/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/120316.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, March 16, 2012, Vol. 16, No. 75 Headlines AES EASTERN: FTI Consulting OK'd as Committee's Financial Advisor AES EASTERN: Wants Until March 23 to File Schedules and Statements AES EASTERN: Court Denies Motion to Transfer Case to Syracuse AES EASTERN: Taps WeinsweigAdvisors as Financial Advisor AHERN RENTALS: Wants Access to AMEX Postpetition Credit Line ALTER COMMS: To Have Ch.11 Trustee If No Plan Is Filed Today AMBAC FINANCIAL: Wins Confirmation of Reorganization Plan AMBAC FINANCIAL: DiConza Represents Shareholder Group AMBAC FINANCIAL: AAC Has Exit Agreements With CEO and CFO AMBAC FINANCIAL: Calif. Court Approves Hercules Settlement AMBAMA LLC: Case Summary & 20 Largest Unsecured Creditors AMERICAN AIRLINES: Groom Law Okayed as Employee Benefits Counsel AMERICAN AIRLINES: Court OKs Debevoise as Aircraft Counsel AMERICAN AIRLINES: Court OKs AvAirPros as Airport Advisors AMERICAN AIRLINES: AEA Wins Nod for Bain as Consultant AMERICAN AIRLINES: Has Approval of KPMG as Tax Consultant AMERICAN HOME: $200MM MBS Suit vs. Citigroup Moved to State Court APOLLO MEDICAL: Appoints Gary Augusta to Board of Directors APPLIANCE DIRECT: Court Enters Final Decree Closing Case ARMSTRONG WORLD: S&P Affirms 'BB-' Corp. Credit Rating on Dividend ATLANTIC & PACIFIC: Emerges From Chapter 11 as Private Company AUSSIE PET: Case Summary & 20 Largest Unsecured Creditors AVIS BUDGET: S&P Gives 'BB' Rating on $500-Mil. Term Loan C AVIV HEALTHCARE: Moody's Assigns 'B1' Rating to Add-On Issuance AVIV REIT: S&P Keeps 'B+' Senior Unsecured Notes Rating on Add-On BERNARD L. MADOFF: Dist. Judge to Oversee $100-Mil. Maxam Suit BI-LO: S&P Affirms 'B' Corp. Credit Rating; Off Watch Negative BIG WEST: S&P Withdraws 'B+' Rating BLUEKNIGHT ENERGY: Reports $33.5 Million Net Income in 2011 BMS REAL ESTATE: Case Summary & 7 Largest Unsecured Creditors BRE PROPERTIES: Fitch Affirms Rating on Preferred Stock at 'BB+' CHOCTAW RESORT: Moody's Raises Corporate Family Rating to 'Caa1' CIT GROUP: Offers $75 Million to Settle Shareholders Class Suit CLARE AT WATER: Janet McDermott Joins Creditors' Committee CLOVIS VILLAGE: Case Summary & 10 Largest Unsecured Creditors COMMERCIAL VEHICLE: Reports $18.6 Million Net Income in 2011 CONTAINER STORE: S&P Rates Corporate Credit 'B-'; Outlook Stable CRAWFORD CONSULTING: Files for Chapter 11 Bankruptcy Protection CRESTWOOD HOLDINGS: S&P Affirms 'B-' Corporate Credit Rating CROSS BORDER: BlackRock Nominates Five Persons to Board DILLARD'S INC: S&P Ups Corp. Credit Rating to 'BB'; Outlook Stable DYNEGY HOLDINGS: Plan Filing Exclusivity Extended to March 21 DYNEGY HOLDINGS: Says Power Plants Are Real Properties DYNEGY INC: Has $236 Million Operating Loss in 2011 DYNEGY INC: S&P Says 'CC' Rating Unaffected by Examiner Report EAST COAST: Plan Confirmation Hearing Scheduled for March 19 EDUCATION MANAGEMENT: S&P Assigns 'BB-' CCR; Outlook Negative ELITE PHARMACEUTICALS: Reports First Shipment of Hydromorphone ELTON APARTMENTS: Case Summary & 5 Largest Unsecured Creditors ENERGY CONVERSION: Taps Plante & Moran as Accountant ENERGY CONVERSION: Hires Quarton Partners as Investment Banker ENERGY CONVERSION: Wants Signature as Real Estate Consultants EXPERT GLOBAL: S&P Gives 'B' Issuer Credit Rating; Outlook Stable FAIRFAX FINANCIAL: S&P Rates C$200-Mil. Preferred Shares at 'BB' FENDER MUSICAL: S&P Affirms 'B' Corporate Credit Rating FERTITTA MORTON: S&P Gives 'B' Corp. Credit Rating; Outlook Stable GALP CNA: Spring Says Plan in Default, Wants Full Rights Exercised GETTY IMAGES: S&P Rates $275-Mil. Incremental Term Loan at 'BB-' GLOBAL PROTECTION: Case Summary & 20 Largest Unsecured Creditors GMX RESOURCES: Swaps 2.3MM Common Shares for $5MM Conv. Notes GOODMAN GROUP: Moody's Raises Hybrid Securities Rating to 'Ba2' GRANGER COURT: Voluntary Chapter 11 Case Summary GRANITE DELLS: Case Summary & 20 Largest Unsecured Creditors HARSCO CORP: Moody's Cuts Subordinated Rating to '(P)Ba1' HAYDEL PROPERTIES: Hires Christy Pickering as Accountant HOST HOTELS: S&P Rates New $300-Mil. Senior Notes at 'BB+' HUNTSMAN CORP: Moody's Raises Corporate Family Rating to 'Ba3' INDIANAPOLIS DOWNS: Exclusivity Period Extended Until March 28 INNER CITY: Can Exclusively File Plan Until July 5 INTEGRA TELECOM: S&P Affirms 'B' Corp. Credit Rating; Outlook Neg INTERNATIONAL ENVIRONMENTAL: Involuntary Chapter 11 Case Summary INTERNATIONAL LEASE: Fitch to Rate Sr. Unsecured Notes at 'BB' ISTAR FINANCIAL: S&P Rates $900MM Senior Credit Facility at 'BB-' JESCO CONSTRUCTION: Taps L. Kelly Baker as Accountant JOHN D. OIL: Faces Lawsuit Against Two Bank in District Court KNIGHT & CARVER: Case Summary & 20 Largest Unsecured Creditors LACK'S STORES: Satisfied Lenders' Claims, Proofs of Claim Expunged LAS VEGAS BILLBOARDS: Case Summary & 20 Largest Unsec. Creditors LATITUDE 23: Voluntary Chapter 11 Case Summary LIGHTSQUARED INC: Sprint Said to Cancel 15-Year Contract M WAIKIKI: Wants to Employ Holthouse Carlin as Tax Accountant MACROSOLVE INC: Incurs $2.5 Million Net Loss in 2011 MARIN CREATIVE: Case Summary & 7 Largest Unsecured Creditors MEDICAL CARD: S&P Keeps 'BB-' Counterparty Credit Rating MDC PARTNERS: S&P Affirms 'B+' Corp. Credit Rating; Outlook Neg MERIDIAN SHOPPING: Taps Diemer Whitmanas Gen. Insolvency Counsel MILESTONE SCIENTIFIC: Incurs $1.5 Million Net Loss in 2011 MONITRONICS INTERNATIONAL: S&P Gives 'B' Corporate Credit Rating NATIVE WHOLESALE: Eberle Berlin OK'd to Handle Idaho Actions NCO GROUP: Negotiating Potential Combination with OEP NCO GROUP: S&P Puts 'CCC+' Issuer Credit Rating on Watch Positive NEIMAN MARCUS: S&P Affirms 'B+' Corporate Credit Rating NEONODE INC: Incurs $2.7 Million Net Loss in Fourth Quarter NORTEL NETWORKS: Seeks to Amend Jefferies & Co Retention Fees OSI RESTAURANT: Parent Considers Initial Public Offering PENN VIRGINIA: S&P Lowers Corp. Credit Rating to 'B'; Outlook Neg PENSON WORLDWIDE: Moody's Cuts Corporate Family Rating to 'Ca' PENSON WORLDWIDE: S&P Lowers Counterparty Credit Rating to 'CC' POTOMAC SUPPLY: Bank Wants Court to Convert Case to Chapter 7 QUANTUM FUEL: Pays $600,000 Note with 630,000 Common Shares RENEGADE HOLDINGS: Judge Stocks Moves Pretrial Hearing to May 1 ROCK GLEN: Case Summary & 14 Largest Unsecured Creditors ROSETTA RESOURCES: S&P Raises Corporate Credit Rating to 'B+' ROTECH HEALTHCARE: Inks $10MM Credit Facility with Credit Suisse ROTHSTEIN ROSENFELDT: Judge Allows Investor to Up Claims by $25MM ROYAL HOSPITALITY: Ch. 11 Trustee Taps D'Archangelo as Accountant ROYAL HOSPITALITY: US Trustee Wants Fees Prior to Confirmation RQB RESORT: Has Authority to Use Cash Collateral Until May 4 SAFENET INC: Moody's Affirms 'B2' Corporate Family Rating SAINT VINCENTS: Court Approves Fourth Amendment to DIP Loan SCHOMAC GROUP: Has Access to Cash Collateral Until April 5 SEARS HOLDINGS: Board OKs Restatement of Annual Incentive Plan SEAWORLD PARKS: S&P Lowers Corporate Credit Rating to 'B+' SERVICE IS US: Case Summary & 20 Largest Unsecured Creditors SHRI JALA: Case Summary & 6 Largest Unsecured Creditors SONICWALL INC: Moody's Expects Repayment of Ba3-Rated Debt SOUTHGATE BUSINESS: Case Summary & 6 Largest Unsecured Creditors SPROUTS FARMERS: S&P Places 'B+' Corp. Credit Rating on Watch Neg SWISS CHALET: Authorized to Disburse $5.83-Mil to CPS/GS PR NPL SYNC TECHNOLOGIES: Voluntary Chapter 11 Case Summary TBS INTERNATIONAL: Defends Chapter 11 Plan Against Shareholders TELESAT HOLDINGS: S&P Affirms 'B+' Corporate Credit Rating TENNECO INC: Fitch Affirms Issuer Default Rating at 'BB' THORNBURG MORTGAGE: Former Executives Respond to SEC Lawsuit TIRE VISIONS: Case Summary & 20 Largest Unsecured Creditors TRIUS THERAPEUTICS: Incurs $12.5 Million Net Loss in 4th Quarter TYSON FOODS: Moody's Affirms 'Ba1' Corporate Family Rating UNITED SURGICAL: S&P Rates $440-Mil. Sr. Unsecured Notes at 'CCC+' USEC INC: Enters Into $235MM Revolving Credit Pact with JPMorgan UTSTARCOM INC: Reports $3.4 Million Net Income in 4th Quarter WATERLOO RESTAURANT: Has $850,000 DIP Loan From GECC WESTERN MOHEGAN: Chapter 11 Filing Blocks Sale of Tamarack Resort WESTMORELAND COAL: Files Form 10-K; Incurs $36.8MM Loss in 2011 WESTMORELAND COAL: Robert King Appointed President and COO WINDMILL SQUARE: Case Summary & 20 Largest Unsecured Creditors WOLFGANG CANDY: Files for Chapter 11 Bankruptcy Protection WOLFGANG CANDY: Voluntary Chapter 11 Case Summary YANKEE CANDLE: Moody's Revises Rating on $725MM Term Loan to 'B1' YANKEE CANDLE: S&P Lowers Rating on New $725MM Term Loan to 'B+' ZALE CORP: Portolan Capital Discloses 5% Equity Stake * Moody's Says US Non-Financial Corporate Cash Holdings Rise * BOOK REVIEW: Performance Evaluation of Hedge Funds ********* AES EASTERN: FTI Consulting OK'd as Committee's Financial Advisor ----------------------------------------------------------------- The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware authorized the Official Committee of Unsecured Creditors in the Chapter 11 cases of AES Eastern Energy, L.P., et al., to retain FTI Consulting, Inc., as financial advisor, nunc pro tunc to Jan. 13, 2012. As reported in the Troubled Company Reporter on Feb. 17, 2012, as financial advisor to the Committee, FTI Consulting, among others, will: 1. assist in the review of financial related disclosures required by the court, including the schedules of assets and liabilities, the statement of financial affairs and monthly operating reports; 2. assist in the preparation of analyses required to assess the use of cash collateral; 3. assist with the assessment and monitoring of the Debtors' short term cash flow, liquidity, and operating results; and 4. assist with the review of the Debtors' proposed key employee retention and other employee benefit programs. FTI will seek payment for compensation on a fixed monthly basis of $125,000 and a completion fee of $500,000, plus reimbursement of actual and necessary expenses incurred by FTI, including legal fees related to this retention application and future fee applications as approved by the Court. The completion fee will be considered earned and payable, subject to Bankruptcy Court approval, upon the earliest occurrence of: (a) confirmation of a Chapter 11 plan of reorganization or liquidation, or (b) the sale, disposition, or transfer of the Somerset facilities and related assets. In addition, FTI will be compensated at its customary hourly rates for any services related to the litigation and testimony associated with the evaluation and analysis of avoidance actions, including fraudulent conveyances, preferential transfers and dividends, to wit: Senior Managing Directors $780 - $895 Directors/Managing Directors $560 - $745 Consultants/Senior Consultants/Managers $280 - $530 Administrative/Paraprofessionals/Project Analyst $115 - $230 Andrew Scruton, a senior managing director with FTI Consulting, attests that FTI does not hold or represent any interest adverse to the estate. About AES Eastern Ithaca, New York-based AES Eastern Energy, L.P., either directly or indirectly, control six coal-fired electric generating plants located in New York State. Currently, the Debtors actively operate two of the six power plants and sell the electricity generated by those plants into the New York wholesale power market to utilities and other intermediaries under short-term agreements or directly in the spot market. AES Eastern Energy and 13 affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 11-14138 through 11-14151) on Dec. 30, 2011. Lawyers at Weil, Gotshal & Manges LLP and Richards, Layton & Finger, P.A., are legal counsel to AES Eastern Energy and affiliates. Barclays Capital is serving as investment banker and financial advisor. Kurtzman Carson Consultants is the claims and noticing agent. AES Eastern Energy estimated $100 million to $500 million in assets and $500 million to $1 billion in debts. The petition was signed by Peter Norgeot, general manager. Gregory A. Horowith, Esq., and Robert T. Schmidt, Esq., at Kramer, Levin, Naftalis & Frankel LLP; and William T. Bowden, Esq., Benjamin W. Keenan, Esq., and Karen B. Skomorucha, Esq., at Ashby & Geddes, P.A., serve as counsel to the Creditors Committee. FTI Consulting Inc. is the financial advisor. AES Eastern Energy prevailed over opposition and obtained authorization to hold a March 26 auction for the two operating power plants. Under a deal reached prepetition, the Debtor would turn the two operating facilities over to debt holders in exchange for debt, absent higher and better offers. AES EASTERN: Wants Until March 23 to File Schedules and Statements ------------------------------------------------------------------ AES Eastern Energy, L.P., et al., in a second motion, ask the U.S. Bankruptcy Court for the District of Delaware to extend until March 23, 2012, their time to file their (i) schedules of assets and liabilities; (ii) schedules of current income and expenditures; (iii) schedules of executory contracts and unexpired leases; and (iv) statement of financial affairs. Absent the extension, the Debtors' filing deadline is set to expire on Feb. 28. The Debtors explain that they need more time to complete and compile the information gathered. About AES Eastern Ithaca, New York-based AES Eastern Energy, L.P., either directly or indirectly, control six coal-fired electric generating plants located in New York State. Currently, the Debtors actively operate two of the six power plants and sell the electricity generated by those plants into the New York wholesale power market to utilities and other intermediaries under short-term agreements or directly in the spot market. AES Eastern Energy and 13 affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 11-14138 through 11-14151) on Dec. 30, 2011. Lawyers at Weil, Gotshal & Manges LLP and Richards, Layton & Finger, P.A., are legal counsel to AES Eastern Energy and affiliates. Barclays Capital is serving as investment banker and financial advisor. Kurtzman Carson Consultants is the claims and noticing agent. AES Eastern Energy estimated $100 million to $500 million in assets and $500 million to $1 billion in debts. The petition was signed by Peter Norgeot, general manager. Gregory A. Horowith, Esq., and Robert T. Schmidt, Esq., at Kramer, Levin, Naftalis & Frankel LLP; and William T. Bowden, Esq., Benjamin W. Keenan, Esq., and Karen B. Skomorucha, Esq., at Ashby & Geddes, P.A., serve as counsel to the Creditors Committee. FTI Consulting Inc. is the financial advisor. AES Eastern Energy prevailed over opposition and obtained authorization to hold a March 26 auction for the two operating power plants. Under a deal reached prepetition, the Debtor would turn the two operating facilities over to debt holders in exchange for debt, absent higher and better offers. AES EASTERN: Court Denies Motion to Transfer Case to Syracuse ------------------------------------------------------------- The Hon. Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware has denied New York State Electric & Gas Corporation's motion to transfer the venue of AES Eastern Energy, L.P., et al.'s bankruptcy case. As reported by the Troubled Company Reporter on Feb. 14, 2012, New York State Electric & Gas Corp. sought to move the case to Syracuse, New York, noting that all six plants of the Debtors and most of the creditors are in New York. AES Eastern opposed the transfer, saying that New Yorkers need less than two hours for a train trip to Delaware, while Syracuse requires use of "sporadic" air service. The official creditors' committee also opposed the transfer, saying Syracuse is "much less convenient." The committee, the company, and the indenture trustee fear moving the case will cause delay and disrupt a sale of the two operating plants. About AES Eastern Ithaca, New York-based AES Eastern Energy, L.P., either directly or indirectly, control six coal-fired electric generating plants located in New York State. Currently, the Debtors actively operate two of the six power plants and sell the electricity generated by those plants into the New York wholesale power market to utilities and other intermediaries under short-term agreements or directly in the spot market. AES Eastern Energy and 13 affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 11-14138 through 11-14151) on Dec. 30, 2011. Lawyers at Weil, Gotshal & Manges LLP and Richards, Layton & Finger, P.A., are legal counsel to AES Eastern Energy and affiliates. Barclays Capital is serving as investment banker and financial advisor. Kurtzman Carson Consultants is the claims and noticing agent. AES Eastern Energy estimated $100 million to $500 million in assets and $500 million to $1 billion in debts. The petition was signed by Peter Norgeot, general manager. Gregory A. Horowith, Esq., and Robert T. Schmidt, Esq., at Kramer, Levin, Naftalis & Frankel LLP; and William T. Bowden, Esq., Benjamin W. Keenan, Esq., and Karen B. Skomorucha, Esq., at Ashby & Geddes, P.A., serve as counsel to the Creditors Committee. FTI Consulting Inc. is the financial advisor. AES Eastern Energy prevailed over opposition and obtained authorization to hold a March 26 auction for the two operating power plants. Under a deal reached prepetition, the Debtor would turn the two operating facilities over to debt holders in exchange for debt, absent higher and better offers. AES EASTERN: Taps WeinsweigAdvisors as Financial Advisor -------------------------------------------------------- AES Eastern Energy, L.P., et al., ask for permission from the U.S. Bankruptcy Court for the District of Delaware to employ WeinsweigAdvisors, L.L.C., nunc pro tunc to Feb. 8, 2012, as financial advisors and consultants. Weinsweig will, among other things: a. assist in preparing statements of financial affair, schedule of assets and liabilities, monthly operating reports, and other similar disclosures; b. update the 13-week cash flow forecast; and c. assist with general financial management of the Debtors. All of the services that Weinsweig will provide to the Debtors will be directed by the Debtors so as to avoid duplicative efforts among the other professionals retained in the Chapter 11 cases. The Debtors assure the Court that there will be no duplication of services being provided by Barclays Capital, Inc., an investment bank already retained by the Debtors, and Weinsweig. Barclays is focused on the sale and marketing of the Debtors' assets, while Weinsweig is supporting those efforts. Weinsweig will assist the Debtors with general business disclosures, financial management, and due diligence, and will be focusing on short-term week-to-week cash flow forecasts. Barclays, in contrast, has been working with the Debtors on a long-term financial model more pertinent to the sale process, and has been coordinating the marketing and sale process. Weinsweig will additionally be working with financial advisors to the Creditors' Committee as their point of contact to ensure a smooth information flow between the Debtors and the Committee. The Debtors will pay Weinsweig for its services on a monthly fixed fee basis at the rate of $45,000 per month for the work of one managing director, Chris Stevens. In addition, the Debtors will pay a one-time fee of $54,000 for 120 hours of the assistance of Marc Weinsweig, the principal and founder of Weinsweig. Mr. Weinsweig assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About AES Eastern Ithaca, New York-based AES Eastern Energy, L.P., either directly or indirectly, control six coal-fired electric generating plants located in New York State. Currently, the Debtors actively operate two of the six power plants and sell the electricity generated by those plants into the New York wholesale power market to utilities and other intermediaries under short-term agreements or directly in the spot market. AES Eastern Energy and 13 affiliates filed for Chapter 11 bankruptcy (Bankr. D. Del. Case Nos. 11-14138 through 11-14151) on Dec. 30, 2011. Lawyers at Weil, Gotshal & Manges LLP and Richards, Layton & Finger, P.A., are legal counsel to AES Eastern Energy and affiliates. Barclays Capital is serving as investment banker and financial advisor. Kurtzman Carson Consultants is the claims and noticing agent. AES Eastern Energy estimated $100 million to $500 million in assets and $500 million to $1 billion in debts. The petition was signed by Peter Norgeot, general manager. Gregory A. Horowith, Esq., and Robert T. Schmidt, Esq., at Kramer, Levin, Naftalis & Frankel LLP; and William T. Bowden, Esq., Benjamin W. Keenan, Esq., and Karen B. Skomorucha, Esq., at Ashby & Geddes, P.A., serve as counsel to the Creditors Committee. FTI Consulting Inc. is the financial advisor. AES Eastern Energy prevailed over opposition and obtained authorization to hold a March 26 auction for the two operating power plants. Under a deal reached prepetition, the Debtor would turn the two operating facilities over to debt holders in exchange for debt, absent higher and better offers. AHERN RENTALS: Wants Access to AMEX Postpetition Credit Line ------------------------------------------------------------ Ahern Rentals, Inc., asks the Bankruptcy Court for authorization to obtain postpetition unsecured debt from American Express Travel Related Services Company, Inc. Prior to the Petition Date, the Debtor maintained various credit card accounts with American Express pursuant to a Corporate Services Commercial Account Agreement. The Debtor uses FedEx and UPS's transportation and delivery services to deliver equipment parts and supplies to and from its customers and branch stores across the country. The Debtor's sole purpose in maintaining the AMEX Accounts is to pay FedEx and UPS shipping and delivery charges. In December 2011, Debtor wired $100,000 to AMEX with instructions to immediately pay pending charges on the AMEX Accounts. At the time of the Wire, there was approximately $50,000 of charges posted or pending on Debtor's AMEX Accounts, due to FedEx and UPS. Accordingly, the excess Wire amount should have been applied to Debtor's AMEX Accounts as a credit. After the Petition Date, AMEX froze the Debtor's AMEX Accounts. The Debtor believes AMEX will agree to unfreeze the AMEX Accounts, apply the Wire to the outstanding charges on the AMEX Accounts, and provide Debtor postpetition financing under the AMEX Contract, contingent upon the entry of an order of the Bankruptcy Court. FedEx has indicated it may not continue providing services to the Debtor if its charges are not paid. Therefore, the Debtor believes the application of the Wire to the balance of the prepetition charges and Debtor's continued postpetition, ordinary course use of the AMEX Accounts are necessary and in the best interest of the estate and creditors. Kirk D. Homeyer, Esq., at Gordon Silver, submits that the Debtor has exercised prudent business judgment in determining to continue to obtain credit under the AMEX Contract on a postpetition basis, as such postpetition financing will benefit Debtor's estate, not to mention Debtor's business operations and relationship with its customers. If the Debtor cannot obtain postpetition financing under the AMEX Contract, the Debtor's estate risks losing a valuable, mutually-beneficial business relationship with FedEx. Without FedEx's services, the Debtor will be hindered in shipping parts and equipment to its customers and branch stores, thereby jeopardizing customer relationships and Debtor's overall revenue. The Debtor submits that it has established that postpetition credit under the AMEX Contract will benefit the estate and is properly within the Debtor's business judgment. About Ahern Rentals Founded in 1953 with one location in Las Vegas, Nevada, Ahern Rentals Inc. -- http://www.ahern.com/-- now offers rental equipment to customers through its 74 locations in Arizona, Arkansas, California, Colorado, Georgia, Kansas, Maryland, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia and Washington. Ahern Rentals filed a voluntary Chapter 11 petition (Bankr. D. Nev. Case No. 11-53860) on Dec. 22, 2011, after failing to obtain an extension of the Aug. 21, 2011 maturity of its revolving credit facility. Judge Bruce T. Beesley presides over the case. Lawyers at Gordon Silver serve as the Debtor's counsel. The Debtor's financial advisors are Oppenheimer & Co. and The Seaport Group. Kurtzman Carson Consultants LLC serves as claims and notice agent. Counsel to Bank of America, as the DIP Agent and First Lien Agent, are Albert M. Fenster, Esq., and Marc D. Rosenberg, Esq., at Kaye Scholer LLP, and Robert R. Kinas, Esq., at Snell & Wilmer. Attorneys for the Majority Term Lenders are Paul Aronzon, Esq., and Robert Jay Moore, Esq., at Milbank, Tweed, Hadley & McCloy LLP. Counsel for the Majority Second Lienholder are Paul V. Shalhoub, Esq., Joseph G. Minias, Esq., and Ana M. Alfonso, Esq., at Willkie Farr & Gallagher LLP. Attorney for GE Capital is James E. Van Horn, Esq., at McGuirewoods LLP. Wells Fargo Bank is represented by Andrew M. Kramer, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C. Allan S. Brilliant, Esq., and Glenn E. Siegel, Esq., at Dechert LLP argue for certain revolving lenders. Attorneys for U.S. Bank National Association, as successor to Wells Fargo Bank, as collateral agent and trustee for the benefit of holders of the 9-1/4% Senior Secured Notes Due 2013 under the Indenture dated Aug. 18, 2005, is Kyle Mathews, Esq., at Sheppard, Mullin, Richter & Hampton LLP and Timothy Lukas, Esq., at Holland & Hart. In its schedules, the Debtor disclosed $485,807,117 in assets and $649,919,474 in liabilities. The Official Committee of Unsecured Creditors has tapped Covington & Burling LLP as counsel, Downey Brand LLP as local counsel, and FTI Consulting as financial advisor. ALTER COMMS: To Have Ch.11 Trustee If No Plan Is Filed Today ------------------------------------------------------------ Arthur Hirsch at The Baltimore Sun reports that U.S. Bankruptcy Court Judge Nancy V. Alquist gave Alter Communications Inc. and its creditors to file a Chapter 11 plan until 9:30 a.m., on March 16, 2012, and scheduled a hearing on the proposal for that afternoon. The report relates, if the deadline is missed, Judge Alquist said she would consider H.G. Roebuck & Son, Inc.'s motion to appoint a trustee. Alter Communications and H.G. Roebuck are negotiating a revision of a plan that Alter filed in December 2011 that involves an investor group headed by Dr. Scott Rifkin, a Baltimore physician turned health care enterpreneur. According to the report, Alter's counsel Alan M. Grochal said the competing plans to reorganize the company filed by the publisher and Roebuck were no longer being considered. The report says progress was held up because Alter representatives were not able to reach Dr. Rifkin or the lawyer who has been his chief representative in these negotiations. The proposal originally called for Mr. Rifkin's group to invest $600,000 in exchange for an 80% stake in Alter. The report notes that, on March 13, 2012, Judge Alquist approved a motion allowing Alter's co-publisher, Ronnie Buerger, to loan the company $100,000 to cover urgent expenses, including employee salaries, printing and phone bills. In an earlier report, Gus G. Sentementes at The Baltimore Sun said Alter, in January, posted a profit of $17,667 on revenue of $454,779, according to court documents. But it has racked up around $500,000 in expenses while under bankruptcy protection, court documents show. The report further relates Andrew Buerger, CEO and publisher of Alter, said he did not have a dollar figure for the amount of short-term working capital needed. About Alter Communications Based in Baltimore, Maryland, Alter Communications publishes the Baltimore Jewish Times. Other publications include the magazine Style, with 90,000 circulation, and Chesapeake Life, with a circulation of 57,000. Alter Communications filed for Chapter 11 bankruptcy (Bankr. D. Md. Case No. 10-18241) on April 14, 2010, after losing a $362,000 judgment to the printer, H.G. Roebuck & Son Inc. Alan M. Grochal, Esq., and Maria Ellena Chavez-Ruark, Esq., at Tydings and Rosenberg, in Baltimore, serve as the Debtor's bankruptcy counsel. The Debtor estimated assets and debts between $1 million and $10 million in its Chapter 11 petition. In December 2010, the Bankruptcy Court approved Alter's Chapter 11 exit plan. Roebuck appealed, saying the plan wasn't filed in good faith and that it "discriminates unfairly." In June 2011, the U.S. District Judge Court in Maryland set aside the confirmation order. Because Roebuck said it would pay more for the new stock, the District Court reversed and sent the case back to the bankruptcy court with instructions to allow the filing of competing plans. AMBAC FINANCIAL: Wins Confirmation of Reorganization Plan --------------------------------------------------------- Judge Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York entered an order confirming the Fifth Amended Plan of Reorganization of Ambac Financial Group, Inc. on March 14, 2012. Judge Chapman approved the Plan, saying it represented Herculean efforts by the company, its creditors, and regulators, and that her decision to approve it was "not a close call," according to Reuters. Ambac Financial's President and Chief Executive Officer, Diana Adams, said, "I am pleased that through the diligent efforts of all of those involved, and months of negotiations with various constituents, we have successfully secured Plan confirmation. While many challenges lie ahead, this is a key milestone in our work to reorganize Ambac Financial. The court's decision positions us to focus on consummation of the Plan and on our future." To the extent that any objections to confirmation of the Plan have not been withdrawn, resolved, or mooted before entry of the Confirmation Order, all those objections are hereby overruled, Judge Chapman ruled. Nevertheless, "the Court regrets that it must approve a plan that provides no recovery for equity holders," Judge Chapman was quoted as saying at the March 14 hearing, Reuters relayed. "They must, unfortunately, join the ranks of the victims of the global financial crisis." At the March 13 Confirmation Hearing, various shareholders told the Court that there should be money left for them while the Debtor's financial advisor said there is no such money. "The fact that it's confusing does not change the fact that there's no hidden value here," Ambac lead lawyer Peter Ivanick, Esq., at Dewey & LeBoeuf LLP, in New York, told Judge Chapman, according to a separate Bloomberg News report. "There is no Ambac leprechaun that has hidden pots of gold into the loss reserves." C.J. Brown, a managing director at Blackstone Group, testified at the March 14 hearing on how Ambac's assets had been valued and insisted that there's no money for shareholders, Bloomberg relayed. Mr. Brown elaborated that the market for trading in the company's senior debt currently values it at about 12 to 13 cents on the dollar and the junior debt is valued at 2 to 3 cents on the dollar, showing that debt investors do not believe there will be anything left for shareholders, Bloomberg relayed. Given the company's debt of about $1.7 billion, it would need to have made an error of $1.5 billion to $1.6 billion in its valuation estimate for there to be value for shareholders, Judge Chapman determined, Bloomberg stated. Counsel for a group of equity security holders sought to discredit Blackstone's valuation analysis, arguing that Mr. Brown in nearly three hours of testimony relied too heavily on third party data rather than his own expertise, Reuters related. Shareholder Edward Hosinger told Judge Chapman that there is still around $6.65 a share in value for equity holders because Ambac overstated its loss reserves, Bloomberg relayed. Mr. Hosinger argued that this excess amount of monies placed in the loss reserves belongs to stockholders, Bloomberg added. Judge Chapman overruled those objections. The Plan provides for the full payment of secured claims and 8.5% to 13.2% recovery for general unsecured claims. Senior Noteholders will get 11.4% to 17.6% recovery of their claims while holders of Subordinated Notes will recover 0.5% to 0.8%. Holders of Section 510(b) Claims, Intercompany Claims, and Equity Interests will get 0% recovery under the Plan. Exact recoveries will depend in part on the value of the Debtor's estate, which Blackstone pegged at between $145 million and $225 million, an Ambac spokesperson told Reuters. Pursuant to an Amended Plan Settlement, which forms the basis of the Plan, the Debtor would allocate $3.65 billion of net operating losses or NOLs to Ambac Assurance Corporation and its subgroup, subject to certain conditions. The Reorganized Company will also be looking after its interest in AAC although it may seek to acquire other businesses, Mr. Brown told the Court. Ambac Financial's President and Chief Executive Diana Adams said, "I am pleased that through the diligent efforts of all those involved, and months of negotiations with various constituents, we have successfully secured Plan confirmation. While many challenges lie ahead, this a key milestone in our work to reorganize Ambac Financial. The Court's decision positions us to focus on consummation of the Plan and on our future." Mr. Ivanick told the Court that AFG has begun to seek approval from government agencies regarding its settlement offer, which means that it will take longer than usual for the company to exit bankruptcy protection, Bloomberg disclosed. The Debtor has offered to resolve the dispute with the Internal Revenue Service on the tax treatment of credit default swaps that generated approximately $7.3 billion in NOLs. Under the IRS Settlement, the Debtor will pay $1.9 million in connection with the IRS claims and AAC will pay approximately $100 million to the revenues agency. Sec. 1129 Requirements The Court confirmed the Plan after holding that it satisfies the confirmation requirements under Section 1129 of the Bankruptcy Code: (1) The Plan complies fully with the requirements of Sections 1122 and 1123 of the Bankruptcy Code and all other applicable provisions of the Bankruptcy Code, thereby satisfying Section 1129(a)(1). (2) The Debtor, as the Plan proponent, has complied with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules, except to the extent otherwise permitted by order of the Bankruptcy Court. Accordingly, the requirements of Bankruptcy Code section 1129(a)(2) are satisfied. (3) The Debtor has proposed and negotiated the Plan, including the Plan Exhibits and other documents necessary to effectuate the Plan, in good faith and not by any means forbidden by law, thereby complying with Bankruptcy Code Section 1129(a)(3). Based on the evidence presented, the Court finds that the Plan has been proposed with the legitimate purpose of maximizing the return available to creditors. The Plan's classification of Claims and Equity Interests, injunction, exculpation, and release provisions have been negotiated in good faith and at arm's-length, are consistent with the Bankruptcy Code, and are each necessary to the Debtor's successful emergence from Chapter 11. (4) The Plan provides that Professionals seeking an award of compensation for services rendered or expenses incurred through and including the Effective Date must file their applications for the allowance of such compensation no later than 60 days after the Effective Date of the Plan. Pursuant to the interim application procedures established in the Debtor's Chapter 11 case and Section 331 of the Bankruptcy Code, any and all payments made or to be made by the Debtor for services in connection with the Debtor's Chapter 11 case have been approved by, or are subject to the approval of, the Bankruptcy Court as reasonable under Section 330. Thus, the requirements of Section 1129(a)(4) are satisfied. (5) The Debtor has complied with Section 1129(a)(5). Pursuant to the Plan, the New Board will be comprised of the Reorganized Debtor's Chief Executive Officer and four additional directors. The nature of compensation paid to any insider directors of the Reorganized Debtor has also been disclosed. (6) Section 1129(a)(6) is inapplicable to the Debtor, which does not charge rates subject to the jurisdiction of any governmental regulatory agency. (7) The liquidation analysis attached to the Disclosure Statement and the other evidence in support of the Plan proffered or adduced at, prior to, or in connection with the Confirmation Hearing were accurate as of the time they were prepared and subsequent developments have not rendered them inaccurate in any material respect, are based on reasonable methodologies and assumptions, provide a reasonable estimate of the Debtor's liquidation value upon conversion to a case under Chapter 7 of the Bankruptcy Code, and establish that each holder of Allowed Claims and Equity Interests will recover property of a value at least as much under the Plan on account of such Claims or Equity Interest, as of the Effective Date, as the amount such holder would receive if the Debtor was liquidated under Chapter 7. Accordingly, the requirements of Section 1129(a)(7) are satisfied. (8) Classes 1 and 2 are deemed to accept the Plan pursuant to Section 1126(f) of the Bankruptcy Code and Classes 3, 4, and 5 voted to accept the Plan. Accordingly, Bankruptcy Code Section 1129(a)(8) has been satisfied with respect to Classes 1 through 5. Although Section 1129(a)(8) has not been satisfied with respect to Classes 6, 7, and 8, which are deemed not to have accepted the Plan pursuant to Section 1126(g), the Plan is confirmable because it does not discriminate unfairly and is fair and equitable with respect to the Rejecting Classes, and thus, satisfies Section 1129(b). (9) The treatment of Administrative Claims, Accrued Professional Compensation Claims, Priority Tax Claims, and Priority Non- Tax Claims satisfies the requirements of Section 1129(a)(9). (10) As set forth in the Vote Certification, Classes 3, 4, and 5, which are Impaired, voted to accept the Plan. Thus, at least one Class of Claims that is impaired under the Plan voted to accept the Plan, without including any acceptance of the Plan by any insider of the Debtor. Accordingly, the requirements of Section 1129(a)(10) are satisfied. (11) The Plan is feasible, thus satisfying Section 1129(a)(11). Confirmation of the Plan is not likely to be followed by the liquidation or the need for further financial reorganization of the Reorganized Debtor. Moreover, each of the conditions precedent to consummation of the Plan has been satisfied or waived in accordance with the Plan, or is reasonably likely to be satisfied. (12) The Plan provides that all fees payable under Section 1930 of Title 28 of the U.S. Code will be timely paid by the Debtor or the Reorganized Debtor, as applicable, until a final decree closing the Debtor's Chapter 11 case is entered by the Bankruptcy Court. Accordingly, the requirements of Section 1129(a)(12) are satisfied. (13) Section 1129(a)(13), (14), (15) and (16) are not applicable to the Debtor's Chapter 11 cases. The Amended Plan Settlement and the Plan's injunction, exculpation, and release provisions are permitted by applicable law, within the jurisdiction of the Bankruptcy Court under Section 1334 of Title 28 of the U.S. Code, an essential means for implementing the Plan, in the best interests of the Debtor and its estate, critical to the Plan's objective of finally resolving all Claims among parties in interest, and consistent with the Bankruptcy Code and applicable law, Judge Chapman determined, Confirmation of the Plan and entry of the confirmation Order will be without prejudice to the IRS in the IRS Dispute or elsewhere, Judge Chapman clarified. Pending finalization of the IRS Settlement and regardless of entry of the Confirmation Order, the Debtor will not consummate the Plan, make any distributions to Holders of Claims or Equity Interests outside of the ordinary course of business, or file a motion pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure requesting approval of the IRS Settlement without the United States Government's prior written approval. The effective date of the Plan will be determined in accordance with the Plan terms, including the satisfaction of the conditions precedent to consummation of the Plan. A full-text copy of the March 14, 2012 Confirmation Order is available for free at: http://bankrupt.com/misc/Ambac_Mar14ConfirmationOrder.pdf About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary Chapter 11 petition (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 8, 2010. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed US$30.05 billion in total assets, US$31.47 billion in total liabilities, and a US$1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of (US$394.5 million) and total liabilities of US$1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about US$1.62 billion. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP, serve as the Debtor's bankruptcy counsel. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Lazard Freres & Co. LLC is the Committee's financial advisor. Bankruptcy Creditors' Service, Inc., publishes Ambac Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group and the restructuring proceedings of Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945- 7000). AMBAC FINANCIAL: DiConza Represents Shareholder Group ----------------------------------------------------- DiConza Traurig Magaliff LLP disclosed to the U.S. Bankruptcy Court for the Southern District of New York that it represents an Ad Hoc Group of Equity Security Holders in connection with Ambac Financial Group, Inc.'s Chapter 11 case. Howard P. Magaliff, Esq., at DiConza Traurig Magaliff LLP, in New York, filed with the Court an amended list of members of the Ad Hoc Group of Security Holders. Mr. Magaliff disclosed that the Equity Group holds in the aggregate 10,371,603 shares of Ambac Financial Group, Inc., instead of 9,878,577 aggregate shares as previously reported. A copy of the amended list is available for free at: http://bankrupt.com/misc/Ambac_AmEquityAdHocGrpMembers.pdf The Equity Group was formed on Dec. 1, 2011. DTM was retained as counsel for the group on Dec. 30, 2011. DTM related to the Court that it has never provided any legal services to the Debtor and holds no claim against the Debtor. The counsel's address is: Howard P. Magaliff DICONZA TRAURIG MAGALIFF LLP 630 Third Avenue 7th Floor New York, NY 1007 Tel. No. (212) 682-4940 Email: hmagaliff@dtmlawgroup.com About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor- in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed US$30.05 billion in total assets, US$31.47 billion in total liabilities, and a US$1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of (US$394.5 million) and total liabilities of US$1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about US$1.62 billion. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP, serve as the Debtor's bankruptcy counsel. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Lazard Freres & Co. LLC is the Committee's financial advisor. Bankruptcy Creditors' Service, Inc., publishes Ambac Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group and the restructuring proceedings of Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945- 7000). AMBAC FINANCIAL: AAC Has Exit Agreements With CEO and CFO --------------------------------------------------------- Ambac Assurance Corporation on February 24, 2012, entered into agreements with Diana N. Adams, its Chief Executive Officer, and David Trick, its Chief Financial Officer, which provide for benefits to the executives in the event of termination of their employment prior to March 13, 2013, according to Ambac Financial Group, Inc.'s February 29, 2012 filing with the U.S. Securities and Exchange Commission. The Termination Agreements provides for substantially similar benefits as each executive would have received under the Ambac Assurance Severance Plan in the event of termination of his or her employment by Ambac Assurance prior to March 31, 2013 for any reason other than for cause. The New Agreements are effective as of February 24, 2012, and provide for (a) termination payments in the amount of one year's base salary ($750,000 for Ms. Adams and $600,000 for Mr. Trick) and (b) reimbursement of the premiums paid by each executive officer for COBRA for 12 months in the event of the termination, provided that the executive officer will have executed a release in the form required by Ambac Assurance. If either Ms. Adams or Mr. Trick is terminated for cause by Ambac Assurance or voluntarily terminates her or his employment for any reason, then no Termination Payment will be paid. In the event that either Ms. Adams or Mr. Trick wishes to voluntarily terminate her or his employment, 30 days' notice to Ambac Assurance is required. AFG will pay its allocable portion of such amounts in accordance with Ambac's procedures for allocating expenses. During the term of the New Agreements, Ms. Adams and Mr. Trick are not eligible to participate in the Ambac Assurance Severance Pay Plan. About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor- in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed US$30.05 billion in total assets, US$31.47 billion in total liabilities, and a US$1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of (US$394.5 million) and total liabilities of US$1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about US$1.62 billion. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP, serve as the Debtor's bankruptcy counsel. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Lazard Freres & Co. LLC is the Committee's financial advisor. Bankruptcy Creditors' Service, Inc., publishes Ambac Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group and the restructuring proceedings of Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945- 7000). AMBAC FINANCIAL: Calif. Court Approves Hercules Settlement ---------------------------------------------------------- Ambac Assurance Corporation announced that a California court has approved a settlement in its litigation against the City of Hercules and its redevelopment agency. The litigation asserted that the City had improperly diverted revenues pledged to bondholders from the redevelopment agency to the City. Under the settlement, Ambac received security in two City properties with values estimated to be well in excess of the revenues diverted. Ambac will also be paid interest and legal costs. Peter Cain, Managing Director at Ambac, said, "Ambac pursued its rights, to the benefit of bondholders and we are pleased with the settlement." www.HerculesPatch.com earlier reported the parties have prepared two stipulations containing the settlement terms of AAC's $4.1 million lawsuit against the City. One stipulation has details that will be made public while the other could be sealed, the report relayed. The parties recognized that some details of the agreement becoming public "could hinder performance under the agreement," Mr. Duran explained in his e-mail. If the court approves the stipulations, the non-sealed stipulations can be released," Mr. Duran noted, the report relayed. The parties have delivered the stipulations to court last week, the report added. AAC sued the City's redevelopment agency to recover $4.1 million in tax increments collected in December. About Ambac Financial Ambac Financial Group, Inc., headquartered in New York City, is a holding company whose affiliates provided financial guarantees and financial services to clients in both the public and private sectors around the world. Ambac Financial filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-15973) in Manhattan on Nov. 8, 2010. Ambac said it will continue to operate in the ordinary course of business as "debtor- in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Ambac's bond insurance unit, Ambac Assurance Corp., did not file for bankruptcy. AAC is being restructured by state regulators in Wisconsin. AAC is domiciled in Wisconsin and regulated by the Office of the Commissioner of Insurance of the State of Wisconsin. The parent company is not regulated by the OCI. Ambac's consolidated balance sheet -- which includes non-debtor Ambac Assurance Corp -- showed US$30.05 billion in total assets, US$31.47 billion in total liabilities, and a US$1.42 billion stockholders' deficit, at June 30, 2010. On an unconsolidated basis, Ambac said in a court filing that it has assets of (US$394.5 million) and total liabilities of US$1.6826 billion as of June 30, 2010. Bank of New York Mellon Corp., as trustee to seven different types of notes, is listed as the largest unsecured creditor, with claims totaling about US$1.62 billion. Peter A. Ivanick, Esq., Allison H. Weiss, Esq., and Todd L. Padnos, Esq., at Dewey & LeBoeuf LLP, serve as the Debtor's bankruptcy counsel. The Blackstone Group LP is the Debtor's financial advisor. Kurtzman Carson Consultants LLC is the claims and notice agent. KPMG LLP is tax consultant to the Debtor. Anthony Princi, Esq., Gary S. Lee, Esq., and Brett H. Miller, Esq., at Morrison & Foerster LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Lazard Freres & Co. LLC is the Committee's financial advisor. Bankruptcy Creditors' Service, Inc., publishes Ambac Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by Ambac Financial Group and the restructuring proceedings of Ambac Assurance Corp. (http://bankrupt.com/newsstand/or 215/945- 7000). AMBAMA LLC: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Ambama, LLC dba Comfort Suites Hotel Attn: Jyotsna Patel, Manager 1300 N. Ponce De Leon Blvd. Saint Augustine, FL 32084 Bankruptcy Case No.: 12-01611 Chapter 11 Petition Date: March 13, 2012 Court: United States Bankruptcy Court Middle District of Florida (Jacksonville) Judge: Paul M. Glenn Debtor's Counsel: Buddy D. Ford, Esq. BUDDY D. FORD, P.A. 115 N. MacDill Avenue Tampa, FL 33609-1521 Tel: (813) 877-4669 Fax: (813) 877-5543 E-mail: Buddy@tampaesq.com Scheduled Assets: $2,806,436 Scheduled Liabilities: $7,281,349 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/flmb12-01611.pdf The petition was signed by Jyotsna "Jane" Patel, manager. Affiliate that filed separate Chapter 11 petition: Petition Debtor Case No. Date ------ -------- ---- Durgama, Inc 11-02409 04/01/11 JAI Ambaji Corporation 11-09119 12/20/11 Patel, Jyotsna & Narendra 12-00051 01/05/12 The Historical Properties, LLC 11-09128 12/20/11 AMERICAN AIRLINES: Groom Law Okayed as Employee Benefits Counsel ---------------------------------------------------------------- The Bankruptcy Court entered a final order authorizing the employment of Groom Law Group, Chartered as AMR Corp. and its affiliates' special employee benefits counsel, nunc pro tunc to the Petition Date. Groom will not withdraw as the Debtors' counsel prior to the effective date of any Chapter 11 Plan confirmed in these Chapter 11 cases without prior approval of the Court, Judge Lane ruled. Randall White, associate general counsel of AMR Corp., said the Debtors selected the firm because of its "invaluable experience in providing legal services in connection with employee benefit plans and related issues." In return for its services, Groom Law will be paid its standard hourly rates minus a 10% discount and will be reimbursed of its expenses. The firm received a $100,000 retainer fee from the Debtors. The firm does not hold or represent any interest adverse to the Debtors or their estates, according to a declaration by Gary M. Ford, Esq., a principal in Groom Law. Mr. Ford may be reached at: Gary M. Ford, Esq. GROOM LAW GROUP, CHARTERED 1701 Pennsylvania Avenue, N.W. Washington, D.C. 20006-5811 Tel: (202) 861-6627 Fax: (202) 659-4503 E-mail: gford@groom.com About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. The Company's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Court OKs Debevoise as Aircraft Counsel ---------------------------------------------------------- The Bankruptcy Court entered a final order authorizing AMR Corp. and its affiliates' employment of Debevoise & Plimpton LLP as special aircraft counsel for the Debtors, nunc pro tunc to the Petition Date. In February, the Court entered an interim order approving the Debtors' employment of Debevoise. The Debtors tapped the firm to provide legal services with respect to issues related to aircraft financing and lease arrangements, and issues related to the treatment of those arrangements under Section 1110 of the Bankruptcy Code. The firm will also prepare and file court papers on behalf of the Debtors. Debevoise will be paid of its fees on an hourly basis and will be reimbursed of its expenses. Its hourly rates range from $850 to $1,075 for partners; $785 to $965 for counsel; $425 to $820 for associates; and $175 to $360 for legal assistants. The firm received a $2.1 million retainer and an advance against expenses for all services to be performed, according to court papers. Richard Hahn, Esq., at Debevoise & Plimpton LLP, disclosed in a declaration that his firm does not represent interest adverse to the Debtors. Mr. Hahn may be reached at: Richard Hahn, Esq. DEBEVOISE & PLIMPTON LLP 919 Third Avenue New York, NY 10022 Tel: (212) 909-6235 Fax: (212) 521-7236 E-mail: rfhahn@debevoise.com About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. The Company's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Court OKs AvAirPros as Airport Advisors ---------------------------------------------------------- Bankruptcy Judge Sean authorized the employment of AvAirPros as AMR Corp. and its affiliates' consultants, nunc pro tunc to January 23, 2012. As part of their overall restructuring efforts, the Debtors are evaluating and assessing their current airport real estate holdings and seek AvAirPros' recognized experience and knowledge in performing airline and real estate consulting and advisory services. AvAirPros currently functions in an interface/liaison capacity or provides assistance to, among others, American Airlines Inc., Alaska Airlines, Delta Air Lines, Southwest Airlines, and United Airlines as it relates to addressing financial, lease, business, technical, and operational issues that arise as part of both the business relationship between the Airlines and various airports, as well as the implementation of airport capital improvement programs at various airports throughout the United States. As the Debtors' consultant, AvAirPros will provide facility inventory and implementation planning services, facility standard benchmarking services, business negotiation and financial analysis in support of American's facility adjustment, and American's corporate real estate leadership various reports and analyses, to the Debtors. The engagement will terminate six months after the effective date of the firm's retention. AvAirPros will be paid for its services on an hourly basis and will get reimbursed for expenses. The firm's hourly rates are $231 for officer, $215 for senior managing director, $205 for managing director, $193 for senior director, $179 for director, $158 for senior manager, $143 for manager, $130 for consultant, and $63 for administrative. AvAirPros' total billings for its work will not exceed $765,023. Kevin Corrigan, vice president of AvAirPros, assures the Court that his firm is a "disinterested person" as the term is defined under Section 101(14) of the Bankruptcy Code. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. The Company's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: AEA Wins Nod for Bain as Consultant ------------------------------------------------------ Judge Sean Lane approved, on a final basis, the application to employ Bain & Company, Inc., as strategic consultants to American Eagle Airlines, Inc., nunc pro tunc to December 14, 2011. All prepetition claims of Bain against any of the Debtors, in excess of amounts already paid to Bain, will be waived, the Court ruled. Likewise, all prepetition claims of Bain's subsidiary Bain & Company Inc. United Kingdom against American Airlines, Inc., in excess of amounts already paid to Bain & Company Inc. United Kingdom or to Bain on account of such claims, will be waived. Mary Schlangenstein of Bloomberg News reported on March 2 that AMR Corp. is no longer using Bain & Co. as an adviser during its bankruptcy restructuring because the consultant's "assignment has been completed," AMR spokesman Sean Collins said. AMR hired Bain late in 2010 to help evaluate options for the divestiture of its American Eagle regional airline, Bloomberg noted. The Transport Workers Union had opposed continuing to pay Bain as an adviser during AMR's bankruptcy, the report said. The Debtors said in the application that the consulting services firm, which has previously served as American Eagle's strategic consultant, will assist the company in labor-cost assessment and negotiations. It will also help the company identify and structure potential labor solutions as part of its restructuring, and assist in the ongoing development of its business strategy. Bain will get a monthly fee of $525,000 and reimbursed expenses. American Eagle will also indemnify the firm for any liability that may result in connection with its employment, according to court papers. "Having worked with [American Eagle's] management and its other advisors, Bain has developed relevant experience and expertise regarding [American Eagle] that will assist it in providing effective and efficient services in these Chapter 11 cases," said John Hutchinson, the company's chief financial officer. Bain's services for American Eagle do not overlap with any other services provided by professionals working for the other affiliated debtors of AMR Corp., Mr. Hutchinson said, pointing out that its employees belong to different unions and are covered by different collective bargaining agreements. Bain does not hold or represent interest adverse to American Eagle or its estate, according to court papers filed by William Wade, vice-president of the firm. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. The Company's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN AIRLINES: Has Approval of KPMG as Tax Consultant --------------------------------------------------------- Judge Sean Lane approved, on a final basis, AMR Corp.'s application to employ KPMG LLP as their tax compliance and tax consultants, nunc pro tunc to the Petition Date. As tax consultant, KPMG will provide analysis concerning the tax implications of the Debtors' bankruptcy cases. It will also review the tax section of the Debtors' bankruptcy plan, and administer tax claims management and schedule of tax liabilities. The firm also agreed to provide international executive tax services for American Airlines and its international assignees for the past three years. KPMG will be paid on an hourly basis for its tax consulting services and will be reimbursed for its expenses. The firm's hourly rates are: Professionals Hourly Rate ------------- ----------- Partner $460-$590 Partner, Washington Nat'l. Tax/M&A $540 Director $410 Director, Washington Nat'l. Tax/M&A $440 Senior Manager $355-$495 Sr. Manager, Washington Nat'l. Tax/M&A $395 Manager $295-$410 Manager, Washington Nat'l. Tax/M&A $325 Senior Associate $210-$300 Sr. Associate, Washington Nat'l. Tax/M&A $230 Associate $180-$245 Associate, Washington Nat'l. Tax/M&A $200 KPMG will also be paid for its tax compliance services at these rates: Flat Rates per Tax Compliance Services Debtors' Employee ----------------------- ----------------- US Tax Compliance US Federal Income Tax Return $1,365 US State Income Tax Return $465 US Tax Equalization Calculation $465 Pre/Post Departure Interviews $545 Cost Projection $825 US Hypothetical Tax Calculation $330 Technology Fee $15/active assignee/month US Payroll Services $146/hour Global Coordination Fee 5% of global tax services Melisa Denis, a partner at KPMG, disclosed in a declaration that her firm does hold or represent interest adverse to the Debtors or their estates. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. American Airlines, American Eagle and the AmericanConnection carrier serve 260 airports in more than 50 countries and territories with, on average, more than 3,300 daily flights. The combined network fleet numbers more than 900 aircraft. The Company reported a net loss of $884 million on $18.02 billion of total operating revenues for the nine months ended Sept. 30, 2011. AMR recorded a net loss of $471 million in the year 2010, a net loss of $1.5 billion in 2009, and a net loss of $2.1 billion in 2008. The Company's balance sheet at Sept. 30, 2011, showed $24.72 billion in total assets, $29.55 billion in total liabilities, and a $4.83 billion stockholders' deficit. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/or 215/945-7000). AMERICAN HOME: $200MM MBS Suit vs. Citigroup Moved to State Court ----------------------------------------------------------------- Max Stendahl at Bankruptcy Law360 reports that U.S. District Judge Richard J. Sullivan ruled Tuesday that Allstate Insurance Co.'s $200 million suit over risky mortgage-backed securities bought from Citigroup Inc. belongs in state court despite the bankruptcy of American Home Mortgage Holdings Inc., a mortgage originator responsible for some loans pooled in the securities. Judge Sullivan agreed with Allstate that the Chapter 11 case of American Home Mortgage was not relevant to the insurer's suit, filed in February 2011 in state court, according to Law360. About American Home Defunct subprime mortgage lender American Home Mortgage Investment Corp. (NYSE: AHM) -- http://www.americanhm.com/-- based in Melville, New York, and seven affiliates filed for Chapter 11 protection on Aug. 6, 2007 (Bankr. D. Del. Case Nos. 07-11047 through 07-11054). James L. Patton, Jr., Esq., Joel A. Waite, Esq., and Pauline K. Morgan, Esq. at Young, Conaway, Stargatt & Taylor LLP represent the Debtors. Epiq Bankruptcy Solutions LLC acts as the Debtors' claims and noticing agent. The Official Committee of Unsecured Creditors selected Hahn & Hessen LLP as counsel. The Creditors Committee also retained Hennigan, Bennett & Dorman LLP, as special conflicts counsel. As of March 31, 2007, American Home Mortgage's balance sheet showed total assets of $20,553,935,000 and total liabilities of $19,330,191,000. AHM filed a de-consolidated plan of liquidation on Aug. 15, 2008. The plan was confirmed in February 2009. The plan was implemented in November 2010. APOLLO MEDICAL: Appoints Gary Augusta to Board of Directors ----------------------------------------------------------- Apollo Medical Holdings, Inc., announced the appointment of Gary Augusta to its Board of Directors. In addition, Mr. Augusta's investment firm - SpaGus Capital Partners - has agreed to provide ApolloMed with working capital. Mr. Augusta brings more than 20 years of experience as an executive focused on private equity, growth strategy, operations, corporate development and M&A at companies ranging from start-up ventures to Fortune 500 companies. He is also an experienced investor and operator of growth businesses. "Gary brings a wide scope of experience and expertise that will help ApolloMed earn a growing share of the $650 billion spent annually in the U.S. on inpatient hospital care," stated Warren Hosseinion, M.D., Chief Executive Officer of Apollo Medical Holdings, Inc. "His hands-on approach, business and investor network and ability to execute will benefit us tremendously." Mr. Augusta currently serves as President of SpaGus Ventures LLC and SpaGus Capital Partners, growth funds that invest in life sciences and technology companies. He previously co-founded and served as President and CEO of OCTANe, an innovation development corporation formed to start and fund biomedical, technology, green tech and other types of innovative startup companies. "I look forward to working with Warren and the talented ApolloMed team to help take the company to the next level," stated Gary Augusta. "ApolloMed's unique patient-centric, results-driven inpatient and post-discharge care delivery model positions it as a leader in this market." Earlier in his career, Mr. Augusta was Vice President of M&A and Corporate Development at engineering and construction giant Fluor, where he focused on internal new business creation and mergers and acquisitions. Prior to his tenure at Fluor, he served as a principal at global management consulting firm A.T. Kearney, where he focused on growth strategy, operational improvement and change management assignments for clients including Prudential Healthcare, FedEx, Wachovia and many others. Other posts include serving as Executive Director of the OCTANe Foundation for Innovation, and member of the UC Irvine CEO Roundtable, the Keck Graduate Institute Advisory Council and the UC Irvine Advisory Boards for both the School of Engineering and the School of Information & Computer Science. He serves as a board member or advisor to several start-up companies in the biomedical and technology industries, as well as board director for a publicly traded micro-cap company. Mr. Augusta resides in Southern California. He earned a BS in Mechanical Engineering from the University of Rhode Island and a Master of Science and Management (MSM) from Georgia Tech. In connection with his service to the Company as a director, Mr. Augusta entered into the Company's form of Director Agreement, which provides for Mr. Augusta to be a director and entitles Mr. Augusta to receive a restricted stock grant of 400,000 shares of the Company's Common Stock. The shares will vest monthly at a rate of 1/36 per month over a three year time period. Warrants Issued to Mr. Schreck The Company also issued, in connection with Mr. Schreck's appointment as Chairman of the Board of Directors, warrants to purchase 1,000,000 shares of Common Stock to Edward Schreck on February 15, 2012, with that issuance being made in accordance with an exempt private placement under Section 4(2) of the Securities Act. 333,334 of the warrants have vested and are currently exercisable and the remainder vest and become exercisable as to 333,333 of the warrants on Feb. 15, 2013, and as to 333,333 of the warrants on Feb. 15, 2014. Mr. Shreck's warrants have an exercise price of $0.145 per share and can be exercised for ten years. About Apollo Medical Glendale, Calif.-based Apollo Medical Holdings, Inc., provides hospitalist services in the Greater Los Angeles, California area. Hospitalist medicine is organized around the admission and care of patients in an inpatient facility such as a hospital or skilled nursing facility and is focused on providing, managing and coordinating the care of hospitalized patients. The Company reported a net loss of $156,331 in 2011 and a net loss of $196,280 during the prior year. The Company reported a net loss of $293,559 for the nine months ended Oct. 31, 2011. As reported in the Troubled Company Reporter on June 2, 2010, Kabani & Company, Inc., in Los Angeles, expressed substantial doubt about the Company's ability to continue as a going concern, following the Company's results for the fiscal year ended Jan. 31, 2010. The independent auditors noted that the Company has an accumulated deficit of $1.24 million as of Jan. 31, 2010, working capital of $1.07 million and cash flows used in operating activities of $338,141. APPLIANCE DIRECT: Court Enters Final Decree Closing Case -------------------------------------------------------- The U.S Bankruptcy Court in Orlando, Florida, entered its final decree on Feb. 15, 2012, closing the Chapter 11 case of Appliance Direct. Appliance Direct, Orlando's largest independent appliance retailer, filed for Chapter 11 bankruptcy in April 2011. Appliance Direct was founded in 1995 by CEO Sam Pak. The appliance retailer saw significant growth through the late 90's, and into the early 2000's. This successful start catapulted them into becoming the largest appliance retailer in the Orlando market. As a result, Appliance Direct looked to gain regional growth throughout the southeast United States, when they purchased 39 Rex locations. The plan to expand, utilizing heavily burdened Rex stores, failed quickly and lasted only seven months. "We broke our format," says Mark Salmon, President of Appliance Direct. The cost of opening and closing those stores as well as the retreat that followed, overwhelmed Appliance Direct, and led to the bankruptcy filings. "During that time, not one customer lost a penny or an appliance," Mark reported. When asked if they will "play it safe" in the future, Sam said "Different yes, safe no. Mark and I didn't come here looking for cushy government jobs." Appliance Direct will go on marketing their unique brand through fun and informative commercials featuring CEO, Sam Pak. They have created a business model that can sustain itself on very low retail margins. "The lesson we learned is we have to always treat our business as a startup. If it doesn't grow at the same efficiency as it did in the beginning, then we don't do it," said Mark. Appliance Direct has eight locations throughout central Florida and continues to be one of the largest appliance retailers in the country. ARMSTRONG WORLD: S&P Affirms 'BB-' Corp. Credit Rating on Dividend ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Armstrong World Industries Inc. The rating outlook is stable. "At the same time, we affirmed our 'BB-' issue-level ratings on the company's proposed upsized $1.3 billion senior secured credit facility. The proposed upsized facility consists of a $250 million revolving credit facility due 2015, a $250 million term loan A due 2015, and a proposed upsized $800 million term loan B due 2018. The recovery rating remains '3', indicating our expectation for meaningful (50% to 70%) recovery in the event of payment default," S&P said. "We expect proceeds from the proposed upsized term loan B, along with excess balance sheet cash, to be utilized to fund a special $500 million dividend to shareholders," S&P said. "The ratings affirmation follows Armstrong's recent announcement that it was considering the issuance of a $500 million special dividend to shareholders, funded through the combination of excess balance sheet cash and a $250 million add-on to its existing term loan B due 2018," said Standard & Poor's credit analyst Megan Johnston. "As a result of the proposed additional debt, we expect total adjusted leverage to increase to about 4x by year-end 2012, compared with about 3.5x as of the end of 2011, but still be within levels we would consider to be in line with the 'BB-' rating. (Total adjusted leverage includes adjustments for pensions, operating leases, and dividends and half the operating debt from WAVE, Armstrong's ceiling grid joint venture with Worthington Industries Inc. [BBB/Stable/--].) In addition, we expect funds from operations (FFO) to debt to remain between 20% and 30%, and for Armstrong to maintain total liquidity, including cash and revolver availability, in excess of $400 million," S&P said. "The affirmation also reflects our belief that Armstrong will continue to improve profitability, despite relatively weak sales growth, due to ongoing cost-cutting and other rationalization efforts. We expect EBITDA to increase to about $400 million for fiscal year 2012, including about $55 million in dividends from WAVE, up from about $380 million in 2011 (also including $55 million in WAVE dividends)," S&P said. "The rating outlook is stable, reflecting our view that Armstrong's total adjusted leverage will remain 4x or below, in line with our view of the rating, despite additional debt to fund a proposed shareholder dividend. We also believe that Armstrong's ongoing cost-cutting and rationalization efforts will continue to improve EBITDA despite still-challenging economic conditions. We also expect Armstrong to keep total liquidity, including cash and revolver availability, in excess of $400 million," S&P said. "We could take a negative rating action if the company continues to increase its use of debt for additional shareholder-friendly actions or debt-financed acquisitions, or if the ongoing weakness in the company's end markets results in lower-than-expected profitability. We could take a negative rating action if total adjusted leverage exceeds 4.75x on a sustained basis, or if total liquidity, including balance sheet cash and revolver availability, fell below $200 million," S&P said. "We consider a positive rating action unlikely over the near term, given the company's aggressive financial policy toward shareholder dividends, which we consider to be a key rating factor," S&P said. ATLANTIC & PACIFIC: Emerges From Chapter 11 as Private Company -------------------------------------------------------------- The Great Atlantic & Pacific Tea Company, Inc. has successfully consummated its financial restructuring and emerged from Chapter 11 bankruptcy protection as a privately-held company. The United States Bankruptcy Court of the Southern District of New York confirmed the Company's Plan of Reorganization on Feb. 28, 2012. As previously announced, Mount Kellett Capital Management LP, The Yucaipa Companies LLC and investment funds managed by Goldman Sachs Asset Management, L.P., have provided $490 million in debt and equity financing to sponsor A&P's reorganization plan and complete its balance sheet restructuring. In addition, JP Morgan and Credit Suisse arranged a $645 million exit financing facility. "In just over one year, we have completed a thorough restructuring of A&P's cost structure and balance sheet to build a strong foundation for the Company's future," said Sam Martin, A&P's President and Chief Executive Officer. "With the full support of our financial partners, the new A&P is committed to delivering exceptional value and an enhanced in-store experience to all of our customers across our more than 300 neighborhood food and drug stores." As part of the restructuring process, A&P assembled a new management team with experienced executives who are proven experts in their respective areas. The Company also adjusted its store footprint around its core markets, negotiated a new supply and logistics agreement with its principal supplier, C&S Wholesale Grocers, Inc., and worked with the Local Unions representing A&P's associates to modify their collective bargaining agreements. A&P also refurbished stores, eliminated closed store leases, and opened a brand new Superfresh store in Philadelphia's Northern Liberties neighborhood. Mr. Martin commented, "We greatly appreciate the support of our associates, vendors, unions and community leaders throughout the restructuring process, and we especially thank our customers for their loyalty and commitment to shopping at our stores. Going forward, we remain committed to investing in our stores and providing our customers with new products that match their health and wellness needs and reflect the diversity of the neighborhoods we serve." A&P and its subsidiaries filed voluntary Chapter 11 petitions on Dec. 12, 2010. About Great Atlantic & Pacific Founded in 1859, Montvale, New Jersey-based Great Atlantic & Pacific is a supermarket retailer, operating under a variety of well-known trade names, or "banners" across the mid-Atlantic and Northeastern United States. Before filing for bankruptcy in 2010, A&P operated 429 stores in 8 states and the District of Columbia under the following trade names: A&P, Waldbaum's, Pathmark, Pathmark Sav-a-Center, Best Cellars, The Food Emporium, Super Foodmart, Super Fresh and Food Basics. A&P had 41,000 employees prior to the bankruptcy filing. A&P and its affiliates filed Chapter 11 petitions (Bankr. S.D.N.Y. Case No. 10-24549) on Dec. 12, 2010, in White Plains, New York. In its petition, A&P reported total assets of $2.5 billion and liabilities of $3.2 billion as of Sept. 11, 2010. Paul M. Basta, Esq., James H.M. Sprayregen, Esq., and Ray C. Schrock, Esq., at Kirkland & Ellis, LLP, in New York, and James J. Mazza, Jr., Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, serve as counsel to the Debtors. Kurtzman Carson Consultants LLC is the claims and notice agent. Lazard Freres & Co. LLC is the financial advisor. Huron Consulting Group is the management consultant. Dennis F. Dunne, Esq., Matthew S. Barr, Esq., and Abhilash M. Raval, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represent the Official Committee of Unsecured Creditors. A&P sold 12 Super-Fresh stores in the Baltimore-Washington area for $37.83 million, plus the value of inventory. Thirteen other locations didn't attract buyers at auction and were closed mid- July 2011. The Bankruptcy Court entered an order Feb. 27, 2012, confirming the First Amended Joint Plan of Reorganization filed Feb. 17, 2012. The Plan provides for, among other things, a $490 million in financing from Yucaipa Cos., cancellation of existing equity interests and zero recovery for shareholders. AUSSIE PET: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Aussie Pet Mobile, Inc. 85 Enterprise, Suite 400 Aliso Viejo, CA 92656 Bankruptcy Case No.: 12-13141 Chapter 11 Petition Date: March 12, 2012 Court: United States Bankruptcy Court Central District of California (Santa Ana) Judge: Mark S. Wallace Debtor's Counsel: Marvin Maurice Oliver, Esq. LAW OFFICE OF MARVIN M. OLIVER 13522 Newport Ave., Suite 201 Tustin, CA 92780 Tel: (714) 734-8700 Fax: (714) 734-0202 E-mail: moliverlaw@mindspring.com Scheduled Assets: $1,768,462 Scheduled Liabilities: $8,379,560 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb12-13141.pdf The petition was signed by Ian W. Moses, president/CEO. AVIS BUDGET: S&P Gives 'BB' Rating on $500-Mil. Term Loan C ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' issue-level rating to Avis Budget Car Rental LLC's $500 million term loan C maturing 2019. "We also assigned a '1' recovery rating to this issue to indicate our expectation that lenders would receive very high (90%-100%) recovery of principal in the event of a payment default. Avis Budget Car Rental LLC is the major operating subsidiary of Avis Budget Group Inc. The company will use proceeds to pay off existing term loan Bs," S&P said. "The ratings on U.S.-based Avis Budget Group Inc. (parent of the Avis and Budget car rental brands and the Budget consumer truck rental brand) reflect the company's 'aggressive' financial risk profile (according to Standard & Poor's criteria definitions) and the price-competitive and cyclical nature of on-airport car rentals. The ratings also incorporate the company's position as a major global car rental company after the Oct. 3, 2011, acquisition of U.K. car renter Avis Europe PLC and the relatively stable cash flow its businesses generate, even during periods of economic weakness, due to the large noncash depreciation component of cash flow," S&P said. "The long-term rating outlook is stable. We expect Avis Budget's credit metrics to remain relatively consistent over the next two years as the company integrates Avis Europe's operations. We expect combined revenues, earnings, and cash flow to offset the incremental acquisition debt. We could raise the ratings if, over the next 12-18 months, Avis Budget benefits more than we currently expect from the integration, resulting in the adjusted operating margin (after depreciation) improving to greater than 15% over a sustained period. However, we consider this scenario unlikely in 2012. We also believe a ratings downgrade is unlikely, but we could take such an action if industry conditions weaken and the integration does not provide the expected benefits, causing the operating margin (after depreciation) to decline to less than 10% for a sustained period," S&P said. RATINGS LIST Avis Budget Group Inc. Avis Budget Car Rental LLC Corporate credit rating B+/Stable/-- Ratings Assigned Avis Budget Car Rental LLC Senior secured $500 million term loan C due 2019 BB Recovery rating 1 AVIV HEALTHCARE: Moody's Assigns 'B1' Rating to Add-On Issuance --------------------------------------------------------------- Moody's Investors Service has assigned a B1 rating to the add-on offering of senior unsecured notes of Aviv Healthcare Properties Limited Partnership currently being marketed. The rating outlook is stable. Ratings Rationale The proceeds of the add-on issuance are expected to be used to reduce the amounts outstanding under Aviv's secured acquisition facility due 2015 (with two one-year extensions to 2017). This is a credit positive both from the perspective of extending debt maturities (to 2019) and in terms of replacing secured debt with unsecured. Aviv's B1 senior unsecured rating continues to reflect the REIT's success at profitably operating a nationally diversified portfolio of skilled nursing facilities (SNFs), as well as its small size and its private company status. SNF's are characterized by relatively low profitability, as well as by heavy dependence on government reimbursements. Moody's notes that Aviv has sought to address these risks via diversification among 26 states and 35 operators. In doing so, Aviv has endeavored to choose states with more predictable reimbursement regimes and more favorable operating environment. In addition, although many of Aviv's operators are smaller private firms, Aviv has maintained long-term relationships with its tenants for many of which it is the only or the largest landlord. Aviv's credit profile is solid for the rating category with effective leverage of approximately 57% and secured leverage expected to decline closer to 22% following the add-on issuance. Despite the increased interest cost of the bond offering, Aviv's fixed charge is expected to remain over 2.0x. Positively, Aviv's liquidity will be enhanced with additional capacity under its acquisition facility. The stable outlook reflects Aviv's predictable cash flow from its long term triple net leases and no debt maturities until 2015. These credit positives are counterbalanced by Aviv's small size and operating focus on a relatively less profitable sector which tends to be subject to uncertainty associated with government reimbursement, as well as its private company status. A rating upgrade would be difficult in the short-term, and would be predicated upon the REIT increasing its size to over $1 billion in gross assets, with secured debt under 30% of gross assets and fixed charge coverage consistently above 2.5x. Improvement in the size and quality of Aviv's unencumbered pool, as well as ample liquidity at all times, would also be needed for an upgrade. Negative rating movement would most likely be precipitated by a deterioration in Aviv's credit profile beyond current levels, any liquidity concerns, or operational challenges resulting in a significant decline in the level of rent collections. The following ratings were assigned with a stable outlook: Aviv Healthcare Properties Limited Partnership -- senior unsecured debt rating at B1 Moody's last rating action with respect to Aviv was on January 24, 2011, when Moody's assigned a B1 rating to the senior unsecured notes offering of Aviv Healthcare Properties Limited Partnership (Aviv) and a Ba3 corporate family rating to Aviv. The principal methodology used in this rating was Global Rating Methodology for REITs and Other Commercial Property Firms published in July 2010. Aviv is a private, Chicago-based real estate company, organized as a REIT, with a primary focus on owning, acquiring and developing skilled nursing facilities (SNFs). Aviv generates its revenues by entering into long-term triple-net leases with local, regional and national operators throughout the US. At December 31, 2011, Aviv had $951 million in assets and $247 million in equity. AVIV REIT: S&P Keeps 'B+' Senior Unsecured Notes Rating on Add-On ----------------------------------------------------------------- Standard & Poor's Ratings Services said its 'B+' rating for Aviv REIT Inc.'s senior unsecured notes is unaffected by the company's add-on offering of $75 million senior unsecured notes. The notes have a 7.75% coupon and mature on Feb. 15, 2019. The company will use proceeds to repay roughly $72 million under the existing secured acquisition facility. The offering is the second add-on to the company's $200 million senior unsecured issue on Feb. 4, 2011. "Chicago-based Aviv is a private owner of skilled nursing facilities in the U.S., with 225 owned or managed properties housing 20,875 licensed beds. The company finances predominantly local and regional nursing home operators through the sale and leaseback of properties with long-term triple-net leases. Aviv is among the smallest of the REITs we rate and has an undepreciated book asset value of approximately $1 billion, which equates to a moderate $44,000 average cost per bed. However, the company maintains a geographically diverse portfolio of properties in 26 states with concentrations in California (17%), Texas (13%), Ohio (9%), Arkansas (8%), Pennsylvania (8%), and Missouri (7%)," S&P said. "The transaction reduces Aviv's secured debt to 38% of total outstanding debt from 100% at year-end 2010. While the company's interest costs will increase due to this add-on, we believe that Aviv's credit profile will ultimately benefit from the reduction in floating-rate debt and additional progress unencumbering its asset base. For more information on our rating on Aviv REIT, see our full analysis, 'Aviv REIT Inc.,' published Feb. 13, 2012, on RatingsDirect on the Global Credit Portal," S&P said. Ratings List Ratings Outstanding Aviv REIT Inc./ Aviv Healthcare Properties L.P./ Aviv Healthcare Capital Corp. Corporate credit B+/Stable/-- Senior unsecured B+ Recovery rating 3 BERNARD L. MADOFF: Dist. Judge to Oversee $100-Mil. Maxam Suit -------------------------------------------------------------- Maria Chutchian at Bankruptcy Law360 reports that U.S. District Judge Jed S. Rakoff on Wednesday agreed to oversee the Bernard L. Madoff liquidation trustee's suit against Maxam Absolute Return Fund Ltd. seeking $100 million in connection with the imprisoned fraudster's Ponzi scheme. Judge Rakoff granted a motion to withdraw the bankruptcy reference to address a handful of issues surrounding the suit, Law360 relates. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims agent. On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert US$64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. 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 in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.) As of Feb. 8, 2012, Mr. Picard has recovered $8.7 billion for investors. A total of $325.5 million has been distributed to investors. Mr. Picard has filed 1,000 lawsuits seeking $100 billion from banks such as HSBC Holdings Plc and JPMorgan Chase & Co. The trustee has seen more than $28 billion of his claims tossed by district judges. BI-LO: S&P Affirms 'B' Corp. Credit Rating; Off Watch Negative -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed the 'B' corporate credit rating on the Greenville, S.C.-based BI-LO, LLC (BI-LO) and removed the ratings from CreditWatch with negative implications. "At the same time, we revised the recovery rating on the company's $285 million senior secured second- lien notes to '5' from '4' and consequently lowered the issue-level rating on the notes to 'B-' from 'B'. The '5' recovery rating indicates our expectation of modest (10% to 30%) recovery of principal in the event of default, and the notes are now rated one notch below the corporate credit rating. This action comes after the company closed on its purchase of the Jacksonville, Fla.-based Winn-Dixie Stores Inc. (Winn- Dixie)," S&P said. "The recovery rating on the company's notes reflects our expectation of weaker recovery prospects in the event of a payment default for second-lien note holders, which is a result of the increased priority debt," said Standard & Poor's credit analyst Charles Pinson-Rose. He added, "The combined company now has the ability to borrow up to $700 million on its ABL revolving credit facility, which was previously $100 million." "We increased our estimate of the company's enterprise value upon emergence of a default pursuant to the Winn-Dixie acquisition. The increase, however, did not completely compensate for the larger- sized revolving credit facility and therefore worsened the recovery prospects for second- lien note holders, in our view," S&P said. "The outlook is stable. This incorporates our expectation that the company will improve credit metrics with moderate profit growth and debt reduction from free cash flow. We would consider a higher rating if management successfully implements its strategic operational initiatives at Winn-Dixie, BI-LO continues with is positive operating trends, and the combined company improves debt leverage to the mid-4x area and FFO to debt to approximately 18%. We forecast this would occur with about 15% EBITDA growth and debt reduction of $125 million. We believe such a scenario could occur in about two years. However, we would want to be sure that the company's financial policies and its private equity sponsor would be such that the company would maintain credit ratios appropriate for a higher rating," S&P said. "Conversely, we would consider a lower rating if debt leverage was in the mid-6x area, which could occur with a 15% decline in EBITDA. This could in turn occur with only 1% sales growth and about 50 basis points of EBITDA margin contraction at the combined company," S&P said. BIG WEST: S&P Withdraws 'B+' Rating ----------------------------------- Standard & Poor's Ratings Services withdrew its 'B+' rating on Big West Oil LLC at the request of the company. BLUEKNIGHT ENERGY: Reports $33.5 Million Net Income in 2011 ----------------------------------------------------------- Blueknight Energy Partners, L.P., filed with the U.S. Securities and Exchange Commission its Annual Report on Form 10-K disclosing net income of $33.47 million on $176.70 million of total revenue for the year ended Dec. 31, 2011, compared with a net loss of $23.79 million on $152.62 million of total revenue during the prior year. The Company reported net income of $7.58 million on $45.58 million of total revenue for the three months ended Dec. 31, 2011, compared with a net loss of $13.19 million on $39.09 million of total revenue for the same period a year ago. The Company's balance sheet at Dec. 31, 2011, showed $304.75 million in total assets, $246.95 million in total liabilities and $57.79 million in total partners' capital. "Our financial results for the fourth quarter of 2011 reflect the successful completion of the recapitalization and resolution of predecessor litigation. The recent payment of a quarterly distribution on our common units is a significant achievement. Our first distribution since 2008, the payment is an indicator of the progress we have made to lay a foundation to support growth as we meet increased demand for our midstream services," commented J. Michael Cockrell, Blueknight Energy Partners' president and chief operating officer. A copy of the Form 10-K is available for free at: http://is.gd/fnEl38 About Blueknight Energy Blueknight Energy Partners, L.P. (Pink Sheets: BKEP) -- http://www.bkep.com/-- provides integrated terminalling, storage, processing, gathering and transportation services for companies engaged in the production, distribution and marketing of crude oil and asphalt product. It provides services for the customers, and its only inventory consists of pipeline linefill and tank bottoms necessary to operate the assets. It has three operating segments: crude oil terminalling and storage services, crude oil gathering and transportation services, and asphalt services. BMS REAL ESTATE: Case Summary & 7 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: BMS Real Estate Solutions, LLC, Outside U. S. 1001 Service Road East Suite 103 Covington, LA Bankruptcy Case No.: 12-10336 Chapter 11 Petition Date: March 13, 2012 Court: United States Bankruptcy Court Middle District of Louisiana (Baton Rouge) Debtor's Counsel: Tristan Manthey, Esq. HELLER, DRAPER, PATRICK & HORN, LLC 650 Poydras Street, Suite 2500 New Orleans, LA 70130-6103 Tel: (504) 299-3300 Fax: (504) 299-3399 E-mail: tmanthey@hellerdraper.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the list of seven largest unsecured creditors is available for free at http://bankrupt.com/misc/lamb12-10336.pdf The petition was signed by Brett Oubre, manager. BRE PROPERTIES: Fitch Affirms Rating on Preferred Stock at 'BB+' ---------------------------------------------------------------- Fitch Ratings has revised the Rating Outlook for BRE Properties, Inc. (NYSE: BRE) to Positive from Stable. In addition, Fitch has affirmed the following credit ratings: -- Issuer Default Rating (IDR) at 'BBB'; -- Unsecured revolving credit facility at 'BBB'; -- Senior unsecured notes at 'BBB'; -- Convertible senior notes at 'BBB'; -- Preferred stock at 'BB+'. The ratings affirmations reflect Fitch's view that BRE's multifamily portfolio fundamentals will continue to improve in 2012 and 2013, following same-store NOI declines of -6.4% and - 3.7% in 2009 and 2010, respectively. The Outlook revision to Positive is driven by BRE's improvement of its leverage and coverage metrics and by Fitch's expectation that BRE's near- to medium-term credit profile will improve to a level more consistent with a 'BBB+' IDR, for a multifamily REIT which owns properties in coastal California and Seattle. BRE has meaningfully reduced debt on an absolute and relative basis since 2007 through raising equity, selling non-core assets and reducing development spending. Leverage improved to 7.0 times (x) as of Dec. 31, 2011 from 8.1x and 8.4x as of Dec. 31, 2010 and Dec. 31, 2009, respectively. Fitch expects BRE's leverage to continue to decline through organic de-levering (EBITDA growth), remaining between mid-6.0x to 7.0x, a range appropriate for a 'BBB+' rating. In a stress case not anticipated by Fitch resulting in negative same-store NOI, leverage could sustain above 8.0x, which would be appropriate for a 'BBB-' IDR. Fitch defines leverage as net debt divided by recurring operating EBITDA. Additionally, BRE's fixed charge coverage ratio has improved to 2.2x for 2011, as compared to 1.9x for 2010, and Fitch expects this metric to improve to between 2.5x-3.0x as fundamentals improve, a range appropriate for a 'BBB+' IDR. In a stress case not anticipated by Fitch resulting in negative same-store NOI, fixed-charge coverage could sustain below 2.0x, which would be appropriate for a 'BBB-' IDR. Fitch defines fixed charge coverage as recurring operating EBITDA less renewal and replacement capital expenditures, divided by interest expense, capitalized interest and preferred stock dividends. The company has improved the quality of its portfolio over the last few years through approximately $200 million of dispositions in non-core markets. As such, the vast majority of assets are now located in supply constrained, coastal California markets. Fitch views the strategy of owning assets in supply-constrained coastal markets as a credit positive as these markets also exhibit solid demand factors such as high cost of for-sale single-family housing and proximity to solid job growth markets. Fitch expects that BRE's portfolio will continue to experience positive operating fundamentals for the next few years with same store NOI growth between 4% and 6% each year through 2014. The company should benefit from the stabilization of properties under development and recently acquired properties contributing to recurring operating EBITDA. Given California's Proposition 13 tax-related consequence of selling assets, the company has traditionally utilized development as an essential component for growth. The sizeable scale of BRE's development pipeline has historically been a credit concern and negatively impacted the company's leverage ratios. In 2011, citing positive market fundamentals, the company restarted its development pipeline. Although not all costs are contractual nor within Fitch's time horizon, the pipeline's costs will total $1.3 billion of which $935 million remains unfunded. BRE's management intends to front-end its development activity and indicated future development advances will not surpass $200-$250 million annually. Fitch does not view the current pipeline as a significant concern given the positive operating fundamentals, project-specific sub- market supply and strong liquidity profile, although Fitch notes the inherent risks in development. The company's geographic concentration offsets to a degree the credit positive of the company's supply-constrained market focus strategy. 82.5% of same store NOI in 2011 was derived from the state of California (Fitch rates California's general obligation bonds 'A-'; Outlook Stable), with 23% of 2011 NOI from San Diego, 21% from the San Francisco Bay Area, 18% from Orange County, and 15% from Los Angeles. While BRE's SSNOI performance has been in line with a market-weighted PPR index, Fitch notes the seismic risks of the state and the potential for government budget dynamics to pressure property taxes. The Positive Outlook centers on Fitch's expectation that BRE's credit profile will improve to be consistent with a 'BBB+' rating, supported by management's commitment to reduce leverage through equity raises to offset development risks or should operating fundamentals deteriorate. Further, BRE continues to access various sources of capital and maintain a strong liquidity profile. For the period of Jan. 1, 2012 to Dec. 31, 2013, Fitch calculates that BRE's sources of liquidity (cash, availability under its unsecured revolving credit facility and projected retained cash flows from operating activities after dividends and distributions and adjusting for the company's increased dividend) exceed uses of liquidity (debt maturities and amortization and projected renewal and replacement capital expenditures) by 3.4x, which is strong for the current 'BBB' rating. Driving the strong liquidity coverage is BRE's minimal near term maturing debt; the next large debt maturity is a $300 million unsecured notes maturity in 2017. In addition, BRE maintains a strong level of unencumbered assets that provides solid coverage of unsecured debt for the rating category. Fitch calculates that BRE's ratio of unencumbered operating real estate to net unsecured debt (UAUD), ranges from 2.4x to 3.2x using a range of capitalization rates with a UAUD midpoint of 2.7x. This midpoint has improved from 2.4x and 1.9x as of Dec. 31, 2010 and Dec. 31, 2009, respectively, providing increasing cushion to unsecured bondholders. The financial covenants in the company's unsecured debt agreements do not limit BRE's financial flexibility. The two-notch differential between BRE's IDR and its preferred stock ratings is consistent with Fitch's criteria for corporate entities with a 'BBB' IDR. Based on Fitch's report 'Treatment and Notching of Hybrids in Nonfinancial Corporate and REIT Credit Analysis', these preferred securities are deeply subordinated and have loss absorption elements that would likely result in poor recoveries in the event of a corporate default. The following factors may result in an upgrade to 'BBB+': -- Leverage, defined as net debt to recurring operating EBITDA, sustaining below 7.0x for several quarters (leverage was 7.0x as of Dec. 31, 2011); -- Fixed charge coverage sustaining above 2.5x for several quarters (coverage was 2.2x for the year ended Dec. 31, 2011). The following factors may result in negative momentum on the ratings and Rating Outlook: -- Leverage levels sustaining above 8.0x for several consecutive quarters; -- Fixed-charge coverage sustaining below 2.0x for several consecutive quarters; -- If operating fundamentals relapse similar to the environment of 2009 in the near term, rather than remaining strong. CHOCTAW RESORT: Moody's Raises Corporate Family Rating to 'Caa1' ---------------------------------------------------------------- Moody's Investors Service raised Choctaw Resort Development Enterprise's Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to Caa1 from Caa3 after the Enterprise completed a refinancing of its bank debt that extended its debt maturities and improved its liquidity profile. At the same time, Moody's also upgraded the rating of Choctaw's senior unsecured notes to Caa1 from Caa3. The rating outlook is stable. Choctaw Resort recently entered into a new $78 million senior secured term loan agreement due February 2017 (unrated by Moody's) with various lenders. The proceeds from the new loan were mainly used to fully repay the Enterprise's pre-existing bank term loan that was scheduled to mature in May 2012. Moody's has withdrawn the rating on the pre-existing term loan. The rating action is as follows: Ratings upgraded: Corporate Family Rating - to Caa1 from Caa3 Probability of Default Rating -- to Caa1 from Caa3 $118.5 million senior unsecured notes due 2019 -- to Caa1(LGD4, 56%) from Caa3 (LGD4, 56%) Rating withdrawn: Senior Secured Term Loan due 2012 at Caa2 (LGD3, 41%) Ratings Rationale The rating upgrade reflects Choctaw Resort's improved liquidity profile and corresponding decline in near-term default risk after the completion of the term loan refinancing. The action also recognizes the completion of the fiscal year 2011 audit by the Enterprise's new external auditor who issued an unqualified opinion. However, the Caa1 rating also incorporates several key factors Moody's continues to view as credit weaknesses that will constrain any rating upside in the near term. These factors include but are not limited to: 1)Accounting and financial control issues; 2) management stability at both the Enterprise and the Choctaw Tribe -- the owner of the resort casino; and 3) corporate governance and transparency. "While we recognize the initiatives/changes the Enterprise and the Tribe are making collectively in order to restore creditability with investors, they have yet to demonstrate their continued commitment and effort to improve their financial discipline, transparency and corporate governance, as well as to establish a more stable professional management team at the gaming operation," commented Moody's lead analyst John Zhao. These factors are important rating drivers given the series of past events that led to Choctaw's recent financial distress. The Caa1 CFR also reflects Choctaw's small size, earnings concentration in a single jurisdiction and relatively low population density in its primary market. In addition, Moody's remains concerned about the deteriorated gaming revenue trend at the Enterprise's Pearl River Resort since the second half of 2011 attributable to continued weakness in the local economy in its primary gaming markets in Mississippi and Alabama. The rating also incorporates Moody's view that tribal distributions are somewhat aggressive in that the amount to be distributed will likely be maximized as per the credit agreement and bond indenture. The stable rating outlook anticipates that Choctaw's credit metrics will remain solid and its liquidity adequate in the next 12 months. Additionally, while some clarifications were made with regard to the nature of the FBI investigation at the casino since July 2011, the investigation is on-going. Moody's will continue to monitor further development from this investigation and assess potential rating implications as appropriate. While a rating upgrade is unlikely in the near term, positive ratings pressure could develop if no further issues arise concerning the quality of the Enterprise's financial reporting or its internal controls. A higher rating would also require Choctaw to demonstrate the longer-term viability of its operations by establishing a stable management structure and by reversing the recent negative gaming revenue/earnings trend at Pearl River Resort. Conversely, any factors/events that could debilitate the gaming operations would likely result in downward pressure, including an adverse development in the FBI investigation, turnover at management and a deterioration in liquidity. The principal methodology used in rating Chocotaw Resort was the Global Gaming Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Choctaw Resort is a component unit of the Mississippi Band of Choctaw Indians, which was created by the Tribe in October 1999 to run its gaming operations. It owns and operates in central Mississippi the Silver Star Hotel and Casino, the Golden Moon Hotel and Casino and the Bok Homa Casino, which commenced operations in 1994, 2002 and 2010, respectively. CIT GROUP: Offers $75 Million to Settle Shareholders Class Suit --------------------------------------------------------------- Reuters reports that CIT Group Inc on March 13, 2012, asked Judge Barbara Jones of the U.S. District Court for the Southern District of New York to approve a $75 million settlement proposal with former CIT shareholders in a class-action securities fraud lawsuit over actions preceding the large commercial lender's 2009 bankruptcy. According to the report, the preliminary settlement, which was submitted for Judge Jones' approval, would put an end to a lawsuit brought on behalf of purchasers of CIT securities from Dec. 12, 2006 to March 5, 2008. CIT once lent to 1 million small- and mid- sized businesses, but filed one of the five largest bankruptcies in U.S. history on Nov. 1, 2009, after loan losses surged. The New York-based company emerged in 2010 after a prepackaged reorganization, the report notes. The report relates CIT and the plaintiffs called the settlement a "very good result" and urged the judge to grant her initial approval of the proposed deal. The deal calls for CIT to pay $75 million in cash to be distributed among class members. The report notes, in refusing to dismiss the case two years ago, Judge Jones said the investors had sufficiently alleged they were misled by CIT officials. The plaintiffs had accused CIT of failing to disclose a lowering of credit standards, misrepresenting the performance of subprime mortgage and student loan portfolios. The plaintiffs, the judge said, had also adequately shown CIT directors sometimes approved the lowered lending standards while touting a "conservative" and "disciplined" approach to subprime lending, and learned of the weakened loan portfolios while publicly saying CIT would suffer "minimal" losses, the report says. The report adds the lead plaintiff in the case is Pensioenfonds Horeca & Catering, a pension fund for the Dutch hospitality and catering industry. Former CIT Chief Executive Jeffrey Peek is named as a defendant in the lawsuit. Mr. Peek was replaced by John Thain, who previously held the same role at Merrill Lynch & Co and NYSE Euronext. About CIT Group Bank holding company CIT Group Inc. and affiliate CIT Group Funding Company of Delaware LLC filed for Chapter 11 (Bankr. S.D.N.Y. Case No. 09-16565) on Nov. 1, 2009, with a prepackaged Chapter 11 plan of reorganization. Evercore Partners, Morgan Stanley and FTI Consulting served as the Company's financial advisors and Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel in connection with the restructuring plan. Sullivan & Cromwell served as legal advisor to CIT's Board of Directors. The Court validated the vote of CIT's impaired classes of creditors and confirmed the Plan on Dec. 8, 2009. The Plan provided for the conversion to equity or reinstatement of seven classes of debt issued primarily in the form of notes and debentures; one class of unsecured notes was exchanged for new debt. General unsecured creditors, including holders of claims arising from the rejection of executory contracts, were paid in full and deemed unimpaired. Holders of preferred and common stock, as well as subordinated claims, received no recovery. CIT emerged from bankruptcy protection on Dec. 11, 2009. * * * In February 2012, Moody's Investors Service upgraded CIT's Corporate Family Rating to B1 from B2, recognizing CIT's achievements in strengthening its liquidity profile by diversifying funding sources, extending debt maturities, and reducing the level of encumbered assets. Dominion Bond Rating Service also has upgraded CIT's ratings, including its Issuer Rating to BB (low) from B (high). CLARE AT WATER: Janet McDermott Joins Creditors' Committee ---------------------------------------------------------- Patrick S. Layng, the U.S. Trustee for Region 11, pursuant to 11 U.S.C. Sec. 1102(a) and (b), has appointed Janet McDermott to the Official Committee of Unsecured Creditors of The Clare At Water Tower in place of William J. McDermott, recently deceased. The panel now consists of: 1. E. Tryban Telser City of Chicago Esther Department of Law 30 North LaSalle, Room 1400 Chicago, IL 60602 2. Brian Tretiak Sodexo America, LLC 6081 Hamilton Boulevard Allentown, PA 18106 3. Philip Graff The Estate of Dolores Graff 1038 Asbury Evanston, IL 60202 4. Richard H. Harris 1800 North Prospect Avenue, #16D Milwaukee, WI 53202 5. Beatrice Lehman 55 East Pearson Street, #4904 Chicago, IL 60611 6. Betty Bergstrom 55 East Pearson Street, #4704 Chicago, IL 60611 7. Janet McDermott Same 55 East Pearson Street, #3106 Chicago, IL 60611 About The Clare at Water Tower The Clare at Water Tower is an upscale 334-unit high-rise continuing-care retirement community in Chicago, Illinois. The project is only 42% occupied because the target population either hasn't been able to sell homes or lacks sufficient cash to make required deposits as the result declining investments following the recession. The facility is a 53-story building on land rented from Loyola University of Chicago. The facility is managed and developed by a unit of the Franciscan Sisters of Chicago, who invested more than $14 million. The project opened in December 2008. Residents must make partially refundable deposits ranging from $263,000 to $1.2 million. Monthly fees are an additional $2,700 to $5,500. The Clare filed for Chapter 11 protection (Bankr. N.D. Ill. Case No. 11-46151) on Nov. 14, 2011, after defaulting on $229 million in tax-exempt bond financing used to build the project. Judge Susan Pierson Sonderby presides over the case. Matthew M. Murphy, Esq., at DLA Piper LLP, serves as the Debtor's counsel. Houlihan Lokey Capital, Inc., as its investment banker and financial advisor. Deloitte Financial Advisory Services LLP serves as restructuring advisor. Epiq Bankruptcy Solutions serves as claims and noticing agent. The Debtor, in its amended schedules, disclosed $56,778,671 in assets and $321,747,63 in liabilities. The petition was signed by Judy Amiano, president. The Official Committee of Unsecured Creditors proposed to retain SNR Denton US LLP as counsel. The Committee also tapped FTI Consulting, Inc., as its financial advisor. CLOVIS VILLAGE: Case Summary & 10 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Clovis Village Limited, LLC 1 Pointe Drive Suite 330 Brea, CA 92821 Bankruptcy Case No.: 12-13158 Chapter 11 Petition Date: March 12, 2012 Court: United States Bankruptcy Court Central District of California (Santa Ana) Judge: Catherine E. Bauer Debtor's Counsel: Kathy Bazoian Phelps, Esq. DANNING, GILL, DIAMOND & KOLLITZ, LLP 1900 Ave of the Stars 11th Fl Los Angeles, CA 90067 Tel: (310) 277-0077 Fax: (310) 277-5735 E-mail: kphelps@dgdk.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 10 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb12-13158.pdf The petition was signed by Robert M. Clark, president of managing member of manager. Affiliate that filed separate Chapter 11 petition: Petition Debtor Case No. Date ------ -------- ---- Bakersfield Grove Limited LLC COMMERCIAL VEHICLE: Reports $18.6 Million Net Income in 2011 ------------------------------------------------------------ Commercial Vehicle Group, Inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing net income of $18.59 million on $832.02 million of revenue for the year ended Dec. 31, 2011, compared with net income of $6.48 million on $597.77 million of revenue during the prior year. The Company's balance sheet at Dec. 31, 2011, showed $406.88 million in total assets, $394.11 million in total liabilities and $12.77 million in total equity. A copy of the Form 10-K is available for free at: http://is.gd/6WaqdU About Commercial Vehicle Group New Albany, Ohio-based Commercial Vehicle Group, Inc., (Nasdaq: CVGI) supplies fully integrated system solutions for the global commercial vehicle market, including the heavy-duty truck market, the construction and agricultural markets, and the specialty and military transportation markets. The Company has facilities located in the United States in Arizona, Indiana, Illinois, Iowa, North Carolina, Ohio, Oregon, Tennessee, Virginia and Washington and outside of the United States in Australia, Belgium, China, Czech Republic, Mexico, Ukraine and the United Kingdom. * * * In the Oct. 4, 2011, edition of the TCR, Moody's Investors Service upgraded Commercial Vehicle Group, Inc.'s Corporate Family Rating to B2 from B3, and Probability of Default Rating to B2 from B3. The B2 CFR reflects modest size, relatively high debt leverage, and exposure to highly cyclical commercial vehicle end markets. Demand for commercial vehicle components is primarily sensitive to economic cycles, fleet age, and regulatory implementation schedules. The CFR considers the substantial cash balance and absence of funded debt maturities until 2019. Moody's recognizes CVGI's demonstrated ability to manage its cost structure and working capital position to minimize cash burn in a challenging economic environment. Moody's believes the company is positioned to benefit from additional modest improvement in commercial vehicle build rates at least through mid 2012 and has sufficient liquidity to support associated working capital needs. As reported by the TCR on April 12, 2011, Standard & Poor's Ratings Services said it raised its corporate credit rating on New Albany, Ohio-based Commercial Vehicle Group Inc. (CVG) to 'B-' from 'CCC+'. "The upgrade reflects our assumption that CVG can improve EBITDA and cash flow in the next two years, because we believe commercial truck production volumes will continue to rise year-over-year in 2011 and 2012," said Standard & Poor's credit analyst Nancy Messer. Heavy-duty truck production increased by a meaningful 30% in 2010, leading to a 30% year-over-year sales increase. CONTAINER STORE: S&P Rates Corporate Credit 'B-'; Outlook Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B-' corporate credit rating to Coppell, Texas-based The Container Store Inc. "At the same time, we assigned our preliminary 'B-' issue level rating (the same as the preliminary corporate credit rating) with the preliminary '4' recovery rating to the company's proposed $275 million term loan facility. The company plans to use proceeds from the facility to refinance its domestic bank loan and mezzanine notes. The outlook is stable," S&P said. "The ratings reflect Standard & Poor's view that The Container Store Inc. has a 'highly leveraged' financial risk profile, as defined in our criteria, resulting from the 2007 leveraged buyout of the company by Leonard Green & Partners L.P.," said Standard & Poor's credit analyst Mariola Borysiak. She added, "This acquisition added a substantial amount of debt to the company's balance sheet and led to a significant weakening of cash flow protection measures." "Moreover, The Container Store's postbuyout capital structure includes preferred equity, which accrues dividends. We see this security as a means for extracting cash, if the credit facility is amended in the future to provide for this, and we would anticipate the replacement of the preferred stock with debt upon a future change in control. As such, we treat this preferred stock and the accrued dividend as debt in our ratio calculation, according to our criteria," S&P said. "Our ratings outlook is stable. Although we anticipate modest operational gains and adequate liquidity over the near term, we believe that credit metrics will remain deep within levels indicative of a highly leveraged financial risk profile, with leverage above 10x and EBITDA interest coverage below 1.0x," S&P said. "We could consider a downgrade if operating performance significantly deteriorates, likely the result of increased competitive pressure or weaker retail conditions. Specifically, this would result in covenant cushion declining to below 15%, stressing the company's liquidity position. An upgrade is not likely in the near term, given our expectations for consistently weak credit measures resulting from increasing preferred stock," S&P said. CRAWFORD CONSULTING: Files for Chapter 11 Bankruptcy Protection --------------------------------------------------------------- Vanessa Small at the Washington Post reports that Crawford Consulting and Mental Health Services Inc. located at 6490 Landover Rd., Landover, Maryland, has filed for Chapter 11 protection (Case No. 12-14007). Raouf M. Abdullah represents the Company. The Company estimated both assets and debts of $100,000, and $500,000. The Company owes $29,138 to unsecured creditor Joel Ganz. CRESTWOOD HOLDINGS: S&P Affirms 'B-' Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B-' corporate credit rating on Houston-based Crestwood Holdings LLC and 'B' corporate credit rating on operating subsidiary Crestwood Midstream Partners L.P. "We also assigned a preliminary 'CCC+' issue rating to Holdings proposed $400 million term loan B due 2018, pending our review of final documentation. At the same time, we assigned a preliminary '5' recovery rating to this loan, indicating the expectation of modest (10% to 30%) recovery if a payment default occurs. CMLP's 'B-' senior unsecured issue rating and '5' recovery rating remain unchanged. The outlook is stable for both entities," S&P said. "The ratings affirmations reflect our view that the acquisition is neutral for Holdings' and CMLP's overall credit profiles. CMLP's business risk profile will benefit from additional geographic and customer diversity, reducing its exposure to the Barnett Shale and Quicksilver Resources Inc.'s (B+/Stable/--) drilling program. Holdings will get about 20% of its cash flow via distributions from its 65% ownership in Crestwood Marcellus Midstream, the joint venture with CMLP (35% ownership)," S&P said. "In our opinion, significantly higher financial leverage offsets these benefits. In 2012, we expect Holdings' stand-alone leverage to increase to about 5.75x from 4x in 2011, and consolidated leverage to remain unchanged at about 6.1x," said Standard & Poor's credit analyst Michael Grande. "The stable outlook on CMLP reflects our view that the partnership will maintain stand-alone debt to EBITDA of about 4x. A higher rating is unlikely at this time because of CMLP's limited scale and high consolidated leverage. However, a higher rating is possible over time if we believed Holdings could maintain consolidated leverage of 4x or less. We could lower the rating on CMLP if a decrease in volumes causes cash flow to decline and financial ratios to deteriorate, such that stand-alone debt to EBITDA remains above 5x for an extended period," S&P said. CROSS BORDER: BlackRock Nominates Five Persons to Board ------------------------------------------------------- Red Mountain Resources, Inc., and Black Rock Capital, Inc., on Dec. 12, 2011, filed a complaint in the District Court for Clark County, Nevada, seeking (i) an order directing Cross Border Resources, Inc., to conduct an annual meeting for the election of directors and (ii) a declaration by the District Court that a proxy solicitation conducted by RMR and Black Rock in connection with that Annual Meeting and in accordance with applicable rules and regulations would not, in and of itself, constitute or be deemed an "Association," for the purposes of, and as that term is defined, in the Company's Bylaws. On Feb. 21, 2012, RMR, Black Rock, Alan W. Barksdale, Paul N. Vassilakos, Richard Y. Roberts, Lynden B. Rose, Randell K. Ford and William F. Miller, III, filed with the Securities and Exchange Commission a preliminary consent solicitation statement in connection with its anticipated solicitation of written consents from the stockholders of the Company to consent to the following actions without a stockholders' meeting, as authorized by Section 78.320 of the Nevada Revised Statutes: * Amend Article IV, Section 15 of Issuer's Bylaws to provide that stockholders have the ability to fix the size of the Issuer's Board of Directors and to increase the size of the Board to eleven directors; * Amend Article IV, Section 18 of the Bylaws to allow newly created directorships resulting from an increase in the size of the Board to be filled by a vote of the stockholders; * Subject to approval of the above actions, elect each of Alan W. Barksdale, Paul N. Vassilakos, Richard Y. Roberts, Lynden B. Rose, Randell K. Ford and William F. Miller, III, to serve as a director of the Issuer; * Repeal the amendments to the Bylaws adopted by the Board on Nov. 14, 2011, which added Article XIII - Acquisition of a Controlling Interest; and * Remove the power of the Board to amend the Bylaws prior to the next annual meeting of stockholders and repeal any provision of the Bylaws adopted by the Board in effect at the time this proposal becomes effective that was not included in the Bylaws as of Feb. 21, 2012. The Group is seeking to add six independent directors to the Issuer's Board because it does not believe the current Board is acting in the best interests of the Issuer's stockholders and that new independent directors are necessary in order to enhance stockholder value. The Group believes the approval of the actions will provide the Issuer with qualified and committed directors who, in accordance with their respective fiduciary duties as directors, will provide proper oversight and direct management to take decisive steps to maximizing stockholder value. On March 9, 2012, Black Rock delivered to the Issuer a "Notice of Stockholder Nomination of Individuals as Directors and Submission of Business Proposals at the 2012 Annual Meeting of Stockholders of Cross Border Resources, Inc." Therein, Black Rock notified the Issuer of its intention to submit the following business proposals at the Issuer's 2012 Annual Meeting: * Repeal the amendments to the Bylaws adopted by the Board on Nov. 14, 2011, which added Article XIII - Acquisition of a Controlling Interest; and * Repeal any provision of the Bylaws adopted by the Board that is in effect at the time this proposal becomes effective that was not included in, or otherwise a part of the Bylaws in effect as of the close of business on Feb. 26, 2012. Black Rock also notified the Issuer of its intention to nominate Messrs. Barksdale, Vassilakos, Roberts, Ford and Miller to be elected to the Board at the 2012 Annual Meeting. Red Mountain and its affiliates disclosed in an amended Schedule 13D filed with the SEC that, as of March 9, 2012, they beneficially own 6,973,589 shares of common stock of Cross Border Resources, Inc., which represents 38.1% of the shares outstanding. A copy of the filing is available for free at http://is.gd/08IP1m About Cross Border Resources Cross Border Resources, Inc. f/k/a Doral Energy Corp. (OTC BB: DRLY) -- http://www.DoralEnergy.com/-- is a licensed oil and gas operator in the state of New Mexico. The Company is headquartered in Midland, Texas. Cross Border was formed effective Jan. 4, 2011, following a merger between Doral Energy Corp. and the Pure Energy Group. The Company's balance sheet at Sept. 30, 2011, showed $25.92 million in total assets, $7.88 million in total liabilities and $18.04 million in total stockholders' equity. Prior to the merger, MaloneBailey, LLP, in Houston, Texas, issued a going concern qualification on Doral Energy following the results for fiscal year ended July 31, 2010. The auditor said that negative working capital and recurring losses from operations raise substantial doubt about Doral's ability to continue as a going concern. Cross Border reported a net loss of $471,068 on $5.59 million of total revenues and gains for the nine months ended Sept. 30 2011, compared with net income of $755,244 on $3.34 million of total revenues and gains for the same period the year before by the predecessor entity. DILLARD'S INC: S&P Ups Corp. Credit Rating to 'BB'; Outlook Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit rating on Little Rock, AR.-based Dillard's Inc. to 'BB' from 'BB-'. "At the same time, we raised the issue-level rating on the company's unsecured debt to 'BB' from 'BB-' and maintained the '3' recovery rating, indicating our expectation for meaningful (50% to 70%) recovery in the event of default. The outlook is stable," S&P said. "The upgrade reflects the company's steady performance growth over the past year," said Standard & Poor's credit analyst David Kuntz. He added, "It also incorporates our view that operations will demonstrate modest gains over the next 12 months and credit protection measures will remain strong." The ratings on Dillard's Inc. reflect performance over the past year that has been in line with Standard & Poor's expectations. The ratings also incorporate the company's solid credit protection metrics and our view that these measures are likely to remain indicative of an 'intermediate' financial risk profile (based on our criteria) over the near term," S&P said. "The stable outlook reflects our expectation for modest performance gains over the next year. We expect the company to continue to accrue benefits from its successful merchandise differentiation and good cost controls over the near term. It incorporates our view that Dillard's will maintain its credit protection measures, and that the company will use substantially all of its free operating cash flow for share repurchase activity," S&P said. "We would consider an upgrade if the company demonstrates further performance gains through modestly positive same-store sales, strengthens margins because of effective merchandising, and avoids meaningful markdown activity through good inventory controls. This would lead to a positive reevaluation of its business risk. At the same time, the company would have to at least maintain its solid credit protection metrics," S&P said. "Although unlikely, we would consider a downgrade if the company becomes meaningfully more aggressive with regards to shareholder- friendly activities. Under this scenario, the company would issue over $750 million of debt to use for share repurchases. This would result in leverage in the mid-2.0x area," S&P said. DYNEGY HOLDINGS: Plan Filing Exclusivity Extended to March 21 ------------------------------------------------------------- The U.S. Bankruptcy Court in Manhattan issued an ex parte bridge order extending Dynegy Holdings LLC's exclusive period to file a Chapter 11 plan until March 21, 2012. As reported in the March 1, 2012 edition of the Troubled Company Reporter, the Debtors asked the Court to extend the exclusive period for them to file a Chapter 11 plan of reorganization for an additional 120 days through and including July 5, 2012, and their exclusive period to solicit acceptances of that plan for an additional 180 days through and including September 3, 2012. In light of the substantial strides toward plan confirmation that have been made to date, it is critical that the Debtors be permitted to continue this process without disruption, Sophia P. Mullen, Esq., at Sidley Austin LLP, in New York, contends. She adds that the Chapter 11 cases are at an important juncture, and the Debtors believe that the paramount goal of achieving confirmation of the Plan and a timely exit from bankruptcy will be best served by maintaining a structure that optimizes the Debtors' ability to continue leading the plan process. In the three and a half months since commencing these Chapter 11 Cases, the Debtors have made tremendous progress in their restructuring efforts, Ms. Mullen relates. She notes that the Debtors have submitted a confirmable Plan that will resolve more than $3.5 billion in prepetition liabilities and the Consenting Noteholders, which hold in the aggregate approximately $1.8 billion of the approximately $3.57 billion principal amount of Senior Notes and Subordinated Notes, have agreed to vote to accept the Plan. Ms. Mullen further contends that the PSEG Entities, who were once adversaries, is now supporting the Plan. A hearing on the Disclosure Statement, previously scheduled for March 9, was moved to March 12. Ms. Mullen relates that the Debtors anticipate commencing solicitation on the Plan shortly after the Disclosure Statement Hearing, and will seek a confirmation hearing in mid-May. Ms. Mullen argues that in light of the substantial strides toward plan confirmation that have been made to date, it is critical that the Debtors be permitted to continue this process without disruption. She contends that the Chapter 11 cases are at an important juncture, and the Debtors believe that the paramount goal of achieving plan confirmation and a timely exit from bankruptcy will be best served by maintaining a structure that optimizes the Debtors' ability to continue leading the plan process. About Dynegy Inc. Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. In August, Dynegy implemented an internal restructuring that created two units, one owning eight primarily natural gas-fired power generation facilities and another owning six coal-fired plants. Dynegy missed a $43.8 million interest payment Nov. 1, 2011, and said it was discussing options for managing its debt load with certain bondholders. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7 to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion, while Roseton LLC and Dynegy Danskammer LLC each estimated $100 million to $500 million in assets and debt. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. Dynegy was advised by Lazard Freres & Co. LLC and the Debtor Entities' financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors has tapped Akin Gump Strauss Hauer & Feld LLP as counsel nunc pro tunc to November 16, 2011. Bankruptcy Creditors' Service, Inc., publishes DYNEGY BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Dynegy Inc. (http://bankrupt.com/newsstand/or 215/945-7000) DYNEGY HOLDINGS: Says Power Plants Are Real Properties ------------------------------------------------------ Dynegy Holdings LLC said the power plants that will be sold to creditors are real properties and not personal properties as claimed by U.S. Bank N.A. The statement came after U.S. Bank, as indenture trustee for the third party owners of the plants, filed court papers, saying the bankruptcy court should rule without a trial that the plants are leases of personal property. Last year, the bank sued Dynegy Holdings and two other subsidiaries of Dynegy Inc. after they proposed to end certain agreements including leases on the properties, and to determine U.S. Bank's claims arising from the rejection under Section 502(b)(6) of U.S. bankruptcy law. Whether the plants are real or personal property determines whether bankruptcy law puts a cap on damages from terminating the leases through bankruptcy. If the leases of the plants are real property leases, the Dynegy subsidiaries are liable for damages limited to three years rent. If the leases are for personal property, there is no limit on resulting damages, according to bankruptcy law. Dynegy's lawyer, Steven Bierman, Esq., at Sidley Austin LLP, in New York, said the power plants became real property when they were constructed and affixed to the land. Mr. Bierman said the plants "satisfy the three-part test" required under New York law for determining whether a property is real property, which includes "actual annexation to the realty." He also said that the language of the leases did not convert the power plants into personal properties contrary to U.S. Bank's claim. "The facilities became real property when they were constructed and affixed to the land, long before the agreements relied on by U.S. Bank were made, and those mere words, decades later, cannot alter the character of the facilities as real property as a matter of New York law," Mr. Bierman said in court papers. Dynegy Holdings' contention that the facilities are real property under New York law would lead to the absurd result that the sale- leaseback financing transactions and Financing Agreements would be a legal nullity. In court papers, U.S. Bank said the underlying documents provide that the facilities are personal property. "Defendants' contention that the facilities are real property under New York law would lead to the absurd result that the sale- leaseback financing transactions and financing agreements would be a legal nullity," U.S. Bank said. The bank also said it has standing to assert claims for the full amount due under the leases. The case is U.S. BANK NATIONAL ASSICATION, Plaintiff and Counterclaim-Defendant, v. DYNEGY HOLDINGS, LLC, DYNEGY ROSETON, LLC, AND DYNEGY DANSKAMMER, LLC, Defendants and Counterclaim- Plaintiffs, Adversary Pro. No. 11-09083 (Bankr. S.D.N.Y.). About Dynegy Inc. Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. In August, Dynegy implemented an internal restructuring that created two units, one owning eight primarily natural gas-fired power generation facilities and another owning six coal-fired plants. Dynegy missed a $43.8 million interest payment Nov. 1, 2011, and said it was discussing options for managing its debt load with certain bondholders. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7 to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion, while Roseton LLC and Dynegy Danskammer LLC each estimated $100 million to $500 million in assets and debt. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. Dynegy was advised by Lazard Freres & Co. LLC and the Debtor Entities' financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors has tapped Akin Gump Strauss Hauer & Feld LLP as counsel nunc pro tunc to November 16, 2011. Bankruptcy Creditors' Service, Inc., publishes DYNEGY BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Dynegy Inc. (http://bankrupt.com/newsstand/or 215/945-7000) DYNEGY INC: Has $236 Million Operating Loss in 2011 --------------------------------------------------- Dynegy Inc. on March 8 reported a $236 million operating loss for the full 12 months of 2011 compared to an operating loss of $11 million for 2010. These results include pre-tax, unrealized, net mark-to-market losses of $175 million ($107 million after-tax) and mark-to-market gains of $18 million ($11 million after-tax) during the years ended December 31, 2011 and 2010, respectively. 2011 Adjusted EBITDA was $281 million compared to $539 million for 2010. The reduced operating results can be attributed to a $31 million decrease in energy margins, $50 million in lower capacity revenues in all markets, a $123 million decrease in premium revenue due to fewer options sold, and a $34 million loss related to natural gas during the fourth quarter. These results were partially offset by $58 million in lower fixed operating costs. Primarily as a result of the $1,657 million non-cash loss on deconsolidation, the net loss for the full year ended December 31, 2011 totaled $1,645 million compared to a net loss of $234 million for 2010. The operating loss for the fourth quarter of 2011 was $86 million, compared to an operating loss of $163 million during the fourth quarter 2010. These results include pre-tax, unrealized, net mark-to-market losses of $35 million ($21 million after-tax) and mark-to-market losses of $105 million ($64 million after-tax) in the fourth quarter of 2011 and 2010, respectively. Adjusted EBITDA for the fourth quarter of 2011 totaled $(14) million, a decrease of $117 million compared to the fourth quarter 2010. Of the decrease, $37 million is attributable to compressed energy margins and lower generation volumes, arising from lower market prices and outages -- both planned and unplanned. An additional $80 million of the decrease is associated with hedging, broker fees and the natural gas loss. The Company realized a net loss of $1,377 million during the quarter ended December 31, 2011, compared to a net loss of $164 million during the same period in 2010 with the difference primarily attributable to the $1,657 million non-cash loss on deconsolidation. "While the fourth quarter and full-year results for 2011 were severely impacted by the difficult market environment, the Company is making substantial progress in its financial and operational restructuring activities," said Robert C. Flexon, Dynegy President and Chief Executive Officer. "The next milestone for the financial restructuring is the hearing to approve the Disclosure Statement, currently scheduled for March 12, 2012. Operationally, our focus on safety, reliability, and efficiency led to the achievement of no employee injuries during the fourth quarter and year-over-year recurring fixed cost improvements of $58 million. As power markets strengthen, we'll be well positioned to benefit from the hard work our employees continue to put forth." In August 2011, Dynegy reorganized its operations into three segments: 1) Coal, a 3,132 megawatt fleet of primarily coal-fired power plants located in the Midwest, 2) Gas, a 6,771 megawatt fleet of natural gas-fired plants located primarily in California and the Northeast, and 3) DNE, 1,570 megawatts of leased natural gas- and coal-fired facilities and 123 megawatts of owned gas and oil peaking facilities. The Company has recast its segment information for all prior periods to reflect this reorganization. General and administrative expenses are allocated to each segment. Management does not allocate interest expense and income taxes on a segment level and therefore uses operating income (loss) as the most directly comparable GAAP measure to Adjusted EBITDA when performance is discussed on a segment level. Cash flow from operations for the year ended December 31, 2011, which excludes the impact of cash flow from DH and its consolidated subsidiaries from November 8, 2011 through December 31, 2011 due to the deconsolidation, was $(20) million after posting $81 million of cash collateral to the Company's futures clearing managers and bilateral counterparties, as compared to cash flow from operations for the full year 2010 of $423 million after the return of $290 million of net cash collateral from the Company's futures clearing manager and bilateral counterparties. The year-over-year difference was driven by lower operating results in 2011 compared to 2010 and a $371 million net change in collateral associated with broker margins in support of the Company's hedging program. Cash interest costs were $86 million lower in 2011 compared to 2010, due in part to the November 7, 2011 Dynegy Holdings Chapter 11 filing. Cash flow used by investing activities totaled $215 million during 2011 compared to cash flow used by investing activities of $534 million in 2010. The 2011 amount includes a $303 million outflow resulting from the deconsolidation. During 2011, capital expenditures totaled $242 million, including $83 million in maintenance capital expenditures and $159 million in environmental capital expenditures, the latter of which reflects the Company's continuing investment in environmental upgrades under the Consent Decree. During 2010, capital expenditures totaled $333 million, with $121 million in maintenance capital expenditures and $212 million in environmental capital expenditures. Additional changes in cash flow from investing activities during 2011 can be attributed in part to the restructuring activities completed during the year, as well as to liquidation and maturity of short- term investments of cash. Cash flow from financing activities totaled $379 million during 2011 compared to a use of $69 million during 2010 largely due to several refinancing activities completed during the third quarter 2011. PRIDE Update During 2011, management announced a new cost and performance initiative, Dynegy PRIDE (Producing Results through Innovation by Dynegy Employees), that focuses on fixed cash cost improvements, gross margin improvements, and balance sheet efficiency. During 2011, recurring fixed cash costs were reduced by $58 million, compared to 2010 and an additional $26 million of cost improvements have been identified for 2012. Gross margin improved $12 million during 2011 as a result of PRIDE initiatives and $376 million of balance sheet efficiencies were secured primarily through the return of $364 million of collateral and restricted cash. New Chief Accounting Officer Clint Walden has been hired as Vice President - Accounting and will be appointed Vice President and Chief Accounting Officer, effective March 9, 2012. Walden joins Dynegy from Sirius Solutions and has over 20 years of experience in finance and accounting with significant experience with energy trading accounting, operations, processes and controls, complex transactions and technical accounting matters. He will report to Clint Freeland, Executive Vice President and Chief Financial Officer and be responsible for managing the company's financial and operational accounting functions and external reporting. The Chief Accounting Officer position was most recently held by Carolyn J. Stone who has been named Senior Vice President - Financial Planning and Analysis. In her new role, Stone is responsible for the strategic planning, analytics, and financial planning functions. Dynegy Inc. Consolidated Balance Sheets As of December 31, 2011 (in millions) ASSETS Cash and cash equivalents $396 Restricted cash and investments 69 Short-term investments - Accounts receivable, net of allowance for doubtful accounts of $19 and $32, respectively 6 Accounts receivable, affiliates 47 Inventory 57 Assets from risk-management activities 65 Assets from risk-management activities, affiliates 4 Deferred income taxes 5 Broker margin account 10 Prepayments and other current assets 13 -------------- Total Current Assets 672 Property, Plant and Equipment 4,878 Accumulated depreciation (1,544) -------------- Property, Plant and Equipment, Net 3,334 Other Assets Unconsolidated investment - Restricted cash and investments 103 Assets from risk-management activities 1 Assets from risk-management activities, affiliates 3 Intangible assets - Other long-term assets 14 -------------- 121 Total Assets $4,127 ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $15 Accounts payable, affiliates 26 Accrued interest - Accrued interest, affiliates 8 Accrued liabilities & other current liabilities 40 Liabilities from risk-management activities 64 Liabilities from risk-management activities, affiliates 2 Current portion of long-term debt 4 -------------- Total Current Liabilities 159 Long-term debt 584 Long-term debt to affiliates 1,250 -------------- Long-Term Debt 1,834 Other Liabilities Accounts payable, affiliates 870 Liabilities from risk-management activities 2 Deferred income taxes 5 Other long-term liabilities 145 -------------- Total Liabilities 3,015 Commitments and Contingencies Stockholders' Equity Common Stock 1 Additional paid-in capital 6,077 Subscriptions receivable (2) Accumulated other comprehensive loss, net of tax (53) Accumulated deficit (4,841) Treasury stock (70) -------------- Total Stockholders' Equity 1,112 -------------- Total Liabilities and Stockholders' Equity $4,127 ============== Dynegy Inc. Consolidated Statements of Operations Year Ended December 31, 2011 (in millions) Revenues $1,585 Cost of sales (963) -------------- Gross margin 622 Operating & maintenance expense, exclusive of depreciation & amortization expense (393) Depreciation and amortization expense (325) Impairment and other charges (6) Gain on sale of assets, net 1 Restructuring costs - General and administrative expenses (135) -------------- (858) Operating loss (236) Bankruptcy reorganization charges - Loss on deconsolidation (1,657) Losses from unconsolidated investments - Interest expense (357) Debt extinguishment costs (21) Other income and expense, net (6) -------------- Loss from continuing operations before income taxes (2,277) Income tax benefit 632 -------------- Loss from continuing operations (1,645) Income from discontinued operations, net of tax - -------------- Net loss ($1,645) ============== Dynegy Inc. Consolidated Statements of Operations Three Months Ended December 31, 2011 (in millions) Revenues $238 Cost of sales (162) -------------- Gross margin 76 Operating & maintenance expense, exclusive of depreciation & amortization expense (70) Depreciation and amortization expense (51) Impairment and other charges (4) Gain on sale of assets, net 1 Restructuring costs - General and administrative expenses (38) -------------- (162) Operating loss (86) Bankruptcy reorganization charges - Loss on deconsolidation (1,657) Losses from unconsolidated investments - Interest expense (72) Debt extinguishment costs - Other income and expense, net (10) -------------- Loss from continuing operations before income taxes (1,825) Income tax benefit 448 -------------- Loss from continuing operations (1,377) Income from discontinued operations, net of tax - -------------- Net loss ($1,377) ============== Dynegy Inc. Consolidated Statements of Cash Flows Year Ended December 31, 2011 (in millions) CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ($1,645) Adjustments to reconcile loss to net cash flows from operating activities: Depreciation and amortization 346 Goodwill impairments - Loss on deconsolidation of DH 1,657 Impairment and other charges, exclusive of goodwill impairments 12 Losses from unconsolidated investments, net of cash distributions - Risk-management activities 157 Risk management activities, affiliates 5 Loss on sale of assets, net (1) Deferred taxes (632) Debt extinguishment costs 21 Other 43 Changes in working capital: Accounts receivable 49 Inventory (3) Broker margin account (74) Prepayments and other assets (1) Accounts payable and accrued liabilities 105 Affiliate transactions 16 Changes in non-current assets (77) Changes in non-current liabilities 2 -------------- Net cash provided by (used in) operating activities ($20) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ($242) Deconsolidation of DH (303) Unconsolidated investments - Proceeds from asset sales, net - Maturities of short-term investments 475 Purchases of short-term investments (284) Decrease (increase) in restricted cash 88 Other investing, net 12 -------------- Net cash provided by (used in) investing activities ($254) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term borrowings, net of financing costs $2,020 Repayments of borrowings (1,624) Debt extinguishment costs (21) Net proceeds from issuance of capital stock 3 Other financing, net 1 -------------- Net cash provided by (used in) financing activities 379 -------------- Net increase (decrease) in cash & cash equivalent 105 Cash & cash equivalents, beginning 291 -------------- Cash & cash equivalents, end $396 ============== About Dynegy Inc. Through its subsidiaries, Houston, Texas-based Dynegy Inc. (NYSE: DYN) -- http://www.dynegy.com/-- produces and sells electric energy, capacity and ancillary services in key U.S. markets. The power generation portfolio consists of approximately 12,200 megawatts of baseload, intermediate and peaking power plants fueled by a mix of natural gas, coal and fuel oil. In August, Dynegy implemented an internal restructuring that created two units, one owning eight primarily natural gas-fired power generation facilities and another owning six coal-fired plants. Dynegy missed a $43.8 million interest payment Nov. 1, 2011, and said it was discussing options for managing its debt load with certain bondholders. Dynegy Holdings LLC and four other affiliates of Dynegy Inc. sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-38111) Nov. 7 to implement an agreement with a group of investors holding more than $1.4 billion of senior notes issued by Dynegy's direct wholly-owned subsidiary, Dynegy Holdings, regarding a framework for the consensual restructuring of more than $4.0 billion of obligations owed by DH. If this restructuring support agreement is successfully implemented, it will significantly reduce the amount of debt on the Company's consolidated balance sheet. Dynegy Holdings disclosed assets of $13.77 billion and debt of $6.18 billion, while Roseton LLC and Dynegy Danskammer LLC each estimated $100 million to $500 million in assets and debt. Dynegy Holdings and its affiliated debtor-entities are represented in the Chapter 11 proceedings by Sidley Austin LLP as their reorganization counsel. Dynegy and its other subsidiaries are represented by White & Case LLP, who is also special counsel to the Debtor Entities with respect to the Roseton and Danskammer lease rejection issues. Dynegy was advised by Lazard Freres & Co. LLC and the Debtor Entities' financial advisor is FTI Consulting. The Official Committee of Unsecured Creditors has tapped Akin Gump Strauss Hauer & Feld LLP as counsel nunc pro tunc to November 16, 2011. Bankruptcy Creditors' Service, Inc., publishes DYNEGY BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Dynegy Inc. (http://bankrupt.com/newsstand/or 215/945-7000) DYNEGY INC: S&P Says 'CC' Rating Unaffected by Examiner Report -------------------------------------------------------------- Standard & Poor's Ratings Services' ratings on Dynegy Inc. (CC/Negative/--) and Dynegy Power LLC (CCC+/Negative/--) are not currently affected by the conclusion of the examiner of Dynegy Holdings LLC's (D/--/--) bankruptcy that key asset transfers between Dynegy Inc. and certain subsidiaries before the bankruptcy were fraudulent transfers. "While Standard & Poor's does not have an opinion on the merits of the examiner's findings, our negative outlook already reflects the risk that Dynegy Inc. and Dynegy Power may yet be drawn into the Dynegy Holdings bankruptcy. Such risk includes the possibility that these key asset transfers may be reversed. We expect the ensuing litigation among Dynegy Inc. and its subsidiaries and various creditor groups to be a more complex and protracted process given the examiner's conclusions and the likely need to revise the bankruptcy plan," S&P said. EAST COAST: Plan Confirmation Hearing Scheduled for March 19 ------------------------------------------------------------ The Hon. Randy D. Doub of the U.S. Bankruptcy Court for the Eastern District of North Carolina will convene a hearing on March 19, 2012, at 11:00 a.m., to consider the confirmation of East Coast Development II, LLC's Chapter 11 Plan, amended as of Jan. 13, 2012. The Court has conditionally approved the Amended Disclosure Statement. The Court also fixed March 14, as the last day for filing written acceptances or rejections of the Plan, and objections, if any, to the confirmation of the Plan. The amendment to the Disclosure Statement contains restated Exhibits A, B, and C, pursuant to the provisions of Section 1125(b) of the Bankruptcy Code. A full-text copy of the Amendment to the Disclosure Statement is available for free at http://bankrupt.com/misc/EAST_COAST_ds_amendment.pdf About East Coast Development II Wilmington, North Carolina-based East Coast Development II, LLC, dba 100 Block of Market Street, LLC, is in the business of renting real property located in Onslow County, New Hanover County, Guilford County, Wake County, Brunswick County, North Carolina, and Greenville County, Charleston County, and Richland County, South Carolina. East Coast filed for Chapter 11 bankruptcy protection (Bankr. E.D. N.C. Case No. 11-02792) on April 8, 2011. Trawick H. Stubbs, Jr., Esq., at Stubbs & Perdue, P.A., serves as bankruptcy counsel. Laurie R. Brown, CPA, serves as accountant. The Debtor disclosed $24.8 million in assets and $12.2 million in liabilities as of the Chapter 11 filing. The U.S. Trustee has not appointed a creditors committee in the Debtor's case. EDUCATION MANAGEMENT: S&P Assigns 'BB-' CCR; Outlook Negative ------------------------------------------------------------- Standard & Poor's Ratings Services assigned Pittsburgh-based Education Management LLC's new $350 million term loan due 2018 its 'BB' issue-level rating (one notch higher than the 'BB-' corporate credit rating on the company). "The recovery rating on this debt is '2', indicating our expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default," S&P said. "The 'BB-' corporate credit rating on the company, along with the negative rating outlook, remains unchanged," S&P said. "The 'BB-' rating reflects Education Management's dependence on federal student loan programs and the limitations set by the Department of Education's (DoE) regulations on gainful employment and federal student loan eligibility. We expect the company's revenue and EBITDA trends to remain under pressure in 2012 and potentially beyond, as the company implements further initiatives to reduce student loan default rates and revises its business practices to comply with new regulations," S&P said. "We view Education Management's business risk profile as 'weak' because the regulatory risk outweighs its good market position and business fundamentals. We continue to assess the company's financial risk profile as 'aggressive' as a result of the high debt balances it incurred in its 2006 LBO. For 2012, under our base-case scenario, we expect leverage to be in the mid-4x area, broadly in line with the financial risk indicative ratio range of 4x-5x that we associate with an aggressive profile under our criteria," S&P said. "Education Management is one of the leading for-profit post- secondary education providers, offering both traditional and online programs in career-oriented disciplines. The company directly or indirectly derived 90.3% of its fiscal 2011 net revenue from federal government-sponsored financial aid (compared with 88.5% in fiscal 2010) that its students receive. We consider this high exposure to federal student lending as a long-term risk for the company, because any legislative or regulatory action that results in a substantial reduction in funding would significantly hurt its profits," S&P said. RATINGS LIST Education Management LLC Corporate Credit Rating BB-/Negative/-- New Ratings Education Management LLC $350 mil term loan due 2018 BB Recovery Rating 2 ELITE PHARMACEUTICALS: Reports First Shipment of Hydromorphone -------------------------------------------------------------- Elite Pharmaceuticals, Inc., announced the initial shipment of hydromorphone hydrochloride 8 mg tablets, the generic equivalent of Dilaudid 8 mg tablets under the License, Manufacturing and Supply Agreement with its sales and marketing partner, triggering a milestone payment. Elite's sales and marketing partner will distribute the product as part of a multi-product distribution agreement. Hydromorphone hydrochloride is a member of the opioid analgesic and antitussive class. It is a pure opioid agonist used primarily for pain relief or as a cough suppressant. For the twelve months ending September 2011, Dilaudid 8 mg tablets and its generic equivalents had total U.S. sales of approximately $30 million according to IMS Health Data. About Elite Pharmaceuticals Northvale, New Jersey-based Elite Pharmaceuticals, Inc., is a specialty pharmaceutical company principally engaged in the development and manufacture of oral, controlled-release products, using proprietary technology and the development and manufacture of generic pharmaceuticals. The Company has one product, Phentermine 37.5mg tablets, currently being sold commercially. The Company reported a net loss of $8.05 million for the nine months ended Dec. 31, 2011, compared with net income attributable to common shareholders of $3.02 million for the same period a year ago. The Company previously reported a net loss of $13.6 million for fiscal year ended March 31, 2011, following a net loss of $8.1 million in fiscal year 2010. The Company's balance sheet at Dec. 31, 2011, showed $10.34 million in total assets, $24.65 million in total liabilities and a $14.31 million total stockholders' deficit. Demetrius & Company, L.L.C., in Wayne, New Jersey, expressed substantial doubt about Elite Pharmaceuticals' ability to continue as a going concern. The independent auditors noted that the Company has experienced significant losses resulting in a working capital deficiency and shareholders' deficit. ELTON APARTMENTS: Case Summary & 5 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Elton Apartments LLC 184 Kenyon Street Hartford, CT 06105 Bankruptcy Case No.: 12-20543 Chapter 11 Petition Date: March 13, 2012 Court: United States Bankruptcy Court District of Connecticut (Hartford) Judge: Albert S. Dabrowski Debtor's Counsel: Mei-wa Cheng, Esq. 184 Kenyon Street Hartford, CT 06105 Tel: (860) 798-9307 Fax: (860) 232-4970 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 A list of the Company's five largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ctb12-20543.pdf The petition was signed by Mei-wa Cheng, sole member and manager. ENERGY CONVERSION: Taps Plante & Moran as Accountant ---------------------------------------------------- Energy Conversion Devices, Inc., et al., seek authorization from the U.S. Bankruptcy Court for the Eastern District of Michigan to employ Plante & Moran, PLLC as accountant. The Debtors seek to retain P&M to perform certain accounting, consulting services, and other financial analyses. Aaron M. Silver, Esq., at Honigman Miller Schwartz And Cohn LLP, proposed counsel for the Debtors, said that P&M has been engaged since September 2011 and has developed an extensive knowledge of the company's background, operations, financial systems and financial information. The Debtors are seeking authority to retain P&M to continue rendering the accounting services. The Debtors may engage P&M to provide other financial and related assistance, which services may range from financial staffing assistance to information technology assistance. P&M will not formally audit any of the Debtors. P&M will be compensated based on the amount of professional time required at these hourly rates: TimothyWeed, Partner $385 David Priestley, Manager $340 Jackson Richardson, Senior Consultant $240 Andrew Zeleney, Senior Consultant $165 Partner $325-$450 Manager $275-$375 Senior Consultant $175-$275 Consultant $120-$175 Accounting/Paraprofessional $80-$120 Before the Petition Date, the Debtors paid P&M a retainer of $25,000, which will be applied to prepetition and postpetition services. Timothy G. Weed, a partner at P&M, assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Energy Conversion Devices Energy Conversion Devices -- http://energyconversiondevices.com/ -- has a renowned 51 year history since its formation in Detroit, Michigan and has been a pioneer in materials science and renewable energy technology development. The company has been awarded over 500 U.S. patents and international counterparts for its achievements. ECD's United Solar wholly owned subsidiary has been a global leader in building-integrated and rooftop photovoltaics for over 25 years. The company manufactures, sells and installs thin-film solar laminates that convert sunlight to clean, renewable energy using proprietary technology. Energy Conversion Devices filed for Chapter 11 relief (Bankr. E.D. Mich. Case No. 12-43166) on Feb. 14, 2012. Judge Thomas J. Tucker presides over the case. Aaron M. Silver, Esq., Judy B. Calton, Esq., and Robert B. Weiss, Esq., at Honigman Miller Schwartz & Cohn LLP, in Detroit, Michigan, represent the Debtor as counsel. The Debtor estimated assets and debts of between $100 million and $500 million as of the petition date. The petition was signed by William Christopher Andrews, chief financial officer and executive vice president. Affiliate United Solar Ovonic LLC filed a separate Chapter 11 petition on the same day (Bankr. E.D. Mich. Case No. 12-43167). Affiliate Solar Integrated Technologies, Inc., filed a petition for relief under Chapter 7 of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 12-43169. ENERGY CONVERSION: Hires Quarton Partners as Investment Banker -------------------------------------------------------------- Energy Conversion Devices, Inc., et al., seek permission from the U.S. Bankruptcy Court for the Eastern District of Michigan to employ Quarton Partners, LLC, as investment banker. The Debtors seek to retain Quarton to perform certain investment banking and consulting services in connection with the formulation, analysis, negotiation, and implementation of a going concern sale or other strategic alternatives relating to the Debtors' remaining operating businesses and assets, as described more fully in the second amended and restated engagement letter dated January 31, 2012 between Quarton and the Debtors. The salient terms of the Engagement Letter are: a. Continue Ovonic Sale Process. The Debtors retained Quarton in July 2010 to act as investment banker and financial advisor with respect to the restructuring and sale of the Debtors' interest in various businesses referred to as the Ovonic Material Division. Ovonic currently consists of the Ovonic Reformation business and the Ovonic Fuel Cell business. Quarton will continue to pursue potential sales of the Ovonic businesses. b. Ovonyx Sale. The Debtors intend to engage Quarton to manage and effect a going concern sale of Debtor's interest in Ovonyx through a Section 363 sale process. c. Solar Business. The Debtors intend to engage Quarton to manage and effect a going concern sale of it Debtors' solar business unit, which stock or assets are primarily related to the Debtor United Solar Ovonic LLC. d. Non-Core Solar Assets. The Debtors intend to engage Quarton to manage and effect a going concern sale of certain assets used to manufacture solar product that are not core to the Debtors' solar business unit. As described in the Engagement Letter, the Debtors have agreed that fees for services rendered by Quarton during these cases will be: a. Ovonic. These terms apply to a going concern Ovonic transaction: Transaction Fees 1.75% of the Aggregate Expense Reimbursement Reimbursement for reasonable out-of-pocket costs, including travel and legal expenses, incurred in connection with the performance of the services. Minimum Transaction Fee If single transaction: $400,000 minimum transaction fee If multiple transactions: $250,000 minimum transaction fee Maximum Transaction Fee Aggregate transaction fees capped at 10% of the aggregate cash or marketable securities received b. Ovonyx Sale. These terms apply to an Ovonyx transaction: Transaction Fees $300,000 plus 1.75% of the Aggregate Consideration received by the Debtors over $25 million Expense Reimbursement Reimbursement for reasonable out-of-pocket costs, including travel and legal expenses, incurred in connection with the performance of the services plus the expenses of an expert. Minimum Transaction Fee Not applicable. Maximum Transaction Fee Aggregate transaction fees capped at 10% of the aggregate cash or marketable securities received c. USO. These terms apply to a going-concern sale of USO's stock or assets: Transaction Fees $125,000 per month (whether or not a transaction occurs) plus $1,150,000 upon a transaction Expense Reimbursement Reimbursement for reasonable out-of-pocket costs, including travel and legal expenses, incurred in connection with the performance of the services plus the expenses of an expert. Minimum Transaction Fee Not applicable. Maximum Transaction Fee Aggregate transaction fees capped at 10% of the aggregate cash or marketable securities received d. Non-Core Solar Assets. These terms apply to a going concern sale of the Non-Core Solar Assets: Transaction Fees 2.00% of the Aggregate Consideration Expense Reimbursement Reimbursement for reasonable out-of-pocket costs, including travel and legal expenses, incurred in connection with the performance of the services plus the expenses of an expert. Minimum Transaction Fee Not applicable. Maximum Transaction Fee Aggregate transaction fees capped at 10% of the aggregate cash or marketable securities received Andre A. Augier, Managing Director at Quarton, assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Energy Conversion Devices Energy Conversion Devices -- http://energyconversiondevices.com/ -- has a renowned 51 year history since its formation in Detroit, Michigan and has been a pioneer in materials science and renewable energy technology development. The company has been awarded over 500 U.S. patents and international counterparts for its achievements. ECD's United Solar wholly owned subsidiary has been a global leader in building-integrated and rooftop photovoltaics for over 25 years. The company manufactures, sells and installs thin-film solar laminates that convert sunlight to clean, renewable energy using proprietary technology. Energy Conversion Devices filed for Chapter 11 relief (Bankr. E.D. Mich. Case No. 12-43166) on Feb. 14, 2012. Judge Thomas J. Tucker presides over the case. Aaron M. Silver, Esq., Judy B. Calton, Esq., and Robert B. Weiss, Esq., at Honigman Miller Schwartz & Cohn LLP, in Detroit, Michigan, represent the Debtor as counsel. The Debtor estimated assets and debts of between $100 million and $500 million as of the petition date. The petition was signed by William Christopher Andrews, chief financial officer and executive vice president. Affiliate United Solar Ovonic LLC filed a separate Chapter 11 petition on the same day (Bankr. E.D. Mich. Case No. 12-43167). Affiliate Solar Integrated Technologies, Inc., filed a petition for relief under Chapter 7 of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 12-43169. ENERGY CONVERSION: Wants Signature as Real Estate Consultants ------------------------------------------------------------- Energy Conversion Devices, Inc., et al., ask for authorization from the U.S. Bankruptcy Court for the Eastern District of Michigan to employ Signature Associates, L.L.C., as real estate consultants and brokers to the Debtors, nunc pro tunc to the Petition Date. Signature will, among other things, provide the Debtors with strategic consulting, financial analysis, transaction management and disposition services for the numerous buildings, properties and facilities located in North America and Europe that are currently occupied, owned or utilized by the Debtors. Signature will also provide the Debtors with brokerage services for the land and premises commonly referred to as 10 Clark Road, Battle Creek, Michigan, consisting of a 267,672 square foot building on 45 gross acres of land pursuant to the exclusive listing agreement for sale, dated July 21, 2011, as amended by the exclusive listing agreement extension -- sale dated Jan. 5, 2012. The real estate services and the brokerage services are necessary for the Debtors to maximize the value of their estate; improve the administration of key facilities; assist the Debtors in efficiently and effectively using their resources and personnel; and facilitate disposition of the properties. The Debtors intend to compensate Signature for its service under the real estate service agreement based upon completion of the transactions that result from Signature's performance of the real estate services. These transaction fees will be paid out of the funds received by the Debtors at the closing of the applicable transaction, either though the Debtors or the third-party, as the circumstances require. In the sale of a property or lease, the transaction fees to be paid to Signature, and any required cooperating or local broker, are based on the cash received by the Debtors and range from 3.5% - 6% in total. Upon a rent reduction or lease modification, Signature earns 8% of the net savings to the Debtors as agreed to by the Debtors and Signature and payable in three installments within 60 days of the closing date of the transaction. In any sublease brokered by Signature, Signature will receive 6% of the aggregate rental for the first five years and 3% for the next five years or any renewal period. Each individual transaction fee is capped at $300,000, excluding any payments by Signature to cooperating or local brokers. Fees for appraisal services requested by the Debtors will be mutually agreed upon with the Debtors and will not exceed $25,000. The Debtors intend to compensate Signature for its services under the listing agreement by paying Signature a commission of 6% of the aggregate sale price of the Battle Creek property in a sale or option to purchase granted within 90 days after expiration or termination of the listing agreement to a purchaser known to the Debtors to have been shown the Battle Creek property by Signature during the term of the listing agreement. Compensation will be payable upon the closing of a sale transaction and will be paid out of the sale proceeds. John Boyd, Signature Executive Vice President, assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Energy Conversion Devices Energy Conversion Devices -- http://energyconversiondevices.com/ -- has a renowned 51 year history since its formation in Detroit, Michigan and has been a pioneer in materials science and renewable energy technology development. The company has been awarded over 500 U.S. patents and international counterparts for its achievements. ECD's United Solar wholly owned subsidiary has been a global leader in building-integrated and rooftop photovoltaics for over 25 years. The company manufactures, sells and installs thin-film solar laminates that convert sunlight to clean, renewable energy using proprietary technology. Energy Conversion Devices filed for Chapter 11 relief (Bankr. E.D. Mich. Case No. 12-43166) on Feb. 14, 2012. Judge Thomas J. Tucker presides over the case. Aaron M. Silver, Esq., Judy B. Calton, Esq., and Robert B. Weiss, Esq., at Honigman Miller Schwartz & Cohn LLP, in Detroit, Michigan, represent the Debtor as counsel. The Debtor estimated assets and debts of between $100 million and $500 million as of the petition date. The petition was signed by William Christopher Andrews, chief financial officer and executive vice president. Affiliate United Solar Ovonic LLC filed a separate Chapter 11 petition on the same day (Bankr. E.D. Mich. Case No. 12-43167). Affiliate Solar Integrated Technologies, Inc., filed a petition for relief under Chapter 7 of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 12-43169. EXPERT GLOBAL: S&P Gives 'B' Issuer Credit Rating; Outlook Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B' issuer credit rating on Expert Global Solutions LLC (EGS), an intermediate holding company that will be the parent of Expert Global Solutions Inc. (EGS Inc.). The outlook is stable. "At the same time, we assigned our preliminary 'B' issue-level rating on EGS Inc.'s proposed first-lien senior secured credit facility (includes $120 million revolver and $675 million senior secured bank loan). The preliminary recovery rating is '3', indicating our expectation for meaningful (50%-70%) recovery in the event of a payment default. In addition, we assigned our preliminary 'CCC+' issue-level rating on its proposed $200 million second-lien senior secured term loan. The preliminary recovery rating is '6', indicating our expectation for negligible (0%-10%) recovery in the event of a payment default. EGS will guarantee all planned offerings. The ratings are based on preliminary terms and closing conditions for the proposed debt offerings and are subject to review upon receipt of final documentation," S&P said. "NCO Group Inc. recently announced that it is issuing debt to fund the repayment of existing debt and its merger with APAC Customer Services Inc. Concurrent with the closing of the debt offering, it will change its name to Expert Global Solutions Inc. (EGS Inc). NCO is seeking to refinance its existing senior secured credit facility--revolver and term loan--with a new first-lien senior secured credit facility that includes a $120 revolver (undrawn at close) and $675 million term loan. (As of Dec. 31, 2011, the outstanding balance on the revolver was $39 million, and the amount outstanding on the term loan was $457 million.) In addition, the company is issuing a $200 million second-lien senior secured term loan, and NCO's private equity sponsor, One Equity Partners (OEP), will convert its $159 million bridge loan related to its acquisition of APAC Customer Services Inc. into a paid-in- kind (PIK) option loan. The company plans to use the net proceeds to repay its existing outstanding $165 million senior floating rate and $200 million senior subordinated notes," S&P said. "EGS will roll the remaining equity from OEP's purchase of APAC (roughly $300 million) into the combined entity. The new first- lien senior secured credit facility and second-lien term loan will be obligations of EGS. The PIK option loan will be issued by NCO's parent company, Expect Global Solutions Holdings Inc. (not rated), and we expect the company will initially use the PIK option instead of paying cash dividends," S&P said. "As part of the merger transaction, EGS will issue new debt and repay NCO's existing debt. The new debt will have a more favorable payback timeline, with bank loan maturities extended to beyond 2017 from 2013. In addition, the company will repay its senior floating rate and senior subordinated notes that are due in 2013 and 2014. Balance sheet liquidity will be minimal, with cash accounting for an estimated 1.6% of total assets at the time the debt offerings close. Although, EGS will have access to a $120 million revolving line of credit that matures in 2017 with roughly $104 million expected to be undrawn at closing. EGS' ongoing funding needs have declined in recent quarters as NCO exited the purchased receivables line of business. We estimate that EGS' pro forma interest coverage ratio was 2.9x in the 12 months ended Sept. 30, 2011, assuming EGS Holdings does not choose to pay cash interest on its PIK option loan. We will continue to monitor closely EGS' EBITDA relative to its tightening financial covenants, especially considering NCO amended financial covenants multiple times in the past because of deteriorating EBITDA," S&P said. "'EGS' weak profitability, characterized by low margins and resulting, in part, from its sensitivity to the movements of collections markets, is a primary rating factor," said Standard & Poor's credit analyst Kevin Cole. "Assuming $20 million of cost synergies, conservatively lower than management's $30 million estimate, we estimate EGS' pro forma EBITDA margin was roughly 13.8% for the 12 months ended Sept. 30, 2011. We expect that additional cost synergies and modest growth within the customer relationship management segment will raise margins to more than 14% over the next 18 months. We expect that future revenue growth will largely stem from increasing CRM volumes." "In the 12 months ended June 30, 2011 (latest available for APAC), NCO had an adjusted pretax loss of $53.7 million (excluding restructuring charges and impairments), while APAC earned $33.0 million. We expect that the combined entity will remain unprofitable in the near term as restructuring charges more than offset synergies. In the longer term, EGS' profitability will depend highly on its ability to increase CRM revenues. We expect accounts receivable management (ARM) business revenues to be roughly flat as the difficult collections environment and lower credit card balances weigh on growth," S&P said. "'EGS' high leverage limits the rating. Following the merger, EGS will have more debt than that of the stand-alone companies," said Mr. Cole. "However, EGS' private equity owner, OEP, will keep its $300 million equity investment in APAC, which will improve leverage ratios and aggregate capitalization. In addition, the PIK option loan to OEP will be issued by EGS' parent and doesn't require cash dividends, giving it near-term, equity-like characteristics. However, our analysis assumes that EGS will eventually seek to replace the PIK option loan with new debt at the operating company." FAIRFAX FINANCIAL: S&P Rates C$200-Mil. Preferred Shares at 'BB' ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' global scale and 'P-3' Canadian scale ratings to Toronto-based Fairfax Financial Holdings Ltd.'s pending issuance of up to C$200 million in preferred shares, with an option on an additional C$50 million available to the underwriters. "Fairfax intends to issue the preferred shares from its current $2 billion universal shelf filing. We believe the company will use the proceeds to augment its cash position, to increase short-term investments and marketable securities held at the holding company, to retire outstanding debt and other corporate obligations, and for general corporate purposes," S&P said. "Fairfax, through its insurance operating subsidiaries--including Odyssey Reinsurance, Northbridge Financial units, Crum & Forster, and Zenith Insurance--maintains a competitive presence in the North American commercial insurance marketplace, as well as in the global reinsurance market. The ratings on Fairfax reflect the group's enhanced and well-diversified global footprint in reinsurance and insurance, strong operating performance mostly driven by consistent total returns on its investment portfolio, and very strong capitalization. Offsetting these positive factors are substantial catastrophe exposure that can create earnings volatility, above-average appetite for market risk, and reserving risk due to long-tail casualty writings and runoff segment," S&P said. "In 2011, Fairfax reported a pretax operating loss of $486 million, largely as a result of about $1 billion in catastrophe losses, compared with $220.5 million in 2010. Its combined ratio in 2011 for ongoing operations was somewhat high at 114.3%, with 19 percentage points stemming from catastrophe losses in 2011, as compared to 103.5% in 2010. On a pro-forma basis at year-end 2011, upon completion of the issuance and repayment of some outstanding debt, Fairfax's total financial leverage will be approximately 31.5%, which marginally exceeds our expectation, and the impact on EBITDA fixed-charge coverage is negligible. In 2012, we expect earnings and capital growth to bring financial leverage back to our expectation of about 30%," S&P said. RATINGS LIST Fairfax Financial Holdings Ltd. Counterparty Credit Rating BBB-/Positive/-- New Ratings Fairfax Financial Holdings Ltd. C$250 mil. preferred shares Global scale rating BB Canadian scale rating P-3 FENDER MUSICAL: S&P Affirms 'B' Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Fender Musical Instruments Corp. to stable from negative. "At the same time, we affirmed our 'B' corporate credit rating and 'B' senor secured rating on the company," S&P said. "The outlook revision follows Scottsdale, Ariz.-based Fender Musical Instruments Corp.'s announcement of its fourth-quarter 2011 results and improved operating performance and credit measures in 2011," said Standard & Poor's credit analyst Jeffrey Burian. He added, "We estimate Fender's adjusted debt to EBITDA (including our standard adjustments) was about 5.1x at the end of its fiscal year 2011, down from about 11.3x the prior year." "Fender also recently announced its intention to conduct an IPO and to use approximately $100 million of the proceeds to reduce its term loan; however we do not incorporate this into our outlook revision or current ratings because of the uncertainty regarding the potential IPO transaction's timing and final terms. If Fender successfully completes the proposed IPO transaction, resulting in a reduction of Fender's outstanding debt and corresponding improvement in credit metrics, we will evaluate the effect on Fender's ratings at that time. About $246 million of total debt was outstanding on Jan. 1, 2012," S&P said. "The stable outlook reflects our anticipation that the company will maintain adequate liquidity and credit measures near current levels. We could consider an upgrade if Fender's operating cash flow increases and it achieves and sustains strengthened credit measures in line with indicative ratios for an aggressive financial risk profile, including an adjusted total debt to EBITDA ratio between 4x and 5x, and a ratio of FFO to total debt in the range of 12% to 20%. We estimate Fender could achieve these metrics in a scenario of mid-single-digit revenue growth and an upper-single-digit EBITDA margin. Fender may also achieve an improved credit profile if it completes its proposed IPO on terms that include a substantial reduction of the company's outstanding debt. We could consider a downgrade if the company's financial policies become more aggressive, if leverage increases significantly, if operating performance and cash flow deteriorate substantially, or if liquidity becomes constrained," S&P said. FERTITTA MORTON: S&P Gives 'B' Corp. Credit Rating; Outlook Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Houston-based Fertitta Morton's Restaurants Inc. The rating outlook is stable. "At the same time, we assigned our 'BB-' issue-level rating and '1' recovery rating to the company's $215 million senior secured bank credit facility, which consists of a $15 million revolving credit facility due 2016 and a $200 million term loan due 2017. We understand that the company used the proceeds to fund the acquisition of Morton's Restaurant Group, refinance existing debt at Claim Jumper, and pay certain fees and expenses," S&P said. "The ratings reflect what we consider Fertitta Morton's Restaurants' 'weak' business risk profile (based on our criteria), which incorporates its presence in the highly competitive restaurant industry and exposure to commodity cost swings. The company's brand name recognition and diversity partly offset these weaknesses. The ratings also reflect a 'highly leveraged' financial risk profile with thin cash flow coverage ratios. We expect credit measures to improve modestly in the near term, as the company derives benefits from its expense reduction initiatives and uses excess cash flows for debt reduction," S&P said. "Pro forma for the Morton's Restaurants Group transaction, we anticipate leverage of 6x and funds from operations (FFO) to debt of 9%. Going forward, we anticipate credit measures will improve modestly over the next year. Specifically, we see leverage declining to 5.5x and FFO to debt increasing to about 10.5%. EBITDA margins will grow from 17.2% on a pro forma basis to about 17.9% on profit improvement programs," S&P said. Key aspects of S&P's expectations are: * Revenue growth of about 1% to 1.5%, primarily from organic growth initiatives. * "No new restaurant openings or additional acquisitions, as we think management will focus on integration," S&P said. * "We assume cost reduction targets are achievable because of management's track record at other acquired operations, and that cost-cutting efforts would help to offset food cost inflation," S&P said. * Capital spending of about $12 million, primarily for remodeling initiatives. * Free operating cash flow of about $18 million, about half of which the company would likely use for debt reduction. * No dividends. "Our rating on Fertitta Morton's Restaurants also incorporates our view of Landry's Inc. (B/Stable/--). Fertitta Morton's Restaurants is an affiliate of Landry's, sharing the same management teams. Landry's has demonstrated its ability to integrate acquisitions without any major issues and has realized meaningful profit growth through cost cuts, increasing efficiency, and obtaining buying synergies. A key risk to our forecast is the potential for management to be distracted by the concurrent integration of the larger size McCormick & Schmick restaurants that Landry's is acquiring," S&P said. GALP CNA: Spring Says Plan in Default, Wants Full Rights Exercised ------------------------------------------------------------------ Spring Independent School District filed with the U.S. Bankruptcy Court for the Southern District of Texas a written certification of GALP CNA Limited Partnership's default. According to Spring: 1. The Debtor has failed to pay the Class 2 Priority Tax Claims of Spring as required by Wentworth Roundhill I, L.P.'s Fourth Amended Chapter 11 Plan of Reorganization, confirmed on July 25, 2011. 2. The Debtor, Wentworth Roundhill I, L.P., has failed to pay Spring's secured property tax claim as required by the Plan and by the order resolving the Debtor's objection to its claim signed on Nov. 29, 2011. 3. Spring has notified Debtor's counsel of the default. The default has not been cured. 4. Spring gives notice of its intent to exercise its full rights pursuant to Texas law. Spring is represented by: Owen M. Sonik, Esq. PERDUE, BRANDON, FIELDER, COLLINS & MOTT, L.L.P. Independent School District 1235 North Loop West, Suite 600 Houston, TX 77008 Tel: (713) 862-1860 Fax: (713) 862-1429 E-mail: osonik@pbfcm.com About GALP CNA Houston, Texas-based GALP CNA Limited Partnership filed for Chapter 11 bankruptcy protection (Bankr. S.D. Tex. Case No. 10- 38975) on Oct. 4, 2010. The Debtor estimated its assets and debts at $1 million to $10 million at the Petition Date. GALP CNA's case is jointly administered with that of Wentwood Woodside I, L.P., Wentwood Roundhill I, L.P., Wentwood Rollingbrook, L.P., and GALP Cypress Limited Partnership. GALP CNA is the lead case. Houston, Texas-based GALP CNA Limited Partnership filed for Chapter 11 bankruptcy protection on Oct. 4, 2010 (Bankr. S.D. Tex. Case No. 10-38975). The Debtor estimated its assets and debts at $1 million to $10 million at the Petition Date. Houston, Texas-based Wentwood Woodside filed for Chapter 11 bankruptcy protection (Bankr. S.D. Tex. Case No. 10-38981) on Oct. 4, 2010. It estimated its assets at $10 million to $50 million and debts at $1 million to $10 million at the Petition Date. Three affiliates -- Wentwood Roundhill, Wentwood Rollingbrook, and GALP Cypress (Case No. 10-38991) -- also filed for Chapter 11 bankruptcy protection on Oct. 4, 2010. Matthew Hoffman, Esq., at the Law Offices of Matthew Hoffman, P.C., assists the Debtors in their restructuring efforts. GETTY IMAGES: S&P Rates $275-Mil. Incremental Term Loan at 'BB-' ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned Seattle, Wash.-based Getty Images Inc.'s proposed $275 million incremental term loan due 2015 its issue-level rating of 'BB-' (at the same level as its 'BB-' corporate credit rating on the company). "The recovery rating on this debt is '4', indicating our expectation of average (30%-50%) recovery for lenders in the event of a payment default. The company plans to use proceeds, along with $115 million of cash, to fund a distribution of about $379 million to its shareholders," S&P said. "In addition, we affirmed our corporate credit rating on Getty at 'BB-'. The rating outlook is stable," S&P said. "The 'BB-' rating on Getty reflects our expectation that its financial profile will remain 'aggressive' (based on our criteria) because of its private-equity ownership and substantial leverage. We regard Getty's business profile as 'fair' because of its leading market position. This is tempered by our expectation that unfavorable secular trends related to digital migration will continue to put some pressure on the company's traditional business. We expect Getty's business to remain cyclical. We expect operating performance to be stable, but over the near term, we anticipate minimal revenue and EBITDA growth because of organic revenue declines in the fourth quarter and the potential for growth in iStockphoto to slow," S&P said. Getty has a leading position as a global provider of preshot still and moving visual content. Its business relies on sales to the cyclical advertising and publishing industries. Structural shifts in marketing, to moving advertising online from print media, affect Getty's average price per image. Images for online use require small, lower-resolution files, which command lower prices than images for print media; however, the volume of online usage exceeds that of print. Getty has mitigated some of these pressures by exploring alternative licensing models, including value-priced and low-cost licensing, subscription-based package licensing, expansion into editorial photography (used in news, sports, and entertainment), and music licensing for commercial use. GLOBAL PROTECTION: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Global Protection USA, Inc. fka Global Protection Acquisition, Inc. 444 Kelley Drive, Unit 3A West Berlin, NJ 08091 Bankruptcy Case No.: 12-16322 Chapter 11 Petition Date: March 12, 2012 Court: United States Bankruptcy Court District of New Jersey (Camden) Judge: Judith H. Wizmur Debtor's Counsel: Ira Deiches, Esq. DEICHES & FERSCHMANN 25 Wilkins Ave. Haddonfield, NJ 08033 Tel: (856) 428-9696 Fax: (856) 795-6983 E-mail: ideiches@deicheslaw.com Scheduled Assets: $3,252,901 Scheduled Liabilities: $5,440,617 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/njb12-16322.pdf The petition was signed by Stephen Guarino, president. GMX RESOURCES: Swaps 2.3MM Common Shares for $5MM Conv. Notes ------------------------------------------------------------- GMX Resources Inc., on March 12, 2012, entered into an exchange agreement with seven holders of its 5.00% Convertible Senior Notes due 2013. Pursuant to this agreement, as consideration for the surrender by the holders of $5,000,000 aggregate principal amount of the 2013 Convertible Notes, GMXR will issue to the holders an aggregate of 2,285,715 shares of GMXR common stock, par value $0.001 per share, along with cash consideration relating to accrued and unpaid interest. This issuance of the Common Stock is being effected pursuant to Section 3(a)(9) of the Securities Act of 1933, and accordingly such Common Stock is exempt from registration as securities exchanged by the issuer with its existing security holders exclusively where no commission or other remuneration is paid or given directly or indirectly for soliciting such exchange. About GMX Resources GMX Resources Inc. -- http://www.gmxresources.com/-- is an independent natural gas production company headquartered in Oklahoma City, Oklahoma. GMXR has 53 producing wells in Texas & Louisiana, 24 proved developed non-producing reservoirs, 48 proved undeveloped locations and several hundred other development locations. GMXR has 9,000 net acres on the Sabine Uplift of East Texas. GMXR has 7 producing wells in New Mexico. The Company's strategy is to significantly increase production, revenues and reinvest in increasing production. GMXR's goal is to grow and build shareholder value every day. The Company reported a net loss of $206.44 million in 2011, a net loss of $138.29 million in 2010, and a net loss of $181.08 million in 2009. The Company's balance sheet at Dec. 31, 2011, showed $542.20 million in total assets, $474.92 million in total liabilities and $67.27 million in total equity. * * * In November 2011, Moody's downgraded the rating of GMX Resources' corporate family rating (CFR) to 'Caa3' from 'Caa1', the Probability of Default (PDR) rating to 'Ca' from 'Caa1', and the Speculative Grade Liquidity (SGL) rating to SGL-4 from SGL-3. The outlook is negative. The downgrade of GMX's PDR and note ratings reflect the company's announcement that greater than 50% of the holders of the notes due 2019 have accepted a proposed exchange offer, which Moody's views as a distressed exchange. The lowering of the CFR and SGL ratings reflects Moody's expectation of potential liquidity issues through the first quarter of 2013, as well as elevated leverage following the issuance of at least $100 million of proposed secured notes under the exchange offer and a proposed $55 million volumetric production payment (VPP), both of which the company expects to be executed before the end of 2011. Moody's treats VPPs as debt in Moody's leverage calculations. The negative outlook reflects the potential for the CFR and note ratings to be lowered if liquidity deteriorates further. As reported by the TCR on Dec. 21, 2011, Standard & Poor's Ratings Services lowered its corporate credit rating on GMX Resources Inc. to 'SD' (selective default) from 'CC'. "We also lowered the company's issue-level ratings to 'D' from 'CC', reflecting its completion of an exchange offer for a portion of its $200 million 11.375% senior notes due 2019," S&P said. "The rating actions follow the company's announcement that it has completed the exchange offer for its 11.375% senior notes due 2019," said Standard & Poor's credit analyst Paul B. Harvey. "The exchange offer included $53 million principle of 11.375% senior notes that accepted an exchange of $1,000 principle for $750 principle of new 11% senior secured notes due 2017. We consider the completion of such an exchange, at a material discount to par, to be a distressed exchange and, as such, tantamount to a default under our criteria." GOODMAN GROUP: Moody's Raises Hybrid Securities Rating to 'Ba2' --------------------------------------------------------------- Moody's Investors Service has raised to Baa2 from Baa3 Goodman Group's issuer and senior unsecured ratings. In addition, the subordinated rating on Goodman's hybrid securities has been raised from Ba2 to Ba1. The outlook is stable. Ratings Rationale "Goodman's Baa2 rating reflects continued progress made by Goodman in creating a sustainable, long term, prudent business platform", said Maurice O'Connell, a Moody's Senior Analyst. "The current rating incorporates an expectation that Goodman's financial as well as business profile will be sustained in its current form", added Mr. O'Connell. "The rating reflects Goodman's business model being better placed than in previous years to cope with adverse economic developments as a result of the group's establishment of relationships with capital partners as well as a strong focus on pre-sold and pre- committed developments". In particular, Moody's expects that Goodman will maintain gearing at present levels, consistent with its demonstrated progress in de-risking its business model via lower gearing and a less aggressive approach to its development activities. Moody's expects the ratio of Net Debt/EBITDA to trend around 6 times in the next 2-3 years, a level that is supportive of the Baa2 rating. The stable outlook reflects Moody's view that the current operating model is sustainable with development activity being undertaken in a prudent manner and via funds or capital partners funded substantially through retained earnings. Goodman's Baa2 issuer and senior unsecured ratings are driven by the group's portfolio of directly and indirectly owned high quality and well-diversified industrial property assets, its track record and established client relationships within its funds platform, and its leading market position as a developer of industrial property assets. The rating also reflects Moody's view that earnings will be inherently more volatile at Goodman than at a traditional REIT -- given the quantum of its funds management and development business, and the higher leveraged nature of around 40% of its gross rental income derived from its cornerstone investments -- and that its gearing should therefore be commensurately lower at any given rating level compared to traditional REITs. The group's ratings could be considered for an upgrade if look- through Net Debt/EBITDA ratio falls below 4 times (and 2.5 times at the headstock level), and look-through fixed charge coverage rising above 4 times on a sustained basis. When considering these metrics, Moody's would exclude any profit from asset recycling. In addition, Moody's would look for Goodman to maintain a well- laddered debt maturity profile that is more consistent with its asset structure. Downward rating pressures could eventuate if its look-through Net Debt/EBITDA ratio rose above 6.5 times (or headstock to above 5 times), and look-through fixed charge coverage fell below 2.2 times on a consistent basis. A material deterioration in the group's liquidity position (through a material reduction in available liquidity or build-up of short-term debt maturities), or evidence of meaningful increase in development risk or the emergence of financial support for its managed funds, could also lead to rating pressures. The principal methodology used in rating Goodman Group was Moody's Approach for REITs and Other Commercial Property Firms published in July 2010. GRANGER COURT: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Granger Court, LLC aka Granger Court aka Granger Court Apartments 6894 Silkwood Lane Solon, OH 44139 Bankruptcy Case No.: 12-11824 Chapter 11 Petition Date: March 13, 2012 Court: United States Bankruptcy Court Northern District of Ohio (Cleveland) Judge: Pat E Morgenstern-Clarren Debtor's Counsel: Wendy S. Rosett 16781 Chagrin Blvd., Suite 304 Shaker Heights, OH 44120 E-mail: wendy@rosettbk.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Marc D. Wittenberg, managing member. Affiliate that filed separate Chapter 11 petition: Petition Debtor Case No. Date ------ -------- ---- Marc D. Wittenberg 12-10865 02/10/12 GRANITE DELLS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Granite Dells Ranch Holdings LLC 15300 N. 90th Street, #200 Scottsdale, AZ 85260 Bankruptcy Case No.: 12-04962 Chapter 11 Petition Date: March 13, 2012 Court: U.S. Bankruptcy Court District of Arizona (Phoenix) Judge: Redfield T. Baum PCT Sr. About the Debtor: The Debtor filed a Chapter 11 petition to stop foreclosure. Arizona Eco sued Granite Dells on March 6 asking the Arizona court to appoint a receiver. Arizona Eco is foreclosing on a secured loan backed by 15,000 acres of Arizona land. Debtor's Counsel: Alan A. Meda, Esq. STINSON MORRISON HECKER LLP 1850 N. Centra Avenue, #2100 Phoenix, AZ 85004 Tel: (602) 279-1600 Fax: (602) 240-6925 E-mail: ameda@stinson.com Estimated Assets: $100,000,001 to $500,000,000 Estimated Debts: $100,000,001 to $500,000,000 The petition was signed by David V. Cavan, member of Cavan Management Services, LLC, manager. Debtor's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Schupak Non-Exempt -- $1,874,214 Marital Trust, The 9440 E. Mariposa Grande Scottsdale, AZ 85255 Bernard Citron Trust -- $1,352,581 Cecile Citron Bartman, Trustee 11777 San Vicente Boulevard, #600 Los Angeles, CA 90049 Dickey, Russell -- $1,332,581 344 Palmaritas Phoenix, AZ 85021 Christopher F & Cynthia N. Allen -- $1,332,581 1988 Family Trust 20415 Montalvo Oaks Place Saratoga, CA 95070 Marketplace One LLC -- $1,313,831 One N. First Street, #700 Phoenix, AZ 85004 Rovick, David P. & Terri A. -- $1,313,199 8507 E. LaSenda Drive Scottsdale, AZ 85255 Leebaw Mfg Co. -- $669,415 P.O. Box 553 Canfield, OH 44406 Guglielmi, Joseph -- $666,290 6225 N. 42nd Street Paradise Valley, AZ 85253 Riley Investments LLC -- $665,457 4400 N. Scottsdale Road, #9-333 Scottsdale, AZ 85251 Kent C. Mueller & Judith A. Mueller-- $656,915 T/U/A dated 8/28/92 5900 E. Edward Lane Paradise Valley, AZ 85253 WMS Fixed Income Fund I LLC -- $648,165 8550 E. Shea Boulevard, #130 Scottsdale, AZ 85262 Malcolm D. Ratner Marital -- $637,534 Trust 3/12/90 Sheila Ratner, Trustee 10858 E. Salero Drive Scottsdale, AZ 85262 LaBelle Ltd Partnership -- $448,001 405 S. Mission Street Mount Pleasant, MI 48858 DCQA GRNT Enterprises LLC -- $447,907 20875 N. 90th Place Scottsdale, AZ 85255 NTC & Co. -- $361,484 FBO Guy Lammle IRA 10325 E. Celestial Drive Scottsdale, AZ 85262 Olson, Robert A & Uthaiwan L -- $334,708 3190 N. Highway 89A Sedona, AZ 86336 John & Janet Butterfield -- $331,583 Family Trust, The 61 Leschi Drive Steilacoom, WA 98388 Lobodos Ventures LP -- $318,767 4411 W. Folley Place Chandler, AZ 85226 Asher, Joshua -- $318,767 10040 E. Happy Valley Road, #406 Scottsdale, AZ 85255 Bartholomew, Mark -- $318,767 P.O. Box 508 Pipersville, PA 18947-0508 HARSCO CORP: Moody's Cuts Subordinated Rating to '(P)Ba1' --------------------------------------------------------- Moody's Investors Service downgraded Harsco Corporation's senior unsecured rating to Baa3 from Baa2 and lowered the company's short-term rating to Prime-3 from Prime-2. The actions reflect Moody's view that Harsco's operating performance remains weak relative to its investment grade rating. Returns from its growth initiatives have yet to materialize. Also, Moody's anticipates low growth prospects in Harsco's key end markets. The rating outlook is negative. This concludes the review that was initiated on January 11, 2012. The following ratings were affected by these actions: Senior unsecured rating downgraded to Baa3 from Baa2 Multiple priority shelf filing; senior unsecured to (P)Baa3, subordinated to (P)Ba1, preferred to (P)Ba2 Short-term rating downgraded to Prime-3 from Prime-2 Ratings Rationale The downgrade of Harsco's senior unsecured rating to Baa3 from Baa2 and its short term debt rating to Prime-3 from Prime-2 reflects Moody's view that the company's credit metrics will remain stressed due to the weak global economy. Moody's believes that the prolonged weakness in non-residential construction and infrastructure spending, a decline in industrial production and its large European exposure, as well as vulnerability to volatility in steel production and raw materials prices, contribute to low growth prospects. In addition, significant investments in growth are not yet contributing to substantial top line increases or improved operating efficiency. As a result of reduced profitability, higher pension liabilities, and asset write-downs, Moody's projects debt-to-EBITDA may approach 3.0 times and debt-to-book capitalization close to 50% (all ratios incorporate Moody's standard adjustments) over the next 12 to 18 months, which are weak for an investment grade rating. Also, future impairment or restructuring charges would increase the company's debt-to-book capitalization, which may limit availability under its revolving credit facilities. The negative rating outlook reflects Moody's view that Harsco's ability to generate significant earnings is inhibited by weak growth prospects in its end markets, especially as Europe continues to struggle. Although Moody's expects some modest improvement in Harsco's performance, Moody's is concerned that the level of earnings would result in credit metrics not appropriate for an investment grade rating. In addition, the recent management change has created some execution risk for Harsco, raising concerns about the company's ability to achieve a meaningful near- term improvement in its credit metrics. Further deterioration in business conditions that results in operating performance below expectations, or the inability to benefit from past growth investments or restructuring activities may result in ratings pressures. Debt-to-EBITDA sustained above 3.0 times, debt-to-book capitalization remaining above 55%, or (EBITDA-capex)-to-interest expense remaining below 2.5 times (all ratios incorporate Moody's standard adjustments) could result in a negative rating action. Deterioration in the company's liquidity profile, reduction in revolver availability, or shareholder friendly activities such as share repurchases or large dividends could pressure the ratings as well. Harsco needs to demonstrate that it is benefiting from its past cost reduction programs and taking advantage of any rebound in its end markets, resulting in credit metrics more appropriate for the current rating. Debt-to-EBITDA trending towards 2.5 times, debt- to-book capitalization sustained below 50%, and (EBITDA-capex)-to- interest expense approaches 4.0 times (all ratios incorporate Moody's standard adjustments) could result in a stabilization of the rating outlook. The Infrastructure segment returning to profitability could support ratings improvement as well. The principal methodology used in rating Harsco Corporation was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Harsco Corporation, headquartered in Camp Hill, PA is a diversified industrial service company addressing global markets for infrastructure access, outsource services to metal industries, metal recovery & mineral-based products, railway track maintenance and certain industrial equipment. Revenues for the fiscal year ended December 31, 2011 were approximately $3.3 billion. HAYDEL PROPERTIES: Hires Christy Pickering as Accountant -------------------------------------------------------- Haydel Properties, LP, asks the U.S. Bankruptcy Court for the Souther District of Mississippi to employ Christy Pickering, CPA, as accountant. Ms. Pickering will: a. close out the Debtor's books as of the filing date of the petition and maintain new books and records; b. assist in preparing the filing of all required state and federal payroll tax reports; c. assists in preparing the filing of all required financial reports and operating reports; and d. assist in preparing the filing of the Plan of Reorganization and Disclosure Statement. The accountant will be paid $175 per hour for her services. Patrick A. Sheehan, Esq., at Sheehan Law Firm, PLLC, the attorney for the Debtor, assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Haydel Properties LP, in Biloxi, Mississippi, filed for Chapter 11 bankruptcy (Bankr. S.D. Miss. Case No. 12-50048) on Jan. 11, 2012. Judge Katharine M. Samson presides over the case. Patrick A. Sheehan, Esq., at Sheehan & Johnson, PLLC; and Robert Gambrell, Esq., at Gambrell & Associates, PLLC, serve as the Debtor's counsel. In its petition, the Debtor estimated $10 million to $50 million in assets and $1 million to $10 million in debts. The petition was signed by Michael D. Haydel, manager of general partner. HOST HOTELS: S&P Rates New $300-Mil. Senior Notes at 'BB+' ---------------------------------------------------------- Standard & Poor's Ratings Services assigned Bethesda, Md.-based Host Hotels & Resorts L.P.'s proposed $300 million senior notes due 2022 its 'BB+' issue-level rating, with a recovery rating of '1', indicating its expectation of very high (90% to 100%) recovery for lenders in the event of a payment default. "Host expects to use the proceeds to repay the $113 million principal amount outstanding of the 7.5% mortgage due April 2013 secured by the JW Marriott in Washington, D.C., to redeem $150 million of the company's 6 7/8% Series S senior notes due in 2014, and for general corporate purposes," said Standard & Poor's credit analyst Emile Courtney. "In November 2011, Host closed on a new $1 billion revolver (which we do not rate) that released former subsidiary guarantees and pledges of equity interests. As a result, the company's existing senior notes and debentures indentures also released former subsidiary guarantees and stock pledges under provisions in the indentures that require the same guarantees and collateral provided to the revolving credit facility. Effectively, the proposed and existing senior notes are currently unsecured. However, if Host's leverage ratio exceeds 6x for two consecutive fiscal quarters at a time when Host does not have an investment- grade, long-term unsecured debt rating, the subsidiary guarantees and equity pledges will spring back into place in the company's revolver and notes indentures. Given that our simulated default scenario for Host incorporates the assumption that the company's leverage ratio will be above 6x, our '1' recovery rating on the company's existing notes remained unchanged," S&P said. "Our 'BB-' corporate credit rating on Host Hotels & Resorts Inc. reflects our assessment of the company's financial risk profile as 'highly leveraged' and our assessment of the company's business risk profile as 'satisfactory,' according to our criteria," S&P said. "Our assessment of Host's financial risk profile as highly leveraged reflects total lease adjusted debt to EBITDA in the low- 6x area (including Host's pro rata share of joint venture debt and EBITDA) and funds from operations to total lease adjusted debt in the low-teens percentage area at December 2011, and the company's reliance on external sources of capital for growth as a real estate investment trust (REIT). We believe continued revenue per available room (RevPAR) growth in the U.S. lodging industry in 2012, as well as Host's relatively prudent use of equity capital to expand its hotel portfolio, will enable the company to improve credit measures over time and keep them in line with the current rating," S&P said. "Our assessment of Host's business risk profile as satisfactory is based on the company's high-quality and geographically diversified hotel portfolio in the U.S., strong brand relationships, and experienced management team. Partly offsetting these positive attributes are the cyclical nature of the lodging industry and the associated revenue and earnings volatility of the company's owned hotel portfolio," S&P said. HUNTSMAN CORP: Moody's Raises Corporate Family Rating to 'Ba3' -------------------------------------------------------------- Moody's Investors Service upgraded the corporate family rating (CFR) for Huntsman Corporation and Huntsman International LLC (HI), a subsidiary of Huntsman, to Ba3 from B1, and upgraded other ratings as appropriate. The outlook for all of Huntsman's ratings is changed to stable from positive. The upgrade of the CFR to Ba3 reflects improvements in three of the company's main businesses (polyurethanes, performance products and pigments businesses), along with the overall strengthening of its credit profile. "The upgrade reflects Huntsman's strong operating performance, improving credit metrics, and good liquidity profile evidenced, in part, by the lack of sizeable near term debt maturities until 2016," said Moody's analyst Bill Reed. The following summarizes the ratings activity: Ratings Raised Issuer: Huntsman Corporation Corporate Family Rating, Upgraded to Ba3 from B1 Ratings Assigned Probability of Default Rating Ba3 Ratings Withdrawn Speculative grade liquidity assessment SGL-2 Ratings Raised Issuer: Huntsman International LLC Corporate Family Rating, Upgraded to Ba3 from B1 Probability of Default Rating to Ba3 from B1 Senior Secured Bank Credit Facility, to Ba1 LGD2/27% from Ba2 LGD2/24% Senior Subordinated Regular Bond/Debenture, to B2 LGD6/93% from B3 LGD5/89%* Ratings Affirmed Issuer: Huntsman International LLC Senior Unsecured Regular Bond/Debenture, B1 LGD5/72% from LGD4/60% Ratings Assigned Issuer: Huntsman International LLC Senior Secured Bank Credit Facility Term Loan B, Ba1 LGD2/27% Senior Secured Bank Credit Facility Term Loan C, Ba1 LGD2/27% Speculative grade liquidity assessment SGL-2 Outlook Actions: Issuer: Huntsman Corporation Outlook, Changed To Stable from Positive Issuer: Huntsman International LLC Outlook, Changed To Stable from Positive * The ratings on a small tranche of subordinated debt will be withdrawn upon redemption. Ratings Rationale The Ba3 CFR takes into account Huntsman's strong competitive position in key businesses and significant competitive barriers, including process know-how and the benefits of integrated world scale production capabilities. The ratings are nevertheless tempered by high leverage and relatively small amounts of free cash flow generation after dividends at this point in the chemical cycle, even after record EBITDA generation. Other concerns include the company's ongoing exposure to rising prices in some feedstocks and ores, and ongoing weakness in key end markets, notably housing. Any improvement in the housing or additional strength in the automobile markets would result in further cash flow improvement. For the full year 2011 HI generated over $1.1 billion in adjusted EBITDA, a record level for the company. This level of EBITDA results in debt/EBITDA of 4.5x (adjusted for loans from Huntsman), a significant improvement when compared to the 5.8x one year prior. Going forward, Moody's expects that the company will continue to generate improved levels of EBITDA and reduce balance sheet debt, further strengthening HI's credit metrics and profile. Further support for the rating is based on management's public statements they would like to see their unadjusted net debt leverage at about 2 to 2.5 times on a normalized EBITDA basis. Management's public statements in this regard have been consistent over the last several years and they have indicated that they will limit acquisition activity in order to hit those target levels. In the 2011 annual letter from the President and CEO he wrote that reducing debt remains a focus of the board and management team based on the belief that less debt on the balance sheet will enhance shareholder value in the long term. In Moody's August 2011 research announcement, Moody's noted management suggested that over the course of the next year or so (by the end of 2012), cash flow permitting, they would consider paying down an additional $500 - $700 million of debt. Through March 2012 Moody's estimate that about $316 million of balance sheet debt has been repaid or is expected to be redeemed. As documented above, Moody's believes that strengthening the company's balance sheet position, according to senior management is a very high priority of Huntsman's Board of Directors. HI's liquidity profile is good reflecting strong cash balances ($554 million at the end of 2011 for both Huntsman and HI combined), the prospect of improving cash flow, the recent $100 million increase in HI's revolver to $400 million, the extension of its bank credit facility maturities to 2017 and the goal of management to maintain liquidity at close to $1 billion in the form of cash, accounts receivable securitization and revolver availability. The stable outlooks reflects HI's improved credit metrics and good liquidity profile. The outlook incorporates the expectations that the company will continue to improve its credit metrics without materially increasing its leverage. Still, the company's executive chairman has also recently expressed disappointment with the share price in the low teens. Moody's notes that if the share price were to remain at this level for an extended period of time, it could increase the chances for event risk. Should the company amortize between $400-500 million of additional debt from free cash flow over the next two years, Moody's could consider a higher rating. Moody's would consider a negative rating action if EBITDA on a quarterly basis is not sustained above $100 million level. Finally, there would be negative pressure on the rating if a large acquisition or a significant shareholder friendly action were to meaningfully reduce cash balances and increase debt levels. The principal methodology used in rating Huntsman Corporation was the Global Chemical Industry Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Huntsman Corporation is a global manufacturer of differentiated and commodity chemical products. Huntsman's products are used in a wide range of applications, including those in the adhesives, aerospace, automotive, construction products, durable and non- durable consumer products, electronics, medical, packaging, paints and coatings, power generation, refining and synthetic fiber industries. Huntsman had revenues of $11 billion for the last twelve months ending December 31, 2011. INDIANAPOLIS DOWNS: Exclusivity Period Extended Until March 28 -------------------------------------------------------------- BankruptcyData.com reports that the U.S. Bankruptcy Court approved the stipulation between Indianapolis Downs, the ad hoc second lien committee and Fortress that extends the exclusive period during which the Company can file a plan of reorganization and solicit acceptances thereof through and including March 28, 2012 and May 16, 2012, respectively. About Indianapolis Downs Indianapolis Downs LLC operates Indiana Live -- http://www.indianalivecasino.com/-- a combined race track and casino at a state-of-the-art 283 acre Shelbyville, Indiana site. It also operates two satellite wagering facilities in Evansville and Clarksville, Indiana. Total revenue for 2010 was $270 million, representing an 8.7% increase in 2009. The casino captured 53% of the Indianapolis market share. In July 2001, Indianapolis Downs was granted a permit to conduct a horse track operation in Shelvyville, Indiana, and started operating the track in 2002. It was granted permission to operate the casino at the racetrack operation in May 2007. The casino began operations in July 2010. Indianapolis Downs and subsidiary, Indianapolis Downs Capital Corp., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 11-11046) in Wilmington, Delaware, on April 7, 2011. Indianapolis Downs estimated $500 million to $1 billion in assets and up to $500 million in debt as of the Chapter 11 filing. According to a court filing, the Debtor owes $98,125,000 on a first lien debt. It also owes $375,000,000 on secured notes and $72,649,048 on subordinated notes. Matthew L. Hinker, Esq., Scott D. Cousins, Esq., and Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP in Wilmington, Delaware, have been tapped as counsel to the Debtors. Christopher A. Ward, Esq., at Polsinelli Shughart PC, in Wilmington, Delaware, is the conflicts counsel. Lazard Freres & Co. LLC is the investment banker. Bose Mckinney & Evans LLP and Bose Public Affairs Group LLC serve as special counsel. Kobi Partners, LLC, is the restructuring services provider. Epiq Bankruptcy Solutions is the claims and notice agent. INNER CITY: Can Exclusively File Plan Until July 5 -------------------------------------------------- The Hon. Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York entered a bridge order extending the exclusive period during which only Inner City Media Corporation, et al., may file a Chapter 11 plan to and through the date the Court makes a final determination on the relief requested. The Debtors sought to (a) extend the exclusive period to file a Plan for each Debtor through and including July 5, 2012, and (b) extend the exclusive period to solicit acceptances of a Plan for each Debtor through and including Sept. 3, 2012. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, counsel to the Debtor, said that while the Debtors believe that the proposed sale of substantially all of the Debtors' assets approved by the Court represents the best way to maximize the value of the Debtors' assets, the Debtors cannot know with certainty that the Proposed Sale will obtain the requisite regulatory approval from the Federal Communications Commission, let alone before the expiration of the current Exclusive Periods. Out of an abundance of caution, the Debtors request an extension of their Exclusive Periods in order to preserve all of their options in case the Proposed Sale cannot be consummated or cannot be consummated on a timely basis, and there is a resulting need to consider a Chapter 11 plan process. The Debtors' Chapter 11 cases are large and complex. They involve 12 separate Debtor entities that have been involved in numerous complex matters critical to their reorganization. The size and complexity of the Debtors' businesses and corporate structure have placed a heavy burden on the Debtors' management, employees and advisors throughout the Chapter 11 cases. The significant negotiations and discussions with senior lenders and various other constituents in these Chapter 11 cases have diverted attention away from the Debtors' management and advisors. For these reasons, the Debtors submit that the first factor relevant to determining whether cause exists to extend the Exclusive Periods - - complexity and size -- weighs substantially in favor of granting the Debtors' requested extension. In the ordinary course of their businesses, the Debtors have been paying their undisputed postpetition bills as they become due. The Debtors are in the process of obtaining bridge financing to provide the Debtors with sufficient liquidity to operate their businesses through the regulatory approval process. "The requested extension of the Exclusive Periods should not jeopardize the rights of creditors and other parties who do business with the Debtors during these chapter 11 cases," Ms. Dizengoff stated. About Inner City On Aug. 23, 2011, affiliates of Yucaipa and CF ICBC LLC, Fortress Credit Funding I L.P., and Drawbridge Special Opportunities Fund Ltd., signed involuntary Chapter 11 petitions for Inner City Media Corp. and its affiliates (Bankr. S.D.N.Y. Case Nos. 11-13967 to 11-13979) to collect on a $254 million debt. The Petitioning Creditors are party to the senior secured credit Facility pursuant to which they (or their predecessors in interest) extended $197 million in loans to the Alleged Debtors to be used for general corporate purposes. More than two years ago, the Alleged Debtors defaulted under the Senior Secured Credit Facility, and in any event the entire amount of principal and accrued and unpaid interest and fees became immediately due and payable on Feb. 13, 2010. Inner City Media's affiliates subject to the involuntary Chapter 11 are ICBC Broadcast Holdings, Inc., Inner-City Broadcasting Corporation of Berkeley, ICBC Broadcast Holdings-CA, Inc., ICBC- NY, L.L.C., ICBC Broadcast Holdings-NY, Inc., Urban Radio, L.L.C., Urban Radio I, L.L.C., Urban Radio II, L.L.C., Urban Radio III, L.L.C., Urban Radio IV, L.L.C., Urban Radio of Mississippi, L.L.C., and Urban Radio of South Carolina, L.L.C. Judge Shelley C. Chapman granted each of Inner City and its debtor affiliates relief under Chapter 11 of the United States Code. The decision came after considering the involuntary petitions, and the Debtors' answer to involuntary petitions and consent to entry of order for relief and reservation of rights. Attorneys for Yucaipa Corporate Initiatives Fund II, L.P. and Yucaipa Corporate Initiatives (Parallel) Fund II, L.P. are John J. Rapisardi, Esq., and Scott J. Greenberg, Esq., at Cadwalader, Wickersham & Taft LLP. Attorneys for CF ICBC LLC, Fortress Credit Funding I L.P., and Drawbridge Special Opportunities Fund Ltd. are Adam C. Harris, Esq., and Meghan Breen, Esq., at Schulte Roth & Zabel LLP. Akin Gump Strauss Hauer & Feld LLP serves as the Debtors' counsel. Rothschild Inc. serves as the Debtors' financial advisors and investment bankers. GCG Inc. serves as the Debtors' claims agent. The United States Trustee said that an official committee under 11 U.S.C. Sec. 1102 has not been appointed in the bankruptcy case of Inner City Media because an insufficient number of persons holding unsecured claims against the Debtor has expressed interest in serving on a committee. INTEGRA TELECOM: S&P Affirms 'B' Corp. Credit Rating; Outlook Neg ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it affirmed its 'B' corporate credit rating on Portland, Ore.-based competitive local exchange carrier (CLEC) Integra Telecom Inc. and revised the outlook to negative from stable. "Our other ratings on the company's debt remain unchanged, including our 'B-' rating on intermediate holding company Integra Telecom Holdings Inc.'s $250 million term loan and $475 million senior secured note. The '5' recovery rating on the debt indicates prospects for modest (10%-30%) recovery in the event of a payment default. We also rate a $60 million first-out revolving credit facility 'BB-' with a '1' recovery rating, indicating prospects for very high (90%-100%) recovery in the event of a payment default," S&P said. "Our outlook revision follows flat to declining EBITDA over the last 12 to 18 months," said Standard & Poor's credit analyst Catherine Cosentino, "which, when combined with the company's recent aggressive capital spending for growth initiatives, has increasingly pressured covenant cushions, and resulted in material free operating cash flow (FOCF) deficits. Although we believe the company could stabilize and improve covenant headroom and FOCF during the second half of 2012, we also recognize that a downgrade is possible without operating improvements and increased covenant headroom." "The ratings on Integra reflect intense industry competition and pricing pressure, exposure to small-to-midsized businesses (SMBs) more sensitive to economic conditions, negative FOCF generation, and limited covenant cushions. Competition includes larger, better capitalized incumbent local exchange carriers (ILECs) and increasingly competitive cable operators. Strong EBITDA margins relative to its CLEC peers and the company's ownership of fiber assets partly offset the business risks. We characterize the business risk profile as 'vulnerable' and the financial risk profile as 'aggressive' (per our criteria)," S&P said. "The outlook is negative. Declining EBITDA over the last 12 to 18 months, combined with the company's recent aggressive capital spending for growth initiatives, has resulted in diminished cushion under financial covenants. As Integra's new management team pursues its strategic direction, we will monitor the company's operations and strategy, including the balance between conservation of capital and cash flows versus growth investments to counter competitive pressures," S&P said. "We could lower the rating within the next year if earnings and covenant cushions are not on a trajectory to improve, competitive conditions intensify, or economic conditions worsen. This could stem from higher revenue churn or operational missteps, resulting in adjusted leverage approaching 5x and covenant limitations that affect revolver availability, with no prospect for improvement," S&P said. "An upgrade is unlikely in the near term because of our vulnerable business risk assessment, as it would require significant improvement in leverage and liquidity," S&P said. INTERNATIONAL ENVIRONMENTAL: Involuntary Chapter 11 Case Summary ---------------------------------------------------------------- Alleged Debtor: International Environmental Solutions Corporation dba IES Corporation 25685 Sherman Road Menifee, CA 92585 Bankruptcy Case No.: 12-16268 Involuntary Chapter 11 Petition Date: March 13, 2012 Court: U.S. Bankruptcy Court Central District of California (Riverside) Judge: Wayne E. Johnson Creditors who signed the Chapter 11 petition: Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Karen Bertram Accrued Salary/ $1,431,186 7755 Center Avenue, Suite 1100 Default Loans Huntington Beach, CA 92647 James Hinkle Loans in Default $358,417 3891 Allen Glen Drive Reno, NV 89503 Blaine Scott Molle & Dennis Molle Loans in Default $291,718 3035 Champion Street Chino Hills, CA 91709 Linda Babb Loans in Default $156,412 2813 Eckleson Lakewood, CA 90712 INTERNATIONAL LEASE: Fitch to Rate Sr. Unsecured Notes at 'BB' -------------------------------------------------------------- Fitch Ratings expects to assign a rating of 'BB' to International Lease Finance Corp.'s (ILFC) senior unsecured notes issuance. The notes are being issued in two tranches, with maturities in 2015 and 2019. Fitch notes that the proposed issuance is consistent with ILFC's overall financing strategy. The proceeds will be used to repay the company's $750 million senior secured term loan due March 17, 2015, which carries an interest rate of 6.75% (L+475 basis points with a LIBOR floor of 2.0%). The shift from secured to unsecured funding and the extension of debt maturities are both viewed favorably by Fitch. The notes will rank equally in right of payment with existing senior unsecured debt. Covenants are consistent with previously issued senior unsecured debt including a limitation restricting the ability of ILFC to incur liens to secure indebtedness in excess of 12.5% of ILFC's consolidated net tangible assets. ILFC is a market leader in the leasing and remarketing of commercial jet aircraft to airlines around the world. As of Dec. 31, 2011, ILFC owned an aircraft portfolio with a net book value of approximately $36 billion, consisting of 930 jet aircraft. Fitch expects to assign the following ratings: -- Senior unsecured notes due 2015 at 'BB'; -- Senior unsecured notes due 2019 at 'BB'. Fitch currently rates ILFC and its related subsidiaries as follows: ILFC -- Long-term Issuer Default Rating 'BB'; Outlook Stable; -- $3.9 billion senior secured notes 'BBB-'; -- $750 million senior secured term loan 'BBB-'; -- Senior unsecured debt 'BB'; -- Preferred stock 'B'. Delos Aircraft Inc. -- Senior secured debt 'BB'. ILFC E-Capital Trust I -- Preferred stock 'B'. ILFC E-Capital Trust II -- Preferred stock 'B'. ISTAR FINANCIAL: S&P Rates $900MM Senior Credit Facility at 'BB-' ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' long-term issuer credit rating on iStar Financial Inc. and assigned a 'BB-' credit rating to the company's proposed $900 million senior secured credit facility. "Our 'BB-' rating on iStar's proposed $900 million senior secured loan, one notch above its long-term issuer credit rating, reflects our expectation that creditors would receive full repayment in the event of an issuer default," S&P said. "The loan initially will be collateralized by $1.125 billion of assets (according to a third-party valuation commissioned by iStar), or 1.25x the $900 million balance. The collateral includes performing and nonperforming loans, net leases, real estate owned, and other assets. The company plans to use cash flow from the collateral, including through liquidation, to meet the loan's interest and amortization requirements," S&P said. "The secured creditors would also have recourse (alongside unsecured creditors) to the firm's unencumbered assets in a hypothetical default scenario. Given this recourse, the amortization, and the collateral, we believe creditors are likely to recover the full amount of the loan," S&P said. JESCO CONSTRUCTION: Taps L. Kelly Baker as Accountant ----------------------------------------------------- JESCO Construction Corporation asks for permission from the U.S. Bankruptcy Court for the Southern District of Mississippi to employ L. Kelly Baker, CPA, PA, as accountant. The firm will: a. prepare financial statements; b. assume primary responsibility for the filing of necessary tax returns; and c. provide other general accountant services as the Debtor may require from time-to-time. The Firm has agreed to perform the services at these hourly rates: L. Kelly, Baker, CPA $175, or $250 for out- of-town work Senior Accountants $90 Mr. Baker assures the Court that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Jesco Construction Corp. Headquartered in Wiggins, Mississippi, Jesco Construction Corp., a Delaware Corporation, specializes in disaster response and was part of the Hurricane Katrina cleanup. It filed for Chapter 11 bankruptcy (Bankr. S.D. Miss. Case No. 12-50014) on Jan. 5, 2012. Judge Katharine M. Samson presides over the case. Attorneys at the Law Offices of Craig M. Geno, PLLC, serve as counsel for the Debtor. In its schedules, the Debtor disclosed $100 million in assets and $14.7 million in liabilities. JOHN D. OIL: Faces Lawsuit Against Two Bank in District Court ------------------------------------------------------------- David S. Glasier at the News-Herald reports that Richard M. Osborne and a number of his companies are defendants in three foreclosure cases currently active in U.S. District Court in Cleveland. According to the report, RBS Citizens, N.A., a bank holding company, is the primary plaintiff in a $30 million foreclosure case filed on Oct. 3. Among the defendants are the Osborne-owned companies John D. Oil & Gas Co., Ozgas, Ltd. and Great Plains Exploration LLC. Citizens Bank is the primary plaintiff in two foreclosure cases filed on Nov. 1. One foreclosure is for $1,648,000, the second for $225,000. The report relates Mr. Osborne said he had paid off $5 million on the $30 million foreclosure, leaving an unpaid balance of $25 million. There has been no payment made on the other two foreclosures. "We have assets to offset what they say we owe (in foreclosure)," the report quotes Mr. Osborne as saying. "It's a matter of negotiating the proper interest rate." Mr. Osborne blamed his companies' legal woes on the banks for raising interest rates on their loans to 8% from 2%. John D. Oil & Gas Co., Ozgas, Ltd. and Great Plains Exploration LLC are involved in the drilling of natural gas and oil wells in Ohio and other states. Mr. Osborne said that as far as he knows, the companies are current in royalty payments to individuals, businesses and government entities that contracted with the Osborne companies to sink wells on their property. "There was about a 30-day delay (on royalty payments) at one point, which was unfortunate," Mr. Osborne said. He said his drilling companies have been "hit hard, really hard" by a steady decline in market price for natural gas. Last week it fell to $2.253 per 1,000 cubic feet, the lowest price in 10 years. It will take "about six to eight months" to emerge from bankruptcy and resolve the foreclosure cases, Mr. Osborne said. Based in Mentor, Ohio, John D. Oil and Gas Company fka Liberty Self-Stor, Inc., filed for Chapter 11 protection on Jan. 13, 2012 (Bankr. W.D. Penn. Case No. 12-10063). Judge Thomas P. Agresti presides over the case. Robert S. Bernstein, Esq., at Bernstein Law Firm, P.C., represents the Debtor. The United States Trustee said a committee under 11 U.S.C. Sec. 1102 has not been appointed because no unsecured creditor responded to the U.S. Trustee's communication for service on the committee. John D. Oil and Gas Company has debts of $11 million and assets of $8.2 million. KNIGHT & CARVER: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Knight & Carver Yachtcenter, Inc. 1313 Bay Marina Drive National City, CA 91950 Bankruptcy Case No.: 12-03440 Chapter 11 Petition Date: March 12, 2012 Court: United States Bankruptcy Court Southern District of California (San Diego) Debtor's Counsel: John L. Smaha, Esq. SMAHA LAW GROUP, APC 7860 Mission Center Court, Suite 100 San Diego, CA 92108 Tel: (619) 688-1557 Fax: (619) 688-1558 E-mail: jsmaha@smaha.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 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/casb12-03440.pdf The petition was signed by Michael O'Leary, president/CEO. LACK'S STORES: Satisfied Lenders' Claims, Proofs of Claim Expunged ------------------------------------------------------------------ Lack's Stores, Incorporated, et al., notified the U.S. Bankruptcy Court for the Southern District of Texas of the effective date of settlement agreement and payment in full of the senior lender secured claim. Previously, the Court approved that certain Settlement and Release Agreement dated Jan. 18, 2012, between the Debtors and the Lack Parties, on the one hand, and the Senior Lender Parties, on the other hand. Pursuant to the terms of the Settlement Agreement, the agent, on behalf of the Senior Lender Parties, holds an allowed, secured claim against the Debtors' bankruptcy estates in the total amount of $21,400,000. In this relation, the Debtors made payments to the agent on behalf the Senior Lender Parties of (a) $18,000,000 on Feb. 3, 2012, and (b) $3,400,000 on March 1, 2012. Thus, as of March 1, 2012, the Debtors have paid the Senior Lender Parties a total of $21,400,000, which is in full and final satisfaction of the Allowed Claim. AS a result, all proofs of claim filed by any of the Senior Lender Parties in any of the cases will be deemed expunged from the claims registers maintained in the cases. About Lack's Stores Victoria, Texas-based Lack's Stores, Incorporated, is one of the largest, independently-owned retail furniture chains in the United States. Lack's Stores is a chain of 36 retail stores and operates under the trade styles Lacks and Lacks Home Furnishings. The Company sells a complete line of furnishings for the home including furniture, bedding, major appliances and home electronics. The stores are located in South, Central, and West Texas. Lack's Stores filed for Chapter 11 bankruptcy protection (Bankr. S.D. Tex. Case No. 10-60149) on Nov. 16, 2010 . Katherine D. Grissel, Esq., Michaela Christine Crocker, Esq., and Richard H. London, Esq., at Vinson & Elkins LLP, assist the Debtor in its restructuring effort. The Debtor estimated its assets and debts at $100 million to $500 million. Affiliates Lack Properties, Inc., Lack's Furniture Centers, Inc., and Merchandise Acceptance Corporation filed separate Chapter 11 petitions. LAS VEGAS BILLBOARDS: Case Summary & 20 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Las Vegas Billboards, LLC 5665 S. Valley View Blvd. #4 Las Vegas, NV 89118 Bankruptcy Case No.: 12-12779 Chapter 11 Petition Date: March 12, 2012 Court: United States Bankruptcy Court District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: Zachariah Larson, Esq. MARQUIS AURBACH COFFING 10001 Park Run Drive Las Vegas, NV 89145 Tel: (702) 382-1170 Fax: (702) 382-1169 E-mail: cshurtliff@maclaw.com Scheduled Assets: $1,083,310 Scheduled Liabilities: $17,890,237 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/nvb12-12779.pdf The petition was signed by David Harris, managing member. LATITUDE 23: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Latitude 23, LLC Ocariz, Humberto H Reg Agent 201 So Biscayne Blvd., Suite 2400 Miami, FL 33131 Bankruptcy Case No.: 12-15997 Chapter 11 Petition Date: March 13, 2012 Court: United States Bankruptcy Court Southern District of Florida (Miami) Judge: Laurel M. Isicoff Debtor's Counsel: Joel M. Aresty, Esq. 13499 Biscayne Blvd #T-3 No. Miami, FL 33181 Tel: (305) 899-9876 Fax: (305) 723-7893 E-mail: aresty@mac.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 largest unsecured creditors together with its petition. The petition was signed by Alfredo Gerstl, MGM. LIGHTSQUARED INC: Sprint Said to Cancel 15-Year Contract -------------------------------------------------------- Sprint Nextel Corp. is expected to announce Friday the cancellation of a 15-year contract with billionaire Philip Falcone's LightSquared Inc. and return $65 million in prepayments to the wireless start-up, Greg Bensinger, writing for Dow Jones Newswires, reports, citing people familiar with the plans. According to Dow Jones, Sprint's move comes after the Federal Communications Commission said earlier this year that it intended to block LightSquared from operating its planned nationwide fourth-generation network. LightSquared had sought to use satellite wireless airwaves to build out a ground-based network to cover 260 million Americans with a high-speed service known as 4G LTE by 2016. According to Dow Jones, the end of the Sprint contract would leave LightSquared without a major partner to help erect its planned network of 40,000 cell towers and could hurt its ability to raise funds for its operations. LightSquared had hoped to compete with AT&T Inc., Verizon Wireless and others in selling its service wholesale to carriers seeking extra capacity. The report notes a LightSquared spokesman said the company would file a defense of its network with the FCC on Friday, the final day for public comment on the agency's decision. He declined to comment on Sprint's plans. Dow Jones also notes lenders to LightSquared have until the end of Thursday to extend the company's network-sharing and operations contract with Sprint to June, though it wasn't immediately clear if they had plans to do so. LightSquared had estimated the deal would save it $13 billion in costs through the end of the decade. Dow Jones notes LightSquared has said it has enough funds to operate for several quarters, though it hasn't given specifics. About LightSquared Inc. LightSquared Inc. -- http://www.lightsquared.com/-- operates an open wireless broadband network company and is backed by Philip Falcone's Harbinger Capital Partners hedge fund. Reuters reported in February 2012 that Mr. Falcone ruled out a bankruptcy filing for LightSquared even as sources familiar with the matter said the company was seeking restructuring advice. According to Reuters, two people familiar with the matter said LightSquared has hired investment bank Moelis & Co. as restructuring advisor. M WAIKIKI: Wants to Employ Holthouse Carlin as Tax Accountant ------------------------------------------------------------- M Waikiki LLC ask the Bankruptcy Court for permission to employ Holthouse Carlin & Van Trigt LLP (HCVT) to prepare the Debtor's necessary tax returns, pursuant to the terms of the engagement letter, dated January 30, 2012. HCVT has significant experience in tax return preparation for hotels. Also, HCVT has previously assisted the Debtor in preparing its tax returns prior to the Debtor filing for bankruptcy, so HCVT is familiar with the Debtor's business operations and finances. The hourly rates for HCVT's services range from $125 for staff to $550 for tax partners. Subject to Court approval, the key personnel who will be assigned to the engagement are John Lilly, Tax Partner, whose hourly rate is $410, and Stephanie Wilkinson, Senior Tax Manager, whose hourly rate is $250. Mr. Lilly assured the Court that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About M Waikiki M Waikiki owns the Modern Honolulu, a world-class, luxury hotel property located close to Waikiki Beach in Hawaii. The hotel is being managed by Modern Management Services LLC, an affiliate of Aqua Hotels and Resorts. M Waikiki is a Hawaii limited liability company with its principal place of business located in San Diego, California. It is a special purpose entity, having roughly 75 indirect investors, which was formed to acquire the Hotel. The Company filed for Chapter 11 protection (Bankr. D. Hawaii Case No. 11-02371) on Aug. 31, 2011. Judge Robert J. Faris presides over the case. Patrick J. Neligan, Esq., and James P. Muenker, Esq., at Neligan Foley LLP, in Dallas, Tex.; Simon Klevansky, Esq., Alika L. Piper, Esq., and Nicole D. Stucki, Esq., at Klevansky Piper, LLP, in Honolulu, Hawaii, are the attorneys to the Debtor. The Debtor tapped XRoads Solutions Group, LLC, and Xroads Case Management Services, LLC, as its financial and restructuring advisor. The Debtor disclosed $216,116,142 in assets and $135,085,843 in liabilities as of the Chapter 11 filing. Modern Management is represented by Christopher J. Muzzi, Esq., at Moseley Biehl Tsugawa Lau & Muzzi LLC. Marriott Hotel Services, which used to provide management services, is represented by Susan Tius, Esq., at Rush Moore LLP LLP, and Carren B. Shulman, Esq., at Sheppard Mullin Richter & Hampton LLP. MACROSOLVE INC: Incurs $2.5 Million Net Loss in 2011 ---------------------------------------------------- Macrosolve, inc., filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $2.53 million on $1.68 million of net sales for the year ended Dec. 31, 2011, compared with a net loss of $1.92 million on $637,836 of net sales during the prior year. The Company's balance sheet at Dec. 31, 2011, showed $2.39 million in total assets, $3.79 million in total liabilities and a $1.39 million total stockholders' deficit. In its report on the Company's 2011 financial results, Hood Sutton Robinson & Freeman CPAs, P.C., in Tulsa, Oklahoma, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations and has a net capital deficiency. A copy of the Form 10-K is available for free at: http://is.gd/jedCKn About MacroSolve, Inc. Tulsa, Okla.-based MacroSolve, Inc. (OTC BB: MCVE) -- http://www.macrosolve.com/-- is a technology and services company that develops mobile solutions for businesses and government. A mobile solution is typically the combination of mobile handheld devices, wireless connectivity, and software that streamlines business operations resulting in improved efficiencies and cost savings. MARIN CREATIVE: Case Summary & 7 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Marin Creative Group, Corp. Urb. University Gardens 311 Calle Howard San Juan, PR 00927-4015 Bankruptcy Case No.: 12-01844 Chapter 11 Petition Date: March 12, 2012 Court: United States Bankruptcy Court District of Puerto Rico (Old San Juan) Debtor's Counsel: Mary Ann Gandia, Esq. P.O. Box 270251 San Juan, PR 00927 Tel: (787) 390-7111 Fax: (787) 763-8212 E-mail: gandialaw@gmail.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's seven largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/prb12-01844.pdf The petition was signed by Ivelisse Marin Carle, president. MEDICAL CARD: S&P Keeps 'BB-' Counterparty Credit Rating -------------------------------------------------------- Standard & Poor's Rating Services would keep its 'BB-' long-term counterparty credit and financial strength ratings on Medical Card System Inc.'s (MCS) operating companies and the 'B-' long-term counterparty credit rating on MCS on CreditWatch with negative implications, where they were initially placed Dec. 15, 2011. "The CreditWatch placement followed the company's unexpected third-quarter 2011 operating losses and its recent announcement that it was replacing several key executives, including the chief executive officer, with an interim management team affiliated with the Gorman Health Group. We believe that both of these events increase the probability of a covenant breach in the near term," said Standard & Poor's credit analyst Neal Freedman. "The third- quarter losses were mainly the result of increased claims activity in the company's Medicare Advantage business. The company will likely only be able to partially exclude the costs associated with the management realignment from the covenant compliance calculation because of exclusion limits in the calculation. However, the positive fourth-quarter seasonality that is characteristic of the Puerto Rico health insurance marketplace could offset the increased pressure on earnings," S&P said. "We will continue to monitor the company's operating performance, especially as it regards covenant compliance. If the company breached any of its covenants as of year-end 2011, we could lower the ratings by one notch. Conversely, if the company were to avoid a covenant breach, we could remove the ratings from CreditWatch with negative implications, contingent upon our view of expected 2012 operating performance," S&P said. MDC PARTNERS: S&P Affirms 'B+' Corp. Credit Rating; Outlook Neg ------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on New York-based MDC Partners Inc., a holding company for a portfolio of marketing services firms, to negative from stable. "We affirmed our 'B+' corporate credit rating on the company, as well as the 'B+' issue-level rating on the company's senior unsecured debt. The recovery rating on the company's senior unsecured debt also remain unchanged at '4', indicating our expectation of average (30% to 50%) recovery for noteholders in the event of a payment default," S&P said. "The rating outlook revision reflects a steeper EBITDA decline in the fourth quarter of 2011 than we had previously expected," explained Standard & Poor's credit analyst Michael Altberg. "We estimate this will result in fully adjusted leverage (including operating leases and acquisition-related liabilities) in the low-6x area at year-end," S&P said. "As a result, according to our criteria, we are revising our assessment of the company's financial risk profile to 'highly leveraged' from 'aggressive.' In addition, we believe that covenant headroom could narrow in the second quarter of 2012, when a large portion of the company's $51.8 million of near-term deferred acquisition consideration (earn-out) obligations become due. We believe the company will have to meet a large portion of these obligations with borrowings under its revolving credit facility. The total leverage covenant under the company's credit facility agreement steps down to 3.75x at June 30, 2012, from 4.6x, which, in conjunction with more difficult first half year- over-year comparisons, could lead to a slim margin of compliance," S&P said. "We currently consider MDC's business profile as 'fair,' given our view of the strong creative reputation of its key agency, Crispin Porter + Bogusky, and its growing digital capabilities. We believe this despite the company's relatively small agency network, limited global presence, and its still high (but declining) concentration of revenue and EBITDA from two key agencies. However, further EBITDA margin compression could cause us to revise our assessment," S&P said. "MDC is a global provider of marketing services, with revenue concentration in the U.S. (80% of revenue), Canada (16%), and other (4%). The company's subsidiaries provide a comprehensive range of marketing communications and consulting services. The advertising industry is subject to the cyclical nature of advertising, as well as a client's ability to switch to competitors or scale back spending at short notice. MDC has been in an aggressive growth mode over the past two years, spending over $150 million on acquisitions and over $60 million in key talent additions and office expansion. We believe that increased staffing and facilities costs outpaced revenue growth in certain areas. Cost of sales as a percentage of revenue was 72% in 2011, compared to 65% in 2009. As a result, the company plans to reduce headcount by roughly 300 employees across various agencies, which will most likely lead to modest severance expense in the first half of 2012," S&P said. "An important industry trend is the shift of advertising and marketing services to online distribution. Digital business now accounts for over 50% of revenue at MDC, and the company's increased capabilities have led to increased market share and net new business wins being up 33% in 2011. We believe acquisition activity will slow in 2012, but we anticipate that the company will continue to explore opportunities in digital and social media, and integrated agencies, in addition to expanding capabilities in media buying and international markets," S&P said. MERIDIAN SHOPPING: Taps Diemer Whitmanas Gen. Insolvency Counsel ---------------------------------------------------------------- Meridian Shopping Center, LLC, asks the U.S. Bankruptcy Court for the Northern District of California for permission to employ Diemer, Whitman & Cardosi, LLP as general insolvency counsel. In a separate filing, the Debtor notified the Court that it consents to the substitution of Kathryn S. Diemer, Esq., at DWC as counsel of record in place of Dennis Yan. DWC will, among other things: a. amend and verify completeness of schedules and statement of affairs filed in the case as needed; b. advise and consult with Debtor concerning questions arising in the conduct of the administration of the estate, the Debtor's rights and remedies with regard to the estate's assets, the claims of secured, priority and unsecured creditors, compliance with requirements of the U.S. Trustee, and matters concerning other parties in interest; c. appear for, prosecute, defend, and represent the Debtor's interest in suits arising in or related to the case (but not including suits pertaining to discharge of debt or any adversary proceeding without a separate agreement between the Debtor and DWC); DWC will seek compensation based upon its normal and usual hourly billing rates plus reimbursement for all expenses advanced on the Debtor's behalf. Upon approval of the Court, the Debtor will pay DWC any allowed but unpaid amount for fees or reimbursement of costs. To the best of the Debtor's knowledge, DWC has no connection with the Debtor, its creditors, any other party-in-interest, their attorneys and accountants, the U.S. Trustee, or any person employed in the office of the UST. About Meridian Shopping Center LLC Meridian Shopping Center LLC owns and operates the shopping center Meridian Park Plaza in Milpitas, California. Meridian Shopping Center filed for Chapter 11 bankruptcy (Bankr. N.D. Calif. Case No. 12-50380) on Jan. 18, 2012. Judge Stephen L. Johnson presides over the case. The Debtor scheduled $14,000,000 in assets and $10,912,623 in liabilities. The petition was signed by John Wynn, manager. MILESTONE SCIENTIFIC: Incurs $1.5 Million Net Loss in 2011 ---------------------------------------------------------- Milestone Scientific Inc. filed with the U.S. Securities and Exchange Commission its annual report on Form 10-K disclosing a net loss of $1.48 million on $8.37 million of net product sales for the year ended Dec. 31, 2011, compared with a net loss of $614,508 on $9.75 million of net product sales during the prior year. The Company's balance sheet at Dec. 31, 2011, showed $6.99 million in total assets, $5.05 million in total liabilities, and $1.93 million in total stockholders' equity. In its report on the Company's 2011 financial results, Holtz Rubenstein Reminick LLP, in New York, expressed substantial doubt about the Company's ability to continue as a going concern. The independent auditors noted that the Company has suffered recurring losses from operations since inception. A copy of the Form 10-K is available for free at: http://is.gd/woWzOo About Milestone Scientific Piscataway, N.J.-based Milestone Scientific Inc. (OTC BB: MLSS) -- http://www.milestonescientific.com/-- is engaged in pioneering proprietary, highly innovative technological solutions for the medical and dental markets. Central to the Company's IP platform and product development strategy is its patented CompuFlo(R) technology for the improved and painless delivery of local anesthetic. MONITRONICS INTERNATIONAL: S&P Gives 'B' Corporate Credit Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B' corporate credit rating to Dallas, Texas-based Monitronics International Inc. The outlook is stable. "At the same time, we assigned a preliminary 'B' issue rating with a preliminary recovery rating of '3', which indicates our expectation for 50%-70% recovery for lenders in the event of default, to the company's $150 million senior secured revolving credit facility and $500 million first-lien term loan," S&P said. "We also assigned a preliminary 'CCC+' issue rating with a preliminary recovery rating of '6',which indicates our expectation for 0%-10% recovery for lenders in the event of default, to its proposed $460 million of senior unsecured notes," S&P said. The company intends to use the proceeds to repay debt and to fund growth. "The rating on Monitronics reflects the company's 'highly leveraged' financial risk profile, its reliance on debt to fund anticipated growth, and its more limited scale compared with its largest competitor. These factors are partially offset by a highly recurring revenue stream and an above-industry revenue growth rate," S&P said. Monitronics provides electronic security alarm monitoring services to more than 700,000 subscribers in the U.S. and Puerto Rico. Based on revenues of about $312 million for the 12 months ended December 2011, Monitronics was the third-largest company in the highly fragmented residential alarm monitoring industry. Monitronics uses the dealer origination model to acquire new customer accounts. Under this model, the company purchases accounts from a network of independent dealers instead of creating the accounts internally. This results in a lower and more flexible cost structure, but also in higher customer creation costs than for internally created accounts; free cash flow is also lower since account acquisition expenses are reflected on the cash flow statement. Since the industry attrition rate is about 10% to 12% annually, significant customer acquisitions are necessary just to maintain level operating cash flow and subscriber base. "Although we expect the company to generate sufficient operating cash flow to buy the customer accounts necessary to offset attrition, Monitronics will have to use debt to finance anticipated growth. We view customer-acquisition costs as an essential part of Monitronics' business," S&P said. "Monitronics' business risk profile is 'weak'. The company has a second-tier position in the highly competitive U.S. security alarm monitoring industry and it is somewhat susceptible to downturns in the housing markets and economy," S&P said. "Positive factors include a highly recurring and growing revenue base, as well as an efficient dealer business model that allows Monitronics to maintain higher margins compared with its competitors. In 2011, the company's revenue increased by approximately 11%, mainly reflecting growth in its subscriber base, higher prices, and additional revenue from alarm monitoring services," S&P said. "We expect mid- to high-single-digit growth in the near-to- intermediate future," S&P said. "Monitronics will have a highly leveraged financial profile following the transaction, with pro forma adjusted leverage of about 8x for the fiscal year ended December 2011. The EBITDA number is adjusted to reflect the purchases of new accounts necessary to offset attrition. Over the near term, leverage should remain in the same area due to debt and account purchases," S&P said. Free cash flow is negative, which reflects an above-industry growth rate achieved through ongoing spending on new dealer accounts. However, this spending is discretionary and can be adjusted to reflect changing conditions. NATIVE WHOLESALE: Eberle Berlin OK'd to Handle Idaho Actions ------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of New York authorized Native Wholesale Supply Company to employ Eberle, Berlin, Kading, Turnbow & McKlveen, Chartered as special counsel. As reported in the Troubled Company Reporter on Feb. 23, 2012, the Eberle Firm represents the Debtor in two actions pending in the State of Idaho. The Eberle Firm has also been counsel to the Debtor on all matters involving the Idaho Actions since their initiation in 2008. The Eberle Firm is expected to: -- be the Debtor's special counsel with respect to all mattes pertaining to the Idaho Actions; and -- assist the general bankruptcy counsel as needed. The services of the Eberle Firm under a general retainer are necessary to enable the Debtor to execute faithfully its duties as debtor-in-possession. To the best of the Debtor's knowledge, the partners and associates of the Eberle Firm do not have any connection with the debtor, its creditors, or any other party-in-interest, or its respective attorneys. About Native Wholesale Native Wholesale Supply Company is engaged in the business of importing cigarettes and other tobacco products from Canada and selling them within the United States. It purchases the products from Grand River Enterprises Six Nations, Ltd., a Canadian corporation and the Debtor's only secured creditor. Native is an entity organized under the Sac and Fox Nation and has its principal place of business at 10955 Logan Road in Perrysburg, New York. Native filed for Chapter 11 bankruptcy (Bankr. W.D.N.Y. Case No. 11-14009) on Nov. 21, 2011. The Chapter 11 filing was triggered to resolve an ongoing dispute with the United States government regarding up to $43 million in assessments made by the government against the Debtor pursuant to the Fair and Equitable Tobacco Reform Act of 2004 and the Tobacco Transition Payment Program and to restructure the terms of payment of any obligation determined to be owing by the Debtor to the U.S. under the Disputed Assessment. The issues pertaining to the Disputed Assessment resulted in two lawsuits, subsequently consolidated, now pending in the Federal District Court. Robert J. Feldman, Esq., and Janet G. Burhyte, Esq., at Gross, Shuman, Brizdle & Gilfillan, P.C., in Buffalo, N.Y., represent the Debtor as counsel. The Company disclosed $30,022,315 in assets and $70,590,564 in liabilities as of the Chapter 11 filing. No trustee, examiner or creditors' committee has been appointed in the case. NCO GROUP: Negotiating Potential Combination with OEP ----------------------------------------------------- APAC Customer Services, Inc., was acquired by One Equity Partners, the majority stockholder of NCO Group, Inc., on Oct. 14, 2011. OEP had informed the Company that OEP intended to seek to combine APAC with the Company to build market leadership in business process outsourcing and customer care solutions. The Company and OEP are currently negotiating the terms of the potential Combination, and the Combination would be subject to board approval and obtaining New Debt Financing. As part of the Combination, the Company anticipates changing its name to Expert Global Solutions, Inc. The Company said in a Form 8-K recently filed with the Securities and Exchange Commission that it is currently in negotiations to obtain new debt financing, consisting of a new senior secured $795 million first lien credit facility (consisting of a $675 million term loan and a $120 million revolving credit facility) and a new $200 million secured second lien credit facility, consisting of a new term loan. The New Debt Financing, the terms of which have not been finalized, is subject to, among other things, the completion of the Combination and board approval. The proceeds from the New Debt Financing will be used by the Company to refinance substantially all of the Company's outstanding indebtedness, including the Company's outstanding floating rate senior notes due 2013 and 11.875% senior subordinated notes due 2014. There can be no assurance that the Company will be able to successfully consummate the New Debt Financing, or the Combination on a timely basis or on terms satisfactory to the Company or at all. In addition any such refinancing and Combination involves a number of risks, including diverting management's attention from the Company's daily operations, the use of additional management, operational and financial resources, system conversions, and the inability to maintain key pre-Combination relationships with customers, suppliers and employees. If the Combination occurs, the Company might not be able to successfully integrate the Combination into its business or operate the combined businesses profitably, and the Company may be subject to unanticipated problems and liabilities of APAC. A copy of the Form 8-K is available for free at: http://is.gd/7rYxLP About NCO Group Inc. Based in Horsham, Pennsylvania, NCO is a global provider of business process outsourcing services, primarily focused on accounts receivable management and customer relationship management. NCO has over 25,000 full and part-time employees who provide services through a global network of over 100 offices. The company is a portfolio company of One Equity Partners and reported revenues of about $1.2 billion for the twelve month period ended Sept. 30, 2007. The Company reported a net loss of $155.71 million on $1.60 billion of revenue for the year ended Dec. 31, 2010, compared with a net loss of $88.14 million on $1.58 billion of revenue during the prior year. The Company also reported a net loss of $104.49 million on $1.15 billion of total revenues for the nine months ended Sept. 30, 2011, compared with a net loss of $73.45 million on $1.18 billion of total revenues for the same period during the prior year. The Company's balance sheet at Sept. 30, 2011, showed $1.12 billion in total assets, $1.14 billion in total liabilities and a $17.89 million total stockholders' deficit. * * * As reported by the Troubled Company Reporter on Feb. 2, 2011, Moody's Investors Service downgraded NCO Group, Inc.'s CFR to Caa1 from B3 and changed the outlook to negative. Simultaneously, Moody's has also downgraded each of NCO's debt instrument ratings by one notch and lower the Speculative Grade Liquidity rating to SGL-4 from SGL3. The downgrade reflects Moody's concern that greater than expected revenue declines and continued earnings pressure will extend beyond current levels due to deteriorating consumer payment patterns and weaker volumes. In addition, Moody's expects financial flexibility will be further aggravated by tightening headroom under its financial covenants and a potential breach of covenants which will limit the company's ability to draw upon its revolver. Also, the company faces an impending maturity on its $100 million senior secured revolving credit facility due November of 2011. In the Dec. 19, 2011, edition of the TCR, Standard & Poor's Ratings Services affirmed its 'CCC+' issuer credit rating on NCO Group Inc. and removed the rating from CreditWatch with positive implications. "The rating action follows NCO's recent announcement that it is not proceeding with the previously proposed $300 million notes offering that it planned to use, in conjunction with a proposed $870 million new senior secured credit facility, to repay its existing debt and to help finance its merger with APAC Customer Services Inc.," said Standard & Poor's credit analyst Kevin Cole. Concurrent with the closing of the debt offerings, it was planning to change its name to Expert Global Solutions Inc. NCO GROUP: S&P Puts 'CCC+' Issuer Credit Rating on Watch Positive ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'CCC+' issuer credit and senior secured ratings, as well as its 'CCC-' senior unsecured rating, on NCO Group Inc. on CreditWatch with positive implications. "The CreditWatch placement reflects our view that there is a good probability that NCO's recently announced proposed debt offerings will close and the company will materially improve its debt metrics and capital position," said Standard & Poor's credit analyst Kevin Cole. "NCO recently announced that it seeks to refinance its existing senior secured credit facility (revolver and term loan) with a new first-lien senior secured credit facility that includes a $120 revolver ($104 million expected to be undrawn at close) and $675 million term loan. (As of Dec. 31, 2011, the revolver had $39 million outstanding, and the term loan had $457 million outstanding.) In addition, the company is issuing a $200 million second-lien senior secured term loan, and NCO's private equity sponsor, One Equity Partners (OEP), will convert its $159 million bridge loan related to its acquisition of APAC Customer Services into a paid-in-kind (PIK) option loan. The company plans to use the net proceeds to repay its existing outstanding $165 million senior floating rate and $200 million senior subordinated notes. The new debt will have a much more favorable payback timeline, with the revolver and term loan maturities extending to 2017 and 2018. (NCO's current revolver, term loan, senior floating rate notes, and senior subordinated notes are due in December 2012, May 2013, November 2013, and November 2014, respectively)," S&P said. "In conjunction with the closing of the offerings, NCO will acquire APAC from OEP and change its name to Expert Global Solutions Inc. (EGS). The company will roll the remaining equity from OEP's purchase of APAC (roughly $300 million) into the combined entity. The new first-lien senior secured credit facility and second-lien term loan will be obligations of EGS. The PIK option loan will be issued by NCO's parent company, Expect Global Solutions Holdings Inc. (not rated), and will most likely forgo initially paying cash dividends," S&P said. "The company's inability to complete a similar, yet more expansive, refinancing at the end of 2011 somewhat weakens our positive assessment. However, we believe that this transaction faces fewer difficulties, as general investor sentiment has improved and the company is not looking to access the more fickle speculative-grade market," S&P said. "The CreditWatch positive reflects our view of the good probability that NCO's proposed debt offerings will close. In that case, we would likely raise the rating on NCO before we ultimately withdraw it and assign a final rating on the guarantor of the new combined entity, Expert Global Solutions LLC," said Mr. Cole. "If the proposed debt offerings do not close, which is less likely, we likely would remove the ratings on NCO from CreditWatch and assign a negative outlook." NEIMAN MARCUS: S&P Affirms 'B+' Corporate Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services affirmed all ratings on Dallas- based The Neiman Marcus Group Inc., including the 'B+' corporate credit rating. The outlook is stable. "The stable outlook reflects our view that the company's credit protection metrics are likely to remain in line with recent levels, as further operational gains offset the dividend payment and our view of more aggressive financial policies," S&P said. "The ratings on Neiman Marcus reflect our view that its credit protection measures are weak," said Standard & Poor's credit analyst David Kuntz, "but should remain relatively consistent over the near term, as further operational gains offset an increase in debt." "The company's 'fair' business risk profile (based on our criteria) reflects its participation in the highly competitive department store sector, relatively narrow market compared with other department store operators, and small store base. Its solid position in the high-service, luxury merchandise specialty department store industry; strong vendor relationships; and improved operating performance over the past year somewhat offset these risks. In our view, Neiman Marcus has done a good job maintaining its reputation, merchandise, and customer service," S&P said. "The company continues to demonstrate positive operational momentum based on the strength of luxury retail sales," added Mr. Kuntz. "Retail same-store sales increased 7.8% for the quarter ended Jan. 28, 2012 and EBITDA margins increased to 14.3% from 13.8% period over period, based on continued full-price sales and positive operating leverage. We believe that further performance gains will occur over the next 12 months, but at a less robust rate," S&P said. "Our stable rating outlook on Neiman Marcus reflects our expectation that operations are likely to perform well over the next 12 months--given continued strength in luxury retailing--but at a slower rate versus the previous year. We believe that performance will benefit from same-store sales increasing in the mid-single digits, direct marketing sales growth in the low-double digits, and EBITDA margins in the mid-14% area. However, we believe that the increased aggressiveness of the company's financial policies will negate any meaningful improvements in credit protection metrics. In our view, the increase in debt from the imminent dividend payment and the potential for further dividends over the near term will offset operational gains," S&P said. "Although unlikely over the near term, we could raise the company's rating if its revenues continue to grow at its current rate, margins increase by over 100 basis points, and the company significantly moderates its future dividend policies. Under this scenario, leverage would be under 5x and interest coverage would be in the mid-3x area," S&P said. "We could lower the rating if performance slows substantially due to an unexpected drop in luxury retail spending or if the company increases the amount of future dividends and issues debt to fund them. Under this scenario, the company would issue debt above $500 million and use the proceeds to pay a dividend, leading to leverage of about 6x," S&P said. NEONODE INC: Incurs $2.7 Million Net Loss in Fourth Quarter ----------------------------------------------------------- Neonode Inc. reported a net loss of $2.77 million on $3.95 million of net revenue for the three months ended Dec. 31, 2011, compared with a net loss of $7.03 million on $81,000 of net revenue for the same period a year ago. The Company reported a net loss of $17.14 million on $6.06 million of net revenue for the year ended Dec. 31, 2011, compared with a net loss of $31.62 million on $440,000 of net revenue during the prior year. The Company's balance sheet at Dec. 31, 2011, showed $16.62 million in total assets, $2.95 million in total liabilities and $13.67 million in total stockholders' equity. "Our results for the fourth quarter and year ended December 31, 2011 reflect the traction that our patented zForce touchscreen technology is gaining in the marketplace. zForce is currently utilized around the world in products produced by Amazon, Barnes & Noble, KOBO, Onyx and Sony. In addition, we have license agreements with 11 other OEMs who are planning to use our technology in various products that use LCD, Reflective and OLED screens, including mobile phones, printers, GPS devices, e-Readers and Tablet PCs. We are currently working with OEMs who are in the process of qualifying our technology for use in products such as touch panels for automobiles, household appliances, tablet PCs, mobile phones and games and toys," said CEO Thomas Eriksson. A copy of the press release is available for free at: http://is.gd/MoYX0B About Neonode Inc. Lafayette, Calif.-based Neonode Inc. (OTC BB: NEON) -- http://www.neonode.com/-- provides optical touch screen solutions for hand-held and small to midsize devices. KMJ Corbin & Company, LLP, in Costa Mesa, Calif., expressed substantial doubt about Neonode's ability to continue as a going concern, following the Company results for the fiscal year ended Dec. 31, 2010. The independent auditors noted that the Company has incurred significant operating losses and has used substantial amounts of working capital in its operations since inception, and at Dec. 31, 2010, has a working capital deficit of $9.9 million and an accumulated deficit of $112.2 million. NORTEL NETWORKS: Seeks to Amend Jefferies & Co Retention Fees ------------------------------------------------------------- BankruptcyData.com reports that Nortel Networks filed with the U.S. Bankruptcy Court a motion to implement an amendment to the terms of the previously-approved retention of Jefferies & Company as investment banker. Under the amendment, Jefferies' fees will be reduced to $50,000 per month for January through March 2012, and $150,000 thereafter. The original February 13, 2009 motion provided for Jefferies & Company to receive a $250,000 monthly fee, a $2.9 million transaction fee and a partial transaction fee. About Nortel Networks Nortel Networks (OTC BB: NRTLQ) -- http://www.nortel.com/-- was once North America's largest communications equipment provider. It has sold most of the businesses while in bankruptcy. 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 was appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor sought recognition of the CCAA Proceedings in the U.S. by filing a bankruptcy petition under Chapter 15 of the U.S. Bankruptcy Code (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 the Chapter 15 petitioner's counsel. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions (Bankr. D. Del. Case No. 09-10138) on Jan. 14, 2009. 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. Certain of Nortel's European subsidiaries also made consequential filings for creditor protection. On May 28, 2009, at the request of the Administrators, the Commercial Court of Versailles, France ordered the commencement of secondary proceedings in respect of Nortel Networks S.A. On June 8, 2009, Nortel Networks UK Limited filed petitions in this Court for recognition of the English Proceedings as foreign main proceedings under chapter 15 of the Bankruptcy Code. Nortel Networks divested off key assets while in Chapter 11. Nortel has raised $3.2 billion by selling its operations as it prepares to wind up a two-year liquidation due to insolvency. In June 2011, Nortel added US$4.5 billion to its cash pile after agreeing to sell its remaining patent portfolio to Rockstar Bidco, a consortium consisting of Apple Inc., EMC Corporation, Telefonaktiebolaget LM Ericsson, Microsoft Corp., Research In Motion Limited, and Sony Corporation. The consortium defeated a $900 million stalking horse bid by Google Inc. at an auction. The deal closed in July 2011. Nortel Networks has filed a proposed plan of liquidation in the U.S. Bankruptcy Court. The Plan generally provides for full payment on secured claims with other distributions going in accordance with the priorities in bankruptcy law. The Office of the United States Trustee for the District of Delaware has appointed an Official Committee of Unsecured Creditors in respect of the Debtors, and an ad hoc group of bondholders has been organized. Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, and Christopher M. Samis, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, represent the Official Committee of Unsecured Creditors. The Official Committee of Retired Employees and the Official Committee of Long-Term Disability Participants tapped Alvarez & Marsal Healthcare Industry Group as financial advisor. The Retiree Committee is represented by McCarter & English LLP as Delaware counsel, and Togut Segal & Segal serves as the Retiree Committee. The Committee retained Alvarez & Marsal Healthcare Industry Group as financial advisor, and Kurtzman Carson Consultants LLC as its communications agent. OSI RESTAURANT: Parent Considers Initial Public Offering -------------------------------------------------------- OSI Restaurant Partners, LLC's parent company, Kangaroo Holdings, Inc., is considering filing, within the next 60 days, a registration statement with the Securities and Exchange Commission for an initial public offering of its common stock. Although the size of the expected offering has not yet been determined, if the company files a registration statement, it is expected that shares would be offered by underwriters on behalf of the company and possibly, to a lesser extent, on behalf of selling stockholders. The purpose of the offering by the company would be for the repayment of indebtedness of its subsidiary, OSI Restaurant Partners, LLC, and for general corporate purposes. About OSI Restaurant OSI Restaurant Partners, Inc., is the #3 operator of casual-dining spots (behind Darden Restaurants and Brinker International), with more than 1,400 locations in the U.S. and 20 other countries. Its flagship Outback Steakhouse chain boasts more than 950 locations that serve steak, chicken, and seafood in Australian-themed surroundings. OSI also operates the Carrabba's Italian Grill chain, with about 240 locations. Other concepts include Bonefish Grill, Fleming's Prime Steakhouse, and Cheeseburger In Paradise. Most of the restaurants are company owned. A group led by Chairman Chris Sullivan took the company private in 2007. The Company's balance sheet at Sept. 30, 2011, showed $2.32 billion in total assets, $2.37 billion in total liabilities and a $40.30 million total deficit. The Company reported net income of $27.84 million on $3.62 billion of total revenues for the year ended Dec. 31, 2010, compared with a net loss of $54.40 million on $3.60 billion of total revenues during the prior year. PENN VIRGINIA: S&P Lowers Corp. Credit Rating to 'B'; Outlook Neg ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Radnor, Pa.-based Penn Virginia Corp. (PVA) to 'B' from 'BB-'. "At the same time, we lowered our issue rating on PVA's senior unsecured debt to 'B' from 'BB-'. The recovery rating remains '3', indicating our expectation of meaningful recovery (50% to 70%) in the event of a payment of default," S&P said. "The downgrade reflects our expectation that PVA's liquidity and financial measures will weaken as a result of depressed natural gas prices and the significant capital expenditures needed to execute the company's strategy to shift to liquids-based production," said Standard & Poor's credit analyst Christine Besset. "We believe the company could face funding and capital market access issues in 2013 if its drilling strategy is unsuccessful." "The ratings on Penn Virginia Corp. (PVA) reflect what we view as the company's 'aggressive' financial risk and 'vulnerable' business risk. Natural gas still constituted more than 70% of the group's production and reserves in 2011 and, although the company's exposure to oil and natural gas liquid is growing, the shift to a liquids-based production requires substantial drilling expenses in the short-term. PVA's thinning liquidity, relatively small scale, and higher-than-average cost structure relative to other natural gas-weighted companies compound the difficulties of soft natural gas prices," S&P said. "PVA is an independent oil and gas company whose primary business is the exploration, production, and development of natural gas and oil reserves in Texas, the Mid-Continent, Appalachia, and Mississippi. PVA's reserve base at year-end 2011 was 883 billion cubic feet equivalent (bcfe), which is in line with peers in the 'B' rating category. Although the company's production of oil and liquids increased 35% and 81%, respectively, in 2011, the company is still among the most weighted toward natural gas compared with rated peers. Production in 2011 consisted of 72% natural gas (down from 78% of production in 2010), 12% natural gas liquids (NGLs), and 16% crude oil. If the company can successfully execute its drilling program in the Eagle Ford, its possible oil and liquids could represent more than 50% of production at year-end 2013. Although better than 2010 results, the company's lease operating costs of about $1.12 per mcfe and cash, general, and administrative expenses per mcfe of about $0.83 in 2011, were elevated compared with other E&P companies. The outlook is negative reflecting our concerns regarding the company's less- than-adequate liquidity profile. We could lower the rating if availability under the groups' revolving credit facility drops below $100 million. We could affirm the rating if the company takes further steps to strengthen its liquidity," S&P said. PENSON WORLDWIDE: Moody's Cuts Corporate Family Rating to 'Ca' -------------------------------------------------------------- Moody's Investors Service downgraded the Corporate Family Rating and Senior Secured Ratings of Penson Worldwide, Inc. to Ca from Caa1 following its announcement of an exchange offer which Moody's views as a distressed exchange. The outlook is negative reflecting substantial execution risk of its restructuring plan. The rating action reflects Moody's view that the proposed offer, which would require existing senior secured note holders to swap $200 million of existing debt for a combination of $200 million of new payment in kind senior secured notes and preferred stock, is being pursued to avoid payment default and reduce debt. Ratings Rationale If the exchange is executed under the terms of its preliminary announced agreement, Penson will benefit in the short term from the estimated $176 million in reduction of debt. However, Penson's core operating profitability will continue to be challenged by a slump in trading volumes, margin compression, the ongoing low interest rate environment. In addition, the company also has execution risk with respect to the proposed sale of its Canadian clearing business, which would provide the company with greater financial flexibility. The last rating action on Penson was on November 30, 2011 when the Corporate Family Rating and Senior Secured rating was downgraded to Caa1 from B2 (RUR). The principal methodology used in this rating was Global Securities Industry Methodology published in December 2006. PENSON WORLDWIDE: S&P Lowers Counterparty Credit Rating to 'CC' --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term counterparty credit rating on Penson Worldwide Inc. to 'CC' from 'B-' and removed the ratings from CreditWatch Negative. The outlook is negative. Standard & Poor's also said that it lowered its rating on Penson's $200 million senior secured second-lien notes to 'CC' from 'CCC+' and removed the rating from CreditWatch negative. The downgrade reflects the company's announcement that it is launching a debt restructuring effort to help alleviate its heavy debt and debt service burden. Penson's plans to exchange the rated $200 million 12.5% second- lien notes due 2017 for $100 million 12.5% first-lien payment-in- kind (PIK) notes due 2017 and $100 million 12.5% preferred PIK shares redeemable in 2017. Penson also plans to exchange its $60 million senior convertible notes into new PIK notes and 51.6% ownership of the company, and to convert its seller financing note with Broadridge Financial Solutions Inc. into a 9.9% ownership of Penson. "The downgrade also reflects our view that, based on our criteria, the shift into PIK on the rated debt means that the existing debtholders will receive less than originally promised," said Standard & Poor's credit analyst Robert Hoban. "The outlook is negative. When and if the debt exchange is complete, we will lower our long-term counterparty credit rating on Penson to 'SD' (selective default) and lower our rating on its $200 million senior secured second-lien notes to 'D'," S&P said. "The negative outlook also incorporates our belief that the fundamental prospects for the company's business will not materially improve in the near term. We expect that even with the elimination of its cash interest obligations the firm will continue experiencing operating losses for at least the next few quarters because of low interest rates and transaction volumes," said Mr. Hoban. "Once the exchange offer in completed, the company will lower its debt burden and eliminate its cash interest obligations. Shortly thereafter, we will reassess the company's creditworthiness and adjust the ratings to what we deem appropriate under the new debt conditions; most likely no higher than a low single 'B' rating." POTOMAC SUPPLY: Bank Wants Court to Convert Case to Chapter 7 ------------------------------------------------------------- Amanda Ault at Westmoreland News reports that Regions Bank, secured creditor to whom Potomac Supply owes $17.5 million, has requested the U.S. Bankruptcy Court to move Potomac from Chapter 11 bankruptcy to Chapter 7. The Bank has also requested to be allowed onto the premises of Potomac to evaluate Potomac's inventory and assets. Potomac Supply was scheduled to appear in court on March 14 and plans to object to motions filed on behalf of the Bank, the report says. According to the report, the hearing was scheduled for later this month, but Judge Douglas O. Tice Jr. granted a motion filed by Regions to expedite the hearing. "The Court finds that (i) cause for an expedited hearing exists with respect to the relief requested by the Expedited Hearing Motion, (ii) Regions Bank did not, through any lack of due diligence, create the emergency, and (iii) Regions Bank has made a bona fide effort to resolve the matter addressed by the Expedited Hearing Motion prior to seeking an expedited hearing," the report says, citing the court order. "As Regions indicated in its original objection to the Debtor's motion to use cash collateral, Regions on the petition date was secured by a relatively thin margin," the report quotes Regions Bank's lawyer William A. Broscious, Esq., as saying. "With the diminution in assets and the accrual of post-petition interest and fees, it now appears Regions' claim exceeds the value of its collateral." According to the report, Regions also maintains that Potomac has not lived up to its obligations under the "Adequate Protection Order" from the court for allowing the use of cash collateral. The report relates that Richard Gouldin, Potomac's chief operating office, said he believes the bank is "pursuing its aggressive course of constant litigation for reasons having nothing to do with Potomac's operations or value, but rather because of Regions' own reporting obligations to federal regulators." Mr. Gouldin said that Potomac has not failed to do anything required in the court's order and that Potomac and Regions have a differing opinion over reports Regions claim were delivered late, the report says. About Potomac Supply Corp. Kinsale, Virginia-based building-supply manufacturer Potomac Supply Corporation filed for Chapter 11 bankruptcy (Bankr. E.D. Va. Case No. 12-30347) on Jan. 20, 2012, estimating assets and debts of $10 million to $50 million. Potomac in mid-January announced it was suspending manufacturing operations in Kinsale after its lender refused to provide financing without additional investment. Judge Douglas O. Tice, Jr. presides over the case. Patrick J. Potter, Esq., at Pillsbury Winthrop Shaw Pittman LLP, in Washington, D.C., serve as the Debtor's bankruptcy counsel. The petition was signed by William T. Carden, Jr., chief executive officer. QUANTUM FUEL: Pays $600,000 Note with 630,000 Common Shares ----------------------------------------------------------- Quantum Fuel Systems Technologies Worldwide, Inc.'s senior lender made a $600,000 payment demand on the promissory note referred to in the Company's financial statements and notes to financial statements as the "Consent Fee Note." The Company exercised its contractual right to satisfy the payment demand in shares of its common stock and delivered 630,000 shares in full satisfaction of the payment demand. The remaining principal balance due under the Consent Fee Note is $1,090,000. The shares were issued in a transaction exempt from registration pursuant to an exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended. About Quantum Fuel Based in Irvine, California, Quantum Fuel Systems Technologies Worldwide, Inc., is a fully integrated alternative energy company and considers itself a leader in the development and production of advanced clean propulsion systems and renewable energy generation systems and services. Quantum Fuel and its senior lender, WB QT, LLC, entered into a Ninth Amendment to Credit Agreement and a Forbearance Agreement on Jan. 3, 2011. The Senior Lender agreed to provide the Company with a $5.0 million non-revolving line of credit, which may be drawn upon at any time prior to April 30, 2011. Advances under the New Line of Credit do not bear interest -- unless an event of default occurs, in which case the interest rate would be 10% per annum -- and mature on April 30, 2011. The Senior Lender also agreed to forbear from accelerating the maturity date for any portion of the Senior Debt Amount and from exercising any of its rights and remedies with respect to the Senior Debt Amount until April 30, 2011. The Company reported a net loss attributable to stockholders of $11.03 million on $20.27 million of total revenue for the year ended Apri1 30, 2011, compared with a net loss attributable to stockholders of $46.29 million on $9.60 million of total revenue during the prior year. Quantum Fuel reported a net loss attributable to stockholders of $38.49 million on $24.47 million of total revenue for the eight months ended Dec. 31, 2011, compared with a net loss attributable to stockholders of $6.52 million on $10.51 million of total revenue for the same period a year ago. The Company's balance sheet at July 31, 2011, showed $74.15 million in total assets, $31.62 million in total liabilities, and $42.53 million total stockholders' equity. Ernst & Young LLP, in Orange County, California, noted that Quantum Fuel's recurring losses and negative cash flows combined with the Company's existing sources of liquidity and other conditions raise substantial doubt about the Company's ability to continue as a going concern. Possible Bankruptcy The Company anticipates that it will need to raise a significant amount of debt or equity capital in the near future in order to repay certain obligations owed to the Company's senior secured lender when they mature. As of June 15, 2011, the total amount owing to the Company's senior secured lender was approximately $15.5 million, which includes approximately $12.5 million of principal and interest due under three convertible promissory notes that are scheduled to mature on Aug. 31, 2011, and a $3.0 million term note that is potentially payable in cash upon demand beginning on Aug. 1, 2011, if the Company's stock is below $10.00 at the time demand for payment is made. If the Company is unable to raise sufficient capital to repay these obligations at maturity and the Company is otherwise unable to extend the maturity dates or refinance these obligations, the Company would be in default. The Company said it cannot provide any assurances that it will be able to raise the necessary amount of capital to repay these obligations or that it will be able to extend the maturity dates or otherwise refinance these obligations. Upon a default, the Company's senior secured lender would have the right to exercise its rights and remedies to collect, which would include foreclosing on the Company's assets. Accordingly, a default would have a material adverse effect on the Company's business and, if the Company's senior secured lender exercises its rights and remedies, the Company would likely be forced to seek bankruptcy protection. RENEGADE HOLDINGS: Judge Stocks Moves Pretrial Hearing to May 1 --------------------------------------------------------------- The Winston-Salem Journal reports that Judge William Stocks of the U.S. Bankruptcy Court for the Middle District of N.C. has approved continuing the pretrial hearing of Renegade Holdings until 9:30 a.m. on May 1, 2012. The report says the Company has to wait another 45 days before learning whether they will face a trial or be able move toward exiting bankruptcy for the second time. Renegade Holdings and two subsidiaries -- Alternative Brands, Inc. and Renegade Tobacco Company -- filed for Chapter 11 protection (Bankr. M.D.N.C. Lead Case No. 09-50140) on Jan. 28, 2009, and exited bankruptcy on June 1, 2010. They were put back into bankruptcy July 19, 2010, when Judge William L. Stocks vacated the reorganization plan, in part because of a criminal investigation of owner Calvin Phelps and the companies regarding what authorities called "unlawful trafficking of cigarettes." Alternative Brands is a federally licensed manufacturer of tobacco products consisting primarily of cigarettes and cigars. Renegade Tobacco distributes the tobacco products produced by ABI through wholesalers and retailers in 19 states and for export. ABI also is a contract fabricator for private label brands of cigarettes and cigars which are produced for other licensed tobacco manufacturers. The stock of RHI is owned indirectly by Calvin A. Phelps through his ownership of the stock of Compliant Tobacco, LLC which, in turn, owns all of the stock of RHI which in turn owns all of the stock of RTC and ABI. Mr. Phelps was the chief executive officer of all three companies. All three of the Debtors' have their offices and production facilities in Mocksville, North Carolina. In August 2010, the Bankruptcy Court approved the appointment of Peter Tourtellot, managing director of turnaround-management company Anderson Bauman Tourtellot Vos & Co., as Chapter 11 trustee. ROCK GLEN: Case Summary & 14 Largest Unsecured Creditors -------------------------------------------------------- Debtor: Rock Glen Healthcare, Inc. dba Rock Glen Nursing and Rehabilitation Center P.O. Box 40018 Baton Rouge, LA 70835 Bankruptcy Case No.: 12-10320 Chapter 11 Petition Date: March 12, 2012 Court: United States Bankruptcy Court Middle District of Louisiana (Baton Rouge) Debtor's Counsel: Noel Steffes Melancon, Esq. William E. Steffes, Esq. STEFFES, VINGIELLO & MCKENZIE, LLC 13702 Coursey Blvd., Building 3 Baton Rouge, LA 70817 Tel: (225) 751-1751 Fax: (225) 751-1998 E-mail: nsteffes@steffeslaw.com bsteffes@steffeslaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 A copy of the list of 14 largest unsecured creditors is available for free at http://bankrupt.com/misc/lamb12-10320.pdf The petition was signed by Richard T. Daspit, Sr., president. ROSETTA RESOURCES: S&P Raises Corporate Credit Rating to 'B+' ------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Houston-based Rosetta Resources Inc. to 'B+' from 'B'. The outlook is stable. "At the same time, we raised the senior unsecured rating to 'BB-' (one notch higher than the corporate credit rating) from 'B+'. The recovery rating remains '2', indicating our expectation of substantial (70% to 90%) recovery in the event of a payment default," S&P said. "The upgrade on Rosetta reflects our expectation that robust oil prices and its oil-weighted capital spending program in 2012 will benefit its proved developed reserve base," said Standard & Poor's credit analyst Marc D. Bromberg. "We anticipate that Rosetta will increase its proportion of proved developed reserves, which were small at about 36% of its 965 billion cubic feet equivalent (Bcfe) reserve base at year-end 2011. The company intends to allocate about 90% of its $640 million budget to the oil-rich Eagle Ford basin this year, and we think that this program is likely to improve its proved developed reserve base to above 40% of total proved reserves. We consider this level to be appropriate for the 'B+' rating category," S&P said. "The ratings on Rosetta reflect Standard & Poor's view of its relatively small proved reserve base relative to peers, its aggressive growth strategy, and its reliance on one location (Eagle Ford) for much of its future growth. Our ratings also reflect its exposure to robust crude oil prices and its healthy credit protection measures. We consider its business risk to be 'weak' and its financial risk 'aggressive'," S&P said. "The company is limited to the Eagle Ford for a majority of production and intends to spend a majority of its 2012 capital budget in the basin this year. While we view the Eagle Ford favorably because of its high condensate mix, Rosetta's aggressive capital spending program there means the company will become highly reliant on one basin for much of its future cash flows, which it uses to service debt and other obligations. We expect that this investment in the Eagle Ford will leave liquids (crude oil and natural gas liquids [NGLs]) as a percentage of total production to be about 57% at the end of 2012 and 60% at the end of 2013 (in the fourth quarter, about 49% of production was tied to liquids)," S&P said. "The stable outlook reflects our view that Rosetta will continue to benefit from robust oil prices and that its capital spending program in the Eagle Ford will result in further development of its proved reserves. Given its increasing oil production, we foresee Rosetta maintaining credit protection measures that are strong for the current rating, with year-end leverage projected to be below 1x," S&P said. "We could lower the rating if Rosetta exceeds leverage of 4.5x, a level that would require an 84% decline based on annualized fourth quarter EBITDA. We consider this unlikely given Rosetta's exposure to oil prices," S&P said. ROTECH HEALTHCARE: Inks $10MM Credit Facility with Credit Suisse ---------------------------------------------------------------- Rotech Healthcare Inc., on March 17, 2011, entered into a credit agreement with the lenders party thereto, and Credit Suisse AG, as administrative agent thereunder. On March 7, 2012, the Company entered into an amendment to the Original Credit Agreement that extended the final maturity date from March 17, 2012, to March 17, 2014. The Credit Agreement provides for a revolving credit facility commitment of $10,000,000 provided that the maximum outstanding aggregate principal balance at any one time does not exceed $10,000,000. There was no debt outstanding under the Revolving Credit Facility as of Dec. 31, 2011. The Revolving Credit Facility contains customary covenants similar to those in the Company's indentures governing its Senior Secured Notes and Senior Second Lien Notes. The Revolving Credit Facility also includes a maximum leverage ratio above which level the Company would be precluded from making any additional draws. As of Dec. 31, 2011, the Company was below the maximum Leverage Ratio threshold. All borrowings under the Revolving Credit Facility are secured by a first priority security interest in substantially all of the Company's assets. The interest rate per annum applicable to the Revolving Credit Facility is adjusted LIBOR or, at the Company's option, the alternate base rate, which is the higher of (a) the prime rate, (b) the federal funds effective rate plus 0.50%, and (c) adjusted LIBOR for a three-month interest period plus 1.0% in each case, plus the Applicable Margin. The "Applicable Margin" in the case of LIBOR advances is 5.0% per annum and in the case of alternate base rate advances is 4.0% per annum. The default rate under the Revolving Credit Facility is 2.0% above the otherwise applicable interest rate. The Company is also obligated to pay a commitment fee of 0.75% per annum on the daily unused portion of the Company's Revolving Credit Facility. A copy of the Credit Agreement is available for free at: http://is.gd/j5b63a About Rotech Healthcare Based in Orlando, Florida, Rotech Healthcare Inc. (NASDAQ: ROHI) -- http://www.rotech.com/-- provides home medical equipment and related products and services in the United States, with a comprehensive offering of respiratory therapy and durable home medical equipment and related services. The company provides equipment and services in 48 states through approximately 500 operating centers located primarily in non-urban markets. The Company reported a net loss of $4.20 million on $496.42 million of net revenue for the year ended Dec. 31, 2010, compared with a net loss of $21.08 million on $479.87 million of net revenue during the prior year. The Company reported a net loss of $6.31 million on $366.75 million of net revenues for the nine months ended Sept. 30, 2011, compared with a net loss of $598,000 on $372.65 million of net revenues for the same period a year ago. The Company's balance sheet at Sept. 30, 2011, showed $281.71 million in total assets, $567.63 million in total liabilities, $2.95 million in Series A convertible redeemable preferred stock, and a $288.87 million total stockholders' deficiency. * * * In October 2010, Standard & Poor's Ratings Services raised its corporate credit rating on Rotech Healthcare to 'B-' from 'CCC'. The outlook is positive. In the March 22, 2011, edition of the TCR, Standard & Poor's Ratings Services said that it raised its corporate credit rating to 'B' from 'B-' on Orlando, Fla.-based Rotech Healthcare Inc., following the completion of the company's $290 million second-lien senior secured notes offering. "The ratings on Rotech Healthcare Inc. reflect the company's weak business risk profile, incorporating Rotech's exposure to Medicare reimbursement reductions for its products and services," said Standard & Poor's credit analyst Jesse Juliano. The rating also reflects the company's highly leveraged financial risk profile. As previously reported by the TCR on Jan. 13, 2012, Moody's Investors Service lowered Rotech Healthcare Inc.'s Corporate Family rating ("CFR") to B3 from B2 as a consequence of weakening liquidity and worse than expected operating performance in 2011 alongside only modest expectations for improvement in 2012. The downgrade to B3 incorporates Moody's concerns regarding the decline in Rotech's cash balance due to significant working capital usage during 2011 and lower than expected growth in EBITDA. ROTHSTEIN ROSENFELDT: Judge Allows Investor to Up Claims by $25MM ----------------------------------------------------------------- Max Stendahl at Bankruptcy Law360 reports that U.S. District Judge James I. Cohn abruptly reversed course Wednesday and allowed Miami businessman Ira Sochet to increase his claim against jailed Ponzi schemer Scott Rothstein by $25 million, the amount Mr. Sochet previously paid to settle a clawback suit by Rothstein's bankruptcy trustee. According to Law360, Judge Cohn granted Mr. Sochet's motion to reconsider a March 6 order that had prevented him from expanding his $43 million restitution claim in Rothstein's criminal case. About Rothstein Rosenfeldt Scott Rothstein, co-founder of law firm Rothstein Rosenfeldt Adler PA -- http://www.rra-law.com/-- has been suspected of running a $1.2 billion Ponzi scheme. U.S. authorities claimed in a civil forfeiture lawsuit filed November 9, 2009, that Mr. Rothstein, the firm's former chief executive officer, sold investments in non- existent legal settlements. Mr. Rothstein pleaded guilty to five counts of conspiracy and wire fraud on January 27, 2010. Creditors of Rothstein Rosenfeldt Adler signed a petition sending the Florida law firm to bankruptcy (Bankr. S.D. Fla. Case No. 09-34791). The petitioners include Bonnie Barnett, who says she lost $500,000 in legal settlement investments; Aran Development, Inc., which said it lost $345,000 in investments; and trade creditor Universal Legal, identified as a recruitment firm, which said it is owed $7,800. The creditors alleged being owed money invested in lawsuit settlements. Herbert M. Stettin, the state-court appointed receiver for Rothstein Rosenfeldt, was officially carried over as the Chapter 11 trustee in the involuntary bankruptcy case. On June 10, 2010, Mr. Rothstein was sentenced to 50 years in prison. ROYAL HOSPITALITY: Ch. 11 Trustee Taps D'Archangelo as Accountant ----------------------------------------------------------------- Stephen D. Gerling, Chapter 11 Trustee in the case of Royal Hospitality LLC asks the U.S. Bankruptcy Court for the District of Northern District of New York for permission to employ D'Archangelo & Co., LLP as its accountant. D'Archangelo will, among other things: -- review seven monthly operating statements (October 2011 - April 2012); and -- review payroll and sales tax/occupancy tax reporting. Arthur Liberman, a certified public accountant and a partner in the firm, tells the Court that the firm has received no retainer toward payment of fees and none will be accepted. To the best of the trustee's knowledge, D'Archangelo has no interest adverse to the estate. About Royal Hospitality LLC Royal Hospitality LLC, dba Comfort Suites, has been operating the Comfort Suites in Lake George, New York since May 2007. It filed for Chapter 11 protection (Bankr. N.D.N.Y. Case No. 10-13090) on Aug. 19, 2010. The Debtor disclosed $13,432,001 in assets and $11,154,770 in liabilities as of the Petition Date. Richard L. Weisz, Esq., at Hodgson Russ LLP, in Albany, N.Y., represents the Debtor as counsel. BST Valuation & Litigation Advisors LLC serves as accountant to prepare and advise the implementation of cash management and other services. Harry Snyder, Esq., was appointed mediator in the bankruptcy case of Royal Hospitality LLC. ROYAL HOSPITALITY: US Trustee Wants Fees Prior to Confirmation -------------------------------------------------------------- Tracy Hope Davis, U.S. Trustee for Region 2, asks the U.S. Bankruptcy Court for the Northern District of New York to deny confirmation of Royal Hospitality LLC's Plan of Reorganization. On Jan. 31, 2012, the Court approved the First Amended Disclosure Statement dated Jan. 30, 2012. The U.S. Trustee explains that until outstanding fees are paid, confirmation cannot proceed because the Debtor cannot meet its burden to show that it has paid all fees due to the U.S. Trustee. The U.S. Trustee calculates a fee due in the amount of $1,626. As reported in the Troubled Company Reporter on Feb. 20, 2012, the Debtor has filed a plan that proposes a 100% payment to creditors. The Debtor believes that its revenue will exceed $2,000,000 per year while its expenses will be approximately $1,350,000, generating at least $650,000 per year to pay mortgage holders and unsecured creditors. The Debtor disclosed that it has settled a lawsuit for breach of contract by Lumberjack Pass Amusements, LLC seeking over $1,000,000 from the Debtor and its principals and revocation of an easement for water and sewer. A full-text copy of the Disclosure Statement is available for free at http://bankrupt.com/misc/ROYAL_HOSPITALITY_ds_amended.pdf About Royal Hospitality LLC Royal Hospitality LLC, dba Comfort Suites, has been operating the Comfort Suites in Lake George, New York since May 2007. It filed for Chapter 11 protection (Bankr. N.D.N.Y. Case No. 10-13090) on Aug. 19, 2010. The Debtor disclosed $13,432,001 in assets and $11,154,770 in liabilities as of the Petition Date. Richard L. Weisz, Esq., at Hodgson Russ LLP, in Albany, N.Y., represents the Debtor as counsel. BST Valuation & Litigation Advisors LLC serves as accountant to prepare and advise the implementation of cash management and other services. Harry Snyder, Esq., was appointed mediator in the bankruptcy case of Royal Hospitality LLC. RQB RESORT: Has Authority to Use Cash Collateral Until May 4 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida, in a ninth order, authorized RQB Resort LP and RQB Development LP's continued use of the cash collateral which Goldman Sachs until May 4, 2012. A continued hearing on the Debtors' cash collateral motion will be held on May 2, 2012, at 2:30 p.m. The Debtors may use the cash collateral to fund their business operations postpetition. The Debtors will not disburse any amounts to insiders, and will not pay any prepetition debt. As reported in the Troubled Company Reporter on Dec. 27, 2011, as adequate protection for any diminution in value of the lenders' collateral, the Debtors will grant Goldman Sachs a replacement lien on all postpetition account receivable to the same extent, validity and priority as the security interests Goldman Sachs held as of the Petition Date, and superpriority administrative expense claim status. As additional adequate protection, the Debtor will provide Goldman Sachs by the 15th of each month with each of the financial reports previously provided to Goldman Sachs by the Debtors prepetition. About RQB Resort RQB Resort LP and RQB Development LP own Florida's Sawgrass Marriott Resort, the site of the U.S. PGA Tour's Tournament Players Championship. Ponte Vedra Beach, Florida-based RQB Resort, LP, aka Sawgrass Marriott Resort & Cabana Club, filed for Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Case No. 10-01596) on March 1, 2010. The Company's affiliate -- RQB Development, LP, aka Sawgrass Marriott Golf Villas & Spa -- filed a separate Chapter 11 petition. The Company estimated its assets and debts at $100 million to $500 million in its Chapter 11 petition. SAFENET INC: Moody's Affirms 'B2' Corporate Family Rating --------------------------------------------------------- Moody's Investors Service affirmed SafeNet, Inc.'s ratings, including its B2 Corporate Family Rating (CFR) and the ratings for its existing senior credit facilities, and revised SafeNet's ratings outlook to stable from positive. Moody's also assigned a B1 rating to the company's proposed $150 million of incremental first lien term loans, and B1 and Caa1 ratings to the proposed maturity extended first and second lien credit facilities, respectively. The company plans to use a portion of cash on hand and net proceeds from the incremental term loans to pay dividends to shareholders. SafeNet is also proposing to amend and extend a portion of its first and second lien credit facilities. Under the proposed terms of the amendment, the extended first lien term loan would become due in April 2017. However, the maturity dates for the extended first lien term loans would accelerate to 91 days before the maturity date for the extended second lien loans if more than $35 million of second lien loans remain outstanding and consolidated first lien leverage exceeds 3.0x, 91 days before the extended second lien loans mature. As part of the proposed amendments, the maturities for the extended tranches of revolving loan will also extend by 3 years to April 2016 and for the second lien debt by 1 year to April 2016. Rating Rationale The affirmation of the B2 CFR reflects Moody's expectations that SafeNet's total debt to EBITDA leverage to decline from about 6.1x (Moody's adjusted) at the close of the proposed transactions to less than 5.5x in the next 12 to 18 months through EBITDA growth and mandatory debt repayments from free cash flow. Moody's changed SafeNet's ratings outlook to stable from positive as a result of the increase in total debt to EBITDA leverage (Moody's adjusted) by about 1.5x at the close of the proposed dividend recapitalization, which effectively reverses the deleveraging attained over the past five years. The revision of the outlook especially considers the company's tolerance for higher financial risk amid the decline in sales of data protection products to the federal government. The stable ratings outlook incorporates Moody's expectations that SafeNet should be able to maintain stable EBITDA margin and generate revenue growth in the mid single digit rates, more than offsetting the weaker demand for data protection solutions from the federal government through increasing sales to enterprise customers and revenue growth of its software rights management (SRM) products. The B2 CFR is supported by SafeNet's good market position in the niche segments within the data security market and the relatively high barriers to entry in the company's classified government business due to Type 1 certification requirements. The rating is additionally supported by SafeNet's good growth prospects in the enterprise data protection and SRM segments, which represent growing markets, and the company's long-standing history as a vendor of data security services to the U.S. government and its agencies. The rating benefits from the company's prospective stable free cash flows in the mid to high single digit ranges of its total adjusted debt. SafeNet's B2 CFR is constrained by the company's aggressive shareholder oriented financial policies and the increase in the company's business risk profile as it derives a larger proportion of its revenues and the majority of growth from the intensely competitive enterprise data protection market. Given the increase in leverage and the company's shareholder- oriented policies a ratings upgrade is unlikely in the next 12 to 18 months. Moody's could upgrade SafeNet's rating if financial leverage could be sustained at less than 4.0x (Moody's adjusted), incorporating potential for debt-financed distributions to shareholders and ongoing modest-sized acquisitions. Additional upgrade triggers include sustaining free cash flow/Debt ratio in excess of 15% and maintaining a profitable, organic revenue growth. Moody's could downgrade SafeNet's ratings if EBITDA declines or the company experiences an erosion in EBITDA margins such that SafeNet is unable to sustain total debt-to-EBITDA leverage below 6.0x and free cash flow/Debt ratio remains below 5% (both metrics Moody's adjusted), or liquidity becomes weak. Moody's has taken the following rating actions: Issuer: SafeNet, Inc. Ratings Assigned: First lien secured revolving credit facility due April 2016 -- B1, LGD 3, 36% First lien secured Term Loan due April 2017 - B1, LGD 3, 36% Incremental first lien secured Term Loan due March 2018 - B1, LGD 3, 36% Second lien secured Term Loan due April 2016 -- Caa1, LGD 5, 87% Ratings Affirmed: Corporate Family Rating -- B2 Probability of Default Rating -- B2 Unextended first lien secured revolving credit facility due April 2013 -- B1, LGD3, 36% (changed from 32%) Unextended first lien secured credit facility due April 2014 -- B1, LGD3, 36% (changed from 32%) Unextended second lien secured credit facility due April 2015 -- Caa1, LGD 5, 87% (changed from 83%) Outlook action: Outlook changed to Stable from Positive The principal methodology used in rating SafeNet was the Global Software Industry Methodology published in May 2009. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Belcamp, MD, SafeNet provides data security solutions to government and enterprise customers. SafeNet was taken private by Vector Capital in 2007. The company reported $454.7 million in revenue in 2011. SAINT VINCENTS: Court Approves Fourth Amendment to DIP Loan ----------------------------------------------------------- The Hon. Cecelia G. Morris of the U.S. Bankruptcy Court for the Southern District of New York approved the Fourth Amendment to Saint Vincents Catholic Medical Centers of New York, et al.'s Debtor-in-Possession Credit Agreement. The Fourth Amendment is effective as of Feb. 14, 2012. The Debtors are authorized to pay the Fourth Amendment Fee, less the fees that were paid pursuant to the two modifications approved by the Court on Dec. 29, 2011, and Jan. 30, 2012. The DIP Agent and DIP Lenders are entitled to, and are granted, the full protections of Section 364(e) of the Bankruptcy Code. As reported in the Troubled Company Reporter on Jan. 17, 2012, the agreement was entered by the Debtors with General Electric Capital Corporation, as agent, and GE Capital and TD Bank, N.A., as lenders. The fourth amendment contains these salient provisions, which are generally consistent with the initial DIP Facility and the various amendments thereto, among other things: a. Approved Budget. The parties have negotiated a new approved budget, covering the period between Jan. 1, 2012, and March 30. b. Aggregate Commitments. As of Jan. 1, the maximum aggregate commitment under the DIP Credit Agreement is reduced from $22,500,000 to $20,000,000. c. Cash Collateral Account. Consistent with the terms of the DIP Credit Agreement, the Debtors will establish a cash collateral account for the deposit of certain unbudgeted funds, including the proceeds of sales of Nursing Homes. d. Conditions to Borrowing. As an additional condition of borrowing, the Debtors have to deposit cash (whether proceeds from a sale Nursing Home or other cash) into the Cash Collateral Account. f. Fourth Amendment Fee. In consideration for entering into the DIP Amendment and extending the Scheduled Maturity Date for three additional months, the Debtors will pay the DIP Agent, for the benefit of the DIP Lenders, an amendment fee of $50,000. The Debtors are engaged in negotiations with the Debtors' key constituencies on resolving claims and formulating a consensual Chapter 11 Plan. About Saint Vincents Saint Vincents Catholic Medical Centers of New York, doing business as St. Vincent Catholic Medical Centers -- http://www.svcmc.org/-- was anchored by St. Vincent's Hospital Manhattan, an academic medical center located in Greenwich Village and the only emergency room on the Westside of Manhattan from Midtown to Tribeca, St. Vincent's Westchester, a behavioral health hospital in Westchester County, and continuing care services that include two skilled nursing facilities in Brooklyn, another on Staten Island, a hospice, and a home health agency serving the Metropolitan New York area. Saint Vincent Catholic Medical Centers of New York and six of its affiliates first filed for Chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case Nos. 05-14945 through 05-14951). St. Vincents Catholic Medical Centers returned to bankruptcy court by filing another Chapter 11 petition (Bankr. S.D.N.Y. Case No. 10-11963) on April 14, 2010. The Debtor estimated assets of $348 million against debts totaling $1.09 billion in the new petition. Although the hospitals emerged from the prior reorganization in July 2007 with a Chapter 11 plan said to have "a realistic chance" of paying all creditors in full, the bankruptcy left the medical center with more than $1 billion in debt. The new filing occurred after a $64 million operating loss in 2009 and the last potential buyer terminated discussions for taking over the flagship hospital. Adam C. Rogoff, Esq., and Kenneth H. Eckstein, Esq., at Kramer Levin Naftalis & Frankel LLP, represent the Debtor in its Chapter 11 effort. SCHOMAC GROUP: Has Access to Cash Collateral Until April 5 ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of Arizona authorized Schomac Group, Inc., and Tedco, Inc.'s continued use of the cash collateral until April 5, 2012. Each of the Debtors is authorized to pay ordinary and necessary, postpetition expenses in the ordinary course of operating its business. Each of the Debtors will not exceed the total budgeted amount for any line item of expense in the budget by more than 5% for any calendar month without the written consent of lender or an order of the Court. The Court also ordered that the Debtors are not authorized to use lender's cash collateral to, among other things: -- pay any prepetition wages or other obligations owed to W. M. Schoff; -- make any payments to Montecito Bank; and -- for insurance premiums and expenses relating to Feather River Inn, and affiliates or insiders of the Debtors. The right of the Debtors to use cash collateral will immediately cease, without the requirement of notice or demand from the lender, for so long as the trading price of the CubeSmart Units is less than $7.75 per unit at the end of any trading day. As adequate protection from any diminution value of the lender's collateral, the Debtor will grant the lender replacement liens in all property of the same kind and character of the collateral. A continued hearing on the authority to use cash collateral will be held on April 5, at 10:00 a.m. About The Schomac Group & TEDCO Tucson, Arizona-based The Schomac Group, Inc., develops, constructs, manages, and invests in residential, industrial, and commercial real property. Tedco, Inc., invests in real property and in mortgages backed by real property. Schomac Group and Tedco filed for Chapter 11 bankruptcy (Bankr. D. Ariz. Case Nos. 11- 22717 and 11-22720) on Aug. 9, 2011. In its schedules, Schomac Group disclosed $48,929,897 in total assets and $34,583,005 in total liabilities. Judge Eileen W. Hollowell presides over the cases. Mesch, Clark & Rothschild, P.C., serves as the Debtors' counsel. Attorney for secured lender LNV Corp. is William Novotny, Esq., at Mariscal Weeks McIntyre & Friedlander, PA. SEARS HOLDINGS: Board OKs Restatement of Annual Incentive Plan -------------------------------------------------------------- The Compensation Committee of the Board of Directors of Sears Holdings Corporation, on March 7, 2012, approved the restatement of the Sears Holdings Corporation Annual Incentive Plan and 2012 performance goals and measures thereunder, subject to stockholder approval of the Sears Holdings Corporation Umbrella Incentive Program, as amended and restated, at the Company's annual meeting of stockholders to be held on May 2, 2012. The AIP provides the opportunity for salaried and certain corporate hourly employees of the Company, including its executive officers, to receive an incentive award equal to a percentage of his or her base salary or a dollar amount subject to the attainment of quarterly and annual performance goals. Awards under the AIP represent the right to receive cash or, at the discretion of the Compensation Committee, shares of the Company's common stock in lieu of cash or a combination of cash and shares. The issuance of common stock under the AIP is contingent on the availability of shares of stock under a shareholder approved plan of the Company providing for the issuance of shares in satisfaction of AIP awards. The AIP provides that, for each performance period, the Compensation Committee will establish in writing the financial performance goals and any particulars or components applicable to each business and the annual incentive opportunity and assignment with respect to each participant. The primary financial performance goals under the AIP for the executive officers are based on SHC EBITDA, business unit operating profit, or a combination of these goals. The definition of the financial performance goals, including SHC EBITDA and BOP, were approved by the Compensation Committee. The 2012 annual incentive opportunity for the Company's chief executive officer, Louis J. D'Ambrosio, and the Company's chief financial officer, Robert A. Schriesheim, is based solely on SHC EBITDA. The 2012 annual incentive opportunities for the Company's current executive officers named in the Company's proxy statement for the Company's 2011 annual meeting of stockholders under the AIP are based on achievement of a combination of an SHC EBITDA goal and certain BOP goals. Specifically, the 2012 annual incentive opportunity for W. Bruce Johnson is based on the level of performance of the BOP goals for the business units for which he is responsible and the level of performance for the SHC EBITDA goal. The 2012 annual incentive opportunity for each of Dane A. Drobny and William R. Harker is based on the aggregate performance for the BOP goal of certain operating business units and the level of performance for the SHC EBITDA goal. The AIP also provides for quarterly SHC EBITDA targets, payout with respect which, if any, will not be made until the payment date described below. Payouts under the AIP will range from 25%, generally, of the target incentive award at a threshold level of performance established by the Compensation Committee for each performance goal to 200% of the target incentive award at a maximum level of performance. Target incentive awards will be calculated as a percentage up to 200% of base salary. For the SHC EBITDA goal, the incentive payout percentage between threshold and maximum payout is based on a series of straight-line (linear) interpolations as follows: a 1.06% increase in payout for every 1% increase in SHC EBITDA from threshold to a point below target, a 1.73% increase in payout for every 1% increase in SHC EBITDA from such point to target, and a 2% increase in payout for every 1% increase in SHC EBITDA from target to maximum level of performance. For the BOP goals, payout percentage at threshold varies by business unit. Also for the BOP goals, the incentive payout percentage between threshold and target is based on straight-line (linear) interpolation with a 2% increase in payout for every 1% increase in BOP from target to maximum level of performance. The Compensation Committee approved a target award percentage under the AIP of 200% for Mr. D'Ambrosio, 150% for Mr. Schriesheim, 100% for Mr. Johnson, 90% for Mr. Harker and 75% for Mr. Drobny. Certain additional conditions will apply in order for a participant whose employment with the Company terminates due to his or her death or disability prior to the payment date. The Company will pay awards earned under the AIP to participants within 75 days after the end of the Company's 2012 fiscal year, provided that the participant is actively employed by the Company on the payment date and that the Company's stockholders approve the Umbrella Program. The AIP also provides that the Company will seek reimbursement from executive officers if the Company's financial statements or approved financial measures are subject to restatement due to error or misconduct, to the extent permitted by law. About Sears Holdings Hoffman Estates, Illinois-based Sears Holdings Corporation (Nasdaq: SHLD) -- http://www.searsholdings.com/-- is the nation's fourth largest broadline retailer with more than 4,000 full-line and specialty retail stores in the United States and Canada. Sears Holdings operates through its subsidiaries, including Sears, Roebuck and Co. and Kmart Corporation. Sears Holdings also owns a 94% stake in Sears Canada and an 80.1% stake in Orchard Supply Hardware. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has the Country Living collection, which is offered by Sears and Kmart. Kmart Corporation and 37 of its U.S. subsidiaries filed voluntary Chapter 11 petitions (Bankr. N.D. Ill. Lead Case No. 02-02474) on Jan. 22, 2002. Kmart emerged from chapter 11 protection on May 6, 2003, pursuant to the terms of an Amended Joint Plan of Reorganization. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. Kmart completed its merger with Sears on March 24, 2005. The Company reported a net loss of $3.14 billion on $41.56 billion of merchandise sales and services for the 52 weeks ended Jan. 28, 2012, compared with net income of $150 million on $42.66 billion of merchandise sales and services for the 52 weeks ended Jan. 29, 2011. The Company's balance sheet at Jan. 28, 2012, showed $21.38 billion in total assets, $17.04 billion in total liabilities and $4.34 billion in total equity. Negative Outlook Standard & Poor's Ratings Services in January 2012 lowered its corporate credit rating on Hoffman Estates, Ill.-based Sears Holdings Corp. to 'CCC+' from 'B'. "We removed the rating from CreditWatch, where we had placed it with negative implications on Dec. 28, 2011. We are also lowering the short-term and commercial paper rating to 'C' from 'B-2'. The rating outlook is negative," S&P said. "The corporate credit rating reflects our projection that Sears' EBITDA will be negative in 2012, given our expectations for continued sales and margin pressure," said Standard & Poor's credit analyst Ana Lai. She added, "We further expect that liquidity could be constrained in 2013 absent a turnaround or substantial asset sales to fund operating losses." Moody's Investors Service in January 2012 lowered Sears Holdings Family and Probability of Default Ratings to B3 from B1. The outlook remains negative. At the same time Moody's affirmed Sears' Speculative Grade Liquidity Rating at SGL-2. The rating action reflects Moody's expectations that Sears will report a significant operating loss in fiscal 2011. Moody's added that the rating action also reflects the company's persistent negative trends in sales, which continue to significantly underperform peers. SEAWORLD PARKS: S&P Lowers Corporate Credit Rating to 'B+' ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Orlando-based SeaWorld Parks & Entertainment Inc. to 'B+' from 'BB-'. The rating outlook is stable. "In addition, we lowered our issue-level rating on the company's senior secured credit facility, which currently consists of a $172.5 million revolver, a $160 million term loan A, and an $844 million term loan B, to 'BB' from 'BB+', placing the issue-level rating on CreditWatch with negative implications. The recovery rating remains a '1', indicating our expectation of very high (90% to 100%) recovery for lenders in the event of a payment default. However, upon closing of the proposed transaction, we will revise our recovery rating on the existing senior secured credit facility to '2' from '1' and lower our issue-level rating to 'BB-' from 'BB', in accordance with our notching criteria," S&P said. "At the same time, we assigned our preliminary 'BB-' issue-level rating to SeaWorld's proposed $500 million incremental term loan B. The preliminary recovery rating is '2', indicating our expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default. The company intends to use the proceeds of the incremental term loan to fund a distribution to SeaWorld's owners," S&P said. "The downgrade reflects the expected spike in adjusted leverage to over 5x following the proposed transaction from around 4x at Dec. 31, 2011," said Standard & Poor's credit analyst Ariel Silverberg, "and our expectation that leverage will remain around 5x over the intermediate term, in line with the 'B+' rating.' The downgrade also reflects our belief that the owners will maintain an aggressive financial policy with respect to distributions, which we expect will preclude any sustained meaningful improvement in credit measures, even if SeaWorld's credit measures improve over the next few years." "Our 'B+' corporate credit rating on SeaWorld reflects our assessment of the company's business risk profile as 'fair' and our assessment of the company's financial risk profile as 'aggressive'," S&P said. "We have revised our assessment of SeaWorld's business risk profile to fair from 'weak' (according to our criteria)," added Ms. Silverberg, "reflecting recent strong performance, including improvement in its EBITDA margin from the realization of cost- reduction efforts, and our belief the company will maintain an EBITDA margin in the high-20% area. While this level of profitability is still below other rated theme park operators, it compares favorably with many issuers in the leisure space. The re- assessment also reflects our belief that the company will continue to benefit from productive investments made in the business on new attractions. We believe these positive factors are partially offset by the company's EBITDA concentration in a few of its parks, its reliance on consumer discretionary spending, the capital intensity of the theme park business, and the seasonal nature of several of its parks," S&P said. "The stable rating outlook reflects our expectation that adjusted leverage will remain around 5x over the intermediate term, in line with the 'B+' rating given our assessment of SeaWorld's business risk profile as fair," S&P said. "We would consider lower ratings if performance is significantly weaker than we currently anticipate, or if the company pursues additional debt-financed distributions that result in adjusted leverage increasing above 5.5x on a sustained basis. Higher ratings are unlikely at this time given our performance expectations and our belief that the owners will maintain an aggressive financial policy regarding distributions," S&P said. SERVICE IS US: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Service Is Us, Inc. 5459 N. Broadway Chicago, IL 60640 Bankruptcy Case No.: 12-09517 Chapter 11 Petition Date: March 11, 2012 Court: United States Bankruptcy Court Northern District of Illinois (Chicago) Judge: A. Benjamin Goldgar Debtor's Counsel: Joseph A. Baldi, Esq. BALDI BERG & WALLACE, LTD. 19 S Lasalle Street Suite 1500 Chicago, IL 60603 Tel: (312) 726-8150 Fax: (312) 332-4629 E-mail: jabaldi@baldiberg.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ilnb12-09517.pdf The petition was signed by David Todd Armbruster, president. SHRI JALA: Case Summary & 6 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Shri Jala Bapa, Inc. 4050 S. Ferdon Blvd. Crestview, FL 32536 Bankruptcy Case No.: 12-30318 Chapter 11 Petition Date: March 13, 2012 Court: United States Bankruptcy Court Northern District of Florida (Pensacola) Debtor's Counsel: J. Steven Ford, Esq. WILSON, HARRELL, FARRINGTON 307 S. Palafox Street Pensacola, FL 32502 Tel: (850) 438-1111 Fax: (850) 432-8500 E-mail: jsf@whsf-law.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the list of six largest unsecured creditors is available for free at http://bankrupt.com/misc/flnb12-30318.pdf The petition was signed by Harshadbhai Patel, president, director. SONICWALL INC: Moody's Expects Repayment of Ba3-Rated Debt ---------------------------------------------------------- Dell Inc.'s A2 long-term and Prime-1 short-term ratings are not affected by the announcement that Dell agreed to acquire SonicWALL, Inc. a provider of network security products to small and mid-size enterprises. Moody's views the acquisition as credit positive as it expands Dell's software portfolio while enhancing its intellectual property in network security. Upon closing, Moody's expects SonicWALL's senior secured debt (rated Ba3, with corporate family rating of B2) to be repaid, upon which time Moody's will withdraw all of SonicWALL's debt ratings. Dell Inc., headquartered in Austin, Texas, is one of the world's leading providers of personal computers, servers, and related devices. SonicWALL, Inc. is a provider of network security products to small and mid-sized enterprises and is headquartered in San Jose, CA. SOUTHGATE BUSINESS: Case Summary & 6 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Southgate Business Center, LLC dba Southgate Business 5311 Northfield Road Suite 325 Bedford Heights, OH 44146-1135 Bankruptcy Case No.: 12-11760 Chapter 11 Petition Date: March 11, 2012 Court: United States Bankruptcy Court Northern District of Ohio (Cleveland) Judge: Pat E Morgenstern-Clarren Debtor's Counsel: Kenneth J. Freeman, Esq. KENNETH J. FREEMAN CO, LPA 515 Leader Bldg. 526 Superior Ave Cleveland, OH 44114-1903 Tel: (216) 771-9980 Fax: (216) 771-9978 E-mail: kjfcolpa@aol.com Scheduled Assets: $1,264,739 Scheduled Liabilities: $1,837,122 A list of the Company's six largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/ohnb12-11760.pdf The petition was signed by Peter Wairegi, managing member. SPROUTS FARMERS: S&P Places 'B+' Corp. Credit Rating on Watch Neg ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Phoenix- based Sprouts Farmers Markets Holdings LLC, (Sprouts) including the 'B+' corporate credit rating, on CreditWatch with negative implications following its announcement that it has signed an agreement to merge with Sunflower Farmers Markets. The resulting company will be majority-owned by a fund affiliated with Sprouts' current private equity sponsor, Apollo Global Management LLC (Apollo). "Sprouts' CreditWatch placement reflects our view that the company's financial risk profile may deteriorate as a result of its merger of Sunflower," said Standard & Poor's credit analyst Charles Pinson-Rose. "The company did not disclose the financial terms of the transaction or if the transaction was subject to any financing commitment. Nonetheless, we expect Sprouts and Apollo will look to raise additional debt to at least partly fund the transaction. We believe that if Sprouts finances the considerations to Sunflower's shareholders predominately with debt, the financial risk could increase such that we may consider a lower rating, especially considering debt amounts the company used to fund other Apollo acquisitions," S&P said. "We intend to resolve the CreditWatch once the combined company has a financing structure in place, gets the needed approvals, and we are reasonably sure the acquisition will be consummated. We expect to assess the financial risk related to the new capital structure and the business risk profile with management's plans and strategies to merge the two companies and the postacquisition operational and merchandising strategies. We expect a downgrade, if any, would be limited to one notch and that we would resolve the CreditWatch by the end of June 2012," S&P said. SWISS CHALET: Authorized to Disburse $5.83-Mil to CPS/GS PR NPL --------------------------------------------------------------- The Bankruptcy Court has approved the immediate disbursement by wire transfer of $5,831,000 in consigned funds, without interest, less any fees imposed by law, to CPG/GS PR NPL LLC. Judge Enrique Lamoutte Inclan also ordered to transfer the interest accrued in the amount of $286.76 from the Registry interest bearing account #3004138049 to the noninterest bearing account #690-0001-5. The Debtors and CPG/GS PR NPL LLC are granted 10 days to file a motion for the ownership of the interest amount. After failure to reply, the funds will be returned to the Debtor. About The Swiss Chalet Inc. The Swiss Chalet Inc., developed the Gallery Plaza Condominium and Atlantis Condominium in San Juan, Puerto Rico. SCI also owns the DoubleTree Hotel in Condado, San Juan, Puerto Rico, adjacent to the Gallery Plaza. SCI filed a Chapter 11 petition (Bankr. D. P.R. Case No. 11-04414) on May 27, 2011. Charles A. Cuprill, P.S.C. Law Offices, in San Juan, P.R., serves as its bankruptcy counsel. CPA Luis R. Carrasquillo & Co., P.S.C., serves as its financial consultants. In its schedules, the Debtor disclosed total assets of $115,580,977 and total debts of $138,603,384. The petition was signed by Arnold Benus, director. SYNC TECHNOLOGIES: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Sync Technologies, Inc. 2727 2nd Avenue Suite 123 Detroit, MI 48201 Bankruptcy Case No.: 12-46005 Chapter 11 Petition Date: March 12, 2012 Court: United States Bankruptcy Court Eastern District of Michigan (Detroit) Judge: Marci B. McIvor Debtor's Counsel: Jay S. Kalish, Esq. JAY S. KALISH & ASSOCIATES, P.C. 28592 Orchard Lake Road, Suite 360 Farmington Hills, MI 48334 Tel: (248) 932-3000 E-mail: JSKalish@aol.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Leonard Stallings, vice-president. TBS INTERNATIONAL: Defends Chapter 11 Plan Against Shareholders --------------------------------------------------------------- Stephanie Gleason, writing for Dow Jones Daily Bankruptcy Review, reports that TBS International PLC responded to shareholder objections of its Chapter 11 plan on March 12, 2012, saying the restructuring is its only option to avoid liquidating the 41-vessel fleet operation. "Absent receiving the benefits that the restructuring promises, the debtors have no viable strategy to exit from Chapter 11 or to escape liquidation," the report quotes TBS International as saying in documents filed with the U.S. Bankruptcy Court in White Plains, N.Y. TBS obtained $42.8 million in bankruptcy financing from a group of four secured lenders, which TBS International's financial adviser called the "sole reason" the company hasn't already liquidated. No one but the secured lenders were willing to provide financing. According to the report, TBS International said it doesn't have the ability "to cramdown a result on the prepetition secured lenders that preserves value for equity security holders." Besides, equity holders wouldn't receive a recovery in a liquidation either. Equity holders have said TBS's assets were undervalued by the plan and that TBS hasn't market tested its assets. Therefore, the shareholders argued, the company can't show that the Chapter 11 restructuring is better for shareholders than a liquidation. The Bankruptcy Code requires that the recoveries under a Chapter 11 restructuring not be less than would be received in a liquidation. The report notes equity holders Father Securities Ltd. and Maxim Naumov had called for TBS to try to market test its assets with an auction rather than hand the company over to lenders. But TBS said it and its financial adviser have "searched extensively but unsuccessfully" for alternative restructurings. The report notes the current plan exchanges secured lenders' $175 million in debt for 90% equity in the company plus $151 million in new loans while canceling equity holder interests. The plan has the support of creditors, who are being paid in full. The report says TBS was formally delisted from the Nasdaq Stock Market effective March 5 because it no longer qualified. Its plan proposes restructuring as a private company. About TBS International TBS International plc, TBS Shipping Services Inc. and its various subsidiaries and affiliates -- http://www.tbsship.com/-- filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-22224) on Feb. 6, 2012. TBS provides ocean transportation services that offer worldwide shipping solutions to a diverse client base of industrial shippers in more than 20 countries to over 300 customers. Through a 41-vessel fleet of multipurpose tweendeckers and handysize and handymax dry bulk carriers, TBS, in conjunction with a network of affiliated service companies, offers (a) liner, parcel and bulk transportation services and (b) time charter services. TBS's global headquarters, located in Yonkers, New York, oversees all major corporate and operational decision-making, including in connection with drydocking of vessels and other capital expenditures, fleet positioning, and cargo arrangements with third parties, including major vendors and customers. As of the Petition Date, TBS has roughly 140 employees worldwide, the vast majority of whom work in the corporate headquarters. For the year ended Dec. 31, 2011, TBS's consolidated net revenue was roughly $369.7 million. Its consolidated debt is roughly $220 million. TBS filed together with the petition its Joint Prepackaged Plan of Reorganization dated Jan. 31, 2012. As of the Petition Date, the Debtors have received overwhelming acceptance of the Plan from all voting classes. If confirmed, the Plan will implement an agreed restructuring of the Debtors' obligations to their prepetition secured lenders, provide for the payment of all general unsecured claims in full, and effect the cancellation of existing equity interests at the parent holding company levels and the issuance of new equity interests to certain of the Debtors' lenders and key management. To implement this restructuring, the Debtors have obtained commitments to provide $42.8 million in debtor-in- possession financing and an equivalent amount of exit financing. The Debtors are requesting a hearing to confirm the Plan within 35 days of the Petition Date. Judge Robert D. Drain presides over the case. Michael A. Rosenthal, Esq., and Matthew K. Kelsey, Esq., at Gibson, Dunn & Crutcher LLP, serve as the Debtors' counsel. The Debtors' investment banker is Lazard Freres & Co. LLC, the financial advisor is AlixPartners LLP. Cardillo & Corbett serves as special maritime and corporate counsel, Garden City Group serves as administrative agent and Gibson, Dunn & Crutcher as counsel. The petition was signed by Ferdinand V. Lepere, executive vice president and chief financial officer. TBS disclosed US$143 million in assets and US$220 million in debt. No official committee has yet been appointed by the Office of the United States Trustee. TELESAT HOLDINGS: S&P Affirms 'B+' Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Ottawa, Ontario-based satellite communications provider Telesat Holdings Inc. and its 100%-owned operating subsidiary Telesat Canada (collectively Telesat). The outlook is stable. "On a pro forma basis, and when excluding cross currency basis swap liabilities (about C$160 million as of Dec. 31, 2011.), we expect the company to have about C$3.5 billion of reported debt," S&P said. "At the same time, we assigned our 'BB-' issue-level rating to the company's proposed C$2.55 billion equivalent senior secured credit facility, consisting of a $150 million revolver, a $500 million Term Loan A denominated in Canadian dollars and a $1.9 billion Term Loan B. The recovery rating of '2' on these securities indicates our expectation of substantial (70% to 90%) recovery for lenders in the event of payment default. Ratings are based on preliminary documentation and are subject to review of final documents. We will withdraw ratings on all the retired debt issues when the transaction closes," S&P said. "The company intends to use proceeds from the new debt issuance to refinance its existing C$2.25 billion equivalent credit facility (of which about C$1.95 billion was outstanding as of Dec. 31, 2011) and partially fund a C$705 million one-time dividend to its sponsors and option holders. Following these capital activities (which includes conversion of about C$141 million of sponsor owned preferred shares into debt), we expect gross debt to increase by about C$590 million and Telesat's Standard & Poor's adjusted debt to EBITDA ratio to weaken by about 0.8x to 6x based on EBITDA for the 12 months ended Dec. 31, 2012. Our ratings affirmation reflects our view that the higher debt leverage is within the range of our expectation for the ratings and our expectation that the company should be able to deleverage to the low-5x area within the next couple of years as it improves EBITDA from planned expansion satellite launches," S&P said. "Finally, we affirmed our 'B-' issue-level rating and '6' recovery rating on the company's existing $693 million senior unsecured notes due 2015 and $217 million senior subordinated notes due 2017," S&P said. "The ratings on Telesat reflect what Standard & Poor's Ratings Services views as an aggressive financial risk profile that is partially mitigated by the company's attractive business characteristics," S&P said. "The stable outlook reflects our view that Telesat's C$5.4 billion backlog of contracted revenues offers good visibility for revenue and EBITDA for the next couple of years. Although we recognize that the company's demonstrated history of deleveraging, expanding satellite fleet, and higher profitability are supportive of potentially improving creditworthiness, the ratings on Telesat are likely to remain constrained at current levels owing to its ownership structure and future financial policy considerations. We note that the outcome of the company's plans for an initial public offering, additional dividend recapitalization, or other strategic alternatives will remain an important factor affecting ratings in the future. Also, should the company adopt more aggressive growth plans, which could lead to an increase in adjusted gross debt to EBITDA ratio to the 7x level on a sustained basis or result in its tightening liquidity, we could consider downgrading the company," S&P said. TENNECO INC: Fitch Affirms Issuer Default Rating at 'BB' -------------------------------------------------------- Fitch Ratings has affirmed the 'BB' Issuer Default Rating (IDR) and the various issue ratings of Tenneco Inc. (TEN). In addition, Fitch has assigned a rating of 'BBB-' to TEN's proposed $700 million secured revolving credit facility and proposed $250 million secured term loan A. Fitch has revised TEN's Rating Outlook to Positive from Stable. The revision of TEN's Rating Outlook to Positive reflects Fitch expectations that the auto supplier's credit profile will continue to strengthen over the intermediate term as global auto sales continue to grow and demand for the company's emission control technologies remains strong. In particular, increasingly stringent regulations governing commercial truck and off-highway vehicle emissions will provide additional growth opportunities outside of TEN's traditional light vehicle market. Primary risks to the company's credit profile include industry cyclicality, volatile raw material costs and increasing gasoline prices, although the decline in the company's cost structure and its stronger balance sheet have improved its ability to withstand another downturn in global auto demand. The proposed $700 million secured revolving credit facility will replace TEN's current $622 million revolving credit facility ($66 million of which will terminate later this month) and its $130 million tranche B-1 letter of credit/revolving loan facility. The proposed $250 million term loan A will supplement the company's existing $148 million term loan B, which is anticipated to remain in place. Proceeds from the proposed $250 million term loan A will be used to tender for the TEN's $250 million in 8.125% senior unsecured notes due 2015. The company commenced its tender offer for these notes on March 8, 2011. The new revolver will mature in 2017, versus 2014 for the existing revolver and tranche B-1 facility (although the existing revolver would mature in December 2013 if the tranche B-1 facility had not been refinanced prior to that). The new term loan A also matures in 2017, while the existing term loan B continues to have a 2016 maturity. Provided all of the proposed transactions are completed as contemplated, TEN's overall debt level is expected to be about the same, although its intermediate-term maturity profile will be more favorable, with no significant maturities until 2016, and annual interest expense will likely be meaningfully lower. Replacing the unsecured notes with the new secured term loan A increases the amount of secured debt in the capital structure ahead of the remaining unsecured notes. However, by entering into a term loan, rather than issuing new notes, TEN will have increased flexibility to de-lever its balance sheet by prepaying the term loan debt without penalty, which could ultimately benefit TEN's bondholders. The 'BBB-' rating assigned to TEN's current and proposed secured credit facilities, two notches above the IDR, reflects the facilities' collateral backing, which includes virtually all of the company's U.S. assets, as well as up to 66% of the stock of TEN's first-tier foreign subsidiaries. The credit facilities also are guaranteed on a secured basis by TEN's material U.S. subsidiaries. The 'BB-' rating assigned to the company's unsecured debt, one notch below the IDR, reflects the substantial amount of secured debt in the company's capital structure. Fitch notes that, pro forma for the new credit facility and the redemption of the 8.125% unsecured notes, if TEN were to fully draw on its revolving credit facility, over half of the company's debt would be secured. Fitch expects TEN will continue to see demand for its products outpace overall vehicle production due to its strong position in the global emission control and ride control segments. Worldwide, emission regulations in most major auto markets continue to tighten, and are becoming increasingly stringent for commercial trucks and off-highway construction equipment, as well. In addition, tightening regulations for locomotives and marine equipment present further opportunities to diversify the company's revenue stream. TEN estimates that up to 35% of its original equipment revenue will be driven by commercial vehicle and off- highway business by 2015, nearly tripling versus about 12% in 2011. This level of growth, on top of the expected rise in global light vehicle production, could lead to a doubling the company's original equipment revenue over the next five years. Combined with the permanent changes to the company's cost structure, including new or expanded manufacturing facilities in a number of low-cost countries, Fitch expects higher business levels to support margins at or above current levels over the intermediate term. In 2011, TEN's credit profile strengthened as a result of its improved operating performance, while its debt level remained roughly flat. As of Dec. 31, 2011, TEN's leverage (balance sheet debt/Fitch-calculated EBITDA) stood at 2.0 times (x), down from 2.3x at year-end 2010, while total debt of $1.2 billion was virtually unchanged. Free cash flow of $32 million in 2011 was weaker than the $93 million produced in 2010 as a result of higher capital spending and increased cash used for working capital as business levels increased. Fitch's calculation of funds flow from operations (FFO) adjusted leverage was 3.4x at year-end 2011, up from 3.0x at year-end 2010, reflecting primarily an increase in rent expense and off-balance sheet European securitization debt. Although revenue increased 21% in 2011 to $7.2 billion, margins declined somewhat on higher costs, including increased material and engineering expenses. Fitch's calculated EBITDA margin declined to 8.5% in 2011 from 8.9% in 2010. Liquidity remained strong, however, with $214 million in cash and access to the aforementioned credit facilities, while short-term debt maturities (including current maturities of long-term debt) totaled only $66 million. Over the intermediate term, Fitch expects TEN's metrics to strengthen as the company benefits from improving market conditions, new business wins and continued discipline on controllable costs, all of which will lead to higher margins and free cash flow. Fitch's projects that leverage will decline during 2012 and could fall further, potentially to below 1.5x, by year-end 2013 if the company targets its free cash flow toward modest debt reduction. Fitch expects free cash flow to remain solidly positive over the intermediate term, even with increased capital spending to support new programs coming on line over the next several years. The funded status of TEN's global pension plans declined in 2011, with the plans only 67% funded at year-end 2011 versus a 74% funded status at year end 2010. In the U.S., TEN's plans were only 58% funded at Dec. 31, 2011, versus a funded status of 68% at the end of 2010. As with many corporate plans, the lower funded status was primarily due to the decline in long-term interest rates, with TEN using a 4.8% discount rate to value its projected benefit obligation in 2011. In 2010, the company used a 5.6% discount rate. Despite the underfunded status, on a dollar basis, TEN's global plans were only underfunded by $255 million ($175 million in the U.S.), which Fitch believes is manageable, given the company's liquidity position and free cash flow prospects. TEN has estimated that required cash contributions to its global pension plans will be $48 million in 2011, up from $45 million in 2010. The greatest risk facing TEN's credit profile in the near term is the potential for a slowing of the global economy and the resulting decline in vehicle production. This risk is partially offset, however, by the company's increasingly diverse customer base, lower cost structure, and the increasingly stringent regulatory environment, which will continue to drive the market for emission control solutions regardless of global economic conditions. In addition, a lack of meaningful debt maturities until 2017, assuming the proposed capital structure transactions are successfully completed, further helps to mitigate near-term liquidity risk in a weakened demand environment. Rising fuel prices also present a risk to the extent that they could result in a decline in overall vehicle demand, as well as cause a demand shift toward smaller vehicles that are less profitable for TEN, and higher raw material costs could put additional pressure on TEN's margins. Fitch notes, however, that TEN passes along a substantial portion of its material costs to its original equipment customers, although offsetting higher material costs in the aftermarket could be more difficult. Fitch could upgrade TEN's IDR to 'BB+' in the intermediate term if global vehicle production continues to grow and ongoing demand for the company's products leads to a further strengthening of its credit metrics. On the other hand, Fitch could revise the Rating Outlook back to Stable if global vehicle production growth slows or declines as a result of a weakening in the world economy, causing a meaningful deterioration in the company's credit metrics over a prolonged period. Any debt-financed acquisitions or shareholder-friendly actions that result in a significant increase in leverage also could prompt a negative rating action. Fitch has taken the following rating actions on TEN: -- Issuer Default Rating (IDR) affirmed at 'BB'; -- Proposed secured revolving credit facility assigned at 'BBB-'; -- Proposed secured term loan A assigned at 'BBB-'; -- Secured term loan B affirmed at 'BBB-'; -- Existing secured revolving credit facility and tranche B-1 facility affirmed at 'BBB-'; -- Senior unsecured rating affirmed at 'BB-'; -- Rating Outlook revised to Positive from Stable. THORNBURG MORTGAGE: Former Executives Respond to SEC Lawsuit ----------------------------------------------------------- Larry Goldstone and Clay Simmons, the former CEO and CFO of TMST, Inc., (formerly known as Thornburg Mortgage), respectively, responded to the filing of a civil lawsuit against them by the U.S. Securities and Exchange Commission. Goldstone and Simmons believe the action is wholly without merit. They have refused to settle the matter with the SEC, as they do not believe that their actions or the factual record support the SEC's allegations. Instead, they will vigorously defend themselves in court, certain they will prevail. TMST was the nation's second largest independent mortgage originator and became a casualty of the 2008 financial crisis when it was forced to file for bankruptcy in May 2009 after its lenders refused to continue to extend credit because of their own financial difficulties. "We are profoundly disappointed by the SEC's lawsuit, which is based on unfounded claims, emails taken out of context and inaccurate interpretations of management's actions surrounding the company's financial filings at the height of the financial crisis in February and March 2008. The SEC's case singles out and punishes us for not having the clairvoyance to anticipate an unprecedented financial system crisis. It is worth noting that this same crisis was not foreseen by two Secretaries of the Treasury, two Chairmen of the Federal Reserve, the Chairman of the SEC, and the heads of major public and private financial institutions across the globe. Any fair and objective assessment of our actions during that time shows that the SEC's allegations against us have no merit," said Goldstone and Simmons. "In its zealousness to find people to blame for the financial crisis, the SEC has brought a case based on hindsight that is not supported by the facts, unwinnable in court, and profoundly unfair." The key facts include the following: -- The Company's 2007 10-K filing fully disclosed all relevant information in clear terms, providing robust and extraordinary disclosure about the margin calls that TMST had received, and more importantly, about the risks of future margin calls and the possible need to sell assets. The "Recent Developments" section of the 10-K was highly unusual because of its explicit disclosures about the threats to the company's business from unprecedented market events. The market clearly understood the gravity of TMST's disclosure; there was a precipitous drop in stock price that day. -- KPMG, the company's auditor, conducted a review of the circumstances surrounding TMST's financial statements at the time and stated that it had no concerns about management's integrity, that it had found no material weaknesses in the company's internal controls, and that the restatement of TMST's financials resulted from "an error in judgment" about the impact of rapidly changing and illiquid credit markets on the company's financial condition and not from fraud on the part of management. -- Goldstone and Simmons communicated candidly and forthrightly with investors while they waged an 18-month battle to save the company and hundreds of jobs in New Mexico during a period of unprecedented market turmoil. In fact, under their leadership, TMST explicitly warned investors about the volatility of the mortgage securities market and the threats to its business from highly uncertain market conditions at that time. -- Goldstone and Simmons share a long-standing reputation as industry leaders who conducted themselves at all times with integrity, transparency, and good corporate stewardship. Under their leadership, TMST became an industry leader renowned for its high quality lending, which created a portfolio of loans and mortgage securities of outstanding credit quality whose delinquency rates remain well below the industry average. -- Goldstone and Simmons were so well respected by the industry and the investment community that they raised nearly $2 billion through a series of stock and bond offerings even as other larger mortgage companies and global financial institutions collapsed around them. -- The SEC's charges focus solely on one filing and a two-week period in late February and early March 2008, and rests on hindsight judgment about what Goldstone and Simmons supposedly should have disclosed in the midst of an historic market collapse. Within days after the events at issue, the Vice Chair of the Federal Reserve testified that the problems in the mortgage and housing markets were "highly unusual" and that in general these market circumstances "should not threaten their viability." And the Chairman of the SEC, in discussing investment banks, said "We have a good deal of comfort about the capital cushions at these firms at the moment." Five days later, Bear Stearns collapsed. -- Neither Goldstone nor Simmons profited from the financial statements that the SEC claims were false. Indeed, Goldstone has never sold a single share of TMST stock, while Simmons sustained losses on the small number of shares he sold. Both men lost substantial sums as a result of their efforts to save the company. Messrs. Goldstone and Simmons are represented by Wilmer Cutler Pickering Hale and Dorr LLP. About Thornburg Mortgage Based in Santa Fe, New Mexico, Thornburg Mortgage Inc. (NYSE: TMA) -- http://www.thornburgmortgage.com/-- was a single- family residential mortgage lender focused principally on prime and super-prime borrowers seeking jumbo and super-jumbo adjustable rate mortgages. It originated, acquired, and retained investments in adjustable and variable rate mortgage assets. Its ARM assets comprised of purchased ARM assets and ARM loans, including traditional ARM assets and hybrid ARM assets. Thornburg Mortgage and its four affiliates filed for Chapter 11 bankruptcy (Bankr. D. Md. Lead Case No. 09-17787) on May 1, 2009. Thornburg changed its name to TMST, Inc. Judge Duncan W. Keir is handling the case. David E. Rice, Esq., at Venable LLP, in Baltimore, Maryland, served as counsel to Thornburg Mortgage. Orrick, Herrington & Sutcliffe LLP served as special counsel. Jim Murray, and David Hilty, at Houlihan Lokey Howard & Zukin Capital, Inc., served as investment banker and financial advisor. Protiviti Inc. served as financial advisory services. KPMG LLP served as the tax consultant. Epiq Systems, Inc., serves claims and noticing agent. Thornburg disclosed total assets of $24.4 billion and total debts of $24.7 billion, as of Jan. 31, 2009. On Oct. 28, 2009, the Court approved the appointment of Joel I. Sher as the Chapter 11 Trustee for the Company, TMST Acquisition Subsidiary, Inc., TMST Home Loans, Inc., and TMST Hedging Strategies, Inc. He is represented by Shapiro Sher Guinot & Sandler. TIRE VISIONS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Tire Visions Inc. dba Susquehanna Recycling 938 Mine Road Northern Cambria, PA 15714 Bankruptcy Case No.: 12-70237 Chapter 11 Petition Date: March 12, 2012 Court: United States Bankruptcy Court Western District of Pennsylvania (Johnstown) Judge: Jeffery A. Deller Debtor's Counsel: James R. Walsh, Esq. SPENCE CUSTER SAYLOR WOLFE & ROSE 400 U.S. Bank Building P.O. Box 280 Johnstown, PA 15907 Tel: (814) 536-0735 Fax: (814) 539-1423 E-mail: jwalsh@spencecuster.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A list of the Company's 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/pawb12-70237.pdf The petition was signed by John W. Hobor, president. TRIUS THERAPEUTICS: Incurs $12.5 Million Net Loss in 4th Quarter ---------------------------------------------------------------- Trius Therapeutics, Inc., reported a net loss of $12.51 million on $5 million of total revenue for the three months ended Dec. 31, 2011, compared with a net loss of $8.75 million on $2.52 million of total revenues for the same period a year ago. The Company reported a net loss of $18.25 million on $41.01 million of total revenues for the year ended Dec. 31, 2011, compared with a net loss of $23.86 million on $8.03 million of total revenues during the prior year. The Company's balance sheet at Dec. 31, 2011, showed $68.12 million in total assets, $18.23 million in total liabilities and $49.89 million in total stockholders' equity. A copy of the press release is available for free at: http://is.gd/7c9sRV About Trius Therapeutics San Diego, Calif.-based Trius Therapeutics, Inc. (Nasdaq: TSRX) -- http://www.triusrx.com/-- is a biopharmaceutical company focused on the discovery, development and commercialization of innovative antibiotics for serious, life-threatening infections. The Company's first product candidate, torezolid phosphate, is an IV and orally administered second generation oxazolidinone being developed for the treatment of serious gram-positive infections, including those caused by MRSA. In addition to the company's torezolid phosphate clinical program, it is currently conducting two preclinical programs using its proprietary discovery platform to develop antibiotics to treat infections caused by gram-negative bacteria. The Company has incurred losses since its inception and it anticipates that it will continue to incur losses for at least the next several years. The Company does not anticipate that its existing working capital, including the funds received on Aug. 6, 2010, from its IPO, alone will be sufficient to fund its operations through the successful development and commercialization of torezolid phosphate or any other products it develops. As a result, the Company says it will need to raise additional capital to fund its operations and continue to conduct clinical trials to support potential regulatory approval of torezolid phosphate and any other product candidates. TYSON FOODS: Moody's Affirms 'Ba1' Corporate Family Rating ---------------------------------------------------------- Moody's Investors Service affirmed the Corporate Family Rating and Probability of Default Rating of Tyson Foods Inc. at Ba1 and revised the rating outlook to positive from stable. Moody's also affirmed existing senior unsecured debt and shelf ratings of Tyson Foods, Inc. and its subsidiaries. The outlook revision to positive reflects Moody's expectation that Tyson should be able to sustain moderate leverage and strengthen its liquidity profile over the next 12 -- 18 months, which could lead to an upgrade. Moody's positive outlook also takes into consideration that the protein industry could experience challenges over the next year, especially in chicken and beef that combined represent over 75% of Tyson's sales. "Given the amount of debt Tyson has recently paid down, leverage is currently less of a concern than it has been in the past," said Brian Weddington, a Moody's VP-Senior Credit Officer. "As we move through this period when we expect that two of the three main proteins are likely to generate below-average earnings, leverage should remain reasonably low, but Tyson may need to further strengthen its liquidity profile to warrant an upgrade," added Mr. Weddington Ratings Rationale The Ba1 CFR reflects Tyson's large size and scale in three main proteins -- chicken, pork and beef -- that compensates for the low margins and highly competitive nature of the meat processing industry. The rating also reflects meaningful improvements in Tyson's operating strategy in recent years that has focused more on margin management than on market share as it has in the past. Tyson's SGL-1 Speculative Grade Liquidity Rating reflects the company's $857 million cash balance at the end of December 2011, anticipated positive free cash over the next 12 months, and approximately $855 million of availability under its revolving credit facility that has financial covenants that are not currently restrictive, although they could be in the event of severe earnings volatility. Ratings Affirmed: Tyson Foods Inc. Corporate Family Rating at Ba1; Probability of Default Rating at Ba1; Senior unsecured notes, guaranteed by Tyson Fresh Meats, Inc., at Ba1 (LGD4, 62%); Senior unsecured notes due 2018 at Ba2 (LGD6, 90%); Senior unsecured notes due 2028 at Ba2 (LGD6, 90%); Senior unsecured shelf at (P)Ba2 (LGD6, 90%); Speculative Grade Liquidity Rating at SGL-1; The rating outlook has been revised to positive from stable. Tyson Fresh Meats: The rating outlook has been revised to positive from stable. Tyson has reduced its funded debt by $1.3 billion, more than a third of its debt, since 2009 to $2.2 billion at the end of fiscal 2011 ending last September. Most of the reduction occurred in fiscal 2010 when falling commodity prices, including corn, surging foreign demand and tighter supplies generated unusually strong profit and cash flows in all proteins that year. Since then, as input prices began to rise again, Tyson's operating profit margins have tightened (especially in chicken, which generated an $82 million operating loss in the fourth quarter) to 4.3% in fiscal 2011 on a Moody's-adjusted basis from 5.8% in the prior year -- but still historically high profit levels. Moody's notes that Tyson's median quarterly operating profit margin and EBITDA margin over the past 10 years is 2.8% and 3.4%, respectively. On a median-adjusted basis, debt/EBITDA leverage is approximately 2.9x compared to 1.9x as of December 31, 2011 incorporating Moody's standard accounting adjustments. Thus, although Tyson has implemented several cost savings initiatives that should eventually lift its median profit margins, Moody's believes that the current profitability levels are not likely sustainable. Another important enhancement to Tyson's credit profile is the company's focus on maintaining solid liquidity levels, which Moody's considers vitally important for operators in the volatile protein industry. Tyson's stated target liquidity, defined as cash and committed revolving credit facilities, is $1.2 billion to $1.5 billion. The company has sustained at least this amount of liquidity fairly consistently over the past seven years -- current liquidity is approximately $1.7B, of which $857 million is cash. However, Tyson's back-up liquidity consists largely of a $1 billion revolving bank credit facility that features earnings- sensitive covenants that could restrict availability when it is most needed. Moreover, the company will lose $458 million of liquidity by Moody's definition later this year when notes due November 2013 become a current maturity. Given the cyclical nature of the protein industry, and considering the current environment of high input price volatility, Moody's will need to be more comfortable that Tyson will have continued access to sufficient alternative liquidity sources, even in times of severe earnings stress, before an upgrade would occur. Finally, Moody's recognizes the enhancements senior management has made to Tyson's operating strategy that is currently focused more on margin management than on market share as it has in the past. The company has implemented several sustainable cost efficiency measures including plant closings, accelerated production line speeds, and more effective supply chain programs that have contributed to the recent rise in operating profits. In addition, there is evidence that Tyson intends to exercise more discipline in managing its chicken output against demand than it has in the past. Tyson recently has participated in industry-wide reductions in chicken production volumes, which has moderated the severity of ongoing challenges in the chicken industry amid high input costs. This is in contrast to 2008, when as spiking corn prices were causing major losses for chicken producers, Tyson elected not to reduce its output. Later that year, Pilgrim's Pride, the largest US chicken producer at the time, filed for bankruptcy under the weight of high leverage and heavy losses. Moody's could upgrade the ratings to investment grade if Tyson maintain modest leverage, positive free cash flow generation and a solid liquidity profile. Specifically, Moody's could upgrade the ratings if the company maintains debt/EBITDA below 2.5 times, EBITA/interest expense above 5 times and combined cash and external liquidity sources of at least $1.5 billion. In addition, Moody's would need to be comfortable that Tyson will be able to maintain sufficient access to liquidity sources, even in times of severe earnings stress. Moody's would consider downgrading Tyson's ratings if liquidity deteriorates (such as erosion of cushion under financial maintenance covenants or a large reduction in the company's cash balance) or if an unfavorable supply and demand environment drives down profitability. Specifically, ratings could be downgraded if debt-to-EBITDA is sustained above 3.0 times, the company generates negligible free cash flow or liquidity falls below $1 billion. The principal methodology used in rating Tyson was the Global Food - Protein and Agriculture Industry Methodology published in June 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. UNITED SURGICAL: S&P Rates $440-Mil. Sr. Unsecured Notes at 'CCC+' ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned Adisson, Texas-based United Surgical Partners International Inc.'s new $440 million senior unsecured notes due 2020 its 'CCC+' issue-level rating (two notches lower than the 'B' corporate credit rating on the company). "We also assigned a recovery rating of '6' to the notes, indicating our expectation of negligible (0% to 10%) recovery for lenders in the event of a payment default. United Surgical Partners will use the proceeds from the note, in addition to its new senior secured credit facility, as part of the refinancing of its capital structure and payment of a $270 million dividend to its shareholders," S&P said. "The ratings on United Surgical Partners reflect what we consider its 'highly leveraged' financial risk profile and 'weak' business risk profile. We see the transaction adding $150 million of adjusted debt, and adjusted debt leverage increasing minimally. While reported debt will increase $330 million, adjusted debt will increase by approximately $150 million because there will be around a $180 million reduction in preferred stock (which we already consider debt). The reduction in preferred stock includes $100 million in the spin-off of the U.K. facilities to shareholders. We expect adjusted debt leverage to increase minimally and remain below 9x. We believe the annual cash interest expense will increase to about $87 million from $65 million," S&P said. "United Surgical Partners' highly leveraged financial risk profile reflects our expectation that adjusted leverage will remain above 8x over the next few years because of the cumulative dividend of the preferred stock and our expectation for high-single-digit revenue and EBITDA growth. We expect organic revenue growth in the mid-single-digit area, reflecting a 2% to 3% increase in reimbursement and the remainder from volume," S&P said. Ratings List United Surgical Partners International Inc. Corporate Credit Rating B/Stable/-- New Ratings United Surgical Partners International Inc. Senior Unsecured $440 mil notes due 2020 CCC+ Recovery Rating 6 USEC INC: Enters Into $235MM Revolving Credit Pact with JPMorgan ---------------------------------------------------------------- USEC Inc. and its wholly owned subsidiary, United States Enrichment Corporation, entered into a Fourth Amended and Restated Revolving Credit Agreement with the lenders parties thereto, JPMorgan Chase Bank, N.A., as administrative and collateral agent, and the revolving joint book managers, revolving joint lead arrangers and other agents parties thereto. The Amended and Restated Credit Agreement amends and restates the Third Amended and Restated Credit Agreement dated as of Oct. 8, 2010, by and among USEC, United States Enrichment Corporation, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative and collateral agent, and the joint book managers, joint lead arrangers and other agents parties thereto. The Amended and Restated Credit Agreement provides for a credit facility of up to $235.0 million that matures on May 31, 2013. The new credit facility includes a revolving credit facility of $150.0 million and a term loan of $85.0 million. This replaces USEC's existing $310.0 million credit facility, that had been scheduled to expire on May 31, 2012. Under the new credit facility, commencing Dec. 3, 2012, the aggregate revolving commitments and term loan principal will be reduced by $5.0 million per month through the expiration of the credit facility. As with the former facility, the new credit facility is secured by assets of USEC Inc. and its subsidiaries, excluding equity in, and assets of, subsidiaries created to carry out future commercial American Centrifuge activities. Borrowings under the new credit facility are subject to limitations based on established percentages of eligible accounts receivable and USEC-owned inventory pledged as collateral to the lenders. Available credit reflects the levels of qualifying assets at the end of the previous month less any borrowings or letters of credit. If USEC has not terminated operations at the Paducah gaseous diffusion plant by June 30, 2012, and USEC's gross profit for any three consecutive months thereafter is a loss, then commencing on the first date of such quarter and continuing for the remaining term of the new credit facility, the margin on the term loan will increase by 2.0% and the margin on the revolving loans will increase by 1.5%. The new credit facility is available to finance working capital needs and general corporate purposes. The U.S. Department of Energy has proposed a two-year cost share, research, development and demonstration program for the Company's American Centrifuge project and USEC has been working with DOE and Congress for government funding for the RD&D program. On March 9, 2012, the Company amended its Amended and Restated Bylaws. The amendment deletes Article VII, Section 5, which related to the potential inclusion of a legend on the Company's indebtedness. The Company determined that such a legend was not required to be included on the Company's indebtedness. On March 13, 2012, the Company entered into an agreement with DOE by which DOE will acquire from USEC U.S. origin low enriched uranium in exchange for the transfer of quantities of our depleted uranium to DOE. This enables USEC to release encumbered funds of approximately $44 million that were previously provided as financial assurance for the disposition of such depleted uranium. USEC expects that this LEU acquired by DOE could be returned to USEC as part of DOE's cost share under the RD&D program if government funding is provided for the RD&D program in government fiscal year 2012. However, if the RD&D program does not move forward, the LEU would not be returned to USEC, and DOE would not reimburse these American Centrifuge project costs. A copy of the Form 8-K is available for free at: http://is.gd/eNhhV0 About USEC Inc. Headquartered in Bethesda, Maryland, USEC Inc. (NYSE: USU) -- http://www.usec.com/-- supplies enriched uranium fuel for commercial nuclear power plants. The Company reported a net loss of $44.70 million on $1.21 billion of total revenue for the nine months ended Sept. 30, 2011, compared with a net loss of $1.50 million on $1.37 billion of total revenue for the same period a year ago. The Company's balance sheet at Sept. 30, 2011, showed $4.04 billion in total assets, $2.72 billion in total liabilities and $1.32 billion in stockholders' equity. * * * USEC Inc. carries 'Caa1' corporate and probability of default ratings, with "developing" outlook, from Moody's, and 'CCC+' long term foreign issuer credit rating and 'CCC-' long term local issuer credit rating, with outlook "developing", from Standard & Poor's. In May 2010, S&P said that its rating and outlook on USEC Inc. are not affected by the announcement that Toshiba Corp. and Babcock & Wilcox Investment Co., an affiliate of The Babcock & Wilcox Co., have signed a definitive investment agreement for $200 million with USEC. UTSTARCOM INC: Reports $3.4 Million Net Income in 4th Quarter ------------------------------------------------------------- UTStarcom Holdings Corp. reported net income of $3.46 million on $83.46 million of net sales for the three months ended Dec. 31, 2011, compared with a net loss of $23.18 million on $76.13 million of net sales for the same period during the prior year. The Company reported net income $11.77 million on $320.57 million of net sales for year ended Dec. 31, 2011, compared with a net loss of $65.29 million on $291.53 million of net sales during the prior. The Company's balance sheet at Dec. 31, 2011, $600.94 million in total assets, $329.90 million in total liabilities and $271.04 million in total equity. "We finished the year 2011 with a strong financial performance, exceeding the financial targets we set at the beginning of last year," said UTStarcom President and Chief Executive Officer Jack Lu. "We achieved annual revenues of $320.6 million and net income of $13.4 million primarily through strong contribution from our traditional equipment business. Our efforts to streamline our corporate structure, prudently manage costs and build more profit- driven employee incentives have all contributed to a stronger year-over-year sales and a profitable 2011. We are especially encouraged by the steady progress made in our cable business, which experienced improvements in gross margin and overall product mix in China." A copy of the press release is available for free at: http://is.gd/patJy6 About UTStarcom, Inc. UTStarcom, Inc. (Nasdaq: UTSI) -- http://www.utstar.com/-- is a global leader in 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's headquarters are currently in Alameda, California, with its research and design operations primarily in China. WATERLOO RESTAURANT: Has $850,000 DIP Loan From GECC ---------------------------------------------------- Waterloo Restaurant Ventures, Inc., is seeking Bankruptcy Court approval to obtain post-petition secured financing from General Electric Capital Corporation under a secured, priming lien; and to use the cash collateral of GECC to pay the Debtor's ordinary operating expenses. The Debtor believes that all of the cash collateral so used constitutes the collateral for GECC's loans to the Debtor. GECC would make available $550,000 under any Interim Order, with an additional $300,000 available, in GECC's sole discretion, upon entry of a Final Order approving the extension of credit. The DIP loan would incur Interest Rate at 14% per annum, with an additional 4% added if in default. The Loan will mature 60 days after approval of Interim Order. The lending arrangement seeks liens upon all of the real and personal property which the Debtor owns. All liens and security interests are, however, subject to a carve-out of $75,000 for professional fees incurred beyond retainer amounts during the case. In addition, the lender is accorded a super-priority cost of administration claim for any claims unsatisfied by the collateral. The DIP Agreement does not provide deadlines for filing plan, approval of disclosure statement, confirmation hearing, or confirmation order. The Agreement however requires the chief restructuring officer of the Debtor to file his "plan" within 45 days after the petition date. The CRO's internal plan is for the sale or reorganization of the Borrower's assets and business, "which plan must be acceptable to the Lender in the Lender's sole discretion." Prior to the Petition Date, the Debtor obtained $19,734,978 in secured loans from GE Capital Franchise Finance Corporation. As of March 1, 2012, the Debtor owed the Existing Lender in the aggregate principal amount of $11,413,699, together with all interest, fees, and charges. GECC has requested that it be given a first and prior lien upon each and every item of collateral received, subject only to the professional carve-out. GECC is, in effect, asking that its DIP lending prime the liens of its affiliate, the pre-petition lender General Electric Capital Franchise Finance Corporation. The Debtor's counsel has been informed by GECC's counsel that its affiliate consents to such priming. The Debtor noted in court papers that throughout its existence, General Electric entities have been the Debtor's exclusive lenders, and from the first they have asserted first and prior liens upon substantially all of the Debtor's personalty and realty. The Debtor said it has lately found itself unable to pay the terms of the loan agreement presently in place, and GECC had requested that the company hire a chief reorganization officer to assist with efforts to turn around the operation. The Debtor does not believe that, in its current condition, another lender would be willing to lend to it under any circumstances. As a result, it has not solicited other proposals from other possible lenders, believing that the exercise would be fruitless. GECC is, however, willing to extend post-petition credit in order to preserve going-concern values, as well as the collateral values held by GECFFC. About Waterloo Restaurant Ventures Waterloo Restaurant Ventures, Inc., operator of 12 Romano's Macaroni Grill restaurants, filed a Chapter 11 petition (Bankr. N.D. Tex. Case No. 12-31573) in Dallas on March 8, 2012, to use the bankruptcy court for a "successful sale process." The Debtor has 12 stores are in California, Oregon and Washington. The Italian-style casual dining chain said there was a "dramatic decrease in sales in the majority of the franchises" the company owns. Some were generating negative cash flows from operations, a court filing says. Waterloo is represented by Michael "Buzz" Rochelle, Esq., brother of Bloomberg reporter Bill Rochelle, Christopher B. Harper, Esq., and Kerry Ann Miller, Esq., at Rochelle McCullough, LLP. Waterloo estimated assets and debts of $10 million to $50 million. WESTERN MOHEGAN: Chapter 11 Filing Blocks Sale of Tamarack Resort ----------------------------------------------------------------- Michael Novinson at Times Herald-Record reports that the Western Mohegan Tribe and Nation and their investor -- Illinois-based BGA LLC -- have filed for Chapter 11 protection, canceling the sale of its 255-acre Tamarack resort scheduled for March 15, 2012. According to the report, former lawyers for BGA and the tribe claim they are owed $203,862. They have been trying to get repaid since October 2010 by forcing a sale of the tribe's Greenfield Park resort. The report notes that the Tamarack Lodge was initially slated for sale April 28, 2011, but the tribe contested the legitimacy of the action 24 days prior and was given a temporary stay. A judge deemed the case unlikely to succeed Aug. 8, and the stay was lifted. The report relates that Todtman, Nachamie, Spizz & Johns would have to consent to an eventual reorganization plan. That would happen only if the firm is paid in full for unpaid fees and collection efforts. The report notes nine creditors have claims against the tribe totaling $7.83 million, according to the bankruptcy filing. Not including Barton Nachamie's firm, BGA owes $1.36 million to four creditors. The Tamarack resort is assessed at $1.21 million. BGA claims in their bankruptcy papers that they have less than $50,000 worth of assets. Western Mohegan Tribe and Nation is located at 10 Tamarack Road, Greenfield Park, New York. WESTMORELAND COAL: Files Form 10-K; Incurs $36.8MM Loss in 2011 --------------------------------------------------------------- Westmoreland Coal Company filed with the U.S. Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss of $36.87 million on $501.71 million of revenue in 2011, a net loss of $3.17 million on $506.05 million of revenue in 2010, and a net loss of $29.16 million on $443.36 million of revenue in 2009. The Company's balance sheet at Dec. 31, 2011, showed $759.17 million in total assets, $1.01 billion in total liabilities and a $249.85 million total deficit. A copy of the Form 10-K is available for free at: http://is.gd/bC7Wff About Westmoreland Coal Colorado Springs, Colo.-based Westmoreland Coal Company (NYSE AMEX: WLB) -- http://www.westmoreland.com/-- is the oldest independent coal company in the United States. The Company's coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. * * * As reported in the TCR on March 4, 2011, Standard & Poor's Ratings Services said that it assigned a 'CCC+' corporate credit rating to Colorado Springs, Colorado-based Westmoreland Coal Co. The rating outlook is stable. WESTMORELAND COAL: Robert King Appointed President and COO ---------------------------------------------------------- Westmoreland Coal Company announced that the Board of Directors appointed Robert P. King as President and Chief Operating Officer of the Company, effective March 26, 2012. Mr. King, age 59, most recently served as Executive Vice President - Business Advancement and Support Services of CONSOL Energy, Inc., and CNX Gas since January 2009. Mr. King served as Senior Vice President - Administration from February 2007 until January 2009. Prior to joining CONSOL in 2006, he held numerous positions with Interwest Mining Company, a subsidiary of PacifiCorp, beginning in November 1990, including Vice President - Operations and Engineering and General Manager at Centralia Mining Company. The Company has agreed to pay Mr. King an annual base salary of $425,000. In addition, Mr. King will participate in the Company's annual incentive plan with a target annual bonus opportunity of 100% of annual base salary. Mr. King will also participate in the long-term incentive plan with a target of 100% of base salary. The Company's Compensation and Benefits Committee approved a one- time equity award under the Amended and Restated 2007 Equity Incentive Plan to Mr. King of 25,000 shares of common stock, to be issued on March 26, 2012, along with a signing bonus of $100,000, with 50% payable on March 26, 2012, and 50% payable after 12 months of employment with the Company. The Company's executive officers, including Mr. King, are at-will employees and do not have employment agreements. Effective as of March 26, 2012, Keith E. Alessi, the Company's current Chief Executive Officer and President, who has been with the Company since 2007, will continue in the role of Chief Executive Officer. About Westmoreland Coal Colorado Springs, Colo.-based Westmoreland Coal Company (NYSE AMEX: WLB) -- http://www.westmoreland.com/-- is the oldest independent coal company in the United States. The Company's coal operations include coal mining in the Powder River Basin in Montana and lignite mining operations in Montana, North Dakota and Texas. Its power operations include ownership of the two-unit ROVA coal-fired power plant in North Carolina. The Company reported a net loss of $36.87 million in 2011, a net loss of $3.17 million in 2010, and a net loss of $29.16 million in 2009. The Company's balance sheet at Dec. 31, 2011, showed $759.17 million in total assets, $1.01 billion in total liabilities and a $249.85 million total deficit. * * * As reported in the TCR on March 4, 2011, Standard & Poor's Ratings Services said that it assigned a 'CCC+' corporate credit rating to Colorado Springs, Colorado-based Westmoreland Coal Co. The rating outlook is stable. WINDMILL SQUARE: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Windmill Square - Commercial, LLC a California Corporation 24901 Dana Point Harbor Drive, Suite 230 Dana Point, CA 92629 Bankruptcy Case No.: 12-13090 Chapter 11 Petition Date: March 10, 2012 Court: United States Bankruptcy Court Central District of California (Santa Ana) Judge: Catherine E. Bauer Debtor's Counsel: Robert P. Goe, Esq. GOE & FORSYTHE, LLP 18101 Von Karman, Ste 510 Irvine, CA 92612 Tel: (949) 798-2460 Fax: (949) 955-9437 E-mail: kmurphy@goeforlaw.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 20 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/cacb12-13090.pdf The petition was signed by Warren Allan, president. WOLFGANG CANDY: Files for Chapter 11 Bankruptcy Protection ---------------------------------------------------------- Myles Snyder at abc27.com reports that Wolfgang Candy Company has filed voluntary petitions for Chapter 11 reorganization in bankruptcy court. According to the report, the company said the Chapter 11 process will enable it to continue conducting normal business operations while it restructures its debt and other obligations. The company said the filing became necessary after Wolfgang failed to get approval from its bank for a negotiated partnership agreement that would have facilitated a conclusion of restructuring outside of Chapter 11. "This was a difficult decision, but it was the most appropriate decision to allow us the necessary protections as we continue our company restructuring," the report quotes CEO Benjamin McGlaughlin as saying. "We continue to be committed to delivering the highest quality premium confections to all of our retail and fundraising partners and loyal consumers." The report says the company said production will continue as normal at its North York facility, one of the oldest family-owned and managed in the United States, as will the company's national fundraising catalog program. Wolfgang Candy Company -- http://www.wolfgangcandy.com/-- is a family-owned and managed candy company in the United States. WOLFGANG CANDY: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Wolfgang Candy Co., Inc. P.O. Box 226 York, PA 17405 Bankruptcy Case No.: 12-01427 Chapter 11 Petition Date: March 13, 2012 Court: United States Bankruptcy Court Middle District of Pennsylvania (Harrisburg) Judge: Mary D. France Debtor's Counsel: Lawrence V. Young, Esq. CGA LAW FIRM 135 North George Street York, PA 17401 Tel: (717) 848-4900 Fax: (717) 843-9039 E-mail: lyoung@cgalaw.com Estimated Assets: $0 to $50,000 Estimated Debts: $1,000,001 to $10,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Benjamin A. McGlaughlin, president. YANKEE CANDLE: Moody's Revises Rating on $725MM Term Loan to 'B1' ----------------------------------------------------------------- Moody's Investors Service revised the rating on Yankee Candle Company, Inc.'s proposed term loan to B1 from Ba3 following the increase in size to $725 millon from $580 million. Concurrently, Moody's affirmed the ratings on Yankee Candle's indirect parent company, YCC Holdings LLC's ("YCC"), including the B2 Corporate Family and Probability of Default Ratings, along with its SGL-3 Speculative Grade Liquidity Rating. The ratings outlook is stable. The rating revision to B1 from Ba3 reflects the increased proportion of secured term debt within the capital structure. Also, the remaining unsecured notes outstanding will be $10 million rather than $145 million as previously proposed, resulting a lower level of junior support. Proceeds from the proposed term loan will be used in conjunction with balance sheet cash to refinance Yankee Candle's existing $388 million Term Loan B due February 5, 2014 and $315 million of its $325 million senior unsecured notes due 2015 (leaving $10 million outstanding), and to pay related fees and expenses. Moody's took the following rating actions on Yankee Candle: - $725 million senior secured term loan due 2019 revised to B1 (LGD3, 35%) from Ba3 (LGD2, 29%). - $325 senior notes due 2015 affirmed at B2 (LGD4, 54%). These notes will likely be downgraded to B3 (LGD4, 68%) upon completion of the transaction reflecting the significant increase in structurally senior debt in the capital structure. - $188 million subordinated notes due 2017 affirmed at B3 (LGD5, 77%). Moody's also affirmed the following ratings on Yankee Candle. These ratings will be withdrawn upon completion of the transaction: - $140 million secured revolving credit facility due 2013 at Ba2 (LGD2, 15%). - $388 million senior secured term loan due 2014 at Ba2 (LGD2, 15%). Moody's took the following rating actions on YCC: - Corporate Family Rating affirmed at B2. - Probability of Default Rating affirmed at B2. - Speculative Grade Liquidity Ratings affirmed at SGL-3. - $315 million senior subordinated notes due 2016 affirmed at Caa1 (LGD6, 91%). Ratings Rationale YCC's B2 Corporate Family Rating reflects its high debt load and weak credit metrics, with pro forma debt/EBITDA exceeding 6.5 times for the year ended December 31, 2011. The company's high debt stems from the 2007 debt-financed acquisition of the company and a 2011 debt-financed dividend. The rating also reflects the company's limited overall scale relative to the broader global retail industry and its narrow product focus on the premium scented candle category. Supporting the rating are Yankee Candle's solid market position and breadth of distribution across its own retail business and sizable wholesale business. The company has demonstrable brand strength evident in its very high operating margins which compare favorably to best-in-class consumer product companies. Yankee Candle has shown resiliency in the recent weak economic environment, with positive free cash flow and debt reduction. Upon closing of the transaction, YCC's liquidity is expected to remain adequate, as reflected in the SGL-3 Speculative Grade Liquidity Rating. The stable rating outlook reflects Moody's expectation that the company will be able to maintain top-line and operating margin stability, while at the same time maintaining its focus on cash generation and debt repayment. The outlook also assumes that the company maintains adequate liquidity. YCC's ratings could be downgraded if it is unsuccessful in extending its debt maturity profile over the very near term. Its current $140 million revolving credit facility is due to expire on February 6, 2013, and it current $388 million term loan matures on February 6, 2014. Near term refinancing risk aside, YCC's ratings could be downgraded if it experiences negative trends in sales and operating margins that cause credit metrics to erode. Specific metrics include debt/EBITDA sustained above 6.5 times or EBITA/interest below 1.3 times. Factors that could result in an upgrade include sustained growth in revenue and operating earnings, significant debt reduction and maintenance of financial policies that sustainably support lower leverage. Quantitatively, ratings could be upgraded if debt/EBITDA was sustained below 5.5 times and EBITA/interest maintained above 1.75 times. The principal methodology used in rating YCC Holdings LLC was the Global Retail Industry Methodology published in June 2011. Other methodologies used include Loss Given Default for Speculative- Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. YCC Holdings LLC is headquartered in South Deerfield, Massachusetts. Operating through its indirect operating subsidiary, The Yankee Candle Company, Inc., YCC is the largest designer, manufacturer, and distributor of premium scented candles in the U.S. Annual revenues exceed $785 million. The company is owned by affiliates of Madison Dearborn Partners, LLC ("MDP") and members of management. YANKEE CANDLE: S&P Lowers Rating on New $725MM Term Loan to 'B+' ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its issue-level rating on The Yankee Candle Co.'s (B/Stable/--) proposed $725 million term loan B due 2019 to 'B+' from 'BB-' following an increase in the term loan amount from its originally proposed size of $580 million. "We revised the recovery rating to '2' from '1', indicating our expectation for substantial (70% to 90%) recovery in the event of payment default. The issue-level ratings for the 8.5% senior unsecured notes due 2015, 9.750% senior subordinated notes due 2017, and 10.250% senior payment-in-kind (PIK) toggle notes due 2016 are unchanged at 'CCC+'. The recovery ratings for all of these notes remain '6', indicating our expectation for negligible (0% to 10%) recovery in the event of payment default. The 'B' corporate credit rating and stable outlook remain unchanged," S&P said. "Yankee Candle increased the term loan size by about $145 million to tender the majority of its 8.5% senior unsecured notes due 2015. The increased term loan size decreases the recovery prospects for the unsecured debt because of the larger amount of priority claims," S&P said. "The 'B' corporate credit rating on Yankee Candle reflects our assessment of the company's 'highly leveraged' financial risk profile, reflecting its high debt burden and aggressive financial policy. Although we recognize the company's good market position and product offerings within the premium scented candle market, we view the company's business risk profile as 'weak' because of its narrow product focus, significant earnings seasonality, and the discretionary nature of its products," S&P said. RATINGS LIST The Yankee Candle Co. Inc. Corporate Credit Rating B/Stable/-- Downgraded; Recovery Rating Revised To From The Yankee Candle Co. Inc. $725 mil term loan B due 2019 B+ BB- Recovery Rating 2 1 ZALE CORP: Portolan Capital Discloses 5% Equity Stake ----------------------------------------------------- In a Schedule 13G filed with the U.S. Securities and Exchange Commission, Portolan Capital Management, LLC, and George McCabe disclosed that, as of March 5, 2012, they beneficially own 1,624,722 shares of common stock of Zale Corp. representing 5.05% of the shares outstanding. A copy of the filing is available for free at http://is.gd/XNFPdc About Zale Corporation Based in Dallas, Texas, Zale Corporation (NYSE: ZLC) -- http://www.zalecorp.com/-- is a specialty retailer of diamonds and other jewelry products in North America, operating approximately 1,900 retail locations throughout the United States, Canada and Puerto Rico, as well as online. Zale Corporation's brands include Zales Jewelers, Zales Outlet, Gordon's Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale also operates online at http://www.zales.com/, http://www.zalesoutlet.com/, http://www.gordonsjewelers.com/and http://www.pagoda.com/ The Company reported a net loss of $3.03 million on $1.01 billion of revenue for the six months ended Jan. 31, 2012, compared with a net loss of $70.67 million on $953.45 million of revenue for the same period during the prior year. The Company's balance sheet at Jan. 31, 2012, showed $1.25 billion in total assets, $1.05 billion in total liabilities and $202.29 million in total stockholders' investment. * Moody's Says US Non-Financial Corporate Cash Holdings Rise ------------------------------------------------------------ US non-financial corporate cash holdings rose to $1.24 trillion at the end of 2011, reflecting the strength of companies' operations in emerging markets and the negative tax consequences of repatriating cash to the US, according to a new report from Moody's Investors Service. Apple Inc., Microsoft, Cisco, Google and Pfizer held the largest amounts of cash, says the report. Those five cash kings have $276 billion, or 22% of the total non- financial corporate cash balances, up from $207 billion, which represented 17% of the total in 2010, says Moody's. The top 50 holders of cash account for $749 billion, up 13% from $665 billion in 2010. Moody's estimates nearly $700 billion, or 57% of the corporate cash total, is held overseas. This amount reflects the strength of most emerging-market economies over the last few years, the negative tax consequences of repatriating cash to the US and the disproportionate use of cash for US dividends, share buybacks and acquisitions. Without permanent reform that lowers the tax on overseas profits, Moody's expects the absolute and proportionate amount of cash held overseas will continue to rise. Unless Apple implements a first-time dividend or commences to buy back stock, Moody's says that Apple's $97 billion cash pile, which represents about 8% of total corporate cash, could grow to $150 billion or 12% by the end of 2012. Moody's expects overall business conditions to remain modest over the next year and expects companies to continue to use cash for shareholder dividends, share buybacks and acquisition activity, although corporate spending on buybacks and acquisitions will be modestly lower at roughly $400 billion in 2012. Higher spending on such items is associated with solid macroeconomic activity and strong business confidence. Other cash-rich sectors include pharmaceuticals which held around $183 billion at year-end 2011. Pfizer, Johnson & Johnson and Amgen had the largest cash piles. The energy sector held $114 billion, with Chevron, Exxon Mobil and Conoco Phillips sitting on substantial balances, says Moody's. Investment-grade companies rated by Moody's hold $848 billion of cash, or 77% of the rated non-financial corporate universe, down slightly from $852 billion in 2010 but up from $579 billion in 2006. * BOOK REVIEW: Performance Evaluation of Hedge Funds ---------------------------------------------------- Edited by Greg N. Gregoriou, Fabrice Rouah, and Komlan Sedzro Publisher: Beard Books Hardcover: 203 pages Listprice: $59.95 Review by Henry Berry Hedge funds can be traced back to 1949 when Alfred Winslow Jones formed the first one to "hedge" his investments in the stock market by betting that some stocks would go up and others down. However, it has only been within the past decade that hedge funds have exploded in growth. The rise of global markets and the uncertainties that have arisen from the valuation of different currencies have given a boost to hedge funds. In 1998, there were approximately 3,500 hedge funds, managing capital of about $150 billion. By mid-2006, 9,000 hedge funds were managing $1.2 trillion in assets. Despite their growing prominence in the investment community, hedge funds are only vaguely understood by most people. Performance Evaluation of Hedge Funds addresses this shortcoming. The book describes the structure, workings, purpose, and goals of hedge funds. While hedge funds are loosely defined as "funds with no rules," the editors define these funds more usefully as "privately pooled investments, usually structured as a partnership between the fund managers and the investors." The authors then expand upon this definition by explaining what sorts of investments hedge funds are, the work of the managers, and the reasons investors join a hedge fund and what they are looking for in doing so. For example, hedge funds are characterized as an "important avenue for investors opting to diversify their traditional portfolios and better control risk" -- an apt characterization considering their tremendous growth over the last decade. The qualifications to join a hedge fund generally include a net worth in excess of $1 million; thus, funds are for high net-worth individuals and institutional investors such as foundations, life insurance companies, endowments, and investment banks. However, there are many individuals with net worths below $1 million that take part in hedge funds by pooling funds in financial entities that are then eligible for a hedge fund. This book discusses why hedge funds have become "notorious as speculating vehicles," in part because of highly publicized incidents, both pro and con. For example, George Soros made $1 billion in 1992 by betting against the British pound. Conversely, the hedge fund Long-Term Capital Management (LTCP) imploded in 1998, with losses totalling $4.6 billion. Nonetheless, these are the exceptions rather than the rule, and the editors offer statistics, studies, and other research showing that the "volatility of hedge funds is closer to that of bonds than mutual funds or equities." After clarifying what hedge funds are and are not, the book explains how to analyze hedge fund performance and select a successful hedge fund. It is here that the book has its greatest utility, and the text is supplemented with graphs, tables, and formulas. The analysis makes one thing clear: for some investors, hedge funds are an investment worth considering. Most have a demonstrable record of investment performance and the risk is low, contrary to common perception. Investors who have the necessary capital to invest in a hedge fund or readers who aspire to join that select club will want to absorb the research, information, analyses, commentary, and guidance of this unique book. Greg N. Gregoriou teaches at U. S. and Canadian universities and does research for large corporations. Fabrice Rouah also teaches at the university level and does financial research. Komlan Sedzro is a professor of finance at the University of Quebec and an advisor to the Montreal Derivatives Exchange. ********* 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. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Denise Marie Varquez, Ronald C. Sy, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2012. 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 ***