/raid1/www/Hosts/bankrupt/TCR_Public/090521.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, May 21, 2009, Vol. 13, No. 139
Headlines
ACCURIDE CORP: Bank Debt Trades at 34% Off in Secondary Market
AGRIPROCESSORS INC: 4 Ex-Managers Face New Immigration Charges
AGUA DULCE: Wants Schedules & SOFA Filing Extended Until June 5
AGUA DULCE: Wants to Hire Levene Neale as Bankruptcy Counsel
AMERICAN APPAREL: Incurs $9MM Q1 Loss Despite 2.4% Sales Hike
AMERICAN INT'L: Three Firms Eyeing AIG Investments Unit
ANDERSON HOMES: Wants to Obtain Loan Advances From Capital Bank
ANDERSON HOMES: Wants to Obtain Loan Advances from Wachovia Bank
ARCHANGEL DIAMOND: Commences Restructuring Talks with Shareholder
ARIEL FUND: Merkin Steps Down; Fund Placed Into Receivership
ASCOT PARTNERS: Merkin Steps Down; Fund Now in Receivership
AVIS BUDGET: Bank Debt Trades at 36% Discount in Secondary Market
AVISTA CORPORATION: Fitch Raises Issuer Default Rating from 'BB+'
AWESOME ACQUISITION: S&P Raises Corporate Credit Rating to 'B'
BACHRACH ACQUISITION: Can File Schedules and SOFA Until June 22
BARZEL INDUSTRIES: S&P Downgrades Corporate Credit Rating to 'SD'
BEARINGPOINT INC: Committee, Wells Fargo Object to Revised KEIP
BEARINGPOINT INC: Seeks Court Approval of Revised Incentive Plan
BERGENLINE IMAGING: All Proofs of Claim Due by June 30
BIO-RAD LABORATORIES: Moody's Rates $250 Mil. Notes at 'Ba3'
BIO-RAD LABORATORIES: S&P Assigns 'BB+' Rating on $250 Mil. Debt
BLOCKBUSTER INC: Bank Debt Trades at 29% Off in Secondary Market
BOSTON SCIENTIFIC: Fitch Affirms Issuer Default Rating at 'BB+'
BRESNAN COMMUNICATIONS: Moody's Raises Corp. Family Rating to 'B1'
BRODER BROS: Completes Restructuring, Retires $213.5MM in Notes
BUNTING SWINE: Taps Stephen L. Beaman as Bankruptcy Counsel
CARAUSTAR INDUSTRIES: S&P Downgrades Corp. Credit Rating to 'D'
CAP CANA: Moody's Confirms Corporate Family Rating at 'Ca'
CELESTICA INC: Fitch Upgrades Issuer Default Rating to 'BB-'
CHARTER COMMUNICATIONS: Bank Debt Trades at 14% Discount
CHARYS HOLDING: Emerges From Bankruptcy as CCLM Holdings
CHRYSLER LLC: Wins Final Approval of Treasury's $4.96BB DIP Loan
CHRYSLER LLC: To Continue Doing Business With 1,200 Suppliers
CHRYSLER LLC: Dealer Group to Offer Objections to Network Cuts
CHRYSLER LLC: Dealers, Suppliers Object to Fiat Transaction
CHRYSLER LLC: Seeks Permission to Enter Into Daimler-PBGC Deal
CHRYSLER LLC: Seeks to Change "Complex" Governance Structure
CHRYSLER LLC: Seeks July 31 Extension of Ownership Report
CHRYSLER LLC: Kidder to Assume As Chairman After Fiat Deal Closes
CHRYSLER LLC: Dealership Closings Won't Impact Warranty Coverage
CHRYSLER LLC: Checks Paid as Refunds for Faulty Vehicles Bouncing
CHRYSLER LLC: No Superpriority for Professionals' Fees
CMP SUSQUEHANNA: Bank Debt Trades at 52% Discount
CONGRESSIONAL HOTEL: Proposes McNamee Hosea as Bankruptcy Counsel
CPG INTERNATIONAL: Moody's Cuts Corporate Family Rating to 'B3'
CRUSADER ENERGY: Schedules $335MM in Assets and $353MM in Debts
CRUSADER ENERGY: May Use Lenders' Cash Collateral Until May 27
DANA CORP: Bank Debt Trades at 59% Discount in Secondary Market
DEVELOPERS DIVERSIFIED: Fitch Cuts Issuer Default Rating to 'BB'
DEX MEDIA EAST: Bank Debt Trades at 39% Off in Secondary Market
DIRECTV HOLDINGS: Moody's Reviews 'Ba2' Corporate Family Rating
DREIER LLP: Hearing on Proposed Distribution of Cash Today
EAGLE INSURANCE: Claims Bar Date vs Eagle Ins Extended to Sept 28
EDDIE BAUER: Moody's Downgrades Corporate Family Rating to 'Ca'
EUROFRESH INC: Chapter 11 Filing Cues Moody's Rating Cut to 'D'
FANNIE MAE: Thomas Lund Resigns as Single-Family Mortgage Chief
FLUID ROUTING: Private Sale of Fluid Assets to YH Okayed
FIRST INDUSTRIAL: Fitch Downgrades Issuer Default Rating to 'BB-'
FLYING J: May Sell Bakersfield Refinery in California
FOOTHILLS RESOURCES: Wants 4-Month Extension of Plan Period
GABRIEL CAPITAL: Merkin Steps Down; Fund Placed Into Receivership
GATEHOUSE MEDIA: Bank Debt Trades at 77% Off in Secondary Market
GENERAL MOTORS: Bank Debt Trades at 39% Off in Secondary Market
GENERAL MOTORS: Opel Gets 3 Bids; Canadian Unit to Cut 245 Dealers
GENERAL MOTORS: Sale of Healthy Assets to Govt. If Ch. 11 Filed
GIBSON ENERGY: Moody's Assigns 'B1' Rating on $545 Mil. Notes
GMAC LLC: Will Get Over $7BB in Additional Gov't Bailout Funds
GREENBRIER HOTEL: Court Dismisses Chapter 11 Bankruptcy Case
HAWK CORPORATION: Weak Q1 Results Won't Affect Moody's 'B2' Rating
HAWKER BEECHCRAFT: Bank Debt Trades at 44% Off in Secondary Market
HILVENTURES LP: Files Chapter 11 in Santa Ana, California
INN OF THE MOUNTAIN: Missed Payment Won't Affect 'Ca' Rating
ION MEDIA: Terms of Pre-Negotiated Plan with First Lien Lenders
ION MEDIA: Case Summary & 50 Largest Unsecured Creditors
LAUREATE EDUCATION: Bank Debt Trades at 22% Discount
LAZY DAYS: S&P Downgrades Corporate Credit Rating to 'SD'
LEAR CORP: Bank Debt Trades at 43% Discount in Secondary Market
LEHIGH COAL: Records $851,000 Net Income for Jan.-Feb.
LENOX GROUP: PBGC Assumes Pension and Retirement Plans
LYONDELL CHEMICAL: To Renew Workers' Compensation Policy
LYONDELL CHEMICAL: Wants Orders to Apply to Parent
MAJESTIC HOLDCO: Missed Interest Payment Cues S&P's 'D' Rating
MGM MIRAGE: Eyes Luxury-Hotels' Comeback in Asia & Middle East
MGM MIRAGE: Will Repay $825.6MM in Debt After Selling Stock, Notes
MORTGAGE GUARANTY: S&P Puts 'BB' Ratings on Negative CreditWatch
MORTON INDUSTRIAL: Court to Consider Sale of Assets Today
N2N COMMERCE: Assignee Not Authorized to File Bankruptcy Petition
NEW CENTURY: Court Caps Liquidating Trustee's Fees & Expenses
NIELSEN COMPANY: Fitch Affirms Issuer Default Rating at 'B'
NOBLE INT'L: Names ArcelorMittal Lead Bidder for European Unit
NORTEL NETWORKS: S&P Withdraws 'D' Corporate Credit Rating
PAPER INTERNATIONAL: Begins Sending Ballots to Noteholders
PAUL MOLLER: Case Summary & 14 Largest Unsecured Creditors
PENNSYLVANIA SN: Claims Deadline Extended to July 20
PERRY GLOBAL: Moody's Withdraws Prime-1 Rating on ABCP
PFF BANCORP: Wants Plan Filing Period Extended to July 6
PILGRIM'S PRIDE: Chicken Growers' Public Policy Argument Denied
PILGRIM'S PRIDE: Court OKs Plant City Sale to New Southern
POMARE LTD: Maui Divers Offers $1 Million for Firm
QUICKSILVER RESOURCES: S&P Affirms 'B' Corporate Credit Rating
RAM REINSURANCE: Moody's Cuts Insurance Strength Rating to 'Ba3'
REALTY AMERICA: Seeks Chapter 11 Protection in Dallas
REALTY AMERICA: Voluntary Chapter 11 Case Summary
RENEW ENERGY: Seeks to Auction All Assets on June 22
RENEW ENERGY: Wants June 8 as Bar Date for Proofs of Claim
RH DONNELLEY: Seeks Bank Lender Support as Part of Restructuring
SAGITTARIUS RESTAURANTS: S&P Junks Corporate Credit Rating
SEMGROUP LP: Canadian Monitor Files Report on CCAA Proceedings
SEMGROUP LP: Creditors Panel to Amend Suit Against Former Execs
SEMGROUP LP: PA Consulting Bills $1.47MM for 4-Months' Work
SEMGROUP LP: Seeks to Hire Longnecker as Pay Consultants
SHANE CO: Has August 10 Extension of Plan Filing Deadline
SIX FLAGS: Missed Interest Payment Cues S&P's Rating Cut to 'D'
SIX FLAGS: Use of Grace Period Won't Affect Moody's 'Ca' Rating
SPECTRUM BRANDS: Amends Pro Forma Financial Projections
SPECTRUM BRANDS: Court OKs Successor Agent Pact With BoNY, Goldman
SPECTRUM BRANDS: Jungle Labs Files Schedules and Statement
SPECTRUM BRANDS: March 29 Balance Sheet Upside Down by $1.12BB
SPECTRUM BRANDS: Seeks to Assume Agreement with Home Depot
SPECTRUM BRANDS: To Pay Quarterly Incentives to Employees
STOCK BUILDING: Can Access Wolseley $60 Mil. DIP Loan on Interim
TJ3 STYLES: Will Honor Orders for Furniture Despite Store Closure
TOLUCA LAKE: Files Ch. 11 in Woodland Hills, California
TOUSA INC: Court Extends Exclusive Periods to July 29
TOUSA INC: Creditors Object to Disclosure Statement
TOUSA INC: Seeks to Sell Austin Properties for $11.5 Million
TOUSA INC: To Sell Houston Properties for $8.8 Million
TOUSA INC: To Sell JV Membership Interests to Centex for $1.1MM
TROPICANA ENTERTAINMENT: Onex to Take Control of Las Vegas Casino
TRUVO INTERMEDIATE: High Leverage Cues S&P to Junk Corp. Rating
WARNER MUSIC: Moody's Upgrades Corporate Family Rating to 'Ba3'
VITERRA INC: Moody's Reviews 'Ba1' Corporate Family Rating
WMG ACQUISITION: Fitch Assigns 'BB' Rating on $500 Mil. Notes
* Fitch Publishes Analysis on Health Care Sector Liquidity
* PBGC Deficit Climbs to $33.5BB at Mid-Year, Largest in History
* Chapter 11 Cases With Assets and Liabilities Below $1,000,000
*********
ACCURIDE CORP: Bank Debt Trades at 34% Off in Secondary Market
--------------------------------------------------------------
Participations in a syndicated loan under which Accuride Corp. is
a borrower traded in the secondary market at 65.92 cents- on-the-
dollar during the week ended May 15, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 3.14 percentage points
from the previous week, the Journal relates. The loan matures
January 6, 2012. The Company pays 225 basis points above LIBOR to
borrow under the facility. The bank debt is not rated by Moody's.
It carries S&P's CC rating.
Accuride Corporation, headquartered in Evansville, Indiana, is a
diversified North American manufacturer and supplier of commercial
vehicle components. Principal products include wheels, wheel-end
components and assemblies, truck body and chassis parts, and
seating assemblies. Revenues in 2008 were approximately $931
million.
* * *
As reported by the Troubled Company Reporter on May 20, 2009,
Moody's Investors Service lowered Accuride's Corporate Family and
Probability of Default Rating to Caa3 from Caa1. In a related
action the ratings of the company's first out bank credit facility
were lowered to Caa1 from B2, the rating for the senior
subordinated bonds was lowered to Ca from Caa2, and a rating of
Caa3 was assigned to the company's last-out bank credit facility.
The outlook is negative.
The TCR said May 15 that Standard & Poor's Ratings Services
lowered its corporate credit rating on Accuride to 'CCC' from
'B-'. S&P also lowered its issue-level ratings on the company's
senior secured and subordinated debt. The outlook is negative.
AGRIPROCESSORS INC: 4 Ex-Managers Face New Immigration Charges
--------------------------------------------------------------
Federal prosecutors have filed a new 142-count criminal indictment
against Agriprocessor Inc.'s four former managers, including vice
president Sholom Rubashkin.
The new filing before the U.S. District Court for the Northern
Iowa replaces a 79-count indictment issued in March. According to
reports, the new indictment (i) adds 71 counts of harboring
illegal immigrants, and (ii) drops the identity theft charges in
the wake of a U.S. Supreme Court decision that would have made
conviction on those charges difficult.
The former managers are now facing charges of harboring illegal
workers, defrauding creditors, falsifying documents and defying a
2002 order from the U.S. Secretary of Agriculture,
DesMoinesRegister.com reports. Prosecutors, according to the
source, have accused the Debtor and its executives helped
immigrant workers -- mostly laborers from Guatemala and Mexico --
obtain false work papers, social security numbers and other
identification.
Mr. Rubashkin's counsel said his client will plead not guilty to
all charges lodged against him, DesMoinesRegister.com notes.
"[The new indictment] raises questions about the exercise of
prosecutorial discretion and abuse of the grand jury process," the
source quoted Mr. Rubashkin's counsel as saying. Mr. Rubashkin's
trial is scheduled for Sept. 9, 2009.
In March 2009, a former supervisor at Agriprocessors was sentenced
to nearly two years in federal prison for his role in harboring
illegal aliens. Martin De La Rosa-Loera was sentenced to 23
months in federal prison for "aiding and abetting in harboring
illegal aliens." He supervised 70 workers and was accused of
allowing key workers to stay by letting them obtain fake social
security numbers.
The U.S. Immigration and Customs Enforcement began investigating
Agriprocessors in October 2007. ICE agents executed criminal and
administrative search warrants at the Postville plant on May 12,
2008. The investigation is ongoing.
About Agripocessors
Headquartered in Postville, Iowa, Agriprocessors Inc. --
http://www.agriprocessor.com/-- operates a kosher meat and
poultry packing processors located at 220 North West Street. The
Company maintains an executive office with 50 employees at 5600
First Avenue in Brooklyn, New York. The Company filed for Chapter
11 protection on November 4, 2008 (Bankr. E. D. N.Y. Case No. 08-
47472). The case, according to McClatchy-Tribune, has been
transferred to Iowa. Kevin J. Nash, Esq., at Finkel Goldstein
Rosenbloom & Nash represents the Company in its restructuring
effort. The Company listed assets of $100 million to $500 million
and debts of $50 million to $100 million.
AGUA DULCE: Wants Schedules & SOFA Filing Extended Until June 5
---------------------------------------------------------------
Agua Dulce Vineyards, LLC, asks the U.S. Bankruptcy Court for the
Central District of California to extend until June 5, 2009, the
time to file its schedules of assets and liabilities, statement of
financial affairs and creditor matrix.
The Debtor said it needs an extension because it is working with a
limited staff and it is still sorting out its records to identify
and compile the information necessary to accurately complete the
schedules.
Santa Clarita, California-based Agua Dulce Vineyards, LLC, filed
for Chapter 11 on May 4, 2009 (Bankr. C. D. Calif. Case No. 09-
15207). Martin J. Brill, Esq., at Levene, Neale, Bender, Rankin &
Brill L.L.P., represents the Debtor in its restructuring efforts.
In its bankruptcy petition, the Debtor said assets and debts both
are between $10,000,001 and $50,000,000.
AGUA DULCE: Wants to Hire Levene Neale as Bankruptcy Counsel
------------------------------------------------------------
Agua Dulce Vineyards, LLC, asks the U.S. Bankruptcy Court for the
Central District of California for permission to employ Levene,
Neale, Bender, Rankin & Brill L.L.P. as counsel.
LNBRB will, among other things:
-- advise the Debtor with regard to the requirements of the
Bankruptcy Court, Bankruptcy Code, Bankruptcy Rules and the
Office of The U.S. Trustee as they pertain to the Debtor;
-- advise the Debtor with regard to certain rights and remedies
of its bankruptcy estate and the rights, claims and
interests of creditors; and
-- represent the Debtor in any proceeding or hearing in the
Bankruptcy Court involving its estate unless the Debtor is
represented in the proceeding or hearing by other special
counsel.
Martin J. Brill, Esq., a partner at LNBRB, tells the Court that he
and Todd M. Arnold, Esq., will have the primary responsibility in
the Chapter 11 case.
The hourly rates of LNBRB personnel are:
David W. Levene $575
Martin J. Brill $575
David L. Neale $575
Ron Bender $575
Craig M. Rankin $575
Daniel H. Reiss $525
Monica Y. Kim $525
David B. Golubchik $525
Beth Ann R. Young $525
Jacqueline L. Rodriguez $475
Juliet Y. Oh $475
Michelle G. Grimberg $425
Todd M. Arnold $425
Anthony A. Friedman $395
Gil Hopenstand $395
Tania M. Moyron $325
Holly Roark $325
Krikor J. Meshefejian $295
Paraprofessionals $195
Pre-bankruptcy, LNBRB received $20,000 for legal services. The
Debtor advised LNBRB that the retainer was paid by advances made
by Don MacAdam And Cathy MacAdam, managers of Sweetwater
Vineyards, LLC, which is the Debtor's manager.
LNBRB has not been paid any money at any time other than the
retainer. LNBRB has not received any lien or other interest in
property of the Debtor or of a third party to secure payment of
LNBRb's fees and expenses.
The Debtor agreed, subject to the approval of the Court, to make
postpetition payments to LNBRB amounting to $80,0000 for the first
three months of the Chapter 11 case.
Mr. Brill assures the Court that LNBRB is a "disinterested person"
as that term is defined in Section 101(14) of the Bankruptcy Code.
Mr. Brill can be reached at:
Levene, Neale, Bender, Rankin & Brill L.L.P.
10250 Constellation Boulevard, Suite 1700
Los Angeles, CA 90067
Tel: (310) 229-1234
Fax: (310) 229-1244
About Agua Dulce Vineyards, LLC
Santa Clarita, California-based Agua Dulce Vineyards, LLC, filed
for Chapter 11 on May 4, 2009 (Bankr. C. D. Calif. Case No. 09-
15207). Martin J. Brill, Esq., at Levene, Neale, Bender, Rankin &
Brill L.L.P., represents the Debtor in its restructuring efforts.
In its bankruptcy petition, the Debtor said assets and debts both
are between $10,000,001 and $50,000,000.
AMERICAN APPAREL: Incurs $9MM Q1 Loss Despite 2.4% Sales Hike
-------------------------------------------------------------
American Apparel, Inc., released its financial results for the
first quarter of 2009, disclosing a net loss of $9.0 million, or a
$0.13 per diluted share. This compares to a net income of
$1.1 million, or earnings of $0.02 per diluted share, during the
first quarter of 2008.
American Apparel reported net sales for the quarter ended
March 31, 2009, of $114.3 million, a 2.4% increase over net sales
of $111.6 million for the quarter ended March 31, 2008. Total
retail sales increased 16.5% to $78.0 million for the first
quarter of 2009 as compared to $67.0 million for the same period
in 2008, with comparable store sales for stores open at least 12
months declining 7%. American Apparel ended the quarter with 264
stores, having added 4 net new stores in the period. The Company
operated 186 stores at the end of the first quarter of 2008.
Total wholesale sales, excluding online consumer sales, were
$28.1 million for the first quarter of 2009 as compared to
$36.0 million for the first quarter of 2008, a decrease of 21.9%.
Sales to third party wholesale customers in the Company's U.S.
Wholesale segment declined 27.4%, as a result of decreased end-
user demand given the unfavorable economic environment. Slightly
more than a third of the reduction in third party wholesale sales
was a result of significantly reduced sales to the Company's
largest distributor, as the Company decided to limit its credit
exposure to this customer which was in the process of an exchange
offer with bondholders to restructure its debt to avoid a
bankruptcy filing. Total online consumer sales decreased 5.5% to
$8.2 million in the first quarter 2009 versus $8.6 million for the
first quarter of 2008. The decrease was primarily to customers in
the U.S., the result of the combined impact of a reduction in
online advertising spend and the cannibalization of online sales
by the Company's significantly expanded brick-and-mortar retail
footprint in the U.S.
Gross margin for the first quarter of 2009 increased to 57.2% from
55.3% for the first quarter of 2008. Gross margin in the period
benefited from an increase in the proportion of retail sales,
which generate a higher gross margin than wholesale sales. Total
wholesale sales declined to 24.6% of total sales compared to 32.3%
of sales in the first quarter of 2008. The benefit of the mix
shift was partially offset by a decline in the gross margin of the
U.S. Wholesale business segment to 18.0% from 20.6% in the first
quarter of 2008, as a result of lower capacity utilization of the
Company's manufacturing facilities in light of lower wholesale
demand and the Company's constrained liquidity position in the
first quarter of 2009, which necessitated lower-than-planned
production volumes. Additionally, gross margins in the U.S.
Wholesale business segment were negatively impacted by an increase
in production of more complicated product styles. Gross margin
was also negatively impacted by declines in gross margin in the
Canada and International business segments due to unfavorable
currency shifts as a result of the appreciation of the U.S.
dollar.
Operating expenses for the first quarter of 2009 increased to
60.6% of net sales, versus 51.4% for the first quarter of 2008.
Operating expenses increased significantly in the U.S. Retail and
International segments due to higher payroll, rent and occupancy
expense, and depreciation related to the greater number of retail
stores in operation including the accelerated store rollout in the
second half of 2008. Operating expenses as a percentage of net
sales also increased due to the decline in comparable store sales
in the period versus the previous year. Store pre-opening
expenses were $0.7 million in the first quarter of 2009, versus
$1.3 million in the prior year first quarter. Unallocated
corporate expenses increased 7% to $10.7 million from
$10.0 million in the first quarter a year ago.
Operating loss for the first quarter of 2009 was $3.9 million,
versus operating income of $4.4 million in the prior year first
quarter. Operating margin for the first quarter of 2009 was
negative 3.4%, versus 3.9% in the first quarter 2008.
Interest expense for the first quarter 2009 increased to
$7.6 million from $3.3 million in the first quarter 2008. The
increase in interest expense was largely attributable to the
increase in amortization of and early extinguishment of deferred
financing costs primarily related to the extension of the
Company's prior second lien credit facility in December 2008, as
well as increased collateral monitoring fees on behalf of the
Company's senior lender. The amortization and early
extinguishment of deferred financing costs amounted to
approximately $4.7 million in the first quarter of 2009, and
collateral monitoring fees of approximately $0.4 million.
The Company's effective tax rate in the first quarter of 2009 was
32.7% compared to 35.7% in the prior year. Significant items
which contributed to the reduction of the effective tax rate from
the statutory rate included benefits from the domestic
manufacturer deduction, the net impact of empowerment zone
credits, and the benefit from a lower corporate tax rate in
Canada.
In light of the results of the first quarter, and the Company's
business performance so far in the second quarter, the Company
reduced and gave further detail to its financial guidance for
2009. The Company currently expects consolidated net sales in the
range of $550 to $575 million, and income from operations in the
range of $40 to $50 million. The Company expects depreciation and
amortization for the year of approximately $25 million. Following
the financing transaction with Lion Capital completed in March
2009, the Company expects interest expense (including amortization
and early extinguishment of deferred financing fees, and the
amortization of debt discount) for the year of approximately
$25 million. Based on an estimated effective tax rate of
approximately 33%, the Company expects a provision of income taxes
between $4 to $7 million, and net income of between $8 to
$15 million. The Company's guidance also factors in a $3 million
foreign currency transaction loss for the year. These estimates
are before any non-cash stock compensation expense from any
additional grants yet to be made under the 2007 Performance Equity
Plan.
Dov Charney, American Apparel Chairperson and CEO, stated,
"Despite very challenging dynamics in the wholesale market and in
retail, I continue to believe that the American Apparel brand is
well positioned for the long term. While in the first quarter our
business navigated through severe liquidity constraints, which
impacted sales and margins, having completed the financing with
Lion Capital places the Company on solid footing for the future.
Moving forward in 2009, the partnership with Lion is allowing us
to focus more than ever on operations and execution so that we are
able to deliver on the exciting global potential of our brand."
As of May 15, 2009, the Company has opened ten new store locations
since the beginning of the year and has four more locations under
signed leases which are currently in development. For the year,
the Company still expects it will open a total of 25 to 30 new
stores.
Potential Restatement of Previously Issued Financial Statements &
Delay in Filing of Form 10-Q
American Apparel is evaluating its classification of its revolving
credit facility as a long-term obligation, and certain other
balance sheet and cash flow presentation matters, which may result
in a restatement of previously issued financial statements. Any
change in presentation of the revolving credit facility, if made,
would result in a restatement of prior period balance sheets to
present all or some portion of the revolving credit facility as a
current liability instead of long-term debt. However, such change
in presentation, if made, would have no impact on the net cash
flows, cash position, revenues, net income or same store sales.
As soon as practicable following the completion of the evaluation,
American Apparel intends to announce its final conclusions
regarding these accounting issues and, if necessary, file any
amendments to its previous filings with the Securities and
Exchange Commission that may be required.
American Apparel is not in a position to complete the preparation
of the financial statements and certain related information
required to be included in its Quarterly Report on Form 10-Q for
the quarter ended March 31, 2009. The Company intends to file its
Form 10-Q as soon as practicable after the completion of the
evaluation.
As of March 31, 2009, American Apparel listed $321,810,000 in
total assets, $177,329,000 in total liabilities, and $144,481 in
total stockholders' equity.
The Company's financial statements are available at:
http://ResearchArchives.com/t/s?3d11
About American Apparel
American Apparel, Inc. (NYSE Alternext US: APP) is a manufacturer,
distributor, and retailer of branded fashion basic apparel. Based
in downtown Los Angeles, California, American Apparel operates
more than 230 retail stores in 19 countries, including the United
States, Canada, Mexico, United Kingdom, Belgium, France, Germany,
Italy, the Netherlands, Spain, Sweden, Switzerland, Israel,
Australia, Japan, South Korea, Austria, China, and Brazil.
American Apparel also operates a leading wholesale business that
supplies T-shirts and other casual wear to distributors and screen
printers. In addition to its retail stores and wholesale
operations, American Apparel operates an online retail e-commerce
Web site at http://store.americanapparel.net/
As reported by the Troubled Company Reporter on November 18, 2008,
American Apparel said that it violated a covenant in its SOF
Credit Agreement that prohibited it from making capital
expenditures in excess of $50 million for the fiscal year ending
December 31, 2008. The default under the SOF Credit Agreement
also resulted in a cross default under the revolving credit
facility with LaSalle Bank.
On December 19, 2008, American Apparel said it has entered into
amendments to its revolving credit facility and its second lien
credit facility which extend the maturities of these loans for
three months. The amendments, which also modify certain covenants
and impose additional obligations, provide the company with the
ability to operate its business according to its plan while
continuing discussions with its lenders and other parties
regarding longer-term financing. The Company has filed copies of
these amendments and related documentation with the Securities and
Exchange Commission on a Form 8-K, available for free at
http://researcharchives.com/t/s?3926
AMERICAN INT'L: Three Firms Eyeing AIG Investments Unit
-------------------------------------------------------
Jenny Strasburg and Liam Pleven at The Wall Street Journal report
that three companies are vying for American International Group's
AIG Investments unit, which manages $85 billion in assets for
clients including pension funds and insurance companies.
Citing people familiar with the matter, WSJ relates that Franklin
Templeton Investments emerged as the leading bidder for AIG
Investments. The sources said that other interested companies
include Macquarie Group and Religare Enterprises Ltd., WSJ states.
The sources, according to WSJ, said that AIG Investments would
fetch a price of about $500 million, well below the $800 million
some suitors proposed paying two months ago. The report says that
a deal could be completed by the end of June.
People familiar with the matter said that negotiations with
Franklin Templeton and its partner, Crestview Partners LP, are
exclusive, WSJ reports. WSJ, citing a source, says that a deal
with Franklin Templeton would retain certain top AIG Investment
executives, including CEO Win Neuger, and give them an equity
stake in the business through a management-buyout structure
According to WSJ, Franklin Templeton turned to Charles E. Johnson,
the grandson of the company's founder and former president of the
firm, to serve as a consultant on the deal's structure.
WSJ relates that Macquarie and Religare formed a joint venture to
compete for the AIG division. They are prepared to jump back into
bidding if AIG's negotiations with Franklin Templeton and
Crestview Partners fails, WSJ reports, citing people familiar with
the matter.
Based in New York, American International Group, Inc., is the
leading international insurance organization with operation in
more than 130 countries and jurisdictions. AIG companies serve
commercial, institutional and individual customers through the
most extensive worldwide property-casualty and life insurance
networks of any insurer. In addition, AIG companies are leading
providers of retirement services, financial services and asset
management around the world. AIG's common stock is listed on the
New York Stock Exchange, as well as the stock exchanges in Ireland
and Tokyo.
During the third quarter of 2008, requirements to post collateral
in connection with AIG Financial Products Corp.'s credit default
swap portfolio and other AIGFP transactions and to fund returns of
securities lending collateral placed stress on AIG's liquidity.
AIG's stock price declined from $22.76 on September 8, 2008, to
$4.76 on September 15, 2008. On that date, AIG's long-term debt
ratings were downgraded by Standard & Poor's, a division of The
McGraw-Hill Companies, Inc., Moody's Investors Service and Fitch
Ratings, which triggered additional requirements for liquidity.
These and other events severely limited AIG's access to debt and
equity markets.
On September 22, 2008, AIG entered into an $85 billion revolving
credit agreement with the Federal Reserve Bank of New York and,
pursuant to the Fed Credit Agreement, AIG agreed to issue 100,000
shares of Series C Perpetual, Convertible, Participating Preferred
Stock to a trust for the benefit of the United States Treasury.
At September 30, 2008, amounts owed under the facility created
pursuant to the Fed Credit Agreement totaled $63 billion,
including accrued fees and interest.
Since September 30, AIG has borrowed additional amounts under the
Fed Facility and has announced plans to sell assets and businesses
to repay amounts owed in connection with the Fed Credit Agreement.
In addition, subsequent to September 30, 2008, certain of AIG's
domestic life insurance subsidiaries entered into an agreement
with the NY Fed pursuant to which the NY Fed has borrowed, in
return for cash collateral, investment grade fixed maturity
securities from the insurance subsidiaries.
On November 10, 2008, the U.S. Treasury agreed to purchase,
through its Troubled Asset Relief Program, $40 billion of newly
issued AIG perpetual preferred shares and warrants to purchase a
number of shares of common stock of AIG equal to 2% of the issued
and outstanding shares as of the purchase date. All of the
proceeds will be used to pay down a portion of the Federal Reserve
Bank of New York credit facility. The perpetual preferred shares
will carry a 10% coupon with cumulative dividends.
AIG and the Fed also agreed to revise the existing FRBNY credit
facility. The loan terms were extended from two to five years to
give AIG time to complete its planned asset sales in an orderly
manner. The equity interest that taxpayers will hold in AIG,
coupled with the warrants, will total 79.9%.
At September 30, 2008, AIG had $1.022 trillion in total
consolidated assets and $950.9 billion in total debts.
Shareholders' equity was $71.18 billion, including the addition of
$23 billion of consideration received for preferred stock not yet
issued.
The Troubled Company Reporter reported on March 4, 2009, that
Moody's Investors Service confirmed the A3 senior unsecured debt
and Prime-1 short-term debt ratings of American International
Group, Inc. AIG's subordinated debt rating has been downgraded to
Ba2 from Baa1. The rating outlook for AIG is negative. This
rating action follows AIG's announcement of net losses of
$62 billion for the fourth quarter and $99 billion for the full
year of 2008, along with a revised restructuring plan supported by
the U.S. Treasury and the Federal Reserve. This concludes a
review for possible downgrade that was initiated on September 15,
2008.
ANDERSON HOMES: Wants to Obtain Loan Advances From Capital Bank
---------------------------------------------------------------
Anderson Homes, Inc., and its affiliates ask the U.S. Bankruptcy
Court for the Eastern District of North Carolina for authority to
obtain loan advances from Capital Bank under an existing credit
facility, to complete improvements and sell certain "sale
properties."
The Debtors also seek authority to provide adequate protection to
Capital Bank as a condition to making advances including, among
other things, continued compliance with the terms and conditions
as set forth in the Court's second order authorizing the Debtors
to use cash collateral of their construction lenders.
The Debtors contend that Capital is owed $2.6 million pursuant to
a non-revolving line of credit in the amount of $6 million,
secured by first mortgage liens upon properties known as the
Blount Street Commons condominium project, having an aggregate
present value of approximately $3.5 million.
The Debtors tell the Court that Capital Bank has agreed to
continue funding in the ordinary course of business, subject to
approval by the Court and upon these terms and conditions:
a. Capital will continue to fund the improvements to the
extent necessary to finance the exterior and the interior
through sheetrock, with such amount allocated in equal
shares among the units in such building and subject to the
Debtors providing an estimate of such items and approval of
Capital, with the funding necessary to complete the
interior finish of each unit deferred until an acceptable
contract is obtained.
b. Capital will continue to fund the cost to complete the
condominium units which are now subject to an existing
contract of sale with a third-party purchaser (the
"Existing Pre-Sales").
c. Capital will fund the cost to complete condominium units
which subsequently become subject to a contact of sale with
a third-party purchaser (the "New Pre-Sales"); subject to
certain requirements.
d. Upon closing of an Existing Pre-Sale or a New Pre-Sale, the
sale proceeds will be disbursed as the Debtors and Capital
may agree or as may be ordered by the Court after notice
and hearing.
e. Capital has agreed to provide postpetition financing for an
interim period of eight months, pending confirmation of
a plan of reorganization, but terminable upon (i) the
filing of an objection to, or the commencement of an action
to avoid or subordinate any of the claims, liens, security
interests or rights of set-off asserted by Capital in its
proof of claim, (ii) appointment of a trustee, or (iii)
conversion of this case to Chapter 7.
As reported in the Troubled Company Reporter on March 20, 2009,
certain parties, identified as the construction lenders, hold
liens on the sale properties to back their claims on account of
construction line of credit provided to the Debtors prepetition:
Claim Amount
------------
Bank of America $0.25 million
Capital Bank 2.6 million
KeySource Bank 1.1 million
Paragon Commercial Bank 4.3 million
RBC Centura Bank 2.0 million
Regions Bank 4.9 million
Wachovia Bank 4.8 million
In addition, certain secured creditors holding deeds of trust on
certain sale properties. They are James D. Goldston and William
Goldston, owed about $568,000; and Stock Building Supply, Inc.,
owed $1,562,942.
A full-text copy of the Court's Second Cash Collateral Order r
dated April 24, 2009, is available at:
http://bankrupt.com/misc/anderson.2ndorder.pdf
About Anderson Homes, Inc.
Headquartered in Raleigh, North Carolina, Anderson Homes, Inc.,
was formed over 25 years ago and has built homes and developed
neighborhoods in the Research triangle region. In the year 2008,
it built over 300 homes, and has had sales revenue in excess of
$60,000,000. Its sole shareholder is David Servoss, who is also
the president.
Anderson Homes, Inc., and its units filed for Chapter 11 on
March 16, 2009 (Bankr. E.D. N.C. Lead Case No. 09-02062). Gerald
A. Jeutter, Jr., Esq., and John A. Northen, Esq., at Northen Blue,
LLP, represent the Debtors in their restructuring efforts. The
Debtors listed total assets of $17,190,001 and total debts of
$13,742,840.
ANDERSON HOMES: Wants to Obtain Loan Advances from Wachovia Bank
----------------------------------------------------------------
Anderson Homes, Inc., et al., ask the U.S. Bankruptcy Court for
the Eastern District of North Carolina for authority to obtain
loan advances from Wachovia Bank under an existing credit
facility, to complete improvements on, and sell, certain "sale
properties."
The Debtors also seek authority to provide adequate protection to
Wachovia Bank as a condition to making such advances, including
among other things, continued compliance with the terms and
conditions as set forth in the Court's second order authorizing
the Debtors to use cash collateral of their construction lenders.
The Debtors have requested that Wachovia continue to provide
funding, subject to approval by the Court and upon the following
terms and conditions:
a. Wachovia be permitted to continue to fund the cost to
complete the improvements upon properties which are under
"construction (the "Existing Construction").
b. Upon closing of an Existing Construction, the sale will be
disbursed as set forth in the Second Cash Collateral Order;
provided however, in the event of the sale of a townhome in
a multi-unit building, the application of the net sale
proceeds will be as the Debtors and Wachovia may agree or
as may be ordered by the Court after notice and hearing.
c. Wachovia may provide postpetition financing for an interim
period of eight months, pending confirmation of a plan
of reorganization, but terminable immediately upon (i) the
filing of an objection to, or the commencement of an
action to avoid or subordinate any of the claims, liens,
security interests or rights of set-off asserted by
Wachovia in its proof of claim, (ii) appointment of a
trustee, or (ii) conversion of this case to Chapter 7.
The Debtors tell the Court that it owes Wachovia Bank $4.8 million
pursuant to a construction line of credit in the amount of
$8.5 million secured by first mortgage liens upon a number of
properties in Amberlynn Valley, Briar Chapel, Creekside at Landon
Farms, Keystone Crossing, Edgewater, Quail Meadows, Ridgefield,
and Sterling Ridge, having an aggregate value, as alleged by the
Debtors, of approximately $5.5 million, evidenced by a promissory
note in the amount of $8,500,000 dated February 10, 2009, and
letters of credit in various amounts and issued at various dates.
As reported in the Troubled Company Reporter on March 20, 2009,
certain parties, identified as the construction lenders, hold
liens on the sale properties to back their claims on account of
construction line of credit provided to the Debtors prepetition:
Claim Amount
------------
Bank of America $0.25 million
Capital Bank 2.6 million
KeySource Bank 1.1 million
Paragon Commercial Bank 4.3 million
RBC Centura Bank 2.0 million
Regions Bank 4.9 million
Wachovia Bank 4.8 million
In addition, certain secured creditors holding deeds of trust on
certain sale properties. They are James D. Goldston and William
Goldston, owed about $568,000; and Stock Building Supply, Inc.,
owed $1,562,942.
A full-text copy of the Court's Second Cash Collateral Order r
dated April 24, 2009, is available at:
http://bankrupt.com/misc/anderson.2ndorder.pdf
About Anderson Homes, Inc.
Headquartered in Raleigh, North Carolina, Anderson Homes, Inc.,
was formed over 25 years ago and has built homes and developed
neighborhoods in the Research triangle region. In the year 2008,
it built over 300 homes, and has had sales revenue in excess of
$60,000,000. Its sole shareholder is David Servoss, who is also
the president.
Anderson Homes, Inc., and its units filed for Chapter 11 on
March 16, 2009 (Bankr. E.D. N.C. Lead Case No. 09-02062). Gerald
A. Jeutter, Jr., Esq., and John A. Northen, Esq., at Northen Blue,
LLP, represent the Debtors in their restructuring efforts. The
Debtors listed total assets of $17,190,001 and total debts of
$13,742,840.
ARCHANGEL DIAMOND: Commences Restructuring Talks with Shareholder
-----------------------------------------------------------------
Archangel Diamond Corporation approved the commencement of
discussions with Cencan S.A., ADC's majority shareholder,
concerning a proposal from Cencan to provide financing support to
ADC by way of a re-structuring of ADC under the provisions of the
Bankruptcy and Insolvency Act.
Pursuant to the proposal, ADC would appoint a trustee to assist
with its submissions to regulators and its discussions with Cencan
and any other party that may make an alternative financing
proposal.
ADC is continuing to seek alternative proposals from any other
interested parties.
The Corporation confirms that there are no insolvency proceedings
against it to date.
Based in Toronto, Ontario, Archangel Diamond Corporation (CA:AAD)
is a Canadian diamond company focused on exploration and mining in
Russia. The company is listed on the Toronto Venture Exchange
(trading symbol AAD).
ARIEL FUND: Merkin Steps Down; Fund Placed Into Receivership
------------------------------------------------------------
Liz Rappaport at The Wall Street Journal reports that J. Ezra
Merkin has agreed to New York Attorney General Andrew Cuomo's
demands to step down as manager of his hedge funds Ariel Fund
Limited, Ascot Partners, L.P., and Gabriel Capital, L.P., and
place them into receivership.
According to WSJ, Mr. Merkin funneled $2.4 billion from
universities and nonprofit organizations into Bernard Madoff's
firm. Mr. Cuomo charged Mr. Merkin with civil fraud in April,
claiming that the Mr. Merkin "betrayed hundreds of investors" by
repeatedly lying to them about how he invested their money, says
WSJ.
WSJ relates that attorneys from Mr. Cuomo's office presented the
agreement reached between Messrs. Cuomo and Merkin to Justice
Richard Lowe III in the New York State Supreme Court on Tuesday.
WSJ states that two receivers were named to manage Ariel Fund,
Ascot Partners, and Gabriel Capital. According to the report, one
of the receivers will be responsible for managing the remaining
money -- almost $1 billion -- in Gabriel Capital and Ariel Fund.
The other receiver, says the report, will supervise Ascot
Partners, whose entire $1.8 billion in assets were lost in Mr.
Madoff's Ponzi scheme.
Mr. Cuomo, according to WSJ, would submit a formal agreement next
week, giving time to New York University -- which also sued Mr.
Merkin -- to review the agreement.
Mr. Merkin's attorney Andrew Levander in a statement that his
client is working closely with Mr. Cuomo. Mr. Merkin has agreed
in principle to appoint receivers for the funds while he remains
available to consult regarding the wind-down, WSJ relates, citing
Mr. Levander.
Ariel Fund Limited, Ascot Partners, L.P., and Gabriel Capital,
L.P., are hedge funds owned by J. Ezra Merkin.
ASCOT PARTNERS: Merkin Steps Down; Fund Now in Receivership
-----------------------------------------------------------
Liz Rappaport at The Wall Street Journal reports that J. Ezra
Merkin has agreed to New York Attorney General Andrew Cuomo's
demands to step down as manager of his hedge funds Ariel Fund
Limited, Ascot Partners, L.P., and Gabriel Capital, L.P., and
place them into receivership.
According to WSJ, Mr. Merkin funneled $2.4 billion from
universities and nonprofit organizations into Bernard Madoff's
firm. Mr. Cuomo charged Mr. Merkin with civil fraud in April,
claiming that the Mr. Merkin "betrayed hundreds of investors" by
repeatedly lying to them about how he invested their money, says
WSJ.
WSJ relates that attorneys from Mr. Cuomo's office presented the
agreement reached between Messrs. Cuomo and Merkin to Justice
Richard Lowe III in the New York State Supreme Court on Tuesday.
WSJ states that two receivers were named to manage Ariel Fund,
Ascot Partners, and Gabriel Capital. According to the report, one
of the receivers will be responsible for managing the remaining
money -- almost $1 billion -- in Gabriel Capital and Ariel Fund.
The other receiver, says the report, will supervise Ascot
Partners, whose entire $1.8 billion in assets were lost in Mr.
Madoff's Ponzi scheme.
Mr. Cuomo, according to WSJ, would submit a formal agreement next
week, giving time to New York University -- which also sued Mr.
Merkin -- to review the agreement.
Mr. Merkin's attorney Andrew Levander in a statement that his
client is working closely with Mr. Cuomo. Mr. Merkin has agreed
in principle to appoint receivers for the funds while he remains
available to consult regarding the wind-down, WSJ relates, citing
Mr. Levander.
Ariel Fund Limited, Ascot Partners, L.P., and Gabriel Capital,
L.P., are hedge funds owned by J. Ezra Merkin.
AVIS BUDGET: Bank Debt Trades at 36% Discount in Secondary Market
-----------------------------------------------------------------
Participations in a syndicated loan under which Avid Budget Car
Rental LLC is a borrower traded in the secondary market at 63.07
cents-on-the-dollar during the week ended May 15, 2009, according
to data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents an increase of 9.07 percentage
points from the previous week, the Journal relates. The loan
matures April 1, 2012. The Company pays 125 basis points above
LIBOR to borrow under the facility. The bank debt carries Moody's
Ba3 rating and S&P's CCC+ rating.
About Avis Budget
Based in Parsippany, New Jersey, Avis Budget Group, Inc., provides
car and truck rentals and ancillary services to businesses and
consumers in the United States and internationally.
* * *
As reported by the Troubled Company Reporter on April 30, 2009,
Standard & Poor's Ratings Services assigned a '6' recovery rating
to Avis Budget Car Rental LLC's (CCC+/Developing/--) unsecured
notes, indicating expectations of negligible (0%-10%) recovery of
principal in the event of a payment default. Avis Budget Car
Rental LLC is a subsidiary of Avis Budget Group Inc.
(CCC+/Developing/--).
AVISTA CORPORATION: Fitch Raises Issuer Default Rating from 'BB+'
-----------------------------------------------------------------
Fitch Ratings has upgraded Avista Corporation and its subsidiary
Avista Capital II's Issuer Default Ratings and debt ratings:
Avista
-- Long-term IDR to 'BBB-' from 'BB+';
-- Senior secured debt to 'BBB+' from 'BBB';
-- Secured bank facility to 'BBB+' from 'BBB';
-- Senior unsecured debt to 'BBB' from 'BBB-';
-- Short-term IDR to 'F3' from 'B';
Avista Capital II
-- Preferred securities to 'BBB-' from 'BB+'.
The Rating Outlook is Stable.
The upgrades and Stable Outlook mainly reflect Avista's more
balanced regulatory environment, an improved financial profile,
and management focus on the core utility business. Avista has
begun filing general rate cases on a more frequent basis, which
has reduced regulatory lag and enhanced the company's relationship
with the various regulatory commissions. The company's Purchased
Cost Adjustment mechanism in Idaho and Energy Recovery Mechanism
in Washington limit the downside to Avista of increased electric
power supply expenses, and Purchased Gas Adjustment clauses in
Washington, Idaho, and Oregon offer a fair amount of support for
Avista's natural gas utility operations.
Avista's financial profile improved significantly in 2008,
primarily as a result of rate increases in Washington effective
Jan. 1, 2008. Lower interest expense, as well as an increase in
wholesale natural gas sales and other resource optimization
activities also provided some benefit. Cash flows are expected to
strengthen in 2009 due to recent rate increases effective toward
the end of last year in Idaho and Oregon and additional rate
increases in Washington effective Jan. 1, 2009. EBITDA interest
coverage and FFO interest coverage of more than 4.0 times (x) are
expected in 2009, with debt to EBITDA likely to be well below 4.0x
going forward. These metrics are consistent with the 'BBB-' long-
term IDR rating category.
In addition, the December 2008 settlement with the Coeur d'Alene
Tribe over water storage issues resolved a long-time dispute and
resulted in a 50-year agreement, clearing a hurdle that will allow
for a long-term license renewal with the FERC for the company's
Spokane River Project hydroelectric generation facilities.
Following the company's June 2007 sale of substantially all of its
Energy Marketing and Resource Management segment's contracts and
operations to Shell Energy, Avista has remained focused on its
core, regulated utility operations, which account for 94% of
operating revenues and 95% of earnings. Its main unregulated
business is Advantage IQ, Inc., which is a fee-based business that
processes bills and provides facility information and utility cost
management services for large customers in North America.
Credit concerns include the seasonal and annual volatility of
generation from Avista's hydroelectric generation facilities,
which typically account for more than 50% of company-owned
generation. During periods of lighter snowpack and lower
streamflow, Avista must make up the difference in reduced
hydroelectric generation by either purchasing power in the spot
market or increasing output from its natural gas generating
facilities, increasing net power supply costs above amounts
reflected in rates. However, Fitch notes that the negative effect
of below normal hydro conditions is mitigated by the
aforementioned regulatory mechanisms authorized by Washington and
Idaho regulators.
Avista Corp. is an integrated electric and natural gas utility
with operations in eastern Washington, northern Idaho, and
northeast and southwest Oregon. The company serves 355,000 retail
electric and 315,000 natural gas distribution customers.
Subsidiary Avista Capital, Inc. is an intermediate holding company
and parent of Avista's non-utility operations, including Advantage
IQ.
AWESOME ACQUISITION: S&P Raises Corporate Credit Rating to 'B'
--------------------------------------------------------------
Standard & Poor's Ratings Services said it raised its corporate
credit rating on Awesome Acquisition Co. to 'B' from 'B-' because
of the company's improved credit metrics and from modestly
improved profitability and reduced debt with free cash flows. S&P
also raised the ratings on the company's senior secured debt, with
the recovery ratings on the debt remaining unchanged. The outlook
is stable.
"Awesome has reduced leverage consistently over the past two years
as it has decreased debt through free cash flows and has increased
profitability modestly," said Standard & Poor's credit analyst
Charles Pinson-Rose, "despite recent declines in comparable-store
sales." From the time of the company's 2007 LBO, operating lease-
adjusted debt to EBITDA has improved to 5.4x from 6.3x.
"In the near term," added Mr. Pinson-Rose, "we expect similar
deleveraging trends to continue as operating profits will improve
from lower costs-particularly gasoline and food commodities." S&P
also expect negative comparable-store sales to continue in the
near term as a result of weak consumer spending and competition
within the quick-service restaurant industry. New store growth
will also be strained by the current lending environment.
"However, S&P currently feel that those factors will not
materially strain the company's profitability in the near term,"
said Mr. Pinson-Rose. Moreover, the company should generate
meaningful free cash flow given its limited capital expenditures
and its senior secured revolving credit facility has a cash flow
sweep. The debt reduction should lead to improved credit metrics
within the next year and S&P believes that leverage should improve
to the low-5x area within the next year.
BACHRACH ACQUISITION: Can File Schedules and SOFA Until June 22
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
extended until June 22, 2009, Bachrach Acquisition, LLC's time to
file its schedules of assets and liabilities and statement of
financial affairs.
Headquartered in New York City, Bachrach Acquisition, LLC --
http://www.bachrach.com/-- sells men's apparel. The Company
filed for Chapter 11 on May 6, 2009 (Bankr. S. D. N.Y.
Case No. 09-12918). Clifford A. Katz, Esq., Evan J. Salan, Esq.,
Henry G. Swergold, Esq., and Teresa Sadutto-Carley, Esq., at
Platzer, Swergold, Karlan, Levine, Goldberg & Jaslow, LLP,
represent the Debtor in its restructuring efforts. The Debtor's
assets and debts both range from $10 million to $50 million.
BARZEL INDUSTRIES: S&P Downgrades Corporate Credit Rating to 'SD'
-----------------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its long-term
corporate credit rating on Barzel Industries Inc. to 'SD'
(selective default) from 'CCC+'. S&P also lowered the senior
secured debt rating on the company to 'D' (default) from 'CCC'.
At the same time, S&P removed all the ratings from CreditWatch
with negative implications, where they were placed April 24, 2009.
"The downgrade follows Barzel having entered into an agreement
with noteholders to defer the May 15 interest payment on its
US$315 million senior secured notes," said Standard & Poor's
credit analyst Donald Marleau.
The agreement with noteholders defers the interest payment to
August 14, while Barzel seeks recapitalization alternatives.
Although the company likely has adequate liquidity for the
interest payment, S&P believes the combination of negative
operating cash flow and declining availability on its asset-backed
revolver could constrain liquidity to the point of impairing the
company's operations.
Under Standard & Poor's methodology, S&P lowered the ratings on
Barzel because the company failed to make an interest payment when
due, even though the deferral agreement stipulates that no default
has occurred under the notes indenture.
BEARINGPOINT INC: Committee, Wells Fargo Object to Revised KEIP
---------------------------------------------------------------
Wells Fargo Bank N.A. and the official committee of unsecured
creditors in BearingPoint Inc.'s chapter 11 cases object to the
Debtors' request for approval of a revised key employee incentive
plan. The Committee presented to the Court its alternative
incentive plan.
Wells Fargo, in its capacity as agent for the secured lenders
under the Debtors' credit agreement dated June 1, 2007, contends
that the revised KEIP is not more than a glorified key employee
retention plan and that the revised plan is not materially better
than the last one. Wells Fargo says the vast majority of the
supposed "incentives" under it would be little more than payments
for contingencies that already have or will soon occur.
"Where the Debtors are insisting that they pay out nearly $100
million of 'paid time off' and severance payments to its employees
it is untenable for [Wells Fargo] to consider an additional
outflow of $10-20 million for the proposed KEIP given the
circumstances of the cases," Luc A. Despins, Esq., at Paul
Hastings Janofsky & Walker, LLP, in New York, points out. "Had
the Debtors proposed a global resolution on all these compensation
issues, Agent very likely would have supported a modified KEIP
(with more appropriate wind-down metrics)."
The Committee believes portions of the Revised KEIP cannot be
approved because they represent retention payments to insiders
that are prohibited by the Bankruptcy Code. According to Jeffrey
S. Sabin, Esq., at Bingham McCutchen LLP, in New York, the
remainder of the Revised KEIP should not be approved at this time
given that the Debtors have yet to provide the Court and the
Committee with a wind-down budget for the remainder of the cases.
Mr. Sabin says the Court should not, at this time, approve
additional administrative expenses absent a budget showing that
(1) Debtors will have funds available to pay the expense and (2)
payment of the administrative claims associated with the Revised
KEIP will benefit parties other than the secured creditors. The
Committee also notes that the Revised KEIP payments are excessive
in the context of these cases given the massive severance and paid
time off obligations that the Debtors also seek to pay and the
projected return (or lack thereof) to unsecured creditors.
The Committee raised significant issues with the Original KEIP
given that (a) most of the individuals proposed to receive sale
based payments were either not involved in the sales or only
involved in certain of the sales; (b) the proposed plan was
primarily in the nature of retention, as many of the milestones,
including the sales, had already been met, (c) the payments
proposed in connection with the wind-down were undefined and
proposed to be in excess of then uncalculated severance and paid
time off obligations; and (d) the size of the proposed payments
were excessive given the circumstances of these cases.
Mr. Sabin says the Debtors chose not to proceed on the Original
KEIP. Shortly after the initial hearing was adjourned, the
Committee made its own proposal to the Debtors for a KEIP. The
Committee's proposal was contingent upon the Debtor providing
additional detail to the Committee of anticipated severance and
PTO liability in connection with the proposed wind-down.
Mr. Sabin says the Debtors countered the Committee's proposal with
a plan that the Committee viewed, in certain respects, as less
acceptable than the Original KEIP. The Committee expressed its
concerns to the Debtors about this counterproposal on April 25,
2009, and heard nothing from the Debtors with respect to a KEIP
until the Debtors filed their request. The Revised KEIP is an
improvement on the Debtors' counterproposal, Mr. Sabin says.
Committee's Proposed KEIP
1. Sale Incentive Payments:
(a) Total: $1.1 million
(b) Distribution:
Harbach $500,000
DeGroote $300,000
Goldfarb $200,000
Martino $50,000
Palmer $50,000
(c) Bonuses are subdivided 40% PS, 20% CS, 20% Japan, 20%
EMEA.
(d) Timing of Payment: upon closing for domestic sales and
repatriation of 90% of funds for foreign sales.
2. Wind-Down Retention Payments:
(a) Total: Up to $3.5 million
(b) Distribution: Only to non-insiders necessary for
completion of wind-down. Recipients and individual amounts
to be determined by AP Services in connection with
development of wind-down plan and subject to agreement with
the Committee and the U.S. Trustee.
(c) Timing of Payment: Periodic during wind-down as determined
by AP Services in connection with development of wind-down
plan and subject to agreement with the Committee and the
U.S. Trustee.
3. Wind-Down Incentive Payments:
(a) Total: Total available for distribution would be based
upon actual recoveries to unsecured creditors.
-- 2.5% of Unsecured Recoveries up to $75 million
-- 5% of Unsecured Recoveries over $75 million
(b) Distribution: To all insider and non-insider employees
deemed by the Debtors to make a special contribution to
achieving Unsecured Recoveries.
(c) Timing of Payment: Paid upon conclusion of wind-down.
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 September 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.
BearingPoint intended a traditional reorganization by proposing to
issue new stock to unsecured creditors and holders of $690 million
in subordinated notes, pursuant to a Chapter 11 plan. The
Debtors, however, changed their course and sold off certain units.
The Debtors sold their public services group to Deloitte LLP for
$350 million.
On April 2, 2009, BearingPoint International Bermuda Holdings
Limited, BearingPoint's indirect subsidiary, entered into a Share
Sale Agreement with PwC Advisory Co., Ltd., the Japanese member
firm of the PricewaterhouseCoopers global network of firms, for
the sale of BearingPoint's consulting business in Japan to PwC
Japan for roughly $45 million.
On April 17, 2009, BearingPoint and certain of its subsidiaries
entered into a definitive agreement with PricewaterhouseCoopers
LLP pursuant to which BearingPoint agreed to sell a substantial
portion of its assets related to its Commercial Services business
unit, including Financial Services, to PwC. In addition, an
affiliate of PwC also entered into a definitive agreement to
purchase the equity interests of BearingPoint Information
Technologies (Shanghai) Limited, a subsidiary of BearingPoint that
operates a global development center in China, and certain assets
of a separate global development center in India. The aggregate
purchase price for the three transactions is roughly $25 million.
BEARINGPOINT INC: Seeks Court Approval of Revised Incentive Plan
----------------------------------------------------------------
BearingPoint Inc. and its affiliates ask the U.S. Bankruptcy Court
for the Southern District of New York to stamp its approval on a
revised key employee incentive plan.
The Revised KEIP provides for three types of incentives:
(a) for certain executives, $1.8 million in incentives linked
to the sale of certain business units,
(b) for employees not eligible for the Sale Incentives,
$5 million in wind down payments, and
(c) for all employees eligible to receive Sale Incentives or
Wind Down Enhanced Severance, certain incentives that
correspond directly to a percentage of creditor recoveries.
The Debtors tell the Court that the Revised KEIP provides measured
and appropriate incentives to encourage employees to focus on the
sale and wind down process, which will, in turn, maximize the
value of the Debtors' estates.
The proposed KEIP provides for $1.8 million in sale-based
incentives linked to the sale of specific business units:
Business Unit Sale Incentives
------------- ---------------
Public Services Group 40%
Commercial Services Group 20%
BearingPoint Japan 20%
BearingPoint Europe Middle East Africa 20%
For domestic operations -- e.g., the PS and CS Groups -- the Sale
Incentives are payable upon the closing of the sales. For
international operations -- e.g., BE Japan and EMEA -- the Sale
Incentives are payable upon the repatriation of 90% of the net
proceeds allowing for taxes and other necessary and appropriate
deductions. The Debtors and, accordingly, their creditors derive
the substantial majority of their value through such sales.
These individuals are eligible to participate in the Sale
Incentive portion of the KEIP:
Participant PS Group CS Group Japan EMEA
Total
----------- -------- -------- ----- ---- --
---
Ed Harbach
CEO and President $360,000 $180,000 $180,000 $180,000
$900,000
John DeGroote
Exec. V.P. and
Chief Legal Officer $160,000 $80,000 $80,000 $80,000
$400,000
Eric Goldfarb
Exec. V.P.,
Global I.T. $100,000 $50,000 $50,000 $50,000
$250,000
Richard Martino
Exec. V. P.,
Global Human
Resources $60,000 $30,000 $30,000 $30,000
$150,000
Betsy Palmer
Exec. V.P.
Global Marketing
and Communications $40,000 $20,000 $20,000 $20,000
$100,000
With respect to Wind Down Enhanced Severance, the Debtors will
provide two weeks of additional severance for every month of
service completed by designated employees starting with the month
of June 2009. the amounts will be in addition to regular
severance provided for under the severance policy and, as
applicable, any severance payments that are payable under a
managing director agreement. Any employee receiving Wind Down
Enhanced Severance shall receive a minimum of 12 weeks of
severance and a maximum of 52 weeks of severance, both of which
are inclusive of severance payments pursuant to the policy or a
managing director agreement. To the extent severance payments are
under the $5.0 million cap, or individual amounts are forfeited
due to voluntary attrition, the Debtors intend to redistribute the
forfeited amounts to providing additional incentives for existing
or new participants.
To link creditor recoveries with incentives, the Debtors also
propose to provide for the Recovery Incentives that allow the
Debtors, in their discretion, to distribute up to 10% of any
creditor recoveries above $325 million. All employees eligible
for the Sale Incentives or the Wind Down Enhanced Severance are
also eligible to receive Recovery Incentives which are payable at
the conclusion of the wind down.
The Revised KEIP is the Debtors' second proposed key employee
incentive plan. The Debtors originally proposed such a plan on
March 23, 2009, and continued to revise the plan and work with the
Official Committee of Unsecured Creditors to reach a mutually
acceptable proposal. All the while, the Debtors and their
employees continued to aggressively pursue value maximizing
transactions and, to a great extent, succeeded in accomplishing a
number of such transactions. Despite their best efforts, the
Debtors could not reach a consensual resolution with the
Committee.
Notable differences among the Original KEIP and the Revised KEIP
are that (a) the Revised KEIP seeks approval of payments to
executives totaling only $1.8 million as opposed $10.69 million,
(b) all employees are eligible to participate in the Revised KEIP,
and (c) certain incentives correspond directly to creditor
recoveries.
About BearingPoint Inc.
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 September 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.
BearingPoint intended a traditional reorganization by proposing to
issue new stock to unsecured creditors and holders of $690 million
in subordinated notes, pursuant to a Chapter 11 plan. The
Debtors, however, changed their course and sold off certain units.
The Debtors sold their public services group to Deloitte LLP for
$350 million.
On April 2, 2009, BearingPoint International Bermuda Holdings
Limited, BearingPoint's indirect subsidiary, entered into a Share
Sale Agreement with PwC Advisory Co., Ltd., the Japanese member
firm of the PricewaterhouseCoopers global network of firms, for
the sale of BearingPoint's consulting business in Japan to PwC
Japan for roughly $45 million.
On April 17, 2009, BearingPoint and certain of its subsidiaries
entered into a definitive agreement with PricewaterhouseCoopers
LLP pursuant to which BearingPoint agreed to sell a substantial
portion of its assets related to its Commercial Services business
unit, including Financial Services, to PwC. In addition, an
affiliate of PwC also entered into a definitive agreement to
purchase the equity interests of BearingPoint Information
Technologies (Shanghai) Limited, a subsidiary of BearingPoint that
operates a global development center in China, and certain assets
of a separate global development center in India. The aggregate
purchase price for the three transactions is roughly $25 million.
BERGENLINE IMAGING: All Proofs of Claim Due by June 30
------------------------------------------------------
The Honorable Morris Stern directs that all creditors holding
claims against Bergenline Imaging Center, LLC., file a proof of
claim against the debtor's estate by 4:00 p.m. on June 30, 2009 --
including all requests for payment of Chapter 11 administrative
expenses in the Chapter 11 proceeding of Bergenline Imaging
Center, LLC, and requests for payment of Chapter 7 administrative
expenses in the Chapter 7 proceeding of Bergenline Imaging Center,
LLC -- with the Clerk of the United States Bankruptcy Court for
the District of New Jersey and served on the Chapter 7 Trustee:
Stacey L. Meisel, Esq.
BECKER MEISEL LLC
Eisenhower Plaza II
354 Eisenhower Parkway, Suite 2800
Livingston, NJ 07039
or be forever barred, estopped and enjoined from asserting any
such claim unless a Request for Payment of Chapter 11
Administrative Expenses or a Request for Payment of Chapter 7
Administrative Expenses, whichever one or both is applicable.
Bergenline Imaging Center, LLC, sought chapter 11 protection
(Bankr. D. N.J. Case No. 07-19200) on June 29, 2007, represented
by Richard Honig, Esq., at Hellring, Lindeman, Goldstein & Siegal
LLP, in Newark, N.J., and estimating assets and debts of more than
$1 million. The Bankruptcy Court entered an Order converting the
Chapter 11 case to Chapter 7 on February 11, 2008.
BIO-RAD LABORATORIES: Moody's Rates $250 Mil. Notes at 'Ba3'
------------------------------------------------------------
Moody's Investors Service rated the proposed $250 million offering
of 2016 subordinated notes of Bio-Rad Laboratories, Inc. Ba3,
LGD4, 66%. Moody's understand that the proposed notes, being
offered under Rule 144A, will be pari-passu with the existing
subordinated notes. There is no change to the Ba3 rating of the
existing subordinated notes, however, in accordance with Moody's
Loss Given Default methodology the LGD assessments of the existing
notes is expected to change to LGD4, 66% from LGD5, 72%. There
are no changes to the Ba2 Corporate Family or Probability of
Default ratings. The rating outlook remains positive.
The Ba3 rating on the subordinated notes is one notch lower than
the Ba2 Corporate Family Rating reflecting its junior position in
the capital structure behind the company's $200 million senior
secured revolver (undrawn at March 31, 2009).
The last rating action was May 18, 2009 when Moody's changed Bio-
Rad's outlook to positive and affirmed Bio-Rad's Ba2 Corporate
Family Rating and the Ba2 Probability of Default Rating.
Ratings assigned/LGD estimates revised:
-- $250 million Senior Unsecured Subordinated Notes, due 2016,
Ba3 (LGD4, 66%)
-- $200 million Senior Unsecured Subordinated Notes, due 2014,
Ba3 (LGD4, 66%)
-- $225 million Senior Unsecured Subordinated Notes, due 2013,
Ba3 (LGD4, 66%)
Bio-Rad based in Hercules, California, manufactures and supplies
life science research, healthcare, analytical chemistry and other
markets with products used to separate, identify, analyze and
purify the components of complex chemical and biological
materials. Bio-Rad reported revenues of $1.74 billion for the
twelve months ended March 31, 2009.
BIO-RAD LABORATORIES: S&P Assigns 'BB+' Rating on $250 Mil. Debt
----------------------------------------------------------------
On May 19, 2009, Standard & Poor's Ratings Services assigned its
'BB+' rating to Hercules, California-based life sciences company
Bio-Rad Laboratories Inc. announced $250 million subordinated debt
offering. Proceeds will be used for general corporate purposes.
Bio-Rad holds niche, but defensible, positions in both the life
sciences and clinical diagnostic markets.
"We expect the company's EBITDA growth and solid operating
performance are expected to continue, given the company's long-
standing customer relationships and relatively predictable
consumables revenue, despite some near-term industry headwinds,"
said Standard & Poor's credit analyst Arthur Wong. In both the
life science and diagnostics markets, sales of reagents and
consumable products contribute about 70% of total revenues,
providing a steady base of repeat sales.
Still, Bio-Rad is a relatively small player in its markets,
competing with significantly larger companies that are more
diversified and have greater financial resources. Changes to
government funding for life sciences research as well as biopharma
R&D activity could pose additional challenges for the company.
From a financial standpoint, Bio-Rad has maintained an
intermediate financial risk profile. Taking into account the
announced $250 million debt offering, leverage remains under 2.5x.
Bio-Rad's liquidity and cash flows are very adequate for the
current rating. Cash and investments at March 31, 2009, amounted
to over $222 million. The company has been acquisitive in the
past, but its acquisitions have been moderate in size and a future
acquisition will likely be significantly funded with cash on hand.
Should leverage remain under 2.5x for an extended period, ratings
could be upgraded within one year.
Rating List
Bio-Rad Laboratories Inc.
Corporate credit rating BBB-/Positive/--
Rating Assigned
$250 million subordinated debt BB+
BLOCKBUSTER INC: Bank Debt Trades at 29% Off in Secondary Market
----------------------------------------------------------------
Participations in a syndicated loan under which Blockbuster Inc.
is a borrower traded in the secondary market at 70.81 cents-on-
the-dollar during the week ended May 15, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 2.21 percentage points
from the previous week, the Journal relates. The loan matures
August 20, 2011. The Company pays 375 basis points above LIBOR to
borrow under the facility. The bank debt carries Moody's B1
rating and S&P's CCC+ rating.
Blockbuster Inc., headquartered in Dallas, Texas, is a leading
global provider of in-home movie and game entertainment with
approximately 7,400 stores throughout the Americas, Europe, Asia,
and Australia. Revenues are about $5.3 billion.
* * *
As reported by the Troubled Company Reporter, in April 2009,
Moody's Investors Service downgraded Blockbuster's Probability of
Default Rating to Caa3 from Caa1 and its Corporate Family Rating
to Caa2 from Caa1. In addition, Moody's affirmed Blockbuster's
speculative grade liquidity rating at SGL-4 and it secured bank
credit facilities rating at B1. Moody's also rated the proposed
$250 million revolving credit facility, which expires in September
2010, a senior secured rating of B1. The rating outlook is
stable.
Standard & Poor's Ratings Services lowered its corporate credit
rating on Blockbuster to 'CCC' from 'B-'. S&P removed the ratings
from CreditWatch with negative implications, where they were
placed on March 4, 2009. At the same time, S&P lowered the issue-
level ratings on both its secured debt to 'CCC+' from 'B' and its
subordinated debt to 'CC' from 'CCC'. The outlook is negative.
Fitch Ratings affirmed Blockbuster's long-term Issuer Default
Rating at 'CCC' and said it expects to rate the amended $250
million bank credit facility at 'B/RR2'. In addition, Fitch took
these rating actions ($450 million bank credit facility upgraded
to 'B/RR2' from 'CCC+/RR3'; $100 million term A loan upgraded to
'B/RR2' from 'CCC+/RR3'; $550 million term B loan upgraded to
'B/RR2' from 'CCC+/RR3'; and $300 million senior subordinated
notes downgraded to 'C/RR6' from 'CC/RR6'. The Rating Outlook is
Stable. The company had approximately $818 million of debt
outstanding as of Jan. 4, 2009.
BOSTON SCIENTIFIC: Fitch Affirms Issuer Default Rating at 'BB+'
---------------------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Rating and
outstanding debt ratings on Boston Scientific Corp.:
-- IDR at 'BB+';
-- Senior unsecured notes at 'BB+';
-- Unsecured bank credit facility at 'BB+'.
Fitch has also revised the Rating Outlook to Positive from Stable.
The Outlook revision is supported by the success BSX has had in
stabilizing its drug-eluting stent business and returning the
cardiac rhythm management business to growth. BSX has also paid
down approximately $1.3 billion in debt during the last four
quarters. Since March 31, 2008, leverage (total debt/EBITDA) has
decreased to 2.58 times (x) for latest 12 months, ending March 31,
2009 from 3.30x, owing to margin improvement and debt reduction.
Fitch expects BSX's leverage will decline further in the
intermediate term through increased profitability. For BSX's
ratings to be upgraded, the company will need to demonstrate
further leverage reduction, while maintaining strength in its
operations.
The resolution of regulatory issues in the CRM segment has allowed
the firm to introduce a number of new products, which are gaining
acceptance in the medical community. Similarly, significant
progress with regulators in the DES business has also resulted in
a number of new product launches. However, margins in its DES
business are lower than recent historical levels, as Promus
provides lower profitability than Taxus and continues to grow.
The recent introduction of Taxus Liberte and the eventual launch
of Promus Element are expected to help bolster margins. It should
be noted that the DES market is highly competitive and there will
likely be continued volatility in market shares.
In addition to the improved fundamentals of BSX's CRM and DES
business segments, its other businesses have been performing well.
The company's restructuring program is nearly completed and is
also expected to provide a lower cost structure going forward.
BSX's continued focus on costs and efficiency has led to an
initiative that will optimize its manufacturing plant network
during the next few years, offering opportunities for growth in
gross margins.
Research and development efforts are expected to provide a
relatively steady stream of new product introductions across BSX's
entire business, which should provide for longer-term growth and
margin support. While litigation risk is significant for BSX, the
company has made strides in resolving a number of lawsuits,
helping to narrow the range of potential adverse outcomes.
Free cash flow (net cash flow from operations less capital
expenditures) for the LTM ending March 31, 2009 was $846 million.
Interest coverage (EBITDA/interest) was 5.52x and leverage (total
debt/EBITDA) was 2.58x for the LTM ending March 31, 2009. BSX has
approximately $897 million in cash/short-term investments and
$6.25 billion in debt. BSX has approximately $325 million in debt
maturing in 2010, and $3.75 billion maturing in 2011. Fitch
expects BSX will pay down some of the 2011 debt and refinance the
remainder. At March 31, 2009, BSX had full availability on its
$1.75 billion revolver, maturing on April 21, 2011.
BRESNAN COMMUNICATIONS: Moody's Raises Corp. Family Rating to 'B1'
------------------------------------------------------------------
Moody's Investors Service upgraded Bresnan Communications, LLC's
Corporate Family Rating and Probability-of-Default Rating, each to
B1 from B2. In addition, Moody's upgraded Bresnan's first lien
revolving credit and term loan facilities to B1 from B2 and its
second lien term loan facility to B3 from Caa1. The rating
outlook is stable.
The upgrades broadly reflect a more conservative financial profile
(with Moody's adjusted debt-to-EBITDA leverage of 5.3x at fiscal
year end 2008) and further anticipated strengthening of the
company's balance sheet owing to positive business fundamentals,
with leverage expected to fall below 4.5x and free cash flow-to-
debt growing to approximately 5% over the next 18-to-24 months.
Free cash flow is expected to benefit from continued revenue
growth, reduced capital expenditures and lower interest expense.
Also of note, the Company continues to grow its subscriber base
and realize higher penetration rates of its telephony (18% in
2008) and high-speed data (31% in 2008) products, maintains a good
liquidity profile and benefits from its ongoing relationship with
Comcast Corporation, which Moody's believes affords additional
flexibility to more aggressively compete for customers.
Ratings do, however, continue to incorporate financial risk
associated with weak albeit improving coverage levels (which
Moody's calculates as EBITDA less CapEx-to-Interest Expense, of
just 1.1x at fiscal year end 2008), and business risk related to
its very limited scale (2008 revenues of a comparatively modest
$391 million) and geographic diversity. The Company's
predominantly financial sponsor-driven ownership structure, which
has historically demonstrated a propensity for effecting
shareholder distributions through debt-financed transactions, also
serves to somewhat constrain ratings.
Moody's has taken these rating actions:
Bresnan Communications, LLC
* Corporate Family Rating -- Upgraded to B1 from B2
* Probability-of-Default Rating -- Upgraded to B1 from B2
* $125 million senior 1st lien secured revolving credit facility
due 2012 -- Upgraded to B1 from B2, LGD3 -- 44%
* $75 million senior 1st lien secured term loan A due 2012 --
Upgraded to B1 from B2, LGD3 -- 44%
* $540 million senior 1st lien secured term loan B due 2013 --
Upgraded to B1 from B2, LGD3 -- 44%
* $100 million senior 2nd lien secured term loan due 2014 --
Upgraded to B3 from Caa1, LGD6 -- 94%
* Rating Outlook -- Changed to Stable from Positive
The last rating action for Bresnan was on May 13, 2008 when
Moody's affirmed the Company's B2 CFR and changed its rating
outlook to positive from stable.
Bresnan Communications, LLC is a cable operating Company serving
over 300,000 subscribers in the states of Colorado, Montana,
Wyoming, and Utah. Headquartered in Purchase, New York, the
Company's revenues were $391 million for the fiscal year ended
2008. Comcast Corporation owns a 50% common equity interest (30%
on a fully diluted basis) in Bresnan Broadband Holdings, LLC, the
parent of Bresnan. The majority of the remaining interest is held
by financial sponsors and Bresnan management.
BRODER BROS: Completes Restructuring, Retires $213.5MM in Notes
---------------------------------------------------------------
Broder Bros., Co. has completed its financial restructuring
through the settlement of its private exchange offer. The Company
retired an aggregate of $213.5 million in principal amount of its
11.25% senior notes due 2010 in exchange for $94.9 million in
aggregate principal amount of the Company's newly issued 12%/15%
senior payment-in-kind toggle notes due 2013 and shares of the
Company's common stock, which shares in the aggregate represent
96% of its common stock outstanding as of the issuance date. An
aggregate of $11.5 million of the Existing Notes will remain
outstanding. As a result of the completion of the restructuring,
the Company believes that all prior defaults under its existing
revolving credit agreement and the Existing Notes have been cured
or waived.
"With both the amendments to our existing credit facilities and
the exchange offer completed, the Company is already receiving
major shipments from our vendors again," commented Tom Myers, the
Company's CEO. "While we lost orders during this process, we do
not believe that we lost customers. We now return to our primary
focus of supplying the comprehensive assortment of imprintable
activewear that our customers need."
As part of the restructuring, the existing stockholders of the
Company were issued warrants to purchase shares of the Company's
common stock representing an aggregate of 12% of the Company's
fully diluted common stock as of the issuance date. Pursuant to
the terms of restructuring, the Company expects that its board of
directors will be reconstituted to include three members selected
by the ad hoc committee that represented the Existing Notes.
Effective today, the three representatives of the Company's
previous controlling stockholder have resigned from the board of
directors.
The Company anticipates that it will deliver its audited financial
statements for its fiscal year ended December 27, 2008 to its
lenders under its revolving credit agreement prior to its extended
deadline of May 26, 2009. In addition, the Company intends to
cease filing reports with the Securities and Exchange Commission
as soon as possible.
Miller Buckfire & Co., LLC served as the Company's financial
advisor and Kirkland & Ellis LLP served as the Company's legal
counsel. Broadpoint Securities Group, Inc. served as financial
advisor to the ad hoc committee and Quinn Emanuel Urquhart Oliver
& Hedges, LLP served as legal counsel to the ad hoc committee.
The new securities issued pursuant to the exchange offer have not
been and will not be registered under the Securities Act or any
state securities laws. Therefore, the new securities may not be
offered or sold in the United States absent registration or an
applicable exemption from the registration requirements of the
Securities Act and any applicable state securities laws.
About Broder Bros., Co.
Broder Bros., Co. -- http://www.broderbrosco.com/-- is one of the
nation's largest distributors of trade, private label, and
exclusive apparel brands to the imprinting, embroidery and
promotional product industries, serving customers since 1919. It
currently has eight distribution centers across the U.S. and has
the capability to deliver to approximately 80 percent of the U.S.
population in one day. Via its three divisions, the company
distributes industry-leading brands Anvil, Fruit of the Loom,
Gildan, Hanes and Jerzees as well as exclusive retail brands
Adidas Golf and Champion.
* * *
As reported by the Troubled Company Reporter on April 20, 2009,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Broder Bros. Co. to 'SD' from 'CC'. S&P also lowered
the ratings on the company's $225 million 11.25% senior notes due
2010 to 'D' from 'C'. The recovery rating on these notes remains
at '6', indicating expectations for negligible (0%-10%) recovery
in the event of payment default. As of December 31, 2008, S&P
estimates Broder had about $375 million in reported debt
outstanding.
The TCR said March 6, 2009, that Moody's Investors Service
downgraded Broder Bros., Co.'s Probability of Default and
Corporate Family Ratings to Ca from Caa3. Moody's also lowered
the rating on the company's senior unsecured notes to C from Ca.
The rating outlook remains negative.
BUNTING SWINE: Taps Stephen L. Beaman as Bankruptcy Counsel
-----------------------------------------------------------
Bunting Swine Farms, L.L.C., and Bunting Enterprises, LLC, ask the
U.S. Bankruptcy Court for the Eastern District of North Carolina
for permission to employ Stephen L. Beaman, PLLC, Wilson, North
Carolina as counsel.
The firm will assist, act, and advise the Debtors in preserving,
liquidating and recovering certain properties of the estate. The
firm will also be responsible in the orderly completion of the
Chapter 11 case.
The hourly rate of Stephen L. Beaman is $275 and $125 for legal
assistants.
The firm received a $5,000 retainer. The firm also holds $11,590
in its trust account for future fees and expenses.
To the best of the Debtor's knowledge, the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Bunting Swine Farms
Pinetops, North Carolina-based Bunting Swine Farms, L.L.C., c/o C.
B. Bunting, Jr., and Bunting Enterprises, LLC, filed for separate
Chapter 11 on May 4, 2009 (Bankr. E. D. N.C. Lead Case No. 09-
03646). Stephen L. Beaman, PLLC, represents the Debtors in their
restructuring efforts. The Debtors listed total assets of
$4,794,867 and total debts of $18,262,800.
CARAUSTAR INDUSTRIES: S&P Downgrades Corp. Credit Rating to 'D'
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered its
corporate credit rating on recycled paperboard and converted
paperboard products manufacturer Caraustar Industries Inc. to 'D'
from 'CC'. In addition, S&P lowered the issue-level rating on the
company's $29 million senior unsecured notes due May 1, 2010, to
'D' from 'C'. The issue-level rating on the $190 million notes
due June 1, 2009, is unchanged at 'C'. The recovery rating on the
notes is '5', indicating S&P's expectation for modest (10% to 30%)
recovery for lenders in the event of a payment default.
The rating actions stem from the company's announcement that it
did not make the scheduled interest payment on its $29 million
senior unsecured notes. In addition, the company announced that
it has reached an agreement with the lenders under its asset-based
revolving credit facility to extend the date by which it must
provide evidence of repayment or redemption of its $190 million
senior unsecured notes to June 1, 2009, which is also the maturity
date of the notes. According to the agreement, Caraustar will not
have access to the revolving credit facility during the extension
period.
CAP CANA: Moody's Confirms Corporate Family Rating at 'Ca'
----------------------------------------------------------
Moody's Investors Service announced that the ratings of Cap Cana
have been confirmed, and will be subsequently withdrawn. Cap Cana
has undergone a debt restructuring on approximately 96% of its
$250 million senior notes due 2013, in a distressed exchange
transaction. Cap Cana's Ca ratings continue to reflect the
potential for above average loss severity in the future as a
result of significant deterioration in global capital markets,
which severely constrained Cap Cana's financial flexibility and
business viability. This action concludes the review initiated on
October 31, 2008.
These ratings were confirmed and will be withdrawn:
* Cap Cana, SA -- senior secured debt at Ca and corporate family
rating at Ca
The last rating action with respect to Cap Cana was on October 31,
2008, when Moody's downgraded Cap Cana's senior secured debt
rating to Ca from B2 and the corporate family rating to Ca from
B3. The ratings were placed under review for possible downgrade.
Cap Cana, S.A., a privately owned company, is a corporation that
was organized under the laws of the Dominican Republic. Its
principal activity is the development, construction, operation and
administration of a tourist and leisure resort community project
known as Cap Cana. Cap Cana is being developed as a multi-use
luxury Caribbean resort with world-class beaches, championship
golf courses, yachting facilities and similar leisure amenities.
The property consists of over 119.9 square kilometers of land,
including an eight kilometer coastline and 3.5 kilometers of
pristine beach. Cap Cana is located on the easternmost tip of the
Dominican Republic, and is a few minutes drive from Punta Cana
International Airport, which receives nonstop flights from large
metropolitan centers in Europe, Canada and the USA.
Cap Cana'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 Cap Cana's core industry and Cap Cana's ratings are
believed to be comparable to those of other issuers of similar
credit risk.
CELESTICA INC: Fitch Upgrades Issuer Default Rating to 'BB-'
------------------------------------------------------------
Fitch Ratings has upgraded these ratings for Celestica Inc.:
-- Issuer Default Rating to 'BB-' from 'B+';
-- Senior subordinated debt to 'BB-' from 'B/RR5'.
The company's senior secured credit facility is affirmed at 'BB+'
and the 'RR1' rating is removed reflecting the upgrade of the IDR
to 'BB-'. The Rating Outlook is Stable.
The ratings upgrade and Stable Outlook reflect these
considerations:
-- Celestica further strengthened its already conservative
balance sheet during the first quarter of 2009 ([1Q'09] end
March 2009) by tendering for $150 million of its senior
subordinated notes due June 2011, reducing total debt
outstanding to $585 million and improving its net cash
position to $497 million.
-- Fitch estimates Celestica's leverage (total debt-to-operating
EBITDA) at 1.8 times (x) (3.3x when adjusted for off-balance
sheet receivables financing and operating leases), down from
2.7x at the end of the prior year period. Fitch does expect
leverage to increase modestly going forward due to lower
EBITDA as the company's current lower revenue run rate,
consistent for the industry, annualizes. Interest coverage
has improved to 6.0x from 4.5x in the prior year period.
-- Celestica has significantly improved profitability over the
past two years, increasing EBITDA margin from a low of 1.7%
in 1Q'07 (end March 2007) to 4.4% for latest twelve month
period ending March 31, 2009, despite a 9.3% decline in
revenue versus the prior period. These results reflect
management's nearly two-year effort to restructure operations
and focus on higher margin customer engagements.
-- Celestica has significantly improved its working capital
management with cash conversion cycle days down to 36 for the
LTM period from as high as 53 days at the end of 2006. In
combination with higher EBITDA margins, Fitch estimates that
the company has improved its return on invested capital to
16.5% from 12.9% in the prior year period.
-- Fitch estimates that annual free cash flow should average
$100 million or more going forward at the currently reduced
revenue run rate. Fitch estimates that FCF has averaged near
$200 million annually for the past three years, positively
impacted by $100 million-plus average cash inflow from
reduced working capital requirements.
Rating strengths include:
-- Celestica typically generates significant cash from reduced
working capital during a downturn, as typical for businesses
with significant working capital needs.
-- Fitch believes that a long-term trend of increased
outsourcing of manufacturing across multiple economic sectors
will benefit the EMS industry in general.
-- Celestica remains one of the larger global EMS providers with
a blue chip customer base.
Ratings concerns include:
-- Celestica continues to lose market share as revenue has
declined in each of the past nine quarters (versus the prior
year period), although this partly reflects intentional
customer disengagements;
-- Celestica's 4.4% EBITDA margins are the highest among Tier 1
North American EMS companies despite the company's decreased
scale and market share as well as below average capacity
utilization rate which could indicate that the company will
experience margin pressure going forward;
-- Generally low operating margins associated with the EMS model
which has produced returns on invested capital below the cost
of capital for many competitors in recent years; and
-- Celestica has significant customer concentration, as is
typical for the EMS industry, with the top 10 customers
representing 69% of revenue in 1Q'09 including two 10%
customers.
The ratings could be positively impacted by continued strong
margin performance with positive FCF generation and a
stabilization of revenue trends. Conversely, the ratings could be
negatively impacted by significant margin degradation or the
impairment of Celestica's currently solid liquidity by the use of
existing cash for shareholder friendly actions or acquisitions.
As of March 31, 2009, liquidity was solid and consisted of $1.1
billion of cash and a fully available $200 million senior secured
revolving credit facility which matures April 2011. The company
also utilizes an off-balance sheet account receivable sales
facility for additional liquidity purposes.
Total debt as of March 31, 2009 was $585 million and consisted
primarily of $340 million in 7.875% senior subordinated notes due
June 2011 and $250 million in 7.625% senior subordinated notes due
June 2013. Celestica also had approximately $100 million
outstanding under its aforementioned accounts receivable sales
facility.
CHARTER COMMUNICATIONS: Bank Debt Trades at 14% Discount
--------------------------------------------------------
Participations in a syndicated loan under which Charter
Communications is a borrower traded in the secondary market at
85.05 cents-on-the-dollar during the week ended May 15, 2009,
according to data compiled by Loan Pricing Corp. and reported in
The Wall Street Journal. This represents a drop of 1.81
percentage points from the previous week, the Journal relates.
The loan matures March 6, 2014. The Company pays 200 basis points
above LIBOR to borrow under the facility. Moody's has withdrawn
its rating on the bank debt. S&P has assigned a default rating.
Based in St. Louis, Missouri, Charter Communications, Inc. (Pink
OTC: CHTRQ) -- http://www.charter.com/-- is a broadband
communications company and the fourth-largest cable operator in
the United States. Charter provides a full range of advanced
broadband services, including advanced Charter Digital Cable(R)
video entertainment programming, Charter High-Speed(R) Internet
access, and Charter Telephone(R). Charter Business(TM) similarly
provides scalable, tailored, and cost-effective broadband
communications solutions to business organizations, such as
business-to-business Internet access, data networking, video and
music entertainment services, and business telephone. Charter's
advertising sales and production services are sold under the
Charter Media(R) brand.
On March 16, 2009, Charter Communications filed its annual report
on Form 10-K, which contained a going concern modification to the
audit opinion from its independent registered public accounting
firm.
Charter Communications and more than a hundred affiliates filed
voluntary Chapter 11 petitions on March 27, 2009 (Bankr. S.D. N.Y.
Case No. 09-11435). Pacific Microwave filed for bankruptcy
protection on April 20, 2009, disclosing assets of not more than
$50,000 and debts of more than $1 billion.
The Hon. James M. Peck presides over the cases. Richard M. Cieri,
Esq., Paul M. Basta, Esq., and Stephen E. Hessler, Esq., at
Kirkland & Ellis LLP, in New York, serve as counsel to the
Debtors, excluding Charter Investment Inc. Albert Togut, Esq., at
Togut, Segal & Segal LLP in New York, serves as Charter
Investment, Inc.'s bankruptcy counsel. Curtis, Mallet-Prevost,
Colt & Mosel LLP, in New York, is the Debtors' conflicts counsel.
Ernst & Young LLP is the Debtors' tax advisors. KPMG LLP is the
Debtors' independent auditors. The Debtors' valuation consultants
are Duff & Phelps LLC; the Debtors' financial advisors are Lazard
Freres & Co. LLC; and the Debtors' restructuring consultants are
AlixPartners LLC. The Debtors' regulatory counsel is Davis Wright
Tremaine LLP, and Friend Hudak & Harris LLP. The Debtors' claims
agent is Kurtzman Carson Consultants LLC. As of Dec. 31, 2008,
the Debtors had total assets of $13,881,617,723, and total
liabilities of $24,185,668,550.
Bankruptcy Creditors' Service, Inc., publishes Charter
Communications Bankruptcy News. The newsletter tracks the Chapter
11 proceedings undertaken by Charter Communications and more than
100 of its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
CHARYS HOLDING: Emerges From Bankruptcy as CCLM Holdings
--------------------------------------------------------
CCLM Holdings reported that on March 12, 2009, it emerged as the
new holding company under the Plan of Reorganization filed by
Charys Holding Company, Inc.
Charys filed for Chapter 11 protection on February 14, 2008.
Charys' Plan, with the approval of the Committee of Unsecured
Creditors, was confirmed on February 25, 2009. Charys emerged
from Chapter 11 on March 12, 2009, under the legal name New
Holding, Inc., and is now operating as CCLM Holdings.
"We believe that CCLM and its operating subsidiaries, with a much
reduced debt load and significant cash resources, are poised to
take advantage of the continuing growth of wireless communications
and to assist companies around the United States, the Caribbean,
Canada and Mexico to recover from natural and man made disasters,"
said Allen Capsuto, Chairperson of the Board at the Company.
"CCLM continues operations with its four subsidiaries: Cotton
Commercial USA, Inc., (Katy, Texas), Complete Tower Sources, Inc.
(Lafayette, Louisiana), LFC, Inc. (Houston, Texas) and Mitchell
Site Acq, Inc. (Lafayette, Louisiana) -- none of which were part
of the reorganization," stated Mr. Capsuto.
About Charys Holding
Headquartered in Atlanta, Georgia, Charys Holding Co., Inc. --
http://www.charys.com/-- and its affiliated debtor, Crochet &
Borel Services, Inc., filed for Chapter 11 protection on February
14, 2008 (Bankr. Del. Lead Case No. 08-10289). Harvey R. Miller,
Esq., Stephen Karotkin, Esq., and Lydia T. Protopapas, Esq., at
Weil, Gotshal & Manges LLP, represented the Debtors as counsel.
Chun I. Jang, Esq., Mark D. Collins, Esq., and Paul N. Heath,
Esq., at Richards, Layton & Finger, P.A., represent the Debtors as
Delaware counsel. Matthew S. Barr, Esq., at Milbank, Tweed,
Hadley & McCloy, LLP represented the Official Committee of
Unsecured Creditors as counsel. Chad A. Fights, Esq., and Gregory
W. Werkheiser, Esq., at Morris, Nichols, Arsht & Tunnell,
represented the Committee as Delaware counsel.
Upon confirmation of their bankruptcy plan, the Debtors had assets
of roughly $215 million and the liabilities of roughly
$339 million.
About CCLM Holdings
Headquartered in Atlanta, Georgia, CCLM is a privately-held
company providing infrastructure services in two primary markets.
In the remediation and reconstruction markets, CCLM's services
include emergency planning and coordination, response to
catastrophic losses, reconstruction and restoration and
environmental remediation. In the wireless communications and
data infrastructure markets, CCLM provides an array of services
including engineering, program management, construction,
installation and maintenance, and tower services to large service
providers and other business enterprises.
CHRYSLER LLC: Wins Final Approval of Treasury's $4.96BB DIP Loan
----------------------------------------------------------------
Judge Arthur Gonzalez of the U.S. Bankruptcy Court for the
Southern District of New York granted Chrysler LLC final authority
to borrow up to $4.96 billion from the U.S. Treasury Department,
Bloomberg News reported.
According to the report, the loan amount was increased to
$4.96 billion from $4.1 billion. Most of the increase is to
provide $600 million to cover any losses GMAC LLC incurs as a
result of taking on financing commitments for Chrysler's dealers.
Richard Engman, Esq., at Jones Day, said another $260 million will
replace funds transferred to Chrysler Canada.
The Debtors, on May 4, 2009, obtained interim approval from the
Court to obtain as much as $1.4 billion in initial postpetition
loan from The United States Department of the Treasury and Export
Development Canada.
Most of the objections to the loan were resolved and others were
overruled at the May 20 hearing. Judge Gonzalez, according to
Christopher Scinta at Bloomberg, denied an objection made at the
hearing by a lawyer for a group of Indiana pension funds, saying
that the group should have submitted a written objection.
Robert Bosch LLC said it objects to the DIP financing to the
extent its set-off and recoupment claims and tooling or other
possessory liens may be impaired or primed under the terms of the
DIP Credit Facility. Other parties, like Timken Company, Harman
Becker Automotive Systems, Inc., and Superior Industries, Inc.,
asserted that their liens should be considered as "permitted
liens" and that the final DIP order should clarify that the liens
and claims of the DIP Lenders are junior in priority to the set-
off rights and reclamation rights of the creditors. Active
Burgess Mould & Design, Inc., et al., which hold valid prepetition
first-priority liens on the collateral and set-off rights and
recoupment claims against the Debtors, objects to the priming of
their liens, set-off and recoupment rights.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker's smaller lenders,
including hedge funds that he didn't name -- "a small group of
speculators" -- refused to make the concessions agreed to by the
Company's major debt holders and workers.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal
LLP, as conflicts counsel; Capstone Advisory Group LLC, and
Greenhill & Co. LLC, for financial advisory services; and Epiq
Bankruptcy Solutions LLC, as its claims agent.
Chrysler's says that as of December 31, 2008, it had
$39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler
had $1.9 billion in cash at that time.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: To Continue Doing Business With 1,200 Suppliers
-------------------------------------------------------------
Chrysler LLC said it would begin the process of assuming and
assigning the overwhelming majority of the company's supplier
contracts to the new company established in a global alliance with
Fiat S.p.A. once a sale is complete.
In connection with this, Chrysler has instituted a process
pursuant to which suppliers may be paid on account of pre-
bankruptcy accounts receivable, said the statement.
Chrysler noted that it will mail letters to approximately 1,200 of
its suppliers setting forth the amounts the company has determined
will be required to "cure" all contracts to be assumed and
assigned. These letters also provide details of the process by
which suppliers can begin receiving payment of the amounts.
Citing Chrysler spokesman Dave Elshoff, Bloomberg News said the
automaker intends to compensate the suppliers 40% of those
payments while in bankruptcy and the remainder after the formation
of the new company.
The company noted that completing this process quickly is an
important step in its preparations to restart operations, and
provides suppliers with a fast and efficient way to ensure payment
of prepetition claims and to continue their business relationship
with the new company moving forward.
"This is very good news for suppliers and Chrysler," said Scott
Garberding, Senior Vice President and Chief Procurement Officer ?
Chrysler LLC. "I know there was great anxiety in the supplier
community when we announced Chrysler's Chapter 11 filing. This
should be a great relief. The terms are fair and far better than
the treatment trade creditors usually get in a bankruptcy case,
and provide a mechanism for quick resolution of all open issues."
"Our supplier partners will be critical to the success of the new
Chrysler that emerges from Chapter 11," added Mr. Garberding. "We
are asking our suppliers to move quickly to become part of the
vibrant new company that will emerge from the Chrysler?Fiat
alliance."
Chrysler Files Supplier List
Chrysler released on May 15, 2009, an initial list of suppliers
being asked to go forward with New CarCo Acquisition LLC. The
list was not a complete or final listing of suppliers for the new
company, and Chrysler noted that it will continue to work with
those suppliers who wish to become part of the new enterprise.
According to the Debtors, the Assignment and Cure Schedule
inadvertently failed to identify certain Designated Agreements and
Excluded Agreements and also contained certain clerical errors
relating to the listing of the agreements.
For this reason, the Debtors submitted an updated schedule
identifying (a) certain production supplier agreements that the
Debtors have identified as Designated Agreements that they intend
to assume and assign to the Purchaser, (b) certain Excluded
Agreements and (c) the corresponding Cure Costs under the
Designated Agreements as of April 30, 2009. A full-text copy of
the Updated Schedule is available for free at:
http://bankrupt.com/misc/ChrysSuppliers.pdf
The Debtors also filed in Court official notices during May 15 and
16, 2009, disclosing the supplier agreements they intend to assume
and assign to New CarCo. Copies of these notices are available
without charge at:
http://bankrupt.com/misc/ChryslerAssignedContracts1.pdf
http://bankrupt.com/misc/ChryslerAssignedContracts2.pdf
http://bankrupt.com/misc/ChryslerAssignedContracts3.pdf
Suppliers have 10 days after receipt of the notices to file their
objections to the proposed assumption and assignment of the
agreements.
If an objection is filed, the Debtors, New CarCo and the supplier
may resolve the objection without court intervention. If it
cannot be resolved, the decision for the assumption and assignment
of the agreements and the cure costs will be determined by the
Court.
Unless otherwise agreed by the parties, the hearing to consider
objections to the proposed assumption and assignment will be
conducted on June 4, 2009. If the Court determines at the hearing
that the designated agreements cannot be assumed and assigned, or
establishes cure costs that New CarCo is not willing to pay, then
the agreements will no longer be considered for assumption and
assignment.
Among the suppliers whose agreements had been designated for
assumption and assignment include various units of Continental AG,
which will be paid about $70 million; Milwaukee-based Johnson
Controls Inc., $69.8 million or more; Visteon Corp., $22.3
million, and Tokyo-based Yazaki Corp., $20.9 million.
U.S. Treasury Aid Program
Chrysler is convincing suppliers to stop participating in a U.S.
Treasury aid program intended to help partsmakers, according to a
report by Bloomberg. The plan provided $1.5 billion in funding to
guarantee or immediately pay suppliers bills owed by Chrysler. To
participate, suppliers had to pay a fee of 2 percent to 3 percent
of the bills, known as accounts receivable.
"While the program remains open at this time, Chrysler does not
believe suppliers need to use the program as they will be
economically better off being paid through the bankruptcy court
process," the company said in an e-mailed statement to Bloomberg.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker's smaller lenders,
including hedge funds that he didn't name -- "a small group of
speculators" -- refused to make the concessions agreed to by the
Company's major debt holders and workers.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal
LLP, as conflicts counsel; Capstone Advisory Group LLC, and
Greenhill & Co. LLC, for financial advisory services; and Epiq
Bankruptcy Solutions LLC, as its claims agent.
Chrysler's says that as of December 31, 2008, it had
$39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler
had $1.9 billion in cash at that time.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Dealer Group to Offer Objections to Network Cuts
--------------------------------------------------------------
A group of dealers called the Chrysler National Dealers Council
said that the dealers may offer a number of objections to
Chrysler's plan to cut its dealerships and that the case will
enter some uncharted legal territory, according to a report by
Freep.com.
"If there is going to be any rejection of dealers, it's in
everybody interests for the transition to be as smooth and
painless as possible," Freep.com quoted as saying, NDC attorney,
Michael Bernstein, Esq., at Arnold & Porter LLP, in Washington
D.C.
Mr. Bernstein said that under bankruptcy law, Chrysler would have
to show how its "reasonable exercise of business judgment" led to
the closing list. He said that while the automaker cited
standards by which it chose dealerships, it was noteworthy that
Chrysler did not cite costs.
"There's no cost to Chrysler associated with dealers. Dealers are
a source of revenue. A lot of people were surprised by the number
of dealers Chrysler is proposing to reject," Freep.com quoted Mr.
Bernstein as saying.
Chrysler and its debtor-affiliates have sought approval of the
U.S. Bankruptcy Court for the Southern District of New York to
reject 789 agreements with their authorized local dealers in a bid
"to complete the transition to the smaller, more effective and
more profitable dealer network."
In a statement filed with Court, the NDC said there is no evidence
that by rejecting dealership agreements, the new company will save
money to any material degree or enhance its competitive position
in the automobile market.
"To the contrary, closing dealers narrows distribution and reduces
Chrysler's sales and income as fewer dealers buy fewer cars and
retail sales are lost to other brands," Mr. Bernstein pointed out.
According to Mr. Bernstein, Chrysler benefits from a wide dealer
network because it is the dealers which bear the risk on unsold
cars and cars in transit from the factory.
"Fewer dealers will mean less inventory available to the public.
Lower inventory reduces the chances that a customer will find the
car they are looking for and therefore hurts sales," Mr. Bernstein
said, adding that a wider supply of inventory improves Chrysler's
competitive position, an improvement for which the dealers bear
the cost.
Mr. Bernstein urged the Court to allow dealers to assert the
rights that typically protect them under state laws. "Any dealer
whose contract is proposed to be rejected should have a full and
fair opportunity to assert any rights it may have under applicable
law," he further said.
Under the laws of most states, if Chrysler wanted to end a dealer
contract it would have to give the dealer several months to wind
down its business, offer to buy back vehicle and parts inventory
or offer reimbursement for a number of costs. But in bankruptcy,
Chrysler contends it can avoid any such liabilities as part of the
case.
Tim Jackson, head of Colorado's Automobile Dealers Association,
also questioned Chrysler's decision to reduce its dealer network,
according to a report by 9news.com.
Mr. Jackson, who guested in the program YOUR SHOW on Sunday,
reportedly disclosed that three of the 14 dealerships to
eventually lose their Chrysler products were in the top five
sales-wise in Colorado.
"Dealerships are not cost centers to the manufacturers.
Dealerships are profit centers to the manufacturers. The
elimination of the dealerships doesn't save Chrysler one thin
dime," 9news.com quoted Mr. Jackson as saying.
According to Mr. Jackson, industry figures show 90% of the auto
manufacturer profits come from dealerships while state figures
show the sale and service of new and used vehicles accounts for
20% of all the sales tax collected by state and local governments
in the U.S.
Chrysler's dealers have just three weeks before they are closed.
Chrysler President Jim Press said that surviving dealerships will
be urged to purchase autos and replacement parts from closing
dealerships. The closure list collectively accounted for 14% of
the automaker's sales, according to a May 18 report by Bloomberg
News.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker's smaller lenders,
including hedge funds that he didn't name -- "a small group of
speculators" -- refused to make the concessions agreed to by the
Company's major debt holders and workers.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal
LLP, as conflicts counsel; Capstone Advisory Group LLC, and
Greenhill & Co. LLC, for financial advisory services; and Epiq
Bankruptcy Solutions LLC, as its claims agent.
Chrysler's says that as of December 31, 2008, it had
$39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler
had $1.9 billion in cash at that time.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Dealers, Suppliers Object to Fiat Transaction
-----------------------------------------------------------
The Committee of Chrysler Affected Dealers, the largest national
group protesting Chrysler LLC's request to cancel 789 dealer
franchise agreements, has objected to Chrysler's proposed asset
sale and has asked the Court to delay hearings that would approve
the sale transaction with Fiat S.p.A. and rejection of the dealer
franchise agreements.
"Chrysler's proposed asset sale and request for immediate
termination of dealer franchises will destroy several hundred
independent businesses, ruin the livelihoods of their owners,
cause the loss of thousands of jobs and precipitate inevitable
personal and business bankruptcies flowing from the closing of the
affected dealers," said Stephen D. Lerner, Esq., at Squire,
Sanders & Dempsey L.L.P., in New York.
Mr. Lerner leads the team representing the dealer committee, which
represents the collective interests of nearly 300 dealers in 45
states. The number of dealers joining the committee's efforts
grows daily.
"It is impossible to overstate the irreparable harm and suffering
that will be inflicted on the affected dealers, their thousands of
employees, and their employees' families by Chrysler's requested
relief," Mr. Lerner points out.
While the dealers and their employees would be adversely affected
by those transactions, maintaining the affected dealers would not
cost Chrysler anything, according to Mr. Lerner.
"By design, Chrysler requires all of its dealers to pay for
everything, inventory, parts and equipment, real estate, and
salaries and benefits," he says, adding that the primary source of
revenue for Chrysler is its dealer network.
The Dealers Committee also seeks a continuance, asking the court
to delay the hearing dates and deadlines related to the proposed
sale and rejection motion so the committee has a full and fair
opportunity to take discovery and present its defense.
"The relief Chrysler seeks is unprecedented and improper," Mr.
Lerner asserts. "We believe Chrysler's efforts through the sale
and rejection motions violate due process, the US Bankruptcy Code,
other federal statutes and the laws of all 50 states that are
specifically designed to protect the interests of dealers and
prevent the immeasurable harm that Chrysler is inflicting on these
dealers."
"The Bankruptcy Court will be required to address several matters
of first impression and Chrysler has by design given the affected
dealers only three business days to respond. The emotional and
financial catastrophe that would be wrought by the relief
requested in these motions need not happen and should not happen,
and certainly not with only three business days' notice," he said.
He added that under well-settled principles of bankruptcy law and
fundamental notions of due process, Chrysler's restructuring, as
proposed, cannot lawfully happen.
The Dealers Committee, hence, asks the court require Chrysler to
subject its restructuring proposal to the transparency, fairness
and equal treatment of similarly situated creditors mandated by
the disclosure and plan confirmation provisions of the Bankruptcy
Code, and to give the affected dealers the notice and procedural
protections that due process and the Bankruptcy Rules command.
Sub Rosa Plan
According to Mr. Lerner, the sale of the assets pursuant to the
deal between Chrysler and Italy-based automaker Fiat S.p.A. is
also objectionable because it is an "unlawful sub rosa plan."
Mr. Lerner says that the deal requires the sale of most of
Chrysler's assets outside of and before a formal plan of
reorganization or liquidation is filed. He adds that the deal
also contains nearly all other hallmarks of a plan and requires
that only certain favored unsecured creditors, including the
voluntary employee beneficiary association and the U.S. Treasury,
receive value in the form of majority ownership of the new
company.
"Certain unsecured creditors, such as the affected dealers . . .
have no opportunity to participate in the ownership of [New CarCo
Acquisition LLC]," Mr. Lerner points out.
"Chrysler's restructuring transaction is an improper and
impermissible sub rosa plan that seeks to use the thinly veiled
guise of an asset sale to subvert the normal distribution scheme
and creditors' procedural rights as mandated by Chapter 11 in
direct contravention of the basic goal of Chapter 11
reorganization," Mr. Lerner maintained.
More Parties Object
The National Chrysler Retirement Organization likewise objects to
the sale, saying it remains unclear if the benefits under the
Supplemental Retirement Plan, Termination Allowance Plan and the
Income Protection Plan are going to be transferred.
"It is manifestly unjust to simply cut-off these benefits without
any express indication of when, if ever, they will be re-instated
or whether the Debtors plan to reject them or whether they will be
assumed by [New CarCo]," NCRO says.
"The lack of information has directly harmed the ability of the
SRP, TAP and IPP recipients to defend their interests because they
do not know what the Debtors' actual intent is with respect to
their benefits," the group says.
NCRO says it will block approval of the proposed sale to the
extent the purchase agreement between Chrysler and Fiat does not
provide for the assumption of the benefit plans.
The proposed sale of the assets also drew flak from suppliers,
retirees, consumers, tort claimants and other creditors,
specifically:
* Kathy Profitt
* Eugene Vollmer
* Luke Hazlett
* Gerald Beverman
* Timothy Madden
* Fred Luss
* Christopher Taravella
* Piero DiMambro
* Timothy Dykstra
* John Bussian
* Tamara Czarnecki
* Patricia Pascale
* Michelle Simmons
* Claude Miller
* David and Marilyn Robinson
* Terry Martin
* Russell Ellis Sr.
* Hanson International Inc.
* STM MFG. Inc.
* Eclipse Tool & Die Inc.
* Wolverine Tool & Engineering Inc.
* International Tooling Solutions LLC
* Engineered Tooling Systems, Inc.
* Advanced Tooling Systems, Inc.
* Murphy Company
* Sachs Electric Company and McGraw Electric Company.
* Leon Plastics Inc.
* BankFinancial FSB
* Meridian Automotive Systems, Inc.
* Brembo North America, Inc.
* Key Plastics, L.L.C.
* Citation Corporation
* Freudenberg-NOK General Partnership
* Experi-Metal, Inc.
* Exco Engineering
* Nelson Metal Products LLC, J.L. French LLC.
* Robert Bosch LLC
* Indiana State Teachers Retirement Fund
* Conti Causeway Ford
* Jim Boast Dodge Inc.
* Angelo Iafrate Construction Company
* Mitsubishi Motors North America, Inc.
* Grapevine-Colleyville ISD et al.
* Carrollton-Farmers Branch Independent School District
* Magna International, Inc.
* JJF Management Services, Inc. and its affiliates
* Active Burgess Mould & Design, Inc., et al.
* Wilmington Trust Company
* Performance Dodge LLC, et al.
* Fire Defense Equipment Co., Inc..
* Michigan, Department Of Treasury
* Superior Acquisition, Inc.
* Hitachi Capital America Corp.
* Getrag Corporation
* Harman Becker Automotive Systems Inc., et al.
* Waco Independent School District
* Kautex, Inc.
* Tower Automotive Inc.
* City of Memphis
* Chrysler Financial Services Americas LLC
* MAHLE Industries, Inc., et al.
* Bridgestone Americas Tire Operations, LLC.
* City of Milwaukee
* City Of Auburn Hills
* Panasonic Automotive Systems Company of America
* Tenneco Inc.
* Hoegh Autoliners Holdings, Inc.
* PPG Industries Inc.
* Committee of Consumer-Victims of Chrysler LLC
* Ad Hoc Committee Seeking Fairness for Warranty
and Lemon Law Claimants
The groups demand the Debtors to clarify the status of their
retirement plan benefits; clarify how the sale would benefit
unsecured creditors; pay in full their claims from the sale
proceeds, among others. They also disapprove of the sale of the
assets "free and clear of liens," saying it would deprive them of
their interest in the assets.
Dealers Seek to Amend
Sale Procedures Order
Several dealers affected by the proposed sale jointly ask the
Court to amend the order approving the sale procedures to:
(i) extend the time for the Affected Dealers to object to the
sale request from May 19, 2009, to May 26, 2009; and
(ii) adjourn the sale hearing from May 27, 2009, until at
least June 3, 2009.
The Affected Dealers are:
* Webster Chrysler Jeep, Inc.;
* Scotia Motors, Inc.;
* William T. Pritchard, Inc.;
* ABC Chrysler, Inc.;
* James Fiore Motors, Inc.;
* Dependable Motors, Inc.;
* Bob Taylor Jeep, Inc.;
* Tenafly Chrysler Jeep, Inc.;
* Loman Chrysler Jeep, Inc.;
* Thomas Dodge Corp. of New York;
* Eagle Automall;
* Mauro Motors, Inc.;
* Rallye Auto Plaza, Inc.;
* Island Jeep, Inc.; and
* Miller Motor Corp.
Eric J. Snyder, Esq., at Siller Wilk LLP, in New York, contends
that the proposed sale of the Debtors' assets will result in the
immediate demise of the Affected Dealers.
"While Chrysler claims that it 'been actively addressing the
dealer network for a number of years [and] have engaged in a long
term process to rationalize their dealer network,' and while the
Procedures Order gives Chrysler seven days to reply to any
objections to the Sale, the Affected Dealers have been given
effectively only two days to respond to the Sale Motion and, upon
information and belief, were never given notice of the hearing
which culminated in the entry of the Procedures Order," Mr. Snyder
tells the Court.
Giving the Affected Dealers, as well as all of the other dealers,
whose rights will be effectively abrogated as a result of the
Sale, the limited notice to object to the sale request, and to
protect their rights, is manifestly unjust, Mr. Snyder further
argues.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker's smaller lenders,
including hedge funds that he didn't name -- "a small group of
speculators" -- refused to make the concessions agreed to by the
Company's major debt holders and workers.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal
LLP, as conflicts counsel; Capstone Advisory Group LLC, and
Greenhill & Co. LLC, for financial advisory services; and Epiq
Bankruptcy Solutions LLC, as its claims agent.
Chrysler's says that as of December 31, 2008, it had
$39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler
had $1.9 billion in cash at that time.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Seeks Permission to Enter Into Daimler-PBGC Deal
--------------------------------------------------------------
Chrysler LLC and its affiliates seek authority from the U.S.
Bankruptcy Court for the Southern District of New York to enter
into a settlement, pursuant to Rule 9019 of the Federal Rules of
Bankruptcy Procedure, on the terms set forth in the binding term
sheet "Daimler PBGC Binding Term Sheet," dated as of April 27,
2009, among Chrysler LLC; Chrysler Holding, LLC; Daimler AG; the
DC Contributors; Cerberus investors CG Investment Group, LLC, and
CG Investor, LLC; and the Pension Benefit Guaranty Corporation.
The DC Contributors include Daimler North America Finance
Corporation, formally known as DaimlerChrysler North America
Finance Corporation, and Daimler Investments US Corporation,
formerly known as DaimlerChrysler Holding Corporation.
In 1998 Chrysler was acquired by Daimler and became functionally
aligned with Daimler's German headquarters, with key functions
centralized in Germany. Corinne Ball, Esq., at Jones Day, in New
York, relates that with no stand-alone objectives, Chrysler's
products, image and business suffered.
In May 2007, with Chrysler's fortunes waning, Daimler formed
Chrysler Holding solely for the purpose of facilitating Cerberus's
acquisition of a controlling interest in Chrysler, Ms. Ball
relates. At the same time, she says, Chrysler Financial Services
Americas LLC, which had been a wholly owned subsidiary of
Chrysler, was spun off and Chrysler Holding became the ultimate
parent of both Chrysler and Chrysler Financial.
To complete Cerberus's acquisition of a controlling interest in
Chrysler and Chrysler Financial from Daimler, Cerberus, the DC
Contributors and Daimler executed a Contribution Agreement, dated
May 14, 2007. On August 3, 2007, the transactions contemplated by
the Contribution Agreement closed, and the Daimler Divestiture
became effective.
In connection with the transactions comprising the Daimler
Divestiture, Chrysler became a party to the Second Lien Credit
Agreement, dated August 3, 2007, among (i) Chrysler Intermediate
HoldCo II, LLC, as guarantor, (ii) Chrysler, as borrower, (iii)
lender parties, and (iv) JP Morgan, as administrative agent.
Pursuant to the Second Lien Credit Agreement, Chrysler has
received a $1.5 billion loan from Daimler Finance and a $500
million loan from Cerberus affiliate, Madeleine L.L.C.
Daimler also loaned $400 million to CarCo Intermediate HoldCo I, a
wholly owned subsidiary of Chrysler Holding, at the time of the
Daimler Divestiture.
Chrysler's Pension Plans
The PBGC -- a wholly-owned United States government corporation
created under the Employee Retirement Income Security Act of 1974
that administers the defined benefit pension plan termination
insurance program under the ERISA -- guarantees the payment of
certain pension benefits upon the termination of a single-employer
pension plan covered by ERISA. To the extent a pension plan is
underfunded at termination, the PBGC generally becomes the trustee
of the plan and, subject to statutory limitations, pays the plan's
unfunded benefits with its insurance funds. In certain
circumstances, the PBGC also has the right to initiate proceedings
to terminate an underfunded pension plan.
The Debtors sponsor 10 different defined benefit pension plans,
each with their own funding requirements and benefit schedules.
Pension benefits under the plans are determined by a basic formula
that, although calculated differently for different plans,
primarily depends on years of service and final average pay.
At the time of the Daimler Divestiture, the Chrysler Pension Plans
were underfunded, Ms. Ball relates. To address that situation, on
May 13, 2007, the PBGC, Daimler, the predecessors of Chrysler and
Chrysler Holding, and CGI entered into a settlement agreement,
pursuant to which Daimler issued a guaranty of up to $1 billion
for a period of five years to cover any shortfall in the Chrysler
Pension Plans should those plans suffer an involuntary or
distressed termination.
The 2007 Settlement Agreement and the Daimler Pension Guaranty
expire by their own terms if (i) CGI ceases to own either 50% or
more of the voting securities in Chrysler or "substantially all of
the business of Chrysler," or (ii) Chrysler Finance and Chrysler
cease to be part of the same "Controlled Group" as defined in
Section 4001(a)(14) of ERISA. Thus, upon consummation of the
proposed Chrysler-Fiat sale transaction, the $1 billion Daimler
Pension Guaranty will terminate.
The PBGC has estimated that the Chrysler Pension Plans are
currently underfunded by more than $10 billion on a termination
basis. Given the situation, and because the Fiat Transaction
would extinguish the Daimler Pension Guaranty, the PBGC required
that Daimler make contributions to the plans, and provide a
reduced replacement guaranty to address the underfunding issue
prior to the termination of the Daimler Pension Guaranty as a
result of the Fiat Transaction.
Should the PBGC terminate the Chrysler Pension Plans prior to the
consummation of the Fiat Transaction, Ms. Ball avers that the
Debtors' bankruptcy estates would face an additional claim by the
PBGC to make up the estimated shortfall in the Chrysler Pension
Plans, which claim would exceed $9 billion, based on the $10
billion current shortfall estimated by the PBGC less whatever the
PBGC could recover from Daimler pursuant to the $1 billion Daimler
Pension Guaranty.
Daimler-PBGC Binding Term Sheet
Over the past few months, Chrysler, Cerberus, Daimler, the DC
Contributors, and PBGC have engaged in intense and protracted
negotiations aimed at resolving all current and potential claims
arising out of the Daimler Divestiture. The negotiations have
resulted in a number of prepetition and postpetition settlements,
including the Daimler PBGC Binding Term Sheet executed by the
Parties on April 27, 2009, under which the Parties "intend[ed] to
be legally bound."
Pursuant to the Daimler PBGC Binding Term Sheet, among other
things:
(a) Daimler will forgive all of its outstanding loan of $1.5
billion to the Debtors under the Second Lien Credit
Agreement, and Cerberus will forgive all of its
outstanding loan of $500 million to the Debtors under the
Second Lien Credit Agreement;
(b) Daimler will forgive its outstanding $400 million loan to
Chrysler Holding's subsidiary; and
(c) Daimler will make scheduled cash contributions of $600
million over a two-year period for the benefit of the
Chrysler Pension Plans to reduce shortfalls in the funding
of the plans, and it will amend the PBGC Guaranty to
reduce the amount to $200 million and continue the amended
guaranty after the plans are assigned to New Chrysler, or
the New CarCo Acquisition LLC, pursuant to the Fiat
Transaction. These payments and continuing guaranty will
be made in lieu of any other obligation to contribute to
the Chrysler Pension Plans.
"In consideration for the forgiveness of debt and the contribution
of $600 million in cash to the Chrysler Pension Plans along with a
continuing $200 million guaranty, Daimler, Cerberus and Chrysler
have agreed in the Daimler PBGC Binding Term sheet that they 'will
waive all current and future claims that they may have against
each other and against each other's respective Affiliates under
the Contribution Agreement, dated as of May 14, 2007' and other
related Agreements, and that the Parties 'will execute releases
with respect to the waived claims,'" Ms. Ball tells the Court.
As additional consideration for the forgiveness of its second tier
secured loan to Chrysler, Cerberus has requested that the Debtors
release, in addition to the "waived claims" in the Daimler PBGC
Binding Term Sheet, all other claims against Cerberus and Daimler
other than claims relating to certain ongoing agreements.
Since the hearing to approve the Fiat Transaction is currently
scheduled for May 27, 2009, the Debtors ask the Court to consider
their request also on May 27. Objections are due May 25.
A full-text copy of the summary of the Daimler PBGC Binding Term
Sheet is available for free at:
http://bankrupt.com/misc/Chrysler_PBGC_BindingTermSheet.pdf
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker's smaller lenders,
including hedge funds that he didn't name -- "a small group of
speculators" -- refused to make the concessions agreed to by the
Company's major debt holders and workers.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal
LLP, as conflicts counsel; Capstone Advisory Group LLC, and
Greenhill & Co. LLC, for financial advisory services; and Epiq
Bankruptcy Solutions LLC, as its claims agent.
Chrysler's says that as of December 31, 2008, it had
$39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler
had $1.9 billion in cash at that time.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Seeks to Change "Complex" Governance Structure
------------------------------------------------------------
Chrysler's corporate governance framework is set in a "Fourth
Amended and Restated Limited Liability Company Operating Agreement
of Chrysler LLC" by and between Chrysler Holding LLC and CarCo
Intermediate Holdco II LLC.
The current Chrysler governance structure contains complex
corporate governance provisions that were put in place as a result
of negotiations that occurred among the owners of the company in
order to safeguard their interests. Accordingly, Chrysler is
currently controlled by a 13 member board of managers, Corinne S.
Ball, Esq., at Jones Day, in New York, the Debtors' proposed
counsel, relates.
Ms. Ball tells the Court that upon consummation of the transfer of
the majority of the Debtors' operating assets to New CarCo
Acquisition LLC, a newly established Delaware limited liability
company formed by Fiat S.p.A., the Debtors will embark upon an
orderly process of seeking to recognize value from their assets,
and to use that value to satisfy claims. She notes that the
Debtors will do so in an environment in which the interests of
Daimler and Cerberus, the Debtors' owners, are being specifically
addressed, so that there is no longer a need for the complex
corporate governance structure that is currently in place.
Ms. Ball says the Debtors will be better served by a simpler and
more cost effective governance structure that will allow the
Debtors to more easily manage the administration of their estates.
She adds that the Debtors' owners have indicated a desire to
surrender their board positions.
Accordingly, the Debtors seek to implement a new governance
structure to allow them to more efficiently wind down their
businesses after the Fiat Transaction. The proposed New
Governance Structure's terms are:
* Three managers will be appointed to be the Board of
Chrysler. All of the New Managers will be independent of
Cerberus and Daimler. One of the New Managers is expected
to be an independent member of the Current Board, and one of
the New Managers will be appointed after consultation with
the Official Committee of Unsecured Creditors and the
Debtors' other key constituents; and
* One of the New Managers will be appointed Chief Executive
Officer. With the exception of the CEO, the remaining two
managers will be independent of Chrysler.
Upon consummation of the Fiat Transaction, the Debtors plan to
modify the Operating Agreement, including without limitation:
* Deleting the provisions giving Cerberus and Daimler the
right to appoint members to the New Board;
* Requiring that New Board members must be independent, except
one Board Member may be an employee of Chrysler;
* Providing that, in the event that a New Board member ceases
to be a Member of the New Board, the remaining New Board
members will elect his or her successor; and
* Specifying that the Operating Agreement may be further
Amended only with the approval of a majority of the New
Board.
A blacklined copy of the modified Operating Agreement is available
for free at http://bankrupt.com/misc/ChrysAmOpAgrmt.pdf
With regard to the Debtors' board of directors and officers,
Ms. Ball submits that for the past few months, all 13 members of
the Debtors' board of directors and officers have worked
tirelessly to ensure the availability of a viable transaction that
will preserve and allow the Debtors to realize the going concern
value of the Debtors' assets. She notes that the Board Members
and Officers have carried out their responsibilities selflessly
and have made significant personal sacrifices even though 25 of
the Officers have been made subject to salary cap and bonus
limitations as a result of the Debtors' acceptance of funding from
the United States Department of Treasury's Troubled Asset Relief
Program.
However, despite the diligent work of the Current Directors and
Officers, the employees remain subject to the threat of personal
liability for decisions they have made and continue to make in
good faith in their roles. In order to relieve the Current
Directors and Officers of that burden and allow them to focus
without distraction on the task at hand, the Debtors ask the Court
for authority to release the Current Directors and Officers from
all their personal liabilities.
A full-text copy of the Release Agreement is available for free at
http://bankrupt.com/misc/ChrsyReleaseAgrmt.pdf
Ms. Ball contends that without the Release, the Current Directors
and Officers will inevitably be distracted by the threat that they
will somehow be found personally liable for good faith decisions
that they have made and continue to make every day. She adds that
aside from the inherent unfairness of that situation, the
attendant distractions, at this critical juncture, could threaten
the ultimate success of New Chrysler and the administration of the
Debtors' estates.
With regard to the Directors' and Officers' liability insurance,
the Debtors currently maintain liability insurance policies for
their directors and officers which expire upon the sale of all or
substantially all of the Chrysler's assets or the consummation of
the Fiat Transaction involving the sale of all or substantially
all of the Debtors' assets; and the Debtors' Liability Insurance
will expire when that transaction closes.
Ms. Ball argues that if replacement insurance is not in place, the
Debtors will be unable to continue the process of winding down
their affairs. She further argues that as the winding down
process is critical to an orderly review of the claims presented,
as well as to maximizing the resources that will be available to
pay allowed claims, the purchase of replacement insurance clearly
reflects "sound business judgment".
The Debtors seek authority to (a) adopt the Operating Agreement
Modifications; (b) release the Current Directors and Officers from
their personal liabilities; and (c) purchase a replacement
Liability Insurance.
The Debtors ask the Court to convene a hearing May 27, 2009, to
consider the request. Objections are due May 25.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker's smaller lenders,
including hedge funds that he didn't name -- "a small group of
speculators" -- refused to make the concessions agreed to by the
Company's major debt holders and workers.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal
LLP, as conflicts counsel; Capstone Advisory Group LLC, and
Greenhill & Co. LLC, for financial advisory services; and Epiq
Bankruptcy Solutions LLC, as its claims agent.
Chrysler's says that as of December 31, 2008, it had
$39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler
had $1.9 billion in cash at that time.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Seeks July 31 Extension of Ownership Report
---------------------------------------------------------
Chrysler LLC and its affiliates ask Judge Arthur Gonzalez of the
U.S. Bankruptcy Court for the Southern District of New York to
grant them additional time, through and including July 31, 2009,
to file their initial reports of financial information in respect
of entities in which their Chapter 11 estates hold a controlling
or substantial interest.
The Debtors' request will be without prejudice to their ability
to ask for further extensions of time to file their Rule 2015.3
Reports, if necessary, provided that any request will be filed no
later than March 23, 2009.
Pursuant to Rule 2015.3, a Chapter 11 debtor must file, no
later than five days before the date set for the meeting of
creditors under Section 341 of the Bankruptcy Code and every six
months thereafter, periodic financial reports of the value,
operations and profitability of each entity that is not a publicly
traded corporation or a debtor in the Chapter 11 cases, and in
which the debtor holds a substantial or controlling interest.
Rule 9006(b) provides the Court with the ability to enlarge the
period of time to file the Rule 2015.3 Reports "for cause".
Corinne S. Ball, Esq., at Jones Day, in New York, notes that at
the outset of the Chapter 11 cases, the Debtors estimated that
there are approximately 48 entities in which they hold a
substantial or controlling interest. Accordingly, she argues that
cause exists to extend the deadline for the filing of the Rule
2015.3 Reports based on (a) the size, complexity and geographic
reach of the Debtors' businesses and the significant number of
Rule 2015.3 Entities; and (b) the substantial burdens imposed by
compliance with new Bankruptcy Rule 2015.3(a) in the early days of
the Chapter 11 cases when the Debtors are focusing their limited
resources on maximizing value for stakeholders by completing the
pending sale process.
"As such, the Debtors are not in a position to complete the
initial Rule 2015.3 Reports within the period permitted by [Rule
2015.3]," Ms. Ball says. She adds that "... preparing and filing
Rule 2015.3 Reports may implicate various third party agreements
addressing terms of access to and disclosure of required
information."
Ms. Ball tells the Court that under the Debtors' proposed sale of
substantially all of its assets to Fiat S.p.A., many of the Rule
2015.3 Entities will be sold, requiring the Debtors to divert
limited resources to prepare and file detailed Rule 2015.3
Reports.
By extending the deadline for the initial Rule 2015.4 Reports, the
Debtors will have more time to complete a sale process and work
with their financial advisors and the Office of the United States
Trustee to determine the appropriate nature and scope of future
reporting and any proposed modifications to the reporting
requirements established by Rule 2015.3.
Ms. Ball further contends that the requested relief will not
prejudice any party-in-interest because the Debtors intend to work
cooperatively with the U.S. Trustee, the Official Committee of
Unsecured Creditors and other key constituents to provide access
to information regarding the Debtors' business and financial
affairs. She further notes that the Debtors and their
professionals also are working diligently to complete their
Schedules and Statements of Financial Affairs, currently due on
June 29, 2009, which will provide considerable information on the
Debtors' business operations and financial position to all
parties-in-interest.
The Court will convene a hearing regarding the Debtors' request on
June 3, 2009, at 11:00 a.m. New York time. Any objections must be
filed not later than 4:00 p.m. New York time on May 28, 2009.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker's smaller lenders,
including hedge funds that he didn't name -- "a small group of
speculators" -- refused to make the concessions agreed to by the
Company's major debt holders and workers.
In connection with the bankruptcy filing, Chrysler has reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal
LLP, as conflicts counsel; Capstone Advisory Group LLC, and
Greenhill & Co. LLC, for financial advisory services; and Epiq
Bankruptcy Solutions LLC, as its claims agent.
Chrysler's says that as of December 31, 2008, it had
$39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler
had $1.9 billion in cash at that time.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Kidder to Assume As Chairman After Fiat Deal Closes
-----------------------------------------------------------------
Chrysler LLC said C. Robert Kidder, former Chairman of Borden
Chemical Inc. and of Duracell International Inc., will become
Chairman of Chrysler Group LLC, once it completes its acquisition
of the operating assets of Chrysler LLC and completes a global
alliance with Fiat SpA. He will succeed Robert L. Nardelli.
"We are most fortunate that Bob Kidder will lead the new company
through its transformation," said Nardelli. "My number one
priority has been to preserve Chrysler and the livelihoods of
thousands of people who depend on its success. With his broad
expertise serving on numerous world-class boards and his
accomplished business background, Bob will provide the leadership
and strategic counsel that will help to create a strong global
competitor moving forward."
With more than 40 years of experience, Kidder currently serves on
the boards of Morgan Stanley, where he is the lead director,
Schering-Plough Corporation, and Microvi Biotech Inc. He
previously has served as Chairman and Chief Executive Officer of
both Duracell International Inc. and Borden Chemical Inc. and as
director of such companies as Electronic Data Systems Corporation
and General Signal Corporation. During his tenure with McKinsey
and Co. Inc., Bob worked with a major OEM client in the automotive
industry. Bob currently is Chairman and CEO of 3Stone Advisors
LLC, an investment firm that focuses on clean-tech companies. He
holds an M.S., Industrial Economics from Iowa State University and
a B.S., Industrial Engineering from the University of Michigan. He
resides with his family in Columbus, Ohio.
"I am pleased to join Chrysler at a time when Chrysler is poised
to launch an exciting new era," said Mr. Kidder. "I am confident
that Chrysler will emerge from Chapter 11 a lean and powerful
competitor, combining its own rich history of innovation with
Fiat's technology and expertise to invigorate the American car
market and to challenge other car companies around the globe."
Mr. Nardelli, Chrysler's Chairman and CEO since August 2007,
announced on April 30 his plan to leave the company following the
completion of the transactions. He will return to Cerberus
Capital Management LP as an advisor. He said that it was "an
appropriate time to let others take the lead in the transformation
of Chrysler with Fiat, and I will work closely with all of our
stakeholders to see that this new company swiftly emerges with a
successful closing of the alliance."
As stated in the terms of agreement, upon successful completion of
the alliance, a board of directors for the new company will be
appointed. The majority of the directors will be independent (not
employees of Chrysler or Fiat). The board will select a CEO with
Fiat's concurrence.
A complete biography of Mr. Kidder is available at:
http://www.media.chrysler.com
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker's smaller lenders,
including hedge funds that he didn't name -- "a small group of
speculators" -- refused to make the concessions agreed to by the
Company's major debt holders and workers.
In connection with the bankruptcy filing, Chrysler reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal
LLP, as conflicts counsel; Capstone Advisory Group LLC, and
Greenhill & Co. LLC, for financial advisory services; and Epiq
Bankruptcy Solutions LLC, as its claims agent.
Chrysler says that as of December 31, 2008, it had $39,336,000,000
in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion
in cash at that time.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: Dealership Closings Won't Impact Warranty Coverage
----------------------------------------------------------------
Vehicle owners nationwide who have purchased extended warranties
from a dealer or third-party provider are questioning if their
extended protection plans are still viable and wondering how they
should file repair claims following the recent announcements by
Chrysler and GM automakers that nearly 2,000 dealerships are being
closed.
According to the Service Contract Industry Council --
http://www.go-scic.com-- a trade group representing companies
that sell and/or administer vehicle service contracts (sometimes
called extended warranties) nationwide, auto service contracts or
extended warranties will still be viable after a dealer closes.
"Extended warranties sold by a dealer are guaranteed either by the
manufacturer or a third party provider or insurer, and the
warranty repair work can be performed at another dealership or at
other authorized repair centers," said Timothy Meenan, SCIC
executive director. "Many contracts obligate third parties that
are not the manufacturer or dealer and are backed by providers and
insurers regulated by state Departments of Insurance."
"The substantial majority of service contract sales take place
face-to-face in a dealership. We strongly encourage consumers to
read the terms and conditions of a service contract, ask questions
to the dealership representative, and to contact the toll free
number of the service contract issuer found on the service
contract or the Department of Insurance with any concerns or
questions," said Mr. Meenan.
Chrysler, which is reorganizing under Chapter 11 bankruptcy
proceedings, has the bankruptcy court's permission to continue
paying extended warranty claims. Consumers with extended
warranties from dealerships that have gone out of business or have
closed should first attempt to contact the party obligated under
the contract or the service-plan administrator whose names appear
on the contract paperwork. Otherwise, they should contact the
automaker directly.
The SCIC works with state legislatures and regulators to implement
consumer protection laws that ensure the viability of service
contracts should a retailer or dealer go bankrupt, and is an
advocate for the regulation of the service contract industry.
About SCIC
The Service Contract Industry Council -- http://www.go-scic.com/
-- is a national trade association whose member companies
collectively offer approximately 80 percent of the service
contracts sold in the U.S. for home, auto, and consumer goods.
The SCIC educates consumers about service contracts, encourages
its members to pursue high standards of customer satisfaction, and
has developed and promoted model legislation to regulate the
industry with standards designed to protect the consumer and the
industry.
CHRYSLER LLC: Checks Paid as Refunds for Faulty Vehicles Bouncing
-----------------------------------------------------------------
Martin Zimmerman at Los Angeles Times reports that settlement
checks that Chrysler LLC paid to consumers seeking refunds for
defective vehicles are bouncing.
The situation could take away public confidence in purchasing new
cars, LA Times states, citing consumer advocates.
LA Times relates that under state lemon laws make it easier for
consumers to get refunds for defective vehicles that are covered
by a manufacturer's warranty. The report says that these kind of
complaints are often settled through negotiation between the buyer
and the automaker or, if that fails, the buyer can sue.
According to LA Times, financial claims incurred before Chrysler's
Chapter 11 filing can be paid if approved by the bankruptcy judge.
LA Times states that Chrysler hasn't asked for permission to make
payments on the complaints. LA Times reports that Chrysler said
it had no plans at this point to ask the court to approve payments
to settle the complaints. The report quoted Chrysler spokesperson
Mike Palese as saying, "This is a complex process and there are a
lot of issues being discussed. This could be one of those issues
that comes up in the course of the bankruptcy, but I can't say
that we have any plans to present it at this time." The report
states that Chrysler has advised clients with those complaints to
file a proof of claim form with the court.
Alex Simanovsky, an Atlanta attorney, said that he had "a stack of
six or seven checks in my drawer right now from Chrysler that have
bounced," LA Times relates. According to the report, the amounts
in those checks range from $2,000 to $3,000 for clients who were
accepting cash payments to as much as $40,000 in cases where
Chrysler agreed to repurchase the vehicle. "There has been no
determination if these accounts are going to be unfrozen [by the
Bankruptcy Court] and the checks will be good. My feeling is they
will not be," the report quoted Mr. Simanovsky as saying.
LA Times reports that Representatives of consumer groups met with
the auto task force this week to discuss the bouncing check
complaints and other issues due to Chrysler's bankruptcy and the
restructuring of General Motors Corp. "They were open to
listening to us, but I do think that the consumer is not a focus
of the auto task force at this point," LA Times quoted Linda
Sherry of consumer advocacy group Consumer Action, as saying.
Union to Sell Stake to Raise Money
Chris Isidore at CNNMoney.com relates that United Auto Workers
President Ron Gettelfinger said that the union wants to sell its
stake in Chrysler and GM quickly because he is more interested in
raising cash to cover retiree health care costs than having an
ownership stake in the companies.
According to CNNMoney.com, the UAW will receive a 55% stake in
Chrysler through its union trust fund once the Company emerges
from bankruptcy, while it will likely get up to 38% of GM's stock.
CNNMoney.com states that since the trust fund, and not individual
union members or the union itself, will own the stakes in GM and
Chrysler, the union won't push for major changes at either
Chrysler or GM. According to the report, the trust fund will name
one member of Chrysler's new board, even though it will have a
majority stake in the Company.
Citing experts, CNNMoney.com says that union leaders are worried
about being blamed if management of the automakers needs to make
additional plant closings or layoffs to be competitive.
About Chrysler LLC
Headquartered in Auburn Hills, Michigan, Chrysler LLC --
http://www.chrysler.com/-- manufactures 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.
In 2007, Cerberus Capital Management LP acquired an 80.1% stake in
Chrysler for $7.2 billion. Daimler AG kept a 19.9% stake.
Pursuant to the U.S. Government's Automotive Industry Financing
Program, the U.S. Department of the Treasury made emergency loans
to General Motors Corp., Chrysler Holding LLC, and Chrysler
Financial Services Americas LLC. The Treasury purchased senior
preferred stock from GMAC LLC. In exchange, Chrysler and GM
submitted restructuring plans to the Treasury on February 17,
2009. Upon submission, President Obama's Designee on the Auto
Industry determined that the restructuring plans did not meet the
threshold for long-term viability. However, on March 30, 2009,
both GM and Chrysler were granted extensions to complete the
restructuring plans to comply with the requirements set forth
under the Automotive Industry Financing Program.
The U.S. Government told Chrysler March 31, 2009, it would provide
up to $6 billion in financing if (i) Chrysler and Fiat SpA could
complete a deal by the end of April -- on top of the $4 billion
Chrysler has already received -- and (ii) Chrysler would obtain
concessions from constituents to establish a viable out-of-court
plan.
On April 30, Chrysler LLC and 24 affiliates sought Chapter 11
protection from creditors (Bankr. S.D. N.Y (Mega-case), Lead Case
No. 09-50002). U.S. President Barack Obama said that Chrysler had
to file for bankruptcy after the automaker's smaller lenders,
including hedge funds that he didn't name -- "a small group of
speculators" -- refused to make the concessions agreed to by the
Company's major debt holders and workers.
In connection with the bankruptcy filing, Chrysler reached an
agreement with Fiat SpA, the U.S. and Canadian governments and
other key constituents regarding a transaction under Section 363
of the Bankruptcy Code that would effect an alliance between
Chrysler and Italian automobile manufacturer Fiat.
Chrysler has hired Jones Day, as lead counsel; Togut Segal & Segal
LLP, as conflicts counsel; Capstone Advisory Group LLC, and
Greenhill & Co. LLC, for financial advisory services; and Epiq
Bankruptcy Solutions LLC, as its claims agent.
Chrysler says that as of December 31, 2008, it had $39,336,000,000
in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion
in cash at that time.
Bankruptcy Creditors' Service, Inc., publishes Chrysler Bankruptcy
News. The newsletter tracks the Chapter 11 proceedings of
Chrysler LLC and its debtor-affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
CHRYSLER LLC: No Superpriority for Professionals' Fees
------------------------------------------------------
Chrysler LLC withdrew its request that Jones Day's and Capstone
Advisory Group, LLC's "fees and expenses incurred in its
representation of the [automaker be] granted superpriority status,
pursuant to section 364(c)(1) of the Bankruptcy Code" after the
Honorable Arthur J. Gonzalez signaled at Wednesday's hearing that
he would not be inclined to approve that unusual provision absent
evidence that no other competent law firm or financial advisor
would represent Chrysler in its Chapter 11 restructuring on normal
payment terms.
Chrysler's unusual requests to accord superpriority administrative
expense claim status to fees and expenses incurred by Jones Day
and Capstone were previously covered in the Troubled Company
Reporter on May 4 and 12, 2009.
Neither Judge Gonzalez nor any other party-in-interest raised any
complaint about Jones Day's or Capstone's qualifications or
disinterestedness. The Judge's discomfort focused solely on the
issue of according superpriority administrative expense claim
status to Jones Day's and Capstone's fees and expenses under 11
U.S.C. Sec. 364(c)(1) -- something that appears to have never
happened in any chapter 11 case to date.
Juge Gonzalez entered orders on Wed., May 20, 2009 (Docs. 1311 and
1301) approving Jones Day's and Capstone's employment . . . but
without the superpriority administrative claims expense status
originally requested.
As a result, Jones Day and Capstone will share and share alike
with all other professionals representing Chrysler and its
creditors' committee. If Chrysler's estate is administratively
insolvent, Jones Day, Capstone and all other professionals
employed and retained by Chrysler and its creditors' committee may
receive less than 100 cents-on-the-dollar for their services.
Court records suggest that Jones Day collected less than 100
cents-on-the-dollar in Levitz's Furniture's second chapter 11
filing (Bankr. S.D.N.Y. Case No. 07-13532).
CMP SUSQUEHANNA: Bank Debt Trades at 52% Discount
-------------------------------------------------
Participations in a syndicated loan under which CMP Susquehanna
Corp. is a borrower traded in the secondary market at 47.63 cents-
on-the-dollar during the week ended May 15, 2009, according to
data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents an increase of 2.33 percentage
points from the previous week, the Journal relates. The loan
matures May 6, 2013. The Company pays 200 basis points above
LIBOR to borrow under the facility. The bank debt carries Moody's
Caa3 rating and S&P's CCC+ rating.
CMP Susquehanna Radio Holdings Corp. is the third-largest
privately owned radio broadcasting company in the United States
and is believed to be the 10th largest radio broadcasting company
overall in the United States based on 2008 revenues. The Company
owns 32 radio stations, of which it operates 23 FM and 9 AM
revenue generating stations in 9 metropolitan market in the United
States. The Company's headquarters are in Atlanta, Georgia.
The Company posted a net loss of $525.6 million on net revenues of
$203.4 million for the year ended December 31, 2008, compared to a
$185.2 million net loss on net revenues of $223.4 million for year
2007. The Company had $665.2 million in total assets and
$1.09 billion in total liabilities, resulting in $429.5 million in
stockholders' deficit.
Early in April, CMP Susquehanna completed an exchange offer for
the outstanding 9-7/8% Senior Subordinated Notes due 2104 of
subsidiary CMP Susquehanna Corp. CMPSC accepted for exchange all
$175,464,000 aggregate principal amount of Existing Notes that
were tendered for exchange prior to the early participation
premium deadline of 5:00 p.m., New York City time, on March 24,
2009. No additional Existing Notes were tendered for exchange
after the Early Participation Deadline but prior to the Expiration
Time. The Existing Notes accepted for exchange constituted 93.53%
of the total principal amount of Existing Notes outstanding at the
commencement of the exchange offer. As of April 6, 2009,
$12.1 million of the Existing Notes remain outstanding.
The Company and CMPSC offered to exchange all of the outstanding
Existing Notes held by eligible holders in exchange for (1) up to
$15 million aggregate principal amount of Variable Rate Senior
Subordinated Secured Second Lien Notes due 2014 of CMPSC, (2) up
to $35 million in shares of Series A preferred stock of the
Company, and (3) warrants exercisable for shares of the Company's
common stock representing, in the aggregate, up to 40% of the
outstanding common stock on a fully diluted basis.
* * *
The Troubled Company Reporter said April 20, 2009, that Standard &
Poor's Ratings Services raised its corporate credit rating on
Atlanta, Georgia-based CMP Susquehanna Radio Holdings Corp. to
'CCC+' from 'SD'. The rating outlook is stable. Also, S&P raised
its issue-level rating on the company's subordinated debt to
'CCC-' from 'D'. In addition, S&P affirmed its 'CCC+' rating on
the company's secured credit facilities and removed them from
CreditWatch, where they were placed with negative implications
January 30, 2009.
CONGRESSIONAL HOTEL: Proposes McNamee Hosea as Bankruptcy Counsel
-----------------------------------------------------------------
Congressional Hotel Corp. asks the U.S. Bankruptcy Court for the
District of Maryland for permission to employ James M. Greenan,
Esq., and the law firm of McNamee Hosea Jernigan Kim Greenan &
Lynch, P.A., as counsel.
Greenan will:
a. prepare and file all necessary bankruptcy pleadings on
behalf of the Debtor;
b. negotiate with secured creditors regarding postpetition
payment;
c. provide representation with respect to adversary and other
proceedings in connection with the bankruptcy case; and
d. prepare the Debtor's disclosure statement and plan of
reorganization.
The hourly rates of Greenan personnel are:
James M. Greenan, Esq. $400
Partners $250
Junior Associates $190
Paralegal $85
To the best of the Debtor's knowledge, the firm is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Mr. Greenan can be reached at:
McNamee Hosea Jernigan Kim Greenan & Lynch, P.A.
6411 Ivy Lane, Suite 200
Greenbelt, MD 20770
Tel: (301) 441-2420
About Congressional Hotel Corp.
Congressional Hotel Corp. owns and operates The Legacy Hotel &
Meeting Centre, formerly known as The Ramada Inn, which is in
Rockville, Maryland. Congressional Hotel filed for Chapter 11 on
May 3, 2009 (Bankr. D. Md. Case No. 09-17901). James Greenan,
Esq., at McNamee Hosea, represents the Debtor in its restructuring
efforts. The Debtor's assets and debts both range from
$10 million to $50 million.
CPG INTERNATIONAL: Moody's Cuts Corporate Family Rating to 'B3'
---------------------------------------------------------------
Moody's Investors Service has lowered the corporate family rating
of CPG International I Inc. to B3 from B2. In addition, the
ratings on the senior unsecured notes were lowered to Caa1 from
B3. The rating outlook is stable.
The downgrade reflects CPG's highly leveraged balance sheet and
Moody's view that end-market demand is unlikely to rebound
meaningfully over the next twelve months. Moody's expects sales
of AZEK brands to decline in 2009 given their reliance on the
depressed new residential construction and household remodeling
sectors. While first quarter earnings benefited from rapid
declines in resin prices, Moody's believes that reduced volumes
and increased competition will result in EBITDA performance
trending downwards in 2009. Moody's expects earnings to remain
supportive of CPG's current debt load at the B3 level over the
intermediate term.
The stable outlook reflects Moody's view that CPG's good liquidity
profile, strong brands and a growing market acceptance is likely
to offset the declines in demand driven by difficult macro-
economic conditions in North America at the B3 rating level.
Moody's anticipates that CPG's rating will benefit from meaningful
cash generation and revolver availability over the next twelve
months. However, Moody's cautions that free cash flow generation
may decline in 2009 as working capital benefits reaped in 2008
will subside in a weak demand environment. The inability to
generate positive free cash flow could have negative ratings
ramifications given the company's high interest burden.
These ratings/assessments were downgraded:
-- Corporate Family Rating downgraded to B3 from B2;
-- Probability of Default Rating downgraded to B3 from B2; and
-- Senior unsecured notes downgraded to Caa1 (LGD4, 64%) from B3
(LGD4, 61%)
This rating was affirmed:
-- SGL-2 speculative grade liquidity rating.
The previous rating action on CPG was the change in rating outlook
to negative on August 21, 2008.
CPG, headquartered in Scranton, Pennsylvania, is a manufacturer
and fabricator of engineered and branded synthetic products
designed to replace wood and metal in a variety of building
materials and industrial applications. Sales for the twelve
months ended March 31, 2009 were $292 million.
CRUSADER ENERGY: Schedules $335MM in Assets and $353MM in Debts
---------------------------------------------------------------
Crusader Energy Group Inc., et al., filed with the U.S. Bankruptcy
Court for the Northern District of Texas its schedules of assets
and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ------------ ------------
A. Real Property $271,364,236
B. Personal Property $63,663,900
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $293,928,899
E. Creditors Holding
Unsecured Priority
Claims $237,099
F. Creditors Holding
Unsecured Non-priority
Claims $58,687,500
------------ -------------
TOTAL $335,028,136 $352,853,498
A copy of the Debtor's schedules of assets and liabilities is
available at http://bankrupt.com/misc/crusader.schedules.pdf
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. Crusader Energy and its affiliates filed for Chapter 11
protection on March 30, 2009 (Bankr. N.D. Tex. Lead Case No.
09-31797). The Debtors' financial condition as of September 30,
2008, showed total assets of $749,978,331 and total debts of
$325,839,980. Beth Lloyd, Esq., Richard H. London, Esq., and
William Louis Wallander, Esq., at Vinson & Elkins, L.L.P.,
represent the Debtors as counsel. Holland N. Oneil, Esq., Michael
S. Haynes, Esq., and Richard McCoy Roberson, Esq., at Gardere,
Wynne & Sewell, represent the Official Committee of Unsecured
Creditors as counsel.
CRUSADER ENERGY: May Use Lenders' Cash Collateral Until May 27
--------------------------------------------------------------
Crusader Energy Group Inc., et al., have approval to use cash
collateral until May 27, 2009, solely to pay the expenses in
accordance and in the amounts as set forth in a budget.
The U.S. Bankruptcy Court for the Northern District of Texas will
convene a hearing on May 27, at 9:00 a.m., prevailing Central
Time, to consider approval of the Debtors' further use of cash
collateral.
The Court has twice entered interim orders granting the cash
collateral use. The Court's April 28 interim order provided that
it would become a "final cash collateral" order if the prepetition
lenders provide their consent.
The Debtors' authorization to use cash collateral will immediately
and automatically terminate after two business days written notice
to the Debtors of the occurrence of any "Termination Event",
including the entry of an order, without the prior written consent
of the prepetition lenders, converting any of the Chapter 11 cases
to a case under Chapter 7 of the Bankruptcy Code or dismissing any
of the Chapter 11 cases, and the closing of a sale of
substantially all of the Debtors' assets pursuant to an order of
the Court.
Adequate Protection
The Debtors acknowledge that as of the Petition Date:
-- Crusader Energy Group is indebted to Union Bank of
California, N.A., as administrative agent for the lenders, in
the principal amount of $30,000,000 plus unpaid interest,
fees, and other charges, secured by first priority liens on
the property of Crusader and its subsidiaries.
-- Crusader is indebted to JPMorgan Chase Bank, N.A., as
administrative agent for certain lenders, in the principal
amount of $249,750,000, plus unpaid interest, fees, and other
charges, secured by second priority liens on the property of
Crusader.
As adequate protection to the prepetition lenders for the
aggregate diminution in value of their respective interests in
their collateral, they will be granted additional and replacement
security interests in all assets in which the respective lenders
held validly perfected liens as of the petition date and all of
the Debtors' now owned and after-acquired real and personal
property and assets.
The Debtors also owes money to creditors holding trade liens. As
adequate protection, each trade lien creditor will have valid and
perfected adequate protection liens in (i) all assets in which the
respective Trade Lien Creditor has a valid perfected security
interest as of the petition date or is entitled to perfect a valid
security interest after the petition date; and (ii) all of the
Debtors' now owned and after-acquired real and personal property
and assets.
Other secured creditors will be granted replacement, same priority
security interests in, and liens upon, all assets of the
applicable Debtors against whom said secured creditor held validly
perfected unavoidable liens as of the Petition Date.
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. Crusader Energy and its affiliates filed for Chapter 11
protection on March 30, 2009 (Bankr. N.D. Tex. Lead Case No. 09-
31797). The Debtors' financial condition as of September 30,
2008, showed total assets of $749,978,331 and total debts of
$325,839,980.
Beth Lloyd, Esq., Richard H. London, Esq., and William Louis
Wallander, Esq., at Vinson & Elkins, L.L.P., represent the Debtors
as counsel. Holland N. Oneil, Esq., Michael S. Haynes, Esq., and
Richard McCoy Roberson, Esq., at Gardere, Wynne & Sewell,
represent the Official Committee of Unsecured Creditors as
counsel.
DANA CORP: Bank Debt Trades at 59% Discount in Secondary Market
---------------------------------------------------------------
Participations in a syndicated loan under which Dana Corp. is a
borrower traded in the secondary market at 40.17 cents-on-the-
dollar during the week ended May 15, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 4.88 percentage points
from the previous week, the Journal relates. The loan matures
January 31, 2015. The Company pays 375 basis points above LIBOR
to borrow under the facility. The bank debt carries Moody's Ca
rating and S&P's CCC- rating.
Meanwhile, participations in a syndicated loan under which Lear
Corp. is a borrower traded in the secondary market at 56.56 cents-
on-the-dollar during the week ended May 15, 2009, an increase of
11.79 percentage points from the previous week. The loan matures
March 29, 2012. The Company pays 250 basis points above LIBOR to
borrow under the facility. The bank debt is not rated by either
Moody's or S&P.
Participations in a syndicated loan under which General Motors
Corp. is a borrower traded in the secondary market at 60.88 cents-
on-the-dollar during the week ended May 15, 2009, an increase of
1.73 percentage points from the previous week. The loan matures
November 27, 2013. The Company pays 275 basis points above LIBOR
to borrow under the facility. The bank debt carries Moody's Caa2
rating and S&P's CCC rating.
About Dana Corp.
Based in Toledo, Ohio, Dana Corporation -- http://www.dana.com/
-- designs and manufactures products for every major vehicle
producer in the world, and supplies drivetrain, chassis,
structural, and engine technologies to those companies. Dana
employs 46,000 people in 28 countries. Dana is focused on being
an essential partner to automotive, commercial, and off-highway
vehicle customers, which collectively produce more than
60 million vehicles annually.
Dana has facilities in China in the Asia-Pacific, Argentina in
the Latin-American regions and Italy in Europe.
The Company and its affiliates filed for chapter 11 protection
on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). As of
November 30, 2007, the Debtors listed $7,131,000,000 in total
assets and $7,665,000,000 in total debts resulting in a
shareholders' deficit of $534,000,000.
Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day,
in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq.,
Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in
Cleveland, Ohio, represented the Debtors. Henry S. Miller at
Miller Buckfire & Co., LLC, served as the Debtors' financial
advisor and investment banker. Ted Stenger from AlixPartners
served as Dana's Chief Restructuring Officer.
Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel
LLP, represented the Official Committee of Unsecured Creditors.
Fried, Frank, Harris, Shriver & Jacobson, LLP, served as counsel
to the Official Committee of Equity Security Holders. Stahl
Cowen Crowley, LLC, served as counsel to the Official Committee
of Non-Union Retirees.
The Debtors filed their Joint Plan of Reorganization on Aug. 31,
2007. On October 23, 2007, the Court approved the adequacy of the
Disclosure Statement explaining their Plan. Judge Burton Lifland
of the U.S. Bankruptcy Court for the Southern District of New York
entered an order confirming the Third Amended Joint Plan of
Reorganization of the Debtors on December 26, 2007.
The Debtors' Third Amended Joint Plan of Reorganization was deemed
effective as of January 31, 2008. Dana Corp., starting on
the Plan Effective Date, operated as Dana Holding Corporation.
(Dana Corporation Bankruptcy News; Bankruptcy Creditors' Service
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
* * *
As reported by the TCR on Jan. 15, 2009, Standard & Poor's Ratings
Services lowered its ratings on Dana Holding Corp., including the
corporate credit rating, which was lowered to 'B' from 'B+'. The
ratings were also removed from CreditWatch, where they had been
placed with negative implications on Nov. 13, 2008. The outlook
is negative.
"The downgrade reflects our view that very weak market conditions
in most of its business segments in 2009 will hinder the company's
post-bankruptcy restructuring efforts," said Standard & Poor's
credit analyst Nancy Messer. "We expect revenues to be reduced by
weak auto sales and production in North America, weak auto sales
in Europe, and the U.S. recession, which has stalled the recovery
of commercial truck sales. Lacking an expanding revenue base, S&P
believes the benefit from Dana's ongoing initiative to optimize
its manufacturing footprint will fall short of S&P's previous
near-term expectations," she continued. For example, for the last
three months of 2008, the seasonally adjusted annual rate of
light-vehicle sales in the U.S. was below 11 million units, and
S&P expects sales in 2009 to be 10 million units, 24% below 2008
actual sales.
DEVELOPERS DIVERSIFIED: Fitch Cuts Issuer Default Rating to 'BB'
----------------------------------------------------------------
Fitch Ratings downgraded Developers Diversified Realty
Corporation's Issuer Default Rating to 'BB' with a Negative Rating
Outlook.
The rating actions centered on Fitch's view that DDR's borrowing
capacity under its unsecured revolving credit facilities,
unencumbered asset covenant compliance levels, and dependence upon
asset sales and secured debt refinancings are more consistent with
a 'BB' rating.
Fitch stated in its rating action in March that DDR's ratings
could come under further pressure if the company's revolver
availability remained limited. While DDR had approximately $1.027
billion in borrowings outstanding under its $1.325 billion
unsecured credit facilities as of Dec. 31, 2008, it had $1.251
billion in borrowings outstanding under these facilities as of
March 31, 2009. Moreover, while Fitch's rating action in March
took into account the fact that DDR used borrowings under its
unsecured credit facilities to repay unsecured notes that matured
in January 2009, Fitch also believed that asset sales and the
reduction in DDR's common stock dividend would improve the
company's liquidity.
However, Fitch calculates that DDR's sources of liquidity (cash,
availability under the company's $1.325 billion unsecured credit
facilities, retained cash flows from operations, capital raised
through transactions with the Otto family, and other secured debt
refinancings that have been executed subsequent to March 31, 2009)
less uses of liquidity (prorata consolidated and unconsolidated
debt maturities and recurring capital expenditures) result in a
liquidity shortfall of nearly $400 million from March 31, 2009
through Dec. 31, 2010. This shortfall, which is largely unchanged
from Fitch's most recent review of DDR in March, does not take
into account prospective asset sales or secured debt refinancings.
However, revolver capacity has weakened to the point where the
company is now primarily dependent upon retained cash flow, asset
sales and secured debt refinancings for liquidity.
Fitch acknowledges that Developers Diversified is focused on
improving its liquidity position, as evidenced by the company's
intention to distribute the majority of the dividend through the
issuance of new shares. DDR also sold over $67 million of assets
during first-quarter 2009 (1Q'09) at a weighted average cap rate
of 8% and currently has over $175 million of asset sales under
contract or subject to letter of intent, the majority of which is
under contract. In addition, DDR has successfully refinanced
certain secured debt maturities in recent months. DDR also
recently announced that the strategic review of Macquarie DDR
Trust may result in an asset swap with DDR and MDT that may reduce
a portion DDR's 2009-2010 debt maturities. While the timing of a
swap may be some time within the next few months, Fitch
anticipates that such a swap may improve DDR's liquidity position.
DDR also has certain restricted cash in its joint ventures that
may be utilized for contingent liquidity.
Fitch's rating action also takes into account DDR's credit
strengths, including the fact that the company's leverage has
improved during 1Q'09. During the first quarter, DDR repurchased
unsecured bonds at a discount, generating $72.6 million of gains.
DDR's debt-to-annualized recurring EBITDA ratio improved from
12.7x for 4Q'08 to 10.7x for 1Q2009. For the trailing twelve
months ended Mar. 31, 2009, debt-to-recurring EBITDA was 10.3x,
which is solid for a 'BB' rating.
One of DDR's other major credit strengths is that the company
continues to maintain a large pool of high-quality unencumbered
assets, including $5.6 billion in gross book value of unencumbered
properties as of March 31, 2009 as defined in DDR's unsecured
credit facilities agreements. Although DDR maintains a large
unencumbered pool, its unencumbered asset coverage ratio as
defined in these credit agreements was 1.67x (slightly exceeding
its 1.6x covenant requirement), compared with 1.63x as of Dec. 31,
2008. Fitch is concerned that in the event of weakening property
fundamentals, compliance levels may further deteriorate, weakening
financial flexibility.
In addition, DDR's fixed charge coverage ratio (defined as
recurring EBITDA less capital expenditures less straight-line
rents divided by interest expense, capitalized interest and
preferred dividends) was 1.7x for the trailing twelve months ended
March 31, 2009, which is solid for a 'BB' rating. Adjusted fixed
charge coverage (when adjusted for non-cash straight-line rent
adjustments, general and administrative expenses and convertible
debt-related interest expense, as well as operating cash received
from joint ventures) was 1.9x for the trailing twelve months ended
March 31, 2009. DDR's geographically diversified portfolio as of
March 31, 2009 included 701 high-quality shopping centers and
other retail assets, thus providing downside protection to
unsecured bondholders. Developers Diversified also has a strong
management team and granular tenant roster.
The two notch differential between DDR's IDR and its preferred
stock is consistent with Fitch's criteria for corporate entities
with an IDR of 'BB'. The differential further reflects the fact
that DDR's preferred stock does not contain covenant protections
comparable to those within indentures governing DDR's unsecured
debt. In addition, based on Fitch's criteria report concerning
'Equity Credit for Hybrids & Other Capital Securities,' DDR's
preferred stock is 75% equity-like and 25% debt-like since DDR's
preferred stock is perpetual and has no covenants, but has a
cumulative deferral option. Debt plus 25% of preferred stock-to-
recurring EBITDA and debt plus 25% of preferred stock-to-
undepreciated book capital were 10.5x and 59.3%, respectively, as
of March 31, 2009, compared with 10.3x and 57.9% excluding
preferred stock.
The Negative Outlook takes into account DDR's liquidity shortfall
and ongoing efforts to re-lease space recently vacated by
retailers that have filed for bankruptcy. The Negative Outlook
also reflects anticipated same-store net operating income to the
lower end of the 3% to 4% range in 2009, along with occupancy
declines to approximately 90%.
These factors may have a positive impact on the ratings:
-- If DDR improves its liquidity position by having a greater
borrowing capacity under its unsecured credit facilities in
the coming quarters;
-- If DDR's risk-adjusted capital ratio at a 'BB' rating
category stress level returns to 1.0x (as of Mar. 31, 2009,
DDR had a risk-adjusted capital ratio of 0.9x).
Conversely, these factors may place further pressure on DDR's
ratings:
-- If DDR's liquidity deficit worsens;
-- If unencumbered asset coverage of unsecured debt as defined
under DDR's credit agreements declines;
-- If DDR's fixed-charge coverage ratio were to sustain below
1.5x (for the trailing twelve months ended Mar. 31, 2009,
fixed charge coverage was 1.7x).
Developers Diversified is a real estate investment trust based in
Beachwood, Ohio in the business of acquiring, developing,
redeveloping, leasing and managing shopping centers and other
retail assets. As of March 31, 2009, DDR's 701-property portfolio
was situated across 45 states as well as Puerto Rico, Brazil,
Russia, and Canada. As of March 31, 2009, DDR had $10.2 billion
in undepreciated book assets and a total market capitalization of
approximately $6.6 billion.
DEX MEDIA EAST: Bank Debt Trades at 39% Off in Secondary Market
---------------------------------------------------------------
Participations in a syndicated loan under which Dex Media East LLC
is a borrower traded in the secondary market at 60.42 cents-on-
the-dollar during the week ended May 15, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 3.81 percentage points
from the previous week, the Journal relates. The loan matures
November 8, 2009. The Company pays 200 basis points above LIBOR
to borrow under the facility. The bank debt carries Moody's B1
rating and S&P's CCC- rating.
Dex Media East LLC is a subsidiary of Dex Media East, Inc., and an
indirect wholly owned subsidiary of Dex Media, which is a direct
wholly owned subsidiary of R.H. Donnelley Corporation. Dex Media
East is the exclusive publisher of the "official" yellow pages and
white pages directories for Qwest Corporation, the local exchange
carrier of Qwest Communications International Inc., in Colorado,
Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South
Dakota -- the Dex East States. Together with its parent, RHD, Dex
Media is one of the nation's largest Yellow Pages and online local
commercial search companies, based on revenue. During 2006, Dex
Media East's print and online solutions helped more than 200,000
national and local businesses in seven states reach consumers who
were actively seeking to purchase products and services. During
2006, Dex Media East published and distributed more than 23
million print directories. Two of its largest markets are
Albuquerque and Denver.
* * *
As reported by the Troubled Company Reporter on May 19, 2009,
Standard & Poor's Ratings Services lowered its corporate credit
rating on R.H. Donnelley Inc., Dex Media Inc., and Dex Media West
LLC to 'D' from 'CC'. S&P lowered its issue-level ratings to 'D'
from 'C' on these:
-- R.H. Donnelley Inc.'s 11.75% senior notes due 2015;
-- Dex Media Inc.'s 8% senior notes due 2013; and
-- Dex Media Inc.'s 9% senior notes due 2013;
S&P affirmed all of its other outstanding ratings on R.H.
Donnelley-related entities, including the 'CC' corporate credit
rating on Dex Media East LLC. The outlook on this rating is
negative.
DIRECTV HOLDINGS: Moody's Reviews 'Ba2' Corporate Family Rating
---------------------------------------------------------------
Moody's Investors Service placed DIRECTV Holdings, LLC's Ba2
Corporate Family Rating, Ba2 Probability of Default Rating, Baa3
senior secured bank credit facility and Ba3 senior unsecured notes
on review for possible upgrade. The review is prompted by Moody's
belief that DIRECTV may now target and sustain its current lower
leverage level as compared to the targeted 3.0x-to-3.5x debt-to-
EBITDA range that it had previously pledged to remain within and
which constrains current ratings. Moody's also believes that
there is now a lower probability of a significantly leveraging
event given that substantial economic ownership of DIRECTV by
Liberty Media would be eliminated and potential for a controlling
ownership position by Dr. John Malone should be significantly
reduced when the planned merger with Liberty Entertainment, Inc.
is completed after it is spun-off from Liberty Media.
While the review will largely focus on management's commitment to
sustain the company's currently stronger financial risk profile,
Moody's will also consider DIRECTV's ability to maintain and grow
its subscriber base, revenues and free cash flow in light of the
contracting U.S. economy and despite its competitive disadvantage
to cable operators and regional bell operating companies who can
offer consumers a one-stop-shop for triple play services (video,
high speed data and voice).
Moody's last commented on DIRECTV on May 4, 2009 when it said that
DIRECTV's ratings were unaffected by the planned merger with LEI,
albeit mainly in the context of a potential negative rating bias
due to the absorption of incremental debt in conjunction with the
transaction. Moody's last rating action on DIRECTV was an
affirmation of its Ba2 CFR and a change in its rating outlook to
stable from negative on May 7, 2008. Please see the credit
opinion posted to www.moodys.com for additional information on
DIRECTV's ratings.
DIRECTV'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 DIRECTV's core industry and DIRECTV's ratings are
believed to be comparable to those of other issuers of similar
credit risk.
DIRECTV Holdings LLC is a wholly-owned, U.S. operating company of
The DIRECTV Group, Inc. and is the largest direct-to-home digital
television service provider in the United States with 18.1 million
subscribers as of 3/31/2009. Annual revenues of DTVG and DIRECTV
approximate $19.7 billion and $17.3 billion, respectively. DTVG's
additional revenues are generated by its Latin American
operations.
DREIER LLP: Hearing on Proposed Distribution of Cash Today
----------------------------------------------------------
Sheila M. Gowan, the Chapter 11 trustee for Dreier LLP, reached a
stipulation with Dreier's official committee of unsecured
creditors and secured lender Wachovia Bank, N.A., regarding the
Chapter 11 trustee's use of cash collateral.
Wachovia Bank filed a proof of claim in excess of $29 million,
backed by a first lien, security interest in the Debtor's accounts
receivable. The claim has been reduced to $14.85 million pursuant
to prior agreements under which Wachovia was paid by funds posted
prepetition by the Debtor with the bank.
The parties previously signed a stipulation authorizing the
Chapter 11 Trustee to use cash collateral to pay salary and
benefits to the Debtor's employees on April 30, 2009. The
parties' new stipulation provides that:
1. The Chapter 11 Trustee will segregate or spend up to
$1,046,000 of its expected $1,938,369 cash on hand on these
terms:
a. Payments of up to $975,000 in fees and expense
collectively incurred by Diamond McCarthy LLP, DSI, and
Kestadt and Winters.
b. $21,000 in U.S. Trustee fees.
c. $25,000 in potential fees and expenses of Chapter 7
trustee in the event the case is converted to Chapter 7
liquidation.
d. $25,000 in expenses to liquidate the remaining furniture,
complete the move from 499 Park Avenue, and commence
storage of the A/R File Records and the A/R Electronic
Records.
2. The remainder of the Trustee funds will be paid as:
a. $350,000 paid to the Debtor's estate free and clear of
any Wachovia liens or claims.
b. The remainder paid to Wachovia in reduction of its claim.
3. The Trustee will assign to the Creditors Committee the right
to pursue and collect, including standing to litigate on
behalf of the Debtor's estate, with respect to each of the
Debtor's "hourly receivables." The Trustee will retain sole
responsibility to pursue and collect on the bankruptcy and
contingency fee receivables.
4. From the collection of Hourly Receivables, the Trustee will
make these distributions in this order of priority:
-- accrued and unpaid fees and expenses owing to
professionals retained by the Committee associated with
the matter being settled.
-- reimbursement of prior fees and expenses advanced by
Wachovia that are associated with the matter being
settled.
-- (a) With respect to the first $1,500,000 of Hourly AR
Proceeds net of amounts paid to the Committee's
professionals and Wachovia:
* 90% will be paid to Wachovia in reduction of its
claim; and
* 10% will be retained by the Debtor's estate free
and clear of any Wachovia liens or claims.
(b) With respect to any further Net Hourly AR Proceeds
collected:
* 90% will be paid to Wachovia in reduction of its
claim; and
* 10% will be retained by the Debtor's estate free
and clear of any Wachovia liens or claims.
5. From the collection of Bankruptcy Receivables, the Trustee
will make these distributions:
* 95% will be paid to Wachovia in reduction of its
claim; and
* 5% will be retained by the Debtor's estate free
and clear of any Wachovia liens or claims.
6. From the collection of Contingency Receivables, the Trustee
will make these distributions:
* 50% of the first $8 million will be paid to Wachovia
in reduction of its claim.
* 50% of the first $8 million will be retained by the
Debtors' estate free and clear of any Wachovia liens
or claims.
* 100% of the proceeds in excess of $8 million will be
paid to Wachovia in reduction of its claim.
The U.S. Bankruptcy Court for the Southern District of New York
will convene a hearing on May 21, at 10:00 a.m. to consider
approval of the Stipulation.
Farrell Reisenger Asserts Breach of Contract Claim
Hunton & Williams LLP, in a statement filed pursuant to Rule 2019
of the Federal Rules of Bankruptcy Procedure, said Jay K.
Reisinger, Esq.; Stephen S. Stallings, Esq.; and Thomas J.
Farrell, Esq., at Reisinger & Stallings, LLC, hold claims against
the Debtor. Farrell Reisenger filed proofs of claim in March
2009. The Claims arose from the Debtor's breach of employment
contracts with Farrell Reisenger. The claim is unliquidated.
Claims Against Mr. Dreier
According to Bloomberg, creditors of Dreier LLP are worried that
prosecutors' criminal forfeiture suit against Marc Dreier, the
firm's founder, will cut them out of recoveries if the government
distributes proceeds only to victims of the fraud.
The criminal case is U.S. v. Dreier, 08-mag-2676, U.S. District
Court, Southern District of New York (Manhattan).
About Dreier LLP
Marc Dreier founded New York-based law firm Dreier LLP --
http://www.dreierllp.com/-- in 1996.
On December 8, 2008, the U.S. Securities and Exchange Commission
filed a suit, alleging that Mr. Dreier made fraudulent offers and
sales of securities in several cities, selling fake promissory
notes to hedge and other private investment funds. The SEC
asserted that Mr. Dreier also distributed phony financial
statements and audit opinions, and recruited accomplices in
connection with that scheme. Mr. Dreier has been charged by the
U.S. government for conspiracy, securities fraud and wire fraud
before the U.S. District Court for the Southern District of New
York (Manhattan) (Case No. 09-cr-00085-JSR).
Dreier LLP filed for Chapter 11 on December 16, 2008 (Bankr. S.D.
N.Y., Case No. 08-15051). Judge Robert E. Gerber handles the
case. Stephen J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton
& Garrison LLP, has been retained as counsel. The Debtor listed
assets between $100 million and $500 million, and debts between
$10 million and $50 million in its filing.
Wachovia Bank National Association, Sheila M. Gowan as trustee for
Chapter 11 estate of Dreier LLP, and Steven J. Reisman as post-
confirmation representative of the bankruptcy estate of
360networks (USA) Inc. signed a petition that sent Mr. Dreier to
bankruptcy under Chapter 7 on January 26, 2009 (Bankr. S.D. N.Y.,
Case No. 09-10371).
EAGLE INSURANCE: Claims Bar Date vs Eagle Ins Extended to Sept 28
-----------------------------------------------------------------
On August 7, 2007, the Superior Court of New Jersey, Chancery
Division-Mercer County entered an order placing Eagle Insurance
Company and its subsidiaries, Newark Insurance Company, GSA
Insurance Company and National Consumer Insurance Company and its
subsidiaries in liquidation. The Commissioner of Banking and
Insurance was named as Liquidator. The Court found, pursuant to
N.J.S.A.17:30C-1 et seq., Eagle and its subsidiaries to be
insolvent and further transaction of business would be hazardous
to its subscribers and to the public.
Further, per order executed on January 23, 2009, the bar date for
the assertion of claims against Eagle Insurance Company and its
subsidiaries was extended from August 9, 2008, to September 28,
2009. All claims against Eagle and its subsidiaries must be
asserted no later than the amended bar date, in the filing form
established by the Commissioner, or said claims will be forever
barred.
Claimants must file a Proof of Claim form, with proper
documentation concerning the proof of loss, with Eagle and its
subsidiaries, for any actual or potential claims which they may
have against Eagle and its subsidiaries.
The insolvency office for Eagle and its subsidiaries mailed Proof
of Claim forms to all known claimants in accordance with available
company records during March 2009 and April 2009.
Policyholders, claimants and other persons having an interest in
Eagle Insurance Company and its subsidiaries who did not receive a
Proof of Claim form and need to file, may submit their request in
writing to:
Eagle Insurance Company and its Subsidiaries in Liquidation
P.O. Box 54
Cedar Knolls
New Jersey 07927-0554
or by way of email request to:
insolvencyoffice@njliq.org
A copy of the Order of Liquidation is available for downloading at
the State of New Jersey Department of Banking & Insurance Web site
at http://www.state.nj.us/dobi/finesolv.htm
Eagle Insurance Company is a property and casualty insurance
carrier in Bethpage, New York. Eagle Insurance Company was
incorporated on March 24, 1992, in the State of Florida and is
currently not active.
EDDIE BAUER: Moody's Downgrades Corporate Family Rating to 'Ca'
---------------------------------------------------------------
Moody's Investors Service downgraded Eddie Bauer, Inc.'s
Probability of Default rating and Corporate Family rating to Ca
from Caa2. The rating outlook remains negative.
The downgrade reflects that the probability of default has
increased significantly given Eddie Bauer's ongoing efforts to
change its capital structure, particularly, its current
discussions with its convertible note holders to exchange their
securities for equity. Moody's would likely view such an exchange
to equity -- which would be outside of the notes' original terms
and conditions -- as a distressed exchange and hence a Limited
Default. Should Eddie Bauer be unable to orchestrate an equity
infusion into the company, it faces steep, non-cash fees and
penalties imposed by its bank lenders that would increase its
debt. This too increases the company's probability of default
over the near to intermediate term.
These ratings are downgraded:
-- Corporate Family rating to Ca from Caa2,
-- Probability of Default rating to Ca from Caa2,
-- $225 million senior secured term loan to Ca (LGD3, 48%) from
Caa2 (LGD4, 53%)
The Ca probability of default rating primarily reflects Moody's
opinion that Eddie Bauer is highly likely to default over the near
to intermediate term. Such a default could occur through either
the exchange of its senior unsecured convertible notes for equity
or by the need to renegotiate its revolving credit facility
expiration and its term loan covenants with its bank lenders prior
to the first quarter of 2010. Should the company be unable to
orchestrate an equity infusion, it will be put in the precarious
situation of needing to renegotiate its revolving credit facility
and obtaining covenant relief while being unable to meet capital
infusion requirement required by its banks. Moody's expects that
Eddie Bauer will be unable to meet its financial covenants in the
first quarter of 2010 given expectations for weak performance and
the higher interest expense on the term loan facility. Positive
consideration was given to Eddie Bauer's well-recognized brand
name and its multi-channel distribution.
The negative outlook reflects the likelihood for further
downgrades should Eddie Bauer exchange its convertible notes to
equity as Moody's would consider this event a distressed exchange.
In addition, the negative outlook reflects the refinancing risk
the company faces given its revolver expiration in June 2010.
The last rating action on Eddie Bauer was on February 25, 2009
when its Probability of Default rating was downgraded to Caa2 from
B3.
Eddie Bauer, Inc. with headquarters in Bellevue, Washington, is a
multi-channel specialty retailer that sells casual apparel and
accessories. The company offers its products through its 251
retail and 119 outlet stores in the U.S. and Canada along with its
catalogs and e-commerce sites. In addition, the company
participates in a joint venture partnership in Japan and has
licensing agreements across a variety of product categories.
Revenues are about $1.0 billion.
EUROFRESH INC: Chapter 11 Filing Cues Moody's Rating Cut to 'D'
---------------------------------------------------------------
Moody's Investors Service downgraded the probability of default
rating of Eurofresh, Inc. to D from Ca following the filing of a
voluntary petition for protection under Chapter 11 of the U.S.
Bankruptcy Code by Eurofresh and its subsidiary. Moody's affirmed
the company's subordinated debt rating and confirmed the company's
other ratings, including its Ca corporate family rating. The
rating outlook is stable. The rating action concludes Moody's
review for possible downgrade begun on March 5, 2009. Moody's
expects to withdraw Eurofresh's ratings shortly.
Rating downgraded:
-- Probability of default rating to D from Ca
Ratings confirmed and certain LGD assessments revised:
-- Corporate family rating at Ca
-- $170 million senior unsecured discount notes due 2013 at Ca;
to LGD4/58% from LGD3/ 40%
Rating affirmed, with LGD assessments revised:
-- $44.17 million senior subordinated discount notes due 2014 at
C; to LGD 6/93% from LGD5/83%
Eurofresh did not make the January 2009 interest payment on its
senior notes due 2013, entering a grace period which was
subsequently extended. The company and a group of investors have
reached an agreement to recapitalize Eurofresh. As part of this
negotiated settlement, Eurofresh and its subsidiary Eurofresh
Produce, Ltd. filed under Chapter 11.
Moody's most recent rating action for Eurofresh on March 5, 2009
downgraded the company's corporate family and senior notes
ratings, affirmed its probability of default and subordinated
notes ratings, and put all ratings except that of the subordinated
notes under review for possible downgrade.
FANNIE MAE: Thomas Lund Resigns as Single-Family Mortgage Chief
---------------------------------------------------------------
James R. Hagerty at The Wall Street Journal reports that Fannie
Mae said that Thomas A. Lund has decided to resign as chief of the
Company's single-family mortgage business.
Mr. Lund wants to take time off but hopes to be involved again in
the financial services industry, WSJ relates, citing a Fannie Mae
spokesperson.
According to WSJ, Mr. Lund joined Fannie Mae in 1995. WSJ states
that Mr. Lund became chief of the single-family business in 2005
and led it during a period in which Fannie expanded its purchases
of riskier types of loans, leading to huge losses over the past
year.
WSJ, citing Fannie Mae, says that Karen Pallotta will succeed Mr.
Lund, effective June 1. The report states that Ms. Pallotta
joined Fannie in 1990 and is currently a senior vice president in
the single-family business.
About Fannie Mae
The Federal National Mortgage Association -- (FNMA) (NYSE: FNM) --
commonly known as Fannie Mae, is a shareholder-owned U.S.
government-sponsored enterprise. Fannie Mae has a federal charter
and operates in America's secondary mortgage market, providing
mortgage bankers and other lenders funds to lend to home buyers at
low rates.
Fannie Mae was created in 1938, under President Franklin D.
Roosevelt, at a time when millions of families could not become
homeowners, or risked losing their homes, for lack of a consistent
supply of mortgage funds across America. The government
established Fannie Mae to expand the flow of mortgage funds in all
communities, at all times, under all economic conditions, and to
help lower the costs to buy a home.
In 1968, Fannie Mae was re-chartered by the U.S. Congress as a
shareholder-owned company, funded solely with private capital
raised from investors on Wall Street and around the world.
Fannie Mae is the U.S. largest mortgage buyer, according to The
New York Times.
Conservatorship
As reported by the Troubled Company Reporter, the U.S. government
took direct responsibility for Fannie Mae and Freddie Mac, placing
the government sponsored enterprises under conservatorship on
September 7, 2008. James B. Lockhart, director of Federal Housing
Finance Agency, said that Fannie Mae and Freddie Mac share the
critical mission of providing stability and liquidity to the
housing market. Between them, the Enterprises have $5.4 trillion
of guaranteed mortgage-backed securities (MBS) and debt
outstanding, which is equal to the publicly held debt of the
United States. Among the key components of the conservatorship,
the FHFA, as conservator, assumed the power of the Board and
management.
FLUID ROUTING: Private Sale of Fluid Assets to YH Okayed
--------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware has
approved the private sale of certain assets associated with Fluid
Routing Solutions Inc., et al.'s manufacture of fluid handling
systems products to YH America South Carolina LLC.
The aggregate purchase price for the acquired assets payable at
the closing will be equal to (i)(A) $1,200,000 plus (B) the Final
Inventory Value plus (C) the Cash-in-Advance Inventory Value minus
(D) the amount of any Cure Payments made by Purchaser on behalf of
Sellers, and (ii) the assumption of the Assumed Obligations.
A full-text copy of the asset purchase agreement dated as of
May 4, 2009, among YH America South Carolina LLC, YH America, Inc.
and Carolina Fluid Handling Intermediate Holding Corp. is
available at http://bankrupt.com/misc/FluidRouting.YH.APA.pdf
About Fluid Routing
Headquartered in Rochester Hills, Michigan, Fluid Routing
Solutions Inc. now known as Carolina Fluid Handling, Inc. --
http://www.markivauto.com/-- makes automobile parts and
accessories. The Company has manufacturing facilities located in
Lexington, Tennessee; Big Rapids, Michigan; Oscala, Florida; and
Easley, South Carolina. The Company's Detroit facility closed in
2008. The Company had 1,039 employees before it filed for
bankruptcy.
Fluid Routing Solutions and three affiliates filed for Chapter 11
on February 6, 2009 (Bank. D. Del. Lead Case No. 09-10384). Judge
Christopher Sonchi handles the case.
Neil E. Herman, Esq., Kimberly A. Taylor, Esq., Oksana Lashko,
Esq., Kizzy L. Rosenblatt, Esq., Alexis L. Allen, Esq., Rachel
Jaffe Mauceri, Esq., and Luaren Hofmann, Esq., at Morgan Lewis &
Bockuis LLP, represent the Debtors as counsel. Michael R. Nestor,
Esq., and Kenneth J. Enos, Esq., at Young Conaway Stargatt &
Taylor LLP, represent the Debtors as Delaware counsel. Mesirow
Financial Interim Management, LLC, is the Debtors' restructuring
advisor. In its bankruptcy petition, Fluid Routing listed assets
of $10 million to $50 million and debts of $50 million to
$100 million.
The Debtors have sold, through a Court-sanctioned sale process,
their hose extrusion and fuel assembly service business to FRS
Holding Corp. for $11,000,000. Following the sale, Fluid Routing
Solutions changed its corporate name to Carolina Fluid Handling,
Inc.
FIRST INDUSTRIAL: Fitch Downgrades Issuer Default Rating to 'BB-'
-----------------------------------------------------------------
Fitch Ratings has downgraded these credit ratings of First
Industrial Realty Trust, Inc. and its operating partnership, First
Industrial, L.P.:
First Industrial Realty Trust, Inc.
-- Issuer Default Rating to 'BB-' from 'BBB-';
-- $275 million preferred stock to 'B' from 'BB+'.
First Industrial, L.P.
-- IDR to 'BB-' from 'BBB-';
-- $500 million unsecured revolving credit facility to 'BB-'
from 'BBB-';
-- $1.3 billion senior unsecured notes to 'BB-' from 'BBB-';
-- $200 million senior unsecured exchangeable notes to 'BB-'
from 'BBB-'.
The Rating Outlook is Negative.
The rating action revolves around the view that First Industrial's
earnings power has continued to weaken and will remain at weaker
levels for three reasons: first, the recession has had a negative
impact on tenant retention and occupancy in the company's
consolidated industrial property portfolio; secondly, earnings
from the company's joint venture portfolio has been diminished by
certain non-cash impairments; and third, the strength of company's
asset sale platform has subsided as capitalization rate
uncertainties linger and as the credit markets for potential
buyers of industrial properties remain dislocated. These factors
have placed pressure on the company's ability to meet certain
covenants in its credit agreements.
When revising the rating Outlook on First Industrial to Negative
from Stable in December 2008, Fitch cited First Industrial's
recurring EBITDA fixed-charge coverage ratio (defined as recurring
EBITDA excluding joint venture impairments less capital
expenditures and straight-line rents divided by interest expense,
capitalized interest and preferred dividends) as a major rating
factor. FR's fixed-charge coverage was 1.0 times (x) in 2008 and
1.1x for the trailing 12 months ended March 31, 2009. Adjusted
fixed-charge coverage, when also including net income from
discontinued operations, was 1.1x in 2008 and 1.2x for the TTM
ended March 31, 2009. Fitch expects that same-store net operating
income declines of 3%-5% in 2009 will pressure operating
performance and result in fixed-charge coverage weakening to a
level consistent with a 'BB-' IDR. While the calculations of
fixed-charge coverage within the covenant in FR's credit
agreements differs from Fitch's calculations in terms of the
treatment of joint venture income and recurring capital
expenditures, Fitch believes that FR's operating performance will
position the company closer to certain financial covenants, which
may weaken the company's financial flexibility.
Moreover, the occupancy rate for in-service gross leasable area
declined from 88.1% at Dec. 31, 2008 to 86% at March 31, 2009, and
occupancy is expected to weaken further throughout 2009. While
the 86% level includes all properties (including those currently
in lease-up), a major driver of the occupancy decline has been
weaker tenant retention levels. First Industrial's tenant
retention declined from 76.4% in fourth-quarter 2008 (4Q'08) to
69.4% in 1Q'09, and tenant retention is expected to continue
declining and approximate 55% for the remainder of 2009. In
addition, market fundamentals in FR's top market by rental income,
Detroit at 7.5% of total rental income for on-balance-sheet
properties, remain under stress.
With respect to JV earnings, while the $43 million in impairments
that First Industrial incurred in 4Q'08 were non-cash fair-value
adjustments driven by an unfavorable cap rate environment, such
impairments are indicative of the weakened earnings power of First
Industrial's JV platform. That being said, First Industrial
continues to generate asset management fees in connection with its
remaining joint ventures.
The rating action also reflects Fitch's view that FR's ability to
sell properties at gains, though not a central driver of FR's
creditworthiness, has weakened and is expected to remain weaker,
as gains on sale declined from $254.4 million in 2007 to $108
million for the 12 months ended March 31, 2009. Looking forward,
Fitch anticipates that First Industrial's asset sale volume will
remain at lower levels.
The 'BB-' IDR takes into account First Industrial's credit
strengths including the company's large unencumbered portfolio
representing 95.6% of total real estate as of March 31, 2009 and
adequate risk-adjusted capital ratio of 1.6x in the 'BB rating
category' stress environment. First Industrial's credit strengths
also include a staggered lease expiration schedule and granular
tenant roster including 2,051 in-service tenants as of March 31,
2009. The negative rating action is also offset by the
appointment of Bruce Duncan as Chief Executive Officer, who is
providing fresh direction to the company in a challenging
operating environment, which includes the company's reductions in
general and administrative expenses.
The two-notch differential between FR's IDR and its preferred
stock is consistent with Fitch's criteria for corporate entities
with an IDR of 'BB-' and further reflects the fact that FR's
preferred stock does not contain covenant protections comparable
to those within indentures governing senior FR's unsecured debt
obligations. In addition, based on Fitch's criteria report,
'Equity Credit for Hybrids & Other Capital Securities,' FR's
preferred stock is 75% equity-like and 25% debt-like, since FR's
preferred stock is perpetual and has no covenants, but has a
cumulative deferral option. Debt plus 25% of preferred stock-to-
recurring EBITDA and debt plus 25% of preferred stock-to-
undepreciated book capital were 11.2x and 59.7%, respectively, as
of March 31, 2009.
The Negative Outlook reflects the company's covenant compliance
levels, weak liquidity position and the likelihood that the
unencumbered pool will decrease during 2009. While First
Industrial will not pay a cash dividend in the near term and has
limited consolidated debt maturities in 2009-2010, Fitch
calculates that sources of liquidity excluding cash proceeds from
asset sales (cash, availability under FR's revolving credit
facility and retained cash flows from operating activities) less
uses of liquidity (debt maturities and recurring capital
expenditures) result in a liquidity shortfall of approximately $87
million from March 31, 2009 through Dec. 31, 2010. However, Fitch
anticipates that FR will no longer have a liquidity shortfall as
proceeds from expected secured debt transactions will be used to
fund the remaining $119 million of 5.25% unsecured bonds maturing
in June 2009. While Fitch anticipates that the unencumbered asset
pool will decrease to below 90% of total real estate as these
secured debt transactions are consummated, Fitch notes that the
company has no other unsecured bond maturities to address
thereafter until March 2011.
Going forward, these may result in positive momentum on the
ratings:
-- Fitch recurring fixed-charge coverage continuing to sustain
above 1.0x (for the TTM ended Mar. 31, 2009, Fitch recurring
fixed-charge coverage was 1.1x);
-- Unencumbered asset coverage, defined as unencumbered assets -
calculated from company reported unencumbered real estate as
a percentage of total real estate - divided by unsecured
debt, sustaining above 1.7x (as of March 31, 2009,
unencumbered asset coverage was 1.6x);
-- Debt-to-recurring EBITDA remaining below 10x (for the TTM
ended March 31, 2009, debt-to-recurring EBITDA was 11x).
These factors may result in negative momentum on the ratings:
-- A covenant breach under FR's credit agreements;
-- Fitch recurring fixed-charge coverage sustaining below 1.0x;
-- Unencumbered asset coverage sustaining below 1.6x;
-- Debt-to-recurring EBITDA sustaining above 12x.
Organized in 1993, First Industrial is an umbrella partnership
real estate investment trust that owns, manages, acquires, sells,
develops, and redevelops industrial real estate, including bulk
warehouses, light industrial facilities, R&D/Flex space, regional
warehouses and manufacturing facilities. As of March 31, 2009,
First Industrial had $3.7 billion in undepreciated book assets,
and a total market capitalization of $2.5 billion. As of March
31, 2009, FR owned 796 properties (including developments in
process) containing an aggregate of 70.8 million square feet of
gross leasable area.
FLYING J: May Sell Bakersfield Refinery in California
-----------------------------------------------------
Flying J, Inc., and its subsidiary Big West Oil LLC are reviewing
strategic alternatives regarding their Bakersfield Refinery in
California, which may result in the sale of all or part of the
plant, The Tucker reports.
Big West said in a statement that it has retained Deutsche Bank
Securities Inc. as its financial advisor to assist in this
process.
Citing Flying J, The Trucker relates that Big West "subsequently
invested significant capital in the refinery." The facility,
according to the report, had been owned over the years by Getty
Oil, Texaco, and Shell before being acquired by Big West in 2005.
The report says that Bakersfield Refinery was shut down in January
2009, after Flying J filed for bankruptcy.
Based in Ogden, Utah, Flying J Inc. -- http://www.flyingj.com/--
is engaged in the exploration and refining of petroleum products.
It also operates about 200 travel plazas in 41 states and six
Canadian provinces. The Company and six of its affiliates filed
for Chapter 11 protection on December 22, 2008 (Bankr. D. Del.
Lead Case No. 08-13384). Attorneys at Kirkland & Ellis LLP
represent the Debtors as counsel. Young, Conaway, Stargatt &
Taylor LLP is the Debtors' Delaware Counsel. Blackstone Advisory
Services L.P. is the Debtors' investment banker and financial
advisor. Epiq Bankruptcy Solutions LLC is the Debtors' notice,
claims and balloting agent. In its formal schedules submitted to
the Bankruptcy Court, Flying J listed assets of $1,433,724,226 and
debts of $640,958,656.
An official committee of unsecured creditors has been appointed in
the case. Pachulski Stang Ziehl & Jones LLP has been tapped as
counsel for the creditors' panel.
FOOTHILLS RESOURCES: Wants 4-Month Extension of Plan Period
-----------------------------------------------------------
Foothills Resources Inc. is seeking from the U.S. Bankruptcy Court
for the District of Delaware a four-month extension of its
exclusive period to file a Chapter 11 plan. Without an extension,
parties will have the right to file their own plan for Foothills
after June 11. Given the complexity of the business, Foothills
said it's not feasible to promulgate a plan in the first four
months of the bankruptcy reorganization. Foothills has an
agreement with the lender, Regiment Capital Special Situations
Fund III LP, for a five-month extension of a $2.5 million
financing facility that was to mature May 19.
Foothills Resources, Inc., is engaged in the acquisition,
exploration and development of oil and natural gas properties.
The company's operations are primarily through its wholly owned
subsidiaries, Foothills California, Inc., Foothills Texas, Inc.,
and Foothills Oklahoma, Inc.
On February 11, 2009, Foothills Resources and its wholly owned
subsidiaries, Foothills California, Foothills Oklahoma, and
Foothills Texas, filed voluntary petitions for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Lead Case No.
09-10452). Judge Christopher S. Sontchi handles the Chapter 11
cases. Akin Gump Strauss Hauer & Feld LLP is the Debtors' lead
bankruptcy counsel. Norman L. Pernick, Esq., and Patrick J.
Reilley, Esq., at Cole, Schotz, Meisel, Forman & Leonard,
represent the Debtors as Delaware counsel. The Garden City Group,
Inc., is the claims agent for the Debtors. Foothills Resources
listed assets of $89.5 million and debts totaling $78.8 million as
of Sept. 30, with $71.2 million owed to secured creditors on term
loan and revolving credit agreements.
GABRIEL CAPITAL: Merkin Steps Down; Fund Placed Into Receivership
-----------------------------------------------------------------
Liz Rappaport at The Wall Street Journal reports that J. Ezra
Merkin has agreed to New York Attorney General Andrew Cuomo's
demands to step down as manager of his hedge funds Ariel Fund
Limited, Ascot Partners, L.P., and Gabriel Capital, L.P., and
place them into receivership.
According to WSJ, Mr. Merkin funneled $2.4 billion from
universities and nonprofit organizations into Bernard Madoff's
firm. Mr. Cuomo charged Mr. Merkin with civil fraud in April,
claiming that the Mr. Merkin "betrayed hundreds of investors" by
repeatedly lying to them about how he invested their money, says
WSJ.
WSJ relates that attorneys from Mr. Cuomo's office presented the
agreement reached between Messrs. Cuomo and Merkin to Justice
Richard Lowe III in the New York State Supreme Court on Tuesday.
WSJ states that two receivers were named to manage Ariel Fund,
Ascot Partners, and Gabriel Capital. According to the report, one
of the receivers will be responsible for managing the remaining
money -- almost $1 billion -- in Gabriel Capital and Ariel Fund.
The other receiver, says the report, will supervise Ascot
Partners, whose entire $1.8 billion in assets were lost in Mr.
Madoff's Ponzi scheme.
Mr. Cuomo, according to WSJ, would submit a formal agreement next
week, giving time to New York University -- which also sued Mr.
Merkin -- to review the agreement.
Mr. Merkin's attorney Andrew Levander in a statement that his
client is working closely with Mr. Cuomo. Mr. Merkin has agreed
in principle to appoint receivers for the funds while he remains
available to consult regarding the wind-down, WSJ relates, citing
Mr. Levander.
Ariel Fund Limited, Ascot Partners, L.P., and Gabriel Capital,
L.P., are hedge funds owned by J. Ezra Merkin.
GATEHOUSE MEDIA: Bank Debt Trades at 77% Off in Secondary Market
----------------------------------------------------------------
Participations in a syndicated loan under which GateHouse Media is
a borrower traded in the secondary market at 22.04 cents-on-the-
dollar during the week ended May 15, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents a drop of 1.71 percentage points from
the previous week, the Journal relates. The loan matures
February 27, 2014. The Company pays 200 basis points above LIBOR
to borrow under the facility. The bank debt carries Moody's Caa1
rating and S&P's CCC rating.
About Gatehouse Media
GateHouse Media, Inc. -- http://www.gatehousemedia.com/--
headquartered in Fairport, New York, is one of the largest
publishers of locally based print and online media in the United
States as measured by its 97 daily publications. GateHouse Media
currently serves local audiences of more than 10 million per week
across 21 states through hundreds of community publications and
local Web sites.
GENERAL MOTORS: Bank Debt Trades at 39% Off in Secondary Market
---------------------------------------------------------------
Participations in a syndicated loan under which General Motors
Corp. is a borrower traded in the secondary market at 60.88 cents-
on-the-dollar during the week ended May 15, 2009, according to
data compiled by Loan Pricing Corp. and reported in The Wall
Street Journal. This represents an increase of 1.73 percentage
points from the previous week, the Journal relates. The loan
matures November 27, 2013. The Company pays 275 basis points
above LIBOR to borrow under the facility. The bank debt carries
Moody's Caa2 rating and S&P's CCC rating.
Meanwhile, participations in a syndicated loan under which Lear
Corp. is a borrower traded in the secondary market at 56.56 cents-
on-the-dollar during the week ended May 15, 2009, an increase of
11.79 percentage points from the previous week. The loan matures
March 29, 2012. The Company pays 250 basis points above LIBOR to
borrow under the facility. The bank debt is not rated by either
Moody's or S&P.
Participations in a syndicated loan under which Dana Corp. is a
borrower traded in the secondary market at 40.17 cents-on-the-
dollar during the week ended May 15, 2009, an increase of 4.88
percentage points from the previous week. The loan matures
January 31, 2015. The Company pays 375 basis points above LIBOR
to borrow under the facility. The bank debt carries Moody's Ca
rating and S&P's CCC- rating.
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 by the Troubled Company Reporter, GM reported net loss
of $6.0 billion, including special items, in the first quarter of
2009. This compares with a reported net loss of $3.3 billion in
the year-ago quarter. Excluding special items, the Company
reported an adjusted net loss of $5.9 billion in the first quarter
of 2009 compared to an adjusted net loss of $381 million in the
first quarter of 2008. As of March 31, 2009, GM had $82.2 billion
in total assets and $$172.8 billion in total liabilities,
resulting in $90.5 billion in stockholders' deficit.
On April 27, General Motors presented the U.S. Department of
Treasury with an updated plan as required by the loan agreement
signed by GM and the U.S. Treasury on December 31, 2008. The plan
addresses the key restructuring targets required by the loan
agreement, including a number of the critical elements of the plan
that was submitted to the U.S. government on December 2, 2008.
Among these are: U.S. market competitiveness; fuel economy and
emissions; competitive labor cost; and restructuring of the
company's unsecured debt. It also includes a timeline for
repayment of the Federal loans, and an analysis of the Company's
positive net present value.
The plan details the future reduction of GM's vehicle brands and
nameplates in the U.S., further consolidation in its workforce and
dealer network, accelerated capacity actions and enhanced
manufacturing competitiveness, while maintaining GM's strong
commitment to high-quality, fuel-efficient vehicles and advanced
propulsion technologies.
GM also launched a bond exchange offer for roughly $27 billion of
unsecured public debt. If successful, the bond exchange would
result in the conversion of a large majority of this debt to
equity.
GM is also in talks with the UAW to modify the terms of the
Voluntary Employee Benefit Association, and with the U.S. Treasury
regarding possible conversion of its debt to equity. The current
bond exchange offer is conditioned on the converting to equity of
at least 50% of GM's outstanding U.S. Treasury debt at June 1,
2009, and at least 50% of GM's future financial obligations to the
new VEBA. GM expects a debt reduction of at least $20 billion
between the two actions.
In total, the U.S. Treasury debt conversion, VEBA modification and
bond exchange could result in at least $44 billion in debt
reduction.
GM filed with the Securities and Exchange Commission a
registration statement related to its exchange offer. The filing
incorporates the revised Viability Plan. A full-text copy of the
filing is available at http://ResearchArchives.com/t/s?3c09
A full-text copy of GM's viability plan presented in February 2009
is available at http://researcharchives.com/t/s?39a4
Going Concern Doubt
Deloitte & Touche LLP, has said there is substantial doubt about
GM's ability to continue as a going concern after reviewing GM's
2008 financial report. Deloitte cited the Company's recurring
losses from operations, stockholders' deficit and failure to
generate sufficient cash flow to meet the Company's obligations
and sustain the its operations. It said GM's future is dependent
on the Company's ability to execute the Company's Viability Plan
successfully or otherwise address these matters. If the Company
fails to do so for any reason, the Company would 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.
Standard & Poor's Ratings Services on April 10 lowered its issue-
level rating on GM's $4.5 billion senior secured revolving credit
facility to 'CCC-' (one notch above the 'CC' corporate credit
rating on the company) from 'CCC'. It revised the recovery rating
on this facility to '2' from '1', indicating its view that lenders
can expect substantial (70% to 90%) recovery in the event of a
payment default. The corporate credit rating remains unchanged,
at 'CC', reflecting its view of the likelihood that GM will
default -- through either a bankruptcy or a distressed debt
exchange.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
GENERAL MOTORS: Opel Gets 3 Bids; Canadian Unit to Cut 245 Dealers
------------------------------------------------------------------
General Motors Corp.'s Adam Opel GmbH has received three bids for
the acquisition of a stake or the company as a whole, The
Associated Press reports, citing GM Europe spokesperson Chris
Preuss.
Mr. Preuss, according to The AP, confirmed that the bids had been
received but didn't identify who had filed them.
The Wall Street Journal relates that Fiat SpA has been negotiating
with GM for months about a potential merger with the Company's
European and Latin American operations. Fiat, says the report,
wants to integrate the operations into a global alliance with its
auto unit and Chrysler LLC. According to the report, Magna
International Inc. has also signaled its interest in GM Europe.
WSJ, citing a person familiar with the matter, states that RHJ
International also emerged as a suitor for GM Europe earlier this
month.
According to WSJ, the association representing Opel dealers in
Europe is also considering an investment in the company. WSJ says
that the European Opel Dealer Association endorsed on Friday a
plan to seek a minority stake of up to 20% by investing
EUR500 million.
After reviewing the bids, the government would try to draft its
plan by the end of the month, WSJ says, citing Labor Minister Olaf
Scholz. According to the report, Minister Scholz said, "I think
it makes sense that w get some clarity on what will happen in the
course of this week and the beginning of next week."
Citing Economy Ministry spokesperson Steffen Moritz, WSJ relates
that GM will make the final decision on Opel's fate, while the
German government's role is to consider whether and how to offer
state support to the chosen investor. Mr. Moritz, according to
WSJ, said that Commerzbank AG's DresdnerKleinwort unit will
collect the bids.
WSJ relates that interested parties will have to clarify the
future they envision for Opel.
German officials, WSJ states, said on Tuesday that Opel would
receive bridge loans to stay operational while the government
weighs the bids. The financing would be a partnership of federal
and state governments and state-controlled banks, WSJ says, citing
regional authorities and bank officials. WSJ states that Hendrik
Hering, economy minister for the Rhineland-Palatinate, said that
the state is willing to contribute EUR100 million in exchange for
assurances that the engine factory in Kaiserslautern will remain
open. WSJ quoted the minister as saying, "If Kaiserslautern is to
be closed, then we won't give any money, that's clear."
Opel, says WSJ, said that it will need EUR1 billion in fresh
capital over the next month.
GM Canada to Terminate 245 Dealerships
The Associated Press reports that GM Canadian is informing 245 or
42% of its 709 dealers that they will lose their franchises in
2010.
GM Canada, according to The AP, said that it is telling some
dealers that their sales and services agreements won't be renewed
when they expire in October 2010.
GM's Exchange Offer Registration Declared Effective
On May 15, 2009, the U.S. Securities and Exchange Commission
issued an order declaring effective GM's registration statement on
Form S-4 filed on April 27, 2009, regarding its exchange offers
for $27 billion of its unsecured public notes and related consent
solicitations. The effectiveness order is a regulatory
requirement for consummation of the exchange offers and does not
change the terms of the offer in any way.
The exchange offers and consent solicitations are being made to
holders of GM's outstanding unsecured notes solely upon the terms
and subject to the conditions set forth in the Registration
Statement on Form S-4 dated April 27, 2009, which includes a
combined prospectus and proxy statement and information in
accordance with the disclosure requirements of the tender offer
rules of the Securities and Exchange Commission (SEC) that
likewise is reflected in GM's Schedule TO dated April 27, 2009,
and the related letter of transmittal (or form of electronic
instruction notice, in the case of notes held through Euroclear or
Clearstream) (collectively, the Exchange Offer Documents).
A registration statement relating to the securities offered in the
exchange offers has been filed with, and declared effective by,
the SEC. The exchange offers won't be completed prior to their
expiration. The exchange offers and consent solicitations are not
being made to (nor will tenders be accepted from or on behalf of)
holders of notes in any jurisdiction where the offers or the
acceptance thereof would not be in compliance with the securities
or other laws of such jurisdiction.
The securities being offered in exchange for the notes are being
offered and will be issued outside the U.S. to holders who are
"non-U.S. qualified offerees." Offers to holders in the United
Kingdom, Austria, Belgium, France, Germany, Italy, Luxembourg, the
Netherlands, Spain, and Switzerland will be made only pursuant to
the prospectus dated April 27, 2009, including any documents
incorporated by reference into the prospectus, as approved by the
United Kingdom Listing Authority as competent authority under EU
Directive 2003/71/EC, which will incorporate the U.S. prospectus
included in the Exchange Offer Documents and will indicate on the
front cover thereof that it can be used for such offers. Holders
outside of these jurisdictions (and the U.S.) are authorized to
participate in the exchange offers and consent solicitations, as
described in the "Non-U.S. Offer Restrictions" section of the U.S.
prospectus included in the Exchange Offer Documents. In Canada,
the exchange offers will only be made to non-US qualified offerees
and only pursuant to the Canadian Offering Memorandum dated April
27, 2009, which incorporates the U.S. prospectus included in the
Exchange Offer Documents.
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 by the Troubled Company Reporter, GM reported net loss
of $6.0 billion, including special items, in the first quarter of
2009. This compares with a reported net loss of $3.3 billion in
the year-ago quarter. Excluding special items, the Company
reported an adjusted net loss of $5.9 billion in the first quarter
of 2009 compared to an adjusted net loss of $381 million in the
first quarter of 2008. As of March 31, 2009, GM had $82.2 billion
in total assets and $$172.8 billion in total liabilities,
resulting in $90.5 billion in stockholders' deficit.
On April 27, General Motors presented the U.S. Department of
Treasury with an updated plan as required by the loan agreement
signed by GM and the U.S. Treasury on December 31, 2008. The plan
addresses the key restructuring targets required by the loan
agreement, including a number of the critical elements of the plan
that was submitted to the U.S. government on December 2, 2008.
Among these are: U.S. market competitiveness; fuel economy and
emissions; competitive labor cost; and restructuring of the
company's unsecured debt. It also includes a timeline for
repayment of the Federal loans, and an analysis of the Company's
positive net present value.
The plan details the future reduction of GM's vehicle brands and
nameplates in the U.S., further consolidation in its workforce and
dealer network, accelerated capacity actions and enhanced
manufacturing competitiveness, while maintaining GM's strong
commitment to high-quality, fuel-efficient vehicles and advanced
propulsion technologies.
GM also launched a bond exchange offer for roughly $27 billion of
unsecured public debt. If successful, the bond exchange would
result in the conversion of a large majority of this debt to
equity.
GM is also in talks with the UAW to modify the terms of the
Voluntary Employee Benefit Association, and with the U.S. Treasury
regarding possible conversion of its debt to equity. The current
bond exchange offer is conditioned on the converting to equity of
at least 50% of GM's outstanding U.S. Treasury debt at June 1,
2009, and at least 50% of GM's future financial obligations to the
new VEBA. GM expects a debt reduction of at least $20 billion
between the two actions.
In total, the U.S. Treasury debt conversion, VEBA modification and
bond exchange could result in at least $44 billion in debt
reduction.
GM filed with the Securities and Exchange Commission a
registration statement related to its exchange offer. The filing
incorporates the revised Viability Plan. A full-text copy of the
filing is available at http://ResearchArchives.com/t/s?3c09
A full-text copy of GM's viability plan presented in February 2009
is available at http://researcharchives.com/t/s?39a4
Going Concern Doubt
Deloitte & Touche LLP, has said there is substantial doubt about
GM's ability to continue as a going concern after reviewing GM's
2008 financial report. Deloitte cited the Company's recurring
losses from operations, stockholders' deficit and failure to
generate sufficient cash flow to meet the Company's obligations
and sustain the its operations. It said GM's future is dependent
on the Company's ability to execute the Company's Viability Plan
successfully or otherwise address these matters. If the Company
fails to do so for any reason, the Company would 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.
Standard & Poor's Ratings Services on April 10 lowered its issue-
level rating on GM's $4.5 billion senior secured revolving credit
facility to 'CCC-' (one notch above the 'CC' corporate credit
rating on the company) from 'CCC'. It revised the recovery rating
on this facility to '2' from '1', indicating its view that lenders
can expect substantial (70% to 90%) recovery in the event of a
payment default. The corporate credit rating remains unchanged,
at 'CC', reflecting its view of the likelihood that GM will
default -- through either a bankruptcy or a distressed debt
exchange.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
GENERAL MOTORS: Sale of Healthy Assets to Govt. If Ch. 11 Filed
---------------------------------------------------------------
General Motors Corp.'s healthy assets will be quickly sold to a
new firm owned by the U.S. government if the Company files for
bankruptcy, Chelsea Emery and Tom Hals at Reuters report, citing a
person familiar with the matter. According to that person,
transaction will have these terms:
-- the U.S. Government would pay for the assets by assuming
GM's $6 billion of secured debt and forgiving the bulk of
the $15.4 billion of emergency loans that the U.S. Treasury
has provided to the Company.
-- the new GM is likely to distribute stock to the unions in
return for concessions on wages and benefits.
-- the U.S. Government would extend a credit line to new GM.
-- CEO Fritz Henderson will lead the new company. The board of
the new company would be established with the government's
approval.
-- the remaining assets of GM would stay in bankruptcy
protection to satisfy other outstanding claims.
According to Reuters, setting up a new company to buy the healthy
assets is aimed at bringing operations out of bankruptcy as
quickly as possible, as GM is concerned that consumers might not
be willing to make a major purchase from a bankrupt company for
fear that the company wouldn't honor warranties or provide
service.
Reuters reports that investors who hold GM's senior secured debt
said that they aren't aware of any talks and that they would
oppose having the debt moved with the healthy assets. GM couldn't
force the transfer of the secured debt without the agreement of
all the holders of that debt, Reuters relates, citing the
investors, who also opposed giving bondholders anything without
first paying in full the claims of senior secured lenders.
According to Reuters, a person familiar with the matter said that
GM will also likely take on some of the operations of Delphi Corp.
to ensure getting needed auto parts throughout its reorganization.
Citing the source, Reuters says that GM is negotiating terms with
Delphi's estate.
Ralph Nader Seeks Review of Bankruptcy Plan
Consumer advocate Ralph Nader said in a letter to Senator Chris
Dodd and Congressman Barney Frank that the Senate and House
banking committees should hold thorough hearings to protect
taxpayers' investments and seek answers to several questions,
including:
-- Is the task force right in pushing for elimination of as
many brands as it has demanded?
-- Is the task force asking for too many plants to close?
-- Do GM and Chrysler really need to close as many
dealerships as have been announced? Is the logic of
closing dealers to enable the remaining dealers to charge
higher prices; and if so, why is the government
facilitating such a move? Is it reasonable and fair for
GM to impose liability for disposing of unsold cars on
dealers with which it severs relations, as Chrysler has
apparently done?
-- Has the task force evaluated the social ripple effects on
suppliers, innovation, dealers, newspapers, banks, and
others that hold company stock and/or are company
creditors, and other unique harms that might stem from
bankruptcy?
-- Would a government-driven bankruptcy process comport with
the rights of owner-shareholders?
-- Why has the task force maintained the Bush administration-
negotiated obligation for unionized auto workers at GM and
Chrysler to accept wages comparable to those in non-
unionized Japanese company plants in the United States?
-- Is the task force obtaining guarantees that, after
restructuring with U.S. taxpayer financing, GM cars sold
in the United States be made in the United States? If
not, why not?
-- How will bankruptcy affect GM's overseas operations, with
special reference to China and GM corporate entanglements
with Chinese partners? Are they and their profits being
exempted from the restrictions and cutbacks imposed on
domestic operations? If there is such a disparity, is it
reasonable and unavoidable?
-- How will bankruptcy affect GM's obligations to parties
engaged in pending litigation in the courts with GM
regarding serious injuries suffered because of design or
product defects?
-- What guarantees is the task force obtaining to ensure that
the GM of the future invests in safer and more fuel
efficient vehicles, and what investments will the new
company make in ecologically sustainable technologies?
How will a potential bankruptcy filing affect, ignore or
preclude any such future investments and commitments?
Dealers at Risk If GM Files for Bankruptcy
Thomas Hartley at Denver Business Journal reports that GM dealers
who thought they had months to wind down their businesses after
being told that GM will drop them could face much speedier
shutdowns if the Company files for bankruptcy.
GM, says Business Journal, told 1,100 dealers last week that it
won't have their franchise agreements renewed after they expire in
2010. Citing experts, Business Journal states that dealers who
believed they escaped GM's initial cut could be at risk as well if
the Company goes bankrupt. The bankruptcy court might order the
dealer network reduced even further, according to Business
Journal.
Business Journal quoted Garry Graber -- a partner with law firm
Hodgson Russ LLC and chief of its bankruptcy, restructuring and
commercial litigation practice -- as saying, "Once a business
entity files for Chapter 11, its pre-bankruptcy agreements are all
subject to being canceled. That applies both to the dealer
agreement itself as well as a subsequent agreement that the dealer
agreements would be wound down or modified in some way. There is
nothing to stop them from expanding the list, or contracting it,
once they are in Chapter 11. But having said that, GM may or may
not do either."
One-third to one-half of the state's GM dealers would "face
bankruptcy if GM filed bankruptcy" due to cash-flow disruptions
between the Company and the dealer, Business Journal relates,
citing Tim Jackson of the Colorado Automobile Dealers Association.
Gov't-Imposed Fuel-Economy Goals Can Be Met, Says Henderson
Citing Mr. Henderson, The Wall Street Journal reports that GM can
meet the government's newly accelerated timetable for improving
vehicles' fuel efficiency. Mr. Henderon told CNBC that GM is
supportive of the new rules that President Barack Obama's
administration introduced on Monday to raise cars' mileage to an
average of 39 miles per gallon and trucks' mileage to 30 mpg by
2016, which is four years earlier than current federal law
requires.
About General Motors Corp.
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 by the Troubled Company Reporter, GM reported net loss
of US$6.0 billion, including special items, in the first quarter
of 2009. This compares with a reported net loss of US$3.3 billion
in the year-ago quarter. Excluding special items, the company
reported an adjusted net loss of US$5.9 billion in the first
quarter of 2009 compared to an adjusted net loss of US$381 million
in the first quarter of 2008. As of March 31, 2009, GM had
US$82.2 billion in total assets and US$$172.8 billion in total
liabilities, resulting in US$90.5 billion in stockholders'
deficit.
On April 27, General Motors Corp. presented the United States
Department of Treasury with an updated plan as required by the
loan agreement signed by GM and the U.S. Treasury on December 31,
2008. The plan addresses the key restructuring targets required
by the loan agreement, including a number of the critical elements
of the plan that was submitted to the U.S. government on
December 2, 2008. Among these are: U.S. market competitiveness;
fuel economy and emissions; competitive labor cost; and
restructuring of the company's unsecured debt. It also includes a
timeline for repayment of the Federal loans, and an analysis of
the company's positive net present value.
The plan details the future reduction of GM's vehicle brands and
nameplates in the U.S., further consolidation in its workforce and
dealer network, accelerated capacity actions and enhanced
manufacturing competitiveness, while maintaining GM's strong
commitment to high-quality, fuel-efficient vehicles and advanced
propulsion technologies.
GM also launched a bond exchange offer for roughlyUS$27 billion of
unsecured public debt. If successful, the bond exchange would
result in the conversion of a large majority of this debt to
equity.
GM is also in talks with the UAW to modify the terms of the
Voluntary Employee Benefit Association, and with the U.S. Treasury
regarding possible conversion of its debt to equity. The current
bond exchange offer is conditioned on the converting to equity of
at least 50% of GM's outstanding U.S. Treasury debt at June 1,
2009, and at least 50% of GM's future financial obligations to the
new VEBA. GM expects a debt reduction of at least US$20 billion
between the two actions.
In total, the U.S. Treasury debt conversion, VEBA modification and
bond exchange could result in at least US$44 billion in debt
reduction.
GM filed with the Securities and Exchange Commission a
registration statement related to its exchange offer. The filing
incorporates the revised Viability Plan. A full-text copy of the
filing is available at http://ResearchArchives.com/t/s?3c09
A full-text copy of GM's viability plan presented in February 2009
is available at http://researcharchives.com/t/s?39a4
Going Concern Doubt
Deloitte & Touche LLP, has said there is substantial doubt about
GM's ability to continue as a going concern after reviewing GM's
2008 financial report. Deloitte cited the Company's recurring
losses from operations, stockholders' deficit and failure to
generate sufficient cash flow to meet the Company's obligations
and sustain the its operations. It said GM's future is dependent
on the Company's ability to execute the Company's Viability Plan
successfully or otherwise address these matters. If the Company
fails to do so for any reason, the Company would 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.
Standard & Poor's Ratings Services on April 10 lowered its issue-
level rating on GM's US$4.5 billion senior secured revolving
credit facility to 'CCC-' (one notch above the 'CC' corporate
credit rating on the company) from 'CCC'. It revised the recovery
rating on this facility to '2' from '1', indicating its view that
lenders can expect substantial (70% to 90%) recovery in the event
of a payment default. The corporate credit rating remains
unchanged, at 'CC', reflecting its view of the likelihood that GM
will default -- through either a bankruptcy or a distressed debt
exchange.
Moody's Investors Service said February 18 that the risk of a
bankruptcy filing by GM and Chrysler remains high. The last
rating action on GM and Chrysler was a downgrade of their
Corporate Family Ratings to Ca on December 3, 2008.
GIBSON ENERGY: Moody's Assigns 'B1' Rating on $545 Mil. Notes
-------------------------------------------------------------
Moody's Investors Service assigned a first time B1 (LGD-3, 45%)
senior secured rating to Gibson Energy ULC's proposed US$545
million First Lien Notes issue. Gibson Energy ULC is a wholly-
owned subsidiary of Gibson Energy Holding ULC. Moody's also
assigned a B1 Corporate Family Rating and B1 Probability of
Default rating to Gibson Energy Holding ULC. The rating outlook
is stable.
Gibson's B1 Corporate Family Rating reflects its substantial
leverage, which will likely increase to cover growth capex and
ongoing acquisition activity, weak interest coverage, and the
company's small size and concentration of operations in one
primary geographic region in Western Canada. The rating is
supported by Gibson's diversified operations in several midstream
segments, solid market position in each of its principal business
areas, proximity and ability to service the oil sands industry,
experienced management team, and support of a financially capable
private equity sponsor.
The rating also considers the price and volume risks inherent in
the company's business segments, particularly with respect to the
marketing activities which expose the company to markets risks
resulting from movements in commodity prices between the time
volumes are purchased and the time they are sold.
Under Moody's global ratings methodology for midstream energy
companies and partnerships, Moody's expects Gibson's overall
performance to map to an indicated B1 rating category over the
next two years, which is consistent with the assigned rating.
The stable outlook reflects Gibson's steady margins and solid
market position in western Canada.
Assignments:
Issuer: Gibson Energy Holdings ULC
-- Probability of Default Rating, Assigned B1
-- Corporate Family Rating, Assigned B1
Issuer: Gibson Energy ULC
-- Senior Secured Regular Bond/Debenture, Assigned a range of 45
- LGD3 to B1
Gibson Energy Ltd. is a Calgary, Alberta based midstream energy
company engaged in the transportation, storage, blending,
processing, marketing and distribution of crude oil and related
products.
GMAC LLC: Will Get Over $7BB in Additional Gov't Bailout Funds
--------------------------------------------------------------
The U.S. Treasury Department will inject more than $7 billion into
GMAC LLC, the first installment of a new government aid package
that could reach $14 billion, Neil King Jr. and Deborah Solomon at
The Wall Street Journal report, citing people familiar with the
matter.
WSJ relates that the treasury already put $5 billion into GMAC in
December 2008. Citing people familiar with the matter, WSJ states
that the U.S. might end up investing less than the $14 billion
figure.
WSJ notes that due to the bailout, the government could end up
owning GMAC and General Motors Corp. within months. WSJ states
that as the GM plan being devised by the auto task force calls for
the government to emerge with a majority stake, the increasing
infusion of taxpayer money into GMAC could turn the government
into a majority shareholder in the Company.
According to WSJ, the money GMAC will receive from the government
would be used to firm up the Company's battered balance sheet and
let it continue making loans for car purchases at GM and Chrysler
LLC. WSJ reports that the Treasury and the Federal Reserve said
after completing stress tests of 19 financial institutions that
GMAC must increase its capital reserves by $11.5 billion.
WSJ relates that much of that money will be used to help GMAC
shoulder new lending responsibilities for Chrysler dealers and
consumers after Chrysler's bankruptcy filing in April. The
government, as part of the Chrysler reorganization, dissolved
Chrysler Financial and handed its business to GMAC, WSJ says.
According to the report, GMAC spokesperson Gina Proia said that
the Company was expecting government support for the Chrysler
financing. WSJ, citing analysts, states that GM and Chrysler
would fall apart without GMAC's revolving loans for their vast
fleet of dealers, as well as for consumer loans to purchase cars.
GMAC, WSJ relates, is revamping its board of directors and will be
issuing a report on June 8 on how it plans to bulk up its
reserves.
GMAC Financial Services -- http://www.gmacfs.com/-- formerly
General Motors Acceptance Corporation, is a bank holding company
with operations in North America, South America, Europe and Asia-
Pacific. GMAC specializes in automotive finance, real estate
finance, insurance, commercial finance and online banking. As of
December 31, 2008, the company had $189 billion in assets and
serviced 15 million customers around the world.
GMAC is the biggest lender to GM's 6,500 dealers nationwide, most
of which get the financing they need to operate and buy vehicle
inventory from the automaker, CNNMoney.com notes.
GMAC Financial Services is wholly owned by GMAC LLC. Cerberus
Capital Management LP led a group of investors that bought a 51%
stake in GMAC LLC from General Motors Corp. in December 2006 for
$14 billion.
On December 24, 2008, GMAC Financial Services' application to
become a bank holding company under the Bank Holding Company Act
of 1956, as amended, was approved by the Board of Governors of the
Federal Reserve System. In addition, GMAC Bank received approval
from the Utah Department of Financial Institutions to convert to a
state bank.
* * *
As reported in the Troubled Company Reporter on May 5, 2009,
Standard & Poor's Ratings Services maintains its CCC/Negative/C
rating on GMAC LLC despite the Company's announcement that it
entered into an agreement with Chrysler Financial Services
Americas LLC to provide future automotive financing products and
services to Chrysler dealers and customers.
GREENBRIER HOTEL: Court Dismisses Chapter 11 Bankruptcy Case
------------------------------------------------------------
Zinie Chen Sampson at The Associated Press reports that the Hon.
Kevin Huennekens of the U.S. Bankruptcy Court for the Eastern
District of Virginia has dismissed Greenbrier Hotel Corp.'s
Chapter 11 bankruptcy filing.
According to The AP, Greenbrier Hotel asked Judge Huennekens to
dismiss its Chapter 11 case after James Justice, who bought the
Company for $20.1 million, testified that his company, Justice
Family Group, had the financial means to make return the Company
to its former glory. Dismissing the case would let Greenbrier
Hotel's creditors to be paid in full immediately from a
$17 million escrow fund, the report states, citing Mr. Justice.
MetroNews relates that Justice Family struck new contract deals
with hundreds of Greenbrier Hotel employees before the case was
dismissed. MetroNews says that the workers aren't getting back
everything they once had, but a representative said that
Mr. Justice has restored some benefits in a new worker agreement
approved this week. "The contracts are certainly more favorable
than the ones we ratified on April 30th," MetroNews quoted United
Here Local 863 Secretary Treasurer Peter Bostic as saying. The
report says that the previous contracts were with bankrupt CSX and
Marriott, which had signed a tentative purchase agreement to
purchase Greenbrier Hotel earlier this year.
According to MetroNews, Mr. Bostic said, "These agreements, these
new agreements are still concessionary in nature from our previous
agreements so the reduction in costs is still there.... What Mr.
Justice has done is made these changes not as draconian as what we
had agreed to with CSX."
Based in White Sulphur Springs, West Virginia, Greenbrier Hotel
Corporation -- http://www.greenbrier.com/-- fka CSX Hotels, Inc.,
The White Sulphur Springs Co. is a wholly owned subsidiary of The
Greenbrier Resort and Management Corporation, which is wholly
owned by CSX Corporation.
Greenbrier Hotel and its affiliates filed for Chapter 11
protection on March 19, 2009, (Bankr. E. D. Va. Lead Case No.: 09-
31703) Dion W. Hayes, Esq. and Patrick L. Hayden, Esq. at
McGuireWoods LLP, represented the Debtors in their restructuring
efforts. The Debtors employed Huddleston Bolen LLP as corporate
counsel; Dinsmore & Shohl LLP as special labor counsel; Kurtzman
Carson Consultants LLC as claims agent. Greenbrier listed assets
of $50 million to $100 million and debts of $100 million to
$500 million in its bankruptcy petition.
HAWK CORPORATION: Weak Q1 Results Won't Affect Moody's 'B2' Rating
------------------------------------------------------------------
Moody's Investors Service said that the ratings of Hawk
Corporation -- including B2 Corporate Family Rating and negative
outlook -- are not impacted by its weak Q1-2009 operating
performance. Hawk's B2 CFR incorporates its anticipated adequate
liquidity profile and manageable debt level that should enable the
company to sustain some further decline in demand for its friction
products.
The last rating action on Hawk occurred on September 22, 2006 when
the rating on its senior unsecured notes was lowered to B3 from
B2.
Hawk Corporation is a leading supplier of friction products for
industrial, aircraft, defense, agricultural, heavy truck and
performance applications. Friction products include parts for
brakes and transmissions. The company generated total revenues of
approximately $248 million in the last twelve months ended March
31, 2009.
HAWKER BEECHCRAFT: Bank Debt Trades at 44% Off in Secondary Market
------------------------------------------------------------------
Participations in a syndicated loan under which Hawker Beechcraft
is a borrower traded in the secondary market at 55.22 cents-on-
the-dollar during the week ended May 15, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 1.67 percentage points
from the previous week, the Journal relates. The loan matures
March 26, 2014. The Company pays 200 basis points above LIBOR to
borrow under the facility. The bank debt carries Moody's B3
rating and S&P's B rating.
Hawker Beechcraft Acquisition Company, LLC, headquartered in
Wichita, Kansas, is a leading manufacturer of business jets,
turboprops and piston aircraft for corporations, governments and
individuals worldwide.
As reported by the Troubled Company Reporter on May 11, 2009,
Moody's Investors Service lowered Hawker Beechcraft's probability
of default rating to Ca from Caa2. At the same time, the
company's corporate family rating of Caa2, B3 rating on secured
bank facilities, Ca on subordinated debt and speculative grade
liquidity rating of SGL-3 were left unchanged. However,
instrument ratings covering Hawker Beechcraft's unsecured fixed
coupon notes were placed under review for possible downgrade, and
the rating on the unsecured PIK-election notes was lowered to Ca.
The actions follow announcement by the company of a tender offer
to use $100 million of cash to purchase portions of its
outstanding unsecured fixed coupon notes, unsecured PIK-election
notes and subordinated notes at substantial discounts to par
value. The tender would be financed from cash on hand which has
been supplemented by borrowings under the company's revolving
credit facility that is now fully drawn. The outlook is
developing and is contingent upon the outcome of the tender offer
and greater clarity on how the company resolves its "balance sheet
management plans".
On May 4, 2009 Hawker Beechcraft announced it would initiate a
tender offer to acquire portions of its unsecured and subordinated
notes at various prescribed prices (all at substantial discounts
to par value) supplemented by early response premiums. The tender
process follows open market purchases during the first quarter by
Hawker Beechcraft of the same collection of notes. This was
deemed by Moody's to be a distressed exchange. If the tender
transaction proceeds as structured, Moody's would also deem it to
be a distressed exchange, which constitutes an event of default
under Moody's definition of default. Given recent trading prices
of the securities and the consideration being offered, Moody's
believes a significant amount of securities will be tendered. The
designation of a distressed exchange along with the magnitude of
the implied discount to par on the notes leads to a revision of
the PDR to Ca.
HILVENTURES LP: Files Chapter 11 in Santa Ana, California
---------------------------------------------------------
HilVentures LP filed a Chapter 11 petition on May 14 before the
U.S. Bankruptcy Court for the Central District of California.
HilVentures LP operates as a Hilton Garden Inn in Palmdale,
California. The petition says assets and debt both exceed $10
million.
INN OF THE MOUNTAIN: Missed Payment Won't Affect 'Ca' Rating
------------------------------------------------------------
Inn of the Mountain Gods Resort and Casino's ratings are not
affected by the announcement that on May 15, 2009, the company did
not make the scheduled $12 million interest payment on the $200
million 12% senior unsecured notes due November 2010.
Moody's last rating action for IMGRC occurred on March 20, 2009
when the company's corporate family rating was downgraded to Ca
from Caa2.
IMGRC includes all of the gaming and resort enterprises of the
Mescalero Apache Tribe, a federally recognized Indian tribe
located in south-central New Mexico. IMGRC generates
approximately $119 million in annual net revenues.
ION MEDIA: Terms of Pre-Negotiated Plan with First Lien Lenders
---------------------------------------------------------------
Before filing for bankruptcy, ION Media Networks, Inc.,
negotiated terms of a Chapter 11 plan with certain holders of
first lien debt. The deal with holders of over 60% of its first
lien senior secured debt would extinguish all of its indebtedness
through a debt-to-equity conversion.
ION Media signed a Restructuring Support Agreement with Avenue
International Master, L.P., Black Diamond capital Management LLC,
The Canyon Value Realization Fund (Cayman), Ltd., and Trilogy
Porftolio Company LLC, and their related affiliates ("Initial
Consenting First Lien Lenders"), pursuant to which:
(1) Black Diamond and other Initial Consenting First Lien
Lenders and additional first lien lenders will provide
postpetition financing of $300,000,000, of which $150
million will consist of rolled-up prepetition debt.
(2) The Initial Consenting First Lien Lenders will sponsor a
Chapter 11 plan for ION Media, the terms of which were
negotiated by the parties prepetition.
(3) The RSA will be terminated if:
(i) the Company fails to obtain interim approval of the DIP
financing within three days following the petition
date, and if it fails to obtain final approval within
30 days of the petition date.
(ii) the Company fails to file the Plan and related
disclosure statement within 14 days of the petition
date.
(iii) The Disclosure Statement is not approved within 45 days
of the Petition Date.
(iv) The order confirming the Plan is not entered within 90
days after the Petition Date.
(v) The Plan will not have been consummated within 10
business days of the later to occur of the entry of the
Confirmation Order and the date that necessary
approvals from the FCC are obtained.
The salient terms of the Plan negotiated by the parties are:
* Recovery of
Claims and
Interests
Holders
- DIP Facility Claims All loans from the Consenting First
Lien Lenders will be converted to 85.7%
of the new common stock. Certain of
the lenders will have the option to
provide the Company will an exit credit
facility in an aggregate of
$10 million.
- Administrative,
Priority Tax, and
Other Priority
Claims On or after the effective date of the
Plan, each holder of these claims will
be paid in full in cash or otherwise
receive treatment consistent with 11
U.S.C. Sec. 1129(a)(9)
- First Lien Debt $150 million of the First Lien Debt
will be rolled-up into the DIP
Facility. With respect to the balance
of the First Lien Debt, holders will
receive their pro rata share of 14.3%
of the new common stock, subject to
dilution.
- Second Priority
Notes Claims Holders of these claims will receive
warrants to purchase 5$ of the new
common stock with a strike price
equivalent to $1 billion total
enterprise value. The warrants will
expire in five years.
- Other Secured
Claims All of these claims will be satisfied
by either (i) payment in full in cash,
(ii) reinstatement pursuant to Sec.
1124, or (iii) other recovery necessary
to satisfy Sec. 1129.
- Unsecured Claims Each holder of unsecured claims will
receive, on a pro rata basis, warrants
to purchase 5% of the new common stock
with a strike price equivalent to
$1.5 billion total enterprise value.
- Intercompany
claims All intercompany claims will be paid,
adjusted, reinstated or discharged to
the extent reasonably determined by the
Company, subject to the consent of the
Consenting First Lien Lenders.
- Section 510(b)
Claims Any holder of a claim under 11 U.S.C.
Sec. 510(b) will not receive any
distribution under the Plan
- Equity Interests All equity interests in the Debtors
will be extinguished. Prepetition, CIG
Media was the sole holder of ION's
outstanding common stock, which was not
listed on a stock exchange.
* Equity Incentive
Programs for
Directors and
Management Up to 10% of the new common stock will
be reserved for issuance as options,
equity, or equity-based grants in
connection with the reorganized
Debtors' management or director equity
incentive program
* Restructuring
Expenses The Company will pay in cash in full
any and all expenses incurred by (i)
Akin Gump Strauss Hauer & Feld LLP and
UBS Securities LLC, as counsel and
financial advisor to the informal
committee comprised of the Initial
Consenting Lenders and (ii) one counsel
for each of the Initial Consenting
First Lien Lenders, which will not
exceed $100,000 for each counsel and
$400,000 in the aggregate.
* Management
Agreements The Initial Consenting First Lien
lenders will negotiate in good faith a
new and market agreement with the
Company's Chief Executive Officer, and,
prior to the execution of that
contract, the Consenting First Lien
Lenders agree to honor existing
severance obligations under the CEO's
current management agreement.
* Exit Facility Reorganized ION will enter into a
permanent exit financing credit
facility in an amount of not more than
$10 million, to be provided by the
Initial Consenting First Lien Lenders
at their option.
* Avoidance
Actions Reorganized ION will retain all rights
to commence and pursue any causes of
action.
New York-based ION Media Networks, Inc. --
http://www.ionmedia.com/-- owns and operates the nation's largest
broadcast television station group and ION Television, which
reaches over 96 million U.S. television households via its
nationwide broadcast television, cable and satellite distribution
systems, and features popular TV series and movies from the award-
winning libraries of RHI Entertainment, CBS Television, NBC
Universal, Sony Pictures Television, Twentieth Television and
Warner Bros., among others. Using its digital multicasting
capability, the Company has launched several digital TV brands,
including qubo, a channel for children focusing on literacy and
values, and ION Life, a channel dedicated to active living and
personal growth. It also has launched Open Mobile Ventures
Corporation, a business unit focused on the research and
development of portable, mobile and out-of-home transmission
technology using over-the-air digital television spectrum.
Ion Media and more than 100 subsidiaries filed for Chapter 11 on
May 19, 2009 (Bankr. S. D. N.Y. Case No. 09-13124). Jonathan S.
Henes, Esq., at Kirkland & Ellis LLP, has been tapped as
bankruptcy counsel. Holland & Knight LLP is the corporate
counsel, and Moelis & Company LLC is the financial advisor. Ernst
& Young LLP has been also hired as tax advisor. Kurtzman Carson
Consultants LLP is the notice, claims and balloting agent. Ion
Media said it has $1,855,000,000 in assets and $1,936,000,000 in
liabilities as of April 30, 2009.
ION MEDIA: Case Summary & 50 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: ION Media Networks, Inc.
1330 Avenue of the Americas, 32nd Fl.
New York, NY 10019
Bankruptcy Case No.: 09-13125
Debtor-affiliates filing separate Chapter 11 petitions on
May 19, 2009:
Entity Case No.
------ --------
ION Media of New York, Inc. 09-13124
America 51, L.P. 09-13126
ION Media Akron License, Inc. 09-13127
ION Media Albany License, Inc. 09-13128
ION Media of Indianapolis, Inc. 09-13129
ION Media of Jacksonville, Inc. 09-13130
ION Media Atlanta License, Inc. 09-13131
ION Media of Kansas City, Inc. 09-13132
ION Media of Knoxville, Inc. 09-13133
ION Media Battle Creek License, Inc. 09-13134
ION Media of Lexington, Inc. 09-13135
ION Media of Los Angeles, Inc. 09-13136
ION Media Boston License, Inc. 09-13137
ION Media of Louisville, Inc. 09-13138
ION Media of Martinsburg, Inc. 09-13139
ION Media Brunswick License, Inc. 09-13140
ION Media of Memphis, Inc. 09-13141
ION Media Buffalo License, Inc. 09-13142
ION Media of Miami, Inc. 09-13143
ION Media Charleston License, Inc. 09-13144
ION Media of Milwaukee, Inc. 09-13145
ION Media of Minneapolis, Inc. 09-13146
ION Media Chicago License, Inc. 09-13147
ION Media of Nashville, Inc. 09-13148
ION Media Dallas License, Inc. 09-13149
ION Media of New Orleans, Inc. 09-13150
ION Media Denver License, Inc. 09-13151
ION Media of Norfolk, Inc. 09-13152
ION Media Des Moines License, Inc. 09-13153
ION Media of Oklahoma City, Inc. 09-13154
ION Media Entertainment, Inc. 09-13155
ION Media Greensboro License, Inc. 09-13156
ION Media of Orlando, Inc. 09-13157
ION Media of Philadelphia, Inc. 09-13158
ION Media of Phoenix, Inc. 09-13159
ION Media Greenville License, Inc. 09-13160
ION Media of Portland, Inc. 09-13161
ION Media of Providence, Inc. 09-13162
ION Media Hartford License, Inc. 09-13163
ION Media of Raleigh, Inc. 09-13164
ION Media Hawaii License, Inc. 09-13165
ION Media of Roanoke, Inc. 09-13166
ION Media Hits, Inc. 09-13167
ION Media Holdings, Inc. 09-13168
ION Media of Sacramento, Inc. 09-13169
ION Media Houston License, Inc. 09-13170
ION Media of Salt Lake City, Inc. 09-13171
Pollo 48, Inc. 09-13172
ION Media of San Antonio, Inc. 09-13173
ION Media Indianapolis License, Inc. 09-13174
ION Media of San Jose, Inc. 09-13175
ION Media of Scranton, Inc. 09-13176
ION Media Jacksonville License, Inc. 09-13177
ION Media of Seattle, Inc. 09-13178
ION Media of Spokane, Inc. 09-13179
ION Media Kansas City License, Inc. 09-13180
ION Media of Syracuse, Inc. 09-13181
ION Media Knoxville License, Inc. 09-13182
ION Media of Tampa, Inc. 09-13183
ION Media of Tulsa, Inc. 09-13184
ION Media Lexington License, Inc. 09-13185
ION Media of Washington, Inc. 09-13186
ION Media of Wausau, Inc. 09-13187
ION Media License Company, LLC 09-13188
ION Media of West Palm Beach, Inc. 09-13189
ION Media Oklahoma City License, Inc. 09-13190
ION Media Los Angeles License, Inc. 09-13191
ION Media Orlando License, Inc. 09-13192
ION Media LPTV, Inc. 09-13193
ION Media of Philadelphia License, Inc. 09-13194
ION Media Portland License, Inc. 09-13195
ION Media Management Company 09-13196
ION Media Publishing, Inc. 09-13197
ION Media Raleigh License, Inc. 09-13198
ION Media Martinsburg License, Inc. 09-13199
ION Media Sacramento License, Inc. 09-13200
ION Media Memphis License, Inc. 09-13201
ION Media Salt Lake City License, Inc. 09-13202
ION Media San Antonio License, Inc. 09-13203
ION Media San Jose License, Inc. 09-13204
ION Media Milwaukee License, Inc. 09-13205
ION Media Scranton License, Inc. 09-13206
ION Media Songs, Inc. 09-13207
ION Media Minneapolis License, Inc. 09-13208
ION Media Spokane License, Inc. 09-13209
ION Media New Orleans License, Inc. 09-13210
ION Media Syracuse License, Inc. 09-13211
ION Media Television, Inc. 09-13212
ION Media Washington License, Inc. 09-13213
Ion Media of Akron, Inc. 09-13214
ION Media Tulsa License, Inc. 09-13215
ION Media of Albany, Inc. 09-13216
ION Media Wausau License, Inc. 09-13218
ION Media West Palm Beach Holdings, Inc. 09-13219
ION Media of Atlanta, Inc. 09-13220
ION Media West Palm Beach License, Inc. 09-13221
ION Television Net, Inc. 09-13222
ION Media of Battle Creek, Inc. 09-13223
Ocean State Television, LLC 09-13224
Type of Business: ION Media is a U.S. broadcast television station
group. ION Media operates 60 full-power
broadcast television stations, including
stations in each of the top 20 U.S. markets and
39 of the top 50.
See http://www.ionmedia.tv/
Court: Southern District of New York (Manhattan)
Judge: James M. Peck
Debtor's General: Jonathan S. Henes, Esq.
Bankruptcy jhenes@kirkland.com
Counsel Kirkland & Ellis LLP
Citigroup Center
153 E. 53rd Street
New York, NY 10022-4675
Tel: ((212) 446-4927
Fax: ((212) 446-4900
Corporate Counsel: Holland & Knight LLP
195 Broadway, 24th Floor
New York, NY 10007
Tel: ((212) 513-3200
Fax: ((212) 385-9010
http://www.hklaw.com/
Financial Advisor: Moelis & Company LLC
245 Park Avenue, 32nd Floor
New York, NY 10167
Tel: ((212) 880-7300
Fax: ((212) 880-4260
http://www.moelis.com/
Tax Advisor: Ernst & Young LLP
http://www.ey.com/
Notice, Claims and
Balloting Agent: Kurtzman Carson Consultants LLP
2335 Alaska Avenue
El Segundo, CA 90245
Tel: ((866) 967-0678
http://www.kccllc.net/
Debtors' financial condition as consolidated with its domestic
affiliated debtors and non-debtors as of April 30, 2009:
Total Assets: $1,855,000,000
Total Debts: $1,936,000,000
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Cede & Co. series A $448,335,275
The Depository Trust mandatorily
Company, Cede & Co. convertible sr.
55 Water Street sub. notes due
New York, NY 10041 2013, including
Tel: (212) 855-1200 accrued interest
Fax: (212) 855-2350
CIG Media series B $149,266,522
131 Dearborn Street, 32nd Fl. mandatorily
Chicago, IL 60603 convertible sr.
Tel: (312) 395-2100 sub. notes due
Fax: (312) 977-0270 2013, including
accrued interest
CIG Media series A $84,658,107
131 Dearborn Street, 32nd Fl. mandatorily
Chicago, IL 60603 convertible sr.
Tel: (312) 395-2100 sub. notes due
Fax: (312) 977-0270 2013, including
accrued interest
NBCU series A $9,775,199
51 Madison Avenue mandatorily
Public Securities convertible sr.
New York, NY 10010 sub. notes due
Tel: (212) 447-4160 2013,
Fax: (212) 447-4122
New York Life Insurance series A $8,107,560
Annuity Corp. mandatorily
51 Madison Avenue convertible sr.
Public Securities sub. notes due
New York, NY 10010 2013
Tel: (212) 447-4160
Fax: (212) 447-4122
Highland Crusader Offshore series A $4,586,005
PTRS LP mandatorily
129 Front Street convertible sr.
Hamilton, Bermuda sub. notes due
Tel: (972) 628-4100 2013
Highland Crusader Offshore series A $2,306,308
Partners LP mandatorily
129 Front Street convertible sr.
Hamilton, Bermuda sub. notes due
Tel: (972) 628-4100 2013
State of Massachusetts Franchise Tax $1,558,214
P.O. Box 7025
Boston, MA 02204
Massachusetts Department
Of Revenue
Tel: (617) 887-6367
Fax: (617) 626-2330
Warner Bros. Domestic Trade Claim $1,556,217
Cable Distribution
4000 Warner Building
Bldg 160, 9th Floor
Burbank, CA 91522
Josie Posada
Tel: (818) 977-5368
Fax: (818) 977-4299
CBS Paramount Trade Claim $1,446,603
Domestic Television
6100 Wilshire Blvd
10th Floor
Los Angeles, CA 90048
Tel: (323) 634-3507
Fax: (323) 634-3541
SpectraSite Trade Claim $1,055,000
Communications Inc.
P.O. Box 11549
Phoenix, AZ 85061
Keith Foisy
Tel: (602) 274-5718
Fax: (781) 926-4755
Goldman Sachs & Co. series A $833,819
30 Hudson Street mandatorily
16th Floor convertible sr.
Jersey City, NJ 07302 sub. notes due
Tel: (917) 343-1469 2013
Pershing LLC notes $686,070
One Pershing Plaza
7th Floor
Jersey City, NJ 07399
Tel: (201) 413-2000
Fax: (201) 413-0934
Automotive Industries notes $576,577
Pension Trust
C/O The Bank of New
York
One Wall Street
6th Floor
New York, NY 10286
Tel: (212) 495-1784
Fax: (212) 495-2546
Twentieth Television Inc. trade claim $541,216
P.O. Box 900
ATTN: Legal Affairs
Beverly Hills, CA 90213
Stephanie
Tel: (310) 664-6914
Fax: (310) 369-1000
New York Life Account notes $505,613
C/O The Bank of New
York
One Wall Street
6th Floor
New York, NY 10286
Tel: (212) 495-1784
Fax: (212) 495-2546
Sheet Metal Workers of notes $416,909
Northern California,
C/O The Bank of New
York
One Wall Street
6th Floor
New York, NY 10286
Tel: (212) 495-1784
Fax: (212) 495-2546
Blue Ridge trade claim $323,508
Communications
P.O. BOX 215
Palmerton, PA 18071
Tel: (610) 826-2552
Fax: (610) 826-4060
Nielsen Media trade claim $269,088
Research, Inc.
770 Broadway
New York, NY 10003
Tel: (646) 654-8300
Fax: (213) 386-7316
American Tower trade claim $238,997
Corporation
501 Canal Boulevard
Suite E
Point Richmond, CA 94804
Tel: (781) 926-4665
(501) 236-3700
Fax: (781) 926-4755
NYLIM Institutional notes $212,890
High Yield Collective
Funds
C/O The Bank of New
York
One Wall Street
6th Floor
New York, NY 10286
Tel: (212) 495-1784
Fax: (212) 495-2546
Sony Pictures trade claim $202,917
Television, Inc.
Lox Box File 53771
Los Angeles, CA 90074
Eunice Cox
Tel: (310) 244-7391
(310) 244-8608
Fax: (310) 244-1288
Fremantle International trade claim $194,125
Distribution
1 Stephen St.
London, UK W1T1AL
Tel: 20-7691-6871
Fax: 20-7691-5025
CBS Paramount trade claim $175,000
Domestic Television
5555 Melrose Avenue
Hollywood, CA 90038
Tel: (310) 264-3585
Fax: (310) 264-3587
Universal City Studios trade claim $150,000
Productions, LLP
NBC Customer Financial
Services
Room 5130E
New York, NY 10112
State of Delaware Division franchise tax $131,975
of Corporations
P.O. Box 74072
Baltimore, MD 21274
Harris Corporation trade claim $131,099
1999 Broadway Suite 4000
Denver, CO 80202
Rose Behrens
Tel: (217) 221-7491
Fax: (217) 221-7096
1330 Acquisition Co. LLC trade claim $109,828
767 Fifth Avenue
21st Floor
New York, NY 10153
LaRhonda Griffin
Tel: (212) 554-5864
Fax: (212) 554-5804
The American Society trade claim $106,900
of Composers, Authors
and Publishers
One Lincoln Plaza
New York, NY 10133
Jill Kovalsky
Tel: (212) 621-6423
Fax: (212) 621-6055
Broadcast Music Inc. trade claim $98,482
10 Music Square E
Nashville, TN 37203
Tel: (615) 401-2950
Fax: (615) 401-2951
Ernst & Young, LLP trade claim $95,000
P.O. Box 96139
Chicago, IL 60693
Tel: (617) 266-2000
Empire State Building trade claim $87,568
350 Fifth Ave., Room 3210
New York, NY 10118
Patricia Silba
Tel: (212) 736-3100
Fax: (212) 967-6167
Covington & Burling LLP trade claim $84,300
1201 Pennsylvania Ave. NW
Washington, DC 20004
Tel: (202) 662-6000
Fax: (202) 662-6291
Pinellas County Tax property taxes $78,178
Collector
Attn: Diane Nelson, CFC
P.O. Box 1729
Clearwater, FL 33757
Qwest Communications trade claim $75,500
Corp.
P.O. Box 85023
Louisville, KY 40285
Tel: (800) 860-1020
Rachlin LLP trade claim $75,00
1 SE 3rd Avenue
10th Floor
Miami, FL 33131
Tel: (305) 377-4228
Fax: (305) 377-8331
233 Broadcast LLC trade claim $70,371
404 5th Avenue
4th Floor
New York, NY 10018
Dawn Dillard
Tel: (312) 875-1848
Fax: (312) 906-1118
State of Louisiana franchise tax $70,821
P.O. Box 201
Baton Rouge, LA 70821
Dow, Lohnes & Albertson trade claim $67,500
1200 New Hampshire Ave.
Suite 800
Washington, DC 20036
Tel: (202) 776-2000
Fax: (202) 776-2222
Richland Towers trade claim $65,172
400 N. Ashley Drive
Suite 3010
Tampa, FL 33602
Jill Niedhardt
Tel: (812) 286-4140
Fax: (813) 286-4130
TMS International LLC trade claim $60,000
116 Saucon View Drive
Bethlehem, PA 18015
Terri Santisi
Tel: (917) 593-0412
500 Clearlake Plaza trade claim $59,580
c/o Karl Corporation
500 Australian Ave S.
West Palm Beach, FL 33401
Clint Fowlkes
Tel: (561) 436-7365
Palm Beach County property taxes $55,128
Tax Collector
P.O. Box 3353
West Palm Beach, FL
33402-3353
Decisionmark Corp. trade claim $54,150
dba Titan TV Media
818 Dows Road S.E.
Suite 2000
Cedar Rapids, IA 52403-
7000
Mary Jane Rushford
Tel: (319) 365-5597
Fax: (319) 365-5694
MTC Services LLC trade claim $52,750
845 S Tremaine Ave
Los Angeles, CA 90005
Dan Hsieh
Tel: (323) 937-3266
Fax: (206-309-0889
Karavida, Inc. trade claim $50,000
330 McKinstry Road
Gardiner, NY 12525
BR Design Associates LLC trade claim $50,000
233 Spring Street, Suite 8
New York, NY 10013
Michael Rait
Tel: (212) 993-9000
Tel: (212) 993-9001
Cosentini Engineers trade claim $50,000
Two Pennsylvania Plaza
New York, NY 10121
Aldo Ciccotelli
Tel: ((212) 615-3600
Lehr Construction trade claim $50,000
LEHR Construction Corp.
Construction Manager
902 Broadway, 6th Floor
New York, NY 10010
Anthony Landoli Senior
Managing Principal
Tel: (212) 353-1160 Ext. 310
Fax: (646) 330-5570
The Debtors' list of five largest secured creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Avenue Capital certain assets $294,413,250
Management, LLC
535 Madison Avenue, 15th Floor
New York, NY 10022
Marc Lazry
Tel: (212) 878-3500
MacKay Shields LLC certain assets $93,085,878
9 West 57th Street, 33rd Floor
New York, NY 10019
Michael Synder
Tel: (212) 230-3936
AIG Global Investment Group certain assets $92,202,318
Inc
2929 Allen Parkway A37
Houston, TX 77019
Don McClachy
Tel: (713) 831-4342
Avenue Investments LP certain assets $77,304,998
535 Madison Avenue, 15th Floor
New York, NY 10022
Tel: (212) 878-3500
Black Diamond Capital certain assets $49,402,000
Management
100 N Field Drive, Suite 140
Lake Forest, IL 60045
Andy Cohen
Tel: (847) 615-9000
The petition was signed by Brandon Burgess, Chairman, President
and Chief Executive Officer of the company.
LAUREATE EDUCATION: Bank Debt Trades at 22% Discount
----------------------------------------------------
Participations in a syndicated loan under which Laureate Education
is a borrower traded in the secondary market at 77.85 cents-on-
the-dollar during the week ended May 15, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 2.65 percentage points
from the previous week, the Journal relates. The loan matures
August 13, 2014. The Company pays 325 basis points above LIBOR to
borrow under the facility. The bank debt carries Moody's B1
rating and S&P's B rating.
As reported by the Troubled Company Reporter on March 5, 2009,
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on Laureate Education Inc. and removed the ratings
from CreditWatch with negative implications, where they had been
placed on Dec. 5, 2008. The outlook is negative.
S&P also affirmed its issue-level rating on Laureate's secured
debt at 'B'. S&P revised the recovery rating on this debt to '4'
from '3'. The '4' recovery rating indicates S&P's expectation of
average (30%-50%) recovery for lenders in the event of a payment
default.
At the same time, S&P lowered the issue-level ratings on the
company's $260 million 10% senior unsecured notes and 10.25%
senior toggle notes due 2015 to 'CCC+' from 'B-'. S&P revised the
recovery rating on the notes to '6' from '5'. The '6' recovery
rating indicates S&P's expectation of negligible (0%-10%) recovery
in the event of a payment default.
LAZY DAYS: S&P Downgrades Corporate Credit Rating to 'SD'
---------------------------------------------------------
Standard & Poor's Ratings Services said it has lowered its
corporate credit rating on Seffner, Florida-based Lazy Days' R.V.
Center Inc. to 'SD' from 'CC' and lowered S&P's rating on the
company's unsecured debt to 'D' from 'C'. The ratings will be
withdrawn at the company's request.
Lazy Days did not make the interest payment due Nov. 17, 2008, on
its $137 million, 11.75% senior unsecured notes within the 30-day
grace period and has received a series of forbearances from
noteholders.
"The company has been discussing a financial restructuring with
the noteholders," said Standard & Poor's credit analyst Nancy
Messer. "A bankruptcy filing also is still possible," she
continued.
Although a nonpayment of interest on the notes after the grace
period would have also triggered the cross-default provisions
under Lazy Days' floorplan credit facility, the company has
received a series of forbearances from those lenders. The U.S.
recession has caused a sharp drop in sales of recreational
vehicles, pressuring Lazy Days' margins, earnings, and cash flow.
LEAR CORP: Bank Debt Trades at 43% Discount in Secondary Market
--------------------------------------------------------------
Participations in a syndicated loan under which Lear Corp. is a
borrower traded in the secondary market at 56.56 cents-on-the-
dollar during the week ended May 15, 2009, according to data
compiled by Loan Pricing Corp. and reported in The Wall Street
Journal. This represents an increase of 11.79 percentage points
from the previous week, the Journal relates. The loan matures
March 29, 2012. The Company pays 250 basis points above LIBOR to
borrow under the facility. The bank debt is not rated by either
Moody's or S&P.
Meanwhile, participations in a syndicated loan under which Dana
Corp. is a borrower traded in the secondary market at 40.17 cents-
on-the-dollar during the week ended May 15, 2009, an increase of
4.88 percentage points from the previous week. The loan matures
January 31, 2015. The Company pays 375 basis points above LIBOR
to borrow under the facility. The bank debt carries Moody's Ca
rating and S&P's CCC- rating.
Participations in a syndicated loan under which General Motors
Corp. is a borrower traded in the secondary market at 60.88 cents-
on-the-dollar during the week ended May 15, 2009, an increase of
1.73 percentage points from the previous week. The loan matures
November 27, 2013. The Company pays 275 basis points above LIBOR
to borrow under the facility. The bank debt carries Moody's Caa2
rating and S&P's CCC rating.
About Lear Corp.
Based in Southfield, Michigan, Lear Corporation --
http://www.lear.com/-- is one of the world's leading suppliers of
automotive seating systems, electrical distribution systems and
electronic products. The Company's products are designed,
engineered and manufactured by a diverse team of 80,000 employees
at 210 facilities in 36 countries. Lear is traded on the New York
Stock Exchange under the symbol [LEA].
* * *
Lear had approximately $1.2 billion in cash and cash equivalents
as of April 4, 2009, as compared to approximately $1.6 billion as
of December 31, 2008. The decline reflects negative free cash
flow in the first quarter, as well as the termination of an
accounts receivable factoring facility in Europe. Lear had total
assets of $6.4 billion, current liabilities of $4.4 billion and
long-term liabilities of $2.0 billion, resulting in $41.4 million
in stockholders' deficit at April 4, 2009.
In January, Moody's Investors Service lowered the Corporate Family
and Probability of Default ratings of Lear, to Caa2 from B3. In a
related action, the rating of the senior secured term loan was
lowered to Caa1 from B2, and the rating on the senior unsecured
notes was lowered to Caa2 from B3. The ratings remain on review
for further possible downgrade.
Standard & Poor's Ratings Services also lowered its corporate
credit rating on Lear to 'B-' from 'B'. At the same time, S&P
also lowered its issue-level ratings on the company's debt. The
ratings remain on CreditWatch, where they had been placed with
negative implications on Nov. 13, 2008.
LEHIGH COAL: Records $851,000 Net Income for Jan.-Feb.
------------------------------------------------------
Lehigh Coal & Navigation Co. recorded a net income of $851,000 on
revenue of $3.6 million for the first two months of 2009. The
Company generated a $425,000 net profit in February on revenue of
$2 million, Bloomberg's Bill Rochelle said.
Pottsville, Pennsylvania-based Lehigh Coal & Navigation Co. --
http://www.lcncoal.com/-- has been mining anthracite coal since
the late 1700s, with 8,000 acres of coal-producing properties.
Creditors filed an involuntary Chapter 11 petition against the
Company on July 15, 2008 (Bankr. M.D. Penn. Case No. 08-51957).
The involuntary filing was the third filed against the Company in
less than four years. Jeffrey Kurtzman, Esq., at Klehr, Harrison,
Harvey, Branzburg and Ellers, LLP, represents the petitioners.
The Troubled Company Reporter, citing Bloomberg's Bill Rochelle,
reported on Oct. 7, 2008, that the Bankruptcy Court denied a
motion to replace the management of Lehigh Coal with a Chapter 11
trustee, but ordered the appointment of an examiner. In September
2009, the Court called for an investigation by an examiner. The
examiner issued a preliminary report saying more study was
required before deciding whether anyone acted "in a detrimental
manner" toward the Debtor, according to the report. The Debtor
consented to being in Chapter 11 on August 29.
LENOX GROUP: PBGC Assumes Pension and Retirement Plans
------------------------------------------------------
The Pension Benefit Guaranty Corporation assumed responsibility
for two pension plans covering about 4,300 workers and retirees of
Lenox Group Inc., a bankrupt maker of tableware, giftware and
collectibles based in Eden Prairie, Minn.
The PBGC stepped in because the underfunded pensions would be
abandoned following the sale of substantially all company assets,
as contemplated in Lenox's bankruptcy proceeding. The transaction
does not include the pension plans. Retirees and beneficiaries
will continue to receive their monthly benefit checks without
interruption, and other participants will receive their pensions
when they are eligible to retire.
According to PBGC estimates, the Lenox China Pension Plan and the
Lenox Inc. Retirement Plan are 35 percent funded, with combined
assets of $70 million and benefit liabilities of $200 million.
The agency expects to cover $128 million of the $130 million total
shortfall. Both plans were frozen on Jan. 1, 2007.
The PBGC will take over the assets and use insurance funds to pay
guaranteed benefits earned under the plans, which ended as of
March 31, 2009.
Within the next several weeks, the PBGC will send notification
letters to all participants in the two Lenox pension plans. Under
provisions of the Pension Protection Act of 2006, the maximum
guaranteed pension the PBGC can pay is determined by the legal
limits in force on the date of the plan sponsor's bankruptcy.
Therefore participants in these pension plans are subject to the
limits in effect on November 23, 2008, which set a maximum
guaranteed amount of $51,750 for a 65-year-old.
The maximum guaranteed amount is lower for those who retire
earlier or elect survivor benefits. In addition, certain early
retirement subsidies and benefit increases made within the past
five years may not be fully guaranteed.
Workers and retirees with questions may consult the PBGC Web site,
http://www.pbgc.gov/or call toll-free at 1-800-400-7242. For
TTY/TDD users, call the federal relay service toll-free at 1-800-
877-8339 and ask for 800-400-7242.
Lenox retirees who draw a benefit from the PBGC may be eligible
for the federal Health Coverage Tax Credit.
Assumption of the plans' unfunded liabilities will increase the
PBGC's claims by $128 million and was not previously included in
the agency's fiscal year 2008 financial statements.
The PBGC is a federal corporation created under the Employee
Retirement Income Security Act of 1974. It currently guarantees
payment of basic pension benefits earned by 44 million American
workers and retirees participating in over 29,000 private-sector
defined benefit pension plans. The agency receives no funds from
general tax revenues. Operations are financed largely by insurance
premiums paid by companies that sponsor pension plans and by
investment returns.
About Lenox Group
Headquartered in Bristol, Pennsylvania, Lenox Group Inc. --
http://www.department56.com/,http://www.lenox.com/,and
http://www.dansk.com/-- including its two main operating
subsidiaries, D 56, Inc., and Lenox, Incorporated, is a leading
designer, marketer, distributor, wholesaler, manufacturer and
retailer of quality tableware, collectibles, and other giftware
products under the Lenox, Dansk, Gorham, and Department 56 brand
names. These products are sold through department stores, large
specialty retailers, general merchandise chains, national chains
and clubs, small independent specialty retailers, and other
wholesale accounts.
The company and six of its affiliates filed for Chapter 11
protetcion on November 23, 2008 (Bankr. S.D. N.Y. Lead Case No.
08-14679). Harvey R. Miller, Esq., and Alfredo R. Perez, Esq., at
Weil, Gotshal & Manges LLP, represent the Debtors their
restructuring efforts. The Debtors proposed Berenson & Company as
financial advisor, Carl Marks Advisory Group LLC as consultants,
and The Garden City Group as claims and noticing agent. The
Debtors have $264,000,000 in total assets and $238,000,000 in
total debts as of October 25, 2008.
Lenox initially agreed to sell itself to KPS Capital Partners
after a court-supervised transaction in February 2009. Clarion
Capital Partners challenged the results and became successful in
nullifying the KPS Capital/Lenox deal and a second auction was
scheduled.
The Bankruptcy Court reopened the bidding process during a hearing
on February 25, and Clarion won this time, offering $100 million
for the assets, including Lenox brands Dansk, Gorham and
Department 56; plus assumption of certain of Lenox debt. As
reported in the Troubled Company Reporter on March 17, 2009,
Lenox Group completed the sale to Clarion.
LYONDELL CHEMICAL: To Renew Workers' Compensation Policy
--------------------------------------------------------
Lyondell Chemical Co. and its affiliates seek permission from the
U.S. Bankruptcy Court for the Southern District of New York to
assume policies issued by Ace American Insurance Co. for workers'
compensation and automobile liability insurance and all related
agreements. Lyondell also seeks to renew certain workers'
compensation and automobile insurance policies with Ace that
expire June 1.
Lyondell expects to pay ACE a total of $837,878 in connection with
the insurance agreements. In addition, Lyondell will post an
additional deposit of $1.85 million in light of the postpetition
insurance agreements.
Objections to the insurance program are due May 19.
About Lyondell Chemical
LyondellBasell Industries is one of the world's largest polymers,
petrochemicals and fuels companies. It is the global leader in
polyolefins technology, production and marketing; a pioneer in
propylene oxide and derivatives; and a significant producer of
fuels and refined products, including biofuels. Through research
and development, LyondellBasell develops innovative materials and
technologies that deliver exceptional customer value and products
that improve quality of life for people around the world.
Headquartered in The Netherlands, LyondellBasell --
http://www.lyondellbasell.com/-- is privately owned by Access
Industries.
Basell AF and Lyondell Chemical Company merged operations in 2007
to form LyondellBasell Industries, the world's third largest
independent chemical company. LyondellBasell became saddled with
debt as part of the US$12.7 billion merger. About a year after
completing the merger, LyondellBasell Industries' U.S. operations
and one of its European holding companies -- Basell Germany
Holdings GmbH -- filed voluntary petitions to reorganize under
Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to
facilitate a restructuring of the company's debts. The case is In
re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case
No. 09-10023). Seventy-nine Lyondell entities, including Equistar
Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals
Inc., and Wyatt Industries, Inc., filed for Chapter 11.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities. Lyondell Chemical estimated that consolidated
assets total US$27.12 billion and debts total US$19.34 billion as
of the bankruptcy filing date.
Lyondell has obtained approximately $8 billion in DIP financing to
fund continuing operations. The DIP financing includes two credit
agreements: a $6.5 billion term loan (comprising $3.25 billion in
new loans and a $3.25 billion roll-up of existing loans) and a
$1.57 billion asset-backed lending facility.
Luxembourg-based LyondellBasell Industries AF S.C.A. and another
affiliate were voluntarily added to Lyondell Chemical's
reorganization filing under Chapter 11 on April 24 in order to
seek protection against claims by certain financial and U.S. trade
creditors.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
LYONDELL CHEMICAL: Wants Orders to Apply to Parent
--------------------------------------------------
Lyondell Chemical Co. and its affiliates sought, and obtained
interim approval, from the U.S. Bankruptcy Court for the Southern
District of New York to make applicable certain orders entered in
the jointly-administered bankruptcy case of Lyondell Chemical
Company, under Case No. 09-10023, to LyondellBasell Industries AF
S.C.A. and LyondellBasell AFGP S.a.r.l., which filed for
bankruptcy on April 24, 2009.
These orders will apply in the interim to the New Debtors:
* order directing the procedural consolidation and joint
administration of the Chapter 11 cases.
* order (i) extending time to file schedules of assets and
liabilities and statements of financial affairs, (ii)
authorizing Debtors to prepare a consolidated list of
creditors, (iii) waiving the requirement that Debtors file a
list of creditors and (iv) approving the form and manner of
the notice of commencement.
* emergency order authorizing the Debtors to obtain DIP
financing.
* order enforcing and restating automatic stay and ipso facto
provisions.
* order granting administrative expense status to the Debtors'
undisputed obligations arising from the postpetition
delivery of goods offered prepetition.
* order authorizing (i) employment and retention of Epiq
Bankruptcy Solutions, LLC as noticing and claims agent for
the Debtors, and (ii) the appointment of Epiq as agent of
the Bankruptcy Court.
* interim and final orders authorizing the Debtors to pay
prepetition amounts under their insurance programs.
* interim and final orders approving the Debtors' existing
investment guidelines.
* interim and final orders authorizing the Debtors to (i)
maintain and use existing bank accounts, books, records and
business forms, (ii) maintain and use existing cash
management system, as modified, and (iii) provide
superpriority status for intercompany receivables.
* interim order to authorize the Debtors to pay prepetition
employment taxes, regulatory fees and other similar taxes
and fees.
* interim order re (i) authorizing the Debtors (a) to obtain
postpetition financing, (b) utilize cash collateral and (c)
purchase certain assets, and (ii) granting adequate
protection to prepetition secured parties.
* interim and final orders authorizing the Debtors to (i) pay
prepetition wages, salaries, employee benefits and other
compensation, (ii) maintain employee benefits programs and
pay related administrative obligations, (iii) allow
employees to proceed with outstanding workers' compensation
claims and (iv) authorize applicable banks and other
financial institutions to receive, process, honor and pay
all checks presented for payment and to honor all funds
transfer requests.
* interim and final, as amended, orders for authorization to
(i) pay certain prepetition claims of critical vendors and
certain administrative claimholders, and (ii) authorize
financial institutions to honor and process related checks
and transfers.
* interim and final orders authorizing to pay prepetition
claims of common carriers, contractors and service
providers, and warehousemen, and (ii) authorizing their
banks to receive, process, honor and pay the checks and
other transfers made to common carriers, contractors and
service providers, and warehousemen.
* order establishing procedures for interim compensation and
reimbursement of expenses for professionals and committee
members.
* final order to authorize the Debtors to pay prepetition
obligations owed to foreign creditors.
* order authorizing the Debtors to file under seal utility
stipulations and schedule 1 to the Order (i) Prohibiting
utilities from altering, refusing or discontinuing Service,
(ii) deeming utilities adequately assured of future
performance, and (ii) establishing procedures for resolving
objections by utility companies
* order (i) prohibiting utilities from altering, refusing or
discontinuing service, (ii) deeming utilities adequately
assured of future performance, and (iii) establishing
procedures for resolving objections by utility companies.
* order authorizing the Debtors to employ and compensate
certain professionals utilized in the ordinary course of the
Debtors' business.
* temporary restraining order.
* order extending time to file schedules and statements
* order extending Temporary Restraining Order.
* interim and final orders authorizing the Debtors to (i)
enter into certain trading contracts and (ii) take other
actions, including granting first priority liens in and
posting collateral in connection with the trading contracts.
* order authorizing the Debtors to continue certain customer
practices and to honor certain prepetition customer
obligations.
* order authorizing the employment and retention of
Cadwalader, Wickersham & Taft LLP as attorneys for the
Debtors.
* order authorizing the employment and retention of Evercore
Group L.L.C. as investment banker and financial advisor for
the Debtors, nunc pro tunc to the Petition Date.
* order (i) establishing procedures for resolution and payment
of reclamation claims.
* final order (i) authorizing the Debtors (a) to obtain DIP
Financing, (b) to utilize cash collateral and (c) to
purchase certain assets, and (ii) granting adequate
protection to Prepetition Secured Parties.
* order granting application to employ Chemical Market
Associates, Inc. as industry expert to the Official
Committee of Unsecured Creditors.
* order granting application to employ AP Services, LLC and
designate Kevin McShea as chief restructuring officer to the
Debtors.
* order approving procedures for (A) the sale of certain
assets free and clear of liens, claims and encumbrances and
the payment of market rate broker commissions in connection
with sales and (B) the abandonment or donation of certain
personal property.
* order enlarging the time within which to file notices of
removal of related proceedings.
* order granting discovery related to the merger between
Lyondell and Basell.
* order modifying the automatic stay and authorizing the
Debtors to consummate fully-funded prepetition settlement of
certain Multi-District and California State Court Actions
relating to MTBE.
* order modifying the automatic stay to permit certain
litigation to proceed and to compensate counsel through
insurance or third-party indemnities.
* order establishing deadline and procedure for filing proofs
of claim and approving the form and manner of notice
* order granting application to employ Baker Botts L.L.P.,
nunc pro tunc to January 6, 2009.
* order granting application to employ Clifford Chance LLP as
attorneys for the Debtors.
* order, as amended, granting administrative expense status to
the Debtors' undisputed obligations arising from insurers'
deductible payments for claims arising from injuries
occurring during the duration of the bankruptcy cases.
* order granting application to employ Susman Godfrey LLP as
conflicts counsel for the Debtors.
* so ordered stipulation and protective order.
These Orders were also modified, on an interim basis, to fit the
Chapter 11 cases of the New Debtors:
-- the Order Extending Schedules and Statements Period Filing
to extend the deadline for the New Debtors to file their
Schedules and Statements to May 24, 2009;
-- the Order Prohibiting Utility Companies from Altering
Services so that with respect to the New Debtors, the date
that triggers the deadline in the Order will be the
Petition Date for the New Debtors or April 24, 2009;
-- the Reclamations Procedures Order so that, solely with
respect to the New Debtors, the deadline for them to file
a list of Reclamation Claims will be extended to July 7,
2009;
-- the Prepetition Fees and Taxes Order to allow LBI to pay
its prepetition taxes and related costs; and
-- the Final Bank Accounts Order to include the Basell AF
S.C.A. bank account with INC-Luxembourg.
The Bar Date will apply in the interim to the New Debtors, if the
New Debtors file their Schedules and Statements.
ConocoPhillips Responds
ConocoPhillips argued before Judge Robert Gerber that the request
seeks to bind creditors and parties-in-interest in newly-filed
cases with preexisting orders from other proceedings and which
calls for blanket adoption of 55 Court orders without any legal
authority for relief or showing that each of the Proposed Orders
should be made applicable to LBI.
Kenneth N. Klee, Esq., at Klee, Tuchin, Bogdanoff & Stern, LLP,
in Los Angeles, California, argued that LBI is merely a parent
holding company and does not have a need for first-day orders.
He argued that nothing is to be gained by making those orders
applicable to LBI. On the contrary, there is a significant risk
that buried within the Proposed Orders are rulings and findings
of fact that have unintended, and potentially preclusive
consequences for creditors in connection with enforcement of
their rights, he asserted. He reminded the Court that while a
number of the Proposed Orders took into account the relationship
between the Original Debtors and LBI, LBI's bankruptcy now
changes the landscape of the Chapter 11 cases.
Specifically, ConocoPhillips objected to adoption of (i) any
interim orders, (ii) Emergency, Interim or Final DIP Financing
Orders; (iii) orders relating to wage issues, critical vendor
issues, common carriers, contractors, service provides and
warehousemen, customer practices, reclamation claims, sale of
Original Debtors' assets, settlement of litigation by Original
Debtors, and granting administrative expense status to certain
insurance deductibles of the Original Debtors; or (iv) in light
of the expiration of the Injunction and bankruptcy filing of LBI,
orders related to the issuance and extension of injunctive relief
in favor of LBI. Mr. Klee insisted that the Orders will
potentially prejudice creditors' rights without, but do not
afford the New Debtors, real benefits. A list of the Orders
cited by ConocoPhillips as improper is available for free at:
http://bankrupt.com/misc/Lyondell_ConocoImproperOrders.pdf
Moreover, Mr. Klee noted that certain Proposed Orders require the
Debtors to satisfy legal standards and make certain factual
showings as a matter of bankruptcy law.
"Contrary to their wishes, the Debtors cannot satisfy their
burdens by incorporation of facts and arguments from a different
day, involving different parties, relating to different debtors
with different assets and liabilities, and under different
circumstances," he argued.
Accordingly, ConocoPhillips objected to these orders as they are
questionable, a full-text copy of which is available for free at:
http://bankrupt.com/misc/Lyondell_ConocoQuestionableOrders.pdf
To the extent that the Debtors believe that Questionable Orders
are administratively necessary, ConocoPhillips suggested that the
Debtors file a motion detailing, on an order-by-order basis, (i)
necessity of the order, (ii) extent to which the order contains
findings of fact or rulings that would prejudice creditors, (iii)
legal standards that would apply if the New Debtors were seeking
relief for the first time, and (iv) manner in which the New
Debtors meet their legal burdens.
ConocoPhillips does not object to adoption of administrative
orders, but only to the extent that any order provides that: (i)
the Administrative Orders are adopted for administrative and
procedural purposes only; (ii) no findings of fact or conclusions
of law embodied in the Administrative Orders will be binding in
any future proceedings with respect to LBI; and (iii) no
provision of any Administrative Order, which provides for the
incorporation of portions of any motion or other pleading will be
effective. A schedule of the unopposed Administrative Orders is
available for free at:
http://bankrupt.com/misc/Lyondell_ConocoAdminOrders.pdf
ConocoPhillips expects in the meantime to engage in further
discussions with the Debtors with respect to the Questionable
Orders and Improper Orders and reserves its right to withdraw its
Objection.
ConocoPhillips asked the Court to (i) deny the Motion as to the
Improper Orders and Questionable Orders, and (ii) enter an order
with respect to the Administrative Orders containing protective
provisions sought.
About Lyondell Chemical
LyondellBasell Industries is one of the world's largest polymers,
petrochemicals and fuels companies. It is the global leader in
polyolefins technology, production and marketing; a pioneer in
propylene oxide and derivatives; and a significant producer of
fuels and refined products, including biofuels. Through research
and development, LyondellBasell develops innovative materials and
technologies that deliver exceptional customer value and products
that improve quality of life for people around the world.
Headquartered in The Netherlands, LyondellBasell --
http://www.lyondellbasell.com/-- is privately owned by Access
Industries.
Basell AF and Lyondell Chemical Company merged operations in 2007
to form LyondellBasell Industries, the world's third largest
independent chemical company. LyondellBasell became saddled with
debt as part of the US$12.7 billion merger. About a year after
completing the merger, LyondellBasell Industries' U.S. operations
and one of its European holding companies -- Basell Germany
Holdings GmbH -- filed voluntary petitions to reorganize under
Chapter 11 of the U.S. Bankruptcy Code on January 6, 2009, to
facilitate a restructuring of the company's debts. The case is In
re Lyondell Chemical Company, et al., Bankr. S.D. N.Y. Lead Case
No. 09-10023). Seventy-nine Lyondell entities, including Equistar
Chemicals, LP, Lyondell Chemical Company, Millennium Chemicals
Inc., and Wyatt Industries, Inc., filed for Chapter 11.
The Hon. Robert E. Gerber presides over the case. Deryck A.
Palmer, Esq., at Cadwalader, Wickersham & Taft LLP, in New York,
serves as the Debtors' bankruptcy counsel. Evercore Partners
serves as financial advisors, and Alix Partners and its subsidiary
AP Services LLC, serves as restructuring advisors. AlixPartners'
Kevin M. McShea acts as the Debtors' Chief Restructuring Officer.
Clifford Chance LLP serves as restructuring advisors to the
European entities. Lyondell Chemical estimated that consolidated
assets total US$27.12 billion and debts total US$19.34 billion as
of the bankruptcy filing date.
Lyondell has obtained approximately $8 billion in DIP financing to
fund continuing operations. The DIP financing includes two credit
agreements: a $6.5 billion term loan (comprising $3.25 billion in
new loans and a $3.25 billion roll-up of existing loans) and a
$1.57 billion asset-backed lending facility.
Luxembourg-based LyondellBasell Industries AF S.C.A. and another
affiliate were voluntarily added to Lyondell Chemical's
reorganization filing under Chapter 11 on April 24 in order to
seek protection against claims by certain financial and U.S. trade
creditors.
Bankruptcy Creditors' Service, Inc., publishes Lyondell Bankruptcy
News. The newsletter tracks the Chapter 11 proceeding undertaken
by Lyondell Chemical Company and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
MAJESTIC HOLDCO: Missed Interest Payment Cues S&P's 'D' Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its issue-level rating
on the discount notes issued by Majestic Holdco LLC, the parent of
Las Vegas-based Majestic Star Casino LLC, to 'D' from 'C'. This
action reflects the missed April 15, 2009 interest payment on the
notes. The company was precluded from making distributions to the
parent as long as an event of default exists with the bank
facility, the senior secured notes, or the senior unsecured notes.
Majestic Star Casino LLC also did not make the October 15, 2008
interest payments on its senior secured and senior unsecured notes
co-issued by the company and Majestic Star Casino Capital Corp.
prior to the end of the grace period, which triggered an event of
default under both notes, the bank facility, and the discount
notes. The corporate credit rating for Majestic Star, as well as
the issue-level ratings on its senior secured and senior unsecured
notes, were lowered to 'D' on October 15, 2008, when it failed to
pay the interest when due.
Ratings List
Majestic Star Casino LLC (The)
Corporate Credit Rating D/--/--
Downgraded
Majestic Holdco LLC
To From
-- ----
Senior Discount Notes D C
Recovery Rating 6 6
MGM MIRAGE: Eyes Luxury-Hotels' Comeback in Asia & Middle East
--------------------------------------------------------------
Tamara Audi at The Wall Street Journal reports that an MGM Mirage
executive said that the Company has signed eight hotel-management
deals with developers and is negotiating with 10 more about
opening hotels across Asia and the Middle East.
MGM Mirage executives, WSJ states, said that they believe the
luxury-hotel industry will make a comeback in Asia and the Middle
East.
WSJ relates that the hotels will be under the banners of MGM
Mirage's iconic Vegas properties, including the Bellagio and the
MGM Grand. WSJ notes that in most cases, the properties will be
marketed as luxury hotels and won't include casinos.
According to WSJ, the signed agreements include a Bellagio in the
Egyptian Red Sea resort of Sharm El Sheikh and in Dubai. WSJ says
that there are also deals for MGM Grand properties in Cairo,
Vietnam, and Tianjin, China.
WSJ says that MGM Mirage's recently created hotel division, MGM
Mirage Hospitality, has been working quietly to convince
developers to construct lavish hotels and to hire MGM Mirage to
brand and manage them.
WSJ quoted MGM Mirage Hospitality chief Gamal Aziz as saying, "We
want to leverage our brands without any capital." Citing Mr.
Aziz, WSJ relates that under the deals, MGM Mirage expects to
generate revenue of around $100 million per year from hotel
operations by 2014 without spending a penny to develop the hotels.
Mr. Aziz, according to WSJ, wants to pursue hotel deals in the
U.S. "We have aspirations to be in New York, Washington, D.C.,
San Francisco and Hawaii," the report quoted Mr. Aziz as saying.
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.
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 January 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: Will Repay $825.6MM in Debt After Selling Stock, Notes
------------------------------------------------------------------
Kerry E. Grace at Dow Jones Newswires reports that MGM Mirage will
pay back about $825.6 million in debt under its senior credit
facility, after the Company's sale of $1.5 billion in notes and
$1.15 billion in stock.
Dow Jones relates that MGM Mirage is struggling to pay down more
than $14 billion in debt. It has been considering selling off
properties to meet looming obligations, Dow Jones states.
MGM Mirage, according to Dow Jones, said that it will redeem all
of the 7.25% senior debentures of Mirage Resorts Inc. due 2017 and
repurchase its 6% senior notes due this year, as well as Mandalay
Resort Group's 6.5% senior notes.
Dow Jones states that MGM Mirage increased last week its share
offering by about 77%, and priced the private debt offering --
$650 million in five-year notes and $850 million in eight-year
notes. MGM Mirage, according to the report, sold 143 million
shares. The report states that MGM Mirage said on Tuesday that it
sold 21.5 million as part of the underwriters' option to cover
more demand, increasing shares outstanding almost 60%.
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.
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 January 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'.
MORTGAGE GUARANTY: S&P Puts 'BB' Ratings on Negative CreditWatch
----------------------------------------------------------------
Standard & Poor's Ratings Services said that it placed its 'BB'
counterparty credit and financial strength ratings on Mortgage
Guaranty Insurance Corp. on CreditWatch with negative
implications.
There is no change to the 'CCC' unsolicited counterparty credit
rating on MGIC's parent, MGIC Investment Corp., or the 'BB'
counterparty credit and financial strength ratings on MGIC
Indemnity Co., an affiliate of MGIC.
S&P placed the rating on MGIC on CreditWatch negative following an
announcement by MGIC Investment Corp. that it is contemplating a
restructuring that could involve MGIC contributing capital to a
mortgage insurance company that would be a wholly owned subsidiary
of MGIC. This restructuring is one option in management's efforts
to preserve the group's ability to underwrite new mortgage
insurance business. Management believes MGIC could encounter
regulatory constraints on writing new business in the near future.
"We believe there would be both benefits and drawbacks to MGIC
contributing capital to a direct subsidiary," noted Standard &
Poor's credit analyst James Brender. It's S&P's opinion that the
credit quality of MGIC's insured mortgages has been very strong
since the second half of 2008, and S&P think the company will
generate underwriting profits even after considering S&P's
expectations for rising unemployment and falling home prices.
Therefore, continuing to underwrite should improve operating
results and generate funds to pay claims from loans insured before
the second half of 2008. On the other hand, the potential
restructuring could limit MGIC's liquidity and leverage its
capital beyond an appropriate level.
"We put the ratings on CreditWatch negative because S&P does not
believe the positive aspects of a potential restructuring could
lead to an upgrade in the near future," Mr. Brender added. "It
will be some time before the value of the benefit of continuing to
write new business is known. However, S&P could downgrade MGIC if
S&P believed its capital contribution to the subsidiary was large
enough to affect its liquidity."
This unsolicited rating(s) was initiated by Standard & Poor's. It
may be based solely on publicly available information and may or
may not involve the participation of the issuer's management.
Standard & Poor's ha used information from sources believed to be
reliable, but does not guarantee the accuracy, adequacy, or
completeness of any information used.
MORTON INDUSTRIAL: Court to Consider Sale of Assets Today
---------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware will
convene a hearing on May 21 to consider approval of the sale of
Morton Industrial Group Inc.'s assets. Morton was scheduled to
hold an auction May 15 where MIG Acquisition Corp was stalking-
horse bidder. MIG had offered to pay $33 million for the assets,
absent higher and better bids.
Headquartered in Morton, Illinois, Morton Industrial Group Inc. --
http://www.mortongroup.com/-- and its affiliates are contract
metal fabricators serving an array of Original Equipment
Manufacturers. The Debtors operate five manufacturing facilities
located in the Midwestern and Southeastern United States. The
Debtors' customers are Caterpillar Inc., Deere & Co., JLG
Industries, Inc., Hallmark Cards, Kubota Manufacturing of America
and Winnebago Industries, Inc.
Morton Industrial and its affiliates, including MMC Precision
Holdings Corp., filed for Chapter 11 protection on March 22, 2009,
(Bankr. D. Del. Lead Case No.: 09-10998) Paul, Hastings, Janofsky
& Walker LLP represents the Debtors in their restructuring
efforts. The Debtors propose to hire Paul N. Heath, Esq., at
Richards, Layton & Finger PA as co-counsel, AlixPartners, LLP as
restructuring advisors, Kurtzman Carson Consultants LLC as claims,
noticing and balloting agent. Roberta A. DeAngelis, United States
Trustee for Region 3, appointed three members to serve on the
Official Committee of Unsecured Creditors of Morton Industrial
Group Inc. and its debtor-affiliates. The Debtors listed
estimated assets of $50 million to $100 million and estimated
debts of $100 million to $500 million.
N2N COMMERCE: Assignee Not Authorized to File Bankruptcy Petition
-----------------------------------------------------------------
WestLaw reports that a corporation's board of directors did not
authorize the assignee under an assignment for the benefit of
creditors to file a bankruptcy petition on the corporation's
behalf, and that warranted the dismissal of the Chapter 7 case
filed by the assignee. The assignment lacked express authority
permitting the filing of a bankruptcy petition by the assignee,
and instead, through references to the corporation as the "debtor"
and to various sections of the Bankruptcy Code, manifested the
board's intention for the assignment to serve as the exclusive
vehicle for the winding up of the corporation's affairs. The
general language empowering the assignee to liquidate assets and
serve as attorney in fact for the corporation could not be
construed to grant the assignee the extraordinary authority to
commence a bankruptcy case, the Massachusetts bankruptcy court
ruled, but noted that creditors could file an involuntary
bankruptcy petition against the corporation. In re N2N Commerce,
Inc., --- B.R. ----, 2009 WL 1230797 (Bankr. D. Mass.).
NEW CENTURY: Court Caps Liquidating Trustee's Fees & Expenses
-------------------------------------------------------------
WestLaw reports that a cap on the fees and expenses for which a
liquidating trust in Chapter 11 cases was responsible was
warranted, as being in the best interests of creditors, with
respect to any additional services provided by a court-appointed
examiner following his discharge. Such services could include
continued cooperation with governmental agencies and other
parties, transferring and disposing of the investigative record
and other investigative materials, and responding to discovery
requests. The cap was warranted even if it could require the
examiner to seek reimbursement of his fees and costs incurred in
excess of the cap elsewhere. In re New Century TRS Holdings,
Inc., --- B.R. ----, 2009 WL 1241616 (Bankr. D. Del.).
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.
NIELSEN COMPANY: Fitch Affirms Issuer Default Rating at 'B'
-----------------------------------------------------------
Fitch Ratings has taken various actions on Nielsen Company B.V.
and its subsidiaries' ratings:
The Nielsen Company, B.V.
-- Issuer Default Rating affirmed at 'B';
-- Short-term IDR affirmed at 'B';
-- Senior unsecured notes (including EMTNs) downgraded to
'CC/RR6' from 'CCC/RR6'.
Nielsen Finance LLC and Nielsen Finance Co
-- Assigned an IDR of 'B';
-- Assigned a short-term IDR of 'B';
-- Senior secured term loan affirmed at 'BB-/RR2';
-- Senior secured revolving credit facility affirmed at 'BB-
/RR2';
-- $500 million 11.5% senior unsecured notes due 2016 (issued in
late April 2009) rated 'CCC/RR6' (ranked pari-passu with
other senior unsecured debt at NFL/NFC);
-- Senior unsecured notes downgraded to 'CCC/RR6' from
'CCC+/RR6';
-- Senior subordinated discount notes downgraded to 'CC/RR6'
from 'CCC+/RR6'.
Approximately $9.5 billion in total face value of debt is
affected. Certain issue level ratings have also been revised (as
described above) to align with Fitch's rating definitions. The
Rating Outlook is Stable.
Nielsen's ratings continue to reflect these:
-- Nielsen has a relatively stable and well diversified revenue
base. The company generates significant recurring revenue;
greater than 95% in some key areas and 70-75% overall. This
resiliency was exhibited during the challenging fourth
quarter of 2008 and first quarter of 2009 as year-over-year
revenue growth on a constant currency basis was 1% in each
quarter (influenced slightly but favorably by a modest amount
of growth through acquisitions.) Diversity stems from the
broad number of clients the company serves (more than 25,000
in its Media division alone), its multiple product-lines and
the almost 50% of its top-line derived from markets outside
the U.S.;
-- While not immune to competitive pressures and longer-term
structural threats, Fitch believes the company is in a strong
position to defend and grow revenue in its core businesses.
In addition to sound growth prospects in its largest unit,
Consumer Services, Fitch believes there are meaningful
opportunities for organic growth in measuring and analyzing
media consumption and spending globally. The company has
assembled solid platforms for measuring media consumption on
the three key screens (television, online and mobile);
-- With its major cost initiatives reaching maturity, covenant
EBITDA add-backs winding down and the economic slowdown
hindering top line growth (and associated operating
leverage), the meaningful percentage increases in EBITDA in
recent years will likely moderate. However, Fitch expects
the company can continue to grow EBITDA at least at a mid-
single digits pace over the next several years (on average);
-- Fitch's credit ratings also incorporate competition for
Nielsen's lucrative TV ratings franchise; challenges facing
its business-to-business magazines (cyclical and secular) and
trade show unit (predominantly cyclical); acquisition risk;
high leverage (unadjusted total face-value of debt to Fitch
calculated EBITDA of 8.0 times (x) (pro forma for recent debt
activity) and covenant leverage of 6.0x) and material
refinancing risk in 2013 when $5 billion comes due. The
company's ability to access capital multiple times amid very
strained market conditions, bodes well for its capacity to
manage refinancing risk.
Fitch believes Nielsen's liquidity is sufficient. Free cash Flow
approached breakeven in 2008 (at approximately negative $50
million) but was held back by a negative working capital swing
(approximately $200 million) and higher than normal capital
expenditures ($370 million). Capital expenditures should
normalize in 2009 to less than $300 million as there will be fewer
Local People Meter (LPM) roll-outs; fewer one-time, client-
specific platform build-outs; and lower investment in rolling out
the company's three-screen strategy globally. Fitch notes that as
of year-end 2008, the company's projected pension benefit
obligation is $1.2 billion compared to plan assets of $1 billion.
Fitch expects pension contributions in 2009 to be manageable;
roughly equivalent to 2008 levels at approximately $40-50 million.
On flat to slightly pressured constant currency top-line growth,
modest cost reductions, a negative working capital swing similar
to 2009 and more normalized capital expenditures, Fitch expects
FCF to be positive in the range of $10-$75 million in 2009. Fitch
anticipates that FCF will be predominantly dedicated toward debt
repayment with a modest amount potentially being dedicated to
smaller acquisitions.
The company had cash of $410 million at March 31, 2009. The
company also has $388 million available on its $688 million senior
secured revolver due in 2012. The overall fixed/floating mix in
the capital structure is approximately 80%/20% and sufficiently
mitigates floating interest rate risk. The company has been
active in managing its near-term maturities and they appear
manageable over the next several years. Excluding revolver
drawings and bank overdrafts the company faces only $35 million in
maturities through the rest of 2009 (predominantly bank
amortization). Pro forma for the tender offer announced May 12,
2009, bank amortization and EMTN maturities should total
approximately $110 million in 2010 while approximately $90 million
comes due in 2011.
As of March 31, 2009, adjusted for April 2009 financing activity,
Nielsen has total debt of $9.5 billion (face value). Fitch
calculates leverage (including the face value debt and a slightly
more conservative interpretation of EBITDA) of 8.0x compared to
6.0x computed by the company for the purposes of covenant
compliance. Fitch's recovery analysis assumes that the company
would be restructured at the point at which its EBITDA breaches
its covenants (approximately a 35% decline from LTM levels). In
this scenario, Fitch estimates the group could be sold for a
distressed multiple of 6x Fitch-computed LTM EBITDA yielding a
distressed enterprise valuation of roughly $4.6 billion.
Fitch categorizes the company's debt into four distinct
priorities, split among two issuing entities. NFL/NFC's $5.9
billion (total capacity) senior secured credit facilities are
guaranteed by Nielsen and by all of the group's wholly-owned U.S.
subsidiaries. The loans are secured by substantially all of the
U.S. assets and by 100% of the equity of U.S. subsidiaries and 65%
of the equity of non-U.S. subsidiaries (some exceptions are
noted). Fitch estimates senior secured creditors could recover at
the very low end (71%) of the 71-90% range represented by an 'RR2'
recovery rating. Fitch applies two notches for 'RR2' ratings,
reflecting the 'BB-' rating on the senior secured. While Fitch
expects in Fitch's base-case for EBITDA to grow and secured debt
to be paid down, Fitch notes that a modest decline in Fitch's
distressed EBITDA estimate or more secured debt could pressure
this recovery rating below the 'RR2' level.
Given that the senior secured is not fully recovered, Fitch
estimates no recovery ('RR6') for other classes of debt. The
ratings reflect that the notes issued by NFL/NFC benefit from a
guarantee from the same subsidiaries that guarantee the secured
loans. Fitch notches the NFL/NFC senior unsecured notes down two
notches to 'CCC' to reflect its position relative to other debt in
the capital structure. While the subordinated notes ('CC/RR6')
issued by NFL/NFC are guaranteed by the same entities as the
secured loans and senior notes, Fitch distinguishes them from the
senior unsecured given their junior position. The company also
has approximately $670 million of debt (pro forma for recent
refinancing actions and offers) outstanding at Nielsen Company
B.V. which includes senior discount notes issued as part of the
LBO and also legacy VNU debt that was rolled in the transaction.
Fitch views these notes as pari-passu with one another and
recognizes they are structurally subordinate to all NFL/NFC debt
as they do not benefit from any guarantees or security. Fitch
notes they are reliant on the Nielsen's subsidiaries to upstream
dividends for refinancings and interest payments. While they rank
after the NFL/NFC subordinate notes, they carry the same 'CC/RR6'
because ratings on low priority debt typically compresses to a
maximum of three notches from the IDR (given the similarly low
likelihood of any recovery).
Going forward the most likely drivers of rating pressure include:
a material debt funded acquisition, a coercive debt exchange which
included a material reduction in terms for bondholders or if
credit market conditions permitted an attempt by private equity
sponsors over the next several years to extract capital through a
leveraged dividend.
Conversely, while there could be one-notch of potential rating
upside if the company continues to delever, an upgrade outside of
the 'B' category would require strong commitment to tighter
leverage measures and Fitch's belief that achievement and
maintenance of those metrics would be realistic over time.
Fitch's 'B' IDR considers Nielsen's entire debt load, and Fitch
believes the company will need to build financial flexibility
(liquidity enhancements and leverage reductions) in order to
manage refinancing risk in 2013. Fitch is cautious that
intermediate term improvements in the leverage or liquidity
profile may not ultimately accrue to all creditors but could be
exhausted over time via the refinancing or the exit strategy the
company's private equity owners may pursue.
NOBLE INT'L: Names ArcelorMittal Lead Bidder for European Unit
--------------------------------------------------------------
According to Bill Rochelle at Bloomberg News, Noble International
Ltd. will further market test its European business by holding an
auction on May 28. Absent higher and better offers, Noble
International will sell the business to ArcelorMittal SA, the
prior owner. Steelmaker ArcelorMittal agreed to pay $2.1 million
cash and take the business subject to all debt, including a
$108 million bank loan. The Court will convene a hearing May 29
to consider the results of the auction.
The official committee of unsecured creditors of Noble tried --
but failed -- to block approval of procedures governing the sale.
The committee had pointed out that Luxembourg-based ArcelorMittal
is an insider and the former owner of the European business it
sold to Noble for $300 million in 2007, Bloomberg reported.
Noble is pursuing a separate sale process for its assets. An
affiliate of Patriarch Partners LLC, Noble Intentions LLC, has
placed an $11 million "stalking horse" bid for Noble International
Ltd.'s assets. According to Bloomberg, the secured lender General
Electric Capital Corp. is objecting to the sale, saying the
$12.5 million it's owed is more than the sale price.
Headquartered in Warren, Michigan, Noble International, Ltd. --
http://www.nobleintl.com/home.html/-- provides flat, tubular,
shaped and enclosed formed structures to automotive original
equipment manufacturers and their suppliers, for use in automobile
applications, including doors, fenders, body side panels, pillars,
bumpers, door beams, load floors, windshield headers, door tracks,
door frames, and glass channels.
Noble International and its affiliates filed for Chapter 11
protection on April 15, 2009 (Bankr. E. D. Mi. Case No. 09-51720).
The Debtors proposed Foley & Lardner LLP as their general
bankruptcy counsel. Daniel M. McDermott, the United States
Trustee for Region 9, appointed three creditors to serve on an
official committee of unsecured creditors. The Debtors disclosed
total assets of $190,763,000 and total debts of $38,691,000, as of
January 10, 2009.
NORTEL NETWORKS: S&P Withdraws 'D' Corporate Credit Rating
----------------------------------------------------------
Standard & Poor's Ratings Services said it withdrew its ratings,
including its 'D' long-term corporate credit rating, on Toronto-
based telecommunications equipment manufacturer Nortel Networks
Ltd. and its related entities at the company's request.
On Jan. 14, 2009, S&P lowered its long-term corporate credit
rating on NNL to 'D' from 'B-'. The ratings on NNL are based on
the consolidation with parent Nortel Networks Corp. (collectively,
Nortel). At the same time, S&P lowered the issue-level ratings on
all of Nortel's variously rated senior unsecured notes to 'D'.
S&P also lowered the issue-level ratings on NNL's C$750 million
preferred shares outstanding to 'D' from 'C'. The downgrade
followed Nortel's filing for creditor protection in Canada and the
U.S.
PAPER INTERNATIONAL: Begins Sending Ballots to Noteholders
----------------------------------------------------------
The Hon. Robert D. Drain of U.S. Bankruptcy Court for the Southern
District of New York affirmed that Corporacion Durango S.A.B. de
C.V., Paper International, Inc., and Fiber Management of Texas,
Inc. have submitted a disclosure statement contains "adequate
information" that enables creditors to make an informed judgment
about the proposed Joint Chapter 11 Plan of Reorganization filed
on April 27, 2009.
Accordingly the Debtors were granted approval to send solicitation
packages -- containing the ballots, the Disclosure Statement and
the Plan -- to noteholders. Holders of US$520,000,000 10.5%
Senior Notes due 2017, issued by Durango in 2007 comprise the lone
class of creditors that are entitled to vote on the Plan.
Ballots must be returned by June 8, 2009. Judge Drain will begin
hearings to consider confirmation of the Plan on June 17, 2009, at
10:00 a.m. Objections, if any, are due June 8, 2009, by 10:00
a.m.
As reported by to the Troubled Company Reporter on April 28, 2009,
Joint Chapter 11 Plan provides that the Debtors' businesses will
continue to operate in substantially their current form, with
Paper International continuing to own its equity in Durango
McKinley Paper Company and FMT, and FMT continuing the wind down
of its fiber procurement business, which began when FMT ceased its
operations in August 2008.
Durango will (i) issue $250 million in senior notes ("New Senior
Notes") and (ii) also issue new common stock in connection with
its plan to be submitted in its restructuring proceedings in the
District Court for Civil Matters for the District of Durango, in
the country of Mexico ("Concurso Proceedings"). On the Joint
Chapter 11 Plan's effective date, each Reorganized Debtor will
deliver a joint and several guaranty with respect to the New
Senior Notes ("New Senior Notes Guarantees"). To payoff their
claims, Durango has reached a settlement with certain noteholders
under which the Noteholders will receive their pro rata share of
the New Senior Notes, the New Senior Notes Guarantees, and the
Durango New Equity.
All allowed priority claims and general unsecured claims will be
fully reinstated, and equity holders will retain their interests.
Thus they are unimpaired and will be deemed to have accepted the
Plan. Only the Noteholders, classified under Class 3, are
impaired and will be entitled to vote on the Plan.
A full-text copy of the Joint Chapter 11 Plan of Reorganization,
dated as of April 27, 2009, is available for free at:
http://bankrupt.com/misc/PaperInt'l.Ch11Plan.pdf
A full-text copy of the explanatory Disclosure Statement dated
April 27, 2009, is available for free at:
http://bankrupt.com/misc/PaperInt'l.DS.pdf
About Corporacion Durango
Durango, Mexico-based Corporacion Durango S.A.B. de C.V. produces
brown paper and packaging products. Its packaging division,
Empresas Titan, manufactures corrugated packaging in Mexico. It
also produces newsprint through Grupo Pipsamex.
After The First Federal District Court in Durango approved its
plan of reorganization and declared the termination of its
"Concurso Mercantil" proceeding, the Company filed for Chapter 15
bankruptcy (Bankr. S.D. N.Y. Case No. 08-13911) on October 6,
2008. Two affiliates filed for Chapter 11 bankruptcy protection
separately on the same day.
John K. Cunningham, Esq., at White & Case, LLP, represents the
Debtors in their restructuring efforts. In its filing, the Lead
Debtor listed estimated assets of more than US$1 billion and
estimated debts of more than US$1 billion.
About Paper International
Headquartered in Prewitt, New Mexico, Paper International, Inc.
-- http://www.internationalpaper.com/-- is the wholly-owned
direct subsidiary of Corporacion Durango, S.A.B. de C.V., a
corporation organized under the laws of Mexico, which maintains
its principal place of business in Durango, Mexico. The Debtor
currently owns 100% of the equity shares in Fiber Management of
Texas, Inc., a corporation organized under the laws of Texas, as
well as 100% of the equity shares in non-debtor Durango McKinley
Paper Company, a New Mexico company. Paper International is a
holding company which has no employees, no operations, and whose
primary assets are its ownership interests in Durango McKinley and
Fiber Management.
Before August 2008, Fiber Management's primary business was the
procurement of paper materials to manufacture recycled paper
products for use by Durango McKinley and other paper manufacturing
affiliates of Corporacion Durango located in Mexico. In August
2008, Fiber Management ceased procuring fiber and began winding up
all of its business operations.
Paper International and Fiber Management filed for Chapter 11
protection on October 6, 2008 (Bankr. S.D. N.Y. Lead Case No.08-
13917). Larren M. Nashelsky, Esq., and Lorenzo Marinuzzi, Esq.,
at Morrison & Foerster LLP, represent the Debtors as counsel.
Eric Kate Mautner, Esq., at Bingham McCutchen LLP, represents the
Official Committee of Unsecured Creditors as counsel. APS
Services, LLC, serves as the Debtors' crisis managers. The
Debtors designated Meade Monger, a managing director of
AlixPartners, LLP, an affiliate of AP Services, as its chief
restructuring officer. The Court appointed Kurtzman Carson
Consultants, LLC, as claims agent in the Debtors' bankruptcy case.
At March 31, 2009, the Debtors had $123,365,705 in total assets,
$552,348,876 in total liabilities, and $428,983,171 in
stockholders' deficit.
PAUL MOLLER: Case Summary & 14 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Paul Sandner Moller
Rosa Maria Moller
9350 Currey Rd
Dixon, CA 95620
Bankruptcy Case No.: 09-29936
Chapter 11 Petition Date: May 18, 2009
Court: United States Bankruptcy Court
Eastern District of California (Sacramento)
Judge: Christopher M. Klein
Debtor's Counsel: William S. Bernheim, Esq.
255 N Lincoln St.
Dixon, CA 95620
Tel: (707) 678-4447
Total Assets: $46,216,994
Estimated Debts: $6,276,408
The Debtor's Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
John Britton Legal Fees $103,963
3741 Douglas Blvd. Ste. 380
Rosevile CA 95661
Alicia Bugarin Personal Loan $100,000
9090 Approach Ct
Fair Oaks CA 95628
U.S. Bank Credit Card $61,201
P.O. Box 790408 Purchases
Saint Louis MO 63179
Bank of America Credit Card $35,995
Purchases
Bank of America Credit Card $26,987
Purchases
Chase Cardmember Service Credit Card $26,086
Purchases
Bank of America Credit Card $12,749
Purchases
Citibank Credit Card $10,439
Purchases
Bank of America Credit Card $10,115
Purchases
AT&T Universal Credit Card $8,700
Purchases
Capital One Credit Card $8,000
Purchases
Discover Credit Card $6,950
Purchases
Chase Cardmember Service Credit Card $3,550
Purchases
The petition was signed by the Joint Debtors.
PENNSYLVANIA SN: Claims Deadline Extended to July 20
----------------------------------------------------
In a legal notice dated May 20, 2009, Pennsylvania SN, Inc.
(formerly Shepard Niles, Inc.) (formerly Shepard Niles Crane Hoist
Corporation) gave notice that due to a change in the acceptance
date of the filing of its Articles of Dissolution, the
time period within which claims may be presented to the company
has been extended to July 20, 2009,
Accordingly, notice is given that the corporation was dissolved by
the filing of Articles of Dissolution with the Pennsylvania
Department of State on April 27, 2009, instead of April 20, 2009,
as earlier disclosed.
Claims are to be delivered to:
Pennsylvania SN, Inc.
Attention: Corporate Secretary
600 Grant Street, Suite 4600
Pittsburgh, PA 15219
Any claim that is not received by the corporation prior to
July 20, 2009, will be forever barred.
PERRY GLOBAL: Moody's Withdraws Prime-1 Rating on ABCP
------------------------------------------------------
At the issuer's request, Moody's has withdrawn the Prime-1 rating
of the ABCP issued by Perry Global Funding Limited/Perry Global
Funding LLC, a partially supported credit arbitrage ABCP program
administered by Bank of America, N.A. (Aa3/Prime-1/ D).
As of May 15, 2009, all outstanding ABCP had been repaid in full.
There will be no further issuance under this program.
PFF BANCORP: Wants Plan Filing Period Extended to July 6
--------------------------------------------------------
PFF Bancorp, Inc., et al., ask the U.S. Bankruptcy Court for the
District of Delaware to extend its exclusive periods to file a
Chapter 11 plan and to solicit acceptance of said plan to July 6,
2009, and September 3, 2009.
As reported in the Troubled Company Reporter on May 1, 2009, the
Debtors told the Court that they only obtained access to their
books and records on January 27, 2009. In addition, they have yet
to file their statements of financial affairs and schedules of
assets and liabilities based on those records. Under these
circumstances, an extension of their exclusive periods is needed
before they can formulate a consensual Chapter 11 plan in their
bankruptcy cases.
On November 21, 2008, when PFF Bancorp's potential acquisition by
FBOP Corporation failed to close, the Office of Thrift Supervision
closed PFF Bank & Trust and appointed the FDIC as receiver.
Subsequent to the closure, a subsidiary of Minneapolis-based U.S.
Bancorp acquired all of the deposit accounts and all of the loans
of PFF Bank from the FDIC. Subsequent to the Bank Receivership,
the Debtors commenced these Chapter 11 cases to liquidate their
assets.
PFF Bancorp Inc. -- http://www.pffbank.com/-- was a non-
diversified unitary savings and loan holding company within the
meaning of the Home Owners' Loan Act with headquarters formerly
located in Rancho Cucamonga, California. Bancorp is the direct
parent of each of the remaining Debtors.
Prior to filing for bankruptcy, Bancorp was also the direct parent
of PFF Bank & Trust, a federally chartered savings institution,
and said bank's subsidiaries.
PFF Bancorp Inc. and its affiliates sought Chapter 11 protection
on December 5, 2008 (Bankr. D. Del. Case No. 08-13127 to 08-
13131). Chun I. Jang, Esq., and Paul N. Heath, Esq., at Richards,
Layton & Finger, P.A., represent the Debtors in their
restructuring efforts. Kurtzman Carson Consultants LLC serves as
the Debtors' claims agent. Jason W. Salib, Esq., at Blank Rome
LLP, represents the official committee of unsecured creditors as
counsel.
At February 28, 2009, PFF Bancorp had total assets of
$159,857,902, total liabilities of $117,430,056, and total equity
of $42,427,846.
PILGRIM'S PRIDE: Chicken Growers' Public Policy Argument Denied
---------------------------------------------------------------
Judge D. Michael Lynn of the U.S. Bankruptcy Court for the
Northern District of Texas authorized Pilgrim's Pride Corp. to
reject contracts with 30 chicken growers serving a plant in Live
Oak, Florida.
In a memorandum of opinion, Judge Lynn said the court is mindful
of the tragic effect for the Growers on the rejection of their
contracts. Those of the Chicken Growers who testified before the
court were impressive for their candor and obvious competence.
Were the court possessed of magical powers that it could make the
Live Oak plant profitable and, so, rejection of the Growers'
contracts contrary to Debtors' interests, it would do so, Judge
Lynn lamented. Unfortunately the Live Oak plant loses money, he
noted, and the best way to stem that loss is to reduce operations
at the plant, and to reduce operations, the supply of chickens to
the plant must be reduced. Clearly one logical way to accomplish
that reduction is through use of the rejection power provided by
Section 365(a) of the Bankruptcy Code to dispose of some contracts
with growers, Judge Lynn said.
On behalf of the Chicken Growers, Deborah Deitsch-Perez, Esq., at
Lackey Hershman LLP, in Dallas, Texas, argued that it is public
interest standard -- not the business judgment standard -- that
applies in this case. Ms. Deitsch-Perez also pointed out that the
Chicken Growers are protected by the Packers and Stockyard Act,
which primary purpose is "assure fair competition and fair trade
practices in livestock marketing and in the meat packing industry"
and "safeguard farmers . . . against receiving less than the true
market value of their livestock."
The official committee of unsecured creditors sided with the
Debtors' arguments for the Grower contracts' rejection, saying
that the overwhelming weight of the evidence shows that rejection
is "appropriate", giving the Debtors between $800,000 to
$1,000,000 in savings per week or $40,000,000 to $50,000,000 per
year.
The Debtors also disputed the Chicken Growers' allegation that
they, through their employees, discriminated against the Growers
on the basis of ethnicity. The Debtors noted that, even if true,
the Growers are not employees of the Debtors (they are independent
contractors) and thus are not entitled to discrimination
protections under Title VII of the Civil Rights Act of 1964.
The Debtors used a rational method accepted throughout the
industry for measuring the efficiency of the growers supplying the
Live Oak plant and chose for rejection the contracts of the least
efficient growers ascertained through that method, Judge Lynn
affirmed.
There is no evidence that the selection of contracts for rejection
was at all influenced by any questionable motive. On the
contrary, the entire process was rational, sensible and a clear
exercise by Debtors of their sound business judgment, Judge Lynn
held.
For these reasons, Judge Lynn ruled, the objection must be
overruled. Accordingly, Judge Lynn authorized the Debtors to
reject more than 30 Growers' Contracts. Judge Lynn also directed
that all claims arising as a result of the rejection of the
Executory Contracts be filed by June 1, 2009. A full-text copy
of the rejected Executory Contracts is available for free at:
http://bankrupt.com/misc/PPC_rej_Growerscontracts.pdf
Bloomberg's Bill Rochelle said that the ruling could set precedent
for automaker bankruptcies. He said that Judge Lynn's decision in
the Pilgrim's Pride case "will erect an obstacle to states or
cities that might try to stop automakers from shuttering plants.
Judge Lynn analyzed the so-called Bildisco and Mirant cases where
higher courts said public policy should be considered when
terminating labor or electric power supply contracts. Judge Lynn
concluded that the "more rigorous" tests didn't apply to chicken-
supply contracts. He held that "the price of chicken for
consumers, unlike the cost of power," isn't "an evident concern of
Congress." He also said that the "health and safety of the
public" wasn't involved.
About Pilgrim's Pride Corp.
Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation
(Pink Sheets: PGPDQ) -- http://www.pilgrimspride.com/-- produces,
distributes and markets poultry processed products through
retailers, foodservice distributors and restaurants in the U.S.,
Mexico and in Puerto Rico. In addition, the Company owns 34
processing plants in the United States and 3 processing plants in
Mexico. The processing plants are supported by 42 hatcheries, 31
feed mills and 12 rendering plants in the United States and 7
hatcheries, 4 feed mills and 2 rendering plants in Mexico.
Moreover, the company owns 12 prepared food production facilities
in the United States. The Company employs about 40,000 people and
has major operations in Texas, Alabama, Arkansas, Georgia,
Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee,
Virginia, West Virginia, Mexico, and Puerto Rico, with other
facilities in Arizona, Florida, Iowa, Mississippi, and Utah.
Pilgrim's Pride Corp. and six other affiliates filed Chapter 11
petitions on December 1, 2008 (Bankr. N.D. Tex. Lead Case No.
08-45664). The Debtors' operations in Mexico and certain
operations in the United States were not included in the filing
and continue to operate as usual outside of the Chapter 11
process.
Pilgrim's Pride has engaged Stephen A. Youngman, Esq., Martin A.
Sosland, Esq., and Gary T. Holzer, Esq., at Weil, Gotshal & Manges
LLP, as bankruptcy counsel. The Debtors have also tapped Baker &
McKenzie LLP as special counsel. Lazard Freres & Co., LLC, is the
company's investment bankers and William K. Snyder of CRG Partners
Group LLC as chief restructuring officer. The Company's claims
and noticing agent is Kurtzman Carson Consulting LLC.
A nine-member committee of unsecured creditors has been appointed
in the case.
As of December 27, 2008, the Company had $3,215,103,000 in total
assets, $612,682,000 in total current liabilities, $225,991,000 in
total long-term debt and other liabilities, and $2,253,391,000 in
liabilities subject to compromise.
Bankruptcy Creditors' Service, Inc., publishes Pilgrim's Pride
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
of Pilgrim's Pride Corp. and its various affiliates.
PILGRIM'S PRIDE: Court OKs Plant City Sale to New Southern
----------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas
authorized Pilgrim's Pride Corp. and its affiliates to sell their
property in Plant City Florida, to New Southern Food Distributors
Inc. Pursuant to an asset purchase agreement signed with PFS
Distribution Company, New Southern Food agreed to purchase the
assets for $2,570,000. The parties have agreed that the APA will
terminate if closing does not occur by July 3, 2009.
Pilgrim's Pride Corp. was scheduled to hold an auction on May 18
to learn whether anyone will beat the competitor Foster Farms'
$80 million offer for a processing plant in Farmerville,
Louisiana, along with two hatcheries and a feed mill.
About Pilgrim's Pride Corp.
Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation
(Pink Sheets: PGPDQ) -- http://www.pilgrimspride.com/-- produces,
distributes and markets poultry processed products through
retailers, foodservice distributors and restaurants in the U.S.,
Mexico and in Puerto Rico. In addition, the company owns 34
processing plants in the United States and 3 processing plants in
Mexico. The processing plants are supported by 42 hatcheries, 31
feed mills and 12 rendering plants in the United States and 7
hatcheries, 4 feed mills and 2 rendering plants in Mexico.
Moreover, the company owns 12 prepared food production facilities
in the United States. The Company employs about 40,000 people and
has major operations in Texas, Alabama, Arkansas, Georgia,
Kentucky, Louisiana, North Carolina, Pennsylvania, Tennessee,
Virginia, West Virginia, Mexico, and Puerto Rico, with other
facilities in Arizona, Florida, Iowa, Mississippi, and Utah.
Pilgrim's Pride Corp. and six other affiliates filed Chapter 11
petitions on December 1, 2008 (Bankr. N.D. Tex. Lead Case No.
08-45664). The Debtors' operations in Mexico and certain
operations in the United States were not included in the filing
and continue to operate as usual outside of the Chapter 11
process.
Pilgrim's Pride has engaged Stephen A. Youngman, Esq., Martin A.
Sosland, Esq., and Gary T. Holzer, Esq., at Weil, Gotshal & Manges
LLP, as bankruptcy counsel. The Debtors have also tapped Baker &
McKenzie LLP as special counsel. Lazard Freres & Co., LLC, is the
company's investment bankers and William K. Snyder of CRG Partners
Group LLC as chief restructuring officer. The Company's claims
and noticing agent is Kurtzman Carson Consulting LLC.
A nine-member committee of unsecured creditors has been appointed
in the case.
As of December 27, 2008, the Company had $3,215,103,000 in total
assets, $612,682,000 in total current liabilities, $225,991,000 in
total long-term debt and other liabilities, and $2,253,391,000 in
liabilities subject to compromise.
Bankruptcy Creditors' Service, Inc., publishes Pilgrim's Pride
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
of Pilgrim's Pride Corp. and its various affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
POMARE LTD: Maui Divers Offers $1 Million for Firm
--------------------------------------------------
Janis L. Magin at Pacific Business News reports that Maui Divers
Jewelry has offered to acquire Pomare Ltd., doing business as Hilo
Hattie, for $1 million. The official committee of unsecured
creditors supports the sale.
Maui Divers, Business News states, operates jewelry concessions
inside the seven Hilo Hattie stores and is the largest creditor on
the Creditors Committee. The report states that Maui Divers gave
Pomare some $1.25 million that it had given Hilo Hattie last year
as an advance on future rent.
Maui Divers President and CEO Bob Taylor said that the Company has
asked for an expedited hearing on the offer to buy Hilo Hattie,
Business News relates.
Business News states that the offer is contingent upon a number of
conditions, including the successful negotiation of leases at the
seven stores. The report says that if the U.S. Bankruptcy Court
for the District of Hawaii approves the offer, Maui Divers will:
-- rehire most of Hilo Hattie's 200 workers,
-- invest at least $2 million of working capital into
operations and merchandise at the stores, and
-- keep most, if not all, of the local vendors who supply the
merchandise.
Business News relates that the committee had asked the Court in
April to appoint a trustee to take over management of Pomare. The
Hon. Robert Faris put off a decision until another hearing
scheduled for June 22, Business News states.
Based in Honolulu, Hawaii, Pomare Ltd. dba. Hilo Hattie, makes and
sells men's clothing. The company filed for Chapter 11 relief on
October 2, 2008 (Bankr. D. Hawaii Case No. 08-01448). Chuck C.
Choi, Esq., and James A. Wagner, Esq., at Wagner Choi & Verbrugge,
represent the Debtor as counsel. Alexis M. McGinness, Esq., and
Ted N. Pettit, Esq., at Case Lombardi & Pettit, represent The
Official Committee of Unsecured Creditors as counsel. In its
schedules, the Debtor listed total assets of $15,825,657, and
total debts of $13,767,047.
QUICKSILVER RESOURCES: S&P Affirms 'B' Corporate Credit Rating
--------------------------------------------------------------
Standard & Poor's Ratings Services said that it revised its
outlook on Quicksilver Resources Inc. to developing from negative
and affirmed its 'B' corporate credit rating on the company. At
the same time, Standard & Poor's placed its issue-level rating on
the company's second-lien facility on CreditWatch with positive
implications.
"The outlook revision follows the company's announcement that they
are contributing approximately 131 billion cubic feet equivalent
of proved reserves in the Barnett Shale into an alliance with
Eni," said Standard & Poor's credit analyst Amy Eddy. "The
transaction, which S&P expects to close in mid-June, will result
in Quicksilver receiving net proceeds of approximately
$280 million. The majority of proceeds are likely to be applied
to its second-lien debt facility." S&P anticipate that the
balance on this facility will decrease to about $320 million,
which should provide additional cushion under that facility's
asset coverage covenants. The reduction in debt is also likely to
result in improved recovery for holders of the second-lien
facility. However, since the facility will not be entirely
repaid, if prices remain similar to first-quarter 2009 levels, the
cushion could be thin.
As of March 31, 2009, Fort Worth, Texas-based, Quicksilver had
more than $2.5 billion in total adjusted debt (excludes non-
recourse debt at its MLP subsidiary).
The ratings on Quicksilver reflect its highly leveraged financial
profile; improving, but limited, covenant cushion; and a highly
cyclical and capital-intensive industry. The ratings also reflect
the company's competitive cost structure as well as good internal
growth prospects.
The outlook is developing. S&P could lower the rating if, among
other things, the company's liquidity or covenant cushion
materially decreases from current levels. S&P could raise the
rating if the company is able to improve liquidity levels and S&P
expects that it is likely it will be well within compliance on all
of its financial covenants.
RAM REINSURANCE: Moody's Cuts Insurance Strength Rating to 'Ba3'
----------------------------------------------------------------
Moody's has downgraded to Ba3 from Baa3, the insurance financial
strength rating of RAM Reinsurance Company Ltd. Concurrently,
Moody's downgraded the rating of the preference shares of RAM
Holdings, Ltd. to C, from B2. The rating actions reflect Moody's
current view that lack of demand for financial guaranty
reinsurance and RAM Re's constrained financial position are likely
to meaningfully affect future business prospects for the company.
The rating action on the preference shares also takes into
consideration the recent announcement by the company regarding
suspension of dividend payments on the preference stock of RAM
Holdings. The rating outlook for RAM Re's insurance financial
strength rating is negative.
Moody's also announced that it will withdraw the insurance
financial strength rating of RAM Re and the rating on the
preference shares of RAM Holdings. The ratings will be withdrawn
for business reasons. Please refer to Moody's Withdrawal Policy
on moodys.com.
Decline in demand for bond insurance and fewer active primary
companies have resulted in a sharp reduction of business volume
ceded to reinsurance companies, including Ram Re. The commutation
transactions involving Syncora, MBIA and Ambac have reduced the
volatility in portfolio performance as the proportion of mortgage-
related risk has declined. However, these transactions have also
meaningfully affected the value of the company's reinsurance
platform to its clients. RAM Re's current capital base would make
it difficult for the company to participate in large treaties or
transactions in the future.
RAM Re's portfolio quality metrics remain strong, primarily due to
the large concentration of municipal risk in the portfolio.
Moody's commented that losses for the US mortgage-related
portfolio have increased substantially, but these risks account
for only 4% of the overall portfolio. The reduction in capital
base due to the commutations renders the company more vulnerable
to risk concentration issues and risk adjusted capitalization is
considered weak.
As a Bermuda domiciled entity, RAM Re maintains trust accounts in
favor of its primary financial guaranty counterparties, which to
some extent reduces the risk of capital extraction from the
operating company. The primary guarantors have the right to
terminate their reinsurance relationship with RAM Re if certain
rating triggers are breached. In such instances, as seen with
certain of RAM Re's clients, the primary counterparty will
reassume all the risk ceded and take back funds from the trust
account. Should RAM Re's remaining clients exercise their rights
to terminate their reinsurance arrangements, Moody's believes that
RAM Re's remaining financial resources would be insufficient to
repay all outstanding debt and preferred stock. In that scenario,
expected recoveries on the holding company preferred stock could
be very low -- this, along with the company's plan to repurchase
shares in the market for amounts that would likely reflect large
discounts to stated par, accounts for the rating of C on RAM
Holdings Ltd. preferred stock.
The last rating action for RAM Re was on December 4, 2008 when the
insurance financial strength rating of RAM Reinsurance Limited was
downgraded to Baa3, from A3, and the preferred stock rating of RAM
Holdings, Ltd. was downgraded to B2, from Ba1.
List of Rating Actions:
These ratings have been downgraded and will be withdrawn:
* RAM Reinsurance Company Ltd. -- insurance financial strength to
Ba3, from Baa3;
* RAM Holdings Ltd. -- preference shares to C, from B2
RAM Holdings, Ltd. is a Bermuda-based holding company. Its
operating subsidiary RAM Reinsurance Company Ltd. provides
financial guaranty reinsurance for U.S. and international public
finance and structured finance transactions.
REALTY AMERICA: Seeks Chapter 11 Protection in Dallas
-----------------------------------------------------
Mall owner Realty America Group (Lincoln Mall) LP filed a "bare-
bones" Chapter 11 petition on May 18 before the U.S. Bankruptcy
Court for the Northern District of Texas, Bloomberg's Bill
Rochelle said. The petition listed its mall as being worth
$53.3 million. Debt totaling $40.9 million consists chiefly of
$37.6 million in secured debt listed as disputed. Realty America
owns the Lincoln Square mall in Arlington, Texas.
REALTY AMERICA: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Realty America Group (Lincoln Mall), LP
dba
Lincoln Mall
5950 Berkshire Lane, Suite 410
Dallas, TX 75225-5846
Bankruptcy Case No.: 09-33076
Chapter 11 Petition Date: May 18, 2009
Court: United States Bankruptcy Court
Northern District of Texas (Dallas)
Judge: Stacey G. Jernigan
Debtor's Counsel: David W. Elmquist, Esq.
Reed & Elmquist, P.C.
604 Water Street
Waxahachie, TX 75165
Tel: (972) 938-7339
Fax: (972) 923-0430
Email: delmquist@bcylawyers.com
Estimated Assets: $10 million to $50 million
Estimated Debts: $10 million to $50 million
Realty America did not file a list of 20 largest creditors
together with its petition.
The petition was signed by Rives E. Castleman, Sole Member of the
Managing Partner.
RENEW ENERGY: Seeks to Auction All Assets on June 22
----------------------------------------------------
Renew Energy LLC asks the U.S. Bankruptcy Court for the Western
District of Wisconsin to approve procedures that would govern an
auction for substantially all of its assets.
The Debtor has not selected a stalking horse bidder or received a
"firm offer" for its assets.
Bids for its assets must be filed by June 2, 2009, at William
Blair & Company, 222 W. Adams Street in Chicago, Illinois, the
Debtor proposes. An auction will take place on June 22, 2009.
The Debtor is targeting closing of the sale by June 30, 2009.
The Debtor notes that it may cancel the auction and plans to
transfer the assets under the terms of a plan if there are no
bidders for the assets or the bids are not acceptable to the
Debtor.
A preliminary hearing is set for May 26, 2009 at 11:30 a.m., to
consider the Debtor's request.
Headquartered in Jefferson, Wisconsin, Renew Energy LLC --
http://www.renewenergyllc.com/-- operates an ethanol plant
facility. The Company filed for Chapter 11 on January 30, 2009
(Bankr. W.D. Wis. Case No. 09-10491). Christopher Combest, Esq.,
at Quarles & Brady LLP, represents the Debtor in its restructuring
efforts. William T. Neary, the United States Trustee for Region
11, appointed five creditors to serve on an Official Committee of
Unsecured Creditors. When the Debtor filed for bankruptcy, it
said its assets and debts are both between $100 million to
$500 million.
RENEW ENERGY: Wants June 8 as Bar Date for Proofs of Claim
----------------------------------------------------------
Renew Energy LLC asks the U.S. Bankruptcy Court for the Western
District of Wisconsin to set June 8, 2009, as the deadline for
creditors, other than governmental units, to file proofs of claim.
The Debtor proposes July 29, as deadline for filing proofs of
claim for all governmental units.
The Debtor tells the Court that it seeks to set bar dates so that
it could evaluate the nature and scope of all potential claims
against it -- including claims entitle to administrative priority,
if any -- in order to determine the best course for its bankruptcy
case after the closing of a sale of all its assets.
Headquartered in Jefferson, Wisconsin, Renew Energy LLC --
http://www.renewenergyllc.com/-- operates an ethanol plant
facility. The Company filed for Chapter 11 on January 30, 2009
(Bankr. W.D. Wis. Case No. 09-10491). Christopher Combest, Esq.,
at Quarles & Brady LLP, represents the Debtor in its restructuring
efforts. William T. Neary, the United States Trustee for Region
11, appointed five creditors to serve on an Official Committee of
Unsecured Creditors. When the Debtor filed for bankruptcy, it
said its assets and debts are both between $100 million to
$500 million.
RH DONNELLEY: Seeks Bank Lender Support as Part of Restructuring
----------------------------------------------------------------
R.H. Donnelley Corporation said it is holding separate conference
calls with its bank lenders and the ad hoc steering committee of
certain of its bondholders to discuss details relating to a
potential debt restructuring plan. Public lenders can restrict
themselves for the remainder of the forbearance period and obtain
detailed information about the company's business plan and the
potential debt restructuring.
The company hopes to obtain support for a debt restructuring from
its bank lenders and bondholders before the expiration on May 28,
2009 of the forbearance agreements currently in place. There can
be no assurances that the company will be successful in obtaining
support from its bank lenders and bondholders on a debt
restructuring plan.
The company will have no further comment at this time about this
matter.
About R.H. Donnelley
Headquartered in Cary, North Carolina, R.H. Donnelley Corp., fka
The Dun & Bradstreet Corp., -- http://www.rhdonnelley.com/--
(NYSE: RHD) publishes and distributes print and online directories
in the U.S. It offers print directory advertising products, such
as yellow pages and white pages directories. R.H. Donnelley Inc.,
Dex Media, Inc. and Local Launch, Inc. are the company's only
direct wholly owned subsidiaries.
Going Concern Doubt
KPMG LLP, the Company's independent auditor, in March 2009, raised
substantial doubt on the Company's ability to continue as a going
concern. "The Company has significant amounts of maturing debt
which it may be unable to satisfy commencing March 31, 2010,
significant negative impacts on operating results and cash flows
from the overall downturn in the global economy and higher
customer attrition, and possible debt covenant violations in 2009
that raise substantial doubt about its ability to continue as a
going concern," KPMG said in its March 27 report.
R.H. Donnelley reported a net loss of $2.29 billion for the year
ended December 31, 2008, on net revenues of $2.61 billion. As of
December 31, the Company had $11.8 billion in total assets and
$12.3 billion in total liabilities, resulting in $493.3 million in
shareholders' deficit.
* * *
As reported by the Troubled Company Reporter on May 20, 2009,
Moody's Investors Service has changed R.H. Donnelley's Probability
of Default rating to Ca/LD, from Ca, signaling the limited default
that has occurred following the lapse of a 30-day grace period
after the company's failure to make a scheduled coupon payment on
its senior unsecured notes, which was due on April 15, 2009.
Although Donnelley's debtholders have agreed to forbear from
taking any action with respect to the missed interest payment,
Moody's regards Donnelley's failure to make payment within the
just completed grace period as an event of default. Moreover,
Moody's continue to expect that the company will soon announce a
pre-packaged bankruptcy, distressed exchange or other
restructuring measures as a means of addressing its over-leveraged
balance sheet. All of Donnelley's other ratings have remain
unchanged.
On May 19, the TCR said, Standard & Poor's Ratings Services
lowered its corporate credit rating on R.H. Donnelley Inc., Dex
Media Inc., and Dex Media West LLC to 'D' from 'CC'. S&P lowered
its issue-level ratings to 'D' from 'C' on:
-- R.H. Donnelley Inc.'s 11.75% senior notes due 2015;
-- Dex Media Inc.'s 8% senior notes due 2013; and
-- Dex Media Inc.'s 9% senior notes due 2013;
S&P affirmed all of its other outstanding ratings on R.H.
Donnelley-related entities, including the 'CC' corporate credit
rating on Dex Media East LLC. The outlook on this rating is
negative.
SAGITTARIUS RESTAURANTS: S&P Junks Corporate Credit Rating
----------------------------------------------------------
Standard & Poor's Ratings Services said it lowered its ratings on
Nashville-based Sagittarius Restaurants LLC, including the
corporate credit rating, which S&P lowered to 'CCC' from 'B-'. At
the same time, S&P lowered the issue-level rating on the company's
senior secured credit facilities to 'CCC' (the same as the
corporate credit rating) from 'B'. S&P revised the recovery
rating on the facility to '3' from '2'. The '3' recovery rating
indicates S&P's expecation of meaningful (50%-70%) recovery of
principal in the event of default.
Last year, Sagittarius negotiated a covenant amendment with its
senior secured lenders, which provided the company relief of
financial covenants for two years, subsequent to which point those
covenants reset to the levels of the original credit facility. At
the end of the second quarter of 2010, the company must comply
with the original covenant levels, and S&P currently do not
envision any performance scenario in which Sagittarius will comply
with the covenants at that point.
"In the interim," said Standard & Poor's credit analyst Charles
Pinson-Rose, "we estimate that the company will comply with the
amended financial covenants, but if performance is weaker than
S&P's expecations over the next few quarters, S&P feel that a
covenant breach is possible."
SEMGROUP LP: Canadian Monitor Files Report on CCAA Proceedings
--------------------------------------------------------------
Ernst & Young, LLP, the Court-appointed monitor of SemCanada
Crude Company and its affiliates' reorganization proceedings
before the Canadian Companies' Creditors Arrangement Act
disclosed that on April 16, 2009, that:
(1) SemCanada Energy Group intends to sell the shares of
319278 Nova Scotia Company to Onit Energy Ltd, pursuant to
a non-binding Letter Agreement dated April 8, 2009.
(2) the Amended and Restated Initial Order is amended to
include Terrence Ronan, SemGroup, L.P.'s president and
chief executive officer, in his capacity as director and
officer of Wholesale Energy Group ULC; and
(3) the approval of the due diligence of SemCrude Canada by
certain third parties, as part of their intent to acquire
substantially all of the businesses of SemGroup's U.S.
Debtors.
SemEnergy is the sole shareholder of 319, which in turn is the
holding company for all the shares of WEG. 319 has no employees
and is not conducting any business.
Pursuant to an asset sale, WEG has transferred all of its
contracts to Universal Energy Corporation. Certain utility
companies, with which WEG had contracts, continued to deposit
proceeds into the WEB bank account subsequent to the sale. These
proceeds were earned from contracts transferred to Universal
under the asset sale and therefore accrued to and are considered
assets of Universal. SemEnergy intends to make an initial
payment to Universal of $500,000, with the balance to follow when
it appears that no further deposits are being made.
As have been noted, the only asset held by 319 is its investment
in WEG. The identifiable assets of WEG include the WEG name,
certain non-capital losses, and $1.1 million in the WEG bank
account, of which $530,000 is due to Universal. After payment of
its liabilities, WEG will have $480,000 in its bank. The Monitor
has determined that the non-capital losses would likely have
minimal value as a result of a change in control of WEG.
The Letter Agreement between 319 and Onit provides for the sale
of 319 and WEG on an "as is, where is" basis, and payment of all
known liabilities of WEG prior to the sale. The Letter Agreement
also provides for payment of $275,000 cash plus the WEG Cash as
total consideration for the shares. It further provides for an
indemnification by Onit of 319 to the maximum of the purchase
price for possible unknown liabilities of WEG during the time 319
was its sole shareholder, except in the case of fraud,
misrepresentation or gross negligence. The offer will be valid
until April 17, 2009, and must close before May 30, 2009.
According to the Monitor, the $275,000 purchase price to Onit is
reasonable as 319 and WEG have no business activities, their
assets are only minimal assets, and that all their liabilities
will be paid.
As WEG's sole director, Mr. Ronan's continued services are
required to facilitate the sale of 319's shares. Accordingly,
SemCanada seeks to amend the Restated Initial Order to include an
indemnity to Mr. Ronan, as director of WEG.
Furthermore, in connection to offers by third parties to purchase
SemCanada Crude's business, as part of SemGroup L.P. and its U.S.
affiliates to restructure or sell their businesses as debtors-in-
possession, certain third parties are seeking to conduct due
diligence on SemCanada Crude.
The Monitor recommends to the Court of Queen's Bench of Alberta,
Judicial District of Calgary (1) to approve the sale of 319's
shares to Onit, (2) to revise the Amended and Restated Initial
Order to provide for Mr. Ronan's indemnification, and (3) to
approve the due diligence process pertaining to SemCanada Crude.
SemCanada Crude and SemCanada Energy
Seeks Approval of Settlement with
Chevron and Affiliate
The Monitor, in a separate report dated April 27, 2009, related
that SemCanada Crude Company seeks for the approval of the
settlement agreement dated April 17, 2009 among itself, Chevron
Canada Resources, and Aitken Creek Gas Storage ULC. Aitken
Creek, an affiliate of Chevron, has filed a proof of claim for
net amounts it asserted against SemCanada Crude arising from the
sale of condensate and crude oil prior to the bankruptcy
proceedings under the Companies' Creditors' Arrangement Act.
Chevron has sought to set off amounts it asserted against
SemCanada Crude for amounts SemCanada Crude purportedly owes to
Aitken Creek.
The Monitor further discloses that SemCanada Energy Company seeks
approval of its settlement agreement dated April 17, 2009 with
Chevron Canada Resources, Aitken Creek Gas Storage ULC, and
Unocal Canada Hub Limited, in connection with net amounts Aitken
has filed against SemCanada Energy resulting from the short term
purchase and sale of natural gas prior to the CCAA proceedings.
Chevron and Unocal have sought to set off the amounts owing under
both the sale to Chevron and Unocal against the amounts SemCanada
Energy purportedly owes Aitken Creek.
The Monitor recommends the approval of both the SemCanada Crude
Settlement and the SemCanada Energy Settlement.
SemCanada Updates Financial Forecasts,
Seeks to Extend CCAA Stay Period to Aug. 3, 2009
In yet another report, dated April 30, 2009, the Monitor
disclosed that SemCanada Crude Company filed an actual analysis
between its actual and forecasted receipts and disbursements for
the period from January 24, 2009 to April 17, 2009.
January 24, 2009 to April 17, 2009
(in $000's)
----------------------------------
Actual Forecast Difference
Receipts $94,359 $101,957 ($7,598)
Disbursements 94,888 97,788 ($2,900)
------- --------- ----------
Net change in cash (529) 4,169 (4,698)
Opening cash 161,878 161,878 -
-------- --------- ---------
Ending cash 161,349 166,047 (4,698)
Funds held in trust 10,453 10,453 -
-------- --------- ---------
Cash $171,802 $176,500 ($4,698)
======== ========= =========
The variance was a result of volume and price differentials, the
Monitor relates. The ending cash balance of about $172 million
includes amounts held in trust by the Monitor of about $9 million
relating to Enbridge Inc., $0.75 million relating to Gibson
Energy Ltd., and $0.5 million relating to Pembina.
SemCanada Crude is expected to continue to operate in the normal
course during the period from April 18, 2009 to August 7, 2009,
and accordingly files a forecast for the period:
April 18 to
August 7, 2009
(in $000's)
-----------
Receipts $176,119
Disbursements 157,968
-----------
Net change in cash $18,151
Opening cash 161,349
-----------
Ending cash $179,500
Funds held in trust 10,453
-----------
Forecasted cash, Aug. 7, 2009 $189,953
===========
Management assumes no increase in volumes with its current
producers. Moreover, U.S. dollar to Canadian dollar conversion
is at $1.25, and the forecast price of oil is based on West Texas
Intermediate forecasts. Furthermore, management assumes there
will be no further holdbacks and set-off claims asserted by
customers throughout the April 18 to Aug. 7, 2009 forecast
period.
SemCanada Crude's stay period pursuant to the CCAA expires on
June 1, 2009, and suppliers are required to nominate their June
2009 crude oil volumes by May 5, 2009. Certain SemCanada Crude
suppliers, however, are unwilling to nominate volumes to
SemCanada beyond the stay period.
Also, SemCanada Crude received Court approval to provide parties
with confidential information, in regard to a possible sale of
the business. SemCanada Crude anticipates providing further
update on the due diligence by early July 2009. The Monitor
points out that an extension of the stay period will allow
SemCanada Crude to proceed with its due diligence for its
stakeholders, aside from ensuring for SemCanada Crude that its
suppliers continue to nominate future volumes for June, July and
August 2009. The Monitor, accordingly, recommends extension of
the stay period until August 3, 2009.
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). 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, represent the Debtors
in their restructuring efforts. 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
November 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)
SEMGROUP LP: Creditors Panel to Amend Suit Against Former Execs
---------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
bankruptcy cases of SemGroup L.P., SemCrude L.P., and their debtor
affiliates, asks Judge Brendan Linehan Shannon of the U.S.
Bankruptcy Court for the District of Delaware to approve a
stipulation the Creditors' Committee entered into with the Debtors
conferring its standing to prosecute additional causes of action
on behalf of the Debtors' estates by filing a second amended
complaint.
In March 2009, the Creditors' Committee sought and obtained Court
authority to sue Thomas L. Kivisto, Gregory C. Wallace, and
Westback Purchasing Co., LLC, for wrongful conversion of the
Debtors' assets, on the Debtors' estates' behalf. Based on the
report of Semgroup L.P.'s Examiner -- that there exist valid
claims against SemGroup's former officers, Brent Cooper, Kevin L.
Foxx, and Alex G. Stallings, as well as additional claims against
current defendants Westback, and Messrs. Kivisto and Wallace --
the Creditors' Committee, accordingly, files a second amended
complaint.
The second amended complaint alleges:
(a) breach of fiduciary duty against Messrs. Cooper and
Stallings for gross negligence in failing to take action
despite their knowledge of the trades involving Westback,
(b) breach of fiduciary duty and breach of contract against
Mr. Foxx arising from his undisclosed bonus payment, and
non-disclosure of his indirect ownership interest in
another business;
(c) breach of fiduciary duty against Messrs. Kivisto, Wallace,
Cooper, Stallings and Fox on account of SemGroup's
speculative trading activities, and grossly inadequate
risk management;
(d) constructive fraudulent transfer against Messrs. Kivisto,
Wallace and Foxx arising from partnership distributions in
February 2008.
The Court will convene a hearing on the request of the Creditors'
Committee on June 2, 2009. Objections must be filed no later than
May 26, 2009.
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). 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, represent the Debtors
in their restructuring efforts. 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
November 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)
SEMGROUP LP: PA Consulting Bills $1.47MM for 4-Months' Work
-----------------------------------------------------------
Professionals retained in the bankruptcy cases of SemGroup L.P.,
SemCrude L.P., and their debtor affiliates filed applications for
the allowance of fees and reimbursement of expenses:
A. Debtors' Professionals
Firm Period Fees Expenses
---- ---------- ----------- --------
Richards, Layton 12/01/08 -
& Finger, P.A. 03/31/09 $465,194 $37,070
PA Consulting 12/01/08 -
Group, Inc. 03/31/09 $1,472,577 $110,241
B. Official Committee of Unsecured Creditors' Professionals
Firm Period Fees Expenses
---- ---------- ----------- --------
Quinn Emanuel
Urquhart Oliver 03/01/09 -
& Hedges, LLP 03/31/09 $512,259 $30,275
C. Official Producers' Committee's Professionals
Firm Period Fees Expenses
---- ---------- ----------- --------
Lain, Faulkner 11/04/08 -
& Co., P.C. 03/31/09 $506,903 $5,886
Cole, Schotz,
Meisel, Forman, 02/01/09 -
Leonard, P.A. 02/28/09 $9,623 $4,243
Cole, Schotz,
Meisel, Forman, 03/01/09 -
Leonard, P.A. 03/31/09 8,452 5,877
Cole, Schotz,
Meisel, Forman, 11/01/08 -
Leonard, P.A. 03/31/09 69,801 31,053
Warren H. Smith & Associates, P.C., says it did not receive
timely objections to its fee applications for the period from
January 1 to 31, 2009.
Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in
Wilmington, Delaware, discloses that the Court will convene a
hearing on the first interim fee applications of PA Consulting
Group, Inc., Richards, Layton & Finger, P.A., and Blackstone
Advisory Services, L.P., on June 25, 2009.
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). 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, represent the Debtors
in their restructuring efforts. 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
November 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)
SEMGROUP LP: Seeks to Hire Longnecker as Pay Consultants
--------------------------------------------------------
SemGroup L.P., SemCrude L.P., and their debtor affiliates ask the
U.S. Bankruptcy Court for the District of Delaware for authority
to employ Longnecker & Associates as compensation consultants,
nunc pro tunc to April 16, 2009, pursuant to Sections 327 (a) and
328(a) of the Bankruptcy Code, according to the terms of their
engagement letter.
Longnecker will develop a two-phase equity ownership program for
employees in the post-bankruptcy reorganized SemGroup.
In Phase I, Longnecker will:
(a) conduct long-term incentive market analysis for three
different peer groups:
* midstream companies with revenues of about $1 billion;
* energy and petroleum companies with revenues of $1
billion; and
* Chapter 11 reemergence companies that filed initial public
offerings;
(b) provide an overview of different approaches SemGroup could
elect to offer to employees; listing pros and cons of each
approach;
(c) provide a recommendation on the best approach for SemGroup
to take at this time, based upon current economic
conditions, federal rules and regulations, SemGroup's
company profile, its long-term goals and objectives, and its
anticipated financial results. Longnecker will rely upon
its extensive experience in long-term incentive plan design
for energy companies, as well as Longnecker's research and
publication on long-term incentive awards; and
(d) provide an overview of project design for the recommended
approach. This project design will document recommended
participation levels of long-term incentive equity awards
and cash equivalent programs for the general employee
population.
In Phase II, Longnecker will:
-- provide a detailed plan design for the employee ownership
program selected by SemGroup. Longnecker will design this
plan based on the evaluation and selection of plan design
provided in Phase I; and
-- provide a communication plan and documentation for SemGroup
to use when informing constituents and senior leaders in the
organization.
Longnecker has not completed this plan, and believes that
SemGroup is completing this step of Phase II.
SemGroup President and CEO Terrence Ronan, emphasizes that
Longnecker's assistance with the development of an employee
incentive plan is crucial to ensuring that employees receive the
proper motivation. The incentive plan will also assist SemGroup
with meeting its long-term goals by employing a strong base of
employees, he says.
Upon presenting its initial findings and recommendations to
SemGroup management, Longnecker will gather overhang data for the
peer groups. Overhang data refers to the number of shares
awarded to employees as a percentage of total shares
outstanding, and the Overhang Analysis provides Longnecker's
findings, conclusions and recommendations for the appropriate
number of shares to request for employee equity awards.
Moreover, Longnecker will evaluate and design appropriate human
resource infrastructure processes and systems for the post-
bankruptcy SemGroup. Longnecker anticipates that this evaluation
and design will be performed on an as-needed basis and will
likely continue up to the time of SemGroup's successful emergence
from bankruptcy.
For the contemplated services, the Debtors will pay Longnecker
based on these hourly rates:
Professional Hourly Rate
------------ -----------
Chairman & Chief Executive Officer $495
Executive Director $425
Director $350
Senior Consultant $275
Consultant $200
The Debtors will also reimburse Longnecker for any direct
expenses incurred in connection with the engagement. Mr. Ronan
assures that Court that Longnecker will carry out unique
functions for the Debtors, and that the firm will use reasonable
efforts to coordinate with other professionals of the Debtors to
avoid duplication of services.
A copy of the Longnecker engagement letter is available for free
at http://bankrupt.com/misc/semgroup_longneckerletter.pdf
Brent Longnecker, president of Longnecker and Associates, in
Houston, Texas, says his firm is a "disinterested person" within
the meaning of section 101 (14) of the Bankruptcy Code, as
modified by section 1107 (b) of the Bankruptcy Code,
The Court will hear the request on June 25, 2009, so that
objections must be filed no later than by June 1.
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). 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, represent the Debtors
in their restructuring efforts. 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
November 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)
SHANE CO: Has August 10 Extension of Plan Filing Deadline
---------------------------------------------------------
Shane Co. obtained from the U.S. Bankruptcy Court for the District
of Colorado an order extending until August 10, 2009, its
exclusive periods to propose and solicit acceptances of a
Chapter 11 plan of reorganization, Bloomberg's Bill Rochelle
reported.
As reported by the Troubled Company Reporter on April 29, the
Debtor said it is refining its overall financial projections and
formulating proposed terms of a plan of reorganization, in
consultation with the Official Committee of Unsecured Creditors
and its financial advisors. Given this uncertain economy, the
Debtor said it is critical that it be comfortable with its ability
to perform under its own financial projections prior to committing
to the terms of a plan.
In addition, the Debtor said it was in the process of contacting
each of its landlords to attempt to negotiate modifications to the
terms of each of its leases that would help the Debtor in making a
final decision on whether to assume or reject each lease. While
substantial progress has been made by the Debtor in these
negotiations, they are not yet fully concluded, and thus the
Debtor cannot yet make final decisions as to whether to assume or
reject each lease. Furthermore, the Debtor continues to monitor
the financial performance of each store location, which will also
affect its decision as to whether to assume or reject the lease
for each location.
Headquartered in Centennial, Colorado, Shane Co. --
http://www.shaneco.com/-- sells jewelry. The Company filed for
Chapter 11 protection on January 12, 2009 (Bankr. D. Col. Case No.
09-10367). Gregg M. Galardi, Esq., at Skadden, Arps, Slate,
Meagher & Flom, LLP, serves as the Debtor's counsel, and Caroline
C. Fuller, Esq., at Fairfield and Woods, P.C., serves as the
Debtor's local counsel. Charles F. McVay, the U.S. Trustee for
Region 19, appointed six creditors to serve on an Official
Committee of Unsecured Creditors. Cohen Tauber Spievack
& Wagner P.C. represents the Committee. The Debtor proposed
Kurtzman Carson Consultants LLC as its claims agent. The Company
filed formal lists showing assets for $130 million and debt
totaling $103 million, including $31.4 million owing on secured
claims.
SIX FLAGS: Missed Interest Payment Cues S&P's Rating Cut to 'D'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its issue-level rating
on New York City-based Six Flags Inc.'s 4.5% convertible senior
notes due 2015 to 'D' from 'CC', reflecting the company's failure
to make its May 15 interest payment.
In addition, S&P raised the issue-level rating on Six Flags' 9.75%
senior notes to 'C' from 'D', and lowered the issue-level rating
on the company's 8.875% senior notes due 2010 and 9.625% senior
notes due 2014 to 'C' from 'CC'.
The corporate credit rating on the company remains at 'D'. Six
Flags had total debt of $2.3 billion and $308 million of preferred
stock as of March 31, 2009.
A default has not occurred relative to the legal provision of the
4.5% convertible notes, since there is a 30-day grace period to
make the payment. However, S&P consider a default to have
occurred, even if a grace period exists, when the nonpayment is a
function of the borrower being in financial distress, unless S&P
is confident that the payment will be made in full during the
grace period.
In addition, Six Flags is conducting an exchange offer for the
4.5% convertible senior notes due 2015 and three senior note
issues for Six Flags common stock. The company is also seeking a
consent solicitation from its preferred stock holders to convert
the preferred into Six Flags common stock upon consummation of the
exchange offers.
The rating actions follow S&P's April 16, 2009 research report in
which S&P lowered its corporate credit rating on Six Flags and
S&P's issue-level rating on Six Flags' 9.75% notes due 2013 to
'D'. The company announced on April 15, 2009 that it did not make
the April 15 interest payment on the 9.75% notes. Subsequently,
on May 14, 2009, Six Flags announced that it made an interest
payment on the 9.75% notes after taking advantage of the 30-day
grace period.
The 8.875% senior notes due 2010 and 9.625% senior notes due 2014
are also subject to the exchange offer, scheduled to expire on
June 25, 2009. Standard & Poor's would consider the completion of
the exchange to be tantamount to a default. Also, the company has
announced that it currently intends on taking advantage of the 30-
day grace period on the 9.625% senior notes due 2014 and not make
the June 1, 2009 interest payment.
If the exchange offer is consummated, S&P expects to lower its
issue-level ratings on the 9.75%, 8.875%, and 9.625% notes to 'D'.
This restructuring would reduce debt by slightly over one-third,
or about $870 million, and eliminate the company's preferred
stock. As soon as possible thereafter, S&P will reassess the
company's business outlook and financial profile and assign new
ratings. Alternatively, if the transaction is not completed, S&P
believes that a Chapter 11 bankruptcy filing may occur. If so,
S&P would lower all of S&P's issue-level ratings on the company's
debt to 'D'.
Ratings List
Six Flags Inc.
Corporate Credit Rating D/--/--
Downgraded
Six Flags Inc.
To From
-- ----
4.5% conv sr nts due 2015 D CC
Recovery Rating 6 6
8.875% sr nts due 2010 C CC
Recovery Rating 6 6
9.625% sr nts due 2010 C CC
Recovery Rating 6 6
Upgraded
Six Flags Inc.
To From
-- ----
9.75% sr nts due 2013 C D
Recovery Rating 6 6
SIX FLAGS: Use of Grace Period Won't Affect Moody's 'Ca' Rating
---------------------------------------------------------------
Moody's Investors Service indicated that Six Flags, Inc.'s
announcement that it was taking advantage of the 30-day grace
period with respect to the semi-annual interest payment originally
due on May 15, 2009 on its 4.5% convertible notes maturing in 2015
does not affect the company's Ca Corporate Family Rating,
Probability of Default Rating or debt instrument ratings.
The last rating action was on March 13, 2009 when Moody's
downgraded Six Flags' CFR and PDR each to Ca from Caa2.
Six Flags' ratings were assigned by evaluating factors that
Moody's considers relevant to the credit profile of the issuer,
such as the company's (i) business risk and competitive position
compared with others within the industry; (iii) capital structure
and financial risk; (iii) projected performance over the near to
intermediate term; and (iv) management's track record and
tolerance for risk. Moody's compared these attributes against
other issuers both within and outside Six Flags' core industry and
believes Six Flags' ratings are comparable to those of other
issuers with similar credit risk.
Six Flags, headquartered in New York City, is a regional theme
park company that operates 20 parks spread across North America.
SPECTRUM BRANDS: Amends Pro Forma Financial Projections
-------------------------------------------------------
Spectrum Brands, Inc., and its affiliates amended their Pro Forma
Financial Projections to revise the schedules titled "GAAP
Reconciliation to Net Income" and "GAAP Reconciliation to Net
Income (Monthly)," and in each of those schedules only to the
specific line items reconciling Net Income: restructuring and
related charges; reorganization items, net; growing products
shutdown; interest expense; and tax expense.
A full-text copy of the revised Pro-Forma Financial Projections is
available for free at:
http://bankrupt.com/misc/spectrum_rev_DSfinproj.pdf
As reported by the Troubled Company Reporter on April 16, 2009,
the U.S. Bankruptcy Court for the Western District of Texas, San
Antonio Division, approved the Disclosure Statement filed in
connection with Spectrum Brands' pre-negotiated Plan of
Reorganization and authorized the Company to begin soliciting Plan
votes.
The confirmation hearing is scheduled for June 15, 2009.
Prior to filing voluntary petitions for reorganization under
Chapter 11 for Spectrum Brands and its U.S. subsidiaries on
February 3, 2009, the Company reached agreements with noteholders
representing, in the aggregate, roughly 70% of the face value of
its outstanding bonds to pursue a refinancing that, if approved
and implemented as proposed, would enable the Company to reduce
the amount of debt on its balance sheet by approximately
$840 million -- or approximately one-third -- eliminate a
substantial amount in annual cash interest payments and free up
additional cash that could be reinvested in its business to
support meaningful revenue and profit growth.
If the Company's Plan of Reorganization is confirmed as proposed,
existing common stock will be extinguished under the plan, and no
distributions will be made to holders of the Company's current
equity.
Based in Cibolo, Texas, Spectrum Brands, Inc. (PINK SHEETS: SPCB)
-- http://www.spectrumbrands.com/-- supplies consumer batteries,
lawn and garden care products, specialty pet supplies, shaving and
grooming products, household insect control products, personal
care products, and portable lighting. Spectrum Brands' business
is operated in three reportable segments: (a) Global Batteries and
Personal Car; (b) Global Pet Supplies; and (c) Home and Garden.
Spectrum Brands has roughly 5,960 employees worldwide, with about
2,700 of those employees working within the United States. In
addition, Spectrum Brands holds a 50% interest in a domestic
entity; minority interests (less than 25% each) in a domestic
entity and a foreign entity; a limited partnership interest in a
foreign entity; and a 100% interest in a foreign trust.
Spectrum Brands, Inc., and 13 subsidiaries filed separate
Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead
Case No. 09-50455). The Hon. Ronald B. King presides over the
cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr.,
Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B.
Kingman, Esq., in San Antonio, serve as the Debtors' counsel.
Sutherland Asbill & Brennan LLP acts as special counsel; Perella
Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as
tax consultant; and Logan & Company Inc. as claims and noticing
agent. As of September 30, 2008, Spectrum Brands had
$2,247,479,000 in total assets and $3,274,717,000 in total
liabilities.
An official committee of equity security holders -- composed of
Mittleman Brothers, LLC, Ralston H. Coffin, Cookie Jar LLC and
the Peter and Karen Locke Living Trust -- was appointed by the
U.S. Trustee in Spectrum's bankruptcy cases on March 11, 2009.
The Equity Committee has tapped Alston & Bird LLP as its
bankruptcy counsel.
Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Spectrum Brands Inc. and its various subsidiaries.
(http://bankrupt.com/newsstand/or 215/945-7000)
SPECTRUM BRANDS: Court OKs Successor Agent Pact With BoNY, Goldman
------------------------------------------------------------------
Pursuant to Sections 105(a) and 363(b) of the Bankruptcy Code,
Spectrum Brands Inc. and its affiliates sought and obtained
approval from the U.S. Bankruptcy Court for the Western District
of Texas of a Successor Agent Agreement among:
-- The Bank of New York Mellon, the Successor Agent;
-- Goldman Sachs Credit Partners L.P., the Resigned Agent,
in its capacity as former administrative agent and
collateral agent under the $1,600,000,000 Term Loan Credit
Agreement dated March 30, 2007;
-- the lenders under the credit agreement, the Lenders; and
-- Spectrum Brands, Inc., the Borrower under the Term Loan
Credit Agreement.
The Debtors also obtained approval of a fee letter dated April 8,
2009, between BNYM and Spectrum Brands, including the payment of
fees and expenses.
D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in
New York, said the Debtors' obligations under the Term consist of,
among other things, obligations in respect of term loans and a
letter of credit facility secured by substantially all of the
Debtors' domestic assets. The Debtors' proposed Plan of
Reorganization provides for reinstatement of the obligations under
the Term Loan Credit Agreement.
The Term Loan Credit Agreement provides that the administrative
agent may resign at any time upon 30 days prior written notice to
the Lenders and Borrower, and that the Required Lenders have the
right to appoint a successor administrative agent with the
approval of the Borrower.
On March 25, 2009, Goldman Sachs gave notice to the Lenders and
Spectrum Brands, the Borrower, of its resignation as
administrative agent and collateral agent under the Term Loan
Credit Agreement and the other Loan Documents. Accordingly,
Goldman Sachs' resignation became effective on April 24, 2009.
There currently is no institution acting as administrative agent
and collateral agent for the Lenders, Mr. Baker noted. Thus, the
Required Lenders selected BNYM as the successor administrative
agent and collateral agent under the Term Loan Credit Agreement
and the other Loan Documents, and the Borrower has approved the
selection of BNYM.
Upon effectiveness of the Successor Agent Agreement, BNYM will
become the administrative agent and collateral agent under the
Term Loan Credit Agreement and the other Loan Documents. The
expense, indemnity and damages waiver provisions of the Term Loan
Credit Agreement will not be amended. BNYM's fees for serving as
administrative agent and collateral agent are provided in the Fee
Letter.
Upon effectiveness of the Successor Agent Agreement, the Debtors
will pay BNYM an annual administrative agency fee of $189,500 and
an acceptance fee of $10,000, and reimburse BNYM for reasonable
and documented fees and expenses of counsel incurred in
connection with the Successor Agent Agreement.
To enable BNYM's counsel's fees incurred after the effective date
of the Successor Agent Agreement to be paid on an ongoing basis,
consistent with the Agreed Order Relating to Motion of Senior
Secured Lenders for Adequate Protection, the Debtors ask the
Court that BNYM's counsel, McGuire, Craddock & Strother, P.C., be
deemed to constitute a Specified Professional for purposes of the
Adequate Protection Order, and subject to its provisions, the
payment of BNYM's counsel's fees, costs and expenses.
Mr. Baker said there will be no duplication in payment of
administrative agent fees because Goldman Sachs has waived payment
of the administrative agent fee that was due on March 30, 2009.
About Spectrum Brands
Based in Cibolo, Texas, Spectrum Brands, Inc. (PINK SHEETS: SPCB)
-- http://www.spectrumbrands.com/-- supplies consumer batteries,
lawn and garden care products, specialty pet supplies, shaving and
grooming products, household insect control products, personal
care products, and portable lighting. Spectrum Brands' business
is operated in three reportable segments: (a) Global Batteries and
Personal Car; (b) Global Pet Supplies; and (c) Home and Garden.
Spectrum Brands has roughly 5,960 employees worldwide, with about
2,700 of those employees working within the United States. In
addition, Spectrum Brands holds a 50% interest in a domestic
entity; minority interests (less than 25% each) in a domestic
entity and a foreign entity; a limited partnership interest in a
foreign entity; and a 100% interest in a foreign trust.
Spectrum Brands, Inc., and 13 subsidiaries filed separate
Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead
Case No. 09-50455). The Hon. Ronald B. King presides over the
cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr.,
Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B.
Kingman, Esq., in San Antonio, serve as the Debtors' counsel.
Sutherland Asbill & Brennan LLP acts as special counsel; Perella
Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as
tax consultant; and Logan & Company Inc. as claims and noticing
agent. As of September 30, 2008, Spectrum Brands had
$2,247,479,000 in total assets and $3,274,717,000 in total
liabilities.
An official committee of equity security holders -- composed of
Mittleman Brothers, LLC, Ralston H. Coffin, Cookie Jar LLC and
the Peter and Karen Locke Living Trust -- was appointed by the
U.S. Trustee in Spectrum's bankruptcy cases on March 11, 2009.
The Equity Committee has tapped Alston & Bird LLP as its
bankruptcy counsel.
Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Spectrum Brands Inc. and its various subsidiaries.
(http://bankrupt.com/newsstand/or 215/945-7000)
SPECTRUM BRANDS: Jungle Labs Files Schedules and Statement
----------------------------------------------------------
Spectrum Jungle Labs filed with the U.S. Bankruptcy Court for the
Western District of Texas its schedule of assets and liabilities,
disclosing:
A. Real Property $0
B. Personal Property
B.1 Cash on hand 2,000
B.2 Bank Accounts
PNC Bank, Payables & Payroll Acct. (19,718)
B.3 Security Deposits
A.W. Wheeler - Security Deposit 9,938
City of Schertz - Utility Deposit 600
Compaction Services, Inc. - Security Deposit 568
CPS Energy - Utility Deposit 335
Titan Tri-County - Security Deposit 21,144
B.16 Accounts Receivable
Non-trade 975
Aquaria, Inc. 3,948,464
Tetra Holding (US), Inc. 47,497
United Pet Group, Inc. 5,557,228
B.25 Vehicles
Automobiles and trucks 8,675
Vehicles - 2000 Ford F-150 Truck unknown
Vehicles - 2007 Chevrolet Silverado 8,676
B.28 Office Equipment, furnishings, and supplies
Computer software 70,929
Office furniture and equipment 742
B.29 Machinery, fixtures, equipment and supplies
Construction in progress 103,670
Machinery and equipment 1,088,460
Tooling 1,647
B.30 Inventory 3,333,117
B.35 Other Personal Property 458,782
TOTAL SCHEDULED ASSETS $14,643,732
============================================================
C. Property Claimed as Exempt $0
D. Creditors Holding Secured Claims
Goldman Sachs Credit Partners LP
Prepetition Term Loan 1,315,411,335
Goldman Sachs Credit Partners LP
Outstanding Letters of Credit
Related to the Credit Agreement 49,022,467
Wachovia Bank, NA, Outstanding Letts of
Credit Related to ABL Credit Facility 3,000,000
Wachovia Bank, NA, Prepetition Term Loan 161,160,568
E. Creditors Holding Unsecured Priority Claims 0
F. Creditors Holding Unsecured
Non-priority Claims 1,100,167,542
See http://bankrupt.com/misc/spectrum_unsec_npclaims.pdf
TOTAL SCHEDULED LIABILITIES $2,628,761,912
===========================================================
Anthony L. Genito, vice president of Debtor Spectrum Jungle Labs,
Corp, says the liability amount noted for Schedule D includes a
$1,364,433,802 contingent liability arising from the Debtor's
guarantee of the $1.6 billion Credit Agreement dated March 30,
2007, and related letters of credit and a $161,160,571.00
contingent liability arising from the Debtor's guarantee of the
$225 million Credit Agreement dated September 28, 2007, and
related letters of credit. The amounts of those contingent
liabilities have been included in Schedule D in the full amounts
of the total unsecured claims arising under the Term Credit
Agreement and the ABL Credit Facility to accurately reflect the
scope of the potential liabilities. The Schedules that have been
filed on behalf of other Debtors in the bankruptcy cases also
list the total unsecured claims arising under the Term Credit
Agreement and the ABL Credit Facility. In addition, obligations
owing under the ABL Credit Facility as of the Petition Date are
to be subsequently satisfied with the proceeds of the Debtor's
court-approved debtor in possession financing facility. The
lenders entitled to payment under the Term Credit Agreement and
the ABL Credit Facility are not entitled to recover more than
100% of their claims.
The liability amount noted for Schedule F includes $725,955,902
and $361,471,041 in contingent liabilities arising from the
Debtor's guarantee of the 7-3/8% Senior Subordinated Notes due
2015 and the Variable Rate Toggle Senior Subordinated Notes due
2013. The amounts of those contingent liabilities have been
included in Schedule F in the full amounts of the total unsecured
claims arising under the indentures governing the issuance of the
Notes to accurately reflect the scope of the potential
liabilities. The Schedules that have been filed on behalf of
other Debtors in the bankruptcy cases also list the total
unsecured claims arising under the indentures. The noteholders
entitled to payment under the indentures are not entitled to
recover more than 100% of their claims.
Mr. Genito says the liability amounts on the summary page do not
include amounts associated with (i) claims owing to government
units, (ii) employee claims, (iii) certain customer claims, or
(iv) contingent, unliquidated, or disputed claims. Thus, he
says, actual liability may exceed the amounts stated in the
summary page.
Spectrum Jungle Labs also filed its statement of financial
affairs. Mr. Genito reports that during the two years immediately
preceding the Petition Date, the Debtors transferred property
either absolutely or as security to:
(a) Goldman Sachs Credit Partners, L.P., as agent, first
priority liens on the Debtors' domestic property and 65%
of the equity interests of the Debtors' first tier foreign
subsidiaries and second priority liens on the Debtors'
domestic accounts receivable and inventory valuing
$1,600,000,000; and
(b) Wachovia National Association, as agent, first priority
liens on the Debtors' accounts receivable and inventory
valuing $225,000,000.
Within two years immediately preceding the Petition Date, Dwayne
McLeroy, Spectrum Jungle Labs' controller, served as bookkeeper
or accountant and supervised the keeping of Spectrum Brands'
books and records. Within two years preceding the Petition Date,
the corporation's books of accounts and records were audited by
KMPG LLP. At the Petition Date, Spectrum Jungle Labs' books and
records were in the possession of Anthony L. Genito.
Within two years immediately preceding the Petition Date,
Spectrum Brands has periodically submitted its financial
statements to the Securities and Exchange Commission on a
consolidated basis. As a result, the Debtors' consolidated
financial statements are publicly available. In addition,
Spectrum Brands generally provides its consolidated financial
statements directly to its primary lenders, and, in certain
circumstances to other parties in the ordinary course of
business, including in support of requests for extensions of
trade credit and in connection with investor relations
correspondence. Additionally, the Debtor may have provided
financial statements to various third parties in connection with
potential asset purchase sales. Due to confidentiality
obligations, the names and addresses of certain of those parties
have been omitted, Mr. Genito specifies.
These officers or directors own, control, or hold 5% or more of
the voting securities of Spectrum:
Direct Ownership Position
---------------- --------
Spectrum Brands, Inc. Sole Shareholder
Directors and Officers Position
---------------------- --------
Anthony L. Genito Director & VP
Joe D. Gil VP Aquatics, North America
John A. Heil Director & Pres. - Aquatics NA
Kent J. Hussey Director
Barry Seenberg VP - finance, Treasurer
United Pet Group, Inc. Owner, 100% common stock
John T. Wilson Vice president & Secretary
Mr. Genito discloses that the officers and directors hold no
percentage of stock ownership in the company.
With respect to the last two inventories of the Debtors'
property, Mr. Genito reports that the Debtors use an on-going
cycle count process to physically verify inventories throughout
the year. As a result, full physical inventories are not
performed on an annual basis. The Debtors' external auditors,
KPMG, approve of the cycle count process and test it each year as
part of the annual audit.
The amount of inventory conducted as of February 1, 2009, is
$3,333,117.
The Debtor's inventory records are maintained at Spectrum Brands,
Inc., c/o Anthony L. Genito, Six Concourse Parkway, Suite 3300,
Atlanta, Georgia.
About Spectrum Brands
Based in Cibolo, Texas, Spectrum Brands, Inc. (PINK SHEETS: SPCB)
-- http://www.spectrumbrands.com/-- supplies consumer batteries,
lawn and garden care products, specialty pet supplies, shaving and
grooming products, household insect control products, personal
care products, and portable lighting. Spectrum Brands' business
is operated in three reportable segments: (a) Global Batteries and
Personal Car; (b) Global Pet Supplies; and (c) Home and Garden.
Spectrum Brands has roughly 5,960 employees worldwide, with about
2,700 of those employees working within the United States. In
addition, Spectrum Brands holds a 50% interest in a domestic
entity; minority interests (less than 25% each) in a domestic
entity and a foreign entity; a limited partnership interest in a
foreign entity; and a 100% interest in a foreign trust.
Spectrum Brands, Inc., and 13 subsidiaries filed separate
Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead
Case No. 09-50455). The Hon. Ronald B. King presides over the
cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr.,
Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B.
Kingman, Esq., in San Antonio, serve as the Debtors' counsel.
Sutherland Asbill & Brennan LLP acts as special counsel; Perella
Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as
tax consultant; and Logan & Company Inc. as claims and noticing
agent. As of September 30, 2008, Spectrum Brands had
$2,247,479,000 in total assets and $3,274,717,000 in total
liabilities.
An official committee of equity security holders -- composed of
Mittleman Brothers, LLC, Ralston H. Coffin, Cookie Jar LLC and
the Peter and Karen Locke Living Trust -- was appointed by the
U.S. Trustee in Spectrum's bankruptcy cases on March 11, 2009.
The Equity Committee has tapped Alston & Bird LLP as its
bankruptcy counsel.
Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Spectrum Brands Inc. and its various subsidiaries.
(http://bankrupt.com/newsstand/or 215/945-7000)
SPECTRUM BRANDS: March 29 Balance Sheet Upside Down by $1.12BB
--------------------------------------------------------------
Spectrum Brands announced a consolidated net sales of
$503.3 million for the second quarter ended March 29, 2009 as
compared to $532.5 million for the second quarter ended March 30,
2008. Reported net sales exclude the Company's growing products
division, which is being accounted for as discontinued operations.
Net sales excluding a $38.4 million negative impact of foreign
exchange in the second quarter of 2009 increased 1.7 percent from
the same quarter last year.
Consolidated adjusted EBITDA, a non-GAAP measurement which the
Company believes is a useful indicator of the operating health of
the business and its trajectory, was $62.8 million for the
quarter. This amount included a negative impact of foreign
exchange of $10.5 million. In comparison, consolidated adjusted
EBITDA for the second quarter of fiscal year 2008 was
$55.7 million. Year-to-date adjusted EBITDA is up 3.2 percent
over the same period last year. Excluding the negative impact of
foreign exchange of $23.2 million, adjusted EBITDA increased by
23.7% year-to-date over last year.
The Company reported a net loss per fully diluted share of $1.18
per share for the quarter. Excluding certain items which
management believes are not indicative of the Company's on-going
normalized operations, the Company generated adjusted diluted
earnings per share of $0.02, a non-GAAP number. These excluded
items, net of tax, include:
* Net tax adjustments of $21.0 million, or $0.40 per
share, to exclude the effect of certain adjustments made
to the valuation allowance against net deferred taxes
and other tax related items;
* Net loss from discontinued operations of $15.8 million,
or $0.31 per share related to the Company's growing
products portion of its Home and Garden business;
* Reorganization items associated with the Company's
Chapter 11 bankruptcy filing of $13.9 million or $0.26
per share;
* Restructuring and related charges of $10.5 million, or
$0.20 per share, primarily related to consulting, legal
and accounting fees incurred prior to the Company's
bankruptcy filing that related to the evaluation of the
Company's capital structure, as well as cost reduction
initiatives and the Company's decision to exit Ningbo
Baowang, a battery manufacturing facility in China; and
* The write off of deferred financing costs related to the
Company's asset based revolver loan that was paid off in
March 2009 of $1.5 million, or $0.03 per share.
During the second quarter of fiscal year 2008, the Company
reported a net loss per fully diluted share of $2.19. After
adjusting for certain items which management believes are not
indicative of the Company's on-going normalized operations, which
are outlined in detail in this release in Table 3 and its
respective footnotes, the Company generated an adjusted diluted
loss per share of $0.26.
Gross profit and gross margin for the quarter were $184.8 million
and 36.7 percent, respectively, versus $205.5 million and
38.6 percent for the same period in fiscal year 2008. Cost of
sales for the second quarter of fiscal 2009 included approximately
$18 million of negative foreign exchange impacts.
Selling, General and Administrative expenses were $132.4 million,
or 26.3 percent of sales, a $43.0 million reduction from the same
quarter last year. Ongoing organizational streamlining and tight
budget controls as well as $11.0 million of favorable foreign
exchange impacts in the second quarter of fiscal year 2009
contributed to lower expenses in all functional areas.
Global Batteries and Personal Care
The Global Batteries and Personal Care segment reported solid
second quarter results with its ninth consecutive quarter of
year-over-year improvement in adjusted EBITDA due to continued
market share growth, key placement wins in many of its product
categories and successful cost cutting initiatives. Net sales
for the segment for the second quarter were $287.5 million
compared with $307.6 million for the same period last year, a
difference of $20.1 million, of which $33.9 million represents
the impact of negative foreign exchange. Excluding this negative
impact of foreign exchange, sales were up 4.5 percent.
As a result of the successful implementation of numerous segment
cost savings initiatives across all geographic regions and all
functional disciplines, adjusted EBITDA for the Global Batteries
and Personal Care segment was $36.5 million for the quarter,
compared with $32.0 million for the same period last year despite
significant foreign exchange pressure during fiscal 2009.
Excluding $12.4 million of negative foreign exchange impacts
during the second quarter of fiscal year 2009, adjusted EBITDA
was up 53.0 percent compared to last year. Similarly,
profitability for this segment was $33.9 million for the quarter,
up 37.2 percent over last year's level.
Global battery sales for the quarter were $183.8 million, down
$11.3 million from last year due to a negative impact of foreign
exchange of $21.1 million. North America's total battery sales
grew by 44.0 percent as Rayovac(R) branded products continued to
outpace competitors in both dollar share and dollar sales growth.
This growth was driven by 68.8 percent growth in North American
alkaline sales as Rayovac's value positioning and attractive
marketing programs appear to be proving effective in the current
economic downturn.
European battery sales for the quarter were $75.2 million, as
compared with $89.3 million last year. Foreign exchange losses
negatively impacted European sales by $13.4 million.
Latin American battery sales for the quarter were $36.9 million,
down from $56.0 million last year, as the impact of foreign
exchange and a dramatic slowdown in the economies of several
countries, including Brazil, depressed sales.
Global sales of Remington(R) branded products were $85.9 million
for the quarter, compared with $90.7 million during the same
period last year, due to the impact of negative foreign exchange
totaling $11.1 million. With some of the top selling products in
their respective industry categories, according to a recent
Nielson survey of the last 24 weeks ended March 21, 2009,
Remington products were outpacing those of its competitors in a
number of product categories in terms of share growth, including
total haircare, dryers, men's shaving, haircut kits,
straighteners and body grooming.
Global Pet Supplies
The Global Pet Supplies Segment reported net sales of
$142.1 million down from $148.4 million in the same period of last
year, which included $4.5 million of negative foreign exchange
impacts this quarter. Companion animal sales, which made up
37.6 percent of total segment sales and were led by strong sales
of Dingo(R) brand products, were up 13.5 percent while aquatics
sales declined 12.5 percent due primarily to negative impacts of
foreign exchange coupled with inventory de-stocking at certain
European retailers and poor weather conditions delaying the start
of the pond season overseas.
Adjusted EBITDA for the Global Pet Supplies segment was
$20.3 million for the quarter compared to $20.8 million for the
same period last year. Foreign exchange did not have a
significant impact on adjusted EBITDA for the Global Pet Supplies
segment for the quarter. Segment profitability for Global Pet
Supplies for the quarter was $14.5 million compared to
$15.3 million for the same period last year.
Home and Garden
Spectrum's Home and Garden segment's net sales were $73.7 million,
as compared with $76.5 million for the same period last year.
These sales figures include the results from the Company's well-
known brands, like Cutter(R), Repel(R), Hot Shot(R) and
Spectracide(R).
The Home and Garden segment reported an adjusted EBITDA for the
quarter of $11.7 million, slightly improved from $11.1 million in
adjusted EBITDA for the same period last year due to successful
cost reduction initiatives. Segment profitability for the quarter
was $8.9 million for the Home and Garden business as compared with
a loss in the same quarter last year of $6.7 million. This
increase in segment profitability was primarily a result of the
non-recurrence of a charge for depreciation and amortization
expense of $13.5 million, recorded during the Fiscal 2008 second
quarter, that was related to prior period depreciation and
amortization. From October 1, 2006 through December 30, 2007, the
U.S. division of the Company's Home and Garden segment was
designated as discontinued operations. In accordance with
generally accepted accounting principles, while designated as
discontinued operations, the Company ceased recording depreciation
and amortization expense associated with the assets of this
business.
Corporate Expenses and Interest Expense
Corporate expenses were $7.9 million for the quarter as compared
with $9.1 million in corporate expenses during the second quarter
of last year.
Interest expense was $47.5 million compared to $58.2 million in
the same period last year. In accordance with SOP 90-7, as of
February 3, 2009, the Company ceased accruing interest on its
Senior Subordinated Notes as it is probable the repayment of this
debt and interest will be an allowed claim by the bankruptcy
court.
Debt Refinancing
On February 3, 2009, the Company announced a proposed financial
restructuring plan supported by bondholders representing, in the
aggregate, approximately 70 percent of the face value of the
outstanding bonds, that would, if confirmed and consummated as
proposed, significantly reduce the company's outstanding debt,
which management believes will put the Company in a stronger
financial position for the future.
On April 15, 2009, the Company announced that the U.S. Bankruptcy
Court for the Western District of Texas, San Antonio Division,
had approved the Disclosure Statement filed in connection with
the Company's proposed pre-negotiated Plan of Reorganization and
authorized the Company to begin soliciting approval for its Plan.
Pursuant to these decisions, the Company is distributing the
Disclosure Statement and Plan to its bondholders who are entitled
to vote to accept or reject the Plan.
Additionally, these documents are being distributed to the
Company's senior term lenders who are being asked to submit their
votes, although it has not yet been determined by the Bankruptcy
Court whether their votes will be counted. This determination
will be made at the confirmation hearing, which has been
scheduled to begin on June 15, 2009. Assuming the requisite
approvals are received and the Bankruptcy Court confirms the Plan
under the Company's current proposed timetable, the Company
expects to emerge from Chapter 11 protection by late summer.
A full-text copy of Spectrum Brands' First Quarter 2009 Financial
Results for the quarter ending December 28, 2008, on Form 10-Q
filed with the Securities and Exchange Commission is available
for free at http://ResearchArchives.com/t/s?3cbb
Spectrum Brands, Inc.
Condensed Unaudited Consolidated Balance Sheet
As of March 29, 2009
ASSETS
Current Assets:
Cash and cash equivalents $51,556,000
Receivables:
Trade accounts receivable, net 313,803,000
Other 21,981,000
Inventories 386,931,000
Deferred income taxes 14,632,000
Assets held for sale 12,486,000
Prepaid expenses and other 42,959,000
--------------
Total current assets 844,348,000
Property, plant and equipment, net 185,340,000
Deferred charges and other 38,628,000
Goodwill 228,803,000
Intangible assets, net 707,890,000
Debt issuance costs 20,144,000
--------------
Total assets $2,025,153,000
==============
Liabilities and Shareholders' Deficit:
Current maturities of long-term debt $52,904,000
Debtor-in-possession revolving credit facility 136,206,000
Accounts payable 186,820,000
Accrued liabilities:
Wages and benefits 51.066,000
Income taxes payable 18,351,000
Restructuring and related charges 29,468,000
Accrued interest 25,438,000
Other 86,071,000
--------------
Total current liabilities 586,324,000
Long-term debt, net of current maturities 1,362,318,000
Employee benefit obligations, net 39,773,000
Deferred income taxes 126,357,000
Other 41,600,000
--------------
Total liabilities 2,156,372,000
==============
Shareholders' deficit:
Common stock 691,000
Additional paid-in capital 675,535,000
Accumulated deficit (1,868,021,000)
Accumulated other comprehensive income 44,325,000
--------------
(1,147,470,000)
Less treasury stock (76,886,000)
--------------
Total shareholders' deficit (1,124,356,000)
Total liabilities and shareholders' deficit $2,025,153,000
==============
Spectrum Brands, Inc.
Condensed Unaudited Consolidated Statement of Operations
For the Three Month Period Ended March 29, 2009
Net sales $503,262,000
Cost of goods sold 315,767,000
Restructuring and related charges 2,661,000
--------------
Gross profit 184,834,000
Selling 94,848,000
General and administrative 37,562,000
Research and development 5,759,000
Restructuring and related charges 13,479,000
--------------
Total operating expenses 151,648,000
Operating (loss) income 33,186,000
Interest expense 47,446,000
Other expense (income), net 710,000
--------------
Loss from continuing operations
before income taxes (14,970,000)
Income tax expenses 8,348,000
--------------
Loss from continuing operations (44,629,000)
Loss from discontinued operations - net (15,820,000)
--------------
Net Loss ($60,449,000)
==============
Spectrum Brands, Inc.
Condensed Unaudited Consolidated Statements of Cash Flows
For the Six Month Period Ended March 29, 2009
Cash flows from operating activities:
Net loss ($173,106,000)
Loss from discontinuing operations (81,940,000)
-------------
Loss from continuing operations (91,166,000)
Non-cash adjustments to loss from
continuing operations:
Depreciation 20,642,000
Amortization 11,477,000
Amortization of debt issuance costs 6,561,000
Impairment of intangibles -
Reorganization items, net 21,311,000
Write off of debt issuance costs 2,358,000
Other non-cash adjustments 39,194,000
Write off of debt issuance costs 2,358,000
Other non-cash adjustments 39,194,000
Net changes in assets and liabilities, net (130,467,000)
------------
Net cash used by operating activities of
continuing operations (120,090,000)
Net cash used by operating activities
of discontinued operations (18,795,000)
------------
Net cash used by operating activities (138,885,000)
Cash flows from investing activities:
Purchase of property, plant and equipment (3,267,000)
Proceeds from sale of equipment 322,000
-------------
Net cash used by investing activities
of continuing operations (2,945,000)
Net cash used by investing activities
of discontinued operations (860,000)
-------------
Net cash (used) provided by investing activities (3,805,000)
Cash flows from financing activities:
Debt issuance costs (7,750,000)
Proceeds from debt financing 162,104,000
Reduction of debt (240,937,000)
Debtor-in-possession revolving
credit facility activity, net 136,206,000
Proceeds from supplemental loan 45,000,000
Treasury stock purchases (56,000)
------------
Net cash provided by financing activities 94,567,000
Effect of exchange rate changes on
cash and cash equivalents (5,094,000)
Net (decrease) increase in cash and
cash equivalents (53,217,000)
Cash and cash equivalents,
beginning of period 104,773,000
-------------
Cash and cash equivalents, end of period $51,556,000
=============
Based in Cibolo, Texas, Spectrum Brands, Inc. (PINK SHEETS: SPCB)
-- http://www.spectrumbrands.com/-- supplies consumer batteries,
lawn and garden care products, specialty pet supplies, shaving and
grooming products, household insect control products, personal
care products, and portable lighting. Spectrum Brands' business
is operated in three reportable segments: (a) Global Batteries and
Personal Car; (b) Global Pet Supplies; and (c) Home and Garden.
Spectrum Brands has roughly 5,960 employees worldwide, with about
2,700 of those employees working within the United States. In
addition, Spectrum Brands holds a 50% interest in a domestic
entity; minority interests (less than 25% each) in a domestic
entity and a foreign entity; a limited partnership interest in a
foreign entity; and a 100% interest in a foreign trust.
Spectrum Brands, Inc., and 13 subsidiaries filed separate
Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead
Case No. 09-50455). The Hon. Ronald B. King presides over the
cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr.,
Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B.
Kingman, Esq., in San Antonio, serve as the Debtors' counsel.
Sutherland Asbill & Brennan LLP acts as special counsel; Perella
Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as
tax consultant; and Logan & Company Inc. as claims and noticing
agent. As of September 30, 2008, Spectrum Brands had
$2,247,479,000 in total assets and $3,274,717,000 in total
liabilities.
An official committee of equity security holders -- composed of
Mittleman Brothers, LLC, Ralston H. Coffin, Cookie Jar LLC and
the Peter and Karen Locke Living Trust -- was appointed by the
U.S. Trustee in Spectrum's bankruptcy cases on March 11, 2009.
The Equity Committee has tapped Alston & Bird LLP as its
bankruptcy counsel.
Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Spectrum Brands Inc. and its various subsidiaries.
(http://bankrupt.com/newsstand/or 215/945-7000)
SPECTRUM BRANDS: Seeks to Assume Agreement with Home Depot
----------------------------------------------------------
Spectrum Brands Inc. and its affiliates seek authority from Judge
Ronald B. King of the U.S. Bankruptcy Court for the Western
District of Texas to assume an agreement with Home Depot, U.S.A.,
Inc.
The agreement contemplates, among other things:
(i) the transfer to Home Depot of (a) "Vigoro" trademarks,
together with any goodwill arising from the trademarks and
(b) certain related property, including certain artwork
and marketing collateral and empty bag-packaging under the
Vigoro name; and
(ii) the licensing to Home Depot of certain other trademarks
for a limited term.
D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,
in New York, relates that since the 1990s, the Debtors sold
fertilizers, enriched soils, mulch and grass seed to customers
like Home Depot, Lowe's and Wal-Mart through the Debtors'
fertilizer and growing business. On January 1, 2004, United
Industries Corporation, a Debtor, and Home Depot entered into the
Trademark License and Manufacturing and Supply Agreement, the
"January 2004 Agreement."
Under the January 2004 Agreement, UIC licensed the Vigoro Marks
to Home Depot and agreed to manufacture certain Vigoro-branded
fertilizers and fertilizer products exclusively for Home Depot,
as long as Home Depot satisfied certain conditions. In return,
Home Depot agreed to purchase all its requirements for fertilizer
for resale in the United States from UIC. Certain rights and
obligations of the parties under the January 2004 Agreement were
tied to the supply and purchase of Vigoro-branded products. In
addition, if Home Depot satisfied certain conditions related to
purchase requirements, payment for purchases and exclusivity, the
January 2004 Agreement contemplated that UIC would assign the
Vigoro Marks to Home Depot.
In mid-November 2008, the Debtors determined to shut down the
Fertilizer and Growing Business. Notably, at that time, Home
Depot had satisfied approximately 97% of the aforementioned
purchase requirement conditions that were established in the
January 2004 Agreement and, thus, but for the Debtors' shut down
of the FGM Business, the Debtors' obligation to assign the Vigoro
Marks under the January 2004 Agreement would have undoubtedly
materialized.
As a result of the Debtors' exit from the FGM business, the
parties recognized that UIC would no longer supply Home Depot
with Vigoro-branded products. The Debtors recognized, however,
that Home Depot would continue to represent one of their most
important customers in light of the fact that the Debtors' other
business units continued to supply Home Depot with various
products. Indeed, in fiscal year 2008, the Debtors' sales to
Home Depot constituted a significant portion of their overall
revenues, including approximately $117 million in non-Vigoro-
branded products.
For these reasons, coupled with the fact that the Debtors no
longer had any ongoing use for the Vigoro Marks and Property, on
December 1, 2008, UIC and Home Depot entered into a letter
agreement to amend the January 2004 Agreement, Mr. Baker states.
Pursuant to the December 2008 Agreement, UIC agreed to transfer
the Vigoro Marks and Property to Home Depot on May 31, 2009. As
part of the December 2008 Agreement, Home Depot was deemed to
have satisfied the conditions necessary under the January 2004
Agreement for UIC to effectuate the transfer of the Vigoro Marks
to Home Depot.
In addition to the transfer of the Vigoro Marks and Property,
under the December 2008 Agreement UIC granted Home Depot rights
in certain Licensed Marks, including (a) an exclusive right and
license to use the "Super Green" mark for fertilizer and growing
media products only for two years, on the terms set forth
therein, and (b) non-exclusive rights and licenses to use the
names "Weedstop," "Colorburst," "Holland Bulb Booster,"
"Schultz" and "CTR," for one year, on the terms set forth
therein.
In return, Home Depot agreed to maintain all agreed upon SKU
listings for certain pesticide products sold by Home Depot for
the calendar year 2009, pay for those pesticide products at the
prices set forth therein and negotiate in good faith for listings
for those pesticide products for the calendar year 2010. The
Debtors are not currently in default under the December 2008
Agreement.
The Debtors have determined, that the assumption of and
performance under the December 2008 Agreement is necessary to
maintain the valuable relationship the Debtors currently have
with Home Depot, which is one of the Debtors' largest customers.
Further, the Debtors have determined that Home Depot is the only
dominant market participant that would be interested in obtaining
the Vigoro Marks and Property because the other logical potential
transferees for these marks -- Lowe's, Wal-Mart and
Kmart -- already have exclusive marks that they use for marketing
and selling comparable gardening products.
By rejecting the December 2008 Agreement, the Debtors would be
placing at grave risk the economic benefits arising from the
portion of the agreement relating to 2009 SKU listings and
payments for certain pesticides products, which provides
continuing revenue to the Debtors. In addition, the action would
place at grave risk the Company's ability to sell products to
Home Depot in future years.
The Court will convene a hearing to consider the Motion on May 28,
2009 at 9:30 a.m., Central Time.
About Spectrum Brands
Based in Cibolo, Texas, Spectrum Brands, Inc. (PINK SHEETS: SPCB)
-- http://www.spectrumbrands.com/-- supplies consumer batteries,
lawn and garden care products, specialty pet supplies, shaving and
grooming products, household insect control products, personal
care products, and portable lighting. Spectrum Brands' business
is operated in three reportable segments: (a) Global Batteries and
Personal Car; (b) Global Pet Supplies; and (c) Home and Garden.
Spectrum Brands has roughly 5,960 employees worldwide, with about
2,700 of those employees working within the United States. In
addition, Spectrum Brands holds a 50% interest in a domestic
entity; minority interests (less than 25% each) in a domestic
entity and a foreign entity; a limited partnership interest in a
foreign entity; and a 100% interest in a foreign trust.
Spectrum Brands, Inc., and 13 subsidiaries filed separate
Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead
Case No. 09-50455). The Hon. Ronald B. King presides over the
cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr.,
Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B.
Kingman, Esq., in San Antonio, serve as the Debtors' counsel.
Sutherland Asbill & Brennan LLP acts as special counsel; Perella
Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as
tax consultant; and Logan & Company Inc. as claims and noticing
agent. As of September 30, 2008, Spectrum Brands had
$2,247,479,000 in total assets and $3,274,717,000 in total
liabilities.
An official committee of equity security holders -- composed of
Mittleman Brothers, LLC, Ralston H. Coffin, Cookie Jar LLC and
the Peter and Karen Locke Living Trust -- was appointed by the
U.S. Trustee in Spectrum's bankruptcy cases on March 11, 2009.
The Equity Committee has tapped Alston & Bird LLP as its
bankruptcy counsel.
Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Spectrum Brands Inc. and its various subsidiaries.
(http://bankrupt.com/newsstand/or 215/945-7000)
SPECTRUM BRANDS: To Pay Quarterly Incentives to Employees
---------------------------------------------------------
Pursuant to Sections 105 and 363 of the Bankruptcy Code, Spectrum
Brands Inc. and its affiliates sought and obtained authority from
the U.S. Bankruptcy Court for the Western District of Texas to (i)
pay quarterly incentives for the current fiscal quarter to
eligible employees under the Debtors' Quarterly Incentive Plan,
and (ii) continue the Quarterly Incentive Plan in the ordinary
course of business for subsequent quarters.
The Debtors obtained the Court's authority to pay their employees
for their January 1 through March 31, 2009, second fiscal quarter
incentive in the total aggregate amount of approximately $223,000.
D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP,
in New York, relates that the Debtors make quarterly incentive
payments to its deserving employees assigned in their Dixon,
Illinois facility; their Sales Employees in their Global
Batteries and Personal Care Division; and their Global Pet
Supplies Division.
Under the Dixon Quarterly Incentive Plan, about 220 Employees in
the Debtors' Dixon, Illinois distribution facility are eligible
to receive a quarterly bonus of between 8% and 12% of their
quarterly salary.
This bonus, Mr. Baker notes, is only payable if the Dixon
Facility reaches specific performance targets for the applicable
quarter, which targets are set by management and may vary from
quarter to quarter. The Debtors are seeking to pay an aggregate
amount of approximately $135,000 to Employees under the Dixon
Quarterly Incentive Plan. No individual Dixon employee will
receive more than $1,500.
Similarly, the Sales Employees in the Global Batteries and
Personal Care division, which has about 20 employees, are covered
by the GPBC Quarterly Sales Incentive Plan. The compensation
structure for these Employees includes (a) a fixed component of
base salary, and (b) a variable component under the GBPC
Quarterly Incentive Plan through which eligible Employees may
earn up to 30% of their annual base salary.
For the Debtors' second fiscal quarter, the Debtors are seeking
to pay an aggregate amount of approximately $28,000 to Employees
under the GBPC Quarterly Sales Incentive Plan. No individual
salesman will receive more than $4,500.
About 25 field sales Employees of the Debtors' Global Pet
Supplies division are also eligible to receive payment under the
UPG Quarterly Sales Incentive Plan. Under this plan, eligible
Employees are able to earn between 15% and 25% of their quarterly
salary, based upon the eligible employee meeting specific
performance targets, which are set by management every quarter,
and generally require the Employee to meet certain promotional
sales goals. The maximum amount payable to an employee covered
under the UPG Quarterly Sales Incentive Plan is $4,600. The
Debtors are seeking to pay an aggregate amount of approximately
$60,000 to Employees under the UPG Quarterly Sales Incentive
Plan.
Mr. Baker emphasizes that none of the Employees eligible to
participate in these plans are insiders. Factoring in the
Quarterly Incentive Plans, the total compensation packages for
eligible Employees are consistent with the total compensation
packages offered by the Debtors' competitors.
The Debtors initially sought approval of these Quarterly
Incentive Plans along with their other ordinary course incentive
plans as part of their first-day Employee motion. However, as a
result of discussions with the United States Trustee, certain
language was added to the order that can be read to prohibit
payments under any incentive plans without a further court order.
The Debtors believe that the language was directed at insider
incentive plans prohibited by Section 503 of the Bankruptcy Code,
and not on ordinary course plans like the Quarterly Incentive
Plans, but the ambiguity requires that they submit this matter to
the Court, Mr. Baker avers.
Judge Ronald B. King clarified in his order that the
authorizations granted by the Court to the Debtors are permissive
and not obligatory, and the Debtors may, in the exercise of their
discretion, determine whether or not to make any of the payments
authorized.
No payment is permitted to the extent they are violative of any
cash collateral or postpetition financing documents or orders,
Judge King ruled.
About Spectrum Brands
Based in Cibolo, Texas, Spectrum Brands, Inc. (PINK SHEETS: SPCB)
-- http://www.spectrumbrands.com/-- supplies consumer batteries,
lawn and garden care products, specialty pet supplies, shaving and
grooming products, household insect control products, personal
care products, and portable lighting. Spectrum Brands' business
is operated in three reportable segments: (a) Global Batteries and
Personal Car; (b) Global Pet Supplies; and (c) Home and Garden.
Spectrum Brands has roughly 5,960 employees worldwide, with about
2,700 of those employees working within the United States. In
addition, Spectrum Brands holds a 50% interest in a domestic
entity; minority interests (less than 25% each) in a domestic
entity and a foreign entity; a limited partnership interest in a
foreign entity; and a 100% interest in a foreign trust.
Spectrum Brands, Inc., and 13 subsidiaries filed separate
Chapter 11 petitions on February 3, 2009 (Bankr. W.D. Tex. Lead
Case No. 09-50455). The Hon. Ronald B. King presides over the
cases. D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in New York; Harry A. Perrin, Esq., and D. Bobbitt Noel, Jr.,
Esq., at Vinson & Elkins LLP, in Houston, Texas; and William B.
Kingman, Esq., in San Antonio, serve as the Debtors' counsel.
Sutherland Asbill & Brennan LLP acts as special counsel; Perella
Weinberg Partners LP, as financial advisor; Deloitte Tax LLP as
tax consultant; and Logan & Company Inc. as claims and noticing
agent. As of September 30, 2008, Spectrum Brands had
$2,247,479,000 in total assets and $3,274,717,000 in total
liabilities.
An official committee of equity security holders -- composed of
Mittleman Brothers, LLC, Ralston H. Coffin, Cookie Jar LLC and
the Peter and Karen Locke Living Trust -- was appointed by the
U.S. Trustee in Spectrum's bankruptcy cases on March 11, 2009.
The Equity Committee has tapped Alston & Bird LLP as its
bankruptcy counsel.
Bankruptcy Creditors' Service, Inc., publishes Spectrum Brands
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Spectrum Brands Inc. and its various subsidiaries.
(http://bankrupt.com/newsstand/or 215/945-7000)
STOCK BUILDING: Can Access Wolseley $60 Mil. DIP Loan on Interim
----------------------------------------------------------------
The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the
District of Delaware has authorized Stock Building Supply Holdings
LLC and its debtor-affiliates to obtain, on an interim basis,
$60 million of financing under a debtor-in-possession loan
agreement with Wolseley Investments North America Inc.
Stock Building will be able to access a total of $100 million in
financing from Wolseley Investments upon final approval of the DIP
loan. A hearing is set for May 28, 2009, at 10:30 a.m., to
consider final approval of the Debtors' request. Objections, if
any, are due May 21, 2009.
The DIP agreement will terminate on the earliest of (i) Aug. 31,
2009, (ii) 40 days after the entry of the interim DIP order, if
the final order is not entered by the Court by such date, (iii)
the date the plan takes effect; or (iv) date on which the loans
other other postpetition obligations are accelerated if the
Debtors defaulted.
The DIP facility incurs interest at 8% per annum.
Proceeds of the DIP facility will be used, among other things,
working capital requirements and other general corporate purposes
of the Debtors including payment of payroll and any of the cost
and expenses of the Chapter 11 cases that are payable by the
Debtors.
The Debtors granted the DIP lender superpriority administrative
expense claims status in each of the cases for all obligations of
the Debtors under the DIP agreement.
The DIP agreement contains customary and appropriate events of
default.
Headquartered in Raleigh, North Carolina, Stock Building Supply
Holdings LLC -- http://www.stockbuildingsupply.com/-- supplies
building products to builders, contractors and other customers in
the United States. The Company and 25 of its affiliates filed for
Chapter 11 protection on May 6, 2009 (Bankr. D. Del. Lead Case No.
09-11554). Shearman & Sterling LLP and Young, Conaway, Stargatt &
Taylor, represent the Debtors in their restructuring efforts. The
Debtors selected FTI Consulting as restructuring consultant. When
the Debtors' sought for protection from their creditors, they
listed assets between $50 million and $100 million, and debts
between $10 million and $50 million
TJ3 STYLES: Will Honor Orders for Furniture Despite Store Closure
-----------------------------------------------------------------
Bakersfield.com reports that TJ3 Styles Inc.'s Thomasville
Furniture Industries said it will honor local customers' orders.
As reported by the Troubled Company Reporter on May 19, 2009, TJ3
Styles closed the Thomasville Home store in The Marketplace, 9000
Ming Ave. Clients paid for purchases at Thomasville Home but
received neither refunds nor their furniture before the store
closed. Some clients put down thousands of dollars in deposits
last week, and said that they weren't informed that the store
would close.
Thomasville Home, according to Bakersfield.com, was taking
deposits on new orders just days before it closed. Thomasville
Home's supplier said it never received the money, but will still
honor the orders, Bakersfield.com states.
TJ3 Styles spokesperson John Hastings said in a statement, "Please
understand that this process may take several weeks. Thomasville
needs to obtain sales records from the store owner and transfer
inventory to a new location."
TJ3 Styles Inc. is based in Santa Clarita. The Company listed
$1 million to $10 million in liabilities and $500,000 to
$1 million in assets.
TOLUCA LAKE: Files Ch. 11 in Woodland Hills, California
-------------------------------------------------------
Bloomberg's Bill Rochelle reports that Toluca Lake Vintage LLC
filed a Chapter 11 petition on May 14 in the U.S. Bankruptcy Court
for the Central District of California, saying assets and debt
both exceed $10 million. Toluca Lake Vintage is a 45-unit
condominium project in Toluca Lake, California. The units in the
project are listed as costing as much as $1.2 million each.
TOUSA INC: Court Extends Exclusive Periods to July 29
-----------------------------------------------------
Judge John K. Olson of the U.S. Bankruptcy Court for the Southern
District of Florida extended the exclusive plan filing period of
TOUSA Inc. and its affiliates, through and including July 29,
2009, and the Debtors' exclusive solicitation period, through and
including September 27, 2009.
The Debtors submitted to the Court their First Amended Joint
Chapter 11 Plan and Disclosure Statement on April 17, 2009. The
Amended Plan embodies the Debtors' revised business plan to
orderly monetize their assets in 24 to 36 months.
Judge Olson scheduled a hearing to consider adequacy of the
Disclosure Statement on May 14, 2009. As of press time, no
entries regarding either adjournment or results of the Disclosure
Statement hearing have been entered in TOUSA's dockets.
In a separate order, Judge Olson authorized the Debtors to
implement an Associate Incentive Plan, which contemplates to
make payments to employees for $1.7 million for the period from
April 1, 2009, through March 31, 2010.
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A.
Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P.,
TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder
in the United States, operating in various metropolitan markets in
10 states located in four major geographic regions: Florida, the
Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and
markets high-quality detached single-family residences, town
homes, and condominiums to a diverse group of homebuyers, such as
"first-time" homebuyers, "move-up" homebuyers, homebuyers who are
relocating to a new city or state, buyers of second or vacation
homes, active-adult homebuyers, and homebuyers with grown children
who want a smaller home. It also provides financial services to
its homebuyers and to others through its subsidiaries, Preferred
Home Mortgage Company and Universal Land Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on January 29, 2008 (Bankr. S.D. Fla. Case No. 08-
10928). The Debtors have selected M. Natasha Labovitz, Esq.,
Brian S. Lennon, Esq., Richard M. Cieri, Esq., and Paul M. Basta,
Esq., at Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at
Berger Singerman, to represent them in their restructuring
efforts. Lazard Freres & Co. LLC is the Debtors' investment
banker. Ernst & Young LLP is the Debtors' independent auditor and
tax services provider. Kurtzman Carson Consultants LLC acts as
the Debtors' Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008
(Bankr. S.D. Fla. Case No. 08-20746). It listed assets between
$1 million and $10 million, and debts between $1 million and
$10 million.
The Official Committee of Unsecured Creditors hired Patricia A.
Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff &
Sitterson, P.A., as its local counsel.
TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets
of $1,734,422,756 and total liabilities of $2,300,053,979.
Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
TOUSA INC: Creditors Object to Disclosure Statement
---------------------------------------------------
Judge John K. Olson of the U.S. Bankruptcy Court for the Southern
District of Florida scheduled on May 14, 2009, a hearing to
consider adequacy of the disclosure statement explaining the First
Amended Joint Chapter 11 Plan filed by TOUSA Inc. and its
affiliates. The Plan documents were filed April 17, 2009. The
Amended Plan embodies the Debtors' revised business plan to
orderly monetize their assets in 24 to 36 months.
As of press time, no entries regarding either adjournment or
results of the Disclosure Statement hearing have been entered in
TOUSA's dockets.
Several parties have objected to the Disclosure Statement:
(A) Red River/Sierra Vista
Red River/El Dorado 6500, L.L.C., and Rancho Sierra Vista,
L.L.C., complains that the Disclosure Statement to the Debtors'
Joint Amended Chapter 11 Plan fails to provide adequate
information regarding the proposed treatment of their secured
claims and related covenants related to a 2,500-acre undeveloped
land in Pinal County, Arizona, bought by TOUSA Homes under a
Purchase and Sale Agreement with Red River and Rancho Sierra.
Red River and Rancho Sierra also relate that they executed an
agreed order with the Debtors and the Postpetition Secured
Parties for an interim resolution of Red River and Rancho
Sierra's DIP Financing objection. The "Interim Agreement"
provides that sale of any real property encumbered by recorded
covenants and deeds of trust will not result in a payment
obligation to Red River and Rancho Sierra, provided that none of
the triggering events specified in the DIP Loan Documents has
occurred and the property is sold subject to Red River and Rancho
Sierra's rights under the DIP Loan Documents.
Red River and Rancho Sierra contend that the Disclosure Statement
does not specify (i) whether the terms of the "Interim Agreement"
they entered with the Debtors will be adopted in the Amended
Plan, or (ii) whether the intent of the Amended Plan is to alter
or affect the rights of Red River and Rancho Sierra under
recorded covenants and deeds of trust. Red River and Rancho
Sierra assert that they should not be left to speculate as to the
effect of the Amended Plan on their valuable rights embodied in
the covenants and deeds of trust.
Thus, Red River and Rancho Sierra ask the Court to decline to
approve the Disclosure Statement unless and until adequate
information concerning treatment of the Covenants and Deeds of
Trust is provided.
(B) Insurance Companies
In separate filings, Zurich American Insurance Company and ACE
American Insurance Company, ACE Fire Underwriters Insurance
Company, Indemnity Insurance Company of North America,
Westchester Fire Insurance Company, and Westchester Surplus Lines
Insurance Company oppose approval of the Disclosure Statement
accompanying the Debtors' First Amended Joint Chapter 11 Plan.
Zurich American contends that despite the Debtors' knowledge of
their self-insured retention obligations, the Disclosure
Statement does not disclose whether SIR obligations are included
in the estimated Administrative Claims. Against this backdrop,
Zurich American asserts that it is impossible for it or any
potential claimant under HBP Policies to know whether or not (a)
the Debtors intend to pay its SIR obligations as an
Administrative Claim or (b) the Debtors have adequately provided
for the SIR in its estimate of Administrative Claims so that it
can be determined if the Debtors can meet their Administrative
Claim obligations under the Amended Plan. Zurich American thus
asks the Court to deny approval of the Disclosure Statement.
The ACE Entities complain that the Disclosure Statement does not
contain adequate information concerning the treatment of
insurance policies they issued, or the performance of the Debtors
obligations and consequences of the treatment or lack of
performance. The ACE Entities thus ask the Court to deny
approval of the Disclosure Statement unless certain provisions
are added, clarifying that nothing is intended to:
-- enlarge the Debtors' rights under the ACE Policies; and
-- preclude the Debtors or ACE from asserting any and all
claims, defenses, rights or causes of action under the ACE
Policies.
(C) Development Districts
Country Greens Community Development District, Greater
Lakes/Sawgrass Bay Community Development District, Heritage
Landing Community Development District, Highland Meadows
Community Development District, Indigo Community Development
District, and Middle Village Community Development District
complain about the adequacy of the Disclosure Statement o the
Debtors' First Amended Joint Chapter 11 Plan dated April 17,
2009.
The Objectors argue that the Disclosure Statement is unclear as
to how the Debtors propose to treat and classify their claims.
The Objectors note that while it may be inferred that claims of
development districts fall under Class 3 Other Secured Claims,
this classification would be incorrect because the Districts'
Claims are secured by certain real property owned by the Debtors
and are not substantially similar to other secured claims.
Country Greens further elaborates that under Florida law, special
assessments, unlike other secured claims, are pari passu with ad
valorem taxes.
The Objectors thus ask the Court to deny approval of the
Disclosure Statement unless their claims are adequately and
appropriately addressed by including language:
(a) similar to the Home Sales Order providing that the
Districts' liens will remain on the property, provided
that all special assessments owed with respect to the
property sold will be paid by the debtor or satisfied
during the proceeds of closing; and
(b) that pertains to development districts' special
assessments as a Site Development Land Carrying Cost and
Operating Disbursement in the Plan Distribution Analysis.
In a separate filing, The Hammocks Community Development
District, Live Oak No. 1 Community Development District, and Live
Oak No. 2 Community Development District also point out that the
Disclosure Statement is unclear as to how the Debtors propose to
treat and classify their claims. The Disclosure Statement, the
Hammocks and Live Oak Districts say, fails to even make any
mention of their claims or other community developments' claims
for that matter. The Hammocks and Live Oak Districts tell the
Court that they simply cannot tell from a reading of the
Disclosure Statement as to how exactly the Amended Plan is to
treat and classify their claims. Against this backdrop, they
assert that the Disclosure Statement does not contain adequate
information and is confusing.
Accordingly, the Hammocks and Live Oak Districts ask the Court to
deny approval of the Disclosure Statement unless it is amended to
clearly set forth the Debtors' proposed treatment and
classification of the developmental districts' claims and the
consequences of the proposed treatment.
The Hammocks and Live Oak Districts also join in Country Greens'
objection. Hammocks and Country Greens reserve their rights to
object to further modifications to the Disclosure Statement.
(D) Domenic Gualtieri
On behalf of 2,000 fixed income retirees living in a community
located in San Antonio, Domenic Gualtieri opposes any relief
noted in the Disclosure Statement that affects Debtor TOUSA Homes
Florida, L.P.'s responsibility to provide deficit funding to his
community's homeowners association, Tampa Bay Community
Association, Inc. He argues that regardless of their bankruptcy
status, the Debtors should remain financially accountable to his
community, and should be ordered to pay the Deficit-Funding
portion on a monthly basis under Chapter 720 of the Florida
Statutes.
Mr. Gualtieri adds that by waiving the Debtors' right to appoint
directors and allowing the owners to vote for directors, the
Tampa Bay Homeowners Association would be better managed and
TOUSA Homes' Deficit-Funding portion would be minimized.
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A.
Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P.,
TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder
in the United States, operating in various metropolitan markets in
10 states located in four major geographic regions: Florida, the
Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and
markets high-quality detached single-family residences, town
homes, and condominiums to a diverse group of homebuyers, such as
"first-time" homebuyers, "move-up" homebuyers, homebuyers who are
relocating to a new city or state, buyers of second or vacation
homes, active-adult homebuyers, and homebuyers with grown children
who want a smaller home. It also provides financial services to
its homebuyers and to others through its subsidiaries, Preferred
Home Mortgage Company and Universal Land Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on January 29, 2008 (Bankr. S.D. Fla. Case No. 08-
10928). The Debtors have selected M. Natasha Labovitz, Esq.,
Brian S. Lennon, Esq., Richard M. Cieri, Esq., and Paul M. Basta,
Esq., at Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at
Berger Singerman, to represent them in their restructuring
efforts. Lazard Freres & Co. LLC is the Debtors' investment
banker. Ernst & Young LLP is the Debtors' independent auditor and
tax services provider. Kurtzman Carson Consultants LLC acts as
the Debtors' Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008
(Bankr. S.D. Fla. Case No. 08-20746). It listed assets between
$1 million and $10 million, and debts between $1 million and
$10 million.
The Official Committee of Unsecured Creditors hired Patricia A.
Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff &
Sitterson, P.A., as its local counsel.
TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets
of $1,734,422,756 and total liabilities of $2,300,053,979.
Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
TOUSA INC: Seeks to Sell Austin Properties for $11.5 Million
------------------------------------------------------------
TOUSA, Inc., and its affiliates ask the U.S. Bankruptcy Court for
the Southern District of Florida to authorize Newmark Homes, L.P.,
to enter into an asset purchase agreement with Scott Felder Homes,
LLC, of the sale of certain assets located in Austin, Texas, for
$11.5 million.
Paul Steven Singerman, Esq., at Berger Singerman, P.A., in Miami,
Florida, says that under their revised business strategy, the
Debtors intend to continue their operations in the state of
Texas, including the development of 23 communities in Austin, 32
communities in Houston, and 12 communities in San Antonio. The
Debtors market their homes under the brand names, "Newmark
Homes," "Trophy Homes," and "Fedrick, Harris Estate Homes." The
Debtors relate that their business in the Texas Region has been
less affected by challenging market conditions compared to other
regions where they operate.
Mr. Singerman notes that the Debtors and their financial advisor,
Lazard Freres & Co., conducted extensive efforts in marketing the
Texas Assets from February 2009 through mid-April 2009. The
Debtors subsequently determined that value would be maximized if
the Texas Assets were sold by division. Among offers they
received, the Debtors determined that the $11.5 million offer
from Scott Felder Homes, which intended to buy 16 out of the 23
communities within the Austin Division, is the best offer
received for the Austin Assets.
The Debtors emphasize that Scott Felder Homes' offer represents
fair value not only in light of their extensive marketing
efforts, but also because the purchase price reflects appropriate
value in the face of the current homebuilding industry
conditions. Indeed, the sale of the Austin Division pursuant to
Scott Felder Homes APA recognize an immediate and certain
infusion of cash proceeds and is the best way for the Debtors to
monetize their interest in the Austin Division, Mr. Singerman
avers.
The salient terms of the Scott Felder Homes Asset Purchase
Agreement are:
(a) Scott Felder Homes will acquire from Newmark Homes 16
communities of the Debtor's Austin development for
$11,508,000. The Assets to be acquired include all unsold
lots , all lot purchase agreements, all owned and leased
model homes, certain fixed assets, information technology
and other assets relevant for the operation of the Austin
Division.
(b) Newmark Homes will assume and assign, subject to the
consent of the applicable landlord, assign to Scott Felder
Homes:
-- model home leases with certain landlords in the 16
Communities;
-- the option contracts identified on the Purchase
Agreement and any applicable lot sale contracts;
-- the condominium agreement identified on the Purchase
Agreement, any and all development rights that Newmark
Homes currently has, certain computer software rights
identified on the Purchase Agreement and any rights of
first option or first refusal held by Newmark Homes;
(c) Newmark Homes, subject to the consent of the landlord,
will grant Scott Felder Homes a sublease of its lease of
the main office and design center in the Austin Division.
The lease payments for the main office and design center
amount to $30,000 per month. Commencing on January 1,
2010, Scott Felder Homes will make sublease payments of
$10,000 per month. Newmark Homes will pay the remaining
$20,000. The lease will expire on September 30, 2010.
(d) Scott Felder Homes will deposit $1,150,800 with Universal
Land Title. About 10% of the Escrow Deposit will apply to
the portion of the purchase price required to be paid at
each respective closing. At the Final Closing, the
remaining balance will be payable to or at the direction
of Scott Felder Homes.
(e) The Initial Closing will take place 30 days after Court
Approves the Debtors' Sale Motion but in no event later
than July 15, 2009.
(f) Not less than 10 days before each Subsequent Closing,
Scott Felder Homes will identify the portion of the
Subsequent Lots that it intends to acquire at the
Subsequent Closing. In addition, starting 120 days after
the Initial Closing and every 90 days thereafter until the
390th day, Scott Felder Homes is obligated to acquire,
within each period, Subsequent Lots equal in value to and
not less than 1/5 of the total value of the lots existing
on the effective date.
(g) If Scott Felder Homes defaults under the APA by failing to
consummate the Initial Closing or any Subsequent Closing,
Newmark Homes will be entitled to retain the Escrow
Deposit as liquidated damages. Under certain
circumstances, Scott Felder Homes will forfeit the right
to use architectural plans for other than lots actually
purchased and may be required to reassign model home
leases. If Scott Felder Homes is in breach of any other
obligation, Newmark Homes at its option may terminate the
APA, receive the Escrow Deposit, and seek damages for a
default.
(h) If Newmark Homes breaches the APA after the Court's
approval, Scott Felder may either obtain a return of the
Escrow Deposit or enforce the Purchase Agreement by
specific performance or seek damages up to one half of the
purchase price. If Court approval is not obtained, Scott
Felder Homes may terminate the APA and obtain a return of
Escrow Deposit.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A.
Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P.,
TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder
in the United States, operating in various metropolitan markets in
10 states located in four major geographic regions: Florida, the
Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and
markets high-quality detached single-family residences, town
homes, and condominiums to a diverse group of homebuyers, such as
"first-time" homebuyers, "move-up" homebuyers, homebuyers who are
relocating to a new city or state, buyers of second or vacation
homes, active-adult homebuyers, and homebuyers with grown children
who want a smaller home. It also provides financial services to
its homebuyers and to others through its subsidiaries, Preferred
Home Mortgage Company and Universal Land Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on January 29, 2008 (Bankr. S.D. Fla. Case No. 08-
10928). The Debtors have selected M. Natasha Labovitz, Esq.,
Brian S. Lennon, Esq., Richard M. Cieri, Esq., and Paul M. Basta,
Esq., at Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at
Berger Singerman, to represent them in their restructuring
efforts. Lazard Freres & Co. LLC is the Debtors' investment
banker. Ernst & Young LLP is the Debtors' independent auditor and
tax services provider. Kurtzman Carson Consultants LLC acts as
the Debtors' Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008
(Bankr. S.D. Fla. Case No. 08-20746). It listed assets between
$1 million and $10 million, and debts between $1 million and
$10 million.
The Official Committee of Unsecured Creditors hired Patricia A.
Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff &
Sitterson, P.A., as its local counsel.
TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets
of $1,734,422,756 and total liabilities of $2,300,053,979.
Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
TOUSA INC: To Sell Houston Properties for $8.8 Million
------------------------------------------------------
TOUSA, Inc., and its affiliates ask the U.S. Bankruptcy Court for
the Southern District of Florida to authorize Newmark Homes, L.P.,
to sell certain of its assets located in Houston, Texas, to Moody
Fedrick Holdings, LLC, for $8.8 million.
The Debtors' revised business strategy contemplates the
continuation of operations in Texas, which is comprised of three
metropolitan markets throughout the state. The Debtors have 23
communities in Austin, 32 communities in Houston, and 12
communities in San Antonio, which are marketed under the "Newmark
Homes," "Trophy Homes" and "Fedrick, Harris Estate Homes" brand
names. The Debtors' business in the Texas Region has been
unaffected by the market conditions and thus, the Debtors intend
to market the entire Texas Region business and continue operating
each of the three divisions pending an overall sale.
In this light, the Debtors and their investment banker, Lazard
Freres & Co., began contacting potential buyers in February 2009
through mid-April 2009 for the Texas Assets. Upon analysis, the
Debtors determined that value would be maximized if the Texas
Assets was sold by division. In this regard, the Debtors believe
that the offer they received from Moody Fedrick for the purchase
of 19 communities of the 32 communities within the Houston
Division for $8.8 million is the highest and best offer.
Thus, the Debtors entered into a purchase agreement with Moody
Fedrick for the sale of 19 Houston communities, according to Paul
Steven Singerman, Esq., at Berger Singerman, P.A., in Miami,
Florida. The salient terms of the Purchase Agreement are:
(a) Moody Fedrick will acquire 19 communities of the Debtors'
Houston communities for $8,800,000. The assets to be
Acquired will include (i) the book value of all sold lots
for which construction has not yet started; plus (ii) 90%
of the book value for all unsold lots to be purchased;
plus (iii) an average of 20% over book value of model
homes; plus (iv) book value of furniture, fixtures and
equipments.
(b) Within the relevant communities, Moody Fedrick will
acquire all Unsold Lots, all Sold Lots but without homes
started in the corresponding communities, all owned and
leased model homes, certain fixed assets, information
technology and other assets relevant for the operation of
the Houston Division.
(c) Debtor Newmark Homes will assume and assign to Moody
Fedrick:
-- model home leases with certain landlords in the 19
Houston communities;
-- subject to the consent of the landowners, the lot
purchase agreements in the Purchase Agreement;
-- certain lot sale contracts, computer software rights
and certain web site and domain names indentified in
the Purchase Agreement.
(d) Moody Fedrick will deposit with Universal Land Title
$645,000, to be held as a down payment for the lots to be
closed.
(e) The initial closing is contemplated to take place 10 days
after Court approves the Debtors' Sale Motion.
(f) Not less than 10 days prior to the next subsequent
closing, Moody Fedrick will advise Newmark Homes of the
scheduled closing date and the lots to be purchased. The
lots to be purchased will be taken down in three equal
amounts over the three 90-day periods immediately
following the closing, although lots may be taken down at
any time by Moody Fedrick. Moody Fedrick will receive
credit at the first subsequent closing for any lots
purchased at the initial closing. At least one half of
the owned model homes must be purchased at the initial
closing. The balance of the model homes will be purchased
within the first 90-day period following the initial
closing.
(g) If Moody Fedrick defaults under the Purchase Agreement
prior to the closing, Newmark Homes will be exclusively
entitled to retain the Earnest Money Deposit. If Moody
Fedrick is in breach of the Purchase Agreement after the
closing, Newmark Homes will be entitled to any remaining
Earnest Money, and will have the right to terminate the
rights to use agreements under the Purchase Agreement and
may require Moody Fedrick to cease the use of certain
trademarks and names. If Newmark Homes breaches the
Purchase Agreement after Court approval, Moody Fedrick may
either terminate the Purchase Agreement and obtain a
return of the Escrow Deposit or enforce the Purchase
Agreement by specific performance. If the specific
performance of the Purchase Agreement is unavailable to
Moody Fedrick, Newmark Homes will be liable for any actual
damages to which Moody Fedrick may be entitled.
(h) Post-closing agreements between the parties include the
sharing of certain employees for a period of five months,
with Moody Fedrick paying progressively more of the costs.
Subject to the consent of the landlord, the parties will
jointly use the Design Center of Newmark Homes and
commencing 60 days after the closing, Moody Fedrick will
pay the sum of $12,000 per month to Newmark Homes. Moody
Fedrick will use its best efforts to:
-- assist Newmark Homes in selling all remaining
furniture, fixtures, equipment and lots of Newmark
Homes' Houston Division;
-- conduct sales and marketing business for remaining
inventory owned by Newmark Homes in all model home
leases assumed by Moody Fedrick or in Owned Model Homes
purchased by Moody Fedrick until the earlier of (i) all
homes owned by Newmark Homes are sold and closed, or
(ii) December 31, 2009; and
-- to conduct selection activities in the Design Center
for remaining inventory owned by Newmark Homes until
the earlier of (i) all homes owned by Newmark Homes are
sold and closed, or (ii) December 31, 2009.
Mr. Singerman stresses that the $8.8 million purchase price for
the Houston Communities does not only represent fair value given
the Debtors' extensive marketing efforts, but also appropriate
value in light of the current homebuilding industry conditions.
The sale of the Houston Communities pursuant to the Purchase
Agreement, he avers, is the best way for the Debtors to monetize
their interest.
Moreover, Moody Fedrick's managers, who are former employees of
the Debtors that have a vast knowledge of the operations of the
Houston Division, would help effectuate a smooth continuation of
the operations that would afford the Debtors an opportunity to
further enhance value through the completion of current
construction in progress without interruption; and provide the
least likelihood of backlog cancellation or price erosion, Mr.
Singerman adds.
About TOUSA Inc.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A.
Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P.,
TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder
in the United States, operating in various metropolitan markets in
10 states located in four major geographic regions: Florida, the
Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and
markets high-quality detached single-family residences, town
homes, and condominiums to a diverse group of homebuyers, such as
"first-time" homebuyers, "move-up" homebuyers, homebuyers who are
relocating to a new city or state, buyers of second or vacation
homes, active-adult homebuyers, and homebuyers with grown children
who want a smaller home. It also provides financial services to
its homebuyers and to others through its subsidiaries, Preferred
Home Mortgage Company and Universal Land Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on January 29, 2008 (Bankr. S.D. Fla. Case No. 08-
10928). The Debtors have selected M. Natasha Labovitz, Esq.,
Brian S. Lennon, Esq., Richard M. Cieri, Esq., and Paul M. Basta,
Esq., at Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at
Berger Singerman, to represent them in their restructuring
efforts. Lazard Freres & Co. LLC is the Debtors' investment
banker. Ernst & Young LLP is the Debtors' independent auditor and
tax services provider. Kurtzman Carson Consultants LLC acts as
the Debtors' Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008
(Bankr. S.D. Fla. Case No. 08-20746). It listed assets between
$1 million and $10 million, and debts between $1 million and
$10 million.
The Official Committee of Unsecured Creditors hired Patricia A.
Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff &
Sitterson, P.A., as its local counsel.
TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets
of $1,734,422,756 and total liabilities of $2,300,053,979.
Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
TOUSA INC: To Sell JV Membership Interests to Centex for $1.1MM
---------------------------------------------------------------
TOUSA, Inc., and its affiliates ask the U.S. Bankruptcy Court for
the Southern District of Florida to authorize TOUSA Homes, Inc.,
to enter into an agreement with Centex Real Estate Corporation to
effectuate TOUSA Homes' sale of its membership interests and
certain residential lots in a joint venture with Centex Homes.
In November 2005, TOUSA Homes and Centex Homes entered into a
joint venture agreement for the acquisition and development of
real estate in Florida. The joint venture is governed by a
Limited Liability Company Agreement of Centex/TOUSA at Wellington,
LLC. Centex Homes and TOUSA Homes own all of the issued and
outstanding membership interests in the JV. The JV does business
in the completion of infrastructure and horizontal development in
residential communities and in the marketing and sale of finished
lots. If a member of the JV fails to make required capital
contributions, the non-defaulting member has (i) the right under
certain circumstances to make required capital contributions to
the JV, and (ii) the right to make a loan to the JV to replace the
capital contribution the defaulting member was to have made.
The JV obtained a loan in the principal amount of $50,400,000 from
PNC Bank, National Association, as administrative agent, and
certain other lenders. The current outstanding amount due under
the loan is $35,250,000; the JV estimates that the value of all of
its assets is substantially less than the outstanding amount. In
connection with entering into the Loan and the Credit Agreement,
Centex Homes and TOUSA, Inc. executed a (i) Continuing Agreement
of Completion by Centex and TOUSA to the benefit of Agent and
Lenders; (ii) a Continuing Agreement of Repayment by TOUSA; and
(iii) Regulated Substances Certificate and Environmental Indemnity
Agreement by Centex and TOUSA.
Through those Guaranties, TOUSA assumed identical obligations owed
to the Lenders, guaranteeing certain of the JV's obligations
arising out of and related to the Loan and the Credit Agreement.
Paul Steven Singerman, Esq., at Berger Singerman, P.A., in Miami,
Florida, reminds the Court that the Debtors' revised business plan
contemplates an orderly disposition of their interests in their
remaining joint ventures. In this light, TOUSA Homes avers that a
sale of its membership interests in the Centex/TOUSA JV as well as
44 residential lots in a Wellington development owned by TOUSA
Homes and previously conveyed by the JV to TOUSA Homes is
consistent with the revised business plan. The TOUSA Lots are
subject to certain restrictions and limitations with respect to
the right of TOUSA Homes to resell the TOUSA Lots under the LLC
Agreement, Mr. Singerman relates.
Centex Real Estate and TOUSA Homes entered into the Sale
Agreement, which provides that:
(1) Centex Real Estate will pay TOUSA Homes $1,100,000 in
exchange for all of TOUSA Homes' membership interest in
the JV and TOUSA Homes' right, title and interest in the
TOUSA Lots;
(2) Centex Real Estate will deliver to TOUSA Homes the
documents executed by the current holders of the Loan as
are necessary for the withdrawal of PNC Bank's claims, and
a release by the current holder of the Loan of TOUSA from
any liability under the Guaranties;
(3) Centex Real Estate and TOUSA Homes will enter into mutual
releases from their liabilities under the Credit Agreement
and the Loan and any other liability under the LLC
Agreement with respect to the JV;
(4) Centex Real Estate will deliver to TOUSA Homes a waiver of
its rights related to the limitation on the right to
resell the TOUSA Lots under the LLC Agreement; and
(5) TOUSA Homes will deliver a special warranty deed in favor
of Centex Real Estate that conveys the TOUSA Lots, free
and clear of all claims, liens, pledges, restrictions,
encumbrances and interests.
Headquartered in Hollywood, Florida, TOUSA Inc. (Pink Sheets:
TOUS) -- http://www.tousa.com/-- fka Technical Olympic U.S.A.
Inc., dba Technical U.S.A., Inc., Engle Homes, Newmark Homes L.P.,
TOUSA Homes Inc. and Newmark Homes Corp. is a leading homebuilder
in the United States, operating in various metropolitan markets in
10 states located in four major geographic regions: Florida, the
Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and
markets high-quality detached single-family residences, town
homes, and condominiums to a diverse group of homebuyers, such as
"first-time" homebuyers, "move-up" homebuyers, homebuyers who are
relocating to a new city or state, buyers of second or vacation
homes, active-adult homebuyers, and homebuyers with grown children
who want a smaller home. It also provides financial services to
its homebuyers and to others through its subsidiaries, Preferred
Home Mortgage Company and Universal Land Title Inc.
The Debtor and its debtor-affiliates filed for separate Chapter 11
protection on January 29, 2008 (Bankr. S.D. Fla. Case No. 08-
10928). The Debtors have selected M. Natasha Labovitz, Esq.,
Brian S. Lennon, Esq., Richard M. Cieri, Esq., and Paul M. Basta,
Esq., at Kirkland & Ellis LLP; and Paul Steven Singerman, Esq., at
Berger Singerman, to represent them in their restructuring
efforts. Lazard Freres & Co. LLC is the Debtors' investment
banker. Ernst & Young LLP is the Debtors' independent auditor and
tax services provider. Kurtzman Carson Consultants LLC acts as
the Debtors' Notice, Claims & Balloting Agent.
TOUSA's direct subsidiary, Beacon Hill at Mountain's Edge LLC dba
Eagle Homes, filed for Chapter 11 Protection on July 30, 2008
(Bankr. S.D. Fla. Case No. 08-20746). It listed assets between
$1 million and $10 million, and debts between $1 million and
$10 million.
The Official Committee of Unsecured Creditors hired Patricia A.
Redmond, Esq., and the law firm Stearns Weaver Weissler Alhadeff &
Sitterson, P.A., as its local counsel.
TOUSA Inc.'s balance sheet at June 30, 2008, showed total assets
of $1,734,422,756 and total liabilities of $2,300,053,979.
Bankruptcy Creditors' Service, Inc., publishes TOUSA Bankruptcy
News. The newsletter tracks the chapter 11 proceeding undertaken
by TOUSA Inc. and its affiliates. (http://bankrupt.com/newsstand/
or 215/945-7000)
TROPICANA ENTERTAINMENT: Onex to Take Control of Las Vegas Casino
-----------------------------------------------------------------
Peter Lattman and Tamara Audi at The Wall Street Journal report
that Onex Corp. said that it wants to take control of the
Tropicana Resort & Casino on the Las Vegas Strip when it emerges
from bankruptcy protection later this year.
According to WSJ, Onex positioned itself to take over Tropicana by
accumulating debt at a discount. WSJ relates that Onex paid less
than $200 million for a stake in Tropicana's senior loans that are
secured by the hotel property.
WSJ states that Onex has partnered with former MGM Mirage
executive Alex Yemenidjian. The report says that Mr. Yemenidjian
will be Tropicana's new CEO.
WSJ relates that Onex and other, undisclosed, equity partners
would invest as much as $75 million to improve Tropicana. The
court, says the report, has approved the Onex deal but still must
pass muster with Nevada gambling authorities.
About Tropicana Entertainment
Based in Crestview Hills, Kentucky, Tropicana Entertainment LLC --
http://www.tropicanacasinos.com/-- is an indirect subsidiary of
Tropicana Casinos and Resorts. The company is one of the largest
privately-held gaming entertainment providers in the United
States. Tropicana Entertainment owns eleven casino properties in
eight distinct gaming markets with premier properties in Las
Vegas, Nevada, and Atlantic City, New Jersey.
Tropicana Entertainment LLC and its debtor-affiliates filed for
Chapter 11 protection on May 5, 2008 (Bankr. D. Del. Case No.
08-10856). Kirkland & Ellis LLP and Mark D. Collins, Esq., at
Richards Layton & Finger, represent the Debtors in their
restructuring efforts. Their financial advisor is Lazard Ltd.
Their notice, claims, and balloting agent is Kurtzman Carson
Consultants LLC. Epiq Bankruptcy Solutions LLC is the Debtors'
Web site administration agent. AlixPartners LLP is the Debtors'
restructuring advisor.
Stroock & Stroock & Lavan LLP and Morris Nichols Arsht & Tunnell
LLP represent the Official Committee of Unsecured Creditors in
this case. Capstone Advisory Group LLC is financial advisor to
the Creditors' Committee.
On April 29, 2009, Adamar of New Jersey, Inc., doing business as
Tropicana Casino and Resort, and its affiliate, Manchester Mall,
Inc., filed for Chapter 11 (Bankr. D. N.J. Lead Case No. 09-
20711). Judge Judith H. Wizmur presides over the cases. Adamar
and Manchester Mall or the New Jersey Debtors are both affiliates
of Tropicana Entertainment LLC. Manchester Mall is a wholly owned
subsidiary of Adamar that owns and operates certain real property
utilized in the New Jersey Debtors' business operations.
The New Jersey Debtors own and operate one of the largest, and one
of the most established, destination casino resorts in Atlantic
City, New Jersey, known as Tropicana Casino and Resort - Atlantic
City, which ranks third in gaming positions among Atlantic City's
11 casino properties. The New Jersey Debtors initiated the
Chapter 11 cases to effectuate a sale of substantially all their
assets in accordance with a mandate issued by the New Jersey
Casino Control Commission pursuant to the New Jersey Casino
Control Act.
Ilana Volkov, Esq., and Michael D. Sirota, Esq., at Cole, Schotz,
Meisel, Forman & Leonard, in Hackensack, New Jersey, represent the
New Jersey Debtors. Kurtzman Carson Consultants LLC acts as their
claims and notice agent. Adamar disclosed $500 million to
$1 billion both in total assets and debts in its petition.
Manchester Mall disclosed $1 million to $10 million in total
assets, and less than $50,000 in total debts in its petition.
Bankruptcy Creditors' Service, Inc., publishes Tropicana
Bankruptcy News. The newsletter tracks the Chapter 11
restructuring proceedings commenced by Tropicana Entertainment LLC
and its affiliates. (http://bankrupt.com/newsstand/or
215/945-7000)
TRUVO INTERMEDIATE: High Leverage Cues S&P to Junk Corp. Rating
---------------------------------------------------------------
Standard & Poor's Ratings Services said that it lowered to 'CCC+'
from 'B-' its long-term corporate credit rating on Delaware-based
international publisher of classified directories TRUVO
Intermediate LLC. The outlook is negative.
At the same time, S&P lowered to 'CCC-' from 'CCC' its
subordinated debt ratings on related entity TRUVO Subsidiary
Corp.'s EUR395 million 8.5% notes and $200 million 8.375% notes.
The recovery ratings on the notes are unchanged at '6', indicating
S&P's expectation of negligible (0%-10%) recovery in the event of
a payment default.
"The downgrade mainly reflects our opinion that Truvo's capital
structure is likely to become unsustainable over the near term, as
a result of very high leverage, weak free cash flow generation,
and, potentially, further deterioration in the group's operating
performance in 2009," said Standard & Poor's credit analyst
Manuela Gabetta.
Truvo's gross debt stood at about EUR1.6 billion on Dec. 31, 2008,
excluding EUR682 million of shareholder loans.
Truvo's adjusted debt to EBITDA reached about 10.3x on Dec. 31,
2008. This figure is about 9.3x when the Portuguese business is
included and when adjusting pro forma for the anticipated
application to debt reduction of the gross EUR280 million proceeds
from the sale of Truvo's Netherlands operation. S&P anticipate
that the group's adjusted debt to EBITDA will continue to
deteriorate in 2009, potentially approaching 12.0x at year-end, as
a result of continued top-line and earnings pressure at Truvo's
main businesses.
In addition, S&P believes that the group's weaker operating
performance may materially affect Truvo's free operating cash flow
generation in 2009. This would be likely to somewhat undermine
the group's liquidity position, ability to absorb any adverse
working capital movements, and ability to pay down debt.
The negative outlook mainly reflects S&P's opinion that Truvo's
capital structure is likely to become unsustainable in the near
term, especially in light of the current adverse trading
environment.
In S&P's view, in the current market environment, the group's
negative operating trends and over-leveraged capital structure
give rise to significant risks of the implementation of a
discounted distressed exchange offer, which, under S&P's criteria,
S&P would view as tantamount to default. At the same time,
however, S&P acknowledge that there is no indication whatsoever
that Truvo's management intends to explore such a route.
S&P could also lower the ratings if the group's operating
performance and/or liquidity were to further deteriorate from
current expectations.
Given the expected pressure on Truvo's revenues in 2009 and the
unfavorable macroeconomic conditions, S&P believes that a positive
rating action is unlikely over the next 12 months.
WARNER MUSIC: Moody's Upgrades Corporate Family Rating to 'Ba3'
---------------------------------------------------------------
Moody's Investors Service upgraded Warner Music Group Corp.'s
Corporate Family rating to Ba3 from B1, Probability of Default
rating to Ba2 from B1, senior discount notes to B1 from B3 and
senior subordinated bonds to B1 from B3. Moody's changed the
company's Speculative Grade Liquidity rating to SGL-2 from SGL-3.
In addition, Moody's assigned a Ba2 rating to WMG Acquisition
Corp.'s new $1.1 billion Senior Secured Notes due 2016. Moody's
also changed the company's expected recovery rate to 35%,
reflective of an all bond capital structure upon expected
repayment of the senior secured term loans with proceeds from a
new notes issue. The rating outlook is stable. Moody's will
withdraw ratings on the senior secured credit facilities upon
repayment. This concludes the review for upgrade initiated on May
13, 2009.
Following is a summary of the rating action:
-- Corporate Family Rating, Upgraded to Ba3 from B1
-- Probability of Default Rating, Upgraded to Ba2 from B1
-- Senior Subordinated Regular Bond/Debenture, changed to B1
LGD6, 90% from B3 LGD5, 84%
-- Senior Unsecured Regular Bond/Debenture, changed to B1 LGD6,
97% from B3 LGD6, 95%
-- Senior Secured Regular Bond/Debenture, assigned Ba2 LGD3, 47%
-- Speculative Grade Liquidity Rating, Upgraded to SGL-2 from
SGL-3
-- Outlook, Changed To Stable From Rating Under Review
"The upgrade is driven by the company's materially improved
liquidity position and debt reduction," stated Neil Begley, senior
vice president at Moody's Investors Service. Moody's believes
that the new bond offering and expected repayment and termination
of the credit facilities, will alleviate covenant pressure and
improve WMG's financial flexibility. The refinancing also extends
the debt maturities associated with the bank facilities to 2016.
In addition, the company is augmenting the proceeds from the new
notes issue with $300 million of cash on hand to repay the bank
debt which results in a reduction in leverage. Pro-forma debt-to-
EBITDA leverage for the proposed transaction as of 3/31/2009 is
around 4.5x (incorporating Moody's standard adjustments) and
approximately 3.9x on a net debt basis. Although the lack of
financial maintenance covenants and less restrictive provisions in
the notes indenture as compared to the bank agreement provides
less debt holder protection, Moody's believes that management
remains committed to conservative balance sheet strategies and
will manage its balance sheet and financial leverage around
current levels and will refrain from aggressive financial policies
such as large debt-financed acquisitions and / or dividend
payments. The new notes are expected to have a 3.0 times senior
secured debt incurrence covenant, a 2.0 times fixed charge
coverage ratio, and limits on restricted payments.
The SGL-2 liquidity rating is supported by WMG's enhanced
liquidity profile, bolstered by $358 million of balance sheet cash
(pro-forma for the term loan repayment) and the absence of
maintenance covenants. The SGL-2 rating also reflects Moody's
expectation that WMG will generate healthy free cash flow and
maintain a cash balance of at least $200 million over the next
twelve months.
The last rating action was on May 13, 2009 when Moody's placed
WMG's ratings on review for possible upgrade.
The notes are being sold in a privately negotiated transaction
without registration under the Securities Act of 1933 under
circumstances reasonably designed to preclude a distribution
thereof in violation of the Act. The issuance has been designed
to permit resale under Rule 144A.
WMG's ratings were assigned by evaluating factors that Moody's
considers relevant to the credit profile of the issuer, such as
the company's (i) business risk and competitive position compared
with others within the industry; (iii) capital structure and
financial risk; (iii) projected performance over the near to
intermediate term; and (iv) management's track record and
tolerance for risk. Moody's compared these attributes against
other issuers both within and outside WMG's core industry and
believes WMG's ratings are comparable to those of other issuers
with similar credit risk.
Warner Music Group Corp., with its headquarters in New York, is a
leading music content company, with domestic and international
operations in recorded music and music publishing. Annual
revenues approximate $3.2 billion.
VITERRA INC: Moody's Reviews 'Ba1' Corporate Family Rating
----------------------------------------------------------
Moody's Investors Service placed Viterra Inc.'s Ba1 Corporate
Family Rating and other debt ratings under review for possible
downgrade. The review was prompted by the recent announcement
that Viterra and ABB Grain Ltd. (ABB -- unrated) have reached an
agreement for Viterra to acquire ABB in a friendly transaction.
The transaction, valued at approximately A$1.6 billion (C$1.4
billion), is comprised of several options that offer ABB
shareholders combination of cash and shares, including a special
dividend to be paid by ABB to its shareholders. With significant
cash on hand from operations and equity offerings Viterra has pre-
funded all of the maximun
cash consideration for the acquisition under the offer, but the
mix of cash and shares has yet to be finalized.
The transaction is subject to satisfaction of a number of
customary closing conditions, including the receipt of required
regulatory approvals and court approvals, as well as the approval
of ABB shareholders. Regulatory approvals include approval by the
Australian Foreign Investment Review Board, the New Zealand
Overseas Investment Office and TSX (and ASX) in respect of the
issue of new shares (and CDIs) under the scheme by Viterra. The
Implementation Agreement also contains certain terms usual for a
transaction of this nature including no shop and no talk
provisions, mutual break fees, as well as providing Viterra the
right to match a competing proposal, if any.
The review will focus on the final financing arrangements for the
proposed acquisition, (specifically focusing on the choice of ABB
shareholders of a mix of cash versus shares), including altered
terms if any, the strategic fit of the two companies, regulatory
approvals, and the level of cash flow that can be generated to
reduce debt, if needed, in a reasonable fashion given the
cyclicality and price volatility of the company's agricultural
products. However if the transaction goes forward as has been
proposed it is likely that Viterra's existing ratings would be
confirmed.
Viterra has indicated that it anticipates generating roughly A$30
million in synergies by 2011. The likelihood of and time frame in
which these synergies can be achieved will also be considered
under the review. In addition the Ba1 ratings reflect the growth
aspirations of Viterra management and the review will incorporate
a determination of the financial impact of future acquisition
activity.
On Review for Possible Downgrade:
Issuer: Viterra Inc.
-- Probability of Default Rating - Ba1
-- Corporate Family Rating- Ba1
-- Senior Unsecured Regular Bond/Debenture- Ba1
-- Outlook, Changed To Rating Under Review for Possible
Downgrade From Stable
Moody's most recent announcement concerning the ratings for
Viterra was on September 12, 2008, when the initial Ba1 ratings
were assigned.
Viterra Inc., formerly known as Saskatchewan Wheat Pool Inc., is
headquartered in Regina, Saskatchewan, and is the largest grain
handler in Canada. The Viterra entity was formed on May 29, 2007
after the acquisition of Agricore United by Saskatchewan Wheat
Pool. Viterra operates through five business segments; Grain
Handling and Marketing, Agri-Products, Agri-Food Processing,
Livestock Feed and Services, and Financial Products, but derives
the majority of their income through the Grain Handling and
Marketing and Agri-Products business segment. Revenues were C$6.8
billion for the 12 month period ending January 31, 2009.
WMG ACQUISITION: Fitch Assigns 'BB' Rating on $500 Mil. Notes
-------------------------------------------------------------
Fitch Ratings has assigned a 'BB' rating to WMG Acquisition Corp's
$500 million senior secured note offering. The proceeds are
expected to be used for general corporate purposes including the
reduction of outstanding balances on the company's secured term
loan. WMG Acquisition Corp is an indirect wholly owned subsidiary
of Warner Music Group Corp.
Fitch currently rates WMG and its subsidiaries:
Warner Music Group
-- IDR 'BB-'.
WMG Acquisition Corp
-- IDR 'BB-';
-- Senior secured 'BB';
-- Subordinated 'B+'.
WMG Holdings Corp
-- IDR 'BB-';
-- Senior unsecured 'B'.
The Rating Outlook is Stable.
The ratings are supported by WMG's strong market share, global
footprint, and diversified and established content library.
Credit concerns include substantial challenges facing the recorded
music industry related to continued declines to its physical unit
sales. The Stable Outlook is supported by WMG's adequate
liquidity position, scaleable cost structure related to physical
music sales and WMG's position as one of the top global music
publishing businesses.
The music industry continues to deal with declining physical sales
that have not been fully replaced by digital sales in most
markets. Year-to-date May 10, 2009, album units including track-
equivalent album sales (giving 1/10th credit for digital singles)
have decreased 6.9% according to Nielsen SoundScan. Fitch
believes these decreases are predominantly the result of continued
piracy and copying, and proliferation of alternative entertainment
activities and products. Although digital tracks and digital
albums (less than one-third of total) continue to grow (year-to-
date up 16% and 21%, respectively, according to Nielsen) they are
unable to offset physical sale declines (down 19%). While Fitch
is cautiously optimistic regarding the continued roll-out of
cellular music products including over-the-air downloads, Fitch
expects a mid-to-high single digit negative trend on track-
equivalent albums to continue over the intermediate term.
Specifically related to WMG, total revenue decreased 10% in the
most recent quarter on a constant-currency basis due to difficult
international comps and release schedules. Additionally, U.S.
physical retailers continue to manage their physical inventory
levels down. While the conservative inventory management by U.S.
physical retailers has essentially cycled through a material
phase, Fitch expects continued pressure in this area for the
industry. Fitch believes similar behavior by foreign physical
retailers has also been occurring over the last few years.
Digital revenue for WMG increased 11% from the prior year and 3%
sequentially on a constant currency basis. Digital revenue
represented 26% of total revenue for the most recent quarter.
While margins on a quarter-by-quarter basis will continue to
depend somewhat on release schedules, international mix, and
ancillary initiatives, Fitch expects to continue to see general
improvements over time as digital makes up a greater portion of
total revenue and the company manages its cost structure in-line
with such transition. WMG should benefit in the back half of its
fiscal year with a greater volume of releases including Green Day
and Rob Thomas. Other potential releases before year-end include
greatest hits from Madonna and Neil Young.
Fitch continues to believe WMG's push into 360-degree
relationships is prudent. As demonstrated over the last year, the
major labels will likely not pursue established artists in these
agreements as up-front royalty payments could be excessive.
Instead, Fitch expects WMG and the other labels to continue to
push these agreements with new artists and that the recording
industry should have significant leverage regarding deal terms due
to the oligopoly structure of the industry combined with the
virtually limitless supply of aspiring musicians. Further upside
to operations could be realized through radio royalty fees that
are currently being considered in congress, as well as progress
related to ISP's monitoring piracy.
Pro forma for the expected transactions, Fitch expects WMG's net
leverage and cash interest coverage to generally remain the same
at approximately 3.7 times (x) and 3.4x, respectively. The
company's gross leverage should improve to approximately 4.4x
through debt at WMG Holdings. WMG's cash debt service ratio
(defined as EBITDA divided by gross cash interest expense and
principal debt amortization) should remain slightly over 3x pro
forma for these transactions. Including cash interest from the
HoldCo notes payable in 2010 brings the ratio to approximately
2.8x per Fitch's calculations.
Fitch assesses WMG's liquidity position based on the operating
entity, WMG Acquisition Corp. As such, liquidity is adequate and
should comprise $260 million of cash pro forma March 31, 2009 and
available credit revolver of $146 million ($150 million revolver
less $4 million outstanding letters of credit). Liquidity is also
supported by ongoing free cash flow which Fitch estimates will be
in excess of $200 million. Pro forma for the bank amendment and
bond offering, the company's maturity schedule is manageable and
generally could be handled organically through cash on hand and
expected free cash flow.
* Fitch Publishes Analysis on Health Care Sector Liquidity
----------------------------------------------------------
Fitch Ratings has published an in-depth analysis of the U.S.
health care sector liquidity titled 'Liquidity Focus: U.S. Health
Care'. This report focuses on the 19 Fitch-rated entities in this
sector that have issuer default ratings between 'BBB+' and 'CCC'.
The report includes an overview of industry developments along
with a detailed review of liquidity considerations, including
covenant analysis for each company. A selection of key conclusions
from the report are:
-- The participants in this study had strong aggregate financial
flexibility and liquidity generating last 12-month free
cash flow as of Dec. 31, 2008 of approximately $10.1 billion
and maintaining balance sheet cash of approximately $13
billion. This compares to a 2009-2011 debt maturity level,
in aggregate, of $15 billion.
-- The sector revolving credit capacity remains strong with
average availability of approximately 76% or $15 billion.
Additionally, only two companies, Beckman Coulter, Inc. and
Express Scripts Inc., had revolvers expiring before year-end
2010 in this sample.
-- HCA, Inc. has successfully placed two issuances in 2009, but
remains the company with the most severe maturity schedule in
this study with 2009, 2010 and 2011 maturities of $404
million, $1.144 billion and $896 million, respectively.
Likewise, Tenet Healthcare Corp. had the weakest operating
liquidity in this study with a free cash flow deficit of $339
million in 2008.
* PBGC Deficit Climbs to $33.5BB at Mid-Year, Largest in History
----------------------------------------------------------------
The Pension Benefit Guaranty Corporation posted a $33.5 billion
deficit for the first half of fiscal year 2009, PBGC Acting
Director Vince Snowbarger would tell the Senate Special Committee
on Aging at a hearing May 20. Based on unaudited financial
numbers as of March 31, the deficit represents an increase over
FY2008's $11 billion shortfall, and is the largest in the agency's
35-year history.
"The increase in the PBGC's deficit is driven primarily by a drop
in interest rates and by plan terminations, not by investment
losses," Mr. Snowbarger states in his written testimony. "The
PBGC has sufficient funds to meet its benefit obligations for many
years because benefits are paid monthly over the lifetimes of
beneficiaries, not as lump sums. Nevertheless, over the long
term, the deficit must be addressed."
The $22.5 billion deficit increase was due primarily to about
$11 billion in completed and probable pension plan terminations;
about $7 billion resulting from a decrease in the interest factor
used to value liabilities; about $3 billion in investment losses;
and about $2 billion in actuarial charges.
Mr. Snowbarger notes that as of April 30, the PBGC's investment
portfolio consisted of 30 percent equities, 68 percent bonds, and
less than 2 percent alternatives, such as private equity and real
estate. All the agency's alternative investments have been
inherited from failed pension plans.
The PBGC is closely monitoring companies in the auto manufacturing
and auto supply industries. According to PBGC estimates, auto
sector pensions are underfunded by about $77 billion, of which
$42 billion would be guaranteed in the event of plan termination.
The pension insurer also faces increased exposure from weak
companies across all sectors of the economy, including retail,
financial services and health care.
The PBGC is a federal corporation created under the Employee
Retirement Income Security Act of 1974. It currently guarantees
payment of basic pension benefits earned by 44 million American
workers and retirees participating in over 29,000 private-sector
defined benefit pension plans. The agency receives no funds from
general tax revenues. Operations are financed largely by
insurance premiums paid by companies that sponsor pension plans
and by investment returns.
* Chapter 11 Cases With Assets and Liabilities Below $1,000,000
---------------------------------------------------------------
In Re Shane Mitchell Logging, Inc.
Bankr. W.D. La. Case No. 09-80540
Chapter 11 Petition filed May 5, 2009
See http://bankrupt.com/misc/lawb09-80540p.pdf
See http://bankrupt.com/misc/lawb09-80540c.pdf
In Re Tracey F. Randall
dba Site Development Services
Bankr. S.D. Ala. Case No. 09-12117
Chapter 11 Petition filed May 8, 2009
See http://bankrupt.com/misc/alsb09-12117.pdf
In Re Froggie's Full Sun, LLC
aka Full Sun
Bankr. E.D. Ark. Case No. 09-13287
Chapter 11 Petition filed May 8, 2009
See http://bankrupt.com/misc/areb09-13287.pdf
In Re Abdollah Pourmohammad Dargah
Bankr. C.D. Calif. Case No. 09-15484
Chapter 11 Petition filed May 8, 2009
Filed as Pro Se
In Re Mutts A Million, Inc.
Bankr. M.D. Fla. Case No. 09-09559
Chapter 11 Petition filed May 8, 2009
See http://bankrupt.com/misc/flmb09-09559p.pdf
See http://bankrupt.com/misc/flmb09-09559c.pdf
In Re Stuart Cornelius Fisher
aka Neil Fisher
Bankr. S.D. Fla. Case No. 09-18836
Chapter 11 Petition filed May 8, 2009
Filed as Pro Se
In Re Tamara Jeanne'-Fisher
aka Tamara Fisher
aka TJ Fisher
Bankr. S.D. Fla. Case No. 09-18832
Chapter 11 Petition filed May 8, 2009
Filed as Pro Se
In Re A Hilltop Taxi, LLC
dba Hilltop Taxi
dba 3G Transportation, LLC
dba Hilltop Medical Transportation
Bankr. E.D. Ky. Case No. 09-21138
Chapter 11 Petition filed May 8, 2009
See http://bankrupt.com/misc/kyeb09-21138.pdf
In Re Mid-Town Auto Body, Inc.
Bankr. D. Mass. Case No. 09-14238
Chapter 11 Petition filed May 8, 2009
See http://bankrupt.com/misc/mab09-14238.pdf
In Re James R. Thomas
Danielle Thomas
Bankr. D. Nev. Case No. 09-17390
Chapter 11 Petition filed May 8, 2009
See http://bankrupt.com/misc/nvb09-17390.pdf
In Re Gunnar M. Henning
Bankr. D. N.J. Case No. 09-21851
Chapter 11 Petition filed May 8, 2009
See http://bankrupt.com/misc/njb09-21851.pdf
In Re Bret M. Danielson
Sarah M. Danielson
Bankr. D. N. Dak. Case No. 09-30521
Chapter 11 Petition filed May 8, 2009
See http://bankrupt.com/misc/ndb09-30521.pdf
In Re Mujica Electronics, LLC
Bankr. D. S.C. Case No. 09-03563
Chapter 11 Petition filed May 8, 2009
See http://bankrupt.com/misc/scb09-03563.pdf
In Re Phoenix Electronic Mfg. Services, LLC
Bankr. D. S.C. Case No. 09-03549
Chapter 11 Petition filed May 8, 2009
See http://bankrupt.com/misc/scb09-03549.pdf
In Re James Haggard West, Jr.
Bankr. M.D. Tenn. Case No. 09-05273
Chapter 11 Petition filed May 8, 2009
See http://bankrupt.com/misc/tnmb09-05273.pdf
In Re Sean Patrick's sm, LLC
Bankr. W.D. Tex. Case No. 09-11219
Chapter 11 Petition filed May 8, 2009
See http://bankrupt.com/misc/txwb09-11219.pdf
In Re Tekena USA, LLC
Bankr. N.D. Ill. Case No. 09-16969
Chapter 11 Petition filed May 9, 2009
See http://bankrupt.com/misc/ilnb09-16969.pdf
In Re Value Giant Stores, Incorporated
Bankr. N.D. Tex. Case No. 09-32942
Chapter 11 Petition filed May 9, 2009
See http://bankrupt.com/misc/txnb09-32942.pdf
In Re Southern Access, Inc.
Bankr. S.D. Ala. Case No. 09-12132
Chapter 11 Petition filed May 10, 2009
See http://bankrupt.com/misc/alsb09-12132.pdf
In Re Interior Services Network, Inc.
Bankr. D. Colo. Case No. 09-18859
Chapter 11 Petition filed May 11, 2009
See http://bankrupt.com/misc/cob09-18859p.pdf
See http://bankrupt.com/misc/cob09-18859c.pdf
In Re Islamorada, LLC
Bankr. E.D. N.C. Case No. 09-03881
Chapter 11 Petition filed May 11, 2009
See http://bankrupt.com/misc/nceb09-03881.pdf
In Re Dennis Ellis Used Cars, Inc.
Bankr. S.D. Ala. Case No. 09-12157
Chapter 11 Petition filed May 12, 2009
See http://bankrupt.com/misc/alsb09-12157.pdf
In Re Alain B. Calefas
Bankr. N.D. Calif. Case No. 09-31267
Chapter 11 Petition filed May 12, 2009
See http://bankrupt.com/misc/canb09-31267.pdf
In Re Raffo Investments LLC
Bankr. N.D. Calif. Case No. 09-31265
Chapter 11 Petition filed May 12, 2009
See http://bankrupt.com/misc/canb09-31265.pdf
In Re Advanced Executive Group Corp.
Bankr. M.D. Fla. Case No. 09-06463
Chapter 11 Petition filed May 12, 2009
Filed as Pro Se
In Re Christopher Adam Driggers
Jamie Michelle Driggers
Bankr. M.D. Fla. Case No. 09-03830
Chapter 11 Petition filed May 12, 2009
See http://bankrupt.com/misc/flmb09-03830.pdf
In Re Valnet LLC
Bankr. D. Kans. Case No. 09-11420
Chapter 11 Petition filed May 12, 2009
See http://bankrupt.com/misc/ksb09-11420p.pdf
See http://bankrupt.com/misc/ksb09-11420c.pdf
In Re Anastasia Taslis
Bankr. D. Mass. Case No. 09-41856
Chapter 11 Petition filed May 12, 2009
See http://bankrupt.com/misc/mab09-41856.pdf
In Re Midnight Pass Incorporated
Bankr. D. Mass. Case No. 09-14300
Chapter 11 Petition filed May 12, 2009
See http://bankrupt.com/misc/mab09-14300.pdf
In Re Herbert S. Penrose
Bankr. D. Nev. Case No. 09-51444
Chapter 11 Petition filed May 12, 2009
Filed as Pro Se
In Re Keith Bullard's Auto Liquidation Center, Inc.
Bankr. W.D. Pa. Case No. 09-23503
Chapter 11 Petition filed May 12, 2009
See http://bankrupt.com/misc/pawb09-23503.pdf
In Re Jose A. Lara
Kimberly A. Lara
Bankr. D. Ariz. Case No. 09-10228
Chapter 11 Petition filed May 13, 2009
See http://bankrupt.com/misc/azb09-10228.pdf
In Re Traditions Transitional Living Inc.
Bankr. D. Ariz. Case No. 09-10267
Chapter 11 Petition filed May 13, 2009
Filed as Pro Se
In Re Andrew Alec Chavis
aka Drew Chavis
Bankr. S.D. Ind. Case No. 09-80891
Chapter 11 Petition filed May 13, 2009
Filed as Pro Se
In Re Concept Investment Holdings, LLC
Bankr. W.D. N.C. Case No. 09-40402
Chapter 11 Petition filed May 13, 2009
See http://bankrupt.com/misc/ncwb09-40402.pdf
In Re Pavlidis Corporation
aka Pizzi's Pizza II
Bankr. E.D. Pa. Case No. 09-13563
Chapter 11 Petition filed May 13, 2009
See http://bankrupt.com/misc/paeb09-13563.pdf
In Re 54 Troy Street Building Company, LLC
Bankr. D. R.I. Case No. 09-11883
Chapter 11 Petition filed May 13, 2009
Filed as Pro Se
In Re Carl Louis Himel, III
dba Carl Himel State Farm Insurance
Denise Marie Himel
Bankr. E.D. Tex. Case No. 09-10256
Chapter 11 Petition filed May 13, 2009
See http://bankrupt.com/misc/txeb09-10256p.pdf
See http://bankrupt.com/misc/txeb09-10256c.pdf
In Re Gerard Stephan Lazzara, Jr.
Bankr. S.D. Tex. Case No. 09-33361
Chapter 11 Petition filed May 13, 2009
See http://bankrupt.com/misc/txsb09-33361p.pdf
See http://bankrupt.com/misc/txsb09-33361c.pdf
In Re Michael R. Fiola
wwi Claudia L. Fiola
fdba Quality Cabinets
Bankr. E.D. Wash. Case No. 09-02698
Chapter 11 Petition filed May 13, 2009
See http://bankrupt.com/misc/waeb09-02698p.pdf
See http://bankrupt.com/misc/waeb09-02698c.pdf
In Re West Alabama Education, Inc.
dba Central Christian Academy
Bankr. M.D. Ala. Case No. 09-31281
Chapter 11 Petition filed May 14, 2009
See http://bankrupt.com/misc/almb09-31281.pdf
In Re Stephen Thomas Yelverton
aka Stephen T. Yelverton
Bankr. D. D.C. Case No. 09-00414
Chapter 11 Petition filed May 14, 2009
Filed as Pro Se
In Re Stamatike Glarentzos
Bankr. S.D. Fla. Case No. 09-19292
Chapter 11 Petition filed May 14, 2009
See http://bankrupt.com/misc/flsb09-19292.pdf
In Re JSM Auto, Inc.
Bankr. N.D. Ind. Case No. 09-32287
Chapter 11 Petition filed May 14, 2009
See http://bankrupt.com/misc/innb09-32287.pdf
In Re Park Avenue Grill LLC
Bankr. D. Md. Case No. 09-18746
Chapter 11 Petition filed May 14, 2009
See http://bankrupt.com/misc/mdb09-18746.pdf
In Re Joseph Anthony Basile
Bankr. D. N.J. Case No. 09-22388
Chapter 11 Petition filed May 14, 2009
See http://bankrupt.com/misc/njb09-22388.pdf
In Re Noor Furniture, Inc.
dba Route One Furniture
dba Route 1 Furniture
Bankr. E.D. Pa. Case No. 09-13607
Chapter 11 Petition filed May 14, 2009
See http://bankrupt.com/misc/paeb09-13607.pdf
In Re Colvin Timber Company, LC
Bankr. E.D. Tex. Case No. 09-90158
Chapter 11 Petition filed May 14, 2009
See http://bankrupt.com/misc/txeb09-90158p.pdf
See http://bankrupt.com/misc/txeb09-90158c.pdf
In Re Tenex, LLC
Bankr. W.D. Va. Case No. 09-71227
Chapter 11 Petition filed May 14, 2009
See http://bankrupt.com/misc/vawb09-71227.pdf
In Re Stanford E. Nelson
Camille W. Nelson
Bankr. D. Ariz. Case No. 09-10523
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/azb09-10523.pdf
In Re Myron Harrison
Bankr. E.D. Ark. Case No. 09-13484
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/areb09-13484.pdf
In Re Star Hills
Bankr. E.D. Calif. Case No. 09-14472
Chapter 11 Petition filed May 15, 2009
Filed as Pro Se
In Re LLS Entertainment Holding Company, Inc.
Bankr. M.D. Fla. Case No. 09-10059
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/flmb09-10059.pdf
In Re M Wilson Trucking Inc.
Bankr. N.D. Ga. Case No. 09-41996
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/ganb09-41996.pdf
In Re Peter Koulogeorge
Bankr. N.D. Ill. Case No. 09-17713
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/ilnb09-17713.pdf
In Re Robert Eugene Warner
dba Antiques Plus Mall
dba Warner Video
dba MEGA Movies
dba MEGA Tan
Frances Marie Warner
Bankr. D. Kans. Case No. 09-11480
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/ksb09-11480.pdf
In Re MAACS, Inc.
aka Crazy Horse Custom Embroidery
Bankr. D. Maine Case No. 09-20713
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/meb09-20713p.pdf
See http://bankrupt.com/misc/meb09-20713c.pdf
In Re NJ Mpire, Inc.
dba Quizno's Sub
Bankr. D. N.J. Case No. 09-22522
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/njb09-22522.pdf
In Re William D. McNeill
Bankr. D. N.J. Case No. 09-22551
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/njb09-22551.pdf
In Re Jocelyn Ruth Everett
aka Jocelyn R Everett
aka Ruth Everett
aka J. Ruth Everett
aka R Everett
aka JR Everett
aka JRE
aka Jocelyn Everett
aka J Everett
Bankr. E.D. N.C. Case No. 09-04046
Chapter 11 Petition filed May 15, 2009
Filed as Pro Se
In Re The Half Fast Car Company
aka Charles V. Furmanek
Bankr. N.D. Ohio Case No. 09-33283
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/ohnb09-33283.pdf
In Re Great Lakes Helicopters, Inc.
dba SWB Turbines
aka SWB Turbines Inc.
aka S W B
Bankr. E.D. Wisc. Case No. 09-26943
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/wieb09-26943.pdf
In Re Clifford L. Bader, Jr.
Jennifer Bader
Bankr. W.D. Wisc. Case No. 09-13275
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/wiwb09-13275.pdf
In Re Josephine P. Velazquez
dba Madonna Maria Guest Home
Bankr. S.D. Calif. Case No. 09-06693
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/casb09-06693.pdf
In Re Apex Millworks, Inc.
Bankr. D. N.J. Case No. 09-22684
Chapter 11 Petition filed May 15, 2009
See http://bankrupt.com/misc/njb09-22684.pdf
In Re Robert E. Hall
Bankr. N.D. Ala. Case No. 09-41459
Chapter 11 Petition filed May 18, 2009
See http://bankrupt.com/misc/alnb09-41459.pdf
In Re Hall Grading, LLC
Bankr. N.D. Ala. Case No. 09-41460
Chapter 11 Petition filed May 18, 2009
In Re Christian Vision Church
Bankr. C.D. Calif. Case No. 09-22028
Chapter 11 Petition filed May 18, 2009
Filed as Pro Se
In Re Growth and Development Services Corp.
Bankr. N.D. Calif. Case No. 09-53792
Chapter 11 Petition filed May 18, 2009
Filed as Pro Se
In Re John C. McBride
Nancy M. McBride
Bankr. D. Mass. Case No. 09-14485
Chapter 11 Petition filed May 18, 2009
Filed as Pro Se
In Re Joslyn Enterprises, Inc.
dba Wally's Market
Bankr. E.D. Mich. Case No. 09-55615
Chapter 11 Petition filed May 18, 2009
See http://bankrupt.com/misc/mieb09-55615.pdf
In Re Funk Brothers, LLC
Bankr. D. Neb. Case No. 09-41373
Chapter 11 Petition filed May 18, 2009
See http://bankrupt.com/misc/neb09-41373.pdf
In Re Bristol Properties, a NJ Partnership
Bankr. D. N.J. Case No. 09-22663
Chapter 11 Petition filed May 18, 2009
See http://bankrupt.com/misc/njb09-22663.pdf
In Re Mur-Lee Inc.
Bankr. E.D. N.Y. Case No. 09-73575
Chapter 11 Petition filed May 18, 2009
See http://bankrupt.com/misc/nyeb09-73575.pdf
In Re Patriot Energy Services, LLC
Bankr. W.D. Okla. Case No. 09-12641
Chapter 11 Petition filed May 18, 2009
See http://bankrupt.com/misc/okwb09-12641.pdf
In Re James L. Decker, Sr.
fdba Jim Decker General Contractor
Bankr. W.D. Pa. Case No. 09-70618
Chapter 11 Petition filed May 18, 2009
See http://bankrupt.com/misc/pawb09-70618.pdf
In Re James Michael Loftis
aka Mike Loftis
Bankr. D. S.C. Case No. 09-03740
Chapter 11 Petition filed May 18, 2009
Filed as Pro Se
In Re Limousine Service, Inc.
Bankr. M.D. Tenn. Case No. 09-05602
Chapter 11 Petition filed May 18, 2009
See http://bankrupt.com/misc/tnmb09-05602.pdf
In Re Curry Properties Inc.
Bankr. M.D. Ala. Case No. 09-31322
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/almb09-31322.pdf
In Re Patricia Rogers
Michael L. Rogers
Bankr. N.D. Ala. Case No. 09-02994
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/alnb09-02994.pdf
In Re Mary V. Neumeyer
Bankr. N.D. Calif. Case No. 09-31331
Chapter 11 Petition filed May 19, 2009
Filed as Pro Se
In Re Dwight D. Daughtrey
Bankr. M.D. Fla. Case No. 09-10237
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/flmb09-10237.pdf
In Re Pamela S. Brester
Bankr. M.D. Fla. Case No. 09-10300
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/flmb09-10300.pdf
In Re Presh Medspa LLC
Bankr. S.D. Fla. Case No. 09-19662
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/flsb09-19662.pdf
In Re BK47, LLC
aka Farmers Best Market
Bankr. N.D. Ill. Case No. 09-18158
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/ilnb09-18158.pdf
In Re Hope International Christian Ministries, Inc.
Bankr. S.D. Ind. Case No. 09-07113
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/insb09-07113.pdf
In Re Melvin's Forklift Service, LLC
Bankr. D. Md. Case No. 09-19061
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/mdb09-19061.pdf
In Re American Leasing Services, LLC
aka A.L.S., Inc.
Bankr. W.D. Mich. Case No. 09-06014
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/miwb09-06014.pdf
In Re Greg Hibbitts Transport Company
aka Beline Haulers
aka Beline Haulers, Inc.
Bankr. W.D. Mich. Case No. 09-06018
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/miwb09-06018.pdf
In Re Circle Factory Outlet, LLC
Bankr. D. N.J. Case No. 09-22860
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/njb09-22860.pdf
In Re Mariah Construction, Inc.
Bankr. D. N.J. Case No. 09-22777
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/njb09-22777.pdf
In Re Baines Motors, Inc.
dba Ruidoso Rent A Car
Bankr. D. N.M. Case No. 09-12145
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/nmb09-12145.pdf
In Re John Davie Waggett
Nancy Charlene Floyd Waggett
Bankr. E.D. N.C. Case No. 09-04152
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/nceb09-04152.pdf
In Re James J. Costello
Bankr. E.D. Pa. Case No. 09-13709
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/paeb09-13709.pdf
In Re John E. Bortoli
Anna Marie Bortoli
aka Sis Bortoli
Bankr. W.D. Pa. Case No. 09-70627
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/pawb09-70627p.pdf
See http://bankrupt.com/misc/pawb09-70627c.pdf
In Re Nustone Distributing, Inc.
Bankr. M.D. Tenn. Case No. 09-05647
Chapter 11 Petition filed May 19, 2009
See http://bankrupt.com/misc/tnmb09-05647.pdf
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
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
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re-mailing and photocopying) is strictly prohibited without prior
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herein is obtained from sources believed to be reliable, but is
not guaranteed.
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are $25 each. For subscription information, contact Christopher
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*** End of Transmission **