/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/121001.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, October 1, 2012, Vol. 16, No. 273 Headlines 1701 COMMERCE: Forth Worth Sheraton to Pay Creditors in Full 1946 PROPERTY: Wants to Use Cash Collateral of Prepetition Lender 50 BELOW: Case Trustee to Sells Assets to Pay Off Debt ABDIANA A: Voluntary Chapter 11 Case Summary ACTIVECARE INC: Tanner Succeeds Hansen Barnett as Accountant AL LIEBERS: Case Summary & 20 Largest Unsecured Creditors ALLEN FAMILY: Unsecured Creditors to Recoup 10% Under Exit Plan ALPHA NATURAL: Moody's Rates Sr. Unsecured Notes Due 2018 'B2' ALPHA NATURAL: S&P Lowers Corporate Credit Rating to 'B+' AMERICAN AIRLINES: Pilots' Union Seeks Stay of CBA Rejection AMERICAN AIRLINES: Appaloosa Said to Hold AMR, Us Airways Stake AMERICAN AIRLINES: Secures $268-Mil. Aircraft Financing From RPK AMERICAN AIRLINES: May Renew Chartis Insurance AMERICAN AIRLINES: Wins OK to Pay Ad Hoc Creditors' Advisors AMERICAN AIRLINES: Arrivals Slow as Pilots Reminded of Oversight AMERICAN AIRLINES: ST Investments Drop by $535-Mil. in August AMERICAN ARCHITECTURAL: Can Reject Subcontract With Skanska USA AMERICAN GREETINGS: Moody's Reviews 'Ba1' CFR/PDR for Downgrade AMERICAN GREETINGS: S&P Puts 'BB+' CCR on Watch on Going Private AMERICAN WEST: Court Wants Chapter 11 Plan Amended ASIA INTERNATIONAL: Case Summary & 19 Largest Unsecured Creditors ATP OIL: Moncrief Has Option to Buy Mediterranean Sea Investment ATWATER, CA: Could Be Fourth Bankrupt California City AUTO CARE: HIring Patrick Calhoun as Bankruptcy Counsel BANKERS FOR REAL ESTATE: Case Summary & 5 Unsecured Creditors BAPCO LLC: Case Summary & 3 Largest Unsecured Creditors BEALL CORP: Sec. 341 Creditors' Meeting Set for Oct. 30 BEAZER HOMES: Inks $150-Mil. Credit Facility with Credit Suisse BENADA ALUMINUM: Sells Unused Aluminum Press for $2.9 Million BIG SANDY: To Sell Mile High Bank Via Chapter 11 BRAND ENERGY: Moody's Affirms 'B3' CFR/PDR; Outlook Stable BRISTOW GROUP: Moody's Rates $425-Mil. Sr. Unsec. Note Issue Ba3 BRISTOW GROUP: S&P Gives 'BB' Rating on $425MM Sr. Unsecured Notes BROADVIEW NETWORKS: Bingham Approved as Regulatory Counsel BROADVIEW NETWORKS: Evercore Group Approved as Investment Banker BROADVIEW NETWORKS: KCC Approved as Claims and Noticing Agent BROADVIEW NETWORKS: Willkie Farr Approved as Bankruptcy Counsel BROADVIEW NETWORKS: Ernst & Young OK'd to Provide Audit Services CALPINE CORP: Moody's Rates $615-Mil. Sr. Secured Term Loan 'B1' CALVARY WELD: Case Summary & 13 Unsecured Creditors CAREY LIMOUSINE: Case Summary & 20 Largest Unsecured Creditors CDKP DEVELOPMENT: Case Summary & 16 Largest Unsecured Creditors CHAP - KHS: Chapter 9 Case Summary CHARLIE MCGLAMRY: Plan Outline Hearing Scheduled for Oct. 2 CHINA GREEN: Issues 150.3 Million Common Shares for $1.5 Million CHRYSLER LLC: Fiat Seeks Ruling on Dispute With Trust Over Shares CLAIRE'S STORES: Moody's Upgrades CFR to 'Caa1'; Outlook Stable CONTEC HOLDINGS: Garden City Group Approved as Admin. Agent CONTEC HOLDINGS: Pepper Hamilton Approved as Delaware Counsel CORDILLERA GOLF: Settles Dispute With Creditors; To Sell Assets CORTE MADERA: S&P Affirms 'B+' Corp. Credit Rating; Outlook Neg COTT CORP: Moody's Affirms 'B2' Corporate Family Rating CRAMER MOUNTAIN: Chapter 11 Filing Stays Foreclosure Sale DAE AVIATION: Moody's Raises CFR to B3; Rates New Term Loan B2 DAVE & BUSTER'S: IPO Filing No Impact on Moody's 'B3' Ratings DEAN FOODS: Moody's 'Ba3' CFR Remain on Review for Downgrade DERRY & WEBSTER: Case Summary & 13 Unsecured Creditors DICKINSON THEATRES: Files for Chapter 11 Along With Plan DIGITAL DOMAIN: Closes $30-Mil. Sale to Galloping Horse DRINKS AMERICAS: Incurs $438,000 Net Loss in July 31 Quarter DUKE REALTY: Fitch Assigns 'BB' Preferred Stock Rating E-DEBIT GLOBAL: Issues 185.4 Million Common Shares to Creditor ELPIDA MEMORY: Two Universities Allege Patent Infringement EMPRESEAS INTEREX: December Hearing on Bank's Bid to Foreclose FIELD FAMILY: Meeting to Form Creditors' Panel Set for Oct. 9 EMISPHERE TECHNOLOGIES: Defaults on $31.1-Million Notes FIRST FINANCIAL: Board Adopts 2012 Director Program FIRST FINANCIAL: Senator Huddleston Departs from Board FTMI REAL ESTATE: Hearing on Further Cash Use Set for Oct. 31 GARY PAPA: Voluntary Chapter 11 Case Summary GHC NY: Voluntary Chapter 11 Case Summary GLOBAL INVESTMENTS: Case Summary & 3 Unsecured Creditors GOMEZ & GOMEZ: Case Summary & 3 Unsecured Creditors GRAY TELEVISION: Moody's Rates $40-Mil. 1st Lien Revolver 'Ba3' GREAT LAKES: Moody's Affirms 'B2' CFR; Outlook Remains Stable GUARANTY FINANCIAL: Texas Wyoming Drilling Debate Continues HARPER BRUSH: Wants Until Oct. 26 to File Plan and Disclosures HART OIL: Case Summary & 20 Largest Unsecured Creditors HARTFORD FINANCIAL: Fitch Affirms Rating on Three Notes at Low-B HERTZ CORP: Moody's Confirms 'B1' CFR/PDR; Outlook Stable HERTZ CORP: S&P Affirms 'BB' Rating on $1.4-Bil. Term Loan INTERCOASTAL CONTRACTING: Bankruptcy May Delay Bridge Work IRWIN MORTGAGE: Has Until Jan. 8 to Propose Chapter 11 Plan JOHN BECK: Get-Rich-Quick Marketer Ends Up in Chapter 11 JOURNAL REGISTER: Section 341(a) Meeting Scheduled for Oct. 15 JOURNAL REGISTER: U.S. Trustee Forms 5-Member Creditors Committee K-V PHARMACEUTICAL: Files Schedules of Assets and Liabilities L-3 COMMUNICATIONS: Fitch Holds 'BB+' Rating on Senior Sub. Debt LEHMAN BROTHERS: To Make Second Distribution of $10.5 Billion LEHMAN BROTHERS: Still Holding $13.5 Billion After Distribution LEVEL 3 FINANCING: Moody's Rates $1.2BB Secured Term Loan 'Ba3' LIBERTY INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors LIGHTSQUARED INC: Falcone Asks to Share Airwaves for Service LINC USA: Moody's Corrects September 20 Rating Release LON MORRIS: Prepares for Piecemeal Auction MAKENA GREAT: Exclusivity Extended; Plan Outline Hearing Reset MERCURY PAYMENT: S&P Ups Ratings on $225MM Debt Facilities to 'BB' MONTPELIER RE: Solid Operating Performance Cues Fitch to Up Rating MORGAN'S FOODS: Reports $206,000 Net Income in Aug. 12 Quarter MOTORS LIQUIDATION: Trustee Claims Objection Cutoff on March 25 MSR RESORT: Paulson, Winthrop Resort Auction Scheduled for Nov. 8 MUNICIPAL CORRECTIONS: Files Schedules of Assets and Liabilities NORBORD INC: S&P Affirms 'BB-' Corp. Credit Rating; Outlook Stable NORTHFIELD PARK: Moody's Assigns 'B2' CFR; Rates Facilities 'B1' NORTHFIELD PARK: S&P Assigns 'B' Corporate Credit Rating NYTEX ENERGY: Marble Falls Drilling Program in Texas a Success ONE SOURCE RECYCLING: Files for Chapter 7 Bankruptcy Protection OWENS-ILLINOIS INC: S&P Affirms 'BB+' Corporate Credit Rating OXLEY DEVELOPMENT: Paul Reece Marr Approved as Bankruptcy Counsel P & M PETROLEUM: Case Summary & 20 Largest Unsecured Creditors PACIFIC MONARCH: U.S. Trustee Disbands 3-Member Creditors' Panel PARK CAPITAL: Case Summary & 2 Unsecured Creditors PATRIOT COAL: J. Lushefski Succeeds M. Schroeder as CFO PATRIOT COAL: Executives Targeted by Shareholders' Suit PEGASUS RURAL: Gets OK to Sell 2.5 GHz Assets to Various Buyers POST PROPERTIES: S&P Raises Preferred Shares Rating to 'BB+' QUICKSILVER RESOURCES: Moody's Confirms 'B2' CFR; Outlook Neg. RADIOSHACK CORP: J. Gooch Leaves, D. Lively Named Interim CEO REGENCY ENERGY: Fitch Rates $500 Million Senior Notes 'BB' REGENCY ENERGY: Moody's Rates Sr. Unsecured Notes Due 2023 'B1' REGENCY ENERGY: S&P Rates $500MM Senior Unsecured Notes 'BB' RESIDENTIAL CAPITAL: Judge Threatens Homeowner With Sanctions RESIDENTIAL CAPITAL: Jr. Sec. Notes Liens Allegedly Partly Invalid RESIDENTIAL CAPITAL: Third-Lien Bondholders Drop Plan Support RG STEEL: Seeks Exclusive Plan Filing to Jan. 26 RG STEEL: Can Hire Hilco Streambank as Broker for Assets RIVIERA HOLDINGS: Paul Roshetko Succeeds Larry King as CFO ROOMSTORE INC: To Put Mattress Discounters Stake On The Block SALON MEDIA: Sells "The Well" Assets to Well Group for $400,000 SANDS CASTLES: Meeting of Creditors Scheduled for Oct. 9 SANDS CASTLES: Files Schedules of Assets and Liabilities SANDS CASTLES: Taps Peggy J. Lantz as Bankruptcy Attorney SANDS CASTLES: Wants to Hire Jayson & Frisby as Accountant SEALY MATTRESS: Moody's Reviews 'B2' CFR/PDR for Upgrade SEALY CORP: S&P Puts 'B' CCR on Watch on Tempur-Pedic Acquisition SGS INT'L: S&P Cuts Corp. Credit Rating to 'B' Over Onex Deal SINCLAIR BROADCAST: Hikes JPMorgan Term Loan to $500 Million SINCLAIR BROADCAST: S&P Gives 'B' Rating on $500MM Senior Notes SINCLAIR TELEVISION: Moody's Rates $500MM Sr. Unsecured Notes B2 SOUTH LAKES: Proposes to Sell Livestock and Hire Auctioneer SPECIALTY SEAL: Voluntary Chapter 11 Case Summary SPIRIT FINANCE: Macquarie Discloses 8.2% Equity Stake TANDEM TRANSPORT: Oct. 4 Final Hearing on Emergency Financing Set TANDUS FLOORING: Moody's to Withdraw Ratings After Acquisition TELX GROUP: Moody's Affirms 'B3' Corporate Family Rating TELX GROUP: S&P Affirms 'B-' Corp. Credit Rating; Outlook Stable THERMON INDUSTRIES: S&P Raises Corporate Credit Rating to 'BB-' TOWN OF MAMMOTH LAKES: Wants to Settle with MLLA, Case Dismissed TRAINOR GLASS: Exclusive Plan Filing Period Extended to Nov. 9 TRINET HR: Moody's Assigns 'B1' CFR; Rates Sr. Secured Debt 'B1' TRINET HR: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable TRUTH FOR LIVING: Case Summary & 7 Unsecured Creditors TW TELECOM: Moody's Rates $400-Mil. Senior Unsecured Notes 'B1' TW TELECOM: S&P Gives 'BB-' Rating on $400-Mil. Senior Notes UNIVERSAL HEALTH: Credit Amendment No Impact on Moody's Ba2 CFR US FIDELIS: Founder Given Eight Years in Prison VIASAT INC: Moody's Rates $300-Mil. Add-On Notes Issue 'B1' VIASAT INC: S&P Keeps 'B+' Corp. Credit Rating; Outlook Stable VITRO SAB: Bondholders Allowed to Proceed With Involuntary VILLAGIO PARTNERS: Has Final OK to Use Wells Fargo Cash Collateral VITRO SAB: To Ask Appellate Court on Oct. 3 to Enforce Plan VM ODELL'S: Blames Bank Failure for Chapter 11 Filing VM WILLIAMS: Voluntary Chapter 11 Case Summary WAVEDIVISION ESCROW: S&P Keeps 'B-' Rating on $275MM Senior Notes WAVEDIVISION HOLDINGS: Moody's Affirms B2 CFR; Rates Add-On Caa1 WOLFGANG CANDY: Judge Vacates Order Approving Asset Sale WESTERN PLAINS: Enters Shares for Debt Agreements WOODBURY UNIVERSITY: Moody's Affirms Baa3 Rating on $18.6MM Bonds WOONGJIN GROUP: Files for Receivership After MBK Deal Collapses WOOTEN GROUP: Can Employ Jonathan Hayes as Counsel * Chadbourne & Parke Adds Fazio as UK/Brazil Partner * Hughes Watters Named Top Mid-Sized Firm in Texas * Moody's Says US Steel Industry Outlook Turns Negative * Moody's Says Penn. Local Gov't Downgrades to Exceed Upgrades * S&P's Global Corporate Default Tally Rises to 59 Issuers * BOND PRICING -- For Week From Sept. 24 to 28, 2012 ********* 1701 COMMERCE: Forth Worth Sheraton to Pay Creditors in Full ------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the new owner of the bankrupt Sheraton Fort Worth Hotel & Spa in Fort Worth, Texas, is flipping the property for $55 million. The price is enough to pay creditors in full with money left over for the new owner, according to a court filing. According to the Bloomberg report, the buyer is PHC Management LLC, an affiliate of Prism Hotels & Resorts. The date for a hearing to approve the sale hasn't been fixed yet. Dallas-based Prism manages 62 hotels around the country, Kevin Gallagher from Prism said in an interview. About 1701 Commerce 1701 Commerce LLC, owner and operator of a full service "Sheraton Hotel" located at 1701 Commerce, Fort Worth, Texas, filed for Chapter 11 protection (Bankr. N.D. Tex. Case No. 12-41748) on March 26, 2012. The Debtor also was the former operator of a Shula's steakhouse at the Hotel. 1701 Commerce LLC was previously named Presidio Ft. Worth Hotel LLC, but changed its name to 1701 Commerce LLC, prior to the bankruptcy filing date to reduce and minimize any potential confusion relating to an entity named Presidio Fort Worth Hotel LP, an unrelated and unaffiliated partnership that was the former owner of the hotel property owned by the Debtor. 1701 Commerce is a Nevada limited liability company whose members are Vestin Realty Mortgage I, Inc., Vestin Mortgage Realty II, Inc., and Vestin Fund III, LLC. 1701 Commerce LLC's operations are managed by Richfield Hospitality Group, an independent management company that is not affiliated with the Debtor or any of its members. Judge D. Michael Lynn presides over the bankruptcy case. The Law Office of John P. Lewis, Jr., represents the Debtor. The Debtor disclosed $71,842,322 in assets and $44,936,697 in liabilities. 1946 PROPERTY: Wants to Use Cash Collateral of Prepetition Lender ----------------------------------------------------------------- 1946 Property, LLC, asks the U.S. Bankruptcy Court for the Western District of Texas for authority to use cash collateral of its prepetition secured lender to pay reasonable and necessary operating expenses, including, but not limited to, property management, supplies, routine repair and maintenance expenses, leasing commissions, landscaping, providing utilities with deposits, and other operating expenses to minimally, preserve, and optimally, increase the value of the collateral and the Debtor for the benefit of all creditors. The Debtor is also requesting the use of $2,500 of cash to obtain an appraisal of its property which is necessary to rebut the allegations made by the Lender in its motion for relief form the automatic stay. The hearing on the motion is scheduled for Oct. 23, 2012, at 9:30 a.m. The Property was approximately 70% leased as of the Petition Date. Historically, the Property generates $118,500 in monthly revenues, and requires approximately $100,000 for expenses, not including debt service, to maintain operations. The Debtor believes the principal balance owed to the lender, SW Loan A, LP, is $10.3 million as of the Petition Date. The loan is secured by a Deed of Trust on the Debtor's real property and an assignment of rents. The Debtor proposes to grant the lender, as additional adequate protection a replacement lien in all of its postpetition generated cash and cash collateral. About 1946 Property 1946 Property, LLC, is a Texas liability company. The Debtor's sole manager is Edward Reiss. The Debtor owns a 252 unit condominium community located at 1946 Northeast Loop 410, in San Antonio, Texas. The Company filed a bare-bones Chapter 11 petition (Bankr. W.D. Tex. Case No. 12-52489) in San Antonio on Aug. 7, 2012. Bankruptcy Judge Leif M. Clark presides over the case. Vickie L. Driver, Esq., at Coffin & Driver, PLLC, represents the Debtor. In its petition, the Debtor estimated $10 million to $50 million in assets and debts. 50 BELOW: Case Trustee to Sells Assets to Pay Off Debt ------------------------------------------------------ Candace Renalls at Duluth News Tribune reports the court-appointed trustee in the 50 Below bankruptcy case wants to sell the Company's assets in an attempt to pay off its multi-million dollar debt. If successful, the Company would continue to operate under new ownership. "The goal is to get out of bankruptcy," the report quotes Michael McGrath, the Minneapolis attorney who filed the 50 Below Chapter 11 case, as saying. "This is the quickest way out of Chapter 11, which is really important to our employees and customers." The report notes that in a motion filed in U.S. Bankruptcy Court, trustee Nauni Jo Manty sought approval of bid procedures to sell off company assets, including trademarks, divisions, contracts and unexpired leases. A hearing on the bid request will be held on Oct. 4, 2012, in U.S. Bankruptcy Court in Duluth. A hearing on the sale itself is set for Nov. 7. Sealed bids are due Oct. 29. According to the report, proceeds from the sale would go to the creditors, with the government's $10 million in secured claims first up for payment. But even if all assets are sold, Mr. Gallagher doubts it would be enough to also pay off 50 Below's unsecured debt, which he says totals $2 million. The report says the proposed sale is one of two ways for a business to get out of Chapter 11. The Company had initially pursued the other path -- reorganization. That way, the Company could set up a structured five-year plan to pay its taxes, Mr. McGrath had said. 50 Below provides Internet marketing and web design services. The Company has more than $12 million in unsecured claims, nearly $8.8 million of which is owed to the Internal Revenue Service, and another $1 million to the Minnesota Department of Revenue. ABDIANA A: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: Abdiana A, LLC 7140 Wornall Road, Suite 204 Kansas City, MO 64114 Tel: (816) 333-9888 Bankruptcy Case No.: 12-44005 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court Western District of Missouri (Kansas City) Judge: Arthur B. Federman Debtor's Counsel: Donald G. Scott, Esq. MCDOWELL RICE SMITH & BUCHANAN, P.C. 605 W. 47th Street, Suite 350 Kansas City, MO 64112 Tel: (816) 753-5400 Fax: (816) 753-9996 E-mail: dscott@mcdowellrice.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Nicholas Abnos, manager. ACTIVECARE INC: Tanner Succeeds Hansen Barnett as Accountant ------------------------------------------------------------ ActiveCare, Inc., dismissed Hansen Barnett & Maxwell, P.C., as its independent registered public accounting firm on Sept. 25, 2012. The decision was made by the Audit Committee of the Company's Board of Directors. The reports of HBM on the Company's financial statements for the fiscal years ended Sept. 30, 2011, and 2010 did not contain an adverse opinion or disclaimer of opinion and were not modified as to uncertainty, audit scope, or accounting principles, except the reports did contain an explanatory paragraph discussing that there was substantial doubt about the Company's ability to continue as a going concern. On Sept. 25, 2012, the Company engaged Tanner LLC as its new independent registered public accounting firm. The appointment of Tanner LLC was approved by the Audit Committee of the Company's Board of Directors. During the two most recent fiscal years ended Sept. 30, 2011, and 2010 and the subsequent period through Sept. 25, 2012, the Company did not consult with Tanner LLC on (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that may be rendered on the Company's financial statements, and Tanner LLC did not provide either a written report or oral advice to the Company that was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) the subject of any disagreement, as defined in Item 304 (a)(1)(iv) of Regulation S-K and the related instructions, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K. About ActiveCare South West Valley City, Utah-based ActiveCare, Inc., is organized into three business segments based primarily on the nature of the Company's products. The Stains and Reagents segment is engaged in the business of manufacturing and marketing medical diagnostic stains, solutions and related equipment to hospitals and medical testing labs. The CareServices segment is engaged in the business of developing, distributing and marketing mobile health monitoring and concierge services to distributors and customers. The Chronic Illness Monitoring segment is primarily engaged in the monitoring of diabetic patients on a real time basis. The Company's business plan is to develop and market products for monitoring the health of and providing assistance to mobile and homebound seniors and the chronically ill, including those who may require a personal assistant to check on them during the day to ensure their safety and well being. As reported in the TCR on Dec. 30, 2011, Hansen, Barnett & Maxwell, P.C., expressed substantial doubt about ActiveCare's ability to continue as a going concern, following the Company's results for the year ended Sept. 30, 2011. The independent auditors noted that the Company has incurred recurring operating losses and has an accumulated deficit. The Company's balance sheet at June 30, 2012, showed $2.08 million in total assets, $5.34 million in total liabilities, and a stockholders' deficit of $3.26 million. AL LIEBERS: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Al Liebers Golf Equipment, Inc. dba The World of Golf 532 North Bedford Road Bedford Hills, NY 10507 Bankruptcy Case No.: 12-23698 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court Southern District of New York (White Plains) Judge: Robert D. Drain Debtor's Counsel: Leslie S. Barr, Esq. WINDELS MARX LANE & MITTENDORF, LLP 156 West 56th Street New York, NY 10019 Tel: (212) 237-1000 Fax: (212) 262-1215 E-mail: lbarr@windelsmarx.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors is available for free at http://bankrupt.com/misc/nysb12-23698.pdf The petition was signed by David Braham, president. ALLEN FAMILY: Unsecured Creditors to Recoup 10% Under Exit Plan --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Allen Family Foods Inc. proposed a liquidating Chapter 11 plan estimating that unsecured creditors with $32.2 million in claims will recover 10%. According to the report, the business was sold in September 2011 to South Korean poultry producer Harim Co. in a sale that produced $45.2 million, paying off secured claims. There will be a hearing on Nov. 6 in U.S. Bankruptcy Court in Delaware for approval of the explanatory disclosure statement. Once the disclosure statement is approved, creditors can vote on the plan. The confirmation hearing for approval of the plan is tentatively set for Dec. 19. The report relates that the plan was made possible from settlement of a claim from the Pension Benefit Guaranty Corp. The plan is partly based on a separate settlement where the secured lender gave up $5 million. Secured debt when the Chapter 11 case began included $83.2 million on a term loan and revolving line of credit with MidAtlantic Farm Credit ACA as agent. From the sale proceeds, $30 million was held aside to await the result of a lawsuit by the creditors against MidAtlantic. The settlement carved out $5 million for unsecured creditors, with the remainder going to the bank. The Bloomberg report discloses that the bank also agreed to waive claims, so it won't share in any distribution to unsecured creditors as a result of a shortfall in payment of the secured claim. About Allen Family Foods Allen Family Foods Inc. is a 92-year-old Seaford, Delaware, poultry company. Allen Family Foods and two affiliates, Allen's Hatchery Inc. and JCR Enterprises Inc., filed for Chapter 11 bankruptcy protection (Bankr. D. Del. Case No. 11-11764) on June 9, 2011. Allen estimated assets and liabilities between $50 million and $100 million in its petition. Robert S. Brady, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, in Wilmington, Delaware, serve as counsel to the Debtors. FTI Consulting is the financial advisor. BMO Capital Markets is the Debtors' investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. Roberta DeAngelis, U.S. Trustee for Region 3, appointed seven creditors to serve on an Official Committee of Unsecured Creditors in the Debtors' cases. Lowenstein Sandler PC and Womble Carlyle Sandridge & Rice, PLLC, serve as counsel for the committee. J.H. Cohn LLP serves as the Committee's financial advisor. ALPHA NATURAL: Moody's Rates Sr. Unsecured Notes Due 2018 'B2' -------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to the senior unsecured guaranteed notes due in 2018 issued by Alpha Natural Resources, Inc. Proceeds will be used to tender for the 3.25% convertible notes assumed with the Massey Energy acquisition in 2011 and for general corporate purposes. The notes are being issued under the company's shelf registration (P)B2 senior unsecured rating. All other ratings remain unchanged. The rating outlook is stable. Assignments: Issuer: Alpha Natural Resources, Inc Senior Unsecured Regular Bond/Debenture, Assigned B2, LGD4, 67 Ratings Rationale Alpha's B1 corporate family rating (CFR) reflects its position as one of the top three US coal companies in terms of production and reserves, and the largest US metallurgical coal producer. The rating also reflects its operating diversity with approximately 130 coal mines in Appalachia and the Powder River Basin (PRB), its ability to export coal though several East Coast and Gulf terminals, and its approximately 5 billion tons of reserves. The rating also reflects the company's good liquidity position, including approximately $503 million of cash and marketable securities and availability of roughly $1 billion (after adjusting for letters of credit issued) under the revolver and AR securitization facilities as of June 30, 2012. Moody's notes that the company's credit facility requires it to maintain minimum liquidity of $500 million through 2014. In addition, the note offering and tender for the convertible notes improves the company's maturity profile and reduces somewhat the debt maturity tower of roughly $1 billion in 2015. Challenges for the B1 CFR include Alpha's high degree of concentration in Central Appalachia where the industry is facing a secular decline in production and challenging market conditions. Difficult geology, increasing costs, heightened MSHA scrutiny of mine safety, ongoing coal-to-gas substitution, low natural gas prices and expected coal plant retirements have caused coal demand to contract, and coal prices to collapse. At the same time, demand for metallurgical (met) coal is also softening, reflecting weak global steel demand and an oversupplied seaborne met coal market. The ratings are also constrained by inherent volatility of met coal prices and current weakness in the seaborne met coal market, as well as the inherent geological and operating risks associated with mining. While Moody's expects Alpha's metrics to deteriorate over the next 12-18 months due to the challenging environment for coal (thermal and metallurgical) domestically, and in the seaborne market, actions currently being taken by the company in its strategic repositioning of operations, which include reductions in coal production and workforce reductions, are expected to mitigate the degree of deterioration anticipated and indicate an operating flexibility necessary to weather the challenging climate facing US coal producers. In addition, the company's strong liquidity position provides support to the rating. The stable outlook also reflects Moody's expectation that over the long-term, Debt/ EBITDA will be sustained below 5x. Although upward momentum on the ratings is limited due to industry conditions, an upgrade could result if operating performance improves, Debt/ EBITDA is considered sustainable below 4.5x, and free cash flow to debt is above 3%. However, the ratings and/or outlook could come under pressure if the company's liquidity position erodes materially from current levels. The principal methodology used in rating Alpha Natural Resources, Inc. was the Global Mining 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. ALPHA NATURAL: S&P Lowers Corporate Credit Rating to 'B+' --------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Alpha Natural Resources, including the corporate credit rating, to 'B+' from 'BB-', and are removing all of the ratings from CreditWatch, where S&P placed them with negative implications on Sept. 19, 2012. "We assigned our 'B+' (the same as the corporate credit rating) issue-level rating and '3' recovery rating to Alpha's proposed $500 million senior unsecured notes due 2020," S&P said. "The downgrade reflects our expectation that Alpha's 2012 and 2013 EBITDA will be much lower than previously anticipated because of a sharp cyclical downturn in domestic coal demand," said credit analyst Megan Johnston. "We believe that a warmer-than-normal winter and natural gas substitution accelerated what we view as a sustained decline in the economic viability of thermal coal produced in the Central Appalachia basin, which presently accounts for about 40% of Alpha's production. In addition, fewer production disruptions and slowing demand in China and the Eurozone have caused metallurgical coal prices to decline, further pressuring performance." "The stable rating outlook reflects our view that although leverage metrics will remain outside of our rating expectations for the next year to two years, we believe the current downturn in coal is cyclical rather than secular. In addition, we believe Alpha's liquidity is strong to weather the current downturn," S&P said. AMERICAN AIRLINES: Pilots' Union Seeks Stay of CBA Rejection ------------------------------------------------------------ A union representing American Airlines Inc. pilots asked Judge Sean Lane to put on hold temporarily his Sept. 5 ruling until a higher court hears its appeal to review his decision that allowed the company to cancel its labor agreement with pilots. The Sept. 5 decision authorized American Airlines to throw out its agreement with the Allied Pilots Association after the company changed its earlier proposal to remove all restrictions on its power to furlough pilots and to outsource flying via code-share agreements with other airlines. APA lawyer, Joshua Taylor, Esq., at Steptoe & Johnson LLP, in Washington, D.C., said a temporary suspension of Judge Lane's ruling is warranted to prevent "irreparable injury" to the pilots. Mr. Taylor said that with the court ruling, American Airlines can implement "dramatic changes" to the pilots' employment terms, which include replacing the medical plans for pilots and retirees. "While retired pilots currently receive health insurance from the company at no cost, American plans to terminate that coverage completely for pilots over 65," the lawyer said in court papers filed last week. APA seeks to have the case heard by the U.S. District Court for the Southern District of New York. The pilots' union wants the federal court to consider whether Judge Lane erroneously concluded that the changes to the agreement are necessary for American Airlines' restructuring. A group of pilots represented by New York-based Seham, Seham, Meltz & Petersen LLP also filed a motion to temporarily suspend the court order until its appeal is resolved. A court hearing to consider approval of the request is scheduled for 0ctober 9. Objections are due by October 2. In connection with the appeal, American Airlines and AMR Corp. filed court papers seeking court review if Judge Lane correctly concluded that they had met the requirements for rejection of the labor agreement. American Ready to Resume Talks In a related development, the pilots' union said American Airlines wants to resume talks, signaling the company's intent in resolving a stalemate with the union, Reuters reported. American Airlines spokesman Bruce Hicks confirmed the company had told the pilots' union in writing that it was ready to restart talks to try to reach a contract agreement, according to the report. About AMR Corp. 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. AMR'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: Appaloosa Said to Hold AMR, Us Airways Stake --------------------------------------------------------------- Appaloosa Management LP has positioned itself to benefit from a possible merger between AMR Corp. and US Airways Group Inc. after taking stakes in both airlines, Bloomberg News reported citing people familiar with the matter as its source. The hedge fund, which has amassed AMR debt that could be converted to equity in a Chapter 11 restructuring, favors consolidation and may opt later to push for a deal, according to the report. Appaloosa bought claims at AMR from Citigroup Inc. tied to aircraft leases. The hedge fund holds additional AMR debt the firm is not required to disclose and is one of the larger debt holders. Appaloosa has supported airline mergers because past combinations have boosted shares, according to the person familiar with the matter. US Airways Chief Executive Officer Doug Parker began pressing for a merger in January while AMR has resisted. AMR holds the exclusive right to offer a reorganization plan through year-end, so US Airways has not made a formal bid, Bloomberg News reported. About AMR Corp. 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. AMR'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: Secures $268-Mil. Aircraft Financing From RPK ---------------------------------------------------------------- American Airlines Inc. seeks approval from the U.S. Bankruptcy Court for the Southern District of New York to obtain financing of used aircraft from a subsidiary of RPK Capital Partners LLC. American Airlines did not disclose the amount to be financed under the RPK transaction in court filings. The proposed financing is governed by a loan agreement between the company and an RPK subsidiary, which was filed under seal to protect confidential information. According to Kate Stech at Dow Jones' Daily Bankruptcy Review, the proposed financing will total $268 million. The aircraft include two Boeing 777-200ER aircraft and eight Boeing 737-800 aircraft. The aircraft are subject to pre- bankruptcy mortgage loan facilities that are scheduled to mature between October 2012 and May 2013. The proposed financing, if approved, would allow American Airlines to refinance or repay some of the pre-bankruptcy loans secured by the aircraft, according to the court filing. "The aircraft that serve as collateral under each of the existing financings are valuable assets of the estate," said Alfredo Perez, Esq., at Weil Gotshal & Manges LLP, in New York. "The repayment of the existing loans and refinancing of the aircraft will result in a significant benefit to the debtors' estates and will enhance the prospect of a successful reorganization," Mr. Perez said. A court hearing to consider approval of the proposed financing is scheduled for Oct. 9. Objections are due by Oct. 2. About AMR Corp. 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. AMR'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: May Renew Chartis Insurance ---------------------------------------------- AMR Corp. received a go-signal to renew the insurance programs provided by Chartis Inc. The insurance programs include a workers' compensation program, which covers claims asserted by U.S.-based employees of American Airlines Inc., AMR Eagle Holding Corp. and other AMR subsidiaries. Chartis also provides general liability and auto liability coverage. The workers' compensation program to be renewed covers the period August 1, 2012, to July 31, 2013, while the two other insurance programs cover the period December 1, 2012, to November 30, 2013. About AMR Corp. 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. AMR'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: Wins OK to Pay Ad Hoc Creditors' Advisors ------------------------------------------------------------ AMR Corp. obtained court approval to pay the fees and work-related expenses of professionals hired by the ad hoc group of AMR creditors. The group hired Milbank Tweed Hadley & McCloy LLP as its legal counsel, and Houlihan Lokey Howard & Zukin as its financial adviser in connection with its plan to participate in the formulation of the company's Chapter 11 plan. Under the terms of an Aug. 28 letter agreement, Houlihan will get a monthly fee of $150,000 while the other firm will be paid at its standard hourly rates. AMR will also reimburse the firms for its work-related expenses. The group, which includes hedge-fund managers Carlson Capital LP and Claren Road Asset Management LLC, and JPMorgan Chase & Co., is interested in providing equity financing that would help AMR exit bankruptcy. The equity financing currently under consideration is between $1 billion and $2 billion. According to Bloomberg News, the Court's approval signals the continuation of American's negotiations with the group of creditors. Bloomberg News reported that American told the Court that negotiations with the group are an "integral part" of its effort to restructure and exit bankruptcy. Jack Butler, an attorney for AMR's Official Committee of Unsecured Creditors, which is separate from the JPMorgan group, told Judge Lane at the hearing that the fee agreement is a "highly desirable step forward" in the airline's bankruptcy, Bloomberg noted. Others are also interested in providing financing, he said, Bloomberg added. "The dialogue will go on with others," Bloomberg cited Mr. Butler as saying. About AMR Corp. 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. AMR'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: Arrivals Slow as Pilots Reminded of Oversight ---------------------------------------------------------------- Mary Schlangenstein at Bloomberg news reports that American Airlines' flight slowdown reached the two-week mark with fresh delays Sept. 28 even as U.S. regulators reminded pilots of the stepped-up surveillance under way at the bankrupt carrier. According to the report, a Federal Aviation Administration official commented on the surveillance in a response to an e-mailed question from an American pilot. With 920 flights tracked, the on-time rate was 63% as of 4:30 p.m. New York time, according to industry researcher FlightStats.com. The carrier, a unit of AMR Corp., threatened Sept. 27 to take legal action against the Allied Pilots Association if the slowdown didn't stop. The report relates that American's on-time performance began sliding on Sept. 14 after the airline imposed concessions on pilots to help it restructure under court protection. On-time arrivals dropped as low as 37% on Sept. 17, according to FlightStats, raising concern that passengers would shift to other airlines. The FAA surveillance covers "all regulatory requirements which are expected to be followed by the airline, as well as the maintenance and pilot groups," Skip Whitrock, who manages the AMR certificate management office for the FAA, said in the email, which was shared with other pilots Sept. 27 and confirmed by the FAA. Maintenance Reports The report notes that the oversight, which occurs for any bankrupt airline, includes watching for frivolous maintenance reports, misuse of a minimum equipment list that must be completed before each flight, lack of adequate maintenance, deliberate delays and other areas, Whitrock said. American, based in Fort Worth, Texas, had a 50% on time arrival rate Sept. 27, compared with 90% for Delta Air Lines Inc., 85% for Southwest Airlines Co. and 77% for United Continental Holdings Inc., according to FlightStats data. American threatened legal action against APA absent "an immediate, measurable improvement in our operations" because the slowdown is hurting it financially and alienating travelers, according to a Sept. 26 letter sent to the pilots' union by Denise Lynn, the airline's senior vice president for people. While the union has denied organizing or supporting any slowdown, APA President Keith Wilson told members late September 27 to stop immediately if they are doing anything to slow operations without good reason. 'Mechanical Discrepancies' The report discloses that on Sept. 28, Mr. Wilson said in a statement that pilots are required to list "all known mechanical discrepancies" in an airplane's logbook for corrective action and that failure to do so could result in a pilot's license being revoked or a safety risk. American Airlines pilots have encountered "a large number of serious maintenance-related issues" such as a broken pilot oxygen mask, a hydraulic leak in landing gear and fuel tank seepage, he said in the statement. Mr. Wilson Sept. 27 described Ms. Lynn's letter as "nothing short of a sucker punch" because it was received after union leaders had agreed to resume talks with American on a new labor agreement. 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. AMR'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: ST Investments Drop by $535-Mil. in August ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that AMR Corp.'s unrestricted cash and short-term investments fell by $535 million in August, the parent of American Airlines Inc. said in an operating report. According to the report, the net loss for the month was $82 million, according to the report filed Sept. 27 in U.S. Bankruptcy Court in Manhattan. Contributing to the loss were $53 million of interest expenses and $86 million in reorganization items, including $18 million in professional fees. Operating income was $55 million on operating revenue of $2.19 billion. The report relates that operating activities consumed $304 million in cash, according to the consolidated cash flow statement in the operating report. Cash and short-term investments of $4.84 billion at the end of July declined to $4.3 billion by Aug. 31. The Bloomberg report discloses that AMR had another $846 million in restricted cash. More AMR flights began arriving on time after the company threatened legal action against the pilots' union. 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. AMR'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 ARCHITECTURAL: Can Reject Subcontract With Skanska USA --------------------------------------------------------------- Glass Magazine reports that a bankruptcy judge, in a Sept. 18 decision, approved a motion allowing American Architectural Inc. to reject its subcontract with Skanska USA for glazing work at the World Trade Center PATH Hall Project. The report relates Skanska subcontracted AAI to provide ornamental glass railings, select storefronts, balanced doors, smoke baffles and other miscellaneous interior glazing products at the PATH Hall -- a contract amount of more than $6.2 million -- according to court documents. The report notes, as part of the subcontract rejection, AAI was ordered to deliver all materials and drawings, and to assign any and all sub-contracts and purchase orders for the project, as directed by Skanska. By Oct. 15, the two parties will resolve the amounts owed AAI under the PATH project subcontract, according to court documents. About American Architectural and Advanced Acquisitions Bensalem, Pennsylvania-based American Architectural, Inc., and Advanced Acquisitions, LLC, filed for Chapter 11 bankruptcy (Bankr. E.D. Pa. Case Nos. 12-15818 and 12-15819) on June 15, 2012. Judge Magdeline D. Coleman oversees the case. Maschmeyer Karalis P.C. serves as the Debtors' general bankruptcy counsel. Douglas Ziegler LLC serves as accountants. American Architectural provides quality building enclosures. Advanced Acquisitions is the beneficial owner of a 98,000 square feet facility in Bensalem, which houses AAI's offices and manufacturing plant. AAI has 49 employees. AAI completed work on many high profile projects in New York including, the AOL/Time Warner facility at Columbus Circle, the Lincoln Center, the Museum of Arts and Design, the New York Historical Society, and the JetBlue Terminal 5 at JFK International Airport, to name just a few of noteworthy projects. Recently, AAI completed the east coast's largest canopy for Goldman Sachs and has recently closed its fourth major World Trade Center rebuild project. The petitions were signed by John Melching, president and CEO. The Debtors listed assets of $3,874,952 and liabilities of $2,912,684. AMERICAN GREETINGS: Moody's Reviews 'Ba1' CFR/PDR for Downgrade --------------------------------------------------------------- Moody's Investors Service placed American Greetings Corp.'s ratings on review for downgrade following its announcement on Sept. 26 that a group led by Zev Weiss, CEO, and Jeffrey Weiss, COO, have offered to buy the company and take it private in a deal valued at about $580 million. The SGL-2 Speculative Grade Liquidity rating remains unchanged, but could change if and when a transaction is agreed to and the financial profile of the post transaction company becomes more clear. The Weiss brothers said that they expect that the various foundations and related entities and certain members of the family associated with the company would reinvest or rollover all or substantially all of their shares in the acquiring entity, and that it would obtain debt financing to fund the balance of the transaction. Based on the implied value of the company and considering an almost 10% ownership by the Weiss brother and associated family members, Moody's estimates that about $520 million of debt would be needed. "Based on this assumption, we expect debt to EBITDA would increase almost three turns to 5.5 times from 2.7 times," said Kevin Cassidy, Senior Credit Officer at Moody's Investors Service. "We also think retained cash flow to net debt would be significantly reduced to around 15% from almost 40%," he noted. The following ratings were placed on review for downgrade: Corporate Family Rating at Ba1; Probability of Default Rating at Ba1; $400 Million Secured Revolving Credit Facility Rating at Baa3; $225 Million Sir Unsecured Notes Rating at Ba2; Sr. Unsecured Shelf Rating at (P) Ba2 "The review will focus on the terms of any proposed transaction, the capital structure and expected financial policies," noted Cassidy. The review will also focus on the company's integration of Clinton Cards. American Greetings acquired about 400 Clinton Card stores in June, along with the namesake brand. The U.K. greeting card company is one of American Greetings' biggest customers, but ran into financial trouble before being acquired by American Greetings. Ratings Rationale American Greetings' current Ba1 Corporate Family Rating reflects the business risks inherent in the greeting card industry, which is characterized by low or in some cases declining growth rates, its modest size with revenue around $1.7 billion, integration issues with its recent acquisition of Clinton Cards, weak consumer branding and heavy competition. Prior to being placed under review, the rating had also reflected Moody's concern over the possibility of American Greetings being modestly more aggressive with shareholder returns after a couple of years of modest activity. The ratings are supported by the company's position in the U.S. greeting card industry as one of the two leading companies, its long operating history of over 100 years, predictable demand for its products, and important relationships with retail customers. A key element to American Greetings' rating is its efficient cost structure and recent strategic acquisitions and disposition of its US retail operations. This has resulted in strong credit metrics with debt/EBITDA around 2.5 times and retained cash flow/net debt of approximately 40%. Moody's believes stronger credit metrics are necessary to balance the mature nature of American Greetings' business. Prior to being placed under review, Moody's had expected credit metrics to weaken in 2013 as the company integrated Clinton Cards and builds a new corporate headquarter costing between $150 million and $200 million and finances more than half of the construction with debt. The remainder will be paid for with cash. The principal methodology used in rating American Greetings was Moody's Global Packaged Goods Industry methodology published in July 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. American Greetings Corporation is a leading developer, manufacturer and distributor of greeting cards and social expression products. Sales were approximately $1.7 billion for the twelve months ended May 25, 2012. AMERICAN GREETINGS: S&P Puts 'BB+' CCR on Watch on Going Private ---------------------------------------------------------------- Standard & Poor's Ratings Services placed all of its ratings on American Greetings Corp., including the 'BB+' corporate credit rating, on CreditWatch with negative implications, meaning S&P could lower or affirm the ratings following the completion of its review. The CreditWatch placement follows the company's announcement that Zev Weiss, its chief executive officer, and Jeffrey Weiss, its president and chief operating officer, on behalf of themselves and certain other members of the Weiss family and related parties, intend to acquire all remaining outstanding Class A and Class B common shares of American Greetings for $17.18 per share. The Weiss family currently controls about 50% of the voting power between the A and B shares. The Weiss family has indicated that some existing shareholders would likely reinvest or rollover their shares as part of this buyout. They would obtain debt financing to fund the balance of the transaction," S&P said. "If the transaction were to be completed, we believe American Greetings' credit metrics would weaken as a result of a likely increase in leverage, although we don't have the financing plans at this time," said Standard & Poor's credit analyst Stephanie Harter. "Currently, leverage as measured by the ratio of debt to EBITDA (pro forma for the recent Clinton Cards PLC acquisition) is about 3x (including a significant adjustment for operating leases), which is at the high end of our range of between 2x-3x for an 'intermediate' financial risk profile. Given our assessment of the company's business risk profile as 'fair,' additional leverage as a result of the proposed management buyout is likely to result in a downgrade." Standard & Poor's will resolve the CreditWatch when more information regarding the transaction and related financing becomes available. "We will then assess the company's financial policy and the impact of the company's new capital structure on existing ratings," S&P said. AMERICAN WEST: Court Wants Chapter 11 Plan Amended -------------------------------------------------- Tim O'Reiley at Las Vegas Review-Journal reports that U.S. Bankruptcy Court Judge Mike Nakagawa found several flaws tied to a trust fund created by American West Development's reorganization plan that will compensate buyers for construction defects. The report notes American West will have the opportunity to rework provisions, but no timetable was laid out. "We were pleased with the clear direction," the report quotes American West President Robert Evans as saying. "We finally have direction about how to clean up the process and get the plan confirmed." According to the report, the office of the U.S. Trustee, an arm of the Department of Justice that monitors the bankruptcy process, had raised objections to explanations provided to homeowners about how the trust would be funded, plus legal protections granted to people not in bankruptcy. That would included company founder and owner Lawrence Canarelli. The report notes certain changes involving the insurance policies that will back the defect fund came after creditors voted on the plan, so they did not have all the information they needed for their decisions. The report adds the new vote would not only include the insurance information but a chart to make it understandable to homeowners not familiar with legal language. The report relates Judge Nakagawa also found that a permanent injunction preventing outsiders from legally pursuing people tied to the company or the administrator of the defect fund was too broad under current law. According to the report, despite the ruling, most of the plan came through intact. The basic provisions, which were worked out before the bankruptcy, call for slashing $177.5 million in debt to $49.6 million, which will mature at the end of 2015. As part of the deal, lenders agreed to waive a $127.9 million deficiency claim to free cash to repay suppliers and others with unsecured claims. Mr. Canarelli will retain control of America West in return for injecting $10 million, of which $1.5 million will go to unsecured creditors. That group, the report says, would include any American West homeowners that can prove they have met all the requirements of the price promise or price guarantee the company promoted during the recession as a marketing tool to try to comfort buyers who feared falling prices. Another $1.5 million from Mr. Canarelli will go into the defect fund. Home buyers, according to the report, will receive at least $200 and probably less than $300 if they agree not to pursue their complaints further. Buyers who consider that compensation too little will be funneled into the fund, to be run by former homebuilder James L. Moore, and not allowed to go to court. The report relates Mr. Axelrod said 86% of the homeowners voted in favor of this plan. American West estimated in court documents that the defects could amount to as much as $80 million but will probably run less than $20 million. About American West American West Development, Inc. -- fdba Castlebay 1, Inc., et al. -- is a homebuilder in Las Vegas, Nevada, founded on July 31, 1984. Initially, AWDI was known as CKC Corporation, but later changed its name. AWDI filed for Chapter 11 bankruptcy protection (Bankr. D. Nev. Case No. 12-12349) on March 1, 2012. Judge Mike K. Nakagawa presides over the case. Brett A. Axelrod, Esq., and Micaela Rustia Moore, Esq., at Fox Rothschild LLP, serve as AWDI's bankruptcy counsel. Nathan A. Schultz, P.C., is AWDI's conflicts counsel. AWDI hired Garden City Group as its claims and notice agent. American West disclosed $55.39 million in assets and $208.5 million in liabilities as of the Chapter 11 filing. James L. Moore, as future claims representative in the Chapter 11 case of American West Development, Inc., tapped the law firm of Field Law Ltd. as his counsel. ASIA INTERNATIONAL: Case Summary & 19 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Asia International Malls, Inc. 107 Fairway Terrace Mount Laurel, NJ 08054 Bankruptcy Case No.: 12-33409 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court District of New Jersey (Camden) Judge: Judith H. Wizmur Debtor's Counsel: Phong N. Tran, Esq. TRAN AND TRAN PC 107 Fairway Terrace Mount Laurel, NJ 08054 Tel: (856) 722-1100 Fax: (856) 787-0267 E-mail: jnt@tntpclaw.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $10,000,001 to $50,000,000 A copy of the Company's list of its 19 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/njb12-33409.pdf The petition was signed by Phong N. Tran, president. ATP OIL: Moncrief Has Option to Buy Mediterranean Sea Investment ---------------------------------------------------------------- Effective Sept. 18, 2012, ATP East Med Number 1 B.V., a wholly owned, indirect subsidiary of ATP Oil & Gas Corporation, entered into an agreement with Moncrief Oil International Inc. pursuant to which ATP East Med granted to Moncrief, or an affiliate of Moncrief, an option for 90 days to purchase all of ATP East Med's working interests in properties located in the Mediterranean Sea. The Option Agreement also provides that the Company, subject to certain conditions, will sell to Moncrief all of its working interests in the same properties. The Option Agreement provides for a number of conditions, including (i) a mutually agreeable purchase and sale agreement containing normal and customary representations and warranties and indemnification provisions, (ii) satisfactory diligence, (iii) consent by the other working interest owners and (iv) Bankruptcy Court approval. If consummated, Moncrief will pay to ATP East Med an amount equal to all of ATP East Med's expenses incurred with respect to the Interests, with a portion of that amount being distributed to ATP East Med's trade creditors and other portions of that amount being distributed to ATP East Med over a 180 day period. Moncrief may terminate the Option Agreement at any time without penalty if in its sole opinion the investment is not sound technically or commercially or it is unlikely to receive necessary approvals from the other working interest owners or the Israeli Ministry of Energy and Water Resources. ATP East Med may terminate the Option Agreement at any time without penalty if an Israeli court issues an order requiring that all or any part of the Interests be sold to another party. ATP East Med was not a party to the bankruptcy filing. A copy of the Option Agreement is available for free at: http://is.gd/ct1CAZ About ATP Oil Houston, Tex.-based ATP Oil & Gas Corporation is an international offshore oil and gas development and production company focused in the Gulf of Mexico, Mediterranean Sea and North Sea. ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP, serve as bankruptcy counsel. Munsch Hardt Kopf & Harr, P.C., is the conflicts counsel. Opportune LLP is the financial advisor and Jefferies & Company is the investment banker. Kurtzman Carson Consultants LLC is the claims and notice agent. ATP disclosed assets of $3.6 billion and $3.5 billion of liabilities as of March 31, 2012. Debt includes $365 million on a first-lien loan where Credit Suisse AG serves as agent. There is $1.5 billion on second-lien notes with Bank of New York Mellon Trust Co. as agent. ATP's other debt includes $35 million on convertible notes and $23.4 million owing to third parties for their shares of production revenue. Trade suppliers have claims for $147 million, ATP said in a court filing. ATP reported a net loss of $145.1 million in the first quarter on revenue of $146.6 million. Income from operations in the quarter was $11.8 million. For 2011, the net loss was $210.5 million on revenue of $687.2 million. An official committee of unsecured creditors has been appointed in the case. ATWATER, CA: Could Be Fourth Bankrupt California City ----------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Atwater could be the fourth California city to seek municipal bankruptcy protection this year. According to the report, located about 100 miles (160 kilometers) southeast of San Francisco, the city of 28,000 has a $3.8 million budget deficit brought on by lower revenue and rising costs. The Bloomberg report discloses that there is a $2 million bond payment due in November and an Oct. 3 vote on a fiscal emergency by the city council. Previous California cities that have sought court protection under Chapter 9 of the U.S. Bankruptcy Code are Stockton, Mammoth Lakes and San Bernardino. AUTO CARE: HIring Patrick Calhoun as Bankruptcy Counsel ------------------------------------------------------- Auto Care Mall of Fremont Inc. asks the U.S. Bankruptcy Court for the Northern District of California for authority to employ Patrick Calhoun, Esq., as counsel. The professional services to be rendered include: (a) to give Debtor legal advice with respect to its powers and duties as debtor in possession in the continued operation of its business and management of its property; (b) to take necessary action to avoid liens against Debtor's property obtained by attachment by any creditors within 90 days before filing of the said petition under Chapter 11; (c) to represent the Debtor in connection with reclamation proceedings if instituted in the Court by creditors; (d) to prepare on behalf of Debtor necessary applications, answers, orders, reports and other legal papers; and (e) to perform all other legal services for Debtor which may be necessary. The Debtor believes Patrick Calhoun does not now hold nor represent interests adverse to that of the Debtor or the Debtor's estate and that each attorney at the Law Office of Patrick Calhoun is a "disinterested person" within the meaning of 11 U.S.C. Sec. 101(14). The individuals presently designated to represent the Debtor and their hourly rates are: Patrick Calhoun $400 Senior Associates $295 Associate Attorneys $275 About Auto Care Mall of Fremont Auto Care Mall of Fremont, Inc., in San Jose, California, filed for Chapter 11 bankruptcy (Bankr. N.D. Calif. Case No. 12-56050) on Aug. 15, 2012. Judge Stephen L. Johnson presides over the case. The Law Office of Patrick Calhoun, Esq., serves as the Debtor's counsel. The Debtor scheduled $13,400,000 in assets and $11,119,045 in liabilities. The petition was signed by Gina Baumbach, vice president. On May 18, 2012, at the behest of the secured lender, Bank of Marin, the Alameda County Superior Court of the State of California appointed Susan L. Uecker as receiver to the Debtor's real property commonly known as 40851-40967 Albrae Street, in Fremont, California. The Superior Court appointed the receiver to address the Debtor's mismanagement and misappropriation of the bank's cash collateral. The property is improved with four single story warehouse buildings totaling 38,226 square feet and is occupied exclusively with auto service related businesses. The property consists of 15 units, three of which are currently vacant. The property generates monthly rents totaling roughly $34,492 in addition to common area maintenance charges totaling $8,235. According to Bank of Marin, the Debtor owes the bank roughly $6.5 million under two prepetition promissory notes. The Debtor's Schedule D identifies a judgment lien against the property held by Bank of America to secure a $6 million claim scheduled by the Debtor as a non-contingent, liquidated, and undisputed held by Bank of America. The Debtor's Schedules D identifies non- contingent, liquidated and undisputed claims totaling $11.105 million that encumber the property, which the Debtor values at $7.4 million. BANKERS FOR REAL ESTATE: Case Summary & 5 Unsecured Creditors ------------------------------------------------------------- Debtor: Bankers For Real Estate, LLC c/o Nyberg Financial, Inc. 2163 Newcastle Avenue, Suite 150 Cardiff, CA 92007 Bankruptcy Case No.: 12-12981 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court Southern District of California (San Diego) Judge: Margaret M. Mann Debtor's Counsel: Ajay Gupta, Esq. GUPTA LEGAL CENTER 402 West Broadway, Suite 400 San Diego, CA 92101 Tel: (619) 866 3444 Fax: (619) 330 2055 E-mail: ajay@guptalc.com Scheduled Assets: $5,754,700 Scheduled Liabilities: $5,316,600 A copy of the Company's list of its five unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/casb12-12981.pdf The petition was signed by Tamer Salameh, managing member. BAPCO LLC: Case Summary & 3 Largest Unsecured Creditors ------------------------------------------------------- Debtor: BAPCO LLC P.O. Box 5479 Bremerton, WA 98312 Bankruptcy Case No.: 12-19797 Chapter 11 Petition Date: September 26, 2012 Court: United States Bankruptcy Court Western District of Washington (Seattle) Judge: Karen A. Overstreet Debtor's Counsel: Jeffrey B. Wells, Esq. 500 Union St., Suite 502 Seattle, WA 98101 Tel: (206) 624-0088 E-mail: paralegal@jeffwellslaw.com Scheduled Assets: $666,443 Scheduled Liabilities: $3,900,391 A copy of the Company's list of its three unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/wawb12-19797.pdf The petition was signed by Paul Pazooki, managing member. BEALL CORP: Sec. 341 Creditors' Meeting Set for Oct. 30 ------------------------------------------------------- The U.S. Trustee in Portland, Oregon, will hold a Meeting of Creditors pursuant to 11 U.S.C. Sec. 341(a) in the Chapter 11 case of Beall Corporation on Oct. 30, 2012, at 1:00 p.m. at UST1, US Trustee's Office, in Portland, Rm 223. Proofs of claim are due by Jan. 28, 2013. Portland, Oregon-based Beall Corporation, a manufacturer of lightweight, efficient, and durable tanker trucks, trailers and related products, filed a Chapter 11 bankruptcy petition (Bankr. D. Ore. Case No. 12-37291) on Sept. 24, 2012, estimating at least $10 million in assets and liabilities. Founded in 1905, Beall has four factories and nine sale branches across the U.S. The Debtor has 285 employees, with an average weekly payroll of $300,000. Judge Elizabeth L. Perris presides over the case. The Debtor has tapped Tonkon Torp LLP as counsel. BEAZER HOMES: Inks $150-Mil. Credit Facility with Credit Suisse --------------------------------------------------------------- Beazer Homes USA, Inc., on Sept. 24, 2012, entered into a $150 million, three-year amended and restated senior secured revolving credit facility with Credit Suisse AG, Cayman Islands Branch, as agent. The Credit Facility will replace the Company's existing $22 million senior secured revolving credit facility, and will be used for general corporate purposes of the Company and its subsidiaries. The Company may request increases in the amount of the Credit Facility up to $200 million, subject to the availability of additional commitments. Substantially all of the Company's subsidiaries are guarantors of the obligations under the Credit Facility. The Company's ability to access borrowings under the Credit Facility is subject to its completion of certain post-closing obligations with respect to mortgages on its real property, which are required to be completed within 90 days of the date of the Credit Facility. The Credit Facility will mature and all amounts outstanding thereunder will be due and payable on Sept. 24, 2015. A copy of the 2nd Amended Credit Agreement is available at: http://is.gd/kwY68D About Beazer Homes Beazer Homes USA, Inc. (NYSE: BZH) -- http://www.beazer.com/-- headquartered in Atlanta, is one of the country's 10 largest single-family homebuilders with continuing operations in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, New Jersey, New Mexico, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, and Virginia. Beazer Homes is listed on the New York Stock Exchange under the ticker symbol "BZH." The Company's balance sheet at June 30, 2012, showed $1.82 billion in total assets, $1.64 billion in total liabilities, and $179.07 million in total stockholders' equity. * * * Beazer carries (i) a 'B-' issuer credit rating, with "negative" outlook, from Standard & Poor's, (ii) 'Caa2' probability of default and corporate family ratings from Moody's, and (iii) 'B-' issuer default rating from Fitch Ratings. Moody's said in July 2012 that the 'Caa2' CFR reflects Moody's expectation that Beazer's operating and financial performance, while improving, will remain weak through fiscal 2013. Moody's expects that Beazer's cash flow generation will continue to be weak in fiscal 2012 and 2013. "Our current rating outlook on Beazer is negative. We would consider a downgrade if the company's EBITDA growth fails to meet our expectations or if the downturn in the housing market lingers longer than we expect and unit volume remains depressed," S&P said in July 2012. As reported by the TCR on Sept. 10, 2012, Fitch Ratings has upgraded the Issuer Default Rating (IDR) of Beazer Homes USA, Inc. (NYSE: BZH) to 'B-' from 'CCC'. The upgrade and the Stable Outlook reflect Beazer's operating performance so far this year, its robust cash position, and moderately better prospects for the housing sector during the remainder of this year and in 2013. The rating is also supported by the company's execution of its business model, land policies, and geographic diversity. BENADA ALUMINUM: Sells Unused Aluminum Press for $2.9 Million ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Benada Aluminum Products LLC was authorized by the bankruptcy judge at a Sept. 25 hearing to sell an aluminum extrusion press for $2.9 million to Tubelite Inc. According to the report, the press was Benada's fourth and wasn't in use. Wells Fargo Bank NA, owed $7 million on a revolving credit and term loan, and FLT Capital LLC, a part owner and owed $2 million on a secured obligation, agreed to selling the press. The report notes that a lawyer for Benada said at a hearing this week that there are discussions with the lenders about stretching out their debt. About Benada Benada Aluminum Products LLC was formed in 2011 to purchase assets of two aluminum products manufacturing companies. It purchased via 11 U.S.C. Sec. 363 the Sanford facility of Florida Extruders International (Case No. 08-07761). It also purchased the assets Miami, Florida-based Benada Aluminum of Florida Inc. The Debtor has since consolidated operations and operates only out of its location in Sanford. The Company filed for Chapter 11 protection on Aug. 1, 2012 (Bankr. M.D. Fla. Case No. 12-10518). Judge Karen S. Jennemann presides over the case. R. Scott Shuker, Esq., at Latham Shuker Eden & Beaudine LLP, represents the Debtor. The Debtor estimated between $10 million and $50 million in assets and debts. Wells Fargo is represented by Michael Demont, Esq., and Jay Smith, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida. FTL Capital is represented by Christopher J. Lawhorn, Esq., at Bryan Cave LLP in St. Louis, Missouri. BIG SANDY: To Sell Mile High Bank Via Chapter 11 ------------------------------------------------ Mile High Banks disclosed an agreement under which it is to be simultaneously sold and recapitalized with up to $90 million in new capital, positioning the Bank to meet the capital requirements set by its banking regulators and to resume making loans to customers in Colorado. Under the agreement, all of the Bank's stock is to be purchased by Strategic Growth Bancorp Incorporated, a bank holding company with banking locations in Texas and New Mexico. The agreement calls for a purchase price of $5.5 million, subject to a court-ordered competitive bidding process, in addition to the infusion of up to $90 million in new capital into the Bank. "This transaction is the most effective way to recapitalize and position the Bank to meet its regulatory requirements and have the capital it will need in order to grow and resume making loans to its community - all without financial assistance from the government or taxpayers," said Dan Allen, president and chief executive officer of the Bank and Big Sandy Holding Company. "For more than two years, the Bank has been hampered in its efforts to make new loans because of our low capital levels, but the recapitalization will position the Bank to resume lending to customers and to once again compete strongly for banking business in the Front Range and Eastern Plains communities in Colorado." The Bank's current owner, Big Sandy Holding Company, will ask for court approval to sell the Bank's common stock to SGB, with SGB simultaneously investing the additional capital in the Bank. This process will be conducted under the supervision of the U.S. Bankruptcy Court for the District of Colorado following a voluntary Chapter 11 filing by the Holding Company. As part of the process, other qualified bidders will be given the opportunity to submit competing bids for the Bank stock being sold, and any qualified bidder would also be required to recapitalize the Bank to an appropriate level and demonstrate the ability to promptly receive the required regulatory approvals. Mile High Banks will continue to operate as before, without interruption, as the Holding Company's filing will not include the Bank. The Bank operates separately and independently from the Holding Company. "Mile High Banks will continue to offer the same protections to its depositors as before, and customers will continue to have full access to their accounts throughout this recapitalization process," said Allen. "Our offices will remain open as usual. Our customers can rest assured that their deposits continue to be insured to FDIC limits." Keefe, Bruyette & Woods, Inc. served as financial advisor to the Bank, and Ernie Panasci with Jones & Keller P.C. served as legal counsel to the Bank and special regulatory counsel to the Holding Company. Mile High Banks is a Colorado chartered commercial bank whose principal office is located in Longmont, Colorado, and it has 13 banking locations located along the Front Range and Eastern Plains of Colorado. BRAND ENERGY: Moody's Affirms 'B3' CFR/PDR; Outlook Stable ---------------------------------------------------------- Moody's Investors Service changed Brand Energy & Infrastructure Services, Inc.'s rating outlook to stable from negative, since it is removing a liquidity constraint by refinancing its near-term bank debt, resulting in an extended maturity profile. Moody's assigned a B2 rating to the company's proposed senior secured bank credit facility. Proceeds and some cash on hand will be used to pay off Brand's existing $688 million 1st Lien Term Loan maturing February 2014, to pay down the 2nd Lien Term Loan by $65.8 million, and to pay related interest, fees and expenses. Moody's also affirmed Brand's B3 Corporate Family and Probability of Default Ratings. The following ratings/assessments were affected by this action: Corporate Family Rating affirmed at B3; Probability of Default Rating affirmed at B3; 1st Lien Sr. Secured Revolving Credit Facility due 2014 (springing maturity) rated B2 (LGD3, 39%); 1st Lien Sr. Secured LC Facility due 2014 (springing maturity) rated B2 (LGD3, 39%); 1st Lien Sr. Secured Term Loan due 2014 (springing maturity) rated B2 (LGD3, 39%); and, 2nd Lien Sr. Secured Term Loan due 2015 affirmed at Caa2 (LGD5, 89%). Ratings Rationale The change in Brand's rating outlook to stable from negative incorporates Moody's view that the company is removing a liquidity constraint by refinancing its near-term bank debt with a new bank credit facility, effectively extending its nearest maturity to November 2014. The proposed revolver credit facility would be extended to 2017 and the proposed LC Facility and Term Loan would each be extended to 2018 if Brand's 2nd Lien Term Loan maturing in February 2015 is refinanced prior to November 2014. The B2 rating assigned to the proposed senior secured bank credit facility, one notch above the corporate family rating, reflects its position as the most senior committed debt in Brand's capital structure and the priority of payment relative to the company's more junior commitments. The proposed bank credit facility will have a first priority security interest in substantially all of the company's domestic assets and 65% of the capital stock of the company's first-tier foreign subsidiaries. It will be comprised of a $75 million revolving credit facility, a fully funded $50 million letter of credit facility, and a $700 million term loan. Moody's notes that LCs issued under this new facility will be fully cash collateralized and in the event any outstanding LC is drawn on, the resulting draw will be supported by cash held in a restricted account under the exclusive control of the Agent. The revolving credit facility and letter of credit facility will replace Brand's existing revolver and LC facilities. Proceeds from the term loan and some cash on hand will be used to pay off Brand's existing $688 million 1st Lien Term Loan maturing February 2014, to pay down the 2nd Lien Term Loan by $65.8 million, and to pay related interest, fees and expenses. The ratings assigned to the existing 1st lien bank credit facilities will be withdrawn upon closing. Brand's B3 Corporate Family Rating remains constrained by its highly leveraged capital structure. Brand's ability to generate meaningful levels of earnings and free cash flow relative to the amount of debt on its balance sheet remains limited. Brand's debt leverage and interest coverage credit metrics will remain stressed. Following the proposed transaction, pro forma debt-to- EBITDA for the 12 months ended June 30, 2012 will improve to about 6.3 times from 6.6 times. However, interest coverage defined as (EBITDA-CAPEX)-to-interest expense will deteriorate modestly to 1.3 times from 1.5 times for the same period (all ratios incorporate Moody's standard adjustments). Cash interest payments will increase by $10 million, which is very manageable for the company. Nevertheless, Moody's recognizes Brand's operational improvement and expansion across key end markets driven by increased customer spending and share gains. Moody's also anticipates the company should benefit from capital project wins in the refining and chemical end markets, the main drivers of Brand's revenues. Positive rating actions could ensue if Brand demonstrates that its recent operational improvement is sustainable and that it can generate significant levels of operating earnings and free cash flow. Debt-to-EBITDA trending towards 5.5 times or (EBITDA-CAPEX)- to-interest expense sustained above 2.0 times (all ratios incorporate Moody's standard adjustments) could result in upwards ratings movement. Negative rating pressures could result from Brand's liquidity profile becoming constrained or its financial performance deteriorating such that debt-to-EBITDA nears 7.0 times or (EBITDA- CAPEX)-to-interest expense falls towards 1.0 times (all ratios incorporates Moody's standard adjustments). The principal methodology used in rating Brand was the Global Business & Consumer Service Industry Rating Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Brand Energy & Infrastructure Services, Inc., headquartered in Kennesaw, GA, is the largest multi-craft specialty services company in North America. It provides scaffolding, insulation, coatings and other services supporting the refining, chemical and power industries. First Reserve Corporation, through affiliated funds, is the majority owner of Brand. Revenues for the last twelve months through June 30, 2012 totaled about $1.6 billion. BRISTOW GROUP: Moody's Rates $425-Mil. Sr. Unsec. Note Issue Ba3 ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Bristow Group Inc.'s proposed $425 million senior unsecured note issue. Bristow's other ratings were unchanged. The outlook is stable. Net proceeds from this note offering will be used to refinance Bristow's existing $350 million 7.5% senior unsecured notes through a tender offer and/or redemption process, and for general corporate purposes including repayment of other indebtedness. "We view this largely debt-for-debt refinancing transaction to be credit neutral to Bristow's ratings," said Sajjad Alam, Moody's Analyst. Issuer: Bristow Group Inc. Assignments: US$225M Senior Unsecured Regular Bond/Debenture, Assigned Ba3 US$200M Senior Unsecured Regular Bond/Debenture, Assigned Ba3 US$225M Senior Unsecured Regular Bond/Debenture, Assigned a range of LGD5, 74 % US$200M Senior Unsecured Regular Bond/Debenture, Assigned a range of LGD5, 74 % Downgrades: US$350M 7.5% Senior Unsecured Regular Bond/Debenture, Downgraded to a range of LGD5, 74 % from a range of LGD5, 73% Ratings Rationale Bristow's Ba2 CFR reflects its significant market position as a helicopter transportation service provider to the offshore energy industry, the global scope of its operations, the intrinsic value in its mostly owned fleet of helicopters and good liquidity. With 559 aircraft (365 owned, including the recently acquired helicopters from VIH) in 20 countries Bristow ranks as one of the two top players in most major offshore markets and has long standing relationships with a diverse group of large companies engaged in the exploration, development and production of oil and gas. The rating also benefits from the continued strength in global offshore demand for medium and heavy helicopters, particularly for use in the deepwater segment, for which the majority of Bristow's new aircraft are suited. The Ba2 rating is tempered by Bristow's indirect exposure to oil prices and to the cyclical nature of the oilfield services sector, the capital intensity of its operations and the relatively long (up to18-24 months) timeframe between the order of new helicopters and their deployment in revenue generating operations. Under Moody's Loss Given Default Methodology (LGD), the senior unsecured notes are notched down from the CFR because of their subordination to a substantial amount of prior ranking secured debt. The new notes will rank pari passu with the existing $350 million 7.5% notes (which are being tendered) and be issued under a largely similar indenture. The $242.5 million secured term loan and $200 million secured revolver are rated Ba1, one notch above the CFR given their preferential claim to Bristow's assets. The credit facilities are secured by Bristow's US assets, including cash and cash equivalents, accounts receivable, inventories, non- aircraft equipment, prepaid expenses and other intangibles assets, and the capital stock of certain domestic and international subsidiaries. However, the majority of the company's helicopter fleet is owned by, and the consolidated cash flows are generated by, the international non-guarantor subsidiaries. Bristow should have good liquidity through the end of 2013, which is captured in Moody's SGL-2 Speculative Grade Liquidity rating. At June 30, 2012 the company had $227 million of balance sheet cash and revolver availability of $160 million. Cash flow from operations, cash on hand and revolver availability should cover Bristow's capital commitments through 2013, including new aircraft purchases. The company should have sufficient headroom under its two financial covenants (maximum debt/EBITDA of 4x and minimum interest coverage of 3x) governing the credit facilities. Moody's notes that there is substantial value in Bristow's owned aircraft, which are well maintained and retain strong resale value over many years, typically even in weak economic times. The stable outlook reflects Moody's expectation that demand in the offshore helicopter markets will remain robust and that Bristow will manage the growth and operations of its helicopter fleet without increasing leverage. The ratings could be upgraded if Bristow can sustain adjusted debt/EBITDA below 2.5x and keep its significant market position and high fleet utilization. The CFR and/or outlook could come under downward pressure if adjusted debt/EBITDA remains elevated above 3.5x during an upcycle. Any significant debt financed growth or shareholder distributions may also negatively impact the rating. The principal methodology used in rating Bristow Group was the Global Oilfield Services 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. Bristow Group Inc. headquartered in Houston, Texas, is a leading provider of helicopter transportation services to the oil and gas industry worldwide. BRISTOW GROUP: S&P Gives 'BB' Rating on $425MM Sr. Unsecured Notes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB' issue rating to Bristow Group Inc.'s proposed $425 million senior unsecured note offering. "We have assigned a '4' recovery rating to this debt, indicating our expectation of average (30% to 50%) recovery, albeit at the low end of this range, in the event of payment default. Our 'BB' corporate credit rating and negative outlook on the company remains unchanged," S&P said. Bristow plans to use the proceeds to redeem its $350 million of senior unsecured notes due 2017 and for general corporate purposes, including repayment of other debt. As of June 30, 2012, Bristow had slightly more than $1 billion of Standard & Poor's adjusted debt. "The ratings on Houston-based Bristow Group Inc. (Bristow) reflect Standard & Poor's Ratings Services' view of its participation in the highly cyclical and volatile oil and gas industry, exposure to weather and seasonal fluctuations that might limit flight hours, aggressive financial policy, and the capital spending needs inherent in the aviation industry. Our ratings also reflect that Bristow's earnings and funds from operations (FFO) tend to be more stable than its oilfield services peers' due to contract structure, geographic diversity, and its mostly production- oriented (versus development work for exploration and production companies). We consider Bristow's business risk to be 'fair', its financial risk to be 'aggressive', and sources of liquidity to be 'adequate,'" S&P said. RATINGS LIST Bristow Group Inc. Corporate credit rating BB/Negative/-- New Rating Senior unsecured Proposed $200 mil notes due 2022 BB Recovery rating 4 Proposed $225 mil notes due 2020 BB Recovery rating 4 BROADVIEW NETWORKS: Bingham Approved as Regulatory Counsel ---------------------------------------------------------- The Hon. Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York authorized Broadview Networks Holdings, Inc., et al., to employ the law firm of Bingham McCutchen LLP as special regulatory counsel. Bingham will assist the Debtors: a) in matters related to compliance with the requirements of various regulatory commissions and authorities as the Federal Communications Commission and state public utility commissions; and b) by providing ongoing representation and advice, including with respect to litigation in connection with various telecommunications regulatory matters. The Debtors noted that they have applied, or intend to apply, to the Court to employ (a) Willkie Farr and Gallagher LLP as general bankruptcy counsel; (b) Kurtzman Carson Consultants LLC, as claims and noticing agent; (c) Evercore Group L.L.C. as investment banker and financial advisor; and (d) Ernst & Young LLP, as independent auditor, to the Debtors. The Debtors believe that the services of Bingham will not duplicate the services that other professionals will be providing to the Debtors in the Chapter 11 cases. The Bingham attorneys leading the engagement are Catherine Wang and Eric Branfman, both partners, Danielle Burt, of counsel, and Denise Wood, an associate. Additional attorneys will likely be staffed to represent the Debtors. The professionals who will be involved in providing services as special regulatory counsel to the Debtors have current standard hourly rates ranging between $390 and $890. Legal assistants that likely will assist in the Chapter 11 cases have standard hourly rates ranging between $200 and $300. To the best of the Debtors' knowledge, Bingham represents no adverse interest to the Debtors that would preclude Bingham from acting as counsel to the Debtors in matters relating to FCC and PUC regulatory issues. About Broadview Networks Rye Brook, N.Y.-based Broadview Networks Holdings, Inc., is a communications and IT solutions provider to small and medium sized business ("SMB") and large business, or enterprise, customers nationwide, with a historical focus on markets across 10 states throughout the Northeast and Mid-Atlantic United States, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. Broadview Networks and 27 affiliates on Aug. 22, 2012, sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-13579) with a plan that will eliminate half of the debt under the Company's existing senior secured notes and lower interest expense by roughly $17 million annually. The Company's restructuring counsel is Willkie Farr & Gallagher LLP and its financial advisor is Evercore Group, L.L.C. Bingham McCutchen LLP is the special regulatory counsel. Kurtzman Carson Consultants is the claims and notice agent. The restructuring counsel for the ad hoc group of noteholders is Dechert LLP and their financial advisor is FTI Consulting. The Prepackaged Plan provides, among other things (i) holders of senior secured notes aggregating $317.1 million, will recover 100% of their claims; and holders of general unsecured claims estimated at $25 million to $27 million will be paid in full in cash or will have their claims reinstated as of the Effective Date. BROADVIEW NETWORKS: Evercore Group Approved as Investment Banker ---------------------------------------------------------------- The Hon. Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York authorized Broadview Networks Holdings, Inc., et al., to employ Evercore Group LLC as investment banker and financial advisor. As reported in the Troubled Company Reporter on Aug. 30, 2012, Evercore Group will serve as investment banker and financial advisor for a monthly fee of $150,000 and a $3.2 million restructuring fee. About Broadview Networks Rye Brook, N.Y.-based Broadview Networks Holdings, Inc., is a communications and IT solutions provider to small and medium sized business ("SMB") and large business, or enterprise, customers nationwide, with a historical focus on markets across 10 states throughout the Northeast and Mid-Atlantic United States, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. Broadview Networks and 27 affiliates on Aug. 22, 2012, sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-13579) with a plan that will eliminate half of the debt under the Company's existing senior secured notes and lower interest expense by roughly $17 million annually. The Company's restructuring counsel is Willkie Farr & Gallagher LLP and its financial advisor is Evercore Group, L.L.C. Bingham McCutchen LLP is the special regulatory counsel. Kurtzman Carson Consultants is the claims and notice agent. The restructuring counsel for the ad hoc group of noteholders is Dechert LLP and their financial advisor is FTI Consulting. The Prepackaged Plan provides, among other things (i) holders of senior secured notes aggregating $317.1 million, will recover 100% of their claims; and holders of general unsecured claims estimated at $25 million to $27 million will be paid in full in cash or will have their claims reinstated as of the Effective Date. BROADVIEW NETWORKS: KCC Approved as Claims and Noticing Agent ------------------------------------------------------------- The Hon. Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York authorized Broadview Networks Holdings, Inc., et al., to employ Kurtzman Carson Consultants as claims and notice and administrative agent. Prior to the Petition Date, the Debtors provided KCC with a retainer in the amount of $15,000. KCC will apply any remaining amounts of its prepetition retainer as a credit toward postpetition fees and expenses. About Broadview Networks Rye Brook, N.Y.-based Broadview Networks Holdings, Inc., is a communications and IT solutions provider to small and medium sized business ("SMB") and large business, or enterprise, customers nationwide, with a historical focus on markets across 10 states throughout the Northeast and Mid-Atlantic United States, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. Broadview Networks and 27 affiliates on Aug. 22 sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-13579) with a plan that will eliminate half of the debt under the Company's existing senior secured notes and lower interest expense by roughly $17 million annually. The Company's restructuring counsel is Willkie Farr & Gallagher LLP and its financial advisor is Evercore Group, L.L.C. Bingham McCutchen LLP is the special regulatory counsel. Kurtzman Carson Consultants is the claims and notice agent. The restructuring counsel for the ad hoc group of noteholders is Dechert LLP and their financial advisor is FTI Consulting. The Prepackaged Plan provides, among other things (i) holders of senior secured notes aggregating $317.1 million, will recover 100% of their claims; and holders of general unsecured claims estimated at $25 million to $27 million will be paid in full in cash or will have their claims reinstated as of the Effective Date. BROADVIEW NETWORKS: Willkie Farr Approved as Bankruptcy Counsel --------------------------------------------------------------- The Hon. Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York authorized Broadview Networks Holdings, Inc., et al., to employ Willkie Farr & Gallagher LLP under a general retainer as bankruptcy counsel. About Broadview Networks Rye Brook, N.Y.-based Broadview Networks Holdings, Inc., is a communications and IT solutions provider to small and medium sized business ("SMB") and large business, or enterprise, customers nationwide, with a historical focus on markets across 10 states throughout the Northeast and Mid-Atlantic United States, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. Broadview Networks and 27 affiliates on Aug. 22 sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-13579) with a plan that will eliminate half of the debt under the Company's existing senior secured notes and lower interest expense by roughly $17 million annually. The Company's restructuring counsel is Willkie Farr & Gallagher LLP and its financial advisor is Evercore Group, L.L.C. Bingham McCutchen LLP is the special regulatory counsel. Kurtzman Carson Consultants is the claims and notice agent. The restructuring counsel for the ad hoc group of noteholders is Dechert LLP and their financial advisor is FTI Consulting. The Prepackaged Plan provides, among other things (i) holders of senior secured notes aggregating $317.1 million, will recover 100% of their claims; and holders of general unsecured claims estimated at $25 million to $27 million will be paid in full in cash or will have their claims reinstated as of the Effective Date. BROADVIEW NETWORKS: Ernst & Young OK'd to Provide Audit Services ---------------------------------------------------------------- The Hon. Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York authorized Broadview Networks Holdings, Inc., et al., to employ Ernst & Young LLP, as auditor. The Debtors have employed EY LLP as independent auditor since 2002. Subject to court approval, EY LLP will provide these services: a) core audit services, including: i. auditing and reporting on the consolidated financial statements of BVNH for the year ending Dec. 31, 2012; and ii. reviewing BVNH's unaudited interim financial information before BVNH files its Form 10-Q as of and for the period ending Sept. 30, 2012. b) non-core audit services, including other audit-related services such as research or accounting consultation services related to periodic accounting consultations held with management and services associated with BVNH's reorganization filings, including, without limitation, services relating to incremental audit procedures regarding fresh start accounting and disclosures in interim and annual financial statements and procedures related to independence matters and Bankruptcy Court requirements, including any services required by bankruptcy employment and fee application requirements. Dennis Deutmeyer, a partner of EY LLP, relates that the Debtors have agreed to compensate EY LLP for the audit services based on a combination of fixed fees and agreed hourly rates, depending on the relevant audit services: a) Core Audit Services: EY LLP will charge the Debtors a fixed fee of $536,000 for all postpetition Core Audit Services provided. The fee will be billed in these monthly installments: Date to be Billed Amount To Be Billed ----------------- ------------------- Sept. 30, 2012 $80,000 Oct. 31, 2012 $80,000 Nov. 30, 2012 $100,000 Dec. 31, 2012 $75,000 Feb. 28, 2013 $100,000 March 31, 2013 $101,000 b) Non-Core Audit Services: EY LLP will charge the Debtors based on its agreed hourly rates for all postpetition Non- Core Audit Services provided, according to this rate schedule: Title Rate Per Hour ----- ------------- National Accounting Technical Partner $960 Partner $780 Senior Manager $680 Manager $540 Senior $440 Staff $250 To the best of the Debtors' knowledge, EY LLP is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. About Broadview Networks Rye Brook, N.Y.-based Broadview Networks Holdings, Inc., is a communications and IT solutions provider to small and medium sized business ("SMB") and large business, or enterprise, customers nationwide, with a historical focus on markets across 10 states throughout the Northeast and Mid-Atlantic United States, including the major metropolitan markets of New York, Boston, Philadelphia, Baltimore and Washington, D.C. Broadview Networks and 27 affiliates on Aug. 22, 2012, sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 12-13579) with a plan that will eliminate half of the debt under the Company's existing senior secured notes and lower interest expense by roughly $17 million annually. The Company's restructuring counsel is Willkie Farr & Gallagher LLP and its financial advisor is Evercore Group, L.L.C. Bingham McCutchen LLP is the special regulatory counsel. Kurtzman Carson Consultants is the claims and notice agent. The restructuring counsel for the ad hoc group of noteholders is Dechert LLP and their financial advisor is FTI Consulting. The Prepackaged Plan provides, among other things (i) holders of senior secured notes aggregating $317.1 million, will recover 100% of their claims; and holders of general unsecured claims estimated at $25 million to $27 million will be paid in full in cash or will have their claims reinstated as of the Effective Date. CALPINE CORP: Moody's Rates $615-Mil. Sr. Secured Term Loan 'B1' ---------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Calpine Corporation's planned issuance of a new $615 million senior secured term loan due 2019. Concurrent with this rating assignment, Moody's affirmed Calpine's Corporate Family Rating (CFR) at B1 and its Probability of Default Rating at B1. Also, Moody's has withdrawn the B1 rating assigned to a previously announced $615 million senior note offering due 2023, which was cancelled by the company on Friday, September 21st. The rating outlook for Calpine is stable. Ratings Rationale Calpine's B1 CFR incorporates the steady strengthening of key financial metrics since the company's February 2008 emergence from bankruptcy, and the likelihood of continued improved financial performance in the future based upon the incremental earnings and cash flow contributions from the Mid-Atlantic fleet and from incremental contributions from new projects and contracts entered into with a number of end-use customers. The rating considers the company's hedging program, a favorable environmental profile, substantially reduced refinancing risk, and sustained operating performance of the generation fleet, all of which are offset by continued high leverage. At year-end 2011, Moody's calculates the ratio of Calpine's consolidated cash flow (CFO-pre W/C) to debt at 6.4%, its consolidated cash flow coverage of interest at 1.9x and its free cash flow to debt at 0.8%. Unlike its peers, Calpine's ongoing capital requirements for maintenance are fairly modest given the newness of the natural gas fired fleet and the very limited environmental requirements associated with the fleet. Moreover, Calpine has experienced a substantial increase in generation production as its capacity factor for the first half of 2012 was 53% as compared to 37% for the same period in 2011, representing an 45% increase in kilowatt hour production. At the company's second quarter earnings call, management has reaffirmed EBITDA guidance for 2012 at the $1.7 -$1.8 billion range similar to the levels reached in each of the past three years. As such, Moody's believes Calpine's financial performance will continue to position it reasonably well as a strong "B" rated unregulated power company. Proceeds from the secured note offering, along with cash on hand, will be used to redeem 10% of the company's original $5.9 billion in senior notes or $590 million of senior notes. Specifically, Section 3.07 (c) of the indenture allows Calpine to redeem up to 10% of each of the five series of senior secured notes at a price of 103%. As such, Calpine will use the proceeds of the financing along with cash on hand to complete the repurchase, pay the call premium ($17.7 million) and associated closing costs. Calpine's primary motivation for completing the transaction is the expected annual interest savings from the refinancing. The B1 (LGD4, 50%) rating for the secured term loan incorporates the fact that all of the Calpine corporate debt is first lien debt and as such, should carry the same rating as the company's CFR. The collateral securing the term loan consists of a first priority lien on a material percentage of all assets, including equity in subsidiaries of Calpine and the guarantors to the extent permitted by existing contractual arrangements. Key components of the collateral package include a direct first lien on the Geysers, a 725 MW base load geothermal collection of plants in California, as well as a first lien on the majority of the company's US natural gas-fired power generation facilities. The collateral package also includes a first lien on the equity interests in virtually all of the remaining plants. The Calpine secured term loan will share in this collateral package with existing lenders in the company's $1 billion revolver, existing holders of senior notes and senior term loans. Moody's has withdrawn the B1 (LGD4, 50%) rating assigned to the originally planned $615 million senior note offering due 2023 for business reasons as the financing was cancelled by the company on September 21st. The stable rating outlook reflects Moody's expectation for continued execution of the company's strategy through strong plant performance and a carefully implemented hedging strategy which is expected to result in continued free cash flow generation. In light of Moody's belief that future debt reduction will occur at a slower pace, reduced prospects exist for the CFR to be upgraded in the near-term. However, Calpine's CFR could be upgraded if the company's ratio of free cash flow to debt reaches the high single digits, its cash flow to debt exceeds 12%, and cash coverage of interest expense is above 2.3x with all on a sustained basis. The rating could be downgraded if the company is not able to execute on its current operating plan through strong plant performance and its regular hedging strategy leading to the company's cash flow to debt declining below 7%, and its cash coverage of interest expense falling below 1.8x on a sustained basis. The principal methodologies used in this rating were Unregulated Utilities and Power Companies published in August 2009, and Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Headquartered in Houston, Texas, Calpine is a major U.S. independent power company that owns 93 power plants with an aggregate generation capacity that exceed 28,000 MW. During 2011, Calpine had operating revenues of $6.8 billion. CALVARY WELD: Case Summary & 13 Unsecured Creditors --------------------------------------------------- Debtor: Calvary Weld Service, Inc. P.O. Box 97 Pound, VA 24279 Bankruptcy Case No.: 12-71760 Chapter 11 Petition Date: September 26, 2012 Court: United States Bankruptcy Court Western District of Virginia (Roanoke) Judge: William F. Stone Jr. Debtor's Counsel: Robert Tayloe Copeland, Esq. COPELAND & BIEGER, P.C. P.O. Box 1296 Abingdon, VA 24212 Tel: (276) 628-9525 Fax: (276) 628-4711 E-mail: rcopeland@copelandbieger.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 13 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/vawb12-71760.pdf The petition was signed by Christopher Strange, president. CAREY LIMOUSINE: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Carey Limousine L.A., Inc. aka Huntington Transportation Commonwealth Limousines Star's Limousines 5730 Uplander Avenue, Suite 202 Culver City, CA 90230 Bankruptcy Case No.: 12-12664 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court District of Delaware (Delaware) About the Debtor: Carey Limousine, a subsidiary of Carey International, is one of the largest chauffeured transportation services companies in Southern California. The Debtor operates from a centralized location with convenient proximity to Los Angeles International Airport, Beverly Hills, Downtown Los Angeles, and other centers of business and tourism in Southern California. The Debtor has 17 employees and utilized 30 independent owner- operators. Seventeen farm-out companies, providing chauffeurs, fulfill overflow customer requests. Debtor's Counsel: Matthew Barry Lunn, Esq. YOUNG, CONAWAY, STARGATT & TAYLOR 1000 North King Street Wilmington, DE 19809 Tel: (302) 571-6600 E-mail: bankfilings@ycst.com Debtor's Co-Counsel: WILLKIE FARR & GALLAGHER LLP Estimated Assets: $100,001 to $500,000 Estimated Debts: $100,000,001 to $500,000,000 The petition was signed by Mitchell J. Lahr, vice president. Debtor's List of Its 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Plaintiffs in Aguilar Arbitration Litigation $4,517,416 c/o Beth Ross, Esq. LEONARD CARDER, ET AL. 1188 Franklin Street, Suite 201 San Francisco, CA 94109 Ogun Service Company, LLC Trade $30,668 4714 West 163rd Street Lawndale, CA 90260 Ross Limo, Inc. Trade $27,177 3751 Scadlock Lane Sherman Oaks, CA 91403 Nebalsolo LLC Trade $23,378 Fulcrum Livery, LLC Trade $19,240 Dell' Amore Limousine Trade $18,570 Alimousine Corporation Trade $18,255 Lax Limousine Service Inc. Trade $17,401 Bluesky Shuttle & Bus Charters Trade $17,246 Style Trans Inc. Trade $15,976 Prime Limousine Service, LLC Trade $15,642 Eilat International LLC Trade $15,474 Gabriel Limo Svs. Gls. Corp. Trade $13,954 Crystal Limousines & Tours, Inc. Trade $11,839 Eeman Inc. Trade $10,410 Dct Services Company LLC Trade $10,353 Hirang Inc. Trade $10,125 Service Plus, LLC Trade $9,458 Eugene Bakalinsky Trade $8,142 Arrow Towncar & Limousine Service Trade $7,925 CDKP DEVELOPMENT: Case Summary & 16 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: CDKP Development, Inc. 572 Country Club Dr. West Arapahoe, NC 28510 Bankruptcy Case No.: 12-06871 Chapter 11 Petition Date: September 26, 2012 Court: United States Bankruptcy Court Eastern District of North Carolina (Wilson) Judge: Randy D. Doub Debtor's Counsel: George M. Oliver, Esq. OLIVER FRIESEN CHEEK, PLLC P.O. Box 1548 New Bern, NC 28563 Tel: (252) 633-1930 Fax: (252) 633-1950 E-mail: efile@ofc-law.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 16 largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/nceb12-06871.pdf The petition was signed by Philip Hedrick, president. Affiliate that filed separate Chapter 11 petition: Petition Debtor Case No. Date ------ -------- ---- Christopher B. & Tandra L. Garner 12-00399 01/17/12 CHAP - KHS: Chapter 9 Case Summary ---------------------------------- Debtor: CHAP - KHS 300 Fourth Street South Minneapolis, MN 55415 Bankruptcy Case No.: 05-11111 Chapter 9 Petition Date: September 26, 2012 Court: District of Minnesota (Minneapolis) Judge: Kathleen H. Sanberg Debtor's Counsel: Pro Se Affiliates that simultaneously filed for Chapter 9: Debtor Case No. ------ -------- CHAP - NCD 05-22222 CHAP - RJK 05-55555 CHARLIE MCGLAMRY: Plan Outline Hearing Scheduled for Oct. 2 ----------------------------------------------------------- The Hon. James P. Smith of the U.S. Bankruptcy Court for Middle District of Georgia will convene a hearing on Oct. 2, 2012, at 10 a.m., to consider adequacy of the Disclosure Statement explaining Charlie N. Mcglamry's proposed Chapter 11 Plan. As reported in the Troubled Company Reporter on Aug. 30, 2012, Mr. McGlamry filed a proposed Chapter 11 plan that contemplates the creation of a liquidating trust and the appointment as plan trustee of Ward Stone, Esquire, a prominent, well-known bankruptcy lawyer in the Middle District of Georgia. According to the Disclosure Statement, non-exempted assets of the Debtor will be transferred to a liquidating trust. The trustee also will have the power to pursue any causes of action provided for under the bankruptcy code or state law against third parties. Finally, the Debtor will make certain payments to the trust of his disposable income over a period of three years from the Effective Date of the Plan. The Debtor owes Synovus Bank on a $5.559 million loan secured by 74 acres of undeveloped commercial property at the intersection of Russell Parkway and Corder Road in Houston County, Georgia. The Debtor will convey his right to the property in full satisfaction of the secured claim. The Debtor has an unsecured debt of $4.5 million on an obligation relating to his interest in a non-Debtor entity known as Oaky Timberlands, LLC. In addition, the Debtor owes $20 million to unsecured creditors on account of a personal guarantee of the indebtedness of his affiliated companies. The unsecured creditors will share pro rata with Synovus in the proceeds from the liquidating trust. A copy of the Disclosure Statement dated Aug. 24, 2012, is available at http://bankrupt.com/misc/Charlie_McGlamry_DS.pdf About Charlie N. McGlamry Centerville, Georgia-based real estate developer Charlie N. McGlamry filed a petition for Chapter 11 protection, along with his 14 companies, in Macon, Georgia on May 9, 2012. Over the past 44 years, Mr. McGlamry has managed to successfully develop numerous real estate developments in and around Houston County, Georgia. Mr. McGlamry continues to operate his real estate development business through sole proprietorship McGlamry Properties -- http://www.mcglamryproperties.com-- and USA Land Development Inc. Mr. McGlamry individually owns, through his sole proprietorship, approximately, 74 acres of undeveloped commercial property at the intersection of Russell Parkway and Corder Road in Houston County, Georgia. Mr. McGlamry established a number of single member limited liability companies and sole shareholder corporations to own and develop specific tracts of land. Mr. McGlamry and his affiliated companies sought joint administration of their Chapter 11 cases and have Mr. McGlamry's as the lead case (Bankr. M.D. Ga. Case No. 12-51197). Judge James P. Smith oversees the case. Cohen Pollock Merlin & Small, PC, serves as the Debtors' Chapter 11 counsel. Nichols, Cauley & Associates, LLC, serves as their accountant. Mr. McGlamry, as sole shareholder or member, signed Chapter 11 petitions for USA Land Development (Case No. 12-51198); Barrington Hall Development Corp. (12-51199); Bear Branch LLC; By- Pass/Courthouse LLC (12-51201); Chinaberry Place, LLC (12-51202); Eagle Springs LLC (12-51203); Elmdale Development, LLC (12-51204); Gurr/Kings Chapel Road, LLC (12-51205); Jaros Development LLC (12-51206); Lake Joy Development, LLC (12-51207); Old Hawkinsville Road, LLC (12-51208); South Houston Development, LLC (12-51209); The Villages at Nunn Farms, LLC (12-51210); and Houston-Peach Investments LLC (12-51212). Mr. McGlamry estimated up to $50 million in assets and up to $100 million in liabilities in his Chapter 11 filing. The Debtors tapped Cohen Pollock Merlin & Small, PC, as bankruptcy counsel. CHINA GREEN: Issues 150.3 Million Common Shares for $1.5 Million ---------------------------------------------------------------- In connection with a security purchase agreement between China Green Creative, Inc., and 236 investors, on Sept. 19, 2012, the Company closed an offering of $1,503,500 in which the Company issued a total of 150,350,000 shares of the Company's common stock, par value $0.001 per share at a purchase price of $0.01 per share. The Investors except Han Sing Investment Incorporated are individuals and regional independent third-party distributors of the Company. None of these individual distributors held any shares of the Company prior to the Closing Date or was issued more than 5% of the shares of the Company in the Reg. S offering. Han Sing is a Cayman company wholly owned by Mr. Xinghua Chen. Mr. Chen is a director of the Company and is actively involved in the Company's daily operation and management. Prior to the Reg. S. Offering, Han Sing held approximately 245,417 shares of the Company's Common Stock, representing 4.9% of the shares of issued and outstand Common Stock before the Closing Date. Han Sing purchased 88,700,000 shares of the Company's Common Stock in the Reg. S Offering, resulting in its holding of approximately 57.1% of the Company's Common Stock. Through his ownership of Han Sing, Mr. Xinghua Chen became a controlling shareholder of the Company. The Company's Board of Directors has determined that the issuance to Han Sing will be disclosed as a related party transaction. A copy of the Securities Purchase Agreement is available at: http://is.gd/3f04rn About China Green China Green Creative, Inc., located in Shenzhen, Guangdong Province, People's Republic of China, is principally engaged in the distribution of consumer goods and electronic products in the PRC. After auditing the 2011 results, Madsen & Associates CPA's, Inc., in Salt Lake City, Utah, expressed substantial doubt about China Green Creative's ability to continue as a going concern. The independent auditor noted that the Company does not have the necessary working capital to service its debt and for its planned activity. The Company reported a net loss of $344,901 on $1.93 million of revenues for 2011, compared with a net loss of $3.35 million on $2.78 million of revenues for 2010. The Company's balance sheet at June 30, 2012, showed $5.43 million in total assets, $7.43 million in total liabilities, and a $2 million total stockholders' deficit. CHRYSLER LLC: Fiat Seeks Ruling on Dispute With Trust Over Shares ----------------------------------------------------------------- Giada Zampano And Christina Rogers at Dow Jones' Daily Bankruptcy Review reports that Italy's Fiat SpA on Wednesday said it asked a U.S. court to resolve a dispute over the price it must pay a retiree health care trust for a 3.3% stake in Chrysler Group LLC after the two sides differed on the terms of their contract. The report recalls that Fiat said in July it would exercise a call option to raise its stake in Chrysler to 61.8% from 58.5%, tightening its control of its U.S. partner. Fiat is increasingly relying on Chrysler as Fiat sales in Europe wilt while the U.S. auto maker continues to rebound from its bankruptcy in 2009. About Chrysler Group Chrysler Group LLC, formed in 2009 from a global strategic alliance with Fiat Group, produces Chrysler, Jeep(R), Dodge, Ram Truck, Mopar(R) and Global Electric Motorcars (GEM) brand vehicles and products. Headquartered in Auburn Hills, Michigan, Chrysler Group LLC's product lineup features some of the world's most recognizable vehicles, including the Chrysler 300, Jeep Wrangler and Ram Truck. Fiat will contribute world-class technology, platforms and powertrains for small- and medium-sized cars, allowing Chrysler Group to offer an expanded product line including environmentally friendly vehicles. Chrysler LLC and 24 affiliates on April 30, 2009, sought Chapter 11 protection from creditors (Bankr. S.D.N.Y (Mega-case), Lead Case No. 09-50002). Chrysler hired Jones Day, as lead counsel; Togut Segal & Segal LLP, as conflicts counsel; Capstone Advisory Group LLC, and Greenhill & Co. LLC, for financial advisory services; and Epiq Bankruptcy Solutions LLC, as its claims agent. Chrysler has changed its corporate name to Old CarCo following its sale to a Fiat-owned company. As of December 31, 2008, Chrysler had $39,336,000,000 in assets and $55,233,000,000 in debts. Chrysler had $1.9 billion in cash at that time. In connection with the bankruptcy filing, Chrysler reached an agreement with Fiat SpA, the U.S. and Canadian governments and other key constituents regarding a transaction under Section 363 of the Bankruptcy Code that would effect an alliance between Chrysler and Italian automobile manufacturer Fiat. Under the terms approved by the Bankruptcy Court, the company formerly known as Chrysler LLC on June 10, 2009, formally sold substantially all of its assets, without certain debts and liabilities, to a new company that will operate as Chrysler Group LLC. Fiat has a 20% equity interest in Chrysler Group. The U.S. and Canadian governments provided Chrysler with $4.5 billion to finance its bankruptcy case. Those loans are to be repaid with the proceeds of the bankruptcy estate's liquidation. * * * As reported in the Troubled Company Reporter on June 6, 2011, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Chrysler Group LLC. The rating outlook is stable. "At the same time, we assigned our issue-level rating to Chrysler's $4.3 billion senior bank facilities ('BB') and $3.2 billion second-lien notes ('B'). The recovery ratings are '1' and '5'. The company recently completed this financing," S&P stated. CLAIRE'S STORES: Moody's Upgrades CFR to 'Caa1'; Outlook Stable --------------------------------------------------------------- Moody's Investors Service upgraded Claire's Stores, Inc.'s Corporate Family and Probability of Default ratings to Caa1 from Caa2. At the same time, Moody's raised Claire's Speculative Grade Liquidity rating to SGL-2 from SGL-3. The rating outlook is stable. The upgrade of Claire's Corporate Family Rating to Caa1 reflects its ability to address its substantial term loan maturity in 2014 by refinancing it with a $625 million add-on to its existing senior secured first lien notes due 2019. The upgrade of the Speculative Grade Liquidity rating to SGL-2 reflects the positive impact on the company's near-term liquidity as a result of the successful closing of its $115 million revolving credit facility maturing in 2017. These refinancings provide Claire's with financial flexibility as Claire's nearest material debt maturity now occurs on June 15, 2015 when the company's $522 million senior unsecured notes mature. However, Moody's notes that the revolving credit facility has a springing maturity of April 1, 2015 should the senior unsecured notes not be refinanced or repaid by March 31, 2015. The upgrade also considers that despite and increase in annual interest expense as a result of the refinancing, Moody's anticipates that Claire's can fully cover this higher interest burden on an EBITA basis. Ratings upgraded: Corporate Family Rating to Caa1 from Caa2 Probability of Default Rating to Caa1 from Caa2 Senior secured first lien notes due 2019 to B2 (LGD 2, 29%) from B3 (LGD 2, 28%) Senior secured second lien notes due 2019 to Caa2 (LGD 4, 62%) from Caa3 (LGD 4, 62%) Senior unsecured notes due 2015 to Caa2 (LGD 4, 62%) from Caa3 (LGD 4, 62%) Senior subordinated notes due 2017 to Caa3 (LGD 6, 94%) from Ca (LGD 6, 94%) Speculative Grade Liquidity rating to SGL-2 from SGL-3 Rating affirmed: $115 million revolving credit facility due 2017 at B2 (LGD 2, 29%) Ratings confirmed and to be withdrawn: Senior secured revolving credit facility due 2013 at B3 (LGD 2, 28%) Senior secured term loan B due 2014 at B3 (LGD 2, 28%) Ratings Rationale Claire's Caa1 Corporate Family Rating reflects its very high leverage and weak interest coverage. Debt to EBITDA was 8.3 times for twelve months ended July 28, 2012, and EBITA to interest expense pro forma for the refinancing is only 1.0 time. Moody's also expects credit metrics will remain weak and at levels consistent with a Caa1 rating over the next twelve to eighteen months given Claire's substantial level of debt -- about $2.4 billion -- relative to its earnings. The Caa1 rating also considers that despite Claire's improved near-term financial flexibility resulting from the recent refinancings, the company is still faced with a $522 million senior unsecured note maturity on June 1, 2015. Claire's $115 million revolving expiring in September 2017 also has a springing maturity to April 1, 2015 if the company's senior unsecured notes are not refinanced or repaid by March 31, 2015. Favorable rating consideration is given to Claire's value positioned price points, international geographic presence, well known brand name, and high margins relative to specialty retail peers. Also considered is Claire's good liquidity profile as indicated by its SGL-2 Speculative Grade Liquidity rating. Moody's expects that Claire's will be able to cover its working capital, capital expenditure, and debt service requirements with internal sources of cash, and as a result, will not need to borrow under its revolving credit facility other than to fund possible short term working capital needs. While the company may generate negative free cash flow over the next twelve months as a result of growth capital expenditures, Moody's expects any shortfall will be funded from Claire's existing balance sheet cash. In addition to Claire's improved near-term financial flexibility, the stable outlook incorporates Moody's expectation that Claire's earnings will improve modestly, but not enough to meaningfully improve its credit metrics. A higher rating would require Claire's operating performance to improve or absolute debt levels to fall such that the company can achieve and maintain EBITA to interest expense above 1.25 times and debt to EBITDA below 7.5 times. Ratings could be downgraded if Claire's operating performance, liquidity, and/or interest coverage deteriorate, or if the company's probability of default were to increase for any reason. The principal methodology used in rating Claire's Stores, Inc 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. Claire's Stores, Inc., headquartered in Hoffman Estates, IL is a specialty retailer of value-priced jewelry and fashion accessories for pre-teens and young adults. It operates 3,074 stores and franchises 376 stores in North America, Europe, and Asia. Revenues are about $1.5 billion. CONTEC HOLDINGS: Garden City Group Approved as Admin. Agent ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware, according to CHL, Ltd., et al.'s case docket, authorized the Debtors to employ Garden City Group, Inc. as administrative agent. About Contec Holdings Headquartered in Schenectady, New York, Contec Holdings Ltd. -- http://www.gocontec.com/-- is the market leader in the repair and refurbishment of customer premise equipment for the cable industry. The Company repairs more than 2 million cable set top boxes annually, while also providing logistical support services for over 12 million units of cable equipment annually. With substantial operations in the United States and Mexico, the Debtors earned revenues of approximately $153.6 million in 2011, and as of July 28, 2012, the Debtors directly employed over 2,300 people in North America, 72% of which are unionized. Contec Holdings, Ltd., and its affiliates on Aug. 29, 2012 sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12437) with a plan of reorganization that has the support of senior lenders and noteholders. Ropes & Gray LLP, serves as bankruptcy counsel to the Debtors; Pepper Hamilton LLP is the local counsel; AP Services LLC, is the restructuring advisor; Moelis & Company is the investment banker; and Garden City Group is the claims agent. CONTEC HOLDINGS: Pepper Hamilton Approved as Delaware Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware, according to CHL, Ltd., et al.'s case docket, authorized the Debtors to employ Pepper Hamilton LLP as Delaware counsel. About Contec Holdings Headquartered in Schenectady, New York, Contec Holdings Ltd. -- http://www.gocontec.com/-- is the market leader in the repair and refurbishment of customer premise equipment for the cable industry. The Company repairs more than 2 million cable set top boxes annually, while also providing logistical support services for over 12 million units of cable equipment annually. With substantial operations in the United States and Mexico, the Debtors earned revenues of approximately $153.6 million in 2011, and as of July 28, 2012, the Debtors directly employed over 2,300 people in North America, 72% of which are unionized. Contec Holdings, Ltd., and its affiliates on Aug. 29, 2012 sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12437) with a plan of reorganization that has the support of senior lenders and noteholders. Ropes & Gray LLP, serves as bankruptcy counsel to the Debtors; Pepper Hamilton LLP is the local counsel; AP Services LLC, is the restructuring advisor; Moelis & Company is the investment banker; and Garden City Group is the claims agent. CORDILLERA GOLF: Settles Dispute With Creditors; To Sell Assets --------------------------------------------------------------- John Mossman at The Denver Post reports that Cordillera Golf Club has completed successful mediation of a legal dispute with the Cordillera Property Owners, the Cordillera Transition Committee and the Official Creditors Committee. The parties agree that the club will be sold before the end of this year. According to the report, all cash bids for the operating assets of the club are expected to be received by Dec. 3. In the event of multiple bids, an auction would be held. The sale will close before Dec. 28. Cordillera, in the Vail Valley near Edwards, likely will be sold as a single asset, the report adds. The report notes the adjacent Lodge & Spa at Cordillera, which is separately owned, is not part of the proceedings. The report relates the settlement is subject to final court approval. The report, citing a statement released on Sept. 26, relates the club said mediation "provided a framework for resolution of lawsuits between membership and ownership over financial matters, dues structures, ownership rights and the future of club facilities" -- which include three 18-hole golf courses, a short course for instruction, an athletic club and three clubhouses with restaurants. There are about 1,100 homeowners in the Cordillera communities. "I am happy that we were able to come to a resolution of disputes that have affected our homeowners, club members, the community and my family for more than two years," the report quotes club owner David Wilhelm as stating. "It's time to move on in the most positive way." The report adds the bankruptcy case was complicated by litigation between Mr. Wilhelm and 610 club members. The report relates, last spring, Mr. Wilhelm promised to open all four golf courses but -- for the second year in a row -- opened only the Valley course. He also laid off dozens of workers. According to the report, current and former club members sued Mr. Wilhelm in a class-action lawsuit, saying if he was going to open only 25% of the golf courses, they wanted 75% of their dues back. Members say the Wilhelm Family Partnership collected $8 million in membership dues last year and paid itself almost $1 million while failing to open three courses, thus violating the membership agreement. The report says the lawsuit asked that 2011 dues be repaid and that all of the membership deposits be refunded. Such a payout could have totaled $108 million. The report relates Mr. Wilhelm sued the members for $96 million, claiming they were trying to drive him out so they could take over. The report adds the bankruptcy case had been transferred from Delaware, where Mr. Wilhelm's management company is incorporated, to U.S. Bankruptcy Court in Denver. About Cordillera Golf Cordillera Golf Club, LLC, filed for protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 12-11893) on June 26, 2012, the same day a $12.7 million loan was due to Alpine Bank of Colorado. The Debtor owns an exclusive 730-acre four-course golf club at the Cordillera resort community in Edwards, Colorado. The club is located at the 7,000-acre Cordillera development, which has 1,087 residential lots. Non-equity club membership is open to community residents. The club has three golf courses, a Dave Pelz designed short course, five swimming pools, and tennis courts. The membership plan provides that there will be no more than 1,085 golf memberships and up to 100 social memberships. Half of all property owners within Cordillera are club members. The club blamed lower membership rates and tensions with current members for the bankruptcy. David A. Wilhelm, manager of CGH Manager LLC, manager, signed the Chapter 11 petition. Mr. Wilhelm acquired 100% interest in the Debtor in 2009 following an arbitration that stemmed from revelations that the then owners of the 70% interests had diverted funds away from the Debtor's operations. In the petition, the Debtor estimated $10 million to $50 million in assets and debts, including secured debt of $12.7 million owed to Alpine Bank and a $7.5 million secured claim by Mr. Wilhelm. Delaware Bankruptcy Judge Christopher S. Sontchi presides over the case. Lawyers at Young, Conaway, Stargatt & Taylor and Foley & Lardner LLP serve as the Debtor's counsel. Omni Management Group LLC serves as the Debtor's claims agent. On July 16, 2012, the Delaware Court granted the request of certain club members to transfer the venue of the case to the Bankruptcy Court in Colorado. The case has been endorsed to Hon. A. Bruce Campbell in Denver (Bankr. D. Colo. Case No. 12-24882). An official committee of unsecured creditors has been appointed in the case. The Committee members consist of various homeowner and trade creditors of the Debtor. All members have Colorado addresses. The Committee is represented by Munsch Hardt Kopf & Harr, PC as counsel. Certain homeowners also have retained separate counsel, Michael S. Kogan, Esq., at Kogan Law Firm, APC. Secured lender, Alpine Bank in Vail, Colo., is represented by lawyers at Ballard Spahr LLP. CORTE MADERA: S&P Affirms 'B+' Corp. Credit Rating; Outlook Neg --------------------------------------------------------------- Standard & Poor's Ratings Services revised its rating outlook on Corte Madera, Calif.-based Il Fornaio (America) Corp. to negative from stable. "At the same time, we affirmed all ratings on the company, including the 'B+' corporate credit rating," S&P said. "We also affirmed our 'BB-' (one notch above the corporate credit rating) ratings on the company's senior secured bank credit facilities, which consist of a five-year revolver and a six-year term loan. The recovery rating is '2', indicating our expectation of substantial (70% to 90%) recovery for lenders in the event of a payment default," S&P said. "The outlook revision reflects weaker-than-expected EBITDA performance that will defer the improvement in credit protection measures we were anticipating in the next 12 months," said Standard & Poor's credit analyst Andy Sookram. "We also think that profits will be lower than our prior expectations because food cost inflation will hurt earnings and profit contribution from store openings will be delayed into 2013 due to timing of the openings. As a result, we view credit protection measures to be consistent with levels we consider 'highly leveraged,' representing a revision from our prior assessment of 'aggressive.'" "The negative outlook reflects our expectation that commodity cost pressures and slower growth will squeeze profit margins and cash flows over the next year, resulting in weaker-than-expected credit measures. We could lower the ratings if performance deteriorates, precipitated by higher-than-anticipated cost inflation or intensified competition that leads to negative same-store sales. For example, a downgrade could occur if EBITDA declines by about 11%, leverage increases to the mid-6x area on a sustained basis, and FFO/debt drops below 12%," S&P said. "For an outlook revision to stable, Il Fornaio would need to expand its earnings base such that EBITDA increases about 10% from current levels through new company-operated restaurants or cost initiatives and the financial risk profile improves to aggressive from highly leveraged. In this instance, we would need to see leverage in the low-5x area and FFO to debt about 17% or higher," S&P said. COTT CORP: Moody's Affirms 'B2' Corporate Family Rating ------------------------------------------------------- Moody's Investors Service revised Cott Corporation's rating outlook to positive from stable to reflect recent margin enhancements, solid cash generation and the expectation for a further reduction in leverage. All long-term ratings for Cott Corporation and Cott Beverages, Inc. (collectively referred to as "Cott"), including the B2 Corporate Family Rating, were affirmed. The following ratings were affirmed at Cott Corporation: Corporate Family Rating ("CFR") at B2; Probability of Default Rating ("PDR") at B2; and Speculative grade liquidity rating at SGL-2. The following ratings were affirmed at Cott Beverages, Inc.: $375 million senior unsecured notes due 09/01/2018 at B3 (LGD4, 68% from 66%); and $215 million senior unsecured notes due 11/15/2017 at B3 (LGD4, 68% from 66%). Ratings Rationale The positive outlook reflects Moody's view that Cott's margins will continue to improve over the next twelve months in the face of falling volumes due to a combination of successful pricing actions, culling of low margin business, growing its contract manufacturing base and vertical integration efforts. As part of its margin restoration efforts, Cott has begun exiting low margin business, such as case pack water, and walked away from low margin accounts. Moody's expects better margin performance coupled with a reduction in capital spending, upon the completion of the implementation of bottle blowing capacity across their manufacturing footprint, to result in improved cash flows. The outlook anticipates that management will allocate a portion of its free cash flow to both debt reduction and shareholder distributions, either through a dividend or share repurchases, and will remain committed to its stated goal of reducing its net leverage to 2.0x, on a sustainable basis. The B2 CFR continues to reflect expectations of solid credit protection metrics, Cott's leadership position as the largest private label beverage producer in NA, with broad product offerings and manufacturing footprint, and a good liquidity profile. Moody's adjusted leverage of roughly 3.5x at June 30, 2012 is viewed as relatively low compared to similarly rated peers, but is an important mitigating factor to the company's limited market share of the larger NA beverage category, low margins, sales concentration with Walmart and historical volatility in its operating performance due to the company's exposure to commodity input prices and vulnerability to pricing decisions of branded industry players and retailers. Further, the ongoing volume declines in both its carbonated soft drink (CSD) and juice businesses continues to temper earnings growth and margin expansion. While Moody's views the decline in CSD's as permanent shift in consumer demand, the decline in juices is viewed as more of a temporary phenomena tied to the high costs apple juice concentrate and related price increases that have been implemented to preserve gross margin levels. Given the potential for volatility in Cott's operating performance, a ratings upgrade is unlikely prior to debt reduction that supports leverage below 3.5 times, on a sustainable basis, complemented by a good liquidity profile and the stabilization of juice volumes. A decline in earnings as a result of further volume declines or a contraction of Cott's liquidity could warrant the stabilization of Cott's rating outlook. Adjusted Debt-to-EBITDA, approaching 5.5 times would likely result in a ratings downgrade. The principal methodology used in rating Cott Corporation was the Global Soft Beverage 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. Headquartered in Toronto, Ontario, and Tampa, Florida, Cott Corporation is one of the world's largest private label beverage companies. Cott's product portfolio includes CSD's, clear, still and sparkling flavored waters, juice, juice-based products, bottled waters, energy related drinks, and ready-to-drink teas. Cott's customers include many of the largest national and regional grocery, drugstore, wholesalers and convenience store chains. Sales for the twelve months ending June 30, 2012 were approximately $2.3 billion. CRAMER MOUNTAIN: Chapter 11 Filing Stays Foreclosure Sale --------------------------------------------------------- The Chapter 11 filings of Cramer Mountain Country Club & Properties, Inc., and Cramer Mountain Country Club Corp. suspended the foreclosure sale of the club, its golf course property, and the Gastonia's City Club, according to a report by Ragan Robinson at Gaston Gazette. The foreclosure sale was originally scheduled for Sept. 26, 2012, the report says. The report notes court documents also detail a month of legal wrangling during which The City Club president, Graham Bell, battled to keep the restaurant running, pay employees and collect a $49,000 salary himself. According to the report, legally, a sale suspension like the one granted Mr. Bell's corporations can be limited to 30 days. The Debtor can request an extension. The report says Mr. Bell's attorneys, in the bankruptcy filing, estimated the country club's assets at $309,301. Estimated liabilities for the country club are $6.58 million. The City Club has assets of $667,112, while liabilities exceed $4.46 million. The report says Mr. Bell's name appears among the creditors listed in bankruptcy documents for Cramer Mountain Country Club & Properties, saying he is owed $2 million. The report adds income from the country club and The City Club thus far in 2012 comes to $734,542.37, based on a statement of financial affairs filed in bankruptcy court. For 2011, the two brought in $1.93 million. In 2010, consolidated revenue was recorded as $1.74 million. According to the report, on Sept. 5, attorneys filed a request that The City Club be allowed to employ Mr. Bell, the corporation president, at an annual salary of $49,280. The court granted previous requests to pay 14 employees a total of $7,210 earned before the initial bankruptcy petition. The report relates Mr. Bell expects to work an average of 50 hours per week with duties including business development, bookkeeping, corporate organization, restaurant and party management and office work, the report says. The report notes bankruptcy documents also indicate Mr. Bell said in court proceedings he has not received a salary from The City Club for more than a year. The report adds Alliance Bank objected to Mr. Bell's hiring, saying Mr. Bell's management of The City Club, the country club and other corporations he heads led the companies seeking court protection. Based in Cramerton, North Carolina, Cramer Mountain Country Club & Properties, Inc., and its affiliate Cramer Mountain Country Club Corp. filed for Chapter 11 protection (Bankr. W.D. N.C. Lead Case No. 12-32018) on Aug. 22, 2012. Judge J. Craig Whitley presides over the case. Jason L. Hendren, Esq., and Rebecca F. Redwine, Esq., at Hendren & Malone, PLLC, represent the Debtors. The Debtor listed assets of $309,301, and liabilities of $6,581,421. DAE AVIATION: Moody's Raises CFR to B3; Rates New Term Loan B2 -------------------------------------------------------------- Moody's Investors Service upgraded DAE Aviation Holdings, Inc.'s corporate family and probability of default ratings to B3 from Caa1, assigned a B2 rating to DAE's proposed $520 million senior secured term loan 'B' and affirmed the Caa2 rating on DAE's existing $325 million senior unsecured notes. The ratings upgrade is driven by DAE's debt refinancing plan which, once executed, will greatly improve the company's liquidity. The outlook is stable. Net proceeds from the new term loan and new $175 million ABL facility (unrated) will be used to refinance DAE's existing $469 million term loan (due July 2014) and $100 million revolver (due July 2013). The new ABL and term loan will initially mature in January 2015 (extending to 2017 and 2018 respectively if DAE's $325 million July 2015 senior notes are refinanced) and are expected to provide significantly greater leeway against bank financial covenants compared to the existing facilities. The B2 ratings on the existing term loan and revolving credit facility will be withdrawn when the transaction closes. Ratings Rationale DAE's B3 corporate family rating primarily reflects its highly leveraged capital structure (pro forma adjusted Debt/ EBITDA of about 6.6x) and Moody's expectation that working capital requirements will consume a good portion of DAE's surplus cash balances through 2013. However, DAE has a sizeable backlog, a strong competitive position in a market with good long-term fundamentals, good diversification across end markets, and capabilities across a broad range of aircraft engine platforms. In addition, increased aviation activity and favorable outsourcing trends should support modestly higher demand for DAE's maintenance, repair and overhaul ("MRO") services. Over the next 12 to 18 months, Moody's expects DAE will record revenue growth in the mid single digits with stable margins, allowing for deleveraging of Debt/EBITDA towards 5.5x. DAE's new ABL facility will be secured by a first charge on accounts receivables and inventory, and a second lien on all other assets whereas the term loan 'B' has the reciprocal security package. As a result, the ABL facility is ranked ahead of the term loan facility in accordance with Moody's Loss Given Default Methodology, reflecting the relatively liquid nature of receivables and inventory compared to fixed assets. Moody's expects the company to have modest top line growth with slight deleveraging. The rating outlook is therefore stable. The rating could be moved up if DAE maintains an adequate liquidity profile and sustains adjusted leverage below 5x. The rating could be downgraded if liquidity becomes stressed or if adjusted leverage exceeds 7x. The principal methodology used in rating DAE was the Global Aerospace and Defense Industry Methodology published in June 2010. 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 Tempe, Arizona, DAE Aviation Holdings, Inc. is a 100%-owned subsidiary of Dubai Aerospace Enterprises LTD, and is a leading provider of aircraft maintenance, repair and overall (MRO) services, and aircraft completion and modification work to the commercial, business, military and general aviation industries. Revenue for the last twelve months ended June 30, 2012 was $1.6 billion, of which more than 85% was generated in North America. DAVE & BUSTER'S: IPO Filing No Impact on Moody's 'B3' Ratings ------------------------------------------------------------- Moody's Investors Service stated that the ratings and ratings outlook for Dave & Buster's Inc's. ("Dave & Buster's, B3, stable) are not affected by the filing of an S-1 registration statement with the Securities and Exchange Commission (SEC) for a potential initial public offering (IPO) by the company's parent, Dave & Buster's Entertainment Inc. Moody's views the S-1 filing favorably in part because of the specified use of proceeds being designated for debt reduction. In the event the IPO and use of proceeds are successfully executed as proposed and operating performance continues as expected, there could be positive ratings improvement. The company operates under the Dave & Buster's and Dave & Buster's Grand Sports Caf�, and owned and operated 59 stores in 25 states and Canada in addition to one franchised store operating in Canada as of June 29, 2012. Revenues for the last twelve months ended July 29, 2012 were approximately $577 million. DEAN FOODS: Moody's 'Ba3' CFR Remain on Review for Downgrade ------------------------------------------------------------ Moody's Investors Service said on Sept. 27 that following the announcement by Dean Foods Company that it was exploring an option that might result in the sale of its Morningstar business, Dean Foods' Ba3 Corporate Family and other ratings would remain on review for downgrade. Dean said it has not yet identified a buyer for the business and would only sell it in a transaction that maximizes shareholder value and helps ensure the future success of the business. Moody's placed Dean's ratings on review for downgrade following the announcement in early August that it will IPO and then spin- off its WhiteWave/ Alpro Division. Following the IPO, Dean will own at least 80% of WhiteWave's common stock, which it then intends to spin off to its shareholders in a tax free distribution to occur no earlier than the expiration or waiver of a 180-day lock-up period after completion of the IPO. Dean Foods stated that it will use IPO proceeds, as well as new debt that will be issued at the WhiteWave level, to repay and reduce debt outstanding under its existing senior secured credit facility. At the same time, it intends to narrow the focus of the remaining company to be more reliant on its volatile and low margin commodity milk business. The sale of Morningstar, could, if successful, allow for more deleveraging, although it would also further diminish the scale and diversity of the remaining business. The additional proceeds from a Morningstar sale could result in lower leverage than that resulting from a White Wave spin off alone. This further reduction of leverage could benefit the remaining business, but the final financial and business profile of the company post the WhiteWave spin and Morningstar sale transactions remains to be seen. The principal methodology used in rating Dean Foods was Moody's Global Packaged Goods Methodology, published in July, 2009 and available on www.moodys.com in the Rating Methodologies sub- directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub- directory on Moody's website. Dean Foods ("Dean") is the largest processor and distributor of milk and various other dairy products in the United States and the largest producer of soy milk in Europe. The company also markets and sells a variety of branded dairy and dairy-related products including Silk(R) soymilk and almondmilk, Horizon Organic(R) dairy products, International Delight(R) coffee creamers and beverages, LAND O'LAKES(R)creamers and fluid dairy products, and cultured dairy products. Headquartered in Dallas, Texas, Dean Foods had sales of approximately $13 billion for the latest twelve months ending June 30, 2012. DERRY & WEBSTER: Case Summary & 13 Unsecured Creditors ------------------------------------------------------ Debtor: Derry & Webster, LLC 253 Main Street Nashua, NH 03060 Bankruptcy Case No.: 12-12958 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court District of New Hampshire (Manchester) Judge: J. Michael Deasy Debtor's Counsel: Robert L. O'Brien, Esq. O'BRIEN LAW P.O. Box 357 New Boston, NH 03070-0357 Tel: (603) 459-9965 Fax: (603) 250-0822 E-mail: roboecf@gmail.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 13 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/nhb12-12958.pdf The petition was signed by Vatche Manoukian, managing member. DICKINSON THEATRES: Files for Chapter 11 Along With Plan -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Dickinson Theatres Inc., an operator of 18 movie theaters in seven states, filed a proposed reorganization plan along with a Chapter 11 petition (Bankr. D. Kan. Case No. 12- 22602) on Sept. 21 in Kansas City, Kansas. According to the report, based in Overland Park, Kansas, the company's theaters have 210 screens. The Debtor disclosed assets of $2.2 million and liabilities totaling $7.6 million, including $5.1 million in secured debt. All of the theaters are leased. The Bloomberg report discloses that the proposed Chapter 11 plan is designed to pay as much as $840,000 of unsecured claims in full over five years with 4.5% interest. Secured claims and leases will be paid according to their terms or restructured. Sharon L. Stolte, Esq., at Stinson Morrison & Hecker L.L.P., in Kansas City, Missouri, serves as counsel. DIGITAL DOMAIN: Closes $30-Mil. Sale to Galloping Horse ------------------------------------------------------- Richard Verrier at Los Angeles Times reports that Digital Domain Media Group had accepted a bid from Galloping Horse America, a division of a Beijing media company, and Reliance MediaWorks, part of the Indian conglomerate Reliance Group, to buy the company's visual effects studios in Venice, Calif., and Vancouver, Canada, for $30.2 million. The report relates the deal closed on Sept. 27, 2012, and effectively removes Digital Domain from a potentially protracted Chapter 11 bankruptcy filing. That filing caused the near- shutdown of the company's new animation building in Port St. Lucie, Fla., laying off most of its 320 workers. The report notes the deal is expected to improve Digital Domain's ability to compete on a global scale by giving it access to Reliance's production pipeline and to low-cost labor in India and eventually China, where Galloping Horse expects to open a visual effects studio. According to the report, the deal could help Digital Domain expand its business in China, where there is a strong demand for quality visual effects, said Ivy Zhong, vice chairman and managing director of Beijing Galloping Horse Film Co. About Digital Domain Digital Domain Media Group, Inc. -- http://www.digitaldomain.com/ -- engages in the creation of original content animation feature films, and development of computer-generated imagery for feature films and transmedia advertising primarily in the United States. Digital Domain Media Group, Inc. and 13 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 12-12568) on Sept. 11 to sell its business for $15 million to Searchlight Capital Partners LP. The Debtors have also sought ancillary relief in Canada, pursuant to the Companies' Creditors Arrangement Act in the Supreme Court of British Columbia, Vancouver Registry. Port St. Lucie, Florida-based Digital Domain disclosed assets of $205 million and liabilities totaling $214 million. DDMG also announced that it has entered into a purchase agreement with Searchlight Capital Partners L.P. to acquire Digital Domain Productions Inc. and its operating subsidiaries in the United States and Canada, including Mothership Media, subject to the receipt of higher and better offers and Court approval. DDPI and Mothership, with studios in California and Vancouver, are focused on creating digital visual effects, CG animation and digital production for the entertainment and advertising industries and are led by recently promoted Chief Executive Officer Ed Ulbrich. Attorneys at Pachulski Stang Ziehl & Jones serve as counsel to the Debtors. FTI Consulting, Inc.'s Michael Katzenstein is the chief restructuring officer. Kurtzman Carson Consultants LLC is the claims and notice agent. An official committee of unsecured creditors appointed in the case is represented by lawyers at Sullivan Hazeltine Allinson LLC and Brown Rudnick LLP. The company listed assets of $205 million and liabilities totaling $214 million. Debt includes $40 million on senior secured convertible notes plus $24.7 million in interest. There is another issue of $8 million in subordinated secured convertible notes. DRINKS AMERICAS: Incurs $438,000 Net Loss in July 31 Quarter ------------------------------------------------------------ Drinks Americas Holdings, Ltd., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing a net loss of $438,364 on $1.28 million of net sales for the three months ended July 31, 2012, compared with a net loss of $346,268 on $148,080 of net sales for the same period during the prior year. The Company's balance sheet at July 31, 2012, showed $6.24 million in total assets, $4.55 million in total liabilities and $1.68 million in total equity. A copy of the Form 10-Q is available for free at: http://is.gd/lOBkqt About Drinks Americas Headquartered in Wilton, Conn., Drinks Americas Holdings, Ltd. -- http://www.drinksamericas.com/-- through its majority-owned subsidiaries, Drinks Americas, Inc., Drinks Global, LLC, D.T. Drinks, LLC, and Olifant U.S.A Inc., imports, distributes and markets unique premium wine and spirits and alcoholic beverages associated with icon entertainers, celebrities and destinations, to beverage wholesalers throughout the United States. The Company reported a net loss of $4.58 million on $497,453 of net sales for the year ended April 30, 2011, compared with a net loss of $5.61 million on $890,380 of net sales during the prior year. After auditing the fiscal 2011 financial statements, Bernstein & Pinchuk, 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 incurred significant losses from operations since its inception and has a working capital deficiency. DUKE REALTY: Fitch Assigns 'BB' Preferred Stock Rating ------------------------------------------------------ Fitch Ratings assigns a 'BBB-' rating to the $300 million aggregate principal amount of 3.875% senior unsecured notes due Oct. 15, 2022 issued by Duke Realty Limited Partnership, a subsidiary of Duke Realty Corp. (NYSE: DRE). The notes were issued at 99.584% of principal value to yield 3.925% to maturity. Net proceeds from the offering are expected to be used to repay outstanding debt with near-term maturities, including balances on the revolving credit facility, and for general corporate purposes. Fitch currently rates DRE and its operating partnership as follows: Duke Realty Corp. -- Issuer Default Rating (IDR) 'BBB-'; -- Preferred stock 'BB'. Duke Realty Limited Partnership -- IDR 'BBB-'; -- Senior unsecured notes 'BBB-'; -- Unsecured revolving credit facility 'BBB-'. The Rating Outlook is Stable. Fitch anticipates that the company's credit profile will remain consistent with a 'BBB-' rating in the near-to-medium term. Leverage is appropriate for the rating category. The rating also takes into account the company's large pool of diversified industrial, office, and medical office building (MOB) properties, solid unencumbered asset coverage of unsecured debt, and adequate liquidity position. The ratings are balanced by a fixed-charge coverage ratio that is low for the rating category and continued challenging suburban office fundamentals, even as DRE continues to shift its portfolio away from suburban office to a higher percentage of industrial properties and MOBs. The company has a diversified portfolio of 797 bulk distribution, suburban office, MOB, and retail properties located across 18 markets, which Fitch views favorably from a property segment and geographical diversification standpoint. The company's portfolio also benefits from a highly diversified tenant base and well-staggered lease expiration schedule, limiting tenant credit risk and lease rollover risk. DRE's largest 20 tenants represented just 17.2% of annual base rents at June 30, 2012. Lease expirations are less than 13% of the total annual base rent in any given year, with just 3.4% expiring for the remainder of 2012, indicating long-term recurring cash flow across the portfolio. DRE continues to execute on its strategic plan, which entails increasing the exposure to industrial and MOB assets while reducing the exposure to suburban office. Fitch has a Negative Outlook on suburban office fundamentals, and a Stable Outlook on industrial and healthcare fundamentals, and as such, views the company's repositioning strategy favorably. However, there is potential for near-term EBITDA dilution from asset purchases and sales as the company continues to shift the composition of the portfolio. The company's leverage, defined as net debt to recurring operating EBITDA, was approximately 7.1 times (x) at June 30, 2012, compared with 6.9x at Dec. 31, 2011 and 7.2x at Dec. 31, 2010. Fitch expects leverage to trend toward the mid-6.0x range, which is appropriate for the 'BBB-' rating. The company has moderately increased its development pipeline recently. In-process development (including joint ventures) represented 5.5% of undepreciated book assets as of June 30, 2012, compared with 2.6%, 1.3% and 1.4% as of Dec. 31, 2011, Dec. 31, 2010 and Dec. 31, 2009, respectively. Remaining cost to be spent was 3.2% of total undepreciated assets as of June 30, 2012. Notably, the majority of the developments are build-to-suit projects and MOBs, thus minimizing lease-up risk, which Fitch views positively. DRE has adequate liquidity and financial flexibility. As of June 30, 2012, the company had 449 unencumbered properties (excluding eleven wholly owned properties under development) with a gross book value of $5.1 billion. Unencumbered asset coverage of unsecured debt based on applying an 8.5% cap rate to unencumbered annualized stabilized NOI was appropriate for the 'BBB-' IDR at 1.9x as of June 30, 2012. The weighted average cap rate for asset purchases and sales since Jan. 1, 2011 is approximately 7.6%. Pro forma the notes issuance, the company has a moderate liquidity shortfall of $196 million for the period June 30, 2012 - Dec. 31, 2014, resulting in a liquidity coverage ratio of 0.9x. Assuming maturing secured debt is refinanced at 80% of existing balances, liquidity coverage is adequate at 1.1x. Liquidity coverage is defined as sources of liquidity (unrestricted cash, availability under the unsecured revolving credit facility, and projected retained cash flow from operating activities after dividends) divided by uses of liquidity (pro rata debt maturities, expected recurring capital expenditures, and remaining nondiscretionary development costs). DRE's fixed-charge coverage ratio is low for the rating. Fixed- charge coverage (defined as recurring operating EBITDA, less recurring capital expenditures and straight-line rent adjustments, divided by total interest incurred and preferred dividends) was 1.5x for the 12 months ended June 30, 2012, up slightly from 1.4x in 2011 and 1.4x in 2010. Coverage has remained in the 1.4x to 1.6x range since 2008, and Fitch anticipates that fixed-charge coverage will improve moderately through 2014 to 1.8x, driven by moderate NOI growth and reduced preferred dividends due to recent preferred redemptions. In addition, the company has $178 million of 8.375% series O preferreds that become redeemable in 2013, which DRE may redeem to further improve coverage. Suburban office fundamentals remain weak but are moderating, as evidenced by net effective rents on renewals declining 3.4% in 2Q'12 and net effective rental rates on new leases remain weak at $12.83 per square foot (psf) in 2Q'12 compared with $12.89 psf in 1Q'12, $12.05 psf in 2011, $12.56 psf in 2010 and $13.03 in 2009. Fitch anticipates that DRE's suburban office portfolio will continue to face headwinds in the near term, driven by continued weak rental rate growth and high leasing costs. The Stable Rating Outlook is based on Fitch's expectation that leverage will trend lower to the mid-6.0x range in 2014, that coverage will improve moderately to 1.7x in 2013 and 1.8x in 2014, and that the company will maintain adequate liquidity. The two-notch differential between DRE's IDR and preferred stock rating is consistent with Fitch's criteria for corporate entities with a 'BBB-' IDR. Based on 'Treatment and Notching of Hybrids in Nonfinancial Corporate and REIT Credit Analysis,' available on Fitch's Web site at www.fitchratings.com, 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 have a positive impact on the ratings and/or Rating Outlook: -- Fitch's expectation of net debt to recurring operating EBITDA sustaining below 6.0x (as of June 30, 2012, leverage was 7.1x); -- Fitch's expectation of fixed-charge coverage sustaining above 2.0x (latest 12-month coverage was 1.5x as of June 30, 2012). The following factors may have a negative impact on the ratings and/or Rating Outlook: -- Fixed-charge coverage sustaining below 1.3x; -- Net debt to recurring operating EBITDA sustaining above 8.0x; -- AFFO (adjusted funds from operations) payout ratio sustaining above 100%. E-DEBIT GLOBAL: Issues 185.4 Million Common Shares to Creditor -------------------------------------------------------------- E-Debit Global Corporation issued 185,460,000 shares of common stock to a creditor in conversion of C$185,460 of convertible debt of the Company at the rate of $0.001 per share, being the greater of the previous five day average closing trading price. The convertible debt held by the creditor had accumulated as cash advances to the Company from Sept. 1, 2010, to July 1, 2011. The creditor has 30 days from receipt of certificates for the Shares to effect transfer of the Shares into the creditor's brokerage account. In the event that deposit is not completed within said 30 days, the Creditor has 10 days to return the original certificate to the Company. Upon receipt of the original certificates for the Shares the debt conversion will be rescinded and the creditor's original principal balance will be reinstated. The Company has 10,000,000,000 shares of common stock authorized. On Aug. 10, 2012, the Company made the $1,969,339 of outstanding loans and related party debt of the Company as of June 30, 2012, convertible into common stock which if converted into common stock would represent 1,969,339,000 shares of common stock. 70,855,900 shares of outstanding preferred stock is also convertible into common stock on a share for share basis resulting in 2,040,194,900 shares. The 185,460,000 shares issued represent 66% of the currently outstanding common stock and approximately 9% on a fully diluted basis without given any event to any shares reserved under the Company's equity compensation plans. About E-Debit Global Corporation E-Debit Global Corporation (WSHE) is a financial holding company in Canada at the forefront of debit, credit and online computer banking. Currently, the Company has established a strong presence in the privately owned Canadian banking sector including Automated Banking Machines (ABM), Point of Sale Machines (POS), Online Computer Banking (OCB) and E-Commerce Transaction security and payment. E-Debit maintains and services a national ABM network across Canada and is a full participating member of the Canadian INTERAC Banking System. Following the 2011 results, Schumacher & Associates, Inc., in Littleton, Colorado, noted that the Company has incurred net losses for the years ended Dec. 31, 2011, and 2010, and had a working capital deficit and a stockholders' deficit at Dec. 31, 2011, and 2010, which raise substantial doubt about its ability to continue as a going concern. The Company reported a net loss of $1.09 million in 2011, compared with a net loss of $1.15 million in 2010. The Company's balance sheet at June 30, 2012, showed $1.46 million in total assets, $3.13 million in total liabilities and a $1.66 million total stockholders' deficit. ELPIDA MEMORY: Two Universities Allege Patent Infringement ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Massachusetts Institute of Technology and the University of Maryland say that Japan's Elpida Memory Inc. is infringing a patent and is liable for "significant damages." According to the report, the allegations were contained in papers filed with the U.S. Bankruptcy Court in Delaware where Elpida has Chapter 15 protection. As a result of the Chapter 15 proceeding, the two universities are barred from suing Elpida in the U.S. The two universities will ask the bankruptcy judge at an Oct. 24 hearing for permission to commence a patent-infringement suit and obtain an injunction to halt further infringement. They also want the non-bankruptcy court to determine the damages for past infringement. The report relates that the patent pertains to use of a laser to cut links between electrical circuits. The patent is part of the technology Micron Technology Inc. would acquire in purchasing Elpida through the primary bankruptcy in Japan. The Bloomberg report discloses that U.S. bondholders have argued that the proposed sale to Boise, Idaho-based Micron for an estimated $1.8 billion at present value is for substantially less than Elpida's liquidation value. About Elpida Memory Elpida Memory Inc. (TYO:6665) -- http://www.elpida.com/ja/-- is a Japan-based company principally engaged in the development, design, manufacture and sale of semiconductor products, with a focus on dynamic random access memory (DRAM) silicon chips. The main products are DDR3 SDRAM, DDR2 SDRAM, DDR SDRAM, SDRAM, Mobile RAM and XDR DRAM, among others. The Company distributes its products to both domestic and overseas markets, including the United States, Europe, Singapore, Taiwan, Hong Kong and others. The company has eight subsidiaries and two associated companies. After semiconductor prices plunged, Japan's largest maker of DRAM chips filed for bankruptcy in February with liabilities of 448 billion yen ($5.6 billion) after losing money for five quarters. Elpida Memory and its subsidiary, Akita Elpida Memory, Inc., filed for corporate reorganization proceedings in Tokyo District Court on Feb. 27, 2012. The Tokyo District Court immediately rendered a temporary restraining order to restrain creditors from demanding repayment of debt or exercising their rights with respect to the company's assets absent prior court order. Atsushi Toki, Attorney-at-Law, has been appointed by the Tokyo Court as Supervisor and Examiner in the case. Elpida Memory Inc. sought the U.S. bankruptcy court's recognition of its reorganization proceedings currently pending in Tokyo District Court, Eight Civil Division. Yuko Sakamoto, as foreign representative, filed a Chapter 15 petition (Bankr. D. Del. Case No. 12-10947) for Elpida on March 19, 2012. EMPRESEAS INTEREX: December Hearing on Bank's Bid to Foreclose -------------------------------------------------------------- There's a final hearing Dec. 11 in Bankruptcy Court in Puerto Rico on the request of Oriental Bank and Trust for relief from the automatic stay so it may proceed with foreclosure on Empresas Interex, Inc.'s property that serves as collateral to a mortgage note. The bank, in an August filing, said there is cause pursuant to 11 U.S.C. Section 362(d)(1) to lift the automatic stay because the Debtor has failed to comply with the payment of a mortgage note. Empresas Interex is challenging the bank's move. According to the Debtor, considering the litigation costs and the diversion of the Debtor's attention prior to the reorganization process, it is in the best interest of the Debtor's estate that any claims that the bank may have against the Debtor be dealt with in the normal course of the Chapter 11 proceedings and not an individual foreclosure proceeding. The Debtor said the hardship to the Debtor of having to defend itself in a foreclosure proceeding is strong enough to justify forcing the bank to wait until the Debtor has successfully reorganized to be able to pursue its claim. Empresas Interex's deadline for filing of a disclosure statement and plan of reorganization has been extended until Oct. 25, 2012. As reported by the Troubled Company Reporter on Sept. 14, Empresas Interex has arranged postpetition financing that would fund the Chapter 11 case and help its complete development, construction and sale of the Ciudad Atlantis, its residential housing project in Arecibo, Puerto Rico. The hearing on the DIP financing scheduled for Aug. 29 has been reset to Oct. 10. According to a document filed with the bankruptcy court at the end of July, the Debtor's parent, Interamerican University of Puerto Rico, Inc., has agreed to provide financing of up to $700,000, which will bear interest at 4.25% per annum. The $500,000 will be used to complete construction of the residential units of the project and the balance will be used to complete the recreational facilities. The Cuidad Atlantis consists of 131 residences, of which 70 have been sold, 61 are at different termination stages, of which 18 have not been completed, 12 are in the process of termination and the remaining 31 are ready for delivery. DF Servicing, LLC, assignee of Doral Bank, is owed $6.08 million for prepetition loans provided to finance the project. DF and Doral's decision to stop funding prompted the Chapter 11 filing. The Debtor said that the 61 residential units are to be sold at an average sales price of $175,000, producing a gross sales price of $10,675,000, allowing for the payment of the $700,000 loan from the University, to pay DF's claim in full and provide Debtor with funds to pay its other creditors. The loan from the University will be repaid with the sale of 4 to 5 of the Project's residential units. San Juan, Puerto Rico-based Empresas Interex Inc. filed for Chapter 11 bankruptcy (Bankr. D. P.R. Case No. 11-10475) on Dec. 7, 2011. Bankruptcy Judge Mildred Caban Flores presides over the case. The company posts $11,412,500 in assets and US$9,335,561 in liabilities. The Debtor is represented by: Charles A. Cuprill- Hernandez, Esq. Patricia I. Varela-Harrison, Esq. CHARLES A. CUPRILL, P.S.C., LAW OFFICES 356 Fortaleza Street, Second Floor San Juan, PR 00901 Tel: (787) 977-0515 to 977-0517 Fax: 787-977-0518 E-Mail: pvarela@cuprill.com FIELD FAMILY: Meeting to Form Creditors' Panel Set for Oct. 9 ------------------------------------------------------------- Roberta A. DeAngelis, the United States Trustee for Region 3, will hold an organizational meeting on Oct. 9, 2012, at 1:00 p.m. in the bankruptcy case of Field Family Associates, LLP. The meeting will be held at: Office of the United States Trustee 833 Chestnut Street, Suite 501 Philadelphia, PA 19107 The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' case. The organizational meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. A representative of the Debtor, however, may attend the Organizational Meeting, and provide background information regarding the bankruptcy cases. To increase participation in the Chapter 11 proceeding, Section 1102 of the Bankruptcy Code requires that the United States Trustee appoint a committee of unsecured creditors as soon as practicable. The Committee ordinarily consists of the persons, willing to serve, that hold the seven largest unsecured claims against the debtor of the kinds represented on the committee. Section 1103 of the Bankruptcy Code provides that the Committee may consult with the debtor, investigate the debtor and its business operations and participate in the formulation of a plan of reorganization. The Committee may also perform other services as are in the interests of the unsecured creditors whom it represents. Five creditors filed an involuntary Chapter 11 bankruptcy petition against King of Prussia, Pa.-based Field Family Associates, LLC (Bankr. E.D. Pa. Case No. 12-16331) on July 2, 2012. Judge Stephen Raslavich presides over the case. The involuntary petitioners were represented by: Ashely M. Chan, Esq. HANGLEY ARONCHICK SEGAL & PUDLIN One Logan Square, 27th Floor Philadelphia, PA 19103 Tel: (215) 496-7050 E-mail: achan@hangley.com EMISPHERE TECHNOLOGIES: Defaults on $31.1-Million Notes ------------------------------------------------------- Emisphere Technologies, Inc. disclosed that, as of Sept. 27, 2012, it will be in default under the terms of its 11% Senior Secured Convertible Notes issued to MHR Fund Management LLC. Additionally, as of Sept. 27, the Company will be in default under the terms of non-interest bearing promissory notes issued to MHR on June 8, 2010. These defaults occurred, and are continuing, as a result of the Company's failure to pay to MHR $30.5 million in principal and interest due and payable on Sept. 26, 2012 under the terms of the Senior Secured Convertible Notes, and the Company's failure to pay to MHR $600,000 in principal due and payable on Sept. 26, 2012 under the terms of the MHR 2010 Promissory Notes. The Company's obligations under the Senior Secured Convertible Notes are secured by substantially all of the Company's assets, and MHR has the ability to foreclose on such assets as a result of the default there under. MHR has not demanded payment under the Senior Secured Convertible Notes or the MHR 2010 Promissory Notes or exercised its rights there under as a result of the default. MHR has indicated to the Company that it is prepared to continue discussions with the Company regarding proposals relating to the Senior Secured Convertible Notes and MHR 2010 Promissory Notes and the Company's default there under, while reserving all of its rights under the Senior Secured Convertible Notes and MHR 2010 Promissory Notes. Please refer to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on Sept. 26, 2012, for more detailed information. About Emisphere Cedar Knolls, N.J.-based Emisphere Technologies, Inc., is a biopharmaceutical company that focuses on a unique and improved delivery of therapeutic molecules or nutritional supplements using its Eligen(R) Technology. These molecules are currently available or are under development. The Company's balance sheet at June 30, 2012, showed $2.52 million in total assets, $64.86 million in total liabilities, and a stockholders' equity of $62.34 million. McGladrey and Pullen, LLP, in New York City, expressed substantial doubt about Emisphere's ability to continue as a going concern, following the Company's results for the fiscal year ended Dec. 31, 2011. The independent auditors noted that the Company has suffered recurring losses from operations and its total liabilities exceed its total assets. FIRST FINANCIAL: Board Adopts 2012 Director Program --------------------------------------------------- The board of directors of First Financial Service Corporation adopted the 2012 Non-Employee Director Equity Compensation Program. The Director Program enables the Company to compensate non- employee directors for their service on the boards of directors of the Company and First Federal Savings Bank of Elizabethtown with stock awards. The Company currently does not pay cash compensation to non-employee directors of the Company and the Bank pursuant to agreements with bank regulatory agencies. The board has reserved 200,000 of the shares authorized for issuance under the Company's shareholder-approved 2006 Stock Option and Incentive Compensation Plan for stock awards under the Director Program. The Director Program provides that each non-employee director elected or continuing in office on the date of each annual meeting of the Company's shareholders will automatically receive an award of restricted stock on that date having a value of $30,000, based on the closing sale price per share of the Company's common stock on the award date, rounded up to the next whole number. The shares awarded will be subject to restrictions on transfer until the close of business on the day immediately preceding the first anniversary of the award date, or upon the occurrence of a Change of Control of the Company, as defined in the Plan. If a director ceases to serve as a member of the board for any reason, that director will automatically forfeit any unvested shares subject to an award. On Sept. 19, 2012, each of the Company's eight non-employee directors continuing in office received an initial award of 8,241 restricted shares. The restrictions on transfer of these initial awards will expire at the close of business on the day immediately preceding the date of the Company's 2013 annual meeting of shareholders or a Change of Control, and are subject to forfeiture. A copy of the 2012 Director Program is available for free at: http://is.gd/hoH7ul About First Financial Elizabethtown, Kentucky-based First Financial Service Corporation is the parent bank holding company of First Federal Savings Bank of Elizabethtown, which was chartered in 1923. The Bank serves six contiguous counties encompassing central Kentucky and the Louisville metropolitan area, through its 17 full-service banking centers and a commercial private banking center. As reported in the TCR on April 9, 2012, Crowe Horwath LLP, in Louisville, Ky., audited the Company's financial statements for 2011. The independent auditors said that the Company has recently incurred substantial losses, largely as a result of elevated provisions for loan losses and other credit related costs. "In addition, both the Company and its bank subsidiary, First Federal Savings Bank, are under regulatory enforcement orders issued by their primary regulators. First Federal Savings Bank is not in compliance with its regulatory enforcement order which requires, among other things, increased minimum regulatory capital ratios. First Federal Savings Bank's continued non-compliance with its regulatory enforcement order may result in additional adverse regulatory action." The Company's balance sheet at June 30, 2012, showed $1.192 billion in total assets, $1.143 billion in total liabilities, and stockholders' equity of $48.5 million. In its 2012 Consent Order with the FDIC and KDFI, the Bank agreed to achieve and maintain a Tier 1 capital ratio of 9.0% and a total risk-based capital ratio of 12.0% by June 30, 2012. "At June 30, 2012, we were not in compliance with the Tier 1 and total risk- based capital requirements. We notified the bank regulatory agencies that the increased capital levels would not be achieved and anticipate that the FDIC and KDFI will reevaluate our progress toward achieving the higher capital ratios at Sept. 30, 2012." FIRST FINANCIAL: Senator Huddleston Departs from Board ------------------------------------------------------ Senator Walter Dee Huddleston retired as a director of First Financial Service Corporation and its banking subsidiary First Federal Savings Bank of Elizabethtown, Inc., on Sept. 19, 2012. Senator Huddleston has served on the board of directors of the Bank since 1966, and the board of directors of the Company since its inception in 1987, serving as Chairman from 1997 through February 2012. Senator Huddleston has been appointed as a Director Emeritus of the Company and the Bank. Also on Sept. 19, 2012, Gregory S. Schreacke was elected to the board of directors of both the Company and the Bank. Mr. Schreacke's term will expire at the 2013 annual meeting of the Company's shareholders. Mr. Schreacke, age 42, has served as President of the Company and the Bank since January 2008. He assumed principal management responsibility for the Company and the Bank effective Feb. 10, 2012. Mr. Schreacke joined the Company's organization as the Company's chief financial officer in January 2004, serving in that capacity until April 2008, and later from January 2011 to May 2012. He previously served as senior vice president and controller for Team Financial, Inc., in Paola, Kansas for four years. Mr. Schreacke has also served as vice president and controller for Hemet Federal Savings and Loan, as a senior accounting officer at Mercantile Trust & Savings Bank, and as founder and shareholder in Swann, Schreacke & Associates P.C., a certified public accounting practice headquartered in Quincy, Illinois. On May 15, 2012, First Federal Savings Bank of Elizabethtown, Inc., the Company's banking subsidiary, entered into a Branch Purchase Agreement with First Security Bank of Owensboro, Inc., the banking subsidiary of First Security, Inc., headquartered in Owensboro, Kentucky. The Agreement provides for the sale of First Federal's four retail banking offices in Louisville, Kentucky to First Security. The sale is subject to First Security raising additional capital, regulatory approval and other customary closing conditions. The Company no longer expects that the sale will be completed before the end of the third quarter of 2012, as previously announced. The Agreement provides that it may be terminated by either party after Oct. 31, 2012, unless a closing occurs before that date or the Agreement is extended by the parties. About First Financial Elizabethtown, Kentucky-based First Financial Service Corporation is the parent bank holding company of First Federal Savings Bank of Elizabethtown, which was chartered in 1923. The Bank serves six contiguous counties encompassing central Kentucky and the Louisville metropolitan area, through its 17 full-service banking centers and a commercial private banking center. As reported in the TCR on April 9, 2012, Crowe Horwath LLP, in Louisville, Ky., audited the Company's financial statements for 2011. The independent auditors said that the Company has recently incurred substantial losses, largely as a result of elevated provisions for loan losses and other credit related costs. "In addition, both the Company and its bank subsidiary, First Federal Savings Bank, are under regulatory enforcement orders issued by their primary regulators. First Federal Savings Bank is not in compliance with its regulatory enforcement order which requires, among other things, increased minimum regulatory capital ratios. First Federal Savings Bank's continued non-compliance with its regulatory enforcement order may result in additional adverse regulatory action." The Company's balance sheet at June 30, 2012, showed $1.192 billion in total assets, $1.143 billion in total liabilities, and stockholders' equity of $48.5 million. In its 2012 Consent Order with the FDIC and KDFI, the Bank agreed to achieve and maintain a Tier 1 capital ratio of 9.0% and a total risk-based capital ratio of 12.0% by June 30, 2012. "At June 30, 2012, we were not in compliance with the Tier 1 and total risk- based capital requirements. We notified the bank regulatory agencies that the increased capital levels would not be achieved and anticipate that the FDIC and KDFI will reevaluate our progress toward achieving the higher capital ratios at Sept. 30, 2012," the Company said in its quarterly report for the period ended June 30, 2012. FTMI REAL ESTATE: Hearing on Further Cash Use Set for Oct. 31 ------------------------------------------------------------- In a second interim order dated Sept. 24, 2012, FTMI Real Estate, LLC, and FTMI Operator, LLC, obtained interim approval to use cash collateral of the Department of Housing of Urban Development through Oct. 31, 2012, in accordance with a budget. The cash collateral will be utilized solely for ordinary course operations of the assisted living facility, quarterly U.S. Trustee fees and to pay the appointed patient care ombudsman. The Debtors are not allowed to pay any attorneys' fees or costs absent further order of the Court. A further hearing, which may be a final hearing, on the motion will be held on Oct. 31, 2012 at 9:30 a.m. About FTMI Real Estate FTMI Real Estate, LLC and FTMI Operator, LLC sought Chapter 11 protection (Bankr. S.D. Fla. Lead Case No. 12-29214) in Fort Lauderdale on Aug. 10, 2012. FTMI Operator, which operates a health care business The Lenox on The Lake, disclosed just $112,000 in assets and $31.98 million in liabilities. The LENOX -- http://www.thelenox.com-- is South Florida's, newest state-of-the-art Assisted Living and Memory Care community, which has a serene lakeside setting and wonderful waterfront vistas. FTMI Real Estate, a single asset real estate under 11 U.S.C. Sec. 101(51B), scheduled $19.64 million in assets and $28.93 million in liabilities. The Debtor owns The Lenox on The Lake facilities at 6700 Commercial Boulevard, in Lauderhill, Florida valued at $13 million. The Secretary of Housing Urban Development has a $25.87 million claim secured by the property. Thomas L. Abrams, Esq., Esq., at Gamberg & Abrams, in Ft. Lauderdale, Fla., represents the Debtors as counsel. GARY PAPA: Voluntary Chapter 11 Case Summary -------------------------------------------- Debtor: Gary Papa Builders LLC 34 Smithbridge Road Glen Mills, PA 19342 Bankruptcy Case No.: 12-19079 Chapter 11 Petition Date: September 26, 2012 Court: United States Bankruptcy Court Eastern District of Pennsylvania (Philadelphia) Judge: Bruce I. Fox Debtor's Counsel: Paul A.R. Stewart, Esq. LEGAL HELM 333 East Lancaster Avenue Suite 140 Wynnewood, PA 19096 Tel: (610) 864-5600 Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $500,001 to $1,000,000 The Debtor did not file a list of its largest unsecured creditors together with its petition. The petition was signed by Gary Papa, managing member. GHC NY: Voluntary Chapter 11 Case Summary ----------------------------------------- Debtor: GHC NY Corp. 55 Gansevoort Street New York, NY 10014 Bankruptcy Case No.: 12-14031 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court Southern District of New York (Manhattan) Debtor's Counsel: Robert R. Leinwand, Esq. ROBINSON BROG LEINWAND GREENE GENOVESE & GLUCK P.C. 875 Third Avenue, 9th Floor New York, NY 10022 Tel: (212) 603-6300 E-mail: rrl@robinsonbrog.com Estimated Assets: $10,000,001 to $50,000,000 Estimated Debts: $10,000,001 to $50,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Robert Romanoff, authorized signatory. GLOBAL INVESTMENTS: Case Summary & 3 Unsecured Creditors -------------------------------------------------------- Debtor: Global Investments Ltd P.O. Box 5479 Bremerton, WA 98312 Bankruptcy Case No.: 12-19782 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court Western District of Washington (Seattle) Judge: Timothy W. Dore Debtor's Counsel: Jeffrey B. Wells, Esq. LAW OFFICES OF JEFFREY B. WELLS 500 Union Street, Suite 502 Seattle, WA 98101 Tel: (206) 624-0088 E-mail: paralegal@jeffwellslaw.com Scheduled Assets: $1,857,235 Scheduled Liabilities: $3,900,392 A copy of the Company's list of its three unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/wawb12-19782.pdf The petition was signed by Paul Pazooki, president. GOMEZ & GOMEZ: Case Summary & 3 Unsecured Creditors --------------------------------------------------- Debtor: Gomez & Gomez Realty, LLC 300 Parkside Drive Union, NJ 07083 Bankruptcy Case No.: 12-33423 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court District of New Jersey (Newark) Judge: Rosemary Gambardella Debtor's Counsel: David L. Stevens, Esq. SCURA, MEALEY, WIGFIELD & HEYER LLP 1599 Hamburg Turnpike Wayne, NJ 07470 Tel: (973) 696-8391 E-mail: dstevens@scuramealey.com Estimated Assets: $500,001 to $1,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its three unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/njb12-33423.pdf The petition was signed by Janeth Gomez, partner. GRAY TELEVISION: Moody's Rates $40-Mil. 1st Lien Revolver 'Ba3' --------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Gray Television, Inc.'s proposed $40 million priority 1st lien senior secured revolver and a B2 rating to the company's proposed $575 million 1st lien senior secured term loan. Net proceeds from the proposed credit facilities along with the recently issued $300 million senior unsecured notes will be used to refinance existing debt instruments. In addition, Moody's affirmed the B3 Corporate Family Rating (CFR), B3 Probability of Default Rating (PDR) and the SGL -- 2 Speculative Grade Liquidity (SGL) Rating. The rating outlook remains stable. Assigned: Issuer: Gray Television, Inc. NEW $40 million Priority 1st lien Sr Secured Revolver: Assigned Ba3, LGD1 -- 1% NEW $575 million 1st lien Sr Secured Term Loan: Assigned B2, LGD3 -- 33% Affirmed: Issuer: Gray Television, Inc. Corporate Family Rating: Affirmed B3 Probability of Default Rating: Affirmed B3 $300 million Sr Unsecured Notes: Affirmed Caa2, LGD5 -- 85% (from LGD5 -- 87%) Speculative Grade Liquidity (SGL) Rating: Affirmed SGL-2 To be withdrawn upon closing of the transaction: Issuer: Gray Television, Inc. $40 million 1st lien sr sec revolver due December 2014: B2, LGD2 -- 26% $925 million 1st lien sr sec term loan due December 2014 ($461 million outstanding): B2, LGD2 -- 26% $365 million 10.5% 2nd lien sr sec notes due June 2015 ($365 million outstanding): Caa2, LGD5 -- 80% Outlook Actions: Issuer: Gray Television, Inc. Outlook is Stable Ratings Rationale Gray's B3 Corporate Family Rating reflects high leverage with a 2- year average debt-to-EBITDA ratio of 6.9x estimated for September 30, 2012 (including Moody's standard adjustments) and pro forma for the proposed refinancing. Although leverage remains high, the company has been able to improve debt-to-EBITDA ratios and the proposed refinancing will extend 2014-2015 maturities and reduce annual interest expense. Gray continues to benefit from strong demand for political advertising during election years, which should result in markedly higher EBITDA growth for the remainder of 2012 and 2-year average debt-to-EBITDA ratios estimated at 6.8x - 6.9x for FYE2012 compared to 7.6x at the end of 2011. Moody's expects leverage to improve to less than 6.5x over the next 12 to 18 months with 2-year average free cash flow-to-debt ratios of at least 3% - 4%. Ratings incorporate Moody's expectations that total revenues will decline in the low double-digit percentage range in 2013 due to the absence of significant political ad spending only partially offset by low single-digit growth in core ad revenues and expected increases in retransmission fees. Ratings are supported by Gray's longstanding track record for #1 and #2 ranked positions in 29 of 30 markets and good EBITDA margins (including Moody's standard adjustments) reflecting its top ranked local news programming that captures a significant share of market revenues, its relatively low syndicated program costs, and expected cash flow benefits from growing retransmission revenues (net of retrans sharing or reverse compensation). Gray's television stations and associated digital properties also benefit from its strategy of operating stations in university markets (17 collegiate markets) and/or state capitals (8 state capitals) which generally have more stable economies; however, Moody's believes the volatile nature of the company's earnings due to its relatively high level of political revenues increases risks related to unexpected changes in regulations governing political campaign spending. Moody's believes it is critical that Gray continue to focus on reducing debt balances including unfunded pension liabilities, especially during even numbered years, to achieve operating and financial flexibility as well as to absorb risks related to media fragmentation and reliance on political advertising. Ratings incorporate Moody's expectations for good liquidity. As noted previously, the senior note transaction was upsized to $300 million from the initial $250 million and the proposed term loan was decreased to $575 million from $625 million. The priority 1st lien senior secured revolver and 1st lien senior secured term loan share the same collateral; however, at default the term loan is expressly subordinated in right of payment to the first-out revolver. Accordingly, Moody's ranks the priority revolver ahead of the term loan in its priority of claims waterfall. The stable outlook incorporates Moody's expectation that Gray will generate strong political revenue through the first half of November and that EBITDA for 2012 will increase at least 40% above 2011 levels resulting in 2-year average debt-to-EBITDA leverage of 6.9x or less (including Moody's standard adjustments) with further improvement over the rating horizon from expected stable demand for core, non-political advertising. The outlook incorporates Moody's view that the company will maintain good liquidity with the majority of free cash flow being applied to reduce debt balances. To the extent performance tracks management's plan through the end of 2013, the outlook includes the potential for dividends to be reinstated and funded from a portion of free cash flow. Ratings could be downgraded if operating performance falls below expectations or if debt financed acquisitions or shareholder distributions result in 2-year average debt-to-EBITDA ratios increasing above 7.0x. Deterioration in liquidity, including negative free cash flow, could also result in a downgrade. Ratings could be upgraded if Gray's core revenue and EBITDA continue to grow, supported by an improving economic environment, and free cash flow is applied to debt repayment resulting in 2-year average debt-to-EBITDA ratios being sustained below 6.0x (including Moody's standard adjustments) with expectations for further improvement. Gray would also need to maintain good liquidity, including free cash flow-to-debt ratios in the mid-single digit percentage range on a 2-year average basis. The principal methodology used in rating Gray's Television was the Broadcasting and Advertising Related Industry Methodology published in May 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Gray Television, Inc., headquartered in Atlanta, GA, is a television broadcaster that owns 40 primary television stations serving 30 mid-sized markets plus 45 digital second channels. Network affiliations for primary stations include 18 CBS, 10 NBC, 8 ABC, 3 FOX stations, and one in test phase. The company operates stations ranked #1 or #2 in 29 of 30 markets. Gray is publicly traded and the shares are widely held with J. Mack Robinson or affiliates owning approximately 3.1% of common shares. The dual class equity structure provides J. Mack Robinson or affiliates with 39.4% of voting control. The company recorded total revenues of approximately $337 million for the 12 months ended June 30, 2012. GREAT LAKES: Moody's Affirms 'B2' CFR; Outlook Remains Stable ------------------------------------------------------------- Moody's Investors Service has assigned Great Lakes Dredge & Dock Corporation a first-time speculative grade liquidity ("SGL") rating of SGL-2 reflecting a good liquidity profile. Concurrently, all of Great Lakes' ratings, including the B2 corporate family rating, were affirmed. The stable outlook remains unchanged. Great Lakes' good liquidity profile, denoted by the SGL-2 liquidity rating, is supported by a largely undrawn unsecured five-year revolving credit facility put in place in early June (with a springing lien feature) and healthy cash balances. Furthermore, the SGL-2 rating anticipates a moderate improvement in free cash flow generation and ample covenant headroom over the next four quarters. The revolving credit facility is expected to continue to be largely undrawn with minimal usage, if any (except for normal course LC utilization). The company's ability to sell unencumbered assets as a source of liquidity also supports the liquidity rating. The following ratings were affirmed (with updated LGD assessments): Corporate Family Rating, at B2 Probability of Default Rating, at B2 $250 million senior unsecured notes, at B3 (LGD-4, 58%) Rating assigned: SGL-2 Speculative Grade Liquidity Ratings Rationale The affirmation of the B2 corporate family rating reflects the historically volatile domestic dredging bid market, high customer concentration and dependence on government funding priorities. Counterbalancing these factors are Great Lakes' good market position, reasonable financial leverage for the rating category (4.1x on a Moody's adjusted basis including operating leases) and high barriers to entry afforded by the Jones Act and by the sizable capital requirements to enter the dredging business. The ratings consider that debt/EBITDA levels could increase in the intermediate term as the company finances one of its most costly pieces of equipment, a $94 million hopper dredge to be delivered in mid-2014. The stable outlook incorporates Moody's expectations that reasonable growth derived from the company's foreign projects and higher margin capital work in the company's backlog combined with a good liquidity profile should partially mitigate the cyclical nature of the company's business and dependence on government funding priorities and related project timing. The ratings could be raised if the company continues to have a healthy backlog, debt to EBITDA is lowered and sustained at the 3.0 times range, and if there is an expectation of free cash flow to debt of 5% or more on an ongoing basis. The outlook or ratings could be pressured if bid market levels decline meaningfully, the company does a sizable debt-financed acquisition, liquidity weakens, financial leverage rises above 4.5 times and EBITA/interest falls below 1.7 times and is sustained at those levels. The principal methodology used in rating Great Lakes Dredge & Dock Corporation was the Global Construction Industry Methodology, published November 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Great Lakes Dredge & Dock Corporation, founded in 1890 and headquartered in Oak Brook, Illinois is the largest provider of dredging services in the United States. Approximately 20% of Great Lakes' revenues are derived from demolition operations. Revenues for the last twelve months ended June 30, 2012 totaled $638.5 million. GUARANTY FINANCIAL: Texas Wyoming Drilling Debate Continues ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the debate continues in the Fifth Circuit about how specific a Chapter 11 plan must be for lawsuits to be pursued after the plan is confirmed. According to the report, the latest opinion came down on Sept. 19 from U.S. District Judge Sam A. Lindsay in Dallas, whose split decision in larger part allows lawsuits to proceed in the aftermath of the reorganization of Guaranty Financial Group Inc. The report relates that the trustee for the creditors' liquidating trust sued the company's former financial advisers, contending they used confidential information to "short" the company's stock. The report notes that Judge Lindsay was interpreting a pair of decisions from the U.S. Court of Appeals in New Orleans named United Operating and Texas Wyoming Drilling. The 5th Circuit in New Orleans takes appeals from Texas, Mississippi and Louisiana. According to Bloomberg, united operating set the standard originally by requiring that description of forthcoming suits must be "specific and unequivocal." The defendants argued that the two 5th Circuit cases require that the Chapter 11 plan must list the defendants' names, the nature of the suits, and the amount of damages sought. Judge Lindsay disagreed. Upholding most of the suit, he said it is sufficient if the plan or disclosure statement lists the forthcoming lawsuits by category. The two cases, he said, don't require listing the name of the defendant, the amount of the recovery, and the basis for the claim. On the other hand, Lindsay ruled in favor of the defendants and dismissed fraudulent transfer claims under state law. He said the plan only listed fraudulent transfer suits under federal law. Judge Lindsay said claims survived for securities fraud because the plan reserved suits for fraud. He dismissed claims for breach of good faith and fair dealing. He said those two categories weren't covered by a general reference to tort claims or claims for breaches of duties imposed by law. The Bloomberg report notes that the 5th Circuit is unique among the federal appeals courts by requiring as high level of detail laid out in advance of confirmation for suits to be commenced after a plan is implemented. The lawsuit in Judge Lindsay's court is Tepper v. Keefe Bruyette & Woods Inc., 11-2087, U.S. District Court, Northern District of Texas (Dallas). About Guaranty Financial Guaranty Financial, based in Austin, Texas, and its affiliates filed for chapter 11 bankruptcy protection (Bankr. N.D. Tex. Case No. 09-35582) on Aug. 27, 2009, after its bank subsidiary was taken over by regulators. Attorneys at Haynes & Boone, LLP, served as the Debtors' bankruptcy counsel. According to the schedules attached to its petition, Guaranty Financial disclosed $24.3 million in total assets and $323.4 million in total debts, including $305.0 million in trust preferred securities. The bulk of Guaranty's remains were acquired by BBVA Compass, the U.S. division of Banco Bilbao Vizcaya Argentaria SA of Spain. Guaranty Financial received approval of its Second Amended Joint Plan of Liquidation on May 11, 2011. The Plan was declared effective later that month. The Plan is based on a settlement with the FDIC and the indenture trustee for the noteholders. The Plan calls for the FDIC to receive some of the remaining cash and all of the tax refunds, which are estimated at $3.49 million. Unsecured creditors with $382 million in claims stand to recover between 1% and 3%, from proceeds generated from lawsuits. HARPER BRUSH: Wants Until Oct. 26 to File Plan and Disclosures -------------------------------------------------------------- Harper Brush Works, Inc., asks the U.S. Bankruptcy Court for the Southern District of Iowa to extend its exclusive period to file a plan by 30 days, or until Oct. 26, 2012. The Debtor asserts that it is current in all of its obligations under the Bankruptcy Code and Rules, and the requirements of the Office of the United States Trustee, that it has made progress in the preparation of a Plan of Reorganization and Disclosure Statement, which contemplates a sale of substantially all of the Debtor's assets. Its duly-employed investment banker, Debtor relates, has been actively, diligently and aggressively marketing the Debtor and its assets as a going concern. The Debtor says those marketing efforts have resulted in numerous inquiries and interest, but has not progressed far enough to warrant submission of a Plan and Disclosure Statement at this time. The Debtor tells the Court that it is fairly confident that sufficient progress will be made within the next approximately 30 days, such that the Debtor will be able to finalize and file a Plan and Disclosure Statement. About Harper Brush Works Fairfield, Iowa-based Harper Brush Works, Inc., filed a Chapter 11 petition (Bankr. S.D. Iowa) in Des Moines on May 29, 2012. Family-owned Harper Brush -- http://www.harperbrush.com/-- provides more than 1,000 products, including pushbrooms, mops, floor squeegees, automotive brushes, dust pans, and buckets. The Company disclosed assets of $10.4 million against debt totaling $10 million, including $6 million owing to secured creditors. Judge Anita L. Shodeen presides over the case. Donald F. Neiman, Esq., and Jeffrey D. Goetz, Esq., at Bradshaw, Fowler, Proctor & Fairgrave, P.C., serve as bankruptcy counsel to the Debtor. Equity Partners CRB LLC serves as the Debtor's investment banker. An official committee of unsecured creditors has been appointed in the case. Richard S. Lauter, Esq., and Thomas R. Fawkes, Esq., at Freeborn & Peters LLP, in Chicago, represents the Committee as general bankruptcy counsel. Joseph A. Peiffer, Esq., at Day Rettig Peiffer, P.C., in Cedar Rapids, Iowa, represents the Committee as local counsel. HART OIL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Hart Oil & Gas, Inc., a Colorado Profit Corporation 4646 Rockcliff Road Austin, TX 78746 Bankruptcy Case No.: 12-13558 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court District of New Mexico (Albuquerque) Judge: Robert H. Jacobvitz Debtor's Counsel: William F. Davis, Esq. WILLIAM F. DAVIS & ASSOCIATES, P.C. 6709 Academy NE, Suite A Albuquerque, NM 87109 Tel: (505) 243-6129 Fax: (505) 247-3185 E-mail: daviswf@nmbankruptcy.com Estimated Assets: $100,001 to $500,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/nmb12-13558.pdf The petition was signed by Andrew Brian Saied, president. HARTFORD FINANCIAL: Fitch Affirms Rating on Three Notes at Low-B ---------------------------------------------------------------- Fitch Ratings has affirmed all Issuer Default Ratings (IDRs), debt and Insurer Financial Strength (IFS) ratings for the Hartford Financial Services Group, Inc. (HFSG) and its primary life and property/casualty insurance subsidiaries. The Rating Outlook is Stable. Fitch's rating action follows HFSG's announcement that it has reached an agreement to sell its individual life business to Prudential Financial, Inc. (Prudential) for a ceding commission of $615 million. No legal entities will be sold. The transaction is expected to close in early 2013, subject to regulatory approval. The sale is not expected to have a material impact on HFSG's GAAP shareholders' equity (excluding accumulated other comprehensive income [AOCI]) but is expected to have a positive net statutory capital impact to Hartford Life of approximately $1.5 billion. This transaction represents the final step in HFSG's strategy (announced in March 2012) to focus on its property/casualty, group benefits, and mutual funds businesses. The company has already reached agreements to sell its retirement plans business to Massachusetts Mutual Life Insurance Company (MassMutual) and to sell Woodbury Financial Services (its independent broker-dealer) to American International Group, Inc. (AIG), with both transactions expected to close by the end of 2012. In addition, U.S. individual annuity and Japan annuity have been placed into runoff, and HFSG has signed an agreement to sell its individual annuity new business capabilities to Forethought Financial Group. Fitch favorably views HFSG's ability to enter into these agreements in a timely manner and for a reasonable price. A lengthy time horizon for a sale could have increased uncertainty and impaired the market position of these businesses and potentially forced a distressed sale. Favorably, over the long term, management's decision to exit the more volatile variable annuities (VA) and individual life businesses should help to reduce risk by making the company less vulnerable to swings in performance. Fitch expects HFSG to maintain a financial leverage ratio at or below 25% following the final successful execution of the company's strategic initiatives and any ultimate subsequent capital management actions. HFSG's financial leverage ratio (excluding AOCI on fixed maturities) increased to 26.8% at June 30, 2012 from 23.8% at Dec. 31, 2011, due to additional debt issued to redeem the company's 10% junior subordinated debentures investment by Allianz SE. HFSG's operating earnings-based interest and preferred dividend coverage has been reduced in recent years, averaging a low 3.4x from 2008 to 2011. This reflects both constrained operating earnings and increased interest expense and preferred dividends paid on capital over this period. Fitch expects HFSG's run-rate operating earnings-based interest and preferred dividend coverage to improve to at least 5.0x, with a reduced overall level of fixed charges. As the company completes its restructuring efforts, Fitch will review future capitalization plans and earnings capabilities, as well as capital needs in various run-off operations. Over the past two years, HFSG has significantly altered its business profile. The management of the new business profile and ultimate capital structure could influence Fitch's rating opinion. Fitch expects to assess these factors in the coming months as management plans become clear. Fitch maintains separate IFS ratings on HFSG's life and property/casualty companies that reflect each businesses respective stand-alone financial profile. Fitch considers the primary life insurance subsidiaries to be non-core as the life businesses are not considered to be a material strategic focus of the company. As such, the life insurance subsidiaries continue to receive an IFS rating of 'A-', reflecting their own combined financial profile. Upon the closing of the transactions, Fitch will review the ratings of the life insurance companies within the context of its group ratings methodology to consider differentiating the ratings of each life insurance entity based on its stand-alone profile or retaining its group approach for the life subsidiaries. Fitch expects that HFSG will continue to support its insurance subsidiaries and maintain insurance company capitalization that is consistent with the current ratings. The ratings for Hartford Life's operations reflect an adequate U.S. consolidated statutory capital position. While capital generation is expected to remain flat through 2012, Fitch expects consolidated U.S. life insurance to remain above the company's 325% RBC targets for its life operations and 125% for its VA captive operations. The key rating triggers that could result in an upgrade to HFSG's debt ratings include a financial leverage ratio maintained near 20%, maintenance of at least $1 billion of holding company cash, and interest and preferred dividend coverage of at least 6x. Continued success with the strategic plan and successful seasoning of run-off operations would also be considered favorably. Fitch considers a rating upgrade to be unlikely in the near term for HFSG's life and property/casualty insurance subsidiaries. The key rating triggers that could result in a downgrade include significant investment or operating losses that materially impact GAAP shareholders' equity or statutory capital within the insurance subsidiaries, particularly as they relate to any major negative surprises in the runoff VA business; a financial leverage ratio maintained above 25%; a sizable drop in holding company cash; failure to improve interest and preferred dividend coverage; and an inability to execute on the company's strategic plan. Fitch affirms the following ratings with a Stable Outlook: Hartford Financial Services Group, Inc. -- Long-term IDR at 'BBB+'; -- $320 million 4.625% notes due 2013 at 'BBB'; -- $200 million 4.75% notes due 2014 at 'BBB'; -- $300 million 4.0% senior notes due 2015 at 'BBB'; -- $200 million 7.3% notes due 2015 at 'BBB'; -- $300 million 5.5% notes due 2016 at 'BBB'; -- $499 million 5.375% notes due 2017 at 'BBB'; -- $325 million 4.0% senior notes due 2017 at 'BBB'; -- $500 million 6.3% notes due 2018 at 'BBB'; -- $500 million 6% notes due 2019 at 'BBB'; -- $499 million 5.5% senior notes due 2020 at 'BBB'; -- $800 million 5.125% senior notes due 2022 at 'BBB'; -- $298 million 5.95% notes due 2036 at 'BBB'; -- $299 million 6.625% senior notes due 2040 at 'BBB'; -- $325 million 6.1% notes due 2041 at 'BBB'; -- $425 million 6.625% senior notes due 2042 at 'BBB'; -- $600 million 7.875% junior subordinated debentures due 2042 at 'BB+'; -- $500 million 8.125% junior subordinated debentures due 2068 at 'BB+'; -- $556 million 7.25% mandatory convertible preferred stock, series F at 'BB+'. Hartford Financial Services Group, Inc. -- Short-term IDR at 'F2'; -- Commercial paper at 'F2'. Hartford Life, Inc. -- Long-term IDR at 'BBB'; -- $149 million 7.65% notes due 2027 at 'BBB-'; -- $92 million 7.375% notes due 2031 at 'BBB-'. Hartford Life Global Funding -- Secured notes program at 'A-'. Hartford Life Institutional Funding -- Secured notes program at 'A-'. Hartford Life and Accident Insurance Company -- IFS at 'A-'. Hartford Life Insurance Company -- IFS at 'A-'; -- Medium-term note program at 'BBB+'. Hartford Life and Annuity Insurance Company -- IFS at 'A-'. Members of the Hartford Fire Insurance Intercompany Pool: Hartford Fire Insurance Company Nutmeg Insurance Company Hartford Accident & Indemnity Company Hartford Casualty Insurance Company Twin City Fire Insurance Company Pacific Insurance Company, Limited Property and Casualty Insurance Company of Hartford Sentinel Insurance Company, Ltd. Hartford Insurance Company of Illinois Hartford Insurance Company of the Midwest Hartford Underwriters Insurance Company Hartford Insurance Company of the Southeast Hartford Lloyd's Insurance Company Trumbull Insurance Company -- IFS at 'A+'. HERTZ CORP: Moody's Confirms 'B1' CFR/PDR; Outlook Stable --------------------------------------------------------- Moody's Investors Service confirmed The Hertz Corporation's ratings which include: Corporate Family Rating (CFR) and Probability of Default Rating (PDR) at B1; senior secured at Ba1; and senior unsecured at B2. The company's Speculative Grade Liquidity rating is affirmed at SGL-3. Ratings Rationale The confirmation of the Hertz ratings reflects Moody's expectation that the strategic benefits from the acquisition of Dollar Thrifty Automotive Group (Dollar) will enable the company to maintain a competitive position and credit metrics that support a B1 rating. Hertz will finance the $2.6 billion acquisition of Dollar with cash on hand and the issuance of approximately $1.9 billion of new debt. The acquisition will provide Hertz with a well-established and highly competitive position in the value segment of the US car rental market -- a segment in which Hertz's current position lags that of its rivals. Moreover, the company has identified a minimum of $160 million of cost synergies that it expects to achieve over next 24 months. Beyond these savings, Hertz also anticipates that there will be additional growth opportunities resulting from the acquisition. The rating confirmation anticipates that Hertz will achieve a large portion of the planned synergies. Notwithstanding these planned synergies, the $1.9 billion of additional debt taken on by Hertz should not result in a material erosion of its current credit metrics. This capacity to retain metrics near current levels despite the added debt is due largely to the modest leverage and competitive return measures of Dollar. The key credit metrics for Hertz vs. Dollar for the last-twelve- months (LTM) through June 2012 include: pre-tax income/sales of 6.1% vs. 19.8%; EBIT/interest of 1.7x vs. 3.5x; and debt/EBITDA of 3.8x vs. 2.8x. (All metrics reflect Moody's standard adjustments). Dollar's stand alone credit metrics are considerably stronger than those of Hertz. As a result, when the entities are combined on a pro forma basis with the addition of $1.9 billion of acquisition debt, the resulting metrics do not reflect any material weakening from Hertz's current stand alone metrics. Pro forma for the additional debt and assuming no synergy benefits, these LTM measures approximate the following: pre-tax income/sales of 6.8%; EBIT/interest of 1.7x; and debt/EBITDA of 4.0x. These pro forma measures support the B1 rating. Moreover, as Hertz achieves the planned synergies it will demonstrate the strategic soundness of the transaction and will further strengthen its credit profile. A key factor in the rating confirmation is Moody's expectation that Hertz will maintain a sound liquidity profile. This is a critical consideration given the sizable ongoing refunding requirements the company will face in supporting its rental fleet. Pro forma for the acquisition, Hertz's key liquidity source will include a $1.8 billion ABL facility that matures in 2016, approximately $600 million in unrestricted cash, and the proceeds from the sale of vehicles and equipment. The key use of cash will include vehicle and equipment purchases. Funding these purchases will require Hertz to renew various maturing asset-backed-security (ABS) facilities on an ongoing basis. Moody's believes that the company's existing sources of liquidity, its solid operating performance, the appetite of the ABS market for securities supported by car rental assets, and Hertz's pro-active strategy of planning facility renewals well in advance of maturity will help preserve an adequate liquidity profile. Healthy industry fundamentals are also a consideration in the rating confirmation. Moody's expects that the car rental sector will benefit from a number of factors. Vehicle residual values should be supported by the disciplined approach that automotive OEMs have adopted in better matching production levels with retail demand. These values should also be supported by the historically modest levels of off-lease vehicles likely to enter the market over the intermediate term. Although pricing in the car rental sector will remain competitive, the environment should benefit from the consolidation that has taken place and by the increasing focus of car rental companies on improving returns by reducing costs rather than by growing share position through discounting. Finally, demand in the equipment rental sector has improved significantly relative to the levels experienced during 2009. Although there may be some softening during 2013, demand should remain well above that of 2009. Hertz's rating outlook could be changed to positive if the company were to demonstrate clear progress in integrating Dollar and achieving the planned synergies. Credit measures that might support a change in outlook include pre-tax income/sales remaining above 7% and EBIT/interest exceeding 2x. Any improvement in Hertz's outlook or rating would also be dependent upon the company maintaining a prudent liquidity profile. There would be pressure on Hertz's rating if the company can not demonstrate synergistic benefits of the acquisition. Metrics that might indicate rating pressure include pre-tax income/sales below 5% and EBIT/interest below 1.5x. The principal methodology used in rating Hertz was the Global Equipment and Automobile Rental Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. HERTZ CORP: S&P Affirms 'BB' Rating on $1.4-Bil. Term Loan ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' issue-level rating on Hertz Corp.'s $1.4 billion term loan that matures in 2018 after a $750 million add-on. The rating remains on CreditWatch with negative implications. "The recovery rating on this issue is '1', indicating our expectation that lenders would receive very high (90%-100%) recovery of principal in the event of a payment default. Hertz Corp. is the major operating subsidiary of Hertz Global Holdings Inc. (B+/Watch Neg/--). Proceeds from the add-on may only be borrowed in conjunction with Hertz's proposed acquisition of Dollar Thrifty Automotive Group Inc. (DTAG; B+/Watch Neg/--)," S&P said. "Our ratings on Hertz Corp. remain on CreditWatch, where we placed them with negative implications on Aug. 27, 2012, after the company announced it had entered into a definitive agreement to acquire competitor DTAG for $2.6 billion of cash and the assumption of $1.6 billion of DTAG's fleet debt. The company will fund the acquisition through a combination of Hertz's cash, DTAG's cash, and debt, for which Hertz has committed financing. Hertz has stated it will divest its Advantage value brand, certain additional assets, and DTAG airport concessions to obtain regulatory approval. Unless there are additional material changes required to obtain regulatory approval, we would expect to affirm the corporate credit rating and assign a stable outlook upon the closing of the proposed transaction, which we expect to occur by year end, or possibly earlier," S&P said. RATINGS LIST Hertz Corp. Corporate Credit Rating B+/Watch Neg/-- Rating Affirmed Hertz Corp. $2.15 billion term loan due 2018 BB/Watch Neg Recovery Rating 1 INTERCOASTAL CONTRACTING: Bankruptcy May Delay Bridge Work ---------------------------------------------------------- Lindell Kay at The Daily News in Jacksonville, N.C., reported that the replacement of the Herbert G. Phillips Bridge in Jacksonville, North Carolina, may be slowed as a result of the bankruptcy filing of a contractor, but work will not stop. According to The Daily News, Intercoastal Contracting Inc., dba Intercoastal Diving Inc., filed for Chapter 11 bankruptcy late August in U.S. Bankruptcy Court for the Eastern District of North Carolina. The company -- http://www.intercoastalcontracting.com/ -- supports heavy construction, utility and manufacturing industries throughout the Mid-Atlantic Region of the US. The report notes Intercoastal Contracting, in its bankruptcy petition dated Aug. 29, listed between $1 million and $10 million in assets, and between $1 million and $10 million in liabilities, according to court documents. The Company's creditors include more than $2.3 million in job bonds to Liberty Mutual and more than $990,000 to SunTrust Bank, according to court documents. According to the report, Intercoastal Contracting, based in Castle Hayne, was awarded in 2010 a contract by the N.C. Transportation Department for $11.8 million to construct the Buddy Phillips, which spans the New River on Marine Boulevard as part of Business U.S. 17. The company faces a contract penalty if the job isn't done by July 2013. The state requires contractors to be bonded to ensure projects are completed, and as a precaution, the NCDOT decided to involve the bonding company to ensure the project is finished on time, the Daily News quotes David Candela, resident engineer with the NCDOT in Jacksonville, as saying The report, citing an article from The Star News of Wilmington (N.C.), says Intercoastal Diving this summer lost a $2.6 million lawsuit to a Carolina Beach homeowners association for faulty work done to a bulkhead in 2007 that caused damage to the HOA's shoreline. The jury verdict came after two years of legal wranglings and a three-week trial in New Hanover County, According to the report, James Oliver Carter, Esq., at Carter & Carter, represents the Company as its attorney. IRWIN MORTGAGE: Has Until Jan. 8 to Propose Chapter 11 Plan ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Ohio extended Irwin Mortgage Corporation's exclusive periods to file and solicit acceptances for a proposed chapter 11 plan until Jan. 8, 2013, and March 8, 2013, respectively. This is the fourth extension granted by the Debtor. About Irwin Mortgage For a number of years, Irwin Mortgage Corporation, based in Dublin, Ohio, originated, purchased, sold and serviced conventional and government agency backed residential mortgage loans throughout the United States. However, in 2006 and continuing into early 2007, IMC sold substantially all of its assets, including its mortgage origination business, its mortgage servicing business, and its mortgage servicing rights portfolio, to a number of third party purchasers. As a result of those sales, IMC terminated its operations and has been winding down since 2006. Irwin Mortgage filed for Chapter 11 bankruptcy (Bankr. S.D. Ohio Case No. 11-57191) on July 8, 2011. Judge Charles M. Caldwell presides over the case. In its petition, the Debtor estimated assets of $10 million to $50 million, and debts of $50 million to $100 million. The petition was signed by Fred C. Caruso, president. Nick V. Cavalieri, Esq., Matthew T. Schaeffer, Esq., and Robert B. Berner, Esq., at Bailey Cavalieri LLC, serve as the Debtor's counsel. Fred C. Caruso and Development Specialists Inc. provide wind-down management services to the Debtor. JOHN BECK: Get-Rich-Quick Marketer Ends Up in Chapter 11 -------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that John N. Beck II, who made millions of dollars selling supposedly fool-proof schemes to get rich quick, filed a Chapter 11 petition (Bankr. N.D. Calif. Case No. 12-47882) last week in Oakland, California. According to the report, the Federal Trade Commission said that almost everyone lost money in the investment schemes described in his $39.95 books. He has been enjoined by a court from advertising that people make money from his systems and is partly responsible for repaying $478 million to almost 1 million consumers. The Bloomberg report discloses that Mr. Beck estimated assets of less than $10 million and liabilities exceeding $100 million. The FTC case is Federal Trade Commission v. John Beck Amazing Profits LLC, 09-CV-4719, U.S. District Court for the Central District of California (Los Angeles). JOURNAL REGISTER: Section 341(a) Meeting Scheduled for Oct. 15 -------------------------------------------------------------- The U.S. Trustee for Region 2 will convene a meeting of creditors in Journal Register Company, et al.'s Chapter 11 case on Oct. 15, 2012, at 2 p.m. The meeting will be held at the 80 Broad St., 4th Floor, USTM. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. About Journal Register Journal Register Company -- http://www.JournalRegister.com/-- is the publisher of the New Haven Register and other papers in 10 states, including Philadelphia, Detroit and Cleveland, and in upstate New York. The Company's more than 350 multi-platform products reach an audience of 21 million people each month. JRC is managed by Digital First Media and is affiliated with MediaNews Group, Inc., the nation's second largest newspaper company as measured by circulation. Journal Register, along with its affiliates, first filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 09-10769) on Feb. 21, 2009. Attorneys at Willkie Farr & Gallagher LLP, served as counsel to the Debtors. Attorneys at Otterbourg, Steindler, Houston & Rosen, P.C., represented the official committee of unsecured creditors. Journal Register emerged from Chapter 11 protection under the terms of a pre-negotiated plan. Journal Register returned to bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-13774) on Sept. 5, 2012, to sell the business to 21st CMH Acquisition Co., an affiliate of funds managed by Alden Global Capital LLC. The deal is subject to higher and better offers. Journal Register expects to complete the auction and sale process within 90 days. Journal Register exited the 2009 restructuring with $225 million in debt and with a legacy cost structure, which includes leases, defined benefit pensions and other liabilities that have become unsustainable and threatened the Company's efforts for a successful digital transformation. Journal Register managed to reduce the debt by 28% with the Company servicing in excess of $160 million of debt. Alden Global is the holder of two terms loans totaling $152.3 million. Alden Global acquired the stock and the term loans from lenders in Journal Register's prior bankruptcy. Journal Register disclosed total assets of $235 million and liabilities totaling $268.6 million as of July 29, 2012. This includes $13.2 million owing on a revolving credit to Wells Fargo Bank NA. Bankruptcy Judge Stuart M. Bernstein presides over the 2012 case. Neil E. Herman, Esq., Rachel Jaffe Mauceri, Esq., and Patrick D. Fleming, Esq., at Morgan, Lewis & Bockius, LLP; and Michael R. Nestor, Esq., Kenneth J. Enos, Esq., and Andrew L. Magaziner, Esq., at Young Conaway Stargatt & Taylor LLP, serve as the 2012 Debtors' counsel. SSG Capital Advisors, LLC, serves as financial advisors. American Legal Claims Services LLC acts as claims agent. The petition was signed by William Higginson, executive vice president of operations. Otterbourg, Steindler, Houston & Rosen, P.C., represents Wells Fargo. Akin, Gump, Strauss, Hauer & Feld LLP, represents the Debtors' Tranche A Lenders and Tranche B Lenders. Emmet, Marvin & Martin LLP, serves as counsel to Wells Fargo, in its capacity as Tranche A Agent and the Tranche B Agent. JOURNAL REGISTER: U.S. Trustee Forms 5-Member Creditors Committee ----------------------------------------------------------------- Tracy Hope Davis, the United States Trustee for Region 2, appointed these persons to serve on the Official Committee of Unsecured Creditors in the Chapter 11 cases of Journal Register Company, et al. The Committee comprises of: 1. Pension Benefit Guaranty Corporation Attn: Lori A. Butler, Office of Chief Counsel 1200 K Street, N.W. Washington, D.C. 20005 Tel: (202) 326-4020, ext. 3723 Fax: (202) 326-4112 2. Communications Workers of America Attn: William D. Ross, executive director Local 38010 1329 Buttonwood Street Philadelphia, PA 19123 Tel: (215) 928-0178 Fax: (215) 928-0177 3. Affinity Express, Inc. Attn: Kenneth W. Swanson, chief executive officer 2200 Point Blvd., Suite 130 Elgin, IL 60123 Tel: (973) 539-2795 Fax: (847) 930-3299 4. Xpedx Attn: Jeffrey Biskaduros, credit manager Division of International Paper 261 River Road Clinton, NJ 07014 Tel: (973) 405-2231 Fax: (973) 405-2143 5. Flint Group North America Corporation Attn: Judith L. Cook, Treasury Manager 14909 N. Beck Road Plymouth, Michigan 48178 Tel: (734) 781-4600 Fax: (734) 781-4206 As reported in the Troubled Company Reporter on Sept. 17, 2012, Lowenstein Sandler was retained as creditors' committee counsel. About Journal Register Journal Register Company -- http://www.JournalRegister.com/-- is the publisher of the New Haven Register and other papers in 10 states, including Philadelphia, Detroit and Cleveland, and in upstate New York. The Company's more than 350 multi-platform products reach an audience of 21 million people each month. JRC is managed by Digital First Media and is affiliated with MediaNews Group, Inc., the nation's second largest newspaper company as measured by circulation. Journal Register, along with its affiliates, first filed for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 09-10769) on Feb. 21, 2009. Attorneys at Willkie Farr & Gallagher LLP, served as counsel to the Debtors. Attorneys at Otterbourg, Steindler, Houston & Rosen, P.C., represented the official committee of unsecured creditors. Journal Register emerged from Chapter 11 protection under the terms of a pre-negotiated plan. Journal Register returned to bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-13774) on Sept. 5, 2012, to sell the business to 21st CMH Acquisition Co., an affiliate of funds managed by Alden Global Capital LLC. The deal is subject to higher and better offers. Journal Register expects to complete the auction and sale process within 90 days. Journal Register exited the 2009 restructuring with $225 million in debt and with a legacy cost structure, which includes leases, defined benefit pensions and other liabilities that have become unsustainable and threatened the Company's efforts for a successful digital transformation. Journal Register managed to reduce the debt by 28% with the Company servicing in excess of $160 million of debt. Alden Global is the holder of two terms loans totaling $152.3 million. Alden Global acquired the stock and the term loans from lenders in Journal Register's prior bankruptcy. Journal Register disclosed total assets of $235 million and liabilities totaling $268.6 million as of July 29, 2012. This includes $13.2 million owing on a revolving credit to Wells Fargo Bank NA. Bankruptcy Judge Stuart M. Bernstein presides over the 2012 case. Neil E. Herman, Esq., Rachel Jaffe Mauceri, Esq., and Patrick D. Fleming, Esq., at Morgan, Lewis & Bockius, LLP; and Michael R. Nestor, Esq., Kenneth J. Enos, Esq., and Andrew L. Magaziner, Esq., at Young Conaway Stargatt & Taylor LLP, serve as the 2012 Debtors' counsel. SSG Capital Advisors, LLC, serves as financial advisors. American Legal Claims Services LLC acts as claims agent. The petition was signed by William Higginson, executive vice president of operations. Otterbourg, Steindler, Houston & Rosen, P.C., represents Wells Fargo. Akin, Gump, Strauss, Hauer & Feld LLP, represents the Debtors' Tranche A Lenders and Tranche B Lenders. Emmet, Marvin & Martin LLP, serves as counsel to Wells Fargo, in its capacity as Tranche A Agent and the Tranche B Agent. K-V PHARMACEUTICAL: Files Schedules of Assets and Liabilities ------------------------------------------------------------- Ther-Rx Corporation, debtor-affiliate of K-V Discovery Solutions, Inc., filed with the U.S. Bankruptcy Court for the Southern District of New York its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $0 B. Personal Property $258,296,529 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $235,100,000 E. Creditors Holding Unsecured Priority Claims $1,638 F. Creditors Holding Unsecured Non-priority Claims $62,984,613 ----------- ----------- TOTAL $258,296,529 $298,086,251 Debtor-affiliates also filed their respective schedules, disclosing: Company Assets Liabilities ------- ------ ----------- K-V Discovery Solutions, Inc. $50,305,751 $268,084,613 FP1096, Inc. $0 $268,084,613 Zeratech Technologies USA, Inc., $0 $268,084,613 K-V Pharmaceutical Company, ($33,833,152) $598,879,432 K-V Solutions USA, Inc. $0 $268,084,613 DrugTech Corporation ($222,970,212) $268,084,613 K-V Generic Pharmaceuticals, Inc. $14,347,498 $268,084,613 Copies of the schedules are available for free at: http://bankrupt.com/misc/K-V_PHARMACEUTICAL_sal.pdf http://bankrupt.com/misc/K-V_PHARMACEUTICAL_sal_b.pdf http://bankrupt.com/misc/K-V_PHARMACEUTICAL_sal_c.pdf http://bankrupt.com/misc/K-V_PHARMACEUTICAL_sal_d.pdf http://bankrupt.com/misc/K-V_PHARMACEUTICAL_sal_e.pdf http://bankrupt.com/misc/K-V_PHARMACEUTICAL_sal_f.pdf http://bankrupt.com/misc/K-V_PHARMACEUTICAL_sal_g.pdf http://bankrupt.com/misc/K-V_PHARMACEUTICAL_sal_h.pdf About K-V Pharmaceutical KV Pharmaceutical Company (NYSE: KVa/KVb) -- http://www.kvpharmaceutical.com/-- is a fully integrated specialty pharmaceutical company that develops, manufactures, markets, and acquires technology-distinguished branded and generic/non-branded prescription pharmaceutical products. The Company markets its technology distinguished products through ETHEX Corporation, a subsidiary that competes with branded products, and Ther-Rx Corporation, the company's branded drug subsidiary. K-V Pharmaceutical Company and certain domestic subsidiaries on Aug. 4 filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 12-13346, under K-V Discovery Solutions Inc.) to restructure their financial obligations. K-V has retained the services of Willkie Farr & Gallagher LLP as bankruptcy counsel, Williams & Connolly LLP as special litigation counsel, and SNR Denton as special litigation counsel. In addition, K-V has retained Jefferies & Co., Inc., as financial advisor and investment banker. Epiq Bankruptcy Solutions LLC is the claims and notice agent. The U.S. Trustee appointed five persons to serve in the Official Committee of Unsecured Creditors. L-3 COMMUNICATIONS: Fitch Holds 'BB+' Rating on Senior Sub. Debt ---------------------------------------------------------------- Fitch Ratings has affirmed the 'BBB-' Issuer Default Ratings (IDR) and debt ratings for L-3 Communications Holdings, Inc. (L-3) and L-3 Communications Corporation. The Rating Outlook is Stable. Approximately $3.9 billion of outstanding debt is covered by these ratings. The senior subordinated ratings remain one notch below L-3's IDR and senior unsecured debt due to contractual subordination. Convertible contingent debt securities are also rated one notch below the IDR and senior unsecured debt due to subordination of its guarantees. Key factors that support the ratings include L-3's solid credit metrics; strong liquidity position; and Fitch's expectation of solid, though declining operating margins and substantial free cash flow (FCF; cash from operations less capital expenditures and dividends). FCF totaled approximately $1 billion for the last 12 months (LTM) ended June 29, 2012 and includes Engility Corporation (Engility) operating results). Other positive factors include L-3's diverse portfolio of products and services that are in line with the Department of Defense (DoD) requirements and a balanced contract mix. Additionally, some concerns about exposure to declining DoD supplemental budgets were lessened with the spin-off of Engility. Fitch's concerns include: -- L-3's declining revenues and lower margins, which are expected to remain under pressure due to continued redeployment of the U.S. troops from Afghanistan and changing sales mix; -- The company's cash deployment strategy, which includes a focus on dividends and share repurchases, though it is mitigated by the company's commitment to retaining investment grade ratings and the recently implemented and announced debt reductions; and -- Uncertainty surrounding defense spending after fiscal year (FY) 2012 due to U.S. government budget deficits and the potential for an additional $500 billion of reductions to the DoD budget starting in January 2013. Fitch's other concerns include L3's underfunded pension position, totaling $967 million (64% funded status) as of Dec. 31, 2011, all of which stayed with L-3 after the spin-off. The longer-term outlook for DoD budgets related to operations in Iraq and Afghanistan remain a concern but have lessened because of the amount of related revenues that were a part of the spin-off. On July 17, 2012, L-3 completed the spin-off of Engility while retaining its cyber, intelligence and security solutions businesses, which is called National Security Solutions going forward. Engility was a part of L-3's Government Services segment representing approximately $1.6 billion of estimated 2012 revenues. Engility's business was expected to account for approximately 8%-10% of L-3's combined EBITDA and FCF in 2012. In connection with the spin-off, L-3 received a onetime $335 million gross dividend from Engility. The spin-off resulted in increased pro forma leverage (Debt to EBITDA) for L-3. In addition, L-3's 2012 year end forecasted leverage showed further deterioration driven by declining sales and lower operating margins due to DoD budgetary pressures, withdrawal of the troops from Iraq and Afghanistan, and unfavorable sales mix. The company supported its credit metrics by redeeming $250 million of 6.375% senior subordinated notes maturing in 2015 on July 26, 2012, and by initiating redemption of the remaining $250 million of 6.375% senior subordinated notes due 2015 on Sept. 13, 2012. The notes will be redeemed on Oct. 15, 2012. L-3's total debt is expected to decline to approximately $3.6 billion following the redemption of the senior subordinated notes. The repayment of the notes will continue the company's shift away from senior subordinated debt in its capital structure. After giving effect to the planned redemption of the notes, Fitch estimates L-3's leverage to be in the 2.2 times (x) to 2.3x range at the end of 2012, up from 2.1x as of Dec. 31, 2011. Despite a slight deterioration in the company's leverage, its credit profile is still solid for the existing 'BBB-' rating. The company's liquidity as of June 29, 2012 was $1.5 billion, consisting of $996 million of credit facility availability (expiring in February 2017) and $481 million in cash and short- term investments. The liquidity is expected to decline due to the announced redemption of the remaining $250 million 6.375% senior subordinated notes due 2015; however, the remaining liquidity will remain solid. L-3 has no debt maturities through 2015 (giving effect to the discussed redemption of the remaining $250 million 6.375% senior subordinated notes due 2015). The next material debt maturity is in 2016 when $500 million of 3.95% senior unsecured notes are due. L-3 has generated strong FCF through strong operating performance, working capital management, and growth via prior acquisitions. In the LTM ending June 29, 2012, the company generated approximately $1 billion of FCF. L-3 reported approximately $1.1 billion annual FCF in 2011, 2010 and 2009. L-3's FCF benefits from low capital expenditures as a percentage of sales; it has averaged 1.3% of sales between 2008 and 2011. Fitch expects L-3's FCF to decline to approximately $800 to $900 million in 2012 and 2013, mostly driven by the spin-off of Engility. Fitch's rating and Outlook for L-3 incorporate the agency's expectations of small- to medium-sized acquisitions and meaningful cash deployment toward shareholders. In the first six months of 2012, L-3 deployed $216 million towards acquisitions, $315 million for share repurchases and $98 million in dividend payments. Additionally, L-3 acquired Thales Simulation & Training for $134 million effective Aug. 6, 2012. Fitch expects L-3 to deploy approximately $1 billion toward shareholders in 2012. Fitch expects the share repurchase activity may decline significantly beyond 2012 depending on the extent of declines in U.S. defense spending. L-3 has a pension deficit of approximately $1 billion, and the pension funds are 64% funded. The pension benefit obligation (PBO) comprised $2.7 billion at the end of 2011, while the other postretirement benefit obligation was $216 million. Over the past four years, L-3 contributed $591 million to its pension plans, with $176 million contributed in 2011. Given the low interest rate environment, it is likely that L-3's funding position could further deteriorate by the end of this year. L-3 expects to contribute approximately $175 million over the next several years; however the company has flexibility to decrease the contributions as permitted under the MAP-21 Act enacted on July 6, 2012. U.S. government spending trends are key drivers of L-3's financial performance given that the company expects to generates most of its revenues (82% in 2011 including Engility results) from the U.S. government, with the bulk (75% in 2011 including Engility results) coming from the Department of Defense (DoD). U.S. defense spending has been on an upward trend for more than a decade, but the fiscal 2012 and fiscal 2013 budgets represent a turning point, with spending beginning to turn down in fiscal 2013, even excluding war spending, albeit from very high levels. The fiscal 2012 DoD base budget is up less than 1% compared to fiscal 2011, and the requested base budget for fiscal 2013 is down 1% to $525 billion. Fiscal 2013 Modernization Spending (procurement plus research and development [R&D]), the most relevant part of the budget for defense contractors, is down 4%, the third consecutive annual decline by Fitch's calculations. The overhang of potential automatic cuts beginning in early 2013 related to the 'sequestration' situation, as well as the presidential election, add to the uncertainty faced by defense contractors in the current environment. The U.S. defense outlook will be uncertain and volatile over the next one to two years, and program details will be needed to evaluate the full effect on LLL's credit profile. On Sept. 14, 2012, the Office of Management and Budget issued a Sequestration Transparency Act report detailing the potential impact of sequestration on funding reductions for both defense and nondefense budget accounts. The report assessed that unless the sequestration law is changed, the DoD budget will be cut by approximately $52 billion in FY2013. Budget cuts to Modernization Spending would be expected to account for approximately $23 billion or nearly 44% of the cuts despite comprising only 29% of the total DoD budget. The majority of the remaining cuts will be in the Operations and Maintenance account. Should sequestration occur, the cuts in Modernization Spending could be partly mitigated by low outlay rates during the first year for the majority of Procurement and R&D programs. Fitch would not expect sequestration-driven DoD spending declines alone to lead to negative rating actions for L-3. The company's exposure to DoD spending is mitigated by good liquidity and the diversification of its product line. L-3's sales are not tied to any major program as the company does not have a contract which represents more than 3% of its revenues. A higher percentage of sales to foreign customers also mitigate the budget cut risks. What Could Trigger a Rating Action: Fitch may consider a positive rating action should L-3 improve its credit profile by further decreasing leverage and moderating its shareholder friendly cash deployment strategies in form of share repurchases and dividends. A negative rating action may be considered if L-3 completes a large debt-funded acquisition which weakens L-3's credit profile. A negative action is also possible should there be a dramatic change in U.S. defense spending policies, but an action would depend on L-3's efforts to reduce costs in line with lower revenues. Fitch affirms L-3's ratings as follows: L-3 Communications Holdings, Inc. -- IDR at 'BBB-'; -- Convertible contingent debt securities at 'BB+'. L-3 Communications Corporation -- IDR 'BBB-'; -- senior unsecured notes at 'BBB-'; -- Senior unsecured revolving credit facility at 'BBB-'; -- Senior subordinated debt at 'BB+'. LEHMAN BROTHERS: To Make Second Distribution of $10.5 Billion ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Lehman Brothers Holdings Inc. disclosed Sept. 25 that the second distribution to be made Oct. 1 under the confirmed Chapter 11 plan will be about $10.2 billion. A court filing lists the percentage distribution for each class under the plan. According to the report, in addition, Lehman will pay an additional $328 million on claims that were in dispute when the first distribution was made. There will be a third distribution in March 2013, Lehman said. About $1.7 billion is being held back on account of disputed claims. The first distribution was about $22.5 billion. The Chapter 11 plan for the Lehman companies other than the brokerage subsidiary was confirmed in December and implemented in March, with a first distribution in April. The Lehman brokerage is yet to make a first distribution to non customers. About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. LEHMAN BROTHERS: Still Holding $13.5 Billion After Distribution --------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Lehman Brothers Holdings Inc. will retain about $13.5 billion cash after $10.5 billion is distributed to creditors on Oct. 1, the reorganized investment bank disclosed in an operating report filed with the bankruptcy court in New York. The reports shows that aggregate professional fees for the Chapter 11 case from inception in September 2008 through implementation of the plan in March now total $1.732 billion. According to the report, professional costs since the plan was put into effect total $60.1 million, including $20.7 million in August. The Securities and Exchange Commission exercised its right to intervene in the appeal being taken by the trustee for Lehman's brokerage subsidiary. The appeal is the trustee's attempt at reinstating a $1.5 billion judgment against Barclays Plc that was overturned by a federal district judge. The Chapter 11 plan for the Lehman companies other than the broker was confirmed in December and implemented in March, with a first distribution in April. Lehman's brokerage subsidiary is under control of a trustee appointed under the Securities Investor Protection Act. The Lehman brokerage has yet to make a first distribution to non-customers. The Bloomberg report discloses that the Barclays appeal in the court of appeals is Giddens v. Barclays Capital Inc. (In re Lehman Brothers Holdings Inc.), 12-2328, 2nd U.S. Circuit Court of Appeals (Manhattan). The Barclays appeal in district court is Barclays Capital Inc. v. Giddens (In re Lehman Brothers Inc.), 11-6052, U.S. District Court, Southern District of New York (Manhattan). About Lehman Brothers Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was the fourth largest investment bank in the United States. For more than 150 years, Lehman Brothers has been a leader in the global financial markets by serving the financial needs of corporations, governmental units, institutional clients and individuals worldwide. Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008 (Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy petition disclosed US$639 billion in assets and US$613 billion in debts, effectively making the firm's bankruptcy filing the largest in U.S. history. Several other affiliates followed thereafter. Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset LLC sought for bankruptcy protection in December 2009. The Debtors' bankruptcy cases are handled by Judge James M. Peck. Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife, Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq Bankruptcy Solutions serves as claims and noticing agent. Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve as counsel to the Official Committee of Unsecured Creditors. Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's investment banker. On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S. District Court for the Southern District of New York, entered an order commencing liquidation of Lehman Brothers, Inc., pursuant to the provisions of the Securities Investor Protection Act (Case No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as trustee for the SIPA liquidation of the business of LBI. The Bankruptcy Court approved Barclays Bank Plc's purchase of Lehman Brothers' North American investment banking and capital markets operations and supporting infrastructure for US$1.75 billion. Nomura Holdings Inc., the largest brokerage house in Japan, purchased LBHI's operations in Europe for US$2 plus the retention of most of employees. Nomura also bought Lehman's operations in the Asia Pacific for US$225 million. Lehman emerged from bankruptcy protection on March 6, 2012, more than three years after it filed the largest bankruptcy in U.S. history. Lehman is set to make its first payment to creditors under its $65 billion payout plan on April 17, 2012. LEVEL 3 FINANCING: Moody's Rates $1.2BB Secured Term Loan 'Ba3' --------------------------------------------------------------- Moody's Investors Service rated Level 3 Financing, Inc.'s new 7-year $1.2 billion senior secured term loan Ba3. Financing is a wholly-owned subsidiary of Level 3 Communications, Inc. (Level 3), the guarantor of the notes. Level 3's corporate family and probability of default ratings remain unchanged at B3 and its speculative grade liquidity rating remains unchanged at SGL-1 (very good liquidity). In addition, the ratings outlook remains stable. Since the new credit facility replaces a like-sized commitment ($650 million Sr. Secured Tranche B II Term Loan and $550 million Sr. Secured B III Term Loan, both due September 1st, 2018) Level 3's overall credit profile is not affected and both corporate level and instrument ratings remain unchanged at their existing levels (see listing below). The following summarizes the rating action as well as Level 3's ratings: Assignments: Issuer: Level 3 Financing, Inc. Senior Secured Bank Credit Facility, Ba3 (LGD2, 10%) Issuer: Level 3 Communications, Inc. Corporate Family Rating, unchanged at B3 Probability of Default Rating, unchanged at B3 Speculative Grade Liquidity Rating, unchanged at SGL-1 Outlook, unchanged at Stable Senior Unsecured Bond/Debenture, unchanged at Caa2 (LGD6, 92%) Issuer: Level 3 Financing, Inc. Senior Secured Bank Credit Facility, unchanged at Ba3 (LGD2, 10%) Senior Unsecured Regular Bond/Debenture (including debts issued by Level 3 Escrow, Inc. that have been assumed by Level 3 Financing, Inc.), unchanged at B3 (LGD4, 58%) Ratings Rationale Level 3 has a reasonable business proposition as a facilities- based provider of optical, Internet protocol telecommunications infrastructure and services, however, owing to excess transport capacity, margins are relatively weak and, with the combination of the interest carry on the company's sizeable debt burden plus ongoing capital expenditures, there has been little or no capacity to amortize debt. The company's B3 ratings are based on expectations that net synergies from the recently closed acquisition of Global Crossing Ltd. will reduce expenses sufficiently such that Level 3 will be modestly cash flow positive (on a sustained basis) by late 2013. The rating is also based on the expectation that there is sufficient liquidity to continue to fund investments in synergy-related initiative, and that the company's improving credit profile facilitates repayment and/or roll-over of 2015 and 2016 debt maturities. Rating Outlook The stable ratings outlook is premised on net synergies from the recently closed acquisition of Global Crossing Ltd. will reduce expenses sufficiently such that Level 3 will be modestly cash flow positive (on a sustained basis) by late 2013. What Could Change the Rating - UP As the existing B3 ratings anticipate the benefit of future performance, it is unlikely that the rating would be upgraded over the near term. Once execution risks are substantially addressed and presuming solid industry conditions and solid liquidity arrangements, in the event that Debt/EBITDA declines towards 5.0x and (RCF-CapEx)/Debt advances beyond 5% (in both cases, inclusive of Moody's adjustments and on a sustainable basis), positive ratings actions may be warranted. What Could Change the Rating - DOWN Whether the result of execution mis-steps or adverse industry conditions, should it appear that the company is not cash flow self-sufficient or in the event of significant debt-financed acquisition activity, negative ratings activity may be considered. The principal methodology used in rating Level 3 Communications was the Global Communications Infrastructure 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. LIBERTY INDUSTRIES: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Liberty Industries, L.C. 20 S.E. 3rd Street Boca Raton, FL 33432 Bankruptcy Case No.: 12-32843 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court Southern District of Florida (West Palm Beach) Judge: Paul G. Hyman, Jr. Debtor's Counsel: Steven S. Newburgh, Esq. MCLAUGHLIN & STERN, LLP 525 Okeechobee Boulevard, #1530 West Palm Beach, FL 33401 Tel: (561) 659-4020 Fax: (561) 659-4438 E-mail: ssn@newburghlaw.net Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors filed with the petition is available for free at: http://bankrupt.com/misc/flsb12-32843.pdf The petition was signed by William Gates, managing member. LIGHTSQUARED INC: Falcone Asks to Share Airwaves for Service ------------------------------------------------------------ Todd Shields and Tiffany Kary at Bloomberg News report that Philip Falcone's bankrupt LightSquared Inc., in an attempt to revive a planned wireless network stymied by interference concerns, asked U.S. regulators to let it share airwaves with federal-government users. The request was filed Sept. 28 with the Federal Communications Commission, Michael Tucker, a spokesman for the Reston, Virginia-based company, said in an e-mailed statement. The report relates that the company also told the FCC it would give up the right to some operations in airwaves near those used by the global positioning system. The FCC blocked the service in February after GPS-device makers and users -- including the U.S. military and commercial airlines -- said signals from LightSquared's service would confound navigation gear. The report notes that LightSquared filed for bankruptcy in May and said it intends to resolve the interference concerns. LightSquared can't deploy its service while the FCC decides whether to revoke initial approvals, as it proposed doing in February, the agency told Congress Sept. 21. The agency hasn't yet taken final action. Makers and users of GPS equipment in a March filing at the FCC said there are "no feasible mitigation measures" to prevent interference from LightSquared. In Sept. 28 proposal, LightSquared asked the FCC to allow it to share frequencies used by weather balloons and weather satellites. The National Oceanic and Atmospheric Administration is the dominant user of the frequencies, Larry Strickling, administrator of the National Telecommunications and Information Administration, said in a July 2010 speech. U.S. officials were examining whether the airwaves swath could be shared with commercial users and hadn't drawn any conclusions, said Mr. Strickling, whose agency oversees federal airwaves use. "We are aware of LightSquared's interest in sharing," Heather Phillips, a spokeswoman for the NTIA, said in an emailed statement. "If requested by the FCC, NTIA will work with NOAA to evaluate LightSquared's request." According to the Bloomberg report, U.S. officials who manage frequency assignments increasingly are considering sharing arrangements, as airwaves become crowded with new uses. Letting others share parts of the spectrum now set aside for federal agencies could help meet surging demand from wireless smart phones and other mobile devices offered by commercial carriers, a White House advisory panel said in July. Lenders holding more than $1 billion in LightSquared debt have challenged the control of Mr. Falcone, 50, whose hedge fund has invested about $3 billion in the company. Regulatory Reversal The Bloomberg report discloses that Mr. Falcone's strategy of seeking a regulatory reversal is a "high-risk, high-return strategy" the lenders said in a Sept. 6 filing. They recommended instead that the company be sold. The hedge fund, New York-based Harbinger Capital Partners, managed $4 billion at the end of last year, down from a peak of $26 billion in mid-2008. It wrote down its LightSquared position by 59% last year. About LightSquared Inc. LightSquared Inc. and 19 of its affiliates filed Chapter 11 bankruptcy petitions (Bankr. S.D.N.Y. Lead Case No. 12-12080) on May 14, 2012, as the Company seeks to resolve regulatory issues that have prevented it from building its coast-to-coast integrated satellite 4G wireless network. LightSquared had invested more than $4 billion to deploy an integrated satellite-terrestrial network. In February 2012, however, the U.S. Federal Communications Commission told LightSquared the agency would revoke a license to build out the network as it would interfere with global positioning systems used by the military and various industries. In March 2012, the Company's partner, Sprint, canceled a master services agreement. LightSquared's lenders deemed the termination of the Sprint agreement would trigger cross-defaults under LightSquared's prepetition credit agreements. LightSquared and its prepetition lenders attempted to negotiate a global restructuring that would provide LightSquared with liquidity and runway necessary to resolve its issues with the FCC. Despite working diligently and in good faith, however, LightSquared and the lenders were not able to consummate a global restructuring on terms acceptable to all interested parties, prompting the bankruptcy filing. As of the Petition Date, the Debtors employed roughly 168 people in the United States and Canada. As of Feb. 29, 2012, the Debtors had $4.48 billion in assets (book value) and $2.29 billion in liabilities. LightSquared also sought ancillary relief in Canada on behalf of all of the Debtors, pursuant to the Companies' Creditors Arrangement Act (Canada) R.S.C. 1985, c. C-36 as amended, in the Ontario Superior Court of Justice (Commercial List) in Toronto, Ontario, Canada. The purpose of the ancillary proceedings is to request the Canadian Court to recognize the Chapter 11 cases as a "foreign main proceeding" under the applicable provisions of the CCAA to, among other things, protect the Debtors' assets and operations in Canada. The Debtors named affiliate LightSquared LP to act as the "foreign representative" on behalf of the Debtors' estates. Judge Shelley C. Chapman presides over the Chapter 11 case. Lawyers at Milbank, Tweed, Hadley & McCloy LLP serve as counsel to the Debtors. Kurtzman Carson Consultants LLC serves as claims and notice agent. Counsel to UBS AG as agent under the October 2010 facility is Melissa S. Alwang, Esq., at Latham & Watkins LLP. The ad hoc secured group of lenders under the Debtors' October 2010 facility was formed in April 2012 to negotiate an out-of- court restructuring. The members are Appaloosa Management L.P.; Capital Research and Management Company; Fortress Investment Group; Knighthead Capital Management LLC; and Redwood Capital Management. Counsel to the ad hoc secured group is Thomas E. Lauria, Esq., at White & Case LLP. Philip Falcone's Harbinger Capital Partners indirectly owns 96% of LightSquared's outstanding common stock. Harbinger and certain of its managed and affiliated funds and wholly owned subsidiaries, including HGW US Holding Company, L.P., Blue Line DZM Corp., and Harbinger Capital Partners SP, Inc., are represented in the case by Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP. The Office of the U.S. Trustee has not appointed a statutory committee of unsecured creditors. LINC USA: Moody's Corrects September 20 Rating Release ------------------------------------------------------ Moody's Investors Service issued a correction to the Sept. 20, 2012 rating release of Linc USA GP. Moody's assigned first time ratings to Linc USA GP (Linc), including a Caa2 Corporate Family Rating (CFR) and a Caa3 rating to the proposed $265 million senior secured notes. Moody's also assigned an SGL-3 Speculative Grade Liquidity Rating reflecting adequate liquidity. The rating outlook is stable. Linc USA GP is an exploration and production company focused in the US and is a wholly-owned subsidiary of Linc Energy Ltd. (Parent) - a publicly traded energy company based in Brisbane, Australia with a market capitalization of roughly $400 million. Net proceeds from the secured note issue will be used to repay outstanding balances under Linc's existing credit facility, to repay the majority of the Parent's credit facility debt, and for general corporate purposes. The notes will not have a downstream guarantee from the Parent and will be secured solely by the oil and natural gas assets in the US. Assignments: Issuer: Linc USA GP Corporate Family Rating, Assigned Caa2 Probability of Default Rating, Assigned Caa2 Speculative Grade Liquidity Rating, Assigned SGL-3 Senior Secured Regular Bond/Debenture, Assigned Caa3 (LGD4, 62%) Ratings Rationale Linc's Caa2 CFR reflects its small production and proved reserve base, limited drilling and development track record in its current corporate form, high leverage following the secured note issue, and limited financial flexibility. The rating also considers the company's cash flow concentration in one principal geographic area, focus on complex salt dome structures for primary growth, highly prospective nature of the Alaska North Slope and Wyoming Powder River Basin (PRB) assets, and the significant execution risk over the next few years as the company aggressively tries to grow production. The rating is favorably impacted by the high oil content of its reserves (97%) that generates strong revenues and high returns, low geological risks of its Gulf Coast properties that have long production history and provide manageable growth prospects through 2014, and high operated working interest that support better control of the pace, timing and costs of development. Linc's leverage in terms of debt to average net daily production (~$85,000 per boe/d) and debt to proved developed (PD) reserves (~$30.00 per boe) are among the highest within Moody's rated E&P universe. While the company has been able to grow production rapidly (by ~76% on a net basis) since acquiring the Gulf Coast assets in October 2011 demonstrating its technical capability to identify and drill into structural traps in subsurface salt formations, whether the company can repeat this performance consistently at a greater scale given its limited financial resources and operating history, remains to be seen. The company has an ambitious production target and plans to exceed 5,500 boe/d (net) by the end of fiscal 2013 (fiscal year ends at June 30) as it tries to establish critical mass. Linc should have adequate liquidity through the end of calendar 2013, which is captured in the SGL-3 rating. However, liquidity will start to tighten in the first half of calendar 2014 as expenditures continue to exceed cash flows and balance sheet cash is depleted. Therefore, the company may have to draw under its planned new revolving credit facility in the first half of calendar 2014. Any meaningful capital expenditures towards the PRB properties would also necessitate revolver borrowings. The notes indenture permits additional credit facility debt (including letters of credit) not to exceed the greater of $85 million or 15% of adjusted consolidated net tangible assets. Moody's has reviewed only a preliminary term sheet for the proposed credit facility and the company is still negotiating covenant levels with its banks. Moody's assigned SGL rating assume that the company will have adequate covenant cushion though calendar 2013 and are contingent on review of final documentation. The $265 million secured notes are rated Caa3, one notch below the Caa2 CFR, given their subordinated position to the first-lien secured revolving credit facility. Moody's expects the revolver borrowing base to grow with new reserve additions in the coming quarters. Hence, Moody's overrode Moody's Loss Given Default (LGD) Methodology generated note rating because of the high likelihood of increased priority ranking revolver debt in the capital structure. For the ratings, Moody's also assumed that the Alaska asset will be pledged to secure the new credit facility and the notes. The Caa3 rating on the secured notes reflects both the overall probability of default of Linc, to which Moody's assigns a PDR of Caa2, and a loss given default of LGD4 (62%) under Moody's Loss Given Default Methodology. The stable outlook reflects Moody's view that Linc will maintain sufficient liquidity and hold production at or above today's 3,100 boe/d level. High leverage is the biggest impediment to an upgrade. A clear deleveraging trend through organic reserve and production growth coupled with sufficient 12 month forward liquidity would lend positive rating momentum. An upgrade is possible if Linc can sustain a production level of at least 5,000 boe/d while maintaining its debt to average daily production ratio under $50,000 per boe/d. Tight liquidity would be the likely catalyst for a downgrade, If total liquidity (cash plus revolver availability) falls below $20 million, the rating could be downgraded. The principal methodology used in rating Linc was the Global Independent Exploration and Production Industry Methodology published in December 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. Linc USA GP is a Houston, Texas based private oil and gas exploration and production (E&P) company with primary producing assets in the onshore Gulf Coast region of Texas and Louisiana. LON MORRIS: Prepares for Piecemeal Auction ------------------------------------------ Katy Stech at Dow Jones' DBR Small Cap reports that defeated by a federal rule that automatically takes federal school loans away from bankrupt colleges, Texas liberal-arts school Lon Morris College is preparing to sell itself in pieces at a cash auction. About Lon Morris College Lon Morris College was founded in 1854 as a not-for-profit religiously affiliated two-year degree granting institution. Over the past 158 years, the College has impacted the lives of countless members of the local Jacksonville community in Texas. Lon Morris College filed a Chapter 11 petition (Bankr. E.D. Tex. Case No. 12-60557) in Tyler, on July 2, 2012, after lacking enough endowments to pay teachers, vendors and creditors. In May 2012, the Debtor missed two payrolls and vendor payables, utilities, and long term debt were also past due. From a headcount of 1,070 in 2010, enrolments have been down to 547 in 2012. The president of the College has resigned, as have members of the board of trustees. Judge Bill Parker oversees the case. Bridgepoint Consulting LLC's Dawn Ragan took over management of the College as chief restructuring officer. Attorneys at McKool Smith P.C., and Webb and Associates serve as counsel to the Debtor. Capstone Partners serves as financial advisor. According to its books, on April 30, 2012, the College had roughly $35 million in assets, including $11 million in endowments and restricted funds, and $18 million in funded debt and $2 million in trade and other liabilities. The Debtor disclosed $29,957,488 in assets and $15,999,058 in liabilities as of the Chapter 11 filing. Amegy Bank is represented in the case by James Matthew Vaughn, Esq., at Porter Hedges LLP. MAKENA GREAT: Exclusivity Extended; Plan Outline Hearing Reset -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois rescheduled the confirmation hearings for: -- GAC Storage Copley Place, LLC to Oct. 11, at 1 p.m. and Oct. 12, at 10 a.m.; -- GAC Storage El Monte, LLC the El Monte to Oct. 18, at 1 p.m. and Oct. 19 at 10 a.m.; and -- The Makena Great American Anza Company, LLC to Oct. 30, at 1 p.m. and Oct 31, at 10 a.m. The Court has stricken confirmation hearing dates previously scheduled for Sept. 6, 7, and 13. The Court also ordered that the Debtors file any amendments to their respective plans of reorganization by Sept. 27. Any supplemental objections to the amended plan will be filed by Oct. 4. Additionally, the Debtors' exclusivity periods is extended until the new confirmation hearing dates. Lenders Bank of America, N.A., and Wells Fargo Bank, N.A., filed objections to Debtors' motion to reschedule confirmation hearings and extend exclusivity periods. About Makena Great American GAC Storage Lansing LLC -- which owns and operates a warehouse and storage facility with 522 storage units, generally located at 2556 Bernice Road, Lansing, Illinois -- filed for Chapter 11 bankruptcy (Bankr. N.D. Ill. Case No. 11-40944) on Oct. 7, 2011. Jay S. Geller, Esq., D. Sam Anderson, Esq., and Halliday Moncure, Esq., at Bernstein, Shur, Sawyer & Nelson, P.A., represents the Debtor as counsel. Robert M, Fishman, Esq., and Gordon E. Gouveia, Esq., at Shaw Gussis Fishman Glantz Wolfson, & Towbin LLC, in Chicago, represents the Debtor as local counsel. It estimated $1 million to $10 million in assets and debts. The petition was signed by Noam Schwartz, secretary and treasurer of EBM Mgmt Servs, Inc., manager of GAC Storage, LLC. The Makena Great American Anza Company LLC -- http://www.makenacapital.net/-- a commercial shopping center developers in Southern California, filed a Chapter 11 petition (Bankr. N.D. Ill. Case No. 11-48549) on Dec. 1, 2011, in Chicago. Anza leads the way in the acquisition and development of "A-Location" small commercial shopping centers and corner properties in Southern California. Lawyers at Shaw Gussis Fishman Glantz Wolfson & Towbin, LLC, in Chicago, and Bernstein, Shur, Sawyer & Nelson, P.A., in Portland, Maine, serve as counsel to the Debtor. Makena disclosed $13,938,161 in assets and $17,723,488 in liabilities. Other affiliates that sought bankruptcy protection are GAC Storage Copley Place LLC, GAC Storage El Monte LLC, and San Tan Plaza LLC. The cases are being jointly administered under lead case no. 11-40944. At the behest of lender Bank of America, N.A., the Bankruptcy Court dismissed the Chapter 11 case of San Tan Plaza, as reported by the Troubled Company Reporter on July 17, 2012. Anza, Copley and El Monte have filed separate bankruptcy exit plans. The Court is slated to consider approval of those plans at hearings on Sept. 6 and 7, 2012. MERCURY PAYMENT: S&P Ups Ratings on $225MM Debt Facilities to 'BB' ------------------------------------------------------------------ Standard & Poor's Ratings Services raised the issue-level ratings on Mercury Payment Systems LLC's (MPS) $25 million first-lien revolving credit facility and $200 million first-lien term loan B to 'BB' (two notches above the company's 'B+' corporate credit rating) from 'BB-'. "At the same time, we revised the recovery ratings on this debt to '1' from '2'. The '1' recovery rating indicates our expectation for very high (90%-100%) recovery for lenders in the event of a payment default. The higher ratings are the result of a revision to our recovery analysis that increased our estimated recovery valuation at the time of default. The increased valuation was precipitated by the company's continued strong growth, improvement in EBITDA margins, and successful completion of its in-house processing platform build-out. We also revised our presumed default year to 2017, to coincide with the maturity of the company's term loan," S&P said. "Our corporate credit rating and outlook on the company are unchanged. Our ratings on MPS reflect its 'weak' business risk and 'aggressive' financial risk profiles. The business risk incorporates the company's narrow addressable market, modest EBITDA base, high level of competition from entities with significantly better resources, and the risks associated with the transition to its in-house processing platforms (IHP). Partially tempering these considerations are the company's embedded position within its market niche and consistently strong growth and operating performance. The company's favorable financial metrics also provide support for the rating," S&P said. RATINGS LIST Mercury Payment Systems, LLC Corporate Credit Rating B+/Stable/-- Upgraded; Recovery Ratings Revised To From Mercury Payment Systems, LLC $25 mil first-lien revolvg credit facility BB BB- Recovery Rating 1 2 $200 mil first-lien term loan B BB BB- Recovery Rating 1 2 MONTPELIER RE: Solid Operating Performance Cues Fitch to Up Rating ------------------------------------------------------------------ Fitch Ratings today upgraded the ratings of Montpelier Re Holdings Ltd. These ratings upgrades include Montpelier's senior unsecured debt rating, which was upgraded to 'BBB+' from 'BBB', and the Insurer Financial Strength (IFS) rating of Montpelier Reinsurance Ltd. (Montpelier Re), which was upgraded to 'A' from 'A-'. The Rating Outlook is Stable. The ratings upgrade reflects Montpelier's solid operating performance and internal capital generation over the past several years. The upgrade also reflects that the company's underwriting performance, while still volatile relative to many comparably rated reinsurers, is comparable to other property catastrophe reinsurers rated by Fitch when viewed on a multi-year rolling average basis. Montpelier reported $169 million of net earnings in 1H12, driven by a strong combined ratio of 67.2%, which benefited from light catastrophe losses during the period. This result more than offsets the $124 million loss reported for the full year 2011, when record high international catastrophe losses hurt Montpelier's results, along with most other global reinsurers. Fitch further observes that the company's share of global catastrophe losses over the last several years, while significant in some cases, has been manageable and consistent with levels that might be expected from a reinsurer of Montpelier's size and focus. Fitch believes that the company uses sound risk management processes to manage its exposure to potential catastrophe-related losses by geographic zone and relative to its capital base. Montpelier's low underwriting leverage enables the company to preserve capital during periods that include underwriting volatility. Fitch notes favorably that despite Montpelier's 2011 operating loss, capital ratios (such as net premium to equity and assets to equity) consistently remained well within tolerances for the current rating level. Fitch expects this trend to continue for the foreseeable future. Fitch views Montpelier's balance sheet risk as relatively modest. The company maintains relatively low invested asset leverage and its investment portfolio is dominated by highly rated fixed income investments that fared well during periods of capital market volatility. There is relatively little risk of significant adverse loss development from the company's largely short-tail underwriting liabilities. Montpelier's ratings continue to recognize the company's significant exposure to earnings and capital volatility derived from its property catastrophe reinsurance products, most recently evidenced by the company's roughly $409 million of combined catastrophe losses in 2011, including approximately $250 million combined from the Japanese and New Zealand earthquake events. Key rating triggers that could result in a ratings downgrade include weakening of overall risk-adjusted capital strength as measured by traditional operating leverage ratios and the company's publicly disclosed probable maximum losses (PML's) from large catastrophe events as a percent of total shareholders' equity. Specifically, an increase in underwriting leverage (measured by traditional net premiums written to equity ratios) to levels at or above 0.7 times (x) from recent levels of 0.4x could result in a ratings downgrade. Likewise, an increase in Montpelier's 1-100 and 1-250 year per event catastrophe PML's to 30% (currently 19%) and 40% (currently 23%) of total equity, respectively, could result in a downgrade. Additionally, failure to maintain a run rate average combined ratio in the mid-80%'s, which approximates Montpelier's average result from 2007 through mid-year 2012, could result in ratings downgrade. Fitch could also downgrade Montpelier's ratings if the company were to suffer catastrophe losses that were unfavorably inconsistent with its own internally modeled results, or that resulted in earnings and/or capital declines that were significantly worse than comparably rated peers. Key rating triggers that could generate longer term positive rating pressure include a prolonged period during which Montpelier outperformed comparably rated peers with respect to underwriting performance and overall profitability, continued strong risk adjusted capitalization metrics, and enhanced competitive positioning and scale in the company's key product lines. Fitch has upgraded the following ratings and assigned a Stable Rating Outlook: Montpelier Re Holdings Ltd -- Issuer Default Rating (IDR) to 'A-' from 'BBB+'; -- $228,009,000 6.125% senior notes due Aug. 15, 2013 to 'BBB+' from 'BBB'; -- $150,000,000 8.875% non-cumulative perpetual preferred securities to 'BBB-' from 'BB+'. Montpelier Reinsurance Ltd. -- IFS to 'A' from 'A-'. Montpelier Capital Trust III -- $100,000,000 floating rate trust preferred securities due March 30, 2036 to 'BBB-' from 'BB+.' MORGAN'S FOODS: Reports $206,000 Net Income in Aug. 12 Quarter -------------------------------------------------------------- Morgan's Foods, Inc., filed with the U.S. Securities and Exchange Commission its quarterly report on Form 10-Q disclosing net income of $206,000 on $20.64 million of revenue for the quarter ended Aug. 12, 2012, compared with a net loss of $257,000 on $19.51 million of revenue for the quarter ended Aug. 14, 2011. The Company reported net income of $245,000 on $40.95 million of revenue for the 24 weeks ended Aug. 12, 2012, compared with a net loss of $474,000 on $39.07 million of revenue for 24 weeks ended Aug. 14, 2011. The Company's balance sheet at Aug. 12, 2012, showed $52.67 million in total assets, $53.47 million in total liabilities, and a $800,000 total shareholders' deficit. A copy of the Form 10-Q is available for free at: http://is.gd/Vn6I2X About Morgan's Foods Cleveland, Ohio-based Morgan's Foods, Inc., which was formed in 1925, operates through wholly-owned subsidiaries KFC restaurants under franchises from KFC Corporation, Taco Bell restaurants under franchises from Taco Bell Corporation, Pizza Hut Express restaurants under licenses from Pizza Hut Corporation and an A&W restaurant under a license from A&W Restaurants, Inc. As of May 20, 2011, the Company operates 56 KFC restaurants, 5 Taco Bell restaurants, 10 KFC/Taco Bell "2n1's" under franchises from KFC Corporation and franchises from Taco Bell Corporation, 3 Taco Bell/Pizza Hut Express "2n1's" under franchises from Taco Bell Corporation and licenses from Pizza Hut Corporation, 1 KFC/Pizza Hut Express "2n1" under a franchise from KFC Corporation and a license from Pizza Hut Corporation and 1 KFC/A&W "2n1" operated under a franchise from KFC Corporation and a license from A&W Restaurants, Inc. The Company reported a net loss of $1.68 million for the year ended Feb. 26, 2012, compared with a net loss of $988,000 for the year ended Feb. 27, 2011. The Company's balance sheet at May 20, 2012, showed $53.51 million in total assets, $54.51 million in total liabilities and a $1 million total shareholders' deficit. MOTORS LIQUIDATION: Trustee Claims Objection Cutoff on March 25 --------------------------------------------------------------- The Bankruptcy Court has extended until March 25, 2013, the deadline within which Wilmington Trust Company, in its capacity as trust administrator and trustee of the GUC Trust, can file objections to unsecured claims asserted in the bankruptcy cases of Motors Liquidation Company and its affiliated debtors. The Claims Objection Deadline may in the future be extended beyond March 25, 2013, by further order of the Bankruptcy Court. The agreement governing the GUC Trust provides that the trust administrator and trustee of the GUC Trust has the authority to file objections. About Motors Liquidation General Motors Corporation and three of its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 09-50026) on June 1, 2009. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Garden City Group is the claims and notice agent of the Debtors. The U.S. Trustee appointed an Official Committee of Unsecured Creditors and a separate Official Committee of Unsecured Creditors Holding Asbestos-Related Claims. Lawyers at Kramer Levin Naftalis & Frankel LLP served as bankruptcy counsel to the Creditors Committee. Attorneys at Butzel Long served as counsel on supplier contract matters. FTI Consulting Inc. served as financial advisors to the Creditors Committee. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represented the Asbestos Committee. Legal Analysis Systems, Inc., served as asbestos valuation analyst. The Bankruptcy Court entered an order confirming the Debtors' Second Amended Joint Chapter 11 Plan on March 29, 2011. The Plan was declared effect on March 31. On Dec. 15, 2011, Motors Liquidation Company was dissolved. On the Dissolution Date, pursuant to the Plan and the Motors Liquidation Company GUC Trust Agreement, dated March 30, 2011, between the parties thereto, the trust administrator and trustee -- GUC Trust Administrator -- of the Motors Liquidation Company GUC Trust, assumed responsibility for the affairs of and certain claims against MLC and its debtor subsidiaries that were not concluded prior to the Dissolution Date. MSR RESORT: Paulson, Winthrop Resort Auction Scheduled for Nov. 8 ----------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the four resorts still owned by Paulson & Co. and Winthrop Realty Trust will conduct an auction on Nov. 8 to determine who will acquire the properties through implementation of a Chapter 11 plan. According to the report, Paulson and Winthrop gave up trying to retain ownership of the remaining resorts they foreclosed in early 2011. Assuming there is no competing bidder, secured lender Government of Singapore Investment Corp. will acquire the properties for $1.5 billion, including $1.115 million cash and $360 million in debt. The bankruptcy judge in New York approved auction and sale procedures this week. Competing bids are due Nov. 6. The four remaining resorts are the Grand Wailea Resort Hotel and Spa in Hawaii; the La Quinta Resort and Club and the PGA West golf course in La Quinta, California; the Arizona Biltmore Resort and Spa in Phoenix; and the Claremont Resort & Spa in Berkeley, California. In June, the Doral Golf Resort and Spa in Miami was sold to Donald Trump. About MSR Resort MSR Hotels & Resorts, formerly known as CNL Hotels & Resorts Inc., owns a portfolio of eight luxury hotels with over 5,500 guest rooms, including the Arizona Biltmore Resort & Spa in Phoenix, the Ritz-Carlton in Orlando, Fla., and Hawaii's Grand Wailea Resort Hotel & Spa in Maui. On Jan. 28, 2011, CNL-AB LLC acquired the equity interests in the portfolio through a foreclosure proceeding. CNL-AB LLC is a joint venture consisting of affiliates of Paulson & Co. Inc., a joint venture affiliated with Winthrop Realty Trust, and affiliates of Capital Trust, Inc. Morgan Stanley's CNL Hotels & Resorts Inc. owned the resorts before the Jan. 28 foreclosure. Following the acquisition, five of the resorts with mortgage debt scheduled to mature on Feb. 1, 2011, were sent to Chapter 11 bankruptcy by the Paulson and Winthrop joint venture affiliates. MSR Resort Golf Course LLC and its affiliates filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 11-10372) in Manhattan on Feb. 1, 2011. The resorts subject to the filings are Grand Wailea Resort and Spa, Arizona Biltmore Resort and Spa, La Quinta Resort and Club and PGA West, Doral Golf Resort and Spa, and Claremont Resort and Spa. James H.M. Sprayregen, P.C., Esq., Paul M. Basta, Esq., Edward O. Sassower, Esq., and Chad J. Husnick, Esq., at Kirkland & Ellis, LLP, serve as the Debtors' bankruptcy counsel. Houlihan Lokey Capital, Inc., is the Debtors' financial advisor. Kurtzman Carson Consultants LLC is the Debtors' claims agent. The five resorts had $2.2 billion in assets and $1.9 billion in debt as of Nov. 30, 2010, according to court filings. In its schedules, debtor MSR Resort disclosed $59,399,666 in total assets and $1,013,213,968 in total liabilities. The Official Committee of Unsecured Creditors is represented by Martin G. Bunin, Esq., and Craig E. Freeman, Esq., at Alston & Bird LLP, in New York. MUNICIPAL CORRECTIONS: Files Schedules of Assets and Liabilities ---------------------------------------------------------------- Municipal Corrections, LLC, filed with the U.S. Bankruptcy Court for the District of Nevada its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- -------- ----------- A. Real Property $0 B. Personal Property $656,378 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $55,799,625 E. Creditors Holding Unsecured Priority Claims $0 F. Creditors Holding Unsecured Non-priority Claims $5,969,903 -------- ----------- TOTAL $656,378 $61,769,528 About Municipal Corrections Hamlin Capital Management, LLC, Oppenheimer Rochester National Municipals, and UMB, N.A., as indenture trustee -- owed an aggregate $90 million on a bond debt -- filed an involuntary Chapter 11 petition for Municipal Corrections, LLC (Bankr. D. Nev. Case No. 12-12253) on Feb. 29, 2012. Jon T. Pearson, Esq., at Ballard Spahr LLP, in Las Vegas, Nev., serves as counsel to the petitioners. Austin E. Carter, Esq., at Stone & Baxter LLP, in Macon, Ga.; and Lenard E. Schwartzer, Esq., at Schwartzer & McPherson Law Firm, in Las Vegas, Nev., represent the Debtor as counsel. NORBORD INC: S&P Affirms 'BB-' Corp. Credit Rating; Outlook Stable ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Toronto- based oriented strand board (OSB) producer Norbord Inc. to stable from negative. At the same time, Standard & Poor's affirmed its ratings on the company, including its 'BB-' long-term corporate credit rating on Norbord. "We base the outlook revision on what we consider positive trends in the North American housing construction markets, reflected in higher OSB prices and increased demand," said Standard & Poor's credit analyst Jatinder Mall. "We expect these trends to continue as we believe U.S. housing starts will hit 920,000 in 2013," Mr. Mall added. "The ratings on Norbord reflect what Standard & Poor's views as the company's fair business risk profile and aggressive financial risk profile. We believe that Norbord's competitive advantages are in its low-cost, highly efficient operating mills; its market position as the third-largest North American OSB producer; strong liquidity; and geographic diversification to housing construction markets in the U.K. and northern Europe. These strengths are partially offset, in our opinion, by Norbord's exposure to the cyclical U.S. housing construction market, its aggressively leveraged capital structure, and its exposure commodity-type product with little to no pricing power," S&P said. "As the third-largest OSB producer in the world, Norbord has an annual capacity of more than 5 billion square feet. The company also produces other wood products such as particleboard and medium density fiberboard. Its operating facilities are located primarily in North America and about one-third of its capacity is in Europe," S&P said. "The stable outlook on Norbord reflects Standard & Poor's expectations that the increased demand for OSB stemming from a substantial recovery in U.S. housing construction will continue into 2013 and 2014. Increased OSB demand year-to-date has consumed excess supply capacity, resulting in much improved prices so far this year and improved credit metrics for Norbord. We expect Norbord's adjusted debt-to-EBITDA ratio to improve to about 3.6x for 2012, and debt to capital to 60%. We would likely upgrade the company if it uses free operating cash flows to reduce leverage, or if investments are made to improve the firm's business risk profile. A downgrade could occur if U.S. housing starts decline, resulting in lower OSB prices (about US$180 per 1,000 square feet), leading to negative free cash generation, or if unexpected asset write-downs lead to deterioration in the cushion under the bank covenants," S&P said. NORTHFIELD PARK: Moody's Assigns 'B2' CFR; Rates Facilities 'B1' ---------------------------------------------------------------- Moody's Investors Service assigned a B2 Corporate Family Rating to Northfield Park Associates, LLC. Moody's also assigned a B1 rating to the company's $195 million first lien senior secured bank credit facilities. The ratings are subject to receipt of final documentation. The proceeds from the proposed bank facilities will be used to finance construction of the Hard Rock Northfield Park, a racino development project at the existing Northfield Park racetrack located in Northfield Ohio, a suburb of Cleveland. The development project will be owned by a joint venture between Milstein Entertainment, LLC (80%) and HR Ohio Member, LLC (20%). HR Ohio Member, LLC is a joint venture between Hard Rock International and Och-Ziff Capital Management Group. The property will be managed by affiliates of Hard Rock International. Ratings assigned: Corporate Family Rating at B2 Probability of Default Rating at B2 Proposed $25 million first lien senior secured 5-year revolver at B1 (LGD 3, 38%) Proposed $20 million first lien senior secured 6-year delayed draw term loan at B1 (LGD 3, 38%) Proposed $150 million first lien senior secured 6-year term loan B at B1 (LGD 3, 38%) Rating Rationale Northfield Park's B2 Corporate Family Rating (CFR) reflects the start-up nature of the casino project, typical risks associated with cost-over runs and timely completion, single property concentration risk and the low cash equity relative to other recently rated ground-up gaming developments. The B2 CFR also takes into consideration the strength of the Hard Rock brand and management expertise -- Hard Rock currently operates/owns six Hard Rock casinos -- and the favorable demographics of the Cleveland gaming market that is similar to other established, successful gaming markets such as Detroit, MI, St. Louis, MO and Philadelphia, PA. Additionally, Moody's estimates the development budget of $211 million (excluding financing costs and funded interest reserves) equates to a cost of about $92,000 per position, less than Moody's estimate of the cost per position of both Horseshoe Casino Cleveland and Thistledown. These positive attributes suggest that Northfield Park's will have lower leverage and higher interest coverage after it first full year of operations relative to other recent ground-up developments. Moody's expects Northfield Park's 2014 (its first full year of operations) debt/EBITDA and EBITDA/interest expense to range between 3.8 times -- 4.3 times and between 3.0 times -- 3.5 times, respectively. The B1 rating on Northfield Park's proposed $195 million first lien senior secured debt -- one notch above the CFR -- reflects the support provided by the proposed $53 million unsecured subordinated debt (unrated) provided by Och-Ziff. The proposed subordinated debt is payable in kind (PIK) at 4% during construction of the project, then is either cash pay or PIK after the project opens, and matures one year after the bank facility. The first lien bank facilities will be guaranteed by Northfield Park's current and future subsidiaries and secured by a lien on substantially all assets. The stable rating outlook reflects Moody's expectation that Northfield Park has sufficient funds to complete construction and ramp-up of the Hard Rock Northfield Park project and that the casinos can earn a reasonable return on investment such that at year-end 2014 debt to EBITDA will range between 3.8 times -- 4.3 times. Ratings could be lowered if the project experiences cost over-runs or construction delays, or if at any time it is apparent that debt to EBITDA at the end of fiscal year 2014 will be above 5.25 times or if the Cleveland market's operating environment deteriorates for any reason. Ratings improvement is limited at this time given the need to complete construction and ramp-up of the project. The principal methodology used in rating Northfield Park Associates 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. Northfield Park Associates, LLC is a joint venture between Milstein Entertainment, LLC (80%) and HR Ohio Member, LLC (20%). HR Ohio Member, LLC is a joint venture between Hard Rock International and Och-Ziff Capital Management Group. Northfield Park Associates, LLC is developing the Hard Rock Northfield Park, a racino project at the existing Northfield Park racetrack in Northfield, OH. The racino will be managed by Hard Rock International and is expected to open by the end of 2013 with approximately 2,300 video lottery terminals. The Milstein family has owned the Northfield Park racetrack since 1972 and has a longstanding involvement in the Cleveland community. NORTHFIELD PARK: S&P Assigns 'B' Corporate Credit Rating -------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Northfield, Ohio-based Northfield Park Associates LLC (Northfield Park). The rating outlook is positive. "At the same time, we assigned our 'B' issue-level rating and a '3' recovery rating to Northfield Park's proposed $195 million senior secured debt, which will consist of a $25 million revolving credit facility due 2017, a $20 million delayed-draw term loan due 2018, and a $150 million first-lien term loan due 2018. The '3' recovery rating indicates our expectation that lenders will receive meaningful (50% to 70%) recovery of principal in the event of a payment default," S&P said. The company plans to use proceeds from the proposed transaction to: -- fund the development and construction of Hard Rock Northfield Park (the racino (a racetrack complex with gaming operations)); -- fund the initial license payment for the operation of video lottery terminals (VLTs); -- establish an interest reserve to fund debt service through the construction period and the first few months following the opening of the racino; and -- fund transaction fees and expenses. "The 'B' corporate credit rating reflects our assessment of Northfield Park's business risk profile as 'weak' and its financial risk profile as 'highly leveraged,' according to our criteria," S&P said. "Our business risk profile assessment of 'weak' reflects the construction and execution risks associated with developing a gaming property in a new gaming market, as well as Northfield Park's reliance on a single asset to meet debt-service needs," said Standard & Poor's credit analyst Carissa Schreck. "These risks are somewhat mitigated by our favorable view of the location and market demographics, our expectation that the property will be of high quality, and the experienced property manager," S&P said. "Our financial risk profile assessment of 'highly leveraged' reflects our belief that new gaming projects are often somewhat slow to ramp up operations because of uncertain demand and challenges in managing costs effectively, particularly in the first few months. In addition, we believe liquidity could be pressured if the opening of the racino is delayed. Northfield Park relies on a single property for cash flow generation, and we estimate that the interest reserve account will provide a limited cushion after the 12-month construction period has ended. Despite these risks, we are forecasting that the property will generate excess cash flow to facilitate deleveraging beginning in 2014, its first full year of operation, and have EBITDA coverage of interest expense in the mid-3x area at the end of its first full year," S&P said. NYTEX ENERGY: Marble Falls Drilling Program in Texas a Success -------------------------------------------------------------- NYTEX Energy Holdings, Inc., announced the successful drilling and completion of its first vertical well drilled into the Marble Falls formation at 5,500 feet in depth located in Jack County, Texas. The well came in free-flowing at an initial production rate of 75 barrels of oil per day and 1.8 million cubic feet of high BTU gas per day. High BTU gas currently sells for over $4.50 per MCF. This well is the first of five wells that NYTEX recently drilled into the Marble Falls and Barnett Shale that are awaiting completion, with a sixth well currently drilling as of the date of this release. Co-funded with industry partners, NYTEX owns between 10% and 20% through a combination of working interests and overriding royalty and back-in working interests in the six wells. NYTEX currently holds leasehold ownership in 1,205 acres on which there are 30 additional drilling locations, with commitments from mineral owners to acquire an additional 2,500 acres. The Company maintains an ongoing leasehold acquisition initiative in the Marble Falls play. As a result of providing land/lease bank services, NYTEX owns overriding royalty interests in 65,489 acres in Jack, Throckmorton and Young Counties in the Marble Falls, Mississippi Lime and Caddo Limestone resource plays. Also, as a result of the Company generating and selling drilling prospects, NYTEX owns overriding royalty and/or carried working interests in 22,904 acres in Jack, Young, Palo Pinto and Stephens Counties. Michael Galvis, NYTEX President and CEO, commented, "The sale of our Francis Drilling Fluids, Ltd. operations this past May has allowed us to not only simplify our balance sheet, fully redeem all debentures and markedly reduce operating costs and liabilities, but also turn our focus to the burgeoning opportunities created by our early success in our target multi-pay oil resource plays." Mr. Galvis added, "By completing our first six wells, we expect to enjoy substantial increases in cash flows from oil and gas production adding to our land services revenues, as well as build producing oil and gas reserves and create shareholder value." About NYTEX Energy Located in Dallas, Texas, Nytex Energy Holdings, Inc., is an energy holding company with operations centralized in two subsidiaries, Francis Drilling Fluids, Ltd. ("FDF") and NYTEX Petroleum, Inc. ("NYTEX Petroleum"). FDF is a 35 year old full- service provider of drilling, completion and specialized fluids and specialty additives; technical and environmental support services; industrial cleaning services; equipment rentals; and transportation, handling and storage of fluids and dry products for the oil and gas industry. NYTEX Petroleum, Inc., is an exploration and production company focusing on early stage development of minor oil and gas resource plays within the United States. In the auditors' report accompanying the financial statements for year ended Dec. 31, 2011, Whitley Penn LLP, in Dallas, Texas, expressed substantial doubt about Nytex Energy's ability to continue as a going concern. The independent auditors noted that the Company is not in compliance with certain loan covenants related to two debt agreements. The Company's balance sheet at June 30, 2012, showed $9.79 million in total assets, $3.74 million in total liabilities, and $6.04 million in total equity. ONE SOURCE RECYCLING: Files for Chapter 7 Bankruptcy Protection --------------------------------------------------------------- Kevin Haas at Rockford Register Star reports that One Source Recycling Inc., which also operates Total Waste Recycling, has filed for Chapter 7 bankruptcy. The Company filed for Chapter 11 restructuring in 2009. According to the report, Total Waste enabled residents to put trash and recyclables in the same can and sorted out which items could be reused. Veolia Environmental Services had partnered with the company this summer to allow residents to use the service. It also had customers in parts of Roscoe, Durand, Rock City in Stephenson County and Beloit in Wisconsin. The report relates Veolia sent a letter to customers that said the sudden closure means they'll have to separate trash and recyclables again. Veolia compensated for the change by increasing curbside collection to one time per week, rather than every other week. Ed Schmitt is the chief executive of Total Waste. OWENS-ILLINOIS INC: S&P Affirms 'BB+' Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Perrysburg, Ohio-based-Owens-Illinois Inc. to stable from negative. "At the same time, we affirmed all existing ratings on the company, including our 'BB+' corporate credit rating," S&P said. "The outlook revision reflects Owens-Illinois' improved earnings in the first half of 2012, and ongoing debt reduction," said credit analyst Liley Mehta. "We expect FFO-to-total adjusted debt to continue to gradually improve in 2013." "The outlook is stable. Credit measures have improved near appropriate levels, and we believe that management's actions to improve operating efficiency and continued focus on debt reduction should offset weak demand trends in Europe. We believe that financial policies are prudent and that management remains committed to lowering debt leverage, such that FFO-to-total adjusted debt can be sustained in the appropriate 20% to 25% range," S&P said. "We could lower the ratings slightly if credit metrics deteriorated such that FFO-to-total adjusted debt declined to or below 15% with no prospects for recovery. Based on our scenario forecasts, this could occur if the company is unable to pass on higher costs to customers in a timely fashion or if economic weakness materially depresses demand. This could cause volume to decline and EBITDA margins to decline below 16%. We could also lower the ratings if the company pursues debt-financed acquisitions, which cause deterioration in credit measures," S&P said. "While not expected at this time, we could raise the ratings if improved earnings and debt reduction resulted in FFO-to-total adjusted debt improve to 30% on a sustained basis," S&P said. OXLEY DEVELOPMENT: Paul Reece Marr Approved as Bankruptcy Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia authorized Oxley Development Company, LLC, to employ the law firm of Paul Reece Marr, P.C., as bankruptcy counsel. As reported in the Troubled Company Reporter on Sept. 26, 2012, the hourly rates of the law firm's personnel are: Paul Reece Marr, Esq. $295 Paralegal $110 Clerical $40 The Debtor related that West Midtown, LLC, a Georgia limited liability corporation managed by Carl M. Drury, III, and solely owned by Mr. Drury's wife Kathy Drury, paid the $1,046 Court filing fee and the $4,954 attorney fee and expense retainer to the Law Firm. West Midtown, LLC, paid the funds on behalf of Debtor to the law firm as a gift and not as a loan. To the best of Debtor's knowledge, the law firm represents no interest adverse to the debtor or the estate in the matters upon which the law firm will be engaged. About Oxley Development Oxley Development Company, LLC, filed a Chapter 11 petition (Bankr. N.D. Ga. Case No. 12-69799) in Atlanta Aug. 6, 2012. Oxley Development owns the Laurel Bluff and Lauren Island, in Camden County, Georgia. The Debtor, a single asset real estate under 11 U.S.C. Sec. 101(51B), estimated assets of at least $100 million and debts under $100 million. This is not the first time Oxley has sought bankruptcy protection. In October 2011, Oxley filed a Chapter 11 petition in Brunswick (Bankr. S.D. Ga. Case No. 11-21338). But the case was dismissed at the behest of the U.S. Trustee. The bankruptcy judge in May granted relief from stay to German American Capital Corporation, allowing the creditor to pursue its state law remedies in connection with the Debtor's real property. William S. Orange, III, Attorney at Law, represented the Debtor in the prior Chapter 11 case. In the new case, the Debtor is represented by Paul Reece Marr P.C. The Debtor disclosed $105,700,000 in assets and $73,777,219 in liabilities as of the Chapter 11 filing. Creditor German American Capital Corp. is represented in the case by Paul Baisier, Esq., and Shuman Sohrn, Esq., at Seyfarth Shaw LLP. No official committee of unsecured creditors has been appointed pursuant to section 1102 of the Bankruptcy Code. P & M PETROLEUM: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: P & M Petroleum Management, LLC 555 17th Street, #1400 Denver, CO 80202 Bankruptcy Case No.: 12-29883 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court District of Colorado (Denver) Judge: Howard R. Tallman Debtor's Counsel: Lee M. Kutner, Esq. KUTNER MILLER BRINEN, P.C. 303 E. 17th Avenue, Suite 500 Denver, CO 80203 Tel: (303) 832-2400 E-mail: lmk@kutnerlaw.com Estimated Assets: Not Stated Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its 20 largest unsecured creditors is available for free at: http://bankrupt.com/misc/cob12-29883.pdf The petition was signed by Edward Neibauer, manager. PACIFIC MONARCH: U.S. Trustee Disbands 3-Member Creditors' Panel ---------------------------------------------------------------- Peter C. Anderson, the U.S. Trustee for Region 16, notified the U.S. Bankruptcy Court for the Central District of California of the disbanding of the Official Committee of Unsecured Creditors in the Chapter 11 cases of Pacific Monarch Resorts, Inc. The U.S. Trustee relates that all three members of the Committee appointed on Dec. 20, 2011, resigned. In an attempt to reconstitute the Committee, the U.S. Trustee re-solicited the unsecured creditors from the list of 20 largest of unsecured creditors provided by the Debtors, however, only two creditors expressed an interest in serving and both creditors were not committal in their desire to serve. About Pacific Monarch Pacific Monarch Resorts, Inc., and its affiliated debtors operate a "timeshare business" business. The Debtors filed voluntary Chapter 11 petitions (Bankr. C.D. Calif. Lead Case No. 11-24720) on Oct. 24, 2011, disclosing $100 million to $500 million in both assets and debts. The affiliated debtors are Vacation Interval Realty Inc., Vacation Marketing Group Inc., MGV Cabo LLC, Desarrollo Cabo Azul, S. de R.L. de C.V., and Operadora MGVM S. de R.L. de C.V. Based in Laguna Hills, California, Pacific Monarch and its affiliates generate revenue primarily from the sale and financing of "vacation ownership points" in a timeshare program commonly known and marketed as "Monarch Grand Vacations," a multi-location vacation timeshare program that establishes a uniform plan for the development, ownership, use and enjoyment of specified resort accommodations for the benefit of its members. MGV is a nonprofit mutual benefit corporation whose members are timeshare owners, and it is administered by a board of directors elected by MGV members. As of the Petition Date, MGV owned Resort Accommodations within these resorts: Palm Canyon Resort (Palm Springs), Riviera Oaks Resort & Racquet Club (Ramona), Riviera Beach & Spa Resort - Phases I and II (Dana Point), Riviera Shores Beach (Dana Point), Cedar Breaks Lodge (Brian Head), Tahoe Seasons Resort (South Lake Tahoe), Desert Isle of Palm Springs (Palm Springs), the Cancun Resort (Las Vegas), and the Cabo Azul Resort (Los Cabos, Mexico). Future Vacation Accommodations are currently in the pre- development stage in Kona, Hawaii and Las Vegas, Nevada. Additionally, the Cabo Azul Resort has construction in progress on two buildings. The Pacific Monarch entities do not include the entities that actually own the timeshare properties that have been dedicated to use by the purchasers of timeshare points. The trusts that own the properties are not liable for the Pacific Monarch entities' obligations. MGV is not a debtor. Judge Erithe A. Smith presides over the jointly administered cases. Lawyers at Stutman, Treister & Glatt PC, in Los Angeles, serve as counsel to the Debtors. The petition was signed by Mark D. Post, chief executive officer and director. Houlihan Lokey Capital, Inc., serves as investment baker to the Debtors. Raymond J. Gaskill, Esq., represents the Debtors as special timeshare counsel. Greenberg, Whitcombe & Takeuchi, LLP, serves as the Debtors' special counsel for employment and labor matters. Lesley, Thomas, Schwarz & Postma, Inc., serves as the Debtors' tax and vacation ownership points accountants. White & Case LLP is the Debtors' special tax counsel. Attorneys at Brinkman Portillo Ronk, PC, serve as counsel to the Official Committee of Unsecured Creditors. Creditor Ikon Financial Services is represented by Christine R. Etheridge. Creditor California Bank & Trust is represented in the case by Michael G. Fletcher at Frandzel Robins Bloom & Csato, L.C. Marshall F. Goldberg, Esq. at Glass & Goldberg argues for creditor Fifth Third Bank. Creditor The Macerich Company is represented by Brian D. Huben, Esq. at Katten Muchin Rosenman LLP. Interested Party DPM Acquisition is represented by Joshua D. Wayser, Esq. at Katten Muchin Rosenman LLP. PARK CAPITAL: Case Summary & 2 Unsecured Creditors -------------------------------------------------- Debtor: Park Capital Properties, LLC 20400 Stevens Creek Boulevard, Suite 700 Cupertino, CA 95014 Bankruptcy Case No.: 12-56989 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court Northern District of California (San Jose) Judge: Charles Novack Debtor's Counsel: Terrell S. Root, Esq. LAW OFFICES OF JAMES M. SULLIVAN 225 N Santa Cruz Avenue Los Gatos, CA 95030 Tel: (408) 395-3837 E-mail: tracy@jsullinc.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 A copy of the Company's list of its two largest unsecured creditors is available for free at: http://bankrupt.com/misc/canb12-56989.pdf The petition was signed by Paul Schroeder, president. PATRIOT COAL: J. Lushefski Succeeds M. Schroeder as CFO ------------------------------------------------------- Patriot Coal Corporation announced management changes intended to bolster the resources of its finance team as the Company continues its reorganization process. Mark N. Schroeder has been named Senior Vice President of Financial Planning, effective immediately. In this role, Mr. Schroeder will largely focus on steps to maximize value created from the Company's reorganization process. John E. Lushefski, a Patriot Board member and chair of its Finance Committee, is joining the Company and is succeeding Mr. Schroeder as Chief Financial Officer and Chief Accounting Officer of Patriot. Mr. Lushefski is stepping down from the Patriot Board to serve in his new role. "Patriot is fortunate to be able to draw on the services of these two outstanding professionals as the Company continues to address the challenges presented by a rapidly changing industry," said Patriot Chairman and Chief Executive Officer Irl F. Engelhardt. "Jack Lushefski is a highly accomplished financial executive, with prior experience as the CFO of several companies. Having worked closely with him on the Patriot Board, I am confident that Jack's financial expertise, leadership talents and industry experience will provide added strength and depth to the Patriot team." He continued, "As we move through the stages of the reorganization process, Mark's new assignment is an important element of Patriot's future success. Mark will continue to be a member of our executive team and assist Patriot with financial planning and other aspects of the restructuring, while continuing to provide financial expertise to all facets of the organization." Messrs. Lushefski and Schroeder will report to the Chief Executive Officer, and the executives formerly reporting to Mr. Schroeder will now report to Mr. Lushefski. Mr. Lushefski will receive an annual base salary of $575,000. He will be eligible for an annual performance-based cash bonus pursuant to an incentive plan that will be subject to Bankruptcy Court approval. Mr. Lushefski's bonus for the 2012 calendar year will be prorated based on the number of weeks that he is employed in 2012. About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The case has been assigned to Judge Shelley C. Chapman. The U.S. Trustee appointed a seven-member creditors committee. PATRIOT COAL: Executives Targeted by Shareholders' Suit ------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Patriot Coal Corp. executives are targeted in a class action lawsuit filed in U.S. District Court in St. Louis that accused them of violating securities laws by issuing "false and misleading statements concerning the company's court-ordered environmental remediation efforts." According to the report, the lawsuit was filed on behalf of shareholders who purchased stock between October 2010 and July 2012, when Patriot filed for Chapter 11 reorganization. Patriot violated accepted accounting principles by capitalizing environmental costs rather than treating them as expenses, "thereby overstating the company's financial results," according to the complaint. Following an investigation by the U.S. Securities and Exchange Commission, Patriot disclosed in May that it would restate financial results for 2010 and 2011, increasing the losses for both years, the shareholders said. The report relates that because the suit is against Patriot officers and directors, it wasn't automatically halted by the company's bankruptcy. Sometimes, companies in Chapter 11 will call on the bankruptcy judge to stop shareholder suits, saying they distract managers from working on the reorganization. Aaron Palash, a spokesman for Patriot, said the company would have no comment on the suit. Patriot is waiting to learn whether the bankruptcy will remain in New York or be transferred to St. Louis or West Virginia, where most of the coal mines are located. According to Bloomberg Patriot's $200 million in 3.25% senior convertible notes due in 2013 traded on Sept. 26 for 16 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The $250 million in 8.25% senior unsecured notes due in 2018 traded on Sept. 26 for 50 cents on the dollar. The shareholder suit is Espinoza v. Whiting, 12-01711, U.S. District Court, Eastern District of Missouri (St. Louis). About Patriot Coal St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer and marketer of coal in the eastern United States, with 13 active mining complexes in Appalachia and the Illinois Basin. The Company ships to domestic and international electricity generators, industrial users and metallurgical coal customers, and controls roughly 1.9 billion tons of proven and probable coal reserves. Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11 petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y. Lead Case No. 12-12900) on July 9, 2012. Patriot said it had $3.57 billion of assets and $3.07 billion of debts, and has arranged $802 million of financing to continue operations during the reorganization. Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone Advisory Partners LP is serving as financial advisor, and AP Services, LLC is providing interim management services to Patriot in connection with the reorganization. Ted Stenger, a Managing Director at AlixPartners LLP, the parent company of AP Services, has been named Chief Restructuring Officer of Patriot, reporting to the Chairman and CEO. GCG, Inc. serves as claims and noticing agent. The case has been assigned to Judge Shelley C. Chapman. The U.S. Trustee appointed a seven-member creditors committee. PEGASUS RURAL: Gets OK to Sell 2.5 GHz Assets to Various Buyers --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Pegasus Rural Broadband LLC, et al., to sell 2.5 GHz assets of Xanadoo, LLC, pursuant to the terms of the asset purchase agreement; and assume and assign the executory contracts and unexpired leases. The Debtors related that prior to entering into each APA, the Debtors engaged in marketing efforts and competitive sale process in accordance with prior orders entered by the Court. The prices for the purchased assets are in immediately available cash or credit. The Debtors added that in order to maximize the value of the assets listed on Exhibit A to the Debtors' estates, it is essential that the sale of the purchased assets occur within the time constraints set forth in each APA. A copy of the purchasers and APA of the 2.5GHz assets is available for free at: http://bankrupt.com/misc/PEGASUSRURAL_sale_exhibitA.pdf The assets were marketed with the help of Cantor Fitzgerald & Company, the Debtors' investment advisor. As reported in the Troubled Company Reporter on Aug. 24, 2012, Bill Rochelle, the bankruptcy columnist for Bloomberg News, reported that the bankrupt subsidiaries of Xanadoo Co. were authorized by the bankruptcy court Aug. 22 to sell assets in 700 megahertz spectrum to secured lenders in exchange for $30 million in debt. According to that report, the lenders were the stalking-horse for the Aug. 20 auction. The assets include 23 licenses in the 700 megahertz frequency band that were purchased in 2000 and 2001 for $96 million. In addition, the companies auctioned licenses they lease in the 2.5 gigahertz spectrum. Court records indicate that the judge will be approving the sale of individual licenses for prices ranging mostly between $7,500 and $11,000 each. The report relates that the bankruptcy court previously approved the sale of tower facilities for $3 million to Rhino Communications Inc. The companies filed a proposed reorganization plan in February, predicting the sale of licenses in the 700 megahertz spectrum would pay all secured and unsecured creditors in full, with interest. Previously, according to the Debtors' case docket, the Court has extended the deadline to execute asset purchase agreements for the sale of substantially all assets of the Debtors and certain assets of Xanadoo, LLC. About Pegasus Rural Broadband Pegasus Rural Broadband, LLC, and its affiliates, including Xanadoo Holdings Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 11-11772) on June 10, 2011. The Debtors are subsidiaries of Xanadoo Company, a 4G wireless Internet provider. Xanadoo Co. was not among the Chapter 11 filers. The subsidiaries sought Chapter 11 protection after they were unable to restructure $52 million in 12.5% senior secured promissory notes that matured in May. The notes are owing to Beach Point Capital Management LP. Xanadoo Holdings, through Xanadoo LLC -- XLC -- offers wireless high-speed broadband service, including digital phone services, under the Xanadoo brand utilizing licensed frequencies in the 2.5 GHz frequency band. As of May 31, 2011, XLC served 12,000 subscribers in Texas, Oklahoma and Illinois. In the summer of 2010, the Debtors closed all of their retail stores and kiosks in its six operating markets and severed all fulltime sales personnel. Since the closings, the Debtors relied one key retailer in each market to serve as local point of presence to market customer transactions. Judge Peter J. Walsh presides over the case. Rafael Xavier Zahralddin-Aravena, Esq., Shelley A. Kinsella, Esq., and Jonathan M. Stemerman, Esq., at Elliott Greenleaf, in Wilmington, Delaware, serve as counsel to the Debtor. NHB Advisors Inc. is their financial advisors. Epiq Systems, Inc., is the claims and notice agent. Xanadoo Holdings, Pegasus Guard Band and Xanadoo Spectrum each estimated assets of $100 million to $500 million and debts of $50 million to $100 million. The Chapter 11 filing followed the maturity in May 2011 of almost $60 million in secured notes owing to Beach Point Capital Management LP. The Court denied a motion by the secured noteholders to dismiss the Chapter 11 case and appoint a Chapter 11 trustee. The companies filed a proposed reorganization plan in February predicting sale of licenses in the 700 megahertz spectrum would pay all secured and unsecured creditors in full, with interest. In a separate filing, the companies said the assets will be turned over to secured lenders if there is neither a lender nor a buyer to finance a plan. The plan will be funded either by a new loan or by selling the business and the assets. No committee or trustee has been appointed in these cases. POST PROPERTIES: S&P Raises Preferred Shares Rating to 'BB+' ----------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit and senior unsecured debt ratings on Post Properties Inc. to 'BBB' from 'BBB-'. "At the same time, we raised our rating on Post's preferred shares to 'BB+' from 'BB'. We also revised our ratings outlook to stable from positive. These actions affect roughly $280 million of rated debt and $43 million of rated preferred stock," S&P said. "The upgrade acknowledges Post's strong operating performance and recently strengthened credit metrics, which we believe the REIT will sustain at current or stronger levels through future business and development cycles," said credit analyst Eugene Nusinzon. "Post strengthened its credit metrics during the first half of 2012 by modestly reducing leverage, reporting strong organic growth, and refinancing maturing debt with lower-cost issuance. The company also continued to fund its recently expanded development pipeline predominantly with equity." "The stable outlook reflects our expectation that Post will continue to maintain modest leverage and strengthen its cash flow and credit metrics from the lease-up of development projects and organic growth, in tandem with potentially favorable debt refinancing opportunities, over the next two years. An upgrade is unlikely in the near-intermediate term, given the company's increased development appetite and higher portfolio concentration relative to larger, more diversified, higher-rated peers. At the same time, we see limited downside risk to the ratings, given our expectations for favorable fundamentals to continue. However, ratings would come under pressure if the company shifts its financial policy such that it materially deviates from our expectations, if EBITDA declines (perhaps because of a large development stumble) such that FCC drops below 2.5x, liquidity becomes constrained, or coverage of all fixed charges (including the common dividend) dips below 1.0x," S&P said. QUICKSILVER RESOURCES: Moody's Confirms 'B2' CFR; Outlook Neg. -------------------------------------------------------------- Moody's Investors Service confirmed the Corporate Family Rating (CFR) at Quicksilver Resources, Inc. at B2, senior unsecured notes ratings at B3 and subordinated notes rating at Caa1. The outlook is negative. This action concludes the review for downgrade that was announced on July 27, 2012. Ratings Rationale "Quicksilver's B2 CFR is supported by its large, proved developed (PD) reserve base that is comparable to Ba rated E&P peers," stated Michael Somogyi, Moody's Vice President -- Senior Analyst. "Quicksilver's large size and scale, however, are offset by its persistent high debt level relative to its highly concentrated natural gas production volumes, resulting in leverage on production and cash flow coverage metrics that are meaningfully weaker than E&P peers." The confirmation, in part, reflects the company's success in amending its Combined Credit Agreement. The amendment provides for a relaxed financial covenant as it continues to aggressively manage capital expenditures amid the extended low commodity price environment and accelerate strategic initiatives to reduce debt and fund new venture projects. Quicksilver successfully secured an amendment to the interest coverage covenant in its credit facility and pulled forward its fall redetermination which reset the borrowing base to $850 million, down from $1,075 billion at quarter-end June 30, 2012. The amendment is inclusive of a downward revised interest coverage requirement to 1.5x from 2.5x prior, where it remains through March 2014 before stepping up to 2.0x coverage in June 2014 and back to the original 2.5x in September 2014. Quicksilver's bank group also added a senior secured leverage covenant of 2.5x which takes effect in the quarter ending September 2012. Other limitations, inclusive of restricted payments and limitations on the incurrence of certain new debt, are subject to fall-away provisions once the company's total debt / EBITDA is equal to or less than 4.0x. The facility will continue to be redetermined on a semi-annual basis, with the next scheduled review in April 2013. As of June 30, 2012, Quicksilver had approximately $455 million utilized under the revolver. The expanded covenant headroom provides the company with additional time to manage through the extended low natural gas commodity price environment. In addition, reduced capital expenditures over the next 6 -- 18 months and the deferral of capital commitments in the Horn River Basin alleviate near-term liquidity concerns. Quicksilver incurred approximately $155 million of capital expenditures in 2Q2012, bringing total capital spending through the first six months of 2012 to $291 million. The company is projecting to scale back capital expenditures over the second half of 2012 as it reduces development concentrated in the Barnett Shale and delays new development activity. Quicksilver's full year 2012 capital spending forecast was revised down to $360 million, or $50 million less than its original $410 million budget. The company also entered into a cross-assignment and cross-lease agreement with SWEPI LP, a subsidiary of Royal Dutch Shell PLC, to jointly develop acreage in the Niobrara play in the Sand Wash Basin of Northwest Colorado. Each party will own a 50% working interest in approximately 330,000 net acres and have right to 50% interest within the 850,000 acres defined under an Area of Mutual Interest (AMI). Quicksilver will receive an equalization payment for 50% of the acreage differential contributed in excess of SWEPI LP. This agreement provides a source of funds while significantly expanding the long-term development potential of this asset. In addition, Quicksilver remains focused on additional joint venture transactions with the objective of covering development cost exposure on new venture projects and continues to evaluate potential asset sales with proceeds to apply towards debt reduction. Quicksilver's adjusted debt level of roughly $2.1 billion as of June 30, 2012 remains elevated stemming from prior acquisition activity and delayed MLP launch to apply proceeds toward debt reduction. The company's persistent high debt level relative to declining production volumes is expected to further weaken Quicksilver's operating profile and credit protection metrics with debt/average daily production expected to rise to over $35,000 per boe and retained cash flows / debt expected to fall to below 10% by year-end 2013, based on Moody's base case price assumptions. The negative outlook is reflective of the challenging operational backdrop stemming from extended low natural gas prices and Quicksilver's concentrated asset base that is heavily weighted to natural gas production. A downgrade would be considered if Quicksilver's liquidity profile weakens should the company fail to execute on securing outside capital for new project developments or RCF to debt remains below 10% for a sustained period. Given the negative outlook, an upgrade is unlikely at this time. However, the outlook could be stabilized depending on the success of strategic initiatives to fund new venture projects and a proven resolve to reduce debt. Quicksilver has $438 million senior notes due 2015, $591 million senior notes due 2016, and $298 million senior notes due 2019 that are unsecured. The company also has $350 million of senior subordinated notes due 2016. Under Moody's Loss Given Default (LGD) Methodology, the senior notes are rated B3 and the senior subordinated notes are rated Caa1. This notching beneath the B2 CFR reflects the relative size of the senior secured facility's potential priority claim and the debt instruments relative seniority in the capital structure. The principal methodology used in rating QuickSilver was the Global Independent Exploration and Production Industry Methodology published in December 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. Quicksilver is a publicly-traded, independent exploration and production (E&P) company with primary operations in the Barnett Shale in Texas. The company was founded in 1997 and is headquartered in Fort Worth, Texas. RADIOSHACK CORP: J. Gooch Leaves, D. Lively Named Interim CEO ------------------------------------------------------------- RadioShack Corp.'s Board of Directors and James F. Gooch have agreed that Mr. Gooch will step down from his positions as chief executive officer and director of the Company, effective immediately. The Board of Directors is in the process of retaining an executive search firm to assist in conducting a search for a successor. The Board does not intend to place any limitations on the search, which may include internal candidates. Dorvin Lively, the Company's executive vice president and chief financial officer, will assume the interim role as acting CEO, working under the Board's oversight. "We thank Jim for his service to the Company and wish him well in his future endeavors," said Daniel R. Feehan, non-executive chairman of the board for RadioShack Corp. "I would like to thank my colleagues on the Board and everyone at the Company for their strong support," Mr. Gooch said. "I wish them all great success in the future." About Radioshack RadioShack sells consumer electronics and peripherals, including cellular phones. It operates roughly 4,700 stores in the U.S. and Mexico. It also operates about 1,500 wireless phone kiosks in Target stores. The company also generates sales through a network of 1,100 dealer outlets worldwide. Revenues for the last 12 months' period ending June 30, 2012 were roughly $4.4 billion. Radioshack's balance sheet at June 30, 2012, showed $2.08 billion in total assets, $1.38 billion in total liabilities and $704.6 million in total stockholders' equity. * * * As reported by the TCR on Aug. 1, 2012, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Fort Worth, Texas-based RadioShack Corp. to 'B-' from 'B+'. "The downgrade of RadioShack reflects our view that it will be very difficult for the company to improve its gross margin in the second half of the year," said Standard & Poor's credit analyst Jayne Ross, "given the highly promotional nature of year- end holiday retailing in the wireless and consumer electronic categories. It is our belief that all segments of the company's business will remain under margin pressure for 2012 and into 2013." In the July 27, 2012, edition of the TCR, Fitch Ratings has downgraded its long-term Issuer Default Rating (IDR) for RadioShack Corporation to 'CCC' from 'B-'. The downgrade reflects the significant decline in RadioShack's profitability, which has become progressively more pronounced over the past four quarters. REGENCY ENERGY: Fitch Rates $500 Million Senior Notes 'BB' ---------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to Regency Energy Partners L.P.'s (RGP) proposed $500 million senior notes offering due 2023 (senior notes). Proceeds will be used to repay borrowings under RGP's credit facility. The Rating Outlook is Stable. RGP's ratings reflect the fixed fee nature of its operations, the quality and diversity of its portfolio of midstream assets, relatively high leverage, weak distribution coverage metrics and its affiliation with its general partner Energy Transfer Equity, LP (ETE; long-term IDR 'BB-'; Outlook Stable). The ratings consider that RGP is in the midst of a significant capital spending program which will see the company spend over $1 billion in growth cap-ex through 2013 and weigh on leverage metrics in the near to medium term. These growth investments are primarily focused on fee-based or revenue-assured assets, which should help lower RGP's exposure to changes in commodity prices. Additionally, Fitch expects RGP's leverage metrics will improve as it benefits from the earnings and cash flow associated with joint venture and organic projects as they are completed and begin operation. Key Rating Factors Fixed Fee Cash Flow Profile: RGP has over 80% of its gross margin supported by fixed fee type contracts which largely insulate it from direct changes in commodity prices. This translates to fairly predictable earnings and cash flow for the partnership. Additionally, RGP tries to layer on hedges to further lower open commodity price exposure. Geographic and Business Segment Diversity: RGP has a diverse set of midstream assets which allow it to offer fully integrated midstream services to producers. Its assets are located in and around growing production basins that are liquids-rich and should continue to provide significant organic growth opportunities. High Leverage/Improving Metrics: As a result of RGP's rapid growth over the past several years its leverage is high with Debt/Adjusted EBITDA for the LTM period ending June 30, 2012 of 4.7 times (x) based on Fitch calculations. Somewhat offsetting this high leverage is lower relative commodity price exposure due to the fixed fee focus of its business and the expectation that as its growth projects are completed RGP's rising EBITDA will lead to improvement in these metrics. Based on Fitch's calculations for Debt/Adjusted EBITDA, which excludes equity in earnings but includes dividends from unconsolidated affiliates, Fitch expects RGP's 2012 Debt/Adj. EBITDA of roughly 4.6x improving to closer to 4.1x by 2013 as growth projects are completed. Large Capital Spending Plan: RGP has a significant capital expenditure program, with forecasted capital spending of over $1 billion for 2012 and 2013. RGP's large scale spending will weigh on metrics through 2013 prior to construction being completed and cash flows coming on line. Fitch expects RGP to fund its spending with a balance of debt and equity. Tight Distribution Coverage: Fitch expects RGP's distribution coverage to be just under 1.0x for 2012, improving to 1.1x in 2013. Fitch prefers to see distribution coverage in excess 1.0x, as the cash retention can provide a financial cushion in a downturn, and help fund growth spending and or debt reduction. Volumetric Exposure: As typical with gas processor and midstream companies, volumetric risk can be a concern, particularly in a declining rig count environment. However, production and volumes have largely held up or increased in RGP's operating basins, which Fitch expects to continue given the gas from these areas, like the Permian and Eagle Ford basins, tends to have a high liquids component or is tied to oil production which should remain strong given current NGL and oil economics. JV/Structural Subordination: RGP is the owner of several joint venture (JV) interests some of which have external debt. RGP is structurally subordinate to the cash operating and debt service needs of these JVs and reliant on JV distributions to fund its capital spending and its own distributions. General Partner Relationship: While Fitch's ratings are largely reflective of RGP's credit profile on a stand-alone basis, they do consider the company relationship with ETE, the owner of its general partner interest. ETE's general partner interest gives it significant control over the MLP's operations, including most major strategic decisions such as investment plans, distributions, and management of daily operations. The relationship has also provided opportunities that might otherwise be unavailable to RGP, such as RGP's acquisitions of MidContinent Express Pipeline (MEP; IDR 'BBB'; Outlook Stable) and LDH Energy Assets Holdings, from and with another ETE affiliate, Energy Transfer Partners, LP (ETP; IDR 'BBB-'; Outlook Negative) and its participation in its LoneStar JV with ETP. What Could Trigger A Rating Action Positive: Future developments that may, individually or collectively, lead to positive rating action include: -- Sustained improvement in leverage metrics; -- Successful execution of growth plan and continued metric improvements. Fitch would likely consider a positive rating action as Debt/Adj. EBITDA moves closer towards and below 4.0x and distribution coverage remains above 1.0x, provided RGP's 80%+ fee based margin profile and hedging practices stay consistent with current practices. Negative: Future developments that may, individually or collectively, lead to a negative rating action include: -- Continued large-scale capital expenditure program funded by higher than expected debt borrowings, with Debt/Adj. EBITDA above 4.8x on a sustained basis; -- An increase in gross margin sensitivity to changes in commodity prices; -- Significant and prolonged decline in demand/prices for NGLs, crude and natural gas; -- Aggressive growth of distributions at RGP and with continued distribution coverage below 1.0x. Note: In its Master Limited Partnership analysis, Fitch typically adjusts EBITDA to exclude nonrecurring extraordinary items, and noncash mark-to-market earnings. Adjusted EBITDA excludes equity in earnings and includes dividends from unconsolidated affiliates. Fitch currently rates RGP as follows: -- Long-term IDR 'BB' -- Senior Secured Revolver 'BB+' -- Senior Unsecured Notes 'BB' -- Series A Preferred Units 'B+' - Senior subordinated debt at 'BB+' REGENCY ENERGY: Moody's Rates Sr. Unsecured Notes Due 2023 'B1' --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Regency Energy Partners LP and co-issuer Regency Energy Finance Corp.'s senior unsecured notes due 2023. Note proceeds will be used to repay borrowings outstanding under the company's revolving credit facility. The outlook is stable. "The notes offering will provide liquidity to further fund Regency's growth projects, most notably at the company's Lone Star NGL joint venture and the expansion of Regency's midstream infrastructure in the Eagle Ford Shale," commented Andrew Brooks, Moody's Vice President. "While Regency's current leverage is elevated and is expected to rise further, incremental EBITDA generated from recent growth projects is expected to begin to accrue in 2013, stabilizing debt leverage." Ratings Rationale Regency's Ba3 Corporate Family Rating (CFR) reflects its growing size and scale, its business and geographic diversification and increased fee-based income derived from recent expansions and acquisitions. The ratings also recognize Regency's rapid growth and evolving business mix profile, the execution risks associated with its growth projects, and increased structural complexity and elevated leverage. Growth capital spending of $775-$825 million budgeted for 2012 could cause leverage to exceed 5x EBITDA (including Moody's standard adjustments), although debt leverage will likely moderate in 2013 as projects reach completion. Given the financial constraints associated with the Master Limited Partnership (MLP) business model, the Ba3 rating is supported by Regency's track record of issuing equity and management's commitment to the balanced funding of its growth. Moody's also takes into account Regency's ownership by Energy Transfer Equity, L.P. (ETE, Ba1 review down), a significant midstream participant, but also one with elevated consolidated leverage that looks to Regency to help fund its own distributions and debt service obligations. Regency should have adequate liquidity through 2013, which is captured in Moody's SGL-3 Speculative Grade Liquidity (SGL) rating. As of September 25, 2012, Regency had $695 million borrowings outstanding under its $1.15 billion secured revolving credit facility. The revolver expires on June 15, 2014. The next scheduled maturity is in 2016, when $163 million in unsecured notes mature. Regency is expected to have sufficient cushion with regards to its three financial covenants over the next 12 months. Debt to EBITDA is limited to 5.25x, with secured debt to EBITDA limited to 3.0x. Minimum interest coverage is set at 2.75x on the basis of EBITDA to cash interest. The B1 rating on the proposed $500 million of senior notes reflects both the overall probability of default by Regency, which Moody's assigns a PDR of Ba3, and a loss given default of LGD4- 66%. Regency's senior unsecured notes are subordinate to its $1.15 billion senior secured revolving credit facility's potential priority claim to the company's assets. The size of the potential claims relative to Regency's outstanding senior unsecured notes results in the notes being rated one notch below the Ba3 CFR under Moody's Loss Given Default Methodology. The stable outlook reflects Moody's expectation that increased debt leverage will stabilize as new growth projects begin to generate incremental EBITDA. Regency's ratings could be upgraded presuming it successfully executes on its growth initiatives while restoring debt to EBITDA to levels approaching 4.5x while maintaining the source of fee-based operating margins in the 80% range. The rating could be downgraded should peak leverage not begin to trend down. Additionally, should the credit of ETE materially diminish from its current Ba1 CFR, or should ETE aggressively pressure Regency for a higher distribution payout, a negative rating action could be considered. The principal methodologies used in rating Regency were the Global Midstream Energy Industry Methodology published December 1, 2010, and the Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA, published in June 2009. Regency Energy Partners LP is an MLP that owns a portfolio of midstream assets in natural gas gathering and processing (G&P), transportation, compression and treating in Texas, the Mid- Continent, Louisiana, Arkansas, Mississippi, Alabama and Pennsylvania. ETE, also a publicly traded MLP, owns 100% of Regency's general partner (GP). ETE controls Regency through its 2% GP interest , owns 26.2 million of Regency's common units and 100% of its incentive distribution rights. REGENCY ENERGY: S&P Rates $500MM Senior Unsecured Notes 'BB' ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB' senior unsecured rating and '4' recovery rating on U.S. midstream energy partnership Regency Energy Partners L.P.'s and Regency Energy Finance Corp.'s issuance of $500 million senior unsecured notes. The partnership will use proceeds from the notes to repay borrowings outstanding on its revolving credit facility. The outlook is stable. Standard & Poor's ratings on U.S. midstream energy partnership Regency reflect its "fair" business risk profile and "aggressive" financial risk profile under its criteria. Some commodity price sensitivity, a small, but growing, asset base, and a diversified business mix with a large fee-based cash flow component characterize the partnership's fair business risk profile. Moderate financial leverage, an aggressive growth strategy, and the master limited partnership (MLP) structure result in an aggressive financial profile, in S&P's view. Energy Transfer Equity L.P. owns the 2% general partner and 15% limited partner interest in Regency. "The stable rating outlook reflects our view that the partnership's larger cash flow contribution from its pipeline joint-venture interests should continue to lower financial leverage through 2012," said Standard & Poor's credit analyst William Ferara. "In our opinion, higher ratings are possible over the longer term if Regency maintains total adjusted debt to EBITDA at or below 4x (partnership debt to EBITDA plus joint-venture distributions), and increases the cash flow it receives not only from its stable pipeline joint-venture interests but also from fee-based organic projects at the partnership level. We could lower the rating if the partnership's cash financial leverage approaches 4.75x and we do not see a clear path for improvement," S&P said. RESIDENTIAL CAPITAL: Judge Threatens Homeowner With Sanctions ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that a homeowner in a contested foreclosure with an affiliate of Residential Capital LLC was told by the bankruptcy judge that he will be saddled with sanctions if he files any more papers opposing retention of one of ResCap's law firms. According to the report, in August, U.S. Bankruptcy Judge Martin Glenn in New York authorized the mortgage-servicing unit of non- bankrupt Ally Financial Inc. to hire Bradley Arant Boult Cummings LLP as special litigation counsel. A homeowner named Patrick Hopper unsuccessfully objected, contending the firm participated in so called robo-signing activities. The report relates that Mr. Hopper filed two sets of papers later in August, both asking Mr. Glenn to remove Bradley Arant as ResCap lawyers. He contended that a page from his court filings had been deleted. Judge Glenn refused to reconsider the hiring authorization. He ended the five-page opinion by saying that Hopper's last two filings were "frivolous." Judge Glenn warned that any further motions by Mr. Hopper about the firm "will result in the imposition of sanctions." The report notes that Mr. Bradley Arant had represented a ResCap affiliate against Mr. Hopper in what Judge Glenn characterized as a "litigious foreclosure" begun in late 2009 in Florida. Mr. Hopper represented himself in bankruptcy court. The Bloomberg report discloses that the $2.1 billion in third-lien 9.625% secured notes due in 2015 traded Sept. 27 for 100.25 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The $473.4 million of ResCap senior unsecured notes due in April 2013 traded for 26.938 cents on the dollar, according to Trace. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap is selling its mortgage origination and servicing businesses and its legacy portfolio, consisting mainly of mortgage loans and other residual financial assets. At the onset of the bankruptcy case, ResCap struck a deal with Nationstar Mortgage LLC for the mortgage origination and servicing businesses, and with Ally Financial for the legacy portfolio. Together, the asset sales are expected to generate roughly $4 billion in proceeds. Following a hearing in June, the bankruptcy judge scheduled auctions for Oct. 23. A hearing to approve the sales was set for Nov. 5. Fortress Investment Group LLC will make the first bid for the mortgage-servicing business, while Berkshire Hathaway Inc. will serve as stalking-horse bidder for the remaining portfolio of mortgages. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Jr. Sec. Notes Liens Allegedly Partly Invalid ------------------------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that the Residential Capital LLC creditors' committee said it found more than $1 billion in assets that aren't properly collateral for the $2.1 billion in junior secured notes. According to the report, the creditors' panel arranged an Oct. 24 hearing where they will ask the U.S. Bankruptcy Court in New York for permission to sue, void parts of the noteholders' liens, and settle. ResCap itself can't sue because the company agreed the liens are valid in accepting financing for the Chapter 11 case begun in May as a prepackaged reorganization, the committee said. The report relates that the financing required the committee to raise formal objection to lien validity by Sept. 24. A lawsuit "may yield hundreds of millions of dollars for unsecured creditors," the committee said. Upon investigation, the committee said it quickly noted that ResCap published a Dec. 31 balance sheet showing $1.3 billion in collateral for the junior noteholders. When bankruptcy arrived, ResCap said the collateral was actually $2.4 billion. If the collateral were the larger amount, the noteholders would be paid in full. The day of bankruptcy, the third-lien 9.625% secured notes due 2015 traded for 94 cents on the dollar. As the bankruptcy progressed, the notes rose in price, sometimes trading above par. On Sept. 25, they last traded at 101.25 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The $473.4 million of ResCap senior unsecured notes due in April last traded Sept. 25 for 28.9 cents on the dollar, according to Trace. The report notes the Committee found defects in smaller amounts of collateral. In addition to finding a failure to complete the security interest in about $80 million in cash and other assets, the committee said that the noteholders were given $350 million in new collateral within 90 days of bankruptcy that can be voided as a preference. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap is selling its mortgage origination and servicing businesses and its legacy portfolio, consisting mainly of mortgage loans and other residual financial assets. At the onset of the bankruptcy case, ResCap struck a deal with Nationstar Mortgage LLC for the mortgage origination and servicing businesses, and with Ally Financial for the legacy portfolio. Together, the asset sales are expected to generate roughly $4 billion in proceeds. Following a hearing in June, the bankruptcy judge scheduled auctions for Oct. 23. A hearing to approve the sales was set for Nov. 5. Fortress Investment Group LLC will make the first bid for the mortgage-servicing business, while Berkshire Hathaway Inc. will serve as stalking-horse bidder for the remaining portfolio of mortgages. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RESIDENTIAL CAPITAL: Third-Lien Bondholders Drop Plan Support ------------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that holders of third-lien Residential Capital LLC bonds withdrew support for the reorganization plan the mortgage servicing subsidiary of Ally Financial Inc. negotiated before ResCap's Chapter 11 filing in May. According to the report, the announcement about the bondholders coincided with the official ResCap creditors' committee decision to sue with the aim of voiding a major part of the collateral securing the $2.1 billion in third-lien bonds. The report relates that in the e-mailed statement disclosing withdrawal from the plan-support agreement, Gina Proia, a spokeswoman for Ally, said the company will move forward with the plan. When the bankruptcy began, ResCap said the plan was supported by holders of a "significant amount" of the third lien bonds. The $2.1 billion in third-lien 9.625% secured notes due 2015 last traded Sept. 26 for 100.75 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The $473.4 million of ResCap senior unsecured notes due April 2013 last traded Sept. 26 for 27 cents on the dollar, according to Trace. About Residential Capital Residential Capital LLC, the unprofitable mortgage subsidiary of Ally Financial Inc., filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012. Neither Ally Financial nor Ally Bank is included in the bankruptcy filings. ResCap, one of the country's largest mortgage originators and servicers, was sent to Chapter 11 with 50 subsidiaries amid "continuing industry challenges, rising litigation costs and claims, and regulatory uncertainty," according to a company statement. ResCap disclosed $15.68 billion in assets and $15.28 billion in liabilities as of March 31, 2012. Centerview Partners LLC and FTI Consulting are acting as financial advisers to ResCap. Morrison & Foerster LLP is acting as legal adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is the conflicts counsel. Rubenstein Associates, Inc., is the public relations consultants to the Company in the Chapter 11 case. Morrison Cohen LLP is advising ResCap's independent directors. Kurtzman Carson Consultants LLP is the claims and notice agent. Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves as counsel to Ally Financial. ResCap is selling its mortgage origination and servicing businesses and its legacy portfolio, consisting mainly of mortgage loans and other residual financial assets. At the onset of the bankruptcy case, ResCap struck a deal with Nationstar Mortgage LLC for the mortgage origination and servicing businesses, and with Ally Financial for the legacy portfolio. Together, the asset sales are expected to generate roughly $4 billion in proceeds. Following a hearing in June, the bankruptcy judge scheduled auctions for Oct. 23. A hearing to approve the sales was set for Nov. 5. Fortress Investment Group LLC will make the first bid for the mortgage-servicing business, while Berkshire Hathaway Inc. will serve as stalking-horse bidder for the remaining portfolio of mortgages. Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by affiliates of Residential Capital LLC and its affiliates (http://bankrupt.com/newsstand/or 215/945-7000). RG STEEL: Seeks Exclusive Plan Filing to Jan. 26 ------------------------------------------------ Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that RG Steel LLC, which filed for Chapter 11 relief at the end of May and proceeded to auction off the principal plants, for the first time is requesting an expansion of the exclusive right to propose a reorganization plan. According to the report, the steel producer said in a court filing that it has "not yet analyzed in significant detail all issues related to a potential plan filing." RG said it is also evaluating the pursuit of "preference and other potential causes of action." The bankruptcy court authorized selling the principal facilities. All but one of the sales has been completed, RG said in the court filing. The sale of the Wheeling Corrugating division to Nucor Corp. brought in $7 million. The plant in Sparrows Point, Maryland fetched the highest price, $72.5 million. The report relates that the hearing to consider granting exclusive-filing rights until Jan. 26 will take place Oct. 16. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as it's financial advisor. RG STEEL: Can Hire Hilco Streambank as Broker for Assets -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized WP Steel Venture LLC, et al., to employ Hilco IP Services, LLC doing business as Hilco Streambank as broker in connection with the marketing of certain of the Debtors' internet protocol numbers and other internet number resources, nunc pro tunc to Aug. 31, 2012. Since the outset of the Chapter 11 cases, the Debtors' focus has been to monetize their assets and maximize recoveries to creditors. To that end, the Debtors sought a broker to assist in monetizing the IP Addresses. Following arm's-length discussions, the Debtors selected Hilco Streambank as the exclusive broker for the IP Addresses. Hilco IP will, among other things: a. collect and secure all of the available information and other data concerning the IP Addresses; b. develop and execute a sales and marketing program designed to elicit proposals to acquire the IP Addresses from qualified acquirers with a view toward completing one or more sales, assignments, licenses, or other dispositions of the IP Addresses; c. assist the Debtors in connection with the transfer of the IP Addresses to the acquirer(s) who offer the highest or Otherwise best consideration for the Intellectual Property; and d. potentially, and with the Debtors' advance consent, post the IP Addresses on the online sale platform of Hilco Streambank's affiliate, Hilco Superbid Services, LLC d/b/a HilcoBid. The Debtors requested that Hilco Streambank be relieved of the requirements of the interim compensation order entered by the Court. In light of Hilco Streambank's largely commission-based compensation structure, the procedures detailed in the interim compensation order will burden without providing any benefit to the Debtors' estates. If the Debtors and Hilco Streambank are required to prepare, file and serve monthly and quarterly fee statements, substantial administrative costs and professional time may be incurred, without any benefit provided to these estates because Hilco Streambank's fee is largely a set-rate commission per transaction or a fee not paid by the Debtors at all. The Debtors and Hilco Streambank agreed to these terms: a. Hilco Streambank will be compensated by receiving either: (i) a commission of 12% of the aggregate Gross Proceeds generated from the sale, assignment, license, or other disposition of each block of the IP Addresses; or (ii) in the event that IP Addresses are sold through HilcoBid and subject to Hilco Streambank's sole discretion, a standard buyer's premium, in lieu of the Commission, of up to 12% of the aggregate gross receipts from the sale, license or other assignment of the IP Addresses. b. Hilco Streambank will be entitled to reimbursement by the Debtors of its reasonable out of pocket expenses incurred in connection with the provision of services under the Engagement Agreement only if approved in advance in writing by Company. About RG Steel RG Steel LLC -- http://www.rg-steel.com/-- is the United States' fourth-largest flat-rolled steel producer with annual steelmaking capacity of 7.5 million tons. It was formed in March 2011 following the purchase of three steel facilities located in Sparrows Point, Maryland; Wheeling, West Virginia and Warren, Ohio, from entities related to Severstal US Holdings LLC. RG Steel also owns finishing facilities in Yorkville and Martins Ferry, Ohio. It also owns Wheeling Corrugating Company and has a 50% ownership in Mountain State Carbon and Ohio Coatings Company. RG Steel along with affiliates, including WP Steel Venture LLC, sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12- 11661) on May 31, 2012, to pursue a sale of the business. The bankruptcy was precipitated by liquidity shortfall and a dispute with Mountain State Carbon, LLC, and a Severstal affiliate, that restricted the shipment of coke used in the steel production process. The Debtors estimated assets and debts in excess of $1 billion as of the Chapter 11 filing. The Debtors owe (i) $440 million, including $16.9 million in outstanding letters of credit, to senior lenders led by Wells Fargo Capital Finance, LLC, as administrative agent, (ii) $218.7 million to junior lenders, led by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million on account of a subordinated promissory note issued by majority owner The Renco Group, Inc., and (iv) $100 million on a secured promissory note issued by Severstal. Judge Kevin J. Carey presides over the case. The Debtors are represented in the case by Robert J. Dehney, Esq., and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP, and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T. Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial advisor and The Seaport Group serves as lead investment banker. Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman Carson Consultants LLC is the claims and notice agent. Wells Fargo Capital Finance LLC, as Administrative Agent, is represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang Ziehi & Jones LLP. Renco Group is represented by lawyers at Cadwalader, Wickersham & Taft LLP. An official committee of unsecured creditors has been appointed in the case. Kramer Levin Naftalis & Frankel LLP represents the Committee. Huron Consulting Services LLC serves as it's financial advisor. RIVIERA HOLDINGS: Paul Roshetko Succeeds Larry King as CFO ---------------------------------------------------------- The Board of Directors of Riviera Holdings Corporation appointed Paul Roshetko, age 54, as the Company's Chief Financial Officer and Treasurer effective Sept. 24, 2012. Mr. Roshetko was also appointed as the Chief Financial Officer, Treasurer and Vice President-Finance of the Company's wholly-owned subsidiary Riviera Operating Corporation. Mr. Roshetko fills these positions vacated by Mr. Larry King, who separated from these positions effective on Sept. 24, 2012. Mr. King will stay on with the Company and its subsidiaries in an advisory role through Oct. 20, 2012, and the Company has agreed to compensate Mr. King through Jan. 20, 2013. The Company will pay Mr. Roshetko an annual base salary of $175,000 and reimburse him for his health insurance expenses. Mr. Roshetko is a Certified Public Accountant and brings over 25 years of experience in the hospitality industry, primarily in the area of finance and accounting. Before joining the Company, Mr. Roshetko was the Principal of Roshetko Consulting from October 2007, providing temporary and part-time CFO and consulting services to a variety of clients in the hospitality and real estate industries. Mr. Roshetko also served as a Member of the Official Committee of Unsecured Creditors in the Herbst Gaming bankruptcy from April 2008 through January 2011, after having served as the Director of Corporate Finance at Herbst Gaming, a casino operator, between April 2007 and September 2007. Prior to that, Mr. Roshetko served as Executive Vice President and Division Chief Financial Officer for MGM Resorts International, a global hospitality company, between March 1999 and April 2007, during which time his division grew to eight hotel/casinos. Mr. Roshetko also served as Vice President and Treasurer of Primadonna Resorts, Inc., a hospitality company, from August 1996 until it was acquired by MGM Resorts International in March 1999. Mr. Roshetko served as Vice President of Finance and Administration for President Casinos, Inc., a gaming company and casino operator, between June 1993 and June 1996. Mr. Roshetko also served in a variety of senior finance and accounting positions for Aztar Corporation, a hospitality company, and its predecessor Ramada Inc., a hospitality company, between June 1987 and June 1993. Mr. Roshetko received a Bachelor of Science degree in Accounting from The University of Akron in 1981, and received a Master of Business Administration from the University of Phoenix in 1991. About Riviera Holdings Riviera Holdings Corporation, through its wholly owned subsidiary, Riviera Operating Corporation, owns and operates the Riviera Hotel & Casino located in Las Vegas, Nevada, which consists of a hotel comprised of five towers with 2,075 guest rooms, including 177 suites, and which has traditional Las Vegas-style gaming, entertainment and other amenities. In addition, Riviera Holdings, through its wholly-owned subsidiary, Riviera Black Hawk, Inc., owns and operates the Riviera Black Hawk Casino, a casino in Black Hawk, Colorado and has various non-gaming amenities, including parking, buffet-styled restaurant, delicatessen, a casino bar and a ballroom. Riviera Holdings together with the two affiliates filed for Chapter 11 on July 12, 2010 in Las Vegas, Nevada (Bankr. D. Nev. Case No. 10-22910). Riviera Holdings estimated assets and debts of $100 million to $500 million in its petition. Thomas H. Fell, Esq., at Gordon Silver, represents the Debtors in the Chapter 11 cases. XRoads Solutions Group, LLC, is the financial and restructuring advisor. Garden City Group Inc. is the claims and notice agent. Riviera Holdings' Second Amended Joint Plan of Reorganization was confirmed on Nov. 17, 2010. Under the Plan, nearly $280 million in debt will be replaced with a $50 million loan. Creditors will receive new stock relative to what they are owed, and holders of current stock will receive nothing. A total of $10 million in working capital will come from the new owners, along with $20 million in loans to cover investments in the Las Vegas hotel. The Plan of Reorganization became effective on Dec. 1, 2010, but the Plan of Reorganization cannot be substantially consummated until various regulatory and third party approvals are obtained. The Substantial Consummation Date will be the 3rd business day following the day the last approval is obtained. The Company's balance sheet at June 30, 2012, showed $267.71 million in total assets, $114.87 million in total liabilities and $152.83 million in total stockholders' equity. * * * In the July 9, 2012, edition of the TCR, Moody's Investors Service downgraded Riviera Holdings Corporation's Corporate Family and Probability of Default ratings to Caa2 from Caa1. The downgrade of Riviera's Corporate Family Rating to Caa2 reflects heightened concern on Moody's part regarding Rivera's ability to achieve profitability over the next few years given that Riviera Las Vegas, the company's only asset, generates negative EBITDA. As reported by the TCR on July 5, 2011, Standard & Poor's Ratings Services assigned its 'CCC+' corporate credit rating to Riviera Holdings Corp. "The 'CCC+' corporate credit rating reflects the company's high debt leverage and vulnerable business position. Riviera operates two properties (located in Blackhawk, Colo. and Las Vegas, Nev.) with second-tier market positions in the highly competitive markets," said Standard & Poor's credit analyst Michael Halchak. "The rating also factors in the company's excess cash, which we believe would support the company in the event of a moderate decline in operating performance." ROOMSTORE INC: To Put Mattress Discounters Stake On The Block ------------------------------------------------------------- Rachel Feintzeig at Dow Jones' DBR Small Cap reports that a judge cleared RoomStore Inc. to launch a sale process for its valuable equity stake in bedding retailer Mattress Discounters Group LLC. About RoomStore Inc. With more than $300 million in net sales for its fiscal year ending 2010, Richmond, Virginia-based RoomStore, Inc., was one of the 30 largest furniture retailers in the United States. RoomStore also offers its home furnishings through Furniture.com, a provider of Internet-based sales opportunities for regional furniture retailers. RoomStore filed for Chapter 11 bankruptcy (Bankr. E.D. Va. Case No. 11-37790) on Dec. 12, 2011, following store-closing sales at four of its retail stores, located in Hoover, Alabama; Fayetteville, North Carolina; Tallahassee, Florida; and Baltimore, Maryland. At the time of the filing, the Company operated a chain of 64 retail furniture stores, including both large-format stores and clearance centers in eight states: Pennsylvania, Maryland, Virginia, North Carolina, South Carolina, Florida, Alabama, and Texas. It also had five warehouses and distribution centers located in Maryland, North Carolina, and Texas that service the Retail Stores. RoomStore also owns 65% of Mattress Discounters Group LLC, which operates 80 mattress stores (as of Nov. 30, 2011) in the states of Delaware, Maryland and Virginia and in the District of Columbia. RoomStore acquired the MDG stake after MDG's second bankruptcy in 2008. MDG sought Chapter 11 relief on Sept. 10, 2008 (Bankr. D. Md. Case Nos. 08-21642 and 08-21644). It filed the first Chapter 11 bankruptcy on Oct. 23, 2002 (Bankr. D. Md. Case No. 02-22330), and emerged on March 14, 2003. Judge Douglas O. Tice, Jr., presides over RoomStore's case. Lawyers at Lowenstein Sandler PC serve as the Debtor's bankruptcy counsel. Kaplan & Frank, PLC, serves as local counsel. FTI Consulting, Inc., serves as the Debtor's financial advisors and consultants. American Legal Claims Services, LLC, serves as its notice and claims agent. Lucy L. Thomson of Alexandria, Virginia, was appointed as consumer privacy ombudsman. RoomStore filed a plan of liquidation in June 2012 that provides for the sale of inventory and remaining assets to generate sufficient cash to pay secured and unsecured creditors in full. RoomStore's balance sheet at Nov. 30, 2011, showed $59.57 million in total assets, $57.75 million in total liabilities, and stockholders' equity of $1.82 million. The Debtor disclosed $44,624,007 in assets and $34,746,919 in liabilities as of the Chapter 11 filing. The petition was signed by Stephen Girodano, president and chief executive officer. Liquidator Hilco Merchant Resources, Inc., is represented in the case by Gregg M. Galardi, Esq., at DLA Piper LLP (US); and Robert S. Westermann, Esq., and Sheila de la Cruz, Esq., at Hirschler Fleischer, P.C. The U.S. Trustee for Region 4 named seven members to the official committee of unsecured creditors in the case. The Creditors Committee tapped Hunton & Williams LLP as its counsel. SALON MEDIA: Sells "The Well" Assets to Well Group for $400,000 --------------------------------------------------------------- Salon Media Group, Inc., on Sept. 20, 2012, entered into an Asset Sale Agreement with The Well Group, Inc., pursuant to which the Company sold to Well Group and Well Group purchased from the Company, for a purchase price of approximately $400,000, those assets of the Company related to "The Well," an online discussion forum, including, without limitation (i) the domain name "well.com" and all associated URLs, (ii) certain contracts and agreements with certain third parties, including member agreements and (iii) other property and materials as are required to operate the Business as a going concern. The transaction contemplated by the Agreement was consummated later the same day. About Salon Media San Francisco, Calif.-based Salon Media Group (OTC BB: SLNM.OB) -- http://www.Salon.com/-- is an online news and social networking company and an Internet publishing pioneer. The Company reported a net loss of $4.09 million for the year ended March 31, 2012, a net loss of $2.58 million for fiscal 2011, and a net loss of $4.86 million for fiscal year 2010. The Company's balance sheet at March 31, 2012, showed $1.55 million in total assets, $14.34 million in total liabilities and a $12.78 million total stockholders' deficit. Burr Pilger Mayer, Inc., in San Francisco, California, issued a "going concern" qualification on the consolidated financial statements for the fiscal year ended March 31, 2012. The independent auditors noted that the Company has suffered recurring losses and negative cash flows from operations and has an accumulated deficit of $112.5 million at March 31, 2012, which raise substantial doubt about the Company's ability to continue as a going concern. SANDS CASTLES: Meeting of Creditors Scheduled for Oct. 9 -------------------------------------------------------- The U.S. Trustee for Region 7 will convene a meeting of creditors in Sands Castles Ventures, L.L.C.'s Chapter 11 case on Oct. 9, 2012, at 10 a.m. The meeting will be held at Houston, 515 Rusk Suite 3401. This is the first meeting of creditors required under Section 341(a) of the Bankruptcy Code in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Any individual or entity has until Jan. 7, 2013, to file proofs of claim against the Debtor. About Sands Castles Ventures Sands Castles Ventures, L.L.C., filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36465) on Aug. 31, 2012, estimating at least $100 million in assets and liabilities. Judge David R. Jones presides over the case. The Law Offices of Peggy J. Lantz, Esq., serves as the Debtor's counsel. The Debtor disclosed $514,809 in assets and $211,347 in liabilities as of the Chapter 11 filing. The petition was signed by Ronald C. Sands, president. SANDS CASTLES: Files Schedules of Assets and Liabilities -------------------------------------------------------- Sands Castles Ventures, L.L.C., filed with the U.S. Bankruptcy Court Southern District of Texas its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ----------- ----------- A. Real Property $400,000 B. Personal Property $114,809 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $200,227 E. Creditors Holding Unsecured Priority Claims $1,500 F. Creditors Holding Unsecured Non-priority Claims $9,620 ----------- ----------- TOTAL $514,809 $211,347 A copy of the schedules is available for free at http://bankrupt.com/misc/SANDS_CASTLES_sal.pdf About Sands Castles Ventures Sands Castles Ventures, L.L.C., filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36465) on Aug. 31, 2012, estimating at least $100 million in assets and liabilities. Judge David R. Jones presides over the case. The Law Offices of Peggy J. Lantz, Esq., serves as the Debtor's counsel. The petition was signed by Ronald C. Sands, president. SANDS CASTLES: Taps Peggy J. Lantz as Bankruptcy Attorney --------------------------------------------------------- Sands Castle Ventures, LLC, asks the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ Peggy J. Lantz as attorney under a general retainer. Peggy J. Lantz charges an hourly fee of $250. To the best of the Debtor's knowledge, Ms. Lantz has no connection with the Debtor, the creditors or any other party in interest, their respective attorneys and accountants, the U.S. Trustee or any person employed in the office of the U.S. Trustee. About Sands Castles Ventures Sands Castles Ventures, L.L.C., filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36465) on Aug. 31, 2012, estimating at least $100 million in assets and liabilities. Judge David R. Jones presides over the case. The Law Offices of Peggy J. Lantz, Esq., serves as the Debtor's counsel. The Debtor disclosed $514,809 in assets and $211,347 in liabilities as of the Chapter 11 filing. The petition was signed by Ronald C. Sands, president. SANDS CASTLES: Wants to Hire Jayson & Frisby as Accountant ---------------------------------------------------------- Sands Castle Ventures, LLC, asks the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ Michael P. Jayson, C.P.A. and the accounting firm Jayson & Frisby, as an accountant. Jayson & Frisby will, among other things: a. aid the Debtor in preparing the Debtor's schedules and statement of affairs or amendments thereto; b. aid the Debtor in preparing the Debtor's initial Debtor's conference materials; and c. aid the Debtor in reviewing the books and records of the Debtor and maintaining and improving their integrity. The hourly rate charged by Mr. Jayson and his associates are: Mr. Jayson $225 Associates $125 To the best of Debtor's knowledge Mr. Jayson represents no interest adverse to the Debtor or to the estate in matters upon which he is to be engaged for Debtor. About Sands Castles Ventures Sands Castles Ventures, L.L.C., filed a Chapter 11 petition (Bankr. S.D. Tex. Case No. 12-36465) on Aug. 31, 2012, estimating at least $100 million in assets and liabilities. Judge David R. Jones presides over the case. The Law Offices of Peggy J. Lantz, Esq., serves as the Debtor's counsel. The Debtor disclosed $514,809 in assets and $211,347 in liabilities as of the Chapter 11 filing. The petition was signed by Ronald C. Sands, president. SEALY MATTRESS: Moody's Reviews 'B2' CFR/PDR for Upgrade -------------------------------------------------------- Moody's Investors Service placed Sealy's ratings on review for upgrade following its announcement on Sept. 27 that it agreed to be acquired by Tempur-Pedic (unrated) in a deal valued at approximately $1.3 billion. The SGL-2 Speculative Grade Liquidity rating remains unchanged, but could change if and when a transaction is agreed to and the financial profile of the post transaction company becomes clearer. The company said that the transaction, which is subject to customary closing conditions, including regulatory approvals, is expected to close during the first half of 2013. Stockholders holding approximately 51% of Sealy's outstanding common stock have executed a written consent approving the transaction. "Although Tempur-Pedic is not currently rated, we think Tempur has a stronger credit profile than Sealy based on its stronger credit metrics, better growth opportunities and sole focus on specialty mattresses, which are the fastest growing segment of the mattress industry," said Kevin Cassidy, Senior Credit Officer at Moody's Investors Service. Prior to the transaction, Moody's estimates that Tempur's EBITA to revenue was in the mid 20% range and debt to EBITDA was around 1.5 times. This compares to Sealy's EBITA margins of around 8% and debt to EBITDA of almost 7 times. "The combined company will have pro forma EBITA margins of around 16% and debt to EBITDA of about 4 times, excluding transaction costs and possible synergies," said Mr. Cassidy. "In addition to potential cost and revenue synergies, we think the transaction makes strategic sense because it broadens the product offering across all price points for the combined company, notably in the specialty/premium brands and it also enables the combined entity to capture the pent up demand we think is building in the mid-tier brands," Mr. Cassidy noted. The following ratings were placed on review for upgrade: Corporate Family Rating at B2; Probability of Default Rating at B2; $350 million senior secured notes (about $270 million outstanding) due 2016 at Ba3 (LGD 2, 23% - assessment not on review, but subject to change); $390 million senior subordinated notes (about $270 million outstanding) due 2014 at Caa1 (LGD 5, 85% - assessment not on review, but subject to change); "The review will focus on the terms of the proposed transaction, the capital structure and expected financial policies," noted Cassidy. Ratings Rationale Sealy's B2 Corporate Family Rating had reflected its volatility in revenue, earnings and cash flow and the continuing weakness in middle income discretionary consumer spending -- a key driver of the company's volumes. Earnings are sluggish due to increased competition, more advertising costs for new brand launches, high raw material costs and weak consumer demand for mid-price-point mattresses. Prior to being placed on review, credit metrics were likely to remain soft over the near term, but should have improved in 2013 because of debt repayments and modest earnings enhancements. Sealy's strong market position and brand names, and the mattress industry's historically strong fundamentals, had anchored the rating. The principal methodologies used in Sealy's rating were Global Consumer Durables published in October 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non- Financial Companies in the U.S., Canada and EMEA published in June 2009. Sealy Mattress Company, a wholly-owned subsidiary of Sealy Corporation, is headquartered in Trinity, North Carolina. Net sales for the year ended August 2012 approximated $1.3 billion. SEALY CORP: S&P Puts 'B' CCR on Watch on Tempur-Pedic Acquisition ----------------------------------------------------------------- Standard & Poor's Ratings Services placed all of its ratings on Sealy Corp. and its subsidiary, including the 'B' corporate credit rating, on CreditWatch with positive implications, meaning S&P could raise or affirm the ratings following the completion of its review. As of Aug. 26, 2012, Sealy Corp. had $760.5 million of reported debt outstanding. "The CreditWatch placement follows the announcement by Tempur- Pedic International Inc. that it has made an offer to acquire Sealy Corp. and Sealy has accepted, in a deal valued at about $1.3 billion," S&P said. "We believe the transaction will strengthen Sealy's credit profile through a stronger combined business risk profile and improved credit measures," said Standard & Poor's credit analyst Rick Joy. "The combination of the two companies will create a $2.7 billion global bedding manufacturer, with a leading market share of the fast growing U.S. specialty bedding segment." "Currently Standard & Poor's view Sealy's business risk profile as 'weak' and its financial profile as 'highly leveraged.' We estimate that total adjusted leverage for the 12 months ended Aug. 26, 2012, was about 6.4x, and is currently in the range of indicative ratios for a highly leveraged financial risk profile, which includes leverage of more than 5x. Following this transaction, we estimate that pro forma leverage for the combined company could be around 4x, closer to indicative ratios for an 'aggressive' financial risk profile," S&P said. "We will resolve the CreditWatch listing when more information regarding the transaction and related financing becomes available. We will then assess the company's financial policy and the impact of the company's new capital structure on existing ratings," S&P said. SGS INT'L: S&P Cuts Corp. Credit Rating to 'B' Over Onex Deal ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on SGS International Inc. to 'B' from 'B+' and removed all ratings from CreditWatch, where it was placed with negative implications on Sept. 5, 2012, following the company's announcement that it has signed a definite agreement to be acquired by private-equity investor Onex Partners. The outlook is stable. "At the same time, we assigned a 'B' corporate credit rating to holding company Southern Graphics Inc. The outlook is stable," S&P said. "We also assigned Southern Graphics' proposed $450 million first- lien credit facilities our issue-level rating of 'B' (at the same level as our 'B' corporate credit rating on the companies). The recovery rating on this debt is '3', indicating our expectation of meaningful (50% to 70%) recovery for lenders in the event of a payment default. The proposed facility will consist of a $75 million revolving credit facility due 2017 and a $375 million term loan due 2019," S&P said. "Simultaneously, we assigned Southern Graphics' proposed $200 million unsecured notes due 2020 our issue-level rating of 'CCC+' (two notches lower than our 'B' corporate credit rating on the company). The recovery rating on this debt is '6', indicating our expectation of negligible (0% to 10%) recovery for lenders in the event of a payment default. SGS plans to use the aggregate debt proceeds, along with $277 million of common equity, including new equity contributed by Onex Partners and $12 million to $15 million from management, to finance the $813 million acquisition price and pay for fees and expenses," S&P said. "The downgrade reflects Standard & Poor's view that higher debt and interest expense associated with Onex's acquisition of SGS will weaken the company's financial profile, and increase lease- adjusted pro forma debt leverage to the high-6x area," said Standard & Poor's credit analyst Hal Diamond. "We expect the transaction to close in October 2012. The 'B' rating on Southern Graphics Inc. reflects our expectation that its financial profile will be 'highly leveraged' because of its private-equity ownership and substantial leverage. We regard SGS's business profile as 'weak', because of its niche market position as a vertically-integrated provider of packaging-graphics services to branded consumer products companies, retailers, and the printers that service them, and its vulnerability to pricing pressure," S&P said. "The stable outlook reflects the company's consistent operating performance and our belief that debt leverage will gradually moderate over the next few years. We could lower the rating if operating performance deteriorates, causing discretionary cash flow to significantly decrease; EBITDA coverage of interest falls below 1.5x; and the margin of compliance with the net senior leverage covenant drops below 10%. This could occur if the company's revenue decreases at a mid-single-digit percent rate, and EBITDA falls roughly 15%. We could consider raising the rating over the intermediate term if we believe the company will be able to reduce and maintain lease-adjusted leverage below 5.5x, and is able to demonstrate consistently good organic revenue and EBITDA growth," S&P said. SINCLAIR BROADCAST: Hikes JPMorgan Term Loan to $500 Million ------------------------------------------------------------ Sinclair Television Group, Inc., a wholly-owned subsidiary of Sinclair Broadcast Group, Inc., on Sept. 20, 2012, entered into an amendment of its fourth amended and restated credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, the guarantors party thereto, and the lenders party thereto. The Amendment, among other things, increased the incremental term loan capacity from $300 million to $500 million and provided the Company with increased television station acquisition capacity, more flexibility under the other restrictive covenants and prepayments of the existing term loans. There were no changes pertaining to interest rates or maturities of the indebtedness under the Bank Credit Agreement. The Bank Credit Agreement continues to contain certain restrictive covenants. STG's obligations under the Bank Credit Agreement remain (i) jointly and severally guaranteed by the Guarantors, which include the Company and certain subsidiaries of the Company and (ii) secured by a first-priority lien on substantially all of the tangible and intangible assets of STG and the subsidiaries of STG and the Company that are Guarantors and, with respect to the Company, the capital stock of certain of its directly owned subsidiaries. A copy of the Fourth Amendment is available for free at: http://is.gd/qzTmN1 About Sinclair Broadcast Based in Baltimore, Maryland, Sinclair Broadcast Group, Inc. (Nasdaq: SBGI) -- http://www.sbgi.net/-- one of the largest and most diversified television broadcasting companies, currently owns and operates, programs or provides sales services to 58 television stations in 35 markets. The Company's television group reaches roughly 22% of U.S. television households and includes FOX, ABC, CBS, NBC, MNT, and CW affiliates. The Company said in the Form 10-Q for the quarter ended March 31, 2012, that any insolvency or bankruptcy proceeding relating to Cunningham, one of its LMA partners, would cause a default and potential acceleration under a Bank Credit Agreement and could, potentially, result in Cunningham's rejection of the Company's seven LMAs with Cunningham, which would negatively affect the Company's financial condition and results of operations. The Company's balance sheet at June 30, 2012, showed $2.16 billion in total assets, $2.22 billion in total liabilities and a $66.28 million total deficit. * * * As reported by the TCR on Feb. 24, 2011, Standard & Poor's Ratings Services raised its corporate credit rating on Hunt Valley, Md.- based TV broadcaster Sinclair Broadcast Group Inc. to 'BB-' from 'B+'. The rating outlook is stable. "The 'BB-' rating on Sinclair reflects S&P's expectation that the company could keep its lease-adjusted debt to EBITDA below historical levels throughout the election cycle, absent a reversal of economic growth, meaningful debt-financed acquisitions, or significant shareholder-favoring measures," explained Standard & Poor's credit analyst Deborah Kinzer. In September 2010, Moody's raised its ratings for Sinclair Broadcast and subsidiary Sinclair Television Group, Inc., including the Corporate Family Rating and Probability-of-Default Rating, each to Ba3 from B1, and the ratings for individual debt instruments. Moody's also assigned a B2 (LGD 5, 87%) rating to the proposed $250 million issuance of Senior Unsecured Notes due 2018 by STG. The Speculative Grade Liquidity Rating remains unchanged at SGL-2. The rating outlook is now stable. SINCLAIR BROADCAST: S&P Gives 'B' Rating on $500MM Senior Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned Sinclair Television Group Inc.'s proposed $500 million senior notes due 2022 its 'B' issue-level rating with a recovery rating of '6', indicating S&P's expectation of negligible (0% to 10%) recovery for noteholders in the event of a payment default. "In addition, we revised our recovery rating on the company's 9.25% senior secured second-lien notes due 2017 to '2' (70% to 90% recovery expectation) from '4' (30% to 50% recovery expectation). At the same time, we raised our issue-level rating on this debt to 'BB'--one notch higher than our 'BB-' corporate credit rating on the company--from 'BB-'. This recovery rating revision results from the increased valuation for Sinclair, pro forma for the Newport station acquisition," S&P said. "Finally, we affirmed all other ratings on parent Sinclair Broadcast Group Inc., including our 'BB-' corporate credit rating. The outlook is stable," S&P said. "Standard & Poor's Ratings Services' rating on Hunt Valley, Md.- based TV broadcaster Sinclair Broadcast Group Inc. reflects our expectation that, pro forma for the Four Points, Freedom TV, and Newport TV station acquisitions, Sinclair will be able to keep debt to average-trailing-eight-quarter EBITDA below 5.5x, absent a reversal of economic growth, further large debt-financed acquisitions, or significant shareholder-favoring measures," said Standard & Poor's credit analyst Naveen Sarma. "Our rating on Sinclair also reflects our assessment of its business risk profile as 'fair' and its financial risk profile as 'aggressive,' according to our criteria. We view Sinclair's business risk profile as fair because of its strong EBITDA margin and its position as the top revenue earner among the pure-play TV station groups that we rate. Factors in our assessment of the financial risk profile as aggressive include its still-elevated debt-to-EBITDA ratio and a history of debt-financed acquisitions and investment in non-TV assets. Sinclair's debt to average trailing-eight-quarter EBITDA of 5.6x as of June 30, 2012, and funds from operations to debt of 10% are expected to be in line with our financial-risk indicative ratios of 4x to 5x and 12% to 20%, respectively, for an aggressive financial risk profile," S&P said. SINCLAIR TELEVISION: Moody's Rates $500MM Sr. Unsecured Notes B2 ---------------------------------------------------------------- Moody's Investors Service assigned a B2 rating and LGD5 -- 83% assessment to Sinclair Television Group, Inc.'s ("STG") proposed $500 million senior unsecured notes. The proposed notes are being issued primarily to purchase six television stations from Newport Television ($412.5 million), the assets of Bay Television, Inc. ($40 million), KBTV in Port Arthur, TX ($14 million), and WUTD in Baltimore, MD ($2.7 million). Moody's upgraded the rating on STG's 9.25% 2nd lien notes due 2018 to Ba3, LGD4 -- 51% from B1, LGD5 -- 71% due to the increased cushion provided by the new senior unsecured notes. In addition, Moody's affirmed Sinclair Broadcast Group, Inc's ("Sinclair") Ba3 Corporate Family Rating (CFR), Ba3 Probability of Default (PDR) Rating and related debt instrument ratings. LGD point estimates were updated to reflect the new debt mix. The SGL -- 2 Speculative Grade Liquidity (SGL) Rating was affirmed and the outlook remains stable. Assigned: Issuer: Sinclair Television Group, Inc. NEW $500 million Sr Unsecured Notes (10 year maturity): Assigned B2, LGD5 -- 83% Upgraded: Issuer: Sinclair Television Group, Inc. $500 million 9.25% 2nd lien sr secured notes due 2017: Upgraded to Ba3, LGD4 -- 51% from B1, LGD5 -- 71% Affirmed: Issuer: Sinclair Television Group, Inc. 1st lien sr secured revolver due 2016 ($97.5 million commitment): Affirmed Ba1, LGD2 -- 16% (from LGD2 -- 24%) 1st lien sr secured term loan A due 2016 ($268 million outstanding): Affirmed Ba1, LGD2 -- 16% (from LGD2 -- 24%) 1st lien sr secured term loan B due 2016 ($591 million outstanding): Affirmed Ba1, LGD2 -- 16% (from LGD2 -- 24%) 8.375% convertible sr notes due 2018 ($238 million outstanding): Affirmed B2, LGD5 -- 83% (from LGD6 -- 93%) Issuer: Sinclair Broadcast Group, Inc. Corporate Family Rating: Affirmed Ba3 Probability of Default Rating: Affirmed Ba3 4.875% convertible sr notes due 2018 (less than $6 million outstanding): Affirmed B2, LGD6 -- 97% (from LGD6 -- 96%) Speculative Grade Liquidity Rating: Affirmed SGL -- 2 Outlook Actions: Issuer: Sinclair Broadcast Group, Inc. Outlook is Stable. Ratings Rationale Sinclair's Ba3 Corporate Family Rating reflects moderately high leverage with a 2-year average debt-to-EBITDA ratio of less than 5.50x estimated for September 30, 2012 (including Moody's standard adjustments) and pro forma for the pending acquisitions of Newport stations and other announced properties. The pending transactions represent Sinclair's continued investment to expand the company's footprint currently reaching 26% of U.S. households while further diversifying revenues by geographic market and network affiliations. Ratings incorporate strong demand for political advertising during election years, most recently resulting in markedly higher EBITDA growth for Sinclair through the end of 2012. Moody's expects 2-year average leverage ratios to approach 5.0x over the next 12 months with run-rate EBITDA margins greater than 35% (including Moody's standard adjustments) generated by the company's sizable and diverse television station group. Moody's believes total revenues will decline in 2013, on a same store basis, due to the absence of significant political ad spending only partially offset by low single-digit growth in core ad revenues and expected increases in retransmission fees. Ratings incorporate Moody's expectation that the company will achieve most of its planned acquisition synergies for Newport stations soon after the transaction closes having successfully assimilated Four Points Media (acquired January 2012) and Freedom stations (acquired April 2012). Moody's believes Sinclair will continue to generate mid-single digit free cash flow-to-debt ratios and apply free cash flow to reduce debt balances, in the absence of additional acquisitions. Ratings reflect moderately high financial risk, the inherent cyclicality of the broadcast television business, and increasing media fragmentation. The SGL-2 liquidity rating incorporates Moody's expectations that the company will maintain good liquidity and continue to fund quarterly dividends from excess cash. The stable outlook reflects Moody's expectations that core revenues will grow in the low single digit percentage range over the rating horizon with additional increases in retransmission fees, but the absence of significant political ad demand in 2013 will result in total revenue declines. The outlook incorporates the proposed $500 million increase in debt balances to fund pending station purchases. Moody's expects Sinclair will continue to reduce debt balances as cash is generated from operations, absent additional acquisitions. Ratings could be downgraded if 2- year average debt-to-EBITDA ratios are sustained above 5.50x (incorporating Moody's standard adjustments) or if distributions, share repurchases or deterioration in operating performance results in free cash flow-to-debt ratios falling below 4%. Ratings could also be downgraded if liquidity deteriorates due to dividends, share buybacks, debt financed acquisitions, or decreased EBITDA cushion to financial covenants. Ratings could be upgraded if Sinclair's 2-year average debt-to-EBITDA ratios are sustained comfortably below 4.25x with good liquidity including free cash flow-to-debt ratios in the high single-digit range. Management will also need to show a commitment to financial policies consistent with the higher rating. Recent Events In July 2012, Sinclair announced its agreement to purchase the broadcast assets of six television stations and the rights for two LMA's collectively owned or operated by Newport Television for $412.5 million. The transaction is expected to close near the end of 2012, subject to FCC approval. Also in July, Sinclair entered into an agreement to purchase the assets of Bay Television, Inc., which owns WTTA-TV (MyTV) in the Tampa/St. Petersburg, FL market, for $40 million, or less than a 7x buyer multiple. Bay Television, Inc. is majority owned by the Smith family and required a fairness opinion. The transaction received FCC approval and closing is expected in the fourth quarter of 2012. In August 2012, Sinclair agreed to purchase KBTV (FOX) located in Port Arthur, TX for $14 million and exercised its option to purchase WUTB (MNT) in Baltimore, MD for $2.7 million, each subject to FCC approval. Sinclair intends to assign the rights to purchase these two licenses to Deerfield Media, Inc., and Sinclair expects to provide sales and other non-programming services pursuant to shared services and joint sales agreements. The principal methodology used in rating Sinclair was the Broadcast and Advertising Related Industries Methodology published in May 2012. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Sinclair Broadcast Group, Inc., headquartered in Hunt Valley, MD, and founded in 1986, is a television broadcaster, operating 74 stations in 45 markets primarily through Sinclair Television Group, Inc. The station group reaches approximately 26% of U.S. television households and includes FOX, ABC, MyTV, CW, CBS, NBC, and Azteca affiliates. Through the 12 months ending June 30, 2012, reported revenue totaled $871 million. SOUTH LAKES: Proposes to Sell Livestock and Hire Auctioneer ----------------------------------------------------------- South Lakes Dairy Farm asks the U.S. Bankruptcy Court for the Eastern District of California for authority to (i) employ A&M Livestock Auction, Inc., as auctioneer; (ii) sell livestock at auction; and (iii) to pay the auctioneer fees and expenses. The Debtor seeks authorization to sell about 1249 heifer calves located on two calf ranches, which sale will be conducted by A&M. Proceeds will be used to pay the livestock services liens, estimated at $702,764, held by the calf ranches and costs of sale with the remaining proceeds to be paid to Wells Fargo Bank, to be applied to the secured debt (about $16.47 million) held by the bank. The date for the auction sale is Oct. 3, 2012. The auctioneer will receive a 4% commission on the gross proceeds of the sale of the Liquidation Calves. The auctioneer will also receive $1.00 per head for yardage, $2.05 per head for brand inspection and beef promotion, and actual costs for vet fees and feed charges as an expense reimbursement. The auctioneer will be responsible for collecting and paying all sales tax in relation to the sale of the Liquidation Calves; and will bear the cost of all ordinary expenses incidental to an auction sale, including security, advertising, hauling, and other costs of sale. The Debtor believes that A&M and Nick Martella, an owner and operator of A&M, are "disinterested persons" within the meaning of Sec. 101(124) of the Bankruptcy Code. About South Lakes Dairy South Lakes Dairy Farm is a California partnership engaged in the dairy cattle4 and milking business. The partnership filed a bare- bones Chapter 11 petition (Bankr. E.D. Calif. Case No. 12-17458) in Fresno, California on Aug. 30, 2012, disclosing $19.5 million in assets and $25.4 million in liabilities in its schedules. The Debtor said it has $1.97 million in accounts receivable charged to Dairy Farmers of America on account of milk proceeds, and that it has cattle worth $12.06 million. The farm owes $12.7 million to Wells Fargo Bank on a secured note. Bankruptcy Judge W. Richard Lee presides over the case. Jacob L. Eaton, Esq., at Klein, DeNatale, Goldner, Cooper, Rosenlieb & Kimball, LLP, in Bakersfield, Calif., represents the Debtor as counsel. SPECIALTY SEAL: Voluntary Chapter 11 Case Summary ------------------------------------------------- Debtor: Specialty Seal Group, Inc. 1001 Lloyd Avenue Ext. Latrobe, PA 15650 Bankruptcy Case No.: 12-24789 Chapter 11 Petition Date: September 26, 2012 Court: United States Bankruptcy Court Western District of Pennsylvania (Pittsburgh) Judge: Judith K. Fitzgerald Debtor's Counsel: Donald R. Calaiaro, Esq. CALAIARO & CORBETT, P.C. 310 Grant Street, Suite 1105 Pittsburgh, PA 15219-2230 Tel: (412) 232-0930 Fax: (412) 232-3858 E-mail: dcalaiaro@calaiarocorbett.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 Jay Renton, president. SPIRIT FINANCE: Macquarie Discloses 8.2% Equity Stake ----------------------------------------------------- In a Schedule 13D filing with the U.S. Securities and Exchange Commission, Macquarie Group Limited and Macquarie Group (US) Holdings No. 1 Pty, Limited, disclosed that as of Sept. 25, 2012, they beneficially own 6,568,255 shares of common stock of Spirit Realty Capital, Inc., formerly Spirit Finance Corp., representing 8.2% based on 80,501,515 shares of Common Stock outstanding on Sept. 25, 2012. A copy of the filing is available for free at: http://is.gd/uEZPEl About Spirit Finance Spirit Finance Corporation, headquartered in Phoenix, Arizona, is a REIT that acquires single-tenant, operationally essential real estate throughout United States to be leased on a long-term, triple-net basis to retail, distribution and service-oriented companies. * * * As reported by the TCR on Feb. 16, 2012, Standard & Poor's Ratings Services affirmed its 'CCC+' corporate credit rating on Spirit Finance Corp and the Company's 'CCC+' issue-level rating on the company's term loan. In the Sept. 15, 2011, edition of the TCR, Moody's Investors Service affirmed the corporate family rating of Spirit Finance Corporation at Caa1. "This rating action reflects Spirit's consistent compliance with its term loan covenants throughout the downturn (despite relatively thin cushion at certain times), as well as the recent debt paydown which, in Moody's view, will help Spirit remain in compliance within the stated covenant limits going forward." TANDEM TRANSPORT: Oct. 4 Final Hearing on Emergency Financing Set ----------------------------------------------------------------- In a second interim order dated Sept. 21, 2012, the U.S. Bankruptcy Court for the Northern District of Indiana approved the Stipulation and Agreement between Tandem Transport Corp., as Borrower, Consolidated Transport Systems, Inc., Tandem Investment Corporation, and Tandem Eastern, Inc., as Guarantor Debtors, and Marquette Transportation Finance, Inc., as Lender, regarding the emergency emotion of Tandem Transport to incur debt and borrow funds from the Lender. As of the Petition Debt, Tandem Transport owed Marquette $3,115,640, plus costs and expenses. The Guarantor Debtors guaranteed the Debtor's obligation to Lender under the Pre- Petition Documents. Any objection to the Second Interim Order must be filed no later than Sept. 28, 2012. A final hearing on the Stipulation is scheduled for Oct. 4, 2012, at 3:15 p.m. The Second Interim Order expires on the date of the Final Hearing, unless the Second Interim Order is expressly extended by order of the Court. Pursuant to the Stipulation, the maximum aggregate outstanding principal amount of Pre-Petition Indebtedness and the Post- Petition Indebtedness authorized to be borrowed will be $4,750,000. Subject to Permitted Liens in Prepetition Collateral, the Post- Petition Indebtedness will be secured by a first priority security interest in the Post-Petition Collateral. The Joint Debtors will use funds borrowed under the Stipulation only to pay ordinary course of business expenses and to replenish working capital expended in accordance with the budgets. Federal Use Tax The Bankruptcy Court has continued the objection deadline and final hearing on the Debtors' emergency motion for limited authority to use cash collateral for payment of payroll and federal use tax, to Sept. 28, 2012, and Oct. 4, 2012, at 3:15 p.m., respectively, so that these dates track the objection deadline and final hearing dates tentatively scheduled for the Debtors' emergency motion for interim and final orders authorizing Post-Petition Financing from Marquette. About Consolidated Transport, Tandem Transport et al. Michigan City, Indiana-based trucking company Consolidated Transport Systems, Inc., filed a Chapter 11 petition (Bankr. N.D. Ind. Case No. 12-32940) on Aug. 16, 2012. Walter G & Carolyn Bay owns 87.3% of the privately held Debtor. Tandem Transport Corp., and two affiliates Transport Investment Corporation, and Tandem Eastern, Inc., sought Chapter 11 protection (Bankr. N.D. Ind. Case Nos. 12-33135 to 12-33137) on Aug. 31, 2012. The Companies and their predecessors have provided for-hire freight services throughout the United States since 1945. The largest portion (75%) of the Companies' business consists of hauling building materials, with the balance consisting of transporting steel (20%) and other miscellaneous freight such as stone, salt, and machinery (5%). The bulk of the Companies' loads are received and delivered east of the Mississippi River, although they have general commodities authority for the lower 48 states. The Companies have intrastate authority for the states of Georgia, Illinois, Indiana, Kentucky, Michigan, Missouri, North Carolina, Ohio, Tennessee and Texas. The Companies operate as a combined enterprise. Consolidated owns the fleet of roughly 275 tractors and 330 trailers. It also employs office staff of 66 employees. The corporate headquarters is located in Michigan City, Indiana while their executive office is located in St. Louis, Michigan. Transport is the operating company which provides logistics to customers and also brokers freight. Eastern employs 246 drivers, while Investment employs 10 mechanics. Consolidated initiated its chapter 11 proceeding to prevent any actions by equipment lenders such as repossession of equipment that would threaten the Companies' operations and viability while they restructure their respective operations. Transport, Investment and Eastern filed their chapter 11 proceedings to give them the necessary breathing room provided by the Bankruptcy Code, as well as a single forum to allow them to effectively restructure their operations. Consolidated and Tandem each estimated $10 million to $50 million in assets and liabilities. Transport Investment estimated less than $50,000 in assets and up to $50 million in liabilities. Two other entities that filed are Transport Investment Corporation and Tandem Eastern, Inc. Judge Harry C. Dees, Jr. presides over the cases. Jeffrey J. Graham, Esq., and Jerald I. Ancel, Esq., at Taft Stettinius & Hollister LLP, serve as the Debtors' counsel. The petition was signed by Jeffrey T. Gross, president. TANDUS FLOORING: Moody's to Withdraw Ratings After Acquisition -------------------------------------------------------------- Moody's Investors Service said that the September 28, 2012 announcement that Tarkett Enterprises has entered a definitive agreement to acquire Tandus Flooring, Inc. does not affect Tandus' existing ratings. Moody's will withdraw all of the company's ratings at the close of the transaction. As reported by the Troubled Company Reporter-Europe on June 12, 2012, Moody's Investors Service upgraded Tandus Flooring, Inc.'s Corporate Family Rating ("CFR") to B1 from B2, affirmed the B2 rating on its senior secured term loan, and revised the rating outlook to stable from positive. The upgrade reflects debt reduction and expectations for continued improvement in operating performance. Upgraded: Issuer: Tandus Flooring, Inc. Corporate Family Rating, to B1 from B2 Probability of Default Rating, to B1 from B2 Affirmed: Senior secured term loan due May 2014 to B2 (LGD4, 61%) from B2 (LGD4, 57%) Outlook, stable (revised from positive) Tandus is a leading manufacturer of commercial floor covering products, including hybrid resilient sheet flooring, modular carpet tile and high-style broadloom carpets. The company is a wholly-owned subsidiary of Tandus Group, Inc, whose capital stock was majority owned by funds managed by Oaktree Capital Management, LLC, through the OCM Principal Opportunities Fund II, L.P. and BancAmerica Capital Investors II, L.P. prior to the acquisition by Tarkett Enterprises. TELX GROUP: Moody's Affirms 'B3' Corporate Family Rating -------------------------------------------------------- Moody's Investors Service has affirmed Telx Group, Inc.'s B3 Corporate Family Rating (CFR) and Probability of Default Rating (PDR) following the company's announcement of a $35 million add-on to the existing $328 million term loan due September 2017. The incremental term loan proceeds will be used to repay part of the unsecured notes and for general corporate purposes. Given the increased mix of secured debt in the capital structure after the paydown of the unsecured debt, Moody's has decreased the loss- given default (LGD) assessment on the B1-rated senior secured facilities to LGD3-31% from LGD2-29%. Following the debt paydown, the company will have approximately $166 million unsecured notes outstanding, which Moody's does not rate. The re-pricing of the credit facilities and the refinancing of the 12% unsecured debt with lower priced bank debt will result in modestly lower cash interest expense. Rating Actions: Issuer: Telx Group Inc. Revisions: US$60M Senior Secured Revolver, Downgraded to a range of LGD3, 31 % from a range of LGD2, 29 % Senior Secured Term Loan, Downgraded to a range of LGD3, 31 % from a range of LGD2, 29 % Ratings Rationale Telx's B3 rating reflects its small scale and high leverage and Moody's concern regarding the company's near term negative free cash flow which is the result of its high capital intensity. These limiting factors are offset by Telx's stable base of contracted recurring revenues, its strategic real estate holdings in key communications hubs, the strong market demand for colocation services and the improved competitive dynamics from recent industry consolidation. Moody's rates the senior secured term loan and revolving credit facility B1, two notches above the CFR due to its priority claim on assets and the loss protection provided by the remaining $166 million unrated unsecured notes. However, if the company decides to continue to pay down the unsecured notes with secured debt, the B1 instrument ratings on the senior secured facilities would come under pressure and possibly converge towards the CFR. Moody's expects Telx will maintain good liquidity over the next twelve months supported by over $50 million of cash on hand following the close of the deal and an undrawn upsized $60 million revolver. Moody's expects the company to continue to be cash flow negative into 2013, although only modestly, due to the high capital intensity. The company's cash on hand and revolver capacity is enough to meet the projected capital expenditure program and other cash needs over the next 12-18 months. The stable outlook reflects Moody's expectation that strong industry demand will continue to result in revenue growth, higher space utilization and higher EBITDA over the next 12-18 months. Moody's could raise Telx's ratings if the company transitioned to sustainable positive free cash flow, or if leverage were to trend below 6x on a sustainable basis amidst stable operations and adequate liquidity. The ratings could be lowered if liquidity were to become strained, if industry pricing were to deteriorate due to competitive pressure or if the company were to increase leverage. The principal methodology used in rating Telx Group, Inc. was the Global Communications Infrastructure 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. Headquartered in New York, NY, Telx Group, Inc. is a provider of network-neutral, global interconnection and colocation services. As of June 2012, the company operates 17 interconnection and colocation facilities in multiple regions across the United States. TELX GROUP: S&P Affirms 'B-' Corp. Credit Rating; Outlook Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B-' corporate credit rating on New York City-based data center operator The Telx Group Inc. The outlook is stable. "At the same time, we affirmed our 'B' issue-level rating on the company's senior secured credit facilities. The '2' recovery rating remains unchanged and indicates our expectation for substantial (70% to 90%) recovery for debtholders in the event of a default," S&P said. "The affirmations follow the company's announcement that it plans to add $35 million to its existing term loan due September 2017, bringing the current total to $364 million. At the same time, it is seeking to increase borrowing availability on its revolving credit facility to $60 million from $50 million. We expect it will use the proceeds to repay approximately $17.5 of its 12% senior unsecured notes due 2019 and for general corporate purposes," S&P said. "The proposed transactions do not affect our financial risk assessment of the company as 'highly leveraged,'" said Standard & Poor's credit analyst Michael Altberg, "as we expect adjusted leverage to increase only 0.1x pro forma for the increased debt financings to 11.1x based on last-12-month EBITDA as of June 30, 2012. We still expect some reduction of leverage through EBITDA growth but do not expect this measure to decline below 8.0x until at least 2014." "The ratings on Telx are constrained by the high leverage and our assumption that free operating cash flow (FOCF) will not turn positive on a sustained basis until 2013 at the earliest due to expansion-related investments. We have revised our business risk profile assessment for Telx to 'fair' from 'weak,' given our view of the relative stickiness of the business model and healthy intermediate-term growth prospects. Business risk factors include its highly competitive environment, especially in the nine urban areas where it operates, as well as its limited scale compared with other data center providers, and a degree of revenue concentration among its largest facilities. Partially tempering these risk factors are the good growth prospects of the data center industry, the relative stickiness of Telx's business model providing interconnection services within strategically located facilities, and good revenue predictability reflecting multiyear contracts and low revenue churn compared to peers," S&P said. "Our stable rating outlook reflects our expectation that the company will have sufficient liquidity until FOCF turns positive, which we do not anticipate until 2013 at the earliest, given the company's significant capital expansion plans. This expectation, along with continued elevated leverage, most likely precludes an upgrade in the near term. Longer term, we could consider an upgrade if our base-case scenario included leveraged declining substantially to the 6x or 7x range, particularly if accompanied by continued growth, increased diversity, and continued low revenue churn," S&P said. "Conversely, we could lower the rating if the competitive environment resulted in a shift in supply and demand dynamics, such that monthly revenue churn or pricing markedly worsens, if this began to put pressure on the company's adequate liquidity. For example, we could lower the rating if the company was to severely miss its revenue growth expectations or fail to improve utilization in newly expanded facilities, in conjunction with ongoing substantial cash outlays, negative FOCF, and substantial revolver usage," S&P said. THERMON INDUSTRIES: S&P Raises Corporate Credit Rating to 'BB-' --------------------------------------------------------------- Standard & Poor's Ratings Services raised the ratings on San Marcos, Texas-based Thermon Industries Inc., including the corporate credit rating, one notch to 'BB-' from 'B+'. "We also removed the ratings from CreditWatch where we placed them with positive implications on Sept. 21, 2012. The outlook is stable," S&P said. "We raised the rating on Thermon's $210 million senior secured notes to 'BB-' (the same as the corporate credit rating). The recovery rating remains '3', indicating our expectation that lenders would receive meaningful (50% to 70%) recovery in a payment default scenario," S&P said. "The upgrade reflects our view that the private equity sponsors' smaller stake of the company will result in less aggressive financial policies," said Standard & Poor's credit analyst Sarah Wyeth. "We believe that the company will maintain credit measures that are consistent with the 'BB-' rating, including total debt to EBITDA of about 4x." The ratings reflect Thermon's "weak" business risk profile, which includes limited product and end market diversity, and "aggressive" financial risk profile. "We expect the company to benefit from stable global demand for Thermon's products from industrial and energy end markets. We also expect the company to maintain an operating margin (before depreciation and amortization [D&A]) of at least 20%. This should result in debt to EBITDA of about 2x, better than the approximately 4x we consider appropriate for the rating. Our fiscal 2013 forecast assumes good demand for Thermon's products and services in oil, gas, power and chemical markets, resulting in high-single-digit growth in revenue. The company should be able to reduce inventory now that its new manufacturing facility is complete. This, in addition to modest capital expenditures, should result in free cash flow generation of about $40 million." "We expect Thermon to maintain a leading position in the roughly $1 billion market for industrial electric heat-tracing products and services. Heat tracing is the external application of heat to pipes, tanks, and instrumentation to maintain a certain temperature of the fluid or gas being processed. The company is likely to continue to manufacture heat-tracing cables and assemble ancillary components, representing minimal product diversity. It also is likely to continue to provide design and engineering services; turnkey solutions; and maintenance, repair, and overhaul services to heat-tracing systems. Thermon has limited end-market diversity. About two-thirds of its revenues come from the oil and gas industry. Other end markets include chemical, power, and commercial," S&P said. "We believe Thermon's revenues will continue to be tied to the cyclical capital expenditures of customers in these markets. The industrial electric heat-tracing industry is concentrated, with the top two players making up a large portion of the market. Thermon competes with larger, well-capitalized Tyco International Ltd. (A-/Stable/A-2), which has the most extensive installed base globally and is likely to keep its top position in the market. The integral nature of Thermon's recurring maintenance services for a facility's operation partly offsets these risks. This, along with the relatively small portion of total facility expense that a heat-tracing system makes up, insulates the company somewhat from end-market cyclicality," S&P said. "Global energy demands should enable Thermon to maintain its good geographic diversity. Currently more than half of its revenues come from outside of the U.S. Increased energy exploration in arctic climates, such as northern Canada and Russia, could benefit the company. Thermon's cost structure is somewhat flexible, allowing it to maintain an operating margin of approximately 20% through the recent recession. We expect the company to maintain an operating margin greater than 20% over the next couple of years," S&P said. S&P considers Thermon's financial risk profile "aggressive." "The company used part of the proceeds from its 2011 IPO to reduce debt. This, in addition to good operating performance, has resulted in the ratio of total debt (including operating leases) to EBITDA decreasing to 1.7x and funds from operations (FFO) increasing to 34% of debt as of June 30, 2012. For the ratings, we expect total debt to EBITDA of about 4x and FFO to total debt of about 20%. We expect the company to make acquisitions using accumulated cash and incremental debt, which could result in leverage returning to more than 4x. In April 2010, Code Hennessy & Simmons LLC (CHS) acquired Thermon, partly with $210 million in senior secured notes. CHS and its affiliates now own about 20% of the company," S&P said. "The outlook is stable. Our expectation of stability in most of Thermon's end markets and the company's debt reduction support the ratings. We could lower the ratings if a cyclical downturn in Thermon's end markets resulted in fewer heat-tracing projects and weak operating performance. For example, declining exploration in harsh climates could lower earnings, resulting in FFO to debt of less than 15%. We could also lower the ratings if the company pursues a more aggressive financial policy than we expect. For instance, if the company pursues debt-funded acquisitions that result in leverage above 4x for an extended period, we could lower the ratings. The company's weak business profile limits the prospect of an upgrade," S&P said. TOWN OF MAMMOTH LAKES: Wants to Settle with MLLA, Case Dismissed ---------------------------------------------------------------- The town of Mammoth Lakes, California asks the U.S. Bankruptcy Court for the Eastern District of California to enter an order: i) granting relief from the automatic stay to permit the Town and Mammoth Lakes Land Acquisition, LLC to jointly seek, and the Superior Court of Mono County to enter, amendments to that certain writ of mandate, entered by the Superior Court of Mono County on March 23, 2012, commanding the Town to satisfy that certain judgment in favor of MLLA in full, in strict accordance with the terms of that certain Settlement Agreement, dated as of Sept. 20, 2012; and ii) dismissing the Chapter 9 case without further motion by the Town or hearing in the Court, immediately on the filing of a certificate by the Town with the Court indicating that the Amended MLLA Writ has been entered by the Superior Court of Mono County and has become final, by and through the entrance by the Court of an order dismissing the case. According to the Debtor, relief will allow the Town to amicably resolve numerous significant creditor issues, and will provide for the Town's prompt exit from bankruptcy while avoiding the significant cost, delay, risk, and distraction of extensive eligibility and plan confirmation litigation. About Mammoth Lakes The town of Mammoth Lakes, a small California resort community near Yosemite National Park, filed a Chapter 9 bankruptcy petition (Bankr. E.D. Calif. Case No. 12-32463) on July 3, 2012, estimating $100 million to $500 million in assets and $50 million to $100 million in debts. Bankruptcy Judge Thomas C. Holman oversees the case. Lawyers at Fulbright & Jaworski LLP and Klee, Tuchin, Bogdanoff & Stern, LLP, serve as the Debtor's counsel. The petition was signed by Dave Wilbrecht, town manager. According to the report, the bankruptcy judge in Sacramento, California, will hold a status conference on Aug. 29 regarding eligibility for Chapter 9. TRAINOR GLASS: Exclusive Plan Filing Period Extended to Nov. 9 -------------------------------------------------------------- The U.S. Bankruptcy court for the Northern District of Illinois has further extended Trainor Glass Company's exclusive periods to file a plan and to solicit acceptances of a filed plan until Nov. 9, 2012, and Jan. 8, 2013, respectively. As reported in the TCR on Sept. 18, 2012, the Debtor has been liquidating its assets with the authorization of the Court. Substantially all of the Debtor's physical assets have now been liquidated. The Debtor has been working closely with the Official Committee of Unsecured Creditors and its secured lender, First Midwest Bank, to discuss the structure of a plan. About Trainor Glass Trainor Glass Company, doing business as Trainor Modular Walls, Trainor Solar, and Trainor Florida, filed for Chapter 11 bankruptcy (Bankr. N.D. Ill. Case No. 12-09458) on March 9, 2012. Trainor was founded in 1953 by Robert J. Trainor Sr. to pursue a residential glass business in Chicago, Illinois. Trainor's business model was focused on quality fabrication, design, engineering, and installation of glass products and framing systems in virtually every architectural application, including (a) new construction, (b) green-building solutions, (c) building rehabilitation, (d) storefronts and entrances, (e) tenant interiors, and (f) custom-specialty work. The Hon. Carol A. Doyle oversees the Chapter 11 case. David A. Golin, Esq., Michael L. Gesas, Esq., and Kevin H. Morse, Esq., at Arnstein & Lehr LLP, serve as the Debtor's counsel. High Ridge Partners, Inc., serves as its financial consultant. The Debtor scheduled $14,276,745 in assets and $64,840,672 in liabilities. A three-member official committee of unsecured creditors has been appointed in the case. The committee retained Sugar Felsenthal Grais & Hammer LLP as counsel. TRINET HR: Moody's Assigns 'B1' CFR; Rates Sr. Secured Debt 'B1' ---------------------------------------------------------------- Moody's Investors Service assigned ratings to the debt of TriNet HR Corporation -- Corporate Family (CFR) and senior secured ratings at B1, and the Probability of Default Rating (PDR) at B2. The proceeds of the new debt will be used to finance TriNet's acquisition of SOI Holdings, Inc. The rating outlook is stable. This is the first time Moody's has assigned a rating to TriNet's debt. Ratings Rationale The B1 CFR reflects Moody's expectation for deleveraging from the combination of debt reduction and profit growth, to produce debt to EBITDA (Moody's standard adjustments) below 4x by the end of 2013. TriNet's scale in the Professional Employer Outsourcing ("PEO") industry is relatively small, and the industry is fragmented and is characterized by relatively low entry barriers. Further, TriNet's contracts are relatively short term and, as Trinet focuses on the small and medium size business segment ('SMB market'), there is considerable turnover in its customer base. TriNet does have a record of generating free cash flow recently, and Moody's expects an operating margin to exceed 22%. Yet the high customer churn, and the exposure as the co-employer of their customer's employees introduces the potential for some volatility in cash flow over time. Further, the proposed acquisition of SOI will introduce integration risks, particularly because SOI operates in a different segment of the SMB market than TriNet, TriNet offers its customers scale economies in purchasing insurance and in regulatory compliance, which provides TriNet and others in the PEO industry with a compelling value proposition. The stable outlook reflects Moody's expectation that TriNet will rapidly delever through outright debt reduction combined with EBITDA growth such that Moody's expects debt to EBITDA (Moody's standard adjustments) to decline to below 4x by the end of 2013. The ratings could be upgraded if Moody's expects TriNet to increase market share as evidenced by organic revenue growth exceeding industry revenue growth and there is evidence that TriNet's service is differentiated from its key competitors. Furthermore, Moody's would expect absolute debt reduction of at least 15% per year in addition to EBITDA growth. The rating could be downgraded if Moody's expects that client attrition will remain above 20%, or TriNet experiences absolute declines in revenues or EBITDA, or TriNet fails to reduce debt, such that Moody's expects that debt to EBITDA (Moody's standard adjustments) will remain above 4x. Assignments: Issuer: TriNet HR Corporation Probability of Default Rating, Assigned B2 Corporate Family Rating, Assigned B1 Senior Secured Bank Credit Facility, B1, (LGD3, 33) Outlook: Stable TriNet, based in San Leandro, California, is professional employer organization ("PEO"), which provides outsourced human resource functions, including payroll, benefits acquisition, and regulatory compliance management to small and mid-sized businesses. The principal methodology used in rating TriNet was the Global Business and Consumer Services Methodology published in October 2010. Other methodologies used include Loss Given Default for Speculative Grade Issuers in the US, Canada, and EMEA, published in June 2009. TRINET HR: S&P Assigns 'B' Corp. Credit Rating; Outlook Stable -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' preliminary corporate credit rating to San Leandro, Calif.-based TriNet HR Corp. The outlook is stable. "We also assigned our preliminary 'B+' issue-level rating to the company's proposed $350 million five to six year senior secured debt. The facility consists of a $50 million five-year revolving credit facility, $125 million five-year term loan A, and $175 million six-year term loan B. The preliminary recovery rating on this debt is '2', indicating our expectation for substantial (70% to 90%) recovery in the event of a payment default. The ratings are subject to review upon receipt of final information," S&P said. "Our preliminary ratings on TriNet reflect the company's increased leveraged capital structure, its ownership by a financial sponsor, and historic strategy of growing via acquisitions. The ratings also reflect the company's narrow product focus in the highly competitive and fragmented outsourced human resource services industry that could be susceptible to weak economic conditions, and its limited geographic diversity," S&P said. "Standard & Poor's estimate TriNet's pro forma adjusted debt-to- EBITDA leverage increases to about 3.3x after the transaction, from less than 1x at June 30, 2012. We estimate adjusted leverage and the ratio of funds from operations (FFO) to total adjusted debt will be near 3x and 25%, respectively, over the next year. Over the same period, we project interest coverage to be over 6x," S&P said. "The stable outlook reflects our view that TriNet should be able to maintain credit measures near current pro forma levels over the next year, despite still-soft economic conditions and high unemployment," S&P said. "We believe the company's recurring revenue base will partially offset the weak macroeconomic conditions in the U.S. and that it will be successful integrating the SOI acquisition," said Standard & Poor's credit analyst Jacqueline Hui. TRUTH FOR LIVING: Case Summary & 7 Unsecured Creditors ------------------------------------------------------ Debtor: Truth For Living Ministries, Inc. a Florida non-profit corporation 159 Clark Road Jacksonville, FL 32218 Bankruptcy Case No.: 12-06300 Chapter 11 Petition Date: September 26, 2012 Court: United States Bankruptcy Court Middle District of Florida (Jacksonville) Judge: Paul M. Glenn Debtor's Counsel: Brett A. Mearkle, Esq. LAW OFFICE OF BRETT A. MEARKLE 8777 San Jose Blvd., Suite 801 Jacksonville, FL 32217 Tel: (904) 352-1342 Fax: (904) 352-1814 E-mail: bmearkle@mearklelaw.com Scheduled Assets: $2,781,086 Scheduled Liabilities: $2,738,035 A copy of the Company's list of its seven largest unsecured creditors filed together with the petition is available for free at http://bankrupt.com/misc/flmb12-06300.pdf The petition was signed by Dr. Leonard D. Love, senior pastor and president. TW TELECOM: Moody's Rates $400-Mil. Senior Unsecured Notes 'B1' --------------------------------------------------------------- Moody's Investors Service has assigned a B1 rating to the proposed $400 million senior unsecured notes due 2022 to be issued by tw telecom holdings inc. ("TWTH"), an indirect wholly-owned subsidiary of tw telecom inc. ("TWTC" or the "company"). As part of this rating action, Moody's also downgraded the rating on the 8% senior unsecured notes at TWTH to B1 (LGD-5, 71%) from Ba3 (LGD-4, 58%). Moody's also affirmed TWTC's Corporate Family Rating (CFR) and Probability of Default Rating (PDR), both at Ba3, the SGL-1 Speculative Grade Liquidity Rating as well as the Baa3 ratings on the existing credit facilities at TWTH. The rating outlook is stable. New issue proceeds are expected to be used to pre-fund the cash conversion obligation for the 2.375% senior convertible debentures (approximately $374 million outstanding) to the extent holders elect to convert the debentures and the company chooses to settle the conversion obligation in cash. Proceeds may also be used to redeem the obligation when it becomes callable in April 2013 if any portion of the obligation has not converted. Since the refinance transaction is neutral to TWTC's credit profile, the company's CFR, PDR and SGL remain unchanged. However, to reflect the expected change in the composition of the capital structure over the next twelve months as a result of this financing, which increases senior unsecured debt at TWTH and eliminates the structurally subordinated convertible debt at TWTC, TWTH's senior notes will now absorb a higher proportion of losses in a distressed scenario under Moody's Loss Given Default Methodology, and were downgraded to B1. Ratings Assigned: Issuer: tw telecom holdings inc. $400 Million Senior Unsecured Notes due 2022 -- B1 (LGD-5, 71%) Ratings Downgraded: Issuer: tw telecom holdings inc. $430 Million 8% Senior Unsecured Notes due March 2018 to B1 (LGD-5, 71%) from Ba3 (LGD-4, 58%) Ratings Affirmed: Issuer: tw telecom inc. Corporate Family Rating -- Ba3 Probability of Default -- Ba3 Speculative Grade Liquidity - SGL-1 $374 Million 2.375% Senior Unsecured Convertible Debentures due April 2026 -- B2 (LGD-5, 89%) Issuer: tw telecom holdings inc. $80 Million Senior Secured Revolving Credit Facility due December 2014 -- Baa3, LGD assessment revised to (LGD-2, 15%) $474 Million Senior Secured Term Loan B due December 2016 - Baa3, LGD assessment revised to (LGD-2, 15%) Ratings Rationale TWTC's Ba3 Corporate Family Rating reflects the company's successful track record of revenue growth and operational execution, while recognizing the challenging position as a competitive communications provider. Moody's expects TWTC to operate at adjusted debt to EBITDA leverage in the range of 2.5x to 2.8x (incorporating Moody's standard adjustments) over the next 12 to 18 months, with moderate free cash flow generation, given that the business remains highly capital intensive. Debt repayment will be limited by TWTC's plans to utilize free cash flow to repurchase shares. Despite elevated levels of capital spending and relatively high leverage, the company's strong operating performance driven by consistent revenue growth in the enterprise segment and strong margins due to TWTC's significant fiber infrastructure, are credit positives for the ratings. TWTC's results reinforce its differentiated business model that relies on a fiber-rich network with direct connections to major customers, eliminating the need to rely on incumbent carriers for a critical portion of its last mile connections. TWTC continues to have success targeting its medium-to-large enterprise customers rather than small-to-medium sized business (SMB) customers, and the company's stake is built on near-nationwide operating scale in 75 markets in the US. In rating TWTC's debt instruments, Moody's has taken a forward look with respect to the composition and specific levels of debt at the company's various legal entities. TWTC is a first-tier parent holding company and debt issued at this entity does not benefit from upstream operating company guarantees, making it structurally subordinated to the debt residing at TWTH. Given that proceeds from this financing will be used to retire the entire tranche of the TWTC convertible obligation (the most junior debt in the capital structure), the one-notch downgrade to B1 (LGD-5, 71%) on the existing TWTH senior notes reflects the greater loss absorption that this class of debt will now sustain relative to the reduced liabilities at TWTC in a distressed scenario under Moody's Loss Given Default Methodology. Rating Outlook The stable rating outlook reflects Moody's expectations that despite the sluggish economic environment, TWTC's EBITDA will continue to grow. Moody's also believes the company will continue to effectively manage cash spending. Given that the cash proceeds from this debt financing could remain on TWTC's balance sheet until April 2013 when the convertible debt is expected to be called, Moody's expects TWTC's total debt to EBITDA (incorporating Moody's standard adjustments) will temporarily increase to roughly 3.5x before returning to a range of 2.5x to 2.8x by year end 2013. What Could Change the Rating - UP An upgrade is unlikely until Moody's believes the operating pressure on competitive telecom providers will be alleviated over a sustained period. However, upward rating pressure could develop if earnings growth leads to stronger free cash flow generation such that TWTC's free cash flow exceeds 10% of its total adjusted debt, and the company's leverage, as measured by total debt to EBITDA on a Moody's adjusted basis, is expected to be maintained below 2.5x. What Could Change the Rating - DOWN The rating and/or outlook is likely to come under pressure if TWTC's operating performance deteriorates due to increasing competition, changes in the regulatory environment or persistent weakness in the economic environment beyond Moody's current expectations, such that free cash flow turns negative or leverage cannot be maintained below 3.5x total debt to EBITDA (Moody's adjusted). Additionally, if continuous stock repurchases deplete cash balances, ratings could be pressured. The assigned ratings are subject to review of final documentation and no material change in the terms and conditions of the transaction as advised to Moody's. Upon full redemption of the 2.375% senior convertible debentures due 2026 Moody's will withdraw the ratings. The principal methodology used in rating tw telecom inc. was the Global Telecommunications Industry Methodology published in December 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the US, Canada and EMEA published in June 2009. With head offices in Littleton, Colorado, tw telecom inc. is a competitive communications provider. The company provides managed network services, Internet access, virtual private network, voice and data services, and network security to enterprise organizations and communications services companies throughout the US. TWTC's footprint extends to 75 of the top 100 markets in the US. Revenue for the twelve months ended June 30, 2012 totaled approximately $1.4 billion. TW TELECOM: S&P Gives 'BB-' Rating on $400-Mil. Senior Notes ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB-' issue-level rating and '4' recovery rating to TW Telecom Holdings Inc.'s proposed $400 million of senior notes due 2022. "The '4' recovery rating indicates our expectation for average (30%-50%) recovery in the event of payment default. At the same time, we revised the recovery rating on TW Telecom Holdings' existing senior unsecured debt to '4' from '3' given the increased amount of unsecured debt at that entity, which reduces recovery prospects in a default scenario. The 'BB-' rating on that debt remains unchanged," S&P said. "We expect the company to use net proceeds to refinance its $374 million of convertible debentures on or after April 2013 as well as settle a portion of the conversion premium to the extent that holders of the convertible debt elect to convert," S&P said. "The corporate credit rating on Littleton, Colo.-based parent company TW Telecom Inc. is 'BB-' and remains unchanged, as does the positive outlook. TW Telecom is a competitive local exchange carrier (CLEC). Pro forma operating lease-adjusted leverage is moderate, at about 3.2x, and we believe the company has good prospects to reduce leverage toward 3x in 2013, which would support an upgrade. There is no change to our financial risk assessment of the company," S&P said. The ratings on TW Telecom continue to reflect a "fair" business risk profile and "significant" financial risk profile. Key business risk factors include intense competitive pressures from larger and better capitalized incumbent telephone companies, primarily Verizon Communications Inc. and AT&T Inc., in an industry characterized by pricing pressure. Other business risk factors are the company's high capital spending requirements and a long sales cycle associated with selling to larger business customers. These factors somewhat overshadow TW Telecom's well- established network with direct ownership of many customer connections (as opposed to a pure leased access model), a good niche as a provider of telecommunications services to large- and midsized-enterprise customers, some revenue stability from multiyear contracts, and potential revenue growth from new products and services. S&P's base-case scenario incorporates some of these assumptions: -- Revenue grows in the 6%-7% range in 2012 and 2013, reflecting increased penetration of existing buildings, and upselling customers to new Internet protocol (IP) based products and services. -- Customer churn remains at currently low levels, contributing to S&P's revenue growth forecast. -- EBITDA margin remains in the mid- to high-30% area over the next couple of years. -- Debt to EBITDA including S&P's adjustments approaches 3x in 2013. -- The company generates at least $60 million of free operating cash flow (FOCF) in 2012 and $70 million in 2013, which is modestly lower than S&P's prior expectations given the increased level of interest expense associated with the new debt. "If the company successfully issues the proposed $400 million of notes, we would revise our assessment of the company's liquidity to 'strong' from 'adequate,' given our view that it will have sufficient cash to maintain at least a 1.5x coverage of uses, including the likely redemption of the convertible debt," S&P said. RATINGS LIST TW Telecom Inc. Corporate Credit Rating BB-/Positive/-- New Ratings TW Telecom Holdings Inc. $400 mil. senior nts due 2022 BB- Recovery Rating 4 Ratings Remain Unchanged; Recovery Rating Revised To From TW Telecom Holdings Inc. Senior Unsecured BB- BB- Recovery Rating 4 3 UNIVERSAL HEALTH: Credit Amendment No Impact on Moody's Ba2 CFR --------------------------------------------------------------- Moody's Investors Service stated that the recently completed amendment to Universal Health Services, Inc.'s (UHS) credit agreement is a credit positive. However, the amendment, including the upsizing of the term loan A commitment to $900 million from the originally proposed $500 million, does not affect UHS' Ba2 Corporate Family and Probability of Default Ratings or stable rating outlook. The principal methodology used in rating Universal Health Services, Inc. was the Global Healthcare Service Providers Industry Methodology published in December 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. Universal Health Services, Inc., headquartered in King of Prussia, Pennsylvania, owned and operated 25 acute care hospitals and 194 behavioral health centers located in 36 states, Washington, D.C., Puerto Rico and the U.S. Virgin Islands as of June 30, 2012. Services provided by the hospitals include general and specialty surgery, internal medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care, coronary care, pediatric services, pharmacy services and behavioral health services. Universal Health recognized approximately $7.6 billion of revenue before the provision for doubtful accounts for the twelve months ended June 30, 2012. US FIDELIS: Founder Given Eight Years in Prison ----------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Darain Atkinson, who founded US Fidelis Inc. along with brother Cory Atkinson, was given an eight-year prison sentence by a U.S. district judge in St. Louis on Sept. 25. His sentence is more than twice as long as his brother's 40-month term that was meted out last week. According to the report, Darain Atkinson pleaded guilty in April. The brothers previously gave up most of their assets in settlement of a civil lawsuit where they and others were sued for $101 million claimed to be "wrongfully and improperly appropriated" from the company. The criminal case is U.S. v. Atkinson, 12-cr-00122, U.S. District Court, Eastern District of Missouri (St. Louis). About US Fidelis Wentzville, Missouri-based US Fidelis, Inc., was a marketer of vehicle service contracts developed by independent and unrelated companies. It stopped writing new business in December 2009. The Company filed for Chapter 11 bankruptcy protection (Bankr. E.D. Mo. Case No. 10-41902) on March 1, 2010. Brian T. Fenimore, Esq., Crystanna V. Cox, Esq., James Moloney, Esq, at Lathrop & Gage L.C., in Kansas City, Mo.; and Laura Toledo, Esq., at Lathrop & Gage, in Clayton, Mo., advise the Debtor. GCG, Inc., is the consumer claims and noticing agent. Allison E. Graves, Esq., Brian Wade Hockett, Esq., and David A. Warfield, Esq., at Thompson Coburn LLP, in St. Louis, Mo., represent the Official Unsecured Creditors Committee. The Company scheduled assets of $74.4 million and liabilities of $25.8 million as of the petition date. VIASAT INC: Moody's Rates $300-Mil. Add-On Notes Issue 'B1' ----------------------------------------------------------- Moody's Investors Service assigned a B1 rating to ViaSat, Inc.'s new $300 million add-on notes issue (the reference security is the company's $275 million 6.875% senior unsecured notes due June 15, 2020). The company's Ba3 corporate family and probability of default ratings (CFR and PDR respectively) remain unchanged as does its SGL-3 speculative grade liquidity rating (adequate liquidity). The ratings outlook is also unchanged at negative. Proceeds from the new issue will be used to repay the company's $275 million senior unsecured notes due September 15, 2016. With a significant proportion of the notes' proceeds being used to repay debt and the balance being used to pay fees and expenses and for general corporate purposes, the new issue has no affect on ViaSat's credit profile and the new notes are rated at the same B1 level as the company's existing senior unsecured notes (see listing below). The following summarizes ViaSat's ratings and the actions. Rating and Outlook Actions: Assignment: Senior Unsecured Regular Bond/Debenture, assigned B1 (LGD4, 67%) Issuer: ViaSat, Inc. Corporate Family Rating, unchanged at Ba3 Probability of Default Rating, unchanged at Ba3 Speculative Grade Liquidity Rating, unchanged at SGL-3 Senior Unsecured Regular Bond/Debenture, unchanged at B1, with the loss given default assessment revised to LGD4, 67% from LGD4, 69% Outlook, unchanged at Negative Ratings Rationale ViaSat's Ba3 CFR and PRD are based on the company's position as a leading provider of secure, satellite-based, Internet protocol communications devices and a growing position as a leader in providing satellite-based Internet services. Legacy businesses provide a relatively stable cash flow stream and the satellite Internet business provides potentially significant cash flow upside. However, softness in core business activities together with accelerated satellite investment activities are likely to leave the company in a cash flow deficit for some time. As well, with the take-up rate from ViaSat-1 and related satellite-based Internet services' cash generation being uncertain for both technical and commercial reasons, there is the potential of Debt- to-EBITDA leverage remaining above 3x for a prolonged period. These factors cause the ratings outlook to be negative and results in ViaSat's liquidity rating being positioned at the SGL-3 (adequate) level. Rating Outlook ViaSat's ratings outlook is negative given the potential that ongoing softness in core government and commercial services operations will not provide sufficient cash flow with which to cross-subsidize significant investments in a satellite fleet whose technical capabilities and related commercial exploitability are unproven. What Could Change the Rating - UP While positive ratings migration is not anticipated until ViaSat-1 is able to generate meaningful EBITDA, its technical capabilities and economic exploitability proven, consideration for positive ratings actions could occur in the event Moody's expects Debt/EBITDA to be sustained comfortably below 2x, and the company has access to ample liquidity. However, as Moody's expects ViaSat to construct and launch additional satellites, it is unlikely that the rating will progress beyond Ba3 for some time. What Could Change the Rating - DOWN A combination of weak technical/financial returns for ViaSat-1, softness in legacy businesses and a prolonged periods of negative free cash flow are the likely catalysts for adverse ratings actions. These would likely involve liquidity issues and Debt/EBITDA being expected to exceed 3.0x for a sustained period of time. The principal methodology used in rating ViaSat was the Global Communications Equipment Industry Methodology published in June 2008. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. VIASAT INC: S&P Keeps 'B+' Corp. Credit Rating; Outlook Stable -------------------------------------------------------------- Standard & Poor's said satellite provider ViaSat Inc.'s ratings remain unchanged following its announced proposed $300 million tack-on to its existing $275 million of 6.875% senior unsecured notes due 2020. "The company intends to use the proceeds to repay its $275 million of 8.875% notes, with the remainder to be used for general corporate purposes. Our other ratings on ViaSat, including its 'B+' corporate credit rating and stable outlook and the 'B+' issue level rating on its unsecured notes, remain unchanged," S&P said. RATINGS LIST ViaSat Inc. Corporate Credit Rating B+/Stable/-- Senior Unsecured $575 mil. 6.875% nts due 2020 B+ Recovery Rating 4 WaveDivision Holdings, LLC Affirmed B2 Corporate Family Rating Affirmed B2 Probability of Default Rating Senior Secured Bank Credit Facility, Affirmed B1, LGD adjusted to LGD3, 32% from B1, LGD3, 33% 8.125% Senior Unsecured Bonds, Affirmed Caa1, LGD5, 86% Ratings Rationale On a pro forma basis for the acquisition of Wave by Oak Hill Capital Partners, GI Partners and Wave management (expected to close by the end of 2012), the acquisition of Broadstripe assets in Seattle (closed January 2012) and the proposed Black Rock acquisition, Moody's estimates leverage of approximately 7 times debt-to-EBITDA, compared to just under 7 times prior to the Black Rock acquisition. However, Moody's does not expect the leverage or free cash flow profile to change materially over the next year compared to prior expectations. Moody's believes the Black Rock acquisition will help the company expand its commercial business and is in line with the growth focus of the company and its sponsor owners. Black Rock provides dark fiber to enterprise and carrier customers within Wave's territory, and Moody's forecasts modest cost synergies and more meaningful revenue synergies as Wave sells its existing commercial services to Black Rock customers. Moody's believes Black Rock has higher EBITDA margins than Wave but also greater capital intensity, so the acquisition could modestly boost EBITDA margins over time, but is unlikely to materially improve free cash flow. Wave's high financial leverage (approximately 7 times debt-to- EBITDA) poses risk for a small company in the intensely competitive pay television industry. However, Moody's expects the good liquidity profile to enable incremental growth investment, facilitating a decline in leverage primarily through EBITDA growth, recognizing the company's track record of leverage reduction. Video penetration of about 26% is well below rated incumbent peers, but this relatively weaker penetration reflects a lower starting point more so than erosion of video subscribers in excess of peers. Wave's high quality, fiber rich network supports the potential for continued cash flow growth from the high speed data product and the commercial business, as well as asset value. The private equity ownership creates event risk, though Moody's expects the company to focus on value appreciation through growth rather than distributions to the sponsors over the next several years. The stable outlook incorporates expectations for Wave to generate modestly positive free cash flow, to maintain adequate or better liquidity, and for leverage to trend toward 6 times debt-to-EBITDA over the next 18 months. The outlook also assumes stable to improving Triple Play Equivalent penetration and revenue per homes passed (using metrics pro forma for the Broadstripe acquisition as a starting point). The high leverage, lack of scale, sponsor ownership, and weaker than peers TPE and revenue / homes passed metrics constrain upward momentum. An upgrade is highly unlikely given the magnitude of improvement in metrics required to sustain a higher rating. However, Moody's would consider an upgrade with progress toward and a commitment to maintaining leverage below 4 times debt-to- EBITDA and free cash flow to debt in the high single digits. An upgrade would also require expectations for maintenance of good liquidity. Inability to reduce leverage, expectations for sustained negative free cash flow, deterioration of the liquidity profile, or material weakening of subscriber trends could have negative ratings implications. The principal methodology used in rating WaveDivision Holdings was the Global Cable Television Industry Methodology published in July 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 Kirkland, Washington, WaveDivision Holdings, LLC (Wave) provides cable television, high speed data and telephone services to residential and commercial customers in and around the Seattle, Sacramento, San Francisco, and Portland markets. Pro forma for its January 2012 acquisition of Broadstripe, annual revenue is approximately $250 million. In June, Oak Hill Capital Partners (Oak Hill), GI Partners (GI) and Wave management announced plans to acquire Wave from Sandler Capital Management and management (with management reinvesting its equity ownership). Headquartered in Bellingham, Washington, Black Rock Cable, Inc. owns a network of fiber optic lines and leases dark fiber connectivity to customers in Northwest Washington. VITRO SAB: Bondholders Allowed to Proceed With Involuntary ---------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Vitro SAB's losing streak continued last week when a U.S. bankruptcy judge in Dallas allowed holders of 60% of $1.2 billion in defaulted bonds to proceed with their involuntary bankruptcy filing against several subsidiaries. According to the report, in August, a federal district judge in Dallas ruled that the subsidiaries of Mexico's largest glassmaker weren't generally paying their debts as they come due. He set aside a contrary ruling from the bankruptcy court last year and sent the case back to the lower court for determination of the remaining issues deciding whether the subsidiaries can be tossed into Chapter 11 bankruptcy involuntarily. Vitro asked U.S. Bankruptcy Judge Harlin "Cooter" Hale in Dallas to halt the involuntary proceedings pending the outcome of an appeal to be argued on Oct. 3 in the U.S. Court of Appeals in New Orleans. The appeal will decide whether Judge Hale was correct when he ruled that Vitro's Mexican court-approved reorganization shouldn't be enforced in the U.S. The report relates that Judge Hale said in his Sept. 26 opinion that he still must determine if there is any dispute about the validity of the bond debt before he rules definitively on whether the Vitro subsidiaries should be in involuntary Chapter 11 bankruptcy. Turning down Vitro's request to stop the involuntary proceedings, Judge Hale scheduled an Oct. 5 hearing in bankruptcy court for lawyers to argue whether there is a dispute about debt on the defaulted bonds. There won't be an immediate ruling, because Judge Hale said he will allow the lawyers to submit more papers after the Oct. 5 hearing. The report notes that Judge Hale ruled in June that he wouldn't enforce the Vitro parent's Mexican reorganization in the U.S. because it reduced guarantees on the bonds by subsidiaries not in bankruptcy anywhere. Vitro didn't respond to a request for comment on the Sept. 26 ruling. About Vitro SAB Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV: VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global glass producer, serving the construction and automotive glass markets and glass containers needs of the food, beverage, wine, liquor, cosmetics and pharmaceutical industries. Vitro is the largest manufacturer of glass containers and flat glass in Mexico, with consolidated net sales in 2009 of MXN23,991 million (US$1.837 billion). Vitro defaulted on its debt in 2009, and sought to restructure around US$1.5 billion in debt, including US$1.2 billion in notes. Vitro launched an offer to buy back or swap US$1.2 billion in debt from bondholders. The tender offer would be consummated with a bankruptcy filing in Mexico and Chapter 15 filing in the United States. Vitro said noteholders would recover as much as 73% by exchanging existing debt for cash, new debt or convertible bonds. Concurso Mercantil & Chapter 15 Proceedings Vitro SAB on Dec. 13, 2010, filed its voluntary petition for a pre-packaged Concurso Plan in the Federal District Court for Civil and Labor Matters for the State of Nuevo Leon, commencing its voluntary concurso mercantil proceedings -- the Mexican equivalent of a prepackaged Chapter 11 reorganization. Vitro SAB also commenced parallel proceedings under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan on Dec. 13, 2010, to seek U.S. recognition and deference to its bankruptcy proceedings in Mexico. Early in January 2011, the Mexican Court dismissed the Concurso Mercantil proceedings. But an appellate court in Mexico reinstated the reorganization in April 2011. Following the reinstatement, Vitro SAB on April 14, 2011, re-filed a petition for recognition of its Mexican reorganization in U.S. Bankruptcy Court in Manhattan (Bankr. S.D.N.Y. Case No. 11-11754). The Vitro parent received sufficient acceptances of its reorganization by using the US$1.9 billion in debt owing to subsidiaries to vote down opposition by bondholders. The holders of US$1.2 billion in defaulted bonds opposed the Mexican reorganization plan because shareholders could retain ownership while bondholders aren't being paid in full. Vitro announced in March 2012 that it has implemented the reorganization plan approved by a judge in Monterrey, Mexico. In the present Chapter 15 case, the Debtor seeks to block any creditor suits in the U.S. pending the reorganization in Mexico. Chapter 11 Proceedings A group of noteholders opposed the exchange -- namely Knighthead Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc., Davidson Kempner Distressed Opportunities Fund LP, and Brookville Horizons Fund, L.P. Together, they held US$75 million, or approximately 6% of the outstanding bond debt. The Noteholder group commenced involuntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D. Tex. Case No. 10-47470) and 15 other affiliates on Nov. 17, 2010. Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation counsel to analyze the potential rights that Vitro may exercise in the United States against the ad hoc group of dissident bondholders and its advisors. A larger group of noteholders, known as the Ad Hoc Group of Vitro Noteholders -- comprised of holders, or investment advisors to holders, which represent approximately US$650 million of the Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not among the Chapter 11 petitioners, although the group has expressed concerns over the exchange offer. The group says the exchange offer exposes Noteholders who consent to potential adverse consequences that have not been disclosed by Vitro. The group is represented by John Cunningham, Esq., and Richard Kebrdle, Esq. at White & Case LLP. A bankruptcy judge in Fort Worth, Texas, denied involuntary Chapter 11 petitions filed against four U.S. subsidiaries. On April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro America LLC and three other U.S. subsidiaries -- that were subject to the involuntary petitions into voluntary Chapter 11. The Texas Court on April 21 denied involuntary petitions against the eight U.S. subsidiaries that didn't consent to being in Chapter 11. Kurtzman Carson Consultants is the claims and notice agent to Vitro America, et al. Alvarez & Marsal North America LLC, is the Debtors' operations and financial advisor. The official committee of unsecured creditors appointed in the Chapter 11 cases of Vitro America, et al., has selected Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq., and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, as counsel. Blackstone Advisory Partners L.P. serves as financial advisor to the Committee. The U.S. Vitro companies sold their assets to American Glass Enterprises LLC, an affiliate of Sun Capital Partners Inc., for US$55 million. U.S. subsidiaries of Vitro SAB are having their cases converted to liquidations in Chapter 7, court records in January 2012 show. In December, the U.S. Trustee in Dallas filed a motion to convert the subsidiaries' cases to liquidations in Chapter 7. The Justice Department's bankruptcy watchdog said US$5.1 million in bills were run up in bankruptcy and hadn't been paid. On June 13, 2012, U.S. Bankruptcy Judge Harlin "Cooter" Hale in Dallas entered a ruling that precluded Vitro from enforcing its Mexican reorganization plan in the U.S. The judge ruled that the Mexican reorganization was "manifestly contrary" to U.S. public policy because it bars the bondholders from holding Vitro operating subsidiaries liable to pay on their guarantees of the bonds. The Mexican plan reduced the debt of subsidiaries on $1.2 billion in defaulted bonds even though they weren't in bankruptcy in any country. VILLAGIO PARTNERS: Has Final OK to Use Wells Fargo Cash Collateral ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York entered a final order authorizing Villagio Partners, et al.'s limited use of cash collateral, primarily consisting of accounts receivable and rents generated at the Debtors' properties, including proceeds and products, to pay permitted expenditures identified in a monthly budget. The right to use cash collateral of Wells Fargo Bank, N.A., will terminate at the conclusion of the cases, unless earlier terminated due to the occurrence of any Termination Event, including, inter alia, a default under the terms of the Order or the budget. Any party-in-interest (other that the Debtors) that contests or challenges Wells Fargo's Prepetition Liens or Prepetition Claims must file such contest or challenge no later than Nov. 4, 2012. As adequate protection, Wells Fargo is granted replacement liens in all postpetition assets of the Debtors. As further adequate protection, Wells Fargo is granted a superpriority claim pursuant to 11 U.S.C. Sec. 507(b) of the Bankruptcy Code. About Villagio Partners et al. Villagio Partners Ltd., along with six affiliates, filed a bare- bones Chapter 11 petition (Bankr. S.D.N.Y. Case Nos. 12-35928, 12-35930 to 12-35932, 12-35934, 12-35936 and 12-35937) in Houston on Aug. 6, 2012. The Debtors are engaged primarily in the business of owning and operating commercial retail shopping centers and offices. The Debtors' commercial real properties are located in and around the Houston Metropolitan area, including Katy, Humble and The Woodlands. The petitions were signed by Vernon M. Veldekens, CEO for The Marcel Group. The Marcel Group -- http://www.themarcelgroup.com/-- is an integrated commercial real estate firm specializing in development, construction, design, engineering, master planning, leasing and property management. Village Partners, a Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B), estimated assets and debts of at least $10 million. It says that a real property in Katy, Texas, is worth $24.6 million. The affiliated debtors are Compass Care Holdings Ltd., Cinco Office VWM, Greens Imperial Center, Inc., Marcel Construction & Maintenance, Ltd., Tidwell Properties, Inc., and Research-New Trails Partners, Ltd. Bankruptcy Judge Marvin Isgur presides over the case. Wayne Kitchens, Esq., Steven Shurn, Esq., Simon Mayer, Esq., and Allison D. Byman, Esq., at Hughes Watters Askanase, LLP, in Houston, represent the Debtors as counsel. VITRO SAB: To Ask Appellate Court on Oct. 3 to Enforce Plan ----------------------------------------------------------- Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Vitro SAB, Mexico's largest glass maker, will argue before a federal judge next week who already hinted how the case may end. According to the report, on Oct. 3, Vitro will ask three judges on the U.S. Court of Appeals in New Orleans to rule that a bankruptcy judge in Dallas made a mistake by not enforcing company's Mexican reorganization plan in the U.S. One of the judges on the Oct. 3 panel will be Circuit Judge Carolyn D. King, who expressed an opinion about the case in June that might presage the outcome of next week's appeal. Taken at face value, Judge King's previous statement in a formal court ruling implies that a win by Vitro next week might be only temporary in view of additional reasons not to enforce the Mexican plan in the U.S. The report relates that the bankruptcy judge refused to enforce Vitro's Mexican reorganization plan because non-bankrupt subsidiaries owning the assets would have their debt reduced even though they weren't in bankruptcy in any country. U.S. Bankruptcy Judge Harlin "Cooter" Hale didn't rule on several other objections to the Mexican reorganization plan raised by holders of 60% of Vitro's $1.2 billion in defaulted bonds. Judge King was one of three judges ruling on June 27 that Vitro could appeal directly to the Court of Appeals. In the June order Judge King said she would "direct the bankruptcy court to decide promptly any pending issues that would prevent enforcement of the concurso plan if this court were to reverse." The report notes that Judge King was referring to Judge Hale's June 13 opinion where he said there were "two other strong objections" he didn't reach because he already found enough grounds for refusing to enforce the Mexican reorganization in the U.S. Judge Hale questioned whether it was proper for Vitro subsidiaries to vote in the parent's bankruptcy to "extinguish their own guarantees." Judge Hale said the issue might be one for decision by the Mexican court. Judge Hale also questioned whether it was proper for the Mexican plan to preserve $500 million for shareholders when bondholders weren't being paid in full. The appeal is Vitro SAB de CV v. Ad Hoc Group of Vitro Noteholders (In re Vitro SAB de CV), 12-10689, 5th U.S. Circuit Court of Appeals (New Orleans). About Vitro SAB Headquartered in Monterrey, Mexico, Vitro, S.A.B. de C.V. (BMV: VITROA; NYSE: VTO), through its two subsidiaries, Vitro Envases Norteamerica, SA de C.V. and Vimexico, S.A. de C.V., is a global glass producer, serving the construction and automotive glass markets and glass containers needs of the food, beverage, wine, liquor, cosmetics and pharmaceutical industries. Vitro is the largest manufacturer of glass containers and flat glass in Mexico, with consolidated net sales in 2009 of MXN23,991 million (US$1.837 billion). Vitro defaulted on its debt in 2009, and sought to restructure around US$1.5 billion in debt, including US$1.2 billion in notes. Vitro launched an offer to buy back or swap US$1.2 billion in debt from bondholders. The tender offer would be consummated with a bankruptcy filing in Mexico and Chapter 15 filing in the United States. Vitro said noteholders would recover as much as 73% by exchanging existing debt for cash, new debt or convertible bonds. Concurso Mercantil & Chapter 15 Proceedings Vitro SAB on Dec. 13, 2010, filed its voluntary petition for a pre-packaged Concurso Plan in the Federal District Court for Civil and Labor Matters for the State of Nuevo Leon, commencing its voluntary concurso mercantil proceedings -- the Mexican equivalent of a prepackaged Chapter 11 reorganization. Vitro SAB also commenced parallel proceedings under Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 10-16619) in Manhattan on Dec. 13, 2010, to seek U.S. recognition and deference to its bankruptcy proceedings in Mexico. Early in January 2011, the Mexican Court dismissed the Concurso Mercantil proceedings. But an appellate court in Mexico reinstated the reorganization in April 2011. Following the reinstatement, Vitro SAB on April 14, 2011, re-filed a petition for recognition of its Mexican reorganization in U.S. Bankruptcy Court in Manhattan (Bankr. S.D.N.Y. Case No. 11-11754). The Vitro parent received sufficient acceptances of its reorganization by using the US$1.9 billion in debt owing to subsidiaries to vote down opposition by bondholders. The holders of US$1.2 billion in defaulted bonds opposed the Mexican reorganization plan because shareholders could retain ownership while bondholders aren't being paid in full. Vitro announced in March 2012 that it has implemented the reorganization plan approved by a judge in Monterrey, Mexico. In the present Chapter 15 case, the Debtor seeks to block any creditor suits in the U.S. pending the reorganization in Mexico. Chapter 11 Proceedings A group of noteholders opposed the exchange -- namely Knighthead Master Fund, L.P., Lord Abbett Bond-Debenture Fund, Inc., Davidson Kempner Distressed Opportunities Fund LP, and Brookville Horizons Fund, L.P. Together, they held US$75 million, or approximately 6% of the outstanding bond debt. The Noteholder group commenced involuntary bankruptcy cases under Chapter 11 of the U.S. Bankruptcy Code against Vitro Asset Corp. (Bankr. N.D. Tex. Case No. 10-47470) and 15 other affiliates on Nov. 17, 2010. Vitro engaged Susman Godfrey, L.L.P. as U.S. special litigation counsel to analyze the potential rights that Vitro may exercise in the United States against the ad hoc group of dissident bondholders and its advisors. A larger group of noteholders, known as the Ad Hoc Group of Vitro Noteholders -- comprised of holders, or investment advisors to holders, which represent approximately US$650 million of the Senior Notes due 2012, 2013 and 2017 issued by Vitro -- was not among the Chapter 11 petitioners, although the group has expressed concerns over the exchange offer. The group says the exchange offer exposes Noteholders who consent to potential adverse consequences that have not been disclosed by Vitro. The group is represented by John Cunningham, Esq., and Richard Kebrdle, Esq. at White & Case LLP. A bankruptcy judge in Fort Worth, Texas, denied involuntary Chapter 11 petitions filed against four U.S. subsidiaries. On April 6, 2011, Vitro SAB agreed to put Vitro units -- Vitro America LLC and three other U.S. subsidiaries -- that were subject to the involuntary petitions into voluntary Chapter 11. The Texas Court on April 21 denied involuntary petitions against the eight U.S. subsidiaries that didn't consent to being in Chapter 11. Kurtzman Carson Consultants is the claims and notice agent to Vitro America, et al. Alvarez & Marsal North America LLC, is the Debtors' operations and financial advisor. The official committee of unsecured creditors appointed in the Chapter 11 cases of Vitro America, et al., has selected Sarah Link Schultz, Esq., at Akin Gump Strauss Hauer & Feld LLP, in Dallas, Texas, and Michael S. Stamer, Esq., Abid Qureshi, Esq., and Alexis Freeman, Esq., at Akin Gump Strauss Hauer & Feld LLP, in New York, as counsel. Blackstone Advisory Partners L.P. serves as financial advisor to the Committee. The U.S. Vitro companies sold their assets to American Glass Enterprises LLC, an affiliate of Sun Capital Partners Inc., for US$55 million. U.S. subsidiaries of Vitro SAB are having their cases converted to liquidations in Chapter 7, court records in January 2012 show. In December, the U.S. Trustee in Dallas filed a motion to convert the subsidiaries' cases to liquidations in Chapter 7. The Justice Department's bankruptcy watchdog said US$5.1 million in bills were run up in bankruptcy and hadn't been paid. On June 13, 2012, U.S. Bankruptcy Judge Harlin "Cooter" Hale in Dallas entered a ruling that precluded Vitro from enforcing its Mexican reorganization plan in the U.S. The judge ruled that the Mexican reorganization was "manifestly contrary" to U.S. public policy because it bars the bondholders from holding Vitro operating subsidiaries liable to pay on their guarantees of the bonds. The Mexican plan reduced the debt of subsidiaries on $1.2 billion in defaulted bonds even though they weren't in bankruptcy in any country. VM ODELL'S: Blames Bank Failure for Chapter 11 Filing ----------------------------------------------------- Howard Pankratz at The Denver Post reports that VM Odell's LLC, which operates Bella's Market stores, said on Sept. 26, 2012, that a bank failure partly contributed to its troubles. According to the report, Samuel J. Mancini, president and chief executive of Bella's Market said in a statement the company had been a client of FirsTier Bank in Louisville, which was closed by the Colorado Division of Banking in late January 2011. The report relates the company, which closed four of its stores in Wiggins, Haxtun, Akron and St. Francis, Kansas, on Sept. 24, reopened those locations on Sept. 26, though it still has provided no explanation for why those locations closed. "Like many businesses in that situation, the closing severely affected VM Odell's cash flow and operations," the report quotes Mr. Mancini as saying. "Last fall, VM Odell's began banking with Fort Morgan State Bank." He said VM Odell's has a good relationship with the Fort Morgan State Bank and will work with them closely throughout the bankruptcy process, the report adds. The report notes, at the time it was closed, FirsTier had the highest rate of nonperforming loans of any bank in the state at the end of the third quarter of 2010 and sustained heavy losses on commercial real estate loans. VM Odell's LLC operates Bella's Market stores in Akron, Wray, Haxtun, Wiggins, Walden and St. Francis. The Company filed for Chapter 11 bankruptcy on Sept. 24, 2012. The holding company, Village Market Holdings Ltd., did not file for bankruptcy protection. VM WILLIAMS: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: VM Williams LLC dba Limon Super Foods Stratton Super Foods 400 S Colorado Boulevard, Suite 820 Denver, CO 80246-1240 Bankruptcy Case No.: 12-29877 Chapter 11 Petition Date: September 25, 2012 Court: U.S. Bankruptcy Court District of Colorado (Denver) Judge: Sidney B. Brooks Debtor's Counsel: Brent R. Cohen, Esq. ROTHGERBER JOHNSON & LYONS LLP 1200 17th Street, Suite 3000 Denver, CO 80202 Tel: (303) 623-9000 E-mail: bcohen@rothgerber.com - and ? Chad S. Caby, Esq. ROTHGERBER JOHNSON & LYONS LLP One Tabor Center, Suite 3000 Denver, CO 80202-5855 Tel: (303) 623-9000 Fax: (303) 623-9222 E-mail: ccaby@rothgerber.com Estimated Assets: $1,000,001 to $10,000,000 Estimated Debts: $1,000,001 to $10,000,000 The Company did not file a list of creditors together with its petition. The petition was signed by Samuel J. Mancini, manager of SAVOY Holdings Ltd. LLC, a Colorado LLC. Affiliate that filed separate Chapter 11 petition: Entity Case No. Petition Date ------ -------- ------------- VM Odell's LLC 12-29791 09/24/12 WAVEDIVISION ESCROW: S&P Keeps 'B-' Rating on $275MM Senior Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services said its issue-level rating on co-borrowers WaveDivision Escrow LLC and WaveDivision Escrow Corp.'s 8.125% senior notes due 2020 is unchanged. These entities are subsidiaries of Kirkland, Wash.-based cable service provider WaveDivision Holdings LLC. The company is proposing to tack $25 million onto its existing $250 million senior notes, for an aggregate total of $275 million. "The issue-level rating on these notes remains 'B-' and the recovery rating remains '6', which indicates our expectation for negligible (0%-10%) recovery in the event of payment default. At the same time, the 'BB-' issue-level rating on the company's $515 million (upsized from $500 million) senior secured debt loan also remains unchanged, as does the '2' recovery rating, indicating expectations for substantial (70%-90%) recovery in the event of payment default," S&P said. "The company plans to use proceeds from the tack-on notes and add- on term loan, along with $12 million drawn from the senior secured revolver, to fund the $47 million acquisition price for Black Rock Cable, and to pay related fees and expenses," S&P said. "The corporate credit rating on Wave is unchanged at 'B+' and the outlook is stable. We estimate that pro forma debt to last-12- month EBITDA as of June 30, 2012 is only modestly higher, at about 6.9x compared to 6.8x prior to the acquisition. However, we believe that the company does not have room for additional debt- financed acquisitions at the current rating, which incorporates our expectation that leverage will decline to the mid-6x area," S&P said. "Black Rock Cable operates a fiber network for enterprise and telecom carrier customers in Washington. It specializes in dark fiber which does not include optical transmission equipment. While the acquisition does offer strategic benefits, including the expansion of Wave's capabilities in the growing commercial business, the size of the purchase is not large enough to change our 'fair' business risk profile assessment," S&P said. "The ratings on Wave continue to reflect what we consider a fair business risk profile and a 'highly leveraged' financial risk profile. Although we expect leverage to improve in the near term from EBITDA growth, the potential for debt-financed acquisitions and potential dividends to its shareholders could constrain meaningful longer term leverage improvement. Key business risk factors in our analysis include below-industry average penetration levels for video, data, and telephone service; limited geographic diversity; and competitive pressures from satellite providers for video and incumbent telephone companies for data and phone service. Moreover, Wave is an overbuilder in about one-third of its homes passed--the San Francisco market--where it competes with better capitalized incumbent cable operator Comcast Corp. Tempering factors include Wave's operations in high-growth suburban markets with attractive demographics, a fully upgraded network, its incumbent status in the remaining two-thirds of its homes passed, and healthy profitability measures," S&P said. S&P's base-case scenario includes some of these assumptions: -- S&P expects revenue, excluding the acquisition of Black Rock, to increase about 4%-5% for the next couple of years, reflecting growth in data and phone customers as well as higher average revenue per user. S&P also believes that Wave has good prospects to increase revenue in the commercial segment given its currently low penetration levels. -- S&P expects margins to remain steady, in the low- to mid-40% area, over the next couple of years despite rising programming costs, which it believes could lead to lower margins on video. However, this margin pressure should be offset by growth in higher margin data and phone customers. -- S&P further expects leverage to improve to the low- to mid-6x area by the end of 2013, although it believes substantial improvement beyond that level may be temporary due to the potential for debt-financed acquisitions or dividends to shareholders. -- S&P expects free operating cash flow of around $10 million in 2013 and $20 million in 2014. RATINGS LIST WaveDivision Holdings LLC Corporate Credit Rating B+/Stable/-- WaveDivision Escrow LLC WaveDivision Escrow Corp. $275 mil. 8.125% senior notes due 2020 B- Recovery Rating 6 WaveDivision Holdings LLC Senior Secured $515 mil. loan BB- Recovery Rating 2 WAVEDIVISION HOLDINGS: Moody's Affirms B2 CFR; Rates Add-On Caa1 ---------------------------------------------------------------- Moody's Investors Service affirmed the B2 corporate family and probability of default ratings of WaveDivision Holdings, LLC (Wave) and assigned a Caa1 rating to the proposed $25 million bond add-on. The company plans to use proceeds, together with incremental bank debt of approximately $25 million, to fund the acquisition of Black Rock Cable, Inc. (Black Rock). WOLFGANG CANDY: Judge Vacates Order Approving Asset Sale -------------------------------------------------------- Central Penn Business Journal reports that a bankruptcy court judge has vacated a previous order approving the sale of assets of Wolfgang Candy Co. Inc. and ruled to terminate the existing asset purchase and lease agreements. According to the report, the motion was uncontested and its approval puts the North York-based confectioner back on the market. The order, however, does not preclude the buyer in that deal from making another bid after it failed to close on the first arrangement within the prescribed timeframe. The report notes Wolfgang debt holder M&T Bank filed a motion to vacate the court order approving the sale of Wolfgang assets to Divine Serendipity LLC and to terminate the associated asset purchase agreement. The report relates the asset purchase agreement had required M&T be paid $885,000 on or before Aug. 29 and a lease agreement commencing Sept. 1 requires real estate lease payments of $10,000 per month, the filing stated, but the deal has not closed. Wolfgang has heard from other interested potential bidders, the report quotes Larry Young, the attorney representing Wolfgang in bankruptcy proceedings, as saying. The judge vacating the previous agreement frees up Wolfgang to consider other possible deals, he said. The report notes Divine Serendipity President and CEO William "Wayne" Sellers said he continues to work to line up the financing he needs within 10 days and plans to make another offer. Based in York, Pennsylvania, Wolfgang Candy Co., Inc., filed for Chapter 11 bankruptcy protection on March 13, 2012 (Bankr. M.D. Penn. Case No. 12-01427). Judge Mary D. France presides over the case. Lawrence V. Young, Esq., at CGA Law Firm, represents the Debtor. The Debtor listed assets of less than $50,000, and estimated debts of between $1 million and $10 million. WESTERN PLAINS: Enters Shares for Debt Agreements ------------------------------------------------- Western Plains Petroleum Ltd., discloses it has entered into shares for debt agreements to settle payables with various oil field service providers, through the issuance an aggregate of 3,767,558 common shares in the capital of the Company at a price of $0.05 per share, thereby reducing the Company's accounts payable and net debt by $188,377.90. The Common Shares issued under the shares for debt transaction will be subject to a four month hold period from the date of issuance in accordance with applicable securities laws. Hytop Well Servicing Ltd., a private well service company of which David Forrest, President and Chief Executive Officer of Western Plains, owns or controls 50% of the shares, will receive 1,975,313 Common Shares to retire $98,765.65 (inclusive of GST) of payables incurred by the Company for oilfield service work. Steve Glover, Vice-President, Finance, and Chief Financial Officer, has also agreed to accept a total of 315,000 Common Shares to eliminate $15,750.00 (inclusive of GST) of management consulting fees owed by the Company for services provided by Mr. Glover. To the knowledge of the Company, Mr. Forrest currently holds, directly or indirectly, 16,556,663 Common Shares representing approximately 30% of the issued and outstanding Common Shares of Western Plains. Upon the issuance of an additional 1,975,313 Common Shares to Hytop in settlement of the Company's debt, Mr. Forrest will own or control, directly or indirectly, 17,544,319 Common Shares or approximately 31.8% of the outstanding Common Shares of the Company. Mr. Glover currently holds, directly or indirectly, 235,294 Common Shares representing 1% of the issued and outstanding Common Shares of the Company. Upon issuance of 315,000 Common Shares to settle the debt of the Company, Mr. Glover will hold 550,294 Common Shares representing 1% of the issued and outstanding Common Shares of the Company. The proposed issuances of Common Shares to Hytop and Mr. Glover will each be considered a "related party transaction" as defined in Multilateral Instrument 61-101 - Protection of Minority Security holders in Special Transactions, as Hytop and Mr. Glover are each considered to be a related party of the Company. However, the transaction will be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of the Common Shares issued to the Related Parties nor the fair market value of the consideration for the transaction exceeded 25% of the Company's market capitalization, as described in sections 5.5 and 5.7 of MI 61-101. It is possible that a material change report in respect of this transaction may not be filed at least 21 days in advance of the anticipated date closing of the issuance of Common Shares to the Related Parties. The Company believes a shorter period between this disclosure and the issuance of Common Shares is reasonable, in light of its need to satisfy its outstanding debts in a timely manner and the relatively small size of the related party transactions. The issuance of Common Shares by the Company pursuant to the shares for debt agreements is subject to the prior approval of the TSX Venture Exchange. Since April 2012 Western Plains has initiated a number of steps to reduce its net debt including the sale of undeveloped land, suspension of the capital program, careful control over operating, general and administrative expenses. The shares-for-debt transaction is an additional step to achieve the objective of reducing the Company's net debt. In addition, the Company continues to work with Sayer Energy Advisors, its exclusive financial advisor, to provide advice on strategic alternatives. The Company's banker recently provided a waiver of the breaches of the working capital covenant which occurred as at March 31, 2012 and June 30, 2012, in conjunction with the Company's agreement to amend its credit facilities with the bank, which amendment provided that the Company's maximum principal amount of $2,200,000, be reduced by $80,000 at each of Sept. 1, 2012 and Oct. 1, 2012, with a further review scheduled before Oct. 31, 2012. That review will take into account the results of the strategic alternatives process for which the marketing is expected to commence in October 2012. Western Plains is a Lloydminster, Alberta, based junior heavy oil producer with interests located in the Lloydminster area in both Saskatchewan and Alberta. The Common Shares of Western Plains trade on the TSX Venture Exchange under the symbol WPP. WOODBURY UNIVERSITY: Moody's Affirms Baa3 Rating on $18.6MM Bonds ----------------------------------------------------------------- Moody's Investors Service has affirmed Woodbury University's Baa3 rating. The rating applies to the university's $18.6 million of series 2006 fixed-rate bonds issued through the California Educational Facilities Authority. The outlook for the rating is stable. The university also participated in the 2007 College and University Financing Program, rated Ba1 with a negative outlook, issued through the California Educational Facilities Authority ("CEFA"). CEFA's pooled financing is unenhanced, with each institution responsible only for its portion of total debt service. Although Woodbury is a member of the pooled financings, the rating and outlook is based on the "Weak Link Plus" rating approach outlined in the methodology, which places a greater emphasis on the probability of default by the weakest participant in the pool. Summary Rating Rationale The Baa3 rating reflects the university's consistently positive operating cash flows providing healthy debt service coverage and stable market position as a small private university in suburban Los Angeles. The rating also incorporates the heavy operating reliance on student charges, highly competitive student market, and thin financial resources relative to debt and operating expenses. Strengths * Trend of positive operating cash flow margin driven by healthy growth in net tuition per student and conservative budgeting practices. Draft FY 2012 operating cash flow margin was 12.5% providing a healthy 2.6 times debt service coverage. * Market niche as private residential university outside of Los Angeles, CA in Burbank, specializing in architecture, business and media design programs with total full time equivalent (FTE) student of 1,615 in fall 2012. * Attractive academic campus primarily due to significant capital investment in recent years evidenced by a relatively low age of plant at 9.0 years. Challenges * Concentrated revenue base as student charges accounted for 88.6% of FY 2011 operating revenue, according to Moody's calculations. * Small operating revenue base at the current rating level combined with thin financial resources relative to debt and operating expenses. The operating revenue per the draft 2012 financials was $38 million, as compared to Moody's Baa -rated FY 2011 median of $56.6 million. The draft FY 2012 expendable financial resources covered the outstanding debt and operations by 0.44 times and 0.30, respectively. The financial resources are depressed due to pension liability of $7.1 million. * Revenue stress possible as the State of California (rated A1) faces fiscal stress and its impact on the Cal Grant program which supports lower and middle income students with tuition support. Woodbury receives approximately $3.5 million annually or 9% of revenues from this program. Outlook The stable outlook reflects Moody's expectation that the university's stable market position and consistently positive operating performance will continue at least in the near term. What Could Make The Rating Go Up Continuation of positive operating performance coupled with significant increase in financial resources; diversification of revenue base. What Could Make The Rating Go Down Sustained decline in student demand and operating performance; lack of growth in financial resources; debt issuance not accompanied by commensurate growth in financial resources Rating Methodology The principal methodology used in this rating was U.S. Not-for- Profit Private and Public Higher Education published in August 2011. WOONGJIN GROUP: Files for Receivership After MBK Deal Collapses --------------------------------------------------------------- Kanga Kong at Dow Jones' Daily Bankruptcy Review reports that one of South Korea's largest-ever private equity acquisitions collapsed, after Woongjin Holdings Co., which aimed to sell its water purification business to Seoul-based MBK Partners, filed to go into receivership. Conglomerate Woongjin Group and its construction-arm Kukdong Engineering & Construction separately submitted the filing Wednesday following a prolonged slowdown in the country's real- estate market that hammered the group's construction and financial businesses, according to the report. The report notes that Woongjin owes KRW3.3 trillion (US$3 billion) to financial firms including Woori Bank and Shinhan Bank, of which KRW1.2 trillion could go sour according to the country's financial watchdog. WOOTEN GROUP: Can Employ Jonathan Hayes as Counsel -------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California authorized Wooten Group, LLC, to employ M. Jonathan Hayes, Esq.., as general bankruptcy counsel in its Chapter 11 case. Beverly Hills, Calif.-based Wooten Group, LLC, filed a bare- bones Chapter 11 petition (Bankr. C.D. Calif. Case No. 12-31323) in Los Angeles on June 19, 2012. Judge Thomas B. Donovan oversees the case. M. Jonathan Hayes, Esq., represents the Debtor as counsel. When it filed for bankruptcy, the Debtor estimated assets of between $10 million and $50 million and debts of between $1 million and $10 million. The petition was signed by Mark Slotkin, managing member. * Chadbourne & Parke Adds Fazio as UK/Brazil Partner ---------------------------------------------------- The international law firm Chadbourne & Parke LLP disclosed that Silvia Fazio, a leading international corporate lawyer, has joined the firm as an international partner in the corporate practice. Ms. Fazio will be resident in Chadbourne's Sao Paulo and London offices. She will also establish a Brazil Desk in Chadbourne's London office to service the firm's U.K. and European clients who are active in Brazil. Ms. Fazio is well known for her international strategy and corporate insight. Prior to joining Chadbourne, Ms. Fazio was a partner at U.K. firm Collyer Bristow LLP, where as head of International (Legal), she established its Brazilian and Italian desks. Reflecting these achievements, Ms. Fazio has been recognized as a leading lawyer in several industry publications, including Chambers Global and Legal 500. Chambers wrote, "Silvia Fazio plays a central role in international work....advising on an array of cross-border transactions. She is admitted to practice in Brazil and attracts mandates from leading clients such as Banco do Brasil and TAM Brazilian Airlines." Ms. Fazio is widely published and has authored numerous articles and books on corporate and commercial law in Brazil and Europe. She is the editor of a forthcoming book, "Brazilian Commercial Law: A Practical Guide," about a variety of legal issues in Brazil, such as setting up businesses, foreign investment rules and how to choose the best company structure. The book, being released in January 2013, includes contributions from leading Brazilian law firms. With over 15 years experience in international corporate and commercial law, Ms. Fazio specializes in cross-border investments, joint ventures, international banking and financial agreements and transactions, and international tax planning structures for foreign corporations and high net-worth individuals. She has developed significant experience working with a diverse range of clients, including foreign governments and agencies, multinational corporations in several industries, including financial services and airlines, as well as successful small and medium-sized enterprises. "We are delighted to add such a high caliber partner to our practice," said Chadbourne Managing Partner Andrew Giaccia. "Qualified to practice law in Brazil, the U.K., Italy and Portugal, and fluent in five languages, Silvia is a truly international lawyer whose skills and experience will complement and enhance our corporate practice globally." Allen Miller, co-head of Chadbourne's Latin America practice said, "Silvia will help further extend our expanding Latin America practice into London and the markets it serves in a very significant way. She adds an exciting new dimension to both our London office and Latin America practice." Talbert Navia, co-head of the Latin America practice, said, "Chadbourne is the only firm world-wide ranked by Chambers Latin America 2013 in all six Latin America-wide ranking categories for international law firms. With Silvia on board, we are going to take our practice to an even higher level." Ms. Fazio earned her LL.B, first class honors, from the University of Sao Paulo, Brazil in 1994, and LL.M, first class honors, from the University of Heidelberg, Germany in 1996. She completed a Masters in Philosophy on European Union Law and Conflicts Law from the University of Bologna, Italy in 1998, and a Ph.D on International Corporate and Financial Law from the Institute of Advanced Legal Studies, University of London in 2006. Chadbourne's Sao Paulo office, which opened in 2010, regularly advises corporations, international commercial and development banks, investment funds and international investors, multilateral agencies and export-credit agencies in a wide range of capital markets, bank and project finance and debt restructuring transactions. The firm's lawyers have been involved in some of the most innovative and significant matters across the Americas, and have been recognized as leaders in their field by Chambers Global, Chambers Latin America and Legal 500 Latin America. About Chadbourne & Parke Chadbourne & Parke LLP, an international law firm headquartered in New York City, provides a full range of legal services, including mergers and acquisitions, securities, project finance, private funds, corporate finance, energy, communications and technology, commercial and products liability litigation, securities litigation and regulatory enforcement, special investigations and litigation, intellectual property, antitrust, domestic and international tax, insurance and reinsurance, environmental, real estate, bankruptcy and financial restructuring, employment law and ERISA, trusts and estates and government contract matters. Major geographical areas of concentration include Central and Eastern Europe, Russia and the CIS, the Middle East and Latin America. The Firm has offices in New York, Washington, DC, Los Angeles, Houston, Mexico City, London (a multinational partnership), Moscow, St. Petersburg, Warsaw, Kyiv, Almaty, Dubai and Beijing. On the Net: http://www.chadbourne.com/ * Hughes Watters Named Top Mid-Sized Firm in Texas -------------------------------------------------- Hughes Watters Askanase L.L.P. (HWA) has been listed as the Top Mid-sized Law Firm in Texas for business and transactions for 2011 in Super Lawyers 2012 Business Edition. Super Lawyers 2012 Business Edition was released earlier this month and is distributed to 40,000 business leaders, decision makers and in-house counsel from Fortune 1000 companies in the United States. According to Jessica Vanderzanden, senior associate publisher of Super Lawyers magazine, HWA was chosen as the Top Mid-sized Law Firm in Texas for business and transactions in 2011 based on the number of attorneys included in the 2011 list of Super Lawyers and other measurement criteria related to the quality of those attorneys. "We at Hughes Watters Askanase were thrilled to learn that our firm has been recognized by the Super Lawyers organization as the top Mid-Sized Law Firm in Texas for business and transactions for 2011," commented Gary Gunn, co-managing partner of Hughes Watters Askanase. "This distinction validates our ongoing commitment to delivery of superior legal counsel, depth and experience to our clients." The 2012 issue of Super Lawyers Business Edition features exceptional attorneys with business-centered practices. The 2012 edition includes lawyers from more than 8,500 firms across the nation whose careers focus on business and transactional work, construction, real estate and environmental, employment, intellectual property, and business litigation who were named to the list of Super Lawyers in 2011. Top law firms from each practice area in all 50 states are also featured. Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. The selection process is multi-phased and includes independent research, peer nominations and peer evaluations. Super Lawyers magazine features the list and profiles of selected attorneys and is distributed to attorneys in their respective state or region and to American Bar Association -accredited law school libraries. Super Lawyers is also published as a special section in leading city and regional magazines across the country in all 50 states and in Washington, D.C., reaching more than 13 million readers. About Hughes Watters Askanase For more than 34 years, Hughes Watters Askanase, L.L.P. -- http:// www.hwa.com/ -- has helped business organizations, financial institutions and individuals succeed with their business endeavors. The firm's attorneys play a strategic role and support clients through every stage of existence and operation. The firm's practice focuses on representation of commercial and consumer lenders, including banks and credit unions; business bankruptcy; business planning and strategy; default servicing; real estate and finance; commercial and consumer financial services litigation; and estate planning and probate. For more information on Hughes Watters Askanase, L.L.P., please visit. * Moody's Says US Steel Industry Outlook Turns Negative ------------------------------------------------------- Moody's Investors Service has changed its outlook for the US steel industry to negative from stable, reflecting the ratings agency's view that fundamental business conditions in the US steel industry will worsen over the next 12 to 18 months. Demand for US steel will not be enough for the industry to recover sustainably over the next 12 to 18 months, and imports continue to represent a risk, Moody's says in its latest outlook update. Steel prices remain less than optimal for profits in the industry to recovery, Moody's says in the new report, "US Steel Industry Outlook Turns Negative on Weakening Fundamentals." One indication of the softening economic conditions is that the US Institute of Supply Management's Purchasing Management Index (PMI) has stayed just below 50 for each of the three months through August as manufacturing and industrial activity slows. This will impact demand for steel. "While capacity utilization levels remain above 70%, they have slowed since peaking in April 2012 and will likely continue at lower levels," says Carol Cowan, a Moody's Vice President -- Senior Credit Officer. Internationally, the sovereign debt and banking crisis in Europe and slowing GDP growth in China will continue to weigh on purchasing sentiment, says Moody's. Another consideration in the change to a negative outlook is the fact that through August 2012, steel imports into the US were up roughly 18% year-on-year. "While the increased import levels do not affect all areas of the industry equally, they continue to disrupt a market that has not yet returned to historical run rates," says Ms. Cowan. "With slowing demand globally, imports will remain problematic." The outlook could return to stable if the PMI index were to move above 50 for at least two consecutive months and capacity utilization consistently tracked between 75%-80%, says the rating agency. A steady PMI reading above 55 and expectations for sustained capacity utilization above 80% could lead to a positive outlook, Moody's says. * Moody's Says Penn. Local Gov't Downgrades to Exceed Upgrades -------------------------------------------------------------- Rating downgrades of Pennsylvania local governments are likely to outpace upgrades through early 2014 even as the majority of the state's local governments are likely to retain their current ratings, says Moody's Investors Service in a new report. While credit pressures related to the weak economic recovery and other factors, including rising pension costs, will continue, the rating agency concludes that most Pennsylvania municipalities will be able to maintain stable finances with currently adequate financial reserves and the unlimited property taxing ability of most local governments. "The tax base contraction and anemic job growth that characterize the currently slow economic recovery are increasing the pressure," said Moody's Analyst Michael D'Arcy, author of the report, "Pennsylvania Local Governments Face Credit Pressure in Weak Recovery," which examines economic and demographic conditions that are having a negative impact on Pennsylvania local governments. Vulnerability to economically sensitive revenues, state aid cuts, and ongoing demand for government services are the main drivers of weaker credit quality, according to Moody's. School districts are most at risk given their rapidly rising pension costs, flat state aid projections, and, since 2006, a statewide property tax cap that applies only to school districts. "There are several pockets of severe credit stress in the state, notably the state capital, Harrisburg, the City of Scranton and a handful of smaller municipalities," said Mr. D'Arcy. "Each of these highly stressed local governments has experienced five years of slow growth, rising cost burdens and turbulent capital markets that have contributed to severely stretched finances, often exacerbated by poor management decisions and high debt burdens." Pennsylvania must also contend with a slow-growing population that is aging. Some local governments also have exposure to debt structure risks related to variable rate debt and derivatives as well as to contingent liabilities such as guarantees of development project-related debt, as illustrated recently by Scranton's late payment on city-guaranteed debt issued by its parking authority. In contrast to the most distressed cases, Moody's Mr. D'Arcy explained, the cities of Philadelphia (A2 stable) and Pittsburgh (A1 stable), the commonwealth's two most populous cities, have shown considerable resilience since the onset of leaner times in 2007. Improved governance and financial management have resulted in sufficient financial reserves despite some limited draws in recent years. "A sizable concentration of employers specializing in healthcare and higher education has partly insulated both cities from the steep rises in unemployment that accompanied the recession elsewhere," said Mr. D'Arcy. To the benefit of its local governments, Pennsylvania had a more subdued run-up in pre-recession housing prices than many other states, sparing them from the jarring drops in property values that had a large impact on property tax collections in many other states when the recession hit. Municipalities are also benefiting from natural gas exploration in the Marcellus Shale that covers a large portion of the state. Act 47, a state program created in 1987 to help meet the needs of financially troubled local governments, has also played a positive role in preventing some municipalities from falling deeper into distress and nursing a small number back to health. However, the Moody's report notes that Act 47 has some notable weaknesses, including limited access to new revenues, various implementation challenges, and only partial state oversight. * S&P's Global Corporate Default Tally Rises to 59 Issuers ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on U.S.-based oil exploration and production company GMX Resources Inc. to 'SD' (select default) last week, raising the global corporate default tally to 59 issuers so far this year, said an article published Thursday by Standard & Poor's Global Fixed Income Research. The rating action followed the company's announcement that it has completed an exchange offer for its 5.0% convertible notes due 2013 and 4.5% convertible notes due 2015. The exchange offer included $38 million principle of 4.5% convertible notes due 2015 that accepted an exchange of $1,000 principle for $700 principle of new senior secured second-priority notes due 2018. Standard & Poor's 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 its criteria. By region, 32 of the 59 defaulters were based in the U.S., 17 in the emerging markets, seven in Europe, and three in the other developed region (Australia, Canada, Japan, and New Zealand). In comparison, the 2011 total (through Sept. 26) was 29, with 19 issuers based in the U.S., three in the emerging markets, two in Europe, and five in the other developed region. So far this year, bankruptcy filings accounted for 18 defaults, missed payments accounted for 15, distressed exchanges accounted for 11, and 9 were confidential. The remaining six entities defaulted for various other reasons. In 2011, 21 issuers defaulted because of missed interest or principal payments, and 13 defaulted because of bankruptcy filings -- both of which were among the top reasons for defaults in 2010. Distressed exchanges -- another top reason for default in 2010 -- followed with 11 defaults in 2011. Of the remaining defaults, two issuers failed to finalize refinancing on bank loans, two were subject to regulatory action, one had its banking license revoked by its country's central bank, one was appointed a receiver, and two were confidential. * BOND PRICING -- For Week From Sept. 24 to 28, 2012 ---------------------------------------------------- Company Coupon Maturity Bid Price ------- ------ -------- --------- A123 SYSTEMS INC 3.750 4/15/2016 36.750 AES EASTERN ENER 9.000 1/2/2017 2.000 AES EASTERN ENER 9.670 1/2/2029 9.500 AFFYMETRIX INC 3.500 1/15/2038 89.935 AGY HOLDING COR 11.000 11/15/2014 52.250 AHERN RENTALS 9.250 8/15/2013 55.200 ALION SCIENCE 10.250 2/1/2015 57.000 AMBAC INC 6.150 2/7/2087 2.625 AMC-CALL10/12 8.000 3/1/2014 100.220 AMER GENL FIN 5.375 10/1/2012 100.000 ATP OIL & GAS 11.875 5/1/2015 19.000 ATP OIL & GAS 11.875 5/1/2015 19.000 ATP OIL & GAS 11.875 5/1/2015 19.500 BETHEL BAPTIST 7.900 7/21/2026 11.000 BUFFALO THUNDER 9.375 12/15/2014 35.750 CALIF BAPTIST 7.100 4/1/2014 4.500 CAPMARK FINL GRP 6.300 5/10/2017 2.000 DIRECTBUY HLDG 12.000 2/1/2017 20.500 DIRECTBUY HLDG 12.000 2/1/2017 20.500 DOWNEY FINANCIAL 6.500 7/1/2014 55.000 EASTMAN KODAK CO 7.000 4/1/2017 12.550 EASTMAN KODAK CO 7.250 11/15/2013 10.500 EASTMAN KODAK CO 9.200 6/1/2021 9.000 EASTMAN KODAK CO 9.950 7/1/2018 23.354 EDISON MISSION 7.500 6/15/2013 54.363 ELEC DATA SYSTEM 3.875 7/15/2023 97.000 ENERGY CONVERS 3.000 6/15/2013 42.000 FIBERTOWER CORP 9.000 1/1/2016 30.000 GEN CABLE CORP 1.000 10/15/2012 98.630 GEN CABLE CORP 1.000 10/15/2012 98.630 GEOKINETICS HLDG 9.750 12/15/2014 43.176 GLB AVTN HLDG IN 14.000 8/15/2013 35.363 GLOBALSTAR INC 5.750 4/1/2028 46.250 GMX RESOURCES 4.500 5/1/2015 40.250 GMX RESOURCES 5.000 2/1/2013 76.000 HAWKER BEECHCRAF 8.500 4/1/2015 16.500 HAWKER BEECHCRAF 8.875 4/1/2015 19.500 HAWKER BEECHCRAF 9.750 4/1/2017 0.625 HBGCN-CALL10/12 9.000 12/15/2014 97.625 HBGCN-CALL10/12 10.250 6/15/2015 98.063 HCA INC 6.300 10/1/2012 100.000 JAMES RIVER COAL 4.500 12/1/2015 42.250 KV PHARM 12.000 3/15/2015 34.625 KV PHARMA 2.500 5/16/2033 1.900 KV PHARMA 2.500 5/16/2033 3.000 LEHMAN BROS HLDG 0.250 12/12/2013 20.250 LEHMAN BROS HLDG 0.250 1/26/2014 20.250 LEHMAN BROS HLDG 1.000 10/17/2013 20.250 LEHMAN BROS HLDG 1.000 3/29/2014 20.250 LEHMAN BROS HLDG 1.000 8/17/2014 20.250 LEHMAN BROS HLDG 1.000 8/17/2014 20.250 LEHMAN BROS HLDG 1.250 2/6/2014 20.250 LEHMAN BROS HLDG 1.500 3/29/2013 20.250 LEHMAN BROS INC 7.500 8/1/2026 7.550 LIFECARE HOLDING 9.250 8/15/2013 36.854 MANNKIND CORP 3.750 12/15/2013 61.540 MASHANTUCKET PEQ 8.500 11/15/2015 9.250 MASHANTUCKET PEQ 8.500 11/15/2015 15.725 MASHANTUCKET TRB 5.912 9/1/2021 9.250 MF GLOBAL LTD 9.000 6/20/2038 50.000 NEWPAGE CORP 10.000 5/1/2012 3.000 NGC CORP CAP TR 8.316 6/1/2027 13.000 PATRIOT COAL 3.250 5/31/2013 16.000 PENSON WORLDWIDE 8.000 6/1/2014 38.727 PLATINUM ENERGY 14.250 3/1/2015 40.000 PMI CAPITAL I 8.309 2/1/2027 0.500 PMI GROUP INC 6.000 9/15/2016 25.133 POWERWAVE TECH 3.875 10/1/2027 6.000 POWERWAVE TECH 3.875 10/1/2027 11.972 RESIDENTIAL CAP 6.500 4/17/2013 25.875 RESIDENTIAL CAP 6.875 6/30/2015 25.625 TERRESTAR NETWOR 6.500 6/15/2014 10.000 TEXAS COMP/TCEH 10.250 11/1/2015 29.438 TEXAS COMP/TCEH 10.250 11/1/2015 28.270 TEXAS COMP/TCEH 10.250 11/1/2015 27.500 TEXAS COMP/TCEH 15.000 4/1/2021 37.250 TEXAS COMP/TCEH 15.000 4/1/2021 37.750 THQ INC 5.000 8/15/2014 58.500 TIMES MIRROR CO 7.250 3/1/2013 34.050 TRAVELPORT LLC 11.875 9/1/2016 37.750 TRAVELPORT LLC 11.875 9/1/2016 37.500 TRIBUNE CO 5.250 8/15/2015 37.625 USEC INC 3.000 10/1/2014 40.000 WCI COMMUNITIES 4.000 8/5/2023 0.125 WCI COMMUNITIES 4.000 8/5/2023 0.125 WCI COMMUNITIES 6.625 3/15/2015 0.375 ********* 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, Carmel Paderog, Meriam Fernandez, 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 ***