Mrs. Fields Could Crumble and News on Other Financially Challenged U.S. Companies for June 10

The items below are taken from the Credit Manager’s Weekly Summary of Financially Challenged Companies. A full issue contains information on more than 200 companies. Please visit the insideARM bookstore for information on subscribing to the Summary.

American Axle & Manufacturing Holdings Inc. is selling certain production machinery and equipment at a plant in Buffalo, N.Y. that it closed over the winter at a Webcast auction to be held the 17th and 18th of this month.  The auction is being run by Hilco Industrial LLC.

American International Group Inc., the Manhattan, N.Y. insurer, is now the target of both the Justice Department and the Securities and Exchange Commission, which are looking into how the company valued certain derivatives transactions. American International has already been hit by the sagging credit market, reporting a $5.3 billion loss in its fourth quarter and another $7.8 billion loss in the first quarter because of writedowns of credit-swap defaults and its investment portfolio.

Attwood Corp., a Lowell, Mich. maker of boat parts, is shutting down its Swivl-Eze facility in Lancaster, Tx. this summer and laying off more than fifty workers. Attwood is owned by recreational-products maker Brunswick Corp. of Lake Forest, Il. 

CIT Group Inc., the embattled Manhattan, N.Y. lending firm, received a lifeline through a $3 billion financing deal with Goldman Sachs Group Inc. The money should give CIT fairly long-term flexibility in funding as it tries to buck up its finances. Trying to bolster its balance sheet, CIT recently raised $1.6 billion and paid down about $5 billion of its debt, among other moves.

Forest City Enterprises Inc., a Cleveland, real-estate development company, reported a first quarter net loss of $40 million, on an 88% plunge in sales–to $308 million.

Intel Corp. has been subpoenaed by the Federal Trade Commission along with Advanced Micro Devices Inc. regarding alleged anticompetitive behavior by Intel in the market for microprocessors. Antitrust authorities in several countries have already begun inquiries into Intel.

Jewish Hospital & St. Mary’s HeathCare Inc. in Louisville, Ky. was downgraded by Standard & Poor’s from stable” to “negative” regarding debt issued for the company by the Louisville-Jefferson County Metro government.

Microsoft Corp., Redmond, Wash., will shut down its Windows Live Expo classified-ad Web business at the end of next month. Microsoft had had hopes of making Windows Live Expo a rival to San Francisco, Ca.-based Craigslist.

Mrs. Fields Famous Brands LLC, the cookie maker, said that it may have to opt for a bankruptcy filing if it can’t get support for its debt-reduction plan from a sufficient number of senior noteholders. Mrs. Fields, which wants to reduce its debt by $145 million, reportedly reached an agreement with some noteholders that could result either in an out-of-court debt restructuring or a prepackaged Chapter 11 bankruptcy filing.

National City Corp.’s shares plunged recently on worries that the Cleveland, bank’s bad home loans are attracting the attention of federal regulators. A month ago National City arranged a capital infusion of $7 billion from equity investors as it tries to deal with pressures in the home-mortgage market.

NewPage Corp., a Miamisburg, Ohio paper manufacturer, will reduce coated-paper production, citing market conditions. NewPage, which last month closed an operation in Kimberly, Wi., will now also shut two machines at its Niagara mill. The reductions will result in the loss of 444 jobs.

NorthBay HealthCare, a hospital operator in California, is trimming its operations in a money-saving move. The firm will close down its inpatient pediatric program at its North Bay Medical Center in Fairfield, Calif. and also close its pediatric rehab program. The cuts, which will affect sixty-three employees, are aimed at saving $15 million.

Pacific Lumber will reportedly get approval from the U.S. Bankruptcy Court to be acquired by Marathon Asset Management, a hedge fund, and Mendocino Redwood Co.  The sale will take Pacific Lumber out of Chapter 11.

Perma-Fix Environmental Services Inc., Atlanta, divested another facility, selling its Perma-Fix Treatment Services Inc. unit to A Clean Environment Co. of Tulsa, Okla. in a $1.5 million cash deal. Earlier Perma-Fix sold facilities in Maryland and Ohio as part of a strategy to focus on its nuclear business. The company lost $9.2 million last year.

Tropicana Entertainment LLC, which is operating under bankruptcy protection in Delaware, announced that its CEO, William J. Young III, is stepping down after only two years on the job. He will, however, remain on the company’s board. Under Chapter 11, Tropicana is trying to restructure its $2.3 billion in debt.