent registered public accounting firm, Ernst & Young, LLP. "We have not generated any revenues to date, and we have incurred losses in each year since our inception in 1999. We currently have capital resources, including amounts received subsequent to December 31, 2008, that we believe to be sufficient to support our operations approximately into April 2009. We may not be able to raise sufficient capital to continue our existing operations beyond that time, particularly in light of our obligations under our lease and credit agreements, and we are currently evaluating our strategic alternatives with respect to all aspects of our business," Anesiva said in a filing with the Securities and Exchange Commission. Anesiva incurred net losses of $103.2 million, $59.3 million and $55.6 million for the years 2008, 2007, and 2006, respectively. It has an accumulated deficit of $312.0 million as of December 31, 2008. Additionally, it has used net cash of $74.8 million, $48.2 million and $44.6 million to fund operating activities for years ended December 31, 2008, 2007, and 2006, respectively. As of December 31, 2008, the Company had $3 million in total assets and $11 million in total liabilities, all current, resulting in an $8 million stockholders' deficit. On January 20, 2009, Anesiva entered into a securities purchase agreement with Sofinnova Venture Partners VII, L.P., Alta California Partners III, L.P., Alta Embarcadero Partners III, LLC, Alta Partners VIII, LP, CMEA Ventures VII, L.P., CMEA Ventures VII (Parallel), L.P., InterWest Partners VIII, LP, InterWest Investors VIII, LP, and InterWest Investors Q VIII, LP, where it agreed to sell and issue securities for a total principal amount of up to $7.0 million, subject to the terms and conditions set forth in the Investor Agreement. The Securities are secured by a first priority security interest in all of the assets Anesiva owns. The Company will pay interest at a continuously compounding rate of 7% per year. If Anesiva defaults under the Investor Agreement, it will pay interest at a continuously compounding rate of 14% per year. If a change of control event occurs as defined under the Investor Agreement, Anesiva will owe the Investors seven times the amount of the outstanding principal amount of the Securities, plus all accrued but unpaid interest. Unless Anesiva pays the principal back early under the terms of the Investor Agreement or it is accelerated because of a default, it will pay the outstanding principal and accrued but unpaid interest at any time at the request of a certain majority of the Investors on or after July 20, 2009. Under the terms and conditions set forth in the Investor Agreement, Anesiva received an initial $3.0 million January 20, 2009, and it requested and received a second tranche of $2.0 million on March 3, 2009. Anesiva requested the final tranche of $2.0 million under the Investor Agreement to be received before April 1, 2009. "Upon a change of control event, we will be required to repay up to $49.0 million in debt plus accrued interest, which we may not be able to repay our Investors or may not leave sufficient funding to distribute capital to our stockholders," Anesiva said. The announcement is being made in compliance with Nasdaq Marketplace Rule 4350(b)(1)(B), which requires separate disclosure of a recent audit opinion that contains a going concern qualification. The announcement does not represent any change or amendment to the Company's 2008 financial statements or to its annual report on Form 10-K. Anesiva also said it received a letter on March 27, 2009, from The Nasdaq Stock Market notifying the Company that it is not in compliance with Marketplace Rule 4450(a)(3) because the Company's stockholders equity at December 31, 2008, was less than the $10.0 million required for continued listing on The Nasdaq Global Market. In addition, the Company is not in compliance with Marketplace Rule 4450(b)(1) because the market value of listed securities of the Company is less than $50.0 million and the total assets and total revenue of the Company was less than $50.0 million as of December 31, 2008. In the notice, Nasdaq requested that the Company provide a plan to regain compliance with the continued listing requirements of The Nasdaq Global Market by April 13, 2009. Nasdaq will contact the Company with any questions or concerns regarding the plan. If Nasdaq does not accept the plan, it will provide the Company with a written notification that its securities will be delisted from The Nasdaq Global Market. If it receives a notification, the Company may then apply to move to The Nasdaq Capital Market or appeal Nasdaq's delisting determination to a Nasdaq Listing Qualifications Panel. The Company intends to submit a plan with Nasdaq before April 13, 2009, to maintain its listing on The Nasdaq Global Market. The announcement is being made in compliance with Marketplace Rule 4803(a), which requires the Company to make a public announcement through the news media disclosing receipt of the Nasdaq letter and the Nasdaq rules upon which it is based. About Anesiva Anesiva, Inc. -- http://www.anesiva.com/-- seeks to be a leader in the development and commercialization of novel pharmaceutical products for pain management. The company's lead product candidate is Adlea, a novel small molecule formulation of capsaicin that is currently in development for the management of acute pain following orthopedic surgeries. Adlea has been shown in clinical trials to provide extended pain relief after only a single administration in multiple indications for site-specific, acute and chronic, moderate-to-severe pain. Anesiva common stock trades on The NASDAQ Global Market under the symbol "ANSV." ANESIVA INC: Issues 7% Notes Due 2010 to Raise $2.5 Million ----------------------------------------------------------- Anesiva, Inc., is distributing to its stockholders, at no charge, non-transferable subscription rights to purchase an aggregate principal amount of $3,000,000 of the Company's 7% senior notes due 2010. Each stockholder will receive one subscription right for each share of Anesiva common stock owned of record on March 27, 2009. Each subscription right will entitle the holder to purchase $0.12 principal amount of notes. The Company said each subscription right will carry with it an over-subscription privilege to purchase a portion of the principal amount of notes that is not otherwise purchased through the exercise of the basic subscription privilege. The subscription rights will expire if they are not exercised by 5:00 p.m. Pacific time on April 28, 2009, the expected expiration date of the rights offering. The Company, in its sole discretion, may extend the period for exercising the subscription rights. Subscription rights that are not exercised by the expiration date of the rights offering will expire and will have no value. The notes will mature on April 28, 2010. Interest will accrue on the notes at a rate of 7.0% per annum and be payable at maturity; provided that if an event of default has occurred and is continuing, the interest rate will be increased to 14.0%. The notes will be the Company's unsecured obligations. If a change of control event occurs with respect to Anesiva, holders of the notes will have the right to require the Company to repurchase all or part of their notes at the price described in a prospectus supplement. The Company expects net proceeds of $2.5 million. A full-text copy of the Prospectus Supplement dated April 2 is available at no charge at http://ResearchArchives.com/t/s?3b0b The notes will be governed by the terms of the Senior Debt Indenture and the Supplemental Indenture to Indenture, each dated April 2, 2009, by and between the Company and The Bank of New York Mellon Trust Company, N.A. A full-text copy of the Senior Debt Indenture is available at no charge at http://ResearchArchives.com/t/s?3b0c A full-text copy of the Supplemental Indenture is available at no charge at http://ResearchArchives.com/t/s?3b0d On March 31, 2009, Anesiva entered into an amendment to the securities purchase agreement, dated as of January 20, 2009, with Sofinnova Venture Partners VII, L.P., Alta California Partners III, L.P., Alta Embarcadero Partners III, LLC, Alta Partners VIII, LP, CMEA Ventures VII, L.P., CMEA Ventures VII (Parallel), L.P., InterWest Partners VIII, LP, InterWest Investors VIII, LP, and InterWest Investors Q VIII, LP. The Amendment, among other things, provides that (i) the Investors may purchase amounts not purchased by the Company's stockholders, other than the Investors, in the Rights Offering and (ii) in certain circumstances set forth in the Amendment the Investors will be treated on a pari passu basis with the holders of notes purchased in the Rights Offering. On April 1, 2009, Anesiva issued and sold securities in the amount of $1.3 million pursuant to a subsequent closing pursuant to the terms and conditions of the Securities Agreement with Sofinnova, et al. After the subsequent closing, the Company has received an aggregate amount of $6.3 million under the Securities Agreement. On March 27, 2009, the Company entered into an agreement with Titan Pharmaceuticals, Inc. for the sublease of roughly 6,871 square feet for its corporate headquarters located in South San Francisco, California, for a period of 15 months, beginning on April 1, 2009, and ending on June 29, 2010. The monthly base rent, which includes common area maintenance and electricity costs, is roughly $8,933 per month for the term of the Sublease, with payments beginning June 1, 2009, for a total liability of $116,130 for the term of the Sublease. Separately, on March 31, 2009, Rodney A. Ferguson, J.D., Ph.D. tendered his resignation from the Company's Board of Directors and all committees, effective immediately. Dr. Ferguson served on the Audit Committee and the Nominating and Corporate Governance Committee of the Board of Directors. Dr. Ferguson's resignation is not the result of any disagreement with the Company or any matter relating to the Company's operations, policies, or practices. About Anesiva Anesiva, Inc. -- http://www.anesiva.com/-- seeks to be a leader in the development and commercialization of novel pharmaceutical products for pain management. The company's lead product candidate is Adlea, a novel small molecule formulation of capsaicin that is currently in development for the management of acute pain following orthopedic surgeries. Adlea has been shown in clinical trials to provide extended pain relief after only a single administration in multiple indications for site-specific, acute and chronic, moderate-to-severe pain. Anesiva common stock trades on The NASDAQ Global Market under the symbol "ANSV." ARROWHEAD GENERAL: S&P Puts 'B-' Corporate Rating on Neg. Watch --------------------------------------------------------------- Standard & Poor's Ratings Services said that it placed its 'B-' counterparty credit rating on San Diego-based Arrowhead General Insurance Agency Inc. on CreditWatch with negative implications. The action follows the delay by Arrowhead in filing its full-year 2008 audited financial statements with Standard & Poor's. Standard & Poor's is aware that Arrowhead is engaged in discussions with its lenders regarding a potential restructuring of its debt obligations. In 2008, the company had been hurt by declining property/casualty premium rates, some carrier disruption, and more restrictive bank loan covenants. Standard & Poor's will be communicating with Arrowhead's management and expects to resolve the CreditWatch status of the ratings within 30 days. "We could lower the ratings if S&P were to conclude that Arrowhead's financial condition has deteriorated and is unsatisfactory relative to current or prospective debt- servicing requirements and loan covenant performance," noted Standard & Poor's credit analyst Michael Gross. S&P could revise the rating to 'SD' if Arrowhead selectively defaults on a specific debt obligation but continues to meet its payments on other issues. S&P could also revise the rating to 'SD' if there is an exchange offer where an obligation is either repurchased or exchanged for another instrument having a lesser total value. "If S&P conclude that Arrowhead's operating fundamentals and debt- servicing capability are appropriate for the rating, S&P could affirm the ratings," Mr. Gross added. ASARCO LLC: Expects 70%-75% Initial Distribution for Creditors -------------------------------------------------------------- According to Bloomberg News, Jack L. Kinzie, a lawyer for Asarco LLC, told the bankruptcy judge at a hearing last week that he expects that the initial cash distribution to creditors will range from 70 to 75 percent. Bloomberg's Bill Rochelle said that collections on the judgment against Grupo Mexico subsidiary Americas Mining Corp. represent additional distributions that could end up paying unsecured creditors in full with interest. Asarco already has roughly $1 billion in cash. As reported by the TCR on April 3, U.S. District Judge Andrew Hanen of Brownsville, Texas, issued a damages award to ASARCO LLC, currently valued at about $6.04 billion. The ruling stems from the judge's decision in August 2008 that Americas Mining Corporation, a subsidiary of Grupo Mexico S.A. de C.V., had fraudulently transferred to itself ASARCO's 54.18% interest in Southern Peru Copper Corporation. As restitution, the judge ordered that AMC return to ASARCO 260,093,694 shares of Southern Copper Corporation stock, which based on last Wednesday's closing price is worth approximately $4.68 billion, and pay money damages of approximately $1.35 billion. The 70 to 75 cents on the dollar estimate is higher than the estimates provided by ASARCO in its third amended plan of reorganization submitted to the U.S. Bankruptcy Court for the Southern District of Texas on March 16. ASARCO made a third amendment to its proposed plan to incorporate the proposed sale of substantially all of its operating assets to Sterlite (USA), Inc., pursuant to a renewed sale and purchase agreement among the parties dated March 6, 2009. Sterlite USA is the purchaser of the Assets and Sterlite Industries (India) Ltd. serves as guarantor of the purchaser's obligations under the Sale Agreement. Sterlite committed to acquire the ASARCO operating assets with: (a) $1.1 billion in cash payment; (b) assumption of certain liabilities; and (c) a non-interest bearing, secured $600 million note, payable over nine years. The third amended plan estimates that unsecured creditors with claims of $2.1 billion to $2.4 billion would receive between 60% and 75%, according to the explanatory disclosure statement. Those estimates assumed that general unsecured Asbestos claims would be allowed in the amount of $750 million. The Bankruptcy Court is scheduled to convene a hearing to consider approval of the disclosure statement on April 28. ASARCO will be able to begin soliciting votes on, and seek confirmation of, the third amended plan, if the disclosure statement is approved. Judge Hanen on April 1 directed Americas Mining to return what had been Asarco's 54% ownership in Southern Copper. Bill Rochelle recounts that Judge Hanen already ruled last August 2008 that the transfer of ASARCO's "most valuable asset" was an "actual fraudulent transfer." He did not at that time though decide how much Americas Mining should pay in damages. Judge Hanen, Mr. Rochelle adds, ruled last year that the transfer was made with "actual intent to hinder or delay some of Asarco's creditors." Grupo Mexico has said it intends to appeal Judge Hanen's April 1 ruling. Fitch Ratings has said that it will wait for the outcome of the appeal before it will issue ratings changes. Fitch notes that different outcomes are possible following the appeal process, one of which is for Grupo Mexico to retain its ownership of Asarco following its cash payment and 30% transfer of SCC shares. "Should the current ruling be upheld following the appeal, Fitch will assess the liquidity impact against the credit metrics of the company at that point in time. If a ruling was made in Grupo Mexico's favor during the appeal process, a favorable credit revision of Grupo Mexico and its copper subsidiaries could occur." At the time Judge Hanen first ruled in favor of Asarco, competing reorganization plans were on file to pay creditors in full. Asarco had one plan, based on a sale of the business for $2.6 billion to Sterlite Industries (India) Ltd., while Grupo Mexico had another. Since then, Sterlite backed out of the sale. ASARCO and Sterlite last month signed a new contract for the sale, which led to the filing of the third amended plan. Plan-Related Schedules ASARCO has proposed this schedule with respect to its proposed Chapter 11 Plan: April 17, 2009 Deadline to file Disclosure Statement objections April 28, 2009 Disclosure Statement hearing May 6, 2009 Deadline for parties to serve confirmation discovery requests May 20, 2009 Deadline for parties to complete production of documents June 1, 2009 Deadline for parties to commence depositions of fact witnesses June 1, 2009 Deadline for parties to file and serve objections to the Plan June 16, 2009 Deadline for parties to commence depositions of expert witnesses June 19, 2009 Confirmation deposition cutoff date June 26, 2009 Pre-Confirmation status conference June 29 to July 2, 2009 Confirmation Hearing July 6-7, 2009 Confirmation Hearing, if necessary About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on Dec. 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). The Debtors submitted to the Court a joint plan of reorganization and disclosure statement on July 31, 2008. The plan incorporates the sale of substantially all of the Debtors' assets to Sterlite Industries, Ltd., for US$2,600,000,000. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted a reorganization plan to retain its equity interest in ASARCO LLC, by offering full payment to ASARCO's creditors in connection with ASARCO's Chapter 11 case. AMC would provide up to US$2.7 billion in cash as well as a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ATA AIRLINES: Wins Confirmation of Bankruptcy Exit Plan ------------------------------------------------------- ATA Airlines Inc. has won confirmation of its exit plan paving the way for the carrier to consummate a sale of certain of its assets to Southwest Airlines Co. At the hearing on March 26, 2009, ATA Airlines stepped Judge Basil Lorch III of the U.S. Bankruptcy Court for the Southern District of Indiana, through the statutory requirements under Sections 1129(a) and (b) of the Bankruptcy Code necessary to confirm its First Amended Chapter 11 Plan. A. Section 1129(a)(1) requires that the Plan comply with all applicable provisions of the Bankruptcy Code which include compliance with Sections 1122 and 1123, governing classification and contents of the Plan. The classification of Claims and Equity Interests described in the Plan satisfies the standards of Section 1122. The Plan complies with the applicable provisions of the Bankruptcy Code, including Section 1123. The requirements of Section 1129(a)(1) are, therefore, satisfied. B. ATA Airlines has complied with the terms of the Disclosure Statement Approval Order and the applicable provisions of the Bankruptcy Code. Accordingly, the requirements of Section 1129(a)(2) are satisfied. C. ATA Airlines has proposed the Plan with the legitimate and honest purpose of selling the authorizations and assets comprising its business to Southwest Airlines Co., winding down its remaining business, and making distributions to Creditors. The Plan has not been proposed by any means forbidden by law. The Plan fairly achieves a result consistent with the objectives and purposes of the Bankruptcy Code. The Plan is the result of good faith, arm's-length negotiations among the Debtor, the Lenders, the Official Committee of Unsecured Creditors, the Air Line Pilots Association and four other labor unions, Kevin Batman, and other creditor constituencies. The Plan has been proposed in good faith. Therefore, the requirements of Section 1129(a)(3) are satisfied. D. During the ATA II bankruptcy case, Professionals have been required to file interim fee statements that are subject to approval by the Court. Pursuant to the Order Granting Motion to Establish Procedures for Interim Compensation and Reimbursement of Expenses for Professionals and Section 3.4 of the Plan, Professionals are required to file final fee applications, which are also subject to court approval. The Purchase Agreement does not contemplate the payment of any amounts to Southwest or its professionals. Accordingly, any payment made or to be made by the Debtor, or by any person issuing securities or acquiring properties under the Plan, for services or for costs and expenses incurred in connection with the Bankruptcy Case, or in connection with the Plan and incident to the Bankruptcy Case, has been approved by, or will be subject to the approval of, the Court as reasonable. Hence, the requirements of Section 1129(a)(4) are satisfied. E. In compliance with the requirements of Section 1129(a)(5), Section 6.1(d) of the Plan provides that the existing members of the Debtor's board of directors will be deemed terminated, and that the Plan Trustee will nominate and elect new members for the Board of Directors. This procedure is consistent with the interests of Creditors and Interestholders and with public policy. In addition, the Debtor has disclosed the identify of the Plan Trustee and the Unsecured Creditor Trustee, and their proposed compensation. F. ATA Airlines' business does not involve the establishment of rates over which any governmental regulatory commission has or will have jurisdiction after confirmation of the Plan, therefore Section 1129(a)(6) is inapplicable. G. The Plan meets the "best interest of creditors" test of Section 1129(a)(7). The Debtor has prepared a liquidation analysis with respect to a hypothetical liquidation of the Debtor under Chapter 7 of the Bankruptcy Code. This liquidation analysis is attached as Exhibit 3 to the Disclosure Statement. The Court accepts the results of the liquidation analysis and its discussion contained in the Proffer of Direct Testimony of Steven S. Turoff. Based on the liquidation analysis, with respect to each impaired Class of Claims or Equity Interests, (a) each holder of a Claim or Equity Interest of that Class has either accepted the Plan or (b) will receive or retain under the Plan on account of that Claim or Equity Interest, property of a value, as of the Effective Date, that is not less than the amount that the holder would so receive or retain if the Debtor was liquidated under Chapter 7 of the Bankruptcy Code. H. As disclosed in the Certificate of Plan Proponent, all impaired Classes of Claims, except Class 5 Subordinated Claims, voted to accept the Plan. Class 5 Subordinated Claims and Class 6 Equity Interests are deemed to have rejected the Plan pursuant to Section 1126(g). Based on the evidence presented at the Confirmation Hearing, the Court finds that there are no Class 5 Subordinated Claims. In addition, the holder of the Class 6 Equity Interest voted to accept the Plan, notwithstanding the deemed rejection. Accordingly, the requirements of Section 1129(a)(8) are satisfied. Notwithstanding, at the Confirmation Hearing, the Debtor invoked Section 1129(b) to proceed with confirmation of the Plan over the presumed rejection by Class 5 and Class 6, and submitted cramdown evidence under Section 1129(b) concerning those Classes. I. The Plan, as modified in the Confirmation Order, provides for the payment of Allowed Administrative Claims and Allowed Priority Unsecured Non-Tax Claims in Cash on the later of (a) 10 days after the Effective Date or (b) 10 days after the Claim becomes Allowed. Regarding Professional Compensation Claims arising through the tenth day after the Closing Date -- and including fees and expenses incurred in preparing final fee applications and hearings on the applications -- these Claims will be paid after applying the balance of any retainers held by professionals within 10 days after the Claims become Allowed. Under Section 4.1 of the Plan, holders of Allowed Priority Employee Claims have agreed to the treatment provided by the Plan pursuant to the Global Settlement embodied in the Plan. Alternatively, holders of Allowed Priority Employee Claims will receive deferred cash payments equal to the allowed amount of their Claims because the Plan allows these Claims in an amount equal to the Cash to be distributed on account of the Claims. With respect to Claims of the kind specified in Section 507(a)(8), which are defined under the Plan as Priority Unsecured Tax Claims, the Plan provides that these Claims will be satisfied in full at the election of the Plan Trustee by (a) payment of Cash in the amount of the Claim plus accrued interest after the Confirmation Date at the Tax Interest Rate within 10 days after the later of (i) the Effective Date of the Plan (ii) the date the Claim becomes Allowed; or (b) agreement reached with the holder of the Claim. Against this backdrop, the requirements of Section 1129(a)(9) are deemed satisfied. J. Class 4 is comprised of Allowed General Unsecured Claims. Class 4 is impaired under the Plan. Without including any acceptance of the Plan by any insider, Class 4 voted to accept the Plan. The Plan, therefore, complies with Section 1129(a)(10). K. At the Confirmation Hearing, the Debtor both presented testimony and proferred testimony of Steven S. Turoff concerning the feasibility of the Plan. This evidence was not disputed at the Confirmation Hearing. Based on this testimony and the supporting documentary evidence, the Court finds that the Debtor's projections provide a reasonable assurance that all Distributions to Creditors required to be made pursuant to the Plan will occur and the issuance of New Membership Interest to Southwest will be made. Therefore, the Plan is feasible and complies with Section 1129(a)(11). L. Section 3.6 of the Plan provides for the payment of all fees payable under 28 U.S.C. Section 1930(a)(6) pursuant to the Plan Trust Agreement and the Unsecured Creditor Trust Agreement, and this provision was not objected to by the U.S. Trustee. Therefore, the Plan complies with Section 1129(a)(12). M. There are no retiree benefits to be paid by the Debtor, and therefore Section 1129(a)(13) is inapplicable. N. ATA Airlines is not required to pay a domestic support obligation, either under a judicial or administrative order or by statute, and therefore Section 1129(a)(14) is inapplicable. O. Section 1129(a)(15) dictates certain requirements that must be met when the holder of an allowed unsecured claim objects to confirmation of a chapter 11 plan filed by an individual debtor. ATA Airlines is not an individual, and therefore Section 1129(a)(15) is inapplicable. P. Section 1129(a)(16) conditions plan confirmation on the fact that all transfers under the plan will be made in accordance with applicable non-bankruptcy laws that govern the transfer of property by a corporation or trust that is not a money, business, commercial corporation or trust. Because ATA Airlines, the Plan Trust, and the Unsecured Creditor Trust are a moneyed, business, or commercial corporation or trust, Section 1129(a)(16) is inapplicable. Finding that the First Amended Chapter 11 Plan complies with the statutory requirements, Judge Lorch III confirmed ATA Airlines' Plan on March 26, 2009. He overruled all objections to the confirmation that have not been withdrawn or resolved. The Plan's confirmation allows ATA Airlines to settle outstanding equity interests and claims asserted against the airline. Under the Plan, unsecured creditors would be paid about 1.3 percent of their claims totaling about $420 million while secured creditors whose claims total $365 million, would receive about 13.9 percent. Secured creditors also agreed to share proceeds from potential lawsuits against suppliers that could yield as much as $12.2 million in damages. ATA Airlines can also implement the terms of the global settlement it reached with the Official Committee of Unsecured Creditors, Global Aero Logistics, Jefferies Finance, JPMorgan Chase Bank and its terminated employees. Part of the settlement is the dismissal of the lawsuits filed by the Association of Flight Attendants-CWA, Air Line Pilots Association, Aircraft Mechanics Fraternal Association, International Association of Machinists and AeroSpace Workers, Transport Workers Union of America and those employees not affiliated with the labor unions. Any collective bargaining agreement with the labor unions will also be deemed extinguished, terminated and rejected. Sale of Assets to Southwest The confirmation of the Plan also allows Southwest Airlines Co. to buy the assets of ATA Airlines for $7.5 million and take control of the airline's 14 takeoff and landing slots at LaGuardia Airport in New York. Bob Montgomery, Southwest Airlines' vice-president of properties, said the company hopes to begin service at LaGuardia Airport sometime this summer, according to a March 26 report by Terry Maxon of DallasNews. Southwest Airlines did not reveal where it plans to fly from LaGuardia. The 14 slots gives Southwest Airlines only seven departures a day, however, the airline considers acquiring additional takeoff and landing slots, the report said. "Things at LaGuardia are changing very rapidly. We're in touch with the Port Authority [of New York and New Jersey, which operates the airport] and with the [Federal Aviation Administration] on that whole mix. I think we would like to find a way to acquire more slots," DallasNews quoted Mr. Montgomery as saying. Mr. Montgomery said that the slot rules of the FAA are being reconsidered and there is a lack of clarity of what the agency is going to do. Airport officials reportedly agreed to lease Gate B2 in the airport's Terminal B, with some assurances that Southwest Airlines will be able to secure more space as it needs it. Montgomery said that Southwest Airlines is anxious to experience how New York will accept its service in that market. "The experience on delays and air traffic is going to be substantially different from what we've experienced in other places in the country. So we really want to understand all the implications on our schedule, on our pricing and on our customers," Mr. Montgomery said, reports DallasNews. Southwest Airlines, however, is optimistic that it will be in good shape to succeed in that marketplace. LaGuardia's takeoffs and landings are limited by the U.S. Department of Transportation and Federal Aviation Administration due to congestion and delays. Both agencies are attempting to reduce the number even more. The airline industry, however, has been able to block the government's effort in court. Appointment of Plan Trustee, Et Al. The Court approved the appointment of Steven Turoff as Plan Trustee, and JLL Consultants Inc. as Unsecured Creditor Trustee. Mr. Turoff will manage the Plan Trust, which will be established for (i) the prosecution and recovery of ATA Airlines' and estate's claims, licenses and others; (ii) the liquidation of estate property into cash; (iii) the payment of the proceeds from the liquidation of estate property from available cash; (iv) the payment of certain claims from the $5 million priority claim fund; and (v) the payment of fees and expenses of professionals retained in ATA Airlines' bankruptcy case. Meanwhile, JJL will administer the Unsecured Creditors Trust, which will be established to provide a mechanism for the liquidation of the $2.5 million in unsecured settlement fund, net proceeds from the recovery of preference actions and other assets. Other Provisions Judge Lorch held that as of the Effective Date, the Second Circuit Grievance Litigation -- the lawsuit filed in the U.S. District Court for the Eastern District of New York and styled Global Aero Logistics Inc. and ATA Airlines, Inc. vs. Airline Pilots Association International -- including ALPA's appeal, will be dismissed with prejudice by the parties. The Plan Trustee is substituted as the party-in-interest for the Debtor for all purposes in the Second Circuit Grievance Litigation and the Appeal, and is authorized to complete any and all actions necessary, including the filing of papers and pleadings with the appropriate tribunal, to consummate and effect the dismissal with prejudice. ALPA is directed to join or otherwise assist the Plan Trustee in taking the actions necessary to consummate and effect the dismissal with prejudice. The parties will file the papers and pleadings necessary to consummate and effect the dismissal no later than 10 days after the Effective Date, he said. In addition, the WARN Adversaries -- the separate adversary proceedings initiated against ATA and GAL by ALPA, AFA, IAM, and TWU, on behalf of their represented employees and Mr. Batman in the Bankruptcy Court alleging that ATA had violated the WARN Act -- will be dismissed with prejudice by the parties as of the Effective Date. The Plan Trustee is substituted as the party-in- interest for the Debtor for all purposes in the WARN Adversaries, and is authorized to submit orders dismissing the WARN Adversaries with prejudice under Rule 41(a)(2) of the Federal Rules Civil Procedure and Rule 7041 of the Federal Rules of Bankruptcy Procedure without further motion and to complete any other actions necessary effect the dismissal with prejudice. The non-Debtor parties in the WARN Adversaries are directed to join or otherwise assist the Plan Trustee in taking the actions necessary to consummate and effect the dismissal with prejudice. The parties will file the papers and pleadings necessary to consummate and effect the dismissal no later than 10 days after the Effective Date. The Court further ruled that Clearinghouse Receivables will be conveyed and transferred to the Plan Trust subject to -- and not free and clear of -- any valid set-off and recoupment rights of the non-Debtor participants in the Airlines Clearing House, Inc. or, where applicable, the International Air Transport Association Clearing House enforceable under applicable law. The Claims of Travelers Casualty and Surety Company of America asserted in Claim No. 3940 against the Debtor arising in connection with an indemnity agreement and various surety bonds issued by Travelers on behalf of the Debtor to secure the Debtor's financial obligations to various entities will (a) constitute an Other Secured Claim under the Plan to the extent of the value of any Estate Property securing the Claim and (b) constitute a Deficiency Claim to the extent the amount of the Claim exceeds the value of any Estate Property securing the Claim, which Claim will be treated as a General Unsecured Claim under the Plan. Travelers will be entitled to retain any collateral securing its Claim, including the proceeds of a certain letter of credit provided to Travelers as security for the Debtor's obligation to reimburse Travelers in accordance with the terms of the agreements between the parties or otherwise as provided for by law. Neither the Plan nor the Confirmation Order implements a release of any claim or cause of action (a) that San Antonio Aerospace, L.P. asserts against any aircraft owned by World Airways, Inc., or the proceeds thereof and any claims asserted or assertable by San Antonio Aerospace, L.P. against World Airways, Inc., in each case in the adversary proceeding styled San Antonio Aerospace, L.P., and Airbase Services, Inc., vs. ATA Airlines, Inc., et al., pending in the Bankruptcy Court under case no. 08-50226; and (b) asserted or assertable by San Antonio Aerospace, L.P. against World Airways, Inc. in the arbitration styled San Antonio Aerospace, L.P. vs. World Airways, Inc. ? San Antonio, Texas, pending before the American Arbitration Association under case no. 70 181 00581 08. Moreover, any and all Executory Contracts between the Debtor and the City of Phoenix are deemed rejected as of the Effective Date. The City of Phoenix is granted an Allowed Class 4 General Unsecured Claim for $5,200 on account of the rejection of any and all Executory Contracts between the Debtor and the City of Phoenix. The City of Phoenix is not entitled to any Administrative Claim against the Debtor, whether arising under any Executory Contract or otherwise, and any Administrative Claims are disallowed. A copy of the order confirming ATA Airlines' First Amended Chapter 11 Plan is available for free at: http://bankrupt.com/misc/ATAPlanConfirmationOrder.pdf About ATA Airlines Headquartered in Indianapolis, Indiana, ATA Airlines, Inc., was a diversified passenger airline operating in two principal business lines -- a low cost carrier providing scheduled passenger service that leverages a code share agreement with Southwest Airlines; and a charter operator that focused primarily on providing charter service to the U.S. government and military. ATA is a wholly owned subsidiary of New ATA Acquisition, Inc. -- a wholly owned subsidiary of New ATA Investment, Inc., which in turn, is a wholly owned subsidiary of Global Aero Logistics Inc. ATA Acquisition also owns another holding company subsidiary, World Air Holdings, Inc., which it acquired through merger on August 14, 2007. World Air Holdings owns and operates two other airlines, North American Airlines and World Airways. ATA Airlines and its affiliates filed for Chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). The Honorable Basil H. Lorch III confirmed the Debtors' plan of reorganization on Jan. 31, 2006. The Debtors' emerged from bankruptcy on Feb. 28, 2006. Global Aero Logistics acquired certain of ATA's operations after its first bankruptcy. The remaining ATA affiliates that were not substantively consolidated in the company's first bankruptcy case were sold or otherwise liquidated. ATA Airlines filed for Chapter 22 on April 2, 2008 (Bankr. S.D. Ind. Case No. 08-03675), citing the unexpected cancellation of a key contract for ATA's military charter business, which made it impossible for ATA to obtain additional capital to sustain its operations or restructure the business. ATA discontinued all operations subsequent to the bankruptcy filing. ATA's Chapter 22 bankruptcy petition lists assets and liabilities each in the range of $100 million to $500 million. The Debtor is represented in its Chapter 22 case by Haynes and Boone, LLP, and Baker & Daniels, LLP, as bankruptcy counsel. The United States Trustee for Region 10 appointed five members to the Official Committee of Unsecured Creditors. Otterbourg, Steindler, Houston & Rosen, P.C., serves as bankruptcy counsel to the Committee. FTI Consulting, Inc., acts as the panel's financial advisors. The Court gave ATA Airlines Inc. until Feb. 26, 2009, to file its Chapter 11 plan and April 27, 2009, to solicit acceptances of that plan. ATA Airlines submitted to the Court its Chapter 11 Plan of Reorganization and accompanying Disclosure Statement on December 12, 2008, two weeks after it completed the sale of its key assets to Southwest Airlines Inc. Bankruptcy Creditors' Service, Inc., publishes ATA Airlines Bankruptcy News. The newsletter tracks the chapter 11 case of ATA Airlines, Inc. (http://bankrupt.com/newsstand/or 215/945-7000) BANK OF AMERICA: Moody to Review CBP Following 'D' FS Rating ------------------------------------------------------------ Moody's moves to correct a press release issued on March 31st announcing a rating action as to covered bonds issued by BA Covered Bond Program, which release misstated the percentage of overcollateralization that Moody's considers as "committed" under the program. The amount of overcollateralization that Moody's considers to be committed is approximately 4%, which is the minimum overcollateralization specified in the program documents. The prior press release incorrectly listed this percentage as approximately 7.5%, which was the overcollateralization level in effect on the issuance dates of the covered bonds. The substance of the correction does not have any effect on the rating action. Revised release is: Moody's Investors Service has placed on review for possible downgrade the Aaa ratings of the covered bonds issued by BA Covered Bond Program. This rating action follows Moody's recent downgrade of Bank of America, N.A.'s long-term senior unsecured ratings to Aa3 from Aa2 and bank financial strength rating to D from B- on March 25, 2009. Bank of America, N.A. is the sponsor of the covered bond program. The rating action reflects Moody's view that the rating of a covered bond with a high degree of exposure to market value risk (i.e. high refinancing risk) is closely linked to the rating of its sponsor. Moody's ratings on covered bonds address both the sponsor's obligation to pay the covered bonds as well as the value that may be realized on the cover pool following a sponsor's default. The dependence of the rating on the value of the cover pool increases as the strength of the sponsor decreases. For this program, if the sponsor defaults, the realization on the cover pool is particularly subject to market value risk. Under the terms of the program, following a default by the sponsor, the entire cover pool (over $10 billion of mortgage loans) may need to be sold in less than 120 days. Under current market conditions, such a sale may obtain an exceptionally low price or not be completed at all. Moody's has also assigned a Timely Payment Indicator of "improbable" to the program. The TPI of "improbable" is primarily driven by the exposure to market value risk discussed above. This TPI is consistent with the TPI for the only other U.S. covered bond program, sponsored by JPMorgan Chase Bank (acquired from Washington Mutual Bank), which employs comparable liquidation mechanisms in its structure. The TPI indicates Moody's view of the likelihood that covered bond investors will be paid timely interest and principal following a default of the sponsor of a covered bond program. During the review period Moody's will focus on refining Moody's estimate of the realization value of the cover pool in a highly unlikely event of the sponsor defaulting. The data on the trading of mortgages of similar credit quality is extremely sparse in the current market. The estimation of the realization value of the cover pool will also take into account the size of the cover pool relative to the available liquidity in the market. At this stage, Moody's estimate that the likely ratings outcome will not exceed two notches (i.e. not lower than Aa2). The ultimate rating outcome will be dependent upon any change that the sponsor may make to the program structure which may include an increase in level of committed overcollateralization. The level of overcollateralization in this program that Moody's considers to be committed is approximately 4%, which is the minimum overcollateralization specified in the program documents. In Moody's analysis, Moody's give full credit only to the level of committed overcollateralization. The current level of total overcollateralization reported is approximately 37%, which includes approximately 33% of overcollateralization that Moody's considers as "not committed." BASIN WATER: Must Find Buyer or Investor; May File for Bankruptcy ----------------------------------------------------------------- Basin Water Inc. has admitted that it might go bankrupt if it fails to find a buyer or investors. Singerlewak LLP, Basin Water's independent auditor, has raised substantial doubt as to the Company's ability to continue as a going concern. If the Company fails to obtain additional financing on commercially reasonable terms, its business, financial condition, and results of operations will be materially and adversely affected and the Company may be unable to continue as a going concern. The question about Basin Water's ability to continue as a going concern may also limit its ability to obtain financing on acceptable terms or at all, and may limit its ability to obtain new business due to potential customers' concern about the Company's ability to provide water treatment and other services. If the Company fails to continue as a going concern, it may elect or be required to seek protection from creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy. In such a case, Basin Water may have to liquidate the Company's assets and may receive less than the value at which those assets are carried on the Company's financial statements, and it is likely that investors will lose all or a part of their investment. As of December 31, 2008, Basin Water had about $11.5 million in cash and cash equivalents and as of March 30, 2009, the Company had approximately $8.5 million in cash and cash equivalents (excluding cash balances resulting from the consolidation of VL Capital, which funds of VL Capital are not available to the Company to support the Company's liquidity needs). Basin Water has experienced significant negative cash flows from operating and investing activities between 2006 and 2008, and the Company expects to use additional cash for such activities for the foreseeable future. The Company's net losses incurred during the past two fiscal years ended December 31, 2008 and 2007 amounted to $32.5 million and $18.3 million, respectively. Unless and until the Company is able to generate sufficient revenues from the Company's system sales and contract services, the Company expects such losses to continue in the future. Therefore, the Company's ability to continue to operate the Company's business over the next 12 months is highly dependent on the amount of cash and cash equivalents on hand combined with the Company's ability to raise capital to support the Company's future operations. Basin Water has incurred significant net losses since its inception, including net losses of $1.3 million in 2003, $0.6 million in 2004, $13.5 million in 2006, $18.3 million in 2007, and $32.5 million in 2008. The Company's net loss in 2006 resulted in part from reserves the Company recorded in connection with certain of the Company's contracts which have ongoing operating costs in excess of the Company's contract revenues. In addition, the Company's net loss in 2007 resulted in part from additional reserves the Company recorded in the third quarter of 2007. At December 31, 2008, the Company had an accumulated deficiency of approximately $68.4 million. Even if these improved processes do positively impact the Company's results of operations, the Company may not have sufficient capital to continue as a going concern. In February 2009, Basin Water restated its financial statements for fiscal years ended December 31, 2006, and December 31, 2007, and for the fiscal quarter ended March 31, 2008. On December 27, 2007 and January 2, 2008, two purported securities class action complaints were filed in the United States District Court for the Central District of California against Basin Water, Peter L. Jensen, Michael M. Stark and Thomas C. Tekulve for violations of the Exchange Act. The lawsuits were subsequently consolidated, and on October 3, 2008, a Consolidated Amended Complaint was filed which alleges that the Company deliberately understated the reserves it took for certain unprofitable contracts, and committed various intentional violations of GAAP during a putative class period between November 14, 2006 and August 8, 2008. The suit does not state a specific amount of damages. On February 19, 2009, the Company and its insurance carriers reached an agreement in principle to settle the class action with representatives of the class. The settlement is still subject to preparation of a final settlement agreement, following which the Company would intend to seek preliminary approval from the Court so that class members can receive notice of the settlement, providing them with the opportunity to accept its terms or to opt out and choose whether to pursue their own individual claims. Following a fair period of notice to the class, it would be the Company's intention to seek final Court approval of the settlement and the dismissal of all claims against it. The Company denies all of the allegations in the lawsuit and believes that its disclosures were appropriate under the law. Nevertheless, the management has agreed to settle the litigation in order to avoid costly and time-consuming litigation. Basin Water's management doesn't expect a cash effect of the settlement on the Company as the entire settlement amount is expected to be paid by the Company's liability insurers. On January 23, 2008, the Company received a letter dated January 17, 2008, from attorneys representing a purported stockholder demanding that the Company investigate and remedy alleged breaches of fiduciary duty by certain unnamed officers and directors of the Company. In the demand letter, the attorneys allege that the unnamed officers and directors violated their duties to the Company by, among other things, participating in or permitting the company to issue false and misleading statements regarding its business and financial results giving rise to the above named lawsuits. As of December 31, 2008, Basin Water reported $61,176,000 in assets, $16,947,000 in liabilities, and $43,797,000 in stockholders' equity. About Basin Water Rancho Cucamonga, California-based Basin Water, Inc., -- http://www.basinwater.com/-- designs, builds and implements systems for the treatment of contaminated groundwater, industrial process water and air streams from municipal and industrial sources. It provides reliable sources of drinking water for many communities, and the ability to comply with environmental standards and recover valuable resources from process and wastewater streams. Basin Water has developed proprietary, scalable ion-exchange, biological and other treatment systems that effectively process contaminated water and air in an efficient, flexible and cost effective manner. BEARINGPOINT INC: Closed Door Hearing on Deloitte Sale ------------------------------------------------------ BearingPoint Inc. had a closed court hearing on whether it can sell assets to Deloitte LLP. U.S. Bankruptcy Judge Robert Gerber in Manhattan barred the public from most of the hearing on BearingPoint's plan to sell the bulk of its business to Deloitte for $350 million by April 17, Tiffany Kary of Bloomberg reports, citing sensitive business information. "I won't have insider trading under my watch," Judge Gerber said at the outset of the hearing, noting that much of the discussion might involve inside information, such as details about the company's operating results. Bloomberg News points out that BearingPoint said that it wanted to speed up the sale process, citing an April 6 deadline for getting a bidding procedure in place. Bloomberg reported that a committee of creditors said in papers filed March 25 that the company was rushing a sale. The committee said it served document requests seeking to find out whether BearingPoint is "skewing" the sale toward "a bidder favored by management, and a timeframe favored by the senior lenders." The report states the Law Debenture Trust Co. of New York, trustee to $450 million in BearingPoint's Class A and Class B notes, also objected to an expedited sale, saying the sale would gut any alternative plan. About BearingPoint 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. BELLEAIR CONVERSION: Section 341(a) Meeting Slated for May 5 ------------------------------------------------------------ The U.S. Trustee for Region 21 will convene a meeting of creditors in Belleair Conversion Developers LLC' Chapter 11 cases on May 5, 2009, at 2:00 p.m., at 51 SW First Ave Room 1021, Miami, Florida. 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. Creditors in this case have until Aug. 3, 2009, to file proofs of claim. About Belleair Conversion Aventura, Florida-based Belleair Conversion Developers LLC filed for Chapter 11 protection on March 31, 2009, (Bankr. S.D. Fla. Case No. 09-15820). Carlos L De Zayas, Esq., at Lydecker, Lee, Behar, Berga & de Zayas represents the Debtor in its restructuring efforts. In its bankruptcy petition, the Debtor listed total assets of $11,969,262 and total debts of $15,552,788. BERMUDA BAY: Case Summary & 12 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Bermuda Bay, L.L.C. 30 Bellona Arsenal Road Midlothian, VA 23113 Bankruptcy Case No.: 09-32133 Chapter 11 Petition Date: April 3, 2009 Court: Eastern District of Virginia (Richmond) Judge: Douglas O. Tice Jr. Debtor's Counsel: Paula S. Beran, Esq. pberan@tb-lawfirm.com Tavenner & Beran, PLC 20 North Eighth Street, Second Floor Richmond, VA 23219 Tel: (804) 783-8300 Fax: (804) 783-0178 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Landmark Building and Unsecured Loan $683,471 Development of NC, LLC PO Box 147 Harbinger, NC 27944 KDHWWTP, LLC Unused Sewer $480,480 Eddie Goodrich Capacity PO Box 250 Harbinger, NC 27944 David Russotto Unsecured Loan $441,598 5028 Martin's Point Road Kitty Hawk, NC 27949 Bermuda Bay Homeowners Dues $51,000 Assc. Dare County Tax Department Property Taxes $44,921 RPC Contracting Retainage $39,000 Williams Fire Sprinkler Trade $26,328 Cambridge Cove HOA Dues $11,575 Ward & Smith Legal Fees $11,157 Landmark Building and Fees for Services $10,978 Development of NC, LLC Michael Robinson Trade $9,780 Devonshire Place HOA Dues $2,005 The petition was signed by Leroy L. Anderson, III, manager. BERNARD L. MADOFF: J. Ezra Merkin Sued for Lying to Investors ------------------------------------------------------------- Liz Rappaport at The Wall Street Journal reports that the New York state's attorney general, Andrew Cuomo, has sued J. Ezra Merkin for his involvement in Bernard Madoff's Ponzi scheme by repeatedly lying to investors about how their money was invested. Mr. Merkin, says WSJ, is a money manager who funneled $2.4 billion from universities and nonprofit organizations into Bernard L. Madoff Investment Securities LLC. According to WSJ, Mr. Merkin raised billions of dollars from charities, universities, funds, and individual investors and allegedly lied about putting much of it with Mr. Madoff. WSJ states that Mr. Merkin collected more than $470 million in fees for his three hedge funds. According to court documents, Mr. Cuomo said that Mr. Merkin misguided investors about his Madoff investments in quarterly reports, in investor presentations and in conversations with investors. Mr. Cuomo said in court documents, "Merkin held himself out to investors as an investing guru.... In reality, Merkin was but a master marketer." WSJ relates that Mr. Cuomo doesn't claim that Mr. Merkin was aware of Mr. Madoff's Ponzi scheme. WSJ states that investors in Mr. Merkin's funds include: -- Yeshiva University, -- New York University, -- New York Law School, -- Bard College, and -- Boston Properties Chairman and New York Daily News owner Mort Zuckerman's charitable trust. According to WSJ, the investors lost tens of millions of dollars in the Madoff Ponzi scheme through their investments with Mr. Merkin's funds. WSJ relates that New York University, New York Law School, and Mr. Zuckerman have separately filed lawsuits against Mr. Merkin. Andrew Levander, the counsel for Mr. Merkin, said in a statement, "We are disappointed that the attorney general of the state of New York has filed this hasty and ill-conceived civil lawsuit, against which we intend to defend vigorously. The evidence shows that this lawsuit is without merit." According to WSJ, Mr. Merkin agreed to freeze his assets in a stipulation submitted in New York state court. 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 Mr. Madoff and his investment firm 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. istrict 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. BIOPURE CORP: Receives Non-Compliance Notice From NASDAQ -------------------------------------------------------- Biopure Corporation has received several notices from The Nasdaq Stock Market. By letter dated March 24, 2009, Nasdaq advised that, as the Company had not yet filed its Form 10-Q for the fiscal quarter ended January 31, 2009, it was out of compliance with the Nasdaq Marketplace Rules. The Company filed the report and received a letter dated March 26, 2009, stating that the matter was closed. NASDAQ also notified the Company that it has suspended enforcement of its minimum bid price and market value requirements for continued listing, thereby extending the company's time in which to regain compliance. Enforcement of the rules is scheduled to resume on July 20, 2009. The Company estimates, that it now has until September 12, 2009, to regain compliance with the $1.00 minimum bid price requirement. If at any time before that date the bid price of the Company's common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Company should be provided written notification that it complies with the Marketplace Rules. The Company said in a regulatory filing that it has financed operations from inception primarily through sales of equity securities and development and license agreement payments. The Company has not been profitable since inception. In the fiscal years ended October 31, 2008 and 2007, the Company had losses from operations of $20.3 million and $36.3 million, respectively. It had an accumulated deficit of $584 million as of January 31, 2009. It anticipates that it will continue to generate losses for the next several years. The Company has said cash on hand and expected cash inflows are expected to only last into April 2009. Without sufficient additional cash, the Company will be forced to cease operations and liquidate its assets. In June 2008, the Company signed an agreement with purchasers for a private placement of its class A common stock and warrants for up to $2.3 million assuming no exercise of the warrants. Under the terms of the agreement the Company sold to accredited investors in monthly tranches 4,737,928 shares of its common stock and warrants to acquire an additional 4,737,928 shares. The price for one share and one warrant was $0.3377, and the exercise price of each warrant is $0.45. The warrants have terms of five years, become exercisable six months after the closing date, and are callable by Biopure after the initial exercise date provided that the weighted average price of Biopure's common stock for ten consecutive days is over $0.675. Under the agreement, the Company raised a total of $1.5 million. The Company expects current assets and product sales to be sufficient to fund operations through April 2009 under the current operating plan. The Company said it will require significant additional funding to remain a going concern and to fund operations until such time, if ever, as it becomes profitable. There can be no assurance that adequate additional financing will be available to the Company on terms that it deems acceptable, if at all. To continue operations in the near term, the Company is actively seeking to raise additional capital or a strategic alliance transaction. In March 2009, the Company sold its manufacturing facility and land in Pennsylvania and entered into a lease for that facility for consideration of $1.4 million, of which $1.2 million was in the form of cash and the balance as rent abatements. The Company expects that its resources available at January 31, 2009, plus the cash proceeds from the facility sale-leaseback should be sufficient to fund operations through April 2009. Biopure Corporation Biopure Corporation develops and markets pharmaceuticals, called oxygen therapeutics, that are intravenously administered to deliver oxygen to the body's tissues. On November 21, 2008, the company announced that it had suspended manufacturing and terminated most of its work force for financial reasons. The company may not be able to continue as a going concern. As of January 31, 2009, the Company had $7.2 million in total assets and $1.9 million in total liabilities, all current. BLOOMSOUTH FLOORING: Files for Chapter 11 Bankruptcy Protection --------------------------------------------------------------- Boston Business Journal reports that Bloomsouth Flooring Corp. has filed for Chapter 11 protection. According to Business Journal, Bloomsouth Flooring listed $500,000 to $1 million in assets, including $261,000 in accounts receivable. Business Journal says that Bloomsouth Flooring has $1 million to $10 million in debts. Business Journal states that Bloomsouth Flooring's debts include: -- obligations of $888,000 to the Internal Revenue Service, -- $159,000 to the state Department of Revenue, and -- $75,000 to the state Division of Employment. A. Russell Lucid of Rockland, Massachusetts, assists Bloomsouth Flooring in its restructuring effort, Business Journal relates. Bloomsouth Flooring Corp. -- http://www.bloomsouth.com/-- is based in Canton, Massachusetts. It is incorporated in 1999. It is a licensed dealer of the patented Levitate furniture lift technology -- a complete "one-stop" solution for the replacement of carpet without the time-consuming and costly moving of office furniture systems. BloomSouth Flooring also specializes in Food Processing/Production Floors, known as "acid-proof" brick flooring. BORDERS GROUP: Refocuses on Books to Revitalize Sales ----------------------------------------------------- As part of an effort to revitalize sales following another year of losses, Borders Group is looking to return to its roots as an outlet for serious readers, Jaclyn Trop at The Detroit News reports citing company officials. The Detroit News reports that the company plans to focus on book sales and offer more children's, cooking and biography titles, while scaling back its multimedia inventory, including CDs and DVDs. According to The Detroit News, CEO Marshall, who replaced former chief executive George Jones in January, has been charged with rescuing Borders from declining sales. Mr. Marshall, as cited by the report, said Borders also will focus on improving its financial health, closing the gap with its competitors and streamlining operations, from customer service to logistics to information technology. But the downsizing and cuts in inventory most likely won't staunch Borders' money losses, The Detroit News says according to Jim McTevia, managing partner of Bingham Farms-based turnaround firm McTevia & Associates. He said Borders will probably be forced to file for Chapter 11 bankruptcy protection this year. About Borders Group Headquartered in Ann Arbor, Mich., Borders Group, Inc. -- http://www.bordersgroupinc.com-- describes itself as a $3.8 billion retailer of books, music and movies with more than 1,100 stores and over 30,000 employees worldwide. Borders owns a majority stake in Paperchase Products Limited, a leading gifts and stationery retailer in the United Kingdom, and showcases their products in their stores, as well as Books etc., Borders other, mostly London-based bookshop chain. BRITISH VITA: To Meet with Creditors for Debt-for-Equity Exchange ----------------------------------------------------------------- British Vita, the polymer producer acquired by buyout firm TPG Inc. in 2005, is to meet with creditors on a plan to swap loans for equity, Bloomberg News' John Glover reports, citing two people with knowledge of the matter. TPG is asking senior lenders to cancel debt in exchange for a 37.5% stake in the London-based chemical maker, said the people, who declined to be identified because the talks are private. TPG's controlling stake will be cut to 33% under the proposal to be made at a meeting on April 17, Bloomberg said. Bloomberg relates that British Vita missed an interest payment in December on some of the GBP663 million ($954 million) of loans used to finance its buyout. The Company's senior loans were valued at 15.5% of face value at an auction to settle creditdefault swaps on its debt. Bloomberg News reports that the proposed debt exchange includes TPG and some mezzanine lenders putting in 60 million euros ($79.5 million) of new money. Mezzanine creditors, who rank after senior lenders for repayment, will get a 16.7% stake, with 2.5% coming from their previous investment. Lenders in a new 35 million-euro revolving credit will get a 9.9% stake. Headquartered in London, British Vita Group -- http://www.thevitagroup.com/-- produces cellular and industrial polymers, engineered thermoplastic sheet and nonwovens. It operates nearly 80 sites in 20 countries. BSC DEVELOPMENT: Sent to Chapter 11 by Park Lane Catering --------------------------------------------------------- James Fink at Business First of Buffalo reports that Park Lane Catering has filed a Chapter 11 bankruptcy petition for BSC Development. According to Business First, Park Lane is an anchor tenant at BSC's Statler. Business First relates that Park Lane filed a lawsuit against BSC in December 2008 after it suffered more than $1 million in damages through lost bookings because of uncertainties surrounding the Statler Towers. The report states that Park Lane has more than 200 events booked at the Statler's Golden Ballroom and Rendez-Vous Room. Court documents say that Statler, faced with a continuing loss of tenants, is losing more than $70,000 per month. Business First states that Park Lane retained bankruptcy attorney Garry Graber, Esq., at Hodgson Russ, to handled the legal proceedings. National Fuel Gas Corp., according to Business First, is threatening to shut off gas to Statler next week. BSC Development owns Statler Towers. BUCKHEAD COMMUNITY: Defers Quarterly Interest Payments on TruPS --------------------------------------------------------------- Buckhead Community Bancorp, Inc., says its management and Board of Directors are working on plans to improve the Company's capital ratios and to reduce the level of classified assets and are also considering various strategic alternatives. Since inception, the Company has not paid a dividend on the common stock of its holding company, Buckhead Community Bancorp, Inc. From time to time the Bank has paid dividends to the holding company. Dividends from the Bank represent the primary source of the Company's cash flow. Its current regulatory status may prohibit the Bank from paying dividends to the Company. The Company has elected to defer the payment of interest on its holding company debt for one year. Specifically, the Company said that, at December 31, 2008 and 2007, it had junior subordinated debt totaling $15.5 million. On March 6, 2009, the Company began exercising its right to defer quarterly interest payments for each of the trust preferred securities and related debentures. For Trust I, the Company intends to defer interest payments from March 31, 2009 to December 31, 2009, and for Trust II, it intends to defer interest payments from April 7, 2009 to January 7, 2010. During this period of deferral, the Company is precluded from repurchasing shares of common stock and from paying dividends on outstanding common stock. Buckhead Community Bancorp, Inc. is a bank holding company whose principal activity is the ownership and management of its wholly owned subsidiary, The Buckhead Community Bank. The Bank is a commercial bank headquartered in Atlanta, Fulton County, Georgia. The Bank operates seven branch locations and one loan production office, all of which are located in metropolitan Atlanta, Georgia. The Bank provides a full range of banking services in its primary market areas. As of December 31, 2008, the Company had $909.9 million in total assets and $856.8 million in total liabilities. BUCKHEAD COMMUNITY: Not Well Capitalized; "Going Concern" Raised ---------------------------------------------------------------- Buckhead Community Bancorp, Inc., said the report of Mauldin & Jenkins, LLC, its independent registered public accountants, which is included in the Company's 2008 annual report to stockholders, contains an explanatory paragraph as to the Company's ability to continue as a going concern. The accountants cited the Company's recurring losses, declining capital levels, and the memorandum of understanding with the Federal Deposit Insurance Corp. and Georgia Department of Banking and Finance. The Company incurred a net loss of $36.4 million for the year ended December 31, 2008. This loss was largely the result of dramatic increases in non-performing assets, which caused the Company to replenish and build its allowance for loan and lease losses and its reserve for OREO losses. Margin compression also contributed to its net loss for 2008. Additionally, during the fourth quarter of 2008, the Company recorded impairment charges of $17.4 million related to goodwill and core deposit intangible assets. Although the Company has attempted to manage its balance sheet to improve net interest margin, in many cases it has had to sacrifice profitability for liquidity, such as offering higher rates to attract time deposits. Buckhead has made efforts to reduce non-interest expense, by way of a reduction in force, salary reductions and other general cost- cutting measures. In late 2008, it also revamped its service charge structure in an effort to boost non-interest income for 2009. During the first quarter of 2009, it has continued to examine non-interest expense and have made further reductions in cost where possible. Interest reversals on non-performing loans and increases to nonearning, foreclosed assets could continue in 2009, and hinder the Company's ability to improve net interest income. Also, increases in the allowance for loan and lease losses and the reserve for OREO losses are likely to continue in 2009, which will negatively impact its ability to generate net income during the year. The Buckhead Community Bank is currently operating under heightened regulatory scrutiny and entered into an informal Memorandum of Understanding dated November 10, 2008. The MOU places certain requirements and restrictions on the Bank including but not limited to: -- The Tier I Leverage Ratio, Tier I Risk Based Ratio, and the Total Risk Based Capital Ratio must be at least 8%, 6% and 10%, respectively. -- Plans must be made for the scheduled reduction of certain "classified assets." -- No cash dividends may be paid without prior regulatory approval. As of December 31, 2008, and the subsequent prior periods, the Company was not in compliance with the requirements of the MOU. Its failure to comply with the informal agreement could result in further action by its banking regulators such as the issuance of a formal written agreement -- i.e. Order to Cease and Desist. As of December 31, 2008, the Company was not "well capitalized" under regulatory guidelines. In light of the requirement to improve capital ratios of the Bank, management is pursuing a number of strategic alternatives. Current market conditions for banking institutions, the overall uncertainty in financial markets and the Company's high level of non-performing assets are potential barriers to the success of these strategies. Failure to adequately address the regulatory concerns may result in actions by the banking regulators, including but not limited to, entry into a formal written agreement. Ongoing failure to adequately address regulatory concerns could ultimately result in the eventual appointment of a receiver or conservator of the Bank's assets. If current adverse market factors continue for a prolonged period of time, new adverse market factors emerge, or the Company is unable to successfully execute its plans or adequately address regulatory concerns in a sufficiently timely manner, it could have a material adverse effect on the Company's business, results of operations and financial position. Buckhead Community Bancorp, Inc., is a bank holding company whose principal activity is the ownership and management of its wholly owned subsidiary, The Buckhead Community Bank. The Bank is a commercial bank headquartered in Atlanta, Fulton County, Georgia. The Bank operates seven branch locations and one loan production office, all of which are located in metropolitan Atlanta, Georgia. The Bank provides a full range of banking services in its primary market areas. As of December 31, 2008, the Company had $909.9 million in total assets and $856.8 million in total liabilities. BUFFETS INC: Moody's Assigns 'Caa1' Corporate Family Rating ----------------------------------------------------------- Moody's Investors Service assigned a Caa1 Corporate Family Rating and Caa1 Probability of Default Rating to Buffets, Inc. In addition, Moody's assigned a B1 (LGD 2, 15%) senior secured rating to the company's $120 million senior secured 1st lien term loan due 2012. Proceeds from the term loans will be used to finance Buffets, Inc.'s exit from Chapter 11 Bankruptcy. The company filed for reorganization under Chapter 11 on January 22, 2008. The outlook is stable. "The ratings consider that although the factors that lead Buffets, Inc. to file for bankruptcy are being addressed during the reorganization process, weak consumer demand trends and intense competition are not likely to abate over the near term." stated Bill Fahy, Senior Analyst. "As a result, the company's operating margins, cash flow, and liquidity will continue to be pressured despite the benefits achieved through a modified capital structure and improved cost structure." The ratings also acknowledge Buffets, Inc.'s significant leverage -- debt/EBITDA is expected to be over 6.5 times upon the emergence of bankruptcy -- and the lack of an external liquidity facility. Under the current reorganization plan, the company will not have a revolving credit facility. Additionally, while EBITA is expected to cover its cash interest, it will not be enough to cover both cash and non-cash interest. The assigned ratings are subject to Buffets, Inc. receiving final approval of its reorganization plan along with a successful emergence from bankruptcy. The ratings are also subject to the receipt and review of final documentation. Buffets, Inc. owns, operates, and franchises steak-buffet style family restaurants. Annual revenues are approximately $1.5 billion. CALIFORNIA STATE: Names L. Chick as $50-Bil Stimulus Fund Watchdog ------------------------------------------------------------------ Jennifer Steinhauer at The New York Times reports that Gov. Arnold Schwarzenegger has appointed Laura Chick as watchdog for the estimated $50 billion in federal stimulus money or state fiscal stabilization fund to be disbursed to cities and organizations in California. According to The NY Times, Ms. Chick is the Los Angeles controller who has caused headaches for city officials and agencies by exposing waste and incompetence. Budget for Underfunded School Cut Jim Carlton at The Wall Street Journal reports that the state of California's budget cuts has included money for the California State University. According to WSJ, the state government has cut more than $500 million in the budget for CSU, which has been underfunded over the past two years. WSJ relates that CSU officials have to abandon the policy of accepting all qualified applicants to schools of their choice in a system that currently has more than 450,000 students. WSJ notes that for the years 2009-10, some 10,000 eligible applicants are being turned away from the schools they wanted to attend. The report says that CSU has also cut courses offered, increasing the number of students in one class and forcing more undergraduates to postpone graduation. CALPINE CORP: To Pursue Buy Back of $7-Bil. Bankr. Exit Loan ------------------------------------------------------------ Emre Peker of Bloomberg reports that Calpine Corp., which came out of bankruptcy in January 2008, plans to seek an amendment to buy back its $7 billion bankruptcy exit loan. According to Bloomberg, during a conference call with analysts on March 31, Chief Financial Officer Zamir Rauf said that Calpine, which borrowed $725 million from its $1 billion revolving line of credit in October, wants to buy back the debt at a discount. An analyst with CreditSights Inc. in New York Andy DeVries wrote in a report that the credit agreement restricts Calpine from offering less than 101 cents on the dollar for the loan, which is trading at 76 cents to 77 cents. The term loan portion, according to the report, which charges Calpine an interest rate of 2.875 percentage points more than the London interbank offered rate, was trading at 80.5 cents to 81.25 cents on the dollar, Standard & Poor's LCD reported, citing people it didn't name. About Calpine Based in San Jose, California, Calpine Corporation (OTC Pink Sheets: CPNLQ) -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company and its affiliates filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2007, the Debtors disclosed total assets of $18,467,000,000, total liabilities not subject to compromise of $11,207,000,000, total liabilities subject to compromise of $15,354,000,000 and stockholders' deficit of $8,102,000,000. On Feb. 3, 2006, two more affiliates, Geysers Power Company, LLC, and Silverado Geothermal Resources, Inc., filed voluntary chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 06-10197 and 06-10198). On Sept. 20, 2007, Santa Rosa Energy Center, LLC, another affiliate, also filed a voluntary chapter 11 petition (Bankr. S.D.N.Y. Case No. 07-12967). On June 20, 2007, the Debtors filed their Chapter 11 Plan and Disclosure Statement. On Aug. 27, 2007, the Debtors filed their Amended Plan and Disclosure Statement. Calpine filed a Second Amended Plan on Sept. 19, 2007 and on Sept. 24, 2007, filed a Third Amended Plan. On Sept. 25, 2007, the Court approved the adequacy of the Debtors' Disclosure Statement and entered a written order on September 26. On Dec. 19, 2007, the Court confirmed the Debtors' Plan. The Amended Plan was deemed effective as of Jan. 31, 2008. (Calpine Bankruptcy News, Issue No. 98; Bankruptcy Creditors' Service, Inc., <http://bankrupt.com/newsstand/>or 215/945-7000). CAPA MANUFACTURING: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: CAPA Manufacturing Corp. 7100 Holladay Tyler Road Glenn Dale, MD 20769 Tel: (301) 352-8800 Fax: (240) 544-4030 Bankruptcy Case No.: 09-15758 Chapter 11 Petition Date: April 2, 2009 Court: District of Maryland (Greenbelt) Judge: Thomas J. Catliota Debtor's Counsel: Christopher William Mahoney, Esq. cmahoney@duanemorris.com Duane Morris LLP 505 9th Street, Suite 1000 Washington, DC 20004-2166 Tel: (202) 776-7867 Estimated Assets: Less than $50,000 Estimated Debts: $10 million to $50 million The Debtor does not have any creditors who are insiders. The petition was signed by Harley A. Hughes, president chief executive officer. CELL THERAPEUTICS: Meets NASDAQ Requirements on Continued Trading ----------------------------------------------------------------- Cell Therapeutics, Inc. (CTI) (Nasdaq and MTA: CTIC) on April 2, 2009, received notice from The NASDAQ Stock Market indicating that the company has evidenced full compliance with all applicable requirements for continued listing on The NASDAQ Capital Market. The notice followed CTI's compliance with the minimum $35 million market value of listed securities requirement for a minimum of 10 consecutive trading days, as required by Marketplace Rule 4310(c)(3). As of April 1, 2009, the company's market capitalization was $113,287,573. "We are pleased to have regained compliance with The NASDAQ Capital Market listing standards as the result of the increase in our share price, which we believe is attributable to the progress we continue to make in our drug development programs," said James A. Bianco, M.D., CEO of Cell Therapeutics. "We look forward to adding greater shareholder value through our submission of a New Drug Application (NDA) for pixantrone for aggressive relapse non- Hodgkin's lymphoma in the second quarter of 2009 and potential approval this year, in addition to other strategic business initiatives we are currently pursuing." As disclosed on September 6, 2008, and October 10, 2008, the company was previously notified by NASDAQ regarding its non- compliance with the $50 million market value of listed securities requirement for continued listing on The NASDAQ Global Market. At the company's request, on January 6, 2009, the NASDAQ Listing Qualifications Panel determined to transfer the listing of the company's common stock from The NASDAQ Global Market to The NASDAQ Capital Market, subject to the company demonstrating compliance with all applicable requirements for continued listing on The NASDAQ Capital Market, which deadline was extended to April 6, 2009. The matter is now closed. About Cell Therapeutics Headquartered in Seattle, Cell Therapeutics Inc. -- http://www.CellTherapeutics.com/-- is a biopharmaceutical company committed to developing an integrated portfolio of oncology products aimed at making cancer more treatable. Going Concern Doubt Stonefield Josephson Inc. in Los Angeles, California, expressed substantial doubt about Cell Therapeutics' ability to continue as a going concern after auditing company's financial statements for the year ended Dec. 31, 2007. The auditing firm reported that the Company has substantial monetary liabilities in excess of monetary assets as of Dec. 31, 2007, including approximately $19.8 million of convertible subordinated notes and senior subordinated notes which mature in June 2008. As of December 31, 2008, the Company had $64.2 million in total assets and $187.9 million in total liabilities, resulting in $132.0 million in shareholders' deficit. CHARLES SILLER: Case Summary & 17 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Charles W. Siller 1229 Whyler Road Yuba City, CA 95991 Bankruptcy Case No.: 09-26168 Chapter 11 Petition Date: April 2, 2009 Court: Eastern District of California (Sacramento) Judge: Michael S. McManus Debtor's Counsel: Randy Michelson, Esq. Michelson Law Group 150 Spear St., #1600 San Francisco, CA 94105 Tel: (415) 393-2370 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Cotchett, Pitre & McArty Attorney Fees $118,000,000 840 Malcome Road Burlingame, CA 94010 Tel: (650) 697-6000 Neal McArthur Siller Contract $3,000,000 710 No. George Washington Blvd Yuba City, CA 95993 Tel: (530) 682-7819 Spiller & McProud Attorney Fees $2,500,000 505 Coyote Neveda City, CA 95959 Tel: (530) 265-5831 Michael Barrette Attorney Fees $1,500,000 990 Klamath Lane Yuba City, CA 95993 Tel: (530) 674-5996 Randy Thomas Attorney Fees $1,000,000 Attorney At Law 18826 N. Lower Sacramento Road, Ste G Wood Bridge, CA 95258 Tel: (209) 369-2755 Hauser & Mouzes, PC Attorney Fees $1,000,000 18826 N. Lower Sacramento Rd. Wood Bridge, CA 95258 Tel: (209) 368-1368 Francis (Bud) Williamson Attorney Fees $250,000 PG&E Trade Debt $3,000 Sutter County Property Tax $350 Blue Cross Insurance $300 Department of Motor Vehicle Trade Debt $300 David C. Behr, CPA Trade Debt Unknown Thomas Friedberg Attorney Fees Unknown Terrence Keely, Esq. Attorney Fees Unknown Gregory Goth, Esq. Attorney Fees Unknown George S. Wass, Esq. Attorney Fees Unknown CHILDREN'S MUSEUM: Will File for Chapter 7 Bankruptcy Protection ---------------------------------------------------------------- Rick Orlov at LA Daily News reports that The Children's Museum of Los Angeles will file for Chapter 7 bankruptcy protection due to recession, weak public support, and funding problems. LA Daily relates that The Children's Museum board of directors surrendered to the impossibility of raising enough money to repay loans and operate the museum. The Children's Museum Executive Director Cecilia Aguilera Glassman, hired two years ago to raise money for the $52 million, 57,000-square foot facility planned for the Hansen Dam Recreation Area, said in March 2009 that the museum would need at least $22 million to open as scheduled in 2010, according to LA Daily. Sherman Oaks businessman Bruce Friedman, says LA Daily, had pledged $10 million to help revive the project, but he had been charged with securities fraud, and all of his financial assets were frozen. "Since then, we were not able to raise any money," the report quoted Ms. Glassman as saying. The Children's Museum is located in the San Fernando Valley in Los Angeles, California. CHRYSLER LLC: Lenders Back Plan to Join Supplier Aid Program ------------------------------------------------------------ Chrysler LLC's secured lenders agreed to let the Company participate in a $1.5 billion government aid program for suppliers, Mike Ramsey at Bloomberg reports, citing a person familiar with the matter. The source said that this means that the banks aren't gearing up for Chrysler's liquidation, as the program would require the Company to spend as much as $75 million of its cash reserve, Bloomberg relates. Bloomberg, citing a person familiar with the matter, states that Chrysler has been allocated $1.5 billion of a $5 billion supplier-aid fund that the U.S. Treasury created. According to Bloomberg, partsmakers were having trouble securing loans to build parts due to the risk that a client might go into bankruptcy and fail to pay them. Bloomberg says that the program is designed to ensure payment for parts made for U.S. automakers. The report states that the program guarantees payments to autoparts makers who supply Chrysler and General Motors Corp. for a fee of as much as 3%. According to the report, suppliers usually get paid 45 to 60 days after shipping parts to an automaker. Bloomberg relates that Chrysler had made no progress in arranging a debt-for-equity swap with its secured lenders. Chrysler CEO Robert Nardelli told CNBC in March that Treasury would take the lead on the talks. Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. Liquidity Crunch Chrysler has been trying to keep itself afloat. As reported by the Troubled Company Reporter on March 20, 2009, its Chief Financial Officer Ron Kolka, has said even if Chrysler gets additional government loans, it could face another cash shortage in July when revenue dries up as the company shuts down its factories for two weeks to change from one model year to the next. The Company's CFO has said Chrysler planned for the $4 billion federal government bailout it received Jan. 2 to last through March 31. The Company is talking with the Obama administration's autos task force about getting another $5 billion, and faces a March 31 deadline to complete its plan to show how it can become viable and repay the loans. General Motors Corp. and Chrysler admitted in their viability plans submitted to the U.S. Treasury on February 17 that they considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of the Chrysler viability plan is available at: http://ResearchArchives.com/t/s?39a3 A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 * * * As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. CHRYSLER LLC: To Get Continue Getting Parts From Transcast ---------------------------------------------------------- On April 3, 2009, the Ontario Courts ordered Transcast Precision Inc. to supply sufficient parts to Chrysler, GM, Magna and Gates for 14 days of production. Additionally, another proceeding is required within that two-week period to settle matters regarding ongoing price and supply. "If the North American auto industry intends to rebuild itself and emerge from our current recession, it must defend the rights of all business owners -- especially the auto parts manufacturers who are being economically exploited," said Dean Topolinski, President and Director of Transcast Precision Inc. "We are hopeful that the courts will recognize the established pricing and negotiations tactics that exist in market -- ones predisposed to the unfair treatment of smaller auto parts manufacturers and suppliers that rely on relatively few, but very large customers." "Transcast has regrettably been portrayed by Chrysler, et al., as a form of corporate raider seeking to take advantage of the OEMs in the current economic maelstrom in which the automotive industry finds itself. Transcast has had no opportunity to present its side of this story in the proceedings, which were commenced without notice to Transcast and while senior management were out of Canada." Transcast said that on March 30, it initiated contact with Chrysler to sell existing company assets and to enter into an agreement that would permit the long-term viability of the new company. While the correspondence indicated that inventory would need to be purchased above previous prices, the increase was required to help offset a number of transition costs including legal bills and unpaid severance from the previous supplier. This price increase was for a five-day term only. The longer-term agreement was to be negotiated during this interim phase. Transcast said in its statement that notwithstanding its offer to negotiate, Chrysler, Magna, Gates, and GM decided not to engage in discussions to come to a commercial solution to keep the plant open. Rather, they proceeded without notice to take Transcast to court to seek interim relief for the return of tooling and parts. When Transcast discovered the ex parte motions, Transcast appeared in court and vigorously opposed the position presented by Chrysler, Magna, Gates and GM. Transcast will continue to argue its position in court by presenting the facts of the case, which has yet to be finally argued. Any orders made by the Court at this stage are interim only. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. Liquidity Crunch Chrysler has been trying to keep itself afloat. As reported by the Troubled Company Reporter on March 20, 2009, its Chief Financial Officer Ron Kolka, has said even if Chrysler gets additional government loans, it could face another cash shortage in July when revenue dries up as the company shuts down its factories for two weeks to change from one model year to the next. The Company's CFO has said Chrysler planned for the $4 billion federal government bailout it received Jan. 2 to last through March 31. The Company is talking with the Obama administration's autos task force about getting another $5 billion, and faces a March 31 deadline to complete its plan to show how it can become viable and repay the loans. General Motors Corp. and Chrysler admitted in their viability plans submitted to the U.S. Treasury on February 17 that they considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of the Chrysler viability plan is available at: http://ResearchArchives.com/t/s?39a3 A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 * * * As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. 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, Dominion Bond Rating Service 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. CITIGROUP INC: Consumer Business Chief to Retire After 30 Years --------------------------------------------------------------- Dow Jones Newswires reports that Citigroup Inc. said that Citi Holdings' consumer business chief, Steve Freiberg, will retire after almost three decades with the company. Dow Jones relates that Mr. was appointed in January 2009 as leader of the consumer business in Citi Holdings, including mortgage servicing and private-label credit cards. According to Dow Jones, Mr. Freiberg had been leading Citigroup's credit-card operations since 1980. Citigroup, says the report, consolidated in March 2008 its U.S. and international credit-card businesses into a single global business led by Mr. Freiberg. Joe Bel Bruno at The Wall Street Journal states that some discount-brokerage firms report a surge of individual, or retail, investors purchasing Citigroup shares during the past five months, as the Company's stock-price drop. WSJ notes that at online- brokerage firm TradeKing, about 9.3 million shares of Citigroup traded in March 2009, compared with 3.4 million in February 2009. Citing analysts, WSJ states that analysts' average price target for the Citigroup stock is $3.53, despite the Company's recent losses and worries about the impact of the recession. According to WSJ, Fox-Pitt Kelton analyst David Trone said that he expects Citigroup shares "to gravitate back up toward the $3 mark once the emotion of the moment passes." Coughlin Stoia Files Class Action Suit Against Citigroup Coughlin Stoia Geller Rudman & Robbins LLP said that a class action has been commenced in the United States District Court for the Southern District of New York on behalf of all persons who acquired depositary shares of Citigroup's 8.50% Non-Cumulative Preferred Stock, Series F, pursuant and/or traceable to a false and misleading registration statement and prospectus issued in connection with the Company's May 2008 initial public offering of the Securities. The complaint charges Citigroup, certain of its officers and directors, the underwriters of the Offering, and the Company's auditor with violations of the Securities Act of 1933. The complaint alleges that the defendants consummated the Offering pursuant to the false and misleading Registration Statement and Prospectus, selling 81.6 million shares of the Securities at $25 per share, for proceeds of over $2 billion. The Registration Statement incorporated Citigroup's financial results for 2007 and the first quarter of 2008. Citigroup ultimately disclosed huge multi-billion dollar writedowns associated with its exposure to subprime mortgages, related bonds called collateralized debt obligations, and commercial real estate loans and investments, as well as loans to companies with low credit ratings, causing the price of the Securities to decline. The true facts which were omitted from the Registration Statement were: (a) the Company's CDOs were impaired to a greater extent than the Company had disclosed; (b) the Company's commercial real estate loans were impaired to a greater extent than the Company had disclosed; (c) the Company's investments were impaired to a greater extent than the Company had disclosed; (d) the Company's loans to companies with low credit ratings were impaired to a greater extent than the Company had disclosed; (e) the assets in the Company's structured investment vehicles were impaired to a greater extent than the Company had disclosed; (f) defendants failed to properly record losses for impaired assets; (g) the Company's internal controls were inadequate to prevent the Company from improperly reporting its impaired assets; and (h) the Company's capital base was not adequate in light of the significant deterioration in the subprime market. Plaintiff seeks to recover damages on behalf of all persons who acquired the Securities of Citigroup pursuant and/or traceable to the Registration Statement issued in connection with the Company's May 2008 Offering. The plaintiff is represented by Coughlin Stoia, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud. About Coughlin Stoia Coughlin Stoia Geller Rudman & Robbins LLP -- http://www.csgrr.com -- a 190-lawyer firm with offices in San Diego, San Francisco, Los Angeles, New York, Boca Raton, Washington, D.C., Philadelphia and Atlanta, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations. About Citigroup Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. Citi had $2.0 trillion in total assets on $1.9 trillion in total liabilities as of Sept. 30, 2008. As reported in the Troubled Company Reporter on Nov. 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve will backstop residual risk in the asset pool through a non-recourse loan. COACHMEN INDUSTRIES: Stock Suspended from NYSE Trading ------------------------------------------------------ Elkhart, Indiana-based Coachmen Industries, Inc., received a written notice from NYSE Regulation, Inc., that trading of the Company's common stock on the New York Stock Exchange would be suspended before the NYSE opens on April 9, 2009, because it did not maintain an average global market capitalization of at least $15.0 million over a consecutive 30 trading-day period. "Given the broad declines in value in the overall market, and widespread questions about recovery of the housing industry, and because of continued downward pressure on our stock from short sellers, this development is not entirely unexpected," said Rick Lavers, CEO and President. "The Company is considering its options, but regardless, our shareholders should understand that if we are delisted on the New York Stock Exchange, Coachmen's shares will still be publicly traded, just in a different venue. Delisting may actually help us improve our bottom line performance by reducing some of our overhead costs." The Company has a 10-day period in which to file an appeal of NYSE Regulation's decision. The Company may elect to file an appeal prior to the effective date of the trading suspension. NYSE Regulation has informed the Company that application to the Securities and Exchange Commission to delist the Company's common stock is pending the completion of all applicable procedures, including any appeals by the Company of NYSE Regulation's decision. If it elects not to appeal the NYSE's decision, the Company will work with potential market makers to apply for registration and quotation of its common stock on either the OTCQX or the OTC Bulletin Board. Any transition to the over-the-counter markets would not affect the Company's business operations and would not change its obligations to file periodic and certain other reports with the Securities and Exchange Commission under applicable federal securities laws. Going Concern Doubt In March, Coachmen disclosed that its independent public accounting firm -- Ernst & Young LLP -- has said despite the Company's sale of the assets related to its RV Segment, the Company's recurring net losses and lack of current liquidity raise substantial doubt about its ability to continue as a going concern. Coachmen said its ability to continue as a going concern is highly dependent upon its ability to obtain financing or other sources of capital. The Company is currently working with a bridge loan lender to put in place a $6 million bridge loan. The final terms and timing of the closing of the loan are dependent upon a number of factors, including the lender completing their due diligence, determination of covenants, security and other terms and documentation of the loan agreement. The Company is also currently exploring various opportunities to monetize a portion of the expected recovery on certain litigation claims. The Company has received a favorable verdict against Crane Composites, Inc. f/k/a Kemlite for breach of contract and multiple warranty claims arising from the sale of defective sidewall material to Coachmen subsidiaries. All of the counts alleged in the original complaint were found in favor of the Company. The remaining phase of the trial will determine the amount of damages payable on this liability judgment. The Company has asserted claims for warranty related expense in excess of $19 million and is seeking to recover additional damages for lost profits, lost market share and the sale of the RV business. It is anticipated that the final phase of the trial will be conducted in the latter part of 2009. There can be no assurance about the amount or timing of any recovery that the Company may realize from this litigation, nor is there any assurance that the Company will be able to monetize a portion of the potential settlement prior to the final phase of the trial. On February 10, 2009, the Company's Board of Directors authorized and recommended, subject to shareholder approval, an amendment to the Company's Articles of Incorporation, as amended, to authorize the issuance of 10,000,000 shares of preferred stock. The Indiana Business Corporation Law requires approval of the Company's shareholders to adopt the proposed amendment. To be approved requires that more shares are voted in favor of the amendment than shares are voted against. If shareholders approve and authorize this amendment, the Company intends to file Articles of Amendment to authorize the issuance of 10,000,000 shares of preferred stock promptly following its annual meeting on April 30, 2009. The amendment will become effective upon filing the prescribed Articles of Amendment with the Indiana Secretary of State. The Company is also in discussions with a number of third parties regarding various other opportunities to obtain financing or raise equity capital. There are no assurances that the Company's efforts will be successful or the timing or terms of any such opportunities. "The success of our Viability Plan is dependent upon obtaining financing or additional capital, and without such an infusion we may not be able to continue as a going concern and could potentially be forced to seek relief through a filing under the U.S. Bankruptcy Code," Coachmen said. On December 26, 2008, the Company completed the sale of substantially all of the assets of the Company's RV Segment, consisting of its recreational vehicle manufacturing and sales business, to Forest River, Inc. The closing consideration paid was roughly $40.6 million. In February 2009, Coachmen entered into an agreement with Forest River with respect to certain financial obligations under the parties' Asset Purchase Agreement of November 20, 2008. Forest River agreed to accept a fully collateralized short term note from the Company in the original principal amount of $2,719,454.29 that allowed the Company to pay its obligations over time. As of March 23, 2009, the Company had paid the Note in full. On March 23, 2009, Coachmen and Robert J. Deputy, one of the Company's directors, entered into an agreement for a $2.3 million short-term note from the Company in exchange for cash loaned to the Company by Mr. Deputy. The note is collateralized by two properties, bears interest at a rate of 10% per annum, and is on terms more favorable to the Company than those offered by alternative sources of financing in commercial markets. The note may be called by the note holder at any time on or after April 20, 2009. The Company intends to pay this note when it obtains alternative financing arrangements. Coachmen temporarily closed a plant in Rutherfordton, North Carolina early in March. The Company plans to reopen the facility when the market recovers and demand is sufficient. "[T]iming depends on market conditions," the Company said. About Coachmen Industries Coachmen Industries, Inc. is one of America's premier systems- built construction companies under the ALL AMERICAN HOMES(R) and MOD-U-KRAF(R) brands, as well as a manufacturer of specialty vehicles. Coachmen Industries, Inc. is a publicly held company with stock listed on the New York Stock Exchange (NYSE) under the ticker COA. Coachmen had $107.4 million in total assets and $54.7 million in total liabilities as of December 31, 2008. The Company posted a net loss of $69.0 million in 2008 compared to net loss of $38.7 million in 2007, and $31.8 million in 2006. CONSECO INC: Lacks Liquidity to Pay Off Debt in Case of Default --------------------------------------------------------------- Conseco Inc. said in a regulatory filing with the Securities and Exchange Commission that the covenants under its $911.8 million credit facility with Bank of America N.A. and a consortium of lenders, as amended, place significant restrictions on the manner in which the Company may operate its business. Conseco acknowledged its ability to meet the financial covenants may be affected by events beyond its control. "If we default under any of these covenants, the lenders could declare all outstanding borrowings, accrued interest and fees to be immediately due and payable. If the lenders under our Second Amended Credit Facility would elect to accelerate the amounts due, the holders of our Debentures and Senior Note could elect to take similar action with respect to those debts. If that were to occur, we would not have sufficient liquidity to repay our indebtedness," Conseco said. Pursuant to the Second Amended Credit Facility, Conseco agreed to a number of covenants and other provisions that restrict its ability to borrow money and pursue some operating activities without the prior consent of the lenders. Conseco also agreed to meet or maintain various financial ratios and balances. The Second Amended Credit Facility prohibits or restricts, among other things (i) the payment of cash dividends on the Company's common stock; (ii) the repurchase of the Company's common stock; (iii) the issuance of additional debt or capital stock; (iv) liens; (v) certain asset dispositions; (vi) affiliate transactions; (vii) certain investment activities; (viii) change in business; and (ix) prepayment of indebtedness -- other than the Second Amended Credit Facility. The Second Amended Credit Facility also requires that the Company's audited consolidated financial statements be accompanied by an opinion, from a nationally-recognized independent public accounting firm, stating that the audited consolidated financial statements present fairly, in all material respects, the financial position and results of operations of the Company in conformity with GAAP for the periods indicated. The opinion will not include an explanatory paragraph regarding the Company's ability to continue as a going concern or similar qualification. Conseco said it was in compliance with the provisions of the Second Amended Credit Facility as of December 31, 2008. Also, pursuant to the Second Amended Credit Facility, as long as the debt to total capitalization ratio is greater than 20% or certain insurance subsidiaries have financial strength ratings of less than A- from A.M. Best, the Company is required to make mandatory prepayments with all or a portion of the proceeds from these transactions or events including: (i) the issuance of certain indebtedness; (ii) certain equity issuances; (iii) certain asset sales or casualty events; and (iv) excess cash flows as defined in the Second Amended Credit Facility -- the first payment, of roughly $1.3 million is expected to be paid in March 2009. The Company may make optional prepayments at any time in minimum amounts of $3.0 million or any multiple of $1.0 million in excess thereof. At December 31, 2008, there was $55.0 million outstanding under the revolving facility portion of the Second Amended Credit Facility. Last week, Conseco reported results for the fourth quarter and year-end 2008. Conseco posted net loss of $451.8 million for the three months ended December 31, 2008, on total revenues of $1.04 billion. Conseco posted a net loss of $1.12 billion for year 2008 on $4.18 billion in total revenues. As of December 31, 2008, Conseco had $28.7 billion in total assets and $27.1 billion in total liabilities. During 2008, Conseco made scheduled principal payments totaling $8.7 million on its Second Amended Credit Facility. The scheduled repayment of its direct corporate obligations -- including payments required under the Second Amended Credit Facility, the revolving credit facility, the Senior Note and the Debentures -- is: 2009 $90,000,000 2010 326,800,000 2011 33,700,000 2012 33,800,000 2013 845,500,000 -------------- $1,329,800,000 ============== "We are pleased to report our final results for the fourth quarter 2008 today, along with the successful renegotiation of our credit facility with our lenders," Conseco CEO Jim Prieur said. "Renegotiating our debt gives us greater financial flexibility during times of market volatility, as we focus on the continued growth of our core insurance businesses." A full-text copy of Conseco's 2008 Annual Report on Form 10-K is available at no charge at http://ResearchArchives.com/t/s?3b17 A full-text copy of Conseco's Q4 Financial and Operating Results is available at no charge at http://ResearchArchives.com/t/s?3b17 On March 31, 2009, Conseco issued additional financial information for the quarter and year ended December 31, 2008. A full-text copy of the Fourth Quarter 2008 investor supplement is available at no charge at http://ResearchArchives.com/t/s?3b18 About Conseco Inc. Headquartered in Carmel, Indiana, Conseco Inc. (NYSE: CNO) -- http://www.conseco.com/-- is the holding company for a group of insurance companies operating throughout the United States that develop, market and administer supplemental health insurance, annuity, individual life insurance and other insurance products. The company became the successor to Conseco Inc. (Old Conseco), in connection with its bankruptcy reorganization. CNO focuses on serving the senior and middle-income markets. The company sells its products through three distribution channels: career agents, professional independent producers and direct marketing. CNO operates through its segments, which includes Bankers Life, Conseco Insurance Group, Colonial Penn, other business in run-off and corporate operations. * * * As reported in the Troubled Company Reporter on Jan. 6, 2009, Fitch Ratings has downgraded the ratings assigned to Conseco Inc. The rating outlook on Conseco Inc. and its subsidiaries remains negative. Fitch downgraded these ratings: (i) issuer default rating to 'BB-' from 'BB'; (ii) senior secured bank credit facility to 'BB-' from 'BB+'; and (iii) senior unsecured debt to 'B' from 'BB-'. CPG INTERNATIONAL: S&P Downgrades Issue-Level Ratings to 'B-' ------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its issue- level ratings on CPG International Inc.'s senior unsecured floating-rate notes due 2012 and senior unsecured fixed rate notes due 2013. The issue-level ratings were lowered to 'B-' (the same as the corporate credit rating) from 'B' with a recovery rating of '4', which indicates S&P's expectation of average (30%-50%) recovery in the event of a default. The outlook is negative. "The downgrade reflects CPG International's weakening credit metrics and S&P's expectation that the company's building products business will remain under difficult operating conditions in the near term due to the depressed residential end-markets and weakening commercial construction activity," said Standard & Poor's credit analyst Tobias Crabtree. As a result, S&P expects the negative effects on CPG's operating performance to continue, thus weakening its financial profile to a level S&P would consider consistent with a lower rating. Specifically, S&P expects adjusted total debt to EBITDA to remain above 6.5x throughout 2009. Still, liquidity should be adequate. The ratings on CPG, a Scranton, Pennsylvania-based manufacturer of engineered building products, reflect the company's cyclical and seasonal niche markets, exposure to volatile raw material costs, competition from substitute trim board and decking products, and current challenging operating conditions. EXPRESS ENERGY: S&P Downgrades Corporate Credit Rating to 'CCC' --------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Express Energy Services Operating L.P. to 'CCC' from 'CCC+'. The outlook is negative. At the same time, S&P lowered the issue-level rating on the company's senior secured debt to 'CCC' from 'CCC+' (the same as the corporate credit rating), and left the recovery rating unchanged at '3', indicating meaningful (50% to 70%) recovery in the event of a payment default. "The downgrade primarily reflects the continued rapid deterioration in the North American oilfield service industry," said Standard & Poor's credit analyst Amy Eddy. The company's largest segment, drilling support services, is directly correlated to the U.S. land rig count, which has declined by more than 45% from its peak in September 2008. Although Express has implemented several cost reduction initiatives, and drastically curtailed capital spending, the company's EBITDA in January 2009 declined by more than 40% compared to January 2008. This deterioration has resulted in a precipitous drop in cash flow, which could make it challenging for the company to make required debt service payments of $50 million in 2009, including $24 million in principal payments and the remainder in interest expense. CRUSADER ENERGY: Bankruptcy Filing Cues Default Under Loan Pacts ---------------------------------------------------------------- Crusader Energy Group, Inc., says the bankruptcy filing of the company and its affiliates last week constitutes an event of default under both the Second Amended and Restated Credit Agreement, dated June 26, 2008, among the Company, Union Bank of California, N.A., the administrative agent and issuing lender, and the lenders party thereto, as amended, and the Second Lien Credit Agreement, dated July 17, 2008, among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto. The events of default result in all amounts outstanding under the Credit Facilities being immediately due and payable. As of March 30, 2009, the Company had approximately $30 million outstanding under the First Lien Credit Facility and approximately $250 million outstanding under the Second Lien Credit Facility. The ability of the lenders to enforce their rights under the Credit Facilities is subject to the applicable provisions of the Bankruptcy Code. As reported in yesterday's Troubled Company Reporter, Crusader has asked the U.S. Bankruptcy Court for the Northern District of Texas for authority to: a) use the cash collateral of the Union Bank of California, N.A., et al., and JPMorgan Chase Bank, N.A., et al.; b) grant adequate protection to the prepetition lenders and the holders of trade liens; and c) make payments to royalty and working interest owners on account of prepetition and postpetition sales of oil and gas. Crusader also said that effective as of March 29, 2009, its board of directors adopted a Second Amendment to the Second Amended and Restated Bylaws of the Company, as amended. The Second Amendment amends Article III, Section 3.8 of the Bylaws to decrease the time period by which advance written notice of each meeting of the Board must be received by the members of the Board from 48 hours prior to each meeting to 2 hours prior to each meeting. About Crusader Energy Group Inc. Based in Oklahoma City, Oklahoma, Crusader Energy Group Inc. -- http://www.ir.crusaderenergy.com/-- explore, develop and acquire of oil and gas properties, primarily in the Anadarko Basin, Williston Basin, Permian Basin, and Fort Worth Basin in the United States. The Debtor and its debtor-affiliates filed for Chapter 11 protection on March 30, 2009 (Bankr. N. D. Tex. Lead Case No. 09-31797) Beth Lloyd, Esq., Richard H. London, Esq., and William Louis Wallander, Esq., at Vinson & Elkins, LLP, represent the Debtors in their restructuring efforts. The Debtors' financial condition as of September 30, 2008, showed total assets of $749,978,331 and total debts of $325,839,980. CRUSADER ENERGY: Wants Jefferies & Company as Financial Advisors ---------------------------------------------------------------- Crusader Energy Group Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas for authority to employ Jefferies & Company, Inc., as financial advisors. Jefferies will provide: a) the valuation of the Debtors in connection with a refinancing, restructuring, or sale pursuant to the Bankruptcy Code and acting as the exclusive financial advisor of the Debtors; b) assistance in the analysis of the Debtors' assets and liabilities; and c) other services. Tero Janne, managing director of Jefferies, tells the Court that the firm will be paid: a) a monthly fee equal to $125,000 per month for the first three months and $150,000 per month thereafter until the termination of the engagement. 50% of the Monthly Fees in excess of $825,000 will be credited against the Debt Restructuring and M&A Transaction Fees. b) Termination Fee -- upon any termination of the engagement by the Debtors, if the aggregate amount of monthly fees paid to Jefferies is less than $375,000, the Debtors will pay Jefferies an amount equal to $375,000 over the aggregate amount of monthly fees paid by the Debtors prior to termination. c) Debt Restructuring Fee -- upon consummation of a debt restructuring, including the effective date of a confirmed plan, a fee equal to 1% of the principal amount of indebtedness of the Debtors restructured, plus any accrued interest thereon. d) M&A Transaction Fee -- upon the consummation of each M&A Transaction, a fee equal to the greater of (i) 1% of the Transaction Value or (ii) $2 million. e) Debt Restructuring and M&A Fee -- In the event a transaction is both a Debt Restructuring Transaction and an M&A Transaction, a fee equal to the greater of the Debt Restructuring and M&A Transaction Fees, but Jefferies will not be entitled to both fees. f) Capital Raise Fee -- upon the consummation of any financing transaction, a fee equal to (i) 5.5% of the proceeds, plus either (ii) in the case of secured debt, 1.5% of the greater of the aggregate principle or aggregate availability of debt raised; or (iii) in the case of other debt, 2.5% of the greater of the aggregate principle or aggregate availability of the debt raised. If the Debtors execute a term sheet or definitive documentation with any of the parties within six weeks of the effective date of the engagement, 50% of the Capital Raise Fee is due at the time of execution and the remainder is due on consummation of the transaction. g) Opinion Fee -- upon the delivery of an Opinion, a fee equal to $1 million. 50% of the Opinion Fee will be credited against the M&A Transaction Fee for which the opinion is delivered. h) Break-Up Fee -- Jefferies is entitled to recover 25% of any Break-Up Fee received by the Debtors in connection with any M&A Transaction. Mr. Janne assures the Court that Jefferies is a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code. About Crusader Energy Based in Oklahoma City, Oklahoma, Crusader Energy Group Inc. -- http://www.ir.crusaderenergy.com/-- explores, develops and acquires oil and gas properties, primarily in the Anadarko Basin, Williston Basin, Permian Basin, and Fort Worth Basin in the United States. The Debtor and its debtor-affiliates filed for Chapter 11 protection on March 30, 2009 (Bankr. N. D. Tex. Lead Case No. 09- 31797). Beth Lloyd, Esq., Richard H. London, Esq. and William Louis Wallander, Esq. at Vinson & Elkins, LLP, represent the Debtors in their restructuring efforts. The Debtors' financial condition as of September 30, 2008, showed total assets of $749,978,331 and total debts of $325,839,980. DIPLOMAT CONSTRUCTION: Case Summary & 4 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Diplomat Construction, Inc. dba Red Roof Inc - Airport 2100 Parklake Drive Atlanta, GA 30345 Bankruptcy Case No.: 09-68613 Chapter 11 Petition Date: April 3, 2009 Court: Northern District of Georgia (Atlanta) Judge: Mary Grace Diehl Debtor's Counsel: Joseph H. Turner, Jr. Esq. Joseph H. Turner, Jr., PC 6139 Oakbrook Parkway, Suite D Norcross, GA 30093 Tel: (770) 480-1939 Total Assets: $31,322,625 Total Debts: $11,330,505 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ R.C. Patel shareholder loan $2,290,771 2100 Parklake Drive Atlanta, GA 30345 Fulton County Tax 2008 real $105,073 Commissioner property tax PO Box 1050542 Atlanta, GA 30348 Red Roof Inn franchise svcs $89,373 Franchise LLC 605 South Front St. Columbus, OH 43215 City of Hapeville 2008 real $71,013 property taxes The petition was signed by R.C. Patel, chief executive officer. DM INDUSTRIES: Comerica Loan Okayed on Interim; Sets Quick Sale --------------------------------------------------------------- Hon. Laurel M. Isicoff of the U.S. Bankruptcy Court for the Southern District of Florida authorized, on an interim basis, DM Industries, Ltd., to obtain postpetition financing from Comerica Bank. The Debtor said that, as a result of its financial condition, it was unable to obtain an alternative source of cash or credit either in the form of unsecured credit than those proposed by Comerica Bank. Comerica has required the Debtor to complete a sale of all of its assets in two months. The sale process is subject to these milestones: (1) By no later than April 10, 2009, Debtor will retain an investment banker satisfactory to Comerica; (2) By May 29, 2009, Debtor will execute a purchase agreement with the stalking horse bidder, in a form and on terms acceptable to Comerica; (3) By May 29, 2009, Debtor will file a motion with this Court to approve the sale to the stalking horse bidder, subject to higher and better bids; (4) By June 29, 2009, Debtor will conduct an auction; and (5) Subject to the Court's calendar, by June 30, 2009, Debtor will obtain an order from this Court approving the sale The Debtor and Comerica are parties to a Loan Agreement dated April 30, 1998, as amended, pursuant to which the Debtor is indebted (i) based on advances under a revolving credit note dated March 1, 2005, as amended, under which a principal of $8,682,567 was outstanding as of the petition date, plus accrued and accruing interest, costs, fees, and expenses, and (ii) under a fixed rate installment note dated Oct. 20, 2005, under which principal of $1,872,303 was outstanding as of the petition date, plus accrued and accruing interest, costs, fees, and expenses. Central Farms, Ltd., an affiliate of the Debtor, is indebted to Comerica under a fixed rate installment note dated Dec. 14, 2006, under which principal of $1,709,969 was outstanding as of the petition date, plus accrued and accruing interest, costs, fees, and expenses. The Debtor and its general partner Eric Dormoy guaranteed the Central Farms Note under Guaranties dated Dec. 14, 2006. The liabilities owed by the Debtor to Comerica Bank in connection with the prepetition notes, the Central Farms Guaranties, and the other Loan Documents, including without limitation, interest, costs, fees, any letter of credit reimbursement obligations, any obligations of the Debtor under guaranties of debt for Central Farms, Ltd., and expenses, are identified as prepetition indebtedness. The Guarantors guaranteed the prepetition indebtedness under Guaranties dated Oct. 1, 2002, as amended from time to time, and Oct. 24, 2007. Comerica Bank acknowledges that notwithstanding the Guaranties, Mr. Dormoy's guaranty is limited to $3,500,000 plus interest on that amount and all costs incurred by the Bank in collection efforts against the Debtor or Eric Dormoy, including, without limit, Comerica's attorneys' fees. The prepetition indebtedness is secured by substantially all of the Debtor's assets, including without limitation, now owned or hereafter acquired. The DIP Credit Facility will be extended by Comerica subject to these terms and conditions: a. The postpetition financing will be governed by the prepetition loan documents, subject to the modifications. b. Comerica will make postpetition advances, provided that the aggregate principal amount of the requested postpetition advance and all other postpetition advances outstanding as of the date, plus the outstanding aggregate principal amount of the Prepetition Revolving Note will not exceed the lesser of (i) 10,000,000 which includes Debtor's or Guarantors' obligations under any outstanding letters of credit issued by the Bank on behalf of the Debtor or any one of the Guarantors or (ii) the "advance formula". c. Under no circumstances will there be any further advances under the prepetition revolving note, whether in the form of an advance of funds or the issuance of a letter of credit. Bank is not under any obligation to issue any letters of credit for the account of the Debtor or Guarantors. d. The Debtor may use the proceeds of the postpetition advances only to fund payment of expenses as and when budgeted, with a variance of up to 10% with respect to Operating Disbursements, but with no variance on Restructuring Expenses, provided the aggregate amount of expenditures does not exceed the aggregate budget. e. The Debtor's ability to request advances under the Postpetition Note will terminate on the earlier of (i) June 30, 2009, or (ii) upon a default by Debtor under the Postpetition Note, unless the Termination Date is extended by written stipulation of Comerica and the Debtor. f. The Debtor will be obligated to pay to Comerica a $100,000 facility fee. The facility fee is fully earned by Bank and is non-refundable. g. All cash and cash equivalents will be paid to Comerica at the existing cash collateral account at the bank and will be applied to the prepetition indebtedness until paid in full, and thereafter to the Postpetition Note. The Debtor and Guarantors ratify and confirm all of the provisions of the prepetition loan documents. h. The Debtor will continue to employ Alan Goldberg, or other consulting firm acceptable to Comerica, as the Debtor's chief restructuring officer, to assist Debtor with its planned restructuring. i. Bank's Collateral Analysis Department will monitor the Debtor at its expense. The Debtor will pay a fee for CAD monitoring of $1,000 per month, in advance on the first day of each month. j. The Debtor will start a sale process to sell all of its assets, subject to a predetermined set of previously agreed upon benchmarks. The postpetition indebtedness will be secured by a first priority security interest in and lien on all of the property of the Debtor. The Postpetition Indebtedness will have priority over all administrative expenses incurred in or prior to this Case. In addition, and subject to statutory fees of the U.S. trustee, the prepetition indebtedness will have priority over administrative expenses incurred in this case. The Bank is granted a continuing and replacement security interest and lien in all of the postpetition collateral. The replacement lien on postpetition collateral granted to Bank will be junior only to (a) the lien securing the Postpetition Indebtedness and senior liens, if any, permitted by the prepetition loan documents, and (b) if the Debtor's interest in any of the postpetition collateral as of the petition date was encumbered by a valid, binding and unavoidable lien senior to the prepetition lien held by Bank, then to the existing senior lien only. The Budget provides for a maximum amount of $25,000 to be funded for the fees and expenses incurred by any Committee professionals approved by the Court, if a Committee is formed. The Advanced Formula Agreement is available for free at: http://bankrupt.com/misc/DM_Advanced_Formula_Pact.pdf A full-text copy of the Budget is available for free at: http://bankrupt.com/misc/DM_Budget.pdf About DM Industries, Ltd. Headquartered in Opa-Locka, Florida, DM Industries, Ltd. makes portable redwood spas, tubs and showers spas. The Debtor filed for Chapter 11 protection on March 27, 2009, (Bankr. S. D. Fla. Case No. 09-15533). Arthur J. Spector, Esq. at Berger Singerman, P.A. represents the Debtor in its restructuring efforts. In its bankruptcy petition, the Debtor said it has assets of $10 million to $50 million and debts of $10 million to $50 million. DM INDUSTRIES: Sampler Auctions Inventory Hydrotherapy Products --------------------------------------------------------------- Hon. Laurel M. Isicoff of the U.S. Bankruptcy Court for the Southern District of Florida authorized DM Industries, Ltd., to sell of substantially all of its surplus inventory of hydrotherapy products at an auction conducted by Stampler Auctions, Inc. Stampler Auctions, Inc., auctioned the Debtor's surplus inventory of luxury hydrotherapy products on April 4, 2009, at 2320 N.W. 147th Street, Opa-Locka, Florida. The Debtor related that it is necessary and appropriate to sell the surplus inventory Luxury Hydrotherapy products to maximize its value and avoid unnecessary storage costs to preserve it. As the Court-authorized auctioneer, Sampler (i) prepared materials to advertise and market the property; (ii) monitored all pre- auction and post-auction activities and reported to the Debtor; (iii) provided staffing and schedule appointments to afford local and regional buyers an opportunity to inspect the property; and (iv) provided other services as may be required, including assisting the Trustee with meeting any deadlines imposed by the Court and compliance with any procedures established by the Court. The Debtor related that Sampler's compensation was based on a 10% buyer's premium with no commission from the estate. The buyer's premium is paid for by each buyer. Harry Sampler, president of Sampler, told the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About DM Industries, Ltd. Headquartered in Opa-Locka, Florida, DM Industries, Ltd. makes portable redwood spas, tubs and showers spas. The Debtor filed for Chapter 11 protection on March 27, 2009, (Bankr. S. D. Fla. Case No. 09-15533). Arthur J. Spector, Esq. at Berger Singerman, P.A. represents the Debtor in its restructuring efforts. In its bankruptcy petition, the Debtor said it has assets and debts of $10 million to $50 million. DM INDUSTRIES: Wants Berger Singerman as Bankruptcy Counsel ----------------------------------------------------------- DM Industries, Ltd., asks the U.S. Bankruptcy Court for the Southern District of Florida for authority to employ Berger Singerman, P.A., as counsel. Berger Singerman will: a) advise the Debtor with respect to its responsibilities in complying with the U.S. Trustee's Guidelines and reporting requirements and with the rules of the Court; b) prepare motions, pleadings, orders, applications, adversary proceedings, and other legal documents necessary in the administration of the Chapter 11 cases; c) protect the interests of the Debtor in all matters pending before the Court; and d) represent the Debtor in negotiations with their creditors and in the preparation of a Plan. Arthur J. Spector, Esq., a shareholder on Berger Singerman's Business Reorganization Team, tells the Court that the hourly rates for the professionals working on these cases are: Lawyers $320 - $535 Arthur J. Spector, $500 Douglas A. Bates, associate $320 Legal Assistants and Paralegals $75 - $185 Prepetition, the Debtor paid the firm $112,578 for services and expenses. In addition, on March 27, 2009, Berger Singerman received a bankruptcy retainer in the amount of $50,000. The firm will hold its bankruptcy retainer of $50,000 as security for the fees and costs that may be awarded to it by the Court in this case. Mr. Spector assures the Court that Berger Singerman is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Spector can be reached at: Berger Singerman, P.A. 350 East Las Olas Boulevard, Suite 1000 Fort Lauderdale, Florida 33301 Tel: (954) 525-9900 Fax: (954) 523-2872 About DM Industries, Ltd. Headquartered in Opa-Locka, Florida, DM Industries, Ltd. makes portable redwood spas, tubs and showers spas. The Debtor filed for Chapter 11 protection on March 27, 2009, (Bankr. S. D. Fla. Case No. 09-15533). Arthur J. Spector, Esq. at Berger Singerman, P.A. represents the Debtor in its restructuring efforts. In its bankruptcy petition, the Debtor said it has assets and debts of $10 million to $50 million. DRUG FAIR GROUP: Hudson Capital to Conduct GOB Sales at 22 Stores ----------------------------------------------------------------- According to a Bloomberg News report, Drug Fair Group Inc., the operator of 58 drug and general merchandise stores, received final approval from the U.S. Bankruptcy Court for the District of Delaware to hire Hudson Capital Partners LLC as agent to conduct going-out-of-business sales at 22 of the stores not being purchased by Walgreen Co. Bloomberg's Bill Rochelle relates that Hudson guarantees a recovery of 44% of the cost of the inventory at the closing stores. The report adds that after the GOB sales bring in enough to cover the guarantee, the expenses of the sale and a 5% fee for Hudson, the next 2% will be split 50-50 between Drug Fair and the agent. Additional proceeds from the GOB sales will go 70% to Drug Fair and 30% to Hudson. Hudson, Mr. Rochelle notes, is among the liquidators that won the auction to liquidate Gottschalks Inc. As reported by the TCR on March 25, 2009, Drug Fair Group is seeking approval from the Bankruptcy Court to sell 32 pharmacy locations to Walgreen Eastern Co., Inc., or to another party with the higher and better bid at an auction. Walgreen Eastern Co., Inc. is an affiliate of Walgreen Co., which is a national, public traded drug store chain with over 6,000 drugstores in 49 states, the District of Columbia and Puerto Rico. About Drug Fair Group, Inc. Headquartered in Somerset, New Jersey, Drug Fair Group, Inc. -- http://www.drugfair.com/or http://www.costcuttersonline.com/-- fka Community Distributors, Inc. operates pharmacies and general merchandise stores in northern and central New Jersey. Founded in 1954, the Company has two divisions: Drug Fair and Cost Cutters. The Drug Fair division includes stores which sell both pharmaceuticals and general merchandise and the Cost Cutters division which are larger format stores that offer value-oriented, general merchandise. The Debtor and CDI Group, Inc., filed for Chapter 11 protection on March 18, 2009, (Bankr. D. Del. Case No.: 09-10897 to 09-10898) Domenic E. Pacitti, Esq., and Michael W. Yurkewicz, Esq., at Klehr Harrison Harvey Branzburg & Ellers represent the Debtors in their restructuring efforts. The Debtors propose to employ Epiq Bankruptcy Solutions, LLC, as claims agent. The Debtors listed estimated assets of $50 million to $100 million and estimated debts of $100 million to $500 million. ECONOMIC DEVELOPMENT: Fitch Cuts Outstanding Ratings to 'BB+' ------------------------------------------------------------- Fitch Ratings downgrades to 'BB+' from 'BBB-' the outstanding ratings on approximately $48.9 million Economic Development Corporation of the City of Kentwood, Michigan, limited obligation revenue bonds (Holland Home Obligated Group), series 2006A&B. Holland Home has approximately $57.6 million in outstanding parity debt that is not rated by Fitch. The Rating Outlook remains Negative. The downgrade to 'BB+' reflects the effects of the slower than projected level of sales and move-ins at Holland Home's Breton Ridge campus, a further decline in Holland Home's already weak liquidity indicators and potential exposure to swap terminations. When completed the Breton Ridge community will consist of 123 independent living units in two separate wings. Due to the depressed Grand Rapids economy and the decline in area real estate prices, the current level of sales and move-ins is behind management's projections. Wing A, consisting of 75 ILUs, opened in October 2008 and as of March 31, 2009 is 71% sold and 71% occupied. Wing C is expected to be available for occupancy in July 2009 and as of March 31, 2009 is 58% sold. As a result, entrance fee receipts are lower than expected which has negatively impacted Holland Homes' unrestricted cash and investment position. At Dec. 31, 2008 unrestricted cash and investments totaled $24.5 million which translates into 158 days cash on hand, a cushion ratio of 3.5 times (x) and cash to debt of 23%. In fiscal 2008, Holland Home violated a capitalization ratio requirement under certain variable rate indentures for which it has received waivers. Debt service coverage in fiscal 2008 is a light 1.49x as compared to the 'BBB' category. Holland Home's swap portfolio consists of eight separate swap transactions including seven floating to fixed rate swap agreements with three different counterparties. The floating to fixed rate swaps are structured as hedges to convert Holland Home's variable-rate debt to a synthetic fixed-rate obligation. The total notional value of the swaps is approximately $106.3 million and each of the amortizations on the swaps matches a specific series of bonds. At Feb. 28, 2009 the negative mark to market on all the swaps was $15.0 million. Counterparty termination events include a downgrade of Holland Home below 'BB'. The Negative Outlook reflects the increasing risks associated with the development of the Breton Ridge community in light of the more difficult operating environment. Management anticipates funding roughly $7.0 million of the remaining $8.4 million of project costs from initial entrance fees on the new units. A delay in the realization of entrance fees will require the corporation to use cash to finish construction that would further weaken Holland Home's liquidity position and its financial cushion against increasing operating risks which, in turn, could cause downward pressure on the rating. Holland Home's primary credit strength is the strong occupancy across all levels of care at Home Holland's existing campuses. In 2008, occupancy of the 600 ILUs, 541 assisted living units and 241 skilled nursing beds was 96%, 86% and 93%, respectively. Occupancies of the ILUs have been 95% or higher in each year since 2003. Over the same period, average annual occupancy in the assisted living and skilled nursing occupancies have averaged 85% and 92%, respectively. Holland Home operates three campuses of multi-level senior housing in Grand Rapids, Michigan, providing a total of 675 ILUs and cottages, 501 assisted living and dementia units, 20 residential hospice units and 241 nursing beds. Under the Continuing Disclosure Agreement, Holland Home covenants to provide audited financial statements and utilization statistics within 180 days of each fiscal year-end and quarterly interim financial statements and utilizations within 60 days of each fiscal quarter-end. Holland Home's disclosure to Fitch has been excellent in terms of content and timeliness. Fitch downgrades these to 'BB+': -- $35,845,000 Economic Development Corporation of the City of Kentwood, Michigan limited obligation revenue bonds (Holland Home Obligated Group), series 2006A; -- $13,065,000 Economic Development Corporation of the City of Kentwood, Michigan limited obligation revenue bonds (Holland Home Obligated Group), series 2006B; Fitch was not asked to rate Holland Home's additional outstanding debt listed below: -- $10,060,000 Michigan Strategic Fund variable-rate demand limited obligation revenue refunding bonds (Holland Home Obligated Group), series 2005A; -- $7,320,000 Michigan Strategic Fund variable-rate demand limited obligation revenue refunding bonds (Holland Home Obligated Group), series 2005B; -- $9,940,000 Michigan Strategic Fund variable-rate demand limited obligation revenue bonds (Holland Home Obligated Group), series 2004; -- $20,510,000 Economic Development Corporation of the City of Kentwood, Michigan limited obligation revenue bonds (Holland Home Obligated Group), series 2002B; -- $9,815,000 Economic Development Corporation of the City of Grand Rapids, Michigan variable-rate demand limited obligation revenue bonds (Holland Home Obligated Group), series 2000. FAIRFAX FINANCIAL: Fitch Affirms Senior Debt Rating at 'BB+' ------------------------------------------------------------ Fitch Ratings has affirmed the ratings of Fairfax Financial Holdings Limited: -- Issuer Default Rating at 'BBB-'; -- Senior debt at 'BB+'. Fitch has also affirmed the ratings of Fairfax's wholly and partially owned subsidiaries. The Rating Outlook is Stable. Fitch's affirmation of Fairfax's ratings reflects the holding company's continued reduced financial leverage, increased cash position, strong profitability, improved interest coverage and favorable financial flexibility. Partially offsetting these positives are anticipated challenges in the overall competitive, but improving property/casualty market rate environment and the potential for additional adverse reserve development, particularly on older accident years and in runoff operations. Fairfax's debt-to-total-capital ratio is down to about 23.4% at Dec. 31, 2008, compared with 26.9% at Dec. 31, 2007. The company's total debt declined $203 million in 2008, while shareholders' equity increased $711 million, or 16.7% to $5.0 billion at Dec. 31, 2008. This increase is due to record net income of $1.5 billion in 2008, driven largely by significant pretax realized gains on investments of $2.7 billion, primarily from highly volatile credit default swaps and equity and equity index total return swaps and short positions. The company utilizes derivatives to protect itself from what it considers to be a 1-in-50 to 1-in-100-year 'storm' in financial markets, a strategy that has proven particularly effective in the recent volatile credit and investment market environment. Investment returns improved to 16.4% in 2008 and 14.4% in 2007 due to strong growth in realized gains. Over the past two years (2007-2008), Fairfax has posted $2.4 billion in total gains from credit default swaps ($1.2 million realized gains and $1.2 billion mark-to-market gains), which function as a hedge against systemic financial risk and have thus appreciated considerably in the difficult financial environment since mid-2007. As of Dec. 31, 2008, Fairfax had $8.9 billion notional amount of credit default swaps with a fair value of $415 million, unrealized gain of $253.5 million and a remaining average life 3.3 years. Fitch notes that such gains can be difficult to sustain as the market value of these investments are highly volatile and could suffer losses in future periods. In addition to the credit default swaps that Fairfax started to purchase in 2003, equity exposure was significantly hedged with short positions in S&P Depository Receipts, US listed common stocks and equity return swaps. Fairfax posted $2.1 billion of realized gains on short equity and equity index positions in 2008 ($1.055 billion in fourth quarter) as global equity markets suffered massive declines. Fairfax removed this hedge late in 2008 and opportunistically purchased $2.3 billion in common stocks. Negatively, the company also realized $1.0 billion of other than temporary impairment investment losses on common stocks and bonds in 2008. Fairfax maintains a sizable amount of holding company cash, short- term investments and marketable securities of $1.56 billion at Dec. 31, 2008 (up from $972 million at year-end 2007), which is about 1.5 times (x) holding company debt obligations of $1.06 billion and about 80% of total company debt of $2.0 billion at Dec. 31, 2008. Additionally, Fairfax's ratio of debt to earnings before interest and taxes (debt/EBIT) improved to 0.7x at year-end 2008 compared with 0.9x at year-end 2007, while earnings based interest coverage (including realized gains) improved to 16.4x in 2008 from 11.3x in 2007. Fairfax also continues to demonstrate favorable financial flexibility, receiving $728 million of dividends from subsidiaries in 2008, including $494 million from Crum & Forster and $210 million from runoff operations. Going forward, the company should also benefit from increased dividend capacity at Northbridge, following its recent return to 100% ownership by Fairfax. Fairfax reported a higher consolidated combined ratio of 110.1% in 2008, increased from 94.0% in 2007. The 2008 combined ratio includes 7.2 points for losses from Hurricanes Ike and Gustav and 4.2 points for the adverse effect of foreign currency movements from U.S. dollar strengthening, which is almost fully matched by foreign currency translation investment gains. While the recent combined ratio results reflect the company's improved underwriting discipline, as well as the benefits from the hard market of the early 2000s, they still lag peer company results and industry averages. These ratings are affirmed by Fitch with a Stable Rating Outlook: Fairfax Financial Holdings Limited -- Issuer Default Rating at 'BBB-'; -- Senior debt at 'BB+'; -- $182 million 7.75% due April 15, 2012 at 'BB+'; -- $91 million 8.25% due Oct. 1, 2015 at 'BB+'; -- $283 million 7.75% due June 15, 2017 at 'BB+'; -- $144 million 7.375% due April 15, 2018 at 'BB+'; -- $92 million 8.3% due April 15, 2026 at 'BB+'; -- $91 million 7.75% due July 15, 2037 at 'BB+'. Fairfax, Inc. -- IDR at 'BBB-'. Odyssey Re Holdings Corp. -- IDR at 'BBB'; -- $50 million series A unsecured due March 15, 2021 at 'BBB-'; -- $50 million series B unsecured due March 15, 2016 at 'BBB-'; -- $40 million series C unsecured due Dec. 15, 2021 at 'BBB-'; -- $225 million 7.65% due Nov. 1, 2013 at 'BBB-'; -- $125 million 6.875% due May 1, 2015 at 'BBB-'; -- $50 million series A preferred shares at 'BB+'; -- $47 million series B preferred shares at 'BB+'. Odyssey America Reinsurance Corporation -- Insurer Financial Strength at 'A-'. Crum & Forster Holdings Corp. -- IDR at 'BB+'; -- $330 million 7.75% due May 1, 2017 at 'BB'. Crum & Forster Insurance Group: Crum and Forster Insurance Company Crum & Forster Indemnity Company The North River Insurance Company United States Fire Insurance Company -- IFS at 'BBB'. Northbridge Financial Insurance Group: Commonwealth Insurance Company Commonwealth Insurance Company of America Federated Insurance Company of Canada Lombard General Insurance Company of Canada Lombard Insurance Company Markel Insurance Company of Canada Zenith Insurance Company (Canada) -- IFS at 'BBB+'. FELCOR LODGING: Moody's Downgrades Senior Debt Rating to 'B2' ------------------------------------------------------------- Moody's Investors Service downgraded the ratings of FelCor Lodging Limited Partnership's senior unsecured debt to B2 from B1, FelCor Lodging Trust's corporate family rating to B2 from B1, and FelCor Lodging Trust's preferred stock to Caa2 from B3. The rating outlook remains negative. This rating action reflects FelCor's recent announcement that it has suspended its quarterly dividend payments on its Series A Cumulative Convertible Preferred Stock and its Series C Cumulative Redeemable Preferred Stock. While Moody's acknowledges that the dividend suspension will help FelCor preserve liquidity (approximately $40 million per year), the agency would view this suspension as a default if FelCor does not pay its cumulative dividends in arrears, and it is viewed as an impairment to the preferred shareholders. Moody's also believes that the operating environment in the lodging sector has continued to deteriorate in 2009 beyond the industry forecasts made earlier in the year. Therefore, Moody's anticipate increased pressure on FelCor's earnings resulting in reduced cushion under the REIT's covenants. The negative rating outlook continues to reflect Moody's belief that additional weakening in the lodging segment performance is likely and that FelCor's credit profile will also be deteriorating, as a result. The rating outlook would likely return to stable upon repayment of all dividends in arrears, sustained adequate liquidity, and fixed charge over 1.5X and net debt/EBITDA below 7X, both sustained for several quarters. Downward rating movement would likely occur should FelCor encounter any additional liquidity challenges including covenant breaches, or if its fixed charge coverage declines to below 1.3X or net debt/EBITDA increases to above 7.5X. These ratings were downgraded, with a negative outlook: * FelCor Lodging Trust, Inc. -- corporate family rating to B2, from B1; preferred stock to Caa2, from B3; preferred stock shelf to (P) Caa2, from (P) B3. * FelCor Lodging Limited Partnership -- senior unsecured debt to B2, from B1, senior unsecured debt shelf to (P) B2, from (P) B1, subordinate shelf to (P) Caa2, from (P) B3. Moody's last rating action with respect to FelCor was on February 13, 2009, when Moody's downgraded the ratings of FelCor Lodging Trust and FelCor Lodging Limited Partnership (senior debt to B1 from Ba3) and revised the rating outlook to negative from stable. FelCor Lodging Trust, Inc., headquartered in Irving, Texas, USA, is a REIT that specializes in the ownership and management of upper-upscale and all-suite hotels. FelCor's portfolio encompasses 85 consolidated hotels and resorts located in 23 states and Canada. The REIT reported assets of $2.5 billion and total shareholders equity of $0.8 billion as of December 31, 2008. FLEXIBLE PACKAGING: Taps Wigberto Lugo Mende as Bankr. Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Puerto Rico authorized Flexible Packaging Company, Inc., to employ the Law Firm of Wigberto Lugo Mender, Esq., as counsel. The firm is expected to a) provide general legal counseling services in connection with the bankruptcy case; b) guide the Debtors in different financial matters; b) advice the Debtors on the effect of the Chapter 11 filing; and c) permit the use of the name of the firm in connection with the negotiations. The hourly rates of professionals working on Flexible Packaging's cases are: Wigberto Lugo Mender, Esq. $235 Associate Staff Attorney $135 Legal and Financial Assistants $100 Mr. Mender received a retainer of $5,000, which sum was generated by the debtor from the regular operations of the farm. Mr. Mender assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Mender can be reached at: The Law Firm of Wigberto Lugo Mender, Esq. Centro Internacional de Mercadeo Carretera 165, Torre Suite 501 Guaynabo, PR 00968 Tel: (787) 707-0404 Fax: (787) 707-0412 About Flexible Packaging Headquartered in Bayamon, Puerto Rico, Flexible Packaging Company, Inc. -- http://www.flexpackmag.com/-- makes and sells plastics foam products. The Company and its affiliates filed for Chapter 11 protection on March 28, 2009 (Bankr. D. P.R. Lead Case No. 09- 02335). Wigberto Lugo Mender, Esq., at Lugo Mender & Co. represents the Debtors in their restructuring efforts. In its bankruptcy petition, the Company said it had assets and debts of $10 million to $50 million. FORD MOTOR: Investors to Swap $9.9BB in Debt for Cash & Stock ------------------------------------------------------------- Matthew Dolan and John D. Stoll at The Wall Street Journal report that Ford Motor Co. said that its investors agreed to exchange $9.9 billion in debt for cash and stock, resulting in 28% reduction in the Company's overall debt. Ford Motor said that it successfully completed debt restructuring initiatives that will reduce Ford Motor's Automotive debt by $9.9 billion from $25.8 billion at December 31, 2008, and lower Ford Motor's annual cash interest expense by more than $500 million based on current interest rates. According to WSJ, the overall buyback plan came in slightly below the $10.4 billion in debt that Ford Motor said it could have retired. WSJ says that by Goldman Sachs and the Blackstone Group led the offer. "By substantially reducing our debt, Ford is taking another step toward creating an exciting, viable enterprise," said Ford Motor President and CEO Alan Mulally. "As with our recent agreements with the UAW, Ford continues to lead the industry in taking the decisive actions necessary to weather the current downturn and deliver long-term profitable growth." Previously Announced Debt Restructuring Initiatives On March 4, 2009, Ford Motor and Ford Credit announced the major components of a comprehensive debt restructuring: (1) a conversion offer in which Ford Motor offered to pay a premium in cash to induce the holders of any and all of the $4.88 billion principal amount outstanding of its 4.25% Senior Convertible Notes due December 15, 2036, to convert the Convertible Notes into shares of Ford Motor's common stock; (2) a $500 million cash tender offer by Ford Credit for Ford Motor's senior secured term loan debt; and (3) a $1.3 billion cash tender offer by Ford Credit for certain of Ford Motor's unsecured, non-convertible debt securities. Results of Conversion Offer The Conversion Offer expired at 9:00 a.m., New York City time, on April 3, 2009. As of the Expiration Date, approximately $4.3 billion principal amount of Convertible Notes were validly tendered and accepted for purchase, according to information provided by Computershare, Inc., the Exchange Agent with respect to the Conversion Offer. This will result in the issuance of an aggregate of approximately 468 million shares of Ford Motor's common stock and the payment of an aggregate of $344 million in cash ($80 in cash per $1,000 principal amount of Convertible Notes converted), plus the applicable accrued and unpaid interest on such Convertible Notes, on the expected settlement date of April 8, 2009. Upon settlement of the Conversion Offer, approximately $579 million aggregate principal amount of Convertible Notes will remain outstanding. Holders who validly tendered and did not withdraw their Convertible Notes by 9:00 a.m., New York City time, on the Expiration Date and whose Convertible Notes were accepted for purchase will receive, for each $1,000 principal amount of the Convertible Notes converted, 108.6957 shares of Ford Motor's common stock plus $80 in cash and the applicable accrued and unpaid interest. Previously Announced Results of Term Loan Offer On March 23, 2009, Ford Credit announced that the Term Loan Offer, which expired at 5:00 p.m., New York City time, on March 19, 2009, had been over-subscribed. Based on the tenders received, Ford Credit increased the amount of cash used from $500 million to $1 billion to purchase $2.2 billion principal amount of Ford Motor's Term Loan Debt at a price of 47 percent of par. This transaction settled on March 27, 2009, following which Ford Credit distributed the Term Loan Debt to its immediate parent, Ford Holdings LLC. The distribution of the Term Loan Debt is consistent with Ford Credit's previously announced plans to pay distributions to Ford of about $2 billion through 2010. Approximately $4.6 billion aggregate principal amount of Term Loan Debt remains outstanding. Results of Notes Tender Offer Concurrent with this announcement, Ford Credit separately disclosed on April 6, 2009, the results of its previously announced $1.3 billion cash tender offer for Ford Motor's unsecured, non-convertible debt securities. As of the April 3, 2009 expiration date of the Notes Tender Offer, about $3.4 billion principal amount of Notes were validly tendered and accepted for purchase, according to information provided by Global Bondholder Services Corporation, the Depositary and Information Agent with respect to the Notes Tender Offer. This will result in an aggregate purchase price for the Notes of about $1.1 billion, to be paid by Ford Credit on the expected settlement date of April 8, 2009. Upon settlement of the Notes Tender Offer, the Notes will be transferred from Ford Credit to Ford in satisfaction of certain of Ford Credit's tax liabilities to Ford Motor. After settlement of the Notes Tender Offer, approximately $5.5 billion aggregate principal amount of the Notes will remain outstanding. Ford Motor previously disclosed that it has elected to defer future interest payments related to the 6.50% Cumulative Convertible Trust Preferred Securities of Ford Motor Company Capital Trust II, which will result in the deferral of $184 million in interest on the Trust Preferred Securities annually. Skepticism Remains on Ford Motor's Prospects Citing J.P. Morgan auto analyst Himanshu Patel, WSJ states that the debt restructuring may be a sign that the Ford Motor management "believes car sales have bottomed and [has] faith in its own ability to execute" its plan without the U.S. government's financial assistance. Others, says WSJ, remained more skeptical about Ford Motor's prospects. "With poor operating results now expected through 2009, Ford's liquidity is becoming strained," WSJ quoted Gimme Credit auto analyst Shelly Lombard as saying. According to WSJ, Ford Motor had $35.8 billion in debt in 2008, including the $10.1 billion that it drew down in January through its revolving credit. WSJ states that Ford Motor also has payments due to fund a separate trust for its retirees' health care -- about $13 billion over 10 years. The report says that half can be paid in company stock under terms of a recent United Auto Workers agreement, reducing the cash obligation to $6.6 billion. Citing Ford Motor, WSJ relates that Ford Motor Credit will use $2.4 billion in cash, combined with stock, to buy back the debt once the offer closes on Wednesday. According to WSJ, Ford Motor said that it agreed to pay investors $380 in cash and stock for every $1,000 in bonds, or 38 cents on the dollar. The report quoted Ford Motor treasurer Neil M. Schloss as saying, "It reduces our interest expenses between $500 and $600 million a year." 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. FRANKLIN CLO: Fitch Junks Rating on $16 Mil. Class D Notes ---------------------------------------------------------- Fitch Ratings has taken various actions on the classes of notes issued by Franklin CLO I Ltd./Corp. These rating actions are effective immediately: -- $16,799,922 Class B upgraded to 'AAA'; Outlook Stable; -- $23,000,000 Class C affirmed at 'BBB'; Outlook to Positive from Stable; -- $16,000,000 Class D downgraded to 'CCC' from 'BB-' and assign 'RR1'. Franklin is a cash flow collateralized loan obligation managed by Franklin Advisers, Inc. which closed June 29, 2000. The final maturity of the transaction is May 9, 2010. The proceeds of the issuance are invested in a portfolio of predominantly U.S. high yield loans. The upgrade to the class B notes reflects the classes' ability to be redeemed in full by maturity. Since last review in July 2006, classes A-1 and A-2 have been paid in full leading to higher credit enhancement levels for all remaining classes. As of the Feb. 27, 2009 trustee report, the most recent report available for this analysis, the portfolio collateral balance was $59.9 million. All overcollateralization and interest coverage tests were in compliance except for the class D IC failure at 100.5% with a trigger of 105%. The affirmation to the class C notes reflects the likelihood that the class will be redeemed in full by maturity commensurate with the classes' current ratings. The downgrade to the class D notes is the result of a potential undercollateralization due to the current collateral composition and the failure of the class D IC test. The current weighted average rating of the portfolio is 'B/B-', with 3.2% rated 'CCC+' and lower. Approximately, 25% of the portfolio has a Negative Outlook and 4.6% is on Rating Watch Negative. The recent failure of the class D IC test and increasing cost of liabilities as the transaction delevers increase the likelihood of principal being used in the future to pay interest on the class D notes. The ratings on the class B, C, and D notes address the ultimate payment of interest and principal. The ratings on the class C notes address only the receipt of the class C ordinary distributions of London Interbank Offering Rate and not additional distributions. The Distressed Recovery Rating on the classes of notes has been revised to RR to reflect Fitch's updated Rating Definitions Criteria released March 3, 2009. Fitch's current criteria for rating corporate CDOs was released on April 30, 2008. However, due to the high obligor concentration within the portfolio, Fitch used a more deterministic approach in analyzing the portfolio rather than utilizing the Corporate Portfolio Credit Model. Fitch's probability of default was based upon issuer default ratings and term to maturity. The recovery rates were based either upon specified underlying securities' RR or the PCM's assumed recovery rate for senior secured obligations. FRONTIER COMMUNICATIONS: Moody's Puts Ba2 Rating on $300MM Notes ---------------------------------------------------------------- Moody's Investors Service has assigned a Ba2 rating to Frontier Communications Company's proposed $300 million senior unsecured notes to be issued under the recently filed unsecured debt shelf registration. The company is likely to use the proceeds from the notes issuance to largely pre-fund near-term debt maturities. In conjunction with the rating action, Moody's also affirmed the company's Ba2 corporate family rating, Ba2 probability of default rating, Ba2 ratings for all of the company's senior unsecured debt instruments, stable ratings outlook, and the SGL-1 speculative grade liquidity rating (indicating very good liquidity). Ratings and outlook actions include these: Issuer: * Frontier Communications Company Assignments: * New $300 million Senior Unsecured notes - Assigned Ba2 (LGD4, 53%) Affirmations: * Corporate Family Rating - Affirmed as Ba2 * Probability of Default Rating - Affirmed as Ba2 * Rating Outlook - Affirmed as Stable * Speculative Grade Liquidity Rating - Affirmed as SGL-1 * Senior Unsecured Regular Bonds and Debentures - Affirmed as Ba2 (LGD4, 53%) * Senior Unsecured Bank Credit Facility - Affirmed as Ba2 (LGD4, 53%) Moody's most recent rating action for Frontier was on March 23, 2009, at which time Moody's affirmed the Company's ratings, including the Ba2 CFR and PDR. Frontier Communications (formerly Citizens Communications) is an RLEC providing wireline telecommunications services to approximately 2.3 million access lines in primarily rural areas and small- and medium-sized cities. The company is headquartered in Stamford, CT. FRONTIER COMMUNICATIONS: S&P Assigns 'BB' Unsecured Debt Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its preliminary 'BB' unsecured debt rating to Stamford, Connecticut- based Frontier Communications Corp.'s shelf registration. At the same time, S&P assigned a 'BB' issue rating and a '3' recovery rating to the company's proposed $300 senior unsecured notes due 2014, to be drawn from the shelf registration. The '3' recovery rating indicates S&P's expectations for meaningful (50%-70%) recovery in the event of payment default. Proceeds will be used for general corporate purposes, including the repayment of existing debt. S&P also affirmed the 'BB' corporate credit rating and all other ratings on Frontier Communications. The outlook is stable. "Despite ongoing access-line losses and diminishing growth prospects for digital subscriber line services," said Standard & Poor's credit analyst Allyn Arden, "our affirmation reflects the modest improvement in liquidity from the refinancing of upcoming maturities because of the new notes and stable discretionary cash flow generation." Pro forma for this issue, total funded debt is about $5 billion. FUSION TELECOM: Rothstein Kass Raises Going Concern Doubt --------------------------------------------------------- Fusion Telecommunications International, Inc., reported consolidated revenues of $50.6 million and $13.1 million for the year and quarter ended December 31, 2008, respectively. This represented a decrease of 8.1% and 10.9% compared to revenues of $55.0 million and $14.7 million for the year and quarter ended December 31, 2007. The decrease over the prior year was primarily attributable to a decrease in the carrier segment, which was due in large part to lower traffic volumes resulting from the challenging economic environment, as well as normally expected variations in traffic. Consolidated Gross Margin decreased slightly to 6.5% for the year and 6.3% for the fourth quarter of 2008, compared to 7.7% for the year and 7.6% for the fourth quarter of 2007, the Company said. Although overall results were lower than anticipated, the Company said fourth quarter revenue for the corporate division increased by 39% compared to the prior quarter and nearly 400% when compared to the fourth quarter of 2007. The fourth quarter was the Company's fourth successive quarter of growth in both revenue and margin in the corporate division. The Company said the average monthly charge per customer increased by 16% and the total contract value of our existing customer base increased by more than 60%. Fusion reported an increase in net loss in the year ended December 31, 2008, compared to the year ended December 31, 2007. For 2008, Fusion reported a Net Loss of $15.6 million compared to a Net Loss of $12.7 million. As of December 31, 2008, the Company had $9.4 million in total assets, $12.7 million in total current liabilities and $1.4 million in total long-term liabilities, resulting in $4.7 million in stockholders' deficit. As required by Amex Company Guide Section 610(b), the Company also disclosed that financial statements for the fiscal year ended December 31, 2008, again contained a going concern qualification from its independent accounting firm, Rothstein, Kass and Company, P.C. On March 13, 2009 and March 19, 2009, Fusion borrowed an aggregate amount of $360,000 from an entity that is also a related party shareholder of the Company. Each of the promissory notes evidencing these loans, which mature on May 13, 2010 and May 19, 2010 respectively, bears interest on the unpaid principal amount of the note from the date the note was issued until the outstanding principal amount of the note is paid in full, at the rate of 12% per annum. In the event that a note is not repaid by the maturity date, that note will automatically convert to a demand note, and the principal sum and all accrued interest will be payable in full upon 10 days' notice from the lender. The notes also grant the lender a collateralized security interest, pari passu with other lenders, in the Company's accounts receivable. The proceeds are being used for general working capital purposes. To streamline operations, reduce expenses and focus efforts on the development of the Company's Corporate and Carrier sales, the Company adopted a plan in February which would eliminate the consumer product line of its retail segment and restructure its overall operations. The restructuring was initiated February 24, 2009, and is expected to be concluded by June 2009. As a result of this action, three international offices would be closed, and 26 employees and 11 consultants would be terminated. There are expected to be charges and write-downs of assets associated with these actions. The Company expects to save up to $1.5 million a year. Commenting on the results, Matthew Rosen, Chief Executive Officer of Fusion, said, "The fourth quarter of 2008, and the year in general, were challenging for Fusion, and for virtually all companies having to deal with the realities of an uncertain and struggling economy. While our business was impacted by lower traffic volumes and a slowing of both the sales cycles and the availability of investment capital, we ultimately believe that the economic situation will benefit us in the long term, as we are able to provide communications services that assist companies in reducing their costs without compromising on quality. To reach our goal of positive Adjusted EBITDA prior to the end of 2009, in addition to our continuing efforts to work on adequate financing, we have maximized our operational efficiencies, reduced cash requirements and increased our focus on growing our higher margin corporate business." Expanding on Mr. Rosen's comments, Don Hutchins, President and Chief Operating Officer of Fusion, said, "We believe that the major progress we have seen in direct and partner corporate sales will continue, and we anticipate a significant increase in future revenues from this division. Additionally, we expect to increase our focus on the carrier segment that now serves over 200 international customers and vendors, allowing for significant growth. Improved operating efficiencies, increased automation of key processes and systems, as well as other aggressive, cost- cutting measures will help to improve results, and play a significant role in Fusion's future success." GENERAL MOTORS: March 2009 Total Sales Off 45% From A Year Ago -------------------------------------------------------------- General Motors said its dealers in the United States delivered 156,380 vehicles in March 2009, down 45% compared with a year ago. However, comparing March sales with February, 7 of 8 GM brands saw total sales increases with total volume up 23%, or more than 29,000 cars, crossovers and trucks. GM's car sales compared with February were up more than 15,000 vehicles (28%), truck sales were up nearly 11,000 vehicles (23%), and crossover sales increased more than 3,000 vehicles (12%). "Sales for GM and the industry showed signs of life at the end of the month compared with January and February. In April, we're stepping up to the plate to get a rally underway with `GM Total Confidence,' our unprecedented customer protection package," said Mark LaNeve, vice president, GM North America Vehicle Sales, Service and Marketing. "We are encouraged by actions taken by the Federal government to stabilize the industry and stimulate demand. As we continue the reinvention of General Motors, our brands are adding even more world-class, fuel-efficient cars and crossovers to their portfolios. We will also continue to add even more fuel economy technology to our trucks." When compared with March a year ago, GM total car sales of 68,877 were off 41% and total truck sales (including crossovers) of 87,503 were down 47%. Compared with February, total Chevrolet sales were up 25%. Specifically, cars were up 28%, trucks were up 25% and crossovers increased 19%. Chevrolet Silverado and GMC Sierra pickups gained strength in March, when compared with February, with retail sales up 17 and 27%, respectfully. Chevrolet's crossover portfolio of HHR, Equinox and Traverse combined for 14,844 total sales in March, a 19% increase compared with February. In addition, Malibu has increased retail sales for the first three months this year, with sales up 7% compared with the same period a year ago. "We had a strong close at the end of the month as customers responded to strong incentives, President Obama's positive statements about GM, and the government backing domestic warranties," LaNeve added. "Customers told us they wanted a manufacturer to look out for them, and that's exactly what the `GM Total Confidence' program does." A total of 1,612 GM hybrid vehicles were delivered in the month, illustrating the wide range of hybrid product offerings available. GM offers the Chevrolet Malibu, Tahoe and Silverado, GMC Yukon and Sierra, Cadillac Escalade, Saturn Aura and Vue hybrids. So far, in 2009, GM has delivered 3,622 hybrid vehicles. GM inventories dropped compared with a year ago. At the end of March, only about 765,000 vehicles were in stock, down about 108,000 vehicles (or 12%) compared with last year. There were about 332,000 cars and 433,000 trucks (including crossovers) in inventory at the end of March. Inventories were reduced about 15,000 vehicles compared with February. The challenging economic environment had an effect on March 2009 year-over-year GM certified total sales. GM Certified Used Vehicles, Saturn Certified Pre-Owned Vehicles, Cadillac Certified Pre-Owned Vehicles, Saab Certified Pre-Owned Vehicles, and HUMMER Certified Pre-Owned Vehicles, combined sold 32,788 vehicles. GM Certified Used Vehicles, the industry's top-selling certified brand, posted March sales of 28,000 vehicles, down 27% from March 2008. Saturn Certified Pre-Owned Vehicles sold 974 vehicles, down 6%. Cadillac Certified Pre-Owned Vehicles sold 3,143 vehicles, down 5%. Saab Certified Pre-Owned Vehicles sold 436 vehicles, down 16%. However, one brand showed strong results for the month -- HUMMER Certified Pre-Owned Vehicles sold 235 vehicles, up 44%. "Although March sales were down, we're confident more shoppers will seek the quality and value that GM certification offers," said LaNeve. "In uncertain times, Certified Used Vehicles offer consumers the peace of mind that comes with factory backed warranties, such as the 12-month/12,000 mile bumper-to-bumper warranty, reinforcing the durability and reliability of our vehicles." March 2009 Production In March, GM North America produced 170,000 vehicles (73,000 cars and 97,000 trucks). This is down 67,000 vehicles or 28% compared with March 2008 when the region produced 237,000 vehicles (124,000 cars and 113,000 trucks). (Production totals include joint venture production of 8,000 vehicles in March 2009 and 20,000 vehicles in March 2008.) The region's 2009 first-quarter production was 372,000 vehicles (116,000 cars and 256,000 trucks), which is down about 58% compared with a year ago. GM North America built 885,000 vehicles (360,000 cars and 525,000 trucks) in the first-quarter of 2008. The region's 2009 second-quarter production forecast remains at 550,000 vehicles (195,000 cars and 355,000 trucks), which is down about 34% compared with a year ago. GM North America built 834,000 vehicles (382,000 cars and 452,000 trucks) in the second-quarter of 2008. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. 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: Still Hopes for Out-of-Court Restructuring ---------------------------------------------------------- General Motors remains steadfast that an out-of-court restructuring of its business affairs would be best for all stakeholders. On Thursday, General Motors made public in a filing with the Securities and Exchange Commission its 2009-2014 Restructuring Plan Progress Report, as required under its Loan and Security Agreement with the U.S. Department of the Treasury. "General Motors continues to strongly believe that out-of-court restructuring provides the highest value outcome for its customers and this country long term. However, if the changes needed for long-term restructuring cannot be obtained out of court, the Company is prepared and would consider in-court options," GM said. According to GM, to be prepared for events possibly precipitating a bankruptcy filing -- for example, unsuccessful bond exchange or VEBA negotiations -- the Company continues to evaluate its in- court restructuring options as part of contingency planning activities. The Company believes that the impact of a bankruptcy filing on its business would be substantial, on both wholesale (GM to dealers) and retail (GM dealer to customer) levels. In-court options, GM said, would be enhanced by the Administration's commitment to back GM customer warranties, and to provide support for a rapid emergence from any in-court process. A full-text copy of the progress report is available at no charge at http://ResearchArchives.com/t/s?3b08 GM also made public a transcript of its March 31 press conference regarding its proposed public exchange offers. GM intends to file documents with the Securities and Exchange Commission, including filing a Registration Statement on Form S-4 and a Schedule TO containing a prospectus, consent solicitation and tender offer statement regarding the proposed transaction. A full-text copy of the March 31 conference transcript is available at no charge at http://ResearchArchives.com/t/s?3b09 About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. 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: Obama Urged to Fire UAW President Ron Gettlefinger ------------------------------------------------------------------ A Florida congressman called on the Obama administration demanded the firing of UAW President Ron Gettelfinger, saying the union was just as responsible for the predicament at General Motors Corp. as ousted chairman Rick Wagoner, Justin Hyde at Free Press Washington reported. According to the report, U.S. Rep. Connie Mack, R-Fla., said in a statement, "If President Obama is willing to fire the CEO of General Motors because of his failures, then he should be even- handed in demanding Ron Gettelfinger's resignation for his equally egregious failures. Mr. Gettelfinger had called strikes which had hurt the industry and refused concessions to improve the finances of Detroit's automakers." Free Press Washington says the administration said it had asked Mr. Wagoner to leave to give the company a "clean sheet" for revamping its restructuring plan. As reported by the TCR on March 31, the Obama administration has decided to give Chrysler LLC 30 days to work out a deal with Fiat SpA and give General Motors Corp. 60 days to come up with a new restructuring plan. FOXNews.com relates that the Obama administration said that GM and Chrysler failed to submit acceptable plans to receive more bailout money. The report states that the administration has decided not to require the two firms to immediately repay government loan money they previously received, since that would force them into Chapter 11 bankruptcy. Chrysler and General Motors have previously said that they might be forced to file for bankruptcy, which would further hurt revenues, absent additional loans from the U.S. government. GM, in its viability plan submitted Feb. 17, said it needs an additional $16.6 billion on top of the $13.4 billion loaned from the Treasury, while Chrysler needs another $5 billion in addition to the $4 billion it has already received. Chrysler, in its plan, also conveyed plans to form a partnership with Fiat. Chrysler and GM are currently negotiating a balance sheet restructuring with lenders and shareholders but are hoping that they are hoping to effectuate their restructuring outside the bankruptcy courts. Obama Tough to UAW John Lippert and Keith Naughton of Bloomberg News report that while confronting growing public outrage against bailouts President Barack Obama is taking a hard line with the United Auto Workers, the union that supported his election and whose future now hangs in the balance. The UAW, once a pre-eminent U.S. labor organization, is in retreat along with U.S. automakers. According to the report, it is a quarter the size it was at its peak of 1.5 million members in 1979, when its political clout helped Chrysler Corp. get a then- unprecedented $1.2 billion federal bailout. According to Bloomberg, President Obama is now pushing the union, which already has given up job-security programs and some compensation, to take more concessions within 60 days and to come up with deeper cost and debt reductions than the biggest U.S. automaker proposed in its plan submitted last month or General Motors Corp. could face bankruptcy. His auto task force warned the cost of GM's pensions and retiree health care will "grow to unsustainable levels." "The president is showing labor a little tough love. He took away the idea from labor that 'Barack will take care of us, no matter what,'" said David Cole chairman of the Center of Automotive Research in Ann Arbor, Michigan. Instead, President Obama, facing growing public resentment over bailouts following the $165 million in bonuses awarded employees of American International Group Inc., according to the report, is putting the same pressure on the UAW as he is on GM's bondholders. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. 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: Korean Unit 'Optimistic' About Aid -------------------------------------------------- Bloomberg News' Seonjin Cha reports that the South Korean unit of General Motors Corp., GM Daewoo Auto & Technology Co., is "optimistic" state-owned lender Korea Development Bank will back a KRW2.5 trillion ($1.9 billion) investment plan as GM tries to avoid bankruptcy. The KDB owns 27% of the carmaker. Bloomberg says that according to the carmaker's chief executive officer, Michael Grimaldi, GM Daewoo is also considering selling assets to help raise funds. The carmaker, whose first-quarter sales tumbled 44%, has already idled factories and cut workers' wages. The report relates that on Feb. 19 the lender said, GM Daewoo, which makes about 20% of GM vehicles sold worldwide, has requested additional loans from Korea Development after exhausting a $2 billion credit line. Parent GM is also seeking to devise a restructuring plan that will convince the U.S. government to lend it money as it battles plunging domestic sales, Bloomberg said. GM's Sweden based unit, SAAB, and Germany-based unit, Opel, are seeking government aid to maintain operations. As reported by the TCR on March 31, the Obama administration has decided to give Chrysler LLC 30 days to work out a deal with Fiat SpA and give General Motors Corp. 60 days to come up with a new restructuring plan. FOXNews.com relates that the Obama administration said that GM and Chrysler failed to submit acceptable plans to receive more bailout money. The report states that the administration has decided not to require the two firms to immediately repay government loan money they previously received, since that would force them into Chapter 11 bankruptcy. Chrysler and General Motors have previously said that they might be forced to file for bankruptcy, which would further hurt revenues, absent additional loans from the U.S. government. GM, in its viability plan submitted Feb. 17, said it needs an additional $16.6 billion on top of the $13.4 billion loaned from the Treasury, while Chrysler needs another $5 billion in addition to the $4 billion it has already received. Chrysler, in its plan, also conveyed plans to form a partnership with Fiat. Chrysler and GM are currently negotiating a balance sheet restructuring with lenders and shareholders but are hoping that they are hoping to effectuate their restructuring outside the bankruptcy courts. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. 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: Saab Needs "Serious" Business Plan -------------------------------------------------- To win time and continue reorganization, Saab Automobile, the Swedish General Motors Corp. subsidiary, needs to present a "serious" business plan at a meeting with creditors next week, Johan Carlstrom of Bloomberg News reports, citing the judge overseeing the process. Bloomberg News says that Saab creditors, company management and a court-appointed reorganization lawyer meet at the Vaenersborg District Court in southern Sweden on April 6 to discuss Saab's revamp, which started when the Swedish carmaker filed for bankruptcy protection on Feb. 20. The report states that as many as three judges attending the meeting may announce within a week whether Saab gets more time to rebuild. Saab, according to the report, said the April 6 meeting will be a "checkpoint" for all parties involved to assess the progress and determine whether the company should proceed to the three-month point that ends May 20. Saab has been unprofitable for most of the two decades under GM. The company is now searching for a new investor to take over and help Saab roll out new models, Bloomberg said. "If the creditors or the lawyer want the reconstruction to stop, then the court will take a look at that. The judges have the power to force Saab into liquidation within a week of the meeting should they find the company hasn't presented a "serious" business plan," bankruptcy judge Cecilia Tisell, who will be at the meeting, as cited by the report said by telephone. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. 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: To Get Continue Getting Parts From Transcast ------------------------------------------------------------ On April 3, 2009, the Ontario Courts ordered Transcast Precision Inc. to supply sufficient parts to Chrysler, GM, Magna and Gates for 14 days of production. Additionally, another proceeding is required within that two-week period to settle matters regarding ongoing price and supply. "If the North American auto industry intends to rebuild itself and emerge from our current recession, it must defend the rights of all business owners -- especially the auto parts manufacturers who are being economically exploited," said Dean Topolinski, President and Director of Transcast Precision Inc. "We are hopeful that the courts will recognize the established pricing and negotiations tactics that exist in market -- ones predisposed to the unfair treatment of smaller auto parts manufacturers and suppliers that rely on relatively few, but very large customers." "Transcast has regrettably been portrayed by Chrysler, et al., as a form of corporate raider seeking to take advantage of the OEMs in the current economic maelstrom in which the automotive industry finds itself. Transcast has had no opportunity to present its side of this story in the proceedings, which were commenced without notice to Transcast and while senior management were out of Canada." Transcast said that on March 30, it initiated contact with Chrysler to sell existing company assets and to enter into an agreement that would permit the long-term viability of the new company. While the correspondence indicated that inventory would need to be purchased above previous prices, the increase was required to help offset a number of transition costs including legal bills and unpaid severance from the previous supplier. This price increase was for a five-day term only. The longer-term agreement was to be negotiated during this interim phase. Transcast said in its statement that notwithstanding its offer to negotiate, Chrysler, Magna, Gates, and GM decided not to engage in discussions to come to a commercial solution to keep the plant open. Rather, they proceeded without notice to take Transcast to court to seek interim relief for the return of tooling and parts. When Transcast discovered the ex parte motions, Transcast appeared in court and vigorously opposed the position presented by Chrysler, Magna, Gates and GM. Transcast will continue to argue its position in court by presenting the facts of the case, which has yet to be finally argued. Any orders made by the Court at this stage are interim only. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. Liquidity Crunch Chrysler has been trying to keep itself afloat. As reported by the Troubled Company Reporter on March 20, 2009, its Chief Financial Officer Ron Kolka, has said even if Chrysler gets additional government loans, it could face another cash shortage in July when revenue dries up as the company shuts down its factories for two weeks to change from one model year to the next. The Company's CFO has said Chrysler planned for the $4 billion federal government bailout it received Jan. 2 to last through March 31. The Company is talking with the Obama administration's autos task force about getting another $5 billion, and faces a March 31 deadline to complete its plan to show how it can become viable and repay the loans. General Motors Corp. and Chrysler admitted in their viability plans submitted to the U.S. Treasury on February 17 that they considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of the Chrysler viability plan is available at: http://ResearchArchives.com/t/s?39a3 A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 * * * As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. 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, Dominion Bond Rating Service 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. GREEN VALLEY: Station Casinos Q4 Issue Cues S&P's Junk Rating ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Las Vegas-based Green Valley Ranch Gaming LLC to 'CCC' from 'B-'. The rating outlook is negative. In accordance with the corporate credit rating change, S&P also lowered its issue- level ratings on the company's debt by two notches. "The ratings downgrade follows Station Casinos Inc.'s recent fourth-quarter 2008 earnings release, in which it was disclosed that Green Valley Ranch (in which Station owns a 50% interest) generated EBITDA before management fees of $15.8 million in the quarter, 45% below the prior comparable period," said Standard & Poor's credit analyst Ben Bubeck. "This level of decline in EBITDAM was substantially higher than S&P had incorporated in its previous 'B-' rating. In addition, S&P has revised its expectations for performance in 2009, and now project that EBITDAM will decline by 25% this year, also substantially higher than S&P factored into S&P's previous rating." S&P now believes that Green Valley Ranch's ability to generate sufficient cash flow to service its current capital structure is in doubt. S&P's previous rating incorporated its expectation that cash burn over the next several quarters at this property would be modest, and that the owners would likely step in to provide liquidity to the extent required to meet debt service obligations. While GR Ranch Station Inc., the consolidated entity that owns Station's 50% interest in Green Valley Ranch, executed promissory notes with Green Valley Ranch totaling $5 million in the fourth quarter, these notes are only short term. Also, S&P is now concerned that the level of support needed from the owners may be more meaningful than they are willing to provide, given S&P's more negative outlook for cash flows during 2009. Also, Station is operating under a forbearance agreement (scheduled to expire by April 15, 2009) with its creditors following missed interest payments on its five notes issues, which further strains the company's capacity to continue to offer support. Station has proposed a prepackaged bankruptcy filing to its creditors. The rating on GVR reflects the company's high debt leverage, limited liquidity, reliance on a single source of cash flow, and S&P's expectation for continued negative trends in net revenues and EBITDAM over the next several quarters. The property's high quality and good location only slightly temper these factors. During 2008, net revenues and EBITDA before management fees declined 11.8% and 25.7%, respectively, from 2007. As of Dec. 31, 2008, total debt to EBITDAM was more than 9x, and EBITDAM interest coverage was less than 1.5x. In addition, given S&P's expectations for 2009, these measures will likely deteriorate significantly over the next few quarters. HARRAH'S ENTERTAINMENT: CalPERS' $1.7-Billion Bet in Apollo Sours ----------------------------------------------------------------- Bloomberg News reports that last year the California Public Employees' Retirement System poured $1.71 billion into Apollo Management LP, more than twice as much as it gave any other private equity manager, betting that the firm could exploit the global credit crisis. "So far, the bet is coming up snake eyes," Bloomberg's Jonathan Keehner and Jason Kelly note. Messrs. Keehner and Kelly relate that Calpers chief of public affairs Pat Macht wrote in an e-mail, "The market dislocation presents an opportunity to invest at some favorable prices. Apollo was best-suited to take advantage of these opportunities, and Calpers determined they had the most experience and track record -- a view shared by those who provide us independent advice". According to Messrs. Keehner and Kelly, after posting average annual returns of more than 25% in the last two decades, Apollo founder Leon Black is trying to salvage some of the $60 billion worth of companies he has acquired since 2006, which includes Linens 'n Things Inc. and Harrah's Entertainment Inc. According to London-based pricing service Markit, Bloomberg said that at least $2 billion of loans Apollo bought last year have lost half their value. The report notes that as the largest U.S. public pension fund, with $173.8 billion in assets, CalPERS provides retirement and health benefits to 1.6 million state government workers. Bloomberg adds that While Calpers says it stands behind the decision to commit more than $3.5 billion to New York-based Apollo since 2006, Calpers has hired a new chief investment officer who managed private-equity holdings at another state pension fund that didn't invest in Black's funds. About Harrah's Entertainment Las Vegas, Nevada-based Harrah's Entertainment, Inc. -- http://www.harrahs.com-- operates nearly 40 casinos across the United States, primarily under the Harrah's(R), Caesars(R) and Horseshoe(R) brand names; Harrah's also owns the London Clubs International family of casinos and the World Series of Poker(R). Private equity firms Apollo Global Management and TPG Capital LP acquired Harrah's in January for $31 billion. At Sept. 30, 2008, the Company's consolidated condensed balance sheets showed total assets of $37.0 billion, total liabilities of $33.4 billion and stockholders' equity of $3.6 billion. For three months ended Sept. 30, 2008, the company reported net loss of $129.7 million compared with net income of $244.4 million for the same period in the previous year. For nine months ended Sept. 30, 2008, the company posted net loss of $100.9 million compared with net income of $667.2 million for the same period in the previous year. The company's cash and cash equivalents, including funds borrowed during the quarter under its credit facilities, totaled approximately $1.0 billion at Sept. 30, 2008, compared to $654.7 million at Sept. 30, 2007. * * * As reported by the TCR on March 10, 2009, Standard & Poor's Ratings Services lowered its corporate credit rating on Las Vegas- based Harrah's Entertainment Inc. and its wholly owned subsidiary, Harrah's Operating Co. Inc., to 'CC' from 'CCC'. The rating outlook is negative. At the same time, S&P lowered the issue- level rating on each of HOC's outstanding senior secured second- priority and senior unsecured debt issues to 'C', from 'CCC-' and 'CC', respectively. S&P also lowered the issue-level rating on Caesars Entertainment Inc.'s subordinated debt issues to 'C' from 'CC'. In addition, S&P placed the 'B-' issue-level rating for HOC's senior secured first-lien credit facilities on CreditWatch with negative implications. These actions follow Harrah's announcement that it is offering to exchange up to $2.8 billion of new 10% senior secured second-priority notes due 2018 for a portion (or potentially all in some cases) of each of the outstanding senior unsecured and subordinated notes in the company's capital structure. About Linens 'n Things, Inc. Headquartered in Clifton, New Jersey, Linens 'n Things, Inc. -- http://www.lnt.com/-- was the second largest specialty retailer of home textiles, housewares and home accessories in North America. As of Sept. 30, 2008, Linens 'n Things operated 411 stores in 47 states and seven provinces across the United States and Canada. Linens 'n Things was acquired by private equity firm Apollo Management in 2006. On May 2, 2008, these Linens entities filed chapter 11 petition (Bankr. D. Del.): Linens Holding Co. (08-10832), Linens 'n Things, Inc. (08-10833), Linens 'n Things Center, Inc. (08-10834), Bloomington, MN., L.T., Inc. (08-10835), Vendor Finance, LLC (08- 10836), LNT, Inc. (08-10837), LNT Services, Inc. (08-10838), LNT Leasing II, LLC (08-10839), LNT West, Inc. (08-10840), LNT Virginia LLC (08-10841), LNT Merchandising company LLC (08-10842), LNT Leasing III, LLC (08-10843), and Citadel LNT, LLC (08-10844). Judge Christopher S. Sontchi presides over the case. Mark D. Collins, Esq., John H. Knight, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., are Linens 'n Things' bankruptcy counsel. The Debtors' special corporate counsel are Holland N. O'Neil, Esq., Ronald M. Gaswirth, Esq., Stephen A. McCaretin, Esq., Randall G. Ray, Esq., and Michael S. Haynes, Esq., at Morgan, Lewis & Bockius, LLP. The Debtors' restructuring management services provider is Conway Del Genio Gries & Co., LLC. The Debtors' CRO and Interim CEO is Michael F. Gries, co-founder of Conways Del Genio Gries & Co., LLC. The Debtors' claims agent is Kurtzman Carson Consultants, LLC. The Debtors' consultants are Asset Disposition Advisors, LLC, and Protivit, Inc. The Debtors' investment bankers are Financo, Inc., and Genuity Capital Markets. Pursuant to the court order entered on October 16, 2008, Linens Holding Co. is in the process of liquidating the entire Linens 'n Things retail chain. (Bankruptcy News About Linens 'n Things; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). HARTMANN PROPERTIES: Section 341(a) Meeting Slated for April 30 --------------------------------------------------------------- The U.S. Trustee for Region 11 will convene a meeting of creditors in Hartmann Properties, LLC's Chapter 11 case on April 30, 2009, at 1:30 p.m., at 219 South Dearborn, Room 804, Chicago, Illinois. 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. Aurora, Illinois-based, Hartmann Properties, LLC filed for Chapter 11 protection on March 27, 2009 (Bankr. N. D. Ill. Case No. 09- 10822) Gerald F. Munitz, Esq., at Goldberg, Kohn represents the Debtor in its restructuring efforts. The Debtor did not file a list of 20 largest unsecured creditors. The Debtor listed estimated assets of $10 million to $50 million and estimated debts of $10 million to $50 million. HARVEST OIL: Seeks to Access Macquarie-Wayzata Cash Collateral -------------------------------------------------------------- Harvest Oil & Gas LLC and its debtor-affiliates ask the United States Bankruptcy Court for the Western District of Louisiana for interim authority to access cash collateral of Macquarie Bank Limited and Wayzata Investment Partners LLC to maintain the Debtors' operations as a going concern and to avoid irreparable harm. Macquarie Bank provided $25 million in revolving loan to the Debtors to pay amounts due with respect to the acquisition of the harvest companies and related transactions costs while Wayzata Investment provided $97.5 million to partially fund the acquisition. The Debtors defaulted on both loan. The Debtors will use interim period to negotiate a longer term cash collateral agreement on acceptable terms. The Debtors want to use cash collateral until April 12, 2009. The Debtors will continue to protect and preserve the operations and maintain their assets. The equity in the Debtors' property provides adequate protection for their use of cash collateral. A full-text copy of the Debtors' cash collateral budget is available for free at http://ResearchArchives.com/t/s?3b12 Headquartered in Covington, Louisiana, Harvest Oil and Gas, LLC -- http://www.harvest-oil.com/-- is engaged on acquisition, development and exploration of energy resources. The Debtor and its debtor-affiliates filed for Chapter 11 protection on March 31, 2009, (Bankr. W. D. La. Lead Case No. 09-50397) Robin B. Cheatham, Esq., at Adams & Reese LLP represents the Debtors in their restructuring efforts. The Debtors listed estimated assets of $100 million to $500 million and estimated debts of $100 million to $500 million. HERITAGE LAND: Wants Until May 29 to File Schedules & Statements ---------------------------------------------------------------- Heritage Land Company LLC and its debtor-affiliates ask the United States Bankruptcy Court for the District of Nevada to extend until May 29, 2009, the period within which they can file their schedules of assets and liabilities, and statement of financial affairs. The Debtors tell the Court that they need more time to complete their schedules and statements including, among other things, reviewing their records to determine prepetition liabilities to each individual creditors as of their bankruptcy filing and compiling each of their unexpired leases and executor contracts. The initial deadline to file the Debtors' schedules and statements is April 14, 2009. Headquartered in Furlong, Pennsylvania, Heritage Center Inc. filed for Chapter 11 protection on March 12, 2009 (Bankr. D. N.J. Case No. 09-16019). Albert A. Ciardi, III, Esq., Ciardi Ciardi & Astin, P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed assets and debts between $10 million and $50 million each. INNERDOORWAY: American Securities & ACI Capital Acquires Firm ------------------------------------------------------------- Naturalproductsinsider.com reports that New York-based private- equity firms American Securities and ACI Capital have acquired InnoVision Health Media out of Chapter 11 bankruptcy. According to Naturalproductsinsider.com, InnoVision Health will continue operations out of Boulder, Colorado, functioning as a wholly owned subsidiary. InnoVision Health will work closely with ACI and American Securities holdings unit Healthy Directions LLC. Boulder, Colorado-based InnerDoorway, InnerDoorway dba InnoVision Health Media, produces consumer and trade publications with a focus on health and wellness. The Company filed for Chapter 11 protection on Nov. 10, 2008 (Bankr. D. Colo. Case No. 08-27888). Daniel J. Garfield, Esq., at Brownstein Hyatt Farber Schreck, LLP, represents the Company in its restructuring effort. The Company listed assets and debts of $1,000,001 to $10,000,000. ION GEOPHYSICAL: Moody's Cuts Corporate Family Rating to 'B3' ------------------------------------------------------------- Moody's Investors Service downgraded ION Geophysical Corporation's Corporate Family Rating and Probability of Default Rating to B3 from B1. The outlook was changed to negative from stable. The downgrade was driven by ION's much weaker liquidity and higher covenant compliance risk than Moody's expected when the initial ratings were assigned in connection with the company's November 2008 bond offering. This leaves the company with considerably less financial flexibility to manage through the severe decline in demand for ION's products and services, particularly in the North American onshore markets. The ratings will be withdrawn since the proposed bond offering was not completed. Moody's last rating action was on November 17, 2008 when Moody's assigned a B1 CFR and a B2 rating to ION's proposed $175 million of senior unsecured notes. ION Geophysical Corporation provides seismic products and services to the global energy industry and is headquartered in Houston, Texas. JEFFERSON COUNTY: Budget Officer Slams Senate Tax Proposal ---------------------------------------------------------- Bloomberg News' Kathleen Edwards reports that Jefferson County, Alabama's director of revenue, slammed a bill introduced in the state senate that would earmark proceeds of the county's sales tax to pay sewer system debt. According to Bloomberg, the county is negotiating with creditors to restructure the sewer debt and has cut general services by 10%. It will have to cut another 33% from the general fund if the court doesn't reverse its ruling on occupational and business taxes. Travis Hulsey, as cited by the report said the bill would have a "devastating impact" on the county's ability to provide essential services. Mr. Hulsey in a memo to county commission president Bettye Fine Collins added saying, "The legislation, sponsored by Senators Steve French, a Republican, and Linda Coleman, a Democrat, would divert $33.4 million from the county's general fund and another $19.1 million from its health department. Possible loss of the county's general fund sales tax proceeds of $33 million for general government services coupled with the above issues would require massive layoffs of personnel and eliminate a number of public services". 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 Troubled Company Reporter on March 24, 2009, Standard & Poor's Ratings Services kept the ratings on Jefferson County, Alabama's series 1997A, 2001A, 2003-B-8, 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, where they were placed Sept. 16, 2008, due to previous draws against the system's cash and surety reserves beginning in September 2008 and S&P's uncertainty of the system's continued timely payment on the obligations. Although the system depleted its cash reserves and a portion of its surety reserves in late 2008, the trustee indicates there have been no additional draws against its surety reserves since last year. The trustee estimates the system currently has $176 million remaining in total combined surety reserves with Financial Guaranty Insurance Co. (FGIC; CCC/Negative), Syncora Guarantee Inc. (CC/Negative), and Financial Security Assurance Inc. (AAA/Watch Neg), which can be applied on a pro rata basis to any parity debt. JOHN BAYLESS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: John Owen Bayless, Jr. Lisa Anne Bayless dba Bayless Tire & Wheel dba Bayless Auto Salvage, Inc. dba Bayless & Watt Land Development, LLC dba Bayless Motor Co., Inc. dba Design Build-Lease, LLC 218 E. Weaver Rd. Springfield, MO 65810 Bankruptcy Case No.: 09-60657 Chapter 11 Petition Date: April 2, 2009 Court: Western District of Missouri (Springfield) Judge: Arthur B. Federman Debtor's Counsel: Raymond I. Plaster, Esq. riplaster@rip-pc.com 2032 E. Kearney, Ste. 201 Springfield, MO 65803 Tel: (417) 831-6900 Fax: (417) 831-6901 Total Assets: $11,214,955 Total Debts: $7,654,399 The Debtor's Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Guaranty Bank $5,300,000 1341 W. Battlefield Springfield, MO 65807-4101 Mid Missouri Bank $209,000 330 W. Plainview Springfield, MO 65810 Rich Kramer Construction, Inc. $126,546 c/o Tuck & Lukachick 3812 S. Fremont Springfield, MO 65804 Missouri Department of Revenue $100,000 Internal Revenue Service $60,000 Greene County Collector of $19,417 Revenue Bank of America $18,561 Missouri Department of Revenue $16,000 AT&T Universal Card $13,512 Chase Bank $13,050 American Express $10,709 Bank of America $10,366 US Bank Credit Card $8,377 Capital One $7,820 Chase Bank $6,791 Discover $6,761 Greene County Collector of $5,877 Revenue Capital One $4,939 Discover $4,851 Greene County Collector of $3,502 Revenue KRATON POLYMERS: Buys & Retires $30MM Face Value of $200MM Notes ---------------------------------------------------------------- Kraton Polymers LLC purchased and retired $30 million face value of its 8.125% notes on March 16, 2009, for cash consideration of $10.9 million, which included accrued interest of $0.4 million. Kraton Polymers expects to record a gain of approximately $19.5 million in the quarter ending March 31, 2009, related to the purchase and retirement of the 8.125% notes. $7MM Net Loss for Three Months Ended December 31, 2008 Kraton Polymers LLC has released financial results for the three and 12 months ended December 31, 2008. Total operating revenues amounted to $232 million for the three months ended December 31, 2008, a decline of $26 million, or 10%, compared to total operating revenues of $258 million in the three months ended December 31, 2007. For the twelve months ended December 31, 2008, total operating revenues amounted to $1.226 billion, representing an increase of $136 million, or 12%, from $1.090 billion for the twelve months ended December 31, 2007. Gross profit amounted to $49 million for the three months ended December 31, 2008, an increase of $28 million, or 133%, compared to gross profit of $21 million in the three months ended December 31, 2007. For the twelve months ended December 31, 2008, gross profit amounted to $255 million, representing an increase of $104 million, or 69%, from $151 million for the twelve months ended December 31, 2007. In the fourth quarter of 2008, the Company recorded a non-cash lower-of-cost-or-market adjustment to our inventory of $8 million which is included in the 2008 gross profit amounts. Net loss of $7 million for the three months ended December 31, 2008, is an improvement of $29 million compared to the net loss of $36 million in the three months ended December 31, 2007. For the twelve months ended December 31, 2008, net income amounted to $28 million, an increase of $72 million from a net loss of $44 million for the 12 months ended December 31, 2007. "We are generally pleased with our improved financial performance in 2008, especially in light of the headwinds associated with rising feedstock and energy costs that the Company faced for most of the year," said Kevin M. Fogarty, Kraton Polymers' President and Chief Executive Officer. "Although our fourth quarter results exceeded the comparable 2007 period, Kraton is not insulated from global economic market conditions. In fact, each of Kraton's end- use markets recorded a decline in sales volume in the fourth quarter as customers aggressively reduced inventories, resulting in an aggregate 36% decline in sales volume compared to the fourth quarter of 2007." The demand softness in the fourth quarter of 2008 has continued into 2009. Kraton Polymers currently estimates first quarter 2009 sales volume could be approximately 40% below first quarter 2008 sales volume. In addition, the first quarter 2009 results will reflect lower FIFO margins commensurate with selling higher-cost inventory produced when feedstock prices were above our current replacement cost, the negative effect of which could be in the range of $35 to $40 million. Conversely, first quarter 2008 margins were positively affected by more than $5 million uplift commensurate with selling lower cost inventory produced when feedstock prices were below the then current replacement cost. At December 31, 2008, Kraton Polymers had more than $101 million of cash-on-hand and net debt of $474 million, compared to net debt of $490 million at December 31, 2007. In addition to scheduled maturities, Kraton Polymers voluntarily reduced term debt by $10 million in the second quarter of 2008. Last Twelve Months Bank EBITDA, a measure used to determine compliance with our debt covenants, of $149 million for the twelve months ended December 31, 2008, represents an increase of $50 million, or 51%, from $99 million at December 31, 2007. With respect to financial covenants, leverage and interest coverage ratios of 3.87x and 4.15x, respectively, were both well within the requirements of 4.95x and 2.50x, respectively. Mr. Fogarty also noted, "It remains difficult to predict the full impact the current economic downturn will have on global demand for our products. That said, however, after excluding the large negative effect on margins in the first quarter of 2009 and the positive effect on margins in 2008 resulting from the aforementioned FIFO measurements, the Company currently anticipate that earnings in the first quarter of 2009 will be in-line with the first quarter of 2008 earnings, and the Company expect to be in full compliance with our debt covenants at the close of the first quarter. In addition, in 2009 the Company do expect to exceed our $10 million fixed cost reduction target, announced in November, as the Company continue to aggressively pursue new options to reduce cost, improve productivity and manage cash. The Company believe these steps will allow us to endure this down trend and become even more competitive in responding to our innovative customers' demanding needs when an economic recovery takes hold." About Kraton Kraton Polymers LLC is a global producer of engineered polymers. It produces styrenic block copolymers (SBCs), a family of products whose chemistry was pioneered by us over forty years ago. SBCs are highly-engineered thermoplastic elastomers, which enhance the performance of numerous products by delivering a variety of attributes, including greater flexibility, resilience, strength, durability and processability. Kraton's polymers are used in a wide range of applications, including adhesives, coatings, consumer and personal care products, sealants and lubricants and medical, packaging, automotive, paving, roofing and footwear products. The Company's production facilities are located in the United States, Germany, France, The Netherlands, Brazil, and Japan. As reported by the Troubled Company Reporter on November 27, 2008, Moody's Investors Service confirmed the ratings for Kraton Polymers LLC (B2 Corporate Family Rating) and concluded the rating review that was established in April 2008. The outlook for Kraton's ratings is negative. Ratings confirmed: -- Corporate Family Rating, B2 -- Probability of Default Rating, B2 -- Senior Unsecured Subordinated Bond/Debenture, Caa1 LGD5 84% -- Senior Secured Bank Credit Facility, B1 LGD3 33% -- Outlook Negative KRATON POLYMERS: 8K Disclosure Prompts S&P's Rating Cut to 'SD' --------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on Houston, Texas-based Kraton Polymers LLC and Polymer Holdings LLC to 'SD' from 'B-'. At the same time, Standard & Poor's lowered its issue rating on the company's 8.125% $200 million senior subordinated notes due 2014 to 'D' from 'CCC'. The issue rating on the company's first- lien loan remains unchanged at 'B' and was placed on CreditWatch with negative implications. "The lowering of the corporate credit rating follows Kraton Polymers disclosure in a recent 8K that it purchased and retired $30 million face value on its $200 million senior subordinated notes due 2014 for cash consideration of approximately $11 million, which included accrued interest," said Standard & Poor's credit analyst Henry Fukuchi. "The 'SD' rating reflects our expectation that Kraton will continue to pay its other creditors despite the completion of its recent debt purchase," Mr. Fukuchi added. "The 'D' rating on the 8.125% $200 million senior subordinated notes reflect our view that the exchange at this issue level was distressed as the bondholder received significantly less than the original price." The CreditWatch with negative implications on the first-lien term loan indicates that S&P may lower or affirm the rating following its reassessment of the default risk and recovery prospects. S&P plan to complete this review within the next two weeks. Kraton is a leading producer of SBCs with about $1.2 billion in annual sales and approximately $627 million of debt outstanding, including a modest amount of capitalized operating leases and unfunded postretirement obligations. The company produces unhydrogenated SBCs, hydrogenated SBCs, polyisoprene rubber, polyisoprene latex, and SBC-based compounded materials. SBCs offer flexibility, resilience, strength, and durability to a wide range of products in a number of end-use markets including adhesive, sealants, and coatings; paving and roofing; compounding channels; packaging and films; and personal care. L-3 COMMUNICATIONS: Moody's Affirms 'Ba2' Corporate Family Rating ----------------------------------------------------------------- Moody's Investors Service affirmed L-3 Communications Holdings, Inc.'s Ba2 Corporate Family Rating and the Ba3 rating on L-3's Convertible Debt and L-3 Communications Corporation's senior subordinated debt. At the same time, L-3's Speculative Grade Liquidity rating was lowered to SGL-2 from SGL-1. The actions reflect continued strong operating performance across L-3's defense segments but recognize the company's liquidity profile is impacted by the approaching expiration of its $1.0 billion revolving credit facility in March 2010 at the same time that its $650 million term loan matures. The outlook remains positive. With expected revenues in excess of $15 billion in 2009 and sustained operating margins in the 10%-11% range along with modest working capital and capital expenditures, L-3 should continue to generate substantial levels of free cash flow. Free cash flow has averaged roughly $1 billion/year for the last two years. This level of FCF is expected to continue during 2009 despite an increase in its quarterly dividend pay-out. Strong FCF allowed the company to repurchase some $700 million in common stock over the last year (measured net of issuance proceeds), and to add to its cash balances. The Ba2 Corporate Family rating reflects L-3's sizeable revenue base, moderate leverage and its increasing profile as a lead contractor in a variety of segments in the U.S. Government Department of Defense and Department of Homeland Security. This scale along with its consistent margins and substantial backlog supports expectations for ongoing strong free cash generation over the next few years. The rating also takes into consideration L- 3's continued debt levels, which have not changed materially over the past few years despite strong cash generation. Leverage expressed in debt/EBITDA terms, however, has been retreating through growth in operating earnings. Several rating factors currently suggest a higher rating than the current Ba2. However, an approaching debt maturity and expiration of its back-up liquidity arrangements in March 2010 currently inhibit upward movement in the rating. Moody's assesses L-3's liquidity profile as good reflecting its substantial cash balances, ongoing levels of free cash flow but approaching debt maturity and revolving credit expiration. The company's $1.0 billion revolving credit was un-drawn at the end of 2008 but had some $60 million of letters of credit issued against its commitment. L-3 reported a cash balance of $867 million at December 2008 and is expected to be free cash generative through FY 09 (its guidance is roughly $1.2 billion prior to dividends which should approximate $170 million/year). L-3 is expected to maintain ample cushion under financial covenants contained in its credit agreement. As a result, the company should have full access to its revolver through calendar 2009. However, both the revolving credit and a $650 million term loan mature in March 2010. Absent raising external capital beforehand, this suggests a need to retain cash and limit share repurchases and or acquisitions to satisfy the term loan at its stated maturity. As all of L-3's debt is unsecured, the company's asset base is unencumbered, and could potentially be a source of alternative liquidity. The positive outlook reflects Moody's expectations that L-3 will continue to grow its revenues, maintain its margins, and generate substantial free cash flow. Internal resources should enable the company to manage its debt maturities as well as sustain improving trends in leverage and coverage metrics. Moody's believes the company is unlikely to significantly de-lever through reducing aggregate indebtedness and is more likely to deploy excess cash towards share repurchases and acquisition opportunities. Ratings affirmed: L-3 Communications Holdings, Inc. -- Corporate Family Rating, Ba2 -- Probability of Default, Ba2 -- $700 million Convertible Contingent Debt Securities, Ba3 (LGD-4, 67%) L-3 Communications Corporation -- $3.2 billion of senior subordinated debt issues, Ba3 (LGD-4, 67%) Ratings changed: -- L-3 Communications Holdings, Inc. -- Speculative Grade Liquidity rating to SGL-2 from SGL-1 The last rating action was on December 20, 2007 at which time the L-3's Corporate Family Rating was affirmed at Ba2 and the outlook revised to positive. L-3 Communications Holdings, Inc. is a prime contractor in aircraft modernization and maintenance, C3ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance) systems, and government services. In addition, L-3 provides high technology products, systems and subsystems. Revenues in 2008 were approximately $14.9 billion. LINENS 'N THINGS: CalPERS' $1.7-Billion Bet in Apollo Sours ----------------------------------------------------------- Bloomberg News reports that last year the California Public Employees' Retirement System poured $1.71 billion into Apollo Management LP, more than twice as much as it gave any other private equity manager, betting that the firm could exploit the global credit crisis. "So far, the bet is coming up snake eyes," Bloomberg's Jonathan Keehner and Jason Kelly note. Messrs. Keehner and Kelly relate that Calpers chief of public affairs Pat Macht wrote in an e-mail, "The market dislocation presents an opportunity to invest at some favorable prices. Apollo was best-suited to take advantage of these opportunities, and Calpers determined they had the most experience and track record -- a view shared by those who provide us independent advice". According to Messrs. Keehner and Kelly, after posting average annual returns of more than 25% in the last two decades, Apollo founder Leon Black is trying to salvage some of the $60 billion worth of companies he has acquired since 2006, which includes Linens 'n Things Inc. and Harrah's Entertainment Inc. According to London-based pricing service Markit, Bloomberg said that at least $2 billion of loans Apollo bought last year have lost half their value. The report notes that as the largest U.S. public pension fund, with $173.8 billion in assets, CalPERS provides retirement and health benefits to 1.6 million state government workers. Bloomberg adds that While Calpers says it stands behind the decision to commit more than $3.5 billion to New York-based Apollo since 2006, Calpers has hired a new chief investment officer who managed private-equity holdings at another state pension fund that didn't invest in Black's funds. About Harrah's Entertainment Las Vegas, Nevada-based Harrah's Entertainment, Inc. -- http://www.harrahs.com-- operates nearly 40 casinos across the United States, primarily under the Harrah's(R), Caesars(R) and Horseshoe(R) brand names; Harrah's also owns the London Clubs International family of casinos and the World Series of Poker(R). Private equity firms Apollo Global Management and TPG Capital LP acquired Harrah's in January for $31 billion. At Sept. 30, 2008, the Company's consolidated condensed balance sheets showed total assets of $37.0 billion, total liabilities of $33.4 billion and stockholders' equity of $3.6 billion. For three months ended Sept. 30, 2008, the company reported net loss of $129.7 million compared with net income of $244.4 million for the same period in the previous year. For nine months ended Sept. 30, 2008, the company posted net loss of $100.9 million compared with net income of $667.2 million for the same period in the previous year. The company's cash and cash equivalents, including funds borrowed during the quarter under its credit facilities, totaled approximately $1.0 billion at Sept. 30, 2008, compared to $654.7 million at Sept. 30, 2007. * * * As reported by the TCR on March 10, 2009, Standard & Poor's Ratings Services lowered its corporate credit rating on Las Vegas- based Harrah's Entertainment Inc. and its wholly owned subsidiary, Harrah's Operating Co. Inc., to 'CC' from 'CCC'. The rating outlook is negative. At the same time, S&P lowered the issue- level rating on each of HOC's outstanding senior secured second- priority and senior unsecured debt issues to 'C', from 'CCC-' and 'CC', respectively. S&P also lowered the issue-level rating on Caesars Entertainment Inc.'s subordinated debt issues to 'C' from 'CC'. In addition, S&P placed the 'B-' issue-level rating for HOC's senior secured first-lien credit facilities on CreditWatch with negative implications. These actions follow Harrah's announcement that it is offering to exchange up to $2.8 billion of new 10% senior secured second-priority notes due 2018 for a portion (or potentially all in some cases) of each of the outstanding senior unsecured and subordinated notes in the company's capital structure. About Linens 'n Things, Inc. Headquartered in Clifton, New Jersey, Linens 'n Things, Inc. -- http://www.lnt.com/-- was the second largest specialty retailer of home textiles, housewares and home accessories in North America. As of Sept. 30, 2008, Linens 'n Things operated 411 stores in 47 states and seven provinces across the United States and Canada. Linens 'n Things was acquired by private equity firm Apollo Management in 2006. On May 2, 2008, these Linens entities filed chapter 11 petition (Bankr. D. Del.): Linens Holding Co. (08-10832), Linens 'n Things, Inc. (08-10833), Linens 'n Things Center, Inc. (08-10834), Bloomington, MN., L.T., Inc. (08-10835), Vendor Finance, LLC (08- 10836), LNT, Inc. (08-10837), LNT Services, Inc. (08-10838), LNT Leasing II, LLC (08-10839), LNT West, Inc. (08-10840), LNT Virginia LLC (08-10841), LNT Merchandising company LLC (08-10842), LNT Leasing III, LLC (08-10843), and Citadel LNT, LLC (08-10844). Judge Christopher S. Sontchi presides over the case. Mark D. Collins, Esq., John H. Knight, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., are Linens 'n Things' bankruptcy counsel. The Debtors' special corporate counsel are Holland N. O'Neil, Esq., Ronald M. Gaswirth, Esq., Stephen A. McCaretin, Esq., Randall G. Ray, Esq., and Michael S. Haynes, Esq., at Morgan, Lewis & Bockius, LLP. The Debtors' restructuring management services provider is Conway Del Genio Gries & Co., LLC. The Debtors' CRO and Interim CEO is Michael F. Gries, co-founder of Conways Del Genio Gries & Co., LLC. The Debtors' claims agent is Kurtzman Carson Consultants, LLC. The Debtors' consultants are Asset Disposition Advisors, LLC, and Protivit, Inc. The Debtors' investment bankers are Financo, Inc., and Genuity Capital Markets. Pursuant to the court order entered on October 16, 2008, Linens Holding Co. is in the process of liquidating the entire Linens 'n Things retail chain. (Bankruptcy News About Linens 'n Things; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). M W SEWALL: Taps Marcus Clegg as Counsel, U.S. Trustee Objects -------------------------------------------------------------- M.W. Sewall & Co. ask the U.S. Bankruptcy Court for the District of Maine for authority to employ Marcus, Clegg & Mistretta, P.A., as counsel. MCM will: a) analyze the Debtor's financial situation and advice and assist the Debtor in determining whether to file a petition under Chapter 11 of the Code; b) prepare and file the Debtor's petition, schedules, statement of financial affairs, amendments to the foregoing, and all other documents and pleadings required by the Court, the Code, the Federal Rules of Bankruptcy Procedure and the Local Rules of the Court; c) represent the Debtor at the first meeting of creditors and respond to individual creditor inquiries; d) represent the Debtor in connection with the purchase and sale of any of its assets; e) develop the Debtor's Plan of Reorganization, analysis of the feasibility of any plan, negotiation and drafting of the plan and any disclosure statement, respond to objections to the adequacy of the disclosure statement and to confirmation of the plan; f) review and evaluate the Debtor's executory contracts and unexpired leases, and represent the Debtor with respect to any motions to assume or reject the contracts and leases; g) represent the Debtor in connection with any adversary proceedings or automatic stay litigation which may be commenced in these proceedings; h) analyze the Debtor's cash flow and business operations, advice to the Debtor regarding its responsibilities as a debtor in possession and its postpetition financial operations, negotiation of any borrowing or cash collateral stipulations which may be required, furnishing of financial information to the U.S. Trustee's Office and to any committee appointed; i) review and analyze various claims of the Debtor's creditors and the treatment of the claims; j) representation of the Debtor regarding post-confirmation operations and consummation of any plan of reorganization; k) representation of and advice to the Debtor with respect to general limited liability company law matters and general business law issues; and l) general representation of the Debtor during the bankruptcy proceedings. The Debtor proposes to employ Counsel under a general, security retainer amounting to $101,914. In addition, in view of the substantial amount of work expected to be performed by MCM during the course of the Chapter 11 case, once MCM has rendered services and incurred expenses in an amount equal to or greater than the retainer, the Debtor has agreed that it will pay MCM on a bi- weekly basis. To the best of the Debtor's knowledge, MCM is a "disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code. MCM professionals can be reached at: Marcus, Clegg & Mistretta, P.A. One Canal Plaza, Suite 600 Portland, ME 04101 Tel: (207) 828-8000 (800) 806-9242 (800) 207-1180 Fax: (207) 773-3210 (800) 806-8676 U.S. Trustee's Objections The U.S. Trustee for Region 1 complained in a document filed with the Court that: i) the Debtor has not signed the application; ii) the application does not contain any information about the persons who will be working on this case or the fee amounts they will be charging per hour; iii) the Application and the verified statement of George J. Marcus indicated that MCM received the these funds from the Debtor: Feb. 23, 2009 $10,000 March 16, 2009 10,000 March 27, 2009 100,000 (Retainer) ------- $120,000 iv) the Verified Statement indicated that the first $20,000 in payments have been applied with expenses incurred prepetition and that the Debtor has a credit balance of $1,914. However, there is no disclosure of the prepetition legal work that has been done by MCM. v) the application seeks to alter the distribution procedure set forth in D. Me. LBR 2016-2 by seeking an order that authorizes payment of bi-weekly invoices. D. Me. LBR 2016-2 provides that when a professional has received retainer funds in excess of $25,000, none of the retainer will be withdrawn until the professional files a motion for distribution. About M.W. Sewall & Co. Headquartered in Bath, Maine, M.W. Sewall & Co. distributes petroleum products. The Company filed for Chapter 11 protection on March 27, 2009 (Bankr. D. Maine Case No. 09-20400). George J. Marcus, Esq., at Marcus, Clegg & Mistretta, PA represents the Debtor in its restructuring efforts. The Debtor listed assets and debts of $10 million to $50 million. M W SEWALL: U.S. Trustee Sets Section 341 Meeting for April 30 -------------------------------------------------------------- The U.S. Trustee for Region 1 will convene a meeting of creditors in M.W. Sewall & Co.'s Chapter 11 case on April 30, 2009, at 10:00 a.m., at the U.S. Trustees Office, 537 Congress Street, Rm. 302, Portland, Maine. 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. Governmental units have 180 days from date of filing of the case or the date of conversion to file a proof of claim. Proofs of Claims for all other creditors are due on July 29, 2009. About M.W. Sewall & Co. Headquartered in Bath, Maine, M.W. Sewall & Co. distributes petroleum products. The Company filed for Chapter 11 protection on March 27, 2009 (Bankr. D. Maine Case No. 09-20400). George J. Marcus, Esq., at Marcus, Clegg & Mistretta, PA represents the Debtor in its restructuring efforts. The Debtor listed assets and debts of $10 million to $50 million. MAGNA ENTERTAINMENT: Agrees to Hire Chief Restructuring Officer --------------------------------------------------------------- To address creditors' complaints about a proposed sale to Chief Executive Officer Frank Stronach, Magna Entertainment Corp. agreed to hire a restructuring officer and to add new board members, Bloomberg News' Steven Church reported. An affiliate controlled by Mr. Stronach is proposed to be the lead or stalking horse bidder at an auction for Magna's assets, Bloomberg said. Company attorney Brian Rosen, according to Bloomberg News, told the judge overseeing Magna's bankruptcy that a chief restructuring officer would ensure open bidding for the company's assets, including Pimlico Race Course in Baltimore, and Magna's other major race courses, including Santa Anita Park in California. Pimlico is host to the Preakness Stakes, one of three races that make up horseracing's Triple Crown. About Magna Entertainment Based in Aurora, Ontario, Magna Entertainment Corp. is North America's largest owner and operator of horse racetracks, based on revenue. The Company develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MEC owns and operates AmTote International, Inc., a provider of totalisator services to the pari-mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a fifty percent interest in HorseRacing TV(R), a 24-hour horse racing television network, and TrackNet Media Group LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. As of December 31, 2008, the Company had total assets of $1,049,387,000 and total debts of $958,591,000. Following its failure to meet obligations to lenders led by PNC Bank, National Association, and Wells Fargo Bank, National Association, and controlling shareholder MI Developments Inc.'s decision not to provide further financial backing, Magna Entertainment Corp. and 24 affiliates filed for Chapter 11 on March 5, 2009 (Bankr. D. Del., Lead Case No. 09-10720). Marcia L. Goldstein, Esq., Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, have been engaged as bankruptcy counsel. L. Katherine Good, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., are the Debtors' local counsel. Miller Buckfire & Co. LLC, has been tapped as financial advisor and Kurtzman Carson Consultants LLC, as claims agent. MASSACHUSETTS DEVELOPMENT: S&P Withdraws Rating on Issuer Request ----------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its rating on Massachusetts Development Finance Agency's revenue bonds, issued for Orchard Cove Inc., a subsidiary of Hebrew SeniorLife, based on the issuer's request due to insufficient data to update the rating. In February 2008, Standard & Poor's lowered Orchard Cove's rating to 'BB-' with a negative outlook; the rating action was tied to significant construction, fill up, and debt repayment risks associated with Hebrew SeniorLife's Newbridge on the Charles project. Newbridge, another affiliate of Hebrew SeniorLife, issued $457 million of tax-exempt, unrated, and privately placed bonds in late 2007. Newbridge was in the early phase of constructing a large multigenerational campus on 162 acres of land approximately 10 miles from Orchard Cove. The rating action affects roughly $35.9 million of debt outstanding. MAXXAM INC: Palco Issues Cue Grant Thornton's Going Concern Doubt ----------------------------------------------------------------- Grant Thornton LLP last week said the uncertainty surrounding the real estate industry and the ultimate outcome of proceedings involving MAXXAM Inc.'s former unit, Pacific Lumber Company, and their effect on the Company, as well as the Company's operating losses raise substantial doubt about the ability of the Company to continue as a going concern. Grant Thornton noted MAXXAM has incurred losses in 2007 and 2008, and there have been significant declines in real estate demand in areas where the Company operates. The Palco bankruptcy plan was confirmed in July 2008, but the confirmation order has been appealed. MAXXAM also said it has material uncertainties as a result of actions initiated by Richard Wilson and Chris Maranto. MAXXAM said an adverse decision related to the Bankruptcy Cases or the Wilson actions -- in which the plaintiffs are claiming damages exceeding a billion dollars on a combined basis -- would likely have a material adverse effect on the Company's consolidated financial position, results of operations and liquidity. 2008 Financials MAXXAM reported a net loss of $92.4 million for the 12 months ended December 31, 2008, compared to a net loss of $46.9 million for the same period of 2007. The results include a $67.9 million provision for federal income taxes reflecting the estimated utilization of tax attributes in the Company's 2008 federal income tax return relating to the reorganization of Palco and its subsidiaries. For the three months ended December 31, 2008, the Company reported a net loss of $400,000 compared to a net loss of $17.4 million for the same period a year ago. The Company's results for the three months ended December 31, 2008 include the $10.0 million gain related to the settlement of litigation and the net insurance recoveries of approximately $4.3 million related to damage caused by Hurricane Ike at Sam Houston Race Park. As of December 31, 2008, MAXXAM had $400.3 million in total assets and $787.3 million in total liabilities, resulting in $387.0 million in stockholders' deficit. A full-text copy of MAXXAM's 2008 Annual Report is available at no charge at http://ResearchArchives.com/t/s?3b19 Palco Bankruptcy MAXXAM previously conducted forest products operations through its wholly owned subsidiary, The Pacific Lumber Company, and Palco's wholly owned subsidiaries, Britt Lumber Co., Inc., Salmon Creek LLC, Scotia Development LCC, Scotia Inn Inc., and Scotia Pacific Company LLC. In January 2007, Palco and its affiliates filed separate Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division. The bankruptcy filing was precipitated by liquidity shortfalls at Palco and Scopac and their resultant inability to make January 2007 interest payments on their debt obligations. As of the Petition Date, Scopac's indebtedness consisted of its 6.55% Class A-1, 7.11% Class A-2 and 7.71% Class A-3 Timber Collateralized Notes due 2028 -- $713.8 million principal outstanding as of December 31, 2006 -- and a line of credit with a group of banks -- $36.2 million principal outstanding as of December 31, 2006. The obligations were each secured by Scopac's timber, timberlands and timber rights and various related assets. As of the Petition Date, Palco's principal indebtedness consisted of a five-year $85.0 million secured term loan -- $84.3 million principal outstanding as of December 31, 2006 -- and a five-year $60.0 million secured asset-based revolving credit facility -- $24.1 million of borrowings outstanding and $13.7 million of letters of credit issued as of December 31, 2006. Marathon Structured Finance Fund L.P. provided both facilities, which were secured by the stock of Palco owned by its parent, MAXXAM Group Inc., and substantially all of the assets of the Palco Debtors other than Palco's equity interest in Scopac. In December 2007, the Bankruptcy Court approved an agreement allowing the Debtors and certain others to file plans of reorganization. The Debtors subsequently filed a joint plan of reorganization. As the Debtors did not believe the Joint Plan was eligible to be "crammed down" (forced) on creditors who voted against it, the Palco Debtors as a group and Scopac filed separate and alternative stand-alone plans of reorganization. Two other plans of reorganization were filed. The first was filed by Mendocino Redwood Company, LLC and Marathon Structured Finance Fund L.P., Palco's secured lender. The second plan was filed by the Indenture Trustee for the Scopac Timber Notes on behalf of the holders of the Scopac Timber Notes. The MRC/Marathon Plan provided for the Debtors to be reorganized and continued under two new companies, one -- Newco -- to be owned jointly by MRC and Marathon, and the other to be owned by Marathon, with substantial cash payments to be made to all of the creditor classes other than Marathon. The Noteholder Plan, which did not address the Palco Debtors, would have effectively resulted in an auction of Scopac's timberlands to the highest bidder. The MRC/Marathon Plan provided for the loss entirely of the Company's indirect equity interests in the Palco Debtors and Scopac; the Noteholder Plan also provided for the loss of the Company's indirect equity interest in Scopac. May 2008 Settlement Agreement On May 1, 2008, MRC, Marathon, the MAXXAM Entities and the Palco Debtors entered into a settlement of various matters in respect of the Debtors' bankruptcy proceedings. Scopac was not a party to the Settlement Agreement. The Palco Debtors withdrew the Joint Plan and the Palco Debtors' Alternative Plan and the MAXXAM Entities withdrew as co-proponents of the Joint Plan and the two Alternative Plans. The Settlement Agreement required MRC and Marathon to amend the terms of the MRC/Marathon Plan, among other things, to provide for (i) a cash payment of not less than $520.0 million to the Timber Noteholders in satisfaction of their bankruptcy claims, and (ii) assumption of Palco's pension plan by Newco upon consummation of the MRC/Marathon Plan. MAXXAM received consideration of $2.25 million at the time the MRC/Marathon Plan was consummated. An indirect wholly-owned subsidiary of the Company in June 2008 required MRC to re-purchase lumber that the subsidiary had previously purchased from Palco. The subsidiary received $3.9 million at the time of closing and an additional $1.2 million of contingent consideration at the time the MRC/Marathon Plan was consummated. MAXXAM Parent, MAXXAM Group Holdings Inc., the parent of MGI, and MGI granted a release in favor of MRC, Marathon and various related parties. MRC and Marathon granted a release in favor of the MAXXAM Entities and various related parties. MRC and Marathon released the Palco Debtors and various related parties against any and all claims (a) that the MAXXAM Entities, MRC and Marathon had against any of the released parties -- including roughly $40.0 million of intercompany indebtedness owed by the Palco Debtors to the MAXXAM Entities -- and (b) relating to any of the Debtors or their bankruptcy cases that might thereafter arise. The Palco Debtors released each other, MRC, Marathon, the MAXXAM Entities and various related parties against any and all claims. The Settlement Agreement also obligates MAXXAM to indemnify MRC, Marathon, Newco and certain affiliates against certain tax liabilities assessed on the parties subsequent to the reorganization. 5th Cir. Appeal of Confirmation Order On July 8, 2008, the Bankruptcy Court confirmed the MRC/Marathon Plan and denied confirmation of the Noteholder Plan, among other things. On July 11, 2008, the Bankruptcy Court approved the May 2008 Settlement Agreement. The Indenture Trustee and other parties appealed the Confirmation Order to the Fifth Circuit Court of Appeals and requested the Fifth Circuit to stay the Confirmation Order pending appeal. Following the Fifth Circuit's denial of the request for a stay of the Confirmation Order, the MRC/Marathon Plan closed on July 30, 2008 and the Debtors emerged from bankruptcy. The consummation of the MRC/Marathon Plan resulted in the loss entirely of the Company's indirect equity interest in Palco and its subsidiaries, including Scopac. Oral arguments on the appeal by the Indenture Trustee and others of the Confirmation Order were heard in October 2008, but the Fifth Circuit has not yet ruled. There can be no assurance that the MRC/Marathon Plan will not be overturned by the Fifth Circuit. The outcome of the appeal is impossible to predict and, an adverse decision would likely have a material adverse effect on the business of the Debtors, on the interests of creditors and the Company and certain of its affiliates. Specifically, MAXXAM said if the MRC/Marathon Plan is upheld by the Fifth Circuit, it will reverse all or a significant portion of its investment in the Debtors during the period in which the Fifth Circuit renders its decision. The consolidated financial statements include the Company's $484.2 million of losses in excess of its investment in the Debtors. The reversal of the Company's losses in excess of its investment in the Debtors would have a material impact on stockholders' deficit -- i.e. would result in a $484.2 million increase to stockholders' equity. If the Fifth Circuit overturns the MRC/Marathon Plan or renders an inconclusive decision, the Company will re-evaluate its position based on the facts and circumstances at that time. The Company cannot predict when the Fifth Circuit will rule or what its decision will be. The ultimate resolution of the Bankruptcy Cases could result in claims against and could have adverse impacts on MAXXAM Parent and its affiliates, including MGHI and/or MGI. It is possible that the MRC/Marathon Plan could be overturned and unwound as a result of the appeal pending before the Fifth Circuit. If that occurs, the Company would be required to return the $2.25 million of cash consideration it received when the MRC/Marathon Plan was consummated, MGI would be obligated for certain tax liabilities and Newco's assumption of the Palco Pension Plan would no longer be effective, among other things. The estimated unfunded termination obligation attributable to the Palco Pension Plan as of December 31, 2008, was approximately $35.0 million based upon annuity placement interest rate assumptions as of such date. In addition, the consummation of the MRC/Marathon Plan -- or the Noteholder Plan, in the event the MRC/Marathon Plan is overturned upon appeal -- is expected to result in the utilization of all or a substantial portion of the Company's net operating losses and other tax attributes for federal and state income tax purposes. Moreover, the MRC/Marathon Plan -- and the Noteholder Plan -- provides for litigation trusts, which could bring claims against the Company and certain of its affiliates. Wilson Actions On December 7, 2006, an action entitled State of California, ex rel. Richard Wilson and Chris Maranto v. MAXXAM Inc., The Pacific Lumber Company, Scotia Pacific Company, LLC, Salmon Creek LLC, Charles E. Hurwitz and Does 1 through 50 (No. CGC-06-458528) was filed under seal in the Superior Court of San Francisco, California, and on the same day, an action entitled United States of America ex rel. Richard Wilson and Chris Maranto v. MAXXAM Inc., The Pacific Lumber Company, Scotia Pacific Company, LLC, Salmon Creek LLC and Charles E. Hurwitz (No. C 06 7497 CW) was filed under seal in the U.S. District Court for the Northern District of California. The original defendants in the Wilson actions included certain of the Debtors, the Company and Mr. Hurwitz. The Wilson actions allege violations of the California False Claims Act and the Federal False Claims Act, and are qui tam actions -- actions brought by the government, but on the information and at the instigation of a private individual, who would receive a portion of any amount recovered. As the State of California declined to participate in the Wilson state action and the United States declined to participate in the Wilson federal action, the seal on each case was lifted and the private individuals are entitled to proceed with the suits. Both suits allege that the defendants made false claims by submitting to a California agency a sustained yield plan misrepresenting as sustainable the projected harvest yields of the timberlands of Palco and Scopac. The remedies being sought are actual damages -- essentially based on over $300.0 million of cash and approximately 7,700 acres of timberlands transferred by the United States and California in exchange for various timberlands purchased from Palco and its subsidiaries -- as well as treble damages and civil penalties of up to $10,000 for every violation of the California False Claims Act and the Federal False Claims Act, respectively. On February 28, 2008, the plaintiffs settled for nominal amounts the Wilson actions as to the Debtor defendants. The actions are proceeding as to MAXXAM and Mr. Hurwitz. The Wilson federal action is scheduled for trial beginning on April 20, 2009. The Wilson state action was dismissed in September 2008, but the plaintiffs have appealed this decision. As the plaintiffs are claiming damages in the Wilson actions that, on a combined basis, exceed a billion dollars, an adverse decision in either Wilson actions would likely have a material adverse effect on the Company's consolidated financial condition, results of operations and liquidity. The Company has incurred significant attorneys' fees related to these matters. As of December 31, 2008, such fees were in excess of $13.9 million -- of which $5.9 million is reflected as an accrued liability. About MAXXAM Inc. Headquartered in Houston, MAXXAM Inc. is a publicly-traded company, with business interests in forest products, real estate investment and development and racing operations. MERUELO MADDUX: Receives Delisting Notification From Nasdaq ----------------------------------------------------------- Meruelo Maddux Properties has received a Nasdaq staff determination notice. The notice stated that the company was not in compliance with Nasdaq Marketplace Rules 4300, 4450(f) and IM- 4300 because the company and numerous subsidiaries filed voluntary petitions in California for relief under Chapter 11 of the United States Bankruptcy Code. Based on the notice, the company anticipates that its common stock will no longer be listed on The Nasdaq Global Market from and after the opening of business on April 7, 2009. The company is in discussions with market makers in its common stock about potential quotation of the common stock on the OTC Bulletin Board following delisting from The Nasdaq Global Market. About Meruelo Maddux Based in Los Angeles, California, Meruelo Maddux Properties, Inc., -- http://www.meruelomaddux.com/-- together with its affiliates, engage in residential, commercial and industrial development. Meruelo Maddux and its affiliates filed for Chapter 11 protection on March 26, 2009 (Bankr. C. D. Calif. Lead Case No.: 09-13356). John J. Bingham, Jr., Esq. represents the Debtors in their restructuring efforts. The Debtors' financial condition as of December 31, 2008, showed estimated assets of $681,769,000 and estimated debts of $342,022,000. MGM MIRAGE: Files Correct Version of 2005 Amended Incentive Plan ---------------------------------------------------------------- MGM MIRAGE relates that, effective October 6, 2008, the Company amended and restated its 2005 Omnibus Incentive Plan to increase the number of shares available under the Plan by 15 million shares. MGM MIRAGE says an incorrect copy of the 2005 Plan was filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2008. MGM MIRAGE filed with the Securities and Exchange Commission a correct copy of the 2005 Plan, which corrects an administrative error. A full-text copy of the Amended and Restated 2005 Incentive Plan is available at http://ResearchArchives.com/t/s?3b15 About MGM Mirage Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. MGM MIRAGE reported a net loss of $1.14 billion on revenues of $1.62 billion for the three months ended December 31, 2008. MGM MIRAGE reported a net loss of $855.2 million on revenues of $7.20 billion for year 2008. MGM MIRAGE had $23.2 billion in total assets, including $1.53 billion in total current assets; $3.0 billion in total current liabilities; and $12.4 billion in long-term debt. A full-text copy of the Annual Report on Form 10-K is available at no charge at: http://researcharchives.com/t/s?3ae0 The Company does not expect to be in compliance with the financial covenants under its senior credit facility at March 31, 2009. On March 17, Company obtained an amendment to the senior credit facility, which included a waiver of the requirement to comply with the financial covenants through May 15, 2009. Following expiration of the waiver on May 15, 2009, the Company will be subject to an event of default related to the expected noncompliance with financial covenants under the senior credit facility at March 31, 2009. The report of Deloitte & Touche, LLP, MGM MIRAGE's independent registered public accounting firm on the Company's consolidated financial statements for the year ended December 31, 2008, contains an explanatory paragraph with respect to the Company's ability to continue as a going concern. * * * As reported by the Troubled Company Reporter on March 23, 2009, Moody's Investors Service downgraded MGM MIRAGE's Probability of Default Rating to Caa3 from Caa2 and its Corporate Family Rating to Caa2 from Caa1. According to the TCR on March 23, 2009, Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Las Vegas-based MGM MIRAGE and its subsidiaries by two notches; the corporate credit rating was lowered to 'CCC' from 'B-'. These ratings were removed from CreditWatch, where they were initially placed with negative implications on Jan. 30, 2009. S&P said that the rating outlook is negative. The TCR reported on March 25, 2009, that Fitch Ratings took these rating actions for MGM MIRAGE following the lawsuit filed against MGM by City Center JV partner Dubai World, and the two-month covenant waiver obtained from its bank lenders: -- Issuer Default Rating downgraded to 'C' from 'CCC'; -- Senior secured notes downgraded to 'CCC/RR2' from 'B/RR2'; -- Senior unsecured credit facility downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior unsecured notes downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior subordinated notes affirmed at 'C/RR6'. MGM MIRAGE: Asks CityCenter Lenders to Extend April 13 Waiver ------------------------------------------------------------- MGM MIRAGE says lenders to its CityCenter project have temporarily waived through April 13, 2009, certain defaults and potential defaults under CityCenter Holdings, LLC's senior secured credit facility relating to required sponsor equity capital contributions to CityCenter. MGM MIRAGE entered into Amendment No. 3, dated March 26, 2009, to its Fifth Amended and Restated Loan Agreement, as previously amended, with MGM Grand Detroit, LLC, as initial co-borrower, the various lenders and Bank of America, N.A., as administrative agent. Amendment No. 3 modified the Company's ability to make additional investments in CityCenter. Pursuant to Amendment No. 3, the Company is permitted, within seven business days after March 24, 2009 and subject to certain conditions, to make investments in CityCenter in an amount not to exceed the lesser of (i) the aggregate amount requested by CityCenter from the Company and Dubai World, including from their respective affiliates and (ii) $200 million. No other future investments by the Company in CityCenter are permitted by the Fifth Loan Agreement, as amended, except up to $20 million to ensure public health, safety and welfare or regulatory compliance. The Company paid a customary amendment fee to the lenders party to the Loan Agreement in connection with the execution of Amendment No. 3. Certain of the lenders party to the Loan Agreement and their respective affiliates have in the past engaged in financial advisory, investment banking, commercial banking or other transactions of a financial nature with the Company and its subsidiaries, including the provision of advisory services for which they received customary fees, expense reimbursement or other payments. On March 27, 2009, the Company funded $200 million in cash to CityCenter to satisfy the required sponsor equity capital contributions due on or about March 24. The funding included $100 million that should have been funded by Dubai World. The Company has said it intends to work with Dubai World, CityCenter and its lenders, and the Company's lenders, to obtain necessary waivers or amendments prior to April 13, 2009, and to find a long-term solution for the financing of CityCenter. However, there can be no assurance that any waiver, amendment or long-term solution will be available or that CityCenter will not determine to seek relief through a filing under the U.S. Bankruptcy Code. A full-text copy of Amendment No. 3 is available at no charge at: http://ResearchArchives.com/t/s?3b16 About MGM Mirage Headquartered in Las Vegas, Nevada, MGM Mirage (NYSE: MGM) -- http://www.mgmmirage.com/-- is a hotel and gaming company. It owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. MGM MIRAGE reported a net loss of $1.14 billion on revenues of $1.62 billion for the three months ended December 31, 2008. MGM MIRAGE reported a net loss of $855.2 million on revenues of $7.20 billion for year 2008. MGM MIRAGE had $23.2 billion in total assets, including $1.53 billion in total current assets; $3.0 billion in total current liabilities; and $12.4 billion in long-term debt. A full-text copy of the Annual Report on Form 10-K is available at no charge at: http://researcharchives.com/t/s?3ae0 The Company does not expect to be in compliance with the financial covenants under its senior credit facility at March 31, 2009. On March 17, Company obtained an amendment to the senior credit facility, which included a waiver of the requirement to comply with the financial covenants through May 15, 2009. Following expiration of the waiver on May 15, 2009, the Company will be subject to an event of default related to the expected noncompliance with financial covenants under the senior credit facility at March 31, 2009. The report of Deloitte & Touche, LLP, MGM MIRAGE's independent registered public accounting firm on the Company's consolidated financial statements for the year ended December 31, 2008, contains an explanatory paragraph with respect to the Company's ability to continue as a going concern. * * * As reported by the Troubled Company Reporter on March 23, 2009, Moody's Investors Service downgraded MGM MIRAGE's Probability of Default Rating to Caa3 from Caa2 and its Corporate Family Rating to Caa2 from Caa1. According to the TCR on March 23, 2009, Standard & Poor's Ratings Services lowered its corporate credit and issue-level ratings on Las Vegas-based MGM MIRAGE and its subsidiaries by two notches; the corporate credit rating was lowered to 'CCC' from 'B-'. These ratings were removed from CreditWatch, where they were initially placed with negative implications on Jan. 30, 2009. S&P said that the rating outlook is negative. The TCR reported on March 25, 2009, that Fitch Ratings took these rating actions for MGM MIRAGE following the lawsuit filed against MGM by City Center JV partner Dubai World, and the two-month covenant waiver obtained from its bank lenders: -- Issuer Default Rating downgraded to 'C' from 'CCC'; -- Senior secured notes downgraded to 'CCC/RR2' from 'B/RR2'; -- Senior unsecured credit facility downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior unsecured notes downgraded to 'CC/RR3' from 'B-/RR3'; -- Senior subordinated notes affirmed at 'C/RR6'. MICRON TECHNOLOGY: Posts $751MM Net Loss in Second Quarter 2009 --------------------------------------------------------------- Micron Technology, Inc., has released results of operations for the company's second quarter of fiscal 2009, which ended March 5, 2009. For the second quarter of fiscal 2009, the Company posted a net loss of $751 million, or $0.97 per diluted share, on net sales of $1.0 billion. These results reflect a number of cash and non- cash items resulting in a net charge of $120 million in the second quarter of fiscal 2009. The Company ended the quarter with cash and investments of $932 million. The imbalance of supply and demand for semiconductor memory products continued in the second quarter, resulting in significant decreases in the Company's per gigabit average selling prices compared to the preceding quarter. Revenue from sales of DRAM products decreased approximately 30% in the second quarter compared to the first quarter principally due to a 30% decrease in selling prices. Sales volumes for DRAM products remained relatively stable comparing the same periods. Revenue from sales of NAND Flash products decreased 20% in the second quarter compared to the first quarter due to a 13% decrease in selling prices and an eight% decrease in sales volume. Memory production in the second quarter was relatively flat compared to the preceding quarter. Increases in bit production of NAND Flash products resulting from the Company's transitions to higher density 34nm NAND Flash products were offset by decreases in production resulting from the Company's decision to slow down DRAM production at its 200mm facilities and to discontinue production of 200mm NAND Flash wafers at its Boise facility. "We are actively managing our overall cost structure, capital expenditures and technology execution, which are driving our operating margins ahead of industry trend lines," said Steve Appleton, Micron Chairman and CEO. "Notably, our 34nm NAND technology is ramping rapidly and is providing a competitive differentiation in this challenging economic environment." The Company's gross margin on sales of memory products improved 11% in the second quarter compared to the previous quarter, resulting from decreases in per gigabit manufacturing costs and the benefit in the second quarter from sales of products previously written-down, partially offset by decreases in selling prices. Cost of goods sold includes charges for unused production capacity, including charges from the Company's Inotera and IM Flash joint ventures. Excluding the effects of the inventory write-downs and idle capacity charges, per gigabit costs declined significantly for both DRAM and NAND Flash products. Sales of CMOS image sensors in the second quarter decreased 54% compared to the preceding quarter as a result of a sharp decline in unit sales stemming from weakness in consumer markets. The Company's gross margin on sales of Imaging products was two% in the second quarter compared to 29% in the first quarter, primarily resulting from higher per unit manufacturing costs associated with a significant decrease in the level of production. The Company's cost-cutting and restructuring activities have yielded reductions in operating costs and contributed to the Company's cash flow from operating activities in the second quarter. In addition, the Company recently announced that it will phase out the remaining 200mm wafer production at its Boise facility. As a result, the Company recorded a restructure charge of $105 million in the second quarter of fiscal 2009, including $17 million of employee-related costs and $87 million of equipment write-downs. Jerry A. Dicolo at The Wall Street Journal reports that Micron Technology said that it doesn't see a reason to join a Taiwan government plan to aid the chip industry. According to WSJ, Micron Technology has suffered along with foreign rivals from an oversupply in memory chips. "We're still in discussions with the Taiwan government," WSJ quoted Micron Technology CEO Steve Appleton as saying. About Micron Technology Boise, Idaho-based Micron Technology, Inc. -- http://www.micron.com/-- together with its subsidiaries, is a global manufacturer and marketer of semiconductor devices, principally dynamic random access memory, NAND Flash memory, complementary metal-oxide semiconductor (CMOS) image sensors. It operates in two segments: Memory and Imaging. The Memory segment's primary products are DRAM and NAND Flash, which are key components used in electronic applications, including personal computers, workstations, network servers, mobile phones, flash memory cards, universal serial bus storage devices, Moving picture experts group layer-3 audio players and other consumer electronics products. The Imaging segment's primary products are CMOS image sensors, which are key components used electronic applications, including mobile phones, digital still cameras, webcams and other consumer, security and automotive applications. In March 2008, the company announced that it has launched Aptina Imaging for its CMOS imaging business. * * * As reported by the Troubled Company Reporter on March 11, 2009, Standard & Poor's Ratings Services lowered its issue-level and recovery ratings on Micron Technology Inc.'s unsecured debt issue. The issue-level rating on the company's $1.3 billion senior unsecured convertible notes has been lowered to 'B-' (one notch lower than the corporate credit rating on Micron), from 'B'. S&P has a B/Negative/-- rating on Micron Technology. MILLAR WESTERN: Moody's Downgrades Corporate Family Rating to 'B3' ------------------------------------------------------------------ Moody's Investors Service downgraded the Corporate Family Rating of Millar Western Forest Products Ltd. to B3 from B2 and the Probability of Default Rating to Caa1 from B2. Concurrently, the rating on the senior unsecured notes was lowered to Caa1 from B2 and the outlook was changed to negative. This action concludes the review for possible downgrade initiated on September 4, 2008. The downgrade and negative outlook reflect the anticipated deterioration in Millar Western's fundamental credit metrics resulting from the steep decline in the global demand for pulp. To match pulp supply with reduced demand, Millar Western and its competitors have announced considerable production curtailments in the last few months. At the same time, North American lumber markets continue to languish and the Company has reduced output at its two remaining sawmills. The combination of lower shipments and pricing in both segments, even though partly offset by cost reductions, will likely lead to a significant cash drain. Nonetheless, the Company's cash balance is expected to be sufficient to fund operating expenses and other cash needs over the near term. At December 31, 2008, Millar Western reported cash on hand of approximately $46 million and in March 2009 the Company received the remaining $26 million of insurance proceeds due from the settlement of the Fox Creek sawmill fire. Additionally, the $50 million borrowing base revolver (unrated by Moody's) was undrawn at year-end, though effective availability could be limited by lower working capital levels. While Millar Western's PDR was lowered two notches, the CFR was downgraded one notch due to Moody's assessment of a higher than average expected family recovery rate in a distressed scenario. In Moody's opinion, the Company's potential recovery is enhanced by long-term power purchase agreements that significantly lower the operating costs of its Whitecourt pulp mill and sawmill. These ratings were downgraded: -- US$190 million senior unsecured notes due 2013, to Caa1 (LGD3/42%) from B2 (LGD4/56%) -- Corporate Family Rating, to B3 from B2 -- Probability of Default Rating, to Caa1 from B2 Millar Western Forest Products Ltd. is privately held and produces dimension lumber and high-yield pulp. Headquartered in Edmonton, Alberta, revenues for the year ended December 31, 2008 were approximately CAD$330 million. MUZAK HOLDINGS: To Emerge From Ch 11 in Tough Spot, Says Miller --------------------------------------------------------------- Muzak Holdings LLC will come out of Chapter 11 into a "tough spot," Pete Iacobelli at The Associated Press reports, citing Miller Tabak Roberts Securities managing director Matthew Dundon. According to The AP, it would be hard to achieve steady growth as retailers close and fewer new potential clients emerge. The AP states that Muzak was already having trouble growing and its 2008 revenue of $249 million was flat when compared to 2007. "The wind in 2009 is anywhere but at their back," The AP quoted Mr. Dundon as saying. The AP relates that Muzak will keep operating its library of more than 2.6 million songs and continue to research the best songs to reduce stress or to spur shoppers to purchase something. 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. Kirkland & Ellis LLP is the Debtor's counsel. 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 each. NATIONAL CENTURY: Credit Suisse's Bid to Dismiss Claims Denied -------------------------------------------------------------- The Honorable James Graham of the U.S. District Court for the Southern District of Ohio has denied in virtually every respect motions to dismiss the claims filed against Credit Suisse by a litigation trust created in the bankruptcy arising out of the collapse of former asset backed securities issuer National Century Financial Enterprises. The litigation trust, the Unencumbered Assets Trust (UAT), is represented by Gibbs & Bruns LLP. In light of the current financial crisis, the Court's ruling on Credit Suisse's motion to dismiss is highly significant in that it directly addresses and rejects many of the arguments that have been employed in the past to bar claims by trustees of bankrupt entities against investment banks and financial advisors. In its opinion issued mid-March, the Court rejects Credit Suisse's argument that fraudulent conduct on the part of former officers of a company must always bar a bankruptcy trustee from recovering damages from third parties who participated in the fraud -- commonly referred to as the doctrine of in pari delicto. The Court noted that the existence of structural limits and controls typically found in securitization transactions could prevent application of this doctrine. The Court also ruled that application of the in pari delicto doctrine is not automatic where the defendant asserting the defense is alleged to have participated in the conspiracy. With respect to Credit Suisse, the Court's opinion notes that: "According to the complaint, the fraud could never have been pulled of without Credit Suisse's involvement. It was allegedly Credit Suisse that the Founders enlisted to help misappropriate money from NPF VI and NPF XII [the NCFE securitization vehicles]. In Credit Suisse, the Founders had a partner who allegedly agreed to accept substantial investment banking fees is exchange for keeping quiet while assets of their principal were looted, and who further helped conceal the fraud by contributing its own funds to prop up NPF VI's and NPF XII's reserves. And whenever the scheme needed more cash flow, it was Credit Suisse who is alleged to have knowingly issued more notes. It was Credit Suisse's expertise, reputation, and presence as a leading global investment bank that allegedly won the trust of institutional investors who would place millions, sometimes hundreds of millions, of dollars in NPF VI and NPF XII notes. The complaint describes a condemning picture of Credit Suisse's participation, knowledge, and motivation regarding the alleged scheme to defraud and regarding the injury to NPF VI and NPF XII." The Court rejected Credit Suisse's assertion that NCFE's fraud injured only the noteholders who purchased fraudulent notes and, therefore, the bankruptcy trust lacked standing to bring suit. In rejecting this claim, the Court noted that the bankrupt company was injured by the "looting" of the company by its defalcating officers and that it therefore has standing to recover the looted assets, both from those who looted them and from those who assisted in the looting. Lead counsel for the UAT, Kathy Patrick of Gibbs & Bruns said that her client feels vindicated by the court's opinion. "Our client is very pleased that the Court has rejected Credit Suisse's efforts to avoid responsibility for its actions by relying on technicalities. The securities laws require sellers of securities to tell the truth and investment banks and financial advisers to serve their clients faithfully. This opinion confirms that this is a serious lawsuit, with serious claims, and we look forward to presenting these claims to a jury." Gibbs & Bruns LLP -- http://www.gibbs-bruns.com/-- founded in 1983, is a leading boutique law firm engaging in high-stakes business and commercial litigation. The firm is renowned for its representation of both plaintiffs and defendants in complex matters, including securities, energy, director and officer liability, fraud and fiduciary claims, institutional investor, legal malpractice, intellectual property, contract, construction, antitrust, and partnership disputes. Gibbs & Bruns is routinely recognized as a top commercial litigation firm in the US. About National Century Financial Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- was the largest issuer of medical accounts receivable asset backed securities in the United States before it collapsed in bankruptcy in November 2002 amid allegations of widespread fraud and misappropriation of assets. To date, 10 senior executives of the company have been convicted or pled guilty to federal charges of conspiracy, securities fraud, wire fraud, and money laundering arising out of the NCFE securitization program. NCFE -- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust -- is in the midst of liquidating estate assets. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represented the Debtors. (National Century Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NATURAL RESOURCES: S&P Gives Negative Outlook; Keeps 'BB+' Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it revised its outlook on oil and gas exploration and production company Pioneer Natural Resources Inc. to negative from stable. At the same time, S&P affirmed its ratings, including the 'BB+' corporate credit rating on the company. "The outlook revision reflects our concerns that low commodity prices, as well as the company's aggressive financial profile, could lead to cash flow and credit metrics underperformance in the near-term which could pressure the rating," said Standard & Poor's credit analyst Amy Eddy. Pioneer has a satisfactory business risk profile, and has announced considerable cuts to its capital spending budget in 2009, which should allow for debt repayment in excess of $250 million. S&P still expects that the company's credit measures will look weak for the rating category with debt to EBITDAX of more than 4.5x and FFO to debt of slightly more than 15% based on S&P's 2009 pricing assumptions. Debt service coverage ratios will also worsen markedly in 2009, based on S&P's pricing assumptions, with unadjusted EBIT to interest closer to 1x compared to an adjusted EBIT to interest of more than 3x in 2008. NEW CENTURY FINANCIAL: KPMG Sued by Trustee Over Demise ------------------------------------------------------- Sophia Pearson of Bloomberg News reports KPMG International, which oversees the fourth-largest U.S. accounting firm, was sued by the trustee for bankrupt subprime lender New Century Financial Corp. over claims it failed in its role as "gatekeeper." According to the report Steven Thomas, an attorney for New Century Trustee Alan M. Jacobs, said in an interview, "Once an auditing firm lacks independence, then their audits aren't worth the paper they're written on. KPMG had a duty directly to New Century and a duty directly to the public. It was acting as a gatekeeper for a company that was at the center of the housing boom." Bloomberg says that, according to lawsuits filed in state court in Los Angeles and federal court in New York, negligent audits and reviews by KPMG LLP, the U.S. member firm of KPMG International, led to New Century's collapse. The suits, filed against both KPMG International and KPMG LLP, seek at least $1 billion in damages. About New Century Financial Founded in 1995, Irvine, Calif.-based New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/-- is a real state investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The company offers a broad range of mortgage products designed to meet the needs of all borrowers. The company and its debtor-affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Lead Case No. 07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. The Official Committee of Unsecured Creditors selected Hahn & Hessen as its bankruptcy counsel and Blank Rome LLP as its co-counsel. When the Debtors filed for bankruptcy, they listed total assets of $36,276,815 and total debts of $102,503,950. The Court confirmed the Debtors' second amended joint Chapter 11 plan on July 15, 2008. (New Century Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NEW CENTURY: Trustee Wants to Recoup $150MM From Ex-Directors ------------------------------------------------------------- Sophia Pearson and Steven Church of Bloomberg News report that the trustee for New Century Financial Corp. sued former directors of the bankrupt subprime mortgage lender seeking to recoup bonuses and dividends paid when the Company collapsed amid infighting and bad decisions. In a complaint filed in the U.S. Bankruptcy Court for the District of Delaware, trustee Alan M. Jacobs said that New Century co- founder Jacobs Robert Cole and other directors breached their fiduciary duties and wasted assets when they failed to address deficiencies in the company's loan origination practices. According to the report, the suit is seeking repayment of at least $150 million. The report states that Mr. Jacobs accused the directors of knowingly directing the Company to originate and purchase high- risk loans made to unqualified buyers. The directors also failed to take action when the loans resulted in continuing and increased losses and failed to implement controls to protect the company from risks, the complaint said. Mr. Jacobs sued KPMG International and its U.S. member firm KPMG LLP in federal court in New York and in California state court in Los Angeles for their roles in New Century's bankruptcy. Bloomberg states that the suits seek at least $1 billion in damages. Mr. Jacobs also sued the auditor in bankruptcy court over $1.8 million in payments made to KPMG LLP shortly before New Century filed for bankruptcy in April 2007. The report says the trustee is seeking to recoup money to pay thousands of creditors New Century estimates are owed about $2 billion. Bloomberg points out that the Company's liquidation plan approved in July proposed paying about $194 million to creditors. Founded in 1995, Irvine, Calif.-based New Century Financial Corporation (NYSE: NEW) -- http://www.ncen.com/-- was a real estate investment trust, providing mortgage products to borrowers nationwide through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation. The Company offered a broad range of mortgage products designed to meet the needs of all borrowers. The Company and its affiliates filed for Chapter 11 protection on April 2, 2007 (Bankr. D. Del. Lead Case No. 07-10416). Suzzanne Uhland, Esq., Austin K. Barron, Esq., and Ana Acevedo, Esq., at O'Melveny & Myers LLP, and Mark D. Collins, Esq., Michael J. Merchant, Esq., and Jason M. Madron, Esq., at Richards, Layton & Finger, P.A., represent the Debtors. The Official Committee of Unsecured Creditors selected Hahn & Hessen as its bankruptcy counsel and Blank Rome LLP as its co-counsel. When the Debtors filed for bankruptcy, they listed total assets of $36,276,815 and total debts of $102,503,950. The Court confirmed the Debtors' second amended joint Chapter 11 plan on July 15, 2008. (New Century Bankruptcy News, Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). NEXSTAR BROADCASTING: S&P Raises Corporate Credit Rating to 'B-' ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Irving, Texas-based Nexstar Broadcasting Group Inc. and related entities to 'B-' from 'SD' (selective default). The rating outlook is stable. At the same time, S&P raised its issue-level rating on Nexstar Broadcasting Inc.'s 7% senior subordinated notes due 2014 to 'CCC' (two notches lower than the 'B-' corporate credit rating) from 'D'. The recovery rating on this debt remains at '6', indicating S&P's expectation of negligible (0% to 10%) recovery for debtholders in the event of a payment default. In addition, S&P revised its recovery rating on the senior secured debt of Nexstar Broadcasting Inc. and Mission Broadcasting to '2', indicating S&P's expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default, from '1'. S&P lowered the issue-level rating on this debt to 'B' (one notch higher than the corporate credit rating) from 'B+', in accordance with S&P's notching criteria for a '2' recovery rating. S&P also affirmed the issue-level and recovery ratings on Nexstar Broadcasting Group's 11.375% senior discount notes due 2013 at 'CCC' and '6', respectively. The issue-level ratings on the secured debt and senior discount notes were removed from CreditWatch, where they were placed with negative implications on March 10, 2009. "The rating actions reflect our reassessment of the company's financial condition and business outlook following the consummation of its debt exchange offer," explained Standard & Poor's credit analyst Deborah Kinzer. "We believe Nexstar's revised capital structure and reduced interest burden will increase the company's headroom under its bank covenants in the short run. In addition, S&P expects that the company would have sufficient EBITDA to cover potential interest rate increases if recessionary pressures on TV ad demand force it to seek an amendment to its credit agreement or a senior leverage covenant waiver later in the year." The 'B-' rating reflects Nexstar's high debt leverage from aggressive debt-financed acquisitions, advertising's vulnerability to economic downturns, and TV broadcasting's mature revenue growth prospects. The company's cash flow diversity from major network- affiliated TV stations in midsize markets and TV broadcasting's good EBITDA margin minimally offset these factors. Nexstar operates 51 TV stations, reaching 8.2% of U.S. TV households. NBC- and CBS-affiliated stations contribute a majority of its broadcast cash flow. The company has No. 1- or No. 2-rated local news programs in three-quarters of its markets. No market contributes more than 15% of Nexstar's total broadcast cash flow, mitigating the impact of regional economic volatility on ad demand. Even so, revenue comparisons in nonelection years are difficult because of large swings in political advertising. NORTHSTAR CBO: Fitch Changes Ratings on Class A-3 to 'C/RR6' ------------------------------------------------------------ Fitch Ratings revises recovery rating on the remaining class of notes issued by Northstar CBO 1997-2 Ltd./Corp. This rating action is effective immediately: -- $51,456,985 class A-3 notes revised to 'C/RR6' from 'C/DR6'. Northstar 1997-2 is a collateralized bond obligation which closed July 15, 1997 and is managed by ING Investment Management Company. Since the review on Dec. 2, 2005 all performing collateral in the portfolio has been sold. The recovery rating has been revised to 'RR6' from 'DR6' to reflect Fitch's updated Rating Definitions Criteria released March 3, 2009. According to the monthly report only two defaulted assets remain in the portfolio. Accordingly, Fitch expects minimum or no principal repayment on the notes by the final maturity in July of this year. NY CITY INDUSTRIAL: Moody's Cuts Rating on Bonds to 'Ba2' --------------------------------------------------------- Moody's Investors Service has downgraded the New York City Industrial Development Agency Special Airport Facility Revenue bonds (LLC) to Ba2 from Baa3. The Ba2 rating remains on review for further possible downgrade. The downgrade and continued review are due to Moody's concerns about the company's revenue levels as a result of the delinquent payments from its tenant Alliance (not rated). The bonds are supported by lease payments from the company's three tenants Alliance, Delta Airlines (long term corporate family rated B2), and Lufthansa (long term issuer rating Baa3). Alliance accounts for approximately 16% of the facility's revenues and has had a history of falling behind on its lease payments. According to the company Alliance has fallen further behind and it has filed legal action against Alliance. As per the projections supporting this project financing, the company has consistently maintained coverage near 1.3 times in recent years, but given the indications that one of the main tenants is failing to make lease payments Moody's is concerned that revenue will provide for much reduced coverage of debt service requirements in the future. Moody's concerns are heightened by the severe deterioration in the global cargo market, which in Moody's view impairs the ability of Aero JFK to attract replacement tenants to the facility. The ratings are on review for possible downgrade. Rating actions in the upcoming weeks will depend on Moody's assessment of the company's ability to sustain the facility's financial profile. The Aero JFK, LLC bond ratings were assigned by evaluating factors believed to be relevant to the credit profile of the company such as i) the business risk and competitive position of the company versus others within its industry or sector, ii) the capital structure and financial risk of the company, iii) the projected performance of the company over the near to intermediate term, iv) the company's history of achieving consistent operating performance and meeting budget or financial plan goals, v) the nature of the dedicated revenue stream pledged to the bonds, vi) the debt service coverage provided by such revenue stream, vii) the legal structure that documents the revenue stream and the source of payment, and viii) and the company's management and governance structure related to payment. The last rating action was on June 2, 2006, when the ratings on the bonds were affirmed. Aero JFK, LLC, which is beneficially owned by CalEast Global Logistics and Aeroterm, leases and operates two air cargo facilities at New York City's John F. Kennedy International Airport. The 2001 bonds were issued to finance the construction of the facilities, which have been in operation since July 2003 and include 435,000 square feet of cargo space, six aircraft parking positions, and 101 truck loading docks. The project's facilities are located at a prime location at JFK, with good access to both the main terminal complex and the taxiways. OMNI JOINT: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Omni Joint Venture aka O.J.V. 7805 Live Oak Avenue Jonestown, TX 78645 Bankruptcy Case No.: 09-10853 Chapter 11 Petition Date: April 5, 2009 Court: Western District of Texas (Austin) Judge: Craig A. Gargotta Debtor's Counsel: Barbara M. Barron, Esq. bbarron@bnpclaw.com Barron & Newburger, P.C. 1212 Guadalupe, #104 Austin, TX 78701 Tel: (512) 476-9103 Fax: (512) 476-9253 Total Assets: $4,745,227 Total Debts: $15,898,978 The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Aspen Capital, LLC PMSI $8,677,710 8989 S. Schofield Circle Value: $3,966,892 Sandy, UT 84093 Time Warner advances $507,000 12012 North Mopac Expressway Austin, TX 78758 Agrow Credit Corporation PMSI $431,146 2579 Western Trails Blvd Value: $359,414 Ste. 210 Austin, TX 78748 Indymac Bank, F.S.B. PMSI $334,388 901 E. 104th St., Bldg. B, Value: $149,145 Ste. 400/500 Kansas City, MO 64131 Travis County 2008 Ad Valorem $105,032 Taxes Watson, James 2008 TCAD $75,000 Carson Design Associates Design Services $56,895 Tim Zhang Engineering Svcs $31,750 Powers Engineering Water Svcs $29,805 Medina & Associates Legal Associates $26,545 Wolf Subzero $16,250 Armbrust & Brown, L.L.P. Legal Services $10,905 Baker, Rex Attorney Fees $10,000 Online Condos Online Services $3,350 Horizon Engineering Envt'l Study $2,850 A.I. Propane New Tank on $1,923 Alfalfa Ramirez, Efren Suaste $0 Gallo, Syliva & Scott $0 Peterson Bemis, Roach & Reed, LLC City of Jonestown $0 The petition was signed by John Vanderslice. PACIFIC LUMBER: Plan Issues Cloud Former Parent MAXXAM's Future --------------------------------------------------------------- Grant Thornton LLP last week said the uncertainty surrounding the real estate industry and the ultimate outcome of proceedings involving MAXXAM Inc.'s former unit, Pacific Lumber Company, and their effect on the Company, as well as the Company's operating losses raise substantial doubt about the ability of the Company to continue as a going concern. Grant Thornton noted MAXXAM has incurred losses in 2007 and 2008, and there have been significant declines in real estate demand in areas where the Company operates. The Palco bankruptcy plan was confirmed in July 2008, but the confirmation order has been appealed. MAXXAM also said it has material uncertainties as a result of actions initiated by Richard Wilson and Chris Maranto. MAXXAM said an adverse decision related to the Bankruptcy Cases or the Wilson actions -- in which the plaintiffs are claiming damages exceeding a billion dollars on a combined basis -- would likely have a material adverse effect on the Company's consolidated financial position, results of operations and liquidity. 2008 Financials MAXXAM reported a net loss of $92.4 million for the 12 months ended December 31, 2008, compared to a net loss of $46.9 million for the same period of 2007. The results include a $67.9 million provision for federal income taxes reflecting the estimated utilization of tax attributes in the Company's 2008 federal income tax return relating to the reorganization of Palco and its subsidiaries. For the three months ended December 31, 2008, the Company reported a net loss of $400,000 compared to a net loss of $17.4 million for the same period a year ago. The Company's results for the three months ended December 31, 2008 include the $10.0 million gain related to the settlement of litigation and the net insurance recoveries of approximately $4.3 million related to damage caused by Hurricane Ike at Sam Houston Race Park. As of December 31, 2008, MAXXAM had $400.3 million in total assets and $787.3 million in total liabilities, resulting in $387.0 million in stockholders' deficit. A full-text copy of MAXXAM's 2008 Annual Report is available at no charge at http://ResearchArchives.com/t/s?3b19 Palco Bankruptcy MAXXAM previously conducted forest products operations through its wholly owned subsidiary, The Pacific Lumber Company, and Palco's wholly owned subsidiaries, Britt Lumber Co., Inc., Salmon Creek LLC, Scotia Development LCC, Scotia Inn Inc., and Scotia Pacific Company LLC. In January 2007, Palco and its affiliates filed separate Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division. The bankruptcy filing was precipitated by liquidity shortfalls at Palco and Scopac and their resultant inability to make January 2007 interest payments on their debt obligations. As of the Petition Date, Scopac's indebtedness consisted of its 6.55% Class A-1, 7.11% Class A-2 and 7.71% Class A-3 Timber Collateralized Notes due 2028 -- $713.8 million principal outstanding as of December 31, 2006 -- and a line of credit with a group of banks -- $36.2 million principal outstanding as of December 31, 2006. The obligations were each secured by Scopac's timber, timberlands and timber rights and various related assets. As of the Petition Date, Palco's principal indebtedness consisted of a five-year $85.0 million secured term loan -- $84.3 million principal outstanding as of December 31, 2006 -- and a five-year $60.0 million secured asset-based revolving credit facility -- $24.1 million of borrowings outstanding and $13.7 million of letters of credit issued as of December 31, 2006. Marathon Structured Finance Fund L.P. provided both facilities, which were secured by the stock of Palco owned by its parent, MAXXAM Group Inc., and substantially all of the assets of the Palco Debtors other than Palco's equity interest in Scopac. In December 2007, the Bankruptcy Court approved an agreement allowing the Debtors and certain others to file plans of reorganization. The Debtors subsequently filed a joint plan of reorganization. As the Debtors did not believe the Joint Plan was eligible to be "crammed down" (forced) on creditors who voted against it, the Palco Debtors as a group and Scopac filed separate and alternative stand-alone plans of reorganization. Two other plans of reorganization were filed. The first was filed by Mendocino Redwood Company, LLC and Marathon Structured Finance Fund L.P., Palco's secured lender. The second plan was filed by the Indenture Trustee for the Scopac Timber Notes on behalf of the holders of the Scopac Timber Notes. The MRC/Marathon Plan provided for the Debtors to be reorganized and continued under two new companies, one -- Newco -- to be owned jointly by MRC and Marathon, and the other to be owned by Marathon, with substantial cash payments to be made to all of the creditor classes other than Marathon. The Noteholder Plan, which did not address the Palco Debtors, would have effectively resulted in an auction of Scopac's timberlands to the highest bidder. The MRC/Marathon Plan provided for the loss entirely of the Company's indirect equity interests in the Palco Debtors and Scopac; the Noteholder Plan also provided for the loss of the Company's indirect equity interest in Scopac. May 2008 Settlement Agreement On May 1, 2008, MRC, Marathon, the MAXXAM Entities and the Palco Debtors entered into a settlement of various matters in respect of the Debtors' bankruptcy proceedings. Scopac was not a party to the Settlement Agreement. The Palco Debtors withdrew the Joint Plan and the Palco Debtors' Alternative Plan and the MAXXAM Entities withdrew as co-proponents of the Joint Plan and the two Alternative Plans. The Settlement Agreement required MRC and Marathon to amend the terms of the MRC/Marathon Plan, among other things, to provide for (i) a cash payment of not less than $520.0 million to the Timber Noteholders in satisfaction of their bankruptcy claims, and (ii) assumption of Palco's pension plan by Newco upon consummation of the MRC/Marathon Plan. MAXXAM received consideration of $2.25 million at the time the MRC/Marathon Plan was consummated. An indirect wholly-owned subsidiary of the Company in June 2008 required MRC to re-purchase lumber that the subsidiary had previously purchased from Palco. The subsidiary received $3.9 million at the time of closing and an additional $1.2 million of contingent consideration at the time the MRC/Marathon Plan was consummated. MAXXAM Parent, MAXXAM Group Holdings Inc., the parent of MGI, and MGI granted a release in favor of MRC, Marathon and various related parties. MRC and Marathon granted a release in favor of the MAXXAM Entities and various related parties. MRC and Marathon released the Palco Debtors and various related parties against any and all claims (a) that the MAXXAM Entities, MRC and Marathon had against any of the released parties -- including roughly $40.0 million of intercompany indebtedness owed by the Palco Debtors to the MAXXAM Entities -- and (b) relating to any of the Debtors or their bankruptcy cases that might thereafter arise. The Palco Debtors released each other, MRC, Marathon, the MAXXAM Entities and various related parties against any and all claims. The Settlement Agreement also obligates MAXXAM to indemnify MRC, Marathon, Newco and certain affiliates against certain tax liabilities assessed on the parties subsequent to the reorganization. 5th Cir. Appeal of Confirmation Order On July 8, 2008, the Bankruptcy Court confirmed the MRC/Marathon Plan and denied confirmation of the Noteholder Plan, among other things. On July 11, 2008, the Bankruptcy Court approved the May 2008 Settlement Agreement. The Indenture Trustee and other parties appealed the Confirmation Order to the Fifth Circuit Court of Appeals and requested the Fifth Circuit to stay the Confirmation Order pending appeal. Following the Fifth Circuit's denial of the request for a stay of the Confirmation Order, the MRC/Marathon Plan closed on July 30, 2008 and the Debtors emerged from bankruptcy. The consummation of the MRC/Marathon Plan resulted in the loss entirely of the Company's indirect equity interest in Palco and its subsidiaries, including Scopac. Oral arguments on the appeal by the Indenture Trustee and others of the Confirmation Order were heard in October 2008, but the Fifth Circuit has not yet ruled. There can be no assurance that the MRC/Marathon Plan will not be overturned by the Fifth Circuit. The outcome of the appeal is impossible to predict and, an adverse decision would likely have a material adverse effect on the business of the Debtors, on the interests of creditors and the Company and certain of its affiliates. Specifically, MAXXAM said if the MRC/Marathon Plan is upheld by the Fifth Circuit, it will reverse all or a significant portion of its investment in the Debtors during the period in which the Fifth Circuit renders its decision. The consolidated financial statements include the Company's $484.2 million of losses in excess of its investment in the Debtors. The reversal of the Company's losses in excess of its investment in the Debtors would have a material impact on stockholders' deficit -- i.e. would result in a $484.2 million increase to stockholders' equity. If the Fifth Circuit overturns the MRC/Marathon Plan or renders an inconclusive decision, the Company will re-evaluate its position based on the facts and circumstances at that time. The Company cannot predict when the Fifth Circuit will rule or what its decision will be. The ultimate resolution of the Bankruptcy Cases could result in claims against and could have adverse impacts on MAXXAM Parent and its affiliates, including MGHI and/or MGI. It is possible that the MRC/Marathon Plan could be overturned and unwound as a result of the appeal pending before the Fifth Circuit. If that occurs, the Company would be required to return the $2.25 million of cash consideration it received when the MRC/Marathon Plan was consummated, MGI would be obligated for certain tax liabilities and Newco's assumption of the Palco Pension Plan would no longer be effective, among other things. The estimated unfunded termination obligation attributable to the Palco Pension Plan as of December 31, 2008, was approximately $35.0 million based upon annuity placement interest rate assumptions as of such date. In addition, the consummation of the MRC/Marathon Plan -- or the Noteholder Plan, in the event the MRC/Marathon Plan is overturned upon appeal -- is expected to result in the utilization of all or a substantial portion of the Company's net operating losses and other tax attributes for federal and state income tax purposes. Moreover, the MRC/Marathon Plan -- and the Noteholder Plan -- provides for litigation trusts, which could bring claims against the Company and certain of its affiliates. Wilson Actions On December 7, 2006, an action entitled State of California, ex rel. Richard Wilson and Chris Maranto v. MAXXAM Inc., The Pacific Lumber Company, Scotia Pacific Company, LLC, Salmon Creek LLC, Charles E. Hurwitz and Does 1 through 50 (No. CGC-06-458528) was filed under seal in the Superior Court of San Francisco, California, and on the same day, an action entitled United States of America ex rel. Richard Wilson and Chris Maranto v. MAXXAM Inc., The Pacific Lumber Company, Scotia Pacific Company, LLC, Salmon Creek LLC and Charles E. Hurwitz (No. C 06 7497 CW) was filed under seal in the U.S. District Court for the Northern District of California. The original defendants in the Wilson actions included certain of the Debtors, the Company and Mr. Hurwitz. The Wilson actions allege violations of the California False Claims Act and the Federal False Claims Act, and are qui tam actions -- actions brought by the government, but on the information and at the instigation of a private individual, who would receive a portion of any amount recovered. As the State of California declined to participate in the Wilson state action and the United States declined to participate in the Wilson federal action, the seal on each case was lifted and the private individuals are entitled to proceed with the suits. Both suits allege that the defendants made false claims by submitting to a California agency a sustained yield plan misrepresenting as sustainable the projected harvest yields of the timberlands of Palco and Scopac. The remedies being sought are actual damages -- essentially based on over $300.0 million of cash and approximately 7,700 acres of timberlands transferred by the United States and California in exchange for various timberlands purchased from Palco and its subsidiaries -- as well as treble damages and civil penalties of up to $10,000 for every violation of the California False Claims Act and the Federal False Claims Act, respectively. On February 28, 2008, the plaintiffs settled for nominal amounts the Wilson actions as to the Debtor defendants. The actions are proceeding as to MAXXAM and Mr. Hurwitz. The Wilson federal action is scheduled for trial beginning on April 20, 2009. The Wilson state action was dismissed in September 2008, but the plaintiffs have appealed this decision. As the plaintiffs are claiming damages in the Wilson actions that, on a combined basis, exceed a billion dollars, an adverse decision in either Wilson actions would likely have a material adverse effect on the Company's consolidated financial condition, results of operations and liquidity. The Company has incurred significant attorneys' fees related to these matters. As of December 31, 2008, such fees were in excess of $13.9 million -- of which $5.9 million is reflected as an accrued liability. About MAXXAM Inc. Headquartered in Houston, MAXXAM Inc. is a publicly-traded company, with business interests in forest products, real estate investment and development and racing operations. PANOLAM INDUSTRIES: Gets Lenders' Forbearance Until June 12 ----------------------------------------------------------- Panolam Industries International, Inc., and its parent company, Panolam Holdings II Co., entered into a Forbearance Agreement on March 31, 2009, with Credit Suisse, Cayman Islands Branch, as administrative agent, and certain other senior lenders under the Company's Credit Agreement dated September 30, 2005, as amended. Pursuant to the Forbearance Agreement, the Agent and the senior lenders agreed to, among other things, forbear from exercising their default-related rights and remedies against the Borrower Parties with respect to certain specified defaults that have occurred or may occur under the Credit Agreement. The Forbearance Agreement is effective until the earlier of (i) June 30, 2009, (ii) an occurrence of a default under the Forbearance Agreement, or (iii) the fulfillment of all obligations under the Forbearance Agreement and the Credit Agreement and the termination of the Credit Agreement. Among other things, receipt by the Company of a notice from the holders of the Company's 10.75% Senior Subordinated Notes due 2013 accelerating the Company's obligations under the Notes would constitute a default under the Forbearance Agreement. As reported in its Annual Report on Form 10-K for the year ended December 31, 2008, the Company received a blockage notice from the Agent instructing the Company not to make the April 1, 2009 interest payment under the Notes. Failure to make the interest payment constitutes a default under the indenture governing the Notes and entitles the holders of the Notes, after a thirty-day grace period, to accelerate the Company's obligations under the Notes. Receipt by the Company of a notice from the holders of the Notes accelerating the Company's obligations under the Notes would constitute a default under the Forbearance Agreement. The Forbearance Agreement requires the Company to, among other things: (i) deliver to Agent, for the benefit of the senior lenders, a scheduled payment of interest and fees in the amount of $830,335.73 on or before March 31, 2009 (which has occurred), (ii) deliver to the senior lenders certain forecasts, financial statements, financial updates, a preliminary business plan and preliminary financial restructuring proposal in accordance with specified deadlines, and (iii) deliver to Agent, for the benefit of the senior lenders, an excess cash flow payment related to the year ended December 31, 2008, on or before June 30, 2009. During the forbearance period, the Company also covenants, among other things, not to, subject to specified exceptions: -- make the April 1, 2009 interest payment on the Notes, -- make payments of management fees to its sponsor stockholders, -- amend or otherwise change the terms of any of its subordinated indebtedness, -- make any investment, -- enter into any transaction of merger or consolidation, liquidate, wind-up or dissolve itself, -- make any asset sale except in the ordinary course of business, -- enter into any transaction with any affiliate of the Company on terms that are less favorable to the Company, or -- make or incur capital expenditures in an aggregate amount in excess of $1,500,000. In connection with the Forbearance Agreement, the Company paid a forbearance fee of $987,932 in cash in the amount of 0.5% of the aggregate outstanding principal amount of each accepting senior lender's loan amount, as well as fees and expenses related to the Forbearance Agreement and an arranger fee to the Agent. A copy of the Forbearance Agreement is available at: http://researcharchives.com/t/s?3b10 Going-Concern Doubt Deloitte & Touche LLP, auditor of the Company, said that based on Panolam's significant loss in 2008, stockholder's deficit, and its debt covenant violations, there is substantial doubt about its ability to continue as a going concern. The Company had $412,283,000 in assets against debts of $440,162,000 as of Dec. 31, 2008. Net income for the year ended December 31, 2007 was $8.3 million compared to $10.9 million for the year ended December 31, 2006, a decrease of approximately 24%. The decrease in net income is primarily attributable to lower net sales in the year ended December 31, 2007, compared to the year ended December 31, 2006, which were partially offset by decreases in the cost of goods sold, selling general and administrative expenses, interest expense and income taxes in the year ended December 31, 2007. Net sales were $366.7 million for the year ended December 31, 2008, compared to $424.4 million for the year ended December 31, 2007, a decrease of approximately 14%. The Company said that the principal sources of cash to fund its liquidity needs are cash provided by operating activities and cash provided by borrowings under its Credit Facility. "Restrictive covenants in our debt agreements restrict our ability to pay dividends and make other distributions. Specifically, the Credit Facility restricts us from making payments of dividends or distributions, including to Panolam Holdings, subject to certain exceptions." The Company's Credit Facility also requires it to maintain a maximum consolidated leverage ratio (5.00 to 1.00 as of December 31, 2008 and 4.50 to 1.00 as of the end of each quarter ending during fiscal year 2009). As of December 31, 2008, its consolidated leverage ratio was in excess of the permitted maximum amount at 6.47 to 1.00. A copy of the Annual Report is available for free at http://researcharchives.com/t/s?3b11 About Panolam Industries Based in Shelton, Connecticut, Panolam Industries International, Inc. -- http://www.panolam.com/-- designs, manufactures and distributes decorative overlay products, primarily thermally fused melamine panels (TFMs) and high-pressure laminate sheets (HPLs), throughout Canada and the United States. The Company primarily designs, manufactures, markets and distributes decorative laminate products. Its other product offerings, consists of specialty resins, decorative overlay papers and industrial laminates. The Company has two segments: decorative laminates and other. Decorative laminates manufactures and distributes decorative laminates, primarily TFM and HPL, for use in a variety of residential and commercial indoor surfacing applications. Its other segment includes the production and marketing of a variety of specialty resins for industrial uses, custom treated and chemically prepared decorative overlay papers and a variety of other industrial laminates. Its products are manufactured and primarily sold in North America. PARK AT ASPEN: Case Summary & Two Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Park at Aspen Lake II, L.P. 5000 Plaza on the Lake, Suite 300 Austin, TX 78746 Bankruptcy Case No.: 09-10840 Chapter 11 Petition Date: April 3, 2009 Court: Western District of Texas (Austin) Judge: Frank R. Monroe Debtor's Counsel: Eric J. Taube, Esq. erict@hts-law.com Hohmann, Taube & Summers, L.L.P. 100 Congress Ave., Suite 1800 Austin, TX 78701 Tel: (512) 472-5997 Fax: (512) 472-5248 Estimated Assets: $10 million to $50 million Estimated Debts: $10 million to $50 million The Debtor's Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ J. Tworoger QTIP Trust Loan $97,000 Mr. Dietmar E. Schott, Trustee 8799 Balboa Avenue, Suite 270 San Diego, CA 92123 Aspen Growth Properties, Inc. Loan $97,000 5000 Plaza on the Lake, Suite 300 Austin, TX 78746 The petition was signed by David Tworoger, president. PORTA SYSTEMS: Issues Bankruptcy Warning Citing Slow Demand ----------------------------------------------------------- Porta Systems Corp. last week warned that the present economic climate has resulted in a decline in demand for capital goods and has made credit more difficult to obtain for both the Company and its customers. As a result, according to the Company, the current economic slowdown may seriously affect its business to the extent that its customers reduce or defer their purchases. "If we are not able to develop new business and if our customers reduce or defer the purchase of our products, we may be unable to continue in business and it may be necessary for us to seek protection under the Bankruptcy Code," the Company said. On July 31, 2008, Porta Systems amended its certificate of incorporation to effect a one-for-11.11 reverse split pursuant to which each share of common stock was converted into 0.0900090009 share of common stock. The financial statements give retroactive effect to the reverse split. Porta Systems said its debt restructuring eliminated principal and interest of roughly $25,076,000. As part of the restructuring, the Company issued or reserved 8,748,015 shares of common stock and warrants to creditors as partial consideration for their substantial debt reduction. In addition, key members of Porta's management team received an aggregate of 603,277 shares of common stock. As a result of the issuance of more than 50% of the Company's common stock to new stockholders, Porta Systems said its ability to use its remaining net operating loss carry forwards that were generated prior to August 1, 2008, were very substantially reduced in accordance with Section 382 of the Internal Revenue Code. In November 2008, Porta Systems borrowed additional senior debt of $425,000 from its senior debt holder. Interest on the additional $425,000 advance will be expensed as incurred at a rate equal to the six month LIBOR rate plus 10% which was 11.7% at December 31, 2008. Due to the Company's inability to meet the repayment terms of the senior debt issued in the debt restructuring, the senior debt holder modified the terms of the notes effective January 1, 2009. This modification is accounted for as a trouble debt restructuring. As the troubled debt restructuring involved only modifications of the terms of the debt, and did not involve a transfer of assets or a grant of an equity interest, the Company said it accounts for the effects of the restructuring prospectively from the time of the restructuring, and does not change the carrying amount of the liability on the balance sheet. The additional interest due to the terms modifications will be accrued prospectively. Porta Systems said the modification is reflected by an increase in the promissory note to $1,747,012, which reflects the additional borrowing of $425,000 in November 2008 and is to be paid at a rate of $125,000 per month, with a final payment of the remaining principal and interest on April 30, 2010. Payments will be allocated first to accrued interest, then to principal. No other modifications to the note were made. Porta Systems also said the secured promissory note in the principal amount of $11,601,156 is to be paid in 12 quarterly installments each in the amount of $375,000, with the first payment of principal and interest being due on June 30, 2010, followed by 13 quarterly installments of principal and interest each in the amount of $500,000, with a final payment of all remaining principal and accrued interest on September 30, 2016. All payments will be applied first to accrued interest and any remainder to principal. No other modifications to the note were made. Porta Systems Corp. designs, manufactures, markets and supports communication equipment used in telecommunications, video and data networks worldwide. As of December 31, 2008, Porta Systems had $15.7 million in total assets, and $31.8 million in total liabilities, resulting in $16.0 million in stockholders' deficit. The Company posted a net loss of $840 million for the three-month period ended December 31, 2008; and a $15.1 million net income for year 2008. A full-text copy of the Company's Annual Report on Form 10-K is available at no charge at http://ResearchArchives.com/t/s?3b1a Because of the Company's stockholders' deficit, its net loss from continuing operations before extraordinary gain and discontinued operations of $2,352,000 for 2008, its limited working capital and the absence of any source of financing, its accounting firm, BDO Seidman, LLP, included in its report an explanatory paragraph about the Company's ability to continue as a going concern. The Company has said its only source of funds other than normal operations is Cheyne Special Situations Fund, L.P., which advanced $1,000,000 in October 2007, $600,000 in June 2008, and $425,000 in November 2008. However, the Company's continuing losses and the uncertainty of any significant increase in business from British Telecommunications, together with the worldwide economic downturn and the general lack of credit even for companies with strong balance sheets and positive operation results, will increase the difficulties in obtaining financings from other sources and may continue to affect the Company's ability to generate business from new customers as well as its ability to make payments that are due to Cheyne. QIMONDA NA: To Sell Assets Related to Semiconductor Business ------------------------------------------------------------ Qimonda North America Corporation appointed advisors to assist in the sale of its semiconductor manufacturing assets in Sandston, Virginia, subject to bankruptcy court approval. The advisory team is comprised of ATREG, a division of Colliers International, Emerald Technology Valuations LLC and Gordon Brothers Commercial & Industrial. The advisory team is initiating discussions with potential buyers who may consider operating the 300mm fab which has an output of 38,000 wafer starts per month and is 65nm capable. If a strategic buyer is not found, the advisory team will move quickly to a complete 300mm tool line sale, and sale of the clean room manufacturing facilities in separate transactions. "This is the first time an operational 300mm fab has come to the market for sale. The fully automated, state-of-the-art Qimonda Richmond site was built and equipped at a cost of approximately $3 billion, and volume 300mm production began in 2005," said Stephen Rothrock, Managing Director of ATREG. Qimonda requests that all inquires are directed to ATREG, attention: Stephen Rothrock, Doug Barrett (Tel: (206) 515-4497). ATREG -- http://www.ATREG.com/-- the semiconductor sales division of Colliers International, is a specialized team focused to help companies restructure advanced technology assets. Established in 1997 and co-directed by Stephen Rothrock and Doug Barrett, ATREG has represented some of the semiconductor industry's top companies in transactions totaling more than $2 billion. ATREG sells operational semiconductor fabs, wafer supply agreements, process and product IP, complete tool lines, and fab infrastructure. Emerald Technology Valuations LLC -- http://www.emerald-tech.com/ -- is an advisory, valuation, and liquidation firm that specializes exclusively in High Technology equipment and inventories. With over 75 years in combined experience, Emerald's senior team has provided advisory, valuation, and liquidation services to clients such as 3Com, Cisco, Hayes Electronics, IBM, Jabil Circuit, Inc., KLA-Tencor Corp., Lucent Technologies, Micron Technology Inc., Northrop Grumman Corporation, Palm, Inc. and Sanmina-SCI Corporation. Gordon Brothers Commercial & Industrial -- http://www.gordonbrothers.com/-- is a division of Gordon Brothers Group. Founded in 1903, Gordon Brothers Group is a global advisory, restructuring and investment firm specializing in the retail, consumer products, industrial, and real estate sectors. Gordon Brothers Group conducts over $40 billion in transactions and appraisals annually. Gordon Brothers Commercial & Industrial maximizes value for both healthy and distressed companies by purchasing or selling all categories of commercial and industrial assets including machinery & equipment, inventories and industrial real estate. About Qimonda NA Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- is a leading global memory supplier with a diversified DRAM product portfolio. The company generated net sales of EUR1.79 billion in financial year 2008 and had -- prior to its announcement of a repositioning of its business -- approximately 12,200 employees worldwide, of which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond (Virginia, USA). The company provides DRAM products with a focus on infrastructure and graphics applications, using its power saving technologies and designs. Qimonda is an active innovator and brings high performance, low power consumption and small chip sizes to the market based on its breakthrough Buried Wordline technology. Qimonda AG, filed an application with the local court in Munich, Germany, on January 23, 2009, to open insolvency proceedings. QAG's U.S. units, Qimonda North America Corp. and Qimonda Richmond LLC, filed for Chapter 11 before the Delaware bankruptcy court on February 20 (Bankr. D. Del., Lead Case No. 09-10589). Mark D. Collins, Esq., at Richards Layton & Finger PA, has been tapped as counsel. Roberta A. DeAngelis, the United States Trustee for Region 3, appointed seven creditors to serve on an Official Committee of Unsecured Creditors. Jones Day and Ashby & Geddes represent the Committee. In its bankruptcy petition, Qimonda estimated assets and debts of more than $1 billion. QUANTUM CORP: $142 Mil. Tender Offer Prompts S&P's Junk Rating -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its corporate credit rating on San Jose, California-based Quantum Corp. to 'CC' from 'B-'. In addition, S&P lowered the issue-level rating on the company's subordinated rating to 'C' from 'CCC'. These ratings are on CreditWatch with negative implications. S&P also placed its senior secured issue-level rating of 'B-' on CreditWatch with developing implications. The recovery ratings for the debt issue-level ratings are unchanged. "These actions follow the company's announcement that it commenced a cash tender offer to purchase up to $142 million in aggregate principal amount of its outstanding subordinated notes due 2010 for $700 per principal amount," said Standard & Poor's credit analyst Lucy Patricola. Quantum intends to finance the tender offer with the net proceeds of a $100 million term loan it expects to receive from EMC Corporation (A-/Stable/--). S&P views the tender offer as a distressed exchange given the substantial discount to par and S&P's view that Quantum faces considerable near term stress because of a provision in its senior secured credit agreement that requires refinancing of at least $135 million of its convertible notes by early 2010. S&P believes that if the tender is unsuccessful, Quantum could be challenged to source a lender for the requisite funds by the maturity date specified in the credit agreement. At that time, S&P would also lower the senior secured rating to 'CC', equal to the corporate credit rating. S&P notes that EMC's commitment to lend $100 million is contingent upon a successful outcome, whereby at least $135 million of the bonds are tendered. At the same, although unrelated to S&P's conclusion on the tender offer, the company intends to amend its senior secured credit facility to allow for open market purchases of remaining convertible notes, in exchange for a $40 million principal reduction, again to be financed by EMC, although through an advance on expected future license sales. On consummation of the tender, S&P would lower the subordinated notes ratings to 'D' and the corporate credit rating to 'SD' (for selective default). As soon as is practical thereafter, S&P will reassess Quantum's capital structure and assign new ratings based on the amount of notes the company successfully tendered. It is S&P's preliminary expectation that if the tender and credit amendment are executed as proposed, S&P would raise the corporate credit rating to 'B' with a stable outlook. After the tender offer, refinancing risk will be eliminated until 2014, when the senior secured term loan and the EMC loan will mature. Leverage will be considerably lower; S&P estimates debt to EBITDA will be in the 3x range, based on current performance levels. Lower leverage allows for moderate headroom under the performance covenants included in the senior secured loan. S&P will reassess recovery ratings based on the new capital structure and assign issue ratings accordingly. RHODES COS: Chapter 11 Filing Cues S&P's Rating Cut to 'D' ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on The Rhodes Cos. LLC to 'D' from 'CCC' following the company's Chapter 11 filing. At the same time, S&P lowered its ratings on the company's first- and second-lien secured debt to 'D'. Rhodes is one of the largest private homebuilding companies in the Las Vegas area. The company operates primarily in two master- planned communities in that market and has land holdings in Arizona and New Mexico. This undercapitalized regional company had been operating for some time under acute liquidity constraints. On March 31, 2009, Rhodes and certain subsidiaries filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. Rhodes -- along with affiliates Heritage Land Co. and Rhodes Ranch General Partnership -- is a co-borrower under a partially amortizing $430 million secured credit facility that was originated in 2005. Fiscal year-end financial statements are not available, but as of Sept. 30, 2008, guarantor entities' outstanding debt totaled $379 million, which exceeded guarantor entities' $274 million of assets. Concurrent with these downgrades, S&P revised its recovery rating on the first-lien term loan to '5', which indicates S&P's expectation for a modest recovery (10%-30%), from '4'. S&P has not revised S&P's '6' recovery rating on the second-lien term loan. A '6' recovery rating indicates S&P's expectation for a negligible recovery (0%-10 Ratings Lowered The Rhodes Cos. LLC To From -- ---- Corporate credit D/--/-- CCC/Negative/-- First-lien D (Recov. rtg 5) CCC (Recov. rtg: 4) Second-lien D (Recov. rtg 6) CC (Recov. rtg 6) RITZ CAMERA: Will Close 300 Stores & Sell Merchandise ----------------------------------------------------- Triangle Business Journal reports that Ritz Camera Centers Inc. will shut down 300 stores nationwide and sell the merchandise in liquidation sale. According to Business Journal, stores to be closed include these three Triangle stores that operate under the Wolf Camera brand located at: -- Cary Towne Center mall, -- Durham's The Streets at Soutpoint mall, and -- Raleigh's North Hills mixed-use center. Business Journal states that Ritz Camera will have about 400 stores left after the sales, including eight Wolf Camera and two Ritz Camera locations in the Triangle. The liquidation sales started on Saturday, Business Journal says. Headquartered in Beltsville, Maryland, Ritz Camera Centers Inc. -- http://www.ritzcamera.com-- sells digital cameras and accessories, and electronic products. The Company filed for Chapter 11 protection on February 22, 2009 (Bankr. D. Del. Case No. 09-10617). Karen M. McKinley, Esq., and Norman L. Pernick, Esq., at Cole Scholtz Meisel Forman Leonard, P.A., represent the Debtor in its restructuring efforts. The Debtor proposed Thomas & Libowitz PA as corporate counsel; FTI Consulting Inc. t/a FTI Palladium Partners as financial advisor; and Kurtzman Carson Consultants LLC as claims agent. When the Debtor filed for protection from its creditors, it listed assets and debts between $100 million and $500 million. RIVIERA HOLDINGS: Nonpayment of Interest Cues Moody's 'D' Rating ---------------------------------------------------------------- Moody's Investors Service lowered Riviera Holdings Corporation's Probability of Default Rating to D from Ca. This rating action reflects the company's recent disclosure that it has not paid the $4 million interest payment under its credit facility due March 30, 2009 within the three day grace period allowed. Riviera's other ratings were affirmed at Ca. The rating outlook is negative. As a result of the company's failure to make the interest payment within the grace period, the lenders may accelerate the debt and demand immediate payment of all amounts outstanding under the credit agreement -- approximately $228 million plus accrued and unpaid interest --- and exercise all rights and remedies. Riviera is in talks with its lenders regarding restructuring its debts outside of bankruptcy. If the parties do not come to an agreement on a debt restructuring, Riviera will likely begin a Chapter 11 bankruptcy proceeding. This rating was lowered: -- Probability of Default Rating to D from Ca These ratings were affirmed: -- Corporate Family Rating at Ca -- $225 million term loan due 2014 at Ca (LGD3, 48%) -- $20 million revolving credit facility expiring 2012 at Ca (LGD3, 48%) Moody's previous rating action related to Riviera occurred on March 31, 2009 when the company's ratings were lowered to Ca. Riviera Holdings Corporation owns and operates the Riviera Hotel and Casino on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk, Colorado. Riviera generates annual net revenue of approximately $180 million. SAGE COLLEGES: Moody's Affirms 'Ba2' Rating on 1999 Fixed Bonds --------------------------------------------------------------- Moody's Investors Service has affirmed Sage Colleges' Ba2 long- term debt rating on the Series 1999 fixed rate bonds and the Series 2002 variable rate demand bonds, issued through the City of Albany I.D.A. and Rensselaer County I.D.A., respectively. The College's rating has been removed from watchlist for possible downgrade. The outlook is negative. Legal Security: Obligations under the Installment Sale Agreements are general obligations of the college; debt service reserve fund for Series 1999 bonds; Manufacturers & Traders Trust Company letter of credit securing the Series 2002 bonds. Debt-Related Derivatives: Sage Colleges is party to a floating to fixed rate swap with a notional amount of $6.96 million that hedges the interest rates on its Series 2002 bonds. The counterparty for the swap is M&T Bank (rated A1/P-1). Under the swap, Sage pays 3.65% and receives BMA. There are no collateral posting requirements for the swap and the outstanding mark-to- market value as of March 24th is negative $324,600 against the College. Challenges * Highly strained operations in FY 2008 resulting from a drop in enrollment in the fall of 2007. The College is 78% reliant on student fees. An unexpected 12% decline in enrollment in the fall of 2007 manifested in a 9% decline in net tuition revenue and a 15% decline in auxiliary revenue in FY2008 from the previous year. As a result, the College ended the 2008 fiscal year with a negative operating margin of -8.9% and inadequate debt service coverage of 0.2 times, by Moody's calculation. Ultimately, the College ended the 2008 fiscal year with a decline of over $4 million in unrestricted net assets. Management attributes the enrollment plunge to a historically under-developed and stagnant marketing approach. The College, which has two distinct campuses, has a challenging student market position and Moody's believe enrollment levels could be pressured in the next year or two as the College competes heavily with other local public institutions, which are lower priced including community colleges and the University of Albany. * Dependence on endowment secured bank lines of credit and new bank term loan (entered into after close of FY 2008) for operating liquidity. Following the 2008 deficit, the College acquired an additional operating line and term loan for liquidity purposes. New debt consists of $6 million term loan with M&T Bank and a $3 million fully drawn line of credit with First Niagara. According to management approximately $12.5 million of the $24 million endowment (as of 3/31/09) was securing the line of credit as well as the term loan all with M&T Bank. In Moody's opinion, these security features on the bank debt put fixed-rate bondholders in a weaker position, since they do not have the same security. * Increased balance sheet leverage in light of investment losses. The College reports an investment loss consistent with peers at negative 28% as of February 28, 2009 for the 2009 fiscal year. In Moody's opinion, the College's asset allocation is aggressive for an endowment of this size with approximately 40% in alternative investments; up from 25% at the end of the 2008 fiscal year. This growth in allocation to alternatives is partly the result of declines in the traditional equity and fixed income allocations and a decision not to rebalance the portfolio. As of 12/31/2008, the endowment asset allocation consisted of 39% equity, 19% fixed income, 10% hedge funds, 9% private investments and 22% absolute return. The College maintains large allocations of the endowment with certain managers, including 22% of the portfolio with Evanston Weatherlow (absolute return, fund of funds) and 19% with PIMCO (fixed income) and holds no more than 10% of remaining assets with any individual manager. The College utilizes Convergent as investment consultant with investment decisions largely overseen by the investment committee of the board. * Significant deterioration of the balance sheet due to the FY 2008 deficit, new debt in the form of lines of credit and investment losses. Given a Moody's estimated 30% decline in financial resources thus far for the 2009 fiscal year, expendable financial resources cover debt and operations by 0.23 times and 0.18 times, respectively. * Potential to breach Letter of Credit Covenants. Covenants include a total investments to long-term debt ratio of 1.0 times and a debt service coverage ratio of 1.0 times. Given poor investment returns and challenged operations, there is concern that the College may breach either or both of these covenants. As of 4/30/08 (the College's FYE), Coverage levels were 1.01 times coverage of debt service (as calculated by M&T Bank) and 1.9 times coverage of total investments to long term debt (as calculated by Moody's). Projected coverage levels for the end of the fiscal 2009 year are 1.21 times coverage of debt service (as calculated by the College) and 1.05 times coverage of long term debt (as calculated by Moody's based on March 26, 2009 asset valuations). Further investment losses will cause material deterioration of coverage levels. Strengths * Restructuring of management dedicated to growth initiatives. New management, including a new president, vice president for finance, and vice president for marketing and enrollment, is focused on strategic planning, a branding initiative, and longer-term enrollment growth for the College. See RECENT DEVELOPMENTS * Indications of rebounding enrollment and improved retention in 2009. With a moderate enrollment rebound of 7% in the fall of 2008, management is expecting to end the 2009 fiscal year with a more modest deficit of under $1 million. Management reports that they are budgeting higher enrollment for the 2010 fiscal year in light of significant application growth, but remain conservative in their estimates. Other areas of revenue growth include a 5% tuition increase and planned auxiliary growth. A 2010 balanced budget was recently approved by the board. * No additional debt plans in the near term. According to management, the College has the physical capacity to grow its enrollment before extensive investment in plant is necessary. Management expects this advantage to result in more swift revenue growth with limited expense growth. Recent Developments: New Management Implementing Changes In An Effort To Grow Enrollment, Improve Retention And Increase Academic And Campus Appeal. Following the retirement of the College president in the summer of 2008, the College recruited a new president with prior experience as a College President. In addition to a new president, the college has utilized the services of The Presidential Practices as a strategic planning consultant, has brought on a new VP for Finance and Treasurer and VP of Marketing and Enrollment, and is currently searching for a new VP of Administration. This overhaul of management has manifested in swift strategic change over the last year; including large reorganization of departmental management and added staff in essential departments such as marketing and finance. Although Moody's believes that the new management team is working quickly to re-energize the college with significant changes to the strategic plan, Moody's believe the College has a challenged student market position and faces near-term financial challenges which could pressure the rating. The College launched a new marketing campaign which includes new branding and advertising locally in papers, TV spots and on billboards. These efforts have seen initial results with fall 2008 enrollment up 7% from the previous year and fall 2009 applications up 53% for undergraduates and 136% for graduate students compared to this time last year. Ultimately, management plans to grow enrollment from the current 2,159 to 5,000 students over the long term. Management believes there is adequate classroom and residential space to handle much of this enrollment growth without extensive borrowing. However, in order to reach and maintain this ambitious goal of 5,000, significant investment in capital and capital renovation will be necessary in the long term. The College has no debt plans in the near-term. College Trustees initiated strategic changes by establishing a "Transformation Fund" in 2007 of over $669,000 to fund essential growth areas such as enrollment and marketing. In an effort to further develop fundraising, Sage recently reorganized their development team and the president plans to focus, personally, on this area of growth. A recent bequest of $2 million will be used to grow endowment funds and launch a research institute on campus. Other strategic changes include the integration of the two campuses in Troy and Albany and a more focused attention to campus life in an effort to enhance the student experience and increase historically poor retention. Integration will open up the variety of courses available to students; enhancing academic options. More focused attention to campus experience has and will include the opening of a new athletic center, supporting a resurgence of athletic programs for both men and women, the reopening of the swimming pool and the utilization of faculty to help rejuvenate student academic and extra-curricular activity. Freshman to sophomore retention in fall of 2007 was 66%. Fall of 2008 retention was up at both colleges at 82% and 76% which helped to support the boost in enrollment. Management reports upcoming academic changes in the post-graduate arena as well. These will include the merging of the existing health sciences and nursing school, the evolution of a management department into a School of Management and the creation of a new School of the Arts to bridge the established Theatre and Fine Arts Departments. These are in addition to the already established Education department. Sage already offers doctoral programs in Nursing and Education will be adding a third in Women's Studies. Outlook The outlook reflects the College's long-term challenges, highly leveraged balance sheet position, endowment securing bank debt, and Moody's concerns that fall 2009 enrollment levels could be pressured due to broader economic challenges, despite strong application volume. What could change the rating-UP Significant growth of unrestricted financial resources coupled with increased student demand and enrollment and steady growth of net tuition revenue What could change the rating-DOWN Further enrollment declines; continued operating deficits and deterioration of financial resources; additional borrowing; tripping of financial covenants contained within bank documents. Key Indicators (FY 2008 financial data and fall 2008 enrollment data): * Numbers included in parentheses represent the Moody's projection of a 30% decline in resource levels * Total Full-Time Equivalent Students: 2,159 * Freshman Acceptance Rate: 68.8% * Freshman Matriculation Rate: 40.5% * Total Pro-Forma Direct Debt: $29.9 million (includes $5.7 million drawn on line of credit and $6 million term loan) * Expendable Resources to Pro-Forma Direct Debt: 0.32 times (0.23 times) * Expendable Resources to Operations: 0.24 times (0.18 times) * Three-year Average Operating Margin: -1.6% * Operating Cash Flow Margin: 1.7% * Reliance on Student Charges: 78% Rated Debt: * Series 1999 bonds: Ba2 rating * Series 2002 bonds: Ba2 underlying; Aa1/VMIG1 based on two-party pay rating methodology The last rating action with respect to Sage Colleges was on January 13, 2009 when the rating was downgraded to Ba2 and placed on watchlist for further downgrade. SEMGROUP LP: Management Committee Sues CEO Ronan ------------------------------------------------ Steven Church of Bloomberg reports that SemGroup LP's management committee sued Chief Executive Officer Terrence Ronan, accusing him of interfering with plans to reorganize the bankrupt oil transporter. "Regrettably, Terry Ronan has been a roadblock to our efforts," said billionaire John A. Catsimatidis, who leads the management committee which acts as a board of directors for closely held SemGroup. Bloomberg reported that Mr. Ronan and Mr. Catsimatidis have clashed over the direction of SemGroup's bankruptcy. Bloomberg News relates that in February Mr. Ronan and the other SemGroup executives sued Mr. Catsimatidis, claiming he breached a confidentiality agreement and his fiduciary duty as leader of the committee. Bloomberg notes that Mr. Catsimatidis, who controls five of nine seats on the committee, has claimed that Mr. Ronan isn't authorized to reorganize Tulsa, Oklahoma-based SemGroup or make any important decisions without consulting the committee. Mr. Catsimatidis said he wants to reorganize the closely held company and bring it out of bankruptcy intact. About SemGroup LP SemGroup L.P. -- http://www.semgrouplp.com/-- is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storing energy. SemGroup serves customers in the United States, Canada, Mexico, Wales, Switzerland and Vietnam. SemGroup L.P. and its debtor-affiliates filed for Chapter 11 protection on July 22, 2008 (Bankr. D. Del. Lead Case No. 08- 11525). These represent the Debtors' restructuring efforts: John H. Knight, Esq., L. Katherine Good, Esq. and Mark D. Collins, Esq., at Richards Layton & Finger; Harvey R. Miller, Esq., Michael P. Kessler, Esq., and Sherri L. Toub, Esq., at Weil, Gotshal & Manges LLP; and Martin A. Sosland, Esq., and Sylvia A. Mayer, Esq., at Weil Gotshal & Manges LLP. Kurtzman Carson Consultants L.L.C. is the Debtors' claims agent. The Debtors' financial advisors are The Blackstone Group L.P. and A.P. Services LLC. Margot B. Schonholtz, Esq., and Scott D. Talmadge, Esq., at Kaye Scholer LLP; and Laurie Selber Silverstein, Esq., at Potter Anderson & Corroon LLP, represent the Debtors' prepetition lenders. SemGroup L.P.'s affiliates, SemCAMS ULC and SemCanada Crude Company, sought protection under the Companies' Creditors Arrangement Act (Canada) on July 22, 2008. Ernst & Young, Inc., is the appointed monitor of SemCanada Crude Company and its affiliates' reorganization proceedings before the Canadian Companies' Creditors Arrangement Act. The CCAA stay expires on Nov. 21, 2008. SemGroup L.P.'s consolidated, unaudited financial conditions as of June 30, 2007, showed $5,429,038,000 in total assets and $5,033,214,000 in total debts. In their petition, they showed more than $1,000,000,000 in estimated total assets and more than $1,000,000,000 in total debts. Bankruptcy Creditors' Service, Inc., publishes SemGroup Bankruptcy News. The newsletter tracks the chapter 11 proceedings undertaken by SemGroup L.P. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-700) SILICON GRAPHICS: Gets 45-Day Extension to File Schedules --------------------------------------------------------- The Hon. Martin Glenn of the United States Bankruptcy Court for the Southern District of New York extended the time to file the schedules of assets and liabilities, and statements of financial affair of Silicon Graphics Inc. and its debtor-affiliates until 45 days after their bankruptcy filing. The extension of time will be waived if the sale of the Debtors' assets is completed with the 45-day period. Headquartered in Sunnvale, California, Silicon Graphics Inc. -- http://www.sgi.com/-- delivers an array of server, visualization, and storage software. This is the second bankruptcy filing for Silicon Graphics. The Debtors first filed for Chapter 11 on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. The Court confirmed the Debtors' Plan of Reorganization on Sept. 19, 2006. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. The Company and 14 of its affiliates filed for protection for the second time on April 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-11701). Mark R. Somerstein, Esq., at Ropes & Gray LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Davis Polk & Wardell as their corporate counsel; AlixPartners LLC as restructuring advisor; Houlihan Lokey Howard & Zukin Capital, Inc., as financial advisor; and Donlin, Recano & Company, Inc., as claims and noticing agent. When the Debtors filed for protection from their creditors, they listed $390,462,000 in total assets and $526,548,000 in total debts as of 2008. SILICON GRAPHICS: Proposes Houlihan Lokey as Financial Advisor -------------------------------------------------------------- Silicon Graphics Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of New York for authority to employ Houlihan Lokey Howard & Zukin Capital, Inc., as their financial advisor. The firm is expected to provide advice to the Debtors in connection with: a) Financing Transaction: includes any proposals for a private placement of equity, equity-linked or debt securities to provide financing to the Debtors and any of their affiliates. b) Sale Transaction: includes any proposals for a merger, consolidation, joint venture, partnership, spin-off, split- off, business combination, tender or exchange offer, acquisition, sale, distribution, transfer or other disposition of assets or equity interests, or similar transaction, involving all, or a portion of, the business, assets or equity interests of the Company and any of its subsidiaries or affiliates, in one or more transactions. c) Recapitalization Transaction: includes any transaction or series of transactions that constitutes a recapitalization or restructuring of the Debtors' equity and debt securities and other indebtedness, obligations or liabilities, including accrued and accreted interest thereon, including without limitation, interest bearing trade debt, which recapitalization or restructuring is effected pursuant to an exchange transaction, tender offer, a plan of reorganization under the Bankruptcy Code, a solicitation of consents, waivers, acceptances or authorizations, any change of control transaction, any refinancing, sale, acquisition, merger, repurchase, exchange, conversion to equity, cancellation, forgiveness, retirement and modification or amendment to the terms, conditions, or covenants of any agreements or instruments governing any of the Debtors' equity and debt securities or any combination of the foregoing transactions. d) Liquidity Transaction: includes any proposals for the purchase or other acquisition by the Company and/or any of its subsidiaries or affiliates of the Debtors' own capital stock or the capital stock of its subsidiaries, in one or more transactions. Eric Winthrop, Esq., director of the firm, assures the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. A full-text copy of the Debtors' engagement letter is available for free at http://ResearchArchives.com/t/s?3b0a Headquartered in Sunnyvale, California, Silicon Graphics Inc. -- http://www.sgi.com/-- delivers an array of server, visualization, and storage software. This is the second bankruptcy filing for Silicon Graphics. The Debtors first filed for Chapter 11 on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. The Court confirmed the Debtors' Plan of Reorganization on Sept. 19, 2006. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. The Company and 14 of its affiliates filed for protection for the second time on April 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-11701). Mark R. Somerstein, Esq., at Ropes & Gray LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Davis Polk & Wardell as their corporate counsel; AlixPartners LLC as restructuring advisor; Houlihan Lokey Howard & Zukin Capital, Inc., as financial advisor; and Donlin, Recano & Company, Inc., as claims and noticing agent. When the Debtors filed for protection from their creditors, they listed $390,462,000 in total assets and $526,548,000 in total debts as of 2008. SILICON GRAPHICS: Seeks Court Okay to Reject Contracts & Leases --------------------------------------------------------------- Silicon Graphics Inc. and its debtor-affiliates ask the United States Bankruptcy Court for the Southern District of New York for authority to reject certain executor contracts and unexpired leases of personal property and nonresidential real property, and abandon certain property of the estate. Before their bankruptcy filing, as an attempt to reduce operating expenses, the Debtors reviewed certain of their real property leases to determine whether these leased properties are necessary to their ongoing operations. Through that process, the Debtors identified the real property leases, each of which relates to an unoccupied property, which does not provide any benefit to the Debtors' estates and is not necessary to their business. The Debtors say they have exited the premises covered by the property due to a downsizing of their operations and other business changes. The real property leases the Debtors seek to reject are: A) Mountain View. The Debtors lease office space at 1555 Plymouth Street, Mountain View, California, pursuant to a certain lease agreement by and between Sierra Green, as landlord, and Silicon Graphics, Inc., as tenant, dated as of April 5, 1987. Under this lease, the Debtors must pay approximately $50,000 per month in rent obligations. The current term of the lease is from April 1, 2006, to March 31, 2011. The Debtors have been working with Sierra Green to market the lease, and all such attempts have been unsuccessful. B) New Jersey. The Debtors lease office space at 44 Apple Street, Tinton Falls, New Jersey, pursuant to a certain lease agreement by and between TF Associates, as landlord, and Silicon Graphics, Inc., as tenant, dated as of June 12, 2000. Under this lease, the Debtors must pay $6,237 per month in rent obligations. The current term of the lease is from November 1, 2005, to October 31, 2010. Because the Debtors have given notice to the landlord to terminate the lease, the lease will expire by its terms on July 31, 2009, and any attempts to market this lease would be futile. The Debtors tell the Court that the properties are now vacant and they have tendered the leased premises to the landlord. C) AT&T Contract. Pacific Bell Telephone Company dba AT&T California provides network services between two of the Debtors' locations, pursuant to a certain ICB Agreement for Telecommunications Services between SBC Global Services, Inc. -- dba AT&T Global Services -- and Silicon Graphics, Inc., dated as of October 12, 2006. Under this contract, the Debtors must pay $4,500 per month for a term of four years. The Debtors have vacated one of the two locations and no longer need a network connection between the two locations. D) EMC Equipment Lease. The Debtors lease equipment from EMC Corporation pursuant to a certain Master Equipment Lease between EMC Corporation and Silicon Graphics, Inc., as amended by that certain Master Lease Agreement Supplement between EMC Corporation and Silicon Graphics, Inc., dated as of January 23, 2006. Under this lease and lease supplement, the Debtors must pay $25,000 per month for a term of three years. The Debtors are no longer using this equipment and the equipment is sitting idle. The Debtors have tendered the leased equipment to the lessor. The Debtors say the contracts and the leases are burdensome and provides little, if any, benefit to their estates. Headquartered in Sunnyvale, California, Silicon Graphics Inc. -- http://www.sgi.com/-- delivers an array of server, visualization, and storage software. This is the second bankruptcy filing for Silicon Graphics. The Debtors first filed for Chapter 11 on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. The Court confirmed the Debtors' Plan of Reorganization on Sept. 19, 2006. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. The Company and 14 of its affiliates filed for protection for the second time on April 1, 2009 (Bankr. S.D. N.Y. Lead Case No. 09-11701). Mark R. Somerstein, Esq., at Ropes & Gray LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Davis Polk & Wardell as their corporate counsel; AlixPartners LLC as restructuring advisor; Houlihan Lokey Howard & Zukin Capital, Inc., as financial advisor; and Donlin, Recano & Company, Inc., as claims and noticing agent. When the Debtors filed for protection from their creditors, they listed $390,462,000 in total assets and $526,548,000 in total debts as of 2008. SOUTHWEST WATER: Lenders Waive Reporting Requirements 'Til May 31 ----------------------------------------------------------------- Los Angeles-based SouthWest Water Company has received an extension until May 31, 2009, from the syndicate of lenders for its credit facility with regard to reporting financial results for the year ended December 31, 2008. As a result, the Company continues to have full access to its $150 million credit facility for general corporate purposes. On November 10, 2008, the Company said that it would restate prior period financial statements after management discovered errors. On March 13, 2009, the Company said that its Annual Report on Form 10-K would be delayed until the restatement is completed. SouthWest Water also said that on March 27, 2009, it received a Nasdaq Staff Deficiency Letter indicating an additional basis of non-compliance with Nasdaq Marketplace Rule 4310(c)(14), due to the delayed filing of the Annual Report on Form 10-K. On February 19, 2009, the company had announced that it received an extension from the Nasdaq Listing Qualifications Staff until May 11, 2009, to report its financial results for the 2008 third quarter. The March 27th letter indicated that the company had 15 calendar days to submit an updated plan to regain compliance on both delayed filings, but that a further extension by Staff was not available under Nasdaq rules. Should the company be unable to file its delinquent filings by the deadline of May 11, 2009, the Nasdaq Listing Qualifications Staff will give written notice that the company's securities will be delisted. At that time, SouthWest Water may appeal Staff's decision to a Nasdaq Listing Qualifications Panel. SouthWest Water Company -- http://www.swwc.com/-- provides a broad range of operations, maintenance and management services, including water production, treatment and distribution; wastewater collection and treatment; customer service; and utility infrastructure construction management. The company owns regulated public utilities and also serves cities, utility districts and private companies under contract. More than two million people in 10 states depend on SouthWest Water for high-quality, reliable service. SPRINT NEXTEL: S&P Gives Negative Outlook; Affirms 'BB' Rating -------------------------------------------------------------- Standard & Poor's Rating Services said it revised its outlook on Overland Park, Kansas-based wireless carrier Sprint Nextel Corp. and its subsidiaries to negative from stable. At the same time, S&P affirmed all other ratings on the company, including the 'BB' corporate credit rating. Total funded debt outstanding as of Dec. 31, 2008, was about $22 billion. "The outlook revision reflects our concerns that Sprint Nextel's credit measures could deteriorate further in 2009," said Standard & Poor's credit analyst Allyn Arden, "given the company's weaker business position stemming from the ongoing erosion of its subscriber base." Total debt to EBITDA was 3.9x for 2008, up from 2.8x a year ago as revenue and EBITDA fell by 11% and 29%, respectively, largely because of the loss of post-paid customers that totaled 4.1 million and a decline in average revenue per user. "Despite its efforts to improve customer service and reduce churn levels," added Mr. Arden, "Sprint Nextel will be challenged to reverse these trends over the next year given our expectation for increased competition and weaker economic conditions." Its competitors, mainly AT&T Mobility and Verizon Wireless, continue to capture market share at Sprint Nextel's expense while smaller niche carriers, including Leap Wireless International Inc. and MetroPCS Inc., have also demonstrated sustainable subscriber growth. SPX CORPORATION: Fitch Affirms Issuer Default Rating at 'BB+' ------------------------------------------------------------- Fitch Ratings has affirmed SPX Corporation's ratings: -- Issuer Default Rating at 'BB+'; -- Senior secured bank facilities at 'BB+'; -- Senior unsecured debt at 'BB+'. At Dec. 31, 2008 SPX had approximately $1.3 billion of debt outstanding. The Rating Outlook is Stable. The ratings incorporate SPX's solid operating performance, consistent execution of its operating and financial strategies, free cash flow and financial flexibility. The Company continues to refine its business portfolio through acquisitions and divestitures and is currently integrating APV which was acquired for $524 million at the end of 2007. SPX generated strong results in 2008 but expects sales and profit margins to decline in 2009 due to the weak global economy. All of SPX's businesses are likely to be affected although its short-cycle businesses, which represent 60% of SPX's sales, could be more sensitive to near term weakness than SPX's infrastructure businesses. Results in 2009 will include the impact of SPX's planned restructuring that will help reduce costs but also involves approximately $60 million-$80 million of cash charges related to existing and recently acquired businesses. As a result, free cash flow after dividends could decline modestly from the $235 million SPX reported in 2008. During 2008, SPX's leverage declined to a normal range as the company paid down some of its debt used to acquire APV. SPX's long-term strategy is to maintain gross debt/EBITDA within a range of 1.5 times (x) to 2.0x, as defined in its bank agreement. At Dec. 31, 2008 gross debt/EBITDA was 1.6x. The ratio includes certain adjustments and is somewhat understated when compared to the unadjusted measure of 1.8x as calculated by Fitch. Due to its return to lower leverage and its previous efforts to rationalize the company's businesses, Fitch believes SPX is well positioned to adjust to the difficult operating environment. Rating concerns include the impact of economic trends on SPX's operating results and the potential for an increase in leverage related to the company's discretionary spending for acquisitions and share repurchases. Also, net pension liabilities have increased due to market losses during the past year. As a result, required contributions could be materially higher in the future, depending on market returns. These concerns are partly mitigated by the company's commitment to maintain leverage within its targeted range and by long term operating improvements achieved during the past several years. In addition, SPX has sufficient liquidity to meet its near term cash requirements. Liquidity at Dec. 31, 2008 was supported by cash balances of $476 million and approximately $412 million of net availability under secured bank credit facilities, offset by $189 million of debt due within one year. Aside from bank debt that amortizes through 2012, most of SPX's other debt consists of a $500 million note due in 2014. Other cash requirements include pension contributions estimated by SPX at roughly $20 million in 2009. STANADYNE CORP: S&P Changes Outlook to Negative; Keeps 'B' Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Stanadyne Corp. to negative from stable. At the same time, S&P affirmed its ratings on the company, including the 'B' long-term corporate credit rating. "The outlook revision reflects weak conditions in the company's end markets, which are likely to result in deteriorating credit measures and could limit free cash flow generation," said Standard & Poor's credit analyst Dan Picciotto. In addition, Stanadyne's ultimate parent, Stanadyne Holdings Inc., has certain notes which will turn cash-pay in 2010, resulting in an incremental $12 million of annual cash interest expense. Still, the company benefits from fair cash balances and good operating margins. The ratings on Windsor, Connecticut-based Stanadyne reflect the company's vulnerable business position, characterized by cyclical and competitive markets, and its highly leveraged financial profile. Stanadyne is wholly owned by Stanadyne Automotive Holding Corp., which in turn is wholly owned by Stanadyne Holdings Inc. Privately held Stanadyne, controlled by Kohlberg & Co. LLC, is an independent manufacturer of proprietary products, including pumps for gasoline and diesel engines, injectors and filtration systems for diesel engines, and various nonproprietary products manufactured under contract for other companies. Stanadyne sells to original equipment manufacturers in the agricultural, construction, industrial, automotive, and marine markets. The company's product line is narrow and its customer diversity is limited, with Deere & Co. alone providing about 32% of sales. However, the company benefits from significant sales of replacement parts and other products to the aftermarket that represents more than 40% of revenues while the remaining sales are to OEMs. The relatively stable aftermarket sales have historically mitigated the company's earnings and cash flow volatility. Long-term growth in the global diesel engine market supports Stanadyne's internal expansion prospects. The company has good geographical diversification, with more than half its sales coming from outside the U.S. Its global manufacturing footprint tends to reflect the location of its customers. Stanadyne's operating margin (before D&A) has improved to more than 20% from the midteens following the sale of its unprofitable on-highway business in 2006. However, S&P expects the Company to have somewhat significant capital expenditures equivalent to more than 3% of sales. Stanadyne has a highly leveraged financial profile. The Company had total debt to EBITDA of about 5.6x (including postretirement obligations and operating leases) and funds from operations to total debt of about 12% at Dec. 31, 2008. Given operating conditions, credit measures are likely to deteriorate somewhat from these levels. The ratios include as debt discount notes that Stanadyne Holdings issued in late 2004 to fund a cash distribution to stockholders. The notes will accrete to an aggregate principal amount of about $100 million due in 2015, and the Company must begin to make cash interest payments in 2010. In order to make these payments the Company will need to upstream dividends to the holdings Company level, which is subject to certain limitations. At the existing rating, Standard & Poor's expects the Company's ratio of lease-adjusted total debt to EBITDA of 5x, and FFO to total debt of about 10%. S&P could lower the ratings if the Company appears unlikely to generate meaningful free cash flow, if its debt to EBITDA approaches 7x, or if its liquidity diminishes. Also, if Stanadyne does not renew or extend its revolving credit facility in a timely manner, S&P could lower the rating. S&P could revise the outlook to stable if S&P believes the Company will generate meaningfully positive cash flow (after considering the cash pay holdings company notes) while credit measures appear likely to remain at appropriate levels for the rating; such as FFO to debt of around 10%, and the Company is not restricted in servicing the holdings company level debt in the intermediate term. SWIFT ENERGY: Moody's Downgrades Corporate Family Rating to 'B2' ---------------------------------------------------------------- Moody's Investors Service downgraded Swift Energy Company's Corporate Family Rating and Probability of Default Rating to B2 from Ba3. Moody's also downgraded the Company's senior unsecured rating to B3 (LGD 5, 73%) from B1 (LGD 4, 65%). The outlook is stable. The downgrade reflects Swift's deteriorating operating performance, especially its continued high and unsustainable costs trends, and growing financial leverage. Specifically, Swift's costs have increased over the past three years, declining from the Ba level to the B range. Also, Swift's leveraged full-cycle cost per barrel has increased 46% year-over-year to $72.23. During the upcycle Swift's capital spending appears to have added considerable debt without a meaningful addition to its reserve position. Also, over the past three years, Swift's capex has resulted in finding and development costs in the Caa range. Debt/proved developed reserves has increased 9% to $9.79/boe, and debt/average daily production has increased 14% to $21,207. Swift's B2 rating is supported by its scale and its liquidity which appears to be adequate. The Company has a $400 borrowing base revolver with adequate liquidity. The last rating action on Swift was on January 21, 2009, at which time Swift's Ba3 CFR, Ba3 PDR, and the B1 (LGD 4, 65%) senior unsecured rating was placed on review for possible downgrade. Swift Energy Company is a North American independent exploration and production company headquartered in Houston, Texas. TEAM FINANCIAL: Case Summary & Two Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Team Financial Inc. 8 West Peoria, Ste. 200 Paola, KS 66071 Bankruptcy Case No.: 09-10925 Debtor-affiliates filing subject to Chapter 11 petitions: Entity Case No. ------ -------- Team Financial Acquisition Subsidiary Inc. 09-10926 Post Bancorp Inc 09-10927 Type of Business: The Debtors provide banking and financial services in 19 locations in Kansas, Missouri, Nebraska and Colorado. See http://www.teamfinancialinc.com/ Chapter 11 Petition Date: April 5, 2009 Court: District of Kansas (Wichita) Judge: Robert E. Nugent Debtor's Counsel: Edward J. Nazar, Esq. ebn1@redmondnazar.com W. Thomas Gilman, Esq. wtgilman@redmondnazar.com Redmond & Nazar, L.L.P. 245 North Waco, Ste. 402 Wichita, KS 67202 Tel: (316) 262-8361 Fax: (316) 263-0610 The Debtors' financial condition as of March 31, 2009: Total Assets: $692,410 Total Debts: $26,681,000 The Debtor's Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Wells Fargo NA $22,681,000 Trustee Trust Preferred Securities Attn: Corp. Trust Division 919 Market Street Ste 700 Wilmington DE 19801 US Bank $4,000,000 Attn: Timothy N Scheer VP P O Box 790401 St Louis MO 63179-0401 The petition was signed by Sandra Moll, chief operating officer. TEXAS STATE: S&P Cuts Rating on Mortgage Revenue Bonds to 'D' ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Texas State Affordable Housing Corp.'s (South Texas Affordable Housing Corp.) multifamily mortgage revenue bonds (South Texas Apartment Portfolio) series 2002B to 'D' from 'C'. Standard & Poor's received a trustee notice dated March 2, 2009, that South Texas Affordable Properties Corp., the borrower, did not make sufficient payments to the trustee to make any payments of principal or interest to the holders of the series B bonds, and that the funds remaining in the series B debt service reserve fund were insufficient to make these payments. As a result, the March 1, 2009, debt service payment due to the series B bondholders was not made. As of March 2, 2009, the remaining balance in the series B debt service reserve fund was $134,010, which is less than the $590,800 required by the indenture. THORNBURG MORTGAGE: Forbearance Pact Extended to April 30 --------------------------------------------------------- Thornburg Mortgage, Inc., said that on March 31, 2009, its lenders have agreed to grant the Company additional forbearance from demanding payment on deficiency claims under their various financing agreements through April 30, 2009, or earlier if certain events occur. The lenders are: -- JPMorgan Chase Funding Inc. (formerly Bear Stearns Investment Products Inc.); -- Citigroup Global Markets Limited; -- Credit Suisse Securities (USA) LLC; -- Credit Suisse International; -- Greenwich Capital Markets, Inc.; -- Greenwich Capital Derivatives, Inc.; -- The Royal Bank of Scotland plc; and -- UBS AG. In exchange for the continued forbearance, the Company has agreed that the remaining Counterparties who have not previously taken possession of their collateral under their respective financing agreements may do so at the Counterparty's discretion and that the price of such collateral will be determined on a date chosen by the Counterparty. The proceeds from such sales will be applied to reduce the outstanding borrowing amount under the respective financing and ISDA agreements. JPM, CSUSA, CSI, GCM, GCD, and RBS have indicated that they intend to take possession of and sell such collateral during the forbearance period. Citigroup and UBS have agreed to continue to forbear on submitting deficiency claims totaling approximately $394 million and $87 million, respectively, through April 30, 2009, or earlier if certain events occur. The Company expects that additional substantial deficiency claims will result as the remaining Counterparties sell their respective collateral under their respective financing and ISDA agreements; however they have agreed to forbear on submitting such claims through April 30, 2009, or earlier if certain events occur. As a result of the expected and realized deficiency claims, the Company has also agreed to cooperate with the Counterparties to transfer the Company's mortgage servicing rights, which were granted to the Counterparties as security for the Company's obligations to the Counterparties under their respective financing agreements. The Company expects to file for Chapter 11 bankruptcy protection. The Company also intends to commence an orderly sale or liquidation of its remaining assets assisted by Houlihan Lokey Howard & Zukin Capital, Inc., in order to maximize any remaining value for its bondholders and creditors. Once these sales or liquidations are completed, the Company will discontinue operations. New Mexico Business Weekly quoted Thornburg Mortgage President and CEO Larry Goldstone as saying, "Today [April 3] has been a really difficult day for our organization as we have separated with a majority of our colleagues. When an organization has to go through such an exercise, it is always unfortunate because it affects people who were not responsible for the circumstances and who we care about deeply.... Thornburg Mortgage Inc. has been through a very difficult two years as it has tried to survive this tumultuous mortgage marketplace and we have done everything humanly possible over the past year to try to bring a satisfactory resolution to our situation. The sad fact is that the credit crisis has turned out to be far bigger than Thornburg Mortgage, and we could not overcome its challenges." In addition, the Company will not be able to make the March 31, 2009 interest payment on its Senior Subordinated Notes due 2015. However, the Company has a 30-day grace period in which to make such payment before triggering a default under the Senior Subordinated Notes indenture. Thornburg Mortgage reported a net income loss of $2.75 billion in the nine months ended September 30, 2008. The Associated Press reports that Thornburg Mortgage said that it laid off about 130 of its 150 staff members. About Thornburg Mortgage Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA) -- http://www.thornburgmortgage.com/-- is a single-family residential mortgage lender focused principally on prime and super-prime borrowers seeking jumbo and super-jumbo adjustable- rate mortgages. It originates, acquires, and retains investments in adjustable and variable rate mortgage assets. Its ARM assets comprise of purchased ARM assets and ARM loans, including traditional ARM assets and hybrid ARM assets. Thornburg Mortgage, Inc. and Thornburg Investment Management are separate and independent legal entities. Garrett Thornburg is the Chairman of both firms and together they occupy the Thornburg Campus, however the businesses of Thornburg Investment Management are not related to, or affected by, the business of Thornburg Mortgage, Inc. * * * As of September 30, 2008, Thornburg Mortgage had $26.2 billion in total assets and $26.6 billion in total liabilities, resulting in $323.3 million in stockholders' deficit. The Company posted net income of $140.0 million for the three months ended, and net loss of $2.75 billion for the nine months ended, September 30, 2008. As reported in the Troubled Company Reporter on Dec. 22, 2008, Standard & Poor's Ratings Services raised its counterparty credit rating on Thornburg Mortgage Inc. to 'CC' from 'D'. At the same time, S&P also raised its rating on Thornburg's senior notes to 'CC' from 'D'. The outlook is negative. THORNBURG MORTGAGE: Moody's Downgrades Senior Ratings to 'C' ------------------------------------------------------------ Moody's Investors Service has downgraded the ratings on the senior unsecured debt of Thornburg Mortgage, Inc., to C from Ca. This concludes Moody's review. The rating action reflects an expectation of default encapsulated in a bankruptcy filing and the potential for above-average loss severity on Thornburg's debt. The REIT announced in a press release on April 1, 2009, that although it received forbearance from its repo counterparties until April 30, 2009, it anticipates filing for Chapter 11 bankruptcy protection. Thornburg also said that it will not be making an interest payment on its senior subordinated notes due 2015, which will constitute a separate event of default upon the expiration of the 30-day grace period. These ratings were downgraded: * Thornburg Mortgage, Inc. - senior unsecured debt to C from Ca, and senior unsecured debt shelf to (P) C from (P) Ca. Moody's last rating action with respect to Thornburg Mortgage was on October 3, 2008 when Moody's affirmed Thornburg's senior unsecured rating at Ca and continued its review for further possible downgrade. Thornburg Mortgage, Inc. based in Santa Fe, New Mexico, is a single-family mortgage portfolio lender and originator organized as a REIT. As of September 30, 2008, Thornburg Mortgage reported assets of approximately $26.3 billion. Thornburg Mortgage's ratings were assigned by evaluating factors Moody's believe are relevant to the credit profile of the issuer, such as i) the business risk and competitive position of the Company versus others within its industry, ii) the capital structure and financial risk of the Company, iii) the projected performance of the Company over the near to intermediate term, and iv) management's track record and tolerance for risk. These attributes were compared against other issuers both within and outside of Thornburg Mortgage's core industry and the Company's ratings are believed to be comparable to those of other issuers of similar credit risk. TORREYPINES THERAPEUTICS: Receives NASDAQ Non-Compliance Notice --------------------------------------------------------------- La Jolla, California-based TorreyPines Therapeutics, Inc., said it received on March 31, 2009, a letter from the Listing Qualifications Department of the Nasdaq Stock Market notifying the Company that based on the Company's stockholders' equity as reported in its Annual Report on Form 10-K for the year ended December 31, 2008, the Company does not comply with the minimum stockholders' equity requirement of $10 million for continued listing on The Nasdaq Global Market as set forth in NASDAQ Marketplace Rule 4450(a)(3). The Company has until April 15, 2009, to provide a specific plan to achieve and sustain compliance with all of the Nasdaq Global Market continued listing requirements, including a time frame for completion of the plan. The Nasdaq letter has no immediate effect on the listing of the Company's common stock. In the event that the Company receives notice that its common stock is being delisted from the Nasdaq Global Market, Nasdaq rules permit the Company to appeal any delisting determination by the Nasdaq staff to a Nasdaq Listing Qualifications Panel. Alternatively, Nasdaq may permit the Company to transfer its common stock to the Nasdaq Capital Market if it satisfies the requirements for continued listing on that market. About TorreyPines Therapeutics TorreyPines Therapeutics, Inc. (NASDAQ: TPTX) -- http://www.tptxinc.com/-- is a biopharmaceutical company committed to providing patients with better alternatives to existing therapies through the research, development and commercialization of small molecule compounds. The company's goal is to develop versatile product candidates each capable of treating a number of acute and chronic diseases and disorders such as migraine, acute and chronic pain, and xerostomia. The company currently has three clinical stage product candidates: two ionotropic glutamate receptor antagonists and one muscarinic receptor agonist. TORREYPINES THERAPEUTICS: Workforce Down to 3; Eyes Asset Sale -------------------------------------------------------------- TorreyPines Therapeutics, Inc., has reduced its work force to three employees effective March 31, 2009. The reduction is intended to further conserve financial resources, providing the Board of Directors additional time to evaluate strategic alternatives, including a possible sale of the Company. The three remaining employees, the Company's Chief Executive Officer, Chief Financial Officer, and Vice President and General Counsel will assist the Board of Directors in assessing and completing any possible strategic transaction. "It was a very difficult decision to dismiss these talented and dedicated individuals who have contributed significantly to TorreyPines," said Ev Graham, Chief Executive Officer of TorreyPines. "We deeply appreciate their insights and hard work and wish them all well. While the workforce reduction is a difficult step, we believe it is appropriate at this time in order to provide us with the best opportunity to complete a strategic transaction." The Company said in March that due to its current financial condition, it has been continuing to explore financing and strategic alternatives, including a possible project financing, equity financing, or a partnership to continue the development of three product candidates, two ionotropic glutamate receptor antagonists and one muscarinic receptor agonists. Additionally, it has been continuing to explore other strategic alternatives, including a possible asset out-licensing, asset sale or sale of the Company. TorreyPines Therapeutics said if it is unable to complete a financing or strategic transaction during the first half of 2009, it would be unable to continue as a going concern and may be forced to cease operations, seek protection under the provisions of the U.S. Bankruptcy Code or liquidate and dissolve the Company. Ernst & Young LLP, the Company's independent registered public accounting firm, has included an explanatory paragraph in their report on the Company's 2008 financial statements related to the uncertainty and substantial doubt of its ability to continue as a going concern. The Company has incurred net losses of $22.8 million, $23.4 million and $25.4 million for the years ended December 31, 2008, 2007 and 2006, respectively. Since inception, and through December 31, 2008, it has an accumulated deficit of $119.2 million. Based on its operating plan, its existing cash and cash equivalents will only fund its operations into the second quarter, and possibly into the third quarter, of 2009. "These conditions raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements have been prepared assuming that we will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business," the Company said. As of December 31, 2008, the Company had $11.1 million in total assets, and $7.4 million in total liabilities. TorreyPines Therapeutics, Inc. (NASDAQ: TPTX) -- http://www.tptxinc.com/-- is a biopharmaceutical company committed to providing patients with better alternatives to existing therapies through the research, development and commercialization of small molecule compounds. The Company's goal is to develop versatile product candidates each capable of treating a number of acute and chronic diseases and disorders such as migraine, acute and chronic pain, and xerostomia. The Company currently has three clinical stage product candidates: two ionotropic glutamate receptor antagonists and one muscarinic receptor agonist. TPG-AUSTIN PORTFOLIO: S&P Withdraws 'CCC' Corporate Credit Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its 'CCC' corporate credit and secured debt ratings on TPG-Austin Portfolio Holdings LLC. The ratings were previously on CreditWatch with negative implications. S&P is withdrawing its ratings at the Company's request, as the previously rated $292 million secured debt facility has been restructured. TPG-Austin was formed in 2007 to acquire a portfolio of 10 office properties in Austin, Texas (3.5 million square feet; formerly owned by Equity Office Properties) in a $1.15 billion leveraged transaction. TPG-Austin is a wholly-owned subsidiary of a limited partnership joint venture between TPG/CalSTRS LLC (25%), Lehman Bros. (50%), and a sovereign wealth fund (25%). TPG/CalSTRS LLC is, in turn, a limited liability company joint venture between Thomas Properties (25%) and CalSTRS (75%). Thomas Properties, a publicly traded real estate company that is focused on developing and operating office properties in a handful of markets, manages the assets. TPG-Austin is Austin's largest landlord and is a competitive player within the city's class A office market. In December 2008, S&P lowered its ratings and placed them on CreditWatch negative given S&P's concerns regarding TPG-Austin's inability to access funding under its $100 million credit facility following Lehman's bankruptcy filing and management's recent indication that TPG-Austin could itself file for bankruptcy as early as January 2009. Lehman was the sole lender for the Company's $292 million secured debt facility; while the $192 million term portion was fully funded at the time of origination in 2007, TPG-Austin's request for funding under the previously unused $100 million credit facility in September 2008 remains unfunded. As such, the Company pursued legal remedies to compel Lehman to either fund in accordance with the terms of the credit agreement or reject the credit agreement so that TPG-Austin may seek alternative financing supported by the underlying assets currently securing the facility. Ratings Withdrawn TPG-Austin Portfolio Holdings LLC Rating ------ To From -- ---- Corporate credit NR CCC/Watch Neg/-- Secured debt NR CCC/Watch Neg/-- NR - Not rated. TRANSCAST PRECISION: Ordered to Provide Parts to Chrysler & GM -------------------------------------------------------------- On April 3, 2009, the Ontario Courts ordered Transcast Precision Inc. to supply sufficient parts to Chrysler, GM, Magna and Gates for 14 days of production. Additionally, another proceeding is required within that two-week period to settle matters regarding ongoing price and supply. "If the North American auto industry intends to rebuild itself and emerge from our current recession, it must defend the rights of all business owners -- especially the auto parts manufacturers who are being economically exploited," said Dean Topolinski, President and Director of Transcast Precision Inc. "We are hopeful that the courts will recognize the established pricing and negotiations tactics that exist in market -- ones predisposed to the unfair treatment of smaller auto parts manufacturers and suppliers that rely on relatively few, but very large customers." "Transcast has regrettably been portrayed by Chrysler, et al., as a form of corporate raider seeking to take advantage of the OEMs in the current economic maelstrom in which the automotive industry finds itself. Transcast has had no opportunity to present its side of this story in the proceedings, which were commenced without notice to Transcast and while senior management were out of Canada." Transcast said that on March 30, it initiated contact with Chrysler to sell existing company assets and to enter into an agreement that would permit the long-term viability of the new company. While the correspondence indicated that inventory would need to be purchased above previous prices, the increase was required to help offset a number of transition costs including legal bills and unpaid severance from the previous supplier. This price increase was for a five-day term only. The longer-term agreement was to be negotiated during this interim phase. Transcast said in its statement that notwithstanding its offer to negotiate, Chrysler, Magna, Gates, and GM decided not to engage in discussions to come to a commercial solution to keep the plant open. Rather, they proceeded without notice to take Transcast to court to seek interim relief for the return of tooling and parts. When Transcast discovered the ex parte motions, Transcast appeared in court and vigorously opposed the position presented by Chrysler, Magna, Gates and GM. Transcast will continue to argue its position in court by presenting the facts of the case, which has yet to be finally argued. Any orders made by the Court at this stage are interim only. About Chrysler LLC Headquartered in Auburn Hills, Michigan, Chrysler LLC -- http://www.chrysler.com/-- a unit of Cerberus Capital Management LP, produces Chrysler, Jeep(R), Dodge and Mopar(R) brand vehicles and products. The Company has dealers worldwide, including Canada, Mexico, U.S., Germany, France, U.K., Argentina, Brazil, Venezuela, China, Japan and Australia. Liquidity Crunch Chrysler has been trying to keep itself afloat. As reported by the Troubled Company Reporter on March 20, 2009, its Chief Financial Officer Ron Kolka, has said even if Chrysler gets additional government loans, it could face another cash shortage in July when revenue dries up as the Company shuts down its factories for two weeks to change from one model year to the next. The Company's CFO has said Chrysler planned for the $4 billion federal government bailout it received Jan. 2 to last through March 31. The Company is talking with the Obama administration's autos task force about getting another $5 billion, and faces a March 31 deadline to complete its plan to show how it can become viable and repay the loans. General Motors Corp. and Chrysler admitted in their viability plans submitted to the U.S. Treasury on February 17 that they considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of the Chrysler viability plan is available at: http://ResearchArchives.com/t/s?39a3 A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 * * * As reported in the Troubled Company Reporter on Dec. 3, 2008, Dominion Bond Rating Service downgraded the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. As reported in the Troubled Company Reporter on Aug. 11, 2008, Standard & Poor's Ratings Services lowered its ratings on Chrysler LLC, including the corporate credit rating, to 'CCC+' from 'B-'. On July 31, 2008, TCR said that Fitch Ratings downgraded the Issuer Default Rating of Chrysler LLC to 'CCC' from 'B-'. The Rating Outlook is Negative. The downgrade reflects Chrysler's restricted access to economic retail financing for its vehicles, which is expected to result in a further step-down in retail volumes. Lack of competitive financing is also expected to result in more costly subvention payments and other forms of sales incentives. Fitch is also concerned with the state of the securitization market and the ability of the automakers to access this market on an economic basis over the near term, given the steep drop in residual values, higher default rates, higher loss severity being experienced and jittery capital market. As reported in the TCR on Dec. 3, 2008, Dominion Bond Rating Service downgraded on Nov. 20, 2008, the ratings of Chrysler LLC, including Chrysler's Issuer Rating to CC from CCC (high). Chrysler's First Lien Secured Credit Facility and Second Lien Secured Credit Facility have also been downgraded to CCC and CC (low) respectively. All trends are Negative. The ratings action reflects Chrysler's challenge to maintain sufficient liquidity balances amid severe industry conditions that have deteriorated alarmingly over the past few months and are not expected to improve in the near term. With this ratings action, Chrysler is removed from Under Review with Negative Implications, where it was placed on Nov. 7, 2008. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM Europe is based in Zurich, Switzerland, while General Motors Latin America, Africa and Middle East is headquartered in Miramar, Florida. As reported in the Troubled Company Reporter on Nov. 10, 2008, General Motors Corporation's balance sheet at Sept. 30, 2008, showed total assets of US$110.425 billion, total liabilities of US$170.3 billion, resulting in a stockholders' deficit of US$59.9 billion. General Motors Corp. admitted in its viability plan submitted to the U.S. Treasury on February 17 that it considered bankruptcy scenarios, but ruled out the idea, citing that a Chapter 11 filing would result to plummeting sales, more loans required from the U.S. government, and the collapse of dealers and suppliers. A copy of GM's viability plan is available at: http://researcharchives.com/t/s?39a4 The U.S. Treasury and U.S. President Barack Obama's automotive task force are currently reviewing the Plan, which requires an additional $16.6 billion on top of $13.4 billion already loaned by the government to GM. 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, Dominion Bond Rating Service 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. TUSCANY PRESERVE: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Tuscany Preserve Development, Inc. 449 Bay Leaf Drive Kissimmee, FL 34759 Bankruptcy Case No.: 09- 06591 Chapter 11 Petition Date: April 3, 2009 Court: Middle District of Florida (Tampa) Debtor's Counsel: Steven J. Solomon, Esq. ssolomon@adorno.com Adorno & Yoss LLP 2525 Ponce de Leon Boulevard, Suite 400 Miami, FL 33134 Tel: (305) 460-1020 Fax: (305) 503-8961 The Debtor's financial condition as of Nov. 30, 2008: Total Assets: $44,064,958 Total Debts: $48,881,497 The Debtor's Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Benchmark Contractors, LLC $155,870 518 Ronshelle Avenue Haines City, FL 33844 Alamar Services, Inc. $120,319 3316 Ohio Avenue Sanford, FL 32773 Omega Flooring LLC $82,911 P.O. Box 540344 Lake Worth, FL 33454 Four Star Stucco, Inc. $65,038 American Electric Corp. $59,485 Whirlpool $47,721 Moreno & Moreno Corp $42,462 Frost Van den Boom & Smith $41,927 C&J Flooring $26,844 Capital Maintenance & Landsc $23,627 Central Florida Resort $22,871 Absolute Pavers, Inc. $21,950 Goodlette, Coleman & John $19,354 K. Medi Inc. $16,668 Piper Construction, Inc. $14,120 Progress Energy Fl $14,120 JSK Consulting $12,547 Moduss Inc. $12,466 Robert A. Harris Architect $9,438 Verizon $4,658 The petition was signed by Richard Davenport, president. TVI CORPORATION: Wants to Access $19 Million BB&T DIP Facility -------------------------------------------------------------- TVI Corporation and its debtor-affiliates ask the United States Bankruptcy Court for the District of Maryland for authority to access $19,000,000 in financing under a debtor-in-possession agreement with Branch Banking and Trust Company. The Debtors also seek authority to use cash collateral securing repayment of secured loan to their lender. The Debtors together with a non-debtor, Capa Manufacturing Corp., borrowed monies under an amended and restated financing and security agreement dated February 22, 2008, with BB&T. The facility is comprised of $11,000,000 revolving line of credit and $22,500,000 term loan. The Debtors say they owe $10,200,000 under the revolver and $17.1 million under the term loan. The obligations of the Debtors under the credit facility are secured by liens on substantially all of the assets of each Debtor. Salient term of the DIP agreement are: Interim Borrowing Limit: $1,800,000 above the prepetition revolver balance. Final Borrowing Limit: $19,000,000, subject to a borrowing base and other terms and conditions of the DIP financing documents. Interest Rate: Prime rate plus 2.0% per annum, subject to a floor of 5.25% per annum. Maturity: 180 days after the commencement of the Chapter 11 Case, subject to early termination events including, without limitation, the occurrence of one or more events of default and confirmation of plan of reorganization. Unused Line Fee: Quarterly fee of 0.25% per annum. Letter of Credit Fee: 2.0% per annum payable at opening and on each anniversary. Post Default Rate: 200 basis points per annum. Post-Petition Financing Commitment Fee: $25,000 payable at the time the interim financing order is entered. Servicing Fee: $500) per month. Under the DIP agreement, the Debtors are required to (i) provide a draft disclosure statement and a plan of reorganization to the lender within 90 days; (ii) file a disclosure statement and a plan of reorganization acceptable to the lender within 120 days after petition date; (iii) obtain court approval of disclosure statement within 150 days after the petition date; (iv) obtain confirmation of the plan acceptable to the lender within 180 days after the Debtors' bankruptcy filing. The Debtors will grant superpriority administrative expense claims to the lender payable from all pre- and postpetition property of the Debtors' estates to secure any and all of the DIP Obligations; The DIP agreement contains customary and appropriate events of default. Headquartered in Gleen Dale, Maryland, TVI Corporation -- http://www.tvicorp.com/-- supplies military and civilian emergency first responder and first receiver products, personal protection products and quick-erect shelter systems. These products include powered air-purifying respirators, respiratory filters and quick-erect shelter systems used for decontamination, hospital surge systems and command and control. The users of these products include military and homeland defense/homeland security customers. The Company and two of its affiliates filed for Chapter 11 protection on April 1, 2009 (Bankr. D. Md. Lead Case No.: 09-15677). Christopher William Mahoney, Esq., at Duane Morris LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Buccino & Associates, Inc. as their financial advisors and consultants. When the Debtors filed for protection from their creditors, they posted assets between $10 million and $50 million, and debts between $1 million and $10 million. TVI CORPORATION: Seeks More Time to File Schedules and Statements ----------------------------------------------------------------- TVI Corporation and its debtor-affiliates ask the United States Bankruptcy Court for the District of Maryland to extend the deadline for filing their schedules of assets and liabilities, and statement of financial affairs to 45 days from their bankruptcy filing. The Debtors say that they were unable to compile the necessary information to complete their schedules and statement because certain prepetition invoices have yet to be received thus they will not be able to submit the requirements before the initial filing deadline. Headquartered in Gleen Dale, Maryland, TVI Corporation -- http://www.tvicorp.com/-- supplies military and civilian emergency first responder and first receiver products, personal protection products and quick-erect shelter systems. These products include powered air-purifying respirators, respiratory filters and quick-erect shelter systems used for decontamination, hospital surge systems and command and control. The users of these products include military and homeland defense/homeland security customers. The Company and two of its affiliates filed for Chapter 11 protection on April 1, 2009 (Bankr. D. Md. Lead Case No. 09-15677). Christopher William Mahoney, Esq., at Duane Morris LLP, represents the Debtors in their restructuring efforts. The Debtors proposed Buccino & Associates, Inc. as their financial advisors and consultants. When the Debtors filed for protection from their creditors, they posted assets between $10 million and $50 million, and debts between $1 million and $10 million. TVI CORPORATION: Section 341(a) Meeting Set for May 11 in Maryland ------------------------------------------------------------------ The U.S. Trustee for Region 4 will convene a meeting of creditors in TVI Corporation and its debtor-affiliates' Chapter 11 cases on May 11, 2009, at 9:00 a.m., at the 341 meeting rooms, Sixth Floor, Greenbelt, Maryland. 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. Creditors in these cases have until August 10, 2009, to file proofs of claim. About TVI Corporation Headquartered in Glenn Dale, Maryland, TVI Corporation -- http://www.tvicorp.com/-- designs, manufactures and supplies Decontamination, Command and Control, Airborne Infection Isolation, and Mobile Surge Capacity Shelters, Systems and Accessories including generators, trailers and water heaters. TVI also offers a complete line of NIOSH approved Powered Air Purifying Respirators, with multiple headpiece and other filter cartridge options. TVI products serve a variety of markets, including the first responder, fire, law enforcement, healthcare/first receiver, government, military, industrial and commercial. The Company and its affiliates filed for Chapter 11 protection on April 1, 2009 (Bankr. D. Md. Lead Case No. 09-15677). Christopher William Mahoney, Esq., at Duane Morris LLP represents the Debtors in their restructuring efforts. The Debtors propose Buccino & Associates, Inc., to serve as their financial advisors and consultants. The Debtors listed estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. ULTICOM INC: To Finish Financial Reports' Restatement by October ---------------------------------------------------------------- Ulticom Inc. said it is currently in the process of preparing its financial statements, including the restatement of previously reported financial information, to become current in its filings with the Securities and Exchange Commission. The Company expects to file its periodic reports covering the fiscal years 2005, 2006, 2007 and 2008 -- years ended January 31, 2006, 2007, 2008 and 2009 -- certain quarterly reports and any prior periods required for the Company to be current in its reporting obligations, together with any restated historical financial information, by October 31, 2009. The Company said the timing for the completion of its financial statements is dependent in part on the Company's reasonable assurance that no further accounting issues that may impact the Company will be identified by its majority shareholder, Comverse Technology, Inc., during its preparation and audit of its financial statements. On April 2, the Mount Laurel, New Jersey-based Company said its Board of Directors declared a special cash dividend of $4.58 per share, payable on April 20, 2009, to the Company's shareholders of record as of the close of business on April 13, 2009. In connection with the Special Dividend, the Company said that, as contemplated by its equity compensation plans and recommended by the Compensation Committee of the Board, the Board approved a decrease in exercise price of all unexercised stock options that have been previously awarded to officers, employees and directors of the Company after the Special Dividend is paid. Holders of restricted stock and deferred stock units will be eligible to receive the Special Dividend. The Company's cash, cash equivalents and short-term investments as of February 28, 2009, were roughly $281,000,000. The Company has no debt outstanding. The Company had 43,623,105 shares of common stock outstanding as of the close of business on February 28, 2009, including grants of DSU's. After giving effect to the Special Dividend, the Company will have cash, cash equivalents and short-term investments of roughly $81,000,000 and no debt. This Special Dividend represents only a portion of the Company's cash reserves. The Board believes the Special Dividend provides immediate benefit to the Company's shareholders while leaving the Company sufficient capital for meeting operational needs, paying liabilities and funding strategic initiatives. The Board engaged a nationally recognized financial advisor to assist the Company in determining the extent of the Special Dividend. The Special Dividend will be taxed as a dividend to the extent of the Company's current and accumulated earnings and profits (as determined for U.S. federal income tax purposes), then as a return of basis and capital gain. Shareholders are encouraged to consult with their tax advisor regarding the appropriate tax treatment of the Special Dividend. Ulticom Inc. provides service essential signaling solutions for wireless, wireline, and Internet communications. Ulticom's products are used by leading telecommunication equipment and service providers worldwide to deploy mobility, location, payment, switching, and messaging services. Ulticom is headquartered in Mount Laurel, New Jersey, with additional offices in the United States, Europe, and Asia. UNITED AIRLINES: Begins Contract Talks with Flight Attendants ------------------------------------------------------------- Flight attendants at United Airlines went to the negotiating table yesterday seeking contract improvements after enduring huge cuts in pay, quality of work life, healthcare and retirement for nearly seven years. The flight attendants, represented by the Association of Flight Attendants-CWA, AFL-CIO, are exercising the opportunity to negotiate for improvement for the first time since 1996. "Today is full of hope. Flight attendants are committed to rebuilding our career and improving our lives," said Greg Davidowitch, AFA President at United. "Spirits are high as we begin negotiations for improvements that reflect the good work we do at United Airlines." Negotiations began as union and company negotiators exchanged opening proposals. The contract becomes amendable on January 7, 2010; under the Railway Labor Act airline contracts remain in place throughout the negotiations process. The flight attendant contract requires negotiations to begin nine months early with the intention of having a new agreement in place as soon as possible. If negotiations are not concluded by August 7, 2009 the union and the Company will jointly petition the National Mediation Board to begin mediation, the next step in the negotiations process. "For far too long, corporate interests have trumped those of flight attendants," said Mr. Davidowitch. "Our experience is similar to working families throughout our country; recent years have been extremely difficult for flight attendants. Even so, we take pride in our work as safety professionals and our place in the enduring American workforce. We are committed to negotiating a contract that rebuilds our career and compliments the Administration's agenda to reinvigorate the middle class." Flight attendants have been working under concessions since 2002. In its news statement, AFA noted that during United's bankruptcy flight attendants shouldered concessions that caused over 30% reduction in pay, the loss of 10,000 jobs, the burden of greater costs for healthcare, working longer hours away from their families and the termination of their pensions. During Chapter 11 and since United Airlines emerged from its 38-month bankruptcy in February 2006, executives have repeatedly awarded themselves with hundreds of millions of dollars in pay increases and bonuses. Flight attendants are seeking improved compensation, more rest and better work rules to effectively do their job, a reduction in the cost of healthcare and a more secure retirement, according to AFA. "We had to negotiate concessions all through the bankruptcy, but this time is different. Only twice before in twenty-five years have we had the opportunity to negotiate for improvements. We will do whatever it takes to achieve an on-time agreement that meets the needs of United flight attendants," stated Mr. Davidowitch. More than 55,000 flight attendants, including the 16,000 flight attendants at United, join together to form AFA, the world's largest flight attendant union. AFA is part of the 700,000 member strong Communications Workers of America, AFL-CIO. On the Net: http://www.unitedafa.org/ About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The Company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The Company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * As reported in the Troubled Company Reporter on July 29, 2008, Standard & Poor's Ratings Services lowered its ratings on UAL Corp. and subsidiary United Air Lines Inc. (both rated B- /Negative/--), including lowering the long-term corporate credit ratings on both entities to 'B-' from 'B', and removed the ratings from CreditWatch, where they had been placed with negative implications May 22, 2008, as part of an industrywide review. The outlook is negative. VALLEY NATIONAL: S&P Puts 'B' Corp. Rating on Developing Watch -------------------------------------------------------------- Standard & Poor's Ratings Services said that it placed its ratings, including its 'B' corporate credit rating, on Valley National Gases Inc. on CreditWatch with developing implications. The Independence, Ohio-based distributor of packaged gases had total debt of roughly $321 million as of Dec. 31, 2008. The CreditWatch placement reflects the pending acquisition of Valley by Matheson Tri-Gas Inc. MTG is the largest subsidiary of unrated Taiyo Nippon Sanso Corp. of Japan, a global, diversified supplier of industrial gases that generates approximately JPY495 billion in revenue. The CreditWatch listing indicates that the ratings could be raised if it is determined that the Company's financial risk profile benefits from the support garnered from a stronger parent. S&P could also affirm or lower the ratings if the transaction results in a highly leveraged financial risk profile. S&P expects Matheson Tri-Gas Inc. to complete the transaction by the second quarter of this year. S&P plans to conduct discussions with Valley's management and new owners in the near-term, and will resolve the CreditWatch after more information regarding the acquisition has been disclosed. The ratings could also be withdrawn if existing debt is repaid commensurate with the closing of the acquisition. With roughly $300 million in revenues, Valley is a packager and distributor of industrial, medical, and specialty gases, welding supplies, and propane. The Company's 95 branches extend across an 18-state operating territory primarily in the eastern and Midwestern regions of the U.S. VIA PHARMACEUTICALS: Receives Non-Compliance Notice From NASDAQ --------------------------------------------------------------- VIA Pharmaceuticals, Inc. has received a letter, dated March 31, 2009, from the staff of the NASDAQ Stock Market informing the Company that it does not currently comply with NASDAQ Marketplace Rule 4310(c)(3). NASDAQ Marketplace Rule 4310(c)(3) requires companies maintain either: (i) $2,500,000 in stockholders' equity; (ii) a market value of listed securities of $35,000,000; or (iii) net income from continuing operations of $500,000 in the most recently completed fiscal year or two of the last three most recently completed fiscal years. The Company intends to submit a specific plan to achieve and sustain compliance with the $2,500,000 stockholders' equity standard by April 15, 2009, including the time frame for completion of the compliance plan. If the NASDAQ staff determines that the Company's plan does not adequately address the issue, the NASDAQ staff will provide written notice that the Company's securities will be delisted. At that time, the Company may appeal the NASDAQ staff's determination to a NASDAQ Listing Qualifications Panel, which would stay any further delisting action by NASDAQ pending a final decision by the Panel. No assurances can be provided that NASDAQ will grant the Company sufficient time to execute its plan to insure that it will maintain its NASDAQ listing. About VIA Pharmaceuticals Based in San Francisco, California, VIA Pharmaceuticals, Inc. -- http://www.viapharmaceuticals.com/-- is a biotechnology company focused on the development of compounds for the treatment of cardiovascular and metabolic disease. In addition, VIA's pipeline of drug candidates includes other compounds to address other underlying causes of cardiovascular disease: high cholesterol, diabetes and inflammation. YELLOWSTONE CLUB: Blixseth Taps Deschenes Sullivan as Counsel ------------------------------------------------------------- Edra D. Blixseth, owner of Yellowstone Mountain Club LLC, asks the U.S. Bankruptcy Court, District of Montana for authority to employ Gary S. Deschenes, Esq., and Deschenes & Sullivan Law Offices as counsel. Deschenes & Sullivan will give the Debtor legal advice with respect to her powers and duties as debtor-in-possession in the continued operation of her business and management of Debtor's property and to perform all legal services for the debtor-in- possession which may be necessary in connection with the Chapter 11 case. The hourly rates of professionals working on these cases are: Mr. Deschenes $250 Lisa Peck, paralegal $110 Tricia McEwen, paralegal $110 Shane Yeager, paralegal $110 The Debtors propose to employ Deschenes & Sullivan under a general retainer. To the best of the Debtor's knowledge, Deschenes & Sullivan is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Deschenes can be reached at: Deschenes & Sullivan Law Offices P.O. Box 3466 Great Falls, MT 59403-3466 Tel: (406) 761-6112 About Yellowstone Club Located near Big Sky, Montana, Yellowstone Mountain Club LLC -- http://www.theyellowstoneclub.com/-- is a private golf and ski community with more than 350 members, including Bill Gates and Dan Quayle. The Company was founded in 1999. Yellowstone Mountain Club Inc. filed for Chapter 11 on Nov. 10, 2008 (Bankr. D. Montana, Case No. 08-61570). The Company's owner affiliate Edra D. Blixseth, filed for Chapter 11 on March 27 (Case No. 09-60452). Ms. Blixseth listed estimated assets of $100 million to $500 million and estimated debts of $500 million to $1 billion. YOUNG BROADCASTING: Bid Procedures Approved; June 19 Auction Set ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved on April 2, 2009, bidding procedures for either (a) a potential refinancing or equity investment in Young Broadcasting Inc. in support of a plan of reorganization or (b) the sale, as a going concern, of all or part of the Debtors' businesses and/or assets. Bids must be accompanied, among others, by a good faith deposit in an amount equal to the lesser of 10% of the bid amount and $25 million in the form of a certified check or wire transfer. If deemed the winning bidder, the bidder will be required to provide an additional cash deposit in order that the total deposit equals 10% of the value of the winning bid. In connection with the proposed investment or sale transaction, the Court also authorized the Debtors to enter into a stalking horse agreement in connection with a proposed transaction, and approved the Debtors' payment to the Prepetition Agent or Prepetition Secured Lender selected as Stalking Horse Bidder an expense reimbursement not to exceed $300,000 and a break-up fee of no more than 3% of the purchase price. The Stalking Horse Bidder will only be entitled to the expense reimbursement and break-up fee if such bid is a cash bid or if such bid is in excess of the Prepetition Agent's secured claim. In no case will the termination fee be payable if the Stalking Horse Agreement contains a contingency of any kind. Competing bids are due on June 17, 2009. In the event that competing bids are received, an auction to determine the highest and the best offer will be conducted on June 19, 2009, at 10:00 a.m. (Eastern) at the offices of Sonnenschein Nath & Rosenthal LLP, 1221 Avenue of the Americas, New York, New York 10020. The approval hearing will be held on June 25, 2009 at 10:00 a.m. (Eastern). Any objections relating to an equity investment or sale of all or substantially all of the Debtors' assets will be filed with the Court on or before June 23, 2009 at 4:00 p.m. (Eastern). For information about the qualification process, please contact Janine McGratch Shelffo, UBS Securities LLC, at (212) 821-6165, janine.shelffo@ubs.com or Jo Christine Reed, Sonnenschein Nath & Rosenthal LLP, at (212) 398-5236, jcreed@sonnenschein.com A full-text copy of the approved Bid Procedures is available at: http://bankrupt.com/misc/Young.ApprovedBidProcedures.pdf 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 Company and its 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. Andrew N. Rosenberg, Esq., at Paul Weiss Rifkind Wharton & Harrison LLP, represents the Official Committtee of Unsecured Creditors as counsel. The Debtors selected UBS Securities LLC as consultant; Ernst & Young LLP as accountant; 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 Schedules of Assets and Liabilities -------------------------------------------------------------- Young Broadcasting, Inc., et al., filed with the U.S. Bankruptcy Court for the Southern District of New York, their schedules of assets and liabilities, disclosing: Name of Debtor Assets Liabilities -------------- ------ ----------- Young Broadcasting, Inc. $1,625,801,970 $846,416,746 Young Broadcasting of S. Francisco $24,360,823 $2,148,383,041 Young Broadcasting of Richmond $13,496,791 $899,160,389 Young Broadcasting of Sioux Falls $11,600,522 $899,038,378 Young Broadcasting of Green Bay $10,334,346 $884,112,739 Young Broadcasting of Knoxville $9,944,196 $863,185,483 Young Broadcasting of Nashville LLC $8,986,371 $864,279,901 Young Broadcasting of Albany $6,942,433 $878,943,275 Young Broadcasting of Louisiana $6,869,082 $880,950,538 Young Broadcasting of Davenport $6,708,041 $904,358,475 Young Broadcasting of Lansing $6,637,300 $884,356,965 Adam Young, Inc. $2,872,735 $846,700,343 Young Broadcasting of Nashville Inc. $2,434,405 $845,674,691 Young Broacasting of Rapid City $1,916,109 $845,546,771 Young Broadcasting Shared Services $416,742 $845,748,309 WATE, G.P. $0 $900,608,846 WKRN, G.P. $0 $879,129,165 KLFY, L.P. $0 $878,946,057 Winnebago Television Corporation $0 $845,466,906 LAT, Inc. $0 $845,466,906 Young Broadcasting of Los Angeles $0 $845,466,906 YBK, Inc. $0 $845,466,906 YBT, Inc. $0 $845,466,906 Honey Bucket Films, Inc. $0 $845,466,906 Fidelity Television, Inc. $0 $845,466,906 Copies of the SALs are available at: http://bankrupt.com/misc/YoungBroadcastingInc.Schedules.pdf http://bankrupt.com/misc/YoungBcastingofSanFrancisco.Sch.pdf http://bankrupt.com/misc/YoungBcastingofRichmond.Schedules.pdf http://bankrupt.com/misc/YoungBcastingofSiouxFalls.Schedules.pdf http://bankrupt.com/misc/YoungBcastingofGreenBay.Schedules.pdf http://bankrupt.com/misc/YoungBcastingofKnoxville.Schedules.pdf http://bankrupt.com/misc/YoungBcastingofNashvilleLLC.Sch.pdf http://bankrupt.com/misc/YoungBroadcastingofAlbany.Schedules.pdf http://bankrupt.com/misc/YoungBcastingofLouisiana.Schedules.pdf http://bankrupt.com/misc/YoungBcastingofDavenport.pdf http://bankrupt.com/misc/YoungBcastingofLansing.Schedules.pdf http://bankrupt.com/misc/AdamYoung,Schedules.pdf http://bankrupt.com/misc/YoungBcastingofNashvilleInc.Sch.pdf http://bankrupt.com/misc/YoungBcastingofRapidCity.Schedules.pdf http://bankrupt.com/misc/YoungBcastingSharedServices.Sch.pdf http://bankrupt.com/misc/WATE.G.P.Schedules.pdf http://bankrupt.com/misc/WKRNG.P.Schedules.pdf http://bankrupt.com/misc/KLFY.Schedules.pdf http://bankrupt.com/misc/Winnebago.Schedules.pdf http://bankrupt.com/misc/LATInc.Schedules.pdf http://bankrupt.com/misc/YoungBcastingofLosAngeles.pdf http://bankrupt.com/misc/YBKInc.Schedules.pdf http://bankrupt.com/misc/YBTInc.Schedules.pdf http://bankrupt.com/misc/HoneyBucket.Schedules.pdf http://bankrupt.com/misc/FidelityTelevision.Schedules.pdf The foregoing schedules were prepared by the Debtors' management and are unaudited. They remain subject to further review and verification. Subsequent information may result in material changes to the schedules. 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. Young Broadcasting and 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. Andrew N. Rosenberg, Esq., at Paul Weiss Rifkind Wharton & Harrison LLP, represents the Official Committtee of Unsecured Creditors as counsel. The Debtors selected UBS Securities LLC as consultant; Ernst & Young LLP as accountant; 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. ZOHAR WATERWORKS: Deep in Debt, Files for Chapter 11 Protection --------------------------------------------------------------- According to Bloomberg's Bill Rochelle, Zohar Chief Financial Officer Paul F. Tejada said the Company's debt is almost 20 times cash flow. Revenue of $42 million in 2007 declined to $37.4 million in 2008. The net loss in 2008 was $11.9 million. Zohar Waterworks LLC, together with an affiliate, has filed for Chapter 11. The Company in its bankruptcy petition listed assets of $27.3 million against debt totaling $82.9 million. It owes $72.9 million to secured creditors. Columbus, Ohio-based Zohar Waterworks manufactures the Oasis brand water coolers and bottled water coolers. Zohar Waterworks LLC, together with an affiliate B2 International Corporation, filed for Chapter 11 on April 2, 2009 (Bankr. D. Del. Case No. 09-11179). The Debtor has tapped Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, as counsel. ZOUNDS INC: U.S. Trustee Schedules Creditors Meeting on May 5 ------------------------------------------------------------- The U.S. Trustee for Region 14 will convene a meeting of creditors in Zounds, Inc.'s Chapter 11 case on May 5, 2009, at 10:00 a.m., at the US Trustee Meeting Room, 230 N. First Avenue, Suite 102, Phoenix, Arizona. 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 Phoenix, Arizona, Zounds, Inc. -- http://www.zoundshearing.com/-- offers a portfolio of hearing aids and wireless devices. The Debtor filed for Chapter 11 protection on March 30, 2009 (Bankr. D. Ariz. Case No. 09-06053). Jordan A. Kroop, Esq., at Squire Sanders & Dempsey LLP represents the Debtor in its restructuring efforts. The Debtor listed estimated assets of $10 million to $50 million and estimated debts of $10 million to $50 million. * Bill Bartmann Organizes Private Equity Fund to Buy Toxic Assets ----------------------------------------------------------------- Bill Bartmann, co-founder of bankrupt Commercial Financial Services, Inc, is organizing a private equity fund to help investors purchase "toxic assets," which he predicts will attract more than $1 billion in investments. Industry professionals define toxic assets as those that include commercial or residential real estate loans that are not performing. The loans include collateralized mortgage obligations or debt securities which are made up of subprime loans. Mr. Bartmann said that the fund will take advantage of the Obama administration's plan to auction off pools of toxic residential mortgages through the Federal deposit Insurance Corp. The auctions are set up to help restore the nation's economy by encouraging investment, helping the bank's balance sheets and urging them to lend more freely. The FDIC will back 5/6 of the purchase price of these toxic assets and half of the remaining 1/6 of the price will be paid by the Treasury Department with the other half being funded by investors, including Mr. Bartmann's fund. On March 23, the administration announced their intention to take over up to $1 trillion in sour mortgage securities, with the help of private investors. Mr. Bartmann said that the offer will be very attractive to investors with the FDIC's backing. "The government is taking the brunt of the risk, so the investor doesn't stand to lose a lot," said Mr. Bartmann. "Some risk remains based largely on how the assets perform." Mr. Bartmann will be providing initial money while he seeks contributions from sources including investment funds and hedge funds. Mr. Bartmann doesn't anticipate any problems in finding investors in spite of the failure of his company, CFS, which resulted in accusations of accounting fraud. Mr. Bartmann was found not guilty by a federal jury who unanimously acquitted him as a bankruptcy judge apologized to him. No fraud was discovered at CFS, as intelligent investors will understand. Mr. Bartmann conducts seminars on how to grow and succeed in business. He also looks forward to the release of his new book, "Bailout Riches," expected to be available in May. The book is about how everyday investors can make a fortune buying bad loans for pennies on the dollar. Mr. Bartmann said that there is no connection between the book and the fund. The fund will accept only sophisticated investors and the book is aimed at those who do not qualify, but would like to invest elsewhere. Bill Bartmann -- http://www.billionaire.com-- offers due- diligence advice in his online course, Billionaire Business Systems. This course covers financial and legal issues of starting, owning and operating a business. * Blackstone May Raise $3-Bil. In Loans for Struggling Companies ---------------------------------------------------------------- To set up a fund to provide financing for businesses short of cash or facing bankruptcy, Blackstone Group may raise as much as $3 billion, sources told James Kraus of Bloomberg News. The report adds that Blackstone is also raising $15 billion for the sixth installment of Blackstone Capital Partners, a buyout fund. Bloomberg News says that according to the New York Post, the fund would be run by GSO Capital, and will provide debtor-in-possession financing to companies that need capital to pay workers or reorganize part of their business in a bankruptcy restructuring. The Blackstone Group L.P. is an alternative asset manager and provider of financial advisory services. It is an independent alternative asset manager with assets under management of $94.56 billion, as of December 31, 2008. Its alternative asset management businesses include the management of corporate private equity funds, real estate funds, funds of hedge funds, credit-oriented funds, collateralized loan obligation vehicles and publicly- traded, closed-end mutual funds. It also provides financial advisory services, including corporate and mergers and acquisitions advisory, restructuring and reorganization advisory and fund placement services. It operates in four segments: Corporate Private Equity, Real Estate, Marketable Alternative Asset Management and Financial Advisory. On March 3, 2008, it acquired GSO Capital Partners LP and certain of its affiliates. In August 2008, it established a business group, Cleantech Energy Group. In October 2008, it acquired Apria Healthcare Group Inc. * Rep. Jerrold Nadler Proposes Bill to Undo 2005 BAPCPA Changes --------------------------------------------------------------- Congressman Jerrold Nadler (NY-08), Chairman of the House Judiciary Subcommittee on the Constitution, Civil Rights and Civil Liberties, on April 2 introduced the Business Reorganization and Job Preservation Act of 2009, which would amend the federal bankruptcy code to repeal provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Mr. Nadler said in a statement, "As BAPCPA currently stands, many businesses nationwide have been unable to reorganize successfully in bankruptcy and have been pushed into liquidation, at the cost of thousands of jobs. Circuit City, for example, was unable to secure financing to complete its reorganization last year and was forced to liquidate, sacrificing 34,000 jobs across the country." "In an economy as depressed as ours, we must be cognizant of the many difficulties facing American businesses and avoid placing unnecessary hurdles in their paths," added Rep. Nadler. "The Business Reorganization and Job Preservation Act of 2009 will remove some of obstacles now hindering struggling businesses and inject a much-needed economic boost during this time of severe recession. It's essential that we give retailers, which are often the job-providers of our communities, the means to reorganize and stay in business." The present law, Mr. Nadler's statement says, gives landlords and lenders the ability to make tougher demands on businesses filing for bankruptcy and, in many cases, locks tenants into new leases while they face reorganization procedures. In 2008, two dozen major national retailers sought bankruptcy. If passed, the Business Reorganization and Job Preservation Act would stem that tide and offer crucial assistance to retailers suffering major losses in the current economic recession, Mr. Nadler said. According to Bloomberg's Bill Rochelle, the bill by the New York congressman would: -- delete the requirement imposed in 2005 that a company in Chapter 11 must elect within 210 days between assuming or rejecting leases; -- revoke the provision that enables unsecured suppliers to be paid in full for goods delivered within 20 days before bankruptcy; -- reduce the right of suppliers to reclaim goods to 10 days from 45; and -- take away the right that utility companies were given in 2005 to receive security deposits or letters of credit to ensure payment. According to Bill Rochelle, with respect to the 210-day limit, in cases such as Circuit City Stores Inc. and Linens 'n Things Inc., creditors demanded liquidation so they could conduct going-out-of- business sales before being forced out of the stores. He added that since GOB sales take almost four months, from start to finish, many retailers have begun total liquidations three months or so into Chapter 11. The BAPCPA 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. The article notes that 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 mere 210-day period to decide on the leases, among other changes, provided by the BAPCPA is viewed in some quarters as causing retailers to begin liquidating unnecessarily within three months into Chapter 11, Bloomberg's Bill Rochelle said. Bob Duffy, senior managing director at FTI, said in an article posted at http://www.turnaround.org/that BAPCPA critics contend that the shortened timetable have had a chilling effect on lenders' willingness to commit normal debtor-in-possession financing to a debtor. By accelerating the timetable to reject store leases, BAPCPA has unwittingly put at risk the value of a retail debtor's two largest sources of collateral: inventory and store leases that can be assigned. Alan D. Smith, Esq., at Perkins Coie LLP, in an article posted at The Journal Corporate Renewal, said that while the 210-day period may be long enough to determine which leases are under market and thus more valuable for assignment or sale purposes, it often is not nearly enough time to determine whether a debtor will survive in its current form, whether it must reduce its operations in certain geographic or other markets and, most significantly, which locations will be most attractive to potential purchasers of the business. Robert L. Eisenbach III, Esq., at Cooley Godward Kronish LLP, said that in the past, retailers usually evaluated sales at stores for at least one holiday shopping season and sometimes two, before deciding whether to retain the store. Now a retailer has only seven months to make that decision. Pre-BAPCPA, debtors initially had only 60 days to decide on leases, but they were allowed to seek extensions without any statutory limitation. Mr. Smith added that before the BAPCPA, many retail and other debtors also raised significant amounts of money by selling "lease designation rights" to one of a handful of real estate groups that specialized in that arena. In such a sale, a debtor obtained cash and relief from post-petition rent obligations immediately because the designation rights buyer assumed the obligation to pay all regularly recurring occupancy costs. "BAPCPA effectively killed that market," Mr. Smith said. He noted that even if a debtor could easily identify surplus locations, the Section 365(d)(4) does not provide enough time to produce a meaningful return on most real estate portfolio. * South Florida Consumer Bankruptcies Heightens ----------------------------------------------- Patrick Danner and Patricia Mazzei at the Miami Herald reports that the number of people filing for bankruptcy in South Florida reached its highest level since October 2005 when sweeping reforms to U.S. bankruptcy laws led to a crush of people seeking protection from creditors. The report relates that the consumers rushed to file for bankruptcy in 2005, ahead of the Bankruptcy Abuse Prevention and Consumer Protection Act. Under that law, debtors who can repay part of their debt are no longer allowed to simply wipe the slate clean by filing for Chapter 7 liquidation. Banks and credit card companies backed the legislation. Critics contend the reforms have failed to direct more debtors from Chapter 7 liquidation into Chapter 13 reorganization, where they would repay some or all of their debts. The report notes Miami bankruptcy lawyer Patrick L. Cordero as saying, "I've had more clientele come in than ever before that are unemployed. There are just no jobs." Many of the people Mr. Cordero is seeing worked in the real estate industry, such as mortgage brokers, appraisers and construction workers. According to Miami Herald, the 2,247 consumer bankruptcy filings in South Florida in March were the most since 11,286 filings were recorded in October 2005. Last month's filings represent a 57% jump from the 1,426 filings in March 2008 and a 35% increase from February. Mr. Cordero said it's too soon to know if filings will increase through the rest of this year. A lot depends, he said, on federal efforts to aid homeowners struggling to hang on to their homes. As for business filings, Miami Herald said there were 129 in March, up from 82 a year ago. There were 105 filings in February. There were 54 business filings in Miami-Dade and 39 in Broward last month. * U.S. Treasury Won't "Go Begging" for Buyers of Its Debt --------------------------------------------------------- Bloomberg News says that according to a report by Goldman Sachs Group Inc., the U.S. Treasury won't "go begging" for buyers of its debt as households and the Federal Reserve increase their holdings of government bonds. "The fact that yields have remained at historic lows while the Treasury has been borrowing heavily is itself testimony to the strong demand for Treasury securities. The U.S. Treasury will not go begging as it finds that an already heavy auction schedule may need to be increased further if our estimates are right," the report said. Yields may rise "to induce some of these purchases," economists Jan Hatzius, Ed McKelvey and Alec Phillips in a note wrote to clients. According to Candice Zachariahs of Bloomberg the report said that the Treasury will sell a net $1.7 trillion of debt in the second half of this fiscal year, followed by $1.4 trillion in 2010 and $1 trillion in 2011. Ten-year note yields rose three basis points to 2.69% as of 7:30 a.m. in London, on April 2, according to BGCantor Market Data. The price of the 2.75 percent security due in February 2019 fell 1/4, or $2.50 per $1,000 face amount, to 100 18/32. * Sandeep Qusba Joins Simpson Thacher & Bartlett as Partner ----------------------------------------------------------- Simpson Thacher & Bartlett LLP reported that Sandeep Qusba has joined the Firm as a partner in its Bankruptcy and Restructuring practice. "Simpson Thacher is a leader in helping clients address the complex issues that arise when a company faces financial distress," said Pete Ruegger, Chairman of Simpson Thacher's Executive Committee. "Sandy is a welcome addition to our bankruptcy and restructuring practice and will enhance our capacity to advise clients who face these challenging situations." "Sandy Qusba is one of the best and the brightest bankruptcy lawyers with whom I have worked," added Peter Pantaleo, head of Simpson Thacher's Bankruptcy and Restructuring group. "His talent and experience will help us meet the growing needs of our clients for advice in the bankruptcy and restructuring area." Mr. Qusba's practice focuses on bankruptcy and out-of-court restructurings as well as distressed company acquisitions. His experience spans a wide range of industries including the healthcare, energy, automotive, manufacturing, telecommunications and other technology sectors. "I'm thrilled to be joining Simpson Thacher. The Firm's unparalleled strength across its many practice areas, including credit, corporate finance, mergers and acquisitions, governance, litigation as well as bankruptcy and restructuring, enable it to advise on a comprehensive range of solutions to the complexities faced by companies and financial institutions in today's economy," added Mr. Qusba. "The Firm offers an ideal platform for me to provide my clients the comprehensive legal services demanded in today's turbulent environment." Mr. Qusba is a graduate of Tufts University and received his J.D. cum laude from Syracuse University. He served as a law clerk for Chief Judge Stephen D. Gerling in the U.S. Bankruptcy Court of the Northern District of New York. Prior to joining Simpson Thacher, he was a partner at White & Case. Attorneys at Simpson Thacher provide comprehensive services to clients an all aspects of restructuring and bankruptcy, from the first signs of financial distress to the filing and resolution of complex Chapter 11 cases. Whether a company finds itself facing cash flow issues, imminent debt maturities or is considering filing for bankruptcy, the Firm is adept at helping clients successfully meet their challenges. The Firm regularly advises clients on a wide range of alternatives including debt refinancings and balance sheet restructurings as well as representing parties in some of the largest and most complex bankruptcies and restructurings in the country and internationally. The Firm's lawyers play a leading role in finding unique and innovative solutions for the complicated problems that often arise on large multi-party cases. The Firm's broad experience covers almost every industry including airline, automotive, cable and telecommunications, consumer products, energy, healthcare, manufacturing, real estate, retail, steel and textile, among others. About Simpson Thacher & Bartlett Simpson Thacher & Bartlett LLP -- http://www.simpsonthacher.com-- is a leading global law firm with offices in New York, Beijing, Hong Kong, London, Los Angeles, Palo Alto, Tokyo, and Washington, D.C. Established in 1884, the Firm has more than 800 lawyers. Globally, the Firm provides coordinated legal advice on the world's largest and most complex corporate transactions and litigation matters. * Large Companies With Insolvent Balance Sheets ----------------------------------------------- Total Share- Total Total Holders' Working Assets Equity Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------ -------- ------- ABSOLUTE SOFTWRE ABT CN 107 (7) 24 AMR CORP AMR US 25,175 (2,935) (3,439) ARBITRON INC ARB US 200 (14) (29) ARRAY BIOPHARMA ARRY US 136 (27) 54 AUTOZONE INC AZO US 5,235 (187) 112 BARE ESCENTUALS BARE US 300 (0) 146 BLOUNT INTL BLT US 500 (44) 128 BOEING CO BA US 53,779 (1,294) (4,961) BOEING CO BAB BB 53,779 (1,294) (4,961) BOEING CO-CED BA AR 53,779 (1,294) (4,961) CABLEVISION SYS CVC US 9,383 (5,354) (438) CENTENNIAL COMM CYCL US 1,432 (1,021) 101 CENVEO INC CVO US 1,552 (221) 190 CHENIERE ENERGY LNG US 2,922 (354) 350 CHENIERE ENERGY CQP US 1,979 (352) 139 CHOICE HOTELS CHH US 328 (138) (15) CLOROX CO CLX US 4,398 (403) (389) COCA-COLA ENTER CCE US 15,589 (31) (491) CV THERAPEUTICS CVTX US 364 (222) 246 DELTEK INC PROJ US 193 (54) 35 DEXCOM DXCM US 44 (39) 17 DISH NETWORK-A DISH US 6,460 (1,949) (882) DOMINO'S PIZZA DPZ US 464 (1,425) 105 DUN & BRADSTREET DNB US 1,586 (851) (213) EMBARQ CORP EQ US 8,371 (608) (6) ENERGY SAV INCOM SIF-U CN 552 (423) (162) EXELIXIS INC EXEL US 402 (56) 82 EXTENDICARE REAL EXE-U CN 1,806 (40) 95 FORD MOTOR CO F US 222,977 (18,651) (13,313) GARTNER INC IT US 1,093 (21) (238) GENTEK INC GETI US 425 (22) 88 HEALTHSOUTH CORP HLS US 1,998 (700) (64) IMAX CORP IMX CN 238 (91) 41 IMAX CORP IMAX US 238 (91) 41 IMS HEALTH INC RX US 2,087 (153) 231 INTERMUNE INC ITMN US 172 (125) 97 IPCS INC IPCS US 538 (48) 49 JOHN BEAN TECH JBT US 591 (9) 93 KNOLOGY INC KNOL US 643 (56) 26 LINEAR TECH CORP LLTC US 1,494 (310) 992 MEAD JOHNSON-A MJN US 1,361 (1,396) 64 MEDIACOM COMM-A MCCC US 3,719 (347) (274) MOODY'S CORP MCO US 1,773 (994) (584) NATIONAL CINEMED NCMI US 610 (526) 96 NAVISTAR INTL NAV US 9,623 (1,493) 1,367 NPS PHARM INC NPSP US 204 (215) 97 OCH-ZIFF CAPIT-A OZM US 2,003 (219) N.A. OSIRIS THERAPEUT OSIR US 137 (5) 71 OVERSTOCK.COM OSTK US 172 (3) 40 PALM INC PALM US 656 (84) 31 PDL BIOPHARMA IN PDLI US 191 (353) 149 QWEST COMMUNICAT Q US 20,182 (1,449) (883) REGAL ENTERTAI-A RGC US 2,600 (242) (93) RENAISSANCE LEA RLRN US 57 (5) (15) SALLY BEAUTY HOL SBH US 1,489 (720) 365 SEALY CORP ZZ US 889 (162) 34 SONIC CORP SONC US 818 (55) (9) STAR SCIENTIFIC STSI US 12 (0) 6 SUCCESSFACTORS I SFSF US 170 (5) 3 SUN COMMUNITIES SUI US 1,207 (28) N.A. TAUBMAN CENTERS TCO US 3,072 (163) N.A. TEAL EXPLORATION TEL SJ 50 (72) (105) THERAVANCE THRX US 236 (135) 166 UAL CORP UAUA US 19,461 (2,465) (2,420) UNITED RENTALS URI US 4,191 (29) 276 VERIFONE HOLDING PAY US 840 (38) 308 VERIFONE HOLDING VF2 GR 840 (38) 308 VERIFONE HOLDING PAY IT 840 (38) 308 WEIGHT WATCHERS WTW US 1,107 (888) (270) WESTERN UNION WU US 5,578 (8) 528 WR GRACE & CO GRA US 3,876 (354) 965 YUM! BRANDS INC YUM US 6,527 (108) (771) ********* 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. Ma. Theresa Amor J. Tan Singco, 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 ***