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Primus, Tribune, Tronox, Lehman, Madoff: Bankruptcy (Update1)

Updated on

March 17 (Bloomberg) -- Primus Telecommunications Group Inc., a telecommunications provider with 2.4 million customers, filed a Chapter 11 petition yesterday with three affiliates and a reorganization plan reducing $575 million of funded debt obligations by $315 million.

The McLean, Virginia-based holding company said it reached agreement before filing with “significant majorities” of the holders of the second-lien secured notes, the $23.3 million of 5 percent exchangeable senior notes, and the $186 million in 8 percent senior notes of 2014.

The plan calls for giving the second-lien noteholders, owed $173.2 million, half of the new stock plus $123.4 million in new second-lien debt.

The holders of the 8 percent senior notes and the 5 percent exchangeable notes are to have the other half of the new stock plus warrants.

The holders of the $34.2 million of 3.75 percent convertible senior notes, the $8.6 million in step-up convertible debentures, and the $14.2 million of 12.75 percent senior notes are to receive warrants. Existing stockholders are in line for what are called “contingent value rights” that could be exchanged for 15 percent of the new stock when the value of the company rises sufficiently.

Primus also has a $96.25 million first-lien term loan that will be reinstated under the reorganization plan.

The Primus and its three affiliates in Chapter 11 are all holding companies. None of the operating companies filed.

Primus’s balance sheet for Sept. 30 listed assets of $393 million and total liabilities of $827 million. Thomas R. Kloster, the chief financial officer, said in a court filing that earnings before interests, taxes, depreciation, and amortization were about $30 million a year short of being able to service the current debt load.

Kloster said that the Chapter 11 filing was precipitated by the high value of the dollar given that 80 percent of revenue is generated in other currencies. Also, the global economic crisis contributed to the need for reorganization along with $24 million in debt maturing in the last half of 2009. Moody’s Investors Service had predicted in December that Primus would “not be able to repay or refinance” $24 million maturing between June and October.

A proposed Chapter 11 plan and explanatory disclosure statement were filed yesterday along with the petition. Kloster says the companies intend on emerging from reorganization in less than 120 days.

To read other Bloomberg coverage, click here.

The case is In re Primus Telecommunications Group Inc., 09-10867, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Watch List

Ackman Says General Growth Stockholders Can Survive

Although hedge-fund manager William Ackman says he expects General Growth Properties Inc. will be filing Chapter 11 “imminently,” he believes the publicly traded real estate investment trust that owns more than 200 shopping malls in the U.S. can be reorganized so existing stockholders will survive “intact.”

Ackman, the head of Pershing Square Capital Management LP, said in an interview on Bloomberg Television that he’s taken what could work out to be a 25 percent interest in General Growth.

To read Bloomberg coverage, click here.

General Growth has $1.18 billion in past-due debt and $4.09 billion in debt that could be accelerated, not including $2.25 billion in notes issued by Rouse Company LP which it acquired in November 2004.

General Growth announced early this morning that it extended the deadline from March 16 to March 20 for the solicitation of consents to a forbearance agreement on the $2.25 billion of Rouse debt. Not enough holders so far had accepted to reach the required levels of consent that ranged between 75 percent and 90 percent.

The balance sheet of Chicago-based General Growth has assets of $29.6 billion and $27.3 billion in total liabilities as of Dec. 31.

General Growth fell 3 cents yesterday to 61 cents in New York Stock Exchange trading. The stock topped out at $67 on March 23, 2007.

Aventine Not Paying Contractors, Interest Due April 1

Ethanol producer Aventine Renewable Energy Holdings Inc. has several problems, any one of which could result in bankruptcy in view of the Ca corporate rating handed out yesterday by Moody’s Investors Service.

Aventine was unable to pay contractors $24 million on two uncompleted plants. The resulting liens in favor of the contractors violated covenants in the $300 million in senior notes of 2017. On April 1, the company owes $15 million in interest on the notes.

Moody’s also believes Aventine will violate covenants so it won’t have access to the last $50 million of its revolving credit.

Standard & Poor’s said at the end of February that Aventine needs to see “significant improvement in crush spreads or obtain additional financing to remain financially viable through the rest of 2009.”

The Pekin, Illinois-based company was working on two new plants scheduled for completion in the first half of 2009. Revenue for a year ended in September was $2.1 billion.

Forbearance Agreement for Twin Rivers Racino Owner Ends

The forbearance agreement lapsed with regard to the interest payments BLB Management Services Inc. isn’t making on its second-lien debt, according to Moody’s Investors Service.

BLB, a joint venture whose operating subsidiary UTGR Inc. owns the Twin River racino near Providence, Rhode Island, now has a Caa3 first-lien bank rating, a Ca corporate rating, and a C rating on the second-lien debt.

The participants in the joint venture are Kerzner International Ltd., Starwood Capital Group LLC, and Waterford Group LLC.

Energy Partners Borrowing Base Cut Two-Thirds

Energy Partners Ltd., an independent oil and natural gas exploration and production company, was notified by its bank lenders that they made a semi-annual redetermination and lowered the borrowing base to $45 million from $150 million. Currently, $83 million is outstanding on the facility, leaving the company in the position of needing either to pay down debt or provide more collateral.

Standard & Poor’s reported that the company is in discussions about a debt-for-equity exchange with a majority of the holders of the $450 million in senior unsecured notes.

The company also said that the auditors will express substantial doubt about the ability to continue as a going concern.

Standard & Poor’s used the occasion of yesterday’s announcement to lower the corporate rating to CCC- while the notes went to CC.

Moody’s Investors Service had reduced the corporate rating to an equivalent Caa3 on March 11. Moody’s acted when the company didn’t provide $16.7 million in bonds required by federal energy regulators to cover obligations to clean up after abandoned wells. Moody’s inferred that the company exhausted its borrowing ability.

The New Orleans-based company has almost $500 million in debt. Energy Partners fell 30 cents yesterday to 32 cents in New York Stock Exchange trading. The two-year high was $19 on April 16, 2007.

Interstate Hotels Has Multiple Covenant Defaults

Interstate Hotels & Resorts Inc., the owner of interests in 57 hotel properties, violated a loan covenant on being delisted from the New York Stock Exchange, may violate other covenants, and likely will have a going-concern qualification from the auditors that will be the basis for yet another covenant violation.

In addition, a $200 million credit facility matures in March 2010.

Also taking into consideration what Moody’s Investors Service called a “dramatic contraction in the lodging demand,” the ground was laid for a demotion of the corporate credit to Caa1 yesterday.

The new Moody’s rating matches the action taken last week by Standard & Poor’s.

Arlington, Virginia-based Interstate also manages 169 other hotel properties. The hotels, in 37 states, have 46,000 rooms in total.


Tribune Aims at Stopping ERISA Suit Against Officers

Three months before Tribune Co. filed in Chapter 11, several former and current employees filed a class-action suit in U.S. District Court in Illinois contending that the second-largest newspaper publisher in the U.S. violated federal employment law governing the employee ownership plan trust involved in the $13.8 billion leveraged buyout led by Sam Zell in December 2007.

Although the plaintiffs say they are no longer continuing the suit against Tribune, the company filed papers in bankruptcy court last week contending the Illinois lawsuit nonetheless is in violation of the so-called automatic stay resulting from the Chapter 11 filing. In addition to Tribune Co., defendants in the suit include Zell and other Tribune executives.

Even if the Illinois suit is not automatically halted, Tribune wants the bankruptcy judge in Delaware to bring it to a stop even as to the executives. Tribune says the suit is a distraction keeping executives away from the important chore of reorganizing the company.

Although Tribune has an insurance policy that covers the suit, the publisher says the billions in damages the plaintiffs seek far exceeds coverage.

Tribune wants the bankruptcy judge to stop the Illinois suit on a preliminary basis before making a final decision on whether it should halt.

Tribune filed under Chapter 11 in December, listing $13 billion in debt for borrowed money and assets of $7.6 billion. Tribune owns the Chicago Tribune, Los Angeles Times, six other newspapers, and 23 television stations, in addition to the Chicago Cubs professional baseball team and Wrigley Field in Chicago where the team plays. Neither the team nor the field is in bankruptcy.

The case is In re Tribune Co., 08-13141, U.S. Bankruptcy Court, District Delaware (Wilmington).

Tronox Has Official Shareholders’ Committee

In addition to the committee representing unsecured creditors, Tronox Inc., the world’s third-largest producer of a white pigment called titanium dioxide, now has an official committee representing stockholders. Official shareholders’ committees usually aren’t appointed unless there is some chance existing stockholders might be entitled to a distribution under a Chapter 11 plan.

Having an official committee gives stockholders the right to hire a lawyer whose fees will be paid by Tronox.

Oklahoma City-based Tronox filed under Chapter 11 in January, saying at the time it intended to sue Kerr-McGee Corp. to recover environmental remediation costs it was given when spun off in March 2006. Anadarko Petroleum Corp. acquired Kerr-McGee for $18.4 billion in August 2006.

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.

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).

Special Devices May Face Patent-Infringement Trial

Special Devices Inc., a manufacturer of actuators that make automobile air bags deploy, wants the bankruptcy court in Delaware to keep a lid on a patent-infringement lawsuit in California it says “could result in the total loss of the debtor’s mining and blasting business.”

Before the Chapter 11 filing, Orica Explosives Technology Pty sued Special Devices and three unaffiliated companies. Orica in papers filed in February said the suit is “poised for trial” and that cross-motions for summary judgment have been filed. Orica on March 20 is scheduled to ask the bankruptcy judge for freedom to pursue the suit against Special Devices, so that it isn’t required to hold a trial with the other three defendants and conduct a separate trial later in bankruptcy court against Special Devices.

Special Devices, the creditors’ committee and Wayzata Opportunities Fund LLC, one of the pre-bankruptcy lenders, all oppose the idea of allowing the suit to proceed in the California district court.

Moorpark, California-based Special Devices, which filed under Chapter 11 in December, also makes products for the mining and aerospace industries. The company is controlled by affiliates of private-equity investor J.F. Lehman & Co.

The case is In re Special Devices Inc., 08-13312, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Committee Opposes Ritz’s Financing as Benefiting Lenders

The official creditors’ committee of Ritz Camera Centers Inc., the largest chain of camera stores in the U.S., argues that the proposed $85 million in financing only “provides a phantasm of increased availability” and serves no purpose “other than to fund a platform for the rapid liquidation” in a “process controlled entirely by the DIP lenders.”

The committee’s papers were filed in anticipation of a March 19 hearing for final approval of financing.

The committee’s papers contend the financing improperly allows the lenders to “convert their pre-petition debt into post-petition debt, while forcing the debtor to liquidate its assets, at lightening speed, for their sole benefit after taking their $1.7 million fee.”

Ritz was already given authorization to hold an auction today for the assets of the 130-store Boater’s World Marine Centers. The hearing for approval of the sale will also be on March 19.

The company previously said it intends to close 400 camera stores in addition. If the judge concurs at the March 19 hearing, the auction where liquidators can bid for the right to conduct going-out-of-business sales will be held April 1.

Beltsville, Maryland-based Ritz filed under Chapter 11 on Feb. 22. Financing of $80 million comes from existing secured lenders. The main business is the 800 photo stores in 40 states.

With letters of credit, debt includes $54.5 million on a secured revolving credit agreement where Wachovia Bank NA serves as agent. There is also $13.1 million owing on subordinated debentures. The petition said that assets and debt are both less than $500 million.

The case is In re Ritz Camera Centers Inc., 09-10617, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Swimsuit Retailer Needs Loan and Sale Quickly

Everything But Water LLC, the largest U.S. retailer of women’s swimwear with 70 stores in 26 states, is in bankruptcy court today defending its financing and procedures for the sale of the business. Secured lender D.B. Zwirn Special Opportunities Fund LP hopes to be the buyer by exchanging $19 million of secured debt.

Just after the Chapter 11 filing on Feb. 25, the company received authority to borrow $5 million and today wants borrowing power upped to $11 million.

The official creditors’ committee wants the sale process slowed down by a month. Everything But says the business is in extremis and it does “not have the luxury” of slowing down the sale. It also says the May 4 maturity of the loan is all it could negotiate.

The company, based in Orlando, Florida, listed $58 million in assets and debt totaling $35 million, including $25 million in a secured term loan and revolving credit owning to Zwirn, a minority shareholder. Revenue in fiscal 2008 was $52.2 million, down from $54.3 million in fiscal 2007. The company was acquired in April 2006 by a subsidiary of Bear Stearns Cos. which since was taken over by JPMorgan Chase & Co.

The case is In re Everything But Water LLC, 09-10649, U.S. Bankruptcy Court, District Delaware (Wilmington).

Other New Filings

Three Ohio Hospitals File in Youngstown

Nonprofit Forum Health and three Ohio hospitals it operates filed Chapter 11 petitions yesterday in Youngstown, saying assets and debt are both less than $500 million. Debt includes $139 million owing on hospital revenue bonds.

The facilities that Forum owns include Trumball Memorial Hospital and Hillside Rehabilitation Hospital in Warren, Ohio, and Northside Medical Center in Youngstown.

To read Bloomberg coverage, click here.

The case is In re Forum Health, 09-40795, U.S. Bankruptcy Court, Northern District of Ohio (Youngstown).

North Carolina Homebuilder Files in Wilson

Anderson Homes Inc., a homebuilder based in Raleigh, North Carolina, filed a Chapter 11 petition yesterday in Wilson, North Carolina, along with affiliates.

The companies listed assets of $17.2 million against debt totaling $13.7 million, including $10.8 million owing to secured creditors.

Anderson is building homes or condominiums in 20 projects.

The case is In re Anderson Homes Inc., 09-02062, U.S. Bankruptcy Court, Eastern District of North Carolina (Wilson).

Portable Building Manufacturer Files in Texas

Ameri-Tech Building Systems, formally named ACP Ameri-Tech Holding LLC, filed a Chapter 11 petition on March 11 in Lufkin, Texas, 55 miles from its home base in Center, Texas.

The company, which makes portable storage buildings, said assets are less than $10 million while debt exceeds $10 million.

The company has four plants in Texas and Louisiana and 57 sales locations in those states along with New Mexico and Oklahoma.

The case is In re ACP Ameri-Tech Holding LLC, 09-90078, U.S. Bankruptcy Court, Eastern District Texas (Lufkin).

Briefly Noted

The sale in September of the Lehman Brothers Holdings Inc. North American investment banking business was upheld on appeal. U.S. District Judge Denise L. Cote ruled that the bankruptcy judge was not in error when he found that the buyer, Barclays Plc, was a purchaser in good faith. Consequently, bankruptcy law does not permit unraveling a sale to a good faith purchaser even if the sale were otherwise improper. The Lehman holding company filed under Chapter 11 in New York on Sept. 15 and sold office buildings and the North American investment banking business one week later. The Lehman brokerage operations went into liquidation on Sept. 19 in the same court. The brokerage is in the control of a trustee appointed under the Securities Investor Protection Act. The Lehman holding company Chapter 11 case is In re Lehman Brothers Holdings Inc., 08-13555, while the liquidation proceeding under the Securities Investor Protection Act for the brokerage operations is Securities Investors Protection Corp. v. Lehman Brothers Inc., 08-01420, U.S. Bankruptcy Court, Southern District New York (Manhattan).

The trustee liquidating Bernard L. Madoff Investment Securities Inc. is hiring a lawyer in Gibraltar to chase down customers’ assets that may be in the British territory at the tip of Spain. To read Bloomberg coverage, click here. To read a Bloomberg story on how Bernard Madoff’s claimed $826 million in personal assets includes $700 million for the money-management firm that may bring $10 million, if anything at all, click here. To read about formal notice given by prosecutors in advance of seeking criminal forfeiture of Madoff’s four homes, $62 million in cash and bonds allegedly owned by his wife, plus other property, click here. Madoff on March 12 pleaded guilty to defrauding investors of as much as $65 billion and faces a prison term up to 150 years. His bail was revoked and he went immediately to jail. The Madoff firm’s liquidation in U.S. Bankruptcy Court commenced in December with the appointment of the trustee under the Securities Investor Protection Act. Madoff, the firm’s founder, was arrested in December and charged in civil and criminal proceedings with running a Ponzi scheme. The SIPA case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities Inc., 08-01789, U.S. Bankruptcy Court, Southern District New York (Manhattan).

Carl Icahn and other secured creditors intend to bid for the casino in Atlantic City, New Jersey, owned by Tropicana Entertainment LLC. The Atlantic City property is under the control of a conservator appointed by the state court when the New Jersey casino license was lifted. For that reason the Atlantic City property is technically not under the control of the bankruptcy judge in Tropicana’s Chapter 11 case. To read Bloomberg coverage, click here. Tropicana’s creditors are voting on two reorganization plan, one covering Atlantic City and the other governing the casinos elsewhere including Nevada. The confirmation hearing is to begin April 27. The plan will give over ownership to secured creditors. The takeover of the Atlantic City property by the conservator began a series of events that ended with the company’s filing under Chapter 11 in May. The case is In re Tropicana Entertainment LLC, 08-10856, U.S. Bankruptcy Court for the District of Delaware (Wilmington).

Turning aside objections from creditors, the bankruptcy judge at a hearing yesterday gave Aleris International Inc. final approval for a secured $1.075 billion loan to finance reorganization of the producer of rolled and extruded aluminum products. For Bloomberg coverage, click here to read about the unsuccessful objections from pre-bankruptcy lenders who weren’t participating in the post-bankruptcy loan. Acquired by TPG Inc. at the end of 2006 in a $2.3 billion transaction, Aleris filed under Chapter 11 on Feb. 13, listing assets of $4.2 billion against debt totaling $4 billion. Debt owing by the Beachwood, Ohio-based company includes $472 million on revolving credit and related facilities, plus more than $1.1 billion on secured term loans. In addition, there are $1.1 billion in unsecured notes. The case is In re Aleris International, 09-10478, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Although Polaroid Corp. won’t hold a hearing until March 31 for approval of the sale of the assets, former Chief Executive Officer Michael O’Shaughnessy says the property can’t be sold without first paying him $7.2 million under an earn-out agreement. To read Bloomberg coverage, click here. At the auction on March 30, the opening bid of $42 million will come from private-equity investor Genii Capital SA. Other bids are due March 26. Polaroid filed formal lists of assets and debt showing property with a value of $28.5 million against liabilities totaling $302 million, including $72.8 million in secured claims. Minnetonka, Minnesota-based Polaroid, which filed under Chapter 11 in December, was the latest victim of the fraud indictment against Thomas Petters, whose companies bought Polaroid for $426 million in early 2005. Sun Country Airlines Inc., a low-cost carrier, was another Petters investment also now in bankruptcy. Petters along with other investors acquired Sun Country in November 2006, after it had been purchased out of bankruptcy in 2002. The receiver for Petters and his companies put Petters Group Worldwide and Petters Co. into their own Chapter 11 cases in October five days after the Sun Country filing. The bankruptcy was Sun Country’s second. The Polaroid case is In re Polaroid Corp., 08-46617, U.S. Bankruptcy Court, District of Minnesota (Minneapolis). The Sun Country Chapter 11 case is In re MN Airlines Inc., 08-35197, U.S. Bankruptcy Court, District of Minnesota (St. Paul). The Chapter 11 cases for the two Petters companies are In re Petters Co. and In re Petters Group Worldwide LLC, 08-45257 and 08-45258, in the same court. The criminal case is U.S. v. Thomas Joseph Petters, 08-364, U.S. District Court, District of Minnesota (Minneapolis).

There being no competing bids at auction, Precision Parts International Services Corp., the auto-parts maker that filed under Chapter 11 in December, was authorized last week to sell the business to Cerion LLC for $18.5 million. The Rochester Hills, Michigan-based company has six plants in North America. It makes metal formed components for the auto and aerospace industries and owes more than $85 million on bank loans to Golub Capital and Norwest Mezzanine Partners II LP. Court papers say debt includes $184.5 million in secured and unsecured loan obligations plus $30 million owing to trade suppliers. The revolving credit and term loans are $89 million while there is an $88.5 million mezzanine loan. First Atlantic Capital Ltd. acquired control of the company in 2005. The case is In re PPI Holdings Inc., 08-13289, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Mercedes Homes Inc., a Melbourne, Florida-based homebuilder, filed a Chapter 11 petition in January and now has listed assets on the books for $309 million against debt of $280 million. Claims include $224 million owing to secured creditors. The housing projects are in 13 markets in Florida, Texas, North Carolina and South Carolina. Revenue for the first 11 months of fiscal 2009 was $407 million. The case is In re Mercedes Homes Inc., 09-11191, U.S. Bankruptcy Court, Southern District of Florida (West Palm Beach).

WCI Communities Inc., a specialist in building high-end master planned communities in Florida, filed an operating report for January showing a net loss of $18.8 million on revenue of $27.9 million, including affiliates not in bankruptcy. WCI ended the month with $108.5 million cash. The petition listed $1.9 billion debt and assets on the books for $2.2 billion as of June 30. Debt includes $760 million in secured debt and $815 million in subordinated debt. Secured debt includes a $489 million revolving credit. WCI has 40 projects encompassing 12,000 acres and enabling the construction of 15,000 units. Carl Icahn is the chairman and largest investor in the Bonita Springs, Florida-based company. The case is WCI Communities Inc., 08-11643, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Although Cornerstone-Orlando LLC was unable to confirm the proposed Chapter 11 plan when a necessary tenant couldn’t be found for its 149,000-square-foot office and condominium complex in Orlando, Florida, the bankruptcy judge extended the company’s exclusive right to propose a reorganization until June 5. The plan that didn’t work was designed to pay unsecured creditors in full, with half in cash when the plan became effective and the other half six months later. Under the original plan, the secured creditor owed $24 million was to receive $500,000 cash while continuing to receive payments called for in the mortgage. The Chapter 11 petition was filed in November along with an agreement to sell the property and avert foreclosure of the mortgage. Orlando Medical Exchange LLC, the erstwhile buyer willing to pay $2 million for the property, was to be responsible for paying the mortgage after the plan became effective. The petition listed assets of $20 million and debt totaling $26.2 million. The case is In re Cornerstone-Orlando LLC, 08-10595, U.S. Bankruptcy Court, Middle District of Florida (Orlando).

Mirabilis Ventures Inc., which provided management services for small and medium-sized companies, has an extension until May 31 of the exclusive right to propose a Chapter 11 plan. This month, the company received approval for settlement of a forfeiture suit brought by the U.S. government. The settlement divided property between what will go to the government in forfeiture and what the company will retain. The government in addition has an approved unsecured claim for $200 million in the bankruptcy. Frank Amodeo, the principal of the private-equity fund based in Orlando, Florida, was indicted in August and later pleaded guilty to four counts. The government described him as having conducted a “systematic and pervasive theft of payroll taxes” amounting to $182 million. The formal lists of assets and debt show property on the books for $27.1 million against liabilities of $21.1 million. The case is In re Mirabilis Ventures Inc., 08-04327, U.S. Bankruptcy Court, Middle District of Florida (Orlando).

Fleetwood Enterprises Inc., the producer of manufactured housing and recreational vehicles that filed in Chapter 11 on March 10, was given temporary authority three days later to use cash representing collateral for secured lenders’ claims until March 29. Another hearing on cash use will be held March 26. Based in Riverside, California, Fleetwood listed assets of $560 million against debt totaling $624 million and said it intends to sell “one or more of its divisions.” Fleetwood has 19 manufacturing facilities in 11 states. In 2007 it was the second-largest manufactured housing maker in the U.S. and largest manufacturer of recreational vehicles more than 30 feet in length. The case is In re Fleetwood Enterprises Inc., 09-14254, U.S. Bankruptcy Court, Central District California (Riverside).


Carlyle’s Sequa Lowered to Caa1 Corporate by Moody’s

Sequa Corp., which makes and repairs jet engine parts and auto air-bag inflators among other products, was the target of a $2.8 billion acquisition by Carlyle Group in December 2007.

The rating of the New York-based company’s $711 million in two issues senior unsecured notes were affirmed at Caa2 by Moody’s Investors Service. And that’s the good news from yesterday.

The corporate rating was lowered one notch to Caa1.

Moody’s pointed out how the airline side of the business is being hurt by fewer miles flown while revenue is lower from the auto parts business.

Sequa had what Standard & Poor’s called a “much heavier debt burden” after the acquisition.

International Coal Lowered to Caa2 by Moody’s

International Coal Group Inc., the owner of 13 coal mines mostly in Appalachia, was downgraded yesterday by Moody’s Investors Service in view of “operational challenges” and the uncertain prices the company will receive for half its product in 2010.

The new corporate rating is Caa2 while the senior notes are now Caa3. Both are one grade lower.

Scott Depot, West Virginia-based ICG generated $1.1 billion revenue in 2008 from producing 17.9 million tons. The company is a combination of three coal producers purchased from Chapter 11 reorganizations by Wilbur Ross.

Foxwoods Casino Tribal Owner Downgraded to B+

The Mashantucket Western Pequot Tribe, the owner of the Foxwoods casino in Connecticut, received a one-notch downgrade yesterday to a B+ corporate rating from Standard & Poor’s given that “profitability at the resort has declined in fiscal 2008 in light of the recession.”

S&P said it isn’t currently predicting a loan-covenant violation. The new rating from S&P is one level below the demotion issued in February by Moody’s Investors Service.

The tribe competes with the nearby Mohegan Sun casino and the Twin Rivers property near Providence, Rhode Island. The Mohegan Sun property expanded, as did Foxwoods.

To contact the reporter on this story: Bill Rochelle in New York at

To contact the editor responsible for this story: David E. Rovella at

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