Goody’s, Tropicana, Delphi, Circuit City: Bankruptcy

Able to survive only three months outside bankruptcy court protection, 282-store retailer Goody’s LLC and 13 affiliates filed Chapter 11 petitions last night and this morning in Delaware.

This time around, the petition listed assets of $206 million against debt totaling $202 million as of Jan. 3. Chief Financial Officer David G. Peek said the new Chapter 11 case will be used for an “orderly liquidation” conducted by “professional liquidator.” The going-out-of-business sales already began at all the stores.

The re-filing in Chapter 11 was precipitated by suppliers who stopped shipping on credit after Thanksgiving, Peek said. Comparable-store sales were down 18.4 percent in November and 13.6 percent in December, he said.

Goody’s isn’t the only retailer returning to Chapter 11 so quickly. The new owners of the 173-store casual apparel retailer Steve & Barry’s put the business back in bankruptcy less than three months after purchasing the operation. Home-entertainment retailer Tweeter didn’t survive four months outside Chapter 11.

Debt for Knoxville, Tennessee-based Goody’s includes a $29 million secured revolving credit where General Electric Commercial Capital serves as agent. There are second-, third-and fourth-lien term loans for $10 million, $20 million and $15 million, respectively.

The unsecured creditor with the largest claim is Quebecor World (USA) Inc., a company undergoing its own bankruptcy reorganization at U.S. Bankruptcy Court in Manhattan and simultaneously in Canada. Quebecor is owed $1.4 million.

Revenue for 11 months ended Jan. 3 was $786 million, producing a $91 million net loss including restructuring expenses.

Before the new filing, Goody’s held an auction and selected a joint venture between Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC to run the GOB sales. They guarantee a recovery of 77.7 percent of the cost of the inventory. The liquidators and Goody’s will split the proceeds 50-50 after sales cover the guarantee, expenses and a 4 percent fee for the joint venture.

Then formally named Goody’s Family Clothing Inc. and operating 355 stores, the company originally filed under Chapter 11 in June 2008. It had been bought in January 2006 by Prentice Capital Management.

The company exited Chapter 11 in October following confirmation of a reorganization plan where Prentice kept all the stock in the moderately priced family-apparel retailer in exchange for the second- and third-lien loans. Unsecured creditors with claims ranging from $125 million to $160 million were expected to recover between 5 percent and 10 percent.

In the original case, Goody’s listed $313 million in assets and debt totaling $443 million as of May 3.

The first case is In re Goody’s Family Clothing Inc., 08-11133, and the new case is Goody’s LLC, 09-10124, both in U.S. Bankruptcy Court, District of Delaware (Wilmington).

Statistics

Public Company Filings Up 74% in 2008

Last year, 136 public companies filed for bankruptcy relief, counting cases in both Chapter 11 and Chapter 7. In 2007, filings totaled 78, according to BankruptcyData.com

The assets of 124 non-financial companies filing last year totaled $65 billion, compared with $7.3 billion in 2007.

Including financial companies filing in 2008, such as Lehman Brothers Holdings Inc., Washington Mutual Inc. (WM) and IndyMac Bancorp Inc., the asset figure rose exponentially to $1.16 trillion, BankruptcyData.com reported.

The 136 public-company filings last year paled in comparison with the 263 that went bust during 2001 in the dot-com implosion. The year 2008 ranked eighth on the list of public-company filing since 1980, BankruptcyData.com said.

Updates

Tropicana Files Disclosure Statements for Two Plans

Casino operator Tropicana Entertainment LLC on Jan. 11 filed two disclosure statements explaining the two separate reorganization plans submitted three days earlier.

One plan covers the so-called LandCo debtors that own the casinos in Las Vegas and elsewhere other than Atlantic City, New Jersey. The so-called OpCo debtors own the Atlantic City property.

The LandCo loan facility secured creditors owed $443 million are to receive the reorganized company’s new stock, equating to a recovery of between 81 percent and 85.6 percent, according to the disclosure statement. Unsecured creditors with claims of as much as $7.5 million may recover nothing.

At OpCo, the secured creditors with $1.3 billion in debt financing the Atlantic City casino are expected to recover between 58.1 percent and 72.7 percent of their claims. They are to have the new stock or proceeds from the sale of the casino.

Unsecured OpCo noteholders owed almost $1 billion would see 2 percent, at best, from proceeds of lawsuits against insiders and the ability to participate in a rights offering. Other unsecured creditors with claims of as much as $124 million would see the same negligible payment.

Existing ownership would be canceled.

To read other Bloomberg coverage, click here.

The bankruptcy judge last week turned back an effort by the unsecured creditors’ committee for permission to file their own competing plan. The company called the creditors’ plan a “complete impracticability.” Tropicana also said that the lenders believe unsecured creditors are “substantially out of the money” and aren’t entitled to anything aside from the few assets not covered by their liens.

New Jersey regulators took away the gaming license for the Atlantic City property in late 2007 and gave control to a conservator. The takeover of the Atlantic City property began a series of events that ended with the company’s filing under Chapter 11 in May. Tropicana is attempting to recover control from the conservator.

Tropicana’s other casinos are in Evansville, Indiana; Vicksburg, Mississippi; Baton Rouge, Louisiana; Greenville, Mississippi; and Laughlin and Lake Tahoe, Nevada.

The case is In re Tropicana Entertainment LLC, 08-10856, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Delphi Lawsuit Against Appaloosa Set for May Trial

The lawsuit by auto-parts maker Delphi Corp. against Appaloosa Management LP, the leader of a group that declined to go through with commitments to provide Delphi $2.55 billion in equity financing, will be ready for trial in May, according to a modified schedule filed yesterday in U.S. Bankruptcy Court in Manhattan.

In a 69-page decision read aloud in the courtroom on July 28, U.S. Bankruptcy Judge Robert Drain dismissed the largest claims against all of the defendants except Appaloosa and an affiliate. Drain ruled that Delphi couldn’t continue the lawsuit against defendants other than Appaloosa to the extent it was asking for damages exceeding $250 million. He allowed Delphi to go ahead with the suit against Appaloosa, seeking to compel completion of the $2.55 billion investment.

The exchange of documents and pre-trial examinations of witnesses is to complete by Feb. 7. Any party can make a motion for summary judgment at any time.

To succeed, a summary judgment motion must have undisputed evidence showing that one party wins while the other loses. If there are disputes about the facts, the judge can’t rule until after the trial is completed.

The hearing to approve disclosure materials explaining Delphi’s most recently revised plan is now scheduled for March 24. Delphi was unable to implement its original plan in April when the Appaloosa group wouldn’t make the equity investment. That plan was accepted by creditors and approved by the bankruptcy judge in a confirmation order from January 2008.

Troy, Michigan-based Delphi began the Chapter 11 reorganization in October 2005, listing $19.1 billion in debt in its amended schedules of property and liabilities.

The case is In re Delphi Corp., 05-44481, U.S. Bankruptcy Court, Southern District New York (Manhattan).

Circuit City Auction Rescheduled for Today

Hoping to save part of the chain from being liquidated in going-out-of-business sales, Circuit City Stores Inc. pushed back the auction schedule by one day.

Saying it had “received expressions of interest” about continuing some of the business as a going concern, the second-largest U.S. electronics retailer, with 721 stores when it filed under Chapter 11 in November, pushed back the initial bid deadline to yesterday afternoon and rescheduled the auction for this afternoon.

Circuit City first will auction the right to decide which liquidator makes the best offer and later today will accept offers for a going-concern sale. The company will decide which is best for creditors and present the results for approval to the bankruptcy judge at a hearing now set for Jan. 16. A going-concern buyer must provide additional financing.

Circuit City began closing 154 stores before the Nov. 10 Chapter 11 filing. The auction today is for the right to buy or liquidate the remaining stores. No buyers could be found for the leases in the stores already closed.

The petition filed in Circuit City’s hometown of Richmond, Virginia, listed assets of $3.4 billion and debt totaling $2.3 billion as of Aug. 31. Court papers show $898 million owing to the secured revolving-credit lenders. Unsecured trade suppliers are owed another $650 million, the company said in a court filing.

The case is In re Circuit City Stores Inc., 08-35653, U.S. Bankruptcy Court, Eastern District of Virginia (Richmond).

Tronox Wins Interim Borrowing Authority, Fee Disclosed

Tronox Inc. (TRX), the world’s third-largest producer of a white pigment called titanium dioxide, filed in Chapter 11 on Jan. 12 and was given interim authority at a hearing yesterday to borrow $100 million under a secured revolving credit facility provided by Credit Suisse Securities (USA) LLC and some of the existing lenders. When the bankruptcy judge balked at the idea of approving the entire $125 million loan on an interim basis yesterday, the company trimmed back the request by $25 million.

The bankruptcy judge wouldn’t allow Credit Suisse to make a secret of the 3 percent fee it is to receive for arranging the loan.

At yesterday’s hearing Tronox confirmed that it intends to sue Kerr-McGee Corp. (KMG), from which it was spun off in March 2006. The suit will be aimed at recovering environmental remediation costs inherited by Tronox as part of the spinoff.

Tronox’s lawyer said the suit must begin by March 31 to beat the three-year deadline for claims of the type. Since the spinoff, Tronox says it spent $118 million on environmental costs and was reimbursed only $4 million by Kerr-McGee, which itself was acquired for $18.4 billion in August 2006 by Anadarko Petroleum Corp. (APC)

To read Bloomberg coverage, click here.

The Chapter 11 petition listed assets of $1.56 billion against debt totaling $1.22 billion. Debt includes $213 million on a secured term loan and revolving credit, $350 million in 9.5 percent senior notes, and a $40.7 million accounts receivable securitization facility.

Oklahoma City-based Tronox had $1.2 billion in revenue during the first nine months of 2008. The net loss for the first three quarters of 2008 was $72.9 million. Operations are in the U.S., Europe and Australia.

Tronox’s products are used in paints, coatings, plastics, paper and consumer products. The operations outside of the U.S. didn’t file.

The case is In re Tronox Inc., 09-10156, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Merisant Approved for Interim $4 Million Loan

Merisant Worldwide Inc., the manufacturer of artificial sweeteners made with aspartame that filed for Chapter 11 reorganization on Jan. 9, was given interim authority yesterday to borrow $4 million from a group led by Wayzata Investment Partners LLC. The loan will be junior to existing secured financing.

At a final financing hearing on Feb. 5, Merisant will be looking for approval of the entire $20 million financing package.

Merisant’s liabilities include $205 million in first-lien debt and $362 million in two issues of unsecured notes. Wayzata, based in the Minnesota town of the same name, is the holder of $225 million of the notes.

Merisant’s net sales in 2007 were $290 million. For the first nine months of 2008, revenue was $213 million. With 22 percent of the artificial-sweetener market, Merisant’s brand names include Equal and NutraSweet.

The case is In re Merisant Worldwide Inc, 09-10059, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Parent Co., Toy Retailer, Wants Jan. 28 Auction

The Parent Co., the Denver-based Internet retailer of products for babies and children that filed under Chapter 11 on Dec. 28, has an appointment in Delaware bankruptcy court on Jan. 16 where it will ask the judge for authority to sell all the assets at auction on Jan. 28.

If the bankruptcy judge agrees with the proposed procedures, bids would be due Jan. 23 and the hearing for approval of the sale would take place Jan. 30.

Another company being liquidated in Chapter 11 in the same court, KB Toys Inc., is partially opposed to the proposed sale procedures because it’s not sure whether Parent Co. intends to sell the trademarks that KB licenses. KB is the toy retailer that filed in Chapter 11 in December for a second time and is conducting liquidation sales at its 431 stores.

Parent Co. filed in bankruptcy court for the express purpose of selling the assets. Majority-owned by an affiliate of hedge-fund manager D.E Shaw & Co., it listed assets of $20.6 million against debt totaling $35.7 million. Liabilities include $15.8 million owning to suppliers, with most attributable to shipping expenses.

Secured liabilities include $8.6 million on first-lien debt owing to a Shaw affiliate and $10 million on a second-lien term loan also owing to a Shaw affiliate.

The case is In re EToys Direct 1 LLC, 08-13412, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Congoleum’s Newest Plan Opposed by Insurance Companies

Even before creditors of flooring manufacturer Congoleum Corp. can begin voting on the most-recent reorganization plan, two insurance companies asked the bankruptcy judge in Trenton, New Jersey, to rule summarily that the plan violates bankruptcy law and prior rulings in the case and can’t be confirmed.

The motion by First State Insurance Co. and Twin City Fire Insurance Co. is scheduled for argument in bankruptcy court on Feb. 5.

Congoleum, in Chapter 11 since December 2003, filed the newest Chapter 11 plan and explanatory disclosure statement in August. At the conclusion of a hearing on Dec. 18, U.S. Bankruptcy Judge Kathryn C. Ferguson said she would rule later on whether the disclosure statement contains sufficient information so creditors can vote.

Although the revised plan was intended to remedy defects the judge identified when she rejected the 12th amended plan in June and the 10th amended plan in February, the two insurance companies contend in their new motion that the plan still violates bankruptcy law by not treating all creditors alike.

The insurers characterize the plan as giving Congoleum a release from liability “for a minimal contribution” while the insurance companies “would be saddled with a wildly inflated liability.”

To read a detailed description of the new plan, click here. Existing stock will be extinguished.

Mercerville, New Jersey-based Congoleum originally intended to complete a reorganization in July 2004 after the December 2003 so-called prepackaged Chapter 11 filing to deal with asbestos claims. Congoleum’s petition listed assets of $187.1 million against debt totaling $205.9 million.

The case is In re Congoleum Corp., 03-51524, U.S. Bankruptcy Court, District of New Jersey (Trenton).

Charys Plan Goes to Creditors for Vote

Charys Holding Co., the owner of non-bankrupt operating companies in the remediation and telecommunications infrastructure businesses, has an approved disclosure statement and a hearing scheduled for Feb. 25 on confirmation of the Chapter 11 plan.

The plan, supported by the creditor’s committee, is to give the convertible noteholders 94 percent of the new stock plus $20 million in secured notes maturing in four years and paying 15 percent interest, for a recovery estimated at 32.5 percent.

Unsecured creditors with $107 million in claims would participate in whatever is collected by a liquidating trust and are expected to see nothing to 15 percent. Subordinated claims would be wiped out along with existing stockholders.

While approving the explanatory disclosure statement so creditors can vote on the plan, the bankruptcy judge in Delaware also extended the company’s exclusive right until Jan. 30 to propose a reorganization.

The petition listed assets of $245 million against debt totaling $255 million.

Atlanta-based Charys missed an interest payment on the notes in November 2007.

The case is In re Charys Holding Co., 08-10289, U.S. Bankruptcy Court, District of Delaware (Wilmington).

ATA Airlines Plan Ready for Vote By Creditors

ATA Airlines Inc., the air carrier that was operating 29 aircraft before it halted operations and filed in Chapter 11 on April 2, won approval on Jan. 12 of the disclosure statement explaining the liquidating Chapter 11 plan, according to an e-mail from company lawyer Terry Hall.

The disclosure statement says unsecured creditors with an estimated $420 million in claims may recover around 1.3 percent. Secured creditors with claims totaling $365 million could see some 13.9 percent.

To read Bloomberg coverage, click here.

The plan incorporates a settlement with the secured lenders allowing $2.5 million be paid to unsecured creditors plus half of collections in so-called preference actions.

ATA was authorized in early December to sell 14 slots at New York’s La Guardia airport to Southwest Airlines Co. (LUV) for $7.5 million as part of the liquidating Chapter 11 plan the company hopes to confirm by March.

ATA filed formal lists showing assets on the books for $250 million with liabilities totaling $705 million. ATA emerged from a prior reorganization 25 months before the new filing.

The case is In re ATA Airlines Inc., 08-03675, U.S. Bankruptcy Court, Southern District of Indiana (Indianapolis).

Archway to Be Converted to Chapter 7 on Jan. 21

Cookie baker Archway Cookies LLC prevailed over the creditors’ committee, although the bankruptcy grafted a creative twist onto the order converting the Chapter 11 case to a liquidation in Chapter 7, where a trustee will be appointed automatically.

In an order that hit the court records officially on Jan. 9, the bankruptcy judge in Delaware ruled that the case will go into Chapter 7 on Jan. 21. The judge denied a cross-motion introduced by the committee seeking the ability to conduct discovery and file lawsuits in Archway’s name.

The judge did, however, tell the committee it could file a lawsuit against the secured lenders seeking to knock out their liens. When the case goes into Chapter 7 on Jan. 21, the trustee will supplant the committee in continuing the action against the lenders.

Archway last month was authorized to sell the assets and lost the right to use cash at the end of December.

After a whistleblower brought accounting irregularities to light, Archway shut down the business on Oct. 3 and filed under Chapter 11 three days later.

Court papers show $51.4 million owing to Wachovia Capital Finance Corp. on a first-lien revolving credit and term loan. Affiliates of Catterton Partners, the controlling shareholder, are owed $12.4 million on a second-lien loan and $66.2 million on a subordinated loan. Another $25.6 million is owing to trade suppliers.

Parmalat Dairy & Bakery Inc. sold the Archway and Mother’s cookie business to Catterton in early 2005. Parmalat USA filed under Chapter 11 in February 2004 after the Italian parent began a reorganization in Italy in the wake of an accounting scandal.

The case is In re Archway Cookies LLC, 08-12323, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Florida Hotels Survive Until Confirmation Hearing

The reorganization plan proposed by the owners of two Florida hotels, one in Miami and the other in Orlando, is going to creditors for a vote, according to a notation last week on the bankruptcy court docket.

The confirmation hearing for approval of the plan is set for March 25.

The secured lender, Gramercy Investment Trust, argued that the plan doesn’t provide for curing all defaults on the loan while the needed $15 million in new equity “is merely aspirational.” Gramercy also lost its renewed motion for so-called adequate protection.

The bankruptcy judge previously ended the owners’ exclusive right to file a plan, allowing Gramercy to submit one of its own. The companies say they intend to cure the defaults and reinstate the Gramercy loan under their plan.

The companies in their May 1 Chapter 11 petition said they owed Gramercy $93 million. The companies estimated the properties together are worth more than $100 million. They listed unsecured claims totaling $3.3 million.

The case is In re CF Hospitality Inc., 08-03517, U.S. Bankruptcy Court, Middle District of Florida (Orlando).

Other New Filing

Clarke Power Products Files in Toledo

Clarke Power Products Inc., a wholesale distributor of power equipment from Perrysburg, Ohio, filed a Chapter 11 petition on Jan. 8 in Toledo, saying it owes $7.9 million to the secured creditor Key Bank.

Court papers say assets of $13.8 million are comprised of accounts receivable, inventory and cash. Clarke’s products include air compressors and power tools.

The case is In re Clarke Power Products Inc., 09-30071, U.S. Bankruptcy Court, Northern District of Ohio (Toledo).

Briefly Noted

Fortress Credit Corp. was formally approved yesterday to buy the remaining 21 television stations owned by Pappas Telecasting Inc. As administrative agent for secured lenders owed $330 million, Fortress made the only offer at the auction in December with a $260 million credit bid where it will pay for the stations in exchange for secured debt. A trustee was appointed for Pappas at the request of Fortress. The company’s petition filed in May listed assets with a book value of $460 million and debt of $537 million, including inter-corporate debt. Pappas was the largest closely owned television-station owner and operator in the U.S. by number of households served. Revenue in 2007 was $71.3 million. The station’s principal, Harry Pappas, put himself and his wife into their own Chapter 11 reorganization in May. Creditors had filed an involuntary Chapter 7 petition against them earlier that month. The company’s Chapter 11 case is Pappas Telecasting Inc., 08-10916, U.S. Bankruptcy Court, District of Delaware (Wilmington), and the individuals’ cases are In re Harry Pappas, 08-10949, and In re Stella Pappas, 08-10951, also in U.S. Bankruptcy Court in Wilmington.

Quebecor World (USA) Inc., the Montreal-based commercial printer that began simultaneous reorganizations one year ago this month in the U.S. and Canada, for a third time asked for an extension of the exclusive right to propose a Chapter 11 plan. If approved by the Delaware bankruptcy court at a Jan. 22 hearing, so-called exclusivity would be extended until May 31. Quebecor says it’s been dealing with “operational issues,” the world financial crisis, and “unexpected challenges.” Court filings show the second-largest commercial printer in the U.S. as owing $735 million on a revolving credit, $1.45 billion in unsecured notes, and $184 million for secured equipment financing. The case in New York is In re Quebecor World (USA) Inc., 08-10152, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Family-owned Shane Co., the 23-store jewelry retailer that filed under Chapter 11 on Jan. 12 in Denver, blamed its financial troubles in part on an inventory-control system intended to cost $10 million that was two years behind schedule and ended with a $36 million price tag. To read Bloomberg coverage, click here. The petition by the Centennial, Colorado-based company said assets and debt both exceed $100 million while the 20 creditors with the largest unsecured claims are owed $26.2 million in total. The case is Shane Co., 09-10367, U.S. Bankruptcy Court, District of Colorado (Denver).

The trustee for IndyMac Bancorp Inc., the holding company that filed in Chapter 11 in late July after the bank was taken over by the Federal Deposit Insurance Corp., served notice that some of the assets the FDIC intends to sell may in fact belong to the companies in bankruptcy. To read Bloomberg coverage, click here. The case is In re IndyMac Bancorp Inc., 08-21752, U.S. Bankruptcy Court, Central District of California (Los Angeles).

Downgrades

S&P Downgrade Easier on Dana Than Moody’s

Standard & Poor’s and Moody’s Investors Service aren’t on the same page when it comes to Dana Holding Corp. (DAN), the auto-parts maker that emerged from bankruptcy reorganization in February.

Where Moody’s in two actions last year assigned a Caa1 corporate rating, S&P yesterday, in its second downgrade in two months, has the corporate peg at B, or two grades higher than Moody’s.

S&P believes U.S. automakers will sell 10 million units this year, 24 percent below 2008.

Also downgrading a second time in two months, Moody’s in December acted in response to increasingly lower production rates by automakers and the possibility of negative free cash flow in the next year.

The Big 3 Detroit automakers comprise 27 or 28 percent of sales, depending on whether you believe Moody’s or S&P.

Dana’s Chapter 11 plan gave creditors with $3 billion in claims a projected recovery between 72 percent and 86 percent through distribution of new common stock. The projected recovery was based on an assumption the new stock had a midpoint estimated value of $22.03 a share. The stock closed yesterday at 91 cents in New York Stock Exchange trading, up 6 cents.

Toledo, Ohio-based Dana filed under Chapter 11 in March 2006, listing assets of $7.9 billion and $6.8 billion in debt.

The Chapter 11 case was In re Dana Corp., 06-10354, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

S&P Also Easier than Moody’s on Lear Downgrade

Standard & Poor’s is also two notches more charitable than Moody’s Investors Service when it comes to auto-parts maker Lear Corp. (LEA)

Reciting the same mantra in anticipation of 10 million unit sales this year, S&P moved Lear to a B- corporate rating, two steps higher than the demotion issued by Moody’s earlier this month. The downgrade by S&P was the second in three months.

Moody’s noted that Lear had $1.6 billion cash at the year’s end.

Southfield, Michigan-based Lear derives 79 percent of revenue from seating components, with General Motors Corp. (GM) and Ford Motor Co. (F), the two largest customers, accounting for 42 percent of global sales, Standard & Poor’s previously said.

Sales in 2007 were almost $16 billion, down from $17.8 billion in 2006. Annual revenue is expected to decline to $14 billion with the disposition of the interiors business, Moody’s said. In the first nine months of 2008, reported revenue was $11 billion.

Lear operates in 34 countries with 91,000 workers.

Lear’s stock closed yesterday at $1.28, down 2 cents in New York Stock Exchange trading. The two-year high was $40.62 on Feb. 6, 2007.

S&P Also Goes Easier on TRW than Moody’s

With a third auto-parts maker, the discrepancy is again two grades.

TRW Automotive Inc., among the world’s 10 largest auto parts makers, yesterday was demoted to a BB corporate rating by Standard & Poor’s, two levels higher than the downgrade issued in December by Moody’s Investors Service.

TRW derives almost 70 percent of revenue outside of the U.S. The Big 3 U.S. automakers are responsible for 22 percent of sales, S&P said.

Based in Livonia, Michigan, TRW had $14.7 billion in revenue in 2007.

Tenneco Loses One Notch to B+ on S&P Scale

Tenneco Inc. (TEN) was another giant auto-parts maker Standard & Poor’s was forced to downgrade given the decline in auto sales.

The corporate peg is at B+ after yesterday’s one-click downgrade.

The Lake Forest, Illinois-based provider of exhaust and suspension systems, with operations in more than 20 countries, had sales of $6.2 billion in 2007 and $4.7 billion during the first nine months of 2008.

Tenneco closed yesterday at $2.41, down 13 cents in New York Stock Exchange trading. The closing high during the past two years was $37.16 on Aug. 2, 2007.

REIT Spirit Finance Lowered Three Notches to B- Spirit Finance Corp., a real-estate investment trust leasing almost 1,300 retail properties in 46 states, received a three-notch demotion yesterday from Standard & Poor’s that left the corporate rating at B-.

The $850 million secured credit facility also fell three spaces to CCC+ with the expectation that debtholders wouldn’t recover more than 30 percent following payment default.

S&P took action out of concern that reduced consumer spending will cause some tenants to default or negotiate rent concessions on the $4.2 billion portfolio. As evidence of forthcoming difficulties, S&P noted how comparable-store sales at chain stores during the holidays were down 2.2 percent, the largest drop since records were first kept in 1969.

Spirit, based in Scottsdale, Arizona, specializes in triple-net leases where the tenant pays operating expenses and taxes. It was acquired in August 2007 in a $3.3 billion transaction.

MetoKote Lowered to B by S&P on Lower Sales

Standard & Poor’s expects MetoKote Corp., a provider of anti-corrosion coatings for industrial and automotive customers, will have declining sales, lower margins and more leverage.

Consequently, the corporate rating of the Lima, Ohio-based company slipped one grade to B.

Texas Industries Downgraded on Lower Sales

Cement and concrete supplier Texas Industries Inc. (TXI), which generates 80 percent of its income in Texas, slipped one grade on the Standard & Poor’s corporate scale to B1 in view of lower sales.

The $550 million in senior unsecured notes are two clicks lower at B2 now that the previously unsecured $200 million revolving credit has working capital as collateral.

The Dallas-based company had sales of $1.03 billion for the 2008 fiscal year ended in May. Revenue slipped to $478 million during the first six months of the current fiscal year.

The stock closed yesterday at $25.94, down 27 cents in New York Stock Exchange composite trading. The closing high during the past two years was $91.40 on July 19, 2007.

To contact the reporter on this story: Bill Rochelle in New York at wrochelle@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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