/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/090810.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, August 10, 2009, Vol. 13, No. 220 Headlines 3 IN 1 TRINITY: Court Schedules September 1 Auction Sale ACCREDITED HOME: Court Denies Borrowers' Plea for 2nd Committee ACCURIDE CORP: Board Names Panel to Review Restructuring Options ACCURIDE CORP: S&P Cuts Rating to 'D' on Missed Interest Payment ADVANCED CELL: Has Standstill Agreement with Debenture Holders ADVANCED MICRO: Files June 27 Quarterly Report on Form 10-Q ADVANCED MICRO: Morton L. Topfer Retires from Board of Directors AES RED: Moody's Changes Outlook on 'B1' Senior Bonds to Negative AFFILIATED COMPUTER: Debt Trades at 1.75% Off in Secondary Market ALTUS PHARMACEUTICALS: Posts $4.86 Mil. Net Loss in 2nd Quarter AMC ENTERTAINMENT: Bank Debt Trades at 5% Off in Secondary Market AMERICAN ACHIEVEMENT: 59.35% Tendered in Discounted Offer AMERICAN AXLE: Q2 Results Won't Affect S&P's 'CCC+' Rating AMERICAN AXLE: Doesn't See Collection Issues with New GM, Chrysler AMERICAN CAPITAL: Fitch Downgrades Issuer Default Rating to 'B-' AMERICAN INT'L: AIG Global Real Estate Unit Gets 2 New Executives ANDERSON HOMES: Final Cash Collateral Hearing Adjourned to Aug. 26 ANDERSON HOMES: Plan Filing Period Extended to September 13 ARAMARK CORP: Bank Debt Trades at 4% Off in Secondary Market ASARCO LLC: Committee, Bondholders Oppose Parent Plan ASARCO LLC: Has Agreement in Principle With Bondholders ASARCO LLC: Parties Filing Objections to Competing Plans ASARCO LLC: Voting Deadline Extended to August 17 ASCENDIA BRANDS: Court Approves Settlement with Shoppers Drug Mart ASCENSION LOAN: S&P Withdraws Ratings on Various 2008-1 Notes ASTRATA GROUP: Case Summary & 20 Largest Unsecured Creditors ASYST TECHNOLOGIES: Panel Can Retain Arent Fox LLP as Counsel ASYST TECHNOLOGIES: Panel Can Employ BDO Seidman as Fin'l Advisors AVIS BUDGET: Swings to $6 Million Net Loss in Q2 2009 BANK OF AMERICA: Merrill Losses "Not Severe Enough" Pre-Merger BARRY SGARRELLA: Case Summary 8 Largest Unsecured Creditors BEAZER HOMES: Halts Slide, Posts Lower Net Loss in June 30 Qtr BERNARD MADOFF: Frank DiPascali to Plead Guilty of Fraud BEST BRANDS: S&P Upgrades Corporate Credit Rating to 'B-' BIOMET INC: Bank Debt Trades at 5% Off in Secondary Market BLOCKBUSTER INC: Bank Debt Trades at 17% Off in Secondary Market CAPMARK FIN'L: Appoints Frederick Arnold as CFO and EVP CATHOLIC CHURCH: Fairbanks Creditors Want to Pursue Claims CATHOLIC CHURCH: Oregon Court Unseals Some Sexual Abuse Files CATHOLIC CHURCH: T. Harris No Longer Involved in Portland Case CATHOLIC CHURCH: Two Priests Object to Unsealing of Files CENTRAL PACIFIC: Credit Stress Cues Fitch to Junk Issuer Ratings CHRISTAKIS MOUSTAKAS: Voluntary Chapter 11 Case Summary CIT GROUP: Suspends Dividends for Preferred Stock CITIGROUP INC: Citi Funding to Issue Callable Leveraged CMS Notes CITIGROUP INC: To Issue $2.5-Bil. in 6.375% Senior Notes Due 2014 CITIGROUP INC: Citi Funding to Offer Caterpillar-Linked Notes CITIGROUP INC: $44.7BB Long-Term Debt Covered by FDIC Guarantee CINCINNATI BELL: Posts $26.3 Million Net Income for Q2 2009 CLAIRE'S STORES: Bank Debt Trades at 34% Off in Secondary Market CLARIENT INC: Posts $29,000 Net Income for Second Quarter CLEAR CHANNEL: Bank Debt Trades at 38% Off in Secondary Market CNH GLOBAL: S&P Affirms 'BB+' Long-Term Corporate Credit Rating COMMERCECONNECT MEDIA: Confirmation Hearing Slated for Sept. 8 COMMERCIAL VEHICLE: S&P Downgrades Corporate Credit Rating to 'SD' COMMUNITY FIRST BANK: Home Federal Bank Assumes All Deposits COMMUNITY NAT'L BANK: Closed; Stearns Bank Assumes All Deposits CORNERSTONE E & P: Case Summary & 50 Largest Unsecured Creditors COSINE COMMUNICATIONS: Posts $151,000 Net Loss in June 30 Quarter COTT CORPORATION: Moody's Reviews 'Caa1' Corp Rating for Upgrade CRYOPORT INC: Permitted to Issue Notes as Part of Bridge Loan CRYOPORT INC: Taps Catherine Doll to Replace Dee Kelly as CFO CRYSTALLEX INT'L: Posts Net Loss of $6MM in Quarter Ended June 30 CYPRESSWOOD LAND: Court Blesses Insider's Purchase of Assets CUMULUS MEDIA: Reports $14 Million Net Income for June 30 Quarter DANA CORP: Bank Debt Trades at 23% Off in Secondary Market DELTEK INC: CEO Parker Designated as Principal Financial Officer DELTEK INC: Posts $4.90 Million Net Income at June 30 Quarter DEX MEDIA: Bank Debt Trades at 24% Off in Secondary Market DIRECTV GROUP: S&P Raises Corporate Credit Rating From 'BB' DOLE FOOD: Fitch Affirms Issuer Default Rating at 'CCC' DOLLAR THRIFTY: Amends Note Indenture and Terms of L/C Facility DOT VN: April 30 Balance Sheet Upside-Down by $9.4 Million E*TRADE FIN'L: Says Financial Health Not Dependent on TARP Funding ENDOR INC: Case Summary & 20 Largest Unsecured Creditors ENTRAVISION COMMUNICATIONS: Moody's Cuts Corporate Rating to 'B1' EURAMAX INTERNATIONAL: Moody's Assigns 'Caa1' Corp. Family Rating EVERGREEN TRANSPORTATION: Files for Chapter 11 Bankruptcy EXMOVERE HOLDINGS: Posts $136,000 Net Loss in Qrtr. Ended June 30 FANNIE MAE: Posts $14.8BB Q2 Net Loss; FHFA Seeks More Govt Money FINLAY ENTERPRISES: Case Summary & 30 Largest Unsecured Creditors FINLAY ENTERPRISES: S&P Cuts FFJ's 2nd & 3rd Lien Debts to 'D' FIRST STATE BANK, SARASOTA: Stearns Bank Assumes Deposits FLYING J: Deadline to Challenge Lender Liens Moved to Sept. 15 FORD MOTOR: Will Cut Suppliers by Almost 50% by Year-End FORD MOTOR: Bank Debt Trades at 14% Off in Secondary Market FREDDIE MAC: Reports $768MM in Net Income for Qrtr. Ended June 30 GAINEY CORP: Gets More Time to Negotiate Sale Pact With Najafi GENERAL MOTORS: Still Has Issues with Magna on Opel Bid GENERAL MOTORS: Asks for Oct. 30 Ownership List Deadline Extension GEORGIA GULF: Bank Debt Trades at 5% Off in Secondary Market GMAC INC: May Put ResCap Out of Its Misery, CreditSights Says GMAC INC: Quarterly Results Won't Affect S&P's 'CCC' Rating GRAY TELEVISION: Posts $6.64MM Q2 Net Loss; May Violate Covenant HAIGHTS CROSS: Extends Exchange Offer for 2011 Notes Until Aug. 14 HAIGHTS CROSS: S&P Downgrades Corporate Credit Rating to 'D' HARTMARX CORP: Sale to Private Equity Firms Finally Done HEALTHSOUTH CORP: Bank Debt Trades at 4% Off in Secondary Market HERTZ CORP: Bank Debt Trades at 6% Off in Secondary Market HORIZON LINES: Moody's Downgrades Corporate Family Rating to 'B3' ICICI BANK: Moody's Assigns Rating on $160 Mil. Commercial Paper ILLINOIS HOUSING: S&P Junks Rating on 2003 Multifamily Bonds INTERMET CORP: Cerion In Talks to Buy Certain Remaining Assets INTERSTATE HOTELS: Posts $6.7 Million for Quarter Ended June 30 J&R FINANCIAL: Voluntary Chapter 11 Case Summary JOHN MANEELY: Bank Debt Trades at 21% Off in Secondary Market KB TOYS: CE Wins Auction for IP Assets With $2.1MM Bid KEATING CHEVROLET: Case Summary & 20 Largest Unsecured Creditors LAS VEGAS SANDS: Venetian Macau Bank Debt Trades at 11% Off LEAP WIRELESS: Q2 2009 Net Loss Widens to $61.2 Million LEHMAN RE LTD: Voluntary Chapter 15 Case Summary LIN TELEVISION: Moody's Affirms Corporate Family Rating at 'B2' LOS ROBLES CARE: Case Summary & 25 Largest Unsecured Creditors MAB INC: Case Summary & 6 Largest Unsecured Creditors MAGNA ENTERTAINMENT: To Sell Shares in Austria-Based Fex Oko MAGUIRE PROPERTIES: Discloses Imminent Loan Default MARYLAND ECONOMIC: Moody's Cuts Ratings on 2003 Bonds to 'Ba3' MARYLAND ECONOMIC: Moody's Cuts Student Housing Bonds to 'Ba2' MAUI LAND: June 30 Balance Sheet Upside-Down by $34.8 Million MDRNA INC: June 30 Balance Sheet Upside-Down by $953,000 MEDCLEAN TECH: June 30 Balance Sheet Upside-Down by $323,000 MERIDIAN AUTOMOTIVE: To Wind Down Assets Under Chapter 7 MICHAELS STORES: Bank Debt Trades at 16% Off in Secondary Market MIDWAY GAMES: Wants Plan Deadline Moved to September 29 MIDWAY GAMES: To Sell Interests in Foreign Units for $1.7MM MIDWAY GAMES: To Sell San Diego Design Business to THQ MOBILE BAY: Can Hire Paul and Smith as Attorneys MURPHY ROAD: Case Summary 3 Largest Unsecured Creditors NEIMAN MARCUS: Bank Debt Trades at 15% Off in Secondary Market NIELSEN COMPANY: Bank Debt Trades at 5% Off in Secondary Market NORANDA ALUMINUM: Board Approves Amendment to By-laws NORANDA ALUMINUM: Moody's Confirms 'Caa1' Corp. Family Rating NORANDA ALUMINUM: Swings to $12.1MM Second Quarter 2009 Net Loss NORANDA ALUMINUM: To Acquire Remaining 50% of Century JVs NORTEL NETWORKS: CEO Mike Zafirovski May Leave Post NORTHWEST AIRLINES: Claimant Balks at Delay of Settlement Payoff NORTHWEST AIRLINES: Reports $39 Million Second Quarter Net Loss NORTHWEST AIRLINES: Reports Add'l Distribution to Claimholders NORTEL NETWORKS: CCAA Stay Extended Until October 30 NORTEL NETWORKS: Court OKs Issuance of More Than $30MM in Bonds NORTEL NETWORKS: Sec. 341 Meet for NN Cala Creditors on Aug. 24 NORTEL NETWORKS: September 30 Claims Bar Date Set NOVA CHEMICALS: Files Certificate of Continuance & General By-Law OSHKOSH CORP: S&P Puts 'B' Corp. Rating on CreditWatch Negative OPUS WEST: Gets Court Nod on Phoenix Capital as CRO OPUS WEST: Proposes Chatham as Financial Advisor OWENS CORNING: Owens Illinois Serves Subpoena on Asbestos PI Trust OWENS CORNING: Reserves $30 Million for Remaining Claims OWENS CORNING: Sets $10MM Environment Liability Reserve PEACH HOLDINGS: Moody's Reviews 'C' Corporate Rating for Upgrade PEACH HOLDINGS: S&P Cuts Credit to 'SD' on Distressed Exchange PENNY & KENNY: Lawsuit & Supplier Woes Lead to Chapter 11 Filing PHOENIX COS: S&P Downgrades Counterparty Credit Rating to 'B-' PILGRIM'S PRIDE: 5th Circuit to Rehear Arguments in Wheeler Suit PILGRIM'S PRIDE: Asserts Ad Valorem Tax Exemption in Hardy County PILGRIM'S PRIDE: Bank of Montreal Financing to be Cut to $350MM PILGRIM'S PRIDE: Signs Deals for $1.65 Billion Exit Financing POWERMATE CORP: Committee Co-Proponent to Liquidating Plan PRIMEDIA INC: Swings to $11.7 Million Net Loss in June 30 Quarter QSGI INC: Files Schedules of Assets and Liabilities QSGI INC: Obtains Court's Nod to Borrow $500,000 from Victory Park QUEST ENERGY: Restates Form 10-Q for Quarter Ended September 30 QUEST ENERGY: Reclassifies Gains in 2008 Annual Report RAMSONS INVESTMENT: Case Summary & 20 Largest Unsecured Creditors RAYMOND PROFESSIONAL: Court Says Subcontractor Gets Account Funds REDENTOR SAN JUAN: Case Summary & 12 Largest Unsecured Creditors RELIANCE INTERMEDIATE: S&P Assigns 'BB-' Rating on $100 Mil. Notes RFS ECUSTA: Court Approves Trustee's Counsel's Contingency Fee RICH CAPITOL: U.S. Trustee Sets Meeting of Creditors for August 25 RITE AID: Bank Debt Trades at 16% Off in Secondary Market RIVER OAKS: Meeting of Creditors Scheduled for September 14 ROCKY VALLEY: U.S. Trustee Sets Meeting of Creditors for August 24 SCO GROUP: Court Ousts Management From Control, Squashes Sale SEALY CORP: Murray to Replace Walker as SVP, Gen. Counsel & Sec. SEMGROUP LP: Noble's $65.4MM Wins Auction for SemFuel Assets SHIRLEY JOBE: Case Summary & 6 Largest Unsecured Creditors SIRIUS XM: Inks New Employment Deal with Scott Greenstein SIRIUS XM: Net Loss Widens to $157.3 Million in June 30 Quarter SIRIUS XM: Posts $6.26 Mil. Q2 Revenue Related to General Motors SKYPORT GLOBAL: Preference Target Requests Discovery Too Late SCOLR PHARMA: Says Cash to Last Until Late 2009; Seeks More Funds SONYA PORRETTO: Section 341(a) Meeting Scheduled for August 27 SPIRIT AEROSYSTEMS: Moody's Affirms 'Ba3' Corporate Family Rating ST JAMES AND ENNIS: Case Summary & Largest Unsecured Creditor STANDARD PACIFIC: Mortgage Financing Unit's Loan Terms Modified STEEL NETWORK: Court Approves Brooks Pierce as Attorney SUMMERBROOKE LLC: Case Summary & 7 Largest Unsecured Creditors SUNRISE SENIOR: Net Loss Widens to $81.5MM in June 30 Quarter SUPERVALU INC: Bank Debt Trades at 3% Off in Secondary Market SUPPLEMENT SPOT: LLC's Payments on Principal's Mortgage Avoided TESORO CORPORATION: Fitch Affirms Issuer Default Rating at 'BB+' TOUCH AMERICA: Bankr. Court Disallows D&O Indemnification Claims TRIBUNE CO: Bank Debt Trades at 58% Off in Secondary Market TRW AUTOMOTIVE: S&P Says Q2 Results Support 'B/Neg.' Rating UNITED AIR: Bank Debt Trades at 42% Off in Secondary Market UNITRIN INC: Fitch Affirms 'BB+' Rating on $560 Mil. Senior Notes UNIVERSAL MARKETING: Selects Zarwin Baum as Special Counsel UNIVERSAL MARKETING: Taps Maschmeyer Karalis as Counsel US FOODSERVICE: Bank Debt Trades at 25% Off in Secondary Market UTSTARCOM INC: Posts $84.3 Million Net Loss in June 30 Quarter VINYL PROFILES: Case Summary & 20 Largest Unsecured Creditors VISTEON CORP: Bank Debt Trades at 44% Off in Secondary Market VISTEON CORP: Records $112 Mil. Net Loss for Second Quarter VISTEON CORP: Sale of Hyundai Parts Facility to Korean Unit Done VISTEON CORP: U.K. Pensioners Object to Employee Incentive Plan VISTEON CORP: UAW Objects to Termination of Retiree Benefits VOUGHT AIRCRAFT: Moody's Affirms Corporate Family Rating at 'B2' WARNER MUSIC: Net Loss Widens to $37 Million in June 30 Quarter WASHINGTON MUTUAL: JPMorgan Asks for WaMu Noteholder Claims Lists WEIGHT WATCHERS: Posts $58.8 Million Net Income for Q2 2009 WHC LLC: Proposes Ayers & Brown as Bankruptcy Attorney WINDSOR CENTURY: Files for Bankruptcy Protection in Arizona WM BOLTHOUSE: Moody's Affirms Corporate Family Rating at 'B2' WYNN RESORTS: Fitch Assigns Issuer Default Rating at 'B+' XERIUM TECHNOLOGIES: S&P Cuts Corporate Credit Rating to 'CC' XO HOLDINGS: Icahn Sued by Minority Owner for Lowball Offer * Cadwalader Attorneys Recognized in The Best Lawyers In America * AlixPartners' Hoffecker Sees More U.S. Auto-Parts Bankruptcies * 3 Banks Shuttered; Year's Failed Banks Now 72 * Default Rate to Peak at 12.7% in U.S., Moody's Says * Spread on 30-Year Interest-Rate Swap Edges Toward Zero Mark * BOND PRICING -- For the Week From August 3 to 7, 2009 ********* 3 IN 1 TRINITY: Court Schedules September 1 Auction Sale -------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has scheduled an auction sale of 3 in 1 Trinity, LLC's real property located at 202-204 East 110th Street, New York, NY, consisting of a six story building containing 10 apartments and one retail space at the ground floor on September 1, 2009, at 10:00 a.m. at the offices of Carver Federal Savings Bank, 75 West 125th Street, New York, NY 10027. Interested parties must submit written bids prior to or attend the auction sale and comply with the bid terms. The minimum bid for the real property is $3 million. The property will be sold "as is, where is". Interested parties may view the real property by contacting: Gus Costaldo Vice President Carver Federal Savings Bank 75 West 125th Street New York, NY 10027 Tel: (212) 380-8875 Fax: (212) 426-6155 Email: augustus.costaldo@carverbank.com Copies of the proposed contract of sale and bid terms are available for review during the Court's business hours or at: http://www.nysb.uscourts.gov/ A hearing to confirm the sale of the real property will be held before the Bankruptcy Court on September 24, 2009, at 9:45 a.m. Based in New York, 3 in 1 Trinity, LLC filed for Chapter 11 relief on September 30, 2008 (Bankr. S.D.N.Y. Case No. 08-13804). Dawn K. Arnold, Esq., at Rattet, Pasternak & Gordon-Oliver, LLP, represents the Debtors as counsel. When the Debtor filed for protection from its creditors, it listed between $1 million and $10 million each in assets and debts. ACCREDITED HOME: Court Denies Borrowers' Plea for 2nd Committee --------------------------------------------------------------- The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware denied a bid to allow a second creditors committee to represent the legion of borrowers allegedly blindsided by Accredited Home Lenders Holding Co.'s predatory loan practices, according to Law360. As reported by the TCR on July 28, Accredited Home asked the Bankruptcy Court to deny the request, citing that a committee, in addition to the already formed official committee of unsecured creditors, "would only increase expense." Accredited Home notes that the chairman of the official committee of unsecured creditors is a borrower. A group of borrowers had pushed for its own committee, on argument that their interests would be in conflict with the interests of creditors in the creditors committee. About Accredited Home Accredited Home Lenders Holding Co. -- http://www.accredhome.com/ -- is a mortgage banker servicing U.S. markets for conforming and non-prime residential mortgage loans operating throughout the U.S. and in Canada. Founded in 1990, the company is headquartered in San Diego. The Company was acquired by Lone Star Funds for $300 million in October 2007. Lone Star also owns Bruno's Supermarkets LLC and Bi-Lo LLC, two grocery retailers in Chapter 11. Accredited Home and its affiliates filed for Chapter 11 on May 1, 2009 (Bankr. D. Del. Lead Case No. 09-11516). The Debtors selected Hunton & Williams LLP as Chapter 11 counsel, and Pachulski Stang Ziehl & Jones LLP as co-counsel. Accredited Home also tapped Luce, Forward, Hamilton & Scripps LLP and Quinn Emanuel Urquhart Oliver & Hedges LLP for various litigation. APS Services LLC has been tapped to provide management services, including a CRO for the Debtors. Kurtzman Carson Consultants is the Debtors' claims agent. The official committee of unsecured creditors tapped Arent Fox as counsel, Elliott Greenleaf as Delaware and conflicts counsel, and Weiser LLP as financial advisor. According to its bankruptcy petition, Accredited Home's assets range from $10 million to $50 million and its debts from $100 million to $500 million. ACCURIDE CORP: Board Names Panel to Review Restructuring Options ---------------------------------------------------------------- Accuride Corporation said its board of directors has appointed a special committee of independent directors to identify and, with the input of management and the Company's financial advisors, evaluate alternatives to recommend an appropriate course of action to the full board. Accuride is currently negotiating with both senior and subordinated lenders and is negotiating alternatives such as additional amendments or waivers, the sale of non-core assets, or alternative debt structures, such as debt for debt or debt for equity agreements. Accuride said the success of any alternative actions will depend on many factors, several of which are out of management's control. Accuride says the successful execution of its plans, among other factors, raises substantial doubt as to its ability to continue as a going concern. "We continue to operate in a challenging economic environment and our ability to maintain liquidity and comply with our debt covenants has been affected by economic and other conditions that are beyond our control and which are difficult to predict," Accuride said in a Form 10-Q filing with the Securities and Exchange Commission. "We predict operating levels based upon North American Class 8, Class 5-7 and trailer expected productions for the year as well as aftermarket sales. We utilize ACT production forecasts to help predict production for the Class 8, Class 5-7 and trailer production levels. The ACT forecasts for Class 8, Class 5-7, and trailer have seen declines of 27%, 33% and 12%, respectively, since the forecasts at the time of the 10-K filing on March 13, 2009." As reported by the Troubled Company Reporter on August 7, 2009, Accuride reported a net loss of $36.1 million, or ($1.00) per diluted share compared with net income of $3.4 million or $0.10 per diluted share, in the prior year. Cash and cash equivalents at the end of the quarter were $47.6 million. Accuride said its financial results as of and for the three and six months ended June 30, 2009 are directly attributable to the decline of production and the current economic conditions. Accuride entered into a Temporary Waiver Agreement with respect to its Credit Agreement with Accuride Canada Inc., the lenders party thereto, the administrative agent for the lenders, and the other agents party thereto. The Temporary Waiver is dated July 1, 2009, and became effective on July 8, 2009. Pursuant to the terms of the Temporary Waiver, the Lenders have agreed to waive Accuride's compliance with certain financial covenants under the Credit Agreement for the fiscal quarter ended June 30, 2009. Under the Temporary Waiver, (i) interest on advances and all outstanding obligations under the Credit Agreement will accrue at an annual rate of 2.0% plus the otherwise applicable rate during the Temporary Waiver Period, (ii) the Company and its subsidiaries must comply with certain restrictions on incurring additional debt, making investments and selling assets and (iii) the Company must comply with a minimum liquidity requirement. Contemporaneously with the Temporary Waiver, Citicorp USA, Inc. has resigned as administrative agent and the lenders have appointed Deutsche Bank Trust Company Americas to serve as administrative agent. To maintain compliance with the Temporary Waiver, the Company did not pay the roughly $11.7 million of interest due August 3, 2009, to the holders of its 8-1/2% Senior Subordinated Notes due 2015 and intends to use the existing 30-day grace period provided in the Note indenture to continue discussions regarding a capital restructuring with its lenders. Under the indenture, the failure to make this interest payment would not constitute an event of default that permits acceleration of the Notes until the expiration of the 30-day grace period. "If we are unable to obtain permanent waivers, extensions of the waivers, or restructure the Term B Loan Facility prior to August 15, 2009, and satisfactorily address the Senior Subordinated Notes interest payment due at the end of the grace period on August 31, 2009, a default would arise with respect to these obligations, which could also trigger cross accelerations on all our indebtedness," Accuride said. "In such an event, we would be required to repay all outstanding indebtedness immediately. We would not have sufficient liquidity available to repay such indebtedness and, unless we were able to obtain additional capital resources or waivers, we would be unable to continue to fund our operations or continue our business, thereby potentially requiring us to seek relief under the U.S. Bankruptcy Code." A full-text copy of Accuride's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?4137 A full-text copy of the Slide Presentation of Accuride used in connection with Accuride's conference call to discuss financial results for the three and six months ended June 30, 2009, is available at no charge at http://ResearchArchives.com/t/s?4138 Accuride Corporation -- http://www.accuridecorp.com/-- is one of the largest and most diversified manufacturers and suppliers of commercial vehicle components in North America. Accuride's products include commercial vehicle wheels, wheel-end components and assemblies, truck body and chassis parts, seating assemblies and other commercial vehicle components. Accuride's products are marketed under its brand names, which include Accuride, Gunite, Imperial, Bostrom, Fabco, Brillion, and Highway Original. ACCURIDE CORP: S&P Cuts Rating to 'D' on Missed Interest Payment ---------------------------------------------------------------- Standard & Poor's Ratings Services said it has lowered its corporate credit rating on commercial vehicle parts supplier Accuride Corp. to 'D' (default) from 'CCC' and lowered the issue- level rating on the company's senior subordinated debt to 'D' from 'CC'. At the same time, S&P lowered the issue-level ratings on the company's senior secured revolving credit facility and first- out term loan to 'CC' from 'B-'. S&P also lowered the issue-level rating on the company's second-out term loan to 'C' from 'CC' The recovery ratings on the senior secured revolving credit facility and first-out term loan remain at '1', indicating S&P's expectation that lenders would receive very high (90% to 100%) recovery in the event of a payment default. The recovery ratings on the second-out term loan and subordinated notes remain at '6', indicating S&P's expectation that lenders would receive negligible (0 to 10%) recovery in the event of a payment default. The downgrades reflect Accuride's announcement that it did not make an $11.7 million interest payment scheduled for August 3 on its 8.50% subordinated note due in 2015. Under the indentures governing the senior notes, Accuride has a 30-day grace period to make interest payments on these notes before there is an event of default. "S&P is not confident that Accuride will make the payments within the grace period," said Standard & Poor's credit analyst Gregg Lemos Stein, "in part because of the company's very thin liquidity. Among other outcomes, S&P believes the company might pursue a distressed exchange or file for bankruptcy under Chapter 11." If Accuride pursues a distressed exchange, S&P would expect to assign a new corporate credit rating within a short time after such an announcement. The new rating would be based on, among other things, S&P's assessment of the company's new capital structure and liquidity profile. Accuride Corp. had assets of $704,725,000 against debts of $846,182,000 as of June 30, 2009. ADVANCED CELL: Has Standstill Agreement with Debenture Holders -------------------------------------------------------------- Advanced Cell Technology, Inc., on July 29, 2009, entered into a consent, amendment and exchange agreement with holders of its outstanding convertible debentures in the aggregate outstanding principal amount of $17,175,931 and warrants to purchase an aggregate of 205,251,285 shares of the Company's common stock, which were issued in private placements that closed in September 2005, August 2006, August 2007, and March 2008. Simultaneously with the execution of Consent and Amendment, and as a condition of the Consent and Amendment, the Company and the Holders entered into a Standstill and Forbearance Agreement. Pursuant to the Forbearance Agreement: -- The Company acknowledged certain defaults that have occurred under the Debentures and documents executed in connection therewith; -- The Holders agreed to forbear from exercising their rights and remedies under the Debentures and the Transaction Documents. -- The obligation of the Holders to forbear from exercising their rights and remedies under the Debentures and the Transaction Documents will terminate on the earliest of (i) the date, if any, on which a petition for relief under the date, if any, on which a petition for relief under the United States Bankruptcy Code or any similar state or Canadian law is filed by or against the Company or any of its subsidiaries or (ii) the date the Forbearance Agreement is otherwise terminated or expires, it being understood that the Holders holding 67% of the then outstanding principal amount of the Debentures shall have the right to terminate the Forbearance Agreement on 3 business days' prior notice to the Company. -- The Company provided a general release in favor of the Holders. Pursuant to the Consent and Amendment: -- The Company agreed to issue to each Holder in exchange for the Holder's Debenture an amended and restated Debenture in a principal amount equal to the principal amount of the Holder's Debenture times 1.35 minus any interest paid thereon. -- The conversion price under the Amended and Restated Debentures was reduced to $0.10, subject to further adjustment as provided therein (including for stock splits, stock dividends, and certain subsequent equity sales). -- The maturity date under the Amended and Restated Debentures was extended until December 31, 2010. -- The Amended and Restated Debentures bear interest at the rate of 12% per annum, which shall accrete to, and increase the principal amount payable upon maturity. -- The Amended and Restated Debentures will begin to amortize on September 25, 2009 at a rate of 6.25% of the outstanding principal amount per month, valued at the lesser of the then conversion price and 90% of the average volume weighted average price for the 10 prior trading days. -- The Company agreed to issue to each Holder in exchange for such Holder's Warrant an amended and restated Warrant. -- The exercise price under the Amended and Restated Warrants was reduced to $0.10 subject to further adjustment as provided therein (including for stock splits, stock dividends, and certain subsequent equity sales) -- The termination date under the Amended and Restated Warrants was extended until June 30, 2014. -- Each Holder agreed not to convert more than 20% of such Holder's outstanding principal amount of Amended and Restated Debenture in any month during the period from September 1, 2009, through January 31, 2010, provided, however, that this limitation will terminate if (i)(a) the volume weighted average price of the Company's common stock for each of 5 consecutive trading days is greater than $0.15 per share, and (b) the trading volume on such days exceeds 7,500,000 shares per trading day, or (ii)(a) the volume weighted average price for any one trading day is greater than $0.20 per share and (b) the trading volume on such day exceeds 10,000,000 shares. -- The Company agreed to amend the Company's articles of incorporation to increase the number of authorized shares of Common Stock. If the Company does not receive the receive the requisite shareholder approval for, and receive acceptance of the filing for, the Amendment by September 25, 2009, the Company shall pay to the Holders, monthly commencing on September 25, 2009, until the Amendment is duly filed, liquidated damages equal to 5% of the purchase price of the Debentures. -- The Company agreed to increase the number of shares available for issuance under the Company's 2005 Stock Incentive Plan to 129,000,000 shares, by September 18, 2009. -- The Holders agreed to waive any event of default under the Debentures resulting solely from (i) any adjustment to the conversion price of the Debenture and exercise price of the Warrants that would result from the reduction of the conversion price of certain securities of the Company pursuant to the Stipulation of Settlement, dated March 11, 2009, between the Company and Alpha Capital, and (ii) any failure by the Company to reserve such number of authorized but unissued shares of common stock issuable upon conversion of the Debentures and exercise of the Warrants. A full-text copy of the Consent, Amendment and Exchange Agreement is available at no charge at http://ResearchArchives.com/t/s?4108 A full-text copy of the Standstill and Forbearance Agreement is available at no charge at http://ResearchArchives.com/t/s?4109 On August 5, 2009, the Company filed an Amendment to its Annual Report on Form 10-K, for the fiscal year ended December 31, 2008, to file a revised Report of Independent Registered Public Accounting Firm, to correct the date of the original report and to file certain exhibits in Item 15. A copy of the Amendment is available at no charge at http://ResearchArchives.com/t/s?410a Going Concern Doubt In its audit report on July 2, 2008, SingerLewak LLP in Los Angeles, California, said the Company has suffered recurring net losses from operations, negative cash flows from operations, a substantial stockholders' deficit and its total liabilities exceeds its total assets. This raises substantial doubt about the Company's ability to continue as a going concern. As reported in the Troubled Company Reporter on June 12, 2008, Singer Lewak Greenbaum & Goldstein LLP expressed substantial doubt about Advanced Cell's ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended December 31, 2007. The auditor pointed to the company's recurring losses from operations, negative cash flows from operations, substantial stockholders' deficit and current liabilities that exceed current assets. About Advanced Cell Based in Worcester, Massachusetts, Advanced Cell Technology Inc. (OTC BB: ACTC) -- http://www.advancedcell.com/-- is a biotechnology company focused on developing and commercializing human embryonic and adult stem cell technology in the emerging fields of regenerative medicine. Principal activities to date have included obtaining financing, securing operating facilities, and conducting research and development. The Company has no therapeutic products currently available for sale and does not expect to have any therapeutic products commercially available for sale for a period of years, if at all. ADVANCED MICRO: Files June 27 Quarterly Report on Form 10-Q ----------------------------------------------------------- Advanced Micro Devices Inc. on August 5 delivered to the Securities and Exchange Commission its quarterly report on Form 10-Q for the period ended June 27, 2009. As reported by the Troubled Company Reporter on July 28, 2009, AMD posted a net loss of $335 million for the second quarter ended June 27, 2009, compared with a net loss of $1.188 billion for the second quarter ended June 28, 2008. AMD posted a net loss of $749 million for the six months ended June 27, 2009, compared with a net loss of $1.539 billion for the six months ended June 28, 2008. As of June 27, 2009, the Company had $8.68 billion in total assets; $2.02 billion in total current liabilities, $221 million in deferred income taxes, $5.24 billion in long-term debt and capital lease obligations, $577 million in other long-term liabilities, $1.08 billion in non-controlling interest; resulting in $465 million in stockholders' deficit. In July 2009, the Company repurchased an aggregate of $120 million principal amount of its 6.00% Notes -- $109 million, net of un-amortized debt discount -- in open market transactions for $64 million in cash. The Company allocated $3 million of the $64 million as an equity component and $61 million as a debt component, which resulted in a gain of roughly $49 million. On June 29, 2009, the Company launched a tender offer to exchange certain outstanding stock options with an exercise price greater than $6.34 per share, a grant date on or before June 28, 2008, and an expiration date after July 27, 2010, held by eligible employees for replacement options to be granted under the Company's 2004 Equity Incentive Plan. The offer expired on July 27, 2009. As a result of the exchange offer, employees tendered options to purchase 14.6 million shares of common stock (representing 67% of the total options eligible for exchange) with a weighted-average exercise price of $14.70 per share. AMD cancelled and replaced the options on July 27, 2009, with options to purchase 4 million shares of its common stock with an exercise price of $3.80 per share, which was the closing price of the Company's common stock on the New York Stock Exchange on July 27, 2009. The Company does not expect the impact of the option exchange to have a material effect on its consolidated results of operations or financial condition. In December 2002, the Company initiated a restructuring plan to align the cost structure to industry conditions resulting from weak customer demand and industry-wide excess inventory. The 2002 Restructuring Plan resulted in the consolidation of facilities, primarily at the Sunnyvale, California site and at sales offices worldwide. With respect to its Sunnyvale, California site, the Company entered into a sublease agreement for a portion of the facilities with Spansion Inc. On March 1, 2009, Spansion filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. On March 31, 2009, Spansion filed a motion in which it indicated that it does not intend to perform its obligations under its sublease agreement with the Company. As a result of this and the Company's ongoing assessment of the restructuring accrual, the Company recorded an additional charge of roughly $5 million in the first quarter 2009. The Company anticipates these amounts will be paid through 2011. A full-text copy of the quarterly report is available at no charge at http://ResearchArchives.com/t/s?410e About Advanced Micro Devices Headquartered in Sunnyvale, California, Advanced Micro Devices Inc. (NYSE: AMD) -- http://www.amd.com/-- provides innovative processing solutions in the computing, graphics and consumer electronics markets. As reported by the Troubled Company Reporter on May 26, 2009, Fitch revised the senior unsecured debt rating on Advanced Micro Devices to 'CC/RR6' from 'CCC/RR6'. Fitch affirmed AMD's Issuer Default Rating at 'B-'. The Rating Outlook is Negative. The TCR said on April 24, 2009, that Standard & Poor's Ratings Services removed its ratings on AMD from CreditWatch and lowered its corporate credit and senior secured ratings on the Company to 'CCC+' from 'B'. S&P also revised the recovery rating on the senior unsecured notes '4' from '3'. The '4' recovery rating reflects average (30%-50%) recovery in the event of a payment default. The ratings were placed on CreditWatch on April 8, 2009. The outlook is negative. "The rating action reflects our view of the risk that current liquidity, at both AMD as a stand-alone entity and the consolidated group, may be insufficient to adequately fund expected near-term operating losses and debt amortization requirements," said Standard & Poor's credit analyst Lucy Patricola, "even giving consideration for future capital investments by Advanced Technology Investment Corp." The financial support provided by the company's new partner, ATIC (owned by the government of Abu Dhabi) only partly offsets this factor. ADVANCED MICRO: Morton L. Topfer Retires from Board of Directors ---------------------------------------------------------------- Advanced Micro Devices said Morton L. Topfer, 72, has retired from the company's board of directors effective July 30, 2009. He has been a member of the board since February 2005. "We thank Mort for his more than four years of service on the board of directors," said Dirk Meyer, president and CEO of AMD. "We are and will continue to be a better company as a result of the wisdom and experience he brought to our team." The Company also said that on July 30 its Board approved an amendment to Article III, Section 1 of the Company's Amended and Restated Bylaws to increase the authorized number of directors who may serve on the Company's Board to 12. About Advanced Micro Devices Headquartered in Sunnyvale, California, Advanced Micro Devices Inc. (NYSE: AMD) -- http://www.amd.com/-- provides innovative processing solutions in the computing, graphics and consumer electronics markets. As reported by the Troubled Company Reporter on May 26, 2009, Fitch revised the senior unsecured debt rating on Advanced Micro Devices to 'CC/RR6' from 'CCC/RR6'. Fitch affirmed AMD's Issuer Default Rating at 'B-'. The Rating Outlook is Negative. The TCR said on April 24, 2009, that Standard & Poor's Ratings Services removed its ratings on AMD from CreditWatch and lowered its corporate credit and senior secured ratings on the Company to 'CCC+' from 'B'. S&P also revised the recovery rating on the senior unsecured notes '4' from '3'. The '4' recovery rating reflects average (30%-50%) recovery in the event of a payment default. The ratings were placed on CreditWatch on April 8, 2009. The outlook is negative. "The rating action reflects our view of the risk that current liquidity, at both AMD as a stand-alone entity and the consolidated group, may be insufficient to adequately fund expected near-term operating losses and debt amortization requirements," said Standard & Poor's credit analyst Lucy Patricola, "even giving consideration for future capital investments by Advanced Technology Investment Corp." The financial support provided by the company's new partner, ATIC (owned by the government of Abu Dhabi) only partly offsets this factor. AES RED: Moody's Changes Outlook on 'B1' Senior Bonds to Negative ----------------------------------------------------------------- Moody's Investors Service has revised the outlook on AES Red Oak, LLC's B1 rated senior secured bonds to negative. The outlook reflects the anticipated narrowing of the project's liquidity position following the upcoming maturity of both of its working capital lines of credit on August 11 and the implications of this for the project's ability to afford a significant expected increase in capital expenditures in 2010. Both of the project's lines of credit are currently fully drawn and at this point, neither of those lines is expected to be renewed prior to its maturity. While the project should have enough cash to repay the first of those lines, a $5 million facility from Union Bank of California, it may have to access its $10.6 million in restricted EPC settlement funds, which have been designated for as yet undetermined capital improvements, as a temporary bridge until it receives it monthly capacity payment from its offtaker, TAQA Gen X LP. TAQA Gen X is co-owned by Royal Bank of Scotland plc and Abu Dhabi National Energy Company. After the company replenishes its restricted funds and pays debt service on its bonds, however, Moody's estimates that the company will be left with as little as $200,000 in unrestricted cash as of the end of August. Though Moody's expects the UBoC line to be repaid in a timely manner, Moody's do not believe that a default under that facility would cross default to the bonds. Moody's notes that in addition to the $10.6 million in restricted EPC settlement funds, the project also benefits from a $22 million debt service reserve fund, which it does not currently expect it will have to access. The second of the company's working capital line, for $3 million, is provided by the company's parent, AES Corp., is payable on a subordinated basis to the company's other obligations. It is Moody's understanding that there is no direct consequence to the company for failing to repay that line by its stated maturity, and the company currently expects to repay it in September if it is not renewed prior to that point. The company reports that it is currently in discussions with AES Corp. about renewing and expanding this facility. The company is heavily reliant on its external lines of credit because of the seasonality of its cash flows and the narrowness of its financial margins, coupled with a lack of significant unrestricted internal sources of liquidity. Over 50% of the capacity payments under its tolling agreement are received in just four months, between July and October, This should allow the company to replenish its internal cash somewhat and should provide it with sufficient cash to make its November debt service payment date. However, even assuming the company does not encounter any unforeseen operational problems and it is able to achieve its expense budget, the company currently projects that it will be left with just $1.3 million in unrestricted cash going into the winter, when its operating cash flows can turn negative. If the company has insufficient operating cash flows to meet its fixed obligations, it may be able to defer subordinated rebates to its offtaker and management fees payable to AES Corp. In 2008, these totaled $7.4 million and $1.8 million respectively. Debt service coverage in 2008 increases from a very narrow 1.1x to a more manageable 1.3x prior to payment of these expenses. The rebates are payable quarterly after debt service and the management fees are all budgeted for December. However, it is unclear at this point what the consequences under the tolling agreement are for such a deferral. Recent changes in the project's dispatch profile are seeing it run for longer periods and, together with upcoming capital improvements, are expected to benefit financial performance over the medium-to-long term. However, coverage is likely to be lower in 2010 because of a significant expected increase in capital expenditures related to major outages scheduled for 2 of the project's 3 units. These are the first such outages that will be undergone by these units. Because of a mismatch between the project's historical dispatch profile and the payment structure under its long-term service agreement with Siemens Power Generation, Inc., Moody's expect the project will have to make significant true-up payments to Siemens in conjunction with these outages. Given the lack of external liquidity and the narrowness of the company's financial margins, it is unclear how these will be financed at this point. The last rating action on the project bonds occurred on May 22, 2007, when the B1 rating was affirmed. AES Red Oak is an 830 megawatt gas-fired electric generating project located in Sayreville, New Jersey. The project, which is owned by AES Corp., currently sells all of its capacity to TAQA Gen X LP pursuant to a tolling agreement expiring in 2022. AFFILIATED COMPUTER: Debt Trades at 1.75% Off in Secondary Market ----------------------------------------------------------------- Participations in a syndicated loan under which Affiliated Computer Services, Inc. is a borrower traded in the secondary market at 98.25 cents-on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.84 percentage points from the previous week, The Journal relates. The loan matures on Feb. 13, 2013. The Company pays 200 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba2 rating and Standard & Poor's BB rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Affiliated Computer Services, Inc. (NYSE:ACS) -- http://www.acs- inc.com/ -- is a provider of business process outsourcing and information technology services to commercial and government clients. The Company has two segments based on the clients it serves: commercial and government. The commercial segment accounted for approximately 60% of its revenues during the fiscal year ended June 30, 2008 (fiscal 2008). The Company provides services to a variety of clients worldwide, including information technology, human capital management, finance and accounting, customer care, transaction processing, payment services and commercial education. During fiscal 2008, revenues from the government segment accounted for approximately 40% of the Company's revenues. The Company services its clients through long-term contracts. It supports client operations in more than 100 countries. In March 2009, it acquired e-Services Group International. In June 2009, it completed the acquisition of United Kingdom-based Anix. As of August 9, 2009, Affiliated Computer continues to carry an issuer default rating of 'BB' and senior notes rating of 'BB-' from Fitch Ratings, a 'Ba2' long term corporate family rating from Moody's and a 'BB' long term issuer credit rating from Standard & Poor's. ALTUS PHARMACEUTICALS: Posts $4.86 Mil. Net Loss in 2nd Quarter --------------------------------------------------------------- Altus Pharmaceuticals Inc. posted a net loss of $4,862,000 for three months ended June 30, 2009, compared with a net loss of $25,260,000 for the same period in 2008. For six months ended June 30, 2009, the Company posted a net loss of $25,480,000 compared with a net loss of $49,759,000 for the same period in 2008. At June 30, 2009, the Company's balance sheet showed total assets of $26,521,000, total liabilities of $20,696,000 and stockholders' equity of $5,825,000. At June 30, 2009, the Company had $8.1 million in cash and cash equivalents, and held no marketable securities. The Company's balance of cash and cash equivalents at June 30, 2009, does not include $8.9 million held as restricted cash. The Company's funds at June 30, 2009 were invested in government and agency money market funds. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?4125 Based in Cambridge, Massachusetts, Altus Pharmaceuticals Inc. is a developer of oral and injectable protein supplements. Going Concern Doubt As reported in the Troubled Company Reporter on March 13, 2009, Ernst & Young LLP, independent registered public accounting firm for Altus Pharmaceuticals Inc., said that there is substantial doubt about the company's ability to continue as a going concern. E&Y, following its audit of the Company's 2008 results, noted that (i) the Company has incurred recurring operating losses and has an accumulated deficit, (ii) the Company has said that its cash and cash equivalents will fund operations into the fourth quarter of 2009 at which time it will be required to raise additional capital, find alternative means of financial support, or both. AMC ENTERTAINMENT: Bank Debt Trades at 5% Off in Secondary Market ----------------------------------------------------------------- Participations in a syndicated loan under which AMC Entertainment, Inc., is a borrower traded in the secondary market at 95.15 cents- on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.85 percentage points from the previous week, The Journal relates. The loan matures on Jan. 23, 2013. The Company pays 175 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba2 rating and Standard & Poor's BB- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. About AMC Entertainment Headquartered in Kansas City, Missouri, AMC Entertainment, Inc. -- http://www.amctheatres.com/-- is a theatrical exhibition company. As of April 2, 2009, AMC owned, operated or held interests in 307 theatres with a total of 4,612 screens, approximately 99% of which were located in the United States and Canada. Revenues for fiscal 2009 were $2.3 billion. The Company's principal direct and indirect owned subsidiaries are American Multi-Cinema Inc., Grupo Cinemex, S.A. de C.V., and AMC Entertainment International Inc. * * * As of August 9, 2009, AMC Entertainment continues to carry a 'B' long term foreign issuer credit rating from Standard & Poor's and a 'B' long term issuer default rating from Fitch. AMERICAN ACHIEVEMENT: 59.35% Tendered in Discounted Offer --------------------------------------------------------- American Achievement Group Holding Corp. on August 6, 2009, reported the expiration and final results of its cash tender offer regarding its outstanding 12.75% Senior PIK Notes due 2012 (CUSIP No. 02369BAB2, 02369BAA4, 02369BAE6, 02369BAD8). The Offer expired at 5:00 p.m., New York City time, on August 5, 2009. As of the Offer Expiration Date, $65,336,774 aggregate principal amount of the Notes, representing roughly 59.35% of the outstanding Notes, had been validly tendered pursuant to the Offer. Because more than $65,000,000 aggregate principal amount of the Notes, representing roughly 59% of the outstanding Notes, was tendered pursuant to the Offer, the minimum tender condition has been satisfied and because the tender cap of $85,000,000 aggregate principal amount of the Notes was not exceeded, all Notes tendered pursuant to the Offer will be accepted for purchase at the purchase price of $350.00 per $1,000 per principal amount of the Notes. No additional amounts are payable with respect to any accrued or unpaid interest on the Notes since April 1, 2009. The settlement date was expected to be August 7, 2009. American Achievement said its is amending its previously announced cash tender offer with respect to its outstanding 12.75% Senior PIK Notes due 2012 (CUSIP No. 02369BAB2, 02369BAA4, 02369BAE6, 02369BAD8) to extend the offer expiration date from 11:59 p.m., New York City time, on July 31, 2009, to 5:00 p.m., New York City time, on August 5, 2009, and to decrease the minimum tender condition from $70,000,000 aggregate principal amount of the Notes, representing roughly 64% of the outstanding Notes, to $65,000,000 aggregate principal amount of the Notes, representing roughly 59% of the outstanding Notes. Goldman, Sachs & Co. acted as the dealer manager for the Offer. The depositary and information agent for the Offer was Global Bondholder Services Corporation. Questions regarding the Offer may be directed to Goldman, Sachs & Co., at (800) 828-3182 (toll free) or (212) 357-4692 (collect). Requests for copies of the Offer to Purchase and related documents may be directed to Global Bondholder Services Corporation at (866) 873-6300 (toll free) or (212) 430-3774 (banks and brokerage firms). The Offer was made solely by means of the offer to purchase dated June 4, 2009, as amended and supplemented by the supplement dated July 20, 2009. American Achievement Group Holding Corp. is the indirect parent company of American Achievement Corporation. American Achievement Corporation is a provider of products that forever mark the special moments of people's lives. As the parent company of brands like ArtCarved(R), Balfour(R), Keepsake(R), and Taylor Publishing, American Achievement Corporation's legacy is based upon the delivery of exceptional, innovative products, including class rings, yearbooks, graduation products and affinity jewelry through in-school and retail distribution. AMERICAN AXLE: Q2 Results Won't Affect S&P's 'CCC+' Rating ---------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings on American Axle & Manufacturing Holdings Inc. (CCC+/Negative/--) are not immediately affected by the company's announcement of its financial results for the second quarter of 2009. Sales were $245.6 million, down about 50%, year over year. Operating losses were a negative $260.6 million, an improvement from the negative $527.9 million a year ago, due to sharply lower costs. According to the company, its main goal is to complete its restructuring outside bankruptcy, and it is negotiating with key stakeholders on various commercial and financial agreements to achieve long-term business viability. Still, there is no assurance that the company will reach a satisfactory arrangement with its stakeholders, so bankruptcy remains a realistic option. As of June 30, 2009, American Axle was not in compliance with certain covenants under its revolving credit facilities. Consequently, the company entered into a waiver and amendment that has been extended through August 20, 2009. AMERICAN AXLE: Doesn't See Collection Issues with New GM, Chrysler ------------------------------------------------------------------ American Axle & Manufacturing Holdings Inc. reports it has collected substantially all of its pre-bankruptcy receivables from General Motors and Chrysler LLC, and does not anticipate collection issues with any subsequent receivable balances as to both bankrupt automakers. On June 1, 2009, GM filed for bankruptcy protection in the U.S. Southern District of New York. Post-bankruptcy GM -- New GM -- was purchased out of bankruptcy on July 10, 2009. American Axle says sales to GM were roughly 76% of its total net sales for the six months ended June 30, 2009. On April 30, 2009, Chrysler filed for bankruptcy protection in the U.S. Southern District of New York. Post-bankruptcy Chrysler -- New Chrysler -- was purchased out of bankruptcy on June 10, 2009. Axle says sales to Chrysler were roughly 9% of total net sales for the six months ended June 30, 2009. Pursuant to a 1994 Asset Purchase Agreement between GM and Axle, GM agreed to share proportionally in the cost of postretirement healthcare for eligible retirees based on the length of service an associate had with Axle and GM. The GM postretirement cost sharing asset reflects the portion of the obligation expected to be received from GM under this cost sharing agreement. Axle believes that New GM will honor the obligation to AAM under the postretirement cost sharing agreement and, accordingly, Axle has not recorded a loss on the potential inability to recover this asset in full as of June 30, 2009. Axle and New GM continue to negotiate final terms for the assumption by New GM of certain contracts and definitive contract terms. In the second quarter of 2009, GM began extended summer production shutdown for many of the facilities Axle supports. Chrysler also temporarily idled manufacturing operations for a significant portion of the second quarter through its exit from bankruptcy. Axle says the extended production shutdowns at GM and Chrysler significantly reduced production volumes, revenues and gross profit in the second quarter of 2009 and will continue to adversely affect Axle's production volumes, revenues and gross profit in the third quarter of 2009. Axle filed its quarterly report on Form 10-Q for the period ended June 30, 2009. As reported by the Troubled Company Reporter on August 7, 2009, Axle reported a second quarter net loss of $288.6 million or $5.20 per share. This compares to a net loss of $644.3 million or $11.89 per share in the second quarter of 2008. Axle said its results in the second quarter of 2009 were adversely impacted by the extended production shutdowns of GM and Chrysler. AAM estimates the reduction in sales and operating income resulting from these shutdowns to be approximately $203.6 million and approximately $65.7 million (or $1.18 per share), respectively. Net sales in the second quarter of 2009 were $245.6 million as compared to $490.5 million in the second quarter of 2008. AAM estimates that approximately $203.6 million of this decrease was attributable to the extended production shutdowns by GM and Chrysler. Net sales in the first half of 2009 were $648.0 million as compared to $1.1 billion in the first half of 2008. AAM's operating loss in the first half of 2009 was $277.3 million as compared to an operating loss of $609.5 million for the first half of 2008. For the first half of 2009, AAM estimates the reduction in sales and operating income resulting from the extended production shutdowns by GM and Chrysler to be $203.6 million and $65.7 million ($1.18 per share), respectively. At June 30, 2009, Axle had $1.92 billion in total assets and $2.65 billion in total liabilities, resulting in $736.0 million in stockholders' deficit. According to Bloomberg, Chief Executive Officer Richard Dauch said at a conference call with investors on August 5 that American Axle seeks to shrink operations to match a decline in auto output without having to resort to bankruptcy court protection. "It is AAM's primary objective to complete our restructuring outside of a bankruptcy process," Mr. Dauch said. Analysts have earlier suggested the Company may need to file because it won't be able to meet loan terms. In its quarterly report, Axle said it is currently working with key stakeholders on various commercial agreements and financing arrangements (including amendments to existing credit agreements) that would result in a comprehensive, long-term solution outside of bankruptcy. Axle said there can be no assurance it will be successful in reaching agreements with the parties and avoid filing for bankruptcy protection. As of June 30, 2009, Axle was not in compliance with certain covenants in its Revolving Credit Facility agreement. On June 30, Axle entered into a waiver and amendment to the Credit Agreement dated as of January 9, 2004, as amended and restated as of November 7, 2008. The waiver and amendment, among other things, provides a waiver through July 30, 2009, of the financial covenants relating to secured indebtedness leverage and interest coverage as well as a waiver of the collateral coverage requirement of the Revolving Credit Facility. During the waiver period, Axle is required to maintain a daily minimum liquidity of $100 million and will be limited in its ability to incur, refinance or prepay certain debt, make investments, and make restricted payments. On July 29, the waiver was extended through August 20, subject to certain terms and conditions. "If we are unable to further extend the waiver period or amend these agreements, our lenders under the Revolving Credit Facility can terminate their lending commitments under the Revolving Credit Facility and declare the loans outstanding, along with accrued interest, to become immediately due and payable. If the lenders under the Revolving Credit Facility declare the loans thereunder immediately due and payable, this would permit the lenders under the Term Loan and the lenders under certain foreign credit facilities to accelerate and call their respective loans," Axle said. Axle explained acceleration of the Revolving Credit Facility or the Term Loan would also be an event of default under the 7.875% Notes and 5.25% Notes, which would give the holders of 25% of these Notes or the trustee for these Notes the right to accelerate payment of principal and accrued interest on these Notes 30 days after the Company receives written notice from them. Given the uncertainties surrounding its ability to modify its existing debt agreements with lenders, and the consequences of its inability to amend the agreements or obtain an additional waiver of the covenant violations, Axle said it may be unable to continue as a going concern. A full-text copy of Axle's quarterly report is available at no charge at http://ResearchArchives.com/t/s?4110 About American Axle Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- is a world leader in the manufacture, engineering, design and validation of driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for trucks, sport utility vehicles, passenger cars and crossover utility vehicles. In addition to locations in the United States (Michigan, New York, Ohio and Indiana), the Company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea, Thailand and the United Kingdom. * * * As reported by the Troubled Company Reporter on July 14, 2009, Reuters, citing people familiar with the matter, said Axle is working with Shearman & Sterling as it considers restructuring options, including filing for bankruptcy. Axle said that its long-term relationship with Shearman & Sterling, which has included work on securities law and litigation, was broadened to include advice on restructuring. As reported by the TCR on June 11, 2009, Fitch Ratings said its 'CCC' issuer default ratings on American Axle & remain on Watch Negative. According to the TCR on May 14, 2009, Moody's Investors Service lowered American Axle's Probability of Default Rating to Caa3 from Caa1, and its Corporate Family Rating to Ca from Caa1. In a related action Moody's also lowered the rating on the Company's secured bank credit facilities to Caa2 from B2, lowered the rating on the unsecured guaranteed notes to Ca from Caa2, and lowered the rating on the unsecured convertible notes to Ca from Caa2. The Speculative Grade Liquidity Rating was affirmed at SGL-4. The outlook is negative. AMERICAN CAPITAL: Fitch Downgrades Issuer Default Rating to 'B-' ---------------------------------------------------------------- Fitch Ratings has downgraded these American Capital Strategies LLC ratings: -- Issuer Default Rating to 'B-' from 'BB-'; -- Senior unsecured debt to 'B+/RR2' (71% - 90% recovery band) from 'BB-'. The ratings remain on Rating Watch Negative. Approximately $2.3 billion of debt is affected by this action. The rating downgrade underscores the company's limited financial flexibility and significant reliance on the sale of investment assets to reduce leverage. Given the weak economic environment, Fitch recognizes that continued deterioration in ACAS investment portfolio performance is likely and will continue to pressure efforts to reduce leverage due to the recognition of further unrealized losses and lower than anticipated proceeds from asset sales. Notching of the senior unsecured debt rating and the recovery rating reflects Fitch's evaluation of the adequacy of unencumbered investment assets to support repayment of unsecured debt. Fitch's evaluation incorporated the likelihood of further stress on existing portfolio investment values. Regarding the outcome of company's efforts to remedy a default on $2.3 billion of unsecured debt, Fitch notes that ACAS remains actively engaged in negotiations with its banks and unsecured lenders to restructure and resolve the default. Thus far, lenders have not exercised their right to accelerate the repayment of this debt and ACAS continues to pay default interest. Resolution of the Rating Watch Negative will be primarily driven by ACAS' ability to reach an agreement with its unsecured creditors. Fitch anticipates that the restructure will provide a maturity extension and require principal amortization over the life of the transaction, in part, necessary for ACAS to meet the 200% asset coverage requirement as a business development company. Fitch expects that unsecured lenders will also require a secured collateral interest in all existing unencumbered portfolio assets. Timely execution of a restructure that incorporates achievable terms and conditions is a critical near-term rating factor and would alleviate current downward rating momentum. AMERICAN INT'L: AIG Global Real Estate Unit Gets 2 New Executives ----------------------------------------------------------------- American International Group, Inc., has named William J. Glasgow Chief Restructuring Officer of AIG Global Real Estate, the international real estate investment organization. "Will Glasgow's management and restructuring experience spans not only real estate, but also financial services and other industries," said Paula Rosput Reynolds, AIG Vice Chairman and Chief Restructuring Officer. "His background is especially valuable as AIG seeks the best possible outcomes for its real estate assets." In conjunction with the overall restructuring of AIG, AIG Global Real Estate has previously announced its intention to divest certain holdings in its real estate business. Mr. Glasgow will oversee the execution of the real estate restructuring program. Robert Gifford Appointed as Unit President & CEO American International Group, Inc., has named Robert G. Gifford as President and Chief Executive Officer of AIG Global Real Estate, the international real estate investment organization. Mr. Gifford's experience includes 22 years with AEW Capital Management, L.P., the Boston-based real estate investment management advisor to leading institutional and private investors, where he was a Principal holding leadership positions in acquisitions, capital markets, portfolio management and new product development. Prior to AEW, Mr. Gifford worked for The Rouse Company, a developer and owner of regional shopping centers, urban mixed use projects and planned communities. "Rob Gifford brings to AIG a deep and versatile background in real estate investment, development and portfolio management," said Paula Rosput Reynolds, AIG Vice Chairman and Chief Restructuring Officer. "He also has an outstanding reputation for earning the confidence of investors, including during challenging real estate market conditions." Mr. Gifford succeeds Jeffrey Hurd, Senior Vice President, Head of Asset Management Restructuring and AIG Chief Administrative Officer, who has been serving as interim President and Chief Executive Officer of AIG Global Real Estate. Mr. Hurd will resume his previous responsibilities on a full-time basis. AIG Global Real Estate invests in, develops, and manages $24.3 billion of real estate in 50 countries for clients and other AIG companies. In conjunction with the overall restructuring of AIG, the company has previously announced its intention to divest certain holdings in its real estate business and reduce its global footprint. Mr. Gifford earned a bachelor's degree in history magna cum laude from Dartmouth College and a master's degree in public and private management from Yale University About American Int'l Headquartered in New York, AIG Global Real Estate has $24.3 billion of assets under management in 50 countries around the world. Prior to joining AIG, Mr. Glasgow served as the Chief Operating Officer of Scanlan Kemper Bard Companies, LLC, the real estate private equity firm. Previously, he held various senior positions at PacifiCorp, including Chief Financial Officer. Mr. Glasgow also served as Chairman, President and CEO of PacifiCorp Holdings, which included PacifiCorp Financial Services, NERCO, Inc., and Pacific Telecom. His career also includes leadership positions in venture capital management, including BCN Data Systems, and international joint venture controlled by Bechtel, and he has served as a director of numerous public and private companies. Mr. Glasgow earned a bachelor's degree in economics, magna cum laude, from the Wharton School of Business at the University of Pennsylvania and a law degree, magna cum laude, from Harvard University. 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. In September 2008, AIG experienced a liquidity crunch when its credit ratings were downgraded below "AA" levels by Standard & Poor's, Moody's Investors Service and Fitch Ratings. On September 16, 2008, the Federal Reserve Bank created an $85 billion credit facility to enable AIG to meet increased collateral obligations consequent to the ratings downgrade, in exchange for the issuance of a stock warrant to the Fed for 79.9% of the equity of AIG. The credit facility was eventually increased to as much as $182.5 billion. AIG has sold a number of its subsidiaries and other assets to pay down loans received, and continues to seek buyers of its assets. At March 31, 2009, AIG had $819.75 billion in total assets and $765.53 billion in total liabilities. At September 30, 2008, AIG had $1.022 trillion in total assets and $950.9 billion in total debts. 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. 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: Final Cash Collateral Hearing Adjourned to Aug. 26 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of North Carolina has continued to August 26, 2009, at 11:00 a.m. the final hearing on Anderson Homes, Inc., et al.'s emergency motion to use cash collateral. As reported in the TCR on July 8, 2009, the Bankruptcy Court entered its fourth order authorizing the Debtors to continue using their construction lenders' cash collateral to pay operating expenses, generally in accordance with the budget. As reported in the Troubled Company Reporter on March 20, 2009, the Construction Lenders holding liens on certain sale properties and the approximate amounts due to each are: 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 are James D. Goldston and William Goldston, owed about $568,000; and Stock Building Supply, Inc., owed $1,562,942. 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 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. At the time of the filing, Anderson Homes said it had total assets of $17,190,001 and total debts of $13,742,840. ANDERSON HOMES: Plan Filing Period Extended to September 13 ----------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of North Carolina has extended Anderson Homes, Inc., et al.'s exclusive period to file a plan through and including September 13, 2009. The Debtors told the Court that theirs is a complex case involving four separate debtor-entities, numerous secured and unsecured creditors, and a large number of real properties in varying degrees of completion, and that they are in the process of formulating a plan and disclosure statement. 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 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. At the time of the filing, Anderson Homes said it had total assets of ARAMARK CORP: Bank Debt Trades at 4% Off in Secondary Market ------------------------------------------------------------ Participations in a syndicated loan under which ARAMARK Corporation is a borrower traded in the secondary market at 95.56 cents-on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.94 percentage points from the previous week, The Journal relates. The loan matures on Jan. 26, 2014. The Company pays 187.5 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba3 rating and Standard & Poor's BB rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. ARAMARK Corporation -- http://www.aramark.com/-- is the world's #3 contract foodservice provider (behind Compass Group and Sodexo) and the #2 uniform supplier (behind Cintas) in the US. It offers corporate dining services and operates concessions at many sports arenas and other entertainment venues, while its ARAMARK Refreshment Services unit is a leading provider of vending and beverage services. The company also provides facilities management services. Through ARAMARK Uniform and Career Apparel, the company supplies uniforms for healthcare, public safety, and technology workers. Founded in 1959, ARAMARK is owned by an investment group led by chairman and CEO Joseph Neubauer. As of August 9, 2009, Aramark continues to carry a 'B1' long term corporate family rating from Moody's, a 'B+' long term foreign issuer credit rating from Standard & Poor's and a 'B' long term issuer default rating from Fitch. ASARCO LLC: Committee, Bondholders Oppose Parent Plan ----------------------------------------------------- ASARCO LLC has sent to creditors for voting competing plans separately proposed by the Debtors, Asarco Incorporated, and a group led by Harbinger Capital Partners Master Fund I, Ltd. Key parties in the case have filed objections. Various parties have filed objections to the plan proposed by ASARCO Inc. and its related entities. -- ASARCO LLC ASARCO LLC and its affiliated Chapter 11 Debtors oppose the confirmation of the Modified Sixth Amended Plan of Reorganization proposed by ASARCO Incorporated and Americas Mining Corporation because the Parent Plan: (a) is not filed in good faith; (b) is not fair and equitable in that it violates the absolute priority rule and improperly provides a release to the non-debtor Parent for insufficient consideration; (c) is not feasible; and (d) fails to comply with all provisions necessary to confirm a plan of reorganization. Jack L. Kinzie, Esq., at Baker Botts L.L.P., in Dallas, Texas, avers that the Parent has recognized that creditors were voting overwhelmingly in favor of the Debtors' Plan and against the previous version of the Parent Plan, so the Parent filed its latest plan in a last-ditch effort to dramatically limit, if not extinguish, its liability on the judgment entered by the U.S. District Court for the Southern District of Texas, Brownsville Division, in favor of ASARCO, in the litigation against the Parent relating to shares of Southern Peru Copper Company, now known as Southern Copper Corporation. "The Parent is motivated more by a desire to regain control of ASARCO and escape liability for taking ASARCO's crown jewel in actual fraud of ASARCO's creditors than by any desire to reorganize ASARCO," Mr. Kinzie alleges. "The approximately $8 billion judgment against AMC in the Southern Copper lawsuit is completely released with respect to creditors treated under Option A of the Parent's Plan for Class 3 general unsecured creditors (the default option for non-voting creditors)," he explains. In return, Mr. Kinzie asserts, creditors electing Option A, as well as those who do not vote or change their vote on the Parent Plan, receive less than full payment on their claims and no postpetition interest. He contends that under Options B and C of the Parent Plan, the Parent's liability on the SCC Judgment is limited to a mere fraction of the judgment, effectively giving the Parent a release for the balance, again in return for less than full payment. With its Plan, the Parent simply seeks to regain control of ASARCO and retain the shares of SCC with no regard for ASARCO's viability as a going concern or the interests of ASARCO's creditors, Mr. Kinzie argues. -- Creditors Committee In the exercise of its statutory duties under Section 1103 of the Bankruptcy Code, the Official Committee of Unsecured Creditors tells Judge Schmidt that it has undertaken a serious review and analysis of the Modified Sixth Amended Plan of Reorganization filed by Asarco Incorporated and Americas Mining Corporation. The Creditors Committee says it intends to continue review and analyze the Parent Plan in light of the vote of creditors and discovery. In the meantime, the Committee seeks to preserve its rights on all issues prior to the confirmation hearing. On the Committee's behalf, Paul M. Singer, Esq., at Reed Smith LLP, in Pittsburgh, Pennsylvania, contends that the Parent Plan cannot be confirmed because it fails to satisfy the requirements of: (a) Sections 1129(a)(1) and (3) of the Bankruptcy Code because the settlement evidenced by the Amended Agreement in Principle has not been, and cannot be, approved under Rule 9019 of the Federal Rules of Bankruptcy Procedure; (b) Sections 1129(a)(1) and (3) because the Parent Plan provides for a "deemed consolidation" in violation of existing case law; (c) Section 1129(a)(1) and (3) because the Parent Plan provides for releases of non-debtor third parties, which are prohibited under existing case law; (d) Section 1129(a)(5) because the post-Effective Date officers and directors of Reorganized ASARCO, the Plan Administrator, the Litigation Trustee and the members of the Litigation Trust Board have not been disclosed; (e) Section 1129(a)(7) because the Parent has not established that the Parent Contribution exceeds the liquidation value of the New Equity Interests, and the value of the Released Litigation contemplated under the Plan; and (f) Section 1129(a)(8) unless all impaired classes under the Parent Plan have voted in favor of that Plan. The Creditors Committee reserves the right to raise additional objections to the confirmation of any of the Plans prior to or at the Confirmation Hearing, and to withdraw objections raised at or prior to the Confirmation Hearing. -- U.S. Trustee (Objections to Competing Plans) Charles F. McVay, the U.S. Trustee for Region 7, filed separate objections against the three competing plans of reorganization submitted for the Debtors' cases. Mr. McVay tells the Court that he and counsel for Asarco Incorporated and Americas Mining Corporation have discussed his objection to certain provisions in the Parent Plan, specifically, Section 11.9 Releases by Holders of Claims, Demands, and Interests of the Parent Plan. Although the Parent has made some changes in its Plan to satisfy his objections, Mr. McVay says that he still has objections to certain of the provisions in Section 11.9. He contends that the Parent's Sixth Amended Chapter 11 Plan of Reorganization violates Section 524(e) of the Bankruptcy Code with respect to non-debtor releases and therefore, the Plan cannot be confirmed as it violates Section 1129(a)(1) of the Bankruptcy Code. "As they relate to attorneys, the Parent Plan's releases also run afoul of applicable professional standards of conduct," Mr. McVay argues. "The effect of Section 11.9 would be to release and discharge attorneys for their conduct in the case. For the legal profession, it has long been accepted that it is unethical for a professional to accept any form of exoneration of liability from its client," he points out. Permitting broad indemnification or exculpation removes incentive to professionals to perform their duties competently, Mr. McVay tells the Court. He adds that clearly, in a non-bankruptcy context, broad exculpatory provisions are generally not available to attorneys -- the result should be no different in a bankruptcy context. -- United Steelworkers The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union AFL-CIO submits (i) an objection to the ASARCO Incorporated and Americas Mining Corporation's Modified Sixth Amended Plan of Reorganization for the Debtors, and (ii) statement of support for the Debtors' Sixth Amended Plan of Reorganization. The USW is the collective bargaining representative of approximately 1,400 employees of ASARCO LLC and the authorized representative of approximately 800 retirees and surviving spouses of ASARCO. The survival and viability of a reorganized, operating ASARCO, and the long term security of jobs for bargaining unit employees and retiree benefits for bargaining unit retirees, have been and continue to be of prime importance to the USW and the constituencies it represents, Patrick M. Flynn, Esq., in Houston, Texas, tells the Court. The three-year Court-approved collective bargaining agreement between the USW and ASARCO LLC in January 2007 contains a Special Successorship Clause that, with certain exceptions not applicable in these circumstances, requires each prospective purchaser or entity gaining control of ASARCO, including in the context of a plan of reorganization, to negotiate a new collective bargaining agreement with the USW, Mr. Flynn relates. Mr. Flynn discloses that Sterlite (USA), Inc., the purchaser of assets under the Debtors' Plan, has reached a CBA with the USW providing major protections for employees and retirees. He notes that a key part of that agreement, given the expiration of the ASARCO CBA in 10 months and Sterlite's status as a new potential manager of ASARCO's assets, is Sterlite's agreement on a successor agreement that helps bring long term security for ASARCO's employees and retirees. The Sterlite Agreement provides that if the parties cannot agree to a new CBA next year, the terms of a successor CBA extending for an additional three years from June 2010 will be resolved by binding arbitration, with the arbitrator limited to determining improvements in wages and pension benefits. "The USW supports the confirmation of the Debtors' Plan in light of all the facts and circumstances of this case and expresses a preference for the confirmation of that plan," Mr. Flynn tells the Court. "It goes without saying that, in the event of and after confirmation of the Debtors' Plan the USW will continue to forcefully represent employees in future dealings with the employer," he adds. In stating its preference, the USW is also representing retiree creditors, whose relevant retiree claims are impacted by the treatment provided in the CBA or the absence of a CBA, which relate to the plans of reorganization proposed for the Debtors, Mr. Flynn asserts. Under the Debtors' Plan and the assumption of the Sterlite CBA, he notes, those benefits are guaranteed through 2013. The treatment of the benefits under the Parent Plan, however, is presently unclear, but under the Parent's current bargaining offer those benefits could be terminated next year, he points out. Confirmation of the Parent Plan must be denied, Mr. Flynn argues, because (i) the provisions of the SSC are applicable and binding as the law of this case, (ii) the Parent seeks through its Plan to effectuate a de facto rejection of the ASARCO CBA and the SSC contrary to applicable law, and (iii) the Parent Plan fails to meet the confirmation requirements of Sections 1123(b)(6), 1129(a)(1), 1129(a)(2), and 1129(a)(3), as well as the feasibility requirements of Section 1129(a)(11) of the Bankruptcy Code. The Parent Plan violates the SSC because the SSC requires that the Parent reach a consensual agreement with the USW, Mr. Flynn contends. He informs the Court that despite numerous negotiations, the USW and the Parent failed to reach a new consensual CBA. In the absence of an application by the Debtors or the Official Committee of Unsecured Creditors to terminate the SSC, the SSC is binding and the Parent Plan cannot be confirmed, he points out. Mr. Flynn further argues, among other things, that the Parent's Plan cannot be confirmed because the Parent's attempt to obtain confirmation of its Plan is an attack on the SSC, and it thereby seeks to relitigate issues that were decided both by the Court in the CBA Order as well as the District Court's order affirming the CBA Order. -- Majority Bondholders Harbinger Capital Partners Master Fund I, Ltd., and Citigroup Global Markets, Inc., the Debtors' Majority Bondholders that collectively hold approximately two-thirds of the principal amount of unsecured bonds and debentures issued by ASARCO LLC, jointly submit an objection to confirmation of the Sixth Amended Plan of Reorganization for the Debtors proposed by Asarco Incorporated and Americas Mining Corporation. Harbinger proposed a plan of reorganization for the Debtors, but has recently dropped from the race to acquire ASARCO LLC. "The moving target that is the Parent Plan remains unconfirmable, because even in its most recent incarnation it fails to take account of the undisputable fact that these Debtors are solvent," Phillip L. Lamberson, Esq., at Winstead PC, in Dallas, Texas, tells the Court. He notes that ASARCO's most valuable asset is the final judgment against the Parent for intentional fraudulent conveyance of ASARCO's crown jewel -- its stock in Southern Peru Copper Company, now known as Southern Copper Corporation. The SCC Judgment is worth more than $7 billion on its face and, in light of the egregious underlying facts and Judge Hanen's detailed, carefully reasoned opinion, is highly likely to be affirmed on appeal, Mr. Lamberson asserts. Because the Debtors' going concern value together with cash on hand leaves a solvency gap of only about $336 million less than 5% of the SCC Judgment, he explains that the present value of the SS Judgment, beyond any reasonable dispute renders the Debtors solvent. And it does so with a sufficient margin to require full payment of all claims, including postpetition interest, valued as of the effective date of any confirmed plan, he continues. He insists that the Parent Plan fails to offer treatment that satisfies this requirement and thus, is unconfirmable. Since ASARCO is indisputably solvent, Mr. Lamberson contends that the Parent Plan's failure to provide Class 3 General Unsecured Claims, including the Majority Bondholders' claims, with payment in full valued as of the Effective Date renders the Parent Plan non-confirmable under Section 1129 of the Bankruptcy Code for at least two independent reasons: (1) The Parent Plan does not satisfy Section 1129(a)(7)'s best interests of creditors test. Because the Debtors are solvent, that test requires that the Majority Bondholders receive property of a value as of the Effective Date equal to the full amount of their claims, including postpetition interest; and (2) The Majority Bondholders expect that Class 3 General Unsecured Claims will vote not to accept the Parent Plan, therefore requiring that the Parent Plan satisfy the cramdown standards of Section 1129(b). -- Indenture Trustees Indenture Trustees Wells Fargo Bank, National Association, Wilmington Trust Company and Deutsche Bank Trust Company Americas jointly file an objection to the confirmation of Asarco Incorporated and Americas Mining Corporation's Modified Sixth Amended Plan of Reorganization for the Debtors. Under the Parent Plan, holders of Class 3 General Unsecured Claims, which include bondholders, are given the right to elect one of three proposed treatments, the Indenture Trustees relate. However, they assert, the Parent Plan does not include any process for identifying, on the effective date of the Parent Plan, which bondholders made which elections, particularly given that bondholders that exercised an election may have traded their bonds after making the election. Thus, the Indenture Trustees argue that it is not clear to them how the Parent will ensure that accurate distributions are made to bondholders on account of the elections on the Effective Date. The Indenture Trustees also join in the legal arguments advanced by Harbinger Capital Partners Master Fund I, Ltd., and Citigroup Global Markets, Inc., in the Major Bondholders' objection to the confirmation of the Parent Plan. -- Montana Resources, Inc. Montana Resources, Inc., filed with the Court separate objections against the confirmation of the plans of reorganization filed by the Debtors and Harbinger Capital Partners Master Fund I, Ltd. MRI is a substantial creditor in the Debtors' bankruptcy cases, and is entitled to vote Allowed and Disputed Claims in the amount of $58.8 million. MRI is also the defendant in an adversary proceeding, in which the Debtors seek to avoid the contractual extinguishment of a former subsidiary Debtor's interest in a mining partnership under, and to recover the interest. A recovery by the plaintiff in the MRI Action will do no more than entitle MRI to an unsecured breach of contract claim against the bankruptcy estate under Section 502(h) of the Bankruptcy Code for the value of any property it is required to disgorge. If recoveries to creditors under a confirmed plan are anything close to the full payment all Plan Proponents predict, then the MRI Action will be a wash for the estate at best, relates Henry J. Kaim, Esq., at King & Spalding LLP, in Houston, Texas. "Because it has a substantial stake in this matter, MRI is heartened that Debtors believe there is a 'realistic possibility' that all of the estate's creditors will be paid in full," Mr. Kaim tells the Court. Unfortunately, he points out that the Debtors' Plan and the Harbinger Plan cannot be confirmed because the Plans: -- fail to cap recoveries in certain avoidance actions, and to provide for dismissal of those actions when allowed claims and expenses have been paid in full; -- discriminate unfairly against contingent creditors, like MRI, who may assert claims under Section 502(h); and -- contain dubious consolidation and fee shifting provisions. Each of these elements of the Plans violates Section 1129 of the Bankruptcy Code and if left unremedied, requires the Court to deny the Plans' confirmation, Mr. Kaim insists. Mr. Kaim also contends that the Plans cannot be confirmed because the Debtors' Plan approves recoveries in excess of allowed claims, while the Harbinger Plan contains an asbestos channeling injunction that cannot comply with Section 524(g) of the Bankruptcy Code. -- Century Indemnity Company (Against Parent Plan) Century Indemnity Company contends that Americas Mining Corporation and Asarco Incorporated's Modified Sixth Amended Plan of Reorganization for the Debtors is not feasible because it fails to establish reserves for potential claims of Century Indemnity and other insurers pursuant to Section 502(h) of the Bankruptcy Code and other applicable non-bankruptcy law. M. Forest Nelson, Esq., at Burt Barr & Associates, L.L.P., in Dallas, Texas, contends that the Parent Plan cannot be confirmed because it fails to disclose the identities, affiliations and compensation of the management of Reorganized ASARCO. He adds that the Parent Plan fails to comply with Section 1123(a)(5) of the Bankruptcy Code, which requires that a plan provide adequate means for its implementation, because the Parent Plan fails to provide adequate means for implementation insofar as it does not reserve funds for the payment of potential claims. -- Plainfield Special Situations Plainfield Special Situations Master Fund Limited relates that it holds claims classified as Class 3 General Unsecured Claims under Asarco Incorporated and Americas Mining Corporation's Modified Sixth Amended Plan of Reorganization in an aggregate amount of approximately $32 million, consisting of Bondholder Claims, Toxic Tort Claims and Environmental Unsecured Claims. Plainfield objects to the confirmation of the Parent Plan as it violates the absolute priority rule by potentially paying unsecured creditors property of a value that is less than the full allowed amount of their claims, including postpetition interest, while permitting the Parent to retain sole ownership of ASARCO LLC. Mark E. MacDonald, Esq., at MacDonald + MacDonald, P.C., in Dallas, Texas, notes that the Parent concedes in its supplemental solicitation documents that none of its proposed options provide for more than a 96% cash recovery on the Plan Effective Date. It is possible though that under the Parent Plan, creditors may receive additional future cash distributions based on recovery on claims in the fraudulent transfer litigation relating to Southern Copper Corporation stocks, and against Sterlite USA, Inc., Mr. MacDonald acknowledges. But any future cash distributions are capped in an amount equal to unpaid principal and postpetition interest, he points out. "The prospect for any recovery on those claims is not assured." Accordingly, Mr. MacDonald asserts, the value as of the Effective Date of the potential to receive a future additional cash distribution on account of those claims must be discounted, meaning that any distribution to unsecured creditors, like Plainfield, on the Effective Date will have a value of less than payment in full plus postpetition interest. In order for the Parent Plan to be fair and equitable, it must provide for postpetition interest to be confirmed pursuant to the cramdown provisions of Section 1129 of the Bankruptcy Code, Mr. MacDonald emphasizes. Pursuant to the Parent Plan, the Parent will receive 100% of the New Equity Interests in Reorganized ASARCO plus various releases. Recognizing that it would violate the absolute priority rule if the Parent received the consideration on account of its equity interests in ASARCO, without paying unsecured creditors in full, the Parent attempts to avail itself of the purported "new value" exception to the absolute priority rule, Mr. MacDonald contends. The "new value" exception permits a junior claimholder to receive or retain property interests in a reorganized debtor over the objection of an impaired senior class of creditors if the junior claimholder makes a contribution to the debtor that "(1) is new, (2) is in the form of money or money's worth, (3) is reasonably equivalent to the value of the interest retained, and (4) is necessary to the debtor's successful reorganization." Under its Plan, the Parent is contributing the consideration, Mr. MacDonald says. He observes that while the total consideration to be contributed by the Parent appears to exceed the total consideration offered by Sterlite under the Debtors' Plan, the Parent is receiving a valuable asset in return that Sterlite is not -- namely, the release of a large portion of the SCC Final Judgment. By capping the future recovery of unsecured creditors at the Allowed Amount plus Postpetition Interest, and thereby leaving them with property that, when discounted for the possibility of reversal, is worth less than that amount, Mr. MacDonald argues that the Parent Plan fails to comply with the requirement of Section 1129(b) that each creditor receive "property of a value, as of the effective date of the plan, equal to the allowed amount of such claim." Competing Plans ASARCO LLC has sent to creditors three competing Chapter 11 plans for voting -- plans sponsored by investors led by Harbinger Capital Partners Master Fund I Ltd., another by parent Grupo Mexico SAB, through ASARCO Inc. and a third by ASARCO LLC. The Bankruptcy Court is scheduled to begin confirmation hearings for the competing plans on August 10. ASARCO LLC's plan is built upon an agreement to sell assets to Vedanta unit Sterlite Industries Inc. Sterlite has agreed to provide a $770 million promissory note, pay $1.1 billion in cash and assume certain liabilities as part of its consideration in exchange for ASARCO's assets. Grupo Mexico, through ASARCO Inc. and Americas Mining Corp., is offering to purchase ASARCO LLC, and exchange offer creditors 100% 100% of the value of the claims: 97% in the form of payments in cash and equivalents, consisting of $3.152 billion, as well as the remaining 3% from amounts recovered from various litigation proceedings, including against Sterlite. Grupo Mexico recently beefed up its plan to provide recovery options for creditors. Harbinger's plan proposes to purchase ASARCO's assets for $500 million and the assumption of certain liabilities. Harbinger said in early August that while it is not withdrawing its Plan, it wants the Court to suspend confirmation of its own plan in order to conserve estate resources. It said that since it filed its plan, the Debtors and Grupo Mexico have made substantial modifications to the terms of their proposed plans. Copies of the disclosure statement explaining the three plans, as divided into five parts, are available for free at: http://bankrupt.com/misc/ASARCO_Joint_DS_070609_01.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_02.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_03.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_04.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_05.pdf About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on August 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for Chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for Chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its Chapter 11 case. On October 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). ASARCO LLC filed a plan of reorganization on July 31, 2008, premised on the sale of the Debtors' assets to Sterlite USA for US$2.6 billion. By October 2008, ASARCO LLC informed the Court that Sterlite refused to close the proposed sale and thus, the Original Plan could not be confirmed. The parties has since renewed their purchase and sale agreement and ASARCO LLC has obtained Court approval of a settlement and release contained in the new PSA for the sale of the ASARCO assets for US$1.1 billion in cash and a US$600 million note. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted its own plan which allows it to keep its equity interest in ASARCO LLC by offering full payment to ASARCO's creditors. AMC offered provide up to US$2.7 billion in cash and a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Has Agreement in Principle With Bondholders ------------------------------------------------------- Tony M. Davis, Esq., at Baker Botts L.L.P., in Houston, Texas, notifies the Court and parties-in-interest that ASARCO LLC and its debtor-affiliates have reached an agreement in principle with these holders of bonds and indenture trustees: (1) Harbinger Capital Partners Master Fund I and CitiGroup Global Markets Inc.; (2) Wilmington Trust Company, as Indenture Trustee of the ASARCO 8.5% Debentures due 2025; (3) Wells Fargo Bank, N.A., as Indenture Trustee of the ASARCO 7.875% Debentures due 2013; and (4) Deutschebank Trust Company Americas, as Indenture Trustee of: -- Lewis and Clark County, Montana Debentures due 2033; -- the Nueces River Authority Debentures due 2027; -- Lewis and Clark County, Montana Debentures due 2027; -- Nueces River Authority Debentures due 2018; and -- Industrial Development Authority of the County of Gila, Arizona Debentures due 2027. Mr. Davis tells the Court that the parties will proceed in good faith towards documentation and execution of a final definitive agreement reflecting the terms of the Agreement. The parties reserve their rights pending said documentation and execution. They also reserve their rights in the event the Court denies the request seeking approval of the agreement that the Debtors contemplate filing under Rule 9019 of the Federal Rules of Bankruptcy Procedure. The Indenture Trustees have not yet consented to certain portions of the Agreement, nor have the states consented to accept the federal judgment rate of interest, Mr. Davis tells the Court. There are additional details, he says, that must be worked out in connection with the Agreement. Among the terms of the Agreement are: (a) Holders of the Bonds will receive Allowed Class 3 Claims in an amount equal to the $439.8 million principal amount of their Bonds, together with all accrued but unpaid prepetition interest of $7.8 million, for a total of $447.6 million. The claims will be payable pari passu with the Allowed Claims of general unsecured creditors for principal and prepetition interest, if any; (b) Holders of the Bonds will receive Allowed Claims for all accrued postpetition interest at the non-default rate specified in the relevant Bond indentures compounded based on when interest payments were due under the indentures, estimated to be $162 million as of December 31, 2009; (c) Holders of the Montana 2033 Bonds, the Nueces 2027 Bonds, the Montana 2027 Bonds, the Nueces 2018 Bonds and the Gila Bonds will receive Allowed Claims in the amount of the prepayment premiums expressly provided under the indentures for those bonds; (d) Holders of the 2013 Bonds will receive, in settlement of their claims for alleged breach of the no-call feature of those bonds, an Allowed Claim in the amount of $5 million, calculated as 5% of the principal amount of those 2013 Bonds. Holders of the 2025 Bonds will receive, in settlement of their claims for alleged breach of the no-call feature of those bonds, an Allowed Claim in the amount of $15 million, calculated as 10% of the principal amount of those 2025 Bonds; and (e) Harbinger will file an administrative expense claim pursuant to Section 503(b)(3)(D) of the Bankruptcy Code for fees reasonably incurred in connection with its plan of reorganization for the Debtors, up to a cap of $6 million. A full-text copy of the Agreement can be obtained for free at: http://bankrupt.com/misc/ASARCO_AgreementInPrinciple_080309.pdf Parent Further Amends Supplement The Parent has filed with the Court another Supplemental Disclosure as of August 3, 2009. The latest Supplemental Disclosure reflects minor changes, including some footnotes and the Debtors' comments regarding the Parent Plan. A full-text copy of the latest Supplement is available for free at http://bankrupt.com/misc/ASARCOInc_JDS_Supplement_080309.pdf The Parent also filed its Modified Sixth Amended Plan, as previously reported. Competing Plans ASARCO LLC has sent to creditors three competing Chapter 11 plans for voting -- plans sponsored by investors led by Harbinger Capital Partners Master Fund I Ltd., another by parent Grupo Mexico SAB, through ASARCO Inc. and a third by ASARCO LLC. The Bankruptcy Court is scheduled to begin confirmation hearings for the competing plans on August 10. ASARCO LLC's plan is built upon an agreement to sell assets to Vedanta unit Sterlite Industries Inc. Sterlite has agreed to provide a $770 million promissory note, pay $1.1 billion in cash and assume certain liabilities as part of its consideration in exchange for ASARCO's assets. Grupo Mexico, through ASARCO Inc. and Americas Mining Corp., is offering to purchase ASARCO LLC, and exchange offer creditors 100% 100% of the value of the claims: 97% in the form of payments in cash and equivalents, consisting of $3.152 billion, as well as the remaining 3% from amounts recovered from various litigation proceedings, including against Sterlite. Grupo Mexico recently beefed up its plan to provide recovery options for creditors. Harbinger's plan proposes to purchase ASARCO's assets for $500 million and the assumption of certain liabilities. Harbinger said in early August that while it is not withdrawing its Plan, it wants the Court to suspend confirmation of its own plan in order to conserve estate resources. It said that since it filed its plan, the Debtors and Grupo Mexico have made substantial modifications to the terms of their proposed plans. Copies of the disclosure statement explaining the three plans, as divided into five parts, are available for free at: http://bankrupt.com/misc/ASARCO_Joint_DS_070609_01.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_02.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_03.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_04.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_05.pdf About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on August 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for Chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for Chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its Chapter 11 case. On October 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). ASARCO LLC filed a plan of reorganization on July 31, 2008, premised on the sale of the Debtors' assets to Sterlite USA for US$2.6 billion. By October 2008, ASARCO LLC informed the Court that Sterlite refused to close the proposed sale and thus, the Original Plan could not be confirmed. The parties has since renewed their purchase and sale agreement and ASARCO LLC has obtained Court approval of a settlement and release contained in the new PSA for the sale of the ASARCO assets for US$1.1 billion in cash and a US$600 million note. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted its own plan which allows it to keep its equity interest in ASARCO LLC by offering full payment to ASARCO's creditors. AMC offered provide up to US$2.7 billion in cash and a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Parties Filing Objections to Competing Plans -------------------------------------------------------- ASARCO LLC has sent to creditors for voting competing plans separately proposed by the Debtors, Asarco Incorporated, and a group led by Harbinger Capital Partners Master Fund I, Ltd. Some parties have filed objections to all three competing plans. -- Mitsui, et al. Mitsui & Co. (U.S.A.), Inc., Mitsui & Co., Ltd., Ginrei, Inc., and MSB Copper Corp. ask the Court to deny confirmation of the plans of reorganization filed by the Debtors, Americas Mining Corporation and ASARCO Incorporated, and Harbinger Capital Partners Master Fund I, Ltd., unless and until the Plans are amended to cure all of Mitsui's objections. In July 2006, Mitsui filed Claim No. 10409, and in June 2008, supplemented the Original Claim, which supplemented claim was assigned Claim No. 18317. Altogether, Mitsui has asserted a claim for $28,298,974, about $26,210,420 of which was asserted as secured, and $2,088,554 was asserted under unsecured status. The Mitsui Claim is based on leases of silver between Mitsui and Asarco Incorporated. Mitsui objects, pursuant to Section 1122(a) of the Bankruptcy Code, to the separate classification of Class 3 and Class 4 general unsecured claims if and to the extent that the effect of the separate classification is to provide Class 4 with distributions, which are greater than the present value of proposed distributions to Class 3. With respect to Mitsui's unsecured claim in Class 3, the Debtors Plan violates Section 1123(a)(4) of the Bankruptcy Code by providing superior treatment to Class 4, if and to the extent it is found that Class 4 should properly be classified or treated as a single class with Class 3, asserts Stephen A. Goodwin, Esq., at Carrington, Coleman, Sloman & Blumenthal, L.L.P., in Dallas, Texas. The federal judgment interest rate proposed by the Debtors in their Plan is not a "Confirmable Interest Rate," Mr. Goodwin contends. Mitsui asserts instead that a Confirmable Interest Rate in the context of the case is either (a) a floating Wall Street Journal prime rate plus 2%, applicable to all claims receiving interest, or alternatively, (b) the contractual interest rates applicable to each contract. Mr. Goodwin further argues that the Plans, among other things, have not been shown to satisfy Section 1129(a) of the Bankruptcy Code, and the consideration to be paid by the Plan Proponents is simply inadequate to satisfy any of the criteria of Section 1129(a)(7). -- First State, et al. First State Insurance Company, New England Insurance Company, Hartford Accident and Indemnity Company, Twin City Fire Insurance Company and Hartford Financial Services Group, Inc., object to confirmation of the three competing plans of reorganization proposed by the Debtors, Americas Mining Corporation and ASARCO Incorporated, and Harbinger Capital Partners Master Fund I, Ltd., to the limited extent that the Plans contain provisions that purport to impair rights or claims Hartford may have against non- debtors. The Plans appear to enjoin or release potential contribution, indemnity or other claims Hartford may have under applicable law against settling insurers or the Debtors' non-debtor Parent companies for any potential liability Hartford may incur in a pending avoidance action certain Debtors have commenced against Hartford, Ronald A. Simank, Esq., at Schauer & Simank, P.C., in Corpus Christi, Texas, tells Judge Schmidt. As the Bankruptcy Code and the decisions of the Fifth Circuit Court and other Courts of Appeals make clear, there is no basis to approve the release or injunction of third-party claims against non-debtor parties, unless the Plans compensate Hartford through alternative means of recovery for loss of rights, Mr. Simank contends. Accordingly, Hartford insists the Plans should not be confirmed unless they are amended either (i) to delete the third-party release and injunction provisions, or (ii) to include appropriate judgment-reduction provisions permitting Hartford to offset any potential liability in the Action by the amount of any contribution or other claims against non-debtor parties that would be released or enjoined under the Plans. -- Halcyon Master Fund Halcyon Master Fund L.P. submitted separate objections to the plans of reorganization filed by (i) ASARCO LLC and its debtor affiliates, and (ii) Asarco Incorporated and Americas Mining Corporation. Halcyon complains that the Plans do not treat Halcyon's claims in a fair or proper manner. Darrell L. Barger, Esq., at Hartline, Dacus, Barger, Dreyer & Kern, L.L.P, in Corpus Christi, Texas, tells the Court that Halcyon holds $96,295,756 in claims and is one of the Debtors' largest creditors. He notes that depending on how its claims are treated -- in particular, how its contractual rights to interest are treated -- Halcyon stands to lose approximately $20 million. Mr. Barger contends that the Plans include material flaws that result in inequitable treatment for Halcyon's claims. Among other things, he asserts, the Plans: (1) improperly provides for postpetition interest at the federal judgment rate, and not at the full contract rate under the applicable indentures; (2) does not allow for the payment of so-called "make-whole" premiums under the Debtors' debt covenants; and (3) is procedurally flawed because it requires creditors to engage in certain post-confirmation briefing, which is at odds with basic bankruptcy rules and procedures, and will result in substantial unfairness to creditors and encourage inefficiency and waste. Mr. Barger also contends that the Parent Plan fails to satisfy Section 1129(a)(3) of the Bankruptcy Code because it was not proposed in good faith by releasing a $7.4 billion judgment lodged against the Parent in exchange for a cash contribution of less than 25% of that amount. The Parent Plan, he adds, fails to comply with the limited new value exception to the absolute priority rule because the bankruptcy estates do not receive reasonably equivalent value in exchange for releasing the judgment. Unless remedied, Halcyon asserts that the material flaws render the Plans unconfirmable as a matter of law. -- Texas Comptroller The Texas Comptroller of Public Accounts opposes the confirmation of the three pending plans of reorganization for the Debtors. On behalf of the Texas Comptroller, Jay W. Hurst, Esq., Assistant Attorney General of Bankruptcy & Collections Division for the state of Texas, contends that each Plan contains language that purports to preclude rights of setoff. He maintains that pursuant to Section 553 of the Bankruptcy Code, setoff rights survive bankruptcy and are not affected by other sections of the Bankruptcy Code, including Section 1141. The Texas Comptroller has filed proofs of claim in the Debtors' bankruptcy cases for various administrative expense, priority and secured tax claims in excess of $500,000. The Plans' prohibitions against setoff do not comply with the provisions of Section 553 and thus, the Plans cannot be confirmed pursuant to Section 1129(a)(1) of the Bankruptcy Code, Mr. Hurst argues. The Plans contain broad and expansive releases of non-debtors, Mr. Hurst also asserts. He argues that the Court should not confirm a Plan requiring state and local taxing authorities to release non-debtor parties. He insists that the release provisions in the Plans are contrary to the discharge limitations set forth in Section 524(e) of the Bankruptcy Code. The Plans, Mr. Hurst contends, are also not clear on whether administrative expense claims will be paid postpetition interest through the date of payment. He asserts that each Plan defines "Allowed Amount" to exclude postpetition interest, which is part of the tax claim and entitled to administrative expense status. He says that the current interest rate payable in Texas is 4.25% per annum. Competing Plans ASARCO LLC has sent to creditors three competing Chapter 11 plans for voting -- plans sponsored by investors led by Harbinger Capital Partners Master Fund I Ltd., another by parent Grupo Mexico SAB, through ASARCO Inc. and a third by ASARCO LLC. The Bankruptcy Court is scheduled to begin confirmation hearings for the competing plans on August 10. ASARCO LLC's plan is built upon an agreement to sell assets to Vedanta unit Sterlite Industries Inc. Sterlite has agreed to provide a $770 million promissory note, pay $1.1 billion in cash and assume certain liabilities as part of its consideration in exchange for ASARCO's assets. Grupo Mexico, through ASARCO Inc. and Americas Mining Corp., is offering to purchase ASARCO LLC, and exchange offer creditors 100% 100% of the value of the claims: 97% in the form of payments in cash and equivalents, consisting of $3.152 billion, as well as the remaining 3% from amounts recovered from various litigation proceedings, including against Sterlite. Grupo Mexico recently beefed up its plan to provide recovery options for creditors. Harbinger's plan proposes to purchase ASARCO's assets for $500 million and the assumption of certain liabilities. Harbinger said in early August that while it is not withdrawing its Plan, it wants the Court to suspend confirmation of its own plan in order to conserve estate resources. It said that since it filed its plan, the Debtors and Grupo Mexico have made substantial modifications to the terms of their proposed plans. Copies of the disclosure statement explaining the three plans, as divided into five parts, are available for free at: http://bankrupt.com/misc/ASARCO_Joint_DS_070609_01.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_02.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_03.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_04.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_05.pdf About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on August 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for Chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for Chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its Chapter 11 case. On October 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). ASARCO LLC filed a plan of reorganization on July 31, 2008, premised on the sale of the Debtors' assets to Sterlite USA for US$2.6 billion. By October 2008, ASARCO LLC informed the Court that Sterlite refused to close the proposed sale and thus, the Original Plan could not be confirmed. The parties has since renewed their purchase and sale agreement and ASARCO LLC has obtained Court approval of a settlement and release contained in the new PSA for the sale of the ASARCO assets for US$1.1 billion in cash and a US$600 million note. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted its own plan which allows it to keep its equity interest in ASARCO LLC by offering full payment to ASARCO's creditors. AMC offered provide up to US$2.7 billion in cash and a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASARCO LLC: Voting Deadline Extended to August 17 ------------------------------------------------- At the behest of Asarco Incorporated and Americas Mining Corporation, Judge Schmidt entered an order (i) approving the filing of a supplemental disclosure describing the Parent's Sixth Amended Plan of Reorganization in the Court-approved Joint Disclosure Statement supporting the three competing Chapter 11 Plans filed by the Parent, the Debtors and Harbinger Capital Partners Master Fund I, Ltd., and (ii) allowing the modification of solicitation and tabulation procedures as they relate to the confirmation of the Sixth Amended Plan. Judge Schmidt also approved the form of the Supplemental Disclosure and the form of amended ballots. The voting deadline in the Joint Disclosure Statement Order is modified to be August 17, 2009, for all purposes except as used in the definitions of "Asbestos Publication Notice" and "Confirmation Hearing Notice" in the solicitation and tabulation procedures approved by that Order. If the Parent Plan is confirmed, Judge Schmidt ruled that Governmental Environmental Claimants will have 15 days after confirmation of the Parent Plan to submit an election of the treatment options described under the Plan. Parent Further Amends Supplement The Parent has filed with the Court another Supplemental Disclosure as of August 3, 2009. The latest Supplemental Disclosure reflects minor changes, including some footnotes and the Debtors' comments regarding the Parent Plan. A full-text copy of the latest Supplement is available for free at http://bankrupt.com/misc/ASARCOInc_JDS_Supplement_080309.pdf The Parent also filed its Modified Sixth Amended Plan, as previously reported. Competing Plans ASARCO LLC has sent to creditors three competing Chapter 11 plans for voting -- plans sponsored by investors led by Harbinger Capital Partners Master Fund I Ltd., another by parent Grupo Mexico SAB, through ASARCO Inc. and a third by ASARCO LLC. The Bankruptcy Court is scheduled to begin confirmation hearings for the competing plans on August 10. ASARCO LLC's plan is built upon an agreement to sell assets to Vedanta unit Sterlite Industries Inc. Sterlite has agreed to provide a $770 million promissory note, pay $1.1 billion in cash and assume certain liabilities as part of its consideration in exchange for ASARCO's assets. Grupo Mexico, through ASARCO Inc. and Americas Mining Corp., is offering to purchase ASARCO LLC, and exchange offer creditors 100% 100% of the value of the claims: 97% in the form of payments in cash and equivalents, consisting of $3.152 billion, as well as the remaining 3% from amounts recovered from various litigation proceedings, including against Sterlite. Grupo Mexico recently beefed up its plan to provide recovery options for creditors. Harbinger's plan proposes to purchase ASARCO's assets for $500 million and the assumption of certain liabilities. Harbinger said in early August that while it is not withdrawing its Plan, it wants the Court to suspend confirmation of its own plan in order to conserve estate resources. It said that since it filed its plan, the Debtors and Grupo Mexico have made substantial modifications to the terms of their proposed plans. Copies of the disclosure statement explaining the three plans, as divided into five parts, are available for free at: http://bankrupt.com/misc/ASARCO_Joint_DS_070609_01.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_02.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_03.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_04.pdf http://bankrupt.com/misc/ASARCO_Joint_DS_070609_05.pdf About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. ASARCO LLC filed for Chapter 11 protection on August 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When ASARCO LLC filed for protection from its creditors, it listed US$600 million in total assets and US$1 billion in total debts. ASARCO LLC has five affiliates that filed for Chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Sander L. Esserman, Esq., at Stutzman, Bromberg, Esserman & Plifka, APC, in Dallas, Texas, represents the Official Committee of Unsecured Creditors for the Asbestos Debtors. Former judge Robert C. Pate has been appointed as the future claims representative. Details about their asbestos-driven Chapter 11 filings have appeared in the Troubled Company Reporter since April 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for Chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its Chapter 11 case. On October 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. ASARCO's affiliates, AR Sacaton LLC, Southern Peru Holdings LLC, and ASARCO Exploration Company Inc., filed for Chapter 11 protection on December 12, 2006. (Bankr. S.D. Tex. Case No. 06-20774 to 06-20776). Six of ASARCO's affiliates, Wyoming Mining & Milling Co., Alta Mining & Development Co., Tulipan Co., Inc., Blackhawk Mining & Development Co., Ltd., Peru Mining Exploration & Development Co., and Green Hill Cleveland Mining Co. filed for Chapter 11 protection on April 21, 2008. (Bank. S.D. Tex. Case No. 08-20197 to 08-20202). ASARCO LLC filed a plan of reorganization on July 31, 2008, premised on the sale of the Debtors' assets to Sterlite USA for US$2.6 billion. By October 2008, ASARCO LLC informed the Court that Sterlite refused to close the proposed sale and thus, the Original Plan could not be confirmed. The parties has since renewed their purchase and sale agreement and ASARCO LLC has obtained Court approval of a settlement and release contained in the new PSA for the sale of the ASARCO assets for US$1.1 billion in cash and a US$600 million note. Americas Mining Corporation, an affiliate of Grupo Mexico SAB de CV, submitted its own plan which allows it to keep its equity interest in ASARCO LLC by offering full payment to ASARCO's creditors. AMC offered provide up to US$2.7 billion in cash and a US$440 million guarantee to assure payment of all allowed creditor claims, including payment of liabilities relating to asbestos and environmental claims. AMC's plan is premised on the estimation of the approximate allowed amount of the claims against ASARCO. Bankruptcy Creditors' Service, Inc., publishes ASARCO Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by ASARCO LLC and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ASCENDIA BRANDS: Court Approves Settlement with Shoppers Drug Mart ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware has approved the settlement between Ascendia Brands, Inc., et al., Ascendia Brands (Canada) Ltd., and Shoppers Drug Mart, Inc. relating to sums owing to the Debtors for products sold and delivered to Shoppers prior to and after the Debtors' bankruptcy petitions. Under the settlement, Shoppers has agreed to remit the amount C$451,670 to the U.S. Debtors and C$2,847 to Ascendia Brands (Canada) in full settlement of the receivables and all related offsets to which Shoppers is or may be entitled. Headquartered in Hamilton, New Jersey, Ascendia Brands, Inc. -- http://www.ascendiabrands.com/-- was, prior to the sale of substantially all of its assets during bankruptcy, a manufacturer and seller of branded and private labeled health and beauty care products in North America, including Baby Magic, Binaca, Mr. Bubble, Calgon, Ogilvie, the healing garden, Lander and Lander Essentials. Remaining assets consist almost entirely of accounts receivable. The Company and six of its affiliates filed for Chapter 11 protection on August 5, 2008 (Bankr. D. Del. Lead Case No. 08-11787). Kenneth H. Eckstein, Esq., and Robert T. Schmidt, Esq., at Kramer Levin Naftalis & Frankel LLP, represent the Debtors in their restructuring efforts. M. Blake Cleary, Esq., Edward J. Kosmoswki, Esq., and Patrick A. Jackson, Esq., at Young, Conaway, Stargatt & Taylor, LLP, serve as the Debtors' Delaware counsel. Epiq Bankruptcy Solutions LLC is the notice, claims and ballowting agent to the Debtors. At July 5, 2008, Ascendia Brands, Inc., had $194,800,000 in total assets and $279,000,000 in total debts. ASCENSION LOAN: S&P Withdraws Ratings on Various 2008-1 Notes ------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on the notes issued by Ascension Loan Vehicle LLC. The rating withdrawals follow Standard & Poor's receipt of the immediate redemption direction for the transaction dated June 9, 2009. Standard & Poor's received confirmation from the trustee that the notes were paid in full on July 23, 2009. Ratings Withdrawn Ascension Loan Vehicle LLC USD Series 2008-1 Rating ------ Class To From ----- -- ---- A NR AAA B NR AA C NR A D NR BBB E NR BB ASTRATA GROUP: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Astrata Group Incorporated 1801 Century Park East Los Angeles, CA 90067 Bankruptcy Case No.: 09-52652 Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court District of Nevada (Reno) Judge: Gregg W. Zive Debtor's Counsel: Bruce Thomas Beesley, Esq. Lewis And Roca LLP 50 West Liberty Street, Suite 410 Reno, NV 89501 Tel: (775) 823-2900 Fax: (775) 823-2929 Email: bbeesley@lrlaw.com Total Assets: $5,400,000 Total Debts: $10,400,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/nvb09-52652.pdf The petition was signed by Anthony J. Harrison, chief executive officer of the Company. ASYST TECHNOLOGIES: Panel Can Retain Arent Fox LLP as Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California, Oakland Division, has granted the official committee of unsecured creditors of Asyst Technologies Inc. permission to retain Arent Fox LLP as its counsel, nunc pro tunc to April 28, 2009. BDO Seidman has agreed, among other things, to: a) assist, advise and represent the Committee in its consultation with the Debtor relative to the administration of the Debtor's chapter 11 case; b) assist, advise and represent the Committee in analyzing the Debtor's assets and liabilities, investigating the extent and validity of liens, and participating in and reviewing any proposed asset sales or disposition; and c) attend meetings and negotiate with the representative of the Debtor and secured creditors. Arent Fox's hourly rates are: Partners $455-$790 Of Counsel $455-$750 Associates $260-$515 Paraprofessionals $145-$260 Arent Fox can be reached at: Michael S. Cryan, Esq. cryan.michael@arentfox.com Arent Fox LLP 555 W. Fifth Street, 48th Floor Los Angeles, California 90013 Tel: (213) 629-7400 Fax: (213) 629-7401 About Asyst Technologies Headquartered in Fremont, California, Asyst Technologies, Inc. -- http://www.asyst.com/-- is a leading provider of integrated automation solutions primarily for the semiconductor and flat panel display manufacturing industries. The Company is the parent company of seven subsidiaries located in various jurisdictions worldwide. Principally, the Company is the owner of a non- operating holding company organized under the laws of Japan, Asyst Technologies Holdings Company, Inc. ("Asyst Japan Holdings"). Asyst Japan Holdings in turn owns the operating company Asyst Technologies Japan, Inc. The Company filed for Chapter 11 on April 20, 2009 (Bankr. N.D. Calif. Case No. 09-43246). Ali M.M. Mojdehi, Esq., Janet D. Gertz, Esq., and Rayla Dawn Boyd, Esq., at the Law Offices of Baker and McKenzie, serve as the Debtor's bankruptcy counsel. Epiq Bankruptcy Solutions LLC is the Debtors' notice and claims agent. AlixPartners, LLP serves as financial advisor. Andrew I. Silfen, Esq., Mette H. Kurth, Esq., Michael S. Cryan, Esq., and Schuyler G. Carroll, Esq., at Arent Fox LLP, represent the official committee of unsecured creditors. As of December 31, 2008, Asyst had total assets of $295,782,000 and total debts of $315,364,000. The Company's Japanese subsidiaries, Asyst Technologies Holdings Company, Inc., and Asyst Technologies Japan, Inc., entered into related voluntary proceedings under Japan's Corporate Reorganization Law (Kaisha Kosei Ho) on April 20, 2009. Kosei Watanabe was appointed as Trustee of Asyst Japan Holdings and ATJ. ASYST TECHNOLOGIES: Panel Can Employ BDO Seidman as Fin'l Advisors ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of California, Oakland Division, has granted the official committee of unsecured creditors of Asyst Technologies Inc. permission to employ BDO Seidman, LLP, as its financial advisors, effective as of April 30, 2009. BDO Seidman has agreed, among other things, to: a) analyze the financial statements and operations of the Debtor pre- and post- petition, as necessary, including but not limited to intercompany transactions, transactions with affiliates and transactions with insiders; b) analyze cash receipts and disbursements forecasts and/or other projections prepared by the Debtor, including related variance reports; and c) review and analyze payments made by the Debtor pre-petition. BDO Seidman's hourly rates are: Partners/Managing Directors $500-$800 Directors/Senior Managers $400-$600 Managers $300-$400 Seniors $175-$300 Staff $125-$200 About Asyst Technologies Headquartered in Fremont, California, Asyst Technologies, Inc. -- http://www.asyst.com/-- is a leading provider of integrated automation solutions primarily for the semiconductor and flat panel display manufacturing industries. The Company is the parent company of seven subsidiaries located in various jurisdictions worldwide. Principally, the Company is the owner of a non- operating holding company organized under the laws of Japan, Asyst Technologies Holdings Company, Inc. ("Asyst Japan Holdings"). Asyst Japan Holdings in turn owns the operating company Asyst Technologies Japan, Inc. The Company filed for Chapter 11 on April 20, 2009 (Bankr. N.D. Calif. Case No. 09-43246). Ali M.M. Mojdehi, Esq., Janet D. Gertz, Esq., and Rayla Dawn Boyd, Esq., at the Law Offices of Baker and McKenzie, serve as the Debtor's bankruptcy counsel. Epiq Bankruptcy Solutions LLC is the Debtors' notice and claims agent. AlixPartners, LLP serves as financial advisor. Andrew I. Silfen, Esq., Mette H. Kurth, Esq., Michael S. Cryan, Esq., and Schuyler G. Carroll, Esq., at Arent Fox LLP, represent the official committee of unsecured creditors. As of December 31, 2008, Asyst had total assets of $295,782,000 and total debts of $315,364,000. The Company's Japanese subsidiaries, Asyst Technologies Holdings Company, Inc., and Asyst Technologies Japan, Inc., entered into related voluntary proceedings under Japan's Corporate Reorganization Law (Kaisha Kosei Ho) on April 20, 2009. Kosei Watanabe was appointed as Trustee of Asyst Japan Holdings and ATJ. AVIS BUDGET: Swings to $6 Million Net Loss in Q2 2009 ----------------------------------------------------- Avis Budget Group Inc. swung to a net loss of $6 million for the three months ended June 30, 2009, from net income of $15 million for the same period a year ago. Avis Budget swung to a net loss of $55 million for the six months ended June 30, 2009, from net income of $4 million for the same period a year ago. As of June 30, 2009, Avis Budget had $10.8 billion in total assets, including $434 million in cash and cash equivalents; $3.8 billion in total liabilities exclusive of liabilities under vehicle programs and $6.8 billion in liabilities under vehicle programs; and $123 million in stockholders' equity. The Company had revenue of $1.3 billion, a decrease of 17% versus second quarter 2008, and a pretax loss of $2 million. Excluding restructuring costs, second quarter EBITDA was $67 million and pretax income was $6 million. "While we continued to face sharply reduced demand for vehicle rentals in the second quarter, rental volumes did stabilize, and the actions we took to keep fleet levels in line with demand allowed us to achieve a stronger-than-expected 7% increase in domestic time and mileage revenue per day," said Ronald L. Nelson, Avis Budget Group Chairman and Chief Executive Officer. "We also made significant progress in several other areas," added Mr. Nelson. "Our cost saving initiatives continued to deliver substantial benefits, as reflected in the 260-basis-point reduction in direct operating costs and 80-basis-point reduction in SG&A expense as a percentage of revenue for our car rental operations. Our ancillary revenues continued to benefit from our sales training initiative, increasing over 21% on a per day basis, and we continued to retain more than 99% of our commercial accounts. In addition, the used car market, and the performance of our used vehicles at auction, strengthened, and in July we became the first car rental company since 2007 to issue term asset-backed securities to finance our fleet." Debt Covenant Compliance As of June 30, 2009, the Company remained in compliance with its financial covenant requirements under its senior credit facility. EBITDA for the latest 12 months for covenant purposes of roughly $155 million exceeded the requirement of $95 million. Vehicle Financing In May, the Company completed an roughly $325 million operating lease financing transaction for cars to be added to the fleet during the second and third quarters of 2009. In addition, in July, the Company's Avis Budget Rental Car Funding (AESOP) LLC subsidiary completed a $450 million three-year asset-backed securities offering to fund its domestic car rental fleet. Performance Excellence The Company's Performance Excellence process improvement program continued to provide significant cost savings in the second quarter. The initiative is expected to deliver more than $100 million of savings in 2009. Cost-Reduction and Efficiency Improvement Plan During the fourth quarter, the Company unveiled a five-point plan to reduce costs and increase efficiency in response to the economic conditions impacting the industry. The savings from this program are expected to total $220 to $240 million in 2009 and will be incremental to savings from the Company's Performance Excellence initiative. In the second quarter, the Company: -- Eliminated an additional 400 positions, in addition to the 3,300 positions eliminated during fourth quarter 2008 and first quarter 2009; -- Performed a detailed domestic city-by-city review of operating expenses to identify additional cost saving opportunities; -- Instituted price increases taking effect in June and August; -- Began to realize benefits from consolidating its procurement activities; and -- Implemented numerous other actions to reduce costs. The Company had roughly 24,000 employees at June 30, 2009, a 26% decrease compared to a year earlier. Debt The Company borrowed $100 million in second quarter 2009 under its revolving credit facility to fund working capital and fleet in its domestic operations. The Company's total debt balance (vehicle and non-vehicle) has declined by roughly $2.1 billion since June 30, 2008. Relationships with Vehicle Manufacturers Both Chrysler and General Motors continued to honor their obligations to the Company during their bankruptcies, and both manufacturers have assumed their contracts with Avis Budget as they emerged from Chapter 11. Outlook Avis Budget noted that airline capacity and domestic enplanements, which are a principal determinant of on-airport rental volumes, decreased markedly in the first half of 2009 compared to the year- earlier period, but demand for car rental seems to have stabilized in the second quarter. Third quarter demand, especially in the leisure segment, appears to be modestly stronger than recent trends, allowing some upward pressure on pricing to continue as the Company's fleet levels remain in line with demand. Nevertheless, the Company continues to expect the macroeconomic environment, conditions in the credit markets, and demand for vehicle rentals to remain challenging in the second half of 2009. Fleet utilization in 2009 should be consistent with 2008 levels. The used-car market rebounded significantly over the course of the second quarter. The Company said its domestic fleet costs are expected to increase 7-9% on a per-unit basis in 2009, with year- over-year increases in the second half of 2009 expected to be considerably smaller than in the first half. The Company is continuing its efforts to reduce costs and enhance productivity through its Performance Excellence initiative and continues to expect the benefits of this program to exceed $100 million over the course of 2009. Such benefits are expected to be incremental to the over $250 million of annual savings generated by the Company's five-point cost-reduction and efficiency improvement plan and from cost-reduction actions the Company implemented in third quarter 2008. Avis Budget said the recent improvement in the asset backed securities market allowed the Company to raise $450 million in July to replace a portion of the roughly $1 billion of its domestic term ABS debt that matures in 2010. The Company will seek to refinance most of the remainder of the 2010 domestic maturities in the second half of 2009, assuming market conditions remain favorable. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?40ff About Avis Budget Group Avis Budget Group -- http://www.avisbudgetgroup.com/-- provides vehicle rental services, with operations in more than 70 countries. Through its Avis and Budget brands, the Company is a general-use vehicle rental company in each of North America, Australia, New Zealand and certain other regions based on published airport statistics. Avis Budget Group is headquartered in Parsippany, N.J. and has roughly 24,000 employees. * * * 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/--). BANK OF AMERICA: Merrill Losses "Not Severe Enough" Pre-Merger -------------------------------------------------------------- Bank of America Corp.'s executives concluded that Merill Lynch & Co.'s losses weren't severe enough to disclose publicly before voting on the takeover, Dan Fitzpatrick at The Wall Street Journal reports, citing people familiar with the matter. According to The Journal, the sources said that BofA's loss projections for Merrill swelled by almost $2 billion two days before shareholders approved the merger. The Journal relates that BofA Chief Accounting Officer Craig Rosato sent an e-mail on December 3, 2008, to several top bank executives, saying, "4Q revenues need to be adjusted down by $3B." That revision, The Journal states, changed the estimated fourth- quarter net loss to $8.98 billion, which was worse than the previous Merrill forecast of $7.06 billion sent to a top BofA executive earlier the same day. BofA had insisted that the losses at Merrill didn't start increasing until after shareholders approved the takeover on December 5, according to The Journal. The report says that BofA executives didn't disclose Merrill's problems until they spiraled into a net loss of $15.84 billion for the fourth quarter 2008. Citing people familiar with the matter, The Journal states that there was disagreement inside the bank about whether to tell shareholders about Merrill's losses, and that debate continued until executives concluded that the losses weren't material. It "is highly likely" that a change of $2 billion in Merrill's forecasted net losses "would be material, but it is even more likely to be material if this was indicative of conditions at Merrill that were deteriorating," The Journal quoted Duke University corporate and securities law professor James Cox as saying. The Journal relates that critics have claimed that BofA CEO Kenneth Lewis and other executives withheld key information that shareholders should have been told before voting on the deal. BofA is also facing shareholder lawsuits and probes by U.S. and state regulators stemming from its disclosures about the takeover and government assistance. The internal documents reviewed by The Wall Street Journal "support what we have said all along," The Journal quoted BofA spokesperson Robert Stickler as saying. According to the report, Mr. Stickler said that Merrill's internal projections were "forecasting fourth-quarter losses prior to" the shareholder vote, but the forecast "increased significantly in the week following the vote." About Bank of America Based in Charlotte, North Carolina, Bank of America -- http://www.bankofamerica.com/-- is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The Company serves more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,700 ATMs and online banking with nearly 29 million active users. Following the acquisition of Merrill Lynch on January 1, 2009, Bank of America is among the world's leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. Bank of America offers support to more than 4 million small business owners. The Company serves clients in more than 150 countries. Bank of America Corporation stock is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange. The bank needed the government's financial help in completing its acquisition of Merrill Lynch. Merrill Lynch & Co. Inc. -- http://www.ml.com/-- is a wealth management, capital markets and advisory companies with offices in 40 countries and territories. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a strategic advisor to corporations, governments, institutions and individuals worldwide. Merrill Lynch owns approximately half of BlackRock, one of the world's largest publicly traded investment management companies with more than $1 trillion in assets under management. Merrill Lynch's operations are organized into two business segments: Global Markets and Investment Banking (GMI) and Global Wealth Management (GWM). As reported by the Troubled Company Reporter on March 27, 2009, Moody's Investors Service lowered the senior debt rating of Bank of America Corporation to A2 from A1, the senior subordinated debt rating to A3 from A2, and the junior subordinated debt rating to Baa3 from A2. The preferred stock rating was downgraded to B3 from Baa1. The holding company's short-term rating was affirmed at Prime-1. BARRY SGARRELLA: Case Summary 8 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Barry Sgarrella 1100 Cabro Ridge Novato, CA 94947 Bankruptcy Case No.: 09-12498 Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court Northern District of California (Santa Rosa) Debtor's Counsel: Craig K. Welch, Esq. Welch and Olrich 809 Petaluma Blvd. N Petaluma, CA 94952 Tel: (707) 782-1790 Email: welch@welcholrich.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 8 largest unsecured creditors is available for free at: http://bankrupt.com/misc/canb09-12498.pdf The petition was signed by Mr. Sgarrella. BEAZER HOMES: Halts Slide, Posts Lower Net Loss in June 30 Qtr -------------------------------------------------------------- Beazer Homes USA Inc. reported lower net loss of $27.9 million for the third quarter ended June 30, 2009, compared with a net loss of $109.8 million for the same period a year ago. Beazer reported a net loss of $223.1 million for the nine months ended June 30, 2009, compared to a net loss of $477.9 million for the same period a year ago. The Company said total revenue was $224.7 million, compared to $455.6 million in the third quarter of the prior year. At June 30, 2009, Beazer had $2.10 billion in total assets and $1.94 billion in total liabilities, resulting in $159.7 million in stockholders' equity. Cash and cash equivalents as of June 30, 2009, was $464.9 million, compared to $559.5 million at March 31, 2009, and $314.2 million at June 30, 2008. During the quarter, the Company repurchased $115.5 million of senior notes for an aggregate purchase price of $58.2 million or an average price of 50.4%, resulting in a gain on the extinguishment of debt of $55.2 million. Ian J. McCarthy, President and Chief Executive Officer, said, "Although the economic recession continued to weigh on both the overall housing industry and our operations in the third quarter, we continued to experience sequential improvement in sales trends. In addition to normal seasonal patterns, we attribute this increased demand to attractive interest rates, historically high housing affordability and federal and state tax credits which have enticed more prospective buyers to purchase a new home. On the other hand, we remain cautious as rising levels of both unemployment and foreclosures, coupled with the scheduled expiration of the federal home purchase tax credit make it difficult to predict when and to what extent housing market conditions will sustainably recover. As such, we continue to maintain a disciplined operating approach and remain focused on generating and maintaining liquidity." As a result of its current liquidity position, and reduced working capital needs in the current economic environment, the Company does not foresee any need for cash borrowings on its secured revolving credit facility during its remaining term. As a result, the Company has decided to amend and restructure its secured revolving credit facility. As part of this restructuring, the current Secured Revolving Credit Facility was reduced to $22 million and will be provided by one lender. The restructured facility will continue to provide for future working capital and letter of credit needs, collateralized by either cash or assets of the Company at the Company's option, conditioned upon certain conditions and covenant compliance. The Company also entered into three stand-alone, cash-secured, letter of credit agreements with banks to maintain the pre-existing letters of credit that had been issued under the current Secured Revolving Credit Facility. At closing on August 5, 2009, the Company elected to secure all of its letters of credit using cash collateral which required additional cash in restricted accounts of $37.8 million. Due to this restructuring, the Company recognized expense of $3.3 million of previously capitalized unamortized debt issuance costs as of June 30, 2009. A full-text copy of Beazer's quarterly report is available at no charge at http://ResearchArchives.com/t/s?4111 About Beazer Homes USA Beazer Homes USA, Inc. (NYSE: BZH) -- http://www.beazer.com/-- headquartered in Atlanta, is one of the country's 10 largest single-family homebuilders with continuing operations in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, New Mexico, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia. Beazer Homes is listed on the New York Stock Exchange under the ticker symbol "BZH." As reported by the Troubled Company Reporter on June 18, 2009, Standard & Poor's Ratings Services lowered its corporate credit rating on Beazer Homes USA Inc. to 'CCC' from 'CCC+' due to a large second-quarter net loss that further eroded shareholder equity, raised the company's already-high leverage ratios, and increased covenant pressures. The outlook is negative. S&P also lowered its ratings on the company's senior unsecured notes to 'CCC-' from 'CCC'. S&P's '5' recovery rating, indicating S&P's expectation for a modest (10%-30%) recovery in the event of default, is unchanged. "Our rating actions follow a larger-than- anticipated net loss during Beazer's second fiscal quarter, ended March 31, 2009," said Standard & Poor's credit analyst James Fielding. BERNARD MADOFF: Frank DiPascali to Plead Guilty of Fraud -------------------------------------------------------- Frank DiPascali, who helped run Bernard Madoff's investment- advisory operation, is expected to plead guilty to fraud charges on Tuesday, prosecutors said in court documents filed on Friday. As reported by the Troubled Company Reporter on January 21, 2009, Mr. DiPascali, a key lieutenant to investor Mr. Madoff for more than 30 years, is a potential point man in the investigation of the Madoff fraud. He said that he led stock-options trading and was the point man for investment-advisory clients who were told he executed their trades. Citing sources, The Journal said that prosecutors are interested in information Mr. DiPascali can provide about the Madoff operation -- who knew about the fraud and where the money went. According to The Journal, the sources said that the government sent Mr. DiPascali a subpoena for records. People familiar with the matter said that Mr. DiPascali supervised a group of half a dozen other employees involved in taking and keeping track of client orders, The Journal states. Citing prosecutors, Amir Efrati at The Wall Street Journal relates that Mr. DiPascali would appear in federal court in Manhattan before U.S. District Judge Richard Sullivan. The Journal says that while Mr. Madoff declined to implicate other people in his fraud, Mr. DiPacali had an agreement with prosecutors in which he could provide testify if the government brings charges against others. According to The Journal, sources said that prosecutors from the U.S. attorney's office in Manhattan have reviewed evidence they believe suggests that certain investors were aware that their returns were fraudulent. Prosecutors, The Journal relates, said that Mr. DiPascali referred to himself as the "director of options trading" at Mr. Madoff's firm, though the company hadn't done any actual trading for its investment clients since at least 1995. Bernard L. Madoff Investment Securities LLC was a market maker in U.S. stocks, including all of the S&P 500 and more than 350 Nasdaq stocks. The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard L. Madoff. As reported by the Troubled Company Reporter on December 15, 2008, the Securities and Exchange Commission charged Mr. Madoff and his investment firm with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The estimated losses from Mr. Madoff's fraud were allegedly at least US$50 billion. Also on December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. Irving H. Picard, Esq., was appointed as trustee for the liquidation of BLMIS, and Baker & Hostetler LLP was appointed as counsel. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors. BEST BRANDS: S&P Upgrades Corporate Credit Rating to 'B-' --------------------------------------------------------- Standard & Poor's Ratings Services said that it raised its ratings on Minnetonka, Minnesota-based Best Brands Corp. by one notch, including raising the corporate credit rating to 'B-' from 'CCC+'. The outlook is stable. About $197 million of total debt was outstanding as of June 27, 2009. "The upgrade reflects stronger operating performance in the year to date period ended June 2009, and expanded covenant cushion, thereby alleviating S&P's prior concerns about near-term liquidity," said Standard & Poor's credit analyst Alison Sullivan. S&P believes cash flow has improved as the company's commodity costs declined from peak levels in mid-2008 and unfavorable hedges ended. Credit measures have improved in the past six months from significant EBITDA growth, while debt levels remained stable. For the 12 months ended June 27, 2009, S&P estimates lease adjusted total debt (including about $100 million of perpetual preferred stock) to EBITDA improved to about 6.5x, compared with more than 8x in the prior year period. Funds from operations to total debt was about 8% for the 12 months ended June 27, 2009, compared with 2% in the prior year period. The ratings on privately held Best Brands reflect the company's highly leveraged capital structure, narrow product focus, small size relative to financially stronger competitors, and customer concentration. Operating performance has begun to meet S&P's expectations over the past two quarters, due in large part to lower commodity costs and past pricing actions. Best Brands manufactures and distributes specialty bakery products, specializing in frozen laminated dough, frozen baked cakes, frozen muffins, and bakery mixes. The highly fragmented U.S. bakery manufacturing industry is undergoing consolidation, as customers require super-regional or national distribution capability and consistent product quality. Historically, Best Brands has grown through acquisitions, although the company has not acquired any businesses since the December 2006 purchase of Telco Food Products Inc. S&P believes this is in part due to operating weakness and financial constraints. The company has improved performance following a very challenging year in 2008. S&P would consider a positive outlook if Best Brands can demonstrate consistent, sustained improvement in operating performance and maintain strong covenant cushion and liquidity, while reducing leverage. S&P could revise the outlook to negative if performance deteriorates and covenant cushion tightens to less than 15%. S&P estimates that about a 30% reduction in EBITDA could cause Best Brands to trip its fixed- charge covenant. BIOMET INC: Bank Debt Trades at 5% Off in Secondary Market ---------------------------------------------------------- Participations in a syndicated loan under which Biomet, Inc., is a borrower traded in the secondary market at 95.36 cents-on-the- dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.92 percentage points from the previous week, The Journal relates. The loan matures on March 25, 2015. The Company pays 300 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B1 rating and Standard & Poor's BB- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Biomet, Inc. -- http://www.biomet.com/-- based in Warsaw, Indiana, is one of the leading manufacturers of orthopedic implants, specializing in reconstructive devices. Through its EBI subsidiary, the firm also sells electrical bone-growth stimulators and external devices, which are attached to bone and protrude from the skin. Subsidiary Biomet Microfixation markets implants and bone substitute material for craniomaxillofacial surgery. In 2007 Biomet was acquired by a group of private equity firms for more than $11 billion. As of August 9, 2009, Biomet Inc. continues to carry a 'B2' long term corporate family rating from Moody's and a 'B+' long term foreign issuer credit rating from Standard & Poor's. BLOCKBUSTER INC: Bank Debt Trades at 17% Off in Secondary Market ---------------------------------------------------------------- Participations in a syndicated loan under which Blockbuster, Inc., is a borrower traded in the secondary market at 83.00 cents-on- the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 2.50 percentage points from the previous week, The Journal relates. The loan matures Aug. 20, 2011. The Company pays 375 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B1 rating and Standard & Poor's CCC+ rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. 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 January 4, 2009. CAPMARK FIN'L: Appoints Frederick Arnold as CFO and EVP ------------------------------------------------------- The board of directors of Capmark Financial Group Inc. on July 31, 2009, appointed Frederick Arnold as Chief Financial Officer and Executive Vice President of the Company effective September 1. Prior to joining the Company, Mr. Arnold, 55, served as Executive Vice President, Finance, of Masonite International from February 2006 until October 2007. In addition, Mr. Arnold has served as a consultant for various private equity-owned companies. Gregory J. McManus has delayed the effective date of his resignation from his positions as Chief Financial Officer and Executive Vice President of the Company from August 14 until September 1. About Capmark Based in Horsham, Pennsylvania, Capmark Financial Group Inc. -- http://www.capmark.com/-- is a diversified company that provides a broad range of financial services to investors in commercial real estate-related assets. Capmark has three core businesses: lending and mortgage banking, investments and funds management, and servicing. Capmark operates in North America, Europe and Asia. * * * As reported by the TCR on April 30, 2009, Moody's Investors Service downgraded the senior unsecured ratings of Capmark Financial Group Inc. to 'Caa1' from 'B2', with the rating remaining under review for possible downgrade. The rating action reflects the explanatory note in Capmark's 10-K filing in which its auditors raise doubt about the company's ability to continue as a going concern, as well as the still unresolved nature of Capmark's efforts to modify the terms of its bridge loan agreement and senior credit facility, which could have implications for its liquidity and funding. CATHOLIC CHURCH: Fairbanks Creditors Want to Pursue Claims ---------------------------------------------------------- The Official Committee of Unsecured Creditors of the Catholic Bishop of Northern Alaska's bankruptcy case reminds the U.S. Bankruptcy Court for the District of Alaska that mediations set for the case have been unsuccessful. Hence, the Creditors Committee says, it is only fair that it be permitted to pursue recognized claims that CBNA refuses to prosecute. "While a debtor has a duty and, ordinarily, an incentive to bring claims that increase the size of the estate, in this case the Debtor has gone to extreme measures to minimize the estate, in order to shield assets from creditors and place them in friendly hands, and thereby minimize the amount it must pay creditors to satisfy the best interest of creditors requirement for plan confirmation," says James I. Stang, Esq., at Pachulski Stang Ziehl & Jones LLP, in Los Angeles, California. Mr. Stang points out, among other things, that avoidance claims against the Holy See and others that the Creditors Committee wishes to pursue are colorable claims that would benefit the estate, and CBNA's outright refusal to pursue them is unjustifiable. The Creditors Committee filed another reply, which is the same as the first reply except for the signature of another counsel, David H. Bundy, Esq., at David H. Bundy, P.C., in Anchorage, Alaska. Parties' Memos In a supplemental memorandum in support of its Avoidance Action Request, the Creditors Committee informs Judge MacDonald that on July 10, 2009, the Ninth Circuit Court of Appeals issued its opinion in Biltmore Associates, LLC v. Twin City Fire Insurance Company. Mr. Stang points out that at footnote 41 of the opinion, the Ninth Circuit Court stated that a bankruptcy court must grant a creditor standing to commence avoidance actions "if the failure to bring suit does not adequately protect the creditor's interests or the chose in action is of inconsequential value to the estate." In response, Susan G. Boswell, Esq., at Quarles & Brady Streich Lang LLP, representing the Fairbanks Diocese, contends that the Creditors Committee suggests that the Ninth Circuit's opinion in Biltmore Associates is "directly applicable to the issue in dispute between the Debtor and the Committee," in the Avoidance Action Request. "The Committee's description of the footnote is, at best, a misleading attempt to imply that the 9th Circuit overruled its bar on non-consensual assignments of the estate's causes of action under its Estate of Spirtos' decision and eliminated both In re Curry & Sorensen's requirement that a creditor show that the debtor-in-possession's failure to act is an abuse of discretion and any requirement that a creditor demonstrate a colorable claim that, if successful would benefit the estate based on a cost- benefit analysis," in favor of the adequate protection standard under Section 362(d)(1) of the Bankruptcy Code, or the standard for abandonment under Section 554(b) of the Bankruptcy Code, Ms. Boswell argues. The Biltmore Associates decision does concern not the question of whether or not a creditor or committee may obtain standing to pursue the estate's avoidance actions and other causes of action, Ms. Boswell contends. Instead, she argues, Biltmore Associates concerns the unrelated question of whether a debtor-in-possession is the same entity as the prepetition debtor for purposes of a particular insured versus insured exclusion under a director & officer liability policy. Requests Taken Under Advisement Judge MacDonald held that the Court has heard the arguments of the parties with respect to the Avoidance Action Request and Request to Strike, and that the matter is "taken under advisement." About Diocese of Fairbanks The Roman Catholic Diocese of Fairbanks in Alaska, aka Catholic Bishop of Northern Alaska, aka Catholic Diocese of Fairbanks, aka The Diocese of Fairbanks, aka CBNA -- http://www.cbna.info/-- filed for chapter 11 bankruptcy on March 1, 2008 (Bankr. D. Alaska Case No. 08-00110). Susan G. Boswell, Esq., at Quarles & Brady LLP represents the Debtor in its restructuring efforts. Michael R. Mills, Esq., of Dorsey & Whitney LLP serves as the Debtor's local counsel and Cook, Schuhmann & Groseclose Inc. as its special counsel. Judge Donald MacDonald, IV, of the United States Bankruptcy Court for the District of Alaska presides over Fairbanks' Chapter 11 case. The Debtor's schedules show total assets of $13,316,864 and total liabilities of $1,838,719. The church's plans to file its bankruptcy plan and disclosure statement on July 15, 2008. Its exclusive plan filing period expires on Jan. 15, 2009. (Catholic Church Bankruptcy News, Issue No. 133; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Oregon Court Unseals Some Sexual Abuse Files ------------------------------------------------------------- After a long battle, Judge Elizabeth L. Perris of the U.S. Bankruptcy Court for the District of Oregon has ruled on the request filed by Erin K. Olson, Esq., in September 2008, to unseal Docket Nos. 4765 and 4766. Judge Perris ruled that Docket Nos. 4765 and 4766 will be redacted and re-filed unsealed in their redacted form. A copy of Judge Perris' 37-page Opinion is available for free at: http://bankrupt.com/misc/Church_MemoOpinion_Mo2Seal.pdf During the course of the chapter 11 bankruptcy case of debtor Roman Catholic Archbishop of Portland in Oregon, many documents relating to claims of child sexual abuse by priests were produced in discovery. A stipulated protective order limited the public release of many of the discovery documents. Pursuant to that order, some of those documents were filed with the court under seal. Most of the settlements of claims between the Archdiocese and the tort claimants left for a later date the resolution of what documents should be publicly released if the parties did not agree. Certain tort claimants represented by Erin Olson to unseal documents in Docket #4765 and 4766. Many of the documents at issue before the Court involve priests who have already been publicly identified as having been accused of child sexual abuse, including all of the priests who are individually represented in this matter with the exception of one priest. "Balancing the individual's privacy interest in information contained in personnel files against the public interest in accessability to information about allegations of priest sexual abuse of minors and the Archdiocese's response to those allegations, debtor has not demonstrated good cause for a blanket protection of the clergy from disclosure of relevant information contained in the personnel files," Judge Perris said in her memorandum. The protective order dated January 14, 2005, agreed upon by certain parties in the Archdiocese of Portland in Oregon's bankruptcy case, pursuant to which the confidential documents were sealed, is lifted with respect to those documents listed on Exhibit A of Judge Perris' Opinion. Exhibit A, which shows Judge Perris' decision with regard to each of the disputed discovery documents, is currently filed under seal. Judge Perris maintained that the Protective Order is continued for documents relating to those persons listed on Exhibit B to the Opinion, which is to remain under seal. Exhibit B will list the names of any priests for whom Judge Perris determine documents should continue to be protected because the claimants have withdrawn their request to release documents relating to those priests, there are no relevant documents relating to the particular priest, or good cause has been shown. The deposition transcripts of Thomas Laughlin, Archbishop Wm. Levada, Auxiliary Bishop Kenneth Steiner, Fr. Charles Lienert and Fr. Paul Peri, and the exhibits used in those depositions, may be released after they are redacted in accordance with the Opinion, Judge Perris said. She noted that the unsealing and release of documents and deposition transcript pertaining to Frs. B and Laughlin that are otherwise authorized by the Order are stayed until the entry of final judgments, or other final disposition of certain cases presently pending in the U.S. District Court for the District of Oregon. The lifting of the Protective Order, lifting of the seal on the filed documents and re-filing in redacted form unsealed, and release of deposition transcripts and exhibits authorized by the Order are stayed for 30 days after entry of the Order, or until August 12, 2009. Exhibit A will be unsealed upon the expiration of the stay unless the Court continues the seal of all or part of Exhibit A at the request of an appealing party. Prior to the filing of the Order and the Opinion, Judge Perris sent the interested parties a copy of the draft Opinion for comments. Timothy Daly Smith, Esq., Robert E. Sinnott, Esq., Margaret Hoffmann, Esq., and Ms. Olson filed separate letters to the Court to ask questions and express concerns. The lawyers and Judge Perris also exchanged letters to clarify certain things. At the Court's directive, Father MM filed a confidential declaration to explain certain terms that Judge Perris did not understand relating to his confidential documents. The parties have also previously conferred before the final Order and Opinion was released. Archbishop Vlazny's Letter In a letter addressed to the Court, Most Reverend John G. Vlazny, Archbishop of Portland in Oregon, tells Judge Perris that with the recent ruling on the document disclosure matter, "perhaps this chapter of your judicial service may be drawing to a close." Rev. Vlazny enclosed in his letter another letter sent to him by the Survivors Network of those Abused by Priests. SNAP has asked that Rev. Vlazny make good his promise of openness and transparency with respect to issues relating to clergy sexual abuse. "The enclosed letter may be of some interest to you. It certainly enlightened me about the underlying cause for separate consideration with respect to the promise I made to disclose all appropriate and relevant materials at the end of the bankruptcy," Rev. Vlazny tells Judge Perris. "Once the documents are released I imagine there will be another opportunity for a public scolding of the archdiocese and a continued unwillingness to acknowledge all the steps we are taking to make amends for the past and to protect children today and tomorrow," Rev. Vlazny says. "I do hope that you at least are aware of the fact that we Catholic people have learned our lesson and we only hope that others, including those representing public institutions, will follow our lead and come to grips with the demands of justice, as the law has required of us," he continues. A copy of Rev. Vlazny's letter with the SNAP letter can be obtained for free at: http://bankrupt.com/misc/Church_Letter_Vlazny_072209.pdf Portland's Statement The Archdiocese of Portland in mid-July issued a statement saying it disagrees with the decision to lift the protective order on certain clergy personnel files. In some cases, no claim was ever brought against the individual whose file is now ruled public. For some of the files, an individual was accused of misconduct with no proof other than the accusation itself. Accusations without proof should not result in an employee's files being made public. The court itself states that the order is "neither suggesting or deciding that th[e] allegations were meritorious." The Archdiocese released approximately 400 documents in April 2007, and approximately 2,000 additional documents in April 2008. Documents were also released in November 2008 and January 2009 after a process of arbitration by United States Federal District Court Judge Michael Hogan. Archbishop Vlazny stated at a news conference in April 2007: "As part of the healing process and in the interests of transparency, we will also be releasing relevant and appropriate documents, after a process that seeks a fair and just result for all concerned." The documents previously released met the qualifications for "relevant and appropriate" documents. Removing the protective order on additional documents does not. About The Archdiocese of Portland The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. The Court approved the Debtor's disclosure statement explaining its Second Amended Joint Plan of Reorganization on Feb. 27, 2007. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: T. Harris No Longer Involved in Portland Case -------------------------------------------------------------- Margaret Hoffman, Esq., at Schwabe, Williamson & Wyatt, P.C., in Portland, Oregon, notifies the U.S. Bankruptcy Court for the District of Oregon that Tiffany Harris, Esq., is no longer with Schwabe, and will no longer be involved as counsel to the Archdiocese of Portland in Oregon in its bankruptcy case. Ms. Hoffman, hence, asks the Court to remove Ms. Harris from the Court's docket. Ms. Hoffman says that no substitution is necessary because there are other members of the firm already on the docket. About The Archdiocese of Portland The Archdiocese of Portland in Oregon filed for Chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. The Court approved the Debtor's disclosure statement explaining its Second Amended Joint Plan of Reorganization on Feb. 27, 2007. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CATHOLIC CHURCH: Two Priests Object to Unsealing of Files --------------------------------------------------------- Father M and Father D notify the U.S. Bankruptcy Court for the District of Oregon that they will take an appeal from Judge Elizabeth L. Perris' judgment and order lifting protective order, lifting the seal on filed documents, and authorizing the release of deposition transcripts and exhibits entered in the Archdiocese of Portland in Oregon's bankruptcy case on July 13, 2009. Under Rule 8002(c) of the Federal Rules of Bankruptcy Procedure, the appeal is timely because Judge Perris has extended the time for filing the notice of appeal for 30 days after entry of the Order, or until August 12, 2009. To the extent any party contends, or the Court determines that the Notice of Appeal is untimely, Father M and Father D are simultaneously filing a request to extend the time for filing a notice of appeal. In a separate request, appellants Father M and Father D notify Judge Perris of their election for the appeal to be transferred to the U.S. District Court for the District of Oregon for consideration before an Article III judge. They add that they object to the transfer of their appeal to the Bankruptcy Appellate Panel. Father M and Father D subsequently filed amended notices of appeal and election to reflect changes in the names of all parties to the judgment appealed. Appellants Want Extension The Appellants ask the Court to extend the time within which they may file an appeal. Michael B. Merchant, Esq., contends that the Court has stayed the execution of the order lifting protective order to allow parties until August 12, 2009, to appeal the ruling. However, he notes, there may be confusion as to the actual deadline to appeal the order because under Rule 8002(a), rather than the order, the notice of appeal has to be filed within 10 days, rather than 30 days discussed by the Court and reflected in the order unsealing documents and lifting protective order. If the Court determined that the appeal was due July 23, 2009, Father M and Father D ask for an extension of time for filing a notice of appeal. Mr. Merchant asserts that the delay in filing was excusable, and is being done within 20 days from the expiration of the time for filing a notice of appeal, as provided for in Rule 8002(c). In her order, Judge Perris noted that the body of the notice of appeal did not include a request for stay pending appeal, and that the Motion to Extend was not supported by any declaration or other evidentiary support for the factual statements contained in the motion. Judge Perris, therefore, ruled that if Father M and Father D want to stay release of the documents pending appeal, they need to file a request seeking that relief. She also asked them to file a declaration supporting their claim of excusable neglect. Appellants Seek Stay Mr. Merchant relates that Father M and Father D are not parties to the bankruptcy case because no tort claimant has ever sought relief from them arising out of anything done by them. Nonetheless, he asserts, their personnel records were produced to the tort claimants for the purpose of establishing the Archdiocese's responsibility for its conduct. At present, Mr. Merchant states that Father M and Father D have not been publicly associated with the claims asserted against the Archdiocese. However, he argues, the tort claimants seek to change that. He avers that the single most important issue to be decided in the appeal is whether the tort claimants can make a public association through the release of documents into the public domain. "From the perspective of Frs. M and D, once that occurs the damage is done," Mr. Merchant contends. "The Court recognized the importance of the issue and in its July 13, 2009 Order Lifting Protective Order, the court stayed the unsealing of the documents for 30 days, or until August 12, 2009, to allow parties to appeal the decision," he continues. Hence, Father M and Father D ask the Court to issue an order extending the stay preventing the unsealing of documents pertaining to them, until the time that the District Court has considered and issued a final determination of the issue on appeal. Olson Responds Erin K. Olson, Esq., counsel to various tort claimants asserting claims against the Archdiocese, relates that the Tort Claimants take no position regarding Father M and Father D's motion to stay, inasmuch as the priests seek to prevent the release of documents from their Archdiocese personnel files that are subject to the Court's protective order pending their appeal. The Tort Claimants do object, however, to a stay of any other provision of the Court's order lifting the protective order because Father M and Father D have no standing to appeal from so much of the order as it applies to others. The Tort Claimants also disagree with the premise of Father M and Father D that "Frs. M and D have not been publicly associated with the claims asserted against the debtor," Ms. Olson contends. She points out that as noted in the Court's opinion, Fr. M was named in an Oregonian article that is posted on the public Web site for documents relating to priest sexual abuse, and allegations against him were included in the posted portion of a confidential deposition, while Fr. D's name is included in the exhibit list for the excerpts of a deposition, which shows that the exhibit was withdrawn. Hence, neither references to Father M and Father D in depositions, memoranda, or documents obtained from places other than their Archdiocese personnel files, nor their listing on the confidential "Exhibit A" to the Court's memorandum opinion, should be subject to any stay the court might enter pending Father M's and Father D's appeal, Ms. Olson tells Judge Perris. Issues on Appeal Father M and Father D wants the District Court to verify whether the Bankruptcy Court erred in ruling that the protective order be lifted as to the confidential records relating to Appellants. They also want to know whether their privacy interests in not having their confidential employment records published and the potential great harm that will be done to them if the records are released outweigh the various tort claimants' interest in releasing the documents into public domain. The Appellants filed a designation of record to be considered in connection with their appeal. They also submitted an order for hearing transcripts related to their appeal proceedings. About The Archdiocese of Portland The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. The Court approved the Debtor's disclosure statement explaining its Second Amended Joint Plan of Reorganization on February 27, 2007. (Catholic Church Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). CENTRAL PACIFIC: Credit Stress Cues Fitch to Junk Issuer Ratings ---------------------------------------------------------------- Fitch Ratings has downgraded the long-term Issuer Default Ratings of Central Pacific Financial Corp. and its bank subsidiary Central Pacific Bank to 'CCC' and 'B', respectively. The ratings have also been removed from Rating Watch Negative where they were placed on June 26, 2009. The Rating Outlook for Central Pacific Bank is Negative. The downgrade reflects the continued credit stress at CPF and the heightened risk of dividend deferral on its hybrid securities following the announcement by management that the company is postponing its public stock offering. Due to the current financial condition of the holding company and its limited access to alternative liquidity sources without regulatory approval, Fitch believes deferral could be imminent. With the postponement of the previously announced public stock offering, Fitch believes the company will be unable to the raise necessary funds in the near-term to bolster its financial resources at the holding company, and CPF will have to defer dividend payments on its preferred and trust preferred securities. The two notch differential between the holding company IDR and the IDR of its bank subsidiary reflects the holding company's liquidity challenges. Beyond the near-term liquidity concerns of the holding company, which is the primary driver for the notching between the bank subsidiary and the holding company, the rating action reflects Fitch's view that CPF will continue to endure increased credit stress in its Hawaii portfolio, as well as in its still sizeable exposure to California commercial real estate. As anticipated, both portfolios have weakened causing CPF to report a significant loss for the second quarter of 2009, and Fitch anticipates higher loss rates from these portfolios in the future. Further, Fitch believes that CPF needs to bolster its capital base in order to absorb expected higher losses, provide needed liquidity at the parent company, as well as remain in compliance with the enhanced regulatory capital requirements. Due to existing regulatory agreements, Central Pacific Bank is required to maintain enhanced capital levels to be considered well-capitalized, specifically by maintaining a leverage ratio of 9%. The Negative Outlook at the bank subsidiary reflects the prospect of more pronounced credit deterioration than currently anticipated, in either the mainland commercial real estate book, or more notably, the Hawaii portfolio. Conversely, successful capital raising efforts, which augment CPF's capital base and its holding company liquidity position, could have positive rating implications. Fitch assigns recovery ratings to individual security issues where the IDR of the issuer is rated in the 'B' or below category. As such, Fitch has assigned a Recovery Rating (RR) of 'RR3' to the uninsured long-term deposits of Central Pacific Bank, which implies a recovery between 51%-70% on these instruments in the event of failure or default by the issuer, and a 'RR6' to the preferred and trust preferred securities of CPF, which implies recovery between 0%-10%. CPF is a $5.5 billion banking company headquartered in Honolulu, HI. CPF provides a full range of traditional commercial consumer and banking services. Through its bank subsidiary, Central Pacific Bank, the company operates 39 branches through-out Hawaii. Fitch has taken these rating actions: Central Pacific Financial Corp. -- Long-term IDR downgraded to 'CCC' from 'B'; -- Short-term IDR downgraded to 'C' from 'B'; -- Individual downgraded to 'E' from 'D/E'; -- Preferred Stock affirmed at 'CC/RR6'; -- Support affirmed at 5; -- Support Floor affirmed at No Floor. Central Pacific Bank -- Long-term IDR downgraded to 'B' from 'BB-'; -- Long-term Deposit downgraded to 'B+/RR3' from 'BB'; -- Individual downgraded to 'D/E' from 'D'; -- Short-term IDR affirmed at 'B'; -- Short-term Deposit affirmed at 'B'; -- Support affirmed at 5; -- Support Floor affirmed at No Floor. CPB Capital Trust I, II, & IV CPB Statutory Trust III & V -- Trust Preferred Securities affirmed at 'CC/RR6'. CHRISTAKIS MOUSTAKAS: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Joint Debtors: Christakis A. Moustakas Anna Moustakas 12121 North 83rd Avenue Peoria, AZ 85345 Bankruptcy Case No.: 09-18705 Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court District of Arizona (Phoenix) Debtors' Counsel: J. Kent Mackinlay, Esq. Warnock, Mackinlay & Carman, PLLC 1019 S. Stapley Dr. Mesa, AZ 85204 Tel: (480) 898-9239 Fax: (480) 833-2175 Email: kent@mackinlaylawoffice.com Estimated Assets: $1,000,001 to $100,000,000 Estimated Debts: $1,000,001 to $100,000,000 The Debtors did not file a list of their 20 largest unsecured creditors when they filed their petition. The petition was signed by the Joint Debtors. CIT GROUP: Suspends Dividends for Preferred Stock ------------------------------------------------- CIT Group Inc. (NYSE: CIT) said August 7 that its board of directors has decided to suspend dividend payments on its four series of preferred stock to improve liquidity and preserve capital while restructuring efforts are ongoing. Payments on the Company's equity units (NYSE: CIT PrZ) are not affected by this decision. CIT Group also said that its tender offer for its $1 billion Floating Rate Senior Notes due August 17, 2009, met the 58% minimum tender condition. The withdrawal deadline was extended until midnight, New York City time, at the end of August 5. The withdrawal deadline has passed and eligible bonds tendered, and not withdrawn, met the 58% minimum tender condition. The tender offer will expire at midnight, New York City time, at the end August 14, 2009. CIT Group on August 3 said it has amended its pending tender offer for the senior notes, to increase the purchase price to $875 in cash per $1,000 principal amount of notes, as total consideration. Previously, the purchase price, which included an early delivery payment, was $825 per $1,000 principal amount. The amendment also reduced the minimum tender condition to 58% of the Notes. On July 29, 2009, the Company entered into an amended credit agreement with a group of its major bondholders. The Company has received the final $1 billion in incremental borrowings under the Credit Facility, bringing the total loan size to $3 billion. CIT will use a substantial amount of the loan proceeds to support its small business and middle market customers. Evercore Partners and Morgan Stanley are the Company's financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel in connection with the financing and restructuring plan. Sullivan & Cromwell LLP served as legal counsel to the Company's Board of Directors. Morgan Stanley & Co. Incorporated and BofA Merrill Lynch are the Dealer Managers for the Tender Offer and D.F. King & Co., Inc. is the Depositary and Information Agent. Restructuring Plan CIT said July 15 that it has been advised that there is no appreciable likelihood of additional government support being provided over the near term. The Company's Board of Directors and management, in consultation with its advisors, are evaluating alternatives. CIT later announced a restructuring of its liabilities to provide additional liquidity and further strengthen its capital position. CIT obtained a $3 billion loan and commenced a cash tender offer for its outstanding floating-rate senior notes due August 17, 2009. The price offered is less than face value, and the Company has indicated that without a successful tender offer it may have to file for bankruptcy protection. CIT has more than $1 billion of unsecured notes maturing in both third- and fourth-quarter 2009. Payments for these notes could become increasingly difficult to make if borrower draws increase significantly and CIT does not win regulatory approval of its strategic initiatives, Standard & Poor's said. CIT applied for access to government aid before $1 billion in bonds mature in August. Since Nov. 25 the Federal Deposit Insurance Corp. has backed $274 billion in bond sales under its Temporary Liquidity Guarantee Program. However, the FDIC was apprehensive to approve the application because of CIT's worsening credit quality. This led to reports that CIT, which serves as lender to 950,000 businesses, is preparing for a bankruptcy filing. According to the Wall Street Journal, CIT Group hired Skadden, Arps, Slate, Meagher & Flom, LLP, to prepare for a bankruptcy filing. About CIT Group CIT Group Inc. -- http://www.cit.com/-- is a bank holding company with more than $60 billion in finance and leasing assets that provides financial products and advisory services to small and middle market businesses. Operating in more than 50 countries across 30 industries, CIT provides an unparalleled combination of relationship, intellectual and financial capital to its customers worldwide. CIT maintains leadership positions in small business and middle market lending, retail finance, aerospace, equipment and rail leasing, and vendor finance. Founded in 1908 and headquartered in New York City, CIT is a member of the Fortune 500. CIT Group reported $75.7 billion in assets and $68.2 billion in liabilities, including $3 billion in deposits, at the end of the first quarter. As reported by the TCR on July 24, Standard & Poor's Ratings Services said that its ratings on CIT Group Inc. (CC/Negative/C) are not immediately affected by the company's announcement that it had initiated a recapitalization plan and entered into a $3 billion loan facility provided by a group of major bondholders. "The current rating level continues to reflect a significantly heightened risk of bankruptcy," S&P said. As part of the restructuring, CIT commenced a cash tender offer for its outstanding floating-rate senior notes due August 17, 2009. Noting that the price offered is less than face value, S&P said that, in accordance with criteria, upon completion of the offer, it will lower its counterparty credit rating on the company to 'SD' (selective default) and lower the ratings on the affected debt issue to 'D'. As reported by the TCR on July 20, Moody's Investors Service lowered CIT Group's senior unsecured rating to Ca from B3 and issuer rating to Ca from B3. The downgrade follows CIT's announcement that that it expects no additional support from the U.S. government and that it is evaluating alternatives, which Moody's believes includes a high probability of a near-term bankruptcy filing. CITIGROUP INC: Citi Funding to Issue Callable Leveraged CMS Notes ----------------------------------------------------------------- Citigroup Inc. filed a pricing supplement on Form 424B2 with the Securities and Exchange Commission in connection with Citigroup Funding Inc.'s planned issuance of Callable Leveraged CMS Spread Principal Protected Notes Due 2024 at $1,000 per Note. Any payments due from Citigroup Funding are fully and unconditionally guaranteed by Citigroup Inc. The notes are not deposits or savings accounts but are unsecured debt obligations of Citigroup Funding Inc. The notes are not insured by the Federal Deposit Insurance Corporation or by any other governmental agency or instrumentality, and are not guaranteed by the FDIC under the Temporary Liquidity Guarantee Program. The notes will not be listed on any exchange. A full-text copy of the Pricing Supplement filed on August 4 is available at no charge at http://ResearchArchives.com/t/s?4114 The August 4 Supplement provides that Citigroup Global Markets Inc., an affiliate of Citigroup Funding and the underwriter of the sale of the notes, will receive an underwriting fee of $25.00 for each $1,000.00 note sold in the offering. Certain dealers, including Citi International Financial Services, Citigroup Global Markets Singapore Pte. Ltd. and Citigroup Global Markets Asia Limited, broker-dealers affiliated with Citigroup Global Markets, will receive from Citigroup Global Markets a concession of not more than $25.00 for each $1,000.00 note they sell. Citigroup Global Markets will pay the Financial Advisors employed by Citigroup Global Markets and Morgan Stanley Smith Barney LLC, an affiliate of Citigroup Global Markets, a fixed sales commission of $25.00 for each $1,000 note they sell. Additionally, it is possible that Citigroup Global Markets and its affiliates may profit from expected hedging activity related to this offering, even if the value of the notes declines. A full-text copy of the Pricing Supplement filed on August 6 is available at no charge at http://ResearchArchives.com/t/s?4115 The August 6 Supplement provides that Citigroup Global Markets will receive an underwriting fee of $47.50 for each $1,000.00 note sold in this offering. Certain dealers will receive from Citigroup Global Markets a concession of not more than $47.50 for each $1,000.00 note they sell. Additionally, it is possible that Citigroup Global Markets and its affiliates may profit from expected hedging activity related to this offering, even if the value of the notes declines. About Citigroup Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com/-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. At June 30, 2009, Citigroup had total assets of $1.84 trillion and total liabilities of $1.69 trillion. As reported in the Troubled Company Reporter on November 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup issued preferred shares to the Treasury and FDIC. The Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan. Citigroup is one of the banks that, according to results of the government's stress test, need more capital. CITIGROUP INC: To Issue $2.5-Bil. in 6.375% Senior Notes Due 2014 ----------------------------------------------------------------- Citigroup Inc. filed with the Securities and Exchange Commission: -- a free writing prospectus on Form FWP See http://ResearchArchives.com/t/s?4117 -- a prospectus supplement on Form 424B2 See http://ResearchArchives.com/t/s?4118 in connection with its planned issuance of $2,500,000,000 in 6.375% Senior Notes due 2014. The debt is not guaranteed under the Federal Deposit Insurance Corporation's Temporary Liquidity Guarantee Program. The notes will mature on August 12, 2014. The notes will bear interest at a fixed rate of 6.375% per annum. Interest on the notes is payable semi-annually on the 12th day of each February and August, commencing February 12, 2010. The notes may not be redeemed prior to maturity unless changes involving United States taxation occur which could require Citigroup to pay additional amounts. The notes are being offered globally for sale in the United States, Europe, Asia and elsewhere where it is lawful to make such offers. Application will be made to list the notes on the regulated market of the Luxembourg Stock Exchange, but Citigroup is not required to maintain this listing. The total public offering price is $2,483,075,000. The total underwriting discount is $8,125,000. The total proceeds to Citigroup (before expenses) is $2,474,950,000. Interest on the notes will accrue from August 12, 2009, to the date of delivery. Net proceeds to Citigroup (after expenses) are expected to be $2,474,775,000. Citigroup Global Markets Inc. is acting as sole bookrunning manager for the offering and as representative of the underwriters. Each underwriter has severally agreed to purchase from Citigroup the principal amount of notes set forth opposite the name of each underwriter: Principal Amount Underwriter of Notes ----------- ---------------- Citigroup Global Markets Inc. $2,137,500,000 Banc of America Securities LLC 62,500,000 Deutsche Bank Securities Inc. 62,500,000 Goldman, Sachs & Co. 62,500,000 UBS Securities LLC 62,500,000 Barclays Capital Inc. 12,500,000 BNP Paribas Securities Corp. 12,500,000 nabCapital Securities, LLC 12,500,000 RBC Capital Markets Corporation 12,500,000 RBS Securities Inc. 12,500,000 Sandler O'Neill & Partners, L.P. 12,500,000 SBK-Brooks Investment Corp. 12,500,000 TD Securities (USA) LLC 12,500,000 Utendahl Capital Partners, L.P. 12,500,000 ---------------- Total $2,500,000,000 On August 5, Citigroup filed with the Securities and Exchange Commission a template prospectus in connection with its planned issuance of any securities. A full-text copy of the prospectus is available at no charge at http://ResearchArchives.com/t/s?4119 About Citigroup Inc. Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com/-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. At June 30, 2009, Citigroup had total assets of $1.84 trillion and total liabilities of $1.69 trillion. As reported in the Troubled Company Reporter on November 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup issued preferred shares to the Treasury and FDIC. The Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan. Citigroup is one of the banks that, according to results of the government's stress test, need more capital. CITIGROUP INC: Citi Funding to Offer Caterpillar-Linked Notes ------------------------------------------------------------- Citigroup Inc. filed with the Securities and Exchange Commission an Offering Summary in connection with Citigroup Funding Inc.'s planned issuance of Equity LinKed Securities at __% Per Annum Based Upon the Common Stock of Caterpillar Inc. Due 2010. The Note is $10.00 per ELKS. Any payments due from Citigroup Funding are fully and unconditionally guaranteed by Citigroup Inc. The ELKS pay a fixed coupon, with a yield greater than both the current dividend yield of the Underlying Equity and the yield that would be payable on a conventional debt security of the same maturity issued by Citigroup Funding. The ELKS will pay a coupon on the Maturity Date equal to roughly 11% to 12% per annum (approximately 6.42% to 7.00% per seven months on a simple interest basis) (to be determined on the Pricing Date). While the ELKS provide limited protection against the decline in the price of the Underlying Equity, the ELKS are not principal protected. For each ELKS held at maturity, the investor will receive either (a) a fixed number of shares of the Underlying Equity equal to the Equity Ratio (or, if the investor elects, the cash value of those shares based on the closing price of the Underlying Equity on the Valuation Date), if the price of the Underlying Equity is less than or equal to the Downside Threshold Price (to be determined on the Pricing Date) at any time from the Pricing Date up to and including the Valuation Date (whether intra-day or at the close of trading on any day), or (b) $10 in cash. Thus, if the investor receives shares of the Underlying Equity at maturity (or, if the investor elects, the cash value of those shares) and the price of the Underlying Equity at maturity (or on the Valuation Date if the investor elects to receive the cash value of those shares) is less than the Initial Equity Price, the amount the investor receives at maturity for each ELKS will be less than the price paid for each ELKS and could be zero. No Participation in the Growth Potential of the Underlying Equity. In return for receiving the fixed coupon and limited protection against a decline in the price of the Underlying Equity, the investor gives up participation in any increase in the price of the Underlying Equity during the term of the ELKS (except in limited circumstances). Also, the investor will not receive dividends or other distributions, if any, paid on the Underlying Equity. The ELKS are a series of unsecured senior debt securities issued by Citigroup Funding. Any payments due on the ELKS are fully and unconditionally guaranteed by Citigroup Inc., Citigroup Funding's parent company. The ELKS will rank equally with all other unsecured and unsubordinated debt of Citigroup Funding and, as a result of the guarantee, any payments due under the ELKS will rank equally with all other unsecured and unsubordinated debt of Citigroup Inc. The return of the principal amount of the investor's investment in the ELKS at maturity is not guaranteed. The ELKS are not deposits or savings accounts, are not insured by the Federal Deposit Insurance Corporation or by any other governmental agency or instrumentality, and are not guaranteed by the FDIC under the Temporary Liquidity Guarantee Program. All payments on the ELKS are subject to the credit risk of Citigroup Inc. Citigroup noted that Caterpillar is the leader in construction and mining equipment, and diesel and natural gas engines and industrial gas turbines in its size range. The company is also a leading services provider through Cat Financial, Caterpillar Logistics Services Inc., Caterpillar Remanufacturing Services and Progress Rail Services Corporation (Progress Rail). Caterpillar is the largest manufacturer in its industry and a leading U.S. exporter. Citigroup reported net income for the second quarter of 2009 of $4.3 billion, or $0.49 per diluted share. Second quarter revenues were $30.0 billion. The results include an $11.1 billion pre-tax -- $6.7 billion after-tax -- gain associated with the Morgan Stanley Smith Barney joint venture transaction, which closed on June 1, 2009. At June 30, 2009, Citigroup had total assets of $1.84 trillion and total liabilities of $1.69 trillion. A full-text copy of the Offering Summary is available at no charge at http://ResearchArchives.com/t/s?411b About Citigroup Inc. Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com/-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. At June 30, 2009, Citigroup had total assets of $1.84 trillion and total liabilities of $1.69 trillion. As reported in the Troubled Company Reporter on November 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup issued preferred shares to the Treasury and FDIC. The Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan. Citigroup is one of the banks that, according to results of the government's stress test, need more capital. CITIGROUP INC: $44.7BB Long-Term Debt Covered by FDIC Guarantee --------------------------------------------------------------- Citigroup Inc. disclosed in a Form 10-Q filing with the Securities and Exchange Commission that as of June 30, 2009, Citigroup and its affiliates had issued a total of $44.7 billion of long-term debt that is covered under the FDIC guarantee, with $6.35 billion maturing in 2010, $14.75 billion maturing in 2011 and $23.5 billion maturing in 2012. In addition, as of June 30, 2009, Citigroup, through its subsidiaries, also had $27.7 billion in outstanding commercial paper and interbank deposits backed by the FDIC. The FDIC also charges a fee ranging from 50 to 150 basis points in connection with the issuance of those instruments. Under the terms of the FDIC's Temporary Liquidity Guarantee Program, the FDIC will guarantee, until the earlier of either its maturity or June 30, 2012 -- for qualifying debt issued before April 1, 2009 -- or December 31, 2012 -- for qualifying debt issued on or after April 1, 2009 through October 31, 2009 -- certain qualifying senior unsecured debt issued by certain Citigroup entities between October 31, 2008, and October 31, 2009, in amounts up to 125% of the qualifying debt for each qualifying entity. The FDIC charges Citigroup a fee ranging from 50 to 150 basis points in accordance with a prescribed fee schedule for any qualifying debt issued with the FDIC guarantee. As to any entity participating in the TLGP, the TLGP regulations grant discretion to the FDIC, after consultation with the participating entity's appropriate Federal banking agency, to determine that the entity will no longer be permitted to continue to participate in the TLGP. If the FDIC makes that determination, it will inform the entity that it will no longer be provided the protections of the TLGP. Such a determination will not affect the guarantee of prior debt issuances under the TLGP. Citigroup also reported it had roughly $9.6 billion in net U.S. subprime-related direct exposures in the Special Asset Pool at June 30, 2009. The exposure consisted of (a) roughly $8.3 billion of net exposures in the super senior tranches (i.e., the most senior tranches) of CDOs, which are collateralized by asset-backed securities, derivatives on asset-backed securities, or both (ABS CDOs), and (b) roughly $1.4 billion of exposures in its lending and structuring business. The net $8.3 billion in ABS CDO super senior exposures as of June 30, 2009 is collateralized primarily by subprime residential mortgage-backed securities, derivatives on RMBS, or both. The exposures include $7.3 billion in the super senior tranches of ABS CDOs initially issued as commercial paper and roughly $9.0 million of other super senior tranches of ABS CDOs. On June 1, 2009, Citi and Morgan Stanley established a joint venture that combines the Global Wealth Management platform of Morgan Stanley with Citi's Smith Barney, Quilter and Australia private client networks. Citi sold 100% of the businesses to Morgan Stanley in exchange for a 49% stake in the JV and an upfront cash payment of $2.75 billion. The Brokerage and Asset Management business recorded a pretax gain of roughly $11.1 billion ($6.7 billion after-tax) on this sale. Both Morgan Stanley and Citi will access the JV for retail distribution and each firm's institutional businesses will continue to execute order flow from the JV. On August 1, 2009, Citi sold its managed futures business to the Morgan Stanley Smith Barney JV. The sale will result in an after- tax gain of roughly $160 million in the third quarter of 2009 and will not impact Citi's 49% ownership stake in the JV. On May 1, 2009, Citigroup entered into a definitive agreement to sell its Japanese domestic securities business, conducted principally through Nikko Cordial Securities Inc., to Sumitomo Mitsui Banking Corporation in a transaction with a total cash value to Citi of approximately $7.9 billion (JPY774.5 billion). Citi's ownership interests in Nikko Citigroup Limited, Nikko Asset Management Co., Ltd., and Nikko Principal Investments Japan Ltd. were not included in the transaction. Citi expects to recognize an immaterial after-tax gain on the transaction when the transaction closes. Citigroup said the transaction is expected to close by the end of the fourth quarter of 2009, subject to regulatory approvals and customary closing conditions. On July 1, 2009, Citigroup entered into a definitive agreement to sell all of the shares of NikkoCiti Trust and Banking Corporation to Nomura Trust & Banking Co., Ltd. for an all cash consideration of $197 million, subject to certain closing purchase price adjustments. Citigroup said the sale is expected to close in the fourth quarter of 2009, subject to regulatory approvals and customary closing conditions. A full-text copy of Citigroup's Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?411d About Citigroup Inc. Based in New York, Citigroup Inc. (NYSE: C) -- http://www.citigroup.com/-- is organized into four major segments -- Consumer Banking, Global Cards, Institutional Clients Group, and Global Wealth Management. At June 30, 2009, Citigroup had total assets of $1.84 trillion and total liabilities of $1.69 trillion. As reported in the Troubled Company Reporter on November 25, 2008, the U.S. government entered into an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. As part of the agreement, the U.S. Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet. As a fee for this arrangement, Citigroup issued preferred shares to the Treasury and FDIC. The Federal Reserve agreed to backstop residual risk in the asset pool through a non-recourse loan. Citigroup is one of the banks that, according to results of the government's stress test, need more capital. CINCINNATI BELL: Posts $26.3 Million Net Income for Q2 2009 ----------------------------------------------------------- Cincinnati Bell Inc. reported net income of $26.3 million for the three months ended June 30, 2009, compared with a $25.6 million net income for the same period a year ago. Cincinnati Bell reported a net income of $55.1 million for the six months ended June 30, 2009, compared with a $38.5 million net income for the same period a year ago. As of June 30, 2009, Cincinnati Bell had $2.00 billion in total assets and $2.63 billion in total liabilities, resulting in a $623.7 million in shareowners' deficit. Quarterly Highlights -- Quarterly revenue from Technology Solutions totaled $66 million reflecting a year-over-year increase in data center and managed services revenue of $4 million, or 14%, offset by a decline in revenue from telecom and IT equipment of $17 million, or 34%. The growth in the data center business contributed to a 17% increase in Adjusted EBITDA for Technology Solutions, in spite of a 15% reduction in total revenue. Utilization of the company's data center capacity increased to 81% during the quarter. -- Wireless service revenue in the second quarter of 2009 was $71 million compared to $72 million in the prior year quarter. Higher data revenue, driven by smartphone subscriber growth, was more than offset by lower voice revenue resulting from a year-over-year decline in postpaid voice minutes of use per subscriber. Cincinnati Bell's focus on smartphone subscriber growth resulted in the net addition of 8,000 smartphone activations in the second quarter of 2009. -- Bundled customers increased by 2,000 during the second quarter, driven by the company's Priced For Life bundled program. With Priced For Life, customers can eliminate price increases by establishing a permanent monthly rate for a bundle of two or more communications services without a contract. -- Cincinnati Bell continued to repurchase common stock under the program authorized by its Board of Directors in February 2008. In the second quarter of 2009, common stock repurchases totaled 5 million shares for $13 million. Since the program's inception, the company has purchased 37 million shares for $111 million, representing 15% of shares outstanding at the end of 2007. -- The company's net debt decreased by $42 million from the first quarter of 2009 to $1.9 billion. Free cash flow of $61 million for the second quarter of 2009 increased $7 million from the prior year period. Cincinnati Bell also amended and extended its revolving credit facility through August 2012. "Cincinnati Bell continues to perform well in this difficult economy," said John F. Cassidy, president and chief executive officer. "The aggressive expense reductions we implemented in the first half of the year have allowed us to maintain our profitability and increase our cash flow, despite the poor economy. Also, we are pleased with the continuing success of our data center and managed services operations, which had revenue growth of 14% compared to last year." Gary Wojtaszek, chief financial officer, said. "We are also pleased to have completed an extension of our revolving credit facility in the second quarter. We have no significant debt maturities for the next several years." In June 2009, the Company amended its Corporate credit facility, which would have expired in February 2010. The amended Corporate credit facility has a $210 million revolving line of credit and expires in August 2012. A full-text copy of the Company's quarterly report is available at no charge at http://ResearchArchives.com/t/s?4113 On August 4, 2009, Mr. Cassidy, Mr. Wojtaszek, and Brian A. Ross, the Company's chief operating officer, presented second quarter 2009 results. A full-text copy of the presentation is available at no charge at http://ResearchArchives.com/t/s?40c8 On July 1, 2009, Cincinnati Bell and its wholly owned receivables subsidiary Cincinnati Bell Funding LLC entered into the Fifth Amendment to Receivables Purchase Agreement dated as of July 1, 2009, among the Company, CB Funding, the various Purchasers and Purchaser Agents and PNC Bank, National Association as Administrator for each Purchaser Group. The Fifth Amendment amends the Company's Receivables Purchase Agreement originally entered into on March 23, 2007 among the Company, CB Funding, the various Purchaser Groups identified therein and PNC Bank, National Association, as amended, by giving accord to the addition of eVolve Business Solutions LLC, a wholly-owned subsidiary of the Company, to the receivables facility and by making amendments for the handling of certain cash transactions at the Company's retail locations. On July 1, the Company, CB Funding, and eVolve entered into the Joinder and Second Amendment to Purchase and Sale Agreement dated as of July 1, 2009 among eVolve as a New Originator, the Originators identified therein, CB Funding, and the Company as sole member of CB Funding and as Servicer. The Joinder Agreement amends the Purchase and Sale Agreement dated as of March 23, 2007 among CB Funding, the Company, and the various Originators, by adding eVolve as an Originator to the Purchase and Sale Agreement. A full-text copy of the Fifth Amendment to Receivables Purchase Agreement dated as of July 1, 2009, among Cincinnati Bell Funding LLC, as Seller, Cincinnati Bell Inc., as Servicer, the Purchasers and Purchaser Agents identified therein, and PNC Bank, National Association, as Administrator for each Purchaser Group, is available at no charge at http://ResearchArchives.com/t/s?40c9 A full-text copy of the Joinder and Second Amendment to Purchase and Sale Agreement dated as of July 1, 2009, among eVolve Business Solutions LLC as a New Originator, the Originators identified therein, Cincinnati Bell Funding LLC, and Cincinnati Bell Inc. as sole member of Cincinnati Bell Funding and as Servicer, is available at no charge at http://ResearchArchives.com/t/s?40ca About Cincinnati Bell Headquartered in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE: CBB) -- http://www.cincinnatibell.com/-- provides integrated communications solutions-including local, long distance, data, Internet, and wireless services. In addition, the Company provides office communications systems as well as complex information technology solutions including data center and managed services. Cincinnati Bell conducts its operations through three business segments: Wireline, Wireless, and Technology Solutions. * * * As reported in the Troubled Company Reporter on May 1, 2009, Moody's Investors Service lowered Cincinnati Bell's short term liquidity rating to SGL-3 from SGL-1, reflecting primarily the pending maturity of the Company's revolving credit facility in early 2010. Although the Company intends to extend the maturity of the revolver, and has the capacity to repay the revolver outstandings prior to its scheduled maturity in February 2010, the lack of an external facility and the resulting modest cash balances will leave the company with a lower liquidity cushion over the forward four-quarter period ending March 31, 2010. Still, Moody's recognizes the Company's ability to generate about $380 million in cash from operations over the next year, which should leave it in an adequate liquidity position overall. Should the Company refinance the maturing revolver with a multi-year facility, the liquidity rating would likely improve. CLAIRE'S STORES: Bank Debt Trades at 34% Off in Secondary Market ---------------------------------------------------------------- Participations in a syndicated loan under which Claire's Stores, Inc., is a borrower traded in the secondary market at 66.21 cents- on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 2.71 percentage points from the previous week, The Journal relates. The loan matures on May 29, 2014. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating while it carries Standard & Poor's B- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Claire's Stores, Inc. -- http://www.clairestores.com/-- operates as a specialty retailer of fashion accessories and jewelry for preteens and teenagers, as well as for young adults in North America and internationally. It offers jewelry products that comprise costume jewelry, earrings, and ear piercing services; and accessories, including fashion accessories, hair ornaments, handbags, and novelty items. Based in Pembroke Pines, Florida, Claire's Stores operates under two brands: Claire's(R), which operates worldwide and Icing(R), which operates only in North America. As of January 31, 2009, Claire's Stores, Inc. operated 2,969 stores in North America and Europe. Claire's Stores, Inc., also operates through its subsidiary, Claire's Nippon, Co., Ltd., 213 stores in Japan as a 50:50 joint venture with AEON, Co., Ltd. The Company also franchises 198 stores in the Middle East, Turkey, Russia, South Africa, Poland and Guatemala. At May 2, 2009, Claire's Stores has $2,877,264,000 in assets, $212,884,000 in current liabilities and $2,743,540,000 in long- term liabilities (for $2,956,424,000 in total liabilities). CLARIENT INC: Posts $29,000 Net Income for Second Quarter --------------------------------------------------------- Clarient Inc. swung to a $29,000 net income for the three months ended June 30, 2009, from a $4.27 million net loss for the same period a year ago. Clarient posted lower net loss of $127,000 for the six months ended June 30, 2009, from a $5.21 million net loss for the same period a year ago. Clarient said net amount applicable to common shareholders was a loss of $4.3 million, or $0.06 per share for the quarter. This was due to a $4.3 million non-cash deemed dividend arising from a "beneficial conversion feature" in the second tranche of the Oak Purchase Agreement. This "in-the-money non-detachable" conversion feature of the issued 1.4 million Preferred Shares gave Oak Investment Partner the opportunity to convert their Preferred Shares into 5.6 million common shares at a $1.90 per share. This was $0.75 below the market price of $2.65 at May 14, 2009, the date of the second Oak closing. In the second quarter 2008, the Company reported a loss of $4.3 million and a $0.06 loss per share. Net loss applicable to common stockholders for this year's six- month period, including the non-cash deemed dividend mentioned above and a $1.5 million gain on discontinued operations from the satisfaction of post-closing conditions related to the divestiture of its instrument systems business in March of 2007, was a $0.06 loss per share. At June 30, 2009, Clarient had $54.3 million in total assets; $13.8 million in total current liabilities, $982,000 in long-term capital lease obligations and $3.75 million in deferred rent and other non-current liabilities; and $35.6 million in stockholders' equity. Second quarter revenue was $23.7 million, compared to $16.9 million for the same period in 2008. Clarient has now posted 20 consecutive quarters of sequential revenue growth. Revenue for this year's six-month period was $46.9 million, up from $32.8 million in the year-earlier period. A full-text copy of Clarient's quarterly report is available at no charge at http://ResearchArchives.com/t/s?410b "Our success in adding new customers, same store sales to current clients, and new product launches continued to drive strong growth in the second quarter, our 20th in a row with sequential growth. These initiatives combined with our new sales force expansion are the foundation for our future success, and should continue to provide a solid growth trajectory throughout the year," said Ron Andrews, Clarient Vice Chairman and Chief Executive Officer. "What has changed is the strength of our balance sheet and reaching critical mass in terms of revenues -- finally putting us in a position to realize the operating leverage and profits that are possible under this business model. In the second quarter, profits were constrained by investments in much needed infrastructure initiatives, so it is very gratifying for our entire team that we were able to balance these investments and still post our first net income from continuing operations." Ray Land, Senior Vice President and Chief Financial Officer said, "As expected, we were able to complete the second tranche of our private placement of convertible preferred stock with Oak Investment Partners on May 14, 2009 which considerably strengthened our balance sheet. In addition, we collected $19.9 million in cash in the second quarter which is a 34% increase over our first quarter. This is a strong indication that our billing and collection process is improving." Mr. Land cited continued progress in marketing programs and customer retention, combined with the early success of new product introductions, in increasing guidance for annual revenue to the range of $96 million to $101 million, as well as positive adjusted EBITDA and operating income for the year. Mr. Andrews concluded, "Clarient's business model built on a balanced revenue stream across multiple cancer types and technologies is well positioned in the new environment of health reform and cost containment. The opportunities for Clarient to use its established commercial engine to bring new advanced tests to market are numerous and growing daily, and we are hard at work identifying which of those opportunities we will pursue while maintaining a focus on profitability." About Clarient Inc. Based in Aliso Viejo, California, Clarient Inc. (Nasdaq: CLRT) -- http://www.clarientinc.com/-- is an advanced oncology diagnostics services company. The Company's principal customers include pathologists, oncologists, hospitals and biopharmaceutical companies. Going Concern Doubt KPMG LLP in Irvine, California -- in its audit report dated March 19, 2009 -- raised substantial doubt about the Company's ability to continue as a going concern. KPMG cited the Company's recurring losses from operations and negative cash flows from operations, and working capital and net capital deficiencies. KPMG said it is not probable that the Company can remain in compliance with the restrictive financial covenants in its bank credit facilities. CLEAR CHANNEL: Bank Debt Trades at 38% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which Clear Channel Communications, Inc., is a borrower traded in the secondary market at 61.66 cents-on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 2.22 percentage points from the previous week, The Journal relates. The loan matures Jan. 30, 2016. The Company pays 365 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa2 rating and Standard & Poor's CCC rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Clear Channel Communications, Inc. -- http://www.clearchannel.com/ -- is a diversified media company with three primary business segments: radio broadcasting, outdoor advertising and live entertainment. Clear Channel Communications is the operating subsidiary of San Antonio, Texas-based CC Media Holdings, Inc. Clear Channel Communications, Inc.'s balance sheet at March 31, 2009, showed total assets of $22.0 billion and total liabilities of $25.4 billion, resulting in a members' deficit of $3.3 billion CNH GLOBAL: S&P Affirms 'BB+' Long-Term Corporate Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed the ratings, including the 'BB+' long-term corporate credit rating, on CNH Global NV and removed them from CreditWatch, where S&P had placed them with negative implications on January 22, 2009. The outlook is negative. S&P affirmed its ratings on Netherlands-based agricultural and construction equipment manufacturer CNH after taking the same action on CNH's parent, Italy-based auto and truck manufacturer Fiat SpA (BB+/Negative/B). The corporate credit rating and outlook on publicly traded CNH are the same as those on majority owner Fiat, because of the close ties between the two companies. Fiat has a roughly 90% equity ownership stake in CNH. Fiat views CNH as a core business and provides liquidity support to CNH by way of intercompany loans and bank loan guarantees. As of June 30, 2009, CNH had about $900 million of cash deposited with Fiat affiliates' cash management pools (repayable to CNH on one-day's notice). "Because Standard & Poor's views CNH as core to the Fiat Group, a positive or negative rating action on Fiat would result in the same action on CNH," said Standard & Poor's credit analyst Dan Picciotto. "If S&P cease to view CNH as core to the Fiat Group, and if CNH's financial profile, without Fiat support, is insufficient to maintain the ratings, S&P could take a negative rating action," he continued. COMMERCECONNECT MEDIA: Confirmation Hearing Slated for Sept. 8 -------------------------------------------------------------- CommerceConnect Media Holdings Inc. obtained from Judge Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware permission to have a combined hearing to approve the prepetition solicitation rules, the prepackaged plan of reorganization and the adequacy of the disclosure statement. The hearing will be held September 8. Objections to the Plan are due Aug. 31. CommerceConnect won interim permission from the Bankruptcy Court to use its lenders' cash collateral. As reported by the TCR on August 5, 2009, CommerceConnect filed together with its bankruptcy petition, a plan of reorganization negotiated with lenders prepetition. The proposed Chapter 11 plan provides for the conversion of a large portion of its existing first lien debt and all of the existing second lien debt to equity. According to the disclosure statement explaining the Plan: -- Holders of first lien facility claims owed not less than $173,000,000 will recover not more than 70% of their claims. Holders of first lien debt will receive their pro rata share of the $60 million of new term debt and new common stock. -- Holders of second lien facility claims owed $32,000,000 to $35,000,000 will recover not more than 4% of their claims. They will receive warrants to purchase 7,600 shares of Class A common stock at a price of $450 per share, based on an assumed total enterprise value of $105 million. -- The rights of holders of allowed general unsecured claims will be reinstated. They will recover 100% of their claims in the ordinary course. These claimants are unimpaired under the Plan and are deemed to have accepted the Plan. -- All existing stock will be cancelled, and holders of these interests won't recover anything. That plan is supported by all of the holders of the second lien debt and all but one of the holders of the first lien debt. The dissenting first lien lender is Genesis CLO 2007-2, Ltd., managed by Levine Leichtman, and owed $6.4 million of the $173 million in first lien obligations. The agreements governing the first lien debt required unanimous consent for an out-of-court restructuring forcing the Debtors to file for bankruptcy to implement its plan. With the majority of the impaired voting creditors that have accepted the Plan, the Debtors will ask the Court on September 8 to confirm the Plan. Pursuant to Section 1126 of the Bankruptcy Code, an impaired class of claims has accepted the Plan if the holders of at least two-thirds in dollar amount and more than one- half in number of the allowed claims in the call actually voting to have voted to accept the Plan. Holders of existing stock are deemed to reject the Plan owing to their zero recovery. With respect to this class, the Debtors will seek confirmation of the Plan pursuant to the cramdown provisions of Section 1129(b) of the Bankruptcy Code. Copies of the Plan and Disclosure Statement are available for free at: http://bankrupt.com/misc/CC_Prepack_DS.pdf http://bankrupt.com/misc/CC_Prepack_Plan.pdf About CommerceConnect CommerceConnect Media, doing business as Cygnus, is a business-to- business publisher and communications company. CommerceConnect's brands include Qualified Remodeler, Firehouse, Equipment Today, Kitchen and Bath Design News, and the CPA Technology Advisor. In total, CommerceConnect publishes 42 trade publications in 13 markets, with total circulation of more than 3 million. CommerceConnect also operates 38 Web sites which generated more than 180 million page views in 2008. CommerceConnect also produces more than 30 trade shows and events each year. CommerceConnect Media Holdings, Inc., together with affiliates, including Cygnus Business Media Inc., filed for Chapter 11 on August 3, 2009 (Bankr. D. Del. Case No. 09-12765). Attorneys at Richards, Layton & Finger, P.A., and Curtis, Mallet-Prevost, Colt & Mosle LLP, serve as counsel to the Debtors. Garden City Group Inc. serves as noticing and claims agent. Miller Buckfire & Co., LLC, is the Debtors' financial advisor. Attorneys at Sidley Austin represent General Electric Capital Corp., the first lien agent, while attorneys at Paul, Hastings, Janofsky & Walker LLP serve as counsel to Barclays Bank PLC, the second lien agent. Judge Brendan Linehan Shannon presides over the case. The petition says CommerceConnect has $100,000,001 to $500,000,000 in assets and debts. COMMERCIAL VEHICLE: S&P Downgrades Corporate Credit Rating to 'SD' ------------------------------------------------------------------ Standard & Poor's Ratings Services said it has lowered its corporate credit rating on New Albany, Ohio-based Commercial Vehicle Group Inc. to 'SD' (selective default) from 'CCC+'. S&P also lowered its rating on the company's 8% senior unsecured notes to 'D' (default) from 'CCC+' and revised the recovery rating to '5', from '4', because the addition of new debt, senior to the notes, in the capital structure impairs the recovery prospects for the remaining noteholders. The '5' recovery rating indicates that lenders can expect modest (10% to 30%) recovery in the event of a payment default. S&P's rating actions follow the company's announcement on August 4 of various financial transactions. Under S&P's criteria, S&P views an exchange offer at a discount to par by a company under substantial financial pressure as a distressed debt exchange and tantamount to a default. "Our downgrades do not reflect an increase in CVG's risk of bankruptcy in S&P's view," said Standard & Poor's credit analyst Nancy Messer, "and S&P recognize that the combined effect of these transactions provides somewhat improved near-term financial flexibility for the company." S&P expects to assign a new corporate credit rating within the next two weeks, which will be based on, among other things, S&P's assessment of the company's new capital structure, maturity schedule, liquidity profile, and other financial and business risk factors following the financial restructuring. S&P's preliminary expectation is that CVG's corporate credit rating will likely not rise above the 'CCC' category because the benefits of the transaction to CVG's credit measures will not be sufficient to support a higher rating. In S&P's view, although deterioration in the global economy may have slowed, S&P does not expect the economy to improve enough in the year ahead to significantly boost its revenues, earnings, and cash flow. As a result, S&P expects the company's leverage to remain high. The company reported that as of August 4, 2009, it had $20.8 million available under the amended facility, after giving effect for the transactions, including $3.1 million in one-time financing and legal costs, before triggering the requirement to comply with financial maintenance covenants. CVG reported it did not have any borrowings outstanding under its credit facility, which is governed by a borrowing base and expires in January 2012, but had $1.7 million in letters of credit. S&P views CVG's tight liquidity position as caused by the global recession, which has caused commercial-truck production to drop. The debt transactions improve the company's near-term financial flexibility slightly, and CVG has realized substantial cost savings from operational restructuring initiatives taken in recent months. Still, the transactions reduce the revolving credit commitment in size and increase interest expense and will result in higher leverage over time. The indenture governing the company's 8.0% notes was not amended in connection with these transactions. As of March 31, 2009, CVG had assets of 299,363,000 against debts of $275,645,000. COMMUNITY FIRST BANK: Home Federal Bank Assumes All Deposits ------------------------------------------------------------ Community First Bank, Prineville, Oregon, was closed August 7 by the Oregon Division of Finance & Corporate Securities, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Home Federal Bank, Nampa, Idaho, to assume all of the deposits of Community First Bank, excluding those from brokers. The eight branches of Community First Bank will reopen today, Monday, as branches of Home Federal Bank. Depositors of Community First Bank will automatically become depositors of Home Federal Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until Home Federal Bank can fully integrate the deposit records of Community First Bank. As of July 5, 2009, Community First Bank had total assets of $209 million and total deposits of approximately $182 million. In addition to assuming all of the deposits of the failed bank, Home Federal Bank agreed to purchase approximately $197 million of assets. The FDIC will retain the remaining assets for later disposition. Home Federal Bank will purchase all deposits, except about $31 million in brokered deposits, held by Community First Bank. The FDIC will pay the brokers directly for the amount of their funds. Customers who placed money with brokers should contact them directly for more information about the status of their deposits. The FDIC and Home Federal Bank entered into a loss-share transaction on approximately $155 million of Community First Bank's assets. Home Federal Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss- sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers. Customers who have questions about the transaction can call the FDIC toll-free at 1-800-913-3062. Interested parties can also visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/community-prineville.html The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $45 million. Home Federal Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Community First Bank is the 72nd FDIC- insured institution to fail in the nation this year, and the third in Oregon. The last FDIC-insured institution to be closed in the state was Silver Falls Bank, Silverton, Oregon, on February 20, 2009. COMMUNITY NAT'L BANK: Closed; Stearns Bank Assumes All Deposits --------------------------------------------------------------- Community National Bank of Sarasota County, Venice, Florida, was closed August 7 by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Stearns Bank, National Association, St. Cloud, Minnesota, to assume all of the deposits of Community National Bank of Sarasota County. The four branches of Community National Bank of Sarasota County will reopen as branches of Stearns Bank, N.A. Depositors of Community National Bank of Sarasota County will automatically become depositors of Stearns Bank, N.A. Depositors will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until Stearns Bank, N.A., can fully integrate the deposit records of Community National Bank of Sarasota County. Depositors of Community National Bank of Sarasota County can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual. As of June 30, 2009, Community National Bank of Sarasota County had total assets of $97 million and total deposits of $93 million. Stearns Bank, N.A. will pay the FDIC a premium of 0.25% to assume all of the deposits of Community National Bank of Sarasota County. In addition to assuming all of the deposits of the failed bank, Stearns Bank, N.A. agreed to purchase $94 million of the failed banks assets. The FDIC will retain the remaining assets for later disposition. The FDIC and Stearns Bank, N.A. entered into a loss-share transaction on approximately $79 million of Community National Bank of Sarasota County's assets. Stearns Bank, N.A. will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers. Customers who have questions about the transaction can call the FDIC toll-free at 1-800-913-3053. Interested parties can also visit the FDIC's Web site at: http://www.fdic.gov/bank/individual/failed/community-venice.html The FDIC estimates that the cost to the Deposit Insurance Fund will be $24 million. Stearns Bank, N.A.'s acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Community National Bank of Sarasota County is the 71st FDIC-insured institution to fail in the nation this year, and the sixth in Florida. The last FDIC-insured institution to be closed in the state was First State Bank, Sarasota, earlier on August 7. CORNERSTONE E & P: Case Summary & 50 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Cornerstone E & P Company, LP 5525 N. MacArthur Blvd., Suite 775 Irving, TX 75038 Case No.: 09-35228 Debtor-affiliates filing separate Chapter 11 petition: Entity Case No. ------ -------- Cornerstone Southwest GP, LLC 09-35229 Type of Business: The Debtor operates an oil and gas exploration business. Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court Northern District of Texas (Dallas) Judge: Barbara J. Houser Debtor's Counsel: Stephen M. Pezanosky, Esq. Haynes and Boone, LLP 2323 Victory Avenue, Suite 700 Dallas, TX 75219 Tel: (214)651-5000 Fax: (214)651-5940 Email: stephen.pezanosky@haynesboone.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $50,000,001 to $100,000,000 The petition was signed by John Sanchez. Cornerstone E & P's List of 50 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Devon Energy Production Co. Trade Debt $4,855,722 20 N. Broadway Oklahoma City, OK 73102-8260 Felderhoff Brothers Drilling Trade Debt $4,785,533 PO Box 202037 Dallas, TX 75320-2037 Burlington Resources Oil Trade Debt $4,178,409 & Gas Co. 21873 Network Place Chicago, IL 60673-1218 Precision Energy Services Trade Debt $3,724,746 Inc. PO Box 200698 Dallas, TX 75320-0698 NFR Energy LLC Trade Debt $2,460,758 1415 Louisiana, Suite 1600 Houston, TX 77002 Exploreco International LLC Trade Debt $2,314,341 PO Box 951913 Dallas, TX 75395-1913 Schlumberger Technology Trade Debt $2,126,375 Corporation PO Box 201556 Houston, TX 77261-1556 Vanguard Stimulation Trade Debt $1,703,881 Service LLC 19800 MacArthur Blvd., Suite 650 Irvine, CA 92612 Baker Hughes Drilling Fluids Trade Debt $1,252,559 PO Box 200415 Houston, TX 77216-0415 B J Services Company Trade Debt $997,000 PO Box 4346, Dept. 393 Houston, TX 77210-4346 Newpark Drilling Fluids LLC Trade Debt $793,893 PO Box 83116 Baton Rouge, LA 70884-3116 Rowan Drilling Company Inc. Trade Debt $693,500 2800 Post Oak Blvd., Suite 5450 Houston, TX 77056-6189 Simons Petroleum Trade Debt $642,157 PO Box 676686 Dallas, TX 75267-6686 Thomas Tools Trade Debt $554,759 PO Box 200701 Dallas, TX 75230-0701 T A W Inc. Trade Debt $533,712 PO Box 960078 Oklahoma City, OK 73196 Myers Roustabout LLC Trade Debt $523,055 PO Box 751 Jacksboro, TX 76458 Smith International Inc. Trade Debt $514,677 PO Box 200760 Dallas, TX 75230-0760 Phantom Drilling Fluids Trade Debt $512,781 Company 904 Fox Hill Drive Edmond, OK 73034 Drillright Technology Inc. Trade Debt $498,501 2201 SE 38th Moore, OK 73160 Awesome Transport LLC Trade Debt $477,106 PO Box 2407 Elk City, OK 73648 Nabors Well Services Ltd. Trade Debt $451,614 PO Box 973510 Dallas, TX 75397-3510 Ulterra Drilling Trade Debt $429,845 Technologies LP PO Box 975228 Dallas, TX 75397-5228 Quicksilver Resources Inc. Trade Debt $353,355 777 West Rosedale Street, Suite 300 Fort Worth, TX 76104 Basic Energy Services Trade Debt $316,359 PO Box 841903 Dallas, TX 75284-1903 TK Stanley Inc. Trade Debt $307,184 PO Box 31 Waynesboro, MS 39367 Bronco Drilling Company Trade Debt $276,090 Inc. 16217 N. May Avenue Edmond, OK 73013 Seaboard Wellhead Inc. Trade Debt $272,056 PO Box 3177 Houston, TX 77253-3177 Energy Service Company Trade Debt $217,957 Express Energy Services Trade Debt $206,305 TCB Rental Inc. Trade Debt $191,506 Baker Oil Tools Trade Debt $180,515 Pason Systems USA Corp. Trade Debt $165,621 Continental Resources Inc. Trade Debt $164,344 Arrow Pump & Supply Inc. Trade Debt $161,115 T S Dudley Land Co. Inc. Trade Debt $160,946 Jimmy Chatham Dozer Trade Debt $160,773 Service Inc. Streamline Production Trade Debt $157,501 Systems Inc. Tejas Oilfield Service Trade Debt $129,126 Super Flow Testers Inc. Trade Debt $127,579 Brickman Fast Line Inc. Trade Debt $119,116 Moricoli & Schovanec LLC Trade Debt $118,395 Gambler Trucking Inc. Trade Debt $114,166 International Lift Trade Debt $114,117 Systems LLC Western Company of Texas Trade Debt $108,102 Bravo Construction Inc. Trade Debt $107,750 Blowout Tools Inc Trade Debt $98,924 Cenizo Services Inc. Trade Debt $87,969 Topographic Land Trade Debt $83,004 Surveyors Tank 1Services LLC Trade Debt $80,248 Pinson Well Logging Inc. Trade Debt $80,021 COSINE COMMUNICATIONS: Posts $151,000 Net Loss in June 30 Quarter ----------------------------------------------------------------- CoSine Communications, Inc., posted a net loss of $151,000 for the three months ended June 30, 2009, from a net income of 22,000 for the same period a year ago. CoSine posted a net loss of $305,000 for the six months ended June 30, 2009, from a net income of $74,000 for the same period a year ago. CoSine reported zero revenues. CoSine had $22.8 million in total assets; $216,000 in total liabilities, all current; and $22.6 million in stockholders' equity as of June 30, 2009. A full-text copy of the Company's quarterly report is available at no charge at http://ResearchArchives.com/t/s?410c CoSine Communications, Inc.'s current business strategy is to enhance stockholder value by pursuing opportunities to redeploy its assets through an acquisition of one or more operating businesses with existing or prospective taxable earnings that can be offset by use of its net operating loss carry-forwards. No assurance can be given that CoSine will find suitable candidates, and if it does, that it will be able to utilize its existing NOLs. CoSine was a provider of carrier network equipment products and services until the fourth quarter of fiscal year 2004 during which time CoSine discontinued its product lines, took actions to lay off most of its employees, terminated contract manufacturing arrangements, contractor and consulting arrangements and various facility leases, and sold, scrapped or wrote-off inventory, property and equipment. In July 2005, CoSine's board of directors approved its strategy of redeploying existing resources to identify and acquire new business operations. In 2006, CoSine sold the remaining assets of its carrier network products business with the sale of its patent portfolio and the rights to the related intellectual property. During 2006, CoSine also completed the wrap-up of its carrier services business, providing customer support services for its discontinued products through December 31, 2006, at which time CoSine terminated all customer support offerings. Effective July 1, 2007, CoSine engaged SP Corporate Services LLC to provide all of its executive, financial and administrative support service, rent and personnel requirements and, as a result, CoSine no longer has any employees. As reported by the Troubled Company Reporter on May 1, 2009, CoSine said its restructuring activities and new redeployment of assets strategy raise substantial doubt as to its ability to continue as a going concern. Moreover, the report dated February 17, 2009, of Burr, Pilger & Mayer LLP in Palo Alto, California, the Company's independent registered public accounting firm, on the Company's financial statements for the period ended December 31, 2008, expressed doubt on the Company's ability to continue as a going concern. COTT CORPORATION: Moody's Reviews 'Caa1' Corp Rating for Upgrade ---------------------------------------------------------------- Moody's Investors Service placed all the long term ratings of Cott Corporation's, including its Caa1 Corporate Family Rating, on review for possible upgrade. The Speculative Grade Liquidity rating was unaffected by the rating action and remains at SGL-3. The review for possible upgrade follows Cott's substantially improved operating results in the second quarter of 2009 as well as its announcement on August 4, 2009, that it has entered into a purchase agreement with a syndicate of underwriters to issue common shares for gross proceeds of approximately $50 million. Moody's expects Cott to use the proceeds from the equity offering to pay down debt. Moody's review will focus on Cott's capital structure post the proposed recapitalization, future run-rate operating performance and liquidity profile. These ratings were placed under review for possible upgrade: Cott Corporation: -- Corporate Family rating at Caa1 -- Probability of Default Rating at Caa1 Cott Beverages, Inc.: -- $275 million ($269 million outstanding) 8% senior sub notes due 2011 at Caa2, (LGD 5, 74%) -LGD assessment is subject to change -- Speculative grade liquidity rating of SGL-3 remained unchanged The last rating action occurred on March 25, 2009, when Cott's speculative grade liquidity rating was upgraded to SGL-3 from SGL- 4. Headquartered in Toronto, Ontario and Tampa, Florida, Cott Corporation is one of the world's largest retailer-brand soft drink suppliers with a leading position in take-home carbonated soft drink markets in the US, Canada, and the UK. Sales for the trailing twelve month period were approximately $1.6 billion. CRYOPORT INC: Permitted to Issue Notes as Part of Bridge Loan ------------------------------------------------------------- CryoPort, Inc., on July 30, 2009, entered into a Consent, Waiver and Agreement with Enable Growth Partners LP, Enable Opportunity Partners LP, Pierce Diversified Strategy Master Fund LLC, Ena, and BridgePointe Master Fund Ltd. The Holders are the holders of one or more of the Registrant's Original Issue Discount 8% Senior Secured Convertible Debentures dated September 27, 2007 and Original Issue Discount 8% Secured Convertible Debentures dated May 30, 2008. Pursuant to the terms of the Consent, Waiver and Agreement, the Holders (i) consented to the Company's issuance of convertible notes and warrants in connection with a bridge financing of up to $1,500,000 which commenced in March 2009, and (ii) waived, as it relates to the Bridge Financing, a covenant contained in the Debentures not to incur any further indebtedness, except as otherwise permitted by the Debentures. In addition, in connection with the Consent, Wavier and Agreement, the Company and the Holders confirmed that (i) the exercise price of the warrants issued to the Holders in connection with their purchase of the Debentures has been reduced, pursuant to the terms of the warrants, to $0.51 as a result of the Bridge Financing, and (ii) as a result of the decrease in the exercise price, pursuant to the terms of the warrants, the number of shares underlying the warrants held by the Holders of the Debentures has been proportionally increased. About Cryoport Inc. Headquartered in Lake Forest, Calif., CryoPort Inc. (OTCBB: CYRX) -- http://www.cryoport.com/-- develops proprietary, technology- driven shipping and storage products for use in the rapidly growing global biotechnology and biopharmaceutical cold chain. The products developed by CryoPort are essential components of the infrastructure required for the testing, research and end user delivery of temperature-sensitive medicines and biomaterials in an increasingly complex logistical environment. As of March 31, 2009, the Company's current liabilities of $4,747,012 exceeded current assets of $1,053,997 by $3,693,015. Total assets decreased to $1,572,556 at March 31, 2009, from $3,460,889 at March 31, 2008, mainly as a result of cash funds used in operating activities and repayment of notes which were offset by proceeds from the May 2008 Debenture and increases in inventories and intangible assets . Going Concern Doubt KMJ Corbin & Company LLP raised substantial doubt about CryoPort, Inc.'s ability to continue as a going concern after it audited the company's financial statements for the year ended March 31, 2009, and 2008. The auditor pointed to the company's recurring losses and negative cash flows from operations since inception. CRYOPORT INC: Taps Catherine Doll to Replace Dee Kelly as CFO ------------------------------------------------------------- The Board of Directors of CryoPort, Inc., on July 29, 2009, appointed Catherine Doll, a consultant, to the offices of Chief Financial Officer, Treasurer and Assistant Corporate Secretary. She will replace Dee Kelly, the Company's current Chief Financial Officer and Vice President of Finance. Ms. Kelly has tendered her resignation from the Company effective August 20, 2009. Ms. Doll's engagement will become effective on the same date. Ms. Doll, 49, is the owner and chief executive officer of The Gilson Group, LLC, which she founded in 2006. The Gilson Group, LLC provides financial and accounting consulting services to public companies, including Sarbanes Oxley Section 404 compliance, SEC and financial reporting, budgeting and forecasting and finance and accounting systems implementations and conversions. From 1996 to 2006, Ms. Doll was an associate with Resources Global Professionals, where she provided management, financial and accounting services for a variety of clients. Ms. Doll received a B.A. in Economics, with an emphasis in accounting, from the University of California, Santa Barbara, in 1983. She has over 25 years of accounting and financial reporting experience. The Company has agreed to pay Ms. Doll $10,000 per month in consideration for her services to the Company. In addition, the Company has agreed to issue warrants for the purchase of 20,000 shares of the Company's common stock. The terms and exercise price of the warrants will be determined on the date issuance of the warrant is approved by the Board of Directors. About Cryoport Inc. Headquartered in Lake Forest, Calif., CryoPort Inc. (OTCBB: CYRX) -- http://www.cryoport.com/-- develops proprietary, technology- driven shipping and storage products for use in the rapidly growing global biotechnology and biopharmaceutical cold chain. The products developed by CryoPort are essential components of the infrastructure required for the testing, research and end user delivery of temperature-sensitive medicines and biomaterials in an increasingly complex logistical environment. As of March 31, 2009, the Company's current liabilities of $4,747,012 exceeded current assets of $1,053,997 by $3,693,015. Total assets decreased to $1,572,556 at March 31, 2009, from $3,460,889 at March 31, 2008, mainly as a result of cash funds used in operating activities and repayment of notes which were offset by proceeds from the May 2008 Debenture and increases in inventories and intangible assets . Going Concern Doubt KMJ Corbin & Company LLP raised substantial doubt about CryoPort, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the year ended March 31, 2009, and 2008. The auditor pointed to the Company's recurring losses and negative cash flows from operations since inception. CRYSTALLEX INT'L: Posts Net Loss of $6MM in Quarter Ended June 30 ----------------------------------------------------------------- Crystallex International Corporation posted a net loss of $6,750,000 for three months ended June 30, 2009, compared with a net loss of $9,995,000 for the same period in 2008. For six months ended June 30, 2009, the Company posted a net loss of $11,958,000 compared with a net loss of $21,197,000 for the same period in 2008. At June 30, 2009, the Company's balance sheet showed total assets of $371,025,000, total liabilities of $113,867,000 and stockholders' equity of $257,158,000. The Company's management said that there is substantial doubt to its ability to continue as a going concern. As at June 30, 2009, the Company has positive working capital of $5,439 including cash and cash equivalents of $13,381. The management estimates that these funds will be sufficient to meet the Company's obligations and budgeted expenditures into the fourth quarter of 2009, but may not be sufficient to cover its obligations falling due in January 2010. A full-text copy of the Company's Form 6-K is available for free at http://ResearchArchives.com/t/s?40fd Crystallex International Corporation is engaged in the development of gold properties in Venezuela. CYPRESSWOOD LAND: Court Blesses Insider's Purchase of Assets ------------------------------------------------------------ WestLw reports that the mere fact that the insider purchasing a Chapter 11 debtor's assets under its liquidating plan, at a price in excess of what the assets were worth and what any other potential purchaser was willing to pay in what was demonstrably a depressed real estate market, was speculating that the market would turn around and that he would eventually be able to generate a handsome profit as a result of his ownership of the assets did not cause the plan to be unfair or inequitable to any creditors impaired by the plan or to the other equity holders, whose interests would be cancelled. The other equity holders had an opportunity to purchase the assets, but declined to do so. In re Cypresswood Land Partners, I, --- B.R. ----, 2009 WL 136021, 51 Bankr. Ct. Dec. 51 (Bankr. S.D. Tex.). In his capacity as an alleged creditor and 50% equity partner, Stephen A. Morrow filed an involuntary Chapter 11 petition against Cypresswood Land Partners, I (Bankr. S.D. Tex. Case No. 07-32437) on April 4, 2007. On June 22, 2007, the Court entered an Order for Relief. Vincent P. Slusher, Esq., at Beirne Maynard & Parsons, LLP, in Dallas, represented Mr. Morrow prior to entry of the order for relief and the Cypresswood Land after entry of the order for relief. The Debtor's Schedules and Statements indicated that the Debtor owned four tracts of land valued at $10.3 million. Following an evidentiary hearing, the Honorable Jeff Bohm concluded that the land, pledged as collateral two secure repayment of $6.2 million in loans from two lenders, is worth $6.0 million. CUMULUS MEDIA: Reports $14 Million Net Income for June 30 Quarter ----------------------------------------------------------------- Cumulus Media Inc. reported $14.0 million in net income for the three months ended June 30, 2009, compared to $30.2 million net income for the same period a year ago. Cumulus Media reported $10.7 million in net income for the six months ended June 30, 2009, compared to $26.0 million net income for the same period a year ago. Net revenues for the second quarter decreased from $83.6 million to $66.0 million, a decrease of 21.1% versus the second quarter of 2008, primarily due to the impact the current economic recession has had across the Company's entire station platform. Cash revenues for the second quarter decreased from $79.8 million to $62.8 million, a decrease of 21.2% and barter revenue decreased $0.7 million or 18.3% as the Company continues to deemphasize barter transactions. Net revenues for the six months ended June 30, 2009 decreased from $156.5 million to $121.3 million, a decrease of 22.5% from the same period in 2008, due to the impact the current economic recession has had across the Company's entire station platform. Cash revenues for the six months ended June 30, 2009, decreased from $149.4 million to $115.9 million, a decrease of 22.5% and barter revenues decreased 23.0% to $5.5 million from $7.1 million as the Company continues to deemphasize barter transactions. As of June 30, 2009, Cumulus Media had $504.4 million in total assets and $740.7 million in total liabilities, resulting in $236.3 million in stockholders' deficit. As of March 31, 2009, the Company had $523,554,000 in total assets and $775,363,000 in total liabilities, resulting in $251,809,000 in stockholders' deficit. Cumulus Media said the current economic crisis has reduced demand for advertising in general, including advertising on the Company's radio stations. In consideration of current and projected market conditions, overall advertising is expected to continue to decline at least through the remainder of 2009. Therefore, in conjunction with the development of the 2009 business plan, management assessed the impact of recent market developments in a variety of areas, including the Company's forecasted advertising revenues and liquidity. In response to the conditions, management refined the 2009 business plan to incorporate a reduction in forecasted 2009 revenues and cost reductions implemented in the fourth quarter 2008 and during the first six months of 2009 to mitigate the impact of the Company's anticipated decline in 2009 revenue. On June 29, 2009, the Company entered into an amendment to the credit agreement governing its senior secured credit facility. The Credit Agreement maintains the pre-existing term loan facility of $750 million, which, as of June 30, 2009, had an outstanding balance of roughly $647.9 million, and reduces the pre-existing revolving credit facility from $100 million to $20 million. Additional facilities are no longer permitted under the Credit Agreement. Management believes that the Company will continue to be in compliance with all of its debt covenants through December 31, 2010, based upon actions the Company has already taken, which include (i) the amendment to the Credit Agreement, the purpose of which was to provide certain covenant relief through 2010, (ii) employee reductions coupled with a mandatory one-week furlough during the second quarter of 2009, (iii) a new sales initiative implemented during the first quarter of 2009, the goal of which is to increase advertising revenues by re-engineering the Company's sales techniques through enhanced training of its sales force, and (iv) continued scrutiny of all operating expenses. The Company will continue to monitor its revenues and cost structure closely and if revenues decline greater than the forecasted decline from 2008 or if the Company exceeds planned spending, the Company may take further actions as needed in an attempt to maintain compliance with its debt covenants under the Credit Agreement. The actions may include the implementation of additional operational synergies, renegotiation of major vendor contracts, deferral of capital expenditures, and sale of non- strategic assets. Although the Company was able to obtain the amendment to the Credit Agreement that provided relief with regard to certain restrictive covenants, including the fixed charge coverage ratio and total leverage ratio, there can be no assurance that the Company will be able to obtain an additional waiver or amendment to, or refinancing of, the Credit Agreement should additional waivers, amendments or refinancings become necessary to remain in compliance with its covenants in the future. In the event the Company does not maintain compliance with the applicable covenants under the Credit Agreement, the lenders could declare an event of default, subject to applicable notice and cure provisions. Failure to comply with the financial covenants or other terms of the Credit Agreement and failure to negotiate relief from the Company's lenders could result in the acceleration of the maturity of all outstanding debt. Under these circumstances, the acceleration of the Company's debt could have a material adverse effect on its business. If the Company were unable to repay its debts when due, the lenders under the credit facilities could proceed against the collateral granted to them to secure that indebtedness. The Company has pledged substantially all of its assets as collateral under the Credit Agreement. If the lenders accelerate the maturity of outstanding debt, the Company may be forced to liquidate certain assets to repay all or part of the senior secured credit facilities, and the Company cannot be assured that sufficient assets will remain after it has paid all of the its debt. The ability to liquidate assets is affected by the regulatory restrictions associated with radio stations, including FCC licensing, which may make the market for these assets less liquid and increase the chances that these assets will be liquidated at a significant loss. A full-text copy of the Company's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?411e About Cumulus Media Based in Atlanta, Georgia, Cumulus Media Inc. is the second largest radio broadcaster in the United States based on station count, and combined with its affiliate, CMP Media Partners, LLC, the Company is the fourth largest radio broadcast company in the United States based on net revenues, controlling approximately 350 radio stations in 68 U.S. media markets. * * * As reported by the Troubled Company Reporter on April 24, 2009, Moody's Investors Service downgraded Cumulus Media's Corporate Family rating to Caa1 from B3, its Probability of Default rating to Caa2 from Caa1 and the rating on its $850 million credit facility ($100 million revolver due 2012 and $750 million term loan due 2014) to Caa1 from B3. The rating outlook is negative. The downgrade of the CFR to Caa1 largely reflects Moody's expectation that recessionary market conditions will continue to prevail within Cumulus' served markets over the near-to -- intermediate term, placing pressure on the company's top line and compressing its free cash flow. DANA CORP: Bank Debt Trades at 23% Off in Secondary Market ---------------------------------------------------------- Participations in a syndicated loan under which Dana Corporation is a borrower traded in the secondary market at 77.08 cents-on- the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 2.71 percentage points from the previous week, The Journal relates. The loan matures on Jan. 31, 2015. The Company pays 375 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Caa1 rating and Standard & Poor's B rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. 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. Dana Corp. and its affiliates filed for Chapter 11 protection on March 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). 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. Judge Burton Lifland confirming the Plan, as thrice amended, on Dec. 26, 2007. The Plan was declared effective Jan. 31, 2008. Upon emergence, the Company was renamed as Dana Holding Corporation. * * * As reported in the Troubled Company Reporter on June 9, 2009, Moody's Investors Service lowered the Corporate Family Rating of Dana Holding Corporation to Caa2, raised the Probability of Default Rating to Caa1, and adjusted the ratings of certain debt instruments. The company's Speculative Grade liquidity Rating of SGL-3 was affirmed, and the company's rating outlook is negative. The positioning of Dana's PDR at Caa1 reflects ongoing pressures the company faces from the continued erosion in the global automotive and commercial vehicle markets. These conditions have resulted in significant deterioration in the company's sales and operating performance through the first quarter of 2009 and are expected to continue to pressure the company's performance into 2010. The pressures have also resulted in Moody's employing a 40% family recovery rate in its Loss Given Default assessment for the company, which drives the positioning of the CFR at Caa2 under the Loss Given Default Methodology. DELTEK INC: CEO Parker Designated as Principal Financial Officer ---------------------------------------------------------------- Kevin T. Parker, Deltek Inc.'s Chairman, President and Chief Executive Officer, was designated as Deltek's principal financial officer on August 4, 2009. In addition, Michael L. Krone, Deltek's Senior Vice President, Corporate Controller and Assistant Treasurer, was designated as Deltek's principal accounting officer on August 4. On July 29, 2009, Mark L. Wabschall resigned as Executive Vice President, Chief Financial Officer and Treasurer of Deltek. Mr. Wabschall's resignation was not related to Deltek's financial or operating results or to any disagreements or concerns regarding Deltek's financial or reporting practices. Mr. Krone has served as Senior Vice President, Corporate Controller and Assistant Treasurer since July 2009 and joined Deltek as Vice President, Finance and Corporate Controller in August 2008. From August 2007 to July 2008, Mr. Krone, 40, provided independent financial consulting services. From June 2006 to August 2007, Mr. Krone served as Vice President of Finance and Chief Accounting Officer at webMethods, Inc., a leading provider of business integration and optimization software. Prior to joining webMethods, Mr. Krone served as Public Services Industry Controller at BearingPoint, Inc., a global provider of management and technology consulting services, from March 2004 to June 2006. From 1998 to March 2004, Mr. Krone held various senior financial positions with Enterworks, Inc., a provider of enterprise information management solutions, including serving as Chief Financial Officer and Treasurer from August 2001 to March 2004. Mr. Krone received his B.S. in Accounting from Shepherd University in 1992. Mr. Krone's employment agreement has no set term, and employment under it is at will. Mr. Krone's annual base salary is $275,000. In addition, Mr. Krone is eligible to receive performance-based bonuses, to be paid quarterly, based on the satisfaction of agreed-upon targets. The target annual bonus to be received by Mr. Krone is $115,000. In addition, Mr. Krone will continue to be entitled to participate in Deltek's standard benefit plans and programs for employees. If Mr. Krone's employment is terminated other than on the date of or within 18 months following a change in control either by Deltek without cause or by Mr. Krone for good reason, then Mr. Krone will be entitled to his then current base salary as of the date of termination for six months thereafter. In addition, upon any termination that entitles Mr. Krone to the severance benefits, Deltek will also continue his coverage -- including any dependent coverage in place as of his termination date -- under its medical benefit plan for 12 months at his cost at the active-employee premium rate. If Mr. Krone's employment is terminated on the date of or within 18 months following a change in control either by Deltek or its successors without cause or by Mr. Krone for good reason, then Mr. Krone will be entitled to his then current base salary as of the termination date for 18 months thereafter, 150% of his then current target annual bonus (based on his target annual bonus in effect in the period in which he is terminated), and coverage (including any dependent coverage in place as of his termination date) under Deltek's medical benefit plan for 18 months at his cost at the active-employee premium rate. Deltek has entered into a Separation Agreement and Release with Mr. Wabschall pursuant to which Mr. Wabschall will provide, inter alia, transitional consulting services to Deltek for a period of three months. About Deltek Deltek Inc. (Nasdaq: PROJ) -- http://www.deltek.com/-- provides enterprise applications software designed specifically for project-focused businesses. For more than two decades, the Company's software applications have enabled organizations to automate mission-critical business processes around the engagement, execution and delivery of projects. More than 12,000 customers worldwide rely on Deltek to measure business results, optimize performance, streamline operations and win new business. * * * As reported by the Troubled Company Reporter on July 6, 2009, Moody's Investors Service initiated ratings and assigned a corporate family rating of B1 and senior secured rating of B1 to Deltek. The ratings outlook is stable. The B1 corporate family rating reflects Deltek's leadership position providing specialized software to federal government contractors and architectural and engineering firms, strong cash generating capabilities and moderate leverage. The ratings also reflect the company's maturing debt profile, relatively modest size, and limited end market diversity. DELTEK INC: Posts $4.90 Million Net Income at June 30 Quarter ------------------------------------------------------------- Deltek, Inc., reported lower net income of $4.90 million for the three months ended June 30, 2009, from net income of $5.42 million for the same period a year ago. Deltek also posted lower net income of $7.55 million for the six months ended June 30, 2009, from net income of $9.44 million for the same period a year ago. As of June 30, 2009, Deltek had $266.6 million in total assets and $249.2 million in total liabilities, resulting in $17.4 million in stockholders' equity. Deltek had $191.4 million in total assets and $240.2 million in total liabilities, resulting in $48.8 million in stockholders' deficit as of March 31, 2009. Total revenue for the second quarter was $69.4 million, an increase of 12% from Q1. Second quarter license revenue increased 40% from the first quarter to $15.8 million. Maintenance and support revenue in second quarter was $31.0 million, an increase of 1% from the first quarter. Consulting services revenue decreased 4% from the first quarter to $19.2 million. Other revenues in the second quarter increased to $3.4 million from $100,000 in the first quarter. "We had a strong quarter and delivered financial results that significantly exceeded expectations," said Kevin Parker, president and CEO of Deltek. "Our revenue and profitability were driven by improved execution across multiple facets of our business, a continuing focus on operational efficiency and cost reductions, and our customers' increasing confidence in their future business prospects." "We remain focused on executing effectively and committed to delivering a strong bottom line and healthy cash flows. Looking forward, our sales pipeline continues to be strong and the numerous new products we've launched this year are being well received by our customers. Our strong competitive position provides a solid foundation for growth when the economy eventually recovers." Second Quarter Highlights -- Deltek announced that its common stock rights offering was fully subscribed by its stockholders, including its largest stockholders, affiliates of New Mountain Capital. Upon completion of the rights offering, the Company issued 20,000,000 new shares of common stock at a price of $3.00 per share. Deltek used $3.1 million of the $58.2 million in net proceeds from the rights offering to repay indebtedness. Deltek ended Q2 with a cash balance of $113.5 million, compared to $43.0 million in Q1 2009. The $70.5 million increase in cash was driven by proceeds received from the Company's common stock rights offering and cash flow generated from operations. -- Deltek announced the release of Premier Analytics, a new business intelligence solution for GCS Premier customers. Premier Analytics delivers executive dashboards that empower executives to monitor, measure, and manage their businesses using real-time data from GCS Premier, Deltek's powerful project accounting solution for small-to-mid-size government contractors. Deltek also announced the release of GovWin 6.0, the newest version of its industry-leading business development and capture solution for firms who want to do more business with the Federal Government. GovWin 6.0 contains numerous usability enhancements that improve collaboration and communication throughout the business development process. The new release also offers unique Contract Data Management capabilities that enable companies to manage opportunities throughout the entire contract management lifecycle. -- Deltek announced the release of Cobra 5.0, the leading enterprise cost and earned value management (EVM) solution for government contractors and other project-based businesses. As the industry's first EVM solution built on Microsoft's .NET framework and Smart Client architecture, Cobra 5.0 eases the burden on IT resources with one-click deployment, and it eliminates the need for Citrix resulting in lower TCO. By delivering tight control over project costs, insight into mission-critical project data and the ability to easily calculate and report on earned value, Cobra 5.0 helps organizations better manage project and program performance. -- Deltek announced the release of Vision 6.0, the newest version of its industry-leading solution for professional services firms of all sizes. Vision 6.0 enables customers to fully unlock, analyze, and act on the essential data elements within Vision through role-based dashboards and SQL reporting services. In addition, Vision 6.0 offers capabilities to manage the global enterprise, including enhancements that simplify international accounting and tax transactions and foreign language support. In conjunction with Vision 6.0, Deltek also announced the release of Deltek Project Connect and Vision Performance Management. Project Connect facilitates bi-directional integration between Vision Resource Planning and Microsoft Project to keep resources and schedules in synch. Vision Performance Management dashboards empower organizations to proactively manage performance and mitigate risk. -- Deltek held its annual Insight customer conference in Orlando, Florida. Insight 2009 featured approximately 3,000 business leaders and partner attendees representing thousands of unique organizations. The conference showcased major product announcements across all of Deltek's product lines, multiple channel and technology partners, and the winners of the Second Annual Deltek Project Excellence Awards, which recognize customers that achieve superior business performance through their use of Deltek products. A full-text copy of the Company's quarterly report is available at no charge at http://ResearchArchives.com/t/s?4103 About Deltek Deltek Inc. (Nasdaq: PROJ) -- http://www.deltek.com/-- provides enterprise applications software designed specifically for project-focused businesses. For more than two decades, the Company's software applications have enabled organizations to automate mission-critical business processes around the engagement, execution and delivery of projects. More than 12,000 customers worldwide rely on Deltek to measure business results, optimize performance, streamline operations and win new business. * * * As reported by the Troubled Company Reporter on July 6, 2009, Moody's Investors Service initiated ratings and assigned a corporate family rating of B1 and senior secured rating of B1 to Deltek. The ratings outlook is stable. The B1 corporate family rating reflects Deltek's leadership position providing specialized software to federal government contractors and architectural and engineering firms, strong cash generating capabilities and moderate leverage. The ratings also reflect the company's maturing debt profile, relatively modest size, and limited end market diversity. DEX MEDIA: Bank Debt Trades at 24% Off in Secondary Market ---------------------------------------------------------- Participations in a syndicated loan under which Dex Media East, LLC, is a borrower traded in the secondary market at 75.85 cents- on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.50 percentage points from the previous week, The Journal relates. The loan matures on Nov. 8, 2009. The Company pays 200 basis points above LIBOR to borrow under the facility. Moody's has withdrawn its rating on the bank debt while Standard & Poor's has assigned a default rating on the bank debt. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Dex Media East, LLC -- http://www.rhd.com/-- is a publisher of the official yellow pages and white pages directories for Qwest Communications International, Inc., in the states, where Qwest is the primary incumbent local exchange carrier, such as Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota. DIRECTV GROUP: S&P Raises Corporate Credit Rating From 'BB' ----------------------------------------------------------- Standard & Poor's Ratings Services said it raised its ratings on El Segundo, California-based satellite TV provider The DIRECTV Group Inc., including the corporate credit rating to 'BBB-' from 'BB'. The upgrade reflects the company's new and more moderate financial policy, which indicates that leverage may rise within a normalized bane from current low levels. In addition, S&P raised the issue-level rating on subsidiary DIRECTV Holdings LLC's unsecured debt to 'BBB-', the same level as the corporate credit rating. The issue-level rating on the secured debt remains at 'BBB-'. The outlook is stable. "This action follows the company's announcement in its public earnings release for the second quarter of 2009 that it is embracing a more moderate financial policy," said Standard & Poor's credit analyst Naveen Sarma. Specifically, DIRECTV said that it is targeting a leverage ratio of 2.5x debt-to-EBITDA. This leverage target is a tightening from the 3.0x-3.5x range that S&P believes the company was historically comfortable with. DOLE FOOD: Fitch Affirms Issuer Default Rating at 'CCC' ------------------------------------------------------- Fitch Ratings has removed its Negative Outlook from the ratings of Dole Food Company, Inc. and its subsidiary Solvest Ltd. The ratings have been affirmed: Dole Food Company, Inc. (Operating Company) -- Long-term Issuer Default Rating at 'CCC'; -- Secured asset-based revolver at 'B+/RR1'; -- Secured term loan B at 'B+/RR1'; -- Third-lien secured notes at 'CCC/RR4'; -- Senior unsecured debt at 'C/RR6'. Solvest Ltd. (Bermuda-based Subsidiary) -- Long-term IDR at 'CCC'; -- Secured term loan C at 'B+/RR1'. These rating actions affect Dole's approximate $2.0 billion in consolidated debt at June 20, 2009. On August 4, 2009, Dole announced results for the fiscal second quarter of 2009 and outlined plans to offer senior secured notes during the third quarter of 2009. Proceeds from the issuance, together with cash and/or borrowings under its revolver, is expected to be used to redeem the bulk of its $383 million 7.25% notes due June 15, 2010. The company repurchased a total of $37 million of these notes during and subsequent to the most recent quarter ended June 20, 2009. The removal of the Negative Outlook is due to significant improvement in Dole's operating performance over the past 18 months, which Fitch believes increases the probability that the company will be able to issue secured notes at more favorable rates than its March 2009 issuance. On March 18, 2009, Dole completed the sale of $350 million 13.875% third-lien senior secured privately placed notes due March 15, 2014 at a discount of $25 million. The proceeds were used to repay, via a cash tender offer, its $345 million 8 5/8% senior notes due May 1, 2009. Should Dole successfully refinance its 2010 notes and operating performance continues to improve, a one notch upgrade of Dole's IDR, secured asset-based revolver and secured term loan B credit ratings are likely. Ratings and recovery prospects on the company's unsecured notes, which totaled $738 million at June 20, 2009, however, would be further subordinated by the issuance of additional secured debt. Dole's leverage (defined as total debt-to-operating EBITDA) has improved to 4.8x for the latest twelve months period ending June 20, 2009, from a peak of 8.3x for the fiscal year ended December 29, 2007. The improvement has been driven by better cash flow generation and debt reduction. Dole's operating performance and liquidity continues to benefit from stronger results in its Fresh Fruit segment, reduced operating costs and continued asset sales. Dole is targeting $200 million in asset sales during 2009, after receiving approximately $226 million in 2008. The Fresh Fruit division, which represented 71% of sales and 81% of operating EBIT excluding corporate expenses in fiscal 2008, continues to benefit from better worldwide banana pricing. During the most recent LTM period Dole generated $418.5 million of operating EBITDA (which excludes gains related to asset sales) and $164.5 million of free cash flow (defined as cash flow from operations less capital expenditures and dividends), after generating negative free cash flow annually since 2005. Operating cash flow has benefited from significant improvements in working capital and higher operating income. Continued free cash flow improvement would be positive for the ratings. At June 20, 2009, Dole's liquidity included $107.9 million of cash and $243.6 million available under its ABL revolver due April 12, 2011. In addition to the first priority secured leverage ratio, terms of the agreement subject Dole to a springing fixed charge coverage ratio of 1.0x should availability under the revolver fall below $35 million. At June 20, 2009, the borrowing base for this facility was $320 million. Fitch expects to review existing ratings, assign a rating to any newly issued notes and update its recovery analysis on Dole's debt once the company proceeds with its planned refinancing. The current 'RR6' rating on Dole's senior unsecured debt indicates average recovery prospects of less than 10% in a distressed situation, while the 'RR4' rating on the company's third-lien secured notes predicts recovery prospects of 31%-50%. Fitch continues to view Dole's priority bank debt as having outstanding recovery prospects of 91%-100%, especially given considerable improvement in the company's cash flow. DOLLAR THRIFTY: Amends Note Indenture and Terms of L/C Facility --------------------------------------------------------------- Dollar Thrifty Automotive Group, Inc., reports in a Form 10-Q filing with the Securities and Exchange Commission that on August 3, 2009, it made certain technical amendments to the indenture supplements for all series of its asset backed notes in order to add Chrysler Group and General Motors Company as eligible vehicle manufacturers under the indenture supplements. The indenture supplements were further amended to cure any and all conditions triggered as a result of the Chrysler bankruptcy that would have constituted a "Manufacturer Event of Default" as defined in the indenture supplements. In conjunction with the approval of the amendments, the Company also agreed to amend its Senior Secured Credit Facilities under which letters of credit are issued as enhancement for the asset backed notes. Under the terms of the proposed amendment, letters of credit to be issued as enhancement for future fleet financing will be limited to a maximum of 7% of the initial face amount of each series of asset backed notes issued, up to the existing sub- limit under the facility of $100 million. The amendment does not apply to, nor have any impact on, the Company's existing notes and enhancement letters of credit. The Company expects to execute this amendment to the Senior Secured Credit Facilities in August. The 2005, 2006 and 2007 asset backed medium term notes facilities are insured by Syncora Guarantee Inc., Ambac Assurance Corporation and Financial Guaranty Insurance Company, respectively. In February 2009, the Company amended its senior secured credit facilities through June 15, 2013, their final maturity date. As part of the amendment, availability under the revolving credit facility was reduced from $340 million at December 31, 2008, to $231.3 million, with such amount restricted to the issuance of letters of credit. The Revolving Credit Facility also contains sub-limits that limit the amount of capacity available for letters of credit to be used as vehicle enhancement in both its Canadian and U.S. operations. In conjunction with the amendment, the Company also repaid $20 million of the term loan, reducing the outstanding amount to $158.1 million. The amendment replaced the existing leverage ratio covenant with an adjusted tangible net worth covenant and minimum cash maintenance covenant. The Company is now required to maintain a minimum adjusted tangible net worth of $150 million and a minimum of $100 million of unrestricted cash and cash equivalents. Within the $100 million of unrestricted cash and cash equivalents, the Company must also maintain at least $60 million in separate accounts with the Collateral Agent to secure payment of amounts outstanding under the Term Loan and letters of credit issued under the Revolving Credit Facility. Additionally, the Company executed mortgages in favor of the banks encumbering seven additional properties not previously encumbered as well as certain vehicles not pledged as collateral under another vehicle financing facility. The Company incurred a 50 basis point increase in the interest rate on outstanding Term Loan debt and outstanding letters of credit as a result of the amendment and paid one-time amendment fees of 50 basis points based on outstanding commitments or loans. Concurrently with the amendment of the Senior Secured Credit Facilities, the Company made comparable amendments to two fleet financing agreements from a vehicle manufacturer and various banks. Amortization under the vehicle manufacturer and bank lines of credit is required at the earlier of the sale date of the vehicle financed under each facility or the final maturity date of January 2010 and September 2009, respectively. In April 2009, DTG Canada, the General Partner, amended its partnership agreement with an unrelated bank's conduit, the Limited Partner, which provides for vehicle financing in Canada. This amendment reduces the committed funding from C$200 million to C$165 million on the effective date of the amendment. This amendment further reduces the committed funding beginning in October 2009 to C$150 million, beginning in December 2009 to C$125 million and a final reduction in January 2010 to C$100 million, which will remain in effect until the partnership agreement expires on May 31, 2010. In June 2009, the Company amended all series of its asset backed medium term note program to provide the Company with flexibility to manage its inventory by continuing to allow for re-designation of vehicles from the Series 2005-1 Notes to the Series 2006-1 and Series 2007-1 Notes given the scheduled maturity of the Series 2005-1 Notes. In doing so, the Company agreed that it would limit re-designation of vehicles from the Series 2005-1 Notes to no more than $200 million in net book value in the aggregate during the period from effectiveness of the amendment until the occurrence (if any) of an Insurer Related Amortization Event with respect to the Series 2005-1 Notes, and to no more than $30 million in net book value per month after any occurrence of such event. In relation to the amendments to the medium term note programs, the Company amended its Senior Secured Credit Facilities, whereby the Company may not increase the available amount of the letter of credit issued as enhancement for the Company's Series 2005-1 Notes at any time prior to the occurrence of an event of bankruptcy with respect to a Monoline under the Series 2005-1 Notes if, at the time, the aggregate undrawn amount of such letters of credit and unpaid reimbursement obligations in respect thereof were greater than $24.4 million or if the requested increase would cause the Series 2005-1 Letter of Credit Amount to exceed that amount. As reported by the Troubled Company Reporter on August 7, Dollar Thrifty said net income for the second quarter ended June 30, 2009, was $12.4 million, or $0.55 per diluted share, compared with net income of $10.8 million, or $0.49 per diluted share, for the comparable 2008 quarter. Non-GAAP net income for the 2009 second quarter was $6.9 million, or $0.30 per diluted share, compared to a non-GAAP net loss of $5.0 million, or $0.23 loss per diluted share for the 2008 second quarter. For the six months ended June 30, 2009, net income was $3.5 million, or $0.15 per diluted share, compared to a net loss of $287.2 million, or $13.49 loss per diluted share for the comparable period in 2008. The non-GAAP loss per diluted share for the six months ended June 30, 2009, was $0.23, compared to a non-GAAP loss per diluted share of $1.00 for the same period in 2008. As of June 30, 2009, the Company had $2.58 billion in total assets and $2.35 billion in total liabilities. Outlook for 2009 and Management's Plans The Company expects the overall environment in the rental car industry to remain challenging in the second half of 2009, as economic conditions negatively impact consumer confidence and travel demand. Based on the Company's expected fleet size and projected industry-wide rental day demand, the Company narrowed its prior revenue guidance. The Company now expects rental revenues to decline 8% to 10% for the full year of 2009 compared to 2008. Falling rental days are expected to be somewhat mitigated by an increase in rate per day. For the remainder of 2009, the used vehicle market is expected to show year over year improvement. Going forward, according to DTAG, the Company anticipates that Chrysler will continue to be an important supplier of vehicles, but the number of vehicles supplied by Chrysler will depend on DTAG's fleet requirements, the availability of vehicles, and other factors. While there is still some uncertainty as to the timing of a full-scale production restart by Chrysler Group, the Company believes that its purchasing relationships with other suppliers, including Ford Motor Company, will allow it to continue to source vehicles in the ordinary course of business to meet its operating needs. Fleet capacity for the rental car industry is expected to be in line with consumer demand in 2009. Year over year rental pricing trends have continued to improve in 2009, but have been offset by a decline in rental days. Additionally, the Company should continue to benefit from savings resulting from previously implemented cost reduction initiatives. The Company expects its fleet cost to begin to align with industry averages sometime in 2010 after being significantly higher for the past few years. Although the Company has experienced declines in depreciation on a per vehicle basis in the past two quarters, the Company expects vehicle depreciation in the third quarter of 2009 to be higher than last year's third quarter due to the settlement of certain manufacturer incentives during the third quarter of 2008 that lowered per vehicle depreciation expenses. The Company's focus for 2009 is on maximizing revenue per transaction, reducing expenses, de-leveraging and diversifying fleet investment, all in order to properly position the Company for an expected economic recovery in 2010. Liquidity and Capital Resources The Company's primary uses of liquidity are for the purchase of vehicles for its rental and leasing fleets, non-vehicle capital expenditures and for working capital. The Company uses both cash and letters of credit to support asset backed vehicle financing programs. The Company also uses letters of credit or insurance bonds to secure certain commitments related to airport concession agreements, insurance programs and for other purposes. The Company's primary sources of liquidity are cash generated from operations, secured vehicle financing, the Senior Secured Credit Facilities and insurance bonds. Cash generated by operating activities of $394.4 million for the six months ended June 30, 2009 was primarily the result of net income, adjusted for depreciation, and increased collections of outstanding receivables from vehicle manufacturers. The liquidity necessary for purchasing vehicles is primarily obtained from secured vehicle financing, sales proceeds from disposal of used vehicles and cash generated by operating activities. The asset backed medium term notes require varying levels of credit enhancement or overcollateralization, which are provided by a combination of cash, vehicles and letters of credit. The letters of credit are provided under the Company's Revolving Credit Facility. The Company believes that its cash generated from operations, cash balances and secured vehicle financing programs are adequate to meet its liquidity requirements during 2009. The Company has no further maturities of asset backed medium term notes until 2010. Historically, the Company had issued additional asset backed medium term notes each year to increase or replace maturing vehicle financing capacity; however, during 2008, there were significant disruptions in the financial markets that affected the Company's access to funding. The Company expects to use restricted cash and vehicle disposal proceeds to repay the Series 2005-1 Notes that begin maturing in January 2010. The Company believes its access to cost-effective financing may continue to be limited in 2009. A full-text copy of the Company's filing is available at no charge at http://ResearchArchives.com/t/s?411f About Dollar Thrifty Automotive Group Dollar Thrifty Automotive Group, Inc. -- http://www.dtag.com/, http://www.dollar.com/and http://www.thrifty.com/-- is a Fortune 1000 company headquartered in Tulsa, Oklahoma. The Company's brands, Dollar Rent A Car and Thrifty Car Rental, serve value- conscious travelers in more than 70 countries. Dollar and Thrifty have more than 700 corporate and franchised locations in the United States and Canada, operating in virtually all of the top U.S. and Canadian airport markets. The Company's roughly 6,800 employees are located mainly in North America, but global service capabilities exist through an expanding international franchise network. * * * The TCR said April 6, 2009, that Standard & Poor's Ratings Services lowered its ratings on DTAG, including the long-term corporate credit rating to 'CCC' from 'CCC+'. All ratings were removed from CreditWatch, where they were initially placed with negative implications on February 12, 2008, and subsequently lowered three times and maintained on CreditWatch. The outlook is now negative. DOT VN: April 30 Balance Sheet Upside-Down by $9.4 Million ---------------------------------------------------------- Dot VN, Inc.'s balance sheet at April 30, 2009, showed total assets of $2,280,709 and total liabilities of $11,732,186, resulting in a stockholders' deficit of $9,451,477. The Company posted a net loss of $5,472,730 for the year ended April 30, 2009, compared with a net loss of $13,622,311 for the same period in 2008. At April 30, 2009, the Company had a cash balance of $144,842 compared to $480,350 at April 30, 2008, a decrease of $335,508. At April 30, 2009, its working capital deficit was $11,246,046 as compared to $8,251,260 at April 30, 2008. The Company's current assets, other than cash, consist primarily of $103,833 in accounts receivable, $7,632 in prepaid land lease, $9,147 in VAT receivable, and $26,873 in other prepaid expenses. A full-text copy of the Company's Form 10-K is available for free at http://ResearchArchives.com/t/s?4116 Dot VN, Inc. (OTC: DTVI.PK) -- http://www.dotvn.com-- offers Internet services and related online business e-commerce services in Vietnam and internationally. Going Concern Doubt Chang G. Park, CPA, from San Diego, California, expressed on July 24, 2009, substantial doubt about Dot VN Inc.'s ability to continue as a going concern after auditing the company's financial results for the years ended April 30, 2009 and 2008. The auditing firm reported that the company experienced losses from operations. E*TRADE FIN'L: Says Financial Health Not Dependent on TARP Funding ------------------------------------------------------------------ E*TRADE Financial Corporation said that given the success of its capital raising efforts to date, it believes its financial health is not dependent upon receiving funding from the government's Troubled Asset Relief Program Capital Purchase Program. During the fourth quarter of 2008, E*TRADE applied to the U.S. Treasury for funding under the TARP Program. In its quarterly report on Form 10-Q for the period ended June 30, 2009, filed with the Securities and Exchange Commission, E*TRADE said it continues to view TARP funding as a possible component of its capital planning program. E*TRADE cannot predict when or if its application will be acted upon. During the second quarter of 2009, E*TRADE's primary banking regulator, the Office of Thrift Supervision, advised the Company to raise additional equity capital for E*TRADE Bank and to substantially reduce corporate debt service burden. In response, E*TRADE implemented a plan to strengthen capital structure by raising cash equity primarily to support E*TRADE Bank and also to enhance liquidity. As part of this plan, E*TRADE raised $586 million in net proceeds from two separate stock offerings. The Equity Drawdown Program in May 2009 resulted in net proceeds of $63 million and issuance of 41 million shares of common stock. The Public Equity Offering in June 2009 resulted in net proceeds of $523 million and issuance of 500 million shares of common stock. In total, the parent company contributed $500 million of cash equity to E*TRADE Bank during the second quarter of 2009. Also as part of its capital plan, E*TRADE launched an offer to exchange $1.7 billion aggregate principal amount of its corporate debt, which includes up to $1.3 billion principal amount of its 12 1/2% Notes and all $435.5 million principal amount of its 8% Notes, for an equal principal amount of newly issued non-interest bearing convertible debentures. In connection with E*TRADE's pending debt exchange offer, holders of $1.3 billion principal amount of 12-1/2% Notes and almost all of the 8% Notes have tendered notes in exchange for convertible debentures. The pending debt exchange offer is subject to shareholder and regulatory approval, which E*TRADE expects to occur. Management believes that E*TRADE's common stock offerings combined with the expected completion of the pending debt exchange offer, will substantially improve the regulatory capital levels at E*TRADE Bank as well as significantly enhance parent company liquidity, especially through the end of 2011. As a result, E*TRADE believes it will be in a position to take advantage of favorable market conditions with regard to any additional capital planning actions, such as further debt-for-equity exchanges, additional cash capital raising activities or sales of any non- core assets. Pursuant to the Form 10-Q filing, the Company has the option to make interest payments on its 12-1/2% springing lien notes due 2017 in the form of either cash or additional springing lien notes through May 2010. During the second quarter of 2008, E*TRADE elected to make its first interest payment of roughly $121 million in cash. During the fourth quarter of 2008 and second quarter of 2009, E*TRADE elected to make its second and third interest payments of $121 million and $129 million, respectively, in the form of additional springing lien notes. E*TRADE said it will determine whether to make its next two interest payments, in the form of cash or additional springing lien notes based on the facts and circumstances at that time. The November 2010 payment is the first interest payment E*TRADE is required to pay in cash. If the pending debt exchange offer receives shareholder and regulatory approval, E*TRADE said its annual cash interest payments will be reduced by roughly $200 million through 2011. E*TRADE maintains $325.0 million in uncommitted financing to meet margin lending needs. At June 30, 2009, there were no outstanding balances and the full $325.0 million was available. E*TRADE relies on borrowed funds, such as Federal Home Loan Bank advances and securities sold under agreements to repurchase, to provide liquidity for the Bank. E*TRADE's ability to borrow the funds is dependent upon the continued availability of funding in the wholesale borrowings market. At June 30, 2009, the Bank had roughly $6.7 billion in additional collateralized borrowing capacity with the FHLB. The Company posted a net loss of $143.2 million for the three months ended June 30, 2009, from a net loss of $94.5 million for the same period a year ago. The Company posted a net loss of $375.9 million for the six months ended June 30, 2009, from a net loss of $185.7 million for the same period a year ago. As of June 30, 2009, the Company had $47.9 billion in total assets and $44.9 in total liabilities. A full-text copy of the Company's Form 10-Q report is available at no charge at http://ResearchArchives.com/t/s?4120 About E*TRADE FINANCIAL The E*TRADE FINANCIAL family of companies provides financial services including trading, investing and related banking products and services to retail investors. Securities products and services are offered by E*TRADE Securities LLC (Member FINRA/SIPC). Bank products and services are offered by E*TRADE Bank, a Federal savings bank, Member FDIC, or its subsidiaries. * * * The Company's current senior debt ratings are Caa3 by Moody's Investor Service, CC/CCC-(3) by Standard & Poor's and B (high) by Dominion Bond Rating Service. The Company's long-term deposit ratings are Ba3 by Moody's Investor Service, CCC+ (developing) by Standard & Poor's and BB by DBRS. ENDOR INC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Endor, Inc. 1124 W. Old Monee Rd. Crete, IL 60417 Bankruptcy Case No.: 09-28781 Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: A. Benjamin Goldgar Debtor's Counsel: Scott R. Clar, Esq. Crane Heyman Simon Welch & Clar 135 S Lasalle, Suite 3705 Chicago, IL 60603 Tel: (312) 641-6777 Fax: (312) 641-7114 Email: sclar@craneheyman.com Estimated Assets: $0 to $50,000 Estimated Debts: $10,000,001 to $50,000,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ilnb09-28781.pdf The petition was signed by William A. Cunha, president of the Company. ENTRAVISION COMMUNICATIONS: Moody's Cuts Corporate Rating to 'B1' ----------------------------------------------------------------- Moody's Investors Service downgraded Entravision Communications Corporation's Corporate Family Rating to B1 from Ba3, Probability of Default Rating to B2 from B1, and the senior secured credit facility rating to B1 from Ba3. The downgrades reflect Moody's expectation that the advertising slowdown will continue to pressure Entravision's EBITDA over the next 12 months despite the company's cost reduction efforts and incremental retransmission revenue. Moody's anticipates Entravision will maintain debt-to- EBITDA leverage (approximately 6.5x LTM 6/30/09 incorporating Moody's standard adjustment) at an elevated level and limited cushion under its financial maintenance covenants. Moody's views the leverage and thin covenant cushion as being more in line with the revised B1 CFR. Loss given default assessments and point estimates were updated to reflect recent debt pay downs. The rating outlook is stable. Downgrades: Issuer: Entravision Communications Corporation -- Corporate Family Rating, Downgraded to B1 from Ba3 -- Probability of Default Rating, Downgraded to B2 from B1 -- Senior Secured Bank Credit Facility, Downgraded to B1, LGD3 - 31% from Ba3, LGD3 - 32% Outlook Actions: Issuer: Entravision Communications Corporation -- Outlook, Changed To Stable From Negative Entravision is undergoing a significant retrenchment in its revenue due to the advertising downturn. The company has good long-term growth prospects driven by its focus on Spanish-language television and radio broadcasting, and will benefit from Hispanic population growth above that of the overall U.S. population and access to Univision's programming through an affiliation agreement that expires in 2021. Moody's nevertheless anticipates that local advertising market conditions will remain soft over the next year. Moody's believes Entravision's cushion to absorb continued advertising weakness is limited by its thin covenant cushion (factoring in step downs in the leverage covenant through March 2011) and an effective constraint on revolver borrowings in excess of $5 million, which would trigger a one turn tightening of the leverage covenant. The stable rating outlook reflects Moody's projection that Entravision will likely remain in compliance with its financial covenants over the next 12-18 months aided by incremental World Cup and political revenue in 2010 and cost reductions. Moody's also expects Entravision to generate modestly positive free cash flow and the company benefits from the absence of any material required debt repayments until its term loan matures in 2013. Moody's last rating action was on November 4, 2008, when Moody's affirmed Entravision's Ba3 CFR and B1 PDR and changed the rating outlook to negative from stable. Entravision, headquartered in Santa Monica, CA, is a diversified Spanish-language media company with television and radio operations. Entravision owns and/or operates 51 primary television stations and is the largest affiliate group of both the Univision television network and Univision's TeleFutura network. The company also owns and operates a group of primarily Spanish language radio stations, consisting of 48 owned and operated stations in 19 U.S. markets. Entravision's LTM 6/30/09 revenue of $204 million was split approximately 64% television and 36% radio. EURAMAX INTERNATIONAL: Moody's Assigns 'Caa1' Corp. Family Rating ----------------------------------------------------------------- Moody's Investors Service assigned a Caa1 corporate family rating, and a Caa1 senior secured rating to Euramax International, Inc. The rating outlook is stable. The rating action was prompted by the company's recent out-of-court restructuring transaction which eliminated a second lien term loan and PIK notes from the capital structure and added approximately $513 million of new secured term loan debt due 2013. Euramax's outstanding debt was reduced by approximately $380 million at the time of the transaction. About $252 million of the new term loan consists of a pay-in-kind feature, providing additional financial flexibility during this economic downturn. The Caa1 ratings reflect Moody's belief that the company's high leverage, over 10x EBITDA on a pro forma basis, may not be sustainable over the intermediate term, raising the potential for another default. Moody's believes covenant compliance may be tight when the term loan covenants first become effective in June 2010. Over the next 12 months, Moody's expects the company's operating performance to remain weak, primarily due to a slow recovery of the global economy and the depressed state of the residential/commercial building and recreational vehicle end markets. The ratings also consider the limited ability to reduce debt, vulnerability to cyclical end-use markets, and significant customer concentration risks with retail home centers. However, the stable outlook reflects the company's adequate liquidity position in the near term. Euramax has a $70 million ABL revolving credit facility that matures June 2012. Currently, aggregate outstanding amounts are roughly $7 million, with availability of approximately $50 million after considering the most recent borrowing base calculation. The company has approximately $45 million of cash on the balance sheet with no near term maturities. The initial freedom from financial covenants, along with the PIK interest on approximately half the term loan debt, provides time for Euramax's end markets to possibly recover. For the ABL facility, the company must maintain a fixed charge ratio of 1.25 to 1 if availability falls under $20 million. Nonetheless, Moody's believes the company's operating performance will continue to be challenged by a slower global economy and depressed demand. Ratings Assigned: Issuer: Euramax International, Inc. -- Corporate Family Rating, Caa1 -- Probability of Default Rating, Caa1 -- First Lien Sr. Secured Term Loan, Caa1 (LGD4, 58%) -- Outlook, Stable Moody's last rating action was on July 14, 2009, when Euramax's probability of default rating was lowered to D from Ca. Headquartered in Norcross, Georgia, Euramax International Inc. is an international producer of value-added aluminum, steel, vinyl and fiberglass products. EVERGREEN TRANSPORTATION: Files for Chapter 11 Bankruptcy --------------------------------------------------------- Evergreen Transportation, Inc., has filed for Chapter 11 bankruptcy protection before the U.S. Bankruptcy Court for the Southern District of Alabama. Connie Baggett at Press-Register reports that Evergreen Transportation spokesperson Kathy Till said that the Company has no plans to eliminate its 350 drivers and 125 office workers. Evergreen Transportation said in a statement that the reorganization won't affect day-to-day operations, and will give the Company a $5 million credit approval from General Electric Credit Corp. to fund operations and fulfill obligations to workers, clients, and vendors. Former owner and founder Walter Poole will be returning to Evergreen Transportation as adviser, along with former company president David Wildberger, who will return to the same post, Press-Register states, citing Mr. Till. Evergreen Transportation said in a statement that it is negotiating with an investment group led by Mr. Poole. Citing employees, Press-Register relates that Evergreen Transportation has streamlined operations in recent months, with many workers laid off in preparation for the bankruptcy filing. Silver, Voit and Thompson P.C. assists Evergreen Transportation in its restructuring efforts. Press-Register relates that Evergreen Transportation has hired Carriage Hill Partners Ltd. as financial adviser. Evergreen, Alabama-based Evergreen Transportation, Inc., operates a freight and logistics business. The Company listed $10,000,001 to $50,000,000 in assets and $1,000,001 to $10,000,000 in liabilities. EXMOVERE HOLDINGS: Posts $136,000 Net Loss in Qrtr. Ended June 30 ----------------------------------------------------------------- Exmovere Holdings, Inc., fka Clopton House Corporation, posted a net loss of $136,651 for three months ended June 30, 2009, compared with a net loss of $215 for the same period in 2008. For six months ended June 30, 2009, the Company posted a net loss of $190,943 compared with a net loss of $334 for the same period in 2008. June 30, 2009, the Company's balance sheet showed total assets of $22,521,325, total liabilities of $109 and stockholders' equity of $22,521,216. The Company stated that as of June 30, 2009, the Company had $16,825 in cash. The Company added that that it will need additional funding to satisfy its cash requirements for the next twelve months. Completion of its plan of operations is subject to attaining adequate revenue or financing. The Company cannot assure investors that it will generate the revenues needed or that additional financing will be available. In the absence of attaining adequate revenue or additional financing, it may be unable to proceed with its plan of operations. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?4126 On April 14, 2009, PS Stephenson & Co., PC, in Wharton, Texas, raised substantial doubt about Exmovere Holdings, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the years ended December 31, 2008, and 2007. The auditor noted that the Company has no operations, significant assets or cash flows since inception. Exmovere Holdings, Inc., fka Clopton House Corporation, acquires, develops and markets biosensor and emotion detection technologies and integrates existing, profitable businesses, with a focus on healthcare, security, and transportation. The Company's core assets are related to biosensor wristwatches, biosensor turnstiles, emotion detection algorithms and related technologies, originally developed by David Bychkov, Exmovere LLC, Exmocare LLC, Exmogate LLC, and BT2 International. FANNIE MAE: Posts $14.8BB Q2 Net Loss; FHFA Seeks More Govt Money ----------------------------------------------------------------- Fannie Mae reported a net loss of $14.8 billion, or ($2.67) per diluted share, in the second quarter of 2009, compared with a net loss of $23.2 billion, or ($4.09) per diluted share, in the first quarter of 2009. Second-quarter results were driven primarily by $18.8 billion of credit-related expenses, reflecting the ongoing impact of adverse conditions in the housing market, as well as the economic recession and rising unemployment. Credit-related expenses were partially offset by fair value gains. The company also reported a substantial decrease in impairment losses on investment securities, which was due in part to the adoption of new accounting guidance. The Company recorded a net loss attributable to Fannie Mae of $37.9 billion and a diluted loss per share of $6.76 for the first six months of 2009, driven primarily by credit-related expenses of $39.7 billion and other-than-temporary impairment of $6.4 billion that more than offset our net revenues of $10.8 billion. In comparison, it recorded a net loss attributable to Fannie Mae of $4.5 billion and a diluted loss per share of $5.11 for the first six months of 2008, driven primarily by $8.6 billion in credit- related expenses and $3.9 billion in fair value losses that more than offset net revenues of $7.7 billion. The $33.4 billion increase in Fannie Mae's net loss for the first six months of 2009 from the first six months of 2008 was driven principally by a $31.1 billion increase in credit-related expenses, coupled with a $5.8 billion increase in other-than- temporary impairment, that more than offset a $3.2 billion increase in net interest income and a $3.2 billion decrease in fair value losses. As of June 30, 2009, Fannie Mae had $911.3 billion in total assets and $921.8 billion in total liabilities, resulting in $10.7 billion of Fannie Mae stockholders' deficit. As of June 30, 2009, Fannie Mae also had $108 million in non-controlling interest, resulting in $10.6 billion in total deficit. "Taking into account unrealized gains on available-for-sale securities during the second quarter and an adjustment to our deferred tax assets due to the new accounting guidance, the loss resulted in a net worth deficit of $10.6 billion as of June 30, 2009," the Company said in a news statement. The Director of the Federal Housing Finance Agency -- which has been acting as Fannie Mae's conservator since September 6, 2008 -- submitted on August 6, 2009, a request for $10.7 billion from the U.S. Department of the Treasury on Fannie Mae's behalf under the terms of the senior preferred stock purchase agreement between Fannie Mae and the Treasury to eliminate Fannie Mae's net worth deficit. FHFA has requested that Treasury provide the funds on or prior to September 30, 2009. Fannie Mae is continuing its efforts to support the housing market by working with lenders, loan servicers and the government to help homeowners avoid foreclosure and provide liquidity to the mortgage market. Fannie Mae has focused foreclosure-prevention efforts on the implementation of the Making Home Affordable Program, which is designed to significantly expand the number of borrowers who can refinance or modify their mortgages. A full-text copy of Fannie Mae's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?4122 On August 6, 2009, Fannie Mae posted to its Web site a 2009 Second Quarter Credit Supplement presentation consisting primarily of information about Fannie Mae's mortgage credit book of business. A full-text copy of the presentation is available at no charge at: http://ResearchArchives.com/t/s?4123 FINLAY ENTERPRISES: Case Summary & 30 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Finlay Enterprises, Inc. 529 Fifth Avenue New York, NY 10017 Case No.: 09-14873 Debtor-affiliates filing separate Chapter 11 petitions: Entity Case No. ------ -------- Finlay Fine Jewelry Corporation 09-14874 Finlay Jewelry, Inc. 09-14875 eFinlay, Inc. 09-14876 Finlay Merchandising & Buying LLC 09-14877 Carlyle & Co. Jewelers LLC 09-14878 Park Promenade, LLC 09-14879 L. Congress, Inc. 09-14880 Type of Business: The Debtor operates a jewelry retailing business. Chapter 11 Petition Date: August 5, 2009 Court: United States Bankruptcy Court Southern District of New York (Manhattan) Judge: James M. Peck Debtor's Counsel: Shai Waisman, Esq. Weil, Gotshal & Manges, LLP 767 5th Avenue New York, NY 10153 Tel: (212) 310-8274 Fax: (212) 310-8007 Email: shai.waisman@weil.com Estimated Assets: $500,000,001 to $1,000,000,000 Estimated Debts: $500,000,001 to $1,000,000,000 The petition was signed by Shai Y. Waisman. A. Finlay Enterprises' List of 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ US Bank, NA Senior notes $40,582 Vaishali Diamond Corp. trade debt $2,716,596 (partially secured) Royal Jewelry Mfg Inc. trade debt $2,008,333 (partially secured) Richline Group trade debt $1,807,351 (partially secured) B H Multi Com Corp. trade debt $1,255,784 (partially secured) Le Vian Corp. trade debt $1,203,310 (partially secured) Citizen Watch Co of America trade debt $1,098,068 (partially secured) Weindling International trade debt $755,992 Corp LLC (partially secured) Bulova Corp. trade debt $728,204 (partially secured) MJJ Inc. trade debt $690,998 (partially secured) Cybel Trading Corp. trade debt $604,443 (partially secured) Diamond Source Industries trade debt $578,497 Inc (partially secured) Uni-Creation Inc. trade debt $475,808 (partially secured) Tacori Inc. trade debt $474,672 (partially secured) Julius Klein Diamonds Inc trade debt $442,516 (partially secured) Assurant Solutions, Inc. trade debt $423,777 (partially secured) M. Schamroth & Sons trade debt $407,540 (partially secured) Oro Alexander Inc. trade debt $360,226 (partially secured) Seiko Corp. of America trade debt $322,812 (partially secured) Colibri Group Inc trade debt $318,386 (partially secured) China Pearl Import trade debt $312,898 C P Center (partially secured) Lakeview Construction Inc trade debt $311,954 (partially secured) Diamonair USA Inc trade debt $287,998 (partially secured) Movado Group Inc. trade debt $283,723 (partially secured) EMA Jewelry Corp trade debt $242,724 (partially secured) K & F Inc. trade debt $220,687 (partially secured) Color Craft trade debt $207,879 (partially secured) Yurman Design Inc trade debt $203,794 (partially secured) NEI Group trade debt $183,802 (partially secured) Dasan Inc trade debt $180,909 (partially secured) FINLAY ENTERPRISES: S&P Cuts FFJ's 2nd & 3rd Lien Debts to 'D' -------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its unsolicited issue-level ratings on New York City-based Finlay Fine Jewelry Corp.'s second- and third-lien debt to 'D' from 'C'. "The recovery rating for the second- and third-lien debt remains a '6', indicating S&P's expectations of negligible (0%-10%) recovery in the event of a payment default," said Standard & Poor's credit analyst David M. Kuntz. The corporate Credit rating on Finlay Fine Jewelry remains at 'D'. Finlay Enterprises Inc. and Finlay Fine Jewelry, its wholly owned subsidiary, filed voluntary petition for relief under chapter 11 of title 11 of the U.S. bankruptcy code on August 5, 2009. The company will continue to operating its business as a "debtor-in- possession" under the jurisdiction of the court and in accordance with the applicable provisions of the bankruptcy code and the orders of the bankruptcy court. On the same date, the company hired Gordon Brothers Retail Partners to conduct store closing or similar sales of merchandise located at all of Finlay's retail store locations and two distribution centers. FIRST STATE BANK, SARASOTA: Stearns Bank Assumes Deposits --------------------------------------------------------- First State Bank, Sarasota, Florida, was closed August 7 by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Stearns Bank, National Association, St. Cloud, Minnesota, to assume all of the deposits of First State Bank, excluding those from brokers. The nine branches of First State Bank will reopen today, Monday, as branches of Stearns Bank, N.A. Depositors of First State Bank will automatically become depositors of Stearns Bank, N.A. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until Stearns Bank, N.A. can fully integrate the deposit records of First State Bank. As of May 31, 2009, First State Bank had total assets of $463 million and total deposits of approximately $387 million. In addition to assuming all of the deposits of the failed bank, Stearns Bank, N.A. agreed to purchase approximately $451 million of assets. The FDIC will retain the remaining assets for later disposition. Stearns Bank, N.A. will purchase all deposits, except about $8 million in brokered deposits, held by First State Bank. The FDIC will pay the brokers directly for the amount of their funds. Customers who placed money with brokers should contact them directly for more information about the status of their deposits. The FDIC and Stearns Bank, N.A. entered into a loss-share transaction on approximately $364 million of First State Bank's assets. Stearns Bank, N.A. will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers. Customers who have questions about the transaction can call the FDIC toll-free at 1-800-405-8124. Interested parties can also visit the FDIC's Web site at: http://www.fdic.gov/bank/individual/failed/fsb-sarasota.html The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $116 million. Stearns Bank, N.A.'s acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. First State Bank is the 70th FDIC- insured institution to fail in the nation this year, and the fifth in Florida. The last FDIC-insured institution to be closed in the state was Integrity Bank, Jupiter, on July 31, 2009. FLYING J: Deadline to Challenge Lender Liens Moved to Sept. 15 -------------------------------------------------------------- Flying J Inc. and lender Bank of America have reached a stipulation extending until September 15 the official committee of unsecured creditors' deadline to commence an adversary proceeding to challenge the lender's liens. The Court has approved the stipulation. Based in Ogden, Utah, Flying J Inc. -- http://www.flyingj.com/-- is among the 20 largest private companies in America, with 2007 sales exceeding $16 billion. The fully integrated oil company employs approximately 14,700 people in the U.S. and Canada through its interstate operations, transportation, refining and supply, exploration and production, as well as its financial services and communications, divisions. Flying J and six of its affiliates filed for bankruptcy on December 22, 2008 (Bankr. D. Del. Lead Case No. 08-13384). Flying J sought Chapter 11 protections after a precipitous drop in oil prices and disruption in the credit markets brought to bear significant short-term pressure on the company's liquidity position. 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. FORD MOTOR: Will Cut Suppliers by Almost 50% by Year-End -------------------------------------------------------- Mayur Pahilajani at AHN News reports that Ford Motor Co. said that it will let go almost 50% of its suppliers by the end of 2009. According to AHN, Ford said that it would cut the number of suppliers eligible for new sourcing to 850. Ford said that it has a long-term goal of 750 total global production suppliers, AHN states. About 1,683 of Ford's 2,198 global production suppliers as of the end of 2008 were eligible for new sourcing. Ford global powertrain purchasing executive director Burt Jordan said in a statement, "The Ford purchasing organization is laying the groundwork for a more financially viable supply base when stability returns to the industry. We understand the strengths and weaknesses of our supply base better now than we ever have before. That knowledge gives us the ability to also turn the crisis into an opportunity by accelerating our own consolidation with the right suppliers going forward." "In the last few months, there is enough data to suggest we've improved customer consideration of the Ford brand because we are in a different position from our competition," William Diem at WardsAuto.com quoted Ford chief financial officer Lewis Booth as saying. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The Company provides financial services through Ford Motor Credit Company. The Company has operations in Japan in the Asia Pacific region. In Europe, the Company maintains a presence in Sweden, and the United Kingdom. The Company also distributes its brands in various Latin-American regions, including Argentina and Brazil. As reported by the Troubled Company Reporter on April 15, 2009, Standard & Poor's Ratings Services said it raised its ratings on Ford Motor Co. and related entities, including the corporate credit rating, to 'CCC+' from 'SD-'. The ratings on Ford Motor Credit Co. are unchanged, at 'CCC+', and the ratings on FCE Bank PLC, Ford Credit's European bank, are also unchanged, at 'B-', maintaining the one-notch rating differential between FCE and its parent Ford Credit. S&P said that the outlook on all entities is negative. Moody's Investors Service in December 2008 lowered the Corporate Family Rating and Probability of Default Rating of Ford Motor Company to Caa3 from Caa1 and lowered the company's Speculative Grade Liquidity rating to SGL-4 from SGL-3. The outlook is negative. The downgrade reflects the increased risk that Ford will have to undertake some form of balance sheet restructuring to achieve the same UAW concessions that General Motors and Chrysler are likely to achieve as a result of the recently-approved government bailout loans. Such a balance sheet restructuring would likely entail a loss for bond holders and would be viewed by Moody's as a distressed exchange and consequently treated as a default for analytic purposes. FORD MOTOR: Bank Debt Trades at 14% Off in Secondary Market ----------------------------------------------------------- Participations in a syndicated loan under which Ford Motor Co. is a borrower traded in the secondary market at 86.17 cents-on-the- dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.20 percentage points from the previous week, The Journal relates. The loan matures on Dec. 15, 2013. The Company pays 300 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ca rating and Standard & Poor's CCC+ rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles in 200 markets across six continents. With about 260,000 employees and about 100 plants worldwide, the company's core and affiliated automotive brands include Ford, Jaguar, Land Rover, Lincoln, Mercury, Volvo, Aston Martin, and Mazda. The Company provides financial services through Ford Motor Credit Company. The Company has operations in Japan in the Asia Pacific region. In Europe, the Company maintains a presence in Sweden, and the United Kingdom. The Company also distributes its brands in various Latin-American regions, including Argentina and Brazil. As reported by the Troubled Company Reporter on April 15, 2009, Standard & Poor's Ratings Services said it raised its ratings on Ford Motor Co. and related entities, including the corporate credit rating, to 'CCC+' from 'SD-'. The ratings on Ford Motor Credit Co. are unchanged, at 'CCC+', and the ratings on FCE Bank PLC, Ford Credit's European bank, are also unchanged, at 'B-', maintaining the one-notch rating differential between FCE and its parent Ford Credit. S&P said that the outlook on all entities is negative. Moody's Investors Service in December 2008 lowered the Corporate Family Rating and Probability of Default Rating of Ford Motor Company to Caa3 from Caa1 and lowered the company's Speculative Grade Liquidity rating to SGL-4 from SGL-3. The outlook is negative. The downgrade reflects the increased risk that Ford will have to undertake some form of balance sheet restructuring to achieve the same UAW concessions that General Motors and Chrysler are likely to achieve as a result of the recently-approved government bailout loans. Such a balance sheet restructuring would likely entail a loss for bond holders and would be viewed by Moody's as a distressed exchange and consequently treated as a default for analytic purposes. FREDDIE MAC: Reports $768MM in Net Income for Qrtr. Ended June 30 ----------------------------------------------------------------- Freddie Mac reported net income of $768 million for the quarter ended June 30, 2009, compared to a net loss of $9.9 billion for the quarter ended March 31, 2009. After the dividend payment of $1.1 billion on its senior preferred stock to the U.S. Department of the Treasury (Treasury), Freddie Mac reported a net loss per diluted common share of $0.11 in the second quarter of 2009, compared to a net loss per diluted common share of $3.14 in the first quarter of 2009. Freddie Mac had a positive net worth of $8.2 billion at June 30, 2009. As a result, no additional funding was required from Treasury under the terms of the Senior Preferred Stock Purchase Agreement (Purchase Agreement) for the second quarter. "We are pleased that our financial results allowed us to finish the quarter with a positive net worth, meaning we will not need to request any additional financial support from the government at this time. However, we recognize that our financial results for the quarter include one-time accounting adjustments and mark-to- market gains that are subject to change in future periods," said Freddie Mac Interim Chief Executive Officer John Koskinen. "While we are seeing some early signs pointing to a housing recovery -- including a modest uptick in house prices in some markets -- our outlook remains cautious due to rising foreclosures, growing unemployment, tight lending standards and buyers' reluctance to re-enter the market. "Our role in the Obama Administration's recovery efforts has been focused on helping to stem the foreclosure crisis. In the first half of the year, we were able to help more than 85,000 distressed borrowers avoid foreclosure, and we helped an additional 1 million homeowners lower their mortgage payments through refinancing. The Making Home Affordable program is ramping up and Freddie Mac employees are dedicated to working with our borrowers to help them understand their options and with our servicers to quickly increase their infrastructure and capacity. "On another positive note, we look forward to welcoming our new CEO Ed Haldeman to Freddie Mac. I'm confident that under Ed's leadership we will continue to play a leading role in the recovery of the housing market, while building a stronger foundation for our future," Koskinen said. GAAP Results Second quarter 2009 results were driven primarily by $4.3 billion in net interest income mainly due to lower funding costs, as well as $4.2 billion in gains on the company's derivative portfolio and guarantee asset, which were primarily driven by net mark-to-market gains due to increases in long-term interest rates. These results were partially offset by credit-related expenses of $5.2 billion related to the challenging economic conditions during the second quarter. Results were also impacted by net impairment of available-for-sale (AFS) securities recognized in earnings of $2.2 billion for the second quarter of 2009, reflecting the April 1, 2009 adoption of FASB Staff Position No. FSP FAS 115-2 and FAS 124-2, "Recognition and Presentation of Other-Than- Temporary Impairments" (FSP FAS 115-2 and FAS 124-2). Three Months Ended June 30, March 31, June 30, ($in millions) 2009 2009 2008(1) -------------- -------- --------- -------- $4,255 $3,859 $1,529 Net interest income Management and guarantee income 710 780 757 Other non-interest income (loss) (2)(3) 2,505 (3,868) (701) ----- ------- ----- Total revenues 7,470 771 1,585 ----- --- ----- Administrative expenses (383) (372) (404) Credit-related expenses (5,208) (9,097) (2,802) Other non-interest expense (1,296) (2,090) (228) ------- ------- ----- Total expenses (6,887) (11,559) (3,434) ------- -------- ------- Income (loss) before income tax benefit 583 (10,788) (1,849) Income tax benefit 184 937 1,030 --- --- ----- Net income (loss) $767 $(9,851) $(819) Less: Net (income) loss attributable to noncontrolling interest 1 - (2) --- --- --- Net income (loss) attributable to Freddie Mac $768 $(9,851) $(821) ==== ======= ===== Senior preferred stock dividends declared $(1,149) $(370) $- ======= ===== == Total equity (deficit) / GAAP net worth (at period end) $8,232 $(6,008) $13,082 ====== ======= ======= AOCI, net of taxes (at period end) $(34,815) $(28,303) $(24,180) ======== ======== ======== (1) Certain amounts in prior periods have been reclassified to conform to the current presentation. (2) Includes $1.8 billion of gains (losses) on guarantee asset and $2.4 billion of derivative gains (losses) for the second quarter of 2009. (3) Includes $(1.4) billion of total gains (losses) on investments for the second quarter of 2009, of which $(2.2) billion was related to net impairment of available-for-sale securities recognized in earnings. Net interest income for the second quarter of 2009 was $4.3 billion, compared to $3.9 billion for the first quarter of 2009, driven by lower short-term and long-term funding costs, partially offset by a decrease of $0.5 billion in accretion income associated with other-than-temporary impairments on AFS securities reflecting the adoption of FSP FAS 115-2 and FAS 124-2. Management and guarantee income for the second quarter of 2009 was $710 million, compared to $780 million for the first quarter of 2009. This decrease reflects reduced amortization income related to certain pre-2003 deferred fees due to the increase in forecasted interest rates resulting in a decrease in projected prepayments. Other non-interest income (loss) for the second quarter of 2009 was income of $2.5 billion, compared to a loss of $3.9 billion for the first quarter of 2009. The increase was primarily attributable to a significant decrease in net impairments of AFS securities recognized in earnings in the second quarter as the company's prospective adoption of FSP FAS 115-2 and FAS 124-2 on April 1, 2009, impacted its impairment results and the performance of the collateral underlying the Company's AFS securities deteriorated to a lesser extent. During the second quarter of 2009, the company recognized $10.5 billion in total other-than-temporary impairments of AFS securities. Included in this amount were $2.2 billion of credit- related impairments recognized in earnings. As a result of the adoption of FSP FAS 115-2 and FAS 124-2, $0.6 billion of the $2.2 billion represents cumulative credit-related impairments related to securities impaired for the first time during the second quarter. These securities would have been impaired as of March 31, 2009, if the guidance had been in place prior to April 1, 2009. Also included in total other-than-temporary impairments were $8.3 billion of non-credit related impairments that were recognized in accumulated other comprehensive income (loss) (AOCI). This amount represents the portion of cumulative fair value declines that are not related to credit on newly identified securities as a result of the adoption and current period changes in fair value not attributed to credit for previously impaired securities. During the first quarter of 2009, prior to its prospective adoption of the new accounting standard, the company recorded $7.1 billion of security impairments on its AFS securities in earnings, reflecting both credit-related and non-credit-related impairments. Consequently, second quarter of 2009 impairment results are not directly comparable to first quarter of 2009 impairment results. During the second quarter of 2009, the company recognized gains of $4.2 billion on its derivative portfolio and guarantee asset, compared to gains of $25 million recorded in the first quarter of 2009, primarily driven by net mark-to-market gains due to increases in long-term interest rates. Credit-related expenses, consisting of provision for credit losses and real estate owned (REO) operations expense, were $5.2 billion for the second quarter of 2009, compared to $9.1 billion for the first quarter of 2009. Provision for credit losses was $5.2 billion for the second quarter of 2009, compared to $8.8 billion for the first quarter of 2009. The decrease was driven by a reduced rate of growth in the company's loan loss reserve due to the recent modest national home price improvements, which the company believes to be largely seasonal. Also driving the decrease was the impact of enhancements made to the company's estimation methodology, which resulted in an approximate $1.4 billion decline in the Company's estimate of loan loss reserves and consequently its provision for credit losses in the second quarter. Freddie Mac expects its provision for credit losses will likely remain high during the remainder of 2009 and to increase above the level recognized in the second quarter. REO operations expense was $9 million for the second quarter of 2009, down from $306 million for the first quarter of 2009. The decrease was driven by a reduction in market-based write-downs due to a slowdown in the deterioration of REO fair values. Other non-interest expense for the second quarter of 2009 was $1.3 billion, compared to $2.1 billion for the first quarter of 2009. The decrease was primarily related to losses of $1.2 billion on delinquent and modified loans purchased from PC pools in the second quarter of 2009, compared to losses of $2.0 billion in the first quarter of 2009, driven by a significant decrease in the purchase volume of delinquent and modified loans. Certain seriously delinquent loans that would have otherwise been modified under Freddie Mac's traditional programs are currently in three-month trial periods under the Home Affordable Modification program that the company implemented in April. A loan that has begun the three-month trial period will not be modified and purchased out of the PC pool until the borrower successfully completes the trial period. Income tax benefit for the second quarter of 2009 was $184 million, compared to a benefit of $937 million for the first quarter of 2009, primarily resulting from an increase in second quarter pre-tax income, which decreased the estimated 2009 taxable loss. Freddie Mac established a partial valuation allowance against its net deferred tax assets during the third quarter of 2008, and recorded an additional allowance during the fourth quarter of 2008 and first quarter of 2009, as a result of the events and developments related to the conservatorship of the company, other events in the market, and related difficulty in forecasting future profit levels on a continuing basis. The Company is required to assess the realizability of the deferred tax asset on a quarterly basis. In the second quarter of 2009, the Company had a net reduction in its valuation allowance previously recorded against its deferred tax assets of $5.3 billion, primarily resulting from the adoption of FSP FAS 115-2 and FAS 124-2. After recording the valuation allowance adjustment in the second quarter of 2009, the company had a remaining deferred tax asset of $16.9 billion, representing the tax effect of net unrealized losses on its AFS securities, which management believes is more likely than not of being realized because of the company's conclusion that it has the intent and ability to hold its AFS securities until any temporary unrealized losses are recovered. AOCI, net of taxes as of June 30, 2009 was a loss of $34.8 billion, compared to a loss of $28.3 billion as of March 31, 2009. The increase in net loss in AOCI, net of taxes, was primarily attributable to the cumulative-effect adjustment of $9.9 billion resulting from the company's adoption of FSP FAS 115- 2 and FAS 124-2, partially offset by net unrealized gains on the company's AFS securities that are reported at fair value as a component of AOCI. Net Worth and Senior Preferred Stock Freddie Mac's positive net worth of $8.2 billion at June 30, 2009, was primarily attributable to a net increase of $5.1 billion in total equity as a result of the company's adoption of FSP FAS 115- 2 and FAS 124-2 on April 1, 2009, and funding received under the Purchase Agreement with Treasury in June 2009. In addition, the positive net worth also reflects second quarter 2009 net income, and a net increase in AOCI excluding the cumulative effect of adoption of FSP FAS 115-2 and FAS 124-2. Net worth represents the difference between the company's assets and liabilities under generally accepted accounting principles (GAAP) and is equal to the company's total equity (deficit). The aggregate liquidation preference of the company's senior preferred stock was $51.7 billion as of June 30, 2009. The amount remaining under Treasury's $200 billion funding commitment as of June 30, 2009, was $149.3 billion, which does not include the $1 billion of senior preferred stock issued to Treasury as initial consideration for its funding commitment. Based on the aggregate liquidation preference of $51.7 billion, Treasury, the holder of the senior preferred stock, is entitled to annual cash dividends of approximately $5.2 billion. Including the $1.1 billion quarterly dividend on the senior preferred stock paid on June 30, 2009, the Company has paid an aggregate amount of $1.7 billion in cash on the senior preferred stock to Treasury at the direction of the Federal Housing Finance Agency (FHFA), acting as Conservator. The Company's net worth, and consequently draws under the Purchase Agreement, could vary significantly in future periods due to changes in market and credit conditions and other factors. Adoption of FSP FAS 115-2 and FAS 124-2 On April 1, 2009, the Company prospectively adopted FSP FAS 115-2 and FAS 124-2. The new accounting guidance revised the recognition, measurement and presentation for other-than- temporary impairments on AFS securities the company holds. As a result of the adoption, the company recognized a cumulative-effect adjustment of $15.0 billion to its opening balance of retained earnings (accumulated deficit) on April 1, 2009, with a corresponding adjustment of $(9.9) billion, net of tax, to AOCI. The difference primarily represents the release of the previously recorded valuation allowance against the deferred tax asset that is no longer required upon adoption of FSP FAS 115-2 and FAS 124- 2. Thus, as a result of the adoption of the new accounting guidance, the company's total equity increased by $5.1 billion. Foreclosure Prevention and Refinancing Activities Freddie Mac's primary focus in the second quarter was delivering on the Obama Administration's Making Home Affordable (MHA) program. In support of the MHA program, the company implemented the Home Affordable Modification program (HAMP) in April 2009. During the second quarter of 2009, based on information from the company's largest servicers, approximately 16,000 loans entered the three-month trial period that precedes a modification under HAMP. The Company expects that an increasing number of loans eligible for modification under HAMP may enter such trial periods during the remainder of 2009. Freddie Mac also began the purchase of refinance mortgages originated under the MHA program through the Freddie Mac Relief Refinance Mortgage(SM)( )in April 2009. The Company had helped refinance approximately 28,500 loans totaling $5.1 billion of unpaid principal balance as of June 30, 2009, under this program. During the second quarter, the Relief Refinance Mortgage was modified to give borrowers the ability to refinance a Freddie Mac- owned or guaranteed mortgage with any lender affiliated with the company. On July 1, 2009, the Company announced that the maximum loan-to-value ratio for the Relief Refinance Mortgage would be increased on October 1, 2009, from 105 percent to 125 percent of the current value of the property. The Company's total refinance- loan purchase volume for the second quarter of 2009 was approximately $135 billion, compared to approximately $95 billion during the first quarter of 2009. Freddie Mac continued to work with struggling borrowers and lenders to prevent foreclosures through its foreclosure prevention programs. The Company helped approximately 45,000 borrowers stay in their homes or sell their properties. Management Changes On July 21, 2009, Freddie Mac announced that its board of directors had named Charles E. Haldeman, Jr., as the Company's chief executive officer and had elected him as a member of the board of directors. The Company expects that Mr. Haldeman's employment and board tenure will begin on August 10, 2009. Mr. Haldeman will succeed John A. Koskinen who has been serving as Freddie Mac's interim chief executive officer since March 2009 and performing the function of principal financial officer since April 2009. Mr. Koskinen will resume his previous position as non- executive chairman of the board. About Freddie Mac The Federal Home Loan Mortgage Corporation (FHLMC) NYSE: FRE -- http://www.freddiemac.com/-- commonly known as Freddie Mac, is a stockholder-owned government-sponsored enterprise authorized to make loans and loan guarantees. Freddie Mac was created in 1970 to provide a continuous and low cost source of credit to finance America's housing. Freddie Mac conducts its business primarily by buying mortgages from lenders, packaging the mortgages into securities and selling the securities -- guaranteed by Freddie Mac -- to investors. Mortgage lenders use the proceeds from selling loans to Freddie Mac to fund new mortgages, constantly replenishing the pool of funds available for lending to homebuyers and apartment owners. At December 31, 2008, the Company's balance sheet showed total assets of $850.9 billion and total liabilities of $881.6 billion, resulting in a stockholders' deficit of $30.7 billion. Conservatorship As reported by the Troubled Company Reporter, the U.S. government took direct responsibility for Fannie Mae and Freddie Mac, placing the government sponsored enterprises under conservatorship on September 7, 2008. James B. Lockhart, director of Federal Housing Finance Agency, said that Fannie Mae and Freddie Mac share the critical mission of providing stability and liquidity to the housing market. Between them, the Enterprises have $5.4 trillion of guaranteed mortgage-backed securities (MBS) and debt outstanding, which is equal to the publicly held debt of the United States. Among the key components of the conservatorship, the FHFA, as conservator, assumed the power of the Board and management. Being under Conservatorship, Freddie Mac said it is dependent upon the continued support of Treasury and FHFA to continue operating its business. GAINEY CORP: Gets More Time to Negotiate Sale Pact With Najafi -------------------------------------------------------------- Chris Knape at The Grand Rapids Press reports that the U.S. Bankruptcy Court for the Western District of Michigan has given Gainey Corp. more time to work on a sale deal with Najafi Cos. LLC. According to The Grand Rapids Press, Gainey's lenders said that they wouldn't object to allowing the Company to continue to use its cash to fund operations while it negotiates with Najafi. A hearing is set for August 26, the report states. The process of a sale is expected to move forward this week, The Grand Rapids Press says, citing lawyers. The Grand Rapids Press relates that Wachovia Bank, Gainey's largest creditor, has withdrawn its support of the alternative plan that creditors filed last week that could have resulted in the Company's liquidation or sale. Headquartered in Grand Rapids, Michigan, Gainey Corp. -- http://www.gaineycorp.com/-- provides trucking and freight- services in the U.S. and parts of Canada. It has 5,000 trucks and trailers, and employs more than 2,300 workers including 1,900 truck drivers. The Company and its subsidiaries filed for Chapter 11 bankruptcy protection on Octoer 14,, 2008 (Bankr. W.D. Mich. Lead Case No. 08-09092). Daniel F. Gosch, Esq., Geoffrey A. Fields, Esq., John T. Schuring, Esq., and Trent B. Collier, at Dickinson Wright PLLC; Inga April Hofer, Esq., Jacob Joseph Sadler, Esq., and Stephen B. Grow, Esq., at Warner Norcross & Judd, LLP, represent the Debtors as counsel. Alixpartners, LLC, is the Debtors' restructuring and financial consultant. Virchow Krause and Company, LLP, is the Debtors' financial advisor. Eric David Novetsky, Esq., Jay L. Welford, Esq., Judith Greenstone Miller, Esq., Louis P. Rochkind, Esq., Paul R. Hage, Esq., and Richard E. Kruger, Esq., at Jaffe, Raitt, Heuer & Weiss, PC, represent the Official Committee of Unsecured Creditors as counsel. As of the commencement date, the Debtors owned assets with a "book" value of approximately $239,000,000. As of May 22, 2009, the Debtors books and records reflected available cash on hand in the amount of approximately $16,300,000, plus billed accounts receivable in the amount of approximately $18,400,000. GENERAL MOTORS: Still Has Issues with Magna on Opel Bid ------------------------------------------------------- John Smith, GM Group Vice President, wrote in a blog posting at http://drivingconversations.gmblogs.com/that there have been some progress on talks regarding the sale of Opel with bidders -- Magna International Inc. and RHJ International SA -- but said that there are still outstanding issues with respect to those bids. Mr. Smith also denied that Magna International has been selected as winning bidder, saying that press reports tended to exaggerate the state of progress of the talks. As the RHJI proposal is the simpler of the two, there were very few significant issues with this offer, Mr. Smith said. GM, on the other hand, still has to resolve a number of issues with Magna, he stated. Mr. Smith explains the Magna proposal is more complex, owing to the inclusion of Russia and a third, Russian-based investor. "We started the week with about 30 issues to resolve, including New Opel involvement with Chevrolet in Russia, intellectual property transfer rights in Russia, advanced technology access, product development responsibilities, minority shareholder rights and other items," Mr. Smith said. Russia, intellectual property, product development responsibilities and various governance issues are among the unresolved issues, many of them on the table for some time now, Mr. Smith said. In discussions with the German automotive task force last week, GM continued to discuss and contrast the relative commercial merits of the two proposals. The German government's advisor, Lazard, left a strong impression that the RHJI bid was superior. GM said that it has provided in excess of $5 billion to support GM over the past several years. Despite its minority status, GM will continue to support Opel by the near full reimbursement of the new company's annual engineering budget (including a markup) and a reduction in royalties otherwise paid during the first five years of operation by over $2 billion. 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 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. 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. General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, is the Debtors' restructuring officer. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GENERAL MOTORS: Asks for Oct. 30 Ownership List Deadline Extension ------------------------------------------------------------------ General Motors Corp., now known as Motors Liquidation Co., asks the U.S. Bankruptcy Court for the Southern District of New York to extend to October 30 the deadline to file their initial report of financial information in respect of entities in which their chapter 11 estates hold a controlling or substantial interest. The Debtors estimate that at the outset of these cases there were approximately 259 domestic entities and 271 foreign entities in which the Debtors held a substantial or controlling interest within the meaning of F.R.B.P. Rule 2015.3 GM said that its current deadline of Aug. 31 is too soon given the "size, complexity and geographic reach" of its business and the amount of time it had to devote to selling its assets. It added that it had substantially spent its resources to complete the sale of its key assets to NGMCO, Inc., a U.S. Treasury-sponsored purchaser. About General Motors Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/-- was founded in 1908. 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 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. General Motors and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, is the Debtors' restructuring officer. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. In a Bankruptcy Court-sanctioned sale, GM sold its key assets to an entity 60.8% owned by the U.S. Government. The bankrupt estates changed its name to Motors Liquidation Co. following the sale of the U.S. government owned entity that is now known as General Motors Company. Motors Liquidation is winding down remaining assets and has yet to file a Chapter 11 plan that explains how it will pay off claims filed against the bankrupt estates. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) GEORGIA GULF: Bank Debt Trades at 5% Off in Secondary Market ------------------------------------------------------------ Participations in a syndicated loan under which Georgia Gulf Corporation is a borrower traded in the secondary market at 94.90 cents-on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 3.85 percentage points from the previous week, The Journal relates. The loan matures on Oct. 3, 2013. The Company pays 250 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's C rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Georgia Gulf Corporation is a manufacturer and international marketer of two integrated chemical product lines, chlorovinyls and aromatics. The Company's primary chlorovinyls products are chlorine, caustic soda, vinyl chloride monomer (VCM), vinyl resins and vinyl compounds. Its aromatics products are cumene, phenol and acetone. The Company has four business segments: chlorovinyls; window and door profiles, and moldings products; outdoor building products, and aromatics. At March 31, 2009, the Company had $1.56 billion in total assets and $1.66 billion in total liabilities, resulting in $97.3 million stockholders' deficit. As reported in the Troubled Company Reporter on June 19, 2009, Standard & Poor's Ratings Services lowered its issue rating on Georgia Gulf Corp.'s $100 million 7.125% senior notes due 2013 to 'D' from 'C' and retained the '6' recovery rating, indicating S&P's expectation of negligible recovery (0%-10%) on the notes. At the same time, S&P kept its corporate credit rating on Georgia Gulf at 'D'. S&P had lowered its corporate credit rating and these issue ratings on Georgia Gulf to 'D' on May 21, 2009, following a missed interest payment of $34.5 million on these notes. As reported by the TCR on Aug. 3, Moody's Investors Service upgraded the Corporate Family Rating of Georgia Gulf Corporation to B2 from Caa2 as a result of the completion of the private debt- for-equity exchange offer and an amendment to its credit facility that substantially improves the company's liquidity. GMAC INC: May Put ResCap Out of Its Misery, CreditSights Says ------------------------------------------------------------- GMAC may cut losses and the need for capital by sending its home mortgage unit, Residential Capital LLC, into bankruptcy, Bloomberg's Carla Main reported, citing CreditSights Inc. ResCap lost at least $1 billion per quarter since the third period of 2007 and may breach capital covenants in the current quarter, said a report dated Aug. 4 from CreditSights. GMAC could keep ResCap's "remaining good assets" and leave behind $11.4 billion of debt in a bankruptcy, said the report, which asked whether it was "time to put ResCap out of its misery." The future value "may have fallen below the cost of keeping ResCap alive," said the report. "We see no real pragmatic reason for GMAC to absorb another $2 billion-plus quarterly hit." ResCap accounted for a "substantial portion" of losses that appeared in U.S. government stress tests used for obtaining federal money, and GMAC could reduce the need for capital by separating itself from the Minneapolis-based mortgage unit, CreditSights said. As reported by the TCR on August 5, 2009, GMAC Financial Services reported a second quarter 2009 after-tax net loss of $3.9 billion, compared to a net loss of $2.5 billion in the second quarter of 2008. GMAC's mortgage operations, which include ResCap and the mortgage activities of Ally Bank and ResMor Trust, reported a pre-tax loss of $2.0 billion in the second quarter of 2009, compared to a pre-tax loss of $1.8 billion in the second quarter of 2008. GMAC's insurance business reported a pre-tax loss of $476 million in the second quarter of 2009, compared to pre-tax income of $193 million in the year-ago period. Bloomberg recounts that ResCap, once the most profitable unit of GMAC, almost went bankrupt last year amid surging defaults on subprime home loans, and investors asked Hull why GMAC still provides support. GMAC Chief Financial Officer Robert Hull told investors during a conference call August 4 that GMAC continues to support ResCap and that GMAC doesn't want to put ResCap into bankruptcy now because it has a mortgage origination and servicing platform that the parent company needs. Mr. Hull told investors that GMAC will disclose plans for ResCap by year-end. As part of its effort to streamline its international business and focus primarily on its U.S. lending and servicing businesses, ResCap has already sold its mortgage operations in Australia and Spain. About GMAC 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. GMAC INC: Quarterly Results Won't Affect S&P's 'CCC' Rating ----------------------------------------------------------- Standard & Poor's Ratings Services said that its CCC/Developing/C ratings on both GMAC Inc. and Residential Capital LLC are not affected by release of consolidated quarterly results. GMAC reported a consolidated pretax loss of $2.8 billion versus a consolidated pretax loss of $798 million last quarter. Results included sizeable one-time charges as GMAC and Residential Capital LLC continue to deal with legacy assets and reposition their operations. Included in the current quarterly loss was $1.2 billion associated with the tax impact of incorporation (GMAC was incorporated in June; it was previously an LLC). The quarterly loss was again driven by its mortgage business, which continues to report elevated provision levels and net charge-offs. The mortgage operation reported a pretax loss of $2 billion. On a pretax basis, the firm's auto finance operation turned a profit of $346 million. The improved used vehicle market enhanced these positive earnings, as residual value improvements reduced loss severity. The insurance subsidiary also reported a loss, but this was driven by a goodwill impairment associated with its U.S. consumer property and casualty business, which is under strategic review. Absent the goodwill impairment, the insurance subsidiary made $131 million on a pretax basis. S&P believes GMAC and Residential Capital LLC continue to face significant Operating challenges, and S&P expects continued poor quarterly performance. The auto industry remains weak, and S&P thinks housing prices will continue to fall in many markets, pressuring the firm's mortgage business. S&P will continue to monitor developments as they unfold. GRAY TELEVISION: Posts $6.64MM Q2 Net Loss; May Violate Covenant ---------------------------------------------------------------- Gray Television Inc. warned that based on its financial projections it is likely not to be in compliance with the leverage ratio under its senior credit facility as of March 31, 2010. Gray has swung to a $6.64 million net loss for the three months ended June 30, 2009, compared to $3.21 million net income for the same period a year ago. For the six months ended June 30, 2009, the Company widened its net loss to $15.5 million from $635,000 during the same period a year ago. Total revenue decreased $13.7 million, or 17%, to $65.1 million in the 2009 three-month period due primarily to decreased local, national, internet and political advertising revenues, decreased production and other revenue and decreased network compensation revenue. Total revenue decreased $23.3 million, or 16%, to $126.4 million in the 2009 six-month period due primarily to decreased local, national, internet and political advertising revenue, decreased production and other revenue and decreased network compensation revenue. As of June 30, 2009, the Company had $1.23 billion in total assets; and $1.04 billion in total liabilities and $92.7 million in redeemable preferred stock; resulting in $98.9 million stockholders' equity. As of June 30, 2009 and December 31, 2008, the Company had 1,000 shares of Series D Perpetual Preferred Stock outstanding. The no par value Series D Perpetual Preferred Stock has a liquidation value of $100,000 per share for a total liquidation value of $100.0 million as of June 30, 2009, and December 31, 2008. Series D Perpetual Preferred Stock Dividends on the Series D Perpetual Preferred Stock accrued at 12.0% per annum through December 31, 2008 after which the dividend rate increased to 15.0% per annum. The Company did not fund the Series D Perpetual Preferred Stock cash dividend payments due on January 15, 2009, April 15, 2009 or July 15, 2009, that had accumulated for the three-month periods ended December 31, 2008, March 31, 2009 and June 30, 2009. The accrued Series D Perpetual Preferred Stock dividend balance as of June 30, 2009, was $10.5 million. The deferral of dividend payments is allowable under the terms of the Series D Perpetual Preferred Stock. When three consecutive cash dividend payments with respect to the Series D Perpetual Preferred Stock remain unfunded, the dividend rate will increase from 15.0% per annum (or $15 million) to 17.0% per annum (or $17 million). Thus, the Series D Perpetual Preferred Stock dividend began accruing at 17.0% per annum on July 16, 2009, and will accrue at that rate as long as at least three consecutive cash dividend payments remain unfunded. While any Series D Perpetual Preferred Stock dividend payments are in arrears, the Company is prohibited from repurchasing, declaring or paying any cash dividend with respect to any equity securities having liquidation preferences equivalent to or junior in ranking to the liquidation preferences of the Series D Perpetual Preferred Stock including the Company's common stock and Class A common stock. The Company said it can provide no assurances when any future cash payments will be made on any accumulated and unpaid Series D Perpetual Preferred Stock cash dividends presently in arrears or that become in arrears in the future. The Series D Perpetual Preferred Stock has no mandatory redemption date but may be redeemed at the stockholders' option on or after June 30, 2015. The deferral of paying cash dividends on the Series D Perpetual Preferred Stock and the corresponding suspension of paying cash dividends on the common and Class A common stock was made to reallocate cash resources to support the Company's ability to pay increased interest costs or fees associated with the amendment to its senior credit facility. Amendment to Credit Facility Effective as of March 31, 2009, the Company amended its senior credit facility. The terms of the amended senior credit facility include, but are not limited to, an increase in the maximum ratio allowed under the leverage ratio covenant for the year ending December 31, 2009, a general increase in the restrictiveness of the remaining covenants and increased interest rates. Gray said without the amendment, it would not have been in compliance with the leverage ratio covenant and such noncompliance would have caused a default under the agreement. This amendment increased Gray's cash interest rate by 2% per annum (200 basis points) and beginning April 1, 2009, requires an additional 3% per annum (300 basis point) facility fee. For the period beginning April 4, 2009 and ending April 30, 2010, the annual facility fee for the term loan and the revolving loan will accrue and be payable on the respective term loan and revolving loan maturity dates. For the period beginning after April 30, 2010, and for the remaining term of the senior credit facility, the annual facility fee will be payable in cash on a quarterly basis and interest will accrue at an annual rate of 6.5% on the facility fee balance accrued as of April 30, 2010. The senior credit facility requires Gray to maintain leverage ratio, as defined in the agreement, below certain maximum amounts. As of December 31, 2008, Gray's leverage ratio was 7.14 compared to the maximum allowed by the senior credit facility of 7.25. As of March 31, 2009, Gray's leverage ratio was 7.48 compared to the maximum ratio allowed by the amended senior credit facility of 8.00. As of June 30, 2009, Gray's leverage ratio was 7.98 compared to the maximum ratio allowed by the amended senior credit facility of 8.25. Prior to the amendment, the maximum total net leverage ratio allowed would have been 7.25 as of March 31, 2009 and June 30, 2009. Gray said the continuing general economic recession, including the significant decline in advertising by the automotive industry, has adversely impacted its ability to generate cash from operations during the current period and the recent past. "If these general economic trends do not begin to gradually improve, then our ability to maintain adequate liquidity and/or compliance with our leverage ratio covenant will come under increased pressure," Gray said. "Compliance with the leverage ratio covenant on or after March 31, 2010, will depend on the interrelationship of our ability to reduce outstanding debt and/or the results of our operations during the intervening future periods." "In the future, if we are unable to maintain compliance with these covenants, including the leverage ratio test, we would use reasonable efforts to seek an amendment or waiver to our senior credit facility. However, in such circumstances, we could provide no assurances that any amendment or waiver would be obtained nor of its terms. In the future, if we are unable to obtain any required waivers or amendments, we would be in default under the senior credit facility and any such default could allow a majority of the lenders to demand an acceleration of the repayment of all outstanding amounts under our senior credit facility," Gray said. A full-text copy of Gray's quarterly report on Form 10-Q is available at no charge at http://ResearchArchives.com/t/s?4123 On July 1, Gray filed with the Securities and Exchange Commission a Registration Statements on Form S-8 relating to shares of the Company's common stock to be offered and sold under the Gray Television Inc. Employee Stock Purchase Plan. The Company registered an additional 600,000 shares available for issuance under the Plan. A full-text copy of the Form S-8 filing is available at no charge at http://ResearchArchives.com/t/s?4124 About Gray Television Gray Television, Inc. -- http://www.gray.tv/-- is a television broadcast company headquartered in Atlanta, GA. Gray currently operates 36 television stations serving 30 markets. Each of the stations are affiliated with either CBS (17 stations), NBC (10 stations), ABC (8 stations) or FOX (1 station). In addition, Gray currently operates 38 digital second channels including 1 ABC, 4 Fox, 7 CW, 16 MyNetworkTV and 1 Universal Sports Network affiliates plus 8 local news/weather channels and 1 "independent" channel in certain of its existing markets. HAIGHTS CROSS: Extends Exchange Offer for 2011 Notes Until Aug. 14 ------------------------------------------------------------------ Haights Cross Communications, Inc., said the expiration date for its private exchange offer and consent solicitation to qualified investors to exchange HCC's 12-1/2% Senior Discount Notes Due 2011 for shares of common stock of HCC has been extended until 11:59 p.m., New York City time, on August 14, 2009, unless terminated or further extended. The Company has not paid and is currently taking advantage of the applicable 30-day grace period with respect to payment of the semi-annual interest on its Senior Discount Notes that was due on August 3, 2009. Similarly, the Company also intends to take advantage of the applicable 30-day grace period for making the semi-annual interest payment on its 11-3/4% Senior Notes due 2011, due August 17, 2009. The Company's current forbearance agreement and credit agreement for its senior secured term loan prohibits the Company from making interest payments on the Senior Discount Notes while the Company remains in default under the Credit Agreement. The cure of such default will require, among other things, the successful completion of the Exchange Offer. Under the applicable indenture relating to each of the Senior Discount Notes and Senior Notes, use of the 30-day grace period does not constitute a default that permits acceleration of such Notes. The Company is seeking to extend its Forbearance Agreement, which expires on August 7, 2009, to provide the Company with further time to complete Exchange Offer -- as extended -- and other restructuring transactions. The Company also has commenced discussions with holders of its Senior Notes to discuss alternative restructuring plans should the Exchange Offer not be consummated, including the possibility of the commencement of a chapter 11 case and plan of reorganization. As of the close of business on August 6, 2009, the Company was advised by the information and exchange agent for the Exchange Offer that roughly $100 million (at maturity), or 74%, of Senior Discount Notes had been tendered and not validly withdrawn. Senior Discount Notes which have been validly tendered to the Exchange Offer to date and not withdrawn remain tendered and subject to the Exchange Offer. Eligible Holders who have already tendered Senior Discount Notes need not take any additional actions to tender their Senior Discount Notes. The consummation of the Exchange Offer is conditioned upon the satisfaction or waiver of a number of conditions including, among others (i) at least 90% of the aggregate principal amount of the Senior Discount Notes being validly tendered for exchange and not revoked, and Eligible Holders representing such Senior Discount Notes delivering their consents to the proposed amendments to the indenture governing the Senior Discount Notes; and (ii) the execution of a satisfactory amendment to the Credit Agreement. In the event that HCC is not able to successfully complete the restructuring, including the Exchange Offer, HCC intends to explore all other restructuring alternatives available to it at that time, which may include an alternative out-of-court restructuring or the commencement of a chapter 11 case and plan of reorganization. There can be no assurance that any alternative restructuring arrangement or plan could be accomplished. Moreover, if the Company seeks such bankruptcy relief, holders of Senior Discount Notes may receive consideration that is less than what is being offered in the Exchange Offer, and it is possible that such holders may receive no consideration at all for their Senior Discount Notes. The Exchange Offer is being made, and the new shares of Common Stock are being offered, only to Eligible Holders, who consist of accredited investors, or persons other than U.S. persons, in a transaction that is exempt from the registration requirements of the Securities Act of 1933. Any such securities may not be offered or sold absent registration or an applicable exemption from the registration requirements of the Securities Act. This announcement does not constitute an offer to sell, or the solicitation of an offer to purchase, any securities. Any such Exchange Offer or other restructuring proposal, if made, will be made pursuant definitive offering documentation to be provided to Eligible Holders. About Haights Cross Communications Founded in 1997 and based in White Plains, NY, Haights Cross Communications -- http://www.haightscross.com/-- is an educational and library publisher dedicated to creating the finest books, audio products, periodicals, software and online services, serving the following markets: K-12 supplemental education, public and school libraries, and consumers. Haights Cross companies include: Triumph Learning, Buckle Down Publishing and Options Publishing, and Recorded Books. HAIGHTS CROSS: S&P Downgrades Corporate Credit Rating to 'D' ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating on Haights Cross Communication Inc. to 'D' from 'CC' because of the company's failure to make its interest payment due on August 3, 2009, on its 12.5% senior discount notes due 2011. At the same time, S&P lowered the issue-level rating on the 12.5% notes to 'D' from 'C'. S&P removed these ratings from CreditWatch, where they were placed with negative implications June 10, 2009. The recovery rating on the notes remains unchanged at '6', indicating S&P's expectation of negligible (0% to 10%) recovery for noteholders in the event of a payment default. The 'C' issue-level rating on Haights Cross Operating Co.'s 11.75% senior notes due 2011 remains on CreditWatch with negative implications, and the recovery rating on these notes remains at '6'. White Plains, N.Y.-based supplemental education publisher HCC had $383.1 million total debt outstanding at March 31, 2009. The rating action reflects HCC's failure to make the August 3, 2009 interest payment on its 12.5% senior discount notes. In addition, the company currently does not intend to make the August 17, 2009 interest payment on operating subsidiary Haights Cross Operating Co.'s 11.75% senior notes due 2011. While a payment default has not occurred according to the legal provision of the 12.5% notes, Standard & Poor's views an interest or principal payment lapse as a default, even if a grace period exists, in the event that the nonpayment is a function of the borrower being under financial stress and S&P is not confident that the payment will be made in full during the grace period. S&P views the company's high leverage, fractional coverage of gross interest expense, negative discretionary cash flow, limited liquidity, and weak operating outlook together as indications of financial distress. HCC has proposed an offer to exchange its 12.5% notes for shares of common stock. The transaction entails issuing 120.21 shares of common stock for each $1,000 in principal amount at maturity of senior discount notes exchanged. In the sixth extension to the exchange offer, which expires on August 6, 2009, the minimum threshold was reduced to 90% from 95% of the aggregated principal amount of the notes. If HCC is not able to complete the exchange transaction, the company plans to explore other restructuring alternatives, including the commencement of a Chapter 11 bankruptcy plan of reorganization. The issue-level rating on the 11.75% senior notes due 2011 remains on CreditWatch with negative implications. S&P would lower this rating to 'D' if the company does not make its August 17, 2009 interest payment. S&P would also lower the rating if the company announces a Chapter 11 filing. "If the company completes the proposed exchange offer, S&P would reassess the company's business outlook and financial profile and assign new ratings," noted Standard & Poor's credit analyst Tulip Lim. As of March 31, 2009, Haights had total assets of $228,965,000 against debts of $422,917,000. HARTMARX CORP: Sale to Private Equity Firms Finally Done -------------------------------------------------------- SKNL NA and Emerisque Brands said in a statement they have completed the acquisition of assets of Hartmarx Corp. from bankruptcy under the newly formed Hartmarx Operating Company LLC. "We are delighted to have completed this acquisition. This is an important step forward towards our ambition of being "clothiers to the world," said Chairman of SKNL and the new Hartmarx, Nitin Kasliwal. "We thank our customers, partners and employees for supporting Hartmarx throughout the long and complicated transaction period and want to let them know we are committed to being a strong partner, dedicating the resources and expertise necessary to honor Hartmarx's heritage and realize its potential," said Ajay Khaitan, founder of Emerisque and Vice Chairman and CEO of the new Hartmarx. "Although we still face hard work and difficult decisions in the months ahead, we believe that the best days for the Company are ahead." In June 2009, the Bankruptcy Court approved the sale of substantially all assets of Hartmarx to Emerisque Brands UK and SKNL North America, B.V., for a total transaction value of roughly US$119 million. The parties expected the deal to close July 7. However, closing was postponed after parties were unable to finalize the financial details. Various reports in July said that the parties were arguing about who should pay the costs to wind down the parts of the business that aren't subject to Emerisque's takeover. About Hartmarx Corp. Based in Chicago, Illinois, Hartmarx Corporation -- http://www.hartmarx.com/-- produces and markets business, casual and golf apparel under its own brands, including Hart Schaffner Marx, Hickey-Freeman, Palm Beach, Coppley, Monarchy, Manchester Escapes, Society Brand, Racquet Club, Naturalife, Pusser's of the West Indies, Brannoch, Sansabelt, Exclusively Misook, Barrie Pace, Eye, Christopher Blue, Worn, One Girl Who . . . and b.chyll. In addition, the company has certain exclusive rights under licensing agreements to market selected products under a number of premier brands such as Austin Reed, Burberry men's tailored clothing, Ted Baker, Bobby Jones, Jack Nicklaus, Claiborne, Pierre Cardin, Lyle & Scott, Golden Bear, Jag and Dr. Martens. The Company's broad range of distribution channels includes fine specialty and leading department stores, value-oriented retailers and direct mail catalogs. Hartmarx and certain affiliates filed for bankruptcy protection on January 23, 2009 (Bankr. N.D. Ill. Lead Case No. 09-02046). George N. Panagakis, Esq., Felicia Gerber Perlman, Esq., and Eric J. Howe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they listed $483,108,000 in total assets and $261,220,000 in total debts as of August 31, 2008. HEALTHSOUTH CORP: Bank Debt Trades at 4% Off in Secondary Market ---------------------------------------------------------------- Participations in a syndicated loan under which HealthSouth Corporation is a borrower traded in the secondary market at 95.93 cents-on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.11 percentage points from the previous week, The Journal relates. The loan matures on March 10, 2013. The Company pays 250 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba3 rating and Standard & Poor's BB- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. About HealthSouth Based in Birmingham, Alabama, HealthSouth Corporation -- http://www.healthsouth.com/-- is the nation's largest provider of inpatient rehabilitative healthcare services. Operating in 26 states across the country and in Puerto Rico, HealthSouth serves patients through its network of inpatient rehabilitation hospitals, long-term acute care hospitals, outpatient rehabilitation satellites, and home health agencies. As of August 9, 2009, Healthsouth carries a 'B2' long term corporate family rating from Moody's and a 'B' long term foreign issuer credit rating from Standard & Poor's. HERTZ CORP: Bank Debt Trades at 6% Off in Secondary Market ---------------------------------------------------------- Participations in a syndicated loan under which Hertz Corporation is a borrower traded in the secondary market at 94.34 cents-on- the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 0.88percentage points from the previous week, The Journal relates. The loan matures on Dec. 21, 2012. The Company pays 150 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's Ba1 rating and S&P's BB- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. About Hertz Corp. The Hertz Corporation, a subsidiary of Hertz Global Holdings, Inc. (NYSE: HTZ), based in Park Ridge, New Jersey, is the world's largest general use car rental brand, operating from approximately 8,000 locations in 147 countries worldwide. Hertz also operates one of the world's largest equipment rental businesses, Hertz Equipment Rental Corporation, through more than 375 branches in the United States, Canada, France, Spain and China. * * * In July Fitch Ratings downgraded Hertz Corporation's Issuer Default Rating to 'BB-' from 'BB', and Moody's Investors Service lowered Hertz's Corporate Family Rating and Probability of Default to 'B1' from 'Ba3'. HORIZON LINES: Moody's Downgrades Corporate Family Rating to 'B3' ----------------------------------------------------------------- Moody's Investors Service downgraded its debt ratings of Horizon Lines, Inc.; corporate family and probability of default, each to B3 from B2, senior secured to Ba3 from Ba2 and senior unsecured to Caa2 from Caa1. The outlook is negative. The downgrades reflect Moody's expectation of continuing pressure on the credit profile because it believes that demand across Horizon's trade lanes will remain weak in upcoming periods. Additionally, the recent $25 million reduction in the revolving credit facility decreases Horizon's liquidity while the prospect of additional legal settlements remains. The negative outlook reflects the potential for future settlements of either the ongoing Department of Justice investigation or the ongoing class action lawsuits to require significant cash payments, which would likely increase debt and further reduce liquidity. The amended credit agreement deems a DOJ settlement that requires more than $10 million paid during a fiscal year or $30 million in the aggregate as an Event of Default under the credit facility. The B3 corporate family rating reflects Horizon's leading position in its core Jones Act markets and the important link Horizon provides in its customers' distribution chains and the geographic regions it serves. Moody's believes that these factors should support a core level of underlying volume for the company's services and should result in the continuing generation of a base level of funds from operations, including during cyclical troughs in demand. However, the unexpected acceleration of already weak demand affecting each of its three Jones Act markets challenges the ability of productivity programs, cost containment initiatives, and yield measures to mitigate the downwards pressure on margins, operating cash flows and resultant credit metrics. The B3 rating also considers the expectation of a significantly weaker, but still modestly positive free cash flow profile as future settlement payments will compound the pressure of weak demand on funds from operations. The reduced amount of free cash flow should delay the planned de-levering of the capital structure. Ratings could be downgraded if Funds from Operations + Interest to Interest approached 1.75 times or Debt to EBITDA was sustained above 7.0 times. Indications that the resolution of the DOJ investigation or the remaining class action lawsuits would require sizeable cash payments or constrain Horizon's ability to operate in its existing trade lanes could also pressure the B3 rating. Additionally, though not anticipated in the near-term, a new share purchase authorization, one or more acquisitions resulting in meaningfully higher debt levels, a debt-financed program to replace the aging Jones Act fleet or the repurchase at a discount of the convertible notes could also place downward pressure on the ratings. The outlook could be stabilized if Horizon becomes able to generate significant free cash flow, which it either applies to debt reduction or holds in advance of funding legal settlements. The outlook could also be stabilized if the DOJ investigation and lawsuits are settled at amounts that do not consume the majority of Horizon's available liquidity. The outlook could be stabilized if Horizon sustains Funds from Operations + Interest to Interest at about 2.5 times or Debt to EBITDA below 6.0 times after a favorable resolution of the investigation and litigation matters. The last rating action was on November 3, 2008, when Moody's lowered the corporate family and probability of default ratings one notch to B2, the senior secured rating to Ba2 from Ba1 and the senior unsecured rating to Caa1 from B3. The outlook was also changed to negative from stable on November 3rd. Downgrades: Issuer: Horizon Lines, Inc. -- Probability of Default Rating, Downgraded to B3 from B2 -- Corporate Family Rating, Downgraded to B3 from B2 -- Senior Secured Bank Credit Facility, Downgraded to Ba3 from Ba2 -- Senior Unsecured Conv./Exch. Bond/Debenture, Downgraded to Caa2 from Caa1 Horizon Lines, Inc., based in Charlotte, North Carolina, through its wholly-owned indirect operating subsidiary, Horizon Lines, LLC, operates 13 Jones Act qualified U.S. flag container ships in Jones Act liner services between the continental United States and either Alaska, Hawaii, or Puerto Rico and five U.S. flag container ships operating between the U.S. West coast and Guam, in which vessels are slot-chartered from the Far East to the U.S. West Coast. Horizon also provides logistics services through its wholly-owned indirect operating subsidiary Horizon Logistics, LLC. ICICI BANK: Moody's Assigns Rating on $160 Mil. Commercial Paper ---------------------------------------------------------------- Moody's Investors Service has assigned a Prime-1 rating to the commercial paper issued by ICICI Bank Limited (rated Ba2/NP/C-) through its $160 million fully supported commercial paper program. ICICI Bank, acting through its Bahrain Branch, its Hong Kong Branch, and its New York Branch, will issue commercial paper notes and will use the proceeds for general corporate purposes. Each issuing entity will issue its own series of commercial paper. Bank of America, N.A. (Aa3/Prime-1/D) has issued an irrevocable, direct-pay letter of credit that provides full and timely support for the repayment of each series of commercial paper notes upon maturity. Moody's rating on the CP notes is based primarily on Bank of America's Prime-1 rating. Deutsche Bank National Trust Company (Aa3/Prime-1/C), acting as depositary, will draw on the letter of credit to pay maturing series of commercial paper notes. ICICI Bank Limited is the largest retail bank in India. The bank, headquartered in Mumbai, had assets of INR3,793 billion (US$72.7 billion) as of end-March 2009. ICICI Bank has a bank financial strength rating of C-, which translates into a Baseline Credit Assessment of Baa2. The rating reflects the bank's solid franchise as the second-largest commercial bank in India, as well as its sound financial position. ICICI Bank's has foreign currency deposit ratings of Ba2/NP and foreign currency debt ratings of Baa2. This program is ICICI Bank's third letter of credit-backed USCP program. Similar to the other programs, this program issues three series of CP and all three series are fully supported by a single letter of credit issued by Prime-1-rated Bank of America. Each series of CP is issued by a different banking unit of ICICI Bank: Series A is issued through the Bahrain Branch, Series B is issued through the Hong Kong Branch, and Series C is issued through the New York Branch. ICICI Bank's other existing USCP program is also fully supported through letter of credit provided by Prime-1-rated bank. The program, established in 2007, has a $375 million authorized limit and is supported by a LOC provided by Bank of America, N.A. The program issues three series of commercial paper: Series D is issued through ICICI Bank's New York Branch, Series E is issued through its Hong Kong Branch, and Series F is issued by the Bahrain Branch. Deutsche Bank National Trust Company is the depositary and issuing and paying agent for the existing program. ILLINOIS HOUSING: S&P Junks Rating on 2003 Multifamily Bonds ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on Illinois Housing Development Authority's multifamily bonds (Turnberry Village II Apartments) series 2003 to 'CC' from 'BBB' and removed the rating from CreditWatch with negative implications where it was placed June 29, 2009. The outlook is developing. This action follows Standard & Poor's July 28, 2009, downgrade of Ambac Assurance Corp. to CC/Developing from BBB/Watch Neg. The affected issue receives partial support in the form of a guaranteed investment contract from Ambac Assurance Corp. for the debt service reserve fund. According to current criteria, Standard & Poor's considers whether monies deposited in the DSRF, which is generally sized in the amount of at least six to 12 months' debt service, are invested in investment grade securities rated 'BBB-' or higher, and will be available to pay debt service in the event of a shortfall. Because AMBAC is currently rated below investment grade, its rating is no longer consistent with S&P's minimum rating level for DSRF investments. INTERMET CORP: Cerion In Talks to Buy Certain Remaining Assets -------------------------------------------------------------- Amy Matzke-Fawcett and Jeff Sturgeon at The Roanoke Times report that Cerion LLC spokesperson Bob Budlong said that the company is in talks to buy certain of Intermet Corp.'s assets. According to The Roanoke Times, Mr. Budlong said that the assets that Cerion wants to acquire include the Radford factory, in Roanoke, Virginia. As reported by the Troubled Company Reporter on August 7, 2009, 20 employees at Intermet plants in Monroe City and Palmyra, both in Missouri, were laid off. Ardent Cast Metals, LLC, sent the workers letters dated July 24, informing them that their jobs would end. Intermet's sale to Revstone Industries LLC may have been stalled, says The Lake Gazette. The U.S. Bankruptcy Court for the District of Delaware previously approved the proposed liquidation plan of Intermet and the sale of substantially all of its assets to Revstone. Intermet declared Revstone to be the winner of the auction for its cast metals auto parts business with a bid of $11 million, subject to adjustments. Based in Fort Worth, Texas, Intermet Corp. designs and manufactures machine precision iron and aluminum castings for the automotive and industrial markets. The Company and its debtor- affiliates filed for Chapter 11 protection on August 12, 2008 (D. Del. Case Nos. 08-11859 to 08-11866 and 08-11868 to 08-11878). Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Michael E. Comerford, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as the Debtors' counsel. James E. O'Neill, Esq., Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' co-counsel. Kurtzman Carson Consultants LLC serves as the Debtors' claims, notice and balloting agent. An official committee of unsecured creditors has been formed in this case. In its petition, Intermet Corp. listed assets $50 million to $100 million and debts of $100 million to $500 million. This is the Debtors' second bankruptcy filing. Intermet Corp., along with its debtor-affiliates, filed for Chapter 11 protection on September 29, 2004 (Bankr. E.D. Mich. Case Nos. 04-67597 through 04-67614). Salvatore A. Barbatano, Esq., at Foley & Lardner LLP, represented the Debtors. In their previous bankruptcy filing, the Debtors listed $735,821,000 in total assets and $592,816,000 in total debts. Intermet Corporation emerged from its first bankruptcy filing in November 2005. INTERSTATE HOTELS: Posts $6.7 Million for Quarter Ended June 30 --------------------------------------------------------------- Interstate Hotels & Resorts, Inc., posted a net loss of $6.7 million for three months ended June 30, 2009, compared with a net income of $135,000 for the same period in 2008. For six months ended June 30, 2009, the Company posted a net loss of $19.1 million compared to a net loss of $153,000 for the same period in 2008. At June 30, 2009, the Company's balance sheet showed total assets of $465.5 million, total liabilities of $311.6 million and stockholders' equity of $153.9 million. The Company stated that as of June 30, 2009, the Company had $22.8 million in cash on hand and total indebtedness of $243.7 million under its credit facility and non-recourse mortgage loans. The Company's credit facility was to mature in March 2010, and as of June 30, 2009, consisted of a $115.0 million term loan and a $60.3 million revolving loan. On July 10, 2009, the Company amended the Credit Facility to extend the maturity date from March 2010, to March 2012, and converted the credit facility's then outstanding balance of $161.2 million to a new term loan along with an $8 million revolving credit line. The new term loan requires a repayment of principal of $20 million by March 9, 2010, and another $20 million by March 9, 2011. In addition, the Amended Credit Facility requires the Company to make quarterly payments against the outstanding principal balance of the new term loan equal to excess free cash flow. Going Concern Doubt The Company added that the report from KPMG LLP, its independent registered public accounting firm included in our Form 10-K for the year ended December 31, 2008, included an explanatory paragraph expressing substantial doubt about its ability to continue as a going concern due to potential credit facility covenant violations. In July 2009, the Company amended the terms of its credit facility to extend the maturity date from March 2010, to March 2012, and restructure existing financial and non-financial covenants. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?4130 About Interstate Hotels & Resorts Based in Arlington, Virginia, Interstate Hotels & Resorts -- http://www.ihrco.com/-- has ownership interests in 57 hotels and resorts, including seven wholly owned assets. Together with these properties, the company and its affiliates manage a total of 225 hospitality properties with more than 46,000 rooms in 37 states, the District of Columbia, Russia, Mexico, Belgium, Canada, and Ireland. Interstate Hotels & Resorts also has contracts to manage 16 to be built hospitality properties with approximately 4,000 rooms. * * * As reported by the Troubled Company Reporter on March 18, 2009, Moody's Investors Service downgraded the ratings of Interstate Hotels & Resorts (corporate family rating to Caa1 from B2) and Interstate Operating Company, L.P. (senior secured debt to Caa1 from B2). The ratings were placed on review for possible downgrade. J&R FINANCIAL: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: J&R Financial, LLC 1245 Brickyard Road Salt Lake City, UT 84106 Bankruptcy Case No.: 09-28223 Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court District of Utah (Salt Lake City) Debtor's Counsel: Russell S. Walker, Esq. Woodbury & Kesler 265 East 100 South, Suite 300 Salt Lake City, UT 84111 Tel: (801) 364-1100 Fax: (801) 359-2320 Email: rwalker@wklawpc.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its 20 largest unsecured creditors when it filed its petition. The petition was signed by Gerald B. Lambourne, manager of the Company. JOHN MANEELY: Bank Debt Trades at 21% Off in Secondary Market ------------------------------------------------------------- Participations in a syndicated loan under which John Maneely Company is a borrower traded in the secondary market at 78.67 cents-on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.57 percentage points from the previous week, The Journal relates. The loan matures on Dec. 9, 2013. The Company pays 325 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's B rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Headquartered in Beachwood, Ohio, John Maneely Company manufactures steel pipe, hollow structural steel, electrical conduit products and tubular products at ten manufacturing facilities in the U.S. and Canada. The Company is number one or two in its key product areas: HSS, standard pipe and electrical conduit. JMC also enjoys leading market positions in the galvanized mechanical tube and fittings markets. Its products are sold principally to plumbing and electrical distributors. JMC's parent, DBO Holdings, Inc., is approximately 55% owned by the Carlyle Partners IV, LP. In November 2008, Russian steel producer Novolipetsk Steel terminated a $3.53 billion agreement to buy DBO Holdings, Inc., the corporate parent of John Maneely, from the Carlyle Group. DBO Holdings filed a breach-of-contract lawsuit in October 2008 against the Russian steel company in New York federal court because it was taking too much time to close to deal. KB TOYS: CE Wins Auction for IP Assets With $2.1MM Bid ------------------------------------------------------ CE Stories has won the auction for KB Toys, Inc.'s trademark, logos, and Web addresses, Reuters reports, citing Gabe Fried, founder of Streambank LLC which managed the sale of the KB Toys intellectual property. According to Reuters, Mr. Fried said that CE Stores' $2.1 million bid beat bids from KB Toys' lenders as well as an offer from retailer Jimmy Jazz. The auction winds down much of the remaining assets of KB Toys, says Reuters. The report states that funds from the auction will be used to pay off creditors. Headquartered in Pittsfield, Massachusetts, KB Toys, Inc. -- http://www.kbtoys.com/-- operates a chain of retail toy stores. On Jan. 14, 2004, the Debtor and 69 of its affiliates filed for protection under Chapter 11 of the Bankruptcy Code, which were administratively consolidated under Case No. 04-10120. Two of the 200 bankruptcy cases remain open, KB Toys Inc. and KB Toy of Massachusetts Inc. In connection with the emergence of KB Toys from bankruptcy in August 2005, and the subsequent organizational restructuring, the assets and operations of many of these prior debtors were transferred among then existing debtor entities and consolidated with KB Toys Group. Furthermore, most of the entities involved were either dissolved or were merged into surviving entities, and several of them changed their names. The company, together with eight of its affiliates, again filed for Chapter 11 on December 11, 2008 (Bankr. D. Del. Lead Case No. 08-13269). Joel A. Waite, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Wilmer Cutler Pickering Hale and Dorr LLP as their co-counsel, FTI Consulting Inc. as financial and restructuring advisor, and Epiq Bankruptcy Solutions LLC as claims and noticing agent. According to Bloomberg, KB listed assets of $241 million against debt totaling $362 million in its Chapter 11 petition filed on December 11. The debts include $143 million in unsecured claims; and $200 million in secured claims, including $95.1 million owed to first-lien creditors where General Electric Capital Corp. serves as agent; and $95 million owed to second-lien creditors. As reported by the Troubled Company Reporter on December 22, 2008, the Hon. Kevin Carey of the U.S. Bankruptcy Court for the District of Delaware allowed KB Toys Inc. to start going-out-of-business sales. KEATING CHEVROLET: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Keating Chevrolet, Inc. dba Mike Young Motor Company dba Mike Young Chevrolet dba Mike Young Chrysler Dodge Jeep 1424 N. 24th Street Nederland, TX 77627 Case No.: 09-10438 Type of Business: The Debtor operates an automobile dealing business. Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court Eastern District of Texas (Beaumont) Debtor's Counsel: Robert E. Barron, Esq. P.O. Box 1347 Nederland, TX 77627 Tel: (409)727-0073 Fax: (409) 724-7739 Email: ecffiling@rbarronlaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The petition was signed by Michael Young, the company's president. Debtor's List of 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ American Wires $0 American Tire Distributors $0 American Press $0 American Heritage Life $0 American Express $0 Amanda Frederick $0 Allstate Dealer Services $0 Allied Waste Services #862 $0 Allen Samuels Dodge Katy $0 Allen Samuels Chrysler-Dodge $0 Alldata $0 Airtight Auto Glass $0 Aetna Small Group Premium $0 Collections Aetna Insurance Company $0 Aer Technologies, Inc $0 Advanta Bank Corp $0 ADP Dealer Services $0 Action Glass Co. $0 Ace Imagewear $0 Absolute Equipment Service $0 Solutions LAS VEGAS SANDS: Venetian Macau Bank Debt Trades at 11% Off ----------------------------------------------------------- Participations in a syndicated loan under which Venetian Macau US Finance Co LLC is a borrower traded in the secondary market at 88.42 cents-on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents a drop of 3.00 percentage points from the previous week, The Journal relates. The loan matures on May 25, 2013. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's B- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Venetian Macau is a wholly owned subsidiary of Las Vegas Sands. VML owns the Sands Macau in the People's Republic of China Special Administrative Region of Macau and is also developing additional casino hotel resort properties in Macau. Based in Las Vegas, Nevada, Las Vegas Sands Corp. (NYSE: LVS) -- http://www.lasvegassands.com/-- owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and an expo and convention center. The company also owns and operates the Sands Macao, the first Las Vegas-style casino in Macao, China. As reported by the TCR on Aug. 4, 2009, Moody's Investors Service has placed Las Vegas Sands, Corp.'s ratings, including its B3 Corporate Family Rating, on review for possible downgrade. The review for possible downgrade reflects LVSC's weak fiscal 2009 second quarter operating results and Moody's heightened concern regarding the company's ability to maintain an adequate liquidity profile, reduce leverage, and remain in compliance with its financial covenants. LEAP WIRELESS: Q2 2009 Net Loss Widens to $61.2 Million ------------------------------------------------------- Leap Wireless International, Inc., said net loss for the second quarter ended June 30, 2009, was $61.2 million, compared to a net loss of $24.6 million for the comparable period of the prior year. Diluted net loss per share for the second quarter of 2009 was $0.89, compared to diluted net loss per share of $0.39 for the comparable period of the prior year. The $0.50 year-over-year increase in diluted net loss per share reflects roughly $0.37 of non-recurring loss per share resulting from the Company's repayment in June 2009 of amounts under its $1.1 billion credit facility and roughly $0.26 of loss per share due to increased interest expense from the Company's issuance of senior and convertible senior notes in June 2008 and June 2009. Service revenues for the second quarter increased 30% over the prior year quarter to $541.6 million. The Company reported adjusted operating income before depreciation and amortization (OIBDA) of $137.8 million for the second quarter of 2009, an increase of roughly $31.1 million, or 29%, over the prior year period. Adjusted OIBDA for the Company's existing business was $191.5 million, an increase of roughly $37 million, or 24%, over the prior year period. Operating income for the second quarter of 2009 was $26.3 million, compared to operating income of $14.5 million for the second quarter of 2008, an increase of $11.8 million, or roughly 81%. As of June 30, 2009, the Company had $5.42 billion in total assets; and $3.55 billion in total liabilities and $77.8 million in redeemable non-controlling interests; resulting in $1.79 billion in stockholders' equity. As of June 30, 2009, the Company had $323.9 million in accumulated deficit. "The Company delivered solid financial performance in the second quarter and for the first half of the year. We believe this solid performance reflects our ability to execute on our long-term strategy. The rapid transformations taking place within the wireless industry have not changed our positive long-term view, but will have an impact on our performance for the balance of 2009, and the outlook for the Company has been revised appropriately. Our superior products, state-of-the-art 3G network, broad and diverse distribution channels and value leadership supported by our industry-leading cost structure provide us with a long-term competitive advantage to attract and retain customers in the wireless marketplace," said Doug Hutcheson, Leap's president and chief executive officer. "We believe that the second quarter results reflect the fundamental strength of our business and underlying cost structure," said Walter Berger, Leap's executive vice president and chief financial officer. "The benefits of our growing scale are evident in the 29 percent year-over-year increase in adjusted OIBDA and 44 percent adjusted OIBDA margins delivered by our existing business. As we look ahead, we have updated our business outlook to reflect the investments we intend to make to meet challenges to our business. In support of these actions, we also expect to launch additional productivity and process improvement initiatives beginning in the second half of 2009 that we believe will help capture incremental opportunities and cost efficiencies we have identified and accelerate the benefits of scale we are experiencing as our business grows. We believe that our strong balance sheet, growing cash flows and disciplined focus on cost management strongly position us to meet the challenges facing our business and put us at the forefront in an industry where a low cost structure and strong liquidity are significant competitive advantages." Updated Business Outlook The Company has updated its business outlook for fiscal years 2009 and 2010 to reflect its current expectations for customer growth and financial results as a result of recently emerging challenges in the competitive environment, actions the Company is taking to increase the number of customers using its Cricket services, and the evolving challenges our customers face in the economic environment. Sale of $1.1-Bil. Notes Due 2016 On June 5, 2009, Leap's subsidiary, Cricket Communications, Inc., completed the closing of the sale of $1.1 billion aggregate principal amount of 7.75% senior secured notes due 2016. The Notes are guaranteed on a senior secured basis by Leap and its indirect wholly owned domestic subsidiaries. The Notes also will be guaranteed by any future wholly owned direct or indirect domestic restricted subsidiaries of Leap that guarantee any indebtedness of Cricket or of any Guarantor of the Notes. Leap used a portion of the net proceeds from the Notes offering -- which are estimated to be roughly $1.04 billion after deducting discounts, commissions and estimated offering expenses -- to repay all amounts outstanding under Leap's amended and restated credit agreement that it entered into with Bank of America, N.A., as administrative agent, and the lenders party thereto on June 16, 2006, together with accrued interest and related expenses, including a prepayment premium of roughly $17.5 million and a payment of roughly $8.1 million in connection with the unwinding of associated interest rate swap agreements. In connection with such repayment, Leap terminated the Credit Agreement and the revolving credit facility thereunder. Leap said it intends to use the remaining net proceeds of roughly $133.7 million for general corporate purposes, which could include the expansion and improvement of its network footprint, acquisitions of additional spectrum or complementary businesses and, over the longer term, the deployment of next generation network technology. Pending application of the net proceeds, Leap said it would invest the net proceeds in short-term, investment- grade, interest-bearing securities The initial purchasers of the Notes included, among others, Goldman, Sachs & Co., Deutsche Bank Securities Inc. and Citigroup Global Markets Inc. Deutsche Bank Trust Company Americas, an affiliate of Deutsche Bank Securities Inc., was a lender under Leap's term loan facility under the Credit Agreement and received a portion of the proceeds of the offering as a result of the repayment of the term loans under the Credit Agreement. In addition, Goldman Sachs Lending Partners, an affiliate of Goldman, Sachs & Co., Deutsche Bank Trust Company Americas, an affiliate of Deutsche Bank Securities Inc., and Citicorp North America, Inc., an affiliate of Citigroup Global Markets Inc., were lenders under Leap's undrawn revolving credit facility under the Credit Agreement, which was cancelled upon the repayment of the term loans. Certain of the initial purchasers and their affiliates have also performed financial advisory, investment banking and commercial banking services in the ordinary course of business for Leap, for which they have received customary fees and expenses. The Notes will mature on May 15, 2016, unless earlier redeemed or repurchased. A full-text copy of the Indenture, dated as of June 5, 2009, among Cricket, the Guarantors and Wilmington Trust FSB, as trustee (including the form of the 7.75% Senior Secured Note due 2016), is available at no charge at http://ResearchArchives.com/t/s?3dc0 A full-text copy of the Security Agreement, dated as of June 5, 2009, among Cricket, the Guarantors and Wilmington is available at no charge at http://ResearchArchives.com/t/s?4129 A full-text copy of the Collateral Trust Agreement, dated as of June 5, 2009, among Cricket, the Guarantors and Wilmington is available at no charge at http://ResearchArchives.com/t/s?412a A full-text copy of the Registration Rights Agreement, dated as of June 5, 2009, among Cricket, the Guarantors and Goldman and Deutsche Bank, as representatives of the Initial Purchasers, is available at no charge at http://ResearchArchives.com/t/s?412b About Leap Wireless Leap Wireless International, Inc. (NASDAQ: LEAP) -- http://www.leapwireless.com/-- provides wireless services in 29 states and holds licenses in 35 of the top 50 U.S. markets. Cricket offers customers a choice of unlimited voice, text, data and mobile Web services. * * * According to the Troubled Company Reporter on April 29, 2009, Standard & Poor's Ratings Services revised its outlook on Leap Wireless International Inc. to positive from stable. At the same time, S&P affirmed its ratings on the San Diego-based wireless carrier, including the 'B-' long-term corporate credit rating and 'B+' secured bank loan rating on subsidiary Cricket Communications Inc. LEHMAN RE LTD: Voluntary Chapter 15 Case Summary ------------------------------------------------ Chapter 15 Petitioner: Lehman Re Ltd. Chapter 15 Debtor: Lehman Re Ltd. c/o Peter C.B. Mitchell & D. Geoffrey Hunter, Joint Provisional Liquidators PricewaterhouseCoopers Advisory Limited Dorchester House, 7 Church St. Hamilton Bermuda, HM11 Chapter 15 Case No.: 09-14884 Type of Business: The Debtor is a Bermuda-based insurance unit of Lehman Brothers Holdings Inc. Chapter 15 Petition Date: August 8, 2009 Court: Southern District of New York (Manhattan) Judge: James M. Peck Chapter 15 Petitioner's Counsel: Gregory M. Petrick, Esq. gregory.petrick@cwt.com Ingrid Bagby, Esq. ingrid.bagby@cwt.com Cadwalader, Wickersham & Taft LLP One World Financial Center New York, NY 10281 Tel: (212) 504-6000 Fax: (212) 993-2747 Estimated Assets: $500 million to $1 billion Estimated Debts: More than $1 billion LIN TELEVISION: Moody's Affirms Corporate Family Rating at 'B2' --------------------------------------------------------------- Moody's Investors Service affirmed LIN Television Corporation's B2 Corporate Family Rating and B2 Probability of Default Rating following the company's announcement that it has completed an amendment to its credit facility. The affirmation reflects Moody's opinion that the risk of a covenant violation has diminished and that LIN will maintain modest headroom under the revised financial maintenance covenants through the end of 2010. Moody's believes the incremental headroom, the company's cost reduction efforts and its cash contingency plans collectively provide greater flexibility to manage through the advertising downturn. However, the speculative-grade liquidity rating remains SGL-4 as Moody's views the projected cushion between the combination of cash, projected cash flow and unused revolver capacity to be very modest relative to the company's cash needs. Loss given default assessments and point estimates have been updated to reflect LIN's current liability mix. The rating outlook remains negative. LGD Updates: Issuer: LIN Television Corporation -- Senior Secured Bank Credit Facility, Changed to LGD2 - 14% from LGD2 - 11% (no change to Ba2 rating) -- Senior Subordinated Regular Notes, Changed to LGD5 - 70% from LGD4 - 67% (no change to B3 rating) Moody's anticipates that LIN's revenue and EBITDA will remain pressured for the remainder of 2009 and into 2010 due to the weak advertising environment, but expects political advertising to contribute to revenue growth in the second half of 2010. Moody's does not expect LIN's cash interest expense over the next 12 months to change materially from the LTM 6/30/09 run rate of approximately $48 million. Moody's estimates that recent debt reduction and the change in LIN's debt mix -- specifically, the repurchase of its 6.5% notes in Q4-08 and Q1-09 funded with revolver borrowings -- will largely mitigate the increase in the Libor spread on the credit facility to 375 basis points that occurred in conjunction with the amendment. The SGL-4 speculative-grade liquidity rating continues to reflect Moody's view that the company's liquidity remains weak, albeit modestly improved with the recently completely bank credit facility amendment. Moody's estimates that LIN has approximately $25 million of cash and unused revolver capacity as of June 30, 2009 (factoring in payments made in July to 54 Broadcasting to settle a license transfer dispute and fees related to the credit facility amendment) relative to $4 million of required quarterly term loan amortization and any potential payments to the NBC Universal joint venture to cover any debt service shortfalls at that entity. Moody's believes LIN's free cash flow generation will be only modestly positive through mid-2010 due to pressure on earnings but should ramp up somewhat meaningfully due to political spending in the second half of 2010. While Moody's anticipates LIN will remain in compliance with its financial covenants, step downs in the covenants through the end of 2010 will keep the cushions modest, with heightened potential risk of a violation in 2011 if the advertising environment does not improve as expected. The negative rating outlook continues to reflect Moody's concern that debt-to-EBITDA leverage (approximately 8.9x LTM 6/30/09 incorporating Moody's standard adjustments and including restructuring costs as a reduction in EBITDA) will remain elevated for the B2 CFR over the next 12 months and that LIN will maintain only a modest level of cash, unused revolver capacity and financial covenant cushion to absorb incremental advertising weakness. The last rating action was on December 19, 2008, when Moody's downgraded LIN's CFR and PDR to B2 from B1, concluding the review for downgrade initiated on November 3, 2008. LIN, a wholly-owned subsidiary of LIN TV Corp. headquartered in Providence, RI, owns and operates and/or programs 27 television stations, including two stations pursuant to local marketing agreements, in 17 mid-sized markets in the United States. In addition, the company's parent owns 20% of KXAS-TV in Dallas, Texas and KNSD-TV in San Diego, California, through a joint venture with NBC Universal. The company recorded total revenues of approximately $360 million for the 12-months ending June 2009. LOS ROBLES CARE: Case Summary & 25 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Los Robles Care Center, Inc. aka Cicciari Financial Services, Inc. 601 North Montgomery Street Ojai, CA 93023 Bankruptcy Case No.: 09-13125 Chapter 11 Petition Date: August 5, 2009 Court: United States Bankruptcy Court Central District of California (Santa Barbara) Judge: Robin Riblet Debtor's Counsel: Daren Brinkman, Esq. 4333 Pk Terr Dr., Suite 205 Westlake Village, CA 91361 Tel: (818) 597-2992 Email: office@brinkmanlaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 25 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-13125.pdf The petition was signed by Samuel T. Eubanks, Jr., president of the Company. MAB INC: Case Summary & 6 Largest Unsecured Creditors ----------------------------------------------------- Debtor: MAB, Inc. P.O. Box 22436 Alexandria, VA 22304 Bankruptcy Case No.: 09-16354 Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court Eastern District of Virginia (Alexandria) Judge: Robert G. Mayer Debtor's Counsel: Richard J. Stahl, Esq. Stahl Zelloe, P.C. 11350 Random Hills, Road, Suite 700 Fairfax, VA 22030 Tel: (703) 691-4940 Fax: (703) 691-4942 Email: r.stahl@stahlzelloe.com Estimated Assets: $0 to $50,000 Estimated Debts: $500,001 to $1,000,000 A full-text copy of the Debtor's petition, including a list of its 6 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/vaeb09-16354.pdf The petition was signed by Margaret Brent, president of the Company. MAGNA ENTERTAINMENT: To Sell Shares in Austria-Based Fex Oko ------------------------------------------------------------ Carla Main at Bloomberg News reports that Magna Entertainment Corp. is asking the U.S. Bankruptcy Court for the District of Delaware for permission to sell the stock in Fex Oko- Faservarbeitungs-GmbH. The shares of Fex Oko are owned by a non- bankrupt unit of Magna Entertainment. According to Court filings, Neusied-Zeya, Austria-based Fex Oko manufactures Strufex, "an environmentally friendly horse bedding." Bloomberg recounts that after acquiring Fex Oko in 2004, a Magna unit bought land for manufacturing and entered into a licensing agreement for the product, Fex Straw, which had sales of $1.2 million in 2008. Fex Oko stock isn't the property of the bankruptcy estate because all of the stock is owned by a non- debtor subsidiary, Magna argues in court papers. The motion is set for a hearing on Aug. 26. Objections are to be filed by Aug. 19. About Magna Entertainment Based in Aurora, Ontario, Magna Entertainment Corp. is North America's largest owner and operator of horse racetracks based on revenue. The Company develops, owns and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. MEC also develops, owns and operates casinos in conjunction with its racetracks where permitted by law. MEC owns and operates AmTote International, Inc., a provider of totalisator services to the pari-mutuel industry, XpressBet(R), a national Internet and telephone account wagering system, as well as MagnaBet(TM) internationally. Pursuant to joint ventures, MEC has a fifty% interest in HorseRacing TV(R), a 24-hour horse racing television network, and TrackNet Media Group LLC, a content management company formed for distribution of the full breadth of MEC's horse racing content. Following its failure to meet obligations to lenders led by PNC Bank, National Association, and Wells Fargo Bank, National Association, and controlling shareholder MI Developments Inc.'s decision not to provide further financial backing, Magna Entertainment Corp. and 24 affiliates filed for Chapter 11 on March 5, 2009 (Bankr. D. Del. Lead Case No. 09-10720). Marcia L. Goldstein, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, have been engaged as bankruptcy counsel. L. Katherine Good, Esq., and Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., are the Debtors' local counsel. Miller Buckfire & Co. LLC, has been tapped as financial advisor and Kurtzman Carson Consultants LLC, as claims agent. Magna Entertainment Corp. had total assets of US$1.054 billion and total liabilities of US$947.3 million based on unaudited consolidated financial statements as of December 31, 2008. MAGUIRE PROPERTIES: Discloses Imminent Loan Default --------------------------------------------------- Christina S.N. Lewis at The Wall Street Journal reports that Maguire Properties Inc. has notified the mortgage holders of seven buildings that it expected imminent default on $1.06 billion in loans and is planning to surrender control of the properties. The seven buildings represent 20% of Maguire's portfolio, The Journal says. The Journal relates that the buildings are worth less then their mortgages and aren't generating enough cash to pay debt service and finance leasing expenses. According to The Journal Maguire Properties founder Robert Maguire purchased the properties on the assumption that rents would continue rising. Instead, vacancy rate in Orange County hovers around 20%, up from 6% three years ago, The Journal says, citing Maguire Properties. The Journal, citing Moore Stephens Wurth Frazer & Torbet's administrator John Metzen, says that Maguire Properties cut its initial rent offer by about 20% to $25 per square foot and offered these incentives: footing the bill for the space's renovation and charging a $10,000 monthly rent for the first year. Moore Stephens is an accounting firm that signed a $3.35 million, seven-year lease a few months ago for 19,000 square feet of space in a Maguire-owned building in California. Maguire Properties CEO Nelson Rising, The Journal states, said that the Company could restructuring the debt on six of the buildings, located in Orange County and Los Angeles, but the most likely scenario is that the mortgage holders will take over the properties and try to sell them. The Journal relates that Maguire Properties already has a deal to turn over one of the buildings, Park Place One, to LBA Realty, while the debt on the other six properties was packaged by Wall Street firms and sold as commercial mortgage backed securities to dozens of institutional investors. Maguire Properties would work closely with the servicers of that debt to transfer control of the buildings, The Journal states, citing Mr. Rising. The Journal notes that Mr. Rising's plan has been to sell or give back to lenders troubled properties and shore up the Company's balance sheet until it is able to raise capital. Mr. Rising said that it would have cost Maguire Properties about $31 million a year to keep the seven buildings because they weren't generating enough money to pay these and other expenses and debt service, The Journal relates. Maguire Properties, according to The Journal, will take a $345 million charge on the properties' loss in value. According to The Journal, Mr. Rising has been able to cut Maguire Properties' debt by $1.6 billion, but the Company still has about $3.5 billion in debt, an amount that some analysts say exceeds the value of the Company's remaining properties. Maguire Properties, Inc. -- http://www.maguireproperties.com-- is the largest owner and operator of Class A office properties in the Los Angeles central business district and is primarily focused on owning and operating high-quality office properties in the Southern California market. Maguire Properties is a full-service real estate company with substantial in-house expertise and resources in property management, marketing, leasing, acquisitions, development and financing. As of March 31, 2009, the Company reported $5,116,386,000 in assets and $5,173,046,000 in liabilities, resulting in total stockholders' deficit of $51,373,000. MARYLAND ECONOMIC: Moody's Cuts Ratings on 2003 Bonds to 'Ba3' -------------------------------------------------------------- Moody's Investors Service has downgraded to Ba3 from Ba2 the rating on the Maryland Economic Development Corporation Student Housing Revenue Bonds (Bowie State University Project) Series 2003. Rating outlook remains negative. Approximately $20 million of the original $21.47 million of bonds remains outstanding. This rating action is primarily due to Moody's assessment of MBIA Inc. and MBIA Insurance Corporation (currently rated Ba3/ NEG and B3 / NEG, respectively), which hold the debt service reserve fund of the Bowie State University Project in a collateralized Guaranteed Investment Contract. Non-performance of the GIC provider is a risk to bondholders in transactions where bond payments rely wholly or partially on a GIC. This is because there could be a need for the Trustee to draw on the debt service reserve fund during the time when the GIC provider is in bankruptcy and its assets are subject to an automatic stay under the U.S. Bankruptcy code. Recent Developments: Based on the audited financial statements ending June 30, 2008, the project's financial performance slightly improved from the prior year, yet remains weak, as demonstrated by the low debt service coverage level of 1.08x. Several expenses, such as student life and management fees are subordinated and are not included in the debt service coverage calculations. In an effort to reduce the continuing bad debt situation at the project, student residents who wish to pay rent with financial aid are able to direct the University to send a portion of their financial aid directly to the property manager to pay for their rental expenses. Additionally, rent is now payable upfront and by semester. According to management the bad debt expense was significantly reduced to approximately 3% of revenues in FY2009. Occupancy has remained high at approximately 98% for the fall 2008 and spring 2009, and has always been near such levels since the project opened in September 2004. The average rent increase was approximately 8.5% and 8.4% for FY2008 and FY2009, respectively. Despite the rent increase, occupancy is not expected to be affected due to the lack of comparably priced off-campus housing available nearby. Credit Strengths: -- Consistently high occupancy (approximately 98% in fall 2008 and spring 2009) reflecting adequate demand for student housing, partially due to provided amenities which are superior to those at the University's own housing. -- Involvement of the University to mitigate the bad debt associated with collections by allowing students to direct the University to send their financial aid funds directly to the project to cover the rent. -- Strong oversight by MEDCO, as both issuer for the bonds and owner of the project. Credit Challenges: -- The Project's debt service reserve fund is invested in a collateralized Guaranteed Investment Contract with MBIA Inc. and MBIA Insurance Corporation (currently rated Ba3/ NEG and B3 / NEG, respectively). Non-performance of the GIC provider is a risk to bondholders in transactions where bond payments rely wholly or partially on a GIC. -- Audited financial statements for fiscal year ending June 30, 2008 reflected slightly improved, albeit still low 1.08x debt service coverage. -- Absence of a long-term financial or legal commitment from the University, the University System of Maryland (rated Aa2), or the State of Maryland (rated Aaa). Outlook The negative rating outlook reflects the possibility of a further downgrade if the project's financial position does not significantly improve in the near term. What could change the rating -- UP -- Replacement of the debt service reserve fund GIC with an appropriate rated GIC provider. -- A substantial increase in debt service coverage. What could change the rating -- DOWN -- Continued weak financial performance. The last rating action was on July 17, 2009, when the Moody's placed the Ba2 rating on Watchlist for potential downgrade on the Series 2003 bonds. MARYLAND ECONOMIC: Moody's Cuts Student Housing Bonds to 'Ba2' -------------------------------------------------------------- Moody's Investors Service has downgraded to Ba2 from Baa3 rating on the Maryland Economic Development Corporation Student Housing Revenue Bonds (Salisbury University Project) Series 2003. This rating action affects approximately $15.035 million of debt outstanding. This rating action is primarily due to Moody's assessment of MBIA Inc. and MBIA Insurance Corporation (currently rated Ba3/ NEG and B3 / NEG, respectively), which hold the debt service reserve fund of the Salisbury University Project in a collateralized Guaranteed Investment Contract. Non-performance of the GIC provider is a risk to bondholders in transactions where bond payments rely wholly or partially on a GIC. This is because there could be a need for the Trustee to draw on the debt service reserve fund during the time when the GIC provider is in bankruptcy and its assets are subject to an automatic stay under the U.S. Bankruptcy code. Recent Developments: The 312-bed project known as Phase II of the University Park Apartments, continues to maintain strong occupancy and sound financial performance, as demonstrated by the FY2008 audited financial statements. Based on the audited financial statements as of June 30, 2008, the project's operations in fiscal year 2008 resulted in a strong debt service coverage ratio of 1.30x (excluding all subordinated expenses and the reserve for replacements expenditures), which represents a slight decrease from the 1.36x debt service coverage achieved in 2007 due solely to a decline in interest income. Management has been able to successfully increase rents by approximately 10% for academic year 2008-09 without impacting the demand for student housing. Occupancy has remained at 100% and management reports all units are currently leased for the Fall 2009 semester. Enrollment at Salisbury University has been growing, with approximately 5% projected increase in 2009 from the prior year in total full-time- equivalent students. The Reserve for Replacements accounts is currently funded at $235,258. Credit Strengths: -- Consistently high occupancy of 100% for Phase II since the project opened in Fall 2004. Management reports that rental rates were increased an average of 6% for FY2010 and that the project has 100% occupancy for the upcoming Fall semester. -- Experienced property manager Allen O'Hara Education Services, LLC, who has been successful in increasing rents by approximately 10% in the 2008 - 09 academic year without any negative impact on the demand for student housing. Allen O'Hara is the also the property manager for the Phase I project. -- Strong oversight by MEDCO, as both issuer for the bonds and owner of the project. Credit Challenges: -- The Project's debt service reserve fund is invested in a collateralized Guaranteed Investment Contract with MBIA Inc. and MBIA Insurance Corporation (currently rated Ba3/ NEG and B3 / NEG, respectively). Non-performance of the GIC provider is a risk to bondholders in transactions where bond payments rely wholly or partially on a GIC. -- There is substantial competition from nearby University Village, a 592-unit rental apartment building targeting students from Salisbury University. However, this competition is mitigated by the fact that certain services provided to University Park by Salisbury University, such as a shuttle bus service, internet service, and active promotion of this privatized student housing project to its students are not made available to University Village. Potential competition may arise from any future developments by the University. -- Absence of a long-term financial or legal commitment from the University, the University System of Maryland (rated Aa2), or the State of Maryland (rated Aaa). Outlook The rating outlook has been revised to negative. The negative outlook at the Ba2 rating level reflects the potential downward pressure on the rating in the event of deteriorating financial performance of the project or a downgrade of the debt service reserve fund GIC provider. While the project is currently performing well, a substantial decline in demand would negatively impact the debt service coverage, and may necessitate the use of the debt service reserve fund to pay debt service on the bonds. What could change the rating -- UP -- Replacement of the debt service reserve fund GIC with an appropriate rated GIC provider. -- A substantial increase in debt service coverage. What could change the rating -- DOWN -- Declining demand for the project thereby reducing net operating income with negative impact on debt service coverage. The last rating action was on July 17, 2009, when the Moody's maintained the Baa3 rating on Watchlist for potential downgrade on the Series 2003 bonds. MAUI LAND: June 30 Balance Sheet Upside-Down by $34.8 Million ------------------------------------------------------------- Maui Land & Pineapple Co.'s balance sheet at June 30, 2009, showed total assets of $182,550,000 and total liabilities of $217,430,000, resulting in a stockholders' deficit of $34,880,000. For the six months ended June 30, 2009, the Company incurred a net loss of $67.4 million and had negative cash flows from operations of $15.1 million. At June 30, 2009, the Company had amounts outstanding under borrowing agreements of $102 million; and $10.7 million available under existing lines of credit and $1.5 million in cash and cash equivalents. As a result of the continued poor operating results in 2009, the Company also had negative working capital of $42.7 million and a deficiency in stockholders' equity. The Company's near term cash outlook is highly dependent on the conclusion of real estate sales and various other transactions, the timing of which are uncertain. The Company said that there is substantial doubt about its ability to continue as a going concern. In March 2010, $58.8 million of borrowings under the Company's two lines of credit are scheduled to mature. The lines of credit have financial covenants requiring, among other things, a minimum of $10 million in liquidity and a limitation on new indebtedness. As of June 30, 2009, the Company's liquidity was $12.2 million. The Company's ability to meet its financial covenants is highly dependent on selling certain real estate assets in a difficult market. If the Company is unable to sell those real estate assets, it would likely be out of compliance with the financial covenants as of Dec. 31, 2009. If the Company is unable to meet its financial covenants or to extend the maturity date of its lines of credit resulting in the borrowings becoming immediately due, the Company would not have sufficient liquidity to repay such outstanding borrowings. In addition, the Company is obligated to purchase the spa, beach club improvements and the sundry store from Kapalua Bay Holdings at actual construction costs of approximately $35 million. The Company is currently negotiating the terms of the purchase of the improvements with the members of Bay Holdings to fund a portion of the purchase price in 2009, with the remaining purchase price to be paid at a later date. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?4128 Maui Land & Pineapple Company, Inc. (NYSE:MLP) consists of a landholding and operating parent company and its principal subsidiaries, including Maui Pineapple Company, Ltd., and Kapalua Land Company, Ltd. The Company operates in three segments: Agriculture, Resort and Community Development. MDRNA INC: June 30 Balance Sheet Upside-Down by $953,000 -------------------------------------------------------- MDRNA, Inc.'s balance sheet at June 30, 2009, showed total assets of $15,735,000 and total liabilities of $16,688,000, resulting in a stockholders' deficit of $953,000. For three months ended June 30, 2009, the Company posted a net loss of $7,532,000 compared with a net loss of $14,331,000 for the same period in 2008. For six months ended June 30, 2009, the Company posted a net loss of $251,000 compared with a net loss of $30,849,000 for the same period in 2008. As of June 30, 2009, the Company had an accumulated deficit of $255.2 million and expect to incur additional losses in the future as it continues its research and development activities. At June 30, 2009, the Company had working capital of $6.4 million and $9.4 million in cash and cash equivalents, including $1.5 million in restricted cash. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?40f7 Going Concern Doubt On April 8, 2009, KPMG LLP in Seattle, Washington raised substantial doubt about MDRNA, Inc.'s ability to continue as a going concern after auditing the Company's financial results for the years ended December 31, 2008, and 2007. The auditor noted the Company's recurring losses, recurring negative cash flows from operations, and an accumulated deficit. About MDRNA Inc. Bothell, Washington-based MDRNA, Inc. (MRNA) -- http://www.mdrnainc.com-- is a biotechnology company focused on the development and commercialization of therapeutic products based on RNA interference (RNAi). MEDCLEAN TECH: June 30 Balance Sheet Upside-Down by $323,000 ------------------------------------------------------------ MedClean Technologies Inc.'s balance sheet at June 30, 2009, showed total assets of $2,023,620 and total liabilities of $2,347,493, resulting in a stockholders' deficit of $323,873. For the three months ended June 30, 2009, the Company posted a net loss of $2,668,159 compared with a net loss of $1,510,620 for the same period in 2008. For the six months ended June 30, 2009, the company posted a net loss of $4,551,885 compared with a net loss of $3,034,415 for the same period in 2008. The Company said that its incurred substantial recurring losses raised substantial doubt about its ability to continue as a going concern. The Company has available cash and cash equivalents of $166,191 at June 30, 2009, which it intends to utilize for working capital purposes and to continue developing its business. To supplement its cash resources, the Company has been pursuing a number of alternative financing arrangements with various investment entities. The Company is currently looking to secure additional working capital to provide the necessary funds for it to execute its business plan through various sources, including bank facilities, bridge loans and equity offerings. In the event the Company is unable to continue as a going concern it may pursue a number of different options, including, but not limited to, filing for protection under the federal bankruptcy code. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?4127 MedClean Technologies, Inc. (OTC:MCLN) aka Aduromed Industries, Inc., is in the business of providing solutions for managing medical waste on site including designing, selling, installing and servicing on site turnkey systems to treat regulated medical waste. The Company provides these systems to hospitals and other medical facilities as efficient, safe, cost effective and legally compliant solutions to incineration, off site hauling of untreated waste and other alternative treatment technologies and methodologies. MTI's principal products are the MedClean series systems. Also effective January 2, 2009, the Company merged its former wholly owned subsidiary, Aduromed Corporation, with and into the Company. MERIDIAN AUTOMOTIVE: To Wind Down Assets Under Chapter 7 -------------------------------------------------------- Meridian Automotive Systems, Inc. filed a petition for liquidation under Chapter 7 before the U.S. Bankruptcy Court for the District of Delaware In its resolution authorizing the voluntary Chapter 7 filing, the board of directors of Meridian said, "[I]t is desirable and in the best interests of the corporation, its creditors, shareholders and other interested parties that the corporation proceed with an orderly wind-down and liquidation of the corporation and its domestic subsidiaries." Under Chapter 7, the company stops all operations and goes completely out of business. A trustee is appointed to "liquidate" the company's assets and the money is used to pay off the debt, which may include debts to creditors and investors. Meridian said in its petition that assets and debts are between $100 million to $500 million, and that the number of creditors is between 1,000 and 5,000. In a court filing, Meridian says that entities that directly or indirectly own 10% or more of its equity interests are GE Capital Corporation, Grand Central Asset Trust, CMF Series, Monarch Master Funding Ltd., and Sola Ltd. Meridian's counsel, Young Conaway, may be reached at: John D. McLaughlin, Jr. Young, Conaway, Stargatt & Taylor The Brandywine Bldg., 17th Floor 1000 West Street P.O. Box 391 Wilmington, DE 19899-0391 Tel: (302)-571-6600 Fax: (302) 576-3316 E-mail: bankfilings@ycst.com Meridian becomes at the least the 23rd U.S. auto-parts maker to seek bankruptcy protection in the last year, according to data compiled by Bloomberg News. The list includes billion-dollar filers Visteon Corp., Lear Corp. and Cooper-Standard Holdings Inc. About Meridian Automotive Systems Based in Allen Park, Michigan, Meridian Automotive Systems Inc. -- http://www.meridianautosystems.com/-- supplies front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian Automotive Systems, together with eight affiliates, filed for Chapter 7 protection on August 7, 2009 (Bankr. D. Del. Case No. 09-12806). Attorneys at Foley & Lardner LLP and Young, Conaway, Stargatt & Taylor serve as bankruptcy counsel to the Debtors. This is the second bankruptcy filing by the Company in just over 4 years. Meridian and its affiliates filed for Chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). Young Conaway Stargatt & Taylor, LLP, represented the Debtors in their restructuring efforts. In its Chapter 11 petition, Meridian listed $530 million in total assets and approximately $815 million in total liabilities. The Hon. Mary Walrath confirmed the Debtors' Chapter 11 plan on December 6, 2006. The Debtors emerged from bankruptcy December 29, 2006. The Plan cut debt by $470 million. MICHAELS STORES: Bank Debt Trades at 16% Off in Secondary Market ---------------------------------------------------------------- Participations in a syndicated loan under which Michaels Stores, Inc., is a borrower traded in the secondary market at 84.05 cents- on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 2.59 percentage points from the previous week, The Journal relates. The loan matures on Oct. 31, 2013. The Company pays 225 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's B rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Headquartered in Irving, Texas, Michaels Stores, Inc., is the largest arts and crafts specialty retailer in North America. As of March 9, 2009, the company operated 1,105 "Michaels" retail stores in the United States and Canada and 161 Aaron Brothers Stores. As of Jan. 31, 2009, Michaels Stores had $1.62 billion in total assets and $4.51 billion in total liabilities resulting in a $2.88 billion in stockholders' deficit. For fiscal year 2008 - ended Jan. 31, 2009 -- the Company posted a $5 million net loss on $3.81 billion in net sales. MIDWAY GAMES: Wants Plan Deadline Moved to September 29 ------------------------------------------------------- Midway Games Inc. and its affiliates ask the Bankruptcy Court to extend their exclusive period to file a Chapter 11 plan by 50 days, through September 29, 2009. The Debtors also ask the Court to extend the corresponding period to solicit acceptances of a Chapter 11 plan through November 30. On July 10, 2009, Midway and its U.S. units completed their sale of substantially all of their assets to Warner Bros. Entertainment Inc. in a sale approved by the Court on July 1. The aggregate gross purchase price is approximately $49 million, including the assumption of certain liabilities. On August 6, 2009, the Debtors filed a motion to sell their equity interests of its Midway Home Entertainment Inc. unit in certain subsidiaries outside the U.S. The sale will result in a payment of $1.7 million to Midway Home Entertainment. On August 6, the Debtors also filed a motion to approve a private sale of THQ Inc. of substantially all of the remaining assets used in connection with and arising out of the operation of Midway Home Entertainment's video game design and development business conducted at the studio located in San Diego, California. THQ has agreed to pay $200,000 cash and offer employment to not less than 40 employees of the San Diego studio. The Debtors explain that upon the Court's approval of the pending sale motions and the anticipated sale closings by the latter part of August, the Debtors will be in a better position to continue and finalize substantive negotiations with their major creditor constituencies with respect to a proposed Chapter 11 plan of liquidation. Once the August 11, 2009 governmental bar date has passed, the Debtors intend to review the filed claims in an effort to identify any issues that may need to be dealt with in the confirmation process. About Midway Games Midway Games Inc. (OTC Pink Sheets: MWYGQ), headquartered in Chicago, Illinois, with offices throughout the world, is a leading developer and publisher of interactive entertainment software for major videogame systems and personal computers. More information about Midway and its products can be found at http://www.midway.com/ The Company and nine of its affiliates filed for Chapter 11 protection on February 12, 2009 (Bankr. D. Del. Lead Case No. 09-10465). David W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard as their investment banker, Dewey & LeBoeuf LLP as special counsel, and Epiq Bankruptcy Solutions LLC as claims agent. MIDWAY GAMES: To Sell Interests in Foreign Units for $1.7MM ----------------------------------------------------------- Midway Games Inc. and its affiliates ask for permission from the Bankruptcy Court to sell their equity interests of its Midway Home Entertainment Inc. unit in: (A) Midway Games sAS, a French societe par actions simplifiee, and Midway Games Limited, and English limited liability private company, to Spiess Media Holding UG, pursuant to a stock purchase agreement; and (B) Midway Games GmbH, a limited liability company regustered under the commercial registry of the Local Court Amtsgericht) of Munich, to F+F Publishing GmbH pursuant to another stock purchase agreement. Following the recent sale of key assets to Warner Brothers Entertainment Inc., the Debtors have been in the process of marshaling and managing remaining assets. Other than the proposed purchasers, there were no other parties interested in the Foreign Subsidiaries. Aside from the three units to be sold in the private sales, other foreign subsidiaries of Midway include Midway Studios-NewCastle Ltd. in the U.K.; Midway Australia Holdings Pty Ltd. in Victoria, Australia; Ratbag Pty Ltd. in South Australia; Midway Games Canada Corp. in Nova Scotia; and K.K. Midway Games in Japan. Newcastle is subject to insolvency proceedings and previously operated as a studio and a developer of video games. The other foreign subsidiaries are not currently subject to insolvency proceedings in any location, and primarily distribute the Debtors' products overseas. Terms of Sale Spiess Media is a German enterprise company with limited liability formed by Martin Spiess for the purchase of the shares of Midway SAS and Midway Limited. Mr. Spiess has served as the Executive Vice President - International for Midway Limited since April 2008. F+F Publishing GmbH is a German limited liability company primarily in the business of distributing video games and other products to retailers. F+F Publishing has been operated for several years by Uwe Furstenberg and Hans Meyer, the sole shareholders of F+F. Messrs. Furstenberg and Meyer are current members of management of Midway GmbH. The two private sales will yield a total consideration of $1.7 million to Midway Home Entertainment. Spiess Media will pay EUR1 for all of MHE's shares in Midway SAS and Midway Limited. F+F Publishing will pay EUR1 for all of MHE's shares in Midway GmbH. As a condition to closing, MHE and Midway Games on the one hand and Midway SAS, Midway Limited and Midway GmBH on the other will enter into an intercompany claims agreement to resolve certain of their intercompany obligations. Pursuant to the agreement, Midway Limited will pay to MHE $1,700,000. The Bankruptcy Court will convene a hearing to consider approval of the sale of the Shares on Aug. 18. Objections must be filed by Aug. 14. About Midway Games Midway Games Inc. (OTC Pink Sheets: MWYGQ), headquartered in Chicago, Illinois, with offices throughout the world, is a leading developer and publisher of interactive entertainment software for major videogame systems and personal computers. More information about Midway and its products can be found at http://www.midway.com/ The Company and nine of its affiliates filed for Chapter 11 protection on February 12, 2009 (Bankr. D. Del. Lead Case No. 09- 10465). David W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard as their investment banker, Dewey & LeBoeuf LLP as special counsel, and Epiq Bankruptcy Solutions LLC as claims agent. On July 10, 2009, Midway and certain of its U.S. subsidiaries completed their sale of substantially all of their assets to Warner Bros. Entertainment Inc. in a sale approved by the Court. The aggregate gross purchase price is approximately $49 million, including the assumption of certain liabilities. MIDWAY GAMES: To Sell San Diego Design Business to THQ ------------------------------------------------------ Midway Games Inc. and its affiliates ask the Bankruptcy Court to approve a private sale to THQ Inc. of substantially all of the remaining assets used in connection with and arising out of the operation of Midway Home Entertainment's video game design and development business conducted at the studio located in San Diego, California. THQ has agreed to pay $200,000 cash and offer employment to not less than 40 employees of the San Diego studio. Following the recent sale of key assets to Warner Brothers Entertainment Inc., the Debtors have been in the process of marshaling and managing remaining assets. The business conducted at the San Diego studio, which remained after the WBEI sale, consisted primarily of the design and development team working on the TNA Wrestling video game. Although several parties expressed interest in an acquisition of the business in San Diego, none of these parties had progressed to the point of any certainty that a transaction could be completed. Therefore, on July 1, 2009, the Debtors gave the required 60-day notice under the federal Worker Adjustment and Retraining Notification Act of 1988 to the design team at the studio and certain other employees totaling 99 employees. Terms of Sale Sold assets include tangible personal property; pre-existing tools, software and code; all digital assets pertaining to game development; intellectual properties; certain licenses; and infringement claims. The License Agreement effective as of September 15, 2005, between TNA Entertainment LLC and MHE, as amended, and the completed TNA iMPACT! Wrestling game and third party development contracts for the development of handlheld versions of that game are excluded assets under the Purchase Agreement. THQ will pay $200,000 cash plus any cure amounts associated with the assumption of contracts. THQ will make offers of employment to not less than 40 employees of the San Diego studio. In the event the purchase agreement is terminated, the Debtors have agreed to reimburse to THQ up to $50,000. Closing will occur not later than September 4, 2009. The Debtors say that the purchase agreement reached with THQ, an experienced and financially strong buyer, has very few conditions to closing. The Court will consider approval of the sale at the hearing scheduled for August 18. Objections are due August 14. About Midway Games Midway Games Inc. (OTC Pink Sheets: MWYGQ), headquartered in Chicago, Illinois, with offices throughout the world, is a leading developer and publisher of interactive entertainment software for major videogame systems and personal computers. More information about Midway and its products can be found at http://www.midway.com/ The Company and nine of its affiliates filed for Chapter 11 protection on February 12, 2009 (Bankr. D. Del. Lead Case No. 09- 10465). David W. Carickhoff, Jr., Esq., Michael David Debaecke, Esq., and Victoria A. Guilfoyle, Esq., at Blank Rome LLP, represent the Debtors in their restructuring efforts. The Debtors proposed Lazard as their investment banker, Dewey & LeBoeuf LLP as special counsel, and Epiq Bankruptcy Solutions LLC as claims agent. MOBILE BAY: Can Hire Paul and Smith as Attorneys ------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Alabama authorized Moblie Bay Investments LLC to employ Paul and Smith, P.C., as attorneys to assist the Debtor in carrying out its duties under the Bankruptcy Code. C. Michale Smith, Esq., and Suzanne Paul, Esq., attorenys of the firm, both charge $225 per hour for this engagement. The Debtor assured the Court that the firm does not hold or represent an interest adverse to the estate, and is disinterested persons as that term is defined in Section 101(14) of the Bankruptcy Code. Based in Mobile, Alabama, Mobile Bay Investments L.L.C. files for Chapter 11 protection on July 22, 2009 (Bankr. S.D.N.Y. Case No. 09-13322). When the Debtor sought protection from its creditors, it both listed assets and debts between $10 million and $50 million. MURPHY ROAD: Case Summary 3 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Murphy Road Partnership, LLC 108 Stekoia Lane, Suite 103 Knoxville, TN 37912 Bankruptcy Case No.: 09-34248 Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court Eastern District of Tennessee (Knoxville) Debtor's Counsel: Thomas Lynn Tarpy, Esq. Hagood, Tarpy & Cox PLLC Suite 2100, Riverview Tower 900 South Gay Street Knoxville, TN 37902-1537 Tel: (865) 525-7313 Email: ltarpy@htandc.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 3 largest unsecured creditors is available for free at: http://bankrupt.com/misc/tneb09-34248.pdf The petition was signed by Victor Jernigan, chief manager of the Company. NEIMAN MARCUS: Bank Debt Trades at 15% Off in Secondary Market -------------------------------------------------------------- Participations in a syndicated loan under which Neiman Marcus Group, Inc., is a borrower traded in the secondary market at 84.54 cents-on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 3.69 percentage points from the previous week, The Journal relates. The loan matures on April 6, 2013. The Company pays 175 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's BB- rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Neiman Marcus Group, Inc., headquartered in Dallas, Texas, operates 40 Neiman Marcus stores, 2 Bergdorf Goodman stores, 27 clearance centers, and a direct business. Total revenues are about $3.9 billion. The Company carries a Caa1 Corporate Family Rating and Caa1 Probability of Default Rating from Moody's Investors Service. NIELSEN COMPANY: Bank Debt Trades at 5% Off in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which The Nielsen Company B.V. is a borrower traded in the secondary market at 94.60 cents-on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.00 percentage points from the previous week, The Journal relates. The loan matures on May 1, 2016. The Company pays 375 basis points above LIBOR to borrow under the facility. The bank debt is not rated by Moody's, while it carries Standard & Poor's B+ rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Active in approximately 100 countries, with headquarters in Haarlem, The Netherlands and New York, USA, The Nielsen Company B.V. is a global information and media company. Nielsen Company carries a 'B2' long term corporate family rating from Moody's, 'B' issuer credit rating from standard & Poor's, and 'B' issuer default rating from Fitch. NORANDA ALUMINUM: Board Approves Amendment to By-laws ----------------------------------------------------- Noranda Aluminum Holding Corporation reports that on August 3, 2009, the Company's Board of Directors approved an amendment to the Company's by-laws. The amendment provides that: (i) A quorum of directors shall include at least one Apollo representative so long as there is at least one Apollo representative on the Board of Directors; and (ii) this bylaw may not be amended, modified, or replaced without the approval of no less than two-thirds of the Directors including at least one Apollo representative if there is at least one Apollo representative on the Board of Directors. A full-text copy of the Company's Amended and restated bylaws dated August 3, 2009, is available at no charge at: http://ResearchArchives.com/t/s?4105 About Noranda Aluminum Noranda Aluminum Holding Corporation -- http://www.norandaaluminum.com/-- is a North American integrated producer of value-added primary aluminum products, as well as high quality rolled aluminum coils. The Company has two businesses, an upstream and downstream business. The primary metals, or upstream business, produced approximately 261,000 metric tons of primary aluminum in 2008. The rolling mills, or downstream business, are one of the largest foil producers in North America and a major producer of light gauge sheet products. Noranda Aluminum Holding Corporation is a private company owned by affiliates of Apollo Management, L.P. As reported by the Troubled Company Reporter on July 17, 2009, Standard & Poor's Ratings Services raised its corporate credit rating on Noranda Aluminum Holding Corp. to 'CCC+' from 'SD'. The outlook is developing. NORANDA ALUMINUM: Moody's Confirms 'Caa1' Corp. Family Rating ------------------------------------------------------------- Moody's Investors Service confirmed Noranda Aluminum Holding Corporation's Caa1 Probability of Default rating, Caa1 Corporate Family Rating, and Caa3 senior unsecured notes rating. At the same time, Moody's confirmed Noranda Aluminum Acquisition Corporation's B2 senior secured revolver and senior secured term loan ratings and its Caa2 senior unsecured notes rating. The speculative grade liquidity rating remains SGL-3 and the rating outlook is stable. This concludes the review initiated on January 30, 2009, and continued on April 2, 2009. The confirmation of the Corporate Family Rating reflects the conclusion of Noranda's negotiations with its insurance companies regarding settlement of claims relating to the ice damage at New Madrid and the receipt of $67.5 million in proceeds. The smelter is now operating at just under 60%, the restart continues to proceed well, and the company indicates that proceeds received are sufficient to fully restore operations. Noranda's Caa1 corporate family rating reflects the current operational and earnings challenges given the low level of aluminum demand and its corollary effect on prices. Given the nature of the company's business as a margin on metal construct, volume levels are critical to performance. Although the company has restored approximately 60% of its potlines following the outage at its New Madrid smelter in January 2009, which impacted roughly 75% of capacity, operating inefficiencies remain although as the potlines come back on stream this will continue to ease. Cost challenges continue, although cost reduction programs implemented are providing savings. In addition, cash production costs in the upstream operations exceeded realized prices for the first six months of 2009. At current aluminum prices performance should improve however, the sustainability of current prices remains questionable given continued weak demand levels in all end markets. Moody's notes that Noranda will be acquiring its joint venture partner's (Century Aluminum) interests in Gramercy Alumina LLC and St Ann Bauxite LLC (51% interest in St. Ann held by the Government of Jamaica). This has no impact on the rating although over the medium to longer term sole ownership of Gramercy could provide strategic benefits. The rating also considers Noranda's limited size, dimensioned by its single smelter operation and four rolling mills, its high leverage (as evidenced by the debt/EBITDA ratio of roughly 18x at June 30, 2009 -- EBITDA adjusted for non-cash gains and losses) following the 2007 acquisition by Apollo and subsequent issuance of Holdco debt, the high absolute debt level at roughly $1.1 billion, and its higher cost base compared to some of its larger competitors. Although the company has downstream fabricating operations, their contribution, while historically stable, is relatively modest compared with the degree of leverage the company has to the performance of its primary upstream aluminum operations. However, the low volume levels in both the upstream and downstream operations and overall cost position continue to contribute to modest income and EBITDA and this is expected to continue until significant improvement in market demand is evidenced. However, the rating acknowledges the company's favorable hedge position on its primary production and the ability to monetize its hedge book to provide cash. Through June 30, 2009, Noranda has monetized approximately $71 million of its hedge book to repurchase roughly $240 million of debt. Moody's views all such repurchases as distressed exchanges. The rating also incorporates the favorable maturity profile with no debt due until 2013 and lack of maintenance financial covenants. While a number of aluminum producers have curtailed production, global aluminum production still remains well above demand levels and some production capacity in China as well as elsewhere is being restarted. Inventory levels have continued to grow and at approximately 109 days represent around 14% of global demand. Moody's have not seen significant sustainable improvement in underlying demand and expect therefore that prices will remain pressured. As a consequence, Noranda's performance will remain challenged. The stable outlook reflects the company's acceptable liquidity position, which includes its hedging position through 2012 and the likely cash to be recognized from this position. The outlook also reflects the receipt of $67.5 million in insurance proceeds, which the company has indicated is sufficient to restore the potlines at New Madrid. New Madrid is currently operating above 55% of capacity. Outlook Actions: Issuer: Noranda Aluminum Acquisition Corporation -- Outlook, Changed To Stable From Rating Under Review Issuer: Noranda Aluminum Holding Corporation -- Outlook, Changed To Stable From Rating Under Review Confirmations: Issuer: Noranda Aluminum Acquisition Corporation -- Senior Secured Bank Credit Facility, Confirmed at B2, LGD-2, 24% -- Senior Unsecured Regular Bond/Debenture, Confirmed at Caa2, LGD-5, 76% Issuer: Noranda Aluminum Holding Corporation -- Probability of Default Rating, Confirmed at Caa1 -- Corporate Family Rating, Confirmed at Caa1 -- Senior Unsecured Regular Bond/Debenture, Confirmed at Caa3, LGD-6, 95% Moody's last rating action on Noranda Aluminum Holding Corporation and Noranda Aluminum Acquisition Corporation was on April 2, 2009, when the ratings were downgraded and the review for possible further downgrade was continued. Headquartered in Franklin, Tennessee, Noranda generated revenues of $941 million for the twelve months ended June 30, 2009. It operates in two business segments: primary aluminum and downstream. NORANDA ALUMINUM: Swings to $12.1MM Second Quarter 2009 Net Loss ---------------------------------------------------------------- Noranda Aluminum Holding Corporation said second quarter 2009 net loss was $12.1 million, compared with a $44.3 million net income in first quarter 2009, and a $3.5 million net income for second quarter 2008. Net income for the first six months of 2009 was $32.2 million, compared to $20.7 million in second quarter 2008. Operating income in second quarter 2009 was $12.4 million, compared to an $85.2 million operating loss in first quarter 2009 and a $35.0 million operating profit in second quarter 2008. Operating loss in the first six months of 2009 was $72.8 million, compared to operating income of $76.9 million in the first six months of 2008. The decrease relates to gross margin (sales minus cost of sales) reductions of $139.7 million, as well as a $3.8 million decrease in selling, general and administrative and other expenses. Consolidated sales in second quarter 2009 were $157.7 million, representing a 4.0% decrease from first quarter 2009 and a 54.6% decrease from second quarter 2008. Year-to-date revenues were $322.0 million. At June 30, 2009, the Company had $1.73 billion in total assets; $123.7 million in total current liabilities, $1.10 billion in long-term debt, $128.9 million in pension liabilities, $35.5 million in other long-term liabilities, $303.4 million in deferred tax liabilities, $2.0 million in common stock subject to redemption; and $36.6 million in shareholders' equity. Liquidity Operating cash flows provided $108.1 million in the first six months of 2009, compared to $100.6 million provided during the first six months of 2008. Adjusted EBITDA was $33.6 million for second quarter 2009 and $41.2 million for the first six months of 2009, compared to $80.3 million for second quarter 2008 and $165.0 million for first six months 2008. The 2009 year-to-date results reflect the continued impact of the global economic contraction that began in the second half of 2008. The improvement in operating cash flows is primarily attributable to the Company's efforts to drive productivity by reducing expenses and managing working capital and to manage its financial structure. Operating cash flow for 2009 includes $70.1 million from hedge terminations under the hedge settlement agreement and $18.1 million generated through reductions of working capital, excluding the impact of $34.1 million insurance receivable. The improvements were realized despite a $16 million unfavorable working capital impact from the power outage, driven primarily by higher than normal alumina and metal inventories. Management believes cash flows from operating activities, including the proceeds from the insurance claim, together with cash and cash equivalents, will be sufficient to meet the Company's short-term liquidity needs, including restoring its New Madrid smelter to full capacity. Cash flows from operating activities are also supported by favorable aluminum hedge positions. Despite monetizing a portion of the Company's hedges to deleverage the balance sheet, Noranda continues to have attractive aluminum hedge positions. In addition to proceeds received from settling hedges to repurchase debt, Noranda received $56.1 million of net hedge settlements on fixed-price aluminum sale swaps during the first six months of 2009 compared to $8.2 million paid during the comparable 2008 period. During the first six months of 2009, the Company entered into fixed-price aluminum purchase swaps to lock-in the value of a portion of its existing fixed-price aluminum sale swaps. Through the end of the quarter, the Company had locked in the value of its hedges on approximately 75% of its 2009 through 2012 forward aluminum hedges. In March 2009 the Company entered into a hedge settlement agreement with Merrill Lynch. The agreement provides a mechanism for the Company to monetize up to $400 million of the favorable net position of its long-term hedges to fund debt repurchases. During the first six months of 2009, Noranda received $70.1 million in proceeds under the hedge settlement agreement and used those proceeds to fund the repurchase of $239.7 million aggregate principal amount of debt at a cost of $70.8 million, plus fees. The Company ended the second quarter of 2009 with total debt of $1.1 billion and $182.3 million in cash. The Company has no financial maintenance covenants on any of its borrowings. In May 2009, the Company made a permitted election under the indentures governing its HoldCo Notes and its AcquisitionCo Notes to pay all interest under the notes that are due on November 15, 2009 entirely in kind. At June 30, 2009, the Company's Adjusted EBITDA to fixed charge ratio was 1.3 to 1 at the HoldCo level, and 1.7 to 1 at the AcquisitionCo level, while AcquisitionCo's net debt to Adjusted EBITDA ratio for its senior secured credit facilities was 3.6 to 1. The ratios fall outside of the minimum and maximum levels established in the Company's indentures and credit agreements. As a result of not meeting certain minimum and maximum financial levels established by the indentures as conditions to the execution of certain transactions, the Company's ability to incur future indebtedness, grow through acquisitions, make certain investments, pay dividends and retain proceeds from asset sales may be limited. "Despite the difficult environment and the effects of the New Madrid smelter outage," said Layle K. "Kip" Smith, Noranda's President and Chief Executive Officer. "[W]e have maintained a stable cash position from the end of 2008, ending the second quarter with $182.3 million in cash. Our recent $67.5 million insurance settlement will provide liquidity and flexibility for our operation to rebuild the idled portions of the New Madrid smelter while we continue to serve our customers from current operating capacity. We remain dedicated to our key priorities: returning the smelter to its operating capability, implementing our CORE productivity programs to reduce costs, taking care of our customers through exceptional quality and service, and continuing to improve our financial structure. We believe that driving these priorities will provide the best support for our company during the uncertain times ahead." On July 27, 2009, Noranda filed with the Securities and Exchange Commission a slide presentation that it intends to use in a series of investor meetings. A full-text copy of the slide presentation is available at no charge at http://ResearchArchives.com/t/s?4106 On July 27, Noranda also released preliminary second quarter results. As of June 30, Noranda had outstanding fixed-price aluminum sales swaps that were entered into to hedge aluminum shipments of roughly 848.7 million pounds. Beginning in the first quarter of 2009, Noranda entered into fixed-price purchase swaps to offset the fixed-price sale swaps. At June 30, it had offset a total of roughly 634.7 million pounds for the years 2009 through 2012. A copy of the preliminary earnings release is available at no charge at http://ResearchArchives.com/t/s?4107 About Noranda Aluminum Noranda Aluminum Holding Corporation -- http://www.norandaaluminum.com/-- is a North American integrated producer of value-added primary aluminum products, as well as high quality rolled aluminum coils. The Company has two businesses, an upstream and downstream business. The primary metals, or upstream business, produced approximately 261,000 metric tons of primary aluminum in 2008. The rolling mills, or downstream business, are one of the largest foil producers in North America and a major producer of light gauge sheet products. Noranda Aluminum Holding Corporation is a private company owned by affiliates of Apollo Management, L.P. As reported by the Troubled Company Reporter on July 17, 2009, Standard & Poor's Ratings Services raised its corporate credit rating on Noranda Aluminum Holding Corp. to 'CCC+' from 'SD'. The outlook is developing. NORANDA ALUMINUM: To Acquire Remaining 50% of Century JVs --------------------------------------------------------- Noranda Aluminum Holding Corporation on August 3, 2009, entered into an agreement to acquire the remaining 50% ownership interests in its joint ventures, Gramercy Alumina LLC and St. Ann Bauxite Limited, from Century Aluminum Company. As consideration in the transaction, Noranda has agreed to release Century from certain obligations owed to Noranda, Gramercy, and St. Ann. At the Closing, NSA General Partnership will pay Gramercy $5 million of the Gramercy Payable. As soon as practicable after the Closing -- but no later than 20 days after the Closing Date -- Representatives of Century and Gramercy will jointly determine the Closing Monthly Cash Payment Amount. In connection with the determination, Gramercy will make available to Century its Representatives, and vice versa, all personnel, work papers and other books and records as the other reasonably believes are necessary to make the determination. Century and Gramercy will, and will cause their Representatives to, cooperate in good faith to resolve any dispute with respect to the determination. No later than 20 days after the determination of the Closing Monthly Cash Payment Amount, (i) Century will pay, or cause to be paid, to Gramercy the amount, if any, by which the Closing Monthly Cash Payment Amount is less than the Target Monthly Cash Call Amount and (ii) Gramercy will pay Century or its designee the amount, if any, by which the Closing Monthly Cash Payment Amount is greater than the Target Monthly Cash Call Amount. On or prior to December 31, 2009, NSA will pay Gramercy $5 million in payment of the remainder of the Gramercy Payable. The transaction is expected to close in August, at which point Noranda will own 100% of each of Gramercy and St. Ann. In connection with this transaction, Century and Noranda will enter into an agreement under which Century will purchase alumina from Gramercy in 2009 and 2010. "Century has been a valuable partner for Noranda in this shared alumina production operation. We wish them the best going forward," said Layle K. "Kip" Smith, Noranda's President and Chief Executive Officer. "Our action to become the sole owner of the Gramercy alumina refinery and the St. Ann bauxite mining operations is consistent with our vertical integration strategy and our continuing desire to have a secure strategic supply of alumina. We also believe owning 100% of these two operations represents an opportunity to enhance profitability as market pricing improves." A full-text copy of the Securities Purchase Agreement by and among Century Louisiana, Inc., Century Bermuda I Limited, Century Aluminum Company, NSA General Partnership, St. Ann Bauxite Holdings Limited, Gramercy Alumina Holdings Inc., Gramercy Alumina Holdings II Inc., Gramercy Alumina LLC, St. Ann Bauxite Limited and Noranda Aluminum Holding Corporation, dated August 3, 2009, is available at no charge at http://ResearchArchives.com/t/s?4104 About Noranda Aluminum Noranda Aluminum Holding Corporation -- http://www.norandaaluminum.com/-- is a North American integrated producer of value-added primary aluminum products, as well as high quality rolled aluminum coils. The Company has two businesses, an upstream and downstream business. The primary metals, or upstream business, produced approximately 261,000 metric tons of primary aluminum in 2008. The rolling mills, or downstream business, are one of the largest foil producers in North America and a major producer of light gauge sheet products. Noranda Aluminum Holding Corporation is a private company owned by affiliates of Apollo Management, L.P. As reported by the Troubled Company Reporter on July 17, 2009, Standard & Poor's Ratings Services raised its corporate credit rating on Noranda Aluminum Holding Corp. to 'CCC+' from 'SD'. The outlook is developing. NORTEL NETWORKS: CEO Mike Zafirovski May Leave Post --------------------------------------------------- Frederic Tomesco at Bloomberg News reports that Nortel Networks Corp. Chief Executive Officer Mike Zafirovski said he plans to leave the company soon. Mr. Zafirovski told the Ottawa Citizen newspaper that he has been approached to run other companies and expects to take up another post elsewhere. "I've told the board of directors I'll give this job 100 per cent and walk out with my head held high," the newspaper cited Mr. Zafirovski as saying. "Obviously I'm not going to be a CEO of a residual company dealing with patent assets and claims." Meanwhile Canadian lawmakers has begun emergency hearings on to review the sale of Nortel Networks Corporation's key assets to Ericsson AB, on concerns that Canada could lose technology it helped develop. The bankruptcy courts in Canada and U.S. have approved the Ericsson deal. Bloomberg earlier reported that Industry Minister Tony Clement has said that if there is a review of the sale, Ericsson would have to demonstrate that the transfer of assets provides net benefits to Canada. "Canadians have invested so much money through the research and development credits that we should be in control of that technology," said Brian Masse, a committee member from the New Democratic Party. "It's critical for Canada to keep control over some of that information -- the patents -- and also the people." As reported by the Troubled Company Reporter on July 29, 2009, Nortel, at a joint hearing July 28, the Company, its principal operating subsidiary Nortel Networks Limited, and certain of its other subsidiaries including Nortel Networks Inc., obtained orders from the Ontario Superior Court of Justice and the United States Bankruptcy Court for the District of Delaware approving the sale agreement with Telefonaktiebolaget LM Ericsson for substantially all of Nortel's CDMA business and LTE Access assets for a purchase price of US$1.13 billion. Under the asset sale agreement, Ericsson will purchase substantially all of Nortel's CDMA business which is the second largest supplier of CDMA infrastructure in the world, and substantially all of Nortel's LTE Access assets giving it a strong technology position in next generation wireless networks. Also as part of this agreement, a minimum of 2,500 Nortel employees supporting the CDMA and LTE Access business will receive offers of employment from Ericsson. The sale to Ericsson has not yet been closed. Completion of the sale is subject to regulatory and other customary closing conditions, and the purchase price is subject to certain post- closing adjustments. Nortel previously said it will work diligently with Ericsson to close the sale later this year. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated and Nortel Networks (CALA) Inc., have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTHWEST AIRLINES: Claimant Balks at Delay of Settlement Payoff ---------------------------------------------------------------- To recall, Judge Allan Gropper designated Claim No. 10341 filed by Jesse Velez as a disputed claim in the capped amount of $1,682,036. The Court held that the amounts sought by Mr. Velez in Claim No. 10341 for punitive or exemplary damages totaling $3,317,963, constitute subordinated claims under the Debtors' Plan of Reorganization. During a mediation held on March 16, 2009, Mr. Velez accepted Northwest Airlines Corp. and its affiliates' offer of $150,000 in Delta Air Lines, Inc. common stock, and was subsequently informed that the payment distribution is scheduled on July 1. However, on July 7, the Debtors informed him that he was not going receive payment pursuant to the Settlement, noting that the Debtors "did not or forgot to include" Mr. Velez in the distribution. Mr. Velez was informed that he would receive distribution in October. "Delaying [the] distribution is irresponsible, negligent and a breach of spoken or covenant contract and further inflicts more financial burden," Mr. Velez says. Against this backdrop, Mr. Velez asks Judge Gropper to direct the Debtors to (i) distribute to him "three times [the] amount of $150,000 in [Delta] stock" as compensation for non-compliance with the Settlement, or (ii) pay Mr. Velez for the costs and litigation expenses, as well as attorneys' fees resulting from the Settlement. In the alternative, Mr. Velez asks the Court to void the Settlement and grant work reinstatement, compensatory seniority, back pay, sick pay and disability benefits. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for Chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On January 12, 2007, the Debtors filed with the Court their Chapter 11 plan. On February 15, 2007, the Debtors filed an amended plan and disclosure statement. The Court approved the adequacy of the Debtors' amended disclosure statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' amended plan. That amended plan took effect May 31, 2007. Northwest Airlines is now a unit of Delta Air Lines after it was acquired by Delta in October 2008. * * * As reported by the TCR on June 29, 2009, Fitch Ratings has downgraded the debt ratings of Delta Air Lines, Inc., and its wholly owned subsidiary Northwest Airlines, Inc. -- (i) DAL's Issuer Default Rating to 'B-' from 'B', First-lien senior secured credit facilities to 'BB-/RR1' from 'BB/RR1', and Second-lien secured credit facility to 'B-/RR4' from 'B/RR4', and (ii) NWA's IDR to 'B-' from 'B'; and Secured bank credit facility to 'BB- /RR1' from 'BB/RR1'. The downgrade of DAL's ratings reflects the continued erosion of the airline's near-term cash flow generation potential that has resulted from extremely weak business travel demand and large year-over-year declines in passenger revenue per available seat mile. NORTHWEST AIRLINES: Reports $39 Million Second Quarter Net Loss --------------------------------------------------------------- Northwest Airlines Corporation and its subsidiaries filed with the U.S. Securities and Exchange Commission on July 30, 2009, its financial results for the quarter ended June 30, 2009. During the Quarter, the Company recorded a net loss of $39 million. Total operating revenue declined 27% in the June 2009 quarter compared to the June 2008 quarter at $2.6 billion. Total consolidated passenger revenue declined 28% to $2.3 billion. Operating expenses in the quarter decreased 36% year-over-year to $2.5 billion, primarily related to lower aircraft fuel and related costs in the June 2009 quarter and impairment related charges recorded. At June 30, 2009, Northwest had $2.6 billion in cash, cash equivalents and short-term investments. In addition, the Company had $500 million in an undrawn revolving credit facility. As of June 30, 2009, there were 1,000 shares of the registrant's Common Stock outstanding. Ray Winborne, vice-president for Finance at Northwest, emphasized that the global economic recession has resulted in weaker demand for air travel and may create challenges for the Company that could have a material adverse effect on their business and results of operations. "As the effects of the global economic recession have been felt in our domestic and international markets, we are experiencing weaker demand for air travel. Our demand began to slow during the December 2008 quarter and global economic conditions in 2009 are substantially reducing U.S. airline industry revenues in 2009 compared to 2008," Mr. Winborne noted. As a result, Delta is reducing consolidated capacity by 7-9% in 2009 compared to 2008, which reflects planned domestic capacity reductions of 8 to 10% and international capacity reductions of 7 to 9%. Delta said demand for air travel could remain weak or even continue to fall if the global economic recession continues for an extended period, and overall demand could fall lower than we are able prudently to reduce capacity. Moreover, Delta said the weakness in the United States and international economies is having a significant negative impact on the Company's results of operations and could continue to have a significant negative impact on future results of operations. Management Risks Northwest's results of operations are materially impacted by changes in aircraft fuel prices, interest rates and foreign currency exchange rates. In an effort to manage its exposure to the risks, the Company periodically enters into various derivative instruments, including fuel, interest rate and foreign currency hedges. Northwest also participates in a fuel hedge program sponsored by Delta Air Lines, Inc., whereby Delta enters into fuel hedges to manage the price risk of fuel costs associated with the estimated consolidated fuel consumption of Delta and Northwest. According to Mr. Winborne, Northwest performs, at least quarterly, both a prospective and retrospective assessment of the effectiveness of its hedge contracts, including assessing the possibility of counterparty default. If determined that a derivative is no longer expected to be highly effective, Northwest discontinues hedge accounting prospectively and recognizes subsequent changes in the fair value of the hedge in earnings. Mr. Winborne further relates that the rapid spread of a contagious illness, such as the H1N1 flu virus beginning in March 2009, can have a material adverse effect on the demand for worldwide air travel and therefore have a material adverse effect on business and results of operations. Further acceleration of the spread of H1N1 during the flu season in the Northern Hemisphere could have a significant adverse impact on the Company's financial results in addition to the impact that it already experienced during the spring of 2009. According to the report, the Company's operations could be negatively affected if employees are quarantined as the result of exposure to a contagious illness. Similarly, travel restrictions or operational problems resulting from the rapid spread of contagious illnesses in any part of the world in which the airline operates may materially impact operations and adversely affect the Company's results of operations. Northwest also faces significant competition with respect to routes, services and fares. Its domestic routes are subject to competition from both new and established carriers, and at several hub airports. Similarly, the Company also faces competition in smaller to medium-sized markets from regional jet operators. In addition, Northwest competes with foreign carriers, both on interior U.S. routes, due to marketing and codesharing arrangements, and in international markets. Through marketing and codesharing arrangements with U.S. carriers, foreign carriers have obtained access to interior U.S. passenger traffic. Credit Facilities Northwest is party to a $904 million senior corporate credit facility and a $500 million revolving credit facility. The Bank Credit Facility was fully drawn at June 30, 2009, and December 31, 2008. The Company did not have any outstanding borrowings under the $500 Million Revolving Credit Facility at June 30, 2009, or December 31, 2008. The final maturity date for borrowings under the Bank Credit Facility and the $500 Million Revolving Credit Facility is the earlier of (i) the date that Northwest Airlines, Inc. is no longer a separate legal entity, including when it is merged with and into Delta Air Lines, Inc.; or (ii) December 31, 2010 for the Bank Credit Facility, and October 29, 2009, and October 29, 2011 for the $300 million and $200 million tranches under the $500 Million Revolving Credit Facility. To integrate the operations of Delta and Northwest, the Companies must obtain a single operating certificate for the two airlines from the Federal Aviation Administration. When Northwest is no longer a certificated carrier, key assets of the two companies would be combined into a single entity, Mr. Winborne says. Legal Proceedings On December 12, 2007, Northwest filed a declaratory judgment action against six of its employee pilots, styled Northwest Airlines, Inc. v. Filipas, et al., at the U.S. District Court for the District of Minnesota. The Company sought a declaration that its recently implemented Target Benefit Pension Plan -- collectively bargained for with the Air Line Pilots Association -- does not violate any applicable prohibitions against age discrimination, including under ERISA. The court has certified a defendant class of all employee pilots who will receive less under the new target plan than they would have received under the predecessor plan that provided benefits to pilots on a "flat percentage" or "pro rata to pay" basis. On January 26, 2009, the District Court granted summary judgment in favor of Northwest on its claim as well as the defendants' counterclaims. Claims by the employee pilots against the Air Line Pilots Association remain pending in the case and consequently no final order has been entered. A full-text copy of Northwest's Second Quarter Results is available at the SEC at: http://ResearchArchives.com/t/s?40a1 Northwest Airlines Corporation Consolidated Balance Sheet As of June 30, 2009 ASSETS Current Assets: Cash & cash equivalents $2,621,000,000 Short-term investments 21,000,000 Restricted cash and cash equivalents 128,000,000 Accounts receivable, net of allowance 638,000,000 Hedge margin receivable 0 Expendable parts & supplies, net of allowance 156,000,000 Deferred income taxes 37,000,000 Prepaid expenses and other 258,000,000 ---------------- Total current assets 3,859,000,000 Property and Equipment, net 8,424,000,000 Other assets: Goodwill 4,578,000,000 Identifiable intangibles 2,673,000,000 Other non-current assets 173,000,000 ---------------- Total other assets 7,424,000,000 ---------------- Total assets $19,707,000,000 ================ LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current Liabilities: Current maturities of long-term debt $1,156,000,000 Air traffic liability 1,422,000,000 Accounts payable 869,000,000 Frequent flyer deferred revenue 499,000,000 Accrued salaries & related benefits 408,000,000 Hedge derivatives liability 61,000,000 Taxes payable 256,000,000 Note payable to parent 600,000,000 Other accrued liabilities 170,000,000 ---------------- Total current liabilities 5,441,000,000 Non-current Liabilities: Long-term debt & capital leases 4,373,000,000 Pension, postretirement & related benefits 5,592,000,000 Frequent flyer deferred revenue 1,443,000,000 Deferred income taxes, net 989,000,000 Other non-current liabilities 434,000,000 ---------------- Total non-current liabilities 12,831,000,000 Commitments and Contingencies Stockholders' Equity: Common stock at $0.01 par value, 1,000 shares issued at June 30, 2009 0 Additional paid-in capital 3,663,000,000 Accumulated deficit (761,000,000) Accumulated other comprehensive loss (1,467,000,000) ---------------- Total stockholder's equity 1,435,000,000 ---------------- Total Liabilities & Stockholders' Equity $19,707,000,000 ================ NORTHWEST AIRLINES CORPORATION Unaudited Consolidated Statements of Operations Three Months Ended June 30, 2009 Operating Revenue: Passenger Mainline $1,802,000,000 Regional Carriers 462,000,000 ---------------- Total Passenger Revenue 2,264,000,000 Cargo 84,000,000 Other, net 274,000,000 ---------------- Total operating revenue 2,622,000,000 Operating expenses: Salaries and related costs 733,000,000 Aircraft fuel and related taxes 599,000,000 Contract carrier arrangements 222,000,000 Contracted services 144,000,000 Aircraft maintenance materials & repairs 153,000,000 Passenger commissions & selling expenses 124,000,000 Landing fees and other rents 131,000,000 Depreciation and amortization 126,000,000 Aircraft rent 60,000,000 Passenger service 62,000,000 Impairment of goodwill & other intangible assets 0 Restructuring and merger-related items 31,000,000 Other, net 104,000,000 ---------------- Total operating expenses 2,489,000,000 ---------------- Operating income (loss) 133,000,000 Other income (expense): Interest expense (189,000,000) Interest income 3,000,000 Miscellaneous, net 17,000,000 ---------------- Total other expense, net (169,000,000) ---------------- Loss before Income Taxes (36,000,000) Income tax (provision) benefit 3,000,000 ---------------- Net Loss ($39,000,000) ================ Northwest Airlines Corporation Consolidated Statement of Cash Flows Six Months Ended June 30, 2009 Net cash provided by operating activities $369,000,000 Cash flows from investing activities: Property and equipment additions 77,000,000 Proceeds from sales of flight equipment 73,000,000 Redemption of short-term investments 28,000,000 Decrease in restricted cash & cash equivalents 7,000,000 Investment in affiliated companies 0 Other, net 0 ---------------- Net cash provided by investing activities 185,000,000 Cash flows from financing activities: Proceeds from intercompany loan 400,000,000 Payments of long-term debt and capital lease obligations (328,000,000) Payments on short-term obligations, net (73,000,000) Proceeds from long-term obligations 0 Payments of deferred financing costs 0 ---------------- Net cash used in financing activities (1,000,000) Increase (Decrease) in cash & cash equivalents 553,000,000 Cash and cash equivalents, beginning of period 2,068,000,000 ---------------- Cash and cash equivalents, end of period $2,621,000,000 ================ About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007, the Debtors filed with the Court their chapter 11 plan. On Feb. 15, 2007, the Debtors filed an amended plan and disclosure statement. The Court approved the adequacy of the Debtors' amended disclosure statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' amended plan. That amended plan took effect May 31, 2007. Northwest Airlines is now a unit of Delta Air Lines after it was acquired by Delta in October 2008. * * * As reported by the TCR on June 29, 2009, Fitch Ratings has downgraded the debt ratings of Delta Air Lines, Inc., and its wholly owned subsidiary Northwest Airlines, Inc. -- (i) DAL's Issuer Default Rating to 'B-' from 'B', First-lien senior secured credit facilities to 'BB-/RR1' from 'BB/RR1', and Second-lien secured credit facility to 'B-/RR4' from 'B/RR4', and (ii) NWA's IDR to 'B-' from 'B'; and Secured bank credit facility to 'BB- /RR1' from 'BB/RR1'. The downgrade of DAL's ratings reflects the continued erosion of the airline's near-term cash flow generation potential that has resulted from extremely weak business travel demand and large year-over-year declines in passenger revenue per available seat mile. NORTHWEST AIRLINES: Reports Add'l Distribution to Claimholders -------------------------------------------------------------- Northwest Airlines Corp. and its affiliates reported to the Court that they have made a distribution with respect to shares to be distributed in accordance with their confirmed First Amended Joint and Consolidated Plan of Reorganization. To recall, the Debtors disclosed that they made these distributions of shares of new common stock, from May 31, 2007, to October 1, 2008: (a) an initial distribution on May 31, 2007 (b) a Catch-up Distribution on July 16, 2007 (c) a Periodic and a Catch-up Distribution on October 1, 2007 (d) a Periodic and a Catch-up Distribution on January 2, 2008 (e) a Periodic and a Catch-up Distribution on April 1, 2008 (f) a Periodic and a Catch-up Distribution on July 1, 2008 (g) a Periodic and a Catch-up Distribution on October 1, 2008 (h) a Periodic and a Catch-up Distribution on January 2, 2009. The Reorganized Debtors did not make a periodic distribution or a Catch-up Distribution on April 1, 2009, "because at least 2% of the shares in the Distribution Reserve were not available for distribution," Nathan A. Haynes, Esq., at Greenberg Traurig LLP, in New York, explains, on behalf of the Debtors. Mr. Haynes says that as of the Periodic Distribution Date of July 1, 2009, the Debtors expected to distribute 720,433 shares of new common stock to creditors allocable to Class 1D. The Debtors expected that 6,725,611 shares would remain for Disputed Claims totaling $195 million. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The Company and 12 affiliates filed for chapter 11 protection on September 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Scott L. Hazan, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C. as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed $14.4 billion in total assets and $17.9 billion in total debts. On January 12, 2007, the Debtors filed with the Court their chapter 11 plan. On February 15, 2007, the Debtors filed an amended plan and disclosure statement. The Court approved the adequacy of the Debtors' amended disclosure statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' amended plan. That amended plan took effect May 31, 2007. Northwest Airlines is now a unit of Delta Air Lines after it was acquired by Delta in October 2008. * * * As reported by the TCR on June 29, 2009, Fitch Ratings has downgraded the debt ratings of Delta Air Lines, Inc., and its wholly owned subsidiary Northwest Airlines, Inc. -- (i) DAL's Issuer Default Rating to 'B-' from 'B', First-lien senior secured credit facilities to 'BB-/RR1' from 'BB/RR1', and Second-lien secured credit facility to 'B-/RR4' from 'B/RR4', and (ii) NWA's IDR to 'B-' from 'B'; and Secured bank credit facility to 'BB- /RR1' from 'BB/RR1'. The downgrade of DAL's ratings reflects the continued erosion of the airline's near-term cash flow generation potential that has resulted from extremely weak business travel demand and large year-over-year declines in passenger revenue per available seat mile. NORTEL NETWORKS: CCAA Stay Extended Until October 30 ---------------------------------------------------- Nortel Networks Corporation and its four Canadian affiliates that filed for creditor protection under Canada's Companies' Creditor Arrangement Act sought and obtained an order from the Ontario Superior Court of Justice extending through October 30, 2009, the stay of proceedings that was previously granted by the Canadian Court. The purpose of the stay of CCAA proceedings is to allow the Nortel companies to continue to advance in discussions with interested parties for the sale of their businesses, continue to assess other restructuring alternatives if they are unable to maximize value through sales, and file a plan of arrangement. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. Nortel Networks (CALA) Inc. filed for Chapter 11 on July 14, 2009 (Bankr. D. Del. Case No. 09-12515). Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTEL NETWORKS: Court OKs Issuance of More Than $30MM in Bonds --------------------------------------------------------------- The Bankruptcy Court authorized Nortel Networks Inc. and its affiliates, but not directed, to enter into Letter of credit and bonding facilities that "collectively permit the issuance of a face amount of performance bonds and letters of credit greater than $30 million, so long as the Debtors do not request the issuance of bonds and LOCs from sureties and financial institutions in an amount greater than $30 million." The Court also authorized the Debtors to post cash collateral necessary to secure the performance bonds and letters of credit, even if the amount of the collateral exceeds $30 million. The Debtors had sought the Court's confirmation that the order it previously issued permits the issuance of letters of credit and performance bonds with a face amount of up to $30 million, and the posting of collateral to secure those letters of credit and bonds even if the collateral exceeds $30 million. Attorney for the Debtors, Ann Cordo, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, Delaware, said that the Debtors have identified two parties that could potentially provide them with more than $30 million in face amount of letters of credit or performance bonds. The Debtors relate that while they acknowledge that the Final Order caps the aggregate face amount of letters of credit or performance bonds that may be issued at $30 million, they believe that it is in their best interest to enter into both agreements. "The Debtors believe it is in their interest to enter into both facilities in order to provide them flexibility with regard to the issuance of any particular letter of credit or performance bond from time to time, because certain contractual obligations can only be supported by a performance bond and not a letter of credit or vice versa," Ms. Cordo pointed out. She added that it would also provide the Debtors flexibility in case one of the providers does not elect to continue providing the support available under those uncommitted facilities. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. Nortel Networks (CALA) Inc. filed for Chapter 11 on July 14, 2009 (Bankr. D. Del. Case No. 09-12515). Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTEL NETWORKS: Sec. 341 Meet for NN Cala Creditors on Aug. 24 --------------------------------------------------------------- Roberta DeAngelis, the Acting United States Trustee for Region 3, will convene a meeting of creditors of Nortel Networks (CALA) Inc., on August 24, 2009, at 11:00 a.m. Prevailing Eastern Time at J. Caleb Boggs Federal Building-844 King Street, 2nd Floor, Room 2112, in Wilmington, Delaware. This is the first meeting required under Section 341(a) of the Bankruptcy Code in NN CALA's bankruptcy case. Attendance by the creditors at the meeting is welcome but not required. The Sec. 341(a) meeting offers the creditors a one- time opportunity to examine NN CALA's representative under oath about its financial affairs and operations that would be of interest to the general body of creditors. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. Nortel Networks (CALA) Inc. filed for Chapter 11 on July 14, 2009 (Bankr. D. Del. Case No. 09-12515). Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NORTEL NETWORKS: September 30 Claims Bar Date Set ------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has set September 30, 2009, as the deadline for creditors to file proofs of claim against Nortel Networks Inc. and its U.S.-based debtor affiliates. For creditors whose claims stem from the rejection of their unexpired leases and executory contracts with the Debtors, they can file their proofs of claim within 30 days after the issuance of an order approving the rejection of the contract or lease, or 35 days after NNI issues a notice of contract or lease rejection. Meanwhile, for creditors whose scheduled claims have been amended or supplemented, they are given 20 days from the date of the notice to file their proofs of claim. The Ontario Superior Court of Justice, which oversees the proceedings of Nortel Networks Corporation and its four affiliates under Canada's Companies' Creditors Arrangement Act, also issued an order setting September 30, 2009, as the deadline for creditors to file their proofs of claim against the Canada- based companies. Certain creditors are exempted from the requirement to file a proof of claim against NNC and its affiliates, including their current or former employees and individual bondholders whose claims relate solely to the debt evidenced by their bonds. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers next- generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel does business in more than 150 countries around the world. Nortel Networks Limited is the principal direct operating subsidiary of Nortel Networks Corporation. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young has been appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor also sought recognition of the CCAA Proceedings in the Bankruptcy Court under Chapter 15 of the Bankruptcy Code. The Chapter 15 case is Bankr. D. Del. Case No. 09-10164. Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as Chapter 15 petitioner's counsel. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. Nortel Networks (CALA) Inc. filed for Chapter 11 on July 14, 2009 (Bankr. D. Del. Case No. 09-12515). Certain of Nortel's European subsidiaries have also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of $11.6 billion and consolidated liabilities of $11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about $9 billion and liabilities of $3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about $4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) NOVA CHEMICALS: Files Certificate of Continuance & General By-Law ----------------------------------------------------------------- NOVA Chemicals Corporation filed with the Securities and Exchange Commission its: -- Certificate of Continuance and Articles of Continuance under New Brunswick Corporations Act See http://ResearchArchives.com/t/s?412c -- General By-Law No. 3 See http://ResearchArchives.com/t/s?412d As reported by the Troubled Company Reporter on July 8, 2009, International Petroleum Investment Company and NOVA Chemicals Corporation completed on July 6, 2009, the acquisition of NOVA Chemicals by way of a plan of arrangement. NOVA Chemicals will continue to operate its chemicals and plastics business from its North American base. As reported by the TCR on July 20, 2009, Moody's Investors Service raised Nova Chemicals' Corporate Family Rating to Ba3 from B2 following the closing of its acquisition by the International Petroleum Investment Company (rated Aa2) for $6.00 per share. Coincident with the acquisition IPIC contributed $350 million of additional equity ($200 million in cash and conversion of $150 million loan to equity). The outlook is stable. Moody's also raised its ratings on NOVA's unsecured debt to B1 from B3 and affirmed its Speculative Grade Liquidity rating at SGL-3. These actions conclude the review initiated on February 23, 2009. The TCR said July 9, 2009, Fitch Ratings took various rating actions on the Issuer Default Rating and outstanding debt ratings of NOVA Chemicals after the closing of its acquisition by the International Petroleum. The company's Rating Outlook is Stable. Fitch took these actions: -- IDR upgraded to 'B+' from 'B-'; -- Secured revolver upgraded to 'BB+/RR1' from 'BB-/RR1'; -- Series 'A' preferred notes upgraded to 'BB+/RR1' from 'BB- /RR1'; -- Senior unsecured revolver revised to 'B+/RR4' from 'BB- /RR1'. -- Senior unsecured notes revised to 'B+/RR4' from 'BB-/RR1'. About Nova Chemicals NOVA Chemicals Corporation -- http://www.novachemicals.com/-- develops and manufactures chemicals, plastics and other end- products. NOVA Chemicals shares are traded as NCX on the Toronto and New York stock exchanges. OSHKOSH CORP: S&P Puts 'B' Corp. Rating on CreditWatch Negative --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including the 'B' corporate credit rating, on Oshkosh Corp. on CreditWatch with positive implications. The CreditWatch placement follows the Company's announcement that it has commenced a 13 million share common stock offering, and plans to use the proceeds to repay term loan borrowings. Headroom under covenants, which the company and lenders reset in March 2009, would increase moderately following the anticipated debt repayment. In addition, the company received more than $2 billion in delivery orders from the U.S. government to build 3,944 M-ATV (Mine Resistant Ambush Protected All Terrain Vehicles), which has meaningfully improved the company's near-term prospects. Standard & Poor's expects to resolve the CreditWatch listing following the conclusion of the proposed stock offering. "Our review will consider the effect on the capital structure of the expected debt repayment, and the improved prospects in the company's defense segment, following the sizable orders it has received," said Standard & Poor's credit analyst Dan Picciotto. "We would expect any upgrade to be limited to one notch," he continued. OPUS WEST: Gets Court Nod on Phoenix Capital as CRO --------------------------------------------------- Opus West Corporation sought and obtained the Court's permission to employ Phoenix Capital Partners LLC as its chief restructuring officer as of the Petition Date. Phoenix Capital will direct OWC's Chapter 11 case and will be responsible for assisting OWC in its reorganization efforts, including negotiating with parties-in-interest and coordinating with other professionals who have been and will be assisting the Debtor. Every effort will be made to prevent any duplication of efforts in these cases, OWC assured the Court. Specifically, as CRO, Phoenix Capital will: a. manage OWC's business affairs until the earlier of confirmation of a reorganization plan or conversion to Chapter 7, unless earlier terminated; b. analyze, negotiate and implement actions or measures regarding employee and staffing levels and retention terms or terminations; c. ensure that the value of the real estate and other assets of OWC are properly managed and maintained; d. analyze, negotiate and implement actions and measures regarding alternative exit strategies for OWC from its ownership interests and evaluating any information that could materially and adversely affect the development or marketability of OWC's assets; e. monitor the current status of entitlements, permits and approvals governing OWC's assets, which may include meeting with government officials regarding entitlement status, and obtaining and analyzing relevant documents; f. analyze, negotiate and implement actions and measures regarding the completion of projects under construction; g. analyze, negotiate and implement actions and measures regarding the disposition of assets in a manner consistent with OWC's and its lenders' objectives for properties not included in the business; h. analyze, negotiate and implement actions and measures regarding terms of asset disposition with joint venture partners and creditors; i. analyze, negotiate and implement actions and measures regarding review, certification and delivery of all financial reporting; j. aggregate property data necessary for asset disposition or reorganization; and k. testify, certify and execute all bankruptcy petitions, reports, schedules and other documents required for bankruptcy proceedings before the Bankruptcy Court. OWC will pay Phoenix Capital a monthly fee equal to $91,667 for its services. The Debtor will deposit $275,000 for the first three months of estimated expenses upon execution of the agreement. OWC will also office space and general office equipment and supplies to Phoenix Capital at no charge and will reimburse Phoenix Capital for reasonable direct travel and meal expenses and third-party expense directly related to the engagement. Phoenix Capital will submit the expenses for payment on a monthly basis. Since Phoenix Capital is employed pursuant to Section 363 of the Bankruptcy Code, rather than as a professional under Section 327 of the Bankruptcy Code, Phoenix Capital will not be required to submit fee applications pursuant to Sections 330 and 331 of the Bankruptcy code. Instead, Phoenix Capital will file with the Court, and provide notice to the United States Trustee and all official committees, reports of compensation earned on at least a quarterly basis. The Debtor will indemnify, defend and hold Phoenix Capital, its directors, officers, and employees harmless from and against all losses, claims, damages, liabilities, and expenses, joint or several arising out of the firm's conduct while acting within the scope of its authority. The indemnity, however, will not apply to gross negligence or willful misconduct on the part of Phoenix Capital in the performance of its services. John Greer, a managing member of Phoenix Capital, assures the Court that his firm does not have an active relationship with the Debtor in matters related to the Chapter 11 cases and that his firm is not a "creditor" of the Debtor within the meaning of Section 101(10) of the Bankruptcy Code. He adds that to the best of his knowledge, Phoenix Capital is not a holder of any of the Debtors' debt or equity securities. Phoenix Capital is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code, Mr. Greer maintains. About Opus West Corporation Based in Phoenix, Arizona, Opus West Corporation is a full-service real estate development firm that focuses on acquiring, constructing, operating, managing, leasing and/or disposing of real estate development projects primarily located in the western United States. Opus West and its affiliates filed for Chapter 11 on July 6, 2009 (Bankr. N.D. Tex. Case No. 09-34356). Clifton R. Jessup, Jr., at Greenberg Traurig, LLP, represents the Debtors in their restructuring efforts. Franklin Skierski Lovall Hayward, LLP, is co-counsel to the Debtors. Pronske & Patel, P.C. is conflicts counsel. Chatham Financial Corp. is financial advisor. BMC Group is the Company's claims and notice agent. As of May 31, Opus West -- together with its non-debtor affiliates -- had $1,275,334,000 in assets against $1,462,328,000 in debts. In its bankruptcy petition, Opus West said it had assets and debts both ranging from $100 million to $500 million. Opus West joins affiliates that previously filed for bankruptcy. Opus East LLC, a real estate operator from Rockville, Maryland, commenced a Chapter 7 liquidation on July 1 in Delaware. Opus South Corp., a Florida condominium developer based in Atlanta, filed a Chapter 11 petition April 22 in Delaware. OPUS WEST: Proposes Chatham as Financial Advisor ------------------------------------------------ The Opus West Corp. and its affiliates ask the Court for authority to employ Chatham Financial Corp., as their financial advisors and real estate consultants, nunc pro tunc to the Petition Date. Chatham is a diversified provider of a wide variety of services to both sound and financially distressed companies, including accounting and financial advisor services and specialized services to real estate development companies, specifically in the areas of defeasance and the provision of debt advisory services. The Debtors submit that Chatham's employees are leading financial advisors and real estate service providers to debtors, secured and unsecured creditors, acquirers, and other parties-in-interest involved in financially troubled companies both in and outside bankruptcy. Through its role in restructuring engagements, the Chatham team has developed considerable expertise in many of the issues that will be presented in its engagement with the Debtors. The Debtors aver that they need Chatham to perform financial advisor and real estate consulting services from time to time. Specifically, the Debtors expect Chatham to: a. provide strategic direction on how to work with creditors; b. work with counsel to develop legal strategies and disposition structures consistent with the company's objections; c. market properties for a Section 363 sale; d. identify potential stalking horse bidders; e. negotiate appropriate pricing, term, conditions, and break- up fees for stalking horse bidders; f. run auction process among secured lenders, stalking horse bidders, and other bidders; g. evaluate and determine which bids are in the best interest of the Debtors' bankruptcy estates; h. draft a notice for each sale that: -- informs interested parties of the timing and terms of each sale; -- describes the asset being sold; -- confirms that the sale is an arms-length transaction made in good faith; -- describes why the sale is in the best interests of the bank; and -- confirms the fair value of each transaction; i. testify, if called upon, as to accuracy of the items included in the notices, including the good faith of the sales negotiations and the fair value of the transactions; j. assist with any ad hoc creditor negotiations that take place during the engagement; and k. assist the Debtors with other services as necessary. The Debtors advanced to Chatham a $300,000 retainer. They note that Chatham will apply for fees amounting to $100,000 per month for the first three months of their Chapter 11 cases, and $100,000 per month thereafter for the financial advisor services, plus reimbursement of actual, necessary expenses and other charges incurred by the firm. With regard to the real estate consulting and marketing services to be provided by Chatham, the Debtors will pay Chatham any fees in connection with the Debtors' proposed sale and surcharge of properties sold pursuant to Sections 363 and 506(c) of the Bankruptcy Code and not from the Advance Retainer. The fees will be equal to 1/4 of 1% of the disposition price, including any assumed underlying mortgage debt, upon disposition of properties, or direct or indirect interests in the properties, owned directly or indirectly by the Debtors. However, the aggregate of all Disposition Fees payable will in not exceed 25% of the disposition price excluding any assumed underlying mortgage debt. In addition, Chatham will also be entitled to a $300,000 fee contingent upon the confirmation of a Chapter 11 plan. Matthew P. Henry, an employee at Chatham, assures the Court that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Opus West Corporation Based in Phoenix, Arizona, Opus West Corporation is a full-service real estate development firm that focuses on acquiring, constructing, operating, managing, leasing and/or disposing of real estate development projects primarily located in the western United States. Opus West and its affiliates filed for Chapter 11 on July 6, 2009 (Bankr. N.D. Tex. Case No. 09-34356). Clifton R. Jessup, Jr., at Greenberg Traurig, LLP, represents the Debtors in their restructuring efforts. Franklin Skierski Lovall Hayward, LLP, is co-counsel to the Debtors. Pronske & Patel, P.C. is conflicts counsel. Chatham Financial Corp. is financial advisor. BMC Group is the Company's claims and notice agent. As of May 31, Opus West -- together with its non-debtor affiliates -- had $1,275,334,000 in assets against $1,462,328,000 in debts. In its bankruptcy petition, Opus West said it had assets and debts both ranging from $100 million to $500 million. Opus West joins affiliates that previously filed for bankruptcy. Opus East LLC, a real estate operator from Rockville, Maryland, commenced a Chapter 7 liquidation on July 1 in Delaware. Opus South Corp., a Florida condominium developer based in Atlanta, filed a Chapter 11 petition April 22 in Delaware. OWENS CORNING: Owens Illinois Serves Subpoena on Asbestos PI Trust ------------------------------------------------------------------ Owens Illinois, through its counsel, Maron Marvel Bradley & Anderson, P.A., served on July 31, 2009, a subpoena on the Owens Corning/Fibreboard Asbestos Personal Injury Trust. The Subpoena calls for the production of these documents by August 14, 2009: * Owens Corning invoices for sales of Kaylo, from January 1, 1959 through December 31, 1978, to: -- DuPont Plant Repauno Works -- E.I. Dupont de Nemours & Company, Repauno Works, Gibbstown, NJ -- DuPont Repauno Construction Project * Affidavit of the Records Custodian for the invoices set forth. About Owens Corning Headquartered in Toledo, Ohio, Owens Corning fka Owens Corning (Reorganized) Inc. (NYSE: OC) -- http://www.owenscorning.com/-- is a producer of residential and commercial building materials and glass fiber reinforcements, and other similar materials for composite systems. The Company has operations in 26 countries. The Company filed for Chapter 11 protection on October 5, 2000 (Bankr. D. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represented the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represented the Official Committee of Asbestos Creditors. James J. McMonagle served as the Legal Representative for Future Claimants until June 20, 2007. Mr. McMonagle was replaced by Michael J. Crames. Mr. Crames served as Mr. McMonagle's counsel until July 2005, when he retired from the law firm Kaye Scholer LLP. On September 28, 2006, the Honorable John P. Fullam, Sr., of the U.S. District Court for the Eastern District of Pennsylvania affirmed the order of Honorable Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware confirming Owens Corning's Sixth Amended Plan of Reorganization. The Plan took effect on October 31, 2006, marking the company's emergence from Chapter 11. Reorganized Owens sought on July 25, 2008, from the Delaware Bankruptcy Court a final decree closing the Chapter 11 cases of 17 of its affiliates. Only the Chapter 11 case of Owens Corning Sales, LLC, formerly known as Owens Corning, under Case No. 00-03837 will remain open. (Owens Corning Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) OWENS CORNING: Reserves $30 Million for Remaining Claims -------------------------------------------------------- Owens Corning reports that as of June 30, 2009, it has reserved about $30,000,000 to pay remaining claims, not including asbestos liabilities, asserted in its in bankruptcy case. This reserve is referred to as the "Disputed Distribution Reserve." The Disputed Distribution Reserve is reflected as restricted cash on the consolidated balance sheets of the Company. Reorganized Owens Corning was initially formed on July 21, 2006, as a wholly owned subsidiary of Owens Corning Sales, LLC, and did not conduct significant operations prior to October 31, 2006, when Owens Sales or Predecessor Owens and 17 of its subsidiaries emerged from Chapter 11 bankruptcy proceedings. Under the terms of the plan of reorganization confirmed in the Owens Sales bankruptcy proceedings, all asbestos claims against Owens Sales and Fibreboard Corporation either have been resolved or are barred pursuant to the Plan and Confirmation Order. Accordingly, the Company has no further asbestos liabilities. A full-text copy of Owens Corning's Second Quarter 2009 Financial Results filed on Form 10-Q is available for free at: http://http://ResearchArchives.com/t/s?410f About Owens Corning Headquartered in Toledo, Ohio, Owens Corning fka Owens Corning (Reorganized) Inc. (NYSE: OC) -- http://www.owenscorning.com/-- is a producer of residential and commercial building materials and glass fiber reinforcements, and other similar materials for composite systems. The company has operations in 26 countries. The Company filed for Chapter 11 protection on October 5, 2000 (Bankr. D. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represented the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represented the Official Committee of Asbestos Creditors. James J. McMonagle served as the Legal Representative for Future Claimants until June 20, 2007. Mr. McMonagle was replaced by Michael J. Crames. Mr. Crames served as Mr. McMonagle's counsel until July 2005, when he retired from the law firm Kaye Scholer LLP. On September 28, 2006, the Honorable John P. Fullam, Sr., of the U.S. District Court for the Eastern District of Pennsylvania affirmed the order of Honorable Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware confirming Owens Corning's Sixth Amended Plan of Reorganization. The Plan took effect on October 31, 2006, marking the company's emergence from Chapter 11. Reorganized Owens sought on July 25, 2008, from the Delaware Bankruptcy Court a final decree closing the Chapter 11 cases of 17 of its affiliates. Only the Chapter 11 case of Owens Corning Sales, LLC, formerly known as Owens Corning, under Case No. 00-03837 will remain open. (Owens Corning Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) OWENS CORNING: Sets $10MM Environment Liability Reserve ------------------------------------------------------- In a Form 10-Q filing with the Securities and Exchange Commission for the quarter ended June 2009, Owens Corning disclosed that its reserve for environmental liabilities at December 31, 2007, was $10,000,0000, of which $4,000,000 is recorded in the Disputed Distribution Reserve. Owens Corning has been deemed by the Environmental Protection Agency to be a Potentially Responsible Party with respect to certain sites under the Comprehensive Environmental Response, Compensation and Liability Act. The Company has also been deemed a PRP under similar state or local laws and in other instances, other PRPs have brought lawsuits against the Company as a PRP for contribution under certain federal, state, or local laws. At June 30, 2009, the Company had environmental remediation liabilities as a PRP at 39 sites, Duncan J. Palmer, senior vice president and chief financial officer of Owens Corning, relates. Owens Corning's environmental liabilities at 20 of those sites will be resolved pursuant to the Disputed Distribution Reserve, he notes. At the other 19 sites, Owens Corning has a continuing legal obligation to either complete remedial actions or contribute to the completion of remedial actions as part of a group of PRPs, Mr. Palmer adds. A full-text copy of Owens Corning's Second Quarter 2009 Financial Results filed on Form 10-Q is available for free at: http://http://ResearchArchives.com/t/s?410f About Owens Corning Headquartered in Toledo, Ohio, Owens Corning fka Owens Corning (Reorganized) Inc. (NYSE: OC) -- http://www.owenscorning.com/-- is a producer of residential and commercial building materials and glass fiber reinforcements, and other similar materials for composite systems. The company has operations in 26 countries. The Company filed for Chapter 11 protection on October 5, 2000 (Bankr. D. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represented the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represented the Official Committee of Asbestos Creditors. James J. McMonagle served as the Legal Representative for Future Claimants until June 20, 2007. Mr. McMonagle was replaced by Michael J. Crames. Mr. Crames served as Mr. McMonagle's counsel until July 2005, when he retired from the law firm Kaye Scholer LLP. On September 28, 2006, the Honorable John P. Fullam, Sr., of the U.S. District Court for the Eastern District of Pennsylvania affirmed the order of Honorable Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware confirming Owens Corning's Sixth Amended Plan of Reorganization. The Plan took effect on October 31, 2006, marking the company's emergence from Chapter 11. Reorganized Owens sought on July 25, 2008, from the Delaware Bankruptcy Court a final decree closing the Chapter 11 cases of 17 of its affiliates. Only the Chapter 11 case of Owens Corning Sales, LLC, formerly known as Owens Corning, under Case No. 00-03837 will remain open. (Owens Corning Bankruptcy News; Bankruptcy Creditors' Service Inc.; http://bankrupt.com/newsstand/or 215/945-7000) PEACH HOLDINGS: Moody's Reviews 'C' Corporate Rating for Upgrade ---------------------------------------------------------------- Moody's Investors Service placed the C corporate family and senior secured bank credit facility ratings of Peach Holdings Inc. on review for possible upgrade. The review reflects possible improvement in Peach's financial and operating flexibility stemming from potential recapitalization and financing transactions, including debt repurchases. Although, to Moody's knowledge, Peach is not in default under its debt agreements, Moody's would consider such transactions, including distressed debt repurchases, to be "default events" under its published definitions. Given that fact, as well as Moody's loss assumptions on the debt issued by Peach, Moody's has rated Peach's debt at C. However, the effect of the above-referenced recapitalization and financing transactions could result in an improvement in Peach's financial profile. During its review, Moody's will consider potential additional developments, including Peach's further progress in establishing sound alternative funding sources in order to continue operations and maintain sufficient liquidity. Tangible evidence that Peach has made additional progress in this regard could lead to an upgrade in the company's ratings. The last rating action was on June 11, 2009, when Moody's downgraded Peach's corporate family and senior secured bank credit facility ratings to C from Caa2 and assigned a developing outlook. Peach Holdings, Inc., is located in Boynton Beach, FL; the company reported assets of approximately $477 million at March 31, 2009. PEACH HOLDINGS: S&P Cuts Credit to 'SD' on Distressed Exchange -------------------------------------------------------------- Standard & Poor's Ratings Services has downgraded its ratings on Peach Holdings Inc. to 'SD' from 'CC'. At the same time, S&P is lowering its issue rating on Peach's term loan to 'D' from 'CC'. "Peach has repurchased a portion of its debt at a significant discount as an alternative to seeking debt covenant relief -- S&P considers such a repurchase to be a distressed debt exchange. Upon completion of an exchange S&P views to be distressed, S&P lower S&P's ratings on the affected issues to 'D', and the issuer credit rating is reduced to 'SD' (selective default), assuming the issuer continues to honor its other obligations," said Standard & Poor's credit analyst John Bartko. This is the case even though the investors, technically, may accept the offer voluntarily and no legal default occurs. Subsequent to the exchange, S&P will reevaluate the rating to again focus on conventional default risk. This applies even in the case of an extended de facto restructuring -- such as a proposed series of auctions to buy back distressed debt. In Peach's case, the repurchase allows the company to remain in compliance with its leverage covenant. "Over the next few weeks, S&P will conduct a full review and reassess the firm's ongoing ability to meet future payment obligations. At that time the ratings will be changed to reflect the company's long-term creditworthiness," Mr. Bartko added. PENNY & KENNY: Lawsuit & Supplier Woes Lead to Chapter 11 Filing ---------------------------------------------------------------- Penny & Kenny Shoes, LLC, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York, citing the general status of the market as a major contributor to its collapse, Crain's New York reports. It is difficult for a smaller company like Penny & Kenny to compete against larger brands when most retailers are stocking only the "tried and true", Crain's states, citing Monique Umeh, accessories and footwear editor at trend tracking firm Stylesight. Penny & Kenny said in court documents that "the delivery of inferior product" from suppliers was a factor in its financial difficulties, as well as an expensive lawsuit against Penny & Kenny. According to Crain's, Penny & Kenny listed almost $4.9 million in debts owed to more than 50 creditors against more than $900,000 in assets. Penny & Kenny's creditors include: -- shoe distributor Orly, which is owed almost $30,000; and -- Willy & Well Trading Co., owed about $360,000. New York-based Penny & Kenny Shoes, LLC -- aka P&K, aka PLK, aka Penny Loves Kenny -- is a seven-year-old retailer of value-priced junior girl's shoes to more than 70 retailers in New York City, including David Z, Urban Outfitters and Infinity Shoes. The Company was co-founded by Ken Robinson. PHOENIX COS: S&P Downgrades Counterparty Credit Rating to 'B-' -------------------------------------------------------------- Standard & Poor's Ratings Services said lowered its counterparty credit rating on Phoenix Cos. Inc. to 'B-' from 'B+'. Standard & Poor's also said that it lowered its counterparty credit and financial strength ratings on PNX's operating subsidiaries -- Phoenix Life Insurance Co., PHL Variable Insurance Co., and AGL Life Assurance Co. (collectively referred to as Phoenix) -- to 'BB' from 'BBB-'. The outlook on all of these companies is negative. "The downgrade follows Phoenix's release of its second-quarter 2009 results,' said Standard & Poor's credit analyst Adrian Pask. These showed that the statutory surplus and asset valuation reserve decreased by $89.9 million (13%) and there was a GAAP operating loss of $16.1 million. The decline in surplus stemmed from increases in reserves for discontinued group accident and health business, larger-than-expected death claims for universal life products, and credit losses. Offsetting these weaknesses are improved holding-company liquidity, the formation of a new distribution operation, and expense-reduction initiatives. The operating-company ratings reflect a capital deficiency relative to S&P's expectation for the ratings. S&P believes that the deficiency is greater than two years of operating-company earnings. Statutory earnings have also been below expectations for the rating in 2009, reduced by reserve strengthening, investment losses, and higher-than-expected mortality claims. The execution of internal or external reinsurance treaties could be either a source of capital or reduce capital requirements. Offsetting these weaknesses are the consistent profitability of Phoenix's closed block, its ability to absorb investment losses through the policyholder dividend mechanism, and the potential to monetize the closed-block embedded value. The ratings also reflect a strong investment portfolio and strong operating-company liquidity. The negative outlook primarily reflects the risks inherent in managing the competing tasks that Phoenix faces, which are rebuilding statutory capital to levels commensurate with the rating and providing cash to the holding company to cover its obligations. "If the company is unable to improve its profitability or resolve the capital deficiency, S&P could lower the ratings again, most likely by one notch," Mr. Pask added. "We could also lower the ratings by one notch if surrender activity increases. Alternatively, if the company can resolve the capital deficiency without hurting longer-term statutory earnings as well as sustain earnings improvements over the next 12-24 months, S&P could revise the outlook to stable." PILGRIM'S PRIDE: 5th Circuit to Rehear Arguments in Wheeler Suit ---------------------------------------------------------------- The United States Court of Appeals for the Fifth Circuit will rehear Pilgrim's Pride Corporation's arguments over the Court's decision in the lawsuit filed by Cody Wheeler, Don Davis and Davey Williams alleging that PPC violated Sections 202(a)-(b) of the Packers and Stockyards Act. The Circuit Court, on July 21, 2009, affirmed the decision of the U.S. District Court for the Eastern District of Texas holding that a plaintiff need not prove an adverse effect on competition to prevail under Section 192(a)-(b) of Title 7 of the U.S. Code. Messrs. Wheeler, Davis, and Williams, chicken farmers who grow chickens known as "broilers," filed the lawsuit in January 2006 against PPC alleging that PPC's refusal to afford them an opportunity to operate under the same terms as Lonnie "Bo" Pilgrim, who is PPC's founder and chairman, is "unfair and unjustly discriminatory" and affords Mr. Pilgrim an undue or unreasonable preference or advantage in violation of Section 192(a)-(b). The lawsuit explained that PPC compensates the Growers under a "tournament system" where PPC ranks the Growers against one another and against the other growers operating in their complex and compensates the Growers based on the quality of their broilers, the number that survive the grow-out process, and the amount of feed and supplies the Growers used. At least one grower operates under a different system than the Growers. Mr. Pilgrim purchases chicks, feed, and supplies from PPC rather than having them consigned to him. Operating in a different complex than the Growers, Mr. Pilgrim then raises the chickens at his farm and sells them back to PPC. Rather than compensating Mr. Pilgrim under the tournament system, PPC pays Mr. Pilgrim the lesser of a weekly quoted market price or 102% of his costs. According to the Growers, Mr. Pilgrim earns more under his arrangement with PPC than they earn under their arrangements with PPC. The Growers further contend that PPC refused to offer them growing arrangements similar to Mr. Pilgrim's. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (Pink Sheets: PGPDQ) -- http://www.pilgrimspride.com/-- employs roughly 41,000 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors. 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: Asserts Ad Valorem Tax Exemption in Hardy County ----------------------------------------------------------------- Pilgrim's Pride Corp. and its affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas to determine that the personal property used by the Debtor for the subsistence of livestock in its Hardy County, West Virginia farming operation is exempt from ad valorem property taxation, pursuant to Section 11- 3-9(a)(21) of the West Virginia Code, which provides an exemption for all property on hand to be used in the subsistence of livestock on hand at the commencement of the assessment year. On September 30, 2008, Pilgrim's Pride Corporation filed personal property tax renditions for the Hardy County personal property omitting various assets that appeared to be exempt from ad valorem taxation under Sections 11-3-9(a)(21) and 11-3-9(a)(28)of the W.Va. Code as items used in agricultural operations. In January 2009, Jim Wratchford, the Hardy County Assessor, asked a ruling from the Tax Commissioner for the West Virginia Department of Taxation as to whether the Properties were exempt from ad valorem taxation. In February 2009, the Tax Commissioner ruled that the Properties were subject to ad valorem property taxation, and stated that the ruling was binding unless PPC filed a lawsuit with the Circuit Court of Hardy County within 30 days to request their review of the ruling. In March 2009, PPC and its affiliates filed with the Circuit Court a Petition for Appeal of State Tax Commissioner's Property Tax Ruling 09-38 and Notice of Suggestion of Bankruptcy to preserve any rights they may have should the Bankruptcy Court not determine the issues raised in this motion. Stephen A. Youngman, Esq., at Weil, Gotshal, & Manges LLP in Dallas, Texas, informs the Bankruptcy Court that for purposes of the West Virginia statute, the Debtors' principal business activity is farming, and they are primarily involved in the agricultural business of breeding, hatching, growing and processing chickens. The Debtors' personal property in Hardy County include property used in its hatchery, feed mill processing plant, protein conversion facility and live haul center. This property is used by the Debtors to facilitate the production of poultry for sale to consumers. Personal property is exempt from ad valorem property taxation pursuant to Section 11-3-9(a)(21)of the W.Va. Code, which provides an exemption for "[a]ll property on hand to be used in the subsistence of livestock on hand at the commencement of the assessment year," Mr. Youngman asserts. According to the West Virginia Code of State Rules Title 110 Series 3-2.51, the term "property on hand to be used in the subsistence of livestock" is meant to include "all personal property primarily, actually and directly used for, and reasonably necessary for the care or feeding of livestock." Under 110 CSR 3-28, chickens are specifically included within the definition of livestock. Hardy County Objects The Assessor of Hardy County does not agree with the Debtors' contentions in asking the Bankruptcy Court to determine their tax liability for their property located in Hardy County. In defiance of the Debtors' motion, Hardy County asks the Bankruptcy Court to abstain from determining the Debtors' ad valorem tax issues and allow the appeal of the Tax Commissioner's Property Tax Ruling 09-38 to proceed in the Hardy Count Circuit Court. Further, the Assessor asks the Bankruptcy Court to deny the motion should it consider its merits, determining that the exemptions do not apply to the Debtors' property in Hardy County. J. Robert Forshey, Esq., at Forshey & Prostok, L.L.P., in Forth Worth, Texas, informs the Bankruptcy Court that Hardy County's request for the Bankruptcy Court to abstain from determining the Debtors' tax liability stems from the complex structure of the Debtors' assets and liabilities, and because this matter involves complex issues of West Virginia law. Moreover, given the Circuit Court's greater familiarity with West Virginia law and the specific ad valorem issues involved, it is likely that the Circuit Court could adjudicate this matter more efficiently in the Circuit Court. More importantly, Hardy County will be significantly prejudiced by having the tax issues raised by the Motion decided by a Texas court, Mr. Forshey contends. Debtors Talk Back The Debtors stood their ground in asking the Court to determine their tax liability and countered Hardy County's request that the Court abstain from acting on the Debtors' motion. According to Mr. Youngman, a bankruptcy court should first determine whether the Bankruptcy Code's objectives or bankruptcy issues will be implicated before it decides to abstain from tax determination pursuant to a ruling of the Fifth Circuit Court In re Luongo, 259 F. 3d 323,332. Here, the Bankruptcy Code's objectives will be implicated since the tax determination involves a dispute of approximately $1,000,000 per year in property tax liability, Mr. Youngman asserts. This will directly impact the Debtors' creditors and the Debtors themselves for years to come. In this case, the tax determination will benefit the estate since the exemption will result in a reduction of PPC's property taxes in West Virginia by approximately $1,000,000 per year, Mr. Youngman explains. "When a tax determination could benefit creditors, especially in a chapter 11 case, the Bankruptcy Code's objectives are implicated and courts routinely decline to abstain," he asserts. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (Pink Sheets: PGPDQ) -- http://www.pilgrimspride.com/-- employs roughly 41,000 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors. 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: Bank of Montreal Financing to be Cut to $350MM --------------------------------------------------------------- Pilgrim's Pride Corporation and its debtor affiliates asked Judge D. Michael Lynn of the United States Bankruptcy Court for the Northern District of Texas for authority to enter into the Third Amendment to Amended and Restated Post-Petition Credit Agreement by and among the Debtors, the DIP Lenders and Bank of Montreal. On December 2, 2008, the Bankruptcy Court granted interim approval authorizing the Company and certain of its subsidiaries consisting of PPC Transportation Company, PFS Distribution Company, PPC Marketing, Ltd., and Pilgrim's Pride Corporation of West Virginia, Inc. (collectively, the "US Subsidiaries"), and To-Ricos, Ltd., and To-Ricos Distribution, Ltd., to enter into a Post-Petition Credit Agreement among the Company, as borrower, the US Subsidiaries, as guarantors, Bank of Montreal, as agent (the "DIP Agent"), and the lenders party thereto. On December 2, 2008, the Company, the US Subsidiaries and the other parties entered into the Initial DIP Credit Agreement, subject to final approval of the Bankruptcy Court. On December 30, 2008, the Bankruptcy Court granted final approval authorizing the Company and the Subsidiaries to enter into an Amended and Restated Post-Petition Credit Agreement dated December 31, 2008, as amended, among the Company, as borrower, the Subsidiaries, as guarantors, the DIP Agent, and the lenders party thereto. The DIP Credit Agreement provides for an aggregate commitment of up to $450 million, which permits borrowings on a revolving basis. The commitment includes a $25 million sub-limit for swingline loans and a $20 million sub-limit for standby letters of credit. Outstanding borrowings under the DIP Credit Agreement will bear interest at a per annum rate equal to 8.0% plus the greatest of (i) the prime rate as established by the DIP Agent from time to time, (ii) the average federal funds rate plus 0.5%, or (iii) the LIBOR rate plus 1.0%, payable monthly. The weighted average interest rates for the three and nine months ended June 27, 2009 were 11.25% and 11.33%, respectively. The loans under the Initial DIP Credit Agreement were used to repurchase all receivables sold under the Company's Amended and Restated Receivables Purchase Agreement dated September 26, 2008, as amended (the "RPA"). Loans under the DIP Credit Agreement may be used to fund the working capital requirements of the Company and its subsidiaries according to a budget as approved by the required lenders under the DIP Credit Agreement. Actual borrowings by the Company under the DIP Credit Agreement are subject to a borrowing base, which is a formula based on certain eligible inventory and eligible receivables. The borrowing base formula is reduced by (i) pre-petition obligations under the Fourth Amended and Restated Secured Credit Agreement dated as of February 8, 2007, among the Company and certain of its subsidiaries, Bank of Montreal, as administrative agent, and the lenders parties thereto, as amended, (ii) administrative and professional expenses incurred in connection with the bankruptcy proceedings, and (iii) the amount owed by the Company and the Subsidiaries to any person on account of the purchase price of agricultural products or services (including poultry and livestock) if that person is entitled to any grower's or producer's lien or other security arrangement. The borrowing base is also limited to 2.22 times the formula amount of total eligible receivables. The DIP Credit Agreement provides that the Company may not incur capital expenditures in excess of $150 million. The Company must also meet minimum monthly levels of EBITDAR. Under the DIP Credit Agreement, "EBITDAR" means, generally, net income before interest, taxes, depreciation, amortization, writedowns of goodwill and other intangibles, asset impairment charges, certain closure costs and other specified costs, charges, losses and gains. The DIP Credit Agreement also provides for certain other covenants, various representations and warranties, and events of default that are customary for transactions of this nature. As of June 27, 2009, the applicable borrowing base and the amount available for borrowings under the DIP Credit Agreement were both $348.6 million as there were no outstanding borrowings under the Credit Agreement. The principal amount of outstanding loans under the DIP Credit Agreement, together with accrued and unpaid interest thereon, are payable in full at maturity on December 1, 2009, subject to extension for an additional six months with the approval of all lenders thereunder. All obligations under the DIP Credit Agreement are unconditionally guaranteed by the Subsidiaries and are secured by a first priority priming lien on substantially all of the assets of the Company and the Subsidiaries, subject to specified permitted liens in the DIP Credit Agreement. The DIP Credit Agreement allows the Company to provide additional advances to the Non-filing Subsidiaries of up to approximately $25 million. Management believes that all of the Non-filing Subsidiaries, including the Company's Mexican subsidiaries, will be able to operate within this limitation. On July 15, 2009, the Company entered into a Third Amendment to the DIP Credit Agreement. The Amendment is subject to the approval of the Bankruptcy Court. The Amendment amends the DIP Credit Agreement to allow the Company to invest in certain interest bearing accounts and government securities, subject to certain conditions. In connection with the Amendment, the Company also agreed to reduce the total available commitments under the DIP Credit Agreement from $450 million to $350 million. The Amendment also allows the Company to enter into certain ordinary course hedging contracts relating to feed ingredients used by the Company and its subsidiaries in their businesses. The Company may only enter into hedging contracts which satisfy the following conditions, among other restrictions: (a) the contract is traded on a recognized commodity exchange; (b) the contract expiration date is no later than March 21, 2010, or a later date if agreed to by the DIP Agent; (c) the Company and its subsidiaries do not have open forward, futures or options positions in the subject commodity, other than commodity hedging arrangements entered into at the request or direction of a customer, in excess of 50% of the Company's other expected usage of such commodity for a specified period; (d) the contract is not entered into for speculative purposes; and (e) the Company will not have more than $100 million in margin requirements with respect to all such non-customer hedging contracts. The amendments in the Third DIP Financing Amendment are beneficial to the Debtors and their creditors, Stephen A. Youngman, Esq., at Weil, Gotshal & Manges LLP, in Dallas, Texas stresses. The removal of the current restriction on hedging to allow Permitted Hedging Contracts will permit the Debtors to hedge their businesses against future volatility in the prices of certain commodities, like the price of corn used in the feed for chickens, and to take advantage of current favorable hedging conditions. Moreover, since the DIP Credit Agreement currently only permits Cash Collateral to be deposited in non-interest bearing accounts maintained by the DIP Agent, the amendment to the existing restriction on where Cash Collateral Accounts and Collection Accounts may be held allows the Debtors to earn interest on Cash Collateral and provides the Debtors added flexibility in managing their cash management system. A full-text copy of the Third DIP Credit is available for free at http://bankrupt.com/misc/PPC_3rdDIPCreditAmendment.pdf Creditors Committee's Objection The Official Committee of Unsecured Creditors objects to the Debtors' motion to enter into the Third DIP Credit Agreement, contending that the Debtors need to show why it is necessary to continue to pay the commitment fees called for under the DIP Credit Agreement for what is now a "stand-by" DIP. The Creditors' Committee tells the Court the Debtors need to explain why the Debtors are not terminating the DIP loan and why is it necessary to continue to maintain the DIP Credit Agreement. The Debtors, in response, note that the Creditors' Committee is the only objecting party to the Motion. The Debtors further note that the Creditors' Committee does not challenge or object to any of the proposed amendments to the DIP Credit Agreement. Instead, the Committee appears to challenge the Debtors' business decision to keep in place the postpetition financing facility. The Debtors maintain that it is in the best interest of their estates and their creditors to maintain a postpetition credit facility on a "standby" basis, albeit at a smaller commitment level. Mr. Youngman asserts that as recent history has shown, capital markets and the economy are volatile and, among other things, it is essential that the Debtors' customers, suppliers, and employees see that the Debtors have sufficient liquidity if the unexpected should occur. The Debtors insist that their request should be approved. About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (Pink Sheets: PGPDQ) -- http://www.pilgrimspride.com/-- employs roughly 41,000 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors. 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: Signs Deals for $1.65 Billion Exit Financing ------------------------------------------------------------- The Chapter 11 cases of Pilgrim's Pride Corporation and its debtor affiliates have progressed on track and it is in their goal to confirm a plan of reorganization and exit bankruptcy by the end of 2009. A key element of the restructuring contemplated by any proposed plan of reorganization and condition precedent to any plan is the availability of exit financing that will provide sufficient funding for the Debtors to meet their cash obligations on the effective date of the plan and thereafter. Accordingly, the Debtors are currently working with certain of their existing lenders to establish an exit financing facility. Because the Debtors anticipate the need for a substantial exit financing facility, the Debtors believe that a loan syndicate is the best option to obtain that financing. To that end, the Debtors have engaged the assistance of CoBank, ACB, and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank International," New York Branch, to structure and arrange the exit financing facility and to use their best efforts to form a syndicate of financial institutions to provide financing for any exit credit facility pursuant to the terms of a mandate letter and mandate fee letters, and, upon execution, a commitment letter and commitment fee letters. Mandate & Commitment Letters By this motion, the Debtors ask Judge D. Michael Lynn of the United States Bankruptcy Court for the Northern District of Texas to approve the Mandate Letter, dated July 21, 2009, by and among PPC, To-Ricos, Ltd., To-Ricos Distribution, Ltd., CoBank, and Rabobank setting forth the terms and conditions on which CoBank and Rabobank will structure, arrange, and syndicate a credit facility to provide exit financing to the Debtors in connection with a plan of reorganization. Pursuant to the Mandate Letter, CoBank and Rabobank will structure, arrange and syndicate a senior revolving, term A and term B credit facility in an aggregate principal amount of up to $1,650,000,000 for the Debtor Parties, pursuant to exit financing being provided in connection with a plan of reorganization of the Debtors. CoBank and Rabobank and, to the extent they are appointed, other institutions will serve as joint lead arrangers to form a syndicate of financial institutions, in consultation with and reasonably acceptable to the Debtor Parties, to provide the financing for the Credit Facility. The Mandate Letter provides that CoBank will serve as the sole and exclusive administrative agent for the Credit Facility, and CoBank and Rabobank will serve as joint syndication agents. However, neither the Mandate Letter nor the Mandate Fee Letters constitute a commitment by CoBank or Rabobank or any of their affiliates to provide or underwrite any portion of the Credit Facility. The Mandate Letter further provides that the arrangements with CoBank and Rabobank will be on an exclusive basis through September 15, 2009, and that during that period the Debtor Parties will not solicit, initiate, entertain, or permit any discussions in respect of the offering, placement, or arrangement of any competing senior credit facility or facilities of the Debtor Parties. The Mandate Letter contains customary provisions for loan syndication arrangements, including an obligation of the Debtor Parties to cooperate with and assist CoBank and Rabobank in their efforts to syndicate an exit facility. The Mandate Letter also requires the Debtor Parties, subject to approval by the Court, to pay the Joint Lead Arrangers, any additional Joint Lead Arrangers, the Joint Syndication Agents and an institution for the Credit Facility the nonrefundable fees set forth in the Mandate Fee Letters and to reimburse CoBank and Rabobank and their respective affiliates for all reasonable and documented out of pocket expenses incurred in connection with the Credit Facility and any related documentation and administration. The Mandate Letter further provides for the Debtor Parties to indemnify each Lender Party and its affiliates, as well as their officers, directors, employees, advisors and agents, against all claims and liabilities to which any the Indemnified Person may become subject, in connection with the Mandate Letter, the Credit Facility, the use of the Facility's proceeds, or any related transaction. A full-text copy of the Mandate Letter is available for free at http://bankrupt.com/misc/ppc_mandateletter.pdf Upon execution, the Commitment Letter will supersede the Mandate Letter. The Commitment Letter contains substantially the same terms as the Mandate Letter except that it: (a) provides that CoBank and Rabobank collectively will commit a portion of the Credit Facility; (b) extends the exclusivity period for the Joint Lead Arrangers to provide the exit financing from September 15, 2009, to December 31, 2009; and (c) authorizes the lenders providing the exit financing to condition their commitments to provide that financing upon (i) certain additional conditions relating to the Debtor Parties' delivery of satisfactory information regarding their corporate structure, capital structure, debt instruments, material agreements, governing documents and financial condition, subject to the approval of the Debtor Parties; and (ii) delivery of certain due diligence information within the time periods set forth in the Commitment Letter. A draft copy of the Commitment Letter is available for free at http://bankrupt.com/misc/ppc_exitletter.pdf Fee Letters In connection with the entry to the Mandate and Commitment Letters, the Debtors ask the Court to approve: -- an administrative agent fee letter with CoBank; -- a collateral agent fee letter with CoBank and Rabobank; -- a joint lead arranger fee letter with CoBank and Rabobank; -- a joint syndication agent fee letter with CoBank and Rabobank; and -- commitment fee letters. The Joint Syndication Agent Mandate Fee Letter provides that, following entry of an order authorizing the Debtor Parties to enter into the Mandate Letter and Mandate Fee Letters, the Debtors must pay certain fees to each Joint Syndication Agent provided that, among other things, the Debtor Parties, CoBank and Rabobank have entered into the Commitment Letter and Commitment Fee Letters. In addition, the Mandate Fee Letters provide for additional amounts to be paid by the Debtors prior to December 31, 2009, if other conditions are met. The Joint Lead Arranger Mandate Fee Letter and Joint Syndication Agent Mandate Fee Letter provide that the full amount of the arranger and syndication fees under those documents must be paid if the Lender Parties are willing to provide financing on terms substantially similar to those contemplated in the term sheet attached to the Mandate Letter and the Debtor Parties do not accept the financing but consummate exit financing with another party. Upon execution of the Commitment Letter, the Commitment Fee Letters will supersede the Mandate Fee Letters. The Commitment Fee Letters do not alter the amount of fees that would otherwise have been paid pursuant to the terms of the Mandate Fee Letters; that is, the fees the Debtors are obligated to pay remains unchanged by the superseding of the Mandate Fee Letters by the Commitment Fee Letters, although the Commitment Fee Letters do contain certain insubstantial changes to the Mandate Fee Letters. The Debtors seek the Court's authority to pay fees and expenses pursuant to the terms set forth in the Mandate Letter, Commitment Letter, and Fee Letters. Because the Fee Letters contain proprietary information, the Debtors have not described in detail the fee arrangements set forth in the Fee Letters. The Debtors seek the Court's authority to file the Fee Letters under seal so that the specific fee arrangements may be disclosed to the Court, the United States Trustee and to the statutory committees appointed in theses Chapter 11 cases who have executed appropriate confidentiality agreements. Mayer Brown LLP represents the Administrative Agent and the Joint Lead Arrangers. Mayer Brown is located at: 1675 Broadway New York, NY 10019-5820 Tel: (212) 506-2500 Fax: (212) 262-1910 About Pilgrim's Pride Headquartered in Pittsburgh, Texas, Pilgrim's Pride Corporation (Pink Sheets: PGPDQ) -- http://www.pilgrimspride.com/-- employs roughly 41,000 people and operates chicken processing plants and prepared-foods facilities in 14 states, Puerto Rico and Mexico. The Company's primary distribution is through retailers and foodservice distributors. 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. POWERMATE CORP: Committee Co-Proponent to Liquidating Plan ---------------------------------------------------------- Powermate Holding Corp. and its affiliates filed a liquidating chapter 11 Plan and explanatory disclosure statement with the U.S. Bankruptcy Court for the District of Delaware. The Plan is co- sponsored by the official committee of unsecured creditors formed in Powermate's case. A hearing to approve the adequacy of the Disclosure Statement is scheduled for September 4, 2009, at 10:00 a.m. Objections, if any, are due no later than 4:00 p.m. on August 28. The Plan is a single, joint liquidating plan for Powermate and two affiliates. On or after the Plan's effective date, a Plan administrator will wind up the Debtors' affairs and liquidate any remaining estate assets. Distributions under the Plan will come from cash, collection of accounts receivable, and disposal of the Debtors' other non-cash assets. The Debtors estimate that they will have approximately $7,000,000 in cash and a book value of $1 million in uncollected accounts receivable on or about the effective date. On May 5, 2008, and May 7, 2008, the Bankruptcy Court entered orders approving the private sale of the majority of the Debtors' finished goods inventory to Homelite Technologies, Ltd., and the sale of substantially all of the Debtors' remaining assets to various purchasers at an auction on May 2, 2008. Secured Prepetition Indebtedness As of the petition date, Powermate Corp. had total outstanding secured debt in the approximate principal sum of $40.0 million. Roughly $11.9 million is owed to Wachovia Bank, N.A. As a result of the sales of the Debtors' assets since the petition date, Wachovia has been paid in full. Roughly $18 million is owed by Powermate Corp. to York Street Mezzanine Partners, L.P., and SCSF Powermate, LLC, under two tranches of subordinated notes. SCSF is an affiliate of Sun Powermate, LLC, which owns 95% of the parent entity of the Debtors; and York is a 5% shareholder in the Debtors' parent entity. Powermate Corp. is also a borrower under a $10 million junior subordinated note issued by Sun Powermate. Powermate Holding Corp. has roughly $6.3 million in unsecured debt issued in connection with Sun Powermate's purchase of Powermate Holding in 2004. The Debtors have approximately $45 million in trade debt that was unpaid as of the petition date. Summary of Plan Terms Pursuant to the Plan terms, after payment of $4.7 million from the Prepetition Claims Bucket to holders of unsecured claims, each holder of an allowed secured claim (other than the lenders whose secured claims will be treated in accordance with the Stipulation) will receive a return of the collateral or other property that secures the claim. The Prepetition Claims Bucket refers to the segregated account created by the Debtors for distribution to the prepetition allowed unsecured creditors. The Stipulation refers to that certain Stipulation and Settlement amount the Debtors, the Committee, Sun Powermate, SCSF, York, and the Sun Director Designees, approved by the Bankruptcy Court on November 18, 2008. Allowed unsecured claims will receive their pro rata share of the $4.7 million in the Prepetition Claims Bucket and any other cash distribution from the estate assets in accordance with the Stipulation. Equity interests will not receive or retain any property under the Plan. Classification of Claims and Interests The Plan places the various claims against and interests in the Debtors into 4 classes: Claim Treatment Voting Rights ------------------------- ---------- --------------------- Class 1 - Priority Claims Unimpaired Deemed to accept; not entitled to vote. Class 2 - Secured Claims Impaired Entitled to vote. Class 3 - Unsecured Claims Impaired Entitled to vote. Class 4 - Equity Interests Impaired Deemed to reject; not entitled to vote. Copies of the Disclosure Statement and Plan are available at: http://bankrupt.com/misc/powermate.ch11plan.pdf http://bankrupt.com/misc/powermate.ds.pdf Headquartered in Aurora, Illinois, Powermate Holding Corp., Powermate Corp., and Powermate International, Inc. -- http://www.powermate.com/-- were, prior to the petition date, one on the world's leading manufacturers of portable and standby electric generators, pressure washers and accessories. Prior to the sale of a portion of their business in March 2008, the Debtors also were a leading supplier of air compressors and air tools. Products were distributed through mass retailers, home centers, specialty store chains, industry buying co-operatives, on-line e- Dealers, and independent hardware retailers. Powermate Holding is the 100% owner of Powermate Corp. and two non-debtor entities, Powermate Canada, Inc., a Canadian corporation, and Powermate S. de R.L. de C.V., a Mexican corporation. Powermate Corp., in turn is the 100% owner of Powermate International. The three companies filed for Chapter 11 protection on March 17, 2008 (Bankr. D. Del. Lead Case No.08-10498). Neil Herman, Esq., at Morgan, Lewis & Bokius, represents the Debtors as counsel. Kenneth Enos, Esq., and Michael Nestor, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors as local counsel. Monika J. Machen, Esq., at Sonnenschein Nath Rosenthal LLP, represents the official committee of unsecured creditors as counsel. Charlene D. Davis, Esq., Eric M. Sutty, Esq., and Daniel A. O'Brien, Esq., at Bayard P.A., represent the Creditors Committee as local counsel. In its schedules filed with the Bankruptcy Court on May 23, 2008, Powermate Corporation disclosed assets of $60,139,442 against debts of $85,700,759. PRIMEDIA INC: Swings to $11.7 Million Net Loss in June 30 Quarter ----------------------------------------------------------------- PRIMEDIA Inc. swung to a net loss of $11.7 million for the three months ended June 30, 2009, compared to a net income of $1.93 million for the same period a year ago. PRIMEDIA posted a net loss of $11.3 million for the six months ended June 30, 2009, compared to a net income of $15.5 million for the same period a year ago. Second quarter highlights include: -- Total revenue of $65.2 million, representing an $11.6 million decrease compared to second quarter 2008, primarily due to lower New Homes and DistribuTech revenue. -- Apartments, the Company's largest division, representing 92% of second quarter advertising revenue, recorded a 1.0% decline in revenue compared to second quarter 2008. -- Adjusted EBITDA decreased $1.3 million to $13.6 million; however, Adjusted EBITDA margin increased to 20.9% from 19.4% compared to second quarter 2008. -- Provision for restructuring costs was $21.5 million, primarily as a result of previously announced actions to optimize the Company's distribution footprint by eliminating underperforming locations. -- Income from Continuing Operations decreased $11.8 million to ($8.3) million, or ($0.19) per common share, primarily due to lower revenue and higher restructuring costs, partially offset by gain on redemption of debt. -- Retired $14.0 million in long-term debt, resulting in a net gain of $3.6 million. As of June 30, 2009, the Company posted $244.5 million in total assets and $357.7 million in total liabilities, resulting in $113.2 million in stockholders' deficiency. As of June 30, the Company's cash and cash equivalent balance was $2.1 million, versus $6.8 million as of June 30, 2008. The Company had debt, net of cash, of $231.0 million at June 30, 2009, compared to net debt of $247.1 million at June 30, 2008. In addition to the required quarterly repayment under the Company's Term Loan Facility and repayment of $4.4 million outstanding under the revolving credit facility, the Company used excess cash to retire an incremental $14.0 million of its Term Loan B Facility. "We strengthened our competitive positioning and made significant improvements in operating efficiency during the second quarter," said Charles Stubbs, president and CEO of PRIMEDIA. "Despite challenging economic conditions, our Apartments businesses achieved gains in customer count, expanded markets and produced relatively stable financial results. The ongoing weakness in the residential real estate market continued to adversely impact our New Homes and DistribuTech businesses, which contributed to a decline in total revenue. "We generated strong cash flow and improved the overall financial health of the organization by effectively executing against our strategic objectives and initiatives," added Mr. Stubbs. "By applying rigorous financial discipline to all of our operations, we now expect to reduce our 2009 operating expenses by at least $20 million compared to the 2008 operating expense base, a $5 million improvement over the objective that we announced earlier this year. PRIMEDIA has a strong financial foundation, and we remain committed to managing our businesses with focused discipline, while investing in growth opportunities to increase our customer count and enhance long-term shareholder value." On June 30, 2009, the Company's bank credit facility was amended. Among other things, the Amendment gives the Company the right to prepay or otherwise acquire with or for cash, on either a pro rata or non-pro rata basis, loans outstanding under the Term Loan B Facility and held by lenders who consent to the prepayment or acquisition, at a discount to the par value of such principal at any time and from time to time on and after June 30, 2009 and on or prior to June 30, 2011; provided that the aggregate amounts expended by the Company in connection with all prepayments or acquisitions do not exceed $35.0 million. All loans prepaid or acquired will be retired and extinguished and deemed paid effective upon such prepayment or acquisition. The Amendment also memorializes the reduction of the Revolving Facility commitment of Lehman Commercial Paper Inc., a subsidiary of Lehman Brothers Inc. to $0.0 million and, as a consequence thereof, the total capacity under the Revolving Facility has now been confirmed to have been reduced by $12.0 million to $88.0 million. The Company believed and had previously disclosed that the total capacity under the Revolving Facility had been effectively reduced by $12.0 million as a result of bankruptcy proceedings related to Lehman Brothers Holdings Inc., the parent company of Lehman. The commitment under the Revolving Facility for each other lender remains unchanged from each such lender's commitment immediately prior to such reduction. Additionally, effective June 30, 2009, Lehman ceased to be a co-documentation agent under the bank credit facility. In connection with the Amendment, the Company incurred roughly $500,000 in modification fees, which were paid to the creditors and will be expensed over the remaining term of the loan. There are no scheduled commitment reductions under the Revolving Facility. The loans under the Term Loan B Facility are subject to scheduled repayment in quarterly installments of $600,000 each payable on March 31, June 30, September 30, and December 31 of each year through June 30, 2014, followed by a final repayment of $219.8 million on the Term Loan B Maturity Date. On June 30, 2009, the Company redeemed $14.0 million in principal of its Term Loan B Facility for $10.1 million. In connection with the redemption the Company also wrote off $300,000 in deferred financing fees, resulting in a net gain of $3.6 million, which is included in other income, net in the condensed consolidated statement of operations. In September 2008, the Company borrowed $13.2 million against its Revolving Facility. In March 2009, the Company repaid $8.8 million of the amount outstanding and the remaining $4.4 million in June 2009. In early July 2009, the Company borrowed $5.0 million against its Revolving Facility and repaid the entire amount borrowed in late July 2009. On May 15, 2008, the Company redeemed all $2.6 million of its outstanding 8% Senior Notes. The Notes were redeemed at a 4% premium of the aggregate outstanding principal amount, which was roughly $100,000. The Company did not incur any early termination penalties in connection with the redemption of the 8% Senior Notes beyond the 4% redemption premium. Under the most restrictive covenants contained in the bank credit facilities agreement, the maximum allowable total leverage ratio, as defined in the agreement, is 5.25 to 1. As of June 30, 2009, this leverage ratio was roughly 3.0 to 1. A full-text copy of the Company's Form 10-Q filing is available at no charge at http://ResearchArchives.com/t/s?412e The Company's Board of Directors authorized a regular quarterly cash dividend of $0.07 per share of common stock, payable on September 2, 2009, to stockholders of record on August 17, 2009. The Company currently expects to continue to pay a regular quarterly dividend. About PRIMEDIA Inc. Headquartered in Atlanta, PRIMEDIA Inc. (NYSE: PRM) -- http://www.primedia.com/-- through its Consumer Source Inc. operation, is a provider of advertising-supported consumer guides for the apartment and new home industries. Consumer Source publishes and distributes more than 38 million guides such as Apartment Guide and New Home Guide to roughly 60,000 U.S. locations each year through its proprietary distribution network, DistribuTech. The Company also distributes category-specific content on its leading Web sites, including http://www.ApartmentGuide.com/,http://www.NewHomeGuide.com/,and http://www.Rentals.com/,a comprehensive single unit real estate rental site. As reported by the Troubled Company Reporter on June 30, 2009, Standard & Poor's Rating Services lowered its corporate credit rating on Norcross, Georgia-based PRIMEDIA Inc. to 'B+' from 'BB-', reflecting S&P's expectation of continued operating weakness at the new homes and distribution segments in 2009, which is more than offsetting relatively flat performance at the apartment segment. The outlook is stable. At the same time, S&P lowered its issue-level rating on PRIMEDIA's secured debt to 'B+' (the same level as the corporate credit rating) from 'BB-'. The recovery rating of '3' remains unchanged, reflecting S&P's expectation for meaningful (50%-70%) recovery in the event of a payment default. QSGI INC: Files Schedules of Assets and Liabilities --------------------------------------------------- QSGI, Inc., has filed with the U.S. Bankruptcy Court for the Southern District of Florida its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ---------- ----------- A. Real Property $0 B. Personal Property $8,511,894 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $5,837,729 E. Creditors Holding Unsecured Priority Claims $351,859 F. Creditors Holding Unsecured Non-priority Claims $4,920,829 ---------- ----------- TOTAL $8,511,894 $11,110,417 A copy of the Schedules is available at: http://bankrupt.com/misc/qsgi.SAL.pdf About QSGI Inc. Palm Beach, Florida-based QSGI, Inc., and its affiliates provide technology services and mainternance geared towards both uses of enterprise class hardware as well as the uses of business - competing hardware. The Debtors filed for Chapter 11 on July 2, 2009 (Bankr. S. D. Fla. Lead Case No. 09-23658). Bradley S. Shraiberg, Esq. at Shraiberg, Ferrara, Landau P.A. represents the Debtors in their restructuring efforts. The Debtors listed between $10 million and $50 million each in assets and debts. QSGI INC: Obtains Court's Nod to Borrow $500,000 from Victory Park ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of Florida has granted QSGI, Inc., et al., authority to obtain postpetition financing of up to $500,000, with an initial interim advance not to exceed $250,000, from Victory Park Credit Opportunities Master Fund, Ltd., in accordance with a budget. A final hearing is scheduled for 1:30 p.m. on August 10, 2009. Proceeds of the loan will be utilized for working capital and to pay for the costs of administration of the Debtors' bankruptcy cases. Interest on the DIP Revolving Loan will be 12.5% p.a. Default interest is 15.0% p.a. All amounts due under the postpetition financing will become due in full upon the earlier of (i) September 11, 2009; (ii) the substantial consummation of a plan of reorganization that is confirmed pursuant to an order of the Bankruptcy Court; (iii) conversion of any of the Chapter 11 cases to a case under Chapter 7; (iv) dismissal of any of the Chapter 11 cases; (v) ten days after receipt of a notice of an Event of Default; or (vi) repayment in full in cash of the DIP indebtedness. As security, Victory Park is granted first priority priming liens upon all currently owned and hereafter acquired assets and real and personal property of the Debtors. In addition, subject to a maximum carve-out not to exceed $200,000 in the aggregate, the DIP indebtedness will have the highest administrative priority under Section 364(c)(1) of the Bankruptcy Code, which will at all times be senior to the rights of any Debtor, any successor trustee or estate representative in the Debtors' chapter 11 cases or any successor cases. As of the petition date, the Debtors were indebted to Victory Park in the amount of $6,331,816 plus interest costs and attorneys fees. About QSGI Inc. Palm Beach, Florida-based QSGI, Inc., and its affiliates provide technology services and mainternance geared towards both uses of enterprise class hardware as well as the uses of business - competing hardware. The Debtors filed for Chapter 11 on July 2, 2009 (Bankr. S. D. Fla. Lead Case No. 09-23658). Bradley S. Shraiberg, Esq. at Shraiberg, Ferrara, Landau P.A. represents the Debtors in their restructuring efforts. The Debtors listed between $10 million and $50 million each in assets and debts. QUEST ENERGY: Restates Form 10-Q for Quarter Ended September 30 --------------------------------------------------------------- Quest Energy Partners, L.P., filed with the Securities and Exchange Commission its quarterly report on Form 10-Q for the quarter ended September 30, 2008, which includes: -- consolidated interim financial statements as of September 30, 2008, and for the three and nine month periods ended September 30, 2008, which have not previously been issued; and -- its predecessor's restated carve out financial statements for the three and nine month periods ended September 30, 2007, which have not previously been restated in any other report, for the Company. The Company stated that its consolidated balance sheet as of December 31, 2007, was restated in its annual report on Form 10-K for the year ended December 31, 2008, filed on June 16, 2009, and amended on July 28, 2009. On August 22, 2008, in connection with an inquiry from the Oklahoma Department of Securities, the boards of directors of Quest Resource Corporation, Quest Energy GP, LLC, its general partner, and Quest Midstream GP, LLC, the general partner of Quest Midstream Partners, L.P., a private limited partnership controlled by QRCP, held a joint working session to address certain unauthorized transfers, repayments and re-transfers of funds to entities controlled by their former chief executive officer, Jerry D. Cash. The Company added that a joint special committee comprised of one member designated by each of the boards of directors of Quest Energy GP, QRCP, and Quest Midstream GP was immediately appointed to oversee an independent internal investigation of the Transfers. In connection with this investigation, other errors were identified in prior year financial statements and management and the board of directors concluded that the Company had material weaknesses in its internal control over financial reporting. As of December 31, 2008, these material weaknesses continued to exist. The board of directors of Quest Energy GP determined that its audited consolidated financial statements as of December 31, 2007, and for the period from November 15, 2007, to December 31, 2007, its unaudited consolidated financial statements as of and for the three months ended March 31, 2008, and as of and for the three and six months ended June 30, 2008, the predecessor's audited consolidated financial statements as of and for the years ended December 31, 2005, and 2006, and for the period from January 1, 2007, to November 14, 2007, must no longer be relied upon. The predecessor's financial statements represent the carve out financial position, results of operations, cash flows and changes in partners' capital of the Cherokee Basin operations of QRCP, and reflect the operations of Quest Cherokee, LLC, and Quest Cherokee Oilfield Service, LLC, located in the Cherokee Basin, which QRCP contributed to us at the completion of its initial public offering on November 15, 2007. The investigation and determination that its issued financial statements must no longer be relied upon resulted in its inability to timely file this quarterly report on Form 10-Q for the quarter ended September 30, 2008. In October 2008, Quest Energy GP's audit committee engaged a new independent registered public accounting firm to audit its consolidated financial statements for 2008 and, in January 2009, engaged them to reaudit its consolidated financial statements as of December 31, 2007, and for the period from November 15, 2007, to December 31, 2007, and the predecessor's consolidated financial statements as of and for the years ended December 31, 2005, and 2006, and for the period from January 1, 2007, to November 14, 2007. It was determined that its issued consolidated financial statements contained errors in a majority of the financial statement line items for all periods presented. The Company added that the quarterly report on Form 10-Q for the quarter ended September 30, 2008, includes only comparisons of reported amounts to the restated amounts for the three and nine month periods ended September 30, 2007, which have not previously been restated in any other report. A full-text copy of the Company's Form 10-Q is available for free at http://ResearchArchives.com/t/s?411c Based in Oklahoma City, Quest Energy Partners was formed by Quest Resources Corporation in 2007 to conduct, in a master limited partnership structure, the exploration and production operations previously conducted by QRCP's wholly-owned subsidiaries, Quest Cherokee, LLC, and Quest Cherokee Oilfield Service, LLC. QRCP owns 100% of Quest Energy Partners' general partner and controls the election of the board of directors of the general partner. Since Quest Energy Partners' initial public offering, its general partner has had the same executive officers as QRCP. Quest Energy Partners does not have any employees, other than field level employees, and depends on QRCP for all general and administrative functions necessary to operate Quest Energy Partners' business. QRCP provides services pursuant to the terms of the management services agreement between Quest Energy Partners and Quest Energy Service, LLC, a wholly owned subsidiary of QRCP. Going Concern Doubt As reported in the Troubled Company Reporter on July 1, 2009, UHY LLP in Houston, Texas, in its June 15, 2009 audit report, raised substantial doubt about the ability of Quest Energy Partners, L.P., and subsidiaries -- the Partnership -- to continue as a going concern, citing the Partnership's inability to amend the terms of its credit facilities. Quest Energy Partners does not expect to be in compliance with the covenants in its credit agreements for all of 2009. If defaults exist at June 30, 2009, or in subsequent periods that are not waived by the lenders, Quest Energy Partners said its assets could be subject to foreclosure or other collection efforts. QUEST ENERGY: Reclassifies Gains in 2008 Annual Report ------------------------------------------------------ Quest Energy Partners, L.P., filed with the Securities and Exchange Commission an amendment on Form 10-K/A to its Annual Report ended December 31, 2008, to correct an error identified in July 2009, related to the incorrect classification of realized gains on commodity derivative instruments during the year ended December 31, 2008. The Company stated that the error resulted in an understatement of revenue and an overstatement of the gain from derivative financial instruments by approximately $14.6 million for the year ended December 31, 2008, of which $2.4 million, $17.8 million, $15.1 million and a negative $20.7 million related to the quarters ended March 31, June 30, September 30, and December 31, 2008, respectively. The error had no effect on net income (loss), net income (loss) per unit, partners' equity or the Partnership's Consolidated Balance Sheet, Consolidated Statement of Cash Flows or Consolidated Statement of Partners' Equity as of and for the year ended December 31, 2008, or any of the interim periods during 2008. The Company added that the amendment sets forth the original filing in its entirety; however, the amendment only amends: i) amounts and disclosures related to the error within the consolidated financial statements and elsewhere within the original filing; ii) disclosures for certain events occurring subsequent to the original filing; and iii) other insignificant items to correct for certain typographical and other minor errors identified within the original filing. A full-text copy of the Company's Form 10-K/A is available for free at http://ResearchArchives.com/t/s?411a Based in Oklahoma City, Quest Energy Partners was formed by Quest Resources Corporation in 2007 to conduct, in a master limited partnership structure, the exploration and production operations previously conducted by QRCP's wholly-owned subsidiaries, Quest Cherokee, LLC, and Quest Cherokee Oilfield Service, LLC. QRCP owns 100% of Quest Energy Partners' general partner and controls the election of the board of directors of the general partner. Since Quest Energy Partners' initial public offering, its general partner has had the same executive officers as QRCP. Quest Energy Partners does not have any employees, other than field level employees, and depends on QRCP for all general and administrative functions necessary to operate Quest Energy Partners' business. QRCP provides services pursuant to the terms of the management services agreement between Quest Energy Partners and Quest Energy Service, LLC, a wholly owned subsidiary of QRCP. Going Concern Doubt As reported in the Troubled Company Reporter on July 1, 2009, UHY LLP in Houston, Texas, in its June 15, 2009 audit report, raised substantial doubt about the ability of Quest Energy Partners, L.P., and subsidiaries -- the Partnership -- to continue as a going concern, citing the Partnership's inability to amend the terms of its credit facilities. Quest Energy Partners does not expect to be in compliance with the covenants in its credit agreements for all of 2009. If defaults exist at June 30, 2009, or in subsequent periods that are not waived by the lenders, Quest Energy Partners said its assets could be subject to foreclosure or other collection efforts. RAMSONS INVESTMENT: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Ramsons Investment, Inc. dba Econo Lodge fdba Holiday Inn Express 450 N. G Street San Bernardino, CA 92410 Bankruptcy Case No.: 09-28026 Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court Central District of California (Riverside) Judge: Sheri Bluebond Debtor's Counsel: Lawrence A. Diamant, Esq. 1888 Century Park East, #1500 Los Angeles, CA 90067-1702 Tel: (310) 277-7400 Fax: (310) 277-7584 Email: kfinn@rdwlawcorp.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/cacb09-28026.pdf The petition was signed by Sanjay Maharaj, vice president of the Company. RAYMOND PROFESSIONAL: Court Says Subcontractor Gets Account Funds ----------------------------------------------------------------- WestLaw reports that under the Illinois Mechanics Lien Act, the funds in a bank account created by the Chapter 11 debtor- contractor and a subcontractor for excess project revenues in connection with a project to construct a cogeneration power plant facility were held in a pre-bankruptcy trust for the sole benefit of the subcontractor, an Illinois bankruptcy court has held. Therefore, the funds were not property of either the debtor's or its parent company's bankruptcy estate. The facility's owner had agreed with the debtor to settle all claims against it for a payment of $2.5 million, with payment conditioned on the debtor and the subcontractor each providing waivers of lien. The lien waivers were given and $2.5 million was deposited into the account. The subcontractor did not waive its lien rights via an earlier, "final" waiver, the court determined, as the earlier waiver, though labeled "final," allowed the subcontractor to retain a lien claim for retainage and extra work. Thus, the subcontractor did not then fully and finally waive all of its lien rights. Moreover, the subcontractor's rights under the Act did not lapse, the court found, and the subcontractor's final lien waiver applied to its outstanding lien claim, which exceeded the amount of the settlement. In re Raymond Professional Group, Inc., --- B.R. ----, 2009 WL 2185646 (Bankr. N.D. Ill.). Engineering and design company Raymond Professional Group, Inc. -- http://www.raymond-co.com/index.cfm?fuseaction=home-- and five of its affiliates filed Chapter 11 petitions (Bankr. N.D. Ill. Case No. 06-16748) on December 18, 2006. The Debtors are represented by Jason M. Torf, Esq., at Schiff Hardin LLP in Chicago. When the Debtors sought chapter 11 protection, they estimated their assets and debts between $1 million and $100 million. REDENTOR SAN JUAN: Case Summary & 12 Largest Unsecured Creditors ---------------------------------------------------------------- Joint Debtors: Redentor Beles San Juan Evangeline Gamad San Juan 26 Estate Court South San Francisco, CA 94080 Bankruptcy Case No.: 09-32251 Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court Northern District of California (San Francisco) Debtors' Counsel: Kenneth R. Graham, Esq. Law Office of Kenneth R. Graham 171 Mayhew Way #208 Pleasant Hill, CA 94523 Tel: (925) 932-0170 Email: ken@1031focus.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 12 largest unsecured creditors is available for free at: http://bankrupt.com/misc/canb09-32251.pdf The petition was signed by the Joint Debtors. RELIANCE INTERMEDIATE: S&P Assigns 'BB-' Rating on $100 Mil. Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services said it assigned its 'BB-' debt rating to Reliance Intermediate Holdings LP's proposed 10-year US$100 million senior notes, issued in substantially the same terms and conditions as the US$250 million notes issued in July. At the same time, S&P assigned a recovery rating of '4' to the notes, indicating S&P's expectation of average (30%-50%) recovery if a payment default occurs. The ratings are subject to review of final documentation and legal review. Proceeds from the proposed issue will be distributed to Alinda Capital Partners LLC, its ultimate 100% owner, to repay RIHLP's earlier equity bridge injections. The proposed debt rating reflects that the ultimate source of cash flow is derived from what S&P considers Reliance LP's investment- grade business risk profile, supported by predictable recurring revenue from the company's utility-like water heater business, which contributes to 80% of its EBITDA, and partially offset by the relatively more variable security monitoring business. "We also factor into the rating the structurally subordinated nature of the proposed notes and the impact this will have on RIHLP's ability to service these debts," said Standard & Poor's credit analyst Greg Pau. "RIHLP is a pure holding company whose only asset is its equity interests in Reliance LP. As such, S&P believes it will solely rely on cash distributions from Reliance LP for servicing its obligations under the proposed notes," Mr. Pau added. Despite the predictability of Reliance LP's operating cash flow, S&P believe that cash distribution to RIHLP, limited to the residual cash flow available after Reliance LP has satisfied its own debt servicing requirements and financial obligations, could be more volatile. S&P considers Reliance LP effectively ring- fenced with structural features that protect Reliance LP's creditors and limit its ability to distribute cash to RIHLP, in accordance with Standard & Poor's criteria on ring-fencing a subsidiary. Reliance LP is a special purpose, bankruptcy-remote operating partnership formed to indirectly own the companies that operate a portfolio of home comfort businesses, with provision of an independent director and a nonconsolidation opinion. In addition, Reliance LP's debt agreement contains cash management features, performance tests, and a debt service reserve in place, which should ensure cash distribution to RIHLP. The adequacy of the distributed cash in the future could, in S&P's view, be reduced as a result of weaker Reliance LP's business cash flow, or higher debt level (and therefore servicing requirement) at either Reliance LP or RIHLP. Standard & Poor's expects that distributed cash to RIHLP in 2009 should be adequate to cover 2.4x-2.8x the annual interest of about C$37 million on the RIHLP notes. Although capacity under the debt covenants is adequate in its view, S&P believes that a substantial increase in debt is unlikely, barring a material increase in EBITDA. RIHLP's liquidity is weak for the rating. Although the proposed notes (the only debt) mature in 2019 and there is no operating cash requirement, RIHLP's debt servicing will effectively depend on Reliance LP's cash distribution and, in the event of a shortfall, on a capital injection from Alinda. Ratings List Reliance LP Rating Assigned Senior secured US$100 mil. nts due 2019 BB- Recovery rating 4 RFS ECUSTA: Court Approves Trustee's Counsel's Contingency Fee -------------------------------------------------------------- WestLaw reports that a court has allowed, as a reasonable fee for representing a Chapter 7 trustee, the total compensation requested in the law firm's fee application, including the contingency fee for which the firm had bargained, in exchange for voluntarily reducing its hourly rate by 25%, in the amount of 25% of the trustee's total recoveries in excess of the amount needed to pay a lender's secured claim in full. It did not matter that unsecured creditors would receive only a small dividend on their claims. When the case was filed, it appeared that only the lender would receive any payment on its claim, and only a partial payment at that, and it was only as a result of the firm's exceptional success in pursuing complicated litigation that the case was transformed into one in which the lender was paid in full, priority claims could be paid, and unsecured creditors could receive even this small dividend. In re RFS Ecusta Inc., --- B.R. ----, 2009 WL 1684704 (Bankr. W.D.N! .C.). RFS Ecusta Inc., and RFS US Inc., were leading manufacturers of high quality premium paper products for the tobacco and specialty and printing paper products. The Company filed for chapter 11 protection on October 23, 2002 (Bankr. Del. Case No. 02-13110), and converted to a chapter 7 liquidation thereafter. Christopher A. Ward, Esq., at The Bayard Firm represented the Debtors in their restructuring efforts. Lawyers at Moses & Singer LLP and Mullen Holland & Cooper P.A., represent Langdon M. Cooper, who serves as the Chapter 7 Trustee. When the Debtors filed for protection from their creditors, they estimated debts and assets of more than $10 million each. RICH CAPITOL: U.S. Trustee Sets Meeting of Creditors for August 25 ------------------------------------------------------------------ The U.S. Trustee for Region 21 will convene a meeting of creditors in Rich Capitol, LLC's Chapter 11 case on August 25, 2009, at 2:30 p.m. The meeting will be held at Flagler Waterview Bldg, 1515 N. Flagler Drive Room 870, West Palm Beach, Florida. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Boca Raton, Florida, Rich Capitol, LLC, aka Capital Walk Apartments, operates an investment firm. The Company filed for Chapter 11 on July 28, 2009 (Bankr. S. D. Fla. Case No. 09-25422.) Heather L. Harmon, Esq., represents the Debtors in its restructuring efforts. In its petition, the Debtor listed assets and debts both ranging from $10,000,001 to $50,000,000. RITE AID: Bank Debt Trades at 16% Off in Secondary Market --------------------------------------------------------- Participations in a syndicated loan under which Rite Aid Corporation is a borrower traded in the secondary market at 84.05 cents-on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 2.20 percentage points from the previous week, The Journal relates. The loan matures on May 25, 2014. The Company pays 175 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's B+ rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. About Rite Aid Corporation Headquartered in Camp Hill, Pennsylvania, Rite Aid Corporation (NYSE: RAD) -- http://www.riteaid.com/-- is the largest drugstore chain on the East Coast and the third largest drugstore chain in the U.S. The Company operates more than 4,900 stores in 31 states and the District of Columbia. * * * The Troubled Company Reporter said on June 2, 2009, Moody's Investors Service assigned a B3 rating to Rite Aid Corporation's $400 million term loan due 2015. All other ratings, including the company's Caa2 Corporate Family Rating, Caa2 Probability of Default Rating, and SGL-4 Speculative Grade Liquidity rating, were affirmed. According to the Troubled Company Reporter on April 29, 2009, Fitch Ratings has affirmed Rite Aid's Issuer Default Rating at 'B- ' and revised the Rating Outlook to Negative from Stable. Rite Aid had $6 billion of book debt outstanding as of Feb. 28, 2009. RIVER OAKS: Meeting of Creditors Scheduled for September 14 ----------------------------------------------------------- The U.S. Bankruptcy Administrator for Western District of North Carolina will convene a meeting of creditors in River Oaks Landing Development, LLC's Chapter 11 case on September 14, 2009, at 11:00 a.m. The meeting will be held at the Johnson J. Hayes Federal Building, 207 West Main Street, 2nd Floor, Wilkesboro, North Carolina. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Richmond, Virginia-based River Oaks Landing Development, LLC, filed for Chapter 11 on July 27, 2009 (Bankr. W. D. N.C. Case No. 09-51073.) Richard M. Mitchell, Esq., at Mitchell & Culp, PLLC, represents the Debtor in its restructuring efforts. In its petition, the Debtor listed $10,000,001 to $50,000,000 in assets and $100,001 to $500,000 in debts. ROCKY VALLEY: U.S. Trustee Sets Meeting of Creditors for August 24 ------------------------------------------------------------------ The U.S. Trustee for Region 19 will convene a meeting of creditors in Rocky Valley Partners, LLC's Chapter 11 case on August 24, 2009, at 9:30 a.m. The meeting will be held at the U.S. Custom House, 721 19th St., Room 104, Denver, Colorado. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Denver, Colorado-based Rocky Valley Partners, LLC filed for Chapter 11 on July 28, 2009 (Bankr. D. Colo. Case No. 09-25177.) George Dimitrov, Esq. represents the Debtor in its restructuring efforts. In its petition, the Debtor listed total assets of $10,141,770 and total debts of $11,257,294. SCO GROUP: Court Ousts Management From Control, Squashes Sale ------------------------------------------------------------- Peg Brickley at The Wall Street Journal reports that the Hon. Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware has squashed The SCO Group Inc.'s third attempt to sell itself and ousted the management from control of the Company. Judge Gross said that SCO has been "waiting for 'the dough'" from a losing battle with Novell Inc. for too long, The Journal relates. Novell is winning, and SCO's value is plummeting amid "staggering losses, the report says, citing Judge Gross. According to The Journal, the Judge Gross denied approval on SCO's sale on suspicion the deal was a ploy to avoid having the Company's Chapter 11 bankruptcy case dismissed. Judge Gross said that the "sale was clearly a rushed, last-ditch effort" to avoid having SCO's bankruptcy case knocked down from a Chapter 11 proceeding to one under Chapter 7, and the terms of the deal were "troublesome," the report states. Citing Judge Gross, The Journal says that SCO's "bankruptcy cases have been fraught with difficulties and have not progressed after nearly 22 months." The Journal relates that while Judge Gross found that SCO has abandoned the idea of rehabilitating its business, SCO General Counsel Ryan E. Tibbitts said that the executive team is "still trying to work through" the implications of the decision, and "we're obvious pleased that the court denied IBM's and Novell's motions to convert the case to a Chapter 7. Beyond that, we're still reviewing with our counsel." The Journal states that Judge Gross ordered the appointment of a Chapter 11 trustee to protect SCO, creditors and clients, and suggested that federal bankruptcy watchdogs appoint a retired judge or veteran litigator to decide what's next for SCO. Headquartered in Lindon, Utah, The SCO Group Inc. (Nasdaq:SCOX) fka Caldera International Inc. -- http://www.sco.com/-- provides software technology for distributed, embedded and network-based systems, offering SCO OpenServer for small to medium business and UnixWare for enterprise applications and digital network services. The company has office locations in Australia, Austria, Argentina, Brazil, China, Japan, Poland, Russia, the United Kingdom, among others. The Company and its affiliate, SCO Operations Inc., filed for Chapter 11 protection on September 14, 2007 (Bankr. D. Del. Lead Case No. 07-11337). Paul Steven Singerman, Esq., and Arthur Spector, Esq., at Berger Singerman P.A., represent the Debtors in their restructuring efforts. James O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, are the Debtors' Delaware and conflicts counsels. Epiq Bankruptcy Solutions LLC, acts as the Debtors' claims and noticing agent. The United States Trustee failed to form an Official Committee of Unsecured Creditors in the Debtors' cases due to insufficient response from creditors. As of January 31, 2009, the Company had $8.78 million in total assets and $13.2 million in total liabilities, resulting in $4.51 million in stockholders' deficit. SEALY CORP: Murray to Replace Walker as SVP, Gen. Counsel & Sec. ---------------------------------------------------------------- Effective as of August 1, 2009, in anticipation of retirement, Kenneth L. Walker has stepped down as Senior Vice President, General Counsel & Secretary of Sealy Corporation. As part of Sealy's succession plan, the Board of Directors has selected Michael Q. Murray to be Sealy's Senior Vice President, General Counsel & Secretary effective August 1, 2009. Mr. Murray has been with Sealy for over 10 years, most recently as Vice President and Associate General Counsel. Trinity, North Carolina-based Sealy Corp. (NYSE: ZZ) -- http://www.sealy.com/-- is the largest bedding manufacturer in the world with sales of $1.5 billion in fiscal 2008. The Company manufactures and markets a broad range of mattresses and foundations under the Sealy(R), Sealy Posturepedic(R), including SpringFree(TM), PurEmbrace(TM) and TrueForm(R); Stearns & Foster(R), and Bassett(R) brands. Sealy operates 25 plants in North America, and has the largest market share and highest consumer awareness of any bedding brand on the continent. In the United States, Sealy sells its products to roughly 3,000 customers with more than 7,000 retail outlets. At May 31, 2009, the Company had $1.0 billion in total assets; $222.8 million in current liabilities, $836.6 million in long-term obligations, net of current portion, $95.9 million in rights liability for convertible notes, $69.1 million in other liabilities, $6.7 million in deferred income tax liabilities; and $230.4 million in shareholders' deficit. * * * As reported by the Troubled Company Reporter on May 19, 2009, Standard & Poor's Ratings Services lowered its corporate credit rating on Sealy Corp. to 'B' from 'B+'. At the same time, S&P lowered the issue-level ratings on the company's senior secured credit facilities to 'BB-', from 'BB', while maintaining the '1' recovery rating. S&P also lowered the issue-level rating on the Company's senior subordinated notes to 'CCC+' from 'B+', and revised the recovery rating on these notes to '6' (indicating the likelihood of negligible [0%-10%] recovery in a payment default) from '4'. At the same time, Standard & Poor's assigned its 'BB-' issue-level rating with a recovery rating of '1' (indicating the likelihood of very high [90%-100%] recovery) to Sealy Mattress' proposed seven-year $350 million senior secured notes due 2016, and a 'B' issue-level rating with a recovery rating of '4' (indicating the likelihood of average [30%-50%] recovery) to its proposed $177 million senior secured convertible pay-in-kind notes due 2016. Sealy's proposed $100 million asset-based revolving credit facility maturing in 2013 is not rated. On May 18, the TCR said Moody's Investors Service assigned a Ba3 rating to Sealy's proposed senior secured notes. At the same time, Sealy's B2 corporate family rating and probability-of- default rating was affirmed as was the Caa1 rating on the senior subordinated notes and SGL 3 liquidity rating. The ratings outlook remains negative. SEMGROUP LP: Noble's $65.4MM Wins Auction for SemFuel Assets ------------------------------------------------------------ Noble Americas Corp., a company controlled by Hong Kong-based commodity supplier Noble Group, won an Aug. 3 auction for some SemFuel L.P. assets, after presenting a $65.4 million bid, according to a report by Michael Bathon at Bloomberg News. Judge Brendan Linehan Shannon will consider approving the sale at an Aug. 13 hearing in Wilmington. QuikTrip Corp, U.S. Oil Co. and Magellan Pipeline Co. had been designated as so-called stalking-horse, or lead bidders, for specific groups of assets. At the auction the sale price rose $14.4 million from the opening offer of $51 million, said Tom Becker, an outside spokesman for SemGroup. The assets being sold include facilities in Wisconsin, Michigan, Kansas, Oklahoma, Iowa and Texas. About SemGroup L.P. SemGroup, L.P., -- http://www.semgrouplp.com/-- is a midstream service company that provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids and refined products. Services include purchasing, selling, processing, transporting, terminalling and storing energy. SemGroup serves customers in the United States, Canada, Mexico and Wales. 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) SHIRLEY JOBE: Case Summary & 6 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Shirley A. Jobe dba Castle Antiques 2908 Ocean Blvd Corona del Mar, CA 92625 Case No.: 09-18128 Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court Central District of California (Santa Ana) Judge: Theodor Albert Debtor's Counsel: Marc C. Forsythe, Esq. 18101 Von Karman Avenue, Suite 510 Irvine, CA 92612 Tel: (949) 798-2460 Fax: (949) 955-9437 Email: kmurphy@goeforlaw.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $1,000,001 to $10,000,000 The petition was signed by Ms. Jobe. Debtor's List of 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo Financial Cash Advance $4,367 Advance Home Depot Credit Card $2,874 Purchases Neiman Marcus Credit Card $2,262 Purchases Washington Mutual (Chase) Credit Card $1,872 Purchases Macy's Visa Credit Card $1,030 Purchases HSBC Card Services Credit Card $979 Purchases SIRIUS XM: Inks New Employment Deal with Scott Greenstein --------------------------------------------------------- Sirius XM Radio Inc. on July 28, 2009, entered into a new employment agreement with Scott A. Greenstein to continue to serve as the Company's President and Chief Content Officer through July 27, 2013. The Employment Agreement provides for an annual base salary of $850,000, with an increase to at least $925,000 on January 1, 2010; at least $1,000,000 on January 1, 2011; at least $1,100,000 on January 1, 2012; and at least $1,250,000 on January 1, 2013. Mr. Greenstein will also be eligible to receive annual bonuses in an amount determined each year by the Compensation Committee of our board of directors. The Employment Agreement supersedes Mr. Greenstein's existing employment agreement. In connection with the execution of the Employment Agreement, Sirius XM granted Mr. Greenstein an option to purchase 27,768,136 shares of the Company's common stock at an exercise price of $0.43 per share (the closing price of the Company's common stock on July 28, 2009). The Option will vest in four equal installments on each of July 26, 2010, July 26, 2011, July 26, 2012 and July 26, 2013. The vesting of these stock options will accelerate upon the termination of Mr. Greenstein's employment by the Company without cause, by him for good reason, and upon his death or disability. The Option will generally expire on July 27, 2019, subject to earlier termination following Mr. Greenstein's termination of employment. If Mr. Greenstein's employment is terminated without cause or he terminates his employment for good reason, subject to an execution of a release of claims, the Company is obligated to pay him a lump sum payment equal to his then annual salary and the cash value of the bonus last paid or payable to him in respect of the preceding fiscal year and to continue his health and life insurance benefits for one year. In the event that any payment the Company makes, or benefit the Company provides, to Mr. Greenstein would require him to pay an excise tax under Section 280G of the Internal Revenue Code, the Company has agreed to pay Mr. Greenstein the amount of such tax and such additional amount as may be necessary to place him in the exact same financial position that he would have been in if the excise tax was not imposed. Karmazin Employment Agreement On June 30, 2009, the Company entered into an amendment to the amended Employment Agreement, dated November 18, 2004, with Mel Karmazin Employment Agreement. The Amendment (i) extends the term of the Employment Agreement through and until December 31, 2012, (ii) increases his base salary from $1,250,000 per year to $1,500,000 per year beginning on January 1, 2010, and (iii) provides for the grant of an option to purchase 120,000,000 shares of our common stock, at an exercise price of $0.430 per share (the closing price of the Company's common stock on June 30, 2009). Other than as provided in the Amendment, the Employment Agreement will continue in accordance with its terms. The Option will vest in equal installments on each of December 31, 2010, December 31, 2011, June 30, 2012 and December 31, 2012. The vesting of the stock options will accelerate upon the termination of Mr. Karmazin's employment by the Company without cause, by him for good reason, upon his death or disability and in the event of a change of control. The Option will generally expire on December 31, 2014; provided that if the parties subsequently agree to extend the term of the Employment Agreement through December 31, 2013 or later, then the term of the Option will automatically extend until the later of (i) December 31, 2015 and (ii) the date that is one year following the date that such new employment agreement expires. About SIRIUS XM Radio Based in New York, SIRIUS XM Radio Inc. broadcasts in the United States music, sports, news, talk, entertainment, traffic and weather channels for a subscription fee through proprietary satellite radio systems. Subscribers can also receive certain music and other channels over the Internet. The Company's satellite radios are primarily distributed through automakers, retailers and the Company's Web sites. The Company has agreements with every major automaker to offer SIRIUS or XM satellite radios as factory or dealer-installed equipment in their vehicles. SIRIUS and XM radios are also offered to customers of rental car companies. * * * As reported by the Troubled Company Reporter on April 17, 2009, Standard & Poor's Ratings Services raised its corporate credit rating on Sirius XM Radio Inc. and XM Satellite Radio Holdings Inc. (which S&P analyzes on a consolidated basis) to 'CCC+' from 'CCC'. In accordance with this rating change, S&P also raised its issue-level ratings on the companies' debt by one notch (with the exception of Sirius XM's senior unsecured notes, which were affirmed at 'CCC-'). All of these ratings were removed from CreditWatch, where S&P placed them with positive implications on February 17, 2009. The corporate credit rating outlook is stable. SIRIUS XM: Net Loss Widens to $157.3 Million in June 30 Quarter --------------------------------------------------------------- Sirius XM Radio Inc. posted wider net loss of $157.3 million for the three months ended June 30, 2009, from a net loss of $83.8 million for the same period a year ago. Sirius XM posted a net loss of $207.7 million for the six months ended June 30, 2009, from a net loss of $188.0 million for the same period a year ago. Second quarter 2009 pro forma total revenue was $608 million, up 1% from second quarter 2008 pro forma total revenue of $601 million. Second quarter 2009 subscription revenue was $577 million, up 3% from the second quarter 2008 subscription revenue of $558 million. Subscriber acquisition cost per gross subscriber addition was $57 in the second quarter 2009, an improvement of 20% over the $71 in pro forma SAC per gross subscriber addition in the second quarter 2008. For the six months ended June 30, 2009, SIRIUS XM recognized total pro forma revenue of $1,213 million compared with $1,180 million for the six months ended June 30, 2008. This 3%, or $33 million, increase in revenue was primarily driven by an increase in subscriber revenue resulting primarily from a 4% growth in weighted average subscribers over the period as well as revenues from the sale of "Best of" programming, increased rates on the company's multi-subscription packages and revenues earned on the company's internet packages. As of June 30, 2009, the Company had $7.50 billion in total assets and $7.36 billion in total liabilities, resulting in $143.7 million in stockholders' equity. "Just one year ago, combined operations produced negative adjusted income from operations of $61 million," said Mel Karmazin, SIRIUS XM's CEO. "This year our revenue increase in the second quarter, paired with a $187 million expense reduction, drove an improvement of roughly $193 million in adjusted income from operations to $132 million in second quarter 2009. Based on these results we are increasing guidance again and expect to exceed over $400 million in adjusted income from operations during 2009. Growing our revenue in the face of broad declines in the advertising and automotive markets is a remarkable accomplishment, and we are well positioned for a rebound in auto sales." SIRIUS XM expects to achieve over $400 million in 2009 adjusted income from operations. This is an increase from the company's previous guidance of over $350 million in 2009 adjusted income from operations provided on May 7, 2009. A full-text copy of the Company's Form 10-Q report is available at no charge at http://ResearchArchives.com/t/s?412f On July 1, 2009, the Company filed with the Securities and Exchange Commission a registration statement on Form S-8 to register 600,000,000 shares of common stock in connection with the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan. A full- text copy of the Form S-8 filing is available at no charge at: http://ResearchArchives.com/t/s?4131 About SIRIUS XM Radio Based in New York, SIRIUS XM Radio Inc. broadcasts in the United States music, sports, news, talk, entertainment, traffic and weather channels for a subscription fee through proprietary satellite radio systems. Subscribers can also receive certain music and other channels over the Internet. The Company's satellite radios are primarily distributed through automakers, retailers and the Company's Web sites. The Company has agreements with every major automaker to offer SIRIUS or XM satellite radios as factory or dealer-installed equipment in their vehicles. SIRIUS and XM radios are also offered to customers of rental car companies. * * * As reported by the Troubled Company Reporter on April 17, 2009, Standard & Poor's Ratings Services raised its corporate credit rating on Sirius XM Radio Inc. and XM Satellite Radio Holdings Inc. (which S&P analyzes on a consolidated basis) to 'CCC+' from 'CCC'. In accordance with this rating change, S&P also raised its issue-level ratings on the companies' debt by one notch (with the exception of Sirius XM's senior unsecured notes, which were affirmed at 'CCC-'). All of these ratings were removed from CreditWatch, where S&P placed them with positive implications on February 17, 2009. The corporate credit rating outlook is stable. SIRIUS XM: Posts $6.26 Mil. Q2 Revenue Related to General Motors ---------------------------------------------------------------- SIRIUS XM Radio Inc. said it recorded total revenue from General Motors, primarily consisting of subscriber revenue, of $6,264,000 and $13,256,000 for the three and six months ended June 30, 2009, respectively. The Company recognized Sales and marketing expense with GM of $7,537,000 and $15,631,000 for the three and six months ended June 30, 2009, respectively. It recognized Revenue share and royalties expense with GM of $13,982,000 and $31,655,000 for the three and six months ended June 30, 2009, respectively. It recognized Subscriber acquisition costs with GM of $5,545,000 and $14,805,000 for the three and six months ended June 30, 2009, respectively. As of June 30, 2009, amounts due from GM and prepaid expenses with GM recorded in Related party current assets were $9,672,000 and $92,796, respectively. As of June 30, prepaid expenses with GM recorded in Related party long-term assets were $100,863,000. As of December 31, 2008, amounts due from GM and prepaid expenses with GM recorded in Related party current assets were $10,132,000 and $94,444,000, respectively. As of December 31, 2008, prepaid expenses with GM recorded in Related party long-term assets were $116,296,000. As of June 30, 2009 and December 31, 2008, amounts due to GM recorded in Related party current liabilities were $54,329,000 and $63,023,000, respectively. As of June 30, 2009 and December 31, 2008, amounts due to GM recorded in Related party long-term liabilities were $21,123,000 and $0, respectively. XM has a long-term distribution agreement with GM. GM has a representative on the Company's board of directors and is considered a related party. During the term of the agreement, GM has agreed to distribute the XM service. To encourage the broad installation of XM radios in GM vehicles, XM subsidizes a portion of the cost of XM radios and makes incentive payments to GM when the owners of GM vehicles with installed XM radios become subscribers to XM's service. XM also shares with GM a percentage of the subscriber revenue attributable to GM vehicles with installed XM radios. As part of the agreement, GM provides certain call-center related services directly to XM subscribers who are also GM customers for which we reimburse GM. XM makes bandwidth available to OnStar Corporation for audio and data transmissions to owners of XM-enabled GM vehicles, regardless of whether the owner is an XM subscriber. OnStar's use of XM's bandwidth must be in compliance with applicable laws, must not compete or adversely interfere with XM's business, and must meet XM's quality standards. XM also granted to OnStar a certain amount of time to use XM's studios on an annual basis and agreed to provide certain audio content for distribution on OnStar's services. About SIRIUS XM Radio Based in New York, SIRIUS XM Radio Inc. broadcasts in the United States music, sports, news, talk, entertainment, traffic and weather channels for a subscription fee through proprietary satellite radio systems. Subscribers can also receive certain music and other channels over the Internet. The Company's satellite radios are primarily distributed through automakers, retailers and the Company's Web sites. The Company has agreements with every major automaker to offer SIRIUS or XM satellite radios as factory or dealer-installed equipment in their vehicles. SIRIUS and XM radios are also offered to customers of rental car companies. * * * As reported by the Troubled Company Reporter on April 17, 2009, Standard & Poor's Ratings Services raised its corporate credit rating on Sirius XM Radio Inc. and XM Satellite Radio Holdings Inc. (which S&P analyzes on a consolidated basis) to 'CCC+' from 'CCC'. In accordance with this rating change, S&P also raised its issue-level ratings on the companies' debt by one notch (with the exception of Sirius XM's senior unsecured notes, which were affirmed at 'CCC-'). All of these ratings were removed from CreditWatch, where S&P placed them with positive implications on February 17, 2009. The corporate credit rating outlook is stable. SKYPORT GLOBAL: Preference Target Requests Discovery Too Late ------------------------------------------------------------- WestLaw reports that good cause warranted the issuance of a protective order to protect a Chapter 11 debtor from prejudicial delay in its preference avoidance proceeding by forbidding the adversary defendant from adducing evidence relating to interrogatories and a request for production that it failed to timely serve. The defendant's conduct in serving its discovery request only nine days before the discovery deadline was inconsistent with the applicable procedural rules and the court's scheduling order, requiring the debtor to respond at such a late date would cause prejudicial delay in the adversary proceeding. The defendant, moreover, did not request an extension of the discovery deadline until after the deadline had passed. In re Skyport Global Communications, Inc., --- B.R. ----, 2009 WL 2338033 (Bankr. S.D. Tex.). Satellite and terrestrial communication service provider SkyPort Global Communications, Inc. -- http://www.skyportglobal.com/-- sought Chapter 11 protection (Bankr. S.D. Tex. Case No. 08-36737) on October 24, 2008. Edward L. Rothberg, Esq., at Weycer Kaplan Pulaski & Zuber, in Houston, represents the Debtor. At the time of the chapter 11 filing, the Debtor reported $8,736,791 in assets and was unable to estimate its liabilities. A list of the Debtor's largest unsecured creditors is available at http://bankrupt.com/misc/txsb08-36737.pdfat no charge. SCOLR PHARMA: Says Cash to Last Until Late 2009; Seeks More Funds ----------------------------------------------------------------- SCOLR Pharma, Inc., reports it had roughly $3.1 million in cash and cash equivalents, and $473,711 in restricted cash as of June 30, 2009. Based on its current operating plan, SCOLR Pharma anticipates that existing cash and cash equivalents, together with expected royalties from third parties, will fund operations until late 2009, assuming SCOLR Pharma does not trigger additional obligations, including contractual severance or lease obligations and unless unforeseen events arise that negatively impact its liquidity. In the event SCOLR Pharma is unsuccessful generating additional revenues or raising additional funds, SCOLR Pharma said it will have to substantially reduce operations to preserve capital or seek bankruptcy protection or otherwise wind up the business. In addition to efforts to enter into alliances and licensing agreements, SCOLR Pharma plans to continue to seek access to the capital markets to fund operations. SCOLR Pharma filed a shelf registration statement in the amount of $40 million which was declared effective by the Securities and Exchange Commission on November 25, 2008 under which it may offer from time-to-time, one or more offerings of securities up to an aggregate public offering price of $40 million. "However, the financial markets have been very difficult for companies at our development stage and financial condition and financing may not be available on favorable terms or at all. Additionally, we have received notice from the NYSE Amex that we are not in compliance with continued listing requirements. While we have provided the NYSE Amex with a plan to regain compliance with applicable listing standards, our inability to maintain listing of our common stock on the NYSE Amex may further limit our ability to access the capital markets. Any issuance of additional securities would be extremely dilutive to our existing stockholders," SCOLR Pharma said. Total revenues, which consist of royalty revenue from the Company's collaboration agreements, decreased 17%, or $48,782 to $230,789 for the three months ended June 30, 2009, compared to $279,571 for the same period in 2008. This decrease is primarily due to lower royalty income from its relationship with Perrigo. Total revenues decreased 26%, or $142,565 to $402,561 for the six months ended June 30, 2009, compared to $545,126 for the same period in 2008. This decrease is primarily due to lower royalty income from the Company's relationship with Perrigo. Net loss decreased 26%, or $540,603 to $1.6 million for the three months ended June 30, 2009, compared to $2.1 million for the same period in 2008 and the net loss for the six months ended June 30, 2009, decreased 15%, or $628,477 to $3.5 million, compared with a net loss of $4.1 million for the same period in 2008. These decreases were primarily due to lower operating expenses offset by lower revenues. Dr. Bruce Morra, SCOLR Pharma's President and CEO, said, "We continue to advance discussions with a number of potential partners for our 12-hour controlled release ibuprofen. These potential partners have been committing resources to due diligence and preliminary negotiations of license terms. In the nutraceutical arena, we are working with companies interested in commercializing products we have developed for growing segments of this field in both the US and international markets. We continue to work with our investment bankers on potential strategic transactions, including mergers and other business combinations that could yield opportunities to increase shareholder value and provide additional resources for us to develop our Controlled Delivery Technology (CDT(R)) platforms. However, we are faced with a difficult marketplace and many specialty pharmaceutical companies competing for alliances with the more established pharmaceutical and consumer product companies. Our operating strategy is to preserve our capital by limiting clinical and development expenses to our ibuprofen and pseudoephedrine lead products while also supporting our existing alliances. We have made significant reductions to our operating expenses so far this year and are continuing to evaluate additional areas to further minimize our burn rate." About SCOLR Pharma Based in Bothell, Washington, SCOLR Pharma, Inc. -- http://www.scolr.com/-- is a specialty pharmaceutical company. SCOLR Pharma's corporate objective is to combine its formulation expertise and its patented CDT platform to develop novel pharmaceutical, over-the-counter (OTC), and nutritional products. SONYA PORRETTO: Section 341(a) Meeting Scheduled for August 27 -------------------------------------------------------------- The U.S. Trustee for Region 7 will convene a meeting of creditors in Sonya M Porretto's Chapter 11 case on August 27, 2009, at 3:00 p.m. The meeting will be held at Suite 3401, 515 Rusk Ave, Houston, Texas. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Houston, Texas-based Sonya M. Porretto aka Sonya Nelson dba Porretto Beach filed for Chapter 11 on July 27, 2009 (Bankr. S. D. Tex. Case No. 09-35324.) Jeffrey Wells Oppel, Esq. at Oppel Goldberg et. al. represents the Debtor in its restructuring efforts. In its petition, the Debtor listed $10,000,001 to $50,000,000 in assets and $1,000,001 to $10,000,000 in debts. SPIRIT AEROSYSTEMS: Moody's Affirms 'Ba3' Corporate Family Rating ----------------------------------------------------------------- Moody's Investors Service affirmed the ratings of Spirit AeroSystems, Inc., including the Corporate Family Rating, secured bank facilities at Ba3 and Probability of Default rating at B1. The rating outlook remains stable. This affirmation follows the execution of an amendment to the revolving credit facility whereby the commitment amount was increased and the maturity for a tranche of the facility was extended for two years solidifying the company's liquidity profile. The affirmation also considers and management's July 30 announcement of a slight reduction in revenue guidance for full- year 2009 and expectation of a $10 million operating loss for the 2nd quarter following $137 million charges for unusual items. The Ba3 corporate family rating acknowledges Spirit's track record following its 2005 sale by Boeing, its still modest leverage, and a capital structure and liquidity profile which provides sufficient flexibility to manage through the current commercial aerospace down cycle and development program delays and cost over- runs. The ratings benefit from Spirit's strong position in non- OEM commercial aviation aerostructures across most aircraft platforms, typically on a long-term contract, sole source basis and the still very substantial order backlog. The rating however also considers the highly cyclical nature of new aircraft demand and its ties to air travel demand, the heavy investment requirement during the development and growth phases in the commercial aviation cycle, the risk of significant unreimbursed cost over-runs on development programs, and the very high (80% plus) Boeing customer concentration. The company's senior secured credit facility was amended wherein the revolving credit commitment was increased to $729 million from $650 million and the maturity date with respect to $408.8 million was extended two years to June 30, 2012. The maturity date for the remaining $320.2 million continues to be June 30, 2010. The $137 million of special charges in the 2nd quarter was due to a $93 million forward-loss recognition on the Gulfstream G250 wing program and tooling contract, a $33 million cumulative catch-up adjustment related to residual effects of the 2008 Boeing strike, B787 nutplate rework and ERP systems transition inefficiencies and $11 million related to termination of the Cessna Columbus business jet program. The stable rating outlook reflects Moody's expectations that despite the global economic slowdown and the drop in air travel and attendant demand reduction for new aircraft, the current order backlog combined with an adequate liquidity profile provides sufficient flexibility for production and credit metrics to stay within the Ba3 category. Ratings affirmed and Loss Given Default Assessments: -- Corporate Family, Ba3; -- Probability of Default, B1; -- $729 million (previously $650 million) senior secured revolving credit facility, Ba3 (LGD-3, 30%); -- $577 million senior secured term loan, Ba3 (LGD-3, 30%). The last rating action was on April 3, 2008 when the Ba3 corporate family and senior secured bank facility ratings were affirmed as the revolver was increased to $650 million from $400 million. Spirit AeroSystems, Inc., headquartered in Wichita, KS, with facilities in Wichita, Tulsa and McAlester OK, and Prestwick, Scotland, is a designer and manufacturer of fuselages, pylons, struts, nacelles, thrust reversers, wing assemblies and other complex components for commercial aircraft and business jets. ST JAMES AND ENNIS: Case Summary & Largest Unsecured Creditor ------------------------------------------------------------- Debtor: St James and Ennis Hanford Investment, LLC 643 N Westwood St Porterville, CA 93257 Case No.: 09-17500 Chapter 11 Petition Date: August 5, 2009 Debtor-affiliate filing separate Chapter 11 petition July 17, 2009: Entity Case No. ------ -------- Ennis Land Development, Inc. 09-16750 Debtor-affiliate filing separate Chapter 11 petition June 5, 2009: Entity Case No. ------ -------- Ennis Enterprises 190, LLC 09-15237 Debtor-affiliate filing separate Chapter 11 petition February 2, 2009: Entity Case No. ------ -------- Ennis Homes, Inc. 09-10848 Court: United States Bankruptcy Court Eastern District of California (Fresno) Judge: W. Richard Lee Debtor's Counsel: Peter L. Fear, Esq. 7750 N Fresno, St #101 Fresno, CA 93720-1145 Tel: (559) 436-6575 Total Assets: $26,299,660 Total Debts: $20,266,847 The petition was signed by James L. Clark Jr., the company's authorized agent, secretary and member representative. Debtor's List of 1 Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Zumwaldt Hansen & Associate, Trade debt $55,000 Inc. STANDARD PACIFIC: Mortgage Financing Unit's Loan Terms Modified --------------------------------------------------------------- Standard Pacific Corp. filed with the Securities and Exchange Commission its quarterly report on Form 10-Q for the quarter ended June 30, 2009. Standard Pacific said in June 2009, it amended its mortgage financing subsidiary's mortgage credit facilities to, among other things, modify the commitment amount, extend the maturity date and modify certain financial and other covenants. The mortgage credit facilities consist of a $30 million warehouse facility, of which $15 million is uncommitted -- meaning that the lender has discretion to refuse to fund requests -- and a $45 million early purchase facility. The amended mortgage credit facilities which are scheduled to mature in April 2010, require Standard Pacific Mortgage to maintain cash collateral accounts aggregating $2.7 million. The facilities also contain certain financial covenants which require Standard Pacific Mortgage to, among other things, maintain a minimum level of tangible net worth, not exceed a debt to tangible net worth ratio, maintain a minimum liquidity of $5 million, and satisfy certain pretax income (loss) requirements. As of and for the six months ended June 30, 2009, Standard Pacific was in compliance with the financial and other covenants contained in the facilities. During 2008, Standard Pacific initiated a restructuring plan designed to reduce ongoing overhead costs and improve operating efficiencies through the consolidation of selected divisional offices, the disposal of related property and equipment, and a reduction in its workforce. The restructuring activities are substantially complete as of June 30, 2009. However, until market conditions stabilize, Standard Pacific said it may incur additional restructuring charges for employee severance, lease termination and other exit costs. As reported by the Troubled Company Reporter on July 30, 2009, Standard Pacific generated a net loss of $23.1 million, or $0.10 per diluted share, for the second quarter ended June 30, 2009, versus a net loss of $249.0 million, or $3.44 per diluted share, for the year earlier period. As of June 30, 2009, the Company had $1.91 billion in total assets and $1.56 billion in total liabilities. A full-text copy of the Company's Form 10-Q filing is available at no charge at http://ResearchArchives.com/t/s?4132 About Standard Pacific Corp. Headquartered in Irvine, California, Standard Pacific Corp. (NYSE: SPF) -- http://www.standardpacifichomes.com/-- operates in many of the largest housing markets in the country with operations in major metropolitan areas in California, Florida, Arizona, the Carolinas, Texas, Colorado and Nevada. The Company also provides mortgage financing and title services to its homebuyers through its subsidiaries and joint ventures, Standard Pacific Mortgage Inc., SPH Home Mortgage and SPH Title. * * * According to the Troubled Company Reporter on April 1, 2009, Standard & Poor's Ratings Services lowered its issue-level rating on Standard Pacific Corp.'s senior unsecured notes to 'CCC-' from 'CCC' and removed the rating from CreditWatch, where it was placed with negative implications on March 4, 2009. At the same time, S&P lowered its recovery rating on the debt to '5' from '4', indicating that senior noteholders can expect modest (10%-30%) recovery in the event of a payment default. STEEL NETWORK: Court Approves Brooks Pierce as Attorney ------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of North Carolina authorized The Steel Network Inc. and Applied Science International LLC to employ Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, as their attorney. The firm will: a) give the Debtors legal advice with respect to their powers and duties as debtors-in-possession in the continued operation of their business and management of the property owned; b) prepare on behalf of the Debtors necessary applications, schedules, complaints, answers, orders, reports, motions, notices, plans of reorganization, disclosure statements, and other papers necessary to the Debtors' reorganization cases; c) perform all necessary legal services in connection with the Debtors' reorganization, including Court appearances, research, opinions and consultations on reorganization options, direction and strategy; d) take necessary action, if any, to avoid liens against the Debtors' property obtained by creditors and to recover preferential payments to creditors within the applicable time period of the filing of the bankruptcy petitions; e) make a detailed search of the records of Register of Deed's Office and the Clerk of Superior Court's Office in the counties where the Debtors' property is located to determine the validity of all liens filed against the Debtors' property; and f) perform all other legal services for the Debtors that may be necessary in their Chapter 11 cases. The firm will be paid based on the hourly rates of its professionals that are involved in the case: Professional Hourly Rate ------------ ----------- John H. Small, Esq. $360 Katherine J. Clayton, Esq. $195 The Debtor assured the Court that the firm does not hold or represent an interest adverse to the estate, and is disinterested persons as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Durham, North Carolina, The Steel Network Inc. operates a steel company. The Company and its affiliate, Applied Science International LLC, filed for Chapter 11 protection on July 24, 2009 (Bankr. M.D. N.C. Lead Case No. 09-81230). When the Debtors sought protection from their creditors, they both listed assets and debts between $10 million and $50 million. SUMMERBROOKE LLC: Case Summary & 7 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Summerbrooke, LLC 204 Commerce Boulevard P.O. Box 511 Lawrence, PA 15055 Bankruptcy Case No.: 09-25782 Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court Western District of Pennsylvania (Pittsburgh) Debtor's Counsel: Jonathan G. Babyak, Esq. Campbell & Levine, LLC 1700 Grant Building Pittsburgh, PA 15219 Tel: (412) 261-0310 Fax: (412) 261-5066 Email: candl@camlev.com Total Assets: $2,705,724 Total Debts: $5,232,000 A full-text copy of the Debtor's petition, including a list of its 7 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/pawb09-25782.pdf The petition was signed by Robert A. Janusey, president of the Company. SUNRISE SENIOR: Net Loss Widens to $81.5MM in June 30 Quarter ------------------------------------------------------------- Sunrise Senior Living, Inc., posted wider net loss of $81.5 million for the three months ended June 30, 2009, from $33.2 million for the same period a year ago. The Company posted a net loss of $99.8 million for the six months ended June 30, 2009, higher compared to $67.4 million for the same period in 2008. Sunrise reported revenues of $380.9 million for the second quarter of 2009, as compared to $411.3 million for the second quarter of 2008. In the second quarter, net loss from operations for the three months ended June 30, 2009, was $43.2 million. Excluding SEC investigation costs of $1.2 million and restructuring costs of $9.2 million and non-cash charges including depreciation and amortization of $14.4 million, the provision for doubtful accounts of $2.0 million, write-off of capitalized project costs of $1.4 million and impairment of long lived assets of $25.0 million, adjusted income from ongoing operations is $10.0 million. As of June 30, 2009, the Company had $1.14 billion in total assets and $1.09 billion in total liabilities. Sunrise had $37.0 million and $29.5 million of unrestricted cash at June 30, 2009 and December 31, 2008, respectively. As of June 30, 2009, Sunrise and its consolidated subsidiaries had debt of $614.5 million, of which $99.1 million of debt is scheduled to mature in 2009, along with $69.2 million of draws on the Bank Credit Facility. Long-term debt that is in default totals $360.4 million, including $190.2 million of debt that is in default as a result of the failure to pay principal and interest to the lenders of Sunrise's German communities, and $170.2 million of debt that is in default as a result of Sunrise's failure to meet certain financial covenants. "Our restructuring activities have progressed and we have seen signs of progress in expense controls. In recent weeks we have seen a modest lift in occupancy," said Mark Ordan, Sunrise's chief executive officer. "While we are pleased by these accomplishments, we have much more to do and our organization is fully committed to this task." Bankruptcy Warning Sunrise Senior Living said it has no borrowing availability under its bank credit facility, and it has significant scheduled debt maturities in 2009 and significant long-term debt that is in default. Sunrise is endeavoring to extend debt maturity dates, re-finance debt and obtain waivers from applicable lenders. It is engaged in discussions with various venture partners and third parties regarding the sale of certain assets with the purpose of increasing liquidity and reducing obligations to enable the Company to continue operations. Sunrise expects that its cash balances and expected cash flow are sufficient to enable it to meet operating obligations through December 2, 2009. If it is not able to achieve these objectives, it will not have sufficient financial resources to meet financial obligations and it could be forced to seek reorganization under the U.S. Bankruptcy Code. On April 28, 2009, Sunrise Senior Living entered into a Twelfth Amendment to the Bank Credit Facility. The significant terms include waiver of all existing financial covenants through December 2, 2009, the maturity date of the Bank Credit Facility; requirement to maintain minimum cash balance as of the last day of each month and of not less than $5 million at any time; a cash sweep as of the last day of October and November 2009 to reduce principal equal to the greater of consolidated cash in excess of $35 million or $2 million; and a permanent reduction of the commitment after an agreed-upon repayment of the outstanding balance from dispositions consented to by our lenders, federal income tax refunds of $20.8 million and payments received from the cash sweep. Sale of Assets In the second quarter of 2009, the Company engaged a broker to assist in the sale of the nine German communities. Initial bids have been received from various potential buyers. The Company expects a sale to occur within 90 days although there can be no assurance that the initial bids received will result in the consummation of a sale. If a sale does not occur within a reasonable time period, the Company intends to close the communities. Other assets held for sale consists of $40.4 million of undeveloped land parcels, $4.5 million of land and $7.5 million of condominium units with a lower of carrying value or fair value less estimated costs to sell of $52.4 million and $49.1 million at June 30, 2009, and December 31, 2008, respectively. Stockholders Meeting on November 18 Sunrise Senior will hold its 2009 annual meeting of stockholders on November 18, 2009. Stockholders of record at the close of business on September 25, 2009, will be entitled to notice of and to vote at the Annual Meeting. The matters to be considered at the Annual Meeting include the election of six directors. The Company will mail its definitive proxy materials to its stockholders prior to the Annual Meeting, which will include the time and location of the meeting. Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, the Company has established the close of business on August 28, 2009, for receipt by the Company of any stockholder proposals submitted under Rule 14a-8 for inclusion in the Company's proxy materials for the Annual Meeting. The proposals must be delivered to the Secretary of the Company at the Company's address. The Company recommends that the proposals be sent by certified mail, return receipt requested. The proposals also will need to comply with the rules of the Securities and Exchange Commission regarding the inclusion of stockholder proposals in the Company's proxy materials, and may be omitted if not in compliance with applicable requirements. A full-text copy of the Company's Form 10-Q filing is available at no charge at http://ResearchArchives.com/t/s?4133 About Sunrise Senior Living Sunrise Senior Living, a McLean, Va.-based company -- http://www.sunriseseniorliving.com/-- employs roughly 40,000 people. As of June 30, 2009, Sunrise operated 415 communities in the United States, Canada, Germany and the United Kingdom, with a combined unit capacity of roughly 42,750 units. Sunrise offers a full range of personalized senior living services, including independent living, assisted living, care for individuals with Alzheimer's and other forms of memory loss, as well as nursing and rehabilitative services. Sunrise's senior living services are delivered by staff trained to encourage the independence, preserve the dignity, enable freedom of choice and protect the privacy of residents. SUPERVALU INC: Bank Debt Trades at 3% Off in Secondary Market ------------------------------------------------------------- Participations in a syndicated loan under which SUPERVALU Inc. is a borrower traded in the secondary market at 96.72 cents-on-the- dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.07 percentage points from the previous week, The Journal relates. The loan matures on June 2, 2012. The Company pays 150 basis points above LIBOR to borrow under the facility. The bank debt is not rated by Moody's and carries Standard & Poor's BB rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. SUPERVALU Inc. (NYSE:SVU) -- http://www.supervalu.com/-- is a grocery channel that conducts its retail operations under the banners, such as Acme Markets, Albertsons, Bristol Farms, bigg's, Cub Foods, Farm Fresh, Hornbacher's, Jewel-Osco, Lucky, Save-A- Lot, Shaw's Supermarkets, Shop 'n Save, Shoppers Food & Pharmacy and Star Markets. Additionally, the Company provides supply chain services, primarily wholesale distribution, across the United States retail grocery channel. The Company operates in two segments: Retail food and Supply chain services. During the fiscal year ended February 28, 2009 (fiscal 2009), the Company added 44 new stores through new store development and closed 97 stores. The Company leverages its distribution operations by providing wholesale distribution and logistics and service solutions to its independent retail customers through its Supply chain services segment. As reported by the Troubled Company Reporter on July 27, 2009, Standard & Poor's Ratings Services said that it revised its outlook on Minneapolis-based supermarket and distributor SUPERVALU Inc. to negative from stable, and affirmed the 'BB-' corporate credit rating on the company. "This action reflects S&P's expectation that SUPERVALU's credit metrics will deteriorate further from weaker operating performance, despite plans to pay down outstanding debt by $700 million," said Standard & Poor's credit analyst Stella Kapur. SUPPLEMENT SPOT: LLC's Payments on Principal's Mortgage Avoided --------------------------------------------------------------- WestLaw reports that a bankrupt limited liability company did not receive "reasonably equivalent value" for prepetition payments that it made on the residential mortgage debt of its principal, as required for avoidance of the payments as constructively fraudulent to creditors. The LLC was not indebted on the mortgage loans and never conducted any business on this residential property. Thus, the payments benefited only principal and her son individually. In re Supplement Spot, LLC, --- B.R. ----, 2009 WL 2006837 (Bankr. S.D. Tex.). Supplement Spot, LLC, fka Young Again Nutrition, LLC -- in the business of selling nutritional supplements and related products primarily though its Internet Web site at http://www.suplementspot.com/-- filed a voluntary Chapter 11 petition on November 3, 2006 (Bankr. S.D. Tex. Case No. 06-35903), and Ben B, Floyd was appointed as the Chapter 11 Trustee on March 1, 2007. A copy of the Debtor's chapter 11 petition is available at http://bankrupt.com/misc/txsb06-35903.pdfat no charge. TESORO CORPORATION: Fitch Affirms Issuer Default Rating at 'BB+' ---------------------------------------------------------------- Fitch Ratings has affirmed Tesoro Corporation's ratings, with a Negative Outlook: -- Issuer Default Rating at 'BB+'; -- Senior unsecured notes at 'BB+'; -- Secured bank facility at 'BBB-'. Tesoro's ratings are supported by the scale and diversification benefits of its portfolio of seven refineries; its solid long-term competitive position in the supply-constrained California market; recent system upgrades, and reasonable year-to-date benchmark crack spreads for the West Coast. Offsetting factors to the rating include the margin impact of the collapse in light-heavy crude oil differentials on Tesoro's profits, especially at its deep conversion California refineries; the severity of the global downturn in refined product demand; Tesoro's still significant core capital spending requirements, including environmental, regulatory, and maintenance spending; and the potential impact of future environmental legislation. The macro-environment for refiners remains very weak. In the second quarter Tesoro realized a net loss of $45 million despite benchmark ANS WC 321 crack spreads of $16.70/barrel, and an overall utilization rate of approximately 85%. A major driver for this weakness was the narrowing of differentials for cost- advantaged feedstocks, including light-heavy and sweet-sour crude oil differentials. Looking forward to the second half of the year, Fitch believes that the large and unseasonable summer build in distillate inventories in the U.S. may dampen any distillates- based rally in upcoming quarters and force utilization rates lower across the sector. According to the latest EIA data, distillate inventories are brimming at 162 million barrels, far above long- run averages in the 120-130 million barrel range. Fitch currently expects Tesoro will be free cash flow negative in 2009. Tesoro has had notable success in managing to lower capex in the current depressed refining environment. Tesoro's 2008 capex came in at just $650 million (excluding maintenance spending) versus original projections of $1.1 billion, a 41% drop. Capital spending in 2009 to date has been consistent with a low spend scenario, totaling just $222 million in the first half of this year. Tesoro has also begun to benefit from recent income improvement projects as well as synergies from the Wilmington refinery acquisition. These benefits include economies of scale for crude purchases in California; the commissioning of the delayed coker at Golden Eagle last year; improved electricity reliability and control modernization at Hawaii; increased sour crude oil processing capacity at Anacortes, and improved distillate yields. However, although Tesoro's 2009 capex has been pared back significantly, very weak market conditions may still pressure Tesoro's balance sheet and challenge its goals of generating cash flow from operations equal to planned capex of $600 million in 2009. Significant borrowings to fund capex during the second half of 2009 combined with a lack of improvement in the outlook for the sector in 2010 would be a catalyst for a downgrade. Tesoro's liquidity is reasonable. At June 30, 2009, cash and equivalents were $279 million, and approximately $1.3 billion in capacity was available under Tesoro's $1.81 billion secured revolver. Availability under the secured revolver is defined as the minimum of revolver capacity or the value of the borrowing base, which is subject to periodic redetermination and includes cash (100%), eligible petroleum inventories (85%) and receivables (80%). The borrowing base, which had been as high as $1.86 billion as of the third quarter of last year, fell to $620 million at year-end but has since rebounded to approximately $1.7 billion at the end of the second quarter, in line with higher crude oil prices. Tesoro has no near-term maturities due and $450 million in 6.25% notes and $120 million in junior subordinated notes due in 2012. Total debt at the end of the second quarter was $1.84 billion, following the company's issuance of $300 million in unsecured notes in June. The majority ($1.7 billion) of Tesoro's debt contains non-investment-grade covenant protections which fall away if Tesoro's debt is upgraded to investment grade, including the $450 million 2012 notes, $450 million 2015 notes, $500 million 2017 notes, and $300 million 2019 notes. Note that the covenants are not reinstituted if Tesoro subsequently falls below investment grade. Fitch's Negative Rating Outlook primarily reflects concerns about the still high levels of planned capital expenditures across Tesoro's refinery system in the context of the very poor current refining fundamentals. Tesoro's Asset Retirement Obligation at year-end 2008 totaled $35 million and was primarily linked to expected site remediation. The company's pension was underfunded by $227 million at year-end 2008 versus underfunding of $64 million at year-end 2007. The company anticipates that it will make a total of $25 million in contributions to its plans in 2009. Tesoro owns and operates seven crude oil refineries with a rated crude oil capacity of approximately 664,500 barrels per day (bpd). Five of Tesoro's refineries are on the West Coast, with facilities in California, Alaska, Hawaii, and Washington. Tesoro also has refineries in Salt Lake City, Utah, and Mandan, North Dakota. Tesoro sells refined products wholesale or through its network of branded retail outlets, which totaled 879 at year-end 2008. TOUCH AMERICA: Bankr. Court Disallows D&O Indemnification Claims ---------------------------------------------------------------- WestLaw reports that disallowance of the claims of Chapter 11 debtors' officers and directors for indemnification of the defense costs that they incurred in a third-party civil action brought against them was warranted. Standing alone, the claims satisfied the "reimbursement" requirement of the bankruptcy statute providing for the disallowance of a contingent claim for reimbursement or contribution of a debtor's co-debtor. Moreover, the officers and directors failed to show that they properly requested from the debtors an advancement of the defense costs in the underlying action, such that their claims for indemnification of those costs was contingent. Finally, given the interdependence of the defense costs and the claims for indemnification of underlying liability, the potential co-liability of one debtor in the underlying action satisfied, as to the defense costs, the co- liability requirement for claims disallowance. In re Touch America Holdings, Inc., --- B.R. ----, 2009 WL 2341835 (Bankr. D. Del.). In July 2008, Bloomberg News columnist Bill Rochelle reported that creditors of Touch America Holdings, Inc., entered into a settlement agreement with the plan trustee and the Debtor's former executives, under which creditors would receive $21 million from the Debtor's insurance company. That settlement pact resolved litigation pending in Montana state court (Cause No. DV-02-201) between the plan trustee, Brent C. Williams, and 11 former officers. THe Montana suit alleged several causes of action stemming from actions and omissions of the Debtor's officers and directors in 2002 and 2003, which includes, among other things, negligence, breach of fiduciary duties and delayed Chapter 11 bankruptcy filing. On Dec. 23, 2003, the Debtor sold substantially all of its Internet services, private line, and dark fiber assets to Vancouver-based 360networks for $28 million, and sold certain dark fiber assets to Qwest Communications, Inc. for $8 million. About Touch America Headquartered in Butte, Montana, Touch America Holdings, Inc., through its principal operating subsidiary, Touch America, Inc., develops, owns, and operates data transport and Internet services to commercial customers. The Company filed for chapter 11 protection on June 19, 2003 (Bankr. D. Del. Case No. 03-11915) Maureen D. Luke, Esq., and Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP represent the Debtor. When the Company filed for bankruptcy protection, it listed $631,408,000 in total assets and $554,200,000 in total debts. The Court confirmed the Debtors' Chapter 11 Plan on October 6, 2004, and the Plan took effect on October 19, 2004. According to a regulatory filing with the Securities and Exchange Commission, the plan returned about 65% to unsecured creditors. The Debtors ceased operations on Feb. 29, 2004. Brent C. Williams is the Plan Trustee pursuant to the confirmed Plan. C. MacNeil Mitchell, Esq., at Winston & Strawn LLP and Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP represents the Plan Trustee. TRIBUNE CO: Bank Debt Trades at 58% Off in Secondary Market ----------------------------------------------------------- Participations in a syndicated loan under which Tribune Co. is a borrower traded in the secondary market at 41.71 cents-on-the- dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.36 percentage points from the previous week, The Journal relates. The loan matures May 17, 2014. Tribune pays 300 basis points above LIBOR to borrow under the facility. Moody's has withdrawn its rating on the bank debt, while it is not rated by Standard & Poor's. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Headquartered in Chicago, Illinois, Tribune Co. -- http://www.tribune.com/-- is a media company, operating businesses in publishing, interactive and broadcasting, including ten daily newspapers and commuter tabloids, 23 television stations, WGN America, WGN-AM and the Chicago Cubs baseball team. The Company and 110 of its affiliates filed for Chapter 11 protection on December 8, 2008 (Bankr. D. Del. Lead Case No. 08- 13141). The Debtors proposed Sidley Austion LLP as their counsel; Cole, Schotz, Meisel, Forman & Leonard, PA, as Delaware counsel; Lazard Ltd. and Alvarez & Marsal North Americal LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims agent. As of December 8, 2008, the Debtors have $7,604,195,000 in total assets and $12,972,541,148 in total debts. Bankruptcy Creditors' Service, Inc., publishes Tribune Bankruptcy News. The newsletter tracks the chapter 11 proceeding undertaken by Tribune Company and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) TRW AUTOMOTIVE: S&P Says Q2 Results Support 'B/Neg.' Rating ----------------------------------------------------------- Standard & Poor's Ratings Services said that, based on TRW Automotive Inc.'s reported results for the second quarter, the company's financial performance supports S&P's expectations for the current rating (B/Negative/--). Also, as S&P had expected, TRW successfully obtained an amendment to its credit facility, on June 24, 2009, which was required for the company to remain in compliance with covenants at June 30, 2009. The company reported it had $905 million available on the $1.4 billion revolving credit facility as of July 3, 2009. The revised financial covenants -- senior-secured-leverage ratio (which replaces the total-leverage ratio) and the minimum interest coverage -- are effective for the second quarter of 2009 and continue through the third quarter of 2011, after which the financial covenants contained in the previous credit agreement apply. TRW reported second-quarter sales of $2.7 billion, down 39% year over year, on lower production volumes and the unfavorable effect of foreign currency translation. The company reported EBITDA of $192 million, excluding restructuring costs, for the second quarter, which brings first-half 2009 EBITDA, excluding nonrecurring items, to $235 million. Although EBITDA fell 53% in the second quarter, year over year, the company achieved a relatively decent 7.1% margin from cost-cutting initiatives; EBITDA margin was 4.6% for the first half of 2009. It is unclear how much of the restructuring benefits can be retained in the year ahead if production volumes improve, as S&P expect. In addition, most auto suppliers, including TRW, will experience an increase in working capital requirements when auto production volumes rise. S&P's rating on the company reflects S&P's assumption that TRW will generate negative cash flow in the year ahead. Although global volumes should increase in 2010 versus 2009, S&P is not assuming a strong economic rebound, whenever it occurs, following the trough of the global recession. UNITED AIR: Bank Debt Trades at 42% Off in Secondary Market ---------------------------------------------------------- Participations in a syndicated loan under which About United Airlines, Inc., is a borrower traded in the secondary market at 57.63 cents-on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 1.63 percentage points from the previous week, The Journal relates. The loan matures on February 13, 2013. United pays 200 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B3 rating and Standard & Poor's B+ rating. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. About UAL Corporation Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Eugene R. Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) * * * UAL Corp. carries a 'Caa1' probability of default rating from Moody's, 'B-' long term foreign issuer credit rating from Standard & Poor's, and 'CCC' long term issuer default rating from Fitch. UNITRIN INC: Fitch Affirms 'BB+' Rating on $560 Mil. Senior Notes ----------------------------------------------------------------- Fitch Ratings has affirmed these ratings of Unitrin, Inc., and removed them from Rating Watch Negative: Unitrin -- Issuer Default Rating at 'BBB-'; -- $560 million senior notes at 'BB+'. Trinity Universal Insurance Co. United Insurance Co. of America Union National Life Insurance Co. Reliable Life Insurance Co. -- Insurer Financial Strength rating at 'A-'. The Rating Outlook for all ratings is Negative. Unitrin's Negative Outlook mainly reflects Fitch's concern regarding the uncertainty at Fireside Bank, Unitrin's consumer finance business, over the next 12 to 18 months versus a more near-term concern reflected by the Negative Watch. On March 24, 2009, Unitrin announced a plan to exit the auto finance business and has suspended all new lending activity and ceased opening new certificates of deposit. While Fitch believes that Fireside Bank's existing capital and liquidity are adequate, a significant reduction in its funding source could lead to capital being transferred from the insurance companies to support the bank. As of June 30, 2009, Fireside Bank has shown modest improvement after suffering significant losses in 2008 and 2007. Delinquent balances and charge-offs, as a percent of loan balances, declined. However, as loan balances decline due to the suspension of loan originations, the ratio of delinquent balances and charge-offs to total loan balances are more likely to increase. Fireside Bank's operating results also improved during the second quarter leading to a marginal profit, which is partially attributable to the $30 million reduction in the provision to loan losses during the second quarter. Fitch will continue to monitor the bank's results during the run-off of its operations. The ratings also reflect adequate capitalization of Unitrin's insurance subsidiaries, satisfactory operating results and significantly reduced equity exposure, which should lead to lower capital volatility. Additionally, the ratings reflect Fitch's expectation that pricing softness in the property/casualty insurance marketplace will persist. Favorably, Unitrin's financial leverage remains within Fitch's expectation at 24.9% on June 30, 2009. UNIVERSAL MARKETING: Selects Zarwin Baum as Special Counsel ----------------------------------------------------------- Universal Marketing Inc. asks the U.S. Bankruptcy Court for the Eastern District of Pennsylvania for authority to employ Zarwin, Baum, DeVito, Kaplan, Schaer & Toddy P.C., as its special counsel to assist in the collection of the Debtor's accounts receivable. The firm's partners will bill $360 per hour for this engagement. The Debtor assures the Court that the firm does not hold any interest adverse to the Debtor and its creditors, and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Based in Philadelphia, Pennsylvania, Universal Marketing Inc. runs an advertising and marketing business. The Company filed for Chapter 11 protection on July 23, 2009 (Bankr. E.D. Pa. Case No. 09-15404). When the Debtor sought protection from its creditors, it both listed assets and debts between $10 million and $50 million. UNIVERSAL MARKETING: Taps Maschmeyer Karalis as Counsel ------------------------------------------------------- Universal Marketing Inc. asks the U.S. Bankruptcy Court for the Eastern District of Pennsylvania for authority to employ Maschmeyer Karalis P.C., as its bankruptcy counsel. The firm will, among other things: a) advise the Debtor of its rights, powers and duties as a debtor-in-possession in continuing to operate and manage its assets; b) advise the Debtor concerning and assisting in the negotiation and documentation of the use of cash collateral and financing restructuring and related transactions; and c) review the nature and validity of agreements relating to the Debtor's business and advise the Debtor in connection therewith. The firm's standard hourly rates are: Designation Hourly Rate ----------- ----------- Shareholders $425 Associates $230-$360 Paralegals $105-$120 The Debtor assures the Court that the firm does not hold any interest adverse to the Debtor and its creditors, and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Based in Philadelphia, Pennsylvania, Universal Marketing Inc. runs an advertising and marketing business. The Company filed for Chapter 11 protection on July 23, 2009 (Bankr. E.D. Pa. Case No. 09-15404). When the Debtor sought protection from its creditors, it both listed assets and debts between $10 million and $50 million. US FOODSERVICE: Bank Debt Trades at 25% Off in Secondary Market --------------------------------------------------------------- Participations in a syndicated loan under which U.S. Foodservice, Inc., is a borrower traded in the secondary market at 74.96 cents- on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 2.38 percentage points from the previous week, The Journal relates. The loan matures on July 3, 2014. The Company pays 275 basis points above LIBOR to borrow under the facility. The bank debt carries Moody's B2 rating, while it is not rated by Standard & Poor's. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. U.S. Foodservice, Inc. -- http://www.usfoodservice.com/-- is a foodservice supplier serving some 250,000 customers from more than 70 distribution facilities. The Company supplies restaurants, hotels, school, and other foodservice operators with a wide variety of food products, including canned and dry foods, meats, frozen foods, and seafood. It also distributes kitchen equipment and cleaning supplies among other non-food supplies. U.S. Foodservice distributes both national brand products and its own private labels. Tracing its roots to 1853, the company is owned by private equity firms KKR & Co. and Clayton, Dubilier & Rice. UTSTARCOM INC: Posts $84.3 Million Net Loss in June 30 Quarter -------------------------------------------------------------- UTStarcom, Inc., said net loss for the second quarter ended June 30, 2009, was $84.3 million, or ($0.66) per share, and includes $57 million in charges related to restructuring actions and the June 2009 settlement with Personal Communications Devices Holdings, LLC, and Personal Communications Devices, LLC, a wholly owned subsidiary of PCD Holdings, relating to a 2008 merger agreement and 2008 supplier agreement. The second quarter of 2008 net loss was $38.8 million, or ($0.31) per share. For the six months ended June 30, 2009, the Company had $151.7 million net loss compared to $13.9 million during the same period a year ago. Net sales for the second quarter of 2009 were $80.2 million as compared to $633 million in the second quarter of 2008. The decline in sales primarily reflects the PCD divestiture and decline in the PAS business. Gross margins for the second quarter of 2009 were negative 20% as compared to 13% in the second quarter of 2008. The operating loss for the second quarter of 2009 and 2008 was $85.4 million and $31.1 million, respectively. As of June 30, 2009, the Company had $1.08 billion in total assets and $756.2 million in total liabilities. Cash, cash equivalents and short-term investments as of June 30 was $276 million compared to $314 million on December 31, 2008. The Company said its recurring losses and expected negative cash flows from operations raise substantial doubt about the Company's ability to continue as a going concern. The Company incurred net losses of $150.3 million, $195.6 million and $117.3 million during the years ended December 31, 2008, 2007 and 2006, respectively. The Company recorded operating losses in 17 of the 18 consecutive quarters in the period ended June 30, 2009. At June 30, 2009, the Company had an accumulated deficit of $993.2 million. The Company incurred net cash outflows from operations of $55.2 million and $225.1 million in 2008 and 2007 respectively. Cash used in operations was $37.1 million during the six months ended June 30, 2009. At June 30, 2009, the Company had cash and cash equivalents of $272.6 million in the aggregate to meet the Company's liquidity requirements of which $122.9 million was held by its subsidiaries in China. China imposes currency exchange controls on transfers of funds from/to China. Going forward, the amount of cash available for transfer from the China subsidiaries for use by the Company's non-China subsidiaries is limited both by the liquidity needs of the subsidiaries in China and by Chinese-government mandated limitations including currency exchange controls on transfers of funds outside of China. Management expects the Company to continue to incur losses and negative cash flows from operations over at least the remainder of 2009. The Company's only committed sources for borrowings are its credit facilities in China. Each borrowing under these facilities is subject to the banks' then current favorable opinion of the credit worthiness of the Company's China subsidiaries, the banks having funds available for lending, and other Chinese banking regulations and practices. As a result, management cannot be certain that borrowings under these facilities will be adequate, if available at all, to meet the Company's liquidity requirements. In addition, the credit facilities expire in the second half of 2009. Upon expiration of these facilities, management is not certain that new credit facilities will be available on commercially reasonable terms or at all. Even if these facilities are renewed upon expiration, based on the Company's recent financial performance, the total available credit may be reduced. Accordingly, management is not certain that borrowings under the Company's credit facilities in China will be adequate to meet the Company's financing requirements. In 2009 and 2008, the Company took a number of actions to improve its liquidity, including divesting the Company's non-core businesses. In December 2008, management announced initiatives including efforts to eliminate functional duplications by consolidation of a number of functions into the Company's China operations. In June 2009, management expanded the initiatives to include a worldwide reduction in workforce, outsourcing of manufacturing operations and optimizing research and development spending with a focus on selected products. Management believes that these initiatives, if executed successfully, will help achieve significant operating expense reductions by the fourth quarter of 2009 and enable the Company's fixed cost base to be better aligned with operations, market demand and projected sales levels. If the level of sales anticipated by the Company's financial plan does not materialize, the Company will need to take further actions to reduce costs and expenses or explore other cost reduction options. Management believes that if the Company is able to achieve projected sales levels in 2009 and contain expenses and cash used in operations to levels contemplated in the Company's 2009 financial plan, both the Company's China and non-China operations will have sufficient liquidity to finance working capital and capital expenditure needs during the next 12 months. If the Company is not able to execute its 2009 financial plan successfully, the Company may need to obtain funds from equity or debt financings. There can be no assurance that additional financing, if required, will be available on terms satisfactory to the Company or at all, and if funds are raised in the future through issuance of preferred stock or debt, these securities could have rights, privileges or preference senior to those of the Company's common stock and newly issued debt could contain debt covenants that impose restrictions on the Company's operations. Further, any sale of newly issued debt or equity securities could result in additional dilution to the Company's current shareholders. Chairman Hong Liang Lu Steps Down On August 3, 2009, UTStarcom said Hong Liang Lu has stepped down as executive chairman of the board of directors, and he will continue to serve on the board. Peter Blackmore will continue as president and chief executive officer. Thomas J. Toy, currently lead director, will assume the chairman role. "It has been my privilege and honor to work with UTStarcom's employees and customers around the world," Mr. Lu noted. "I am proud of the people and pioneering technologies that have helped our customers achieve success." Mr. Lu founded UTStarcom in 1991 as Unitech Telecom, focusing on the telecommunications market in China. In 1995, Unitech merged with Starcom Networks to form UTStarcom. Under Mr. Lu's leadership, UTStarcom went public in 2000 and went on to expand its business and products globally. "Hong is one of the telecommunications industry's visionaries," said Mr. Blackmore. "He is recognized globally for his entrepreneurial instincts and technology talent, and I look forward to continuing to work with him in a board capacity." Mr. Toy said, "Hong has made numerous significant contributions to UTStarcom. He co-founded and led the company for eighteen years, and built a talented and capable team. UTStarcom and its community owe him a great deal of appreciation." A full-text copy of the Company's Form 10-Q filing is available at no charge at http://ResearchArchives.com/t/s?4134 About UTStarcom Inc. UTStarcom Inc. -- http://www.utstar.com/-- provides IP-based, end-to-end networking solutions and international service and support. The Company sells its solutions to operators in both emerging and established telecommunications markets around the world. UTStarcom enables its customers to rapidly deploy revenue- generating access services using their existing infrastructure, while providing a migration path to cost-efficient, end-to-end IP networks. The Company was founded in 1991 and is headquartered in Alameda, California. VINYL PROFILES: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Vinyl Profiles Acquisition, LLC 11675 Mahoning Ave PO Box 698 North Jackson, OH 44451 Bankruptcy Case No.: 09-42981 Chapter 11 Petition Date: August 6, 2009 Court: United States Bankruptcy Court Northern District of Ohio (Youngstown) Judge: Kay Woods Debtor's Counsel: Andrew W. Suhar, Esq. Suhar & Macejko, LLC 29 East Front Street, 2nd Floor P.O. Box 1497 Youngstown, OH 44501-1497 Tel: (330) 744-9007 Email: asuhar@suharlaw.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A full-text copy of the Debtor's petition, including a list of its 20 largest unsecured creditors, is available for free at: http://bankrupt.com/misc/ohnb09-42981.pdf The petition was signed by Randy Vegso, president of the Company. VISTEON CORP: Bank Debt Trades at 44% Off in Secondary Market ------------------------------------------------------------- Participations in a syndicated loan under which Visteon Corporation is a borrower traded in the secondary market at 55.70 cents-on-the-dollar during the week ended Friday, Aug. 7, 2009, according to data compiled by Loan Pricing Corp. and reported in The Wall Street Journal. This represents an increase of 5.70 percentage points from the previous week, The Journal relates. The loan matures on May 30, 2013. Visteon pays 300 basis points above LIBOR to borrow under the facility. Moody's has withdrawn its rating while Standard & Poor's has assigned a default rating on the bank debt. The debt is one of the biggest gainers and losers among widely quoted syndicated loans in secondary trading in the week ended Aug. 7, among the 137 loans with five or more bids. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VISTEON CORP: Records $112 Mil. Net Loss for Second Quarter ----------------------------------------------------------- Visteon Corporation (OTC: VSTN) announced its second-quarter 2009 results, reporting a net loss of $112 million, or 87 cents per share, on sales of $1.57 billion. For the second quarter of 2008, Visteon reported a net loss of $42 million, or 32 cents per share, on sales of $2.91 billion. Adjusted EBITDA, as defined below, for second quarter 2009 was $73 million, compared with $188 million in second quarter 2008. Compared with first quarter 2009, Visteon's second quarter 2009 sales, gross margin and adjusted EBITDA improved, reflecting continued benefits from restructuring and cost-saving efforts along with modest increases in vehicle production. "While we have seen signs of sequential improvement in vehicle production, the industry remains extremely challenged in the near- term," said Donald J. Stebbins, chairman and chief executive officer. "Despite the difficult operating environment, our second-quarter results demonstrate that we have been able to take the necessary actions to serve our customers, preserve capital and position our global business for future success." Approximately 29 percent of second quarter product sales were to Ford Motor Co., while Hyundai-Kia accounted for 28 percent. Renault-Nissan and PSA/Peugeot-Citroen accounted for about 9 percent and 7 percent of sales, respectively. On a regional basis, Europe accounted for about 39 percent of total product sales, with Asia representing 35 percent, North America representing 20 percent and the balance in South America. Second Quarter 2009 Results For second quarter 2009, total sales were $1.57 billion, including product sales of $1.48 billion and services revenue of $87 million. Product sales decreased by about $1.30 billion, or 47 percent, year-over-year as lower production, net of new business, reduced sales by about $840 million. Divestitures and facility closures, as well as foreign currency, further reduced sales by about $240 million and $180 million, respectively. The company experienced lower sales in each of the major regions in which it operates, reflecting decreased customer production volumes as vehicle sales declined in response to weak global economic conditions. Gross margin for second quarter 2009 was $80 million, compared with $231 million for the same period a year ago. The impact of lower production levels, along with divestitures and facility closures, more than offset savings from favorable net cost performance and restructuring activities. Selling, general and administrative expense for second quarter 2009 totaled $97 million, a decrease of $59 million, or 38 percent, compared with the same period a year ago, reflecting significant ongoing cost-reduction actions. For second quarter 2009, the company reported a net loss of $112 million, or 87 cents per share. This compares with a net loss of $42 million, or 32 cents per share, in the same quarter a year ago. Restructuring and reorganization costs of $18 million and $7 million, respectively, were incurred during the quarter. Additionally, there were no reimbursable costs from the escrow account during the quarter as all available funds in this account had been allocated as of March 31, 2009. Second-quarter 2008 results included $11 million of asset impairments and loss on divestiture, along with $36 million of restructuring and other reimbursable expenses, of which $18 million qualified for reimbursement from the escrow account. Income tax expense for second quarter 2009 was $31 million, compared with $49 million in the same period a year earlier. Adjusted EBITDA for second quarter 2009 was $73 million, compared with $188 million for second quarter 2008. First Half 2009 For the first half of 2009, total sales of $2.92 billion were lower by $2.85 billion, or 49 percent, compared with the same period a year earlier. For the first half of 2009, Visteon reported a net loss of $110 million, or 85 cents per share, compared with a net loss of $147 million, or $1.14 per share during the first half of 2008. Adjusted EBITDA for the first half of 2009 was $95 million, compared with $354 million reported in the first half of 2008. First-half 2009 results include the UK deconsolidation gain of $95 million recorded in the first quarter in connection with the placement of Visteon UK Ltd. into administration on March 31, 2009. Cash Flow and Liquidity As of June 30, 2009, Visteon had cash balances totaling $742 million, down $25 million from the level reported as of March 31, 2009. Cash generated by operating activities totaled $40 million for second quarter 2009, compared with $133 million during the same period a year earlier. The decrease was attributable to higher net losses, as adjusted for non-cash items, and lower trade working capital inflows. Trade working capital inflows in second quarter 2009 reflect, among other items, the impact of pre- petition payables that have not been settled. Capital expenditures were $33 million for second quarter 2009, compared with $80 million in second quarter 2008, reflecting aggressive actions to preserve capital. Free cash flow was $7 million for second quarter 2009, compared with $53 million for the same period in 2008. New Business Wins Visteon continues to win new business despite the difficult economic environment. During the first half of 2009, Visteon won more than $300 million in new business. On a regional basis, Asia accounted for 44 percent of the total while North America and Europe accounted for 38 percent and 18 percent, respectively. A full-text copy of Visteon's 2nd Quarter 2009 Results is available for free at the U.S. Securities and Exchange Commission at http://ResearchArchives.com/t/s?40fb Visteon Corporation and Subsidiaries Consolidated Condensed Balance Sheets As of June 30, 2009 ASSETS Cash and cash equivalents $647,000,000 Restricted cash 95,000,000 Accounts receivable, net 998,000,000 Inventories, net 329,000,000 Other current assets 208,000,000 ------------- Total current assets 2,277,000,000 Property and equipment, net 2,053,000,000 Equity in assets of non-consolidated affiliates 237,000,000 Other non-current assets 80,000,000 ------------- Total Assets $4,647,000,000 ============= LIABILITIES & STOCKHOLDERS' EQUITY Short-term debt $136,000,000 Accounts payable 780,000,000 Accrued employee liabilities 161,000,000 Other current liabilities 200,000,000 ------------- Total current liabilities 1,277,000,000 Long-term debt 62,000,000 Employee Benefits 409,000,000 Deferred income taxes 136,000,000 Other non-current liabilities 343,000,000 Liabilities subject to compromise 3,142,000,000 Stockholders' deficit: Common stock 131,000,000 Stock warrants 127,000,000 Additional paid-in capital 3,407,000,000 Accumulated deficit (4,814,000,000) Accumulated other comprehensive income 165,000,000 Other (5,000,000) ------------- Total Visteon shareholders' deficit (989,000,000) Noncontrolling interests 267,000,000 ------------- Total shareholders' deficit (722,000,000) ------------- Total liabilities & stockholders' equity $4,647,000,000 ============= Visteon Corporation and Subsidiaries Consolidated Statements of Operations Three Months Ended June 30, 2009 Net sales Products $1,482,000,000 Services 87,000,000 ------------- 1,569,000,000 Cost of sales Products 1,403,000,000 Services 86,000,000 ------------- 1,489,000,000 ------------- Gross margin 80,000,000 Selling, general and administrative expenses 97,000,000 Restructuring expenses 18,000,000 Reimbursement from escrow account 0 Reorganization items 7,000,000 ------------- Operating (loss) income (42,000,000) Interest expense 47,000,000 Interest income 2,000,000 Equity in net income of non-consolidated 19,000,000 ------------- (Loss) income before income taxes (68,000,000) Provision for income taxes 31,000,000 ------------- Net loss ($99,000,000) Net income attributable to non-controlling interests 13,000,000 ------------- Net loss attributable to Visteon Corporation ($112,000,000) ============= Visteon Corporation and Subsidiaries Consolidated Statements of Cash Flows Six Months Ended June 30, 2009 Operating activities: Net loss ($90,000,000) Adjustments to reconcile net loss to net cash (used by) provided from operating activities: Depreciation and amortization 162,000,000 Deconsolidation gain (95,000,000) Gains on asset sales (2,000,000) Equity in net income of non-consolidated net of dividends remitted (20,000,000) Other non-cash items (6,000,000) Changes in assets and liabilities: Accounts receivable (39,000,000) Inventories 24,000,000 Accounts payable (64,000,000) Other assets and liabilities (105,000,000) ------------- Net cash (used by) provided from operating activities (235,000,000) Investing activities: Capital expenditures (58,000,000) Cash associated with deconsolidation (11,000,000) Proceeds from divestitures and asset sales 4,000,000 Other 0 ------------- Net cash used by investing activities (65,000,000) Financing activities: Short-term debt, net (19,000,000) Cash restriction (95,000,000) Proceeds from issuance of debt 56,000,000 Principal payments on debt (119,000,000) Repurchase of unsecured debt securities 0 Other, including book overdrafts (58,000,000) ------------- Net cash used by financing activities (235,000,000) Effect of exchange rate changes on cash 2,000,000 ------------- Net decrease in cash equivalents (533,000,000) ------------- Cash and equivalents at beginning of year 1,180,000,000 ------------- Cash and equivalents at end of period $647,000,000 ============= About Visteon Corp. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The Company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VISTEON CORP: Sale of Hyundai Parts Facility to Korean Unit Done ---------------------------------------------------------------- Visteon Corp. submitted to the Bankruptcy Court a notice that (i) all conditions to the closing of the sale of Visteon Domestic Holding, LLC's equity interest in Halla Climate Systems Alabama Corp., have been met, (ii) the closing of sale has occurred; and (iii) payment for the U.S. Trustee has been made. The Debtors earlier obtained the Court's permission to sell the 80% equity interest in Debtor Halla Climate Systems Alabama Corp., to Halla Climate Control Corporation, free and clear of all liens, claims, encumbrances and other interest, pursuant to a sale and purchase agreement, dated June 26, 2009. Halla Climate Control Corporation or "Halla Korea" is a non- debtor affiliate of Visteon Corporation organized under the laws of the Republic of Korea. Halla Korea's majority shareholder is Visteon Corp., which owns a 70% equity interest in the company. Visteon Corp. and Halla Korea design and manufacture fully integrated heating, ventilation, and air conditioning systems for original manufacturers like Hyundai Motor Company and Kia Motors Corporation. Halla Alabama, on the other hand, was originally formed as a wholly owned subsidiary of Visteon Domestic. Halla Alabama operates a 135,000 sq. ft. manufacturing facility located in Shorter, Alabama, 30 miles east of Montgomery, the home of Hyundai Motor Manufacturing Alabama, LLC, Hyundai's only manufacturing facility in the United States. The Hyundai business accounts for nearly 100% of all Halla Alabama sales, and nearly 60% of Halla Korea's global climate control business, which generates about $1.7 billion in annual gross revenue, making Hyundai Visteon Corp.'s second largest customer on a consolidated basis. "Given Halla Alabama's and Halla Korea's close affiliation with Hyundai, it is necessary to the Debtors' long-term profitability and growth to continue to foster and develop this customer relationship," says Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware. Hyundai, however, has expressed numerous concerns regarding Halla Alabama's debtor status and Halla Alabama's ability to maintain an uninterrupted supply of goods, according to Mr. Billion. He notes that Hyundai may seek to reduce its exposure with respect to Halla Alabama by resourcing its supply of climate control products to Halla Alabama's competitors if it continues to have concerns regarding Halla Alabama's prolonged involvement in these Chapter 11 cases. Accordingly, Visteon Domestic sought to enter into the Purchase Agreement with Halla Korea whereby: -- Halla Korea will pay Visteon Domestic $37,000,000 for 80% of Visteon Domestic's stake in Halla Alabama; and -- Halla Korea will make a cash payment to Visteon Corp. for roughly $26,000,000 in full satisfaction of Visteon Corp.'s intercompany loan to Halla Alabama in the same amount. A full-text copy of the Halla Korea Purchase and Sale Agreement is available for free at: http://bankrupt.com/misc/Visteon_HallaSale.pdf About Visteon Corp. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VISTEON CORP: U.K. Pensioners Object to Employee Incentive Plan --------------------------------------------------------------- Crawford McKee, on behalf of the Visteon UK Pensioners Action Group, lodged objection to the Debtors' motion to implement Visteon incentive program. According to Mr. McKee, following Visteon UK's decision to close three plants in the United Kingdom on April 1, 2009, the underfunded UK Pension fund has been placed into administration. Mr. McKee adds that the fund passes into the UK government sponsored Pension Protection Fund where the Group stands to lose significant life-changing pension payments -- some 40% to 60% in reductions. The Group represents 3,000 U.K. Visteon current and deferred pensioners. The Debtors are seeking the Court's permission to honor a postpetition Visteon Incentive Program, which consists of a key employee incentive plan, the Debtors' 2009 annual incentive plan and the Debtors' current long-term incentive plan. The AIP and LTIP are continuations of the Debtors' prepetition incentive programs, while the KEIP is a newly proposed plan. The Debtors are also seeking authority to pay their employees amounts earned under the Visteon Incentive Program without regard to whether those obligations accrued or arose before or after the Petition Date. Specifically, the Debtors seek authority to pay up to $6,200,000 on account of targets already reached but not yet earned under the LTIP, and up to $6,000,000 that still may be earned on account of certain 2009 and 2010 benchmarks, if achieved based on the Debtors' business goals, as set forth under the metrics of the LTIP established in 2007 and 2008. About Visteon Corp. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VISTEON CORP: UAW Objects to Termination of Retiree Benefits ------------------------------------------------------------ Debtors Visteon Corporation, Visteon Systems LLC, and Visteon Caribbean Inc. are asking the Bankruptcy Court for authority to modify or terminate their plans and programs that providing these post-employment benefits: (1) Employer-paid post-employment health care benefits for current active employees, their spouses, surviving spouses, domestic partners and dependents; (2) Employer-paid post-employment health care benefits for current and future retirees, their spouses, surviving spouses, domestic partners and dependents; (3) Retiree medical credits and related retiree medical notional accounts established by the Sponsoring Debtors; and (4) Employer-paid post-employment basic life insurance benefits for current retirees. Union Objects The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America contends that Section 1114 of the Bankruptcy Code precludes the Debtors from terminating the retiree benefits of the UAW-represented employees and retirees from the North Penn plant, in Lansdale, Pennsylvania, because the collective bargaining agreement in force there precludes the at- will termination of those benefits. "Congress enacted Section 1114 to ensure that modifications to retiree benefits are necessary to the debtor's reorganization and are fair and equitable to all affected stakeholders, and to ensure that they only take place after good faith negotiations regarding the proposed modifications," says Peter D. DeChiara, counsel for UAW. "Because the Motion constitutes an impermissible attempt to end-run Section 1114, it should be denied," he asserts. Another union, the International Union of Electronic, Electrical, Technical Salaried, Machine, and Furniture Workers-Communication Workers of America, asserts that the amendment or termination of those benefits will deprive over 2,000 IUE-CWA retirees of medical and life insurance benefits they have earned and paid for over a lifetime of service to the Debtors. According to the IUE-CWA, if Debtors succeed in the Retiree Benefits Motion, those retirees will be left in dire circumstances by the complete elimination of their healthcare benefits. The IUE-CWA represent hourly employees at the Debtors' plants at Connersville, Indiana, and Bedford, Indiana. At the Connersville Plant, IUE-CWA members assembled automotive radiators and compressors. At the Bedford Plant, IUE-CWA members assembled automotive fuel tanks, fuel pumps, pressure gauges, and window washer pumps. In a letter sent to the Court on August 4, 2009, Phyllis Gassaway, former President of IUE-CWA Local 907, together with her 66 co-workers, expressed her objection as to the Retirees Benefits Motion. Nine additional letters from retirees were filed with the Court for the period from July 30 to 31, 2009, opposing the Debtors' proposed termination of post-employment health care benefits. Employee Benefit Plans Debtors Visteon Corporation, Visteon Systems LLC, and Visteon Caribbean Inc. currently maintain employee benefit plans and programs that provide "other post-employment benefits" to certain retirees and their spouses, surviving spouses, domestic partners and dependents. The Debtor may also provide OPEB in the future to certain active employees who are currently or may become eligible for OPEB, certain former employees who are currently or may become eligible for OPEB, and their spouses, surviving spouses, domestic partners and dependents, in their retirement. The Debtors aver that the cost of providing the OPEB is one of the largest and most significant long-term liabilities on their balance sheet. These benefits, the Debtors note, are funded on a pay-as-you-go basis. The Sponsoring Debtors provide OPEB to approximately 6,650 retirees, including former salaried employees and former hourly employees under the Visteon Corporation Health and Welfare Program for Salaried Employees, the Visteon Systems LLC Health and Welfare Benefit Plan for Hourly Employees, the Connersville and Bedford Plan, the Visteon Systems LLC Health and Welfare Benefit Plan for Hourly Employees (North Penn Location), and the Visteon Caribbean Inc. Employee Group Insurance Plan. Laura Davis Jones, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, related that after full and careful deliberation, the Sponsoring Debtors have determined that they must eliminate their current and future costs associated with providing OPEB in order to successfully restructure their businesses. Ms. Jones tells the Court that the Sponsoring Debtors' OPEB liability is projected to be $310,000,000 by end of 2009, with projected cash costs of $31,000,000 in this year alone. "These liabilities are not sustainable," Ms. Jones stated in the Debtors' request to modify or terminate their employee benefit plans. About Visteon Corp. Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. The company has corporate offices in Van Buren Township, Michigan (U.S.); Shanghai, China; and Kerpen, Germany. It has facilities in 27 countries and employs roughly 35,500 people. The Company has assets of $4,561,000,000 and debts of $5,311,000,000 as of March 31, 2009. Visteon Corporation and 30 of its affiliates filed for Chapter 11 protection on May 28, 2009, (Bank. D. Del. Case No. 09-11786 through 09-11818). Judge Christopher S. Sontchi oversees the Chapter 11 cases. James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, represent the Debtors in their restructuring efforts. Laura Davis Jones, Esq., James E. O'Neill, Esq., Timothy P. Cairns, Esq., and Mark M. Billion, Esq., at Pachulski Stang Ziehl & Jones LLP, in Wilmington, Delaware, serve as the Debtors' local counsel. The Debtors' investment banker and financial advisor is Rothschild Inc. The Debtors' notice, claims, and solicitation agent is Kurtzman Carson Consultants LLC. The Debtors' restructuring advisor is Alvarez & Marsal North America, LLC. Bankruptcy Creditors' Service, Inc., publishes Visteon Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Visteon Corp. and its debtor-affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) VOUGHT AIRCRAFT: Moody's Affirms Corporate Family Rating at 'B2' ---------------------------------------------------------------- Moody's Investors Service affirmed Vought Aircraft Industries, Inc.'s B2 Corporate Family and Probability of Default ratings and upgraded the company's senior secured bank credit facility rating to Ba2 from Ba3 as well as the company's senior unsecured notes rating to B3 from Caa1. The ratings outlook is stable. The rating action follows the announcement that Vought completed the sale of the assets and operations conducted at its North Charleston, South Carolina facility to a subsidiary of The Boeing Company. The facility performs fabrication and assembly of structures and systems installation of the 787 aft-fuselage sections. Simultaneously, the company obtained an amendment to its credit facility to allow for the sale and subsequent debt paydown from the proceeds of the transaction. Among other things, the company's revolving credit facility was lowered to $100 million with an increase in interest rate associated with the facility, and the company's remaining synthetic L/C facility was converted into an incremental term loan. The revolving credit facility is now fully available with no borrowings. Despite the near term positives of the transaction, including immediate deleveraging and termination of the 787 Supply Agreement and thus improved liquidity profile, the sale of the 787 operations reduces a major long-term revenue and earnings generating prospect for Vought. As part of the agreement however Vought has entered into new long-term supply workscope agreements for Boeing's 737, 777, and 787 aircraft programs, and these activities should help to mitigate downside risks. Yet, in an environment where overall demand for new commercial aircraft is sharply contracting and defense budget cuts could adversely affect the company's prospects in military sales, Moody's believes that the company's B2 CFR and PDR ratings appropriately reflect the net balance of benefits and risks of the proposed transaction. The company's rating outlook is stable at the B2 CFR level given the company's still substantial commercial and military backlog and its much improved liquidity profile benefiting from the removal of on-going funding requirements for the delayed 787 program and also incorporating the company's substantial cash position and unused revolver availability providing it the necessary financial flexibility to address the cyclical downturn in the aerospace industry. These ratings have been affirmed: * Corporate Family Rating at B2; * Probability of Default Rating at B2. These ratings have been upgraded: * $100 million (previously $150 million) secured revolving credit facility due 2010, Ba2 (LGD2, 14%) from Ba3 (LGD2, 26%); * $328.1 million (previously $608 million) term loan B due 2011, Ba2 (LGD2, 14%) from Ba3 (LGD2, 26%); (The company's previous synthetic LC facility was converted into the term loan.) * $270 million 8% senior unsecured notes due 2011, B3 (LGD4, 68%) from Caa1 (LGD5, 79%). The one notch upgrade of the senior secured facility to Ba2 and the 8% unsecured notes to B3, despite unchanged CFR and PDR, reflects the impact of the changes in the capital structure and the resultant changes in the Loss Given Default assessments. This is the result of the significant reduction in the proportion of senior secured liabilities from the last reported date consistent with Moody's Loss Given Default Methodology. The last rating action was on July 7, 2009, when Vought's B2 Corporate Family Rating was affirmed and the instrument ratings were placed on review for possible upgrade. Vought Aircraft Industries, Inc., headquartered in Dallas, Texas, and owned by The Carlyle Group, is one of the largest independent developers and producers of structural assemblies for commercial, military, and business jet aircraft. As of Q1 2009 LTM, Vought had revenues of approximately $1.8 billion. WARNER MUSIC: Net Loss Widens to $37 Million in June 30 Quarter --------------------------------------------------------------- Warner Music Group Corp. posted wider net loss of $37 million for the three months ended June 30, 2009, from a net loss of $9 million for the same period a year ago. Warner posted a net loss of $82 million for the six months ended June 30, 2009, from a net loss of $62 million for the same period a year ago. For the quarter, revenue declined 9.3% to $769 million from $848 million in the prior-year quarter, and was down 2.0% on a constant-currency basis. This performance primarily reflected the company's fiscal fourth quarter-weighted release schedule, general economic pressures and the transition from physical sales to digital sales in the recorded music industry. Domestic revenue declined 10.3% while international revenue decreased 8.2%, but grew 5.3% on a constant-currency basis due primarily to an increase in revenue from the company's European concert promotion business. Revenue growth in the U.K., France, Italy and Canada was offset by weakness in Japan and Latin America. Digital revenue of $175 million grew 5.4% over the prior-year quarter, or 10.8% on a constant-currency basis. Digital revenue grew 1.2% sequentially from the second quarter of fiscal 2009, or 2.3% on a constant-currency basis, and represented 22.8% of total revenue for the quarter. As of June 30, 2009, Warner had $3.98 billion in total assets and $4.13 billion in total liabilities, resulting in $142 million shareholders' deficit. The company reported a cash balance of $345 million as of June 30, 2009. On May 28, 2009, the company completed a $1.1 billion senior secured bond offering, the proceeds from which, along with $335 million of existing cash, were used to retire the company's senior secured credit facility, which had a maturity date of February 28, 2011. The June 30, 2009 cash balance reflects the impact of this refinancing, which has increased the company's financial flexibility by, among other things, pushing out the company's earliest debt maturities from 2011 to 2014 and eliminating financial maintenance tests from its debt covenants. As of June 30, 2009, the company reported total long-term debt of $1.94 billion and net debt (total long-term debt minus cash) of $1.59 billion. For the quarter, net cash provided by operating activities was $11 million compared to $89 million in the prior-year quarter. The decline in operating cash flow was largely related to the decrease in deferred revenue from the company's European concert promotion business. Free Cash Flow -- cash flow from operations less capital expenditures and cash paid or received for investments -- was $11 million, compared to $93 million in the comparable fiscal 2008 quarter. Unlevered After-Tax Cash Flow -- Free Cash Flow excluding cash interest paid -- was $54 million, compared to $140 million in the comparable fiscal 2008 quarter. A full-text copy of Warner's Form 10-Q filing is available at no charge at http://ResearchArchives.com/t/s?4135 About Warner Music Group Warner Music Group Corp. (NYSE: WMG) became the only stand-alone music company to be publicly traded in the United States in May 2005. Warner Music Group is home to a collection of the best- known record labels in the music industry including Asylum, Atlantic, Bad Boy, Cordless, East West, Elektra, Nonesuch, Reprise, Rhino, Roadrunner, Rykodisc, Sire, Warner Bros. and Word. Warner Music International, a leading company in national and international repertoire, operates through numerous international affiliates and licensees in more than 50 countries. Warner Music Group also includes Warner/Chappell Music, one of the world's leading music publishers, with a catalog of more than one million copyrights worldwide. WASHINGTON MUTUAL: JPMorgan Asks for WaMu Noteholder Claims Lists ----------------------------------------------------------------- JPMorgan Chase & Co. asked Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware to order noteholders of Washington Mutual Inc. to provide detailed lists of their claims. The Washington Mutual Noteholders Group claimed in a pleading filed with the Court that it "collectively holds at least $3.3 billion in face amount of outstanding debt securities" issued by WaMU and they are collectively "the principal stakeholders in the Chapter 11 proceedings." JPMorgan pointed out that when the Noteholders Group first appeared in the case, it constituted 23 entities holding an aggregate of more than $1.1 billion in face amount of notes, according to a verified statement under F.R.B.P. Rule 2019 filed by White & Case LLP on October 20, 2008. A second firm -- Kasowitz, Benson, Torrest & Friedman LLP -- appeared on the case on behalf of the Noteholders Group, but has not filed a verified statement. "Tellingly, the Washington Mutual Noteholders Group has provided no explanation of how its holdings increased threefold over the period of eight months," JPM points out. JPM asserts that the Notehlders Group itself must satisfy the disclosure obligations under Bankruptcy Rule 2019. The Noteholders Group, JPM notes, has taken an active role in the Chapter 11 cases and, by its own assertions, expects to be the primary recipient of any distributions from the Debtors' estates. Yet, the identity and composition of the Group remains unknown to the Court, Debtors, JPM and the balance of the Debtors' creditor constituencies. JPM asserts that without these disclosures required by Bankruptcy Rule 2019, the Court should refuse to allow the Noteholders Group to participate in the cases. Key Lawsuits Among Parties Washington Mutual filed a suit in March against the FDIC before the U.S. District Court in Washington after its claim in the bank receivership was denied. The Debtor seeks to recover $6.5 billion in capital contributions, $4 billion in preferred securities and $3 billion in tax refunds. The lawsuit contends the FDIC sold the bank for substantially less than the assets were worth. The holding company believes the bank's assets were worth more than the bank's debt. In April 2009, JPMorgan, which acquired Washington Mutual Bank, filed in the Bankruptcy Court a complaint against Washington Mutual and WMI Investment Corp., and Federal Deposit Insurance Corporation, seeking (i) to ensure that it is not divested of the assets and interests purchased in good faith from the FDIC, as receiver for WMB; and (ii) for indemnification and recovery against the Debtors for certain liabilities that may be asserted against JPMorgan, as successor by merger to WMB, pursuant to a Purchase and Assumption Agreement dated September 25, 2008, with the FDIC. In mid-April 2009, Washington Mutual countered with its own lawsuit against JPM in the Bankruptcy Court, seeking recovery of $4 billion it was holding in deposit accounts at its bank unit when the thrift unit was taken over in September by the FDIC and immediately transferred to JPMorgan Chase & Co. About Washington Mutual Based in Seattle, Washington, Washington Mutual Inc. -- http://www.wamu.com/-- is a holding company for Washington Mutual Bank as well as numerous non-bank subsidiaries. The Company operates in four segments: the Retail Banking Group, which operates a retail bank network of 2,257 stores in California, Florida, Texas, New York, Washington, Illinois, Oregon, New Jersey, Georgia, Arizona, Colorado, Nevada, Utah, Idaho and Connecticut; the Card Services Group, which operates a nationwide credit card lending business; the Commercial Group, which conducts a multi-family and commercial real estate lending business in selected markets, and the Home Loans Group, which engages in nationwide single-family residential real estate lending, servicing and capital markets activities. Washington Mutual Bank was taken over September 25 by U.S. government regulators. The next day, WaMu and its affiliate, WMI Investment Corp., filed separate petitions for Chapter 11 relief (Bankr. D. Del. 08-12229 and 08-12228, respectively). Wamu owns 100% of the equity in WMI Investment. Weil Gotshal & Manges represents the Debtors as counsel. When WaMu filed for protection from its creditors, it listed assets of $32,896,605,516 and debts of $8,167,022,695. WMI Investment listed assets of $500,000,000 to $1,000,000,000 with zero debts. Bankruptcy Creditors' Service Inc. publishes Washington Mutual Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Washington Mutual Inc. (http://bankrupt.com/newsstand/or 215/945-7000). WEIGHT WATCHERS: Posts $58.8 Million Net Income for Q2 2009 ----------------------------------------------------------- Weight Watchers International, Inc., reported that for the second quarter ended July 4, 2009, net revenues were $372.5 million versus $400.0 million in the second quarter of 2008. Net income for the second quarter of 2009 was $58.8 million versus $46.6 million in the prior year period. The Company said net income in the quarter was reduced by after- tax restructuring charges of $1.2 million associated with the Company's previously disclosed cost savings initiatives. Excluding these restructuring charges from the second quarter of 2009 results and adjusting the second quarter of 2008 results to exclude a $30.3 million offset to revenue associated with the previously reported adverse U.K. VAT ruling, net income for the second quarter of 2009 was $60.0 million versus $67.2 million in the prior year period. The Company said earnings per fully diluted share were $0.76 for the second quarter of 2009 versus $0.59 for the prior year period. Excluding the restructuring charges from the second quarter of 2009 results and adjusting the second quarter of 2008 results for the U.K. VAT ruling, earnings per fully diluted share were $0.78 for the second quarter of 2009 versus $0.85 for the prior year period. In the first half 2009, net revenues were $763.1 million versus $837.0 million in the first half 2008. Net income for the first half 2009 was $106.1 million versus $104.0 million in the prior year period. The Company said net income for the first half 2009 was reduced by after-tax restructuring charges of $3.1 million associated with the Company's previously disclosed cost savings initiatives. Excluding these restructuring charges from the first half 2009 results and adjusting the first half 2008 results to exclude a $27.9 million offset to revenue associated with the previously reported adverse U.K. VAT ruling, net income for the first half 2009 was $109.2 million versus $122.9 million in the prior year period. Earnings per fully diluted share were $1.38 for the first half 2009 versus $1.31 for the prior year period. Excluding the restructuring charges from the first half 2009 results and adjusting the first half 2008 results for the U.K. VAT ruling, earnings per fully diluted share were $1.42 for the first half 2009 versus $1.55 for the prior year period. As of July 4, 2009, the Company had $1.08 million in total assets; $1.87 billion in total liabilities; and $792.8 million in total deficit. "In the midst of this difficult economic environment, we were able to deliver second quarter earnings per fully diluted share nearly comparable to the prior year level, after adjusting for $0.06 per fully diluted share of unfavorable year-over-year foreign currency fluctuation," commented David Kirchhoff, President and Chief Executive Officer of the Company. "While we are closely managing our operations for the near-term given this uncertain economic climate, we are continuing to invest in multiple initiatives that will result in a meaningful and substantial improvement in our long-term growth trajectory." The Company narrowed its full year 2009 earnings guidance range from between $2.50 to $2.75 per fully diluted share to between $2.52 and $2.70 per fully diluted share, excluding restructuring charges associated with the Company's previously disclosed cost savings initiatives. Amendment to Bank of Nova Facility On June 26, 2009, Weight Watchers entered into the Second Amendment to the Sixth Amended and Restated Credit Agreement, dated as of May 8, 2006 (as amended), with The Bank of Nova Scotia, as the administrative agent. The Second Amendment provides the Company with the ability to make loan modification offers to all lenders of a tranche of term loans or revolving loans to extend the maturity date of such loans or reduce or eliminate the scheduled amortization in the case of a tranche of term loans. Any loan modifications would be effective only with respect to the tranche of term loans or revolving loans and only with respect to those lenders that accept the Company's offer. Loan modification offers may be accompanied by increased pricing or fees payable to accepting lenders. The Second Amendment also provides for up to an additional $200 million of incremental term loan financing through the creation of a new tranche of term loans, provided that the aggregate principal amount of such new term loans cannot exceed the amount then outstanding under the Company's existing revolving credit facility. In addition, the proceeds from such new tranche of term loans must be used solely to repay certain outstanding revolving loans and permanently reduce the commitments of certain revolving lenders. Other than the Credit Agreement, there is no material relationship between the Company and the other parties to the Second Amendment. From time to time, the Company conducts other investment-banking or other business with Credit Suisse, The Bank of Nova Scotia and some of the other lenders. A full-text copy of the Second Amendment, dated as of June 26, 2009, to the Sixth Amended and Restated Credit Agreement, dated as of May 8, 2006, among the Company, as borrower, the lenders party thereto, and The Bank of Nova Scotia, as the administrative agent, is available at no charge at http://ResearchArchives.com/t/s?4136 About Weight Watchers International Weight Watchers International, Inc. (NYSE: WTW) provides weight management services, operating globally through a network of Company-owned and franchise operations. Weight Watchers holds over 50,000 weekly meetings where members receive group support and learn about healthy eating patterns, behavior modification and physical activity. WeightWatchers.com provides innovative, subscription weight management products over the Internet and is the leading Internet-based weight management provider in the world. In addition, Weight Watchers offers a wide range of products, publications and programs for those interested in weight loss and weight control. WHC LLC: Proposes Ayers & Brown as Bankruptcy Attorney ------------------------------------------------------ WHC LLC asks the U.S. Bankruptcy Court for the District of Arizona for permission to employ Ayers & Brown P.C., as its attorney to give the Debtor legal advice with respect to the powers and duties of a debtor-in-possession in the continued operation of the business and management of estate property, among other things. Attorney of the firm, Thomas G. Luikens, Esq., will charge $280 per hour for this engagement. The Debtor assures the Court that the firm does not have any interest adverse to the Debtor as the debtor-in-possession of the estate. Based in Phoenix, Arizona, WHC LLC operates a real estate company. The company filed for Chapter 11 protection on July 22, 2009 (Bankr. D. Ariz. Case No. 09-17092). When the Debtor sought protection from its creditors, it posted $20,332,320 in total assets and $15,611,702 in total debts. WINDSOR CENTURY: Files for Bankruptcy Protection in Arizona ----------------------------------------------------------- Windsor Century Plaza LLC filed for Chapter 11 protection in Phoenix Arizona. The property owned by the Debtor is located at 3225 N. Central Ave., Phoenix, and is valued at $19 million. Windsor Century's largest creditor is M&I Thunderbird Bank, which is owed $23 million; $19 million of the debt is secured, according to court files. Windsor owes $1.5 million to Phoenix-based and Lakewood, California-based Summit Builders. Windsor Century Plaza LLC is a single-asset real estate company based in Phoenix, Arizona. The Company filed for Chapter 11 on August 4, 2009 (Bankr. D. Ariz. Case No. 09-18571). Michael W. Carmel, Esq., represents the Debtor. The Company listed $10 million to $50 million in both assets. WM BOLTHOUSE: Moody's Affirms Corporate Family Rating at 'B2' ------------------------------------------------------------- Moody's Investors Service affirmed the B2 CFR of Wm. Bolthouse Farms, Inc., and upgraded the probability of default rating to B2 from B3. The upgrade of the PDR reflects the company's progress in reducing debt to enhance covenant cushion. The rating on the company's 2nd lien term loan was also upgraded, to Caa1 from Caa2, as a result of significant repayments of first lien debt. The rating outlook remains negative. Ratings upgraded: * Probability of Default rating to B2 from B3 * $135 million 2nd lien term loan due December 2013 to Caa1 (LGD5, 89%) from Caa2 (LGD5, 80%) Ratings affirmed, and certain LGD percentages adjusted: * Corporate Family rating at B2 * $75 million 1st lien revolving credit agreement expiring in December 2011 at B1; to LGD3/40% from LGD2/28% * $462 million (originally $500 million) 1st lien term loan due December 2012 at B1; to LGD3/40% from LGD2/28% The upgrade in the probability of default rating follows the application of free cash flow to debt reduction, which has allowed Bolthouse to comply with its leverage covenant, although cushion is still tight. While the cushion on the company's 1st lien leverage covenant was only about 2% at June 30, 2009, Moody's expect cushion to modestly increase in the next few quarters. Moody's notes that Bolthouse's credit agreement allows a financial covenant default to be cured within 10 calendar days by cash or capital injection by Bolthouse's sponsor, subject to certain limits. Although the sponsor is not a signatory to the agreement, Moody's believes that the sponsor would have compelling reasons to inject the relatively moderate amount required to cure any potential near term covenant default given Bolthouse's solid credit metrics and business profile. The negative rating outlook reflects Moody's concern that revenues will be pressured during the recession and that covenant cushion could remain modest, especially given a significant step down in the leverage covenant in March 2010. The affirmation of the company's B2 corporate family rating reflects Moody's expectation that credit ratios will remain appropriate for Bolthouse's rating level. Bolthouse benefits from its position as the larger of two providers of most domestic carrot products -- the two players have over 90% domestic market share -- and has the highest market share in the premium refrigerated business. This market position allows the company to price appropriately and to introduce new products such as yogurt- based salad dressings to an extensive retail customer base. Moody's most recent rating action on Wm. Bolthouse Farms on December 11, 2008, changed the outlook to negative from stable, lowered the probability of default rating to B3 from B2, and affirmed the company's other ratings. Headquartered in Bakersfield, California, BF Bolthouse Holdco, LLC, through its operating subsidiaries including Wm. Bolthouse Farms, Inc., is a grower, processor and distributor of peeled and cut carrots and carrot products, and a producer of fruit and vegetable based beverages. Revenues for the twelve months ended June 30, 2009, were approximately $645 million. The company is majority owned and controlled by an affiliate of private equity firm Madison Dearborn Capital Partners IV, L.P. WYNN RESORTS: Fitch Assigns Issuer Default Rating at 'B+' --------------------------------------------------------- Fitch Ratings has assigned these ratings to Wynn Resorts, Ltd., and its subsidiaries Wynn Las Vegas, LLC, and Wynn Resorts (Macau), SA: Wynn Resorts -- Issuer Default Rating 'B+'. Wynn LV LLC -- IDR 'B+'; -- $697 million senior secured bank credit facility 'BB/RR2'; -- $1.6 billion senior secured first mortgage notes 'BB/RR2'. Wynn Macau SA -- IDR 'B+'; -- $1.5 billion senior secured bank credit facility 'BB+/RR1'. The Rating Outlook is Stable. In accordance with Fitch's Parent and Subsidiary Rating Linkage Criteria, Fitch is currently linking the IDRs of Wynn Resorts, Wynn LV LLC, and Wynn Macau SA. The parent company and subsidiaries are distinct issuers, the subsidiary debt is non- recourse to the parent, and there are no cross guarantees or cross-default provisions (other than if Chairman and CEO Steve Wynn leaves the company under certain circumstances). However, the strategic linkage between the parent and subsidiaries is very high primarily due to the use of the Wynn brand in the overall corporate strategy, the cross-marketing for high-end customers, and the common management team. In addition, the company has demonstrated inter-company support through a number of transactions. Additional detail regarding potential future changes to the rating linkage is provided below. The 'B+' IDRs reflect the company's high consolidated gross leverage driven by its Las Vegas subsidiary, a lack of diversification, weak Las Vegas trends that Fitch expects to continue for the next 12-15 months, event/development risk, and key management risk. The IDRs and Stable Rating Outlook are supported by the company's strong liquidity position including a solid free cash flow profile, minimal near-term maturities, consistently demonstrated capital market access, and little near- term covenant/refinance risk. Additional credit support is provided by the more reasonably leveraged Macau subsidiary, Wynn's strong brand value and high asset quality, and management's focus on balance sheet strengthening since the recession deepened last fall. Operating Trends Likely to Remain Weak Although declines in demand have moderated, Fitch believes fundamental trends in Las Vegas are likely to remain weak for at least the next 12-15 months, which could constrain the performance of Wynn's Las Vegas properties. Fitch believes the rebound in consumer spending related to an economic recovery over that time frame is likely to proceed slowly. As a result, any positive operating leverage to Las Vegas Strip casinos from a potential upcoming economic recovery is unlikely to mirror the significant negative operating leverage experienced during the recession over the past two years, despite impressive recent cost cutting efforts by casino operators. Although CityCenter may help to grow Las Vegas visitation in 2010, Fitch maintains a circumspect view regarding CityCenter's ability to drive profitable incremental demand relative to the supply increase in Las Vegas over the next couple of years. The 'B+' IDRs incorporate concern regarding the cannibalization impact of the late 2009 CityCenter opening on the market amid the weak economic environment, coupled with a soft group and convention segment. Las Vegas room inventory grew 5.7% in 2008 and 2.8% year-to-date through May 2009 to nearly 141,000 rooms. CityCenter, which is 50%-owned by MGM MIRAGE (IDR 'CCC'), will add nearly 6,000 rooms, or another 4.2% to the market by itself, while the recent Hard Rock expansion, the Planet Hollywood Towers opening later this year, and the Cosmopolitan opening in fall 2010, could provide another roughly 4,000 rooms of supply that places further pressure on the market. The continued pressure on profitability in Las Vegas is likely to result in some capacity coming out of the market over the next few years, which could serve to somewhat mitigate the supply-side pressure, but Fitch believes the supply-demand balance in Las Vegas is likely to remain unfavorable until late 2010-2011. Las Vegas visitor volume was down nearly 7% year-to-date through May 2009 (following a 4.4% decline in 2008), with convention attendance down nearly 29% (an acceleration from the 5% decline in 2008), which has forced Strip operators to heavily discount mid- week room rates and fill them with the less profitable leisure/transient segment. Meeting and convention supply is also increasing outside of CityCenter, as Harrah's recently opened a significant amount of additional space to its Caesars Palace property. Fitch believes that MGM has been aggressively pursuing group and convention business for the next few years, particularly at its Mandalay Bay property, likely to reduce available inventory in advance of its upcoming CityCenter supply increase. Given MGM management's recent expectation that CityCenter will help drive Las Vegas visitation growth of 10% next year, and the importance of CityCenter's success to MGM and Las Vegas, Fitch believes the highly competitive environment is poised to become even more intense. Profitability will remain under pressure as operators will be aggressive on pricing and marketing in the second half of 2009 (2H'09) and 2010 as new capacity needs to be filled, corporate travel budgets remain under pressure, and consumer spending patterns improve only modestly. Fitch also believes that the $2.3 billion Encore at Wynn Las Vegas (Encore LV) property has been and will continue to struggle with walk-in traffic. During its development phase, it was expected that three major developments -- Fontainebleau, Echelon, and the Plaza -- would be opening close to and shortly after Encore LV, which would create a newer cluster of resorts at the north end of the Strip. Now only Fontainebleau has a chance to open in the next two years, and even that is highly questionable given its financial struggles. As the recession deepened late last year while approaching the Encore LV opening in December 2008, Wynn aggressively cut room rates in order to fill the additional 2,034 rooms of capacity amid a very weak demand period, indicating that even the newest and best room product in the market will be heavily discounted in order to maximize traffic, even if it is at the expense of a less attractive customer mix. However, the company rationalized Las Vegas expenses and promotional activity much more effectively in the second quarter of 2009 (2Q'09). In addition, Fitch believes the room product and service levels at Encore LV are among the best, if not the best on the Las Vegas Strip, which will somewhat mitigate the weak walk-in traffic since it will attract high-end business, allow it to import customers to the property, and realize its fair share of the high-end market. About 37% of total debt is at Wynn Macau SA, but roughly two- thirds of the company's property EBITDA is generated in Macau, and some headwinds impacting operating performance in that market may be moderating in upcoming quarters. Macau will begin to anniversary the onset of the government's visa policy changes, which became more restrictive in mid-2008 due largely to a surge in inflation and strains on the regional infrastructure after several years of extremely high economic growth driven by the gaming liberalization earlier in the decade. The restrictive policy combined with the global recession appears to have successfully curtailed Macau's inflation rate in 2009, which could result in an easing of the visa policy, or at least less pressure to be as restrictive. In addition, the cap on junket commissions should help profitability if it is finalized and implemented. The $650 million Encore at Wynn Macau (Encore Macau) is currently under construction, fully funded, and will open in 1H'10, bolstering the company's free cash flow profile. However, Fitch remains cautious on the overall Macau outlook, as the recent City of Dreams opening was disappointing, although July trends in Macau appear better than June. Longer-term, if financing options become more accommodating, there is potential for significant increased supply in Macau. High Gross Leverage Offset by Solid Liquidity, Minimal Near-term Maturities, Free Cash Flow Profile Fitch calculates consolidated gross leverage and coverage of 6.6 times (x) and 2.5x, respectively, as of June 30, 2009. Driven by the opening of Encore Macau and Fitch's view of the continued difficult Las Vegas operating environment for Wynn, Fitch estimates that in the absence of any additional opportunistic debt paydown or equity issuance, consolidated gross leverage would remain in the 6x range through the end of 2010, while net leverage could be in the 4.5x-5x range due to the company's solid excess cash position. At the subsidiary level, Fitch estimates gross leverage at Wynn Macau SA would be in the 4x range through 2010, while Wynn LV LLC would remain in the 10x-11x range into 2011 when the leverage covenant resets to 6.5x after being waived in an April 2009 amendment. As it relates to covenant compliance, both of Wynn's bank facility leverage covenants are based on net leverage, which is particularly meaningful in Macau since the sizable excess cash balance there results in net leverage of 2.0x- 2.5x in 2010, based on Fitch estimates. An unlimited equity cure provision in Wynn LV LLC's bank facility, further mitigates covenant compliance concern at the Las Vegas subsidiary in 2011. The 'B+' IDRs and Stable Outlook are supported by a strong liquidity profile. As the global recession deepened following the Lehman bankruptcy in September 2008, the company aggressively strengthened its balance sheet, bolstered its liquidity position, and pushed out debt maturities. After stopping its share repurchase program in July 2008, Wynn Resorts completed two separate secondary equity offerings in the U.S., paid off its $1 billion parent company term loan facility, and repurchased nearly $66 million of Wynn LV LLC's first mortgage notes so far this year. In addition, Wynn LV LLC amended the terms of its credit facility, which essentially removed covenant violation risk until 2011 and pushed the bulk of the revolver maturity out to 2013. Following the 1H'10 completion of Encore Macau, which is the only development project under construction, the company's free cash flow profile improves significantly. The company has virtually no debt maturities until 2011-2012 when $203 million of commitments on the Las Vegas revolver mature in both years, the $1 billion Macau revolver expires in June 2012, and a $112.5 million Las Vegas term loan matures in September 2012. Collateral Supports Issue-Specific Ratings In accordance with Fitch's Recovery Rating (RR) methodology, Fitch has assigned RRs based on the company's 'B+' IDR. While concepts of Fitch's RR methodology are considered for all companies, explicit recovery ratings are assigned only to those companies with an IDR of 'B+' or below. At the lower IDR levels, Fitch believes there is greater probability of default so the impact of potential recovery prospects on issue-specific ratings becomes more meaningful and is more explicitly reflected in the ratings dispersion relative to the IDR. The base for the recovery analysis for each subsidiary is the linked IDR of 'B+', which could change if Fitch determines to view the credits on a standalone rather than linked basis at some point. This could occur in the event the credit becomes distressed and intercompany or parent-level support appears unlikely, insufficient, or not possible. The credit would probably have to deteriorate to a 'B-' IDR level for this to occur. Conversely, as credit quality improves, the IDRs are likely to remain linked. For Wynn LV LLC, Fitch has assigned a 'BB/RR2' rating to both the Las Vegas credit facility and first mortgage notes, which rank pari passu. The RR2 rating reflects a 2-notch positive differential from the 'B+' linked IDR and indicates that Fitch estimates superior recovery of 71-90%, which is supported by a first lien security interest on the assets and equity of Wynn LV, Encore LV, and the golf course. The security interest in the golf course can be released if leverage is less than 6.5x, but Fitch does not expect that to occur in the near-term and will revise recovery assumptions when that becomes imminent. If the IDRs were viewed on a standalone basis, there would be downside for the ratings of Wynn LV LLC. Fitch has assigned a 'BB+/RR1' rating to Wynn Macau SA's credit facility, which indicates an expectation of outstanding recovery in the 91-100% range resulting in the maximum three-notch positive differential from the 'B+' IDR. Security for the Macau credit facility includes substantially all of the assets of Wynn Macau SA including Wynn Encore, but not Cotai land. Certain affiliates have also pledged their interests and executed guarantees as additional security for the Macau loans. If the IDRs were viewed on a standalone basis, there would be upside for the ratings of Wynn Macau SA. Potential Rating and Outlook Drivers The Stable Outlook incorporates a cautious view of Wynn's operating performance over the next 12-18 months, supported by the solid liquidity profile noted above that should enable it to weather the rest of the downturn. As operating pressure continues, Wynn's relative competitive position should improve as its primary competitors-MGM, Las Vegas Sands, and Harrah's-are all in a much weaker financial position, which is likely to result in stronger relative asset quality for Wynn since competitors are currently under-investing in their properties. Positive or negative rating actions in the near-term will likely be driven by the potential for additional equity issuance and subsequent capital allocation, how the Las Vegas market responds to CityCenter's opening, how the Macau market absorbs the Encore Macau opening, and the speed of an economic recovery relative to Fitch expectations. Wynn recently filed an application with the Hong Kong Stock Exchange in connection with a possible listing on the exchange, and Las Vegas Sands is also currently exploring an IPO in Hong Kong. While LVS needs additional financing to restart its Cotai Strip development in Macau, Wynn does not currently need any additional capital, so the capital raise would be more opportunistic for Wynn. If proceeds supported debt reduction, a Positive Outlook could be supported. Otherwise, Fitch believes it could hold the proceeds for future development in Asia, including on the Cotai Strip. Current ratings incorporate an expectation that any significant spending on additional development within the company's current pipeline in Las Vegas (golf course) or Macau (Cotai Strip) is unlikely to commence until the economy and credit markets are much sturdier, and operating trends are significantly improved. As arguably the world's premier casino-resort developer, Fitch also believes that Wynn would consider most major casino development opportunities in large markets around the world, and would be an attractive candidate to governments. Although historically a developer rather than an acquirer, Fitch believes the company's relatively stronger credit profile and continued challenging industry environment positions the company to take advantage of potential distressed opportunities, in addition to potential new developments. For example, Wynn is currently one of a number of bidders that are vying to develop a gaming property at Aqueduct in New York. Management has shown a willingness to be prudent with its investment decision-making, more conservative than peers with respect to development and balance sheet management, and careful with respect to the potential impact any investment may have on how its customers perceive the Wynn brand and its properties. For example, Wynn withdrew from bidding on the Singapore licenses in part because it felt its efforts and management focus would be diluted since it was developing Macau at the time. Still, Fitch remains cautious regarding the prospect of significant deleveraging in 2011-2012, while recognizing that credit metrics in those years may be consistent with a 'BB' category rating based on Fitch's outlook and projections. Fitch is looking for a slow economic recovery to begin this year, with a minimal rebound in consumer spending over the next 12-24 months. Specifically, Fitch's current forecast calls for growth in real U.S. gross domestic product of 1.3% in 2010 and 1.7% in 2011, with personal consumption increasing only 0.3% in 2010 and 0.9% in 2011, as unemployment is expected to peak at 10.6% in mid- 2010. Any revision to Fitch's macro-economic and consumer spending forecasts can influence ratings. XERIUM TECHNOLOGIES: S&P Cuts Corporate Credit Rating to 'CC' ------------------------------------------------------------- Standard & Poor's Ratings Services said that it lowered its ratings on Youngsville, North Carolina-based Xerium Technologies Inc., including the long-term corporate credit rating, to 'CC' from 'CCC+'. The outlook is negative. "The rating action reflects the increased likelihood of an exchange of debt for equity, which S&P would view as distressed and tantamount to default," said Standard & Poor's credit analyst Sarah Wyeth. The company announced that it may be in violation of financial covenants in the third quarter. In addition to seeking an amendment to its credit facility, Xerium is exploring strategic alternatives which could include an exchange of debt for equity. "We could lower the ratings to 'SD' if the company completes an exchange offer," she continued. XO HOLDINGS: Icahn Sued by Minority Owner for Lowball Offer ----------------------------------------------------------- XO Holdings, Inc. (OTCBB: XOHO) said August 6 that it formed a special committee composed of three independent directors to consider, review, and evaluate the proposal made on July 9, 2009 by ACF Industries Holding Corp., which is an affiliate of Carl C. Icahn, to purchase all of the shares of XO Holdings' common stock not currently held by ACF at a price of $0.55 per share. Mr. Icahn is the Chairman of XO Holdings and, through ACF Industries and its affiliates, is the holder of a majority of the shares of XO Holdings' common stock. Robert Knauss, the chair of the panel, stated, "The Special Committee intends to thoroughly evaluate the unsolicited offer put forward by ACF Industries with the assistance of its advisors. We intend to review this proposal in a timely manner, and there can be no assurance that the Special Committee will approve any transaction with ACF Industries." The Special Committee has retained J.P. Morgan Securities Inc. to act as its financial advisor, Dechert LLP as its legal counsel and Bouchard Margules & Friedlander, P.A. as its Delaware legal counsel. Minority Shareholder Says Icahn Offer an Insult Minority shareholder R2 Investments, LDC, wrote a letter to XO Holdings' independent directors saying that Mr. Icahn's $0.55-per- share offer is "insulting." R2 Investments, which owns more than 15 million shares of XO, says that under Mr. Icahn's tutelage, the board is "on the cusp of stripping almost all value from the minority shareholders." "It has taken this board almost four years to find a way to give Mr. Icahn this company, but after a long, arduous process, the board has almost completed its apparent goal -- finding a way to give Mr. Icahn all the assets and NOLs for as little consideration as possible," R2 said. R2 predicts Mr. Icahn will raise his offer to 75 cents per share and perhaps as high as $1 per share. To succeed with his offer, Mr. Icahn will threaten to complete the deal around the minority shareholders: by converting his preferred shares into common equity, he will be able to reach the 90% ownership threshold required to complete a short-form merger. According to R2, minority shareholders, threatened by a squeeze-out, will then give Mr. Icahn his "majority of the minority." R2 has sued Mr. Icahn, other members of XO's board, and XO Holdings in New York state court. It alleges in the lawsuit that approximately one year ago one of the potential bidders valued its combined bid for the assets and the net operating losses at approximately $10 per share. R2 said that the fact that the board rejected this offer in favor of the massively dilutive proposal from Mr. Icahn only causes us to question further the true independence of the "independent directors." In its lawsuit, R2 asserts, among other things, claims of breach of fiduciary duty against Mr. Icahn and members of the XO board, aiding and abetting breach of fiduciary duty against Mr. Icahn related entities, waste of corporate assets against members of XO's board. According to R2, Mr. Icahn's most recent scheme involved three egregious breaches of fiduciary duty: -- the Icahn-controlled Board of Directors gave Mr. Icahn approximately $2 billion of value in stock and NOLs in exchange for less than $1 billion in value in return. -- in doing so, Mr. Icahn and his hand-picked Board breached their fiduciary duties by improperly diluting minority shareholders, offering them collectively one share for every twenty that the Icahn-controlled XO Board of Directors offered Mr. Icahn. -- Mr. Icahn and the Board breached their fiduciary duties by rejecting offers to purchase the Company or its assets that, according to financial advisers to the Company and its Special Committee, would have offered shareholders far greater value than Mr. Icahn's self-dealing transaction. X2 said, "During the preceding months and years, XO's Icahn- controlled Board had failed to take advantage of an extraordinarily liquid credit market to refinance its long-term debt, the majority of which Icahn owned. Instead, the Board had approved an aggressive capital expenditure program but failed to identify the financing for that program. Icahn's strategy of having the Company incur substantial additional expenditures while leaving in place its sizeable debt (owed largely to Icahn) would force the Company into dire financial straits -- and provide an excuse for the self-dealing transaction Icahn would offer to save the Company in exchange for its NOLs." A redacted copy of the lawsuit is available for free at: http://researcharchives.com/t/s?410d About XO Holdings XO Holdings, Inc. -- http://www.xo.com/-- is the holding company of XO Communications, LLC (XOC) and Nextlink Wireless, Inc. (Nextlink). XO Communications is a leading provider of 21st century communications services for businesses and communications services providers, including 50 percent of the Fortune 500 and leading cable companies, carriers, content providers and mobile operators. Utilizing its unique and powerful nationwide IP network and extensive local metro networks and broadband wireless facilities, XOC offers customers a broad range of managed voice, data and IP services in 75 metropolitan markets across the United States. Nextlink -- http://www.nextlink.com/-- whose services going forward have been integrated into XOC's Carrier Services business unit, has historically provided alternative access, backhaul and diverse network solutions and services for the carrier, business and government markets. As one of the nation's largest holders of fixed wireless spectrum, Nextlink delivers high-quality, carrier- grade broadband wireless solutions that scale to meet the demands of converged world of communications - supporting next-generation mobile and wireline voice, data and video applications. XO Communications filed for chapter 11 protection on June 17, 2002 (Bankr. S.D.N.Y. Case No. 02-12947). XO's stand-alone plan of reorganization was confirmed on Nov. 15. 2002, and the company emerged from bankruptcy in January 2003. Under the plan, entities controlled by Carl C. Icachn obtained 80% of the new stock of reorganized XO in exchange for $1.33 billion face amount of senior notes. XO Holdings as of March 31, 2009, had total assets of $1,394,801,000, against liabilities of $408,482,000 and redeemable preferred stock of $1,054,129,000, for a stockholders' deficit of $67,810,000. The Company recorded a net loss of $4,468,000 for the quarter ended March 31. * Cadwalader Attorneys Recognized in The Best Lawyers In America ---------------------------------------------------------------- Cadwalader, Wickersham & Taft LLP, said 33 attorneys in 19 different areas of practice have been named to the 2010 edition of The Best Lawyers in America. Attorneys are selected for inclusion in Best Lawyers based on an exhaustive and rigorous peer-review process. The 2010 edition of the book will be released later this year. The firm's lawyers were chosen as leaders in the areas of Administrative, Antitrust, Banking, Bankruptcy and Creditor-Debtor Rights, Commercial Litigation, Corporate, Corporate Governance and Compliance, Criminal Defense: White-Collar, Derivatives, Employee Benefits, Equipment Finance, Intellectual Property, Leveraged Buyouts and Private Equity, Mergers & Acquisitions, Real Estate, Securities, Structured Finance, Tax, and Trusts and Estates. Cadwalader also placed in the top group of firms in the categories of Derivatives Law in the U.S., Structured Finance in New York, and Derivatives Law in North Carolina. The publication named these lawyers: * James Carroll (Banking, Real Estate, Structured Finance), Stuart Goldstein (Structured Finance), and Francisco Linares (Derivatives) from Cadwalader's Charlotte office; * New York-based Richard Aborn (Equipment Finance), Fredric Altschuler (Real Estate), Louis Bevilacqua (Corporate), Dennis Block (Mergers & Acquisitions), George Davis (Bankruptcy and Creditor-Debtor Rights), Michael Gambro (Structured Finance), Anna Glick (Structured Finance), Bronislaw Grala (Employee Benefits), Ronald Hopkinson (Leveraged Buyouts and Private Equity), Christopher Hughes (Intellectual Property), Robert Lawrence III (Trusts and Estates), Steven Lofchie (Administrative, Derivatives, Securities), Gregory Markel (Commercial Litigation), David Miller (Tax), Christopher Mirick (Bankruptcy and Creditor- Debtor Rights), Patrick Quinn (Structured Finance), John Rapisardi (Bankruptcy and Creditor-Debtor Rights), Richard Schetman (Derivatives), Jordan Schwartz (Structured Finance), Ray Shirazi (Derivatives), Lary Stromfeld (Derivatives, Structured Finance), Linda Swartz (Tax), Andrew Troop (Bankruptcy and Creditor-Debtor Rights), and Christopher White (Real Estate); and * Raymond Banoun (Criminal Defense: White-Collar), Mark Ellenberg (Bankruptcy and Creditor-Debtor Rights Law), Bruce Hiler (Corporate Governance and Compliance Law, Securities Law), Michael Horowitz (Criminal Defense: White -Collar), James Robinson (Criminal Defense: White-Collar), and Charles "Rick" Rule (Antitrust) of the Washington office. "It is gratifying that practitioners in a wide variety of practice areas, and resident in all of our U.S. offices, were recognized by their peers for inclusion in Best Lawyers as among the best in their fields," said Christopher White, Cadwalader's Chairman. "These attorneys exemplify Cadwalader's commitment to provide premier legal counsel and outstanding client service." Best Lawyers made its selections based on more than 2.5 million confidential evaluations by top attorneys in the country, as well as thousands of extensive telephone interviews with leading attorneys throughout the balloting process. The Best Lawyers rankings are especially prestigious because attorneys are not allowed to pay a fee to be listed, instead appearing in an advertisement-free book to honor all those chosen. About Cadwalader Wickersham Cadwalader, Wickersham & Taft LLP -- http://www.cadwalader.com/-- established in 1792, is one of the world's leading international law firms, with offices in New York, London, Charlotte, Washington and Beijing. Cadwalader serves a diverse client base, including many of the world's top financial institutions, undertaking business in more than 50 countries in six continents. The firm offers legal expertise in antitrust, banking, business fraud, corporate finance, corporate governance, financial restructuring and reorganizations, healthcare, intellectual property, litigation, mergers and acquisitions, private client, private equity, real estate, regulation, securitization, structured finance, and tax. * AlixPartners' Hoffecker Sees More U.S. Auto-Parts Bankruptcies ---------------------------------------------------------------- More U.S. auto-parts supplier bankruptcies will occur because the almost 20 in this year's first half aren't enough to eliminate excess capacity in the industry, Bloomberg's Carla Main cited John Hoffecker, managing director at consulting firm AlixPartners LLP, as saying. Segments of the industry still need to come out of bankruptcy "for these companies to be profitable," Mr. Hoffecker said August 4 at an auto conference in Traverse City, Michigan, according to Bloomberg. Suppliers have struggled as carmakers have reduced production because of a 32 percent drop in U.S. sales of cars and light trucks this year through July. At least 17 suppliers have sought bankruptcy protection this year, including an Aug. 3 filing by Cooper-Standard Holdings Inc., Bloomberg said. The top 25% of the companies that remain in business "will do unbelievably well," Mr. Hoffecker said. Those among the more than 4,000 U.S. auto-parts makers that succeed will have unique technology and a diverse customer base, said Mr. Hoffecker, who is based in Southfield, Michigan. U.S. automakers such as General Motors Co. and Ford Motor Co. can benefit from stronger suppliers, including foreign companies, that compete globally, Mr. Hoffecker said, according to the Bloomberg reort. * 3 Banks Shuttered; Year's Failed Banks Now 72 ----------------------------------------------- Three banks -- First State Bank, Sarasota, Florida; Community National Bank of Sarasota County, Venice, Florida; and Community First Bank, Prineville, Oregon -- were closed August 7 by regulators, which appointed the Federal Deposit Insurance Corporation as receiver. This year's closed banks have risen to 72. The FDIC was able to find buyers for certain of the assets and deposits of all three banks. In accordance with Federal law, allowed claims against failed financial institutions will be paid, after administrative expenses, in this order of priority: 1. Depositors 2. General Unsecured Creditors 3. Subordinated Debt 4. Stockholders According to Bloomberg News, regulators have seized the most U.S. banks this year since 1993. The Summer 2009 issue of Supervisory Insights released by the FDIC on June 16, 2008, said the U.S. financial services industry experience a crisis in 2008, with these challenges continuing during the first half of 2009. In 2008, U.S. financial regulatory agencies extended $6.8 trillion in temporary loans, liability guarantees and asset guarantees in support of financial services. By the end of the first quarter of 2009, the maximum capacity of new government financial support programs in place, or announced, exceeded $13 trillion. Bear Stearns was the first large investment bank to be acquired by a bank holding company during 2008. Of the other four largest investment banks in the United States, one would fail and the others would be acquired by, or become, bank holding companies. In 2008, 25 banks with total assets of $372 billion failed. IndyMac Bank, FSB, was closed by the Office of Thrift Supervision on July 11, and the FDIC was named conservator. At the time it was closed, IndyMac's assets of $32 billion made it the second largest bank failure in FDIC history. By the end of the first quarter of 2009, the maximum capacity of new government financial support programs in place, or announced, exceeded $13 trillion. A copy of the Supervisory Insights is available for free at: http://bankrupt.com/misc/FDIC_SI_Summer2009.pdf 2009 Failed Banks List The FDIC was appointed as receiver for the closed banks. To protect the depositors, the FDIC entered into a purchase and assumption agreement with various banks that agreed to assume the deposits of most of the closed banks: Buyer's FDIC Cost Assumed to Insurance Deposits Fund Closed Bank Buyer (millions) (millions) ----------- ---- -------- ----- First State Bank Stearns Bank, N.A. $379.0 $116.0 Community National Stearns Bank, N.A. $93.0 $24.0 Community First Home Federal Bank, Nampa $151.0 $45.0 Integrity Bank Stonegate Bank, Fla. $102.0 $46.0 Mutual Bank United Central, Tex. $1,600.0 $696.0 First BankAmericano Crown Bank, Brick, NJ $157.0 $15.0 First State, Altus Herring Bank, Amarillo, Tex. $98.2 $25.2 Peoples Community First Financial Bank, Ohio $598.2 $129.5 Waterford Village Evans Bank, N.A. $58.0 $5.6 SB - Gwinnett State Bank and Trust $292.0 } SB - North Fulton State Bank and Trust $191.0 } SB - Jones County State Bank and Trust $387.0 } $807.0 SB - Houston County State Bank and Trust $320.0 } SB - North Metro State Bank and Trust $212.0 } SB - Bibb County State Bank and Trust $1,000.0 } Temecula Valley First-Citizen Bank $996.0 $391.0 Vineyard Bank Calif. Bank, San Diego $1,456.0 $579.0 BankFIrst, Sioux Alerus Financial, N.A. $254.0 $91.0 First Piedmont First American Bank $109.0 $29.0 Bank of Wyoming Central Bank & Trust $59.0 $27.0 John Warner Bank State Bank of Lincoln $64.0 $10.0 1st State Winchest. First Nat'l Beardstown $34.0 $6.0 Rock River Bank Harvard State Bank $75.8 $27.6 Elizabeth State Galena State Bank $50.4 $11.2 1st Nat'l Danville First Financial $147.0 $24.0 Founders Bank PrivateBank and Trust $848.9 $188.5 Millennium State State Bank of Texas $115.0 $47.0 Mirae Bank Wilshire State Bank $362.0 $50.0 Metro Pacific Bank Sunwest Bank, Tustin $67.0 $29.0 Horizon Bank Stearns Bank, N.A. $69.4 $33.5 Neighborhood Comm CharterBank, West Point $191.3 $66.7 Community Bank -- None -- - - First National Bank Bank of Kansas $142.5 $32.2 Cooperative Bank First Bank, Troy, N.C. $717.0 $217.0 Southern Community United Community $307.0 $114.0 Bank of Lincolnwood Republic Bank, Chicago $202.0 $83.0 Citizens National Morton Community $200.0 $106.0 Strategic Capital Midland States Bank $471.0 $173.0 BankUnited FSB WL Ross-Led Investors $8,300.0 $4,900.0 Westsound Bank Kitsap Bank $295.1 $108.0 America West Cache Valley Bank $284.1 $119.4 Citizens Community N.J. Community Bank $43.7 $18.1 Silverton Bank -- No Buyer -- - $1,300.0 First Bank of Id US Bank, Minneapolis $261.2 $191.2 First Bank of BH -- No Buyer -- - $394.0 Heritage Bank Level One Bank $101.7 $71.3 American Southern Bank of North Georgia $55.6 $41.9 Great Basin Bank Nevada State Bank $221.4 $42.0 American Sterling Metcalf Bank, Lee Summit $171.9 $42.0 New Frontier Bank -- No Buyer -- - $670.0 Cape Fear Bank First Federal, Charleston $403.0 $131.0 Omni National -- No Buyer -- - $290.0 TeamBank, N.A. Great Southern Bank $474.0 $98.0 Colorado National Herring Bank, Amarillo, TX $82.7 $9.0 FirstCity Bank -- No Buyer -- - $100.0 Freedom Bank Nat'l Georgia Bank, Lavonia $161.0 $36.2 Security Savings Bank of Nevada, L.V. $175.2 $59.1 Heritage Community MB Financial Bank, N.A. $218.6 $41.6 Silver Falls Citizens Bank $116.3 $50.0 Pinnacle Bank Washington Trust Bank $64.0 $12.1 Corn Belt Bank Carlinville Nat'l Bank $142.4 $100.0 Riverside Bank TIB Bank $281.4 $201.5 Sherman County Heritage Bank $85.1 $28.0 County Bank Westamerica Bank $1,300.0 $135.0 Alliance Bank California Bank & Trust $951.0 $206.0 FirstBank Regions Bank $279.0 $111.0 Ocala National CenterState Bank $205.2 $99.6 Suburban Federal Bank of Essex $302.0 $126.0 MagnetBank -- No Buyer -- - $119.4 1st Centennial First California Bank $302.1 $227.0 Bank of Clark Umpqua Bank $523.6 $120-145 Nat'l Commerce Republic Bank of Chicago $402.1 $97.1 A complete list of banks that failed since 2000 is available at: http://www.fdic.gov/bank/individual/failed/banklist.html 305 Banks in Problem List No advance notice is given to the public when a financial institution is closed. The FDIC has a "problem list" of banks, although the list is not divulged to the public. The FDIC said on May 27 that the number of banks and savings institutions in its "Problem List" increased to 305 from 252 at the end of 2008. The 305 banks and thrifts have combined assets of $220 billion, according to the FDIC's quarterly banking profile. The 252 insured institutions with combined assets of $159 billion on the FDIC's "Problem List" as of year-end was already the largest since the middle of 2005. The Problem List had 171 institutions with $116 billion in assets at the end of the third quarter, and 76 institutions with $22 billion in assets at the end of 2007. "Problem" institutions are those institutions with financial, operational, or managerial weaknesses that threaten their continued financial viability. They are rated by the FDIC or Office of the Thrift Supervision as either a "4" or "5", based on a scale of 1 to 5 in ascending order of supervisory concern. The Problem List is not divulged to the public. No advance notice is given to the public when a financial institution is closed. Problem Institutions Failed Institutions -------------------- ------------------- Year Number Assets (Mil) Number Assets (Mil) ---- ------ ------------ ------ ------------ Q1'09 305 $220,047 21 $9,498 2008 252 159,405 25 371,945 2007 76 22,189 3 2,615 2006 50 8,265 0 0 2005 52 6,607 0 0 2004 80 28,250 4 170 A copy of the FDIC's Quarterly Banking Profile for the first quarter of 2009 is available for free at: http://bankrupt.com/misc/FDIC_Mar3109_QBP.pdf * Default Rate to Peak at 12.7% in U.S., Moody's Says ----------------------------------------------------- The global speculative-grade corporate default rate rose to 10.7% in July from a revised 10.3% in June, said Moody's Investors Service in an August 6 report. A year ago, the global default rate stood at only 2.3%. July's default rate surpassed the 2002 peak of 10.4% but was below 1991's peak of 12.2%. The ratings agency's default rate forecasting model now predicts that the global speculative-grade default rate will rise to a peak of 12.2% in the fourth quarter of this year and then decline sharply to 4.4% by July 2010. "As 2009 has progressed, Moody's model forecasts for the peak default rate in this cycle have fallen significantly as high yield bond spreads have narrowed. This narrowing of spreads and the recent re-opening of the high yield bond market is allowing many issuers to refinance their debt who might otherwise have defaulted," said Moody's Director of Default Research Kenneth Emery. A total of 16 Moody's-rated corporate debt issuers defaulted in July, which sends the year-to-date default count to 183. In comparison, only 46 defaults were recorded in the first seven months of 2008. The U.S. speculative-grade default rate increased to 11.5% in July from a revised 11.2% in June. At this time last year, the U.S. default rate stood at 2.7%. Measured on a dollar volume basis, the global speculative-grade bond default rate closed at 16.9% in July, up from June's revised level of 16.4%. Last year, the global dollar-weighted default rate was much lower at 1.5%. Moody's default rate forecasting model now predicts that the U.S. speculative-grade default rate will peak at 12.7% in 2009's final quarter, while the European speculative-grade default rate is expected to peak at 12.0%. A year from now, the U.S. and European default rates are expected to ease to 3.8% and 8.7%, respectively. Among U.S. speculative-grade issuers, the dollar-weighted bond default rate ended at 18.8% in July, up from a revised level of 18.3% in June. The comparable rate was 1.6% in July 2008. Across industries over the coming year, Moody's default rate model indicates that the Automotive Sector will be the most troubled in the U.S. and the Durable Consumer Goods sector will have the highest default rate in Europe. Moody's speculative-grade corporate distress index -- which measures the percentage of rated issuers that have debt trading at distressed levels -- from June's revised level of 37.0% to 34.6% in July. A year ago, the index was much lower at 18.3%. Across regions, 11 of July's defaults were by North American issuers. The remaining defaulters were from Europe, Asia and South America. In the leveraged loan market, a total of seven Moody's-rated loan defaulters defaulted in July. All are North American companies, with the only exception UK-based CEVA Group plc. Last year, six loan issuers defaulted in July, all by North American issuers. The trailing 12-month U.S. leveraged loan default rate edged lower from 8.5% in June to 8.4% in July. A year ago, the loan default rate was 2.8%. Moody's "July Default Report" is now available -- as are Moody's other default research reports -- in the Ratings Analytics section of Moodys.com. * Spread on 30-Year Interest-Rate Swap Edges Toward Zero Mark ------------------------------------------------------------- According to Carla Main at Bloomberg, the spread between the rate to swap floating for fixed-rate payments for 30 years and the yield on similar maturity Treasuries reached the smallest since June as trading normalizes after the worst credit seizure in decades. The 30-year swap spread touched minus 7.47 basis points yesterday, the closest to positive since it was negative 5 basis points on June 5. The 30-year swap rate broke a historical pattern in October and dipped below the 30-year Treasury yield for the first time, resulting in a negative swap spread. The move came amid a shortage of arbitrage capital as dealers cleaned up balance sheets and there was hedging related to losses on other derivatives contracts. * BOND PRICING -- For the Week From August 3 to 7, 2009 ------------------------------------------------------- Company Coupon Maturity Bid Price ------- ------ -------- --------- 155 E TROPICANA 8.75% 4/1/2012 19.90 ABITIBI-CONS FIN 7.88% 8/1/2009 8.00 ACCURIDE CORP 8.50% 2/1/2015 18.00 ADVANTA CAP TR 8.99% 12/17/2026 20.25 AHERN RENTALS 9.25% 8/15/2013 46.50 ALERIS INTL INC 9.00% 12/15/2014 0.06 ALERIS INTL INC 10.00% 12/15/2016 1.60 AMBAC INC 9.38% 8/1/2011 46.00 AMBASSADORS INTL 3.75% 4/15/2027 27.38 AMBASSADORS INTL 3.75% 4/15/2027 28.00 AMER AXLE & MFG 5.25% 2/11/2014 52.25 AMER GENL FIN 3.05% 6/15/2010 60.50 AMER GENL FIN 3.40% 10/15/2009 92.25 AMER GENL FIN 3.85% 9/15/2009 92.65 AMER GENL FIN 3.90% 4/15/2011 60.08 AMER GENL FIN 4.10% 1/15/2010 83.55 AMER GENL FIN 4.20% 8/15/2009 98.68 AMER GENL FIN 4.20% 10/15/2010 57.00 AMER GENL FIN 4.25% 10/15/2010 59.00 AMER GENL FIN 4.30% 9/15/2009 89.50 AMER GENL FIN 4.35% 3/15/2010 82.00 AMER GENL FIN 4.60% 10/15/2010 45.00 AMER GENL FIN 4.75% 8/15/2010 62.10 AMER GENL FIN 5.00% 9/15/2009 95.00 AMER GENL FIN 5.00% 9/15/2010 70.16 AMER GENL FIN 5.00% 10/15/2010 65.00 AMER GENL FIN 5.00% 3/15/2012 43.71 AMER GENL FIN 5.20% 6/15/2010 77.88 AMER GENL FIN 5.40% 6/15/2011 53.79 AMER GENL FIN 8.13% 8/15/2009 99.25 AMER GENL FIN 8.38% 8/15/2011 60.00 AMER MEDIA OPER 8.88% 1/15/2011 48.75 AMR CORP 9.00% 8/1/2012 58.00 AMR CORP 10.40% 3/10/2011 43.20 AMR CORP 10.45% 3/10/2011 47.00 ANTHRACITE CAP 11.75% 9/1/2027 14.77 ANTHRACITE CAP 11.75% 9/1/2027 14.39 APPLETON PAPERS 9.75% 6/15/2014 38.00 ARCO CHEMICAL CO 10.25% 11/1/2010 29.00 BALLY TOTAL FITN 13.00% 7/15/2011 1.87 BANK NEW ENGLAND 8.75% 4/1/1999 10.56 BANK NEW ENGLAND 9.88% 9/15/1999 10.56 BANKUNITED FINL 3.13% 3/1/2034 6.00 BARRINGTON BROAD 10.50% 8/15/2014 33.50 BELL MICROPRODUC 3.75% 3/5/2024 50.00 BLOCKBUSTER INC 9.00% 9/1/2012 45.00 BOWATER INC 6.50% 6/15/2013 17.75 BOWATER INC 9.00% 8/1/2009 18.25 BOWATER INC 9.38% 12/15/2021 15.00 BOWATER INC 9.50% 10/15/2012 16.70 BROOKSTONE CO 12.00% 10/15/2012 49.20 CALLON PETROLEUM 9.75% 12/8/2010 33.00 CAPMARK FINL GRP 7.88% 5/10/2012 24.75 CAPMARK FINL GRP 8.30% 5/10/2017 24.00 CARAUSTAR INDS 7.25% 5/1/2010 50.38 CCH I LLC 9.92% 4/1/2014 0.75 CCH I LLC 10.00% 5/15/2014 0.50 CCH I LLC 13.50% 1/15/2014 1.38 CCH I/CCH I CP 11.00% 10/1/2015 13.50 CCH I/CCH I CP 11.00% 10/1/2015 12.50 CHAMPION ENTERPR 2.75% 11/1/2037 14.08 CHARTER COMM HLD 10.00% 5/15/2011 1.00 CHARTER COMM HLD 13.50% 1/15/2011 1.00 CHARTER COMM INC 6.50% 10/1/2027 42.50 CHENIERE ENERGY 2.25% 8/1/2012 36.50 CIT GROUP INC 3.85% 11/15/2009 59.00 CIT GROUP INC 3.95% 12/15/2009 53.50 CIT GROUP INC 4.00% 9/15/2009 70.50 CIT GROUP INC 4.05% 2/15/2010 46.84 CIT GROUP INC 4.13% 11/3/2009 69.97 CIT GROUP INC 4.25% 2/1/2010 63.00 CIT GROUP INC 4.25% 9/15/2010 50.00 CIT GROUP INC 4.30% 3/15/2010 41.20 CIT GROUP INC 4.30% 6/15/2010 28.00 CIT GROUP INC 4.35% 6/15/2010 41.00 CIT GROUP INC 4.40% 9/15/2009 80.00 CIT GROUP INC 4.45% 5/15/2010 46.50 CIT GROUP INC 4.60% 8/15/2010 48.25 CIT GROUP INC 4.63% 11/15/2009 63.00 CIT GROUP INC 4.75% 12/15/2010 60.00 CIT GROUP INC 4.80% 12/15/2009 54.10 CIT GROUP INC 4.85% 12/15/2009 63.49 CIT GROUP INC 4.85% 3/15/2010 49.00 CIT GROUP INC 4.85% 12/15/2011 46.50 CIT GROUP INC 4.90% 3/15/2010 46.25 CIT GROUP INC 4.90% 12/15/2010 48.00 CIT GROUP INC 4.90% 3/15/2011 48.00 CIT GROUP INC 5.00% 11/15/2009 72.25 CIT GROUP INC 5.00% 11/15/2009 70.10 CIT GROUP INC 5.00% 11/15/2009 65.33 CIT GROUP INC 5.00% 12/15/2010 41.00 CIT GROUP INC 5.00% 3/15/2011 44.00 CIT GROUP INC 5.00% 3/15/2011 42.75 CIT GROUP INC 5.00% 12/15/2011 46.50 CIT GROUP INC 5.00% 3/15/2012 42.50 CIT GROUP INC 5.00% 3/15/2012 45.00 CIT GROUP INC 5.05% 2/15/2010 50.15 CIT GROUP INC 5.05% 3/15/2010 53.00 CIT GROUP INC 5.05% 11/15/2010 51.55 CIT GROUP INC 5.05% 12/15/2010 54.50 CIT GROUP INC 5.05% 3/15/2011 53.00 CIT GROUP INC 5.15% 2/15/2010 54.00 CIT GROUP INC 5.15% 3/15/2010 58.00 CIT GROUP INC 5.15% 2/15/2011 49.00 CIT GROUP INC 5.15% 2/15/2011 50.00 CIT GROUP INC 5.15% 4/15/2011 44.25 CIT GROUP INC 5.15% 2/15/2012 43.50 CIT GROUP INC 5.20% 11/3/2010 59.78 CIT GROUP INC 5.20% 9/15/2011 44.00 CIT GROUP INC 5.20% 11/15/2011 49.50 CIT GROUP INC 5.25% 5/15/2010 45.04 CIT GROUP INC 5.25% 9/15/2010 42.00 CIT GROUP INC 5.25% 11/15/2010 52.00 CIT GROUP INC 5.25% 11/15/2010 49.00 CIT GROUP INC 5.25% 11/15/2010 47.22 CIT GROUP INC 5.25% 12/15/2010 57.00 CIT GROUP INC 5.25% 11/15/2011 42.75 CIT GROUP INC 5.25% 11/15/2011 40.00 CIT GROUP INC 5.25% 11/15/2011 47.00 CIT GROUP INC 5.25% 2/15/2012 43.00 CIT GROUP INC 5.30% 6/15/2010 48.00 CIT GROUP INC 5.35% 6/15/2011 42.10 CIT GROUP INC 5.35% 8/15/2011 43.00 CIT GROUP INC 5.45% 8/15/2010 48.50 CIT GROUP INC 5.50% 8/15/2010 50.13 CIT GROUP INC 5.50% 11/15/2012 41.85 CIT GROUP INC 5.60% 4/27/2011 60.00 CIT GROUP INC 5.75% 8/15/2012 42.75 CIT GROUP INC 5.80% 7/28/2011 59.00 CIT GROUP INC 6.10% 3/15/2067 14.50 CIT GROUP INC 6.25% 9/15/2009 90.26 CIT GROUP INC 6.25% 9/15/2009 87.25 CIT GROUP INC 6.25% 12/15/2009 52.00 CIT GROUP INC 6.25% 2/15/2010 58.00 CIT GROUP INC 6.50% 12/15/2009 60.05 CIT GROUP INC 6.50% 2/15/2010 57.00 CIT GROUP INC 6.50% 3/15/2010 55.00 CIT GROUP INC 6.50% 12/15/2010 54.00 CIT GROUP INC 6.50% 1/15/2011 54.50 CIT GROUP INC 6.50% 3/15/2011 43.00 CIT GROUP INC 6.60% 2/15/2011 54.00 CIT GROUP INC 6.75% 3/15/2011 48.00 CIT GROUP INC 6.88% 11/1/2009 68.50 CIT GROUP INC 7.00% 2/15/2012 40.00 CIT GROUP INC 7.25% 2/15/2012 49.50 CIT GROUP INC 7.25% 3/15/2012 45.75 CIT GROUP INC 7.60% 2/15/2013 42.75 CIT GROUP INC 7.90% 3/15/2013 42.10 CIT GROUP INC 12.00% 12/18/2018 19.00 CITADEL BROADCAS 4.00% 2/15/2011 7.00 CLEAR CHANNEL 4.40% 5/15/2011 38.10 CLEAR CHANNEL 4.50% 1/15/2010 73.00 CLEAR CHANNEL 4.90% 5/15/2015 23.25 CLEAR CHANNEL 5.00% 3/15/2012 38.00 CLEAR CHANNEL 5.50% 9/15/2014 25.50 CLEAR CHANNEL 5.75% 1/15/2013 33.50 CLEAR CHANNEL 6.25% 3/15/2011 51.00 CLEAR CHANNEL 6.88% 6/15/2018 20.00 CLEAR CHANNEL 7.65% 9/15/2010 68.00 CLEAR CHANNEL 10.75% 8/1/2016 34.00 CLEAR CHANNEL 10.75% 8/1/2016 29.00 COLONIAL BANK 9.38% 6/1/2011 55.00 COMPREHENS CARE 7.50% 4/15/2010 75.25 COMPUCREDIT 3.63% 5/30/2025 31.30 COOPER-STANDARD 7.00% 12/15/2012 27.00 COOPER-STANDARD 8.38% 12/15/2014 6.00 CREDENCE SYSTEM 3.50% 5/15/2010 50.50 DAYTON SUPERIOR 13.00% 6/15/2009 32.75 DECODE GENETICS 3.50% 4/15/2011 7.50 DECODE GENETICS 3.50% 4/15/2011 10.84 DEX MEDIA INC 8.00% 11/15/2013 14.00 DEX MEDIA INC 9.00% 11/15/2013 19.06 DEX MEDIA INC 9.00% 11/15/2013 15.19 DEX MEDIA WEST 9.88% 8/15/2013 19.00 DOWNEY FINANCIAL 6.50% 7/1/2014 8.25 DUNE ENERGY INC 10.50% 6/1/2012 48.25 EDDIE BAUER HLDG 5.25% 4/1/2014 12.00 FAIRPOINT COMMUN 13.13% 4/1/2018 19.00 FAIRPOINT COMMUN 13.13% 4/1/2018 30.75 FCX-CALL08/09 6.88% 2/1/2014 102.94 FIBERTOWER CORP 9.00% 11/15/2012 53.00 FINLAY FINE JWLY 8.38% 6/1/2012 0.50 FLEETWOOD ENTERP 14.00% 12/15/2011 30.25 FORD MOTOR CRED 4.90% 10/20/2009 81.67 FORD MOTOR CRED 5.00% 8/20/2009 99.13 FORD MOTOR CRED 5.25% 1/20/2010 79.49 FORD MOTOR CRED 5.75% 1/20/2010 78.74 FORD MOTOR CRED 7.50% 8/20/2010 71.86 FRANKLIN BANK 4.00% 5/1/2027 0.00 GENERAL MOTORS 7.13% 7/15/2013 16.50 GENERAL MOTORS 7.40% 9/1/2025 14.50 GENERAL MOTORS 7.70% 4/15/2016 14.56 GENERAL MOTORS 8.10% 6/15/2024 12.90 GENERAL MOTORS 8.25% 7/15/2023 14.80 GENERAL MOTORS 8.38% 7/15/2033 15.19 GENERAL MOTORS 8.80% 3/1/2021 15.08 GENERAL MOTORS 9.40% 7/15/2021 15.13 GENERAL MOTORS 9.45% 11/1/2011 8.25 GGP LP 3.98% 4/15/2027 33.03 GMAC LLC 5.10% 8/15/2009 99.60 GMAC LLC 7.20% 8/15/2009 99.50 HAIGHTS CROSS CO 12.50% 8/15/2011 7.25 HAIGHTS CROSS OP 11.75% 8/15/2011 39.50 HAWAIIAN TELCOM 9.75% 5/1/2013 1.75 HERBST GAMING 7.00% 11/15/2014 1.50 HERBST GAMING 8.13% 6/1/2012 1.45 HILTON HOTELS 7.20% 12/15/2009 90.13 HINES NURSERIES 10.25% 10/1/2011 14.00 IDEARC INC 8.00% 11/15/2016 5.00 INN OF THE MOUNT 12.00% 11/15/2010 40.13 INTCOMEX INC 11.75% 1/15/2011 40.00 INTL LEASE FIN 3.75% 8/15/2009 99.25 INTL LEASE FIN 4.00% 8/15/2009 99.03 INTL LEASE FIN 4.25% 9/15/2009 94.50 INTL LEASE FIN 4.38% 8/15/2009 99.71 INTL LEASE FIN 4.50% 8/15/2009 99.33 INTL LEASE FIN 4.55% 9/15/2009 96.10 INTL LEASE FIN 5.35% 8/15/2009 99.00 ISTAR FINANCIAL 5.13% 4/1/2011 56.00 ISTAR FINANCIAL 5.15% 3/1/2012 42.14 ISTAR FINANCIAL 5.38% 4/15/2010 76.50 ISTAR FINANCIAL 5.50% 6/15/2012 44.00 ISTAR FINANCIAL 5.65% 9/15/2011 54.00 ISTAR FINANCIAL 5.80% 3/15/2011 62.03 ISTAR FINANCIAL 6.00% 12/15/2010 58.00 JAZZ TECHNOLOGIE 8.00% 12/31/2011 55.00 JOHN HANCOCK LIF 3.65% 8/15/2009 99.30 KAISER ALUM&CHEM 12.75% 2/1/2003 4.00 KEYSTONE AUTO OP 9.75% 11/1/2013 32.13 KNIGHT RIDDER 6.88% 3/15/2029 16.10 KNIGHT RIDDER 7.13% 6/1/2011 46.00 KNIGHT RIDDER 7.15% 11/1/2027 23.00 LANDAMERICA 3.13% 11/15/2033 22.50 LANDAMERICA 3.25% 5/15/2034 22.50 LASALLE FNDG LLC 4.00% 8/15/2009 99.63 LAZYDAYS RV 11.75% 5/15/2012 15.00 LEHMAN BROS HLDG 2.00% 10/31/2012 11.46 LEHMAN BROS HLDG 4.00% 8/3/2009 9.00 LEHMAN BROS HLDG 4.38% 11/30/2010 16.50 LEHMAN BROS HLDG 4.50% 7/26/2010 17.00 LEHMAN BROS HLDG 4.50% 8/3/2011 12.84 LEHMAN BROS HLDG 4.70% 3/6/2013 6.95 LEHMAN BROS HLDG 4.80% 3/13/2014 17.50 LEHMAN BROS HLDG 4.80% 6/24/2023 11.50 LEHMAN BROS HLDG 5.00% 1/14/2011 17.20 LEHMAN BROS HLDG 5.00% 1/22/2013 11.25 LEHMAN BROS HLDG 5.00% 2/11/2013 9.00 LEHMAN BROS HLDG 5.00% 3/27/2013 6.95 LEHMAN BROS HLDG 5.00% 8/3/2014 9.00 LEHMAN BROS HLDG 5.00% 5/28/2023 10.00 LEHMAN BROS HLDG 5.00% 5/30/2023 10.25 LEHMAN BROS HLDG 5.00% 6/17/2023 10.25 LEHMAN BROS HLDG 5.10% 1/28/2013 8.06 LEHMAN BROS HLDG 5.10% 2/15/2020 11.50 LEHMAN BROS HLDG 5.20% 5/13/2020 9.00 LEHMAN BROS HLDG 5.25% 2/6/2012 15.75 LEHMAN BROS HLDG 5.25% 1/30/2014 8.23 LEHMAN BROS HLDG 5.25% 3/5/2018 7.00 LEHMAN BROS HLDG 5.25% 9/14/2019 9.00 LEHMAN BROS HLDG 5.25% 5/20/2023 10.00 LEHMAN BROS HLDG 5.35% 2/25/2018 10.13 LEHMAN BROS HLDG 5.35% 3/13/2020 7.75 LEHMAN BROS HLDG 5.35% 6/14/2030 8.75 LEHMAN BROS HLDG 5.38% 5/6/2023 10.50 LEHMAN BROS HLDG 5.40% 3/6/2020 10.55 LEHMAN BROS HLDG 5.40% 3/20/2020 12.13 LEHMAN BROS HLDG 5.40% 3/30/2029 10.40 LEHMAN BROS HLDG 5.40% 6/21/2030 10.51 LEHMAN BROS HLDG 5.45% 3/15/2025 12.00 LEHMAN BROS HLDG 5.45% 4/6/2029 10.40 LEHMAN BROS HLDG 5.45% 2/22/2030 11.13 LEHMAN BROS HLDG 5.45% 7/19/2030 14.00 LEHMAN BROS HLDG 5.45% 9/20/2030 10.75 LEHMAN BROS HLDG 5.50% 4/4/2016 16.55 LEHMAN BROS HLDG 5.50% 2/4/2018 10.00 LEHMAN BROS HLDG 5.50% 2/19/2018 8.89 LEHMAN BROS HLDG 5.50% 11/4/2018 9.75 LEHMAN BROS HLDG 5.50% 2/27/2020 10.75 LEHMAN BROS HLDG 5.50% 3/14/2023 10.30 LEHMAN BROS HLDG 5.50% 4/8/2023 8.78 LEHMAN BROS HLDG 5.50% 4/15/2023 11.30 LEHMAN BROS HLDG 5.50% 4/23/2023 8.00 LEHMAN BROS HLDG 5.50% 8/5/2023 9.97 LEHMAN BROS HLDG 5.50% 10/7/2023 11.00 LEHMAN BROS HLDG 5.50% 1/27/2029 11.30 LEHMAN BROS HLDG 5.50% 2/3/2029 8.20 LEHMAN BROS HLDG 5.50% 8/2/2030 9.75 LEHMAN BROS HLDG 5.55% 2/11/2018 9.50 LEHMAN BROS HLDG 5.55% 3/9/2029 9.25 LEHMAN BROS HLDG 5.55% 1/25/2030 11.30 LEHMAN BROS HLDG 5.55% 9/27/2030 11.35 LEHMAN BROS HLDG 5.55% 12/31/2034 11.35 LEHMAN BROS HLDG 5.60% 1/22/2018 11.35 LEHMAN BROS HLDG 5.60% 9/23/2023 9.00 LEHMAN BROS HLDG 5.60% 2/17/2029 10.50 LEHMAN BROS HLDG 5.60% 2/24/2029 10.40 LEHMAN BROS HLDG 5.60% 3/2/2029 8.80 LEHMAN BROS HLDG 5.60% 2/25/2030 11.30 LEHMAN BROS HLDG 5.60% 5/3/2030 9.00 LEHMAN BROS HLDG 5.63% 1/24/2013 16.50 LEHMAN BROS HLDG 5.63% 3/15/2030 10.10 LEHMAN BROS HLDG 5.65% 11/23/2029 4.00 LEHMAN BROS HLDG 5.65% 8/16/2030 11.35 LEHMAN BROS HLDG 5.65% 12/31/2034 8.00 LEHMAN BROS HLDG 5.70% 1/28/2018 11.50 LEHMAN BROS HLDG 5.70% 2/10/2029 10.18 LEHMAN BROS HLDG 5.70% 4/13/2029 8.00 LEHMAN BROS HLDG 5.70% 9/7/2029 11.24 LEHMAN BROS HLDG 5.70% 12/14/2029 9.87 LEHMAN BROS HLDG 5.75% 4/25/2011 16.50 LEHMAN BROS HLDG 5.75% 7/18/2011 14.00 LEHMAN BROS HLDG 5.75% 5/17/2013 15.75 LEHMAN BROS HLDG 5.75% 1/3/2017 2.00 LEHMAN BROS HLDG 5.75% 3/27/2023 11.25 LEHMAN BROS HLDG 5.75% 10/15/2023 10.50 LEHMAN BROS HLDG 5.75% 10/21/2023 10.30 LEHMAN BROS HLDG 5.75% 11/12/2023 12.38 LEHMAN BROS HLDG 5.75% 11/25/2023 10.55 LEHMAN BROS HLDG 5.75% 12/16/2028 12.00 LEHMAN BROS HLDG 5.75% 12/23/2028 11.30 LEHMAN BROS HLDG 5.75% 8/24/2029 10.10 LEHMAN BROS HLDG 5.75% 9/14/2029 11.50 LEHMAN BROS HLDG 5.75% 10/12/2029 8.42 LEHMAN BROS HLDG 5.75% 3/29/2030 10.40 LEHMAN BROS HLDG 5.80% 9/3/2020 8.98 LEHMAN BROS HLDG 5.80% 10/25/2030 9.25 LEHMAN BROS HLDG 5.85% 11/8/2030 8.75 LEHMAN BROS HLDG 5.88% 11/15/2017 16.10 LEHMAN BROS HLDG 5.90% 5/4/2029 11.50 LEHMAN BROS HLDG 5.90% 2/7/2031 10.00 LEHMAN BROS HLDG 5.95% 12/20/2030 8.50 LEHMAN BROS HLDG 6.00% 7/19/2012 18.38 LEHMAN BROS HLDG 6.00% 12/18/2015 8.06 LEHMAN BROS HLDG 6.00% 2/12/2018 11.50 LEHMAN BROS HLDG 6.00% 1/22/2020 8.00 LEHMAN BROS HLDG 6.00% 2/12/2020 10.00 LEHMAN BROS HLDG 6.00% 1/29/2021 9.00 LEHMAN BROS HLDG 6.00% 10/23/2028 6.51 LEHMAN BROS HLDG 6.00% 11/18/2028 10.00 LEHMAN BROS HLDG 6.00% 5/11/2029 11.30 LEHMAN BROS HLDG 6.00% 7/20/2029 11.50 LEHMAN BROS HLDG 6.00% 3/21/2031 8.06 LEHMAN BROS HLDG 6.00% 4/30/2034 11.75 LEHMAN BROS HLDG 6.00% 7/30/2034 11.35 LEHMAN BROS HLDG 6.00% 2/21/2036 11.50 LEHMAN BROS HLDG 6.00% 2/24/2036 11.35 LEHMAN BROS HLDG 6.00% 2/12/2037 10.55 LEHMAN BROS HLDG 6.05% 6/29/2029 11.00 LEHMAN BROS HLDG 6.10% 8/12/2023 9.75 LEHMAN BROS HLDG 6.15% 4/11/2031 9.50 LEHMAN BROS HLDG 6.20% 9/26/2014 17.00 LEHMAN BROS HLDG 6.20% 6/15/2027 14.00 LEHMAN BROS HLDG 6.20% 5/25/2029 11.35 LEHMAN BROS HLDG 6.25% 2/5/2021 10.25 LEHMAN BROS HLDG 6.25% 2/22/2023 8.42 LEHMAN BROS HLDG 6.40% 10/11/2022 9.00 LEHMAN BROS HLDG 6.50% 7/19/2017 0.03 LEHMAN BROS HLDG 6.50% 2/28/2023 10.00 LEHMAN BROS HLDG 6.50% 3/6/2023 10.28 LEHMAN BROS HLDG 6.50% 10/18/2027 9.00 LEHMAN BROS HLDG 6.50% 10/25/2027 9.00 LEHMAN BROS HLDG 6.50% 11/15/2032 9.45 LEHMAN BROS HLDG 6.50% 1/17/2033 10.76 LEHMAN BROS HLDG 6.50% 12/22/2036 9.75 LEHMAN BROS HLDG 6.50% 2/13/2037 11.00 LEHMAN BROS HLDG 6.50% 6/21/2037 12.13 LEHMAN BROS HLDG 6.50% 7/13/2037 9.63 LEHMAN BROS HLDG 6.60% 10/3/2022 10.26 LEHMAN BROS HLDG 6.63% 1/18/2012 18.69 LEHMAN BROS HLDG 6.63% 7/27/2027 9.00 LEHMAN BROS HLDG 6.75% 12/28/2017 0.01 LEHMAN BROS HLDG 6.75% 7/1/2022 9.50 LEHMAN BROS HLDG 6.75% 11/22/2027 9.00 LEHMAN BROS HLDG 6.75% 3/11/2033 9.35 LEHMAN BROS HLDG 6.75% 10/26/2037 11.75 LEHMAN BROS HLDG 6.80% 9/7/2032 8.00 LEHMAN BROS HLDG 6.85% 8/16/2032 10.13 LEHMAN BROS HLDG 6.88% 5/2/2018 16.25 LEHMAN BROS HLDG 6.88% 7/17/2037 0.01 LEHMAN BROS HLDG 6.90% 9/1/2032 5.55 LEHMAN BROS HLDG 7.00% 4/16/2019 12.50 LEHMAN BROS HLDG 7.00% 5/12/2023 11.00 LEHMAN BROS HLDG 7.00% 9/27/2027 16.65 LEHMAN BROS HLDG 7.00% 10/4/2032 9.00 LEHMAN BROS HLDG 7.00% 7/27/2037 10.51 LEHMAN BROS HLDG 7.00% 9/28/2037 10.26 LEHMAN BROS HLDG 7.00% 11/16/2037 9.63 LEHMAN BROS HLDG 7.00% 12/28/2037 10.13 LEHMAN BROS HLDG 7.00% 1/31/2038 10.00 LEHMAN BROS HLDG 7.00% 2/1/2038 9.37 LEHMAN BROS HLDG 7.00% 2/7/2038 9.00 LEHMAN BROS HLDG 7.00% 2/8/2038 11.50 LEHMAN BROS HLDG 7.00% 4/22/2038 11.00 LEHMAN BROS HLDG 7.05% 2/27/2038 11.38 LEHMAN BROS HLDG 7.10% 3/25/2038 9.00 LEHMAN BROS HLDG 7.25% 4/29/2038 9.00 LEHMAN BROS HLDG 7.35% 5/6/2038 12.13 LEHMAN BROS HLDG 7.88% 8/15/2010 18.00 LEHMAN BROS HLDG 8.00% 3/5/2022 7.75 LEHMAN BROS HLDG 8.50% 8/1/2015 16.25 LEHMAN BROS HLDG 8.50% 6/15/2022 8.00 LEHMAN BROS HLDG 8.75% 12/21/2021 11.00 LEHMAN BROS HLDG 8.75% 2/6/2023 7.00 LEHMAN BROS HLDG 8.80% 3/1/2015 16.22 LEHMAN BROS HLDG 8.92% 2/16/2017 12.00 LEHMAN BROS HLDG 9.00% 12/28/2022 11.00 LEHMAN BROS HLDG 9.50% 12/28/2022 11.88 LEHMAN BROS HLDG 9.50% 1/30/2023 11.00 LEHMAN BROS HLDG 9.50% 2/27/2023 11.88 LEHMAN BROS HLDG 10.00% 3/13/2023 12.25 LEHMAN BROS HLDG 10.38% 5/24/2024 7.50 LEHMAN BROS HLDG 11.00% 10/25/2017 11.50 LEHMAN BROS HLDG 11.00% 6/22/2022 8.19 LEHMAN BROS HLDG 11.00% 7/18/2022 10.50 LEHMAN BROS HLDG 11.50% 9/26/2022 10.50 LEINER HEALTH 11.00% 6/1/2012 2.00 LOCAL INSIGHT 11.00% 12/1/2017 25.00 LTX-CREDENCE 3.50% 5/15/2011 40.00 MAJESTIC STAR 9.50% 10/15/2010 61.75 MAJESTIC STAR 9.75% 1/15/2011 8.88 MCCLATCHY CO 15.75% 7/15/2014 50.13 MERISANT CO 9.50% 7/15/2013 12.00 MERRILL LYNCH 9.00% 3/9/2011 94.25 METALDYNE CORP 11.00% 6/15/2012 2.31 MFCCN-CALL08/09 5.70% 8/15/2029 98.00 MILLENNIUM AMER 7.63% 11/15/2026 7.50 MORRIS PUBLISH 7.00% 8/1/2013 8.00 NCI BLDG SYSTEMS 2.13% 11/15/2024 69.00 NEFF CORP 10.00% 6/1/2015 8.00 NETWORK COMMUNIC 10.75% 12/1/2013 35.25 NEW PLAN EXCEL 7.40% 9/15/2009 85.45 NEW PLAN EXCEL 7.50% 7/30/2029 18.00 NEW PLAN REALTY 7.68% 11/2/2026 20.00 NEW PLAN REALTY 7.97% 8/14/2026 18.31 NEWPAGE CORP 10.00% 5/1/2012 48.00 NEWPAGE CORP 12.00% 5/1/2013 32.50 NORTH ATL TRADNG 9.25% 3/1/2012 32.91 NTK HOLDINGS INC 0.00% 3/1/2014 5.25 OSCIENT PHARM 12.50% 1/15/2011 32.20 OUTBOARD MARINE 9.13% 4/15/2017 3.50 PAC-WEST TELECOM 13.50% 2/1/2009 4.00 PACKAGING DYNAMI 10.00% 5/1/2016 31.25 PALM HARBOR 3.25% 5/15/2024 33.25 PANOLAM INDUSTRI 10.75% 10/1/2013 5.00 PERKINS & MARIE 14.00% 5/31/2013 52.50 PLY GEM INDS 9.00% 2/15/2012 22.00 PMI CAPITAL I 8.31% 2/1/2027 14.88 POPE & TALBOT 8.38% 6/1/2013 1.00 PRIMUS TELECOM 8.00% 1/15/2014 11.75 PRTL-RESTR07/09 14.25% 5/20/2011 63.00 QUALITY DISTRIBU 9.00% 11/15/2010 58.75 RADIO ONE INC 6.38% 2/15/2013 25.00 RADIO ONE INC 8.88% 7/1/2011 42.63 RAFAELLA APPAREL 11.25% 6/15/2011 23.00 RATHGIBSON INC 11.25% 2/15/2014 35.50 RAYOVAC CORP 8.50% 10/1/2013 36.00 READER'S DIGEST 9.00% 2/15/2017 6.00 REALOGY CORP 12.38% 4/15/2015 33.50 REALOGY CORP 12.38% 4/15/2015 34.00 RESIDENTIAL CAP 8.00% 2/22/2011 55.00 RESIDENTIAL CAP 8.38% 6/30/2010 73.10 RESIDENTIAL CAP 8.50% 6/1/2012 55.00 RH DONNELLEY 6.88% 1/15/2013 6.50 RH DONNELLEY 6.88% 1/15/2013 7.00 RH DONNELLEY 6.88% 1/15/2013 7.00 RH DONNELLEY 8.88% 1/15/2016 4.00 RH DONNELLEY 8.88% 10/15/2017 7.00 ROTECH HEALTHCA 9.50% 4/1/2012 5.00 SALEM COMM HLDG 7.75% 12/15/2010 54.00 SECURITY BENEFIT 7.45% 10/1/2033 8.38 SECURITY BENEFIT 8.75% 5/15/2016 10.50 SILVERLEAF RES 8.00% 4/1/2010 73.50 SIX FLAGS INC 4.50% 5/15/2015 11.50 SIX FLAGS INC 9.63% 6/1/2014 9.00 SIX FLAGS INC 9.75% 4/15/2013 9.00 SPACEHAB INC 5.50% 10/15/2010 45.00 SPHERIS INC 11.00% 12/15/2012 40.50 STALLION OILFIEL 9.75% 2/1/2015 34.75 STANLEY-MARTIN 9.75% 8/15/2015 25.25 STATION CASINOS 6.00% 4/1/2012 33.17 STATION CASINOS 6.50% 2/1/2014 3.85 STATION CASINOS 6.63% 3/15/2018 2.25 STATION CASINOS 6.88% 3/1/2016 1.50 TEKNI-PLEX INC 12.75% 6/15/2010 58.15 THORNBURG MTG 8.00% 5/15/2013 2.00 TIMES MIRROR CO 6.61% 9/15/2027 4.50 TIMES MIRROR CO 7.25% 3/1/2013 6.00 TIMES MIRROR CO 7.50% 7/1/2023 4.00 TOUSA INC 9.00% 7/1/2010 10.00 TOUSA INC 9.00% 7/1/2010 5.00 TOUSA INC 10.38% 7/1/2012 0.10 TRANSMERIDIAN EX 12.00% 12/15/2010 6.75 TRIBUNE CO 4.88% 8/15/2010 8.00 TRIBUNE CO 5.25% 8/15/2015 3.00 TRIBUNE CO 5.67% 12/8/2008 4.00 TRONOX WORLDWIDE 9.50% 12/1/2012 17.00 TRUMP ENTERTNMNT 8.50% 6/1/2015 7.00 UAL CORP 4.50% 6/30/2021 47.00 UAL CORP 5.00% 2/1/2021 55.00 USFREIGHTWAYS 8.50% 4/15/2010 38.00 VERASUN ENERGY 9.38% 6/1/2017 13.20 VERENIUM CORP 5.50% 4/1/2027 22.50 VICORP RESTAURNT 10.50% 4/15/2011 0.01 VION PHARM INC 7.75% 2/15/2012 41.70 VISTEON CORP 7.00% 3/10/2014 3.00 VITESSE SEMICOND 1.50% 10/1/2024 59.00 WASH MUT BANK FA 5.13% 1/15/2015 0.13 WASH MUT BANK NV 5.55% 6/16/2010 24.00 WASH MUTUAL INC 8.25% 4/1/2010 65.20 WCI COMMUNITIES 4.00% 8/5/2023 1.56 WCI COMMUNITIES 6.63% 3/15/2015 4.00 WCI COMMUNITIES 7.88% 10/1/2013 1.00 WII COMPONENTS 10.00% 2/15/2012 46.00 WILLIAM LYON 7.63% 12/15/2012 32.63 WILLIAM LYONS 7.50% 2/15/2014 32.10 WILLIAM LYONS 7.63% 12/15/2012 36.50 WILLIAM LYONS 10.75% 4/1/2013 36.00 WISE METALS GRP 10.25% 5/15/2012 47.00 YELLOW CORP 5.00% 8/8/2023 29.00 YOUNG BROADCSTNG 10.00% 3/1/2011 2.00 ********* 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. Danilo Munnoz, Joseph Medel C. Martirez, Denise Marie Varquez, Philline Reluya, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2009. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***