/raid1/www/Hosts/bankrupt/TCR_Public/121210.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, December 10, 2012, Vol. 16, No. 343
Headlines
A123 SYSTEMS: Wanxiang Wins Auction With $256.6-Mil. Offer
A123 SYSTEMS: Johnson Controls Withdraws From Auction
ACADEMY LTD: Moody's Keeps B2 CFR; Rates New Holdco Notes Caa1
ACCURIDE CORP: New Generation Advisors Loses Appeal
ALLEGHENY COUNTY: Fitch Junks Rating on $2.3-Mil. Revenue Bonds
ALLIANT HOLDINGS: S&P Assigns 'B-' Counterparty Credit Rating
AMERICAN AIRLINES: USAir Sent All-Stock Offer; Pilots Okay New CBA
AMERICAN AIRLINES: Has Deal With Lambert-St. Louis Airport
ATLAS PIPELINE: Moody's Rates $175MM Senior Unsecured Notes 'B2'
ATLAS PIPELINE: S&P Affirms 'B+' Corporate Credit Rating
BALTIMORE CONVENTION: Moody's Holds 'Ba1' Rating on Rev. Bonds
BOMBARDIER RECREATIONAL: Moody's Rates $125MM Sec. Term Loan 'B1'
BROOKLYN NAVY: S&P Cuts Senior Secured Debt Rating to 'CCC'
CARDIUM THERAPEUTICS: Asked by NYSE MKT to Send Plan of Compliance
CCC ATLANTIC: Files for Chapter 11 in Delaware
CCC INFORMATION: S&P Lowers CCR to 'B' on Increased Leverage
CE GENERATION: Moody's Cuts Rating on Sr. Secured Bonds to 'Ba2'
CHARTER COMMUNICATIONS: Fitch Affirms 'BB-' IDR; Outlook Stable
CHILTON MEDICAL: Central Alabama Enters Into Deal to Sell Assets
COMMUNITY CHOICE: S&P Revises Outlook on 'B-' ICR to Negative
CONNACHER OIL: S&P Cuts CCR to 'B-' on Financial Risk Concerns
CORDOVA FUNDING: Moody's Affirms 'Ba3' Rating on Sr. Sec. Bonds
CRC CRYSTAL: Case Summary & 20 Largest Unsecured Creditors
CSD LLC: Has Interim Access to $321K DIP Financing From Neva Lane
CSD LLC: Wants to Auction Newton Museum on March 15
CYBERDEFENDER CORP: 1st Amended Liquidation Plan Confirmed
CYPRESS OF TAMPA: Has Interim OK to Use Cash Collateral
DESTINATION MATERNITY: S&P Withdraws 'B+' Corp. Credit Rating
DEX ONE: Revises Credit Agreements for SuperMedia Merger
DHC GROUP: A.M. Best Affirms 'B-' Financial Strength Rating
DHILLON PROPERTIES: Third Amended Plan of Reorganization Confirmed
DIAMONDBACK CAPITAL: Volume of Redemptions Prompts Wind-Down
DICKINSON THEATRES: Spirit Lease Dispute Stalls Plan Confirmation
ENERGY FUTURE: S&P Cuts CCR to 'SD' on Distressed Debt Exchange
FOCUS BRANDS: S&P Affirms 'B' Corp. Credit Rating on Dividend Plan
FREMONT GENERAL: Calif. Appeals Court Affirms Faigin Judgment
GRAMERCY INSURANCE: A.M. Best Cuts Finc'l. Strength Rating to 'D'
HANGER INC: Two Acquisitions No Impact on Moody's 'B1' CFR
HOMER CITY: Wins Approval of Prepack Plan
HOMER CITY: S&P Assigns 'B-' Corp. Credit Rating; Outlook Stable
INNOVARO INC: Receives Delisting Notification From NYSE MKT
INTERSTATE AUTO: A.M. Best Lowers Finc'l. Strength Rating to 'E'
J & J DEVELOPMENTS: Colliers International Approved as Realtor
J & J DEVELOPMENTS: Gets Interim OK for J.P. Weigand to Sell Asset
J.C. PENNEY: Fitch Lowers Issuer Default Rating to 'B'
JOHN HENRY HOLDINGS: S&P Raises Rating on $320-Mil. Debt to 'B+'
LON MORRIS COLLEGE: Auction Postponed to Jan. 14
MCMORAN EXPLORATION: S&P Puts 'B-' Corp. Credit Rating on Watch
MDC PARTNERS: S&P Rates $80-Mil. Add-On to Unsecured Notes 'B'
MEDAILLE COLLEGE: S&P Gives 'BB+' Rating on Series 2012 Rev Bonds
MEDIA HOLDCO: S&P Assigns Prelim. 'B+' Corp. Credit Rating
MEIS LLC: Assets Sold for $2MM to Mentor Network
METROPLAZA HOTEL: Files for Chapter 11 in New Jersey
METROPLAZA HOTEL: Inn at Woodbridge Proposes Greenbaum as Counsel
MGM RESORTS: Fitch Rates Proposed $1 Billion Senior Notes 'B/RR4'
MGM RESORTS: Moody's Affirms 'B2' CFR; Rates Unsecured Notes 'B3'
MGM RESORTS: S&P Hikes Corp. Credit Rating to 'B+'; Outlook Stable
MODERN PRECAST: Files Chapter 11 Petition in Reading, Pa.
MODERN PRECAST: Proposes to Sell Assets to Oldcastle
MODERN PRECAST: Seeks to Obtain $1.2-Mil. of DIP Financing
MSJ LAS CROABAS: FDIC Wins SARE Declaration
NEW ACADEMY FINANCE: S&P Gives 'B' CCR; $400MM Notes Get 'CCC+'
NEXTAG INC: S&P Lowers CCR to ' B+' on Weaker Performance
OPEN SOLUTIONS: S&P Cuts CCR to 'CCC+' on Operating Weakness
OTTER TAIL: Moody's Hikes Senior Unsecured Rating From 'Ba1'
PPL CORP: Fitch Affirms 'BB+' Rating on Junior Subordinated Notes
PVH CORP: Moody's Assigns 'Ba3' Rating to Senior Unsecured Notes
PVH CORP: S&P Rates $500-Mil. Senior Unsecured Notes Due 2022 'BB'
QUVIS INC: SeaCoast Favored in Equitable Subordination Suit
RESOLUTE ENERGY: Moody's Rates $150-Mil. Sr. Unsecured Notes 'B3'
RESOLUTE ENERGY: S&P Holds 'B' Corp. Credit Rating on Permian Deal
REX ENERGY: Moody's Assigns 'B2' CFR; Rates $250MM Sr. Notes 'B3'
REX ENERGY: S&P Gives 'B' Corporate Credit Rating; Outlook Stable
REX VENTURE: Kenneth Bell Reappointed as Receiver
SABANA DEL PALMAR: FDIC Wins SARE Declaration
SABRE HOLDINGS: S&P Revises Outlook on 'B' CCR to Stable
SCHREPFER INDUSTRIES: Case Summary & 20 Largest Unsec Creditors
SOUTHERN AIR: Taps PricewaterhouseCoopers as Tax Consultant
SOUTHERN AIR: U.S. Trustee Forms Three-Member Creditors Committee
STARWOOD HOTELS: Moody's Assigns '(P)Ba1' Preferred Stock Rating
SUNGARD DATA: S&P Affirms 'B+' Corp. Credit Rating; Outlook Stable
SYNAGRO TECHNOLOGIES: Obtains Waiver Under Credit Agreement
TOPS HOLDING: Moody's Affirms 'B3' CFR; Rates New Sr. Notes 'B3'
TOPS HOLDING: S&P Revises Outlook on 'B+' CCR on Increased Debt
TRANSWITCH CORP: Not Meeting Nasdaq Minimum Bid Price Rules
VALENCE TECHNOLOGY: Amends List of 20 Largest Unsecured Creditors
VALENCE TECHNOLOGY: Files Schedules of Assets and Liabilities
VALENCE TECHNOLOGY: Has Until Jan. 8 to Propose Chapter 11 Plan
VERTIS HOLDINGS: Bankr. Court OKs Sale to Quad/Graphics
VERTIS HOLDINGS: Schedules of Assets and Liabilities Filed
WENNER MEDIA: S&P Assigns 'B' Corp. Credit Rating on Refinancing
WP CPP HOLDINGS: S&P Gives 'B' Corp. Credit Rating; Outlook Stable
* Moody's Says EU Crisis Poses Risk for US Packaging Sector
* 7th Circuit Appoints Halfenger as E.D. Wis. Bankruptcy Judge
* BOND PRICING -- For Week From Dec. 3 to 7, 2012
*********
A123 SYSTEMS: Wanxiang Wins Auction With $256.6-Mil. Offer
----------------------------------------------------------
A123 Systems, Inc. has reached agreement on the terms of an asset
purchase agreement with Wanxiang America Corporation through which
Wanxiang would acquire substantially all of A123's assets for
$256.6 million. The agreement was reached following an auction
conducted under the supervision of the United States Bankruptcy
Court for the District of Delaware. A hearing at which A123 and
Wanxiang will seek the required Court approval of the sale is
scheduled for Tuesday, Dec. 11, 2012.
According to the terms of the asset purchase agreement, Wanxiang
would acquire A123's automotive, grid and commercial business
assets, including all technology, products, customer contracts and
U.S. facilities in Michigan, Massachusetts and Missouri; its
cathode powder manufacturing operations in China; and its equity
interest in Shanghai Advanced Traction Battery Systems Co., A123's
joint venture with Shanghai Automotive. Excluded from the asset
purchase agreement with Wanxiang is A123's Ann Arbor, Mich.-based
government business, including all U.S. military contracts, which
would be acquired for $2.25 million by Navitas Systems, a
Woodridge, Ill.-based provider of energy-enabled system solutions
and energy storage products for commercial, industrial and
government agency customers.
"As we had hoped, the auction process for A123's assets was robust
and competitive. We are pleased with the result of the auction
and believe that the selected bids from Wanxiang and Navitas
maximize the value of A123's assets for the benefit of our
stakeholders. We expect that the sale will be approved by the
Court, at which time we plan to execute the separate asset
purchase agreements with Wanxiang and Navitas," said Dave Vieau,
Chief Executive Officer of A123. "We think we have structured
this transaction to address potential national security concerns
expressed during the review of our previous investment agreement
with Wanxiang announced in August as well as to address concerns
raised by the Department of Energy. We believe this transaction
balances those risks with A123's obligation to act in the best
interest of our creditors."
Based in Chicago, Wanxiang America has been in the automotive and
industrial markets in the U.S. since 1994 and currently has more
than 3,000 employees in the U.S. It is a subsidiary of Wanxiang
Group, China's largest automotive components manufacturer and one
of China's largest non-state-owned companies, and Wanxiang also
continues to expand its interest in clean technology, and A123 is
Wanxiang's fifth clean energy investment in the U.S. in 2012.
"We believe that A123's industry-leading technology for vehicle
electrification, grid energy storage and other industries
complements Wanxiang's strong R&D and manufacturing capabilities,
so we think adding A123 to our portfolio of businesses strongly
aligns with our strategy of investing in the automotive and
cleantech industries in the U.S.," said Pin Ni, president of
Wanxiang America. "We plan to build on the engineering and
manufacturing capabilities that A123 has established in the U.S.
and we are committed to making the long-term investments necessary
for A123 to be successful."
The completion of the sale to Wanxiang is subject to certain
closing conditions, including approval from the Court as well as
from the Committee for Foreign Investment in the U.S. (CIFIUS).
Because the total purchase price for A123's assets would be less
than the total amount owed to creditors, the Company does not
anticipate any recoveries for its current shareholders and
believes its stock to have no value.
* * *
Patrick Fitzgerald, writing for Dow Jones Newswires, reports that
Chinese-owned auto-parts manufacturer Wanxiang America Corp. won
the bidding for A123 Systems Inc. at a bankruptcy auction that
ended early Saturday morning.
Wanxiang's winning bid of $256.6 million topped a combined offer
from Milwaukee-based auto-parts manufacturer Johnson Controls Inc.
and electronics maker NEC Corp. of Japan, the company said.
Wanxiang, a unit of China's Wanxiang Group, is buying most of
A123, including its automotive-battery business and consumer arm
and grid-energy storage division. The sale will not include
A123's government business, which was bought for $2.25 million by
Navitas Systems, a Chicago area company spun off from Sun
MicroSystems.
Wanxiang initially offered about $131 million for A123's assets,
according to a person familiar with the proposal, Dow Jones notes.
The report says German conglomerate Siemens AG also submitted a
qualified bid at the auction, which kicked off Thursday at the
Chicago office of Latham & Watkins, the law firm representing A123
in its Chapter 11 case.
The Bankruptcy Court in Wilmington, Delaware, will convene a
hearing Dec. 11 to consider approval of the sale.
In addition to bankruptcy court approval, any sale to Wanxiang
requires approval from the Committee on Foreign Investment in the
United States, a government body led by Treasury Secretary Timothy
Geithner that reviews deals that could result in the control of a
U.S. business by a foreign person or company.
Earlier this year, Wanxiang and A123 had a $465 million buyout
deal, which later collapsed.
Dow Jones said Johnson Controls declined to comment on whether it
would still be interested in A123 if a sale to Wanxiang isn't
approved. Johnson Controls had initially offered $125 million for
A123's assets.
Dow Jones notes in recent weeks a number of critics have warned of
the risk that some of A123's taxpayer-funded technology could wind
up in the hands of a Chinese purchaser. The report also says at
least two dozen members of Congress have written to CFIUS warning
that a sale to Wanxiang requires careful scrutiny. A123 has a
number of contracts to provide high-power batteries and other
services to the U.S. military.
Dow Jones notes Wanxiang has tried to stem the criticism that
helped derail its earlier deal to buy A123 Systems. In addition
to carving out A123's government business from its purchase,
Wanxiang has said it intends to keep A123's Michigan operations in
business.
According to Dow Jones, although the final purchase price for A123
Systems more than doubles Johnson Controls initial bid, it won't
be enough to pay off the battery maker's lenders. That means
A123's shareholders will be wiped out, the report adds.
About A123 Systems
Based in Waltham, Massachusetts, A123 Systems Inc. designs,
develops, manufactures and sells advanced rechargeable lithium-ion
batteries and battery systems and provides research and
development services to government agencies and commercial
customers.
A123 is the recipient of a $249 million federal grant from the
Obama administration. Pre-bankruptcy, A123 had an agreement to
sell an 80% stake to Chinese auto-parts maker Wanxiang Group Corp.
U.S. lawmakers opposed the deal over concerns on the transfer of
American taxpayer dollars and technology to China.
A123 didn't make a $2.7 million payment due Oct. 15 on $143.75
million in 3.75% convertible subordinated notes due 2016.
A123 and U.S. affiliates, A123 Securities Corporation and Grid
Storage Holdings LLC, sought Chapter 11 bankruptcy protection
(Bankr. D. Del. Case Nos. 12-12859 to 12-12861) on Oct. 16, 2012,
with a deal to sell its auto-business assets to Johnson Controls
Inc. The deal with JCI is valued at $125 million, and subject to
higher offers at a bankruptcy auction.
A123 disclosed assets of $459.8 million and liabilities totaling
$376 million. Debt includes $143.8 million on 3.75% convertible
subordinated notes. Other liabilities include $22.5 million on a
bridge loan owing to Wanziang. About $33 million is owed to trade
suppliers.
The Hon. Kevin J. Carey presides over the case. Lawyers at
Richards, Layton & Finger, P.A., and Latham & Watkins LLP serve as
the Debtors' counsel. Lazard Freres & Co. LLC acts as the
Debtors' financial advisors, while Alvarez & Marsal serves as
restructuring advisors. Logan & Company Inc. serves as the
Debtors' claims and noticing agent. Wanxiang America Corporation
and Wanxiang Clean Energy USA Corp. are represented in the case by
lawyers at Young Conaway Stargatt & Taylor, LLP, and Sidley Austin
LLP. JCI is represented in the case by Josh Feltman, Esq., at
Wachtell Lipton Rosen & Katz LLP.
An official committee of unsecured creditors has been appointed in
the case. The Committee is represented by lawyers at Brown
Rudnick LLP and Saul Ewing LLP.
]
A123 SYSTEMS: Johnson Controls Withdraws From Auction
-----------------------------------------------------
Johnson Controls officially withdrew from the bankruptcy auction
to acquire portions of A123 Systems when it declined to match a
higher bid submitted by Wanxiang. Subsequently A123
representatives have announced they selected Wanxiang's bid of
$257 million as the best offer for the total company over a set of
competing complementary bids by Johnson Controls for the
automotive and government assets and NEC for the grid and
commercial assets.
The final sale is subject to approval by the bankruptcy court. A
hearing is currently scheduled for Dec. 11, 2012. Sale to
Wanxiang is also subject to review by the Committee for Foreign
Investment in the United States (CFIUS) and requires approval by
the U.S. government. Timing for such review and approvals is
unknown at this time.
"While A123's automotive and government assets were complementary
to Johnson Controls' portfolio and aligned with our long-term
goals, Wanxiang's offer was beyond the value of those assets to
Johnson Controls," said Alex Molinaroli, president, Johnson
Controls Power Solutions. "Reports by other parties that our
proposal involved an elimination of jobs in Michigan are
inaccurate."
Johnson Controls was the first in the world to produce Li-ion
batteries for mass-production vehicles, and also launched the
first U.S. facility to produce complete Li-ion battery cells and
packs for hybrid and electric vehicles, in Holland, Mich. The
company was recently named as one of the industry leaders in the
Joint Center for Energy Storage Research $120 million energy
research hub led by Argonne National Lab and funded by the U.S.
Department of Energy (DOE). In 2009, Johnson Controls was awarded
a $299 million matching grant by the DOE under the American
Recovery and Reinvestment Act (ARRA) to build domestic
manufacturing capacity for advanced batteries for hybrid and
electric vehicles.
"Johnson Controls remains committed to the advanced battery
industry and shares the Department of Energy's goal to advance the
domestic capability in the United States," said Molinaroli.
About Johnson Controls Johnson Controls is a global diversified
technology and industrial leader serving customers in more than
150 countries.
About A123 Systems
Based in Waltham, Massachusetts, A123 Systems Inc. designs,
develops, manufactures and sells advanced rechargeable lithium-ion
batteries and battery systems and provides research and
development services to government agencies and commercial
customers.
A123 is the recipient of a $249 million federal grant from the
Obama administration. Pre-bankruptcy, A123 had an agreement to
sell an 80% stake to Chinese auto-parts maker Wanxiang Group Corp.
U.S. lawmakers opposed the deal over concerns on the transfer of
American taxpayer dollars and technology to China.
A123 didn't make a $2.7 million payment due Oct. 15 on $143.75
million in 3.75% convertible subordinated notes due 2016.
A123 and U.S. affiliates, A123 Securities Corporation and Grid
Storage Holdings LLC, sought Chapter 11 bankruptcy protection
(Bankr. D. Del. Case Nos. 12-12859 to 12-12861) on Oct. 16, 2012,
with a deal to sell its auto-business assets to Johnson Controls
Inc. The deal with JCI is valued at $125 million, and subject to
higher offers at a bankruptcy auction.
A123 disclosed assets of $459.8 million and liabilities totaling
$376 million. Debt includes $143.8 million on 3.75% convertible
subordinated notes. Other liabilities include $22.5 million on a
bridge loan owing to Wanziang. About $33 million is owed to trade
suppliers.
The Hon. Kevin J. Carey presides over the case. Lawyers at
Richards, Layton & Finger, P.A., and Latham & Watkins LLP serve as
the Debtors' counsel. Lazard Freres & Co. LLC acts as the
Debtors' financial advisors, while Alvarez & Marsal serves as
restructuring advisors. Logan & Company Inc. serves as the
Debtors' claims and noticing agent. Wanxiang America Corporation
and Wanxiang Clean Energy USA Corp. are represented in the case by
lawyers at Young Conaway Stargatt & Taylor, LLP, and Sidley Austin
LLP. JCI is represented in the case by Josh Feltman, Esq., at
Wachtell Lipton Rosen & Katz LLP.
An official committee of unsecured creditors has been appointed in
the case. The Committee is represented by lawyers at Brown
Rudnick LLP and Saul Ewing LLP.
ACADEMY LTD: Moody's Keeps B2 CFR; Rates New Holdco Notes Caa1
--------------------------------------------------------------
Moody's Investors Service affirmed Academy, Ltd.'s B2 Corporate
Family Rating and assigned a Caa1 rating to the proposed $400
million Senior Notes due 2018 ("Proposed Notes") to be issued by
Academy's newly-formed indirect parent company, New Academy
Finance Company LLC. The rating outlook is stable.
Proceeds from the Proposed Notes will be used to fund a
distribution to shareholders and pay related fees and expenses.
The Proposed Notes will be senior, unsecured obligations of New
Academy HoldCo, and will not be guaranteed by any entity in the
corporate group. New Academy HoldCo is required to pay interest
entirely in cash so long as there is restricted payment capacity
for upstream dividends at the Academy level under the agreements
governing Academy's existing senior secured credit facilities and
existing senior unsecured notes.
The rating is subject to review of final documentation. Upon
completion of the transaction, Academy's Corporate Family and
Probability of Default ratings will be withdrawn and assigned to
New Academy HoldCo.
Moody's took the following rating actions for New Academy HoldCo:
-- Senior unsecured notes due 2018 assigned Caa1 (LGD 6, 93%)
Moody's took the following rating actions for Academy, Ltd.:
-- Corporate Family Rating affirmed at B2;
-- Probability of Default Rating affirmed at B2;
-- Senior secured term loan due 2018 affirmed at B2 (LGD3, 49%);
-- Senior unsecured notes due 2019 affirmed at Caa1 (LGD5, 86%).
Should the transaction close as proposed, the rating on Academy's
existing secured term loan due 2018 will likely be upgraded to B1
and the rating on Academy's existing unsecured notes due 2019 will
likely be upgraded to B3. Consistent with Moody's Loss Given
Default Methodology, the upgrades would reflect the increase in
debt cushion in the capital structure as a result of the proposed
issuance of structurally subordinated New Academy HoldCo debt.
RATINGS RATIONALE
While the increase in debt and leverage is a credit negative, the
affirmation of Academy's B2 corporate family rating reflects
Moody's expectation for leverage reduction over the next twelve
months through continued revenue and earnings growth, led by
positive same-store sales, new store openings and continued cost
savings initiatives.
Academy's B2 Corporate Family Rating is constrained by the high
debt and leverage that stem from the August 2011 acquisition by an
affiliate of Kohlberg Kravis Roberts & Co L.P. ("KKR"), as well as
the current proposed dividend. Pro forma for the transaction,
lease-adjusted debt/EBITDA will likely rise to about 6.25 times
for the latest twelve month period ended October 27, 2012, up from
about 5.2 times. The rating also reflects Academy's limited
geographic presence, small scale relative to other global
retailers, and the potential challenges inherent in its planned
ramp-up of new store growth over the intermediate-term.
The rating favorably reflects the strength of the company's
"Academy Sports + Outdoor" brand, its good market position in the
region where it operates, and its demonstrated ability to maintain
profitable growth despite difficult economic conditions over the
past several years. Academy's liquidity is expected to remain very
good, supported by the expectation that its sizeable cash balance,
positive free cash flow and excess revolver availability will be
more than sufficient to fund working capital, capital spending,
and debt amortization over the next twelve months.
The stable outlook reflects Moody's expectation that the company
will continue to demonstrate profitable growth while maintaining
solid liquidity and reducing leverage in the next twelve months.
Academy's ratings could be downgraded if operating performance
were to materially decline, or if financial policies were to
become more aggressive, leading to sustained deterioration in
credit metrics or weaker liquidity. Debt/EBITDA above 6.5 times or
interest coverage falling below 1.25 times on a sustained basis
could drive a downward rating action.
Sustained growth in revenue and earnings while maintaining good
liquidity could lead to a ratings upgrade. The company would also
need to demonstrate the willingness to sustain a conservative
financial policy, including the use of free cash flow for debt
reduction. Specifically, an upgrade would require debt/EBITDA to
be sustained below 5.5 times and EBITA/interest over 1.5 times.
The principal methodology used in rating Academy, Ltd. 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.
Academy, Ltd., based in Katy, Texas, is a leading sports, outdoor
and lifestyle retailer with a broad assortment of hunting, fishing
and camping equipment and gear along with sports and leisure
products, footwear, and apparel. The company operates 150 stores
under the Academy Sports + Outdoor name in Texas and the
southeastern United States. Revenue for the twelve months ended
October 27, 2012 exceeded $3.4 billion. Academy was acquired by an
affiliate of Kohlberg Kravis Roberts & Co L.P. ("KKR") in August
2011.
ACCURIDE CORP: New Generation Advisors Loses Appeal
---------------------------------------------------
Delaware District Judge Leonard P. Stark ruled that New Generation
Advisors, LLC, is not entitled to additional distribution of new
notes under Accuride Corporation's confirmed Chapter 11 plan.
Judge Stark affirmed a bankruptcy court order denying NGA's Motion
to Enforce the Third Amended Joint Plan of Reorganization.
On Dec., 2009, a few months after their bankruptcy filings, the
Debtors filed their Third Amended Joint Plan of Reorganization
(the "Plan"). (See D.I. 1, Opinion, at 2; Bankr. D.I. 448) On
February 18, 2010, the Bankruptcy Court confirmed the Plan, which
became effective on February 26, 2010. (See D.I. 1, Opinion, at 2;
Bankr. D.I. 856)
The Plan provides for a certain rights offering that entitled a
number of holders of subordinated notes issued by Accuride pre-
bankruptcy to subscribe to rights offering notes up to their
allowed claim amount. NGA received new notes on account of the
$5 million in subordinated notes, but was denied distribution on
account of another $2.5 million in sub notes amid a disagreement
as to whether NGA duly exercised its subscription rights regarding
the $2.5 million of notes.
The Debtor objected to NGA's Motion, asserting that NGA purchased
and received rights offering notes in the exact amounts it had
sought and confirmed three separate times. The Debtor further
asserted it enjoyed immunity from liability under the Plan.
The District Court held that the Bankruptcy Court did not err with
respect to its findings of fact or legal determinations.
The case before the District Court is, NEW GENERATION ADVISORS,
LLC, Appellants, v. ACCURIDE CORPORATION, et al.,1 Appellees, Case
No. 09-13449 (D. Del.). A copy of Judge Stark's Nov. 30, 2012
Memorandum Order is available at http://is.gd/KZsJWZfrom
Leagle.com.
About Accuride Corp.
Evansville, Indiana-based Accuride Corporation --
http://www.accuridecorp.com/-- manufactures and supplies
commercial vehicle components in North America. Accuride's
products include commercial vehicle wheels, wheel-end components
and assemblies, truck body and chassis parts, seating assemblies
and other commercial vehicle components. Accuride's products are
marketed under its brand names, which include Accuride, Gunite,
Imperial, Bostrom, Fabco, Brillion, and Highway Original.
The Company and its affiliates filed for Chapter 11 protection
(Bankr. D. Del. Lead Case No. 09-13449) on Oct. 8, 2009. Latham &
Watkins LLP and Young Conaway Stargatt & Taylor LLP served as
bankruptcy counsel. The Garden City Group Inc. served as claims
agent. The Official Committee of Unsecured Creditors tapped
attorneys at Reed Smith LLP and Irell & Manella LLP as counsel.
The Debtors disclosed $682,263,000 in total assets and
$847,020,000 in total liabilities as of Aug. 31, 2009.
The Bankruptcy Court confirmed the Debtor's reorganization plan in
February 2010. Accuride emerged from bankruptcy on Feb. 26, 2010.
ALLEGHENY COUNTY: Fitch Junks Rating on $2.3-Mil. Revenue Bonds
---------------------------------------------------------------
Fitch Ratings takes the following rating action on Allegheny
County Redevelopment Authority, PA's (the authority) tax increment
revenue bonds:
-- $7.3 million outstanding tax increment financing district
revenue bonds (Robinson Mall project), series 2000A, rated
'BB+', placed on Rating Watch Negative;
-- $2.3 million outstanding tax increment financing district
revenue bonds (Robinson Mall project), series 2000B, rated
'CCC', placed on Rating Watch Negative.
SECURITY
The 2000A bonds are secured by the tax increment revenue derived
from the mall properties, excluding the two parcels owned by Sears
and J.C. Penney. As additional security, the mall owner has
entered into a minimum payment agreement (MPA) pursuant to which
it has agreed to make annual payments to the trustee in amounts
needed to correct any debt service deficiency. The 2000A bonds
are additionally secured by a standard cash-funded debt service
reserve fund.
The 2000B bonds are secured by tax increment revenue generated on
the Sears and J.C. Penney properties and a junior lien on tax
increment revenue from the mall properties. Additionally, Sears
and J.C. Penney have each entered into a MPA securing their
respective pro rata share of debt service on the 2000B bonds in
the event that pledged tax increment revenue is insufficient. The
annual payments are capped at $233,475 for Sears and $235,920 for
J.C. Penney, which would cover about one-half a year's debt
service payments.
KEY RATING DRIVERS
REASSESSMENT THREATENS INCREMENTAL REVENUE: The Rating Watch
primarily considers a countywide property reassessment that is
scheduled to take effect in calendar 2013 and which appears likely
to increase valuations significantly and lower tax rates
commensurately. Sizable tax rate drops by the county, Robinson
Township (the township), and Montour School District (the school
district) would result in pledged revenue declines to levels well
below sum-sufficient debt service coverage.
AGREEMENTS IN FLUX: An agreement among the authority and the
taxing entities indicates a commitment to insuring that sufficient
pledged revenue will be available to fund debt service payments.
Absent a clear indication of how this will be implemented in light
of the reassessment, Fitch believes debt service payments could
remain at risk. Management has also indicated that the MPAs may be
amended but no detail is available.
DOWNWARD ASSESSMENT OF MALL VALUES: Uncertainty remains related to
the 2010 downward reassessment of mall property values by the
county due to appeals.
CHANGE IN SEARS IDR: The 'CCC' rating on the series 2000B bonds is
based on the current Issuer Default Rating (IDR) and Outlook for
Sears. If capped required payments under the minimum payment
agreements for Sears and J.C. Penney's were to be insufficient to
fully compensate for a shortfall in TIF revenue, the rating would
no longer be tied to either company's IDR.
HIGH TAXPAYER CONCENTRATION: Pledged tax increment revenues are
generated from a relatively small but fully developed project area
dominated by retail tenants highly exposed to general economic
conditions and consumer spending patterns.
AVAILABLE BALANCES SUPPORT DEBT: The indenture creates a closed
flow of funds; surplus tax increment revenues remain in reserve to
support series A debt service shortfalls. A fully cash-funded
debt service reserve for series A bonds is also available.
SOLID SOCIOECONOMIC INDICATORS: The economic characteristics of
the immediate retail service area are solid.
WHAT COULD TRIGGER A RATING ACTION
REDUCED PLEDGED REVENUE FOR SERIES A: If the countywide
reassessment results in significant tax rate declines with no
offsetting action to strengthen pledged revenue, coverage on
series A bonds would likely drop to a level no longer consistent
with the current rating.
MINIMUM PAYMENT SHORTFALL FOR SERIES B: If the minimum payment
required under the minimum payment agreements related to the
series B bonds are insufficient to offset a shortfall in TIF
revenue, the rating on those bonds would drop.
DECLINE IN MALL VALUE: Even if bondholders are protected from tax
rate reductions, Fitch will consider negative rating action for
series A bonds if the final outcome of the county's reassessment
of the mall value and potential tax rebates results in
insufficient tax increment revenues to service debt.
CHANGE IN IDR OF SEARS OR JC PENNEY: A rating on either company
below Sears' current 'CCC', Rating Outlook Negative, would likely
result in a downgrade of the series A bonds.
CREDIT PROFILE
The Mall at Robinson opened in fall 2001 in Robinson Township,
along a corridor connecting the Pittsburgh International Airport
and the downtown business district. The mall has direct
interstate access, which helps attract shoppers from a wider trade
area than the immediate region.
WEAK HISTORICAL COVERAGE BUT SOLID RESERVES
Pledged tax increment revenues received in 2011, the most recent
year reported, provided maximum annual debt service coverage of
0.99x (debt service is essentially level) on the 2000A bonds. The
drop in coverage from 1.08x in 2010 reflects taxpayer payment on
the reduced property value of $93.5 million following an appeal
that lowered the value from $104.7 million.
The reduction has been appealed by the township and school
district. If the assessed value is finalized at $93.5 million
there is the potential that the property owner will be owed
$265,976 in excess 2010 taxes (compared to $1.5 million paid in
2011). It is unclear whether or on what schedule the authority
would be obligated to refund the taxing jurisdictions.
Somewhat offsetting concerns about low coverage levels are the
sizable reserves available to repay series A bonds. In addition
to a cash-funded debt service reserve required to be maintained at
$1.35 million, the current balance in the series A TIF account is
$1.2 million. Together these balances represent 1.7x debt service.
COUNTYWIDE REASSESSMENT A THREAT TO PLEDGED REVENUE
The county appears to be nearing the end of a reassessment process
that, according to publicly-available information from the county,
will result in a 35% increase in countywide assessed value. The
township and school district can each expect a 28% jump. Given
the state of Pennsylvania's Act 146 of 1998 (the 'anti-windfall
law'), the county, township, and school district tax rates will
likely have to reduce tax rates accordingly.
The cooperation agreement among the authority, county, township,
and school district requires the tax rate applied to the mall's
value to be the lower of the original (2001) rate or the current
rate. Therefore a significant decline in tax rates would likely
result in a similar reduction in TIF revenue.
However, the cooperation agreement also indicates a commitment by
the parties to insure that sufficient TIF revenue is available for
debt service following a reassessment or change in assessment
system. It is unclear whether and how the parties will implement
this aspect of the agreement. Once the impact of the reassessment
on pledged revenue is resolved, Fitch expects to be able to
address the Rating Watch.
HIGH TAXPAYER CONCENTRATION; MPAS PROVIDE LIMITED VALUE
Robinson Mall-JCP Associates is responsible for three-quarters of
the tax increment revenues. These rely primarily upon lease
rental payments from the mall tenants to make tax payments that
constitute pledged revenue for the series A bonds (net of taxes on
the minimal base year value). The mall owner's MPA provides no
enhancement to Fitch's rating because Fitch does not rate the mall
owner, the payment is only up to 15% of debt service, and the MPA
was violated when the mall owner appealed its assessment.
Series B bonds are dependent entirely on tax payments from the
Sears and J.C. Penney properties and contributions under each
company's MPA. Both companies have been called upon to make
payments under their MPAs, as tax increment revenue is often
insufficient for debt service. For example, in 2011 combined tax
increment from both companies provided coverage of just 0.54x on
series B bonds.
Sears made payments under the MPA for 2007-2010 on a delayed basis
and is now late in its 2011 payment on $32,320 (compared to a
payment for that year under the MPA of $233,475). J.C. Penney has
been making payments which it believes comply with its MPA, but
the authority believes the company owes an accumulated $14,669
(compared to a minimum annual payment under the agreement of
$235,920). Payments from the companies, along with available
balances generated in earlier years and excess series A TIF
revenue, have so far been sufficient to pay debt service but may
not in the future.
CROSS DEFAULT RISK
Under the indenture, in the event of a default on either series
the trustee or 25% of bondholders may declare all bonds to be due
and payable immediately. Fitch does not believe an acceleration
is probable as sufficient funds to redeem bonds is not likely to
be immediately available. If Fitch had an indication that this
acceleration option was to be invoked, the other series would be
downgraded.
REGIONAL MALL WITH SOUND SERVICE AREA CHARACTERISTICS
Allegheny County, Montour School District, and the Township of
Robinson adopted a tax increment financing plan to provide funding
through the issuance of tax increment bonds for the construction
of roadways, utility and infrastructure improvements benefiting
the mall. The county has had stable to slightly declining
population, generally above-average income and educational
attainment, and below-average unemployment relative to the state
and nation.
The mall's anchor tenants are Macy's (which is not included in the
TIF), J.C. Penney, Sears and Dick's Sporting (whose taxes only to
the county are included in the TIF). The mall also houses
approximately 120 'in-line' retailers and eateries under long-term
triple-net leases that generally extend from five to 10 years.
The authority reports there are no additional capital needs at the
mall that would require immediate debt financing.
ALLIANT HOLDINGS: S&P Assigns 'B-' Counterparty Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' long-term
counterparty credit rating to Alliant Holdings I LLC (Alliant LLC)
following the announced leveraged buyout of the company by
private-equity firm Kohlberg Kravis Roberts (KKR; all debt related
to the transaction is to be issued by Alliant LLC. Alliant Inc. is
the current issuer of existing debt) The outlook is stable.
"At the same time, we revised our outlook on Alliant Holdings I
Inc. (Alliant Inc.) to stable from positive, reflecting the higher
prospective debt level following the restructuring. We expect to
withdraw all ratings on Alliant Inc. following the close of the
transaction," S&P said.
"We also assigned our preliminary 'B-' debt and '3' recovery
ratings to Alliant LLC's proposed senior secured facilities
consisting of a $705 million term loan B due 2019 and $100 million
revolving credit facility (undrawn at closing) due 2017,
indicating our expectation for meaningful (50%-70%) recovery of
principal in the event of a default. We also assigned our
preliminary 'CCC' debt and '6' recovery ratings to the company's
proposed $450 million senior unsecured notes due 2020, indicating
our expectation for negligible (0%-10%) recovery of principal in
the event of a default," S&P said.
"The rating actions are in response to our belief that the
company's credit metrics will deteriorate following the proposed
recapitalization," said Standard & Poor's credit analyst Ying
Chan. "The new capital structure will result in a higher debt
level of $1.155 billion ($705 million term loan B and $450 million
unsecured notes) immediately following the transaction, compared
with $823 million ($558 million term loan and $265 unsecured note)
as of Sept. 30, 2012. As a result of the increased debt load, the
company's debt-to-adjusted EBITDA ratio will weaken to 7.7x for
pro-forma 2012 from 5.4x as of Sept. 30, 2012, and falls below our
expectation for the company to maintain financial leverage at 6.5x
or less. Similarly, EBITDA fixed-charge coverage weakens to 2.0x
for pro-forma 2012 from 2.3x for the 12 months ended Sept. 30,
2012. The stable outlook reflects our view that the company will
be able to de-lever at a measured pace during the next few years
because of strong revenue and earnings growth," S&P said.
"Although the proposed recapitalization will lead to a weaker
financial profile, we believe the company's overall credit
characteristics are commensurate with the current rating level.
This view is supported by strong and peer-leading organic revenue
growth of about 4.7% (excluding revenues associated with
construction business generated by a team of brokers hired from
Aon in June 2011) and very strong EBITDA margins of 32% for the
first nine months of 2012. These were primarily driven by
Alliant's specialty niche focus and strategy of hiring and
retaining key producers. In addition, the company produced
positive operating cash flows of $72 million during this period
and has consistently produced positive operating cash flow every
fiscal year since its acquisition by current owner, The Blackstone
Group, in 2007," S&P said.
"Our rating on Alliant LLC is based on the company's limited
financial flexibility arising from a highly leveraged capital
structure, weak EBITDA fixed-charge coverage metrics, revenues and
earnings volatility in certain programs, and a low-quality balance
sheet with negative tangible net worth. Somewhat offsetting these
weaknesses is an experienced management team that focuses on
maintaining Alliant LLC's enhanced competitive position through
strategic acquisitions, the hiring of seasoned producers, and
strong organic revenue growth. In addition to its diversified
revenue base and niche expertise in specialty programs, Alliant
LLC differentiates itself through very strong EBITDA margins and
good liquidity as demonstrated by its history of positive
operating cash flows,"S&P said.
"The outlook is stable. Despite difficult market conditions and
low property/casualty insurance rates, we expect Alliant LLC to
maintain its favorable revenues and earnings growth by attracting
experienced producers, successfully integrating its recent and
potential strategic acquisitions, and showing strong base
performance as measured by peer-leading organic revenue from its
diverse revenue streams and specialty niche focus. We expect the
company to sustain its track record of very strong EBITDA margins
of about 30% and strong and positive operating cash flows for
full-year 2013. In addition, we expect a debt-to-adjusted EBITDA
ratio of about 7.0x or lower and EBITDA fixed-charge coverage of
about 2.0x for full-year 2013, and for these metrics to improve,"
S&P said.
"We could take positive rating actions on the company within the
next 12 months if Alliant LLC maintains its favorable revenues and
earnings performance and is able to reduce its debt-to-adjusted
EBITDA ratio to 6.5x or less on a sustained basis. Alternatively,
we could take negative rating actions on the company if Alliant
LLC does not meet our expectations or if management increases
financial risk tolerance to a level that is no longer in line with
the current rating level," S&P said.
AMERICAN AIRLINES: USAir Sent All-Stock Offer; Pilots Okay New CBA
------------------------------------------------------------------
Mike Spector and Jack Nicas, writing for The Wall Street Journal,
report that people close to the discussions said US Airways Group
Inc. sent a merger proposal in mid-November to AMR Corp. and its
creditors, suggesting an all-stock deal that would give American's
creditors 70% of the new airline and US Airways shareholders 30%.
That implies the combined company could be valued at up to $8.3
billion. The proposal suggested that US Airways Chief Executive
Doug Parker run the combined company.
The sources told WSJ that US Airways' merger proposal didn't
specify values for either airline. But a marriage of the two
could create an airline big enough to rival the world's two
largest carriers by traffic, United Continental Holdings Inc. and
Delta Air Lines Inc., which have market capitalizations of $6.8
billion and $8.6 billion, respectively.
Tempe, Ariz.-based US Airways' market capitalization is around
$2.1 billion, but it values itself around $2.5 billion, taking
into account shares that would be issued from convertible
securities, according to people familiar with its thinking, the
report notes. Based on the larger number, its proposed 70-30
ownership split implies a valuation for American of roughly $5.8
billion.
AMR's Mr. Horton told creditors during a meeting in mid-November
that they deserve more than 70% of a combined airline. WSJ
relates that, according to people familiar with the discussions,
some creditors who agree suggest privately they should get closer
to 80%.
Pilots Approve New Deal
WSJ also reports that American's pilots on Friday approved a new
contract that moves it closer to exiting bankruptcy. More than
7,400 American pilots voted 74% to 26% to accept their first new
contract since 2003, paving the way for AMR and its creditors to
decide between two options for the company:
-- Exit from bankruptcy as an independent airline; or
-- Merge with US Airways to form one of the world's largest
carriers by traffic.
The pilots' new six-year contract gives them an immediate raise of
4%, four annual 2% raises and an adjustment to the industry
standard in its third year. Management recently froze the pilots'
defined-benefit pension plan, but AMR will now annually contribute
14% of their salaries to a 401(k) retirement plan. The contract
also includes a 5% profit-sharing program and a 13.5% equity stake
in the new AMR. In return, the contract allows AMR to schedule
pilots to fly more hours and expand its use of regional airlines,
smaller carriers that fly on behalf of major ones.
"We are approaching the end of the restructuring and the beginning
of a new American," AMR CEO Tom Horton said in a letter to
employees, the report says. AMR expects to reach a conclusion
"soon" on whether to merge with US Airways, he said.
AMR creditors aren't currently concentrating on who leads a
combined or independent airline, instead focusing on which deal
gives them the best financial benefits, a person familiar with
their thinking, according to the WSJ report. Still, they are
cognizant that American's unions, especially its pilots, have been
dissatisfied with current management. AMR's creditors' committee
represents American's three labor unions, trustees for bondholders
and others, and can frustrate restructuring plans should the
airline pursue a path it doesn't support.
According to the report, the Allied Pilots Association said
Friday's vote "should not in any way be viewed as support for the
American stand-alone plan or for this current management team."
Instead, the union said, "this contract represents a bridge to a
merger with US Airways."
WSJ also relates the discussions among AMR, its creditors and US
Airways are expected to continue into next year, and the dynamics
of the negotiations haven't changed much since mid-November, said
people close to the process.
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: Has Deal With Lambert-St. Louis Airport
----------------------------------------------------------
Ken Leiser, transportation writer at the St. Louis Post-Dispatch,
reports that American Airlines struck a deal with the Lambert-St.
Louis International Airport. The salient terms of the deal,
according to the report, are:
-- American would keep four gates at the airport's C
Concourse through the end of its lease in June 2016;
-- American would shed $2.3 million a year in payments to
the airport;
-- American's leased space inside the airport will shrink
to 39,219 square feet by April 1, 2013, from 65,738
square feet last March 31;
-- American would pay Lambert $722,811 in debt from before
the bankruptcy filing and other pending amounts that are
still due the airport, officials said.
-- American will pay about 40% of its $542,072 annual share
of terminal improvements. Lambert officials will file a
claim in bankruptcy court for the remaining 60%;
-- American will also contract with a private company to
handle its cargo.
The agreement, the report says, is expected to be filed next month
with the U.S. Bankruptcy Court in New York.
"They could have rejected the whole lease," said Susan Kopinski,
deputy director of finance and administration at Lambert,
according to the report. "This was actually a very good deal."
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).
ATLAS PIPELINE: Moody's Rates $175MM Senior Unsecured Notes 'B2'
----------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Atlas Pipeline
Partners, L.P.'s proposed $175 million senior unsecured notes.
This issuance is an add-on to the 6.625% $325 million 2020 notes
that were issued in September, 2012. Atlas' other ratings and
stable outlook were unchanged.
Net proceeds from this offering will be used to partially fund the
$600 million acquisition of Cardinal Midstream LLC (Cardinal) that
was announced on December 3, 2012 and is expected to close later
this month.
Issuer: Atlas Pipeline Partners, L.P.
Assignments:
US$175M Senior Unsecured Regular Bond/Debenture, Assigned B2
US$175M Senior Unsecured Regular Bond/Debenture, Assigned a
range of LGD5, 71 %
Upgrades:
US$150M 8.75% Senior Unsecured Regular Bond/Debenture,
Upgraded to a range of LGD5, 71 % from a range of LGD5, 74 %
Ratings Rationale
The proposed notes are unsecured and have a subordinated claim to
Atlas' assets behind the $600 million secured revolving credit
facility lenders. Given the substantial amount of priority claim
secured debt in the capital structure, the notes are rated B2, one
notch below the B1 Corporate Family Rating (CFR) under Moody's
Loss Given Default Methodology.
The notes will be initially issued by Atlas Escrow, LLC (Atlas
Escrow), a newly formed wholly-owned subsidiary of Atlas, and the
note proceeds will be held in a segregated escrow account to
provide funding for the Cardinal acquisition. After closing of the
acquisition, Atlas and Atlas Pipeline Finance Corporation will
assume all of Atlas Escrow's obligations and will become direct
obligor of the notes (and escrowed properties will be released to
Atlas). Other than provisions related to the escrow, the new notes
will have the same terms as the existing 6.625% notes.
Atlas' B1 Corporate Family Rating reflects the company's growing
but still relatively small scale and concentrated operations in
the Mid-Continent region, the inherent price and volume risks of
its core gathering and processing business and the risk of its
master limited partnership (MLP) organizational structure. The
rating also considers the execution and funding risks involving
the ongoing capacity expansion projects and acquisitions. The CFR
is supported by the partnership's growing EBITDA, increasing fee-
based cash flows, long-term contracting arrangements, and the
routine practice of hedging its commodity price exposure
associated with the percentage of proceeds and keep-whole
contracts.
The acquisition of Cardinal will immediately boost Atlas's
earnings, cash flows and fee-based income. The deal also gives
Atlas exposure to the liquids-rich Arkoma Woodford shale play, and
will give the company future organic growth opportunities at
reasonable costs. However, Atlas's higher leverage after buying
Cardinal will partly temper these credit benefits and delay the
deleveraging of its balance sheet needed to move to a higher
rating category.
The stable outlook reflects Moody's view that the demand for
gathering and processing services will remain healthy in the mid-
continent and Texas regions and management will maintain prudent
financial policies.
Greater scale and diversification, a higher proportion of fee-
based revenues and lower leverage would be supportive of an
upgrade. More specifically, Moody's would look for sustainable
EBITDA in excess of $300 million and a debt to EBITDA ratio
approaching 3.75x before considering an upgrade.
The rating could be downgraded if leverage remains above 4.5x or
distribution coverage (FFO -- Maintenance Capex / Distributions)
stays below 1x over a protracted period. A negative rating action
could also result if growth is funded primarily with debt.
The principal methodology used in rating Atlas was the Global
Midstream Energy Rating 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.
Atlas Pipeline Partners, L.P. is a publicly traded master limited
partnership (MLP) engaged primarily in the gathering, processing,
and transportation segments of the midstream natural gas industry.
ATLAS PIPELINE: S&P Affirms 'B+' Corporate Credit Rating
--------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on U.S. midstream energy partnership Atlas Pipeline
Partners L.P. The outlook is stable. "At the same time, we raised
our rating on the partnership's senior unsecured notes to 'B+'
from 'B'. We revised the recovery rating on this debt to '3' from
'5'. Atlas had $787 billion of debt as of Sept. 30, 2012," S&P
said.
"Atlas has entered into a definitive agreement to purchase
Cardinal Midstream LLC for $600 million. In our view, the
transaction improves Atlas' business risk profile by modestly
increasing scale and operating diversity while reducing commodity
price exposure because Cardinal's cash flows are mainly fee-based.
We believe the assets complement Atlas' core competencies and
provide the partnership with a clear path to grow gathering and
processing volumes through low-risk organic projects. That said,
Atlas' geographic footprint remains concentrated in the Mid-
Continent region and its contract mix is highly sensitive to
changes in volumes and the price of natural gas and natural gas
liquids (NGLs)," S&P said.
"A key credit consideration, in our opinion, is the partnership's
ability to ramp up and sustain its volumes amidst weak NGL
prices," said Standard & Poor's credit analyst Nora Pickens.
"The stable outlook reflects our view that Atlas will maintain
adequate liquidity and financial leverage in the 4.0x-4.5x range,
while successfully executing its 2013 expansion plans. A higher
rating is possible if Atlas achieves financial leverage of 3.5x or
less as the partnership builds out its processing facilities and
associated gathering lines. We could lower the rating if a debt-
financed acquisition or weak commodity prices cause debt to EBITDA
to remain above 4.75x for a sustained period or liquidity becomes
constrained," S&P said.
BALTIMORE CONVENTION: Moody's Holds 'Ba1' Rating on Rev. Bonds
--------------------------------------------------------------
Moody's Investors Service has affirmed the ratings on the City of
Baltimore (MD) Hotel Corporation's Convention Center Hotel Revenue
Bonds, Senor Series 2006A rated Ba1 and Subordinate Series 2006B
rated Ba2. The rating outlook remains negative. The senior lien
bonds are outstanding in the amount of $245.82 million and the
subordinate lien bonds are outstanding in the amount of $53.1
million.
Summary Rating Rationale
The ratings reflects the hotel's solid financial performance
during the economic downturn and recovery of revenue growth over
the past three years; however, revenues continue to fall short of
expected levels at the time of the bond financing. The hotel is
generally outperforming its competitive set in the Baltimore
market and maintains solid reserve levels. The subordinate lien
rating also reflects the near depletion of the $4 million
operating reserve portion that supports that lien.
These reserves include site specific hotel occupancy taxes (HOT)
collected at the property and the ability to use up to $7 million
of HOT collected city-wide that must be appropriated from the
city's budget annually, if needed. In addition, 50% of the debt
service reserve fund is supported by $8.5 million surety policy
provided by Syncora Guarantee (ratings withdrawn), which Moody's
believes now provides a substantially lower level of credit
protection.
STRENGTHS
* High level of ongoing municipal support. Tax revenue
contributions could total up to 86% or more of senior lien debt
service in the stabilized year
*Substantial reserves provide good protection from revenue
shortfalls
*Well positioned in a historically strong hospitality market
*Hilton brings substantial expertise, resources, and brand-name
recognition to the project, along with providing a substantial
financial guarantee
CHALLENGES
*The project operates in a highly competitive market, with five
other high quality hotels located nearby, along with a number of
limited service hotels and several new properties expected to be
constructed in the coming years
*Initial revenue performance has been well below expected levels
due to the economic recession and lower demand for hotel space
*Operating and cash trap reserves have been used to cover revenue
shortfalls and the reduced credit strength of the surety policy
providers for 50% of the senior lien debt service reserve fund
reduces that reserve's value to bondholders
*The hotel is dependent in large part on the convention center's
ability to compete successfully with convention centers in other
cities along the Eastern seaboard, an increasingly crowded field.
OUTLOOK
The negative rating outlook is based on Moody's expectation that
economic conditions will make it difficult for the hotel to
generate revenues that cover all expenses and debt service
requirements. The outlook also considers the current level of
reserves, which are lower than initially expected and have been
further reduced to cover revenue shortfalls.
What Could Change the Rating - UP
RevPAR increases to levels contemplated in the initial financing
and full funding of the operating reserve, cash trap, and debt
service reserve could place upward pressure on the rating.
What Could Change the Rating - DOWN
If hotel financial performance continues at levels that do not
allow annual revenues to cover debt service requirements and
expenses and if any additional reserves or HOT collections are
needed to meet all operating and debt service requirements. If
operating performance declines to the point that the hotel
requires the use of funds from the $25 million Hilton guarantee,
the rating could experience a multi-notch downgrade.
RATING METHODOLOGY
The principal methodology used in this rating was Generic Project
Finance Methodology published in December 2010.
BOMBARDIER RECREATIONAL: Moody's Rates $125MM Sec. Term Loan 'B1'
-----------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Bombardier
Recreational Products Inc.'s ("BRP") new $125 million secured term
loan due 2016, which together with cash on hand, was used to repay
a $145 million term loan due June 2013. The company has completed
this refinancing transaction to partially replace its previously
proposed $1.05 billion senior secured term loan issue which was
launched and then cancelled in late November. Accordingly, Moody's
has withdrawn the B1 rating on the cancelled term loan. BRP's B1
corporate family and probability of default ratings, Ba1 senior
secured revolving credit facility rating, and B1 rating on its
existing $530 million term loan are unchanged. The rating outlook
remains stable.
While BRP's current credit metrics remain strong for its ratings
(adjusted Debt/EBITDA of 2.7x and EBITA/Interest of 3.3x), the
company's B1 corporate family rating incorporates the potential
that a re-leveraging dividend would occur in the near term which
could cause Debt/EBITDA to rise above 3.5x.
Ratings Rationale
BRP's B1 corporate family rating primarily reflects event risk
related to its majority ownership by financial sponsors as well as
the cyclical demand for its high-priced, discretionary products.
The rating also reflects Moody's modest volume growth expectations
for BRP's established products into the medium term due to ongoing
economic challenges, elevated consumer debt and high unemployment
levels. However, the rating considers BRP's well-recognized global
brands and leading market positions, efficient management of
dealer inventory levels, good liquidity, and demonstrated ability
to successfully launch new products. Moody's expects stable demand
for existing products and growth from new product introductions to
drive improved profitability and free cash flow which will enable
the company's adjusted Debt/ EBITDA to fall towards 3.5x within
the next 12 to 18 months assuming completion of the debt-financed
dividend recapitalization.
The rating is stable because Moody's expects BRP to realize modest
earnings growth through the next 12 to 18 months but de-leveraging
will be minimal.
The rating would be upgraded if BRP's adjusted Debt/EBITDA were to
remain below 3x, EBITA/Interest was sustained above 3.5x and
Moody's was to gain confidence that BRP would not be highly
levered through shareholder actions. This would be associated with
a material decline in the ownership of BRP by its financial
sponsors. The ratings could be downgraded should increased debt
levels, cash distributions to private owners or earnings
shortfalls result in adjusted Debt/ EBITDA being sustained above
4x and EBITA/ Interest falls below 2x.
The principal methodology used in rating BRP was the Global
Consumer Durables Industry 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.
Bombardier Recreational Products Inc. is a leading global
manufacturer of motorized recreational products, including
snowmobiles, personal watercraft, all-terrain vehicles,
motorcycles and related products. Revenue for the last twelve
months ended July 31, 2012 was $2.9 billion. The company is
headquartered in Valcourt, Quebec, Canada.
BROOKLYN NAVY: S&P Cuts Senior Secured Debt Rating to 'CCC'
-----------------------------------------------------------
Standard & Poor's Ratings Services lowered its senior secured debt
rating to 'CCC' from 'B' on U.S. electricity and steam producer
Brooklyn Navy Yard Cogeneration Partners L.P. (BNYCP). "We also
revised the CreditWatch implications on the rating to developing
from negative. At the same time, we lowered the recovery rating on
the debt to '4' from '3', indicating our anticipation of average
(30% to 50%) recovery in the event of a default," S&P said.
"Our 'CCC' rating reflects our view that the project could default
during the next six to 12 months without equity infusion or
external liquidity support, or in the event of delays or
shortfalls in receiving insurance proceeds, or if the plant does
not return to service next month," said Standard & Poor's credit
analyst Jatinder Mall.
"The CreditWatch listing with developing implications reflects our
view of the heightened uncertainty regarding the project's ability
to meet its near-term debt service obligations during the next six
to 12 months," S&P said.
CARDIUM THERAPEUTICS: Asked by NYSE MKT to Send Plan of Compliance
------------------------------------------------------------------
Cardium Therapeutics reported on a communication from staff of its
current listing exchange that it considered the company to be
noncompliant with certain listing requirements based on its
quarterly report for the period ended Sept. 30, 2012, and provided
that the company should submit a plan to staff of the exchange
that would reestablish compliance with the NYSE MKT listing
requirement by March 31, 2013. The company reported that it has
already submitted a plan designed to reestablish compliance with
the exchange's requirement in advance of the March 31, 2013
timeframe. Additional information and provisions regarding the
NYSE MKT requirements are found in Part 10 of its company guide.
Based on the company's quarterly report on Form 10-Q for the
period ended Sept. 30, 2012, noncompliance was noted with respect
to the requirement of section 1003(a)(iv) of the company guide for
NYSE MKT. The exchange indicated that in order to maintain its
NYSE MKT listing, a plan should be submitted by Dec. 31, 2012
addressing regaining compliance with Section 1003(a)(iv) of the
exchange's company guide by March 31, 2013. Additional
information and provisions regarding the NYSE MKT requirements are
found in Part 10 of its company guide. The company has disputed
the staff's basis for its determination of deemed noncompliance,
but it has also already submitted a plan designed to reestablish
compliance with the listing requirement in advance of the timeline
requested.
The communication and compliance plan has no current effect on the
listing of the company's shares on the exchange. If the plan is
not acceptable or the company does not make sufficient progress
under the plan or reestablish compliance by March 31, 2013, then
staff of the exchange may initiate proceedings for delisting from
the NYSE MKT. The company may then appeal a staff determination
to initiate such proceedings in accordance with the exchange's
company guide. If the company's common stock was not traded on
the NYSE MKT, it would be expected to trade on the OTCQX, an
alternative regulated quotation service that provides quotes, sale
prices and volume information in over-the-counter equity
securities. The company's common stock was traded on the OTC
until July 2007, when the company elected to instead list its
shares on the American Stock Exchange.
CCC ATLANTIC: Files for Chapter 11 in Delaware
----------------------------------------------
Linwood, New Jersey-based CCC Atlantic, LLC, filed a bare-bones
Chapter 11 petition (Bankr. D. Del. Case No. 12-13290) on Dec. 6,
2012. The Debtor, a single-asset real estate as defined in
11 U.S.C. Sec. 101(51B), estimated assets and liabilities of at
least $10 million. Cornerstone Commerce Center, LP, holds 100% of
the capital interest in the Debtor.
CCC INFORMATION: S&P Lowers CCR to 'B' on Increased Leverage
------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Chicago, Ill.-based CCC Information Services Inc. to 'B'
from 'B+'. The outlook is negative.
"In addition, we are assigning our 'B+' issue-level rating with a
recovery rating of '2' to the company's proposed $50 million
senior secured revolving credit facility (unfunded at closing) and
$470 million first-lien term loan. The '2' recovery rating
indicates our expectation for substantial (70% to 90%) recovery
for lenders in the event of payment default," S&P said.
"The company is using the loan proceeds together with $260 million
of mezzanine notes (which we do not rate) and sponsor's equity
contribution to fund the proposed transaction, including
refinancing existing debt," S&P said.
"The downgrade reflects the company's 'weak' business risk
profile, characterized by its narrow product focus within a mature
niche market, and what we view as a 'highly leveraged' financial
risk profile," said Standard & Poor's credit analyst Katherine
Nolan. The company's significant base of recurring revenues, high
barriers to entry, and solid operating margins partly offset these
factors.
Standard & Poor's base-case rating assumptions over the outlook
horizon include: revenue growth in the mid-single digit range,
mainly reflecting add-on product sales; a modest improvement in
EBITDA margins due to scale-related operating efficiency; and
leverage improvement driven by both EBITDA growth and debt
repayments.
"CCC is the leading provider of integrated software, analytics,
and workflow management systems for the auto claims industry,
serving approximately 350 insurance carriers and 21,000 repair
facilities in the U.S. We are maintaining our 'weak' business risk
profile evaluation on CCC. The niche market for software and
services designed to automate the automobile insurance claims
process is a concentrated, approximately $1 billion market,
dominated by CCC, Mitchell International, and Solera. While CCC
has relationships with many of the top insurance carriers, some
dating back more than 20 years, continued execution on service and
investment in product development will be important in this highly
competitive marketplace. Access to CCC's proprietary database,
which includes about $500 billion of claims data, has helped to
create CCC's long-term customer relationships," S&P said.
"We believe that the company's highly recurring revenue base and
solid EBITDA margins will result in steady free cash flow
generation, and that discretionary cash flow will be used to repay
debt. As a result, we expect leverage to improve to about 7x over
the next year," S&P said.
"The negative outlook is based upon pro forma leverage increasing
to 7.5x, which we view as high for the rating. Although we expect
leverage to decline to about 7x by year-end 2013, acquisitions,
dividends, or a loss of a major customer may forestall the
expected reduction in leverage. We could revise the outlook to
stable if the company meets our 2013 year-end leverage target
through expected EBITDA growth and debt repayment. We would lower
the corporate credit rating to 'B-' if heightened competition,
debt-funded acquisitions, or debt-funded dividends preclude an
improvement in leverage by 2013 year-end," S&P said.
CE GENERATION: Moody's Cuts Rating on Sr. Secured Bonds to 'Ba2'
----------------------------------------------------------------
Moody's Investors Service has downgraded the rating on CE
Generation LLC's senior secured bonds to Ba2 from Ba1 The rating
outlook is stable.
Ratings Rationale
The downgrade reflects CE Gen's inability to pay its debt service
in 2012 from subsidiary project distributions alone, owing
primarily to a cash trap that exists at subsidiary, Salton Sea
Funding Corporation (Salton Sea; Baa3, stable)and will therefore
utilize cash on hand, along with other internal sources, to cover
debt service on its obligations. CE Gen had $28.4 million in
consolidated unrestricted cash at the end of September 2012 (of
which $2 million resided at Salton Sea) and $23 million of
consolidated restricted cash in the revenue fund (of which $12
million resided at Salton Sea). Moody's understands that CE Gen
will not draw on its $19.5 million sponsor provided debt service
reserve letters of credit. The rating action further recognizes
the restricted payments test of 1.5x that exist at Salton Sea,
which is a somewhat higher standard than other projects and argues
for wider notching between the rating of CE Gen and Salton Sea. To
that end, the rating action incorporates an expectation for CE
Gen's debt service coverage ratio to remain under pressure over
the next two years, especially if distributions from Salton Sea do
not materialize as projected.
Moody's calculates that at least 75% of the expected dividends
available for debt service at CE Gen is expected to come from
subsidiary Salton Sea. While the CE Gen portfolio has a modest
amount of asset and cash flow diversification from the Saranac,
Yuma and Power Resources plants, all of which are debt free, the
Salton Sea subsidiary is the primary cash flow generator and its
distributions will drive CE Gen's financial performance. Going
forward, Moody's calculates that the Saranac, Yuma and Power
Resources facilities are anticipated to distribute a combined $10-
$12 million annually to CE Gen in each of the next several years.
Aside from 2012, Salton Sea has historically contributed $30-$50
million to its parent, and Moody's would expect similar
performance from Salton Sea over the remaining term of the debt
which matures in 2018. In 2012, the distribution will only amount
to $7 million resulting in CE Gen having to use unrestricted cash
on hand and other resources to fully cover its debt service
obligations in 2012.
During 2012, Salton Sea's financial and operating performance has
been impacted by a number of factors. As of May 2012, 72% of the
project's generating capacity reverted back to Southern California
Edison's (SCE A3 stable) short-run avoided cost (SRAC) energy
price. The current natural gas price environment has pushed SRAC
energy prices to a level substantially below the 6.16 cents per
kWh energy rate that prevailed between May 2008 and May 2012 for
the impacted plants. Recognizing the risk posed by lower energy
prices tied to SRAC, the project sponsors implemented a hedging
strategy to set a natural gas price floor for approximately 80% of
anticipated generation from the SRAC-exposed plants in 2012, 65%
of anticipated generation from the SRAC-exposed plants in 2013 and
40% of anticipated generation from the SRAC-exposed plants in
2014. The hedges will mitigate the full impact of lower energy
rates tied to SRAC for the affected plants; however, operating
revenue at Salton Sea through the first nine months of 2012 is
still $37.1 million lower than the same period in the prior year.
In addition to lower energy rates, Salton Sea has faced certain
operating challenges this year that Moody's does not anticipate to
be recurring, including SCE related line outages and certain
unscheduled outages related to equipment issues. All of these
factors have contributed to Salton Sea's underperformance in 2012,
and resulted in the minimal distribution to CE Gen.
Over the next three years, Salton Sea anticipates investing over
$30 million per year in capital expenditure programs that include
additional well drilling, pipeline enhancements and production
equipment improvements. The capital expenditure program is in
addition to the project's standard major maintenance program.
While Moody's anticipates that Salton Sea's operational and
financial performance will rebound in 2013, any cost increase in
the capital expenditure and major maintenance programs or further
operating issues can impact distributions to CE Gen.
Finally, Salton Sea and CE Gen's rating and stable outlook further
benefit from the strong stewardship provided by CE Gen's co-
owners, MidAmerican Energy Holdings Company, and by TransAlta USA
Inc. In addition to the co-owners providing liquidity support for
the project through debt service letters of credit, both have
demonstrated a willingness to support the projects in the past,
and Moody's believes they will likely do so as required over the
term of the debt. As discussed above, Moody's observes the
substantial degree of capital being invested in Salton Sea, a
renewable resource, as a further indication of the sponsor's long-
term view around support for this investment.
The principal methodology used in this rating was Power Generation
Projects published in December 2008.
CE Generation LLC is jointly-owned by MidAmerican Energy Holdings
Company (50%) and by TransAlta USA Inc. (50%). CE Gen consists of
ten California-based geothermal projects (Salton Sea) with a
generating capacity of 327 megawatts of which eight have long-term
contracts for electric output with SCE, and the remaining two
plants are also fully contracted with other utilities. CE
Generation also owns three gas-fired projects located in New York,
Arizona, and Texas, which when combined with its geothermal
capacity totals an aggregate net ownership interest of 829MW of
electrical generating capacity.
CHARTER COMMUNICATIONS: Fitch Affirms 'BB-' IDR; Outlook Stable
---------------------------------------------------------------
Fitch Ratings has affirmed the 'BB-' Issuer Default Rating (IDR)
assigned to CCO Holdings, LLC (CCOH) and Charter Communications
Operating, LLC (CCO). Each of CCOH and CCO are indirect wholly
owned subsidiaries of Charter Communications, Inc. (Charter).
Fitch has also affirmed the specific issue ratings assigned to
Charter's various subsidiaries as outlined below. The Rating
Outlook for all of Charter's ratings is Stable. Approximately
$13.7 billion of debt (principal value) outstanding as of Sept.
30, 2012 is affected by Fitch's action.
Fitch believes that Charter has sufficient capacity within the
current ratings to accommodate changes to the company's operating
strategy and plans to maintain a higher level of capital
expenditures (relative to historical norms and peer comparisons).
In Fitch's opinion the strategy shift along with higher level of
capital expenditures will lead to a stronger overall competitive
position. The changes to Charter's operating strategy support the
company's overall strategic objectives, set the foundation for
sustainable growth while creating more efficient operating
profile. However Fitch expects the strategy will hinder free cash
flow generation and strain EBITDA margins during 2013 limiting
overall financial flexibility and slowing the company's progress
to achieving its leverage target. During the short term Fitch
believes that customer connections, revenue and expense metrics
will be negatively impacted.
Fitch anticipates that capital spending will range between 20% to
22% of revenues during the ratings horizon. A significant portion
of the company's capital expenditures will be success- based in
support of the company's all-digital initiative. The company's
capital intensity is expected to be among the highest within the
larger cable multiple system operators.
Increased operating and selling expenses supporting the company's
transition to its new selling and operating strategies will lead
to EBITDA margin erosion. Charter's EBITDA margin was 36.1% during
the last 12 month period ending Sept. 30, 2012. Fitch expects
margins to decline by up to 100 basis points during 2013 before
rebounding somewhat during 2014. The stronger margins along with
moderating capital intensity are expected to spur free cash flow
growth and strengthen the company's credit profile.
Charter's capital structure and financial strategy remain
relatively consistent and centers on simplifying its debt
structure, extending its maturity profile while reducing leverage
to its target range of 4x to 4.5x. The company's debt structure
continues to evolve into a more traditional hold-co/op-co
structure, with senior unsecured debt issued by CCOH and senior
secured debt issued by CCO. Charter has eliminated the second
lien tier of the company's debt structure during 2012 and has
redeemed the high-yield debt issued by CCH II. Leverage remains
outside the company's target at 5.1x for the LTM period ended
Sept. 30, 2012 and 4.9x pro forma for the $678 million redemption
of CCH II's 13.5% senior notes due 2016. Fitch anticipates
Charter's leverage will decline to 4.75x by the end of 2013 and
4.25x by year-end 2014.
Charter's more viable capital structure has positioned the company
to generate positive free cash flow. However Fitch expects free
cash flow generation during 2012 and 2013 will suffer from the
effects of lower operating margin and higher capital intensity.
Charter generated approximately $193 million of free cash flow
during the LTM period ended Sept. 30, 2012 down markedly from the
$426 million of free cash flow produced during the year-ended
2011. Fitch anticipates Charter will generate between $250 and
$300 million of free cash flow during 2013 and produce over $500
million during 2014 when stronger margins return.
Rating concerns center on Charter's elevated financial leverage
(relative to other large cable MSOs), a comparatively weaker
subscriber clustering and operating profile. Moreover, Charter's
ability to adapt to the evolving operating environment while
maintaining its relative competitive position given the
challenging competitive environment and weak housing and
employment trends remains a key consideration.
Charter's liquidity position is adequate given the current rating
and is supported by $868 million of cash on hand as of Sept. 30,
2012 (Fitch notes that $768 million of cash was used to fund the
partial redemption of CCH II senior notes in October 2012),
borrowing capacity from CCO's $1.15 billion revolver (all of which
was available as of Sept. 30, 2012) and expected free cash flow
generation. Fitch notes that amounts available for borrowing
under CCO's revolver was approximately $715 million after giving
effect for the redemption of the remaining $468 million of CCH
II's senior notes in November 2012.
Charter has successfully extended its maturity profile as only
5.8% of outstanding debt as of Sept. 30, 2012 is scheduled to
mature before 2016, including $8 million, $267 million and $418
million during the remainder of 2012, 2013 and 2014 respectively.
Fitch anticipates that a large portion of near term maturities
will retired with current cash and future free cash flow
generation. Refinancing risk elevates during 2016 when
approximately $2.3 billion of bank debt is scheduled to mature.
What Could Trigger a Positive Rating Action
-- Positive rating actions would be contemplated as leverage
declines below 4.5x;
-- The company demonstrates progress in closing gaps relative to
its industry peers on service penetration rates and strategic
bandwidth initiatives.
-- Operating profile strengthens as the company captures
sustainable revenue and cash flow growth envisioned when
implementing the current operating strategy.
What Could Trigger a Negative Rating Action
-- Fitch believes negative rating actions would likely coincide
with a leveraging transaction that increases leverage beyond
5.5x in the absence of a credible deleveraging plan;
-- Adoption of a more aggressive financial strategy;
-- A perceived weakening of Charter's competitive position or
failure of the current operating strategy to produce
sustainable revenue and cash flow growth along with
strengthening operating margins.
Fitch has affirmed the following ratings with a Stable Outlook:
CCO Holdings, LLC
-- IDR at 'BB-';
-- Senior secured term loan at 'BB+';
-- Senior unsecured debt at 'BB-'.
Charter Communications Operating, LLC
-- IDR at 'BB-';
-- Senior secured credit facility at 'BB+'.
Fitch has withdrawn the following ratings:
CCH II, LLC
-- IDR at 'BB-';
-- Senior unsecured debt at 'B+'.
CHILTON MEDICAL: Central Alabama Enters Into Deal to Sell Assets
----------------------------------------------------------------
SunLink Health Systems, Inc. disclosed that its subsidiary,
Central Alabama Medical Associates, LLC (CAMA), has entered into
an option agreement with the Chilton County (AL) Hospital Board
(Board) under which the Board has the option for 90 days to
acquire CAMA's real and personal property relating to Chilton
Medical Center in Clanton, AL, for $1,500,000. CAMA currently
leases the Chilton property to a third party hospital operator who
is in default under the CAMA lease and the hospital license held
by the third party operator was suspended by the Alabama
Department of Public Health effective on Oct. 29, 2012. The Board
and CAMA applied jointly for a receiver to take over the
operations of the third party operator and, if successful, the
Board intends to submit plans and applications to re-open the
hospital. If the Board is able to re-establish the hospital's
operations to their satisfaction, it has indicated it intends to
exercise the option to acquire the property from CAMA. However,
there can be no assurance the hospital will be re-opened or that
the option will be exercised.
SunLink Health Systems, Inc. -- http://www.sunlinkhealth.com/--
is the parent company of subsidiaries that operate hospitals and
related businesses in the Southeast and Midwest, and a specialty
pharmacy company in Louisiana. Each hospital is the only hospital
in its community and is operated locally with a strategy of
linking patients' needs with dedicated physicians and healthcare
professionals to deliver quality efficient medical care.
COMMUNITY CHOICE: S&P Revises Outlook on 'B-' ICR to Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook on
Community Choice Financial Inc. (CCFI) to negative from positive
and affirmed the 'B-' long-term issuer credit rating.
"The outlook revision follows a ruling this week from judges in
Ohio's Ninth Judicial District that a single payment installment
loan offered by CCFI's competitor did not comply with the Ohio
Mortgage Loan Act (OMLA). That competitor, CCFI, and other lenders
in Ohio have been making loans under that act since 2008 when the
state passed a separate lending act to cap the total amount and
interest rate of single payment loans at $500 and 28%. Lending
under the Ohio Mortgage Act effectively has allowed CCFI to
circumvent those caps," S&P said.
"Our negative outlook reflects our view that this ruling opens the
possibility that CCFI and other payday lenders will eventually be
unable to offer single payment installment loans in their current
form in Ohio, where approximately 20% of the company's stores are
located," said Standard & Poor's credit analyst Igor Koyfman. "We
are uncertain whether this case will reach the Ohio Supreme Court
or whether a similar case will be heard in other district courts.
However, it seems conceivable that other district judges or the
Ohio Supreme Court could agree with the judges in the Ninth
District."
"Management has demonstrated an ability to navigate through
adverse legislative environments in Ohio in the past," said Mr.
Koyfman. "However, if the company is precluded from operating
under the OMLA, we believe its profitability and cash flow could
decline significantly."
"We note, however, that CCFI's diversification and expansion
strategy partially limits significant downside risks to the
rating," S&P said.
CONNACHER OIL: S&P Cuts CCR to 'B-' on Financial Risk Concerns
--------------------------------------------------------------
Standard & Poor's Rating Services lowered its long-term corporate
credit rating on Calgary, Alta.-based oil and gas producer
Connacher Oil and Gas Ltd. to 'B-' from 'B'. At the same time,
Standard & Poor's lowered its issue-level debt ratings on
Connacher's US$550 million and C$350 million second-lien debt to
'B+' from 'BB-'. "The recovery ratings on the two debt issues are
unchanged at '1', which indicates our expectation of very high
(90%-100%) recovery under our default scenario. The outlook
remains negative," S&P said.
"Our decision in September 2012 to revise the outlook to negative
reflected our assessment of the execution risk associated with the
timely completion of the company's strategic review process.
Connacher has concluded this process without finding either a
joint venture partner or purchaser, so we believe the company's
prospective financial risk profile, and specifically its cash flow
protection metrics, are no longer able to support the 'B' rating,"
said Standard & Poor's credit analyst Michelle Dathorne.
"In addition, we believe that, beyond its current liquidity,
Connacher's existing operations are not able to generate
sufficient funds from operations (FFO) to internally fund its
minimum required maintenance capital spending beyond 2013.
"Although we believe it will continue to seek other forms of
external financing, the uncertainty associated with the timing and
success of this process further weakens the company's overall
credit profile," Ms. Dathorne added.
"The ratings on Connacher reflect Standard & Poor's views of the
company's high full-cycle cost structure, weak expected FFO
generation, and highly leveraged balance sheet. In our view, these
factors hamper Connacher's ability to fully realize the organic
growth potential inherent in its large oil sands resource base. We
believe that somewhat mitigating these weaknesses are the
company's large oil sands resources, the good visibility to long-
term drill-bit related production growth, and the potential for
strong operating cash flows if it achieves better economies of
scale, which we believe is possible with a larger production
base," S&P said.
"With the completion of its asset sales in fourth quarter of 2012,
Connacher's business operations will focus solely on the
development of its steam-assisted gravity drainage (SAGD)
properties. The company's assets now consist of its wholly owned
in-situ bitumen resources in northeast Alberta," S&P said.
"The negative outlook reflects our opinion that Connacher's
internal cash flow generation is not sufficient to sustain its
current operations. Without the liquidity enhancement from the
sale of its conventional oil and gas assets and refinery
(completed in fourth-quarter 2012), we do not believe the company
would be able to fully fund its ongoing financing and maintenance
capital spending requirements. Although we believe Connacher's
cash resources, pro forma the asset sales, should allow it to fund
its announced capital spending through year-end 2013, its
liquidity position will begin to deteriorate within the next 12
months if it cannot secure external equity funding to sustain its
current operations and continue expanding its multiphase SAGD
project. We believe the liquidity position will deteriorate more
rapidly in the second half of 2013. Standard & Poor's now believes
there is significant uncertainty regarding the company's ability
to secure external equity financing during our 12-month forecast
period for Connacher; so we believe there is heightened risk of a
further negative rating action. Based on the company's cash flow
profile relative to its financing and maintenance capital spending
requirements, there is no likelihood of a positive rating action
without a transformative transaction," S&P said.
CORDOVA FUNDING: Moody's Affirms 'Ba3' Rating on Sr. Sec. Bonds
---------------------------------------------------------------
Moody's Investors Service has affirmed the Ba3 rating on Cordova
Funding Corporation's senior secured bonds due 2019. The rating
outlook continues to be stable.
Rating Rationale
The rating affirmation considers the guaranteed capacity payments
under the contract with Constellation Energy Commodities Group
(assumed by Exelon Corporation) that is sized to cover the plant's
fixed operating expenses and debt service obligations. The rating
affirmation acknowledges the support by Cordova's ultimate parent
MidAmerican Energy Holdings Company (MEHC: Baa1 stable) as MEHC
provides a guarantee of the final principal repayment of debt
service amounting to $37 million. The debt service reserve fund is
currently fully cash funded at the project. Additionally, Cordova
had $22.7 million in current restricted cash in the revenue fund
as of September 30, 2012, which gives the project flexibility to
manage any unforeseen maintenance events or other expenditures and
still cover debt service without necessitating a draw on its debt
service reserve fund. Moody's anticipates the restricted cash
balance to continue to gradually grow given the historical
financial performance of Cordova relative to the restricted
payments test of 1.35x.
The principal constraint on the Ba3 rating is the project's
relatively weak financial performance due to a far lower dispatch
rate than was originally forecast. Original financial projections
forecasted the project would have a capacity factor between 60%
and 70%, more reflective of an intermediate-load asset. However,
actual capacity factors over the last five years have not exceeded
5% in any year. The lack of fired hours has limited the plant's
energy margin, and the project has in effect relied solely on
annual capacity revenue to cover its operating expenses and debt
service obligations. Cordova's debt service coverage ratio has
averaged slightly over 1.0 times over the last three years.
On the positive side, the minimal run hours at the plant have also
delayed the plant's major maintenance and capital expenditure
requirements. Cordova has historically maintained high plant
availability, which allows the plant to continue to earn its full
capacity payment.
The stable outlook reflects Moody's view that Cordova will
continue to maintain high plant availability and be able to
maintain debt service coverage ratios slightly over 1.0 times. The
stable rating outlook further reflects the benefits of its active
ownership by MEHC, which as discussed above, provides several
layers of credit support even though Moody's believes that MEHC is
not likely to receive a cash distribution for the foreseeable
future.
Cordova Funding Corporation (Cordova) is the financing subsidiary
of Cordova Energy Company LLC, which owns a 537 MW natural gas-
fired combined cycle power generation facility in Rock Island
County, Illinois. Cordova Energy is indirectly wholly-owned by
MEHC.
The principal methodology used in this rating was Power Generation
Projects published in Decemeber 2008.
CRC CRYSTAL: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: CRC Crystal Research Corporation
4952 East Encanto Street
Mesa, AZ 85206
Bankruptcy Case No.: 12-25713
Chapter 11 Petition Date: December 1, 2012
Court: United States Bankruptcy Court
District of Arizona (Phoenix)
Judge: Randolph J. Haines
Debtor's Counsel: Steven M. Cox, Esq.
WATERFALL ECONOMIDIS CALDWELL ET AL
Williams Center Eighth Floor
5210 E Williams Cr
Tucson, AZ 85711
Tel: (520) 790-5828
Fax: (520) 745-1279
E-mail: smcox@wechv.com
Scheduled Assets: $650,045
Scheduled Liabilities: $1,294,673
A copy of the Company's list of its 20 largest unsecured creditors
filed together with the petition is available for free at
http://bankrupt.com/misc/azb12-25713.pdf
The petition was signed by Dr. Kiril Pandelisev, CEO.
CSD LLC: Has Interim Access to $321K DIP Financing From Neva Lane
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U.S. Bankruptcy Court Judge Bruce Markell has authorized CSD, LLC,
to access DIP financing of up to $321,864 on an interim basis,
from Neva Lane Acceptance, LLC.
As reported by the Troubled Company Reporter on Oct. 29, 2012, CSD
LLC sought authorization to borrow up to $500,000, on an interim
basis, to fund working capital and other corporate purposes of the
Debtor in the ordinary course of its business. The Debtor's
prepetition secured lender, Neva Lane, is related to Texas
businessman Lacy Harber, has agreed to provide the postpetition
financing. Neva Lane is owed in excess of $2.2 million as of the
Petition Date.
Las Vegas Review-Journal reports Mr. Harber has put about $59
million in to the project, buying Mr. Newton's Casa de Shenandoah
estate, adjacent property and paying for renovations. But he has
since decided to bring the project to a close.
Review-Journal notes CSD is aiming for a bankruptcy auction of the
property early next year. In addition, the report says, the two
sides at least hinted at the possibility of trying to settle their
differences instead of continuing with a grinding and expensive
court battle. However, no mediation has been agreed to at this
point.
According to the TCR report, the DIP financing will be unsecured.
Interest rate will be Prime plus 1% per annum. No transaction or
bank fees will be collected. The maturity date of the DIP
financing will be the earliest of (a) Nov. 12, 2013, at 5:00 p.m.,
(b) the effective date of a confirmed plan of liquidation for the
Borrower, and (c) the date on which the Bankruptcy Court approves
the extension of any other credit facility to the Debtor.
About CSD LLC
Las Vegas, Nev.-based CSD, LLC, filed a Chapter 11 petition
(Bankr. D. Nev. Case No. 12-21668) on Oct. 12, 2012, estimating
$50 million to $100 million in assets and $10 million to
$50 million in debts. The petition was signed by Steven K.
Kennedy, manager of CSD Management, LLC, manager.
The Debtor owns 37.82 acres of land, seven houses, and an
equestrian facility, all located at 6629 S. Pecos Road, Las Vegas,
Nevada. The Debtor purchased the property from Mr. Wayne Newton
and his wife, Kathleen, for $19.5 million to develop and operate a
museum/tourist attraction honoring the life and career of Wayne
Newton. Situated on the purchased property is the current home of
the Newtons, known as "Casa de Shenandoah", which was to be used
to showcase Wayne Newton's memorabilia. The museum remains
unopened. DLH, LLC, which holds a 70% interest in the Debtor,
contributed nearly $60 million towards development of the museum.
DLH is a Nevada limited liability company, and its members are
Lacy Harber and Dorothy Harber.
Plans called for contributing $2 million toward the construction
of a new home for Mr. Newton on the acreage. The new home hasn't
been built, so Mr. Newton still lives in the existing home, paying
minimal rent.
While the Debtor has made substantial expenditures towards the
development of the Newton Museum, the Debtor and the Newtons have
been involved in certain disputes regarding the development of the
museum. The Debtor in May 2012 filed a lawsuit in Nevada state
court for fraud, civil conspiracy, and breach. The Newtons filed
counterclaims. Because of the deteriorating relationship of the
parties, it appears that it is no longer feasible for the parties
to move forward with the development of the museum.
On Aug. 9, 2012, the Debtor's committee members held an emergency
meeting and voted to dissolve the Debtor. Though the Debtor has
sought approval in the state court proceedings to dissolve, that
matter is not scheduled to be heard until May 2013.
Because the Debtor is out of money and options, and because the
Debtor's prepetition secured lender, Neva Lane Acceptance, LLC, is
unwilling to lend any additional funds to the Debtor on a
prepetition basis, the majority of the committee members voted in
favor of the bankruptcy filing. Although the Debtor is out of
cash, it claims that it has substantial equity in its property.
The Debtor has decided that a sale of the Debtor's property
pursuant to Section 363 of the Bankruptcy Code, followed by the
filing of a plan of liquidation, is the Debtor's best option for
maximizing the value of the property and maximizing the return to
the Debtor's creditors and interest holders.
James D. Greene, Esq., at Greene Infuso, LLP, in Las Vegas,
represents the Debtor. The Debtor's CRO is Odyssey Capital Group,
LLC.
CSD LLC: Wants to Auction Newton Museum on March 15
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CSD, LLC, asks the Bankruptcy Court for an order approving bidding
procedures in connection with the proposed sale of its assets,
including its 37.82-acre real estate property in Las Vegas
currently being developed as the Newton Museum. The Debtor also
seeks approval of the notice of the proposed sale, Bidding
Procedures, Auction, and Sale Hearing, establishing the dates,
times, and places of the Auction and the Sale Hearing, as well as
the deadline to object to the Sale Order.
In addition, the Debtor seeks Court approval of a process and
procedures to determine the amount of cure obligations, if any,
necessary to be paid for those executory contracts and unexpired
leases that will be assumed and assigned in connection with the
purchase of the Purchased Assets, and establishment of objection
procedures for the counterparties to the executory contracts and
unexpired leases proposed to be assumed and assigned.
Following the Auction, the Debtor will request that the Court
enter an order authorizing it to enter into an asset purchase
agreement free and clear of all liens, claims, interests, and
encumbrances and authorizing the assumption and assignment of
certain executory contracts and unexpired leases in connection
with such Sale.
Due to the decision not to proceed with the development of the
Newton Museum and the substantial equity in the Property, the
Debtor has decided that a sale of substantially all of the
Debtor's property, followed by the filing of a plan of
liquidation, is its best option for maximizing the value of the
Property and maximizing the return to the Debtor's creditors and
interest holders.
James D. Greene, Esq., at Greene Infuso, LLP, representing the
Debtor, states CSD has no funds to take any further actions with
regard to the development of the Newton Museum. The Debtor
generates no revenue and likely never will. The Debtor believes
that the development of the Newton Museum is a lost cause.
In the Debtor's business judgment, the only viable option at this
point is for the Debtor to market and sell substantially all of
its assets, including the Property through a controlled auction.
Once the Debtor's Property is liquidated, the Debtor intends to
promptly file a plan of liquidation which, upon confirmation, will
authorize the distribution of the Debtor's assets to creditors and
interest holders, included among which are entities owned and
controlled by the Newtons.
The Debtor believes that a targeted marketing and sale of the
Purchased Assets through an auction will likely create the
greatest return for the Debtor's creditors and interest holders.
The Purchased Assets are not a complicated group of assets which
present a marketing challenge. Rather, the majority of the value
of the Purchased Assets is attributable to the Real Property and
the Annexed Property, both of which are comprised of prime real
estate. Marketing the Purchased Assets and generating meaningful
and substantial interest therein should not pose a complicated
task.
The salient terms of the Bidding Procedures are:
(a) Assets: The Purchased Assets will consist of substantially
all of the assets of the Debtor other than those assets
specifically excluded from the Sale, which such excluded
assets remain subject to further diligence.
(b) Qualified Bid/Qualified Bidders: In order to ensure that
only bidders with serious interest in the purchase of some
or all of the Purchased Assets participate in the bidding
process, the Bidding Procedures provide that the Debtor
will require that potential bidders meet certain
commercial and competitive considerations in order to
become a Qualified Bidder and for a bid to purchase the
Purchased Assets to be a Qualified Bid, including that
such Qualified Bid (i) be for substantially all of the
Purchased Assets; (ii) not be subject to any further due
diligence and that such Qualified Bidder has obtained all
necessary financing and approvals, to the extent such
approvals can be obtained, which such financing and
approvals are not subject to any conditions; and (iii) not
include (a) a right to request, or entitlement to, any
commitment payment, break-up fee, or similar type of
payment, or (b) reimbursement of fees and expenses; and
(iv) be accompanied by a deposit in the amount of 5% of
the proposed purchase price of the Purchased Assets.
(c) Due Diligence: The Bidding Procedures permit all potential
bidders who sign a confidentiality agreement acceptable to
the Debtor to participate in the due diligence process.
(d) Proposal Deadline: Each party interested in bidding on the
Purchased Assets must deliver a written and duly executed
offer so as to be actually received no later than 5:00
p.m. (Pacific Time) on March 8, 2013, by Nathan Barber,
Odyssey Capital Group, Two North Central Avenue, Suite
720, Phoenix, AZ 85004, Telephone: (602) 257-8400 ext.
118, Fax: (602) 257-8600, E-mail: nbarber@odycap.com.
(e) Auction: If more than one Qualified Bid is received by the
Debtor, an Auction, conducted as set forth in the Bidding
Procedures, shall be held on March 15, 2013, at 9:00 a.m.
(Pacific Time) , at the offices of Greene Infuso, LLP,
3030 South Jones Boulevard, Suite 101, Las Vegas, Nev.
(f) Bidding Increments: The initial minimum overbid amount
Will be announced at the hearing to approve the Bidding
Procedures. The Debtor will announce a minimum bid
increment for each successive round of bidding at the
Auction.
(g) Selection of the Successful Bid: At the close of the
Auction, the Debtor, in its reasonable discretion and in
the exercise of its business judgment, shall identify
which Qualified Bidder has the Successful Bid, which will
be determined by considering, among other things: (i) the
total consideration to be received by the Debtor's
creditors and interest holders under the terms of each
Qualified Bid; (ii) each Qualified Bidder's ability to
timely close a transaction and make any deferred payments,
if applicable; and (iii) the net benefit to the Debtor's
creditors and interest holders and the likely timing and
amount of distributions to the Debtor's creditors and
interest holders from each proposal, including any
potential delays associated with objections by parties-in-
interest to the selection of the Successful Bid.
(h) The Back-Up Bidder: The bid of the next highest or best
bidder to the Successful Bid of the Successful Bidder at
the highest price or otherwise best bid by such bidder at
the Auction will remain open and irrevocable until the
earliest to occur of (i) 60 days following the entry of an
order approving the Sale, (ii) 120 days after the
conclusion of the Auction, (iii) the consummation of the
transaction with the Successful Bidder, or (iv) the
release of such bid by the Debtor.
(i) The Sale Hearing: The Successful Bid will be subject to
approval by the Court at the Sale Hearing to approve the
Sale of the Purchased Assets included in that particular
bid. The Debtor proposes that the Sale Hearing to approve
the proposed Sale of the Purchased Assets to one or more
Successful Bidders take place before the Court on March
27, 2013, at 9:30 a.m. (Pacific Time), or at such other
time thereafter as counsel may be heard.
(k) Reservation of Rights: The Debtor reserves the right, in
its reasonable discretion and the exercise of its business
judgment, to (i) alter or terminate the Bidding
Procedures, (ii) alter the assumptions set forth in the
Bidding Procedures, and/or (iii) terminate discussions
with any and all prospective purchasers and investors at
any time and without specifying the reasons therefor, to
the extent not materially inconsistent with the Bidding
Procedures.
About CSD LLC
Las Vegas, Nev.-based CSD, LLC, filed a Chapter 11 petition
(Bankr. D. Nev. Case No. 12-21668) on Oct. 12, 2012, estimating
$50 million to $100 million in assets and $10 million to
$50 million in debts. The petition was signed by Steven K.
Kennedy, manager of CSD Management, LLC, manager.
The Debtor owns 37.82 acres of land, seven houses, and an
equestrian facility, all located at 6629 S. Pecos Road, Las Vegas,
Nevada. The Debtor purchased the property from Mr. Wayne Newton
and his wife, Kathleen, for $19.5 million to develop and operate a
museum/tourist attraction honoring the life and career of Wayne
Newton. Situated on the purchased property is the current home of
the Newtons, known as "Casa de Shenandoah", which was to be used
to showcase Wayne Newton's memorabilia. The museum remains
unopened. DLH, LLC, which holds a 70% interest in the Debtor,
contributed nearly $60 million towards development of the museum.
DLH is a Nevada limited liability company, and its members are
Lacy Harber and Dorothy Harber.
Plans called for contributing $2 million toward the construction
of a new home for Mr. Newton on the acreage. The new home hasn't
been built, so Mr. Newton still lives in the existing home, paying
minimal rent.
While the Debtor has made substantial expenditures towards the
development of the Newton Museum, the Debtor and the Newtons have
been involved in certain disputes regarding the development of the
museum. The Debtor in May 2012 filed a lawsuit in Nevada state
court for fraud, civil conspiracy, and breach. The Newtons filed
counterclaims. Because of the deteriorating relationship of the
parties, it appears that it is no longer feasible for the parties
to move forward with the development of the museum.
On Aug. 9, 2012, the Debtor's committee members held an emergency
meeting and voted to dissolve the Debtor. Though the Debtor has
sought approval in the state court proceedings to dissolve, that
matter is not scheduled to be heard until May 2013.
Because the Debtor is out of money and options, and because the
Debtor's prepetition secured lender, Neva Lane Acceptance, LLC, is
unwilling to lend any additional funds to the Debtor on a
prepetition basis, the majority of the committee members voted in
favor of the bankruptcy filing. Although the Debtor is out of
cash, it claims that it has substantial equity in its property.
The Debtor has decided that a sale of the Debtor's property
pursuant to Section 363 of the Bankruptcy Code, followed by the
filing of a plan of liquidation, is the Debtor's best option for
maximizing the value of the property and maximizing the return to
the Debtor's creditors and interest holders.
James D. Greene, Esq., at Greene Infuso, LLP, in Las Vegas,
represents the Debtor. The Debtor's CRO is Odyssey Capital Group,
LLC.
CYBERDEFENDER CORP: 1st Amended Liquidation Plan Confirmed
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The Hon. Brendan L. Shannon has confirmed the first amended joint
plan of liquidation for CYDE Liquidating Co., formerly known as
CyberDefender Corporation. The plan was proposed by the Debtor
and the Committee of Unsecured Creditors.
CyberDefender sold its assets to GR Match LLC for $12 million in
debt and $250,000 cash in May. The Debtor on Sept. 10 obtained
approval of the disclosure statement explaining the Joint Plan.
The disclosure statement provides that the Debtor's remaining
assets are cash proceeds from the sale ($500,000 less payment of
post closing expenses to wind down the Debtor's operations) and
various causes of action. Unsecured creditors will receive their
pro rata share of remaining cash of the Debtor. Holders of equity
interests won't receive anything. A copy of the Disclosure
Statement is available at:
http://bankrupt.com/misc/CyberDefender_DS.pdf
About CyberDefender
Los Angeles, Calif.-based CyberDefender Corporation provided
remote LiveTech services and security and computer optimization
software to the consumer and small business market.
CyberDefender filed for Chapter 11 protection (Bankr. D. Del. Case
No. 12-10633) on Feb. 23, 2012. In regulatory filings, the
Company disclosed $7.96 million in total assets, $42.54 million in
total liabilities, and a $34.58 million in total stockholders'
deficit, as of Sept. 30, 2011.
XRoads Solutions Group, LLC serves as financial advisor to the
Company and Pachulski Stang Ziehl & Jones LLP (James E. O'Neill)
serves as bankruptcy counsel.
CyberDefender obtained authority to sell the business to GR Match
LLC for $12 million in debt and $250,000 cash. There were no
competing bids, so an auction was canceled. GR Match also
committed to provide up to $4.6 million in debtor-in-possession
financing.
The Debtor changed its name to CYDE Liquidating Co. following the
sale of the business.
An official committee of unsecured creditors has been appointed in
the case.
CYPRESS OF TAMPA: Has Interim OK to Use Cash Collateral
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The Cypress of Tampa LLC sought and obtained interim Court
approval to use property that may constitute cash collateral
comprised of cash, lease, and rent payments and other income
derived from the Debtor's property. The assets would be used to
fund the Debtors' operating expenses and costs of administration
in the Chapter 11 case pursuant to a budget for the duration of
the chapter 11 case. The Debtor also won permission to provide
replacement liens as adequate protection for the interests in its
Cash Collateral.
The Debtor believes Cypress Retail Holdings LLC, Wells Fargo, or
RAM Development Company may assert liens or security interests in
Cash Collateral. The Debtor proposes to grant as adequate
protection the collection and disbursement of all Cash Collateral
through the Debtor's property manager, periodic reporting and the
grant of replacement liens on all Cash Collateral acquired by the
Debtor or the estate on or before the Petition Date to the same
extent, validity, and priority held as of the Petition Date.
The Debtor and its affiliate The Cypress of Tampa II, LLC, own and
operate a retail and office space, together with certain
outparcels, known as The Cypress located in Hillsborough County,
Florida. In 2004 and 2005, the Debtor and the Affiliate obtained
a loan and future advance in the principal amount of $10,400,000
from First National Bank of Florida in connection with the
purchase and development of certain of the Property and in 2005,
the Debtor and the Affiliate purchased additional property
bringing the total amount of the note to $11,500,000.
In 2005, the Debtor and the Affiliate executed a Notice of Future
Advance and Modification Agreement in favor of Fifth Third Bank,
as apparent successor by merger to First National Bank of Florida.
The Loan Documents were later assigned to Regions Bank in June
2006.
In 2006 and in 2007, the Debtor and the Affiliate executed a
Notice of Future Advance and Modification Agreement in favor of
Regions Bank, which increased the note to $34,885,000.
In 2009, the Debtor and the Affiliate executed a Loan Modification
Agreement and Mortgage Modification Agreement in favor of Regions
and in 2010, the Debtor and the Affiliate executed an Amendment to
Loan Agreement and Mortgage Modification Agreement in favor of
Regions.
Through the 2010 modifications, Regions Bank bifurcated the note
into two renewal notes in the principal amounts of $21,205,808 and
$8,820,400.
On Oct. 12, 2011, Regions Bank and RAM Development Company
apparently entered into a Sale and Assignment Agreement that
provided for the sale of the loan. On Dec. 29, Regions Bank
apparently assigned the loan to Cypress Retail Holdings. On Dec.
29, 2011, Cypress Retail apparently assigned the loan to Wells
Fargo Bank.
On March 12, 2012, Cypress Retail initiated an action for
foreclosure on the Property and its security interests and for
judgment on the notes and loan documents, which case is pending in
the Circuit Court for the Thirteenth Judicial Circuit in and for
Hillsborough County. Cypress Retail alleges that it is the
?holder of Note 1 and Note 2 and is authorized and obligated to
pursue the claims stated herein for the benefit of Wells Fargo.?
According to the Debtor, from the face of the Complaint, it
appears that there is a discrepancy as to which entity actually
owns the notes, and there is no admissible evidence that Cypress
Retail had any authority to pursue the State Court Action on
behalf of Wells Fargo. Further, prior to and during the State
Court Action, the Debtor and the Affiliate had been negotiating
with RAM as to the sale of the Property pursuant to release prices
provided for in the Loan Modification Agreement. The parties came
to a settlement on the sale of the Properties during the State
Court Action, but Cypress Retail apparently decided to proceed
with foreclosure instead.
The Debtor noted that the Property is operating and there are no
allegations of waste. As of the Petition Date, no order had been
entered in the State Court Action transferring title to the
Property, the rents, or the funds held in the Debtor's deposit
accounts. Accordingly, the rents and funds remain property of
the Debtor and its Chapter 11 estate.
Prior the Petition Date, the Debtor utilized United American
Realty Corp. as property manager for the Property. Since that
time, United has managed the day-to-day operations of the Property
and has paid the operating expenses of the Property from the rents
collected.
The Court will hold another hearing Dec. 13 at 9:30 a.m. on the
Debtor's continued use of cash collateral.
The Cypress of Tampa LLC and The Cypress of Tampa II LLC filed
voluntary Chapter 11 petitions (Bankr. M.D. Fla. Case No. 12-17518
and 12-17520) on Nov. 20, 2012. The Cypress of Tampa LLC, a
Single Asset Real Estate as defined in 11 U.S.C. Sec. 101(51B),
estimated assets and debts of $10 million to $50 million. Judge
K. Rodney May oversees the cases. Jennis & Bowen, P.L., serves as
the Debtors' counsel.
DESTINATION MATERNITY: S&P Withdraws 'B+' Corp. Credit Rating
-------------------------------------------------------------
Standard & Poor's Ratings Services withdrew all ratings on
Philadelphia-based Destination Maternity Inc. at the company's
request. This includes the 'B+' corporate credit rating and 'BB'
term loan rating.
Destination Maternity is withdrawing all its ratings because it
now has no rated debt outstanding, only an unrated revolver. The
company repaid the principal amount remaining on its senior
secured term loan in November 2012.
DEX ONE: Revises Credit Agreements for SuperMedia Merger
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Dex One Corporation and SuperMedia Inc. have reached an agreement
with a steering committee representing senior lenders of both
companies on a revised set of amendments to the companies' credit
agreements as part of their proposed merger. As a result, the
companies have also entered into an Amended and Restated Merger
Agreement.
The credit agreement amendments will:
-- Uphold the basic economic terms and strategic merits of the
merger as initially announced;
-- Preserve the interests of all investors without any dilution;
and
-- Extend the maturity dates of the companies' senior secured debt
up to 26 months until Dec. 31, 2016.
Following the initial announcement of the proposed merger in
August 2012, the lender steering committee was formed to evaluate
the proposed amendments to the companies' respective credit
agreements. The existing senior credit agreements for both
companies require 100 percent approval from the senior lenders for
the amendments, and the companies are working with the steering
committee to obtain the requisite approval from the remaining
senior lenders.
The steering committee has unanimously agreed to support the
revised credit agreement amendments.
As previously disclosed, in the event the companies obtain
sufficient, but not unanimous, support from the remaining lenders,
either or both companies may seek to finalize credit agreement
amendments and complete the merger by means of a pre-packaged
bankruptcy.
Dex One and SuperMedia will also seek approval from their
respective shareholders for the proposed merger and the pre-
packaged bankruptcy plan, if the pre-packaged plan becomes
necessary to secure the credit agreement amendments.
The merger is expected to be completed in the first half of 2013.
About Dex One
Dex One, headquartered in Cary, North Carolina, is a local
business marketing services company that includes print
directories and online voice and mobile search. Revenue was
approximately $1.1 billion for the LTM period ended Sept. 30,
2010.
R.H. Donnelley Corp. and 19 of its affiliates, including Dex
Media East LLC, Dex Media West LLC and Dex Media Inc., filed for
Chapter 11 protection on May 28, 2009 (Bank. D. Del. Case No. 09-
11833 through 09-11852). They emerged from bankruptcy on Jan. 29,
2010. On the Effective Date and in connection with its emergence
from Chapter 11, RHD was renamed Dex One Corporation.
Dex One reported a net loss of $518.96 million in 2011 compared
with a net loss of $923.59 million for the eleven months ended
Dec. 31, 2010.
* * *
As reported in the April 2, 2012 edition of the TCR, Moody's
Investors Service has downgraded the corporate family rating (CFR)
for Dex One Corporation's to Caa3 from B3 based on Moody's view
that a debt restructuring is inevitable. Moody's has also changed
Dex's Probability of Default Rating (PDR) to Ca/LD from B3
following the company's purchase of about $142 million of par
value bank debt for about $70 million in cash. The Caa3 rating
also reflects Moody's view that additional exchanges at a discount
are likely in the future since the company amended its bank
covenants to make it possible to repurchase additional bank debt
on the open market through the end of 2013.
As reported by the TCR on April 4, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Cary, N.C.-based
Dex One Corp. and related entities to 'CCC' from 'SD' (selective
default). "The upgrade reflects our assessment of the company's
credit profile after the completion of the subpar repurchase
transaction in light of upcoming maturities, future subpar
repurchases, and our expectation of a continued week operating
outlook," explained Standard & Poor's credit analyst Chris
Valentine.
About Idearc Inc.
Headquartered in D/FW Airport, Texas, Idearc, Inc., now known as
SuperMedia Inc., is the second largest U.S. yellow pages
publisher. Idearc was spun off from Verizon Communications, Inc.
Idearc and its affiliates filed for Chapter 11 protection (Bankr.
N.D. Tex. Lead Case No. 09-31828) on March 31, 2009. The Debtors'
financial condition as of Dec. 31, 2008, showed total assets of
$1,815,000,000 and total debts of $9,515,000,000. Toby L. Gerber,
Esq., at Fulbright & Jaworski, LLP, represented the Debtors in
their restructuring efforts. The Debtors tapped Moelis & Company
as their investment banker; Kurtzman Carson Consultants LLC as
their claims agent.
William T. Neary, the United States Trustee for Region 6,
appointed six creditors to serve on the official committee of
unsecured creditors. The Committee selected Mark Milbank, Tweed,
Hadley & McCloy LLP, as counsel, and Haynes and Boone, LLP, co-
counsel.
Idearc completed its debt restructuring and its plan of
reorganization became effective as of Dec. 31, 2009. In
connection with its emergence from bankruptcy, Idearc changed its
name to SuperMedia Inc. Under its reorganization, Idearc reduced
its total debt from more than $9 billion to $2.75 billion of
secured bank debt.
Less than two years since leaving bankruptcy protection,
SuperMedia remains in quandary. Early in October 2011, Moody's
Investors Service slashed its corporate family rating for
SuperMedia to Caa1 from B3 prior. The downgrade reflects Moody's
belief that revenues will continue to decline at a double digit
rate for the foreseeable future, leading to a steady decline in
free cash flow. SuperMedia's sales were down 17% for the second
quarter of 2011 in a generally improving advertising sector.
Moody's ratings outlook for SuperMedia remains negative.
While SuperMedia is attempting to transition the business away
from its reliance on print advertising through development of
online and mobile directory service applications, Moody's is
increasingly concerned that the company will not be able to make
this change quickly enough to stabilize the revenue base over the
intermediate term. Further, the high fixed cost nature of
SuperMedia's business could lead to steep margin compression,
notwithstanding continued aggressive cost management.
DHC GROUP: A.M. Best Affirms 'B-' Financial Strength Rating
-----------------------------------------------------------
A.M. Best Co. has affirmed the financial strength rating of B-
(Fair) and issuer credit ratings of "bb-" of the members of DHC
Group. The ratings apply to National American Insurance Company of
California and its wholly owned subsidiary, Danielson National
Insurance Company (both domiciled in Long Beach, CA). Both
companies are ultimately owned by Covanta Holding Corporation
(Covanta) [NYSE: CVA]. The outlook for these ratings is stable.
Concurrently, A.M. Best has withdrawn both companies' ratings as
management has requested to no longer participate in A.M. Best's
interactive rating process.
The ratings recognize DHC's historically unfavorable underwriting
performance and adverse loss reserve development. Offsetting
these rating factors is management's recent decision to place of
all its insurance operations into run-off. In addition, the
ratings reflect the continued financial support in the form of
significant capital contributions in recent years to DHC's
entities by its ultimate parent company.
DHILLON PROPERTIES: Third Amended Plan of Reorganization Confirmed
------------------------------------------------------------------
The Hon. Gregg W. Zive of the U.S. Bankruptcy Court for the
District of Nevada has confirmed the Third Amended Plan of
Reorganization filed by Dhillon Properties LLC.
The Bankruptcy Court conditionally approved Dhillon's disclosure
statement in connection with the solicitation of acceptances of
its Third Amended Plan of Reorganization dated June 11, 2012.
The Debtor designates five classes of claims: Secured Claims of
Wells Fargo Bank (Class 1), Secured Claim of City of Elko (Class
2), Secured Claim of Elko Gold Mine, LLC (Class 3), Unsecured
Claims (Class 4), Membership Interest (Class 5).
Administrative Claims, which are unclassified, will be paid in
full on or before the Effective Date.
The Debtor has scheduled against it secured claims totaling
$11.68 million: (1) $11.56 million to Wells Fargo Bank and (2)
$124,803 to City of Elko. The Debtor has scheduled against it
unsecured claims totaling $311,055.
The amount of the Wells Fargo Secured Claim (Class 1) will be the
sum of $6,706,136, plus additional post petition collection costs
and fees subsequent to Sept. 15, 2011, as agreed upon by the
Debtor. Commencing on the 11th day of the next month following
the Confirmation Date, the Debtor will distribute to Wells Fargo a
sum equal to the normal amortized monthly payment based on the
Wells Fargo Interest Rate (5.25% p.a.) and a 30-year amortized
mortgage term. The balance owed on the Wells Fargo Secured Claim,
together with any and all accrued interest, fees and costs due,
will be paid on or before May 11, 2017.
Wells Fargo will have a deficiency claims against the Debtor in
the amount of $4,854,672. In the event of a default by the Debtor
under the Plan, and in the event Debtor fails to cure such default
within 15 days after notice, there will a Default under the Plan,
and Wells Fargo will be entitled to enforce all of the terms of
the Wells Fargo Deed of Trust and the Wells Fargo Note, in
addition to all rights available under Nevada law, including,
without limitation, foreclosure upon the Property and the
opportunity to credit bid the entire amount of the Wells Fargo
Note at any foreclosure sale.
The Secured Claim of the City of Elko (Class 2) and the Secured
Claim of Elko Gold Mine, LLC (Class 3) will be paid by equal
monthly payments over a period of 60 months.
Allowed Unsecured Claims (Class 4) will receive quarterly pro rata
disbursements of $3,000 over a period of 5 years. To the extent
that the Debtor is unable to make payment, Dhillon Holdings, Inc.,
the sole member of the Debtor, or an affiliate company, will
contribute to the Debtor sufficient funds to make the payment.
The member will retain its membership interest, but will receive
no distribution until all claims are paid in full.
Pursuant to the Plan, the Debtor will continue to operate the
Holiday Inn Express post-confirmation. The income generated
therefrom will be used to fund the Plan. The Debtor will sell or
refinance the Property between 48 months and 63 months following
the Effective date. The proceeds from such sale or refinance will
be used to fund the Plan.
Dhillon Holdings, the sole member of the Debtor, or an affiliate
company, will contribute funds as are necessry to implement the
Plan, specifically any sums necessary to cure executory contracts.
A copy of the Third Amended Disclosure Statement is available for
free at http://bankrupt.com/misc/dhillonproperties.doc242.pdf
About Dhillon Properties LLC
Elko, Nevada-based Dhillon Properties, LLC, owns the Holiday Inn
Express located at 3019 Idaho Street, in Elko, Nevada. The
Company filed for Chapter 11 bankruptcy (Bankr. D. Nev. Case
No. 09-54640) on Dec. 31, 2009. In its schedules, the Company
disclosed assets of $13,217,541, and total debts of $9,260,886.
Alan R. Smith, Esq., at the Law Offices of Alan R. Smith, in Reno,
Nev.; and AJ Kung, Esq., and Brandy Brown, Esq., at Kung &
Associates, in Las Vegas, Nev., represent the Debtor as counsel.
DIAMONDBACK CAPITAL: Volume of Redemptions Prompts Wind-Down
------------------------------------------------------------
The Wall Street Journal's Chad Bray reports that hedge fund
Diamondback Capital Management LLC told investors Thursday that it
plans to close and wind down its funds after receiving redemptions
requests totaling more than a quarter of its assets. The report
relates that in a letter to investors Thursday, the Stamford,
Conn., hedge fund's founders Richard Schimel and Larry Sapanski
said they received redemption requests for Dec. 31 of about $520
million, or 26% of its assets under management. As a result, the
fund would be left with about $1.45 billion in assets under
management.
"Rather than continue to manage investor capital while undertaking
to restructure the firm to manage this reduced level of assets, we
have decided that the most prudent course is to wind down and
terminate the funds and return investor capital," Messrs. Schimel
and Sapanski said in the letter.
In its letter on Thursday, Diamondback said that the Dec. 31
redemptions have been suspended, and investors will receive pro
rata distributions as the funds' assets are reduced to cash, a
process the fund has already begun. The redemption deadline for
Diamondback was Nov. 15.
"We anticipate that the majority of investor capital will be
returned during January," said Messrs. Schimel and Sapanski, who
formerly worked for Steven A. Cohen's SAC Capital Advisers,
according to the report.
According to WSJ, the announcement of the wind down comes as
former Diamondback portfolio manager Todd Newman is on trial for
alleged insider trading in technology stocks. Mr. Newman has
denied wrongdoing.
The report says Diamondback itself avoided criminal charges in a
broad crackdown on insider trading by federal prosecutors and
entered into a non-prosecution agreement with the government. The
firm agreed to pay $9 million in disgorgement and penalties.
The report notes the fund is down from its peak of $6 billion in
assets under management in 2010.
DICKINSON THEATRES: Spirit Lease Dispute Stalls Plan Confirmation
-----------------------------------------------------------------
Bankruptcy Judge Dale L. Somers in Kansas denied confirmation of
Dickinson Theatres, Inc.'s First Amended and Restated Plan of
Reorganization Dated Nov. 5, 2012.
Two objections to confirmation were filed, one by the Treasurer of
Maricopa County, Arizona, which the Debtor will resolve by
agreement, and one by Creditors Spirit Master Funding, LLC and
Spirit Master Funding IV, LLC.
Spirit contends the Plan violates 11 U.S.C. Sec. 365 in three
respects: it seeks to delay the decision to assume or reject the
Palm Valley portion of the parties' Master Lease in violation of
the time limits of Sec. 365(d)(4); it improperly classifies the
Spirit Contingent Unsecured Claim as a subclass of an unrelated
unsecured claim of Spirit; and it miscalculates the amount of
rejection damages, which should under Sec. 365(d)(4) be in the
amount of $934,585.51.
Through the Master Lease, Dickinson leases from Spirit four
properties on which it operates some of its movie theaters; three
of those locations are highly profitable, but the fourth, Palm
Valley, is not.
On Sept. 21, 2012, Dickinson filed a motion to reject a portion of
the Master Lease concerning Palm Valley. Spirit objected. On
Oct. 12, the Court issued its opinion and judgment denying the
Debtor's request. On Oct. 26, Dickinson filed a notice of appeal
from that order to the Bankruptcy Appellate Panel of the Tenth
Circuit. The appeal is pending.
The Plan attempts to preserve the Debtor's appeal. It includes
the denial of the Rejection Motion within the schedule of those
actions to be retained after confirmation. Although the Plan
provides for assumption of the Master Lease, it also includes in
the Schedule of Rejected Leases and Executory Contracts the "Palm
Valley portion" of the Master Lease.
The Plan creates a Spirit Contingent Unsecured Claim, defined as
any allowed claim "arising from any court ultimately granting the
relief requested" . At the evidentiary hearing, the Debtor's
counsel clarified that the Spirit Contingent Unsecured Claim is
intended to be Spirit's rejection damages in the event the Master
Lease is rejected in part.
The Court construes the Plan as providing for conditional
assumption of the Master Lease, or at least of the Palm Valley
portion of the Master Lease. The Plan clearly defers the final
decision to assume the lease in full until after the appeal is
finally determined.
Robert J. Horton, Dickinson's Chief Executive Officer, has
testified as to the feasibility of making lease rejection payments
to Spirit under the assumption that partial rejection would be
allowed by an appellate order entered in June 2013. He testified
that Dickinson is projected to have sufficient funds to pay
rejection damages over time, if the damages would be a general
unsecured claim. However, Mr. Horton also testified, that if, as
contended by Spirit, the rejection claim would be entitled to
administrative expense priority and therefore had to be paid in a
lump sum, it would be tough to make payment and "it would make
more sense just to assume [the lease] and not have to pay the full
amount."
For purposes of the confirmation hearing, the parties agreed that
the rejection damage amount would be $934,585.51, the amount
claimed by Spirit, rather than $736,998.72, the amount the Debtor
included in the proposed Plan.
In his decision Tuesday, Judge Somers agreed with Spirit that the
Plan violates the time limits of Sec. 365(d)(4). According to
Judge Somers, there is no provision in Sec. 365(d)(4) allowing for
a conditional assumption -- an assumption subject to a later
option to reject. Judge Somers said the Master Lease is assumed
to be rejected if it is not assumed by the earlier of the date the
order confirming the plan is entered or, unless Spirit consents to
an extension, the 120 day limit, which is April 22, 2013.
According to Judge Somers, the Debtor has not sustained its burden
of proof as to feasibility of the Plan. At the hearing, the
question arose whether, if this Court's ruling denying the
rejection of the Palm Valley portion of the Master Lease were
reversed and Debtor thereafter elected to reject, the rejection
damages which would be owed to Spirit would be an administrative
expense. Thus feasibility requires either a finding that:
(1) as a matter of law the rejection claim would not be
an administrative claim; or
(2) the Debtor's projections show reasonable ability to
pay rejection damages in a lump sum at a future unknown
time.
The Debtor has not attempted at this time to satisfy condition
one, and the Court makes no ruling on the legal issue.
The Debtor also has not satisfied condition two. The Debtor's
financial projections do not include such a lump sum payment. Mr.
Horton's testimony does not convince the Court that such a payment
could be made. He testified that if the rejection occurred prior
to 2017, to make payment, the Debtor would have to resort to a
line of credit, the availability of which was uncertain. He
further testified that although the projections estimate that the
Debtor would have sufficient cash to write a check for $934,000 in
2017, at that time it would make more sense just to assume the
lease rather than have to pay the full amount in a lump sum.
"The Court recognizes that the Court's rulings may in effect
preclude an appeal of the denial of the Partial Rejection Motion.
But this is not a reason to confirm a plan which does not conform
to the requirements of Sec. 1129," Judge Somers said. "In
bankruptcy practice, there are some adverse rulings from which an
effective appeal is not available. In accord with the denial of
the Partial Rejection Motion and the applicable sections of the
Bankruptcy Code, Spirit is entitled to have the Master Lease
either assumed in full or rejected in full."
A copy of the Court's Dec. 4, 2012 Memorandum Opinion and Order is
available at http://is.gd/S4Gwv9from Leagle.com.
Overland Park, Kansas-based Dickinson Theatres, Inc., which is
engaged in the movie theater business in multiple locations, filed
for Chapter 11 protection (Bankr. D. Kan. Case No. 12-22602) on
Sept. 21, 2012. Judge Dale L. Somers presides over the case.
Sharon L. Stolte, Esq., at Stinson Morrison & Hecker L.L.P.,
represents the Debtor. The Debtor listed assets of $2,198,081,
and liabilities of $7,617,413.
ENERGY FUTURE: S&P Cuts CCR to 'SD' on Distressed Debt Exchange
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on Energy Future Holdings Corp. (EFH) to 'SD' from 'CCC'
based on the consummation of a distressed debt exchange of five
EFH-level debt securities totaling about $1.6 billion with the new
Energy Future Intermediate Holding Co. LLC (EFIH) senior secured
toggle notes due 2018 of about $1.1 billion. "We assigned our 'CC'
debt issue rating and '6' recovery rating to the new EFIH notes.
We lowered EFH's series Q and series R unsecured debt to 'D.' The
outlook on EFIH remains negative," S&P said.
"Under our criteria, we lower to 'SD' the corporate credit rating
of a company that undertakes a distressed exchange when it
consummates the offer, and then shortly thereafter revise the
corporate credit rating to its fundamental credit level taking the
effects, if any, of the exchange into account," S&P said.
"The exchange continues EFH's strategy to reduce debt levels and
its annual interest burden through distressed exchanges and remove
maturities in the years in which EFH's subsidiary Texas
Competitive Electric Holdings Co. LLC (TCEH; CCC/Negative/--)
approximate $20 billion coming due between 2014 and 2017. The
exchange lowers EFH-level debt by about 12%. Even so, the new debt
includes an option to pay interest in kind for three years,
helping EFH to meet obligations while distributions from its
regulated electricity transmission unit Oncor Electric Delivery
Co. LLC (BBB+/Stable) are low because it is building out its share
of the CREZ transmission line into West Texas that will bring
renewable electricity to load centers," S&P said.
"The exchange involved the cash-pay and payment-in-kind toggle
notes issued to help fund the LBO in 2007 and three of the pre-LBO
debt securities, series P, Q, and R. The cash-pay and payment-in-
kind toggle notes are already rated 'D' based on previous
distressed exchanges, and kept there since more such exchanges
were likely. The series Q and R securities are also now rated 'D'
and it is likely EFH will continue to reduce its balance further
with similar exchange offers," S&P said.
"These securities have very low recovery prospects in our view,
given that, in a default situation, the enterprise value to EFH's
approximate 80% ownership in Oncor on a discounted cash flow basis
after paying administration fees would only cover the senior
secured debt at EFIH and EFH, not to mention second-lien debt.
Lenders accepting the exchange might be looking to the value, if
any, of being closer to the asset that provides essentially all
cash flow to EFIH and EFH to meet obligations. We do not think
there would be any value going to EFH from TCEH in a default
scenario, due to the very high debt burden at TCEH; even the
senior secured debt at TCEH will not be made whole in a default
situation in our view," S&P said.
"We will revise EFH's rating from 'SD' to its fundamental credit
level shortly," S&P said.
FOCUS BRANDS: S&P Affirms 'B' Corp. Credit Rating on Dividend Plan
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its corporate credit
rating on Atlanta-based Focus Brands Inc. The outlook is stable.
"We are also affirming the 'B' issue-level rating on the company's
amended first-lien credit facilities. The '3' recovery rating is
unchanged. We affirmed 'CCC+' issue-level rating with on the
amended second-lien facility; the '6' recovery rating is
unchanged," S&P said.
"The ratings on Focus Brands reflect our assessment that the
company's business risk profile will continue to be 'weak,'
primarily reflecting its relatively small-size presence in the
highly competitive quick-service restaurant industry," said
Standard & Poor's credit analyst Helena Song. "Our view of its
financial risk profile as 'highly leveraged' incorporates elevated
debt levels, thin cash flow protection measures, and our
expectation that debt-financed dividends will likely resume beyond
the next one to two years. In our opinion, these debt-funded
shareholder initiatives represent a very aggressive financial
policy," S&P said.
"The outlook is stable, which incorporates our expectation of
continuing EBTIDA growth and debt reduction leading to credit
ratio improvement in the next 12 months. However, if profits do
not grow and credit ratios do not improve as anticipated, we may
consider a lower rating. For example, if at the end of fiscal
2013, operating lease-adjusted leverage is still in the high 6x or
worse, we may consider a lower rating or an outlook revision. Such
a scenario could occur if revenue declines 5% in 2013 when
operating margins remain consistent. This could also occur if the
company fails to use bulk of its free operating cash flow to
reduce debt," S&P said.
"We think the potential for a higher rating is limited by the
company's very aggressive financial policies and high debt.
Although unlikely in the next 12 to 18 months, we could consider a
higher rating if we believe that leverage could not exceed 5.0x on
a sustained basis, and FFO to debt would be above 12%," S&P said.
FREMONT GENERAL: Calif. Appeals Court Affirms Faigin Judgment
-------------------------------------------------------------
Signature Group Holdings, Inc., formerly known as Fremont
Reorganizing Corporation, appeals a judgment awarding Alan W.
Faigin, former interim President and Chief Executive Officer of
Fremonth, $1,347,000 in damages for breach of an implied-in-fact
agreement to terminate his employment only for good cause. FRC
contends the evidence does not support the jury verdict and some
of the jury's factual findings are contrary to law. FRC also
contends the damages are excessive and challenges the admission of
evidence and the refusal of its proposed jury instructions.
Mr. Faigin appeals a postjudgment order denying his motion for
prejudgment interest. He contends he is entitled to an award of
prejudgment interest on his unliquidated claim for damages under
Civil Code section 3287, subdivision (b).
The Court of Appeals of California, Second District, Division
Three, last week held that substantial evidence supports the jury
verdict and that FRC has shown no legal error or prejudicial abuse
of discretion. The appellate court also held that the denial of
Mr. Faigin's motion for prejudgment interest was proper. The
appellate court affirm the judgment and the postjudgment orders.
The case is ALAN W. FAIGIN, Plaintiff and Appellant, v. SIGNATURE
GROUP HOLDINGS, INC., Defendant and Appellant, No. B224598 (Calif.
App. Ct.). A copy of the appellate court's Dec. 5, 2012 decision
is available at http://is.gd/Yijao8from Leagle.com.
About Signature Group
Signature Group Holdings, Inc. --
http://www.signaturegroupholdings.com/-- is a diversified
business and financial services enterprise with principal
activities in industrial distribution and special situations debt.
Signature has significant capital resources and is actively
seeking acquisitions as well as growth opportunities for its
existing businesses. The Company was formerly a $9 billion in
assets industrial bank and financial services business that
reorganized during a two-year bankruptcy period. The
reorganization provided for Signature to maintain federal net
operating loss tax carryforwards in excess of $850 million.
Fremont General Corp. filed for Chapter 11 protection (Bankr. C.D.
Calif. Case No. 08-13421) on June 18, 2008. Robert W. Jones,
Esq., and J. Maxwell Tucker, Esq., at Patton Boggs LLP, Theodore
Stolman, Esq., Scott H. Yun, Esq., and Whitman L. Holt, Esq., at
Stutman Treister & Glatt, represented the Debtor as counsel.
Kurtzman Carson Consultants LLC was the Debtor's noticing agent
and claims processor. Lee R. Bogdanoff, Esq., Jonathan S.
Shenson, Esq., and Brian M. Metcalf, at Klee, Tuchin, Bogdanoff &
Stern LLP, represented the Official Committee of Unsecured
Creditors as counsel. Fremont's formal schedules showed
$330,036,435 in total assets and $326,560,878 in total debts.
Fremont General emerged from bankruptcy and filed Amended and
Restated Articles of Incorporation with the Secretary of State of
Nevada on June 11, 2010, which, among other things, changed the
Debtor's name to Signature Group Holdings, Inc.
Signature's plan of reorganization became effective on June 11,
2010. The name change also took effect as of that date.
GRAMERCY INSURANCE: A.M. Best Cuts Finc'l. Strength Rating to 'D'
-----------------------------------------------------------------
A.M. Best Co. has downgraded the financial strength rating to D
(Poor) from C++ (Marginal) and issuer credit rating to "c" from
"b" of Gramercy Insurance Company (GIC) (Dallas, TX). The outlook
for both ratings is negative. Concurrently, A.M. Best has
withdrawn the ratings as GIC has requested to no longer
participate in A.M. Best's interactive rating process.
The rating actions reflect the worsening of GIC's already weak
capitalization through the third quarter of 2012, driven by
ongoing underwriting and operating losses. As a result,
policyholders' surplus has declined by 73%, which has driven
underwriting leverage to very high levels. The heavy underwriting
losses were partially due to an additional $3.7 million of adverse
loss reserve development during 2012, primarily on the 2011 and
pre-2010 accident years. The ratings also reflect GIC's elevated
dependence on reinsurance to support its operations.
The outlook reflects A.M. Best's view that GIC may cease
operations in the near term due to lack of capital support.
HANGER INC: Two Acquisitions No Impact on Moody's 'B1' CFR
----------------------------------------------------------
Moody's Investors Services said Hanger Inc.'s acquisitions of
Faith Prosthetic-Orthotic Services, Inc. and SCOPe Orthotics &
Prosthetics, Inc. have positive credit implications because they
are accretive strategic acquisitions that were funded with cash on
hand, but have no affect on Hanger, Inc.'s rating (B1 CFR) or
positive outlook.
The last rating action on Hanger was on October 19, 2012, at which
time Moody's change the outlook to positive.
The principal methodologies used in rating Hanger Orthopedic
Group, Inc. were Global Business & Consumer Service Industry
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.
Hanger Orthopedic Group, Inc., ("Hanger"; NYSE: HGR) headquartered
in Austin, TX, is the leading provider of orthotic and prosthetic
("O&P) patient-care services in the US.
HOMER CITY: Wins Approval of Prepack Plan
-----------------------------------------
Delaware Bankruptcy Judge Kevin Gross on Thursday gave his stamp
of approval on the plan of reorganization filed by Homer City
Funding LLC, paving the way for the Debtor to exit bankruptcy a
little over a month after seeking Chapter 11 protection.
The plan was accepted prepetition by the required majorities of
the holders of $640 million in bonds. An affiliate of General
Electric Capital Corp. holds $103 million, or 16%, of the bonds.
Under the Plan, ownership will transfer to an entity controlled by
GECC and Metropolitan Life Insurance Company. The new owner will
issue new bonds in exchange for the existing bonds. The new bonds
will be in a principal amount equal to the outstanding principal
and unpaid interest on the old bonds at the non-default rate. The
new bonds will have the same interest rates and maturities.
Interest on the new bonds can be paid by issuing more bonds
through April 2014. GECC will provide the project with a $75
million secured credit on emergence from Chapter 11.
Equity interests in the Debtor are cancelled under the Plan.
The confirmation order also approved minor modifications to the
release provisions in the Plan. The order also sets Dec. 21 as
the deadline for professionals involved in the case to file final
fee applications. The Court will hold a fee approval hearing on
Dec. 27.
A prior court order indicated that if the Plan is confirmed by
Jan. 4, a meeting of creditors under 11 U.S.C. Sec. 341(a) will
not be convened; and the Debtor will be excused from filing its
schedules of assets and liabilities, and statement of financial
affairs.
About Homer City Funding
Homer City Funding LLC, a special-purpose entity created to
finance a coal-fired electric generating facility 45 miles
(72 kilometers) from Pittsburgh, initiated a prepackaged Chapter
11 reorganization (Bankr. D. Del. Case No. 12-13024) on Nov. 5,
2012, to transfer ownership of the plant. The project is operated
under a lease by an affiliate of power producer Edison Mission
Energy. The project's owner is an entity that is 90%-controlled
by an affiliate of General Electric Capital Corp. and 10% by an
affiliate of MetLife Inc.
Upon confirmation of the Plan, ownership will transfer to an
entity controlled by GECC and MetLife. The new owner will issue
new bonds in exchange for the existing bonds.
Judge Kevin Gross oversees the case. Paul Noble Heath, Esq., and
Zachary I Shapiro, Esq., at Richards, Layton & Finger, serve as
the Debtor's counsel. Epiq Bankruptcy Solutions serves as claims
agent.
In its petition, Homer City estimated $500 million to $1 billion
in both assets and debts. The petition was signed by Thomas M.
Strauss, authorized officer.
The petition listed two unsecured creditors: The Bank of New York
Mellon, as trustee for the $465,976,000 in 8.734% Senior Secured
Bond maturing in 2026; and BNY Mellon, as trustee for the
$174,000,000 in 8.137% Senior Secured Bond maturing in 2019. BNY
Mellon is represented by Glenn E. Siegel, Esq. --
glenn.siegel@dechert.com -- at Dechert LLP.
GE Capital is represented by Debra A. Dandeneau, Esq,. at Weil
Gotshal & Manges LLP in New York. MetLife is represented by its
chief counsel of securities investments.
A group of PSA bondholders is represented by George A. Davis,
Esq., at Cadwalader Wickersham & Taft LLP in New York.
HOMER CITY: S&P Assigns 'B-' Corp. Credit Rating; Outlook Stable
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B-' corporate
credit rating to Homer City Generation L.P. The outlook is stable.
"We also assigned a '1' recovery score and 'B+' debt issue rating
to Homer City's $174 million senior secured notes due 2019 and
$465.9 million senior secured notes due in 2026," S&P said.
"We rate Homer City using our Corporate rating criteria and not
our project finance criteria because there is no cash-management
structure characteristic of project finance. Homer City is a 1,884
megawatt (MW) power plant in western Pennsylvania that earns cash
flow from selling electricity and capacity into the PJM
Interconnection and New York markets. Ratings reflect a 'weak'
business profile and "highly leveraged" financial profile," S&P
said.
"Our weak business profile reflects Homer City's small scale, weak
competitive position, no geographic diversity, and little
operational diversity with three plant units. The company is also
exposed to volatility of output market electricity prices and
input fuel costs," S&P said.
"On a better note, we expect about 20% of cash flow in our base
case to come from PJM Interconnection capacity markets, which have
fixed pricing through mid-2017," said Standard & Poor's credit
analyst Terry Pratt.
"The stable outlook reflects our view that the scrubber
infrastructure and other balance of plant works will be
operational before the MATs period begins in early 2015 and that
natural gas prices will remain generally in line with the current
market forward view. An improvement in the rating would require
Homer City to achieve an aggressive financial risk profile, which
is not likely through the construction period (expected to last
through August 2014). We could lower the rating if difficulties
arise during construction that could affect plant operations in
the MATs period. We could also lower the rating if power prices
materially fall due to lower gas prices or demand. A decline in
FFO to debt to about 4% would likely lead to a rating drop," S&P
said.
INNOVARO INC: Receives Delisting Notification From NYSE MKT
-----------------------------------------------------------
Innovaro, Inc. has received notice, dated Dec. 4, 2012, that the
NYSE MKT LLC intends to proceed with an application to the United
States Securities and Exchange Commission to remove the Company's
common stock from listing on the NYSE MKT. This determination,
which the Company intends to appeal, was made in light of the NYSE
MKT's position that the Company is not in current compliance with
certain standards for continued listing on the NYSE MKT.
Specifically, the NYSE MKT believes that the Company is not in
compliance with the following sections of the NYSE MKT Company
Guide:
-- Section 1003(a)(ii) of the NYSE MKT Company Guide in that the
Company reported stockholders' equity of less than $4,000,000 at
Sept. 30, 2012 and losses from continuing operations and/or net
losses in its three out of its four most recent fiscal years ended
Dec. 31, 2011;
-- Section 1003(a)(iii) of the NYSE MKT Company Guide in that the
Company reported stockholders' equity of less than $6,000,000 at
June 30, 2012 and had losses from continuing operations and/or net
losses in each of its five consecutive fiscal years ended Dec. 31,
2011; and
-- Section 1003(a)(iv) of the NYSE MKT Company Guide in that the
Company has sustained losses which are so substantial in relation
to its overall operations or its existing financial resources, or
its financial condition has become so impaired that it appears
questionable, in the opinion of the NYSE MKT, that the Company
will be able to continue operations and/or meet its obligations as
they mature.
In accordance with Sections 1009(d) and 1203 of the NYSE MKT
Company Guide, the Company plans to appeal the NYSE MKT's
determination by requesting a hearing before a Listing
Qualifications Panel. There can be no assurance that the Company's
request for continued listing will be granted or that, if granted,
the Company will be able to continue to meet the minimum listing
requirements.
Innovaro, Inc. -- http://www.innovaro.com/-- helps clients
innovate and grow. Innovaro offers a comprehensive set of
services and software to ensure the success of any innovation
project, regardless of the size or intent.
INTERSTATE AUTO: A.M. Best Lowers Finc'l. Strength Rating to 'E'
----------------------------------------------------------------
A.M. Best Co. has downgraded the financial strength rating to E
(Under Regulatory Supervision) from C+ (Marginal) and the issuer
credit rating to "rs" from "b-" of Interstate Auto Insurance
Company, Inc. (Interstate Auto) (Baltimore, MD).
The rating actions on Interstate Auto follow the announcement that
the insurance regulator of the State of Maryland (The Maryland
Insurance Administration) has issued an order of consent for
Interstate Auto placing it under receivership.
The order follows Interstate Auto's significant depletion of its
capital position in the third quarter of 2012, following the non-
admittance of approximately $1 million in accounts receivable from
its affiliated insurance agency (Katz's Insurance Agency), which
also has been placed under receivership. The consent order
directs the receiver known as Invotex, Inc. to either rehabilitate
or liquidate the businesses of both Interstate Auto and Katz
Insurance Agency.
J & J DEVELOPMENTS: Colliers International Approved as Realtor
--------------------------------------------------------------
The Hon. Robert E. Nugent of the U.S. Bankruptcy Court for the
District of Kansas authorized J&J Developments, Inc., to employ
Colliers International North Texas, LLC as its realtor and
auctioneer.
H. Allen Gump, a Colliers agent, told the Court that Colliers will
receive a fee or commission of 6% of the sale of the real
property. No retainer or other prepaid compensation has been
paid.
Mr. Gump assured the Court that Colliers is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
About J & J Developments
J & J Developments Inc. is a real estate holding company holding
title to real estate in more than 20 locations in Kansas. Many of
those locations contain convenience stores.
J & J Developments filed a Chapter 11 petition (Bankr. D.
Kan. Case No. 12-11881) in Wichita, Kansas, on July 12, 2012.
John E. Brown signed the petition as president and chief executive
officer. The Debtor is represented by Edward J. Nazar, Esq., at
Redmond & Nazar, LLP, in Wichita, Kansas. Judge Robert E. Nugent
presides over the case. According to the petition, the Debtor has
scheduled assets of $18.7 million and scheduled liabilities of
$34,933.
J & J DEVELOPMENTS: Gets Interim OK for J.P. Weigand to Sell Asset
------------------------------------------------------------------
The Hon. Robert E. Nugent of the U.S. Bankruptcy Court for the
District of Kansas authorized, in a preliminary order, J&J
Developments, Inc., to employ J.P. Weigand & Sons, Inc., as
realtor and auctioneer to sell the Debtor's real properties.
The Debtor proposed to sell various real properties using the
sealed bid process:
1. 401 N. Commercial, Sedgwick (Value: $150,000 - $200,000)
-- sealed bid process must raise current offer of $160,000
2. 104 N. Baltimore, Derby (Value: $150,000 - $200,000)
3. 2107 E. Kansas, McPherson (Value: $400,000 - $500,000)
4. 2605 SW 21st Street, Topeka (Value: TBD)
A copy of the terms of application is available for free at
http://bankrupt.com/misc/J&J_auctioneer.pdf
Grant J. Tideman, SIOR, CRE, a J.P. Weigand agent, told the Court
that no retainer or other prepaid compensation has been paid and
the compensation agreed to be paid. Mr. Tideman assured the Court
that Weigand is a "disinterested person" as that term is defined
in Section 101(14) of the Bankruptcy Code.
About J & J Developments
J & J Developments Inc. is a real estate holding company holding
title to real estate in more than 20 locations in Kansas. Many of
those locations contain convenience stores.
J & J Developments filed a Chapter 11 petition (Bankr. D.
Kan. Case No. 12-11881) in Wichita, Kansas, on July 12, 2012.
John E. Brown signed the petition as president and chief executive
officer. The Debtor is represented by Edward J. Nazar, Esq., at
Redmond & Nazar, LLP, in Wichita, Kansas. Judge Robert E. Nugent
presides over the case. According to the petition, the Debtor has
scheduled assets of $18.7 million and scheduled liabilities of
$34,933.
J.C. PENNEY: Fitch Lowers Issuer Default Rating to 'B'
------------------------------------------------------
Fitch does not anticipate any effect on the ratings on the GE
Capital Credit Card Master Trust (GECCC Trust) near term as a
result of the downgrade to J.C. Penney Co. Inc. and J.C. Penney
Corporation Inc. (J.C. Penney). Fitch downgraded the Issuer
Default Ratings assigned to J.C. Penney to 'B' from 'BB-' on Nov.
13, 2012.
The J.C. Penney credit card accounts designated to the GECCC Trust
are mainly designed to facilitate in store purchases. General
Electric Capital Corporation underwrites the credit and provides
funding for the receivables, a portion of which is derived from
securitization. As of Aug. 13, 2012, J.C. Penney private label
and co-brand cards comprised 23.3% of the trust's total $17.6
billion in receivables.
Fitch believes GECCC's available credit enhancement is amply
sufficient to support existing ratings, particularly considering
the current performance of the receivables. The current break-
even multiple under a 'AAA' stress scenario is 10x, well above
Fitch's benchmark of 4.5x. However, if J.C. Penney continues to
struggle over the longer term card usage could decline and foster
adverse selection, resulting in weaker receivables performance.
Should such performance deterioration become significant, Fitch
will review its steady state assumptions for the J.C. Penney
products and the ratings assigned relative to available credit
enhancement.
An Issuer Default Rating (IDR) is an assessment of an issuer's
relative vulnerability to default on financial obligations, and
J.C. Penney's was downgraded due to significant deterioration in
sales and gross margin compression. Fitch's credit card ABS cash
flow model includes a purchase rate stress, which is used to
simulate the loss of one or more key partnerships, retailer
bankruptcies, or the effect of regulatory constraints. Purchase
rate is a measure of new receivables generation, but it also
measures cardholder usage. A lower purchase rate results in a
declining portfolio and an inability to reinvest all of the
monthly principal collections in newly generated credit card
receivables. Since credit card receivables generate yield, which
is used to pay trust expenses, including interest to bondholders,
a failure to generate new receivables could ultimately result in
negative carry and excess spread compression.
JOHN HENRY HOLDINGS: S&P Raises Rating on $320-Mil. Debt to 'B+'
----------------------------------------------------------------
Standard & Poor's Ratings Services updated its recovery analysis
on John Henry Holdings Inc., a wholly-owned subsidiary of New
York-based Multi Packaging Solutions Inc. (MPS). The update
reflects a reduction of $40 million in term loan B debt, and a
resulting increase of $20 million of second-lien debt as part of
the company's dividend recapitalization. "Given the reduction in
first-lien debt, we have raised our issue-level rating to 'B+'
from 'B' on the $30 million revolving credit facility and $290
million term loan B (the recovery rating is revised to '2' from
'3'), indicating our expectation of a substantial (70% to 90%)
recovery in the event of a payment default. We have maintained our
'CCC+' and '6' recovery rating on the $80 million second-lien term
loan, indicating our expectation of negligible (0% to 10%)
recovery in the event of payment default. The existing ratings on
MPS, including the 'B' corporate credit rating, are unchanged. The
outlook is stable," S&P said.
The company will use proceeds from the recapitalization to repay
about $180 million in existing debt, redeem about $179 million in
preferred equity, fund a distribution to equity holders, and pay
fees and expenses.
"Our ratings on MPS reflect the company's relatively narrow scope
of operations, limited customer and geographic diversity, and
competition from larger and financially stronger companies. The
ratings also reflect our assessment of the company's financial
policies as very aggressive and its highly leveraged financial
metrics, including total adjusted debt-to-EBITDA of about 5.5x.
Steady operating performance, benefits from the company's cost
reduction initiatives, and improving end-market diversity
partially offset these risk factors. We characterize MPS' business
risk profile as 'weak' and its financial risk profile as 'highly
leveraged,'" S&P said.
LON MORRIS COLLEGE: Auction Postponed to Jan. 14
------------------------------------------------
Potential buyers planning to take part in the auction of bankrupt
Lon Morris College will have an extra month to prepare as a result
of the Dec. 5 ruling by the U.S. Bankruptcy Court for the Eastern
District of Texas.
The auction was reset for Jan. 14 at 11 a.m. in the Dallas offices
of McKool Smith PC, the law firm representing the estate.
"Shifting the auction date to January 14 will give bidders more
time to further research the property, which will ensure they are
able to bid with confidence. We're glad to have time to help them
in any way we can, and we look forward to a great auction," said
Stephen Karbelk, co-chairman and founder of AmeriBid. "I feel sure
that those parties planning to bid will welcome the additional
time to research the property, arrange financing and address other
needs," he added.
Attorney Hugh Ray III agreed. "All systems are go for a January 14
auction, and AmeriBid is actively working to provide prospective
bidders the information they need to make bidding decisions," said
Ray, of McKool Smith.
The court ruling gave interim approval for $150,000 of a debtor-
in-possession loan of $500,000 to cover expenses related to
continued staffing and marketing the property.
The auction of the 112-acre campus in Jacksonville includes most
of the facilities, including a library, chapel, administration
building, classroom facilities, student center, doors, gymnasium
and athletic fields. The 158-year-old college -- the oldest
junior college in the state -- entered bankruptcy earlier in 2012.
Karbelk said potential bidders for the college include colleges,
churches, denominations, school systems and others who might wish
to use it as a conference center, corporate retreat or even mixed
use development. "The potential uses are almost unlimited," he
said.
AmeriBid is the premier global real estate auction leader
specializing in the sale of commercial and residential real
estate, land properties and other assets for lenders, servicers,
receivers, bankruptcy attorneys, estates, private owners,
investment companies and local, state and federal government
agencies.
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 Webb and Associates, and
McKool Smith P.C., 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.
The college has a Chapter 11 plan on file to be funded by a sale
of the properties.
MCMORAN EXPLORATION: S&P Puts 'B-' Corp. Credit Rating on Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its rating outlook on
Phoenix-based Freeport-McMoRan Copper & Gold Inc. to negative from
stable, while affirming all ratings on Freeport, including the
'BBB' corporate credit rating.
"In addition, we placed all ratings on Plains Exploration &
Production Co. and McMoRan Exploration Co., including the
respective 'BB-' and 'B-' corporate credit ratings, on CreditWatch
with positive implications. It is our expectation that if the
transactions are completed as proposed, we would raise the
corporate credit ratings on Plains and McMoRan to a level
commensurate with that on Freeport, and subsequently withdraw the
ratings on the former two companies," S&P said.
"The rating actions follow Freeport-McMoRan Copper & Gold's
announcement that it intends to acquire Plains Exploration &
Production Co. and McMoRan Exploration Co. in transactions
totaling $20 billion. Freeport intends to finance the acquisitions
with approximately $9 billion of cash and stock, and an
incremental $9.5 billion in debt," S&P said.
"The negative outlook on Freeport reflects a large debt burden
following these acquisitions, as well as risks associated with
absorbing and integrating two oil and gas companies," said
Standard & Poor's credit analyst Marie Shmaruk. "Still, the rating
affirmation reflects our view that the company's credit metrics
would remain sufficient to support the current 'BBB' rating."
Standard & Poor's ratings also consider Freeport management's
demonstrated commitment to credit quality. "We continue to expect
that the company will take steps during the next few years to
reduce debt to more conservative levels," said Ms. Shmaruk.
"The rating and outlook reflect Freeport-McMoRan Copper & Gold's
leading market position in copper mining, significant and diverse
reserve base, and very low-cost Indonesian operations. They also
incorporate the risk Freeport faces in operating in lower-rated
jurisdictions, in particular Indonesia, which can account for 45%-
65% of segment income depending on prices, mine plans, and
business conditions. The ratings also reflect the company's
exposure to cyclical and volatile commodity prices, rising mining
costs, higher costs at its mature U.S.-based operations, and
exposure to political and sovereign risks in Indonesia and other
lower-rated jurisdictions," S&P said.
"In our view, the proposed acquisitions slightly improve the
company's business risk by diversifying its operations away from
Indonesia and adding commodity diversity, but there are high
capital spending needs at both entities," said Ms. Shmaruk.
"McMoRan has faced mechanical difficulties in achieving production
from the high-potential ultra-deep Gulf of Mexico shelf play, and
Freeport will have exposure to the volatile oil and gas markets."
MDC PARTNERS: S&P Rates $80-Mil. Add-On to Unsecured Notes 'B'
--------------------------------------------------------------
Standard & Poor's Ratings Services assigned MDC Partners Inc.'s
proposed $80 million add-on to the unsecured notes due 2016 an
issue-level rating of 'B', with a recovery rating of '4',
indicating its expectation for average (30% to 50%) recovery for
noteholders in the event of default. The company plans to use
proceeds to pay down its revolving credit facility and for general
corporate purposes.
"Under our base-case scenario, we expect that leverage (including
our adjustments for operating leases, earn-outs, and put
obligations) could remain well above 4x through at least 2013. As
a result, over the next 12 to 18 months, we expect to continue to
characterize the company's financial risk profile as 'highly
leveraged,' which includes leverage in the 4x to 5x range, based
on our criteria. Elevated financial risk, together with continued
economic uncertainty and our 'fair' assessment of the company's
business risk profile, are key considerations in the 'B' rating.
Our governance assessment is fair," S&P said.
"Pro forma for the note offering, lease-adjusted debt (including
deferred acquisition consideration and put obligations) to EBITDA
(before noncash stock compensation, including affiliate
distributions and adjustments for deferred acquisition
consideration, but after minority interest) was very high, at
roughly 8x as of Sept. 30, 2012, up from 6x in 2011. The spike in
leverage was because of EBITDA declines, as well as borrowings
under the revolving credit facility to fund deferred acquisition
consideration payments in 2012. Typical of the industry,
consideration for MDC's acquisitions is usually structure as an
upfront portion, often at PBT (profit before tax) multiples of 3x
to 4x, with additional consideration in the form of contingent
deferred acquisition payments. To date, these payments have been
lumpy, limiting the company's liquidity position in certain
periods and causing the need for credit amendments to loosen
financial covenants. As of Sept. 30, 2012, the current portion of
deferred acquisition consideration was $82.7 million or roughly
76% of EBITDA. Although high, MDC should be able to address this
payment with a combination of revolver borrowings given the
increase in availability from this transaction and free cash
flow," S&P said.
"Under our base-case scenario, we believe that leverage could fall
to the mid- to high-5x area in 2012. In 2013, assuming the company
pays the current portion of earn-out obligations, we believe
leverage could drop to the mid-4x area. Further leverage reduction
will depend on the pace of EBITDA recovery, as well as future
acquisition activity and the ongoing level of acquisition-related
liabilities, which we have assumed will be in the $40 million to
$50 million range longer term. Discretionary cash flow (operating
cash flow, less capital expenditures and after dividends and
minority distributions) was negative for the 12 months ended Sept.
30, 2012, mainly because of EBITDA declines, high dividend
payments, and working capital cash usage as a result of
acquisition activity. Due to EBITDA growth and working capital
benefits of media-related acquisitions in the first half of the
year, we expect discretionary cash flow to be positive in the
fourth quarter. As a result, under our base-case scenario, we
believe the company could convert 30%-40% of EBITDA to
discretionary cash flow for the full-year 2012. A key rating
factor will be the company's ability to generate ongoing positive
discretionary cash flow, despite the level of acquisition
activity," S&P said.
"Our rating outlook is stable. The stable rating outlook reflects
our expectation that MDC will generate positive discretionary cash
flow for 2012 and 2013, and that leverage will begin to decrease
as EBITDA rebounds and talent-related spending subsides. Over the
next year, we view both an upgrade and downgrade as equally
unlikely. We could raise the rating over the long term, if
leverage drops to less than 4x on a sustained basis, compliance
with financial covenants remains above 20%, and the company
maintains adequate liquidity and establishes a less aggressive
financial policy. We believe the company could achieve these
measures in 2014, assuming stronger economic trends, and barring a
continuation of aggressive debt-financed acquisition activity. We
expect such a scenario would entail continued mid- to high-single-
digit percent organic revenue growth, and a steady reduction in
deferred acquisition-related liabilities," S&P said.
"Conversely, although less likely in our view, we could lower the
rating if the company does not begin to generate sustainable
positive discretionary cash flow, or if covenant headroom falls
below 15% with an expectation of further narrowing, stemming from
operating weakness and acquisition or earn-out related payments,"
S&P said.
RATINGS LIST
MDC Partners Inc.
Corporate Credit Rating B/Stable/--
New Ratings
MDC Partners Inc.
$80M unsecd nts* B
Recovery Rating 4
* This is an add-on. New total is $420M.
MEDAILLE COLLEGE: S&P Gives 'BB+' Rating on Series 2012 Rev Bonds
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' long-term
rating to Buffalo & Erie County Industrial Land Development Corp.,
N.Y.'s series 2012 revenue bonds, issued for Medaille College. The
outlook is stable.
"We based our rating on our view of the college's limited demand
flexibility, small endowment, weak financial resource ratios, and
relatively high debt," said Standard & Poor's credit analyst
Carolyn McLean.
"We view the college's conservative financial management,
indicated by historical surpluses on a full accrual basis
positively, although management is currently implementing a plan
to increase online and nontraditional enrollment, which will cause
a deficit operating performance in at least the next fiscal year.
This is due to an investment in an outside consultant who will
assist in the implementation of a broader graduate and online
marketing and recruitment strategy. Although management expects a
significant increase in students and tuition revenue from this
investment, we believe projections are aggressive and without a
strong balance sheet, operating performance and credit quality
could deteriorate quickly if targets are not met. Conversely, if
enrollment increases significantly over the next two years and
operating performance produces projected strong surpluses,
positive rating movement is possible," S&P said.
Medaille College, located in Buffalo, was founded in 1875 by the
Sisters of St. Joseph as an institute to prepare religious
educators to staff Catholic schools. In 1968, the charter was
changed to create a co-educational college.
MEDIA HOLDCO: S&P Assigns Prelim. 'B+' Corp. Credit Rating
----------------------------------------------------------
Standard & Poor's Ratings Services assigned Media Holdco L.P., the
majority owner of ION Media Networks Inc., its 'B+' preliminary
corporate credit rating. "We rate the two entities on a
consolidated basis. The outlook is stable," S&P said.
"In addition, we assigned the $50 million five-year revolving
credit facility issued by ION Media Networks our 'BB' preliminary
issue-level rating, with a '1' preliminary recovery rating (two
notches higher than the 'B+' corporate credit rating), indicating
our expectation for very high (90% to 100%) recovery for lenders
in the event of a payment default. The revolving credit facility
will be used for general corporate purposes and is expected to be
undrawn at the time of closing," S&P said.
"We also assigned Media Holdco's $255 million 5.5-year term loan B
our 'BB-' preliminary issue-level rating, with a '2' preliminary
recovery rating (one notch higher than the 'B+' corporate credit
rating), indicating our expectation for substantial (70% to 90%)
recovery in the event of a payment default. The proceeds from the
term loan will be used to buy out two of the three owners of Media
Holdco L.P. Following the transaction, Black Diamond Capital
Management will be the sole owner of Media Holdco, which currently
owns 87% of ION Media Networks," S&P said.
"The 'B+' preliminary rating on Media Holdco reflects our view of
ION Television's modest ratings, minimal original programming, and
above-average use of infomercials," said Standard & Poor's credit
analyst Daniel Haines.
"These factors underpin our view of the business profile as
'weak.' We regard the company's financial risk profile as
'aggressive' due to its private-equity ownership and modest
leverage. Pro forma for the transaction, lease-adjusted debt to
EBITDA is 2.7x (2.1x on an unadjusted basis) and lease-adjusted
EBITDA coverage of interest is 5.6x (we do not add back to EBITDA
stock compensation that is only payable in cash). Pro forma EBITDA
coverage of cash interest is 8.6x. We view the company's
management and governance as 'fair,'" S&P said.
MEIS LLC: Assets Sold for $2MM to Mentor Network
------------------------------------------------
Assets of MEIS LLC, which does business as Inclusive Solutions,
has been sold for $2 million to The Mentor Network, said New
Growth Advisors in October. New Growth Advisors serves as chief
restructuring officer and investment banker in the case.
MEIS, LLC, based in Troy, Ohio, filed for Chapter 11 bankruptcy
(Bankr. S.D. Ohio Case No. 11-31233) on March 13, 2011. Judge Guy
R. Humphrey oversees the case. J. Matthew Fisher, Esq., at Allen,
Kuehnle Stovall & Neuman LLP, serves as the Debtor's counsel. In
its petition, MEIS estimated under $50,000 in assets and between
$1 million to $10 million in debts. A list of the Company's 20
largest unsecured creditors filed together with the petition is
available for free at http://bankrupt.com/misc/ohsb11-31233.pdf
The petition was signed by James Bloom, co-managing member.
METROPLAZA HOTEL: Files for Chapter 11 in New Jersey
----------------------------------------------------
Inn at Woodbridge, Inc., and Metroplaza Hotel, LLC, filed sought
Chapter 11 protection in Trenton, New Jersey (Bankr. D.N.J. Case
Nos. 12-38603 and 12-38611) on Dec. 6, 2012.
Metroplaza Hotel disclosed assets of $36.2 million and liabilities
of $42.2 million, including $41.9 million owed to secured creditor
WBCMT 2006-C24 Wood Avenue, LLC.
Inn at Woodbridge filed schedules disclosing just $831,000 in
assets and $42.7 million in liabilities, including the $41.9
million owing to WBCMT.
Metroplaza owns an 11-story hotel and office building on a 9.95-
acre site in Iselin, New Jersey, which is valued at $35.5 million.
The property serves as collateral to the WBCMT debt.
Judge Raymond Lyons has been assigned to the Debtors' Chapter 11
cases.
James Wolosoff, as president of the two debtors, signed the
Chapter 11 petitions as authorized representative.
Separate attorneys though prepared the Chapter 11 petitions of the
two debtors. David L. Bruck, Esq., at Greenbaum, Rowe, Smith &
Davis LLP is the attorney of Inn at Woodbridge. Joseph J.
DiPasquale, Esq., at Trenk, DiPasquale, Della Fera & Sodono, P.C.,
represents Metroplaza Hotel.
METROPLAZA HOTEL: Inn at Woodbridge Proposes Greenbaum as Counsel
----------------------------------------------------------------
Inn at Woodbridge, Inc., is seeking approval to hire Greenbaum,
Rowe, Smith & Davis LLP as Chapter 11 counsel.
The firm will, among other things.
-- advise the Debtor with respect to its powers and duties as
debtor-in-possession;
-- negotiate with creditors of the Debtor and take the
necessary legal steps to confirm and consummate a plan of
reorganization; and
-- prepare on behalf of the Debtor, all necessary applications,
answers, proposed orders, reports and papers to be filed in
the Chapter 11 case.
The professionals presently designated to represent the Debtor and
their hourly rates are:
Individual Position Rate
---------- -------- ----
David L. Bruck Partner $500
Meja Obradovic Counsel $330
Elyse H. Wolff Associate $265
To the best of the Debtor's knowledge, the firm does not hold an
adverse interest to the estate and is a disinterested person under
11 U.S.C. Sec. 101(14).
Inn at Woodbridge Inc. and Metroplaza Hotel LLC sought Chapter 11
protection (Bankr. D.N.J. Case Nos. 12-38603 and 12-38611) in
Trenton on Dec. 6, 2012.
Metroplaza Hotel disclosed assets of $36.2 million and liabilities
of $42.2 million, including $41.9 million owed to secured creditor
WBCMT 2006-C24 Wood Avenue, LLC. Metroplaza owns an 11-story
hotel and office building on a 9.95-acre site in Iselin, New
Jersey, which is valued at $35.5 million. The property serves as
collateral to the WBCMT debt.
MGM RESORTS: Fitch Rates Proposed $1 Billion Senior Notes 'B/RR4'
-----------------------------------------------------------------
Fitch rates the proposed $1 billion in senior unsecured notes due
2021 being issued by MGM Resorts International (MGM) 'B/RR4'.
Fitch also upgrades MGM's Issuer Default Rating (IDR) to 'B' from
'B-' and MGM Grand Paradise's IDR to 'BB-' from 'B+'. Fitch also
upgrades various tranches of debt issued by MGM and MGM Grand
Paradise, including $8.8 billion in outstanding senior unsecured
notes at MGM and the $2 billion credit facility at MGM Grand
Paradise. The Rating Outlook remains Positive.
MGM announced a new senior secured credit facility comprised of
$2.75 billion in term loans and up to $1.25 billion in revolver
capacity. Fitch expects to rate the facility 'BB/RR1' closer to
the time of the facility being finalized with the 'BB/RR1' rating
being predicated on the assumption that a majority of the
collateral supporting the senior secured notes (being redeemed as
part of this transaction) will be granted to the lenders. The
proceeds from the notes along with approximately $3 billion in
proceeds from a new credit facility and $800 million in cash on
hand will be used to tender for MGM's senior secured notes ($3.095
billion outstanding plus $450 million in anticipated redemption
premium payments and fees) and to repay approximately $1.27
billion outstanding on existing credit facility.
The upgrade of the IDR to 'B' reflects the anticipated interest
cost savings resulting from this transaction, which Fitch
estimates at around $200 million annually. The upgrade also takes
into account improved pro forma liquidity and slightly reduced
gross leverage. The transaction addresses the largest maturities
through 2014, with only $1.2 billion remaining through that
timeframe. Assuming the revolver capacity at $1.25 billion, pro
forma available liquidity at the domestic restricted group will be
considerable at roughly $1.3 billion ($1 billion revolver
availability plus $300 million in excess cash assuming $400
million cage cash). The leverage reduction comes from the net use
of $350 million in cash to reduce debt after accounting for
redemption premiums and financing costs. Pro forma leverage using
consolidated EBITDA minus income attributable to minority
interests in Macau is expected to decline to 8.25x from 8.50x.
Free Cash Flow
Interest cost savings will be a result of refinancing the high
coupon senior secured notes with a weighted average coupon rate of
10.8% with lower interest bank debt, cash and the proposed senior
note issuance. Fitch also expects reduced pricing on the new
credit facility since the lenders will benefit from a more
meaningful collateral package (the existing facility is partially
collateralized). Fitch anticipated these cost savings when it
revised MGM's Rating Outlook to Positive in October 2012.
Taking into account the proposed transactions, Fitch now expects
the domestic group's 2013 free cash flow (FCF) to be around $200
million as opposed to expectation of breakeven FCF at the time of
the Outlook revision. For 2014, Fitch now projects roughly $250
million in FCF relative to the prior forecast of $200 million.
The smaller difference reflects that some of the senior secured
note refinanacings were expected to be realized around late
2013/2014 timeframe.
The FCF profile of the domestic group will be further bolstered by
dividends from Macau (MGM owns 51% of MGM China). MGM's share of
Macau dividends is projected to be $200 million - $250 million per
year as the Macau subsidiary with $678 million in latest 12 months
(LTM) EBITDA is expected to retain ample flexibility to pay
dividends.
MGM Grand Paradise
The upgrade of MGM Grand Paradise reflects the improved credit
profile of MGM's main credit group. Fitch has before stated that
MGM Grand Paradise's stand-alone IDR is closer to the 'BB'
category IDR and maintained a lower rating on the Macau subsidiary
to reflect MGM's weaker credit profile and control over the
subsidiary.
As of Sept. 30, 2012, MGM Grand Paradise's LTM EBITDA was $678 and
outstanding amount on its new credit facility was $539 million
resulting in a gross leverage of 0.8x. Fitch expects leverage to
remain below 3x as MGM Grand Paradise develops its $2.5 billion
casino resort on Cotai.
What Could Trigger a Ratings Change
The Positive Outlook reflects good likelihood of Fitch upgrading
MGM's IDR to 'B+' within a 12-24 month timeframe. This
expectation takes into account MGM's expressed interest and
perceived ability to strengthen its balance sheet and Fitch's
favorable outlook for the Las Vegas Strip and Macau.
The following drivers could lead to an upgrade of MGM's IDR to
'B+':
-- Consolidated leverage adjusted for Macau minority interest
moving towards 7x or lower;
-- Domestic credit group generating discretionary FCF of at
least $200 million; and/or
-- MGM addressing its 2015 maturities.
The following drivers could lead to a revision of the Outlook to
Stable or Negative:
-- Consolidated leverage adjusted for Macau minority interest
migrating above 8.5x for an extended period of time; and/or
-- Domestic group generating discretionary FCF remaining roughly
breakeven.
Fitch takes the following rating actions:
MGM Resorts International
-- IDR upgraded to 'B' from 'B-';
-- Senior secured notes due 2013, 2014, 2017, and 2020 upgraded
to 'BB/RR1' from 'BB-/RR1';
-- Senior credit facility upgraded to 'B+/RR3' from 'B/RR3';
-- Senior unsecured notes upgraded to 'B/RR4' from 'B-/RR4';
-- Convertible senior notes due 2015 upgraded to 'B/RR4' from
'B-/RR4';
-- Senior subordinated notes upgraded to 'CCC+/RR6' from
'CCC/RR6'.
MGM China Holdings, Ltd and MGM Grand Paradise S. A. (co-
borrowers)
-- IDRs upgraded to 'BB-' from 'B+';
-- Senior secured credit facility upgraded to 'BB+' from
'BB/RR2' (includes $1.45 billion revolver and $550 million
term loan).
MGM RESORTS: Moody's Affirms 'B2' CFR; Rates Unsecured Notes 'B3'
-----------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to MGM Resorts
International's proposed $1.25 billion five year senior secured
revolving credit facility, $1.25 billion five year senior secured
term loan A, and $1.5 billion seven year senior secured term loan
B. Moody's also assigned a B3 rating to MGM's proposed $1.0
billion 7 year senior senior unsecured notes. Moody's affirmed the
company's B2 Corporate Family and Probability of Default ratings,
Ba2 senior secured ratings, B3 senior unsecured ratings, and
(P)Caa1 senior subordinated ratings. MGM has an SGL-3 Speculative
Grade Liquidity rating and a stable rating outlook. The proceeds
of the proposed senior secured bank facilities, and proposed
senior unsecured notes, together with cash on hand, will be used
to refinance MGM's existing bank facilities due in 2015,
repurchase four series of existing senior secured notes, pay
prepayment premiums and transaction expenses, and for general
corporate purposes including payment of other debt.
"MGM's proposed refinancing transaction will lower annual interest
expense and push out debt maturities thereby improving the
company's liquidity position," stated Peggy Holloway, Vice
President and Senior Credit Officer. Assuming the transaction
closes, Moody's estimates MGM will now be able to cover all of its
interest expense and capital spending needs from cash flow.
Additionally, Moody's estimates MGM will have adequate liquidity
to support operations and address the remaining 2013 and 2014 debt
maturities of approximately $1.1 billion.
The new bank facilities will be secured by the following
properties: Bellagio, MGM Grand Las Vegas, The Mirage, New York-
New York, MGM Grand Detroit, Gold Strike Tunica. The liens on
Bellagio, MGM Grand Las Vegas, and The Mirage are subject to a
limitation imposed by the MGM's existing bond indentures that
currently totals approximately $3.3 billion.
The proposed notes and bank facility will be guaranteed by
domestic subsidiaries, except for Nevada Landing Partnership, MGM
Grand Detroit, LLC and its subsidiaries and MGM China Holdings
Limited and its subsidiaries. Nevada Landing partnership will not
become a guarantor unless and until Illinois gaming approval is
obtained.
Ratings Rationale
The rating assignments and affirmation of MGM's B2 Corporate
Family rating reflects the company's improving liquidity position,
reduced refinancing risk, and higher interest coverage once the
proposed refinancing closes. The proposed transaction will lower
MGM's annual interest expense by about $200 million thereby
improving pro-forma EBITDA/interest to about 1.25 times from
approximately 1.0 times, increase free cash flow in 2013 and lower
MGM's debt maturities over the next three years by 50% or $3.6
billion. The ratings also consider Moody's view that the operating
environment in Las Vegas will remain challenged due to weak macro-
economic conditions that Moody's believes will weigh on consumer
discretionary spending in 2013. Nevertheless, Moody's expects
MGM's EBITDA (excluding Macau) will rise modestly due to improving
group and convention business and completion of the room remodel
at MGM Grand. Additionally, there is a reasonable probability MGM
will receive distributions from its profitable 51% owned joint
venture in Macau that will be used to reduce debt.
The ratings reflect high leverage - Moody's estimates gross
debt/EBITDA (excluding Macau operations) will reach 12.0 times at
year-end 2012; including debt and EBITDA from Macau operations,
consolidated debt/EBITDA is estimated to decline to 7.8 times at
year-end 2012 from 8.9 times at year-end 2011.
The stable rating outlook reflects Moody's view that the Las Vegas
Strip (which represents between 75%-80% of wholly owned domestic
property EBITDA) will continue a slow recovery path that will
boost EBITDA in the mid-single digits, and that MGM will use cash
distributions received from its Macau subsidiary to reduce debt
resulting in improving credit metrics.
Given MGM's high leverage, Moody's does not expect upward rating
momentum. However, MGM's ratings could be raised if the Las Vegas
Strip's recovery gains greater momentum -- particularly sustained
growth in gaming revenue, and if the company can improve
debt/EBITDA materially. The ratings could be downgraded if
improving operating conditions in Las Vegas stall and leverage and
coverage deteriorates.
Ratings assigned:
MGM Resorts International
Proposed $1,250 million 5 year senior secured revolving credit
facility at Ba2 (LGD 2, 11%)
Proposed $1,250 million 5 year senior secured Term Loan A
Facility at Ba2 (LGD 2, 11%)
Proposed $1,500 million 5 year senior secured Term Loan B
Facility at Ba2 (LGD 2, 11%)
Proposed $1,000 million 7 year senior unsecured notes at B3 (LGD
4, 67%)
Rating affirmed and LGD assessments revised where applicable
Corporate Family Rating at B2
Probability of Default Rating at B2
Senior secured notes at Ba2 (LGD 2, 11% from LGD 2, 13%)
Senior unsecured notes at B3 (LGD 4, 67% from LGD 4, 69%)
Senior unsecured shelf at (P)B3
Senior subordinated shelf at (P)Caa1
Subordinated shelf at (P)Caa1
Speculative Grade Liquidity at SGL-3
Mandalay Resort Group
Senior unsecured notes at B3 (LGD 4, 67% from LGD 4, 69%)
Senior subordinated notes at Caa1 (LGD 6, 97%) from LGD 6, 96%)
Ratings affirmed, assessments revised and to be withdrawn upon
refinancing
MGM Resorts International
13% Senior secured notes due 2013 at Ba2 (LGD 2, 11% from LGD 2,
13%)
10.375% senior secured notes due 2014 at Ba2 (LGD 2, 11% from
LGD 2, 13%)
11.125% senior secured notes due 2017 at Ba2 (LGD 2, 11% from
LGD 2, 13%)
9% senior secured notes due 2020 at Ba2 (LGD 2, 11% from LGD 2,
13%)
The principal methodology used in rating MGM 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.
MGM Resorts International owns and operates 14 wholly-owned
properties located in Nevada, Mississippi and Michigan, and has
investments in three other properties in Nevada, New Jersey and
Illinois. MGM has a 51% interest in MGM Grand Macau, a hotel-
casino resort in Macau S.A.R. and a 50% interest in CityCenter, a
multi-use resort in Las Vegas, Nevada. MGM generates annual net
revenue of approximately $9.1 billion on a consolidated basis and
approximately $6.2 billion excluding Macau.
MGM RESORTS: S&P Hikes Corp. Credit Rating to 'B+'; Outlook Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on MGM Resorts International to 'B+' from 'B-'. The rating
outlook is stable.
"At the same time, we assigned our 'BB' issue-level and '1'
recovery ratings to MGM's proposed $4 billion senior secured
credit facility. The '1' recovery rating reflects our expectation
of very high (90% to 100%) recovery for lenders in the event of a
payment default. The credit facilities will consist of a $1.25
billion revolving credit facility, $1.25 billion term loan A, and
a $1.5 billion term loan B. The revolver and term loan A will
mature in five years and the term loan B in seven years. We also
assigned our 'B+' issue-level and '4' recovery ratings to MGM's
proposed $1 billion senior unsecured notes due 2021. The '4'
recovery rating reflects our expectation of average (30% to 50%)
recovery for lenders in the event of a payment default. Proceeds
from the proposed new credit facilities and unsecured notes,
together with cash on hand, will be used to refinance the
company's existing credit facilities and to repay the company's
various secured notes issuances, as well as to pay transaction
fees and expenses and for general corporate purposes," S&P said.
"We also upgraded all existing issue-level ratings by two notches
in conjunction with the upgrade of the corporate credit rating. We
expect to withdraw our issue-level ratings on the company's senior
secured notes issuances once the tender offer for the notes is
completed and the notes are repaid," S&P said.
"The rating upgrade reflects the company's planned refinancing
transaction, which will reduce the company's interest burden given
the high coupons on the company's various secured notes issuances,
thereby improving interest coverage and cash flow generation,"
said Standard & Poor's credit analyst Melissa Long.
"Although MGM's wholly owned operations will remain highly
leveraged, we expect interest coverage to improve to 1.5x or
better following these transactions, and expect the company will
generate moderate amounts of free cash flow that can be used for
further debt repayment in future periods. Additionally, the
contemplated transactions, along with transactions completed
earlier this year, address a substantial amount of MGM's debt
maturities over the next 3 years, meaningfully improving the
company's maturity profile," S&P said.
"The rating upgrade also reflects a reassessment of our treatment
of MGM China. We had previously indicated that we could reassess
our treatment of MGM China once timeline and financing strategy
for its planned Cotai development became clearer, and if
management more clearly articulated a capital structure strategy
and dividend policy. Although the timeline is still a bit
uncertain as to the start of construction for its planned $2.5
billion development in Cotai, MGM China has formally accepted its
land concession contract, which, along with an amended and
restated $2 billion credit facility, provides clarity as to the
company's financing strategy. We believe that the credit facility,
along with excess cash and cash flow generation, should be
sufficient to fund planned expenditures. Additionally, the amended
and restated credit facility also provides some flexibility for
MGM China to continue to pay dividends to shareholders, of which
MGM would receive 51%, given its ownership stake. Although the
company has not articulated a formal dividend policy, we expect it
will use the flexibility in its credit agreement to pay dividends
over the next few years. We have factored in an expectation that
MGM Resorts continues to receive liquidity support from MGM China
in the form of dividends ranging from $150 million to $200 million
over the next few years, which is in line with the dividend
received earlier this year," S&P said.
MODERN PRECAST: Files Chapter 11 Petition in Reading, Pa.
---------------------------------------------------------
Modern Precast Concrete Inc. and three of its affiliates sought
Chapter 11 protection (Bankr. E.D. Pa. Case No. 12-21304) in
Reading, Pennsylvania, on Dec. 6, 2012.
Founded in 1946 as Woodrow W. Wehrung Excavating, Modern Precast
is a leading manufacturer and distributor of precast concrete
structures, pipes and related products. Modern also purchases and
resells related products. Modern operates from two facilities, a
91,010 square-foot facility in Easton, Pennsylvania and a 43,784
square-foot facility in Ottsville, Pennsylvania.
Modern is a single source supplier of virtually every precast
concrete product needed for residential, commercial/industrial,
Department of Transportation and municipality projects.
Modern, on a consolidated basis, generated revenues of
$23.4 million and $19.4 million and operating EBITDA of
$1.4 million and ($382,000) for years 2010 and 2011, respectively.
Manufacturers and Traders Trust Company is the primary secured
lender. The Debtors are indebted to M&T Bank in the aggregate
amount, as of Nov. 26, 2012, of $13.5 million plus accrued and
unpaid interest in the amount of $105.2 million plus fees and
costs relating to interest rate swap obligations.
The Debtors' financial challenges, which ultimately led to their
need to seek protection under Chapter 11, resulted from an
industry-wide downturn stemming from the recent recession,
combined with the increased leverage associated from the
construction and start-up costs related to the Easton Facility.
The Debtors have concluded that they cannot continue the business
as presently structured and generate sufficient revenues to timely
satisfy their debt obligations. Faced with this reality, the
Debtors engaged Griffin Financial Group LLC and Beane Associates,
Inc. to assist in developing realistic alternatives, including, as
appropriate, a sale or a reorganization. Over time, it became
clear that a sale of the Easton Facility was the best alternative
to a wide-scale liquidation.
The Debtors are seeking an expedited hearing on their first day
motions, which they say are essential to the transition into the
Chapter 11 cases and to their continued business operations.
The Debtors have filed motions to
-- conduct an auction for certain assets;
-- maintain their existing bank accounts;
-- enter into a stipulation for access to cash collateral and
enter into DIP financing;
-- provide adequate assurance of payment to utilities;
-- honor prepetition wages and salaries;
-- pay prepetition sales and use taxes;
-- extend the deadline to file schedules of assets and
liabilities and statement of financial affairs;
-- set procedures for compensation to professionals; and
-- honor prepetition obligations to customers.
In connection with the adequate assurance motion, the Debtors said
they intend to pay all post-petition obligations to utility
providers. They will also provide a deposit of an initial sum
equal to 50% of the estimated average monthly cost of utility
services into a segregated account.
The Debtors have also filed applications to employ Beane
Associates, Inc. as financial restructuring advisor and McElroy,
Deutsch, Mulvaney & Carpenter, LLP as attorneys.
MODERN PRECAST: Proposes to Sell Assets to Oldcastle
----------------------------------------------------
Modern Precast Concrete, Inc. and three affiliates are seeking
Bankruptcy Court to sell majority of their assets to Oldcastle
Precast, Inc., absent higher and better offers.
The Debtor retained Griffin Financial Group, LLC, in April to
market the assets. Griffin identified and solicited to total of
212 potential strategic and financial buyers. After evaluating
the offers, the Debtors and Griffin selected Oldcastle as stalking
horse bidder in a bankruptcy court-sanctioned sale of the assets.
Under the proposed bid procedures, the Debtors will continue to
accept offers for the assets.
Founded in 1946 as Woodrow W. Wehrung Excavating, Modern Precast
is a leading manufacturer and distributor of precast concrete
structures, pipes and related products. Modern also purchases and
resells related products. Modern operates from two facilities, a
91,010 square-foot facility in Easton, Pennsylvania and a 43,784
square-foot facility in Ottsville, Pennsylvania.
The salient terms of the asset purchase agreement with Oldcastle
include:
-- The purchase price for the purchased assets is $7,800,000
plus value of the inventory plus a certain "AR value" less a
WIP adjustment;
-- The Purchased Assets include the Easton Facility and all of
the Debtors' inventory and equipment and other assets used in
the operation of Modern's business other than with respect to
the Debtors' septic tank business or storm trap business;
-- The Purchased Assets do not include cash, nor do they include
causes of action belonging to the Debtors;
-- The Closing Date shall occur no later than Feb. 19, 2013,
subject to extension as provided in the APA; and
-- The Debtors agree to assume and assign to Oldcastle certain
contracts and Oldcastle agrees to pay all cure costs
associated therewith at Closing.
In the event Oldcastle is outbid at the auction, it will receive a
break-up fee of $305,337, calculated as $3% of the purchase price.
The Debtor says the break-up fee is a material inducement for, and
condition of Oldcastle's entry into the asset purchase agreement.
The Debtors propose a Jan. 7, 2013 deadline for objections to the
sale; and a Jan. 15 hearing to approve the sale.
MODERN PRECAST: Seeks to Obtain $1.2-Mil. of DIP Financing
----------------------------------------------------------
Modern Precast Concrete, Inc. says that absent access to new
credit, it will be forced to cease operations and the going
concern value of its business will be lost. Accordingly, Modern
Precast and its affiliates filed a motion to access $1.2 million
of DIP financing from Manufacturers and Traders Trust Company (M&T
Bank) and use cash collateral.
The DIP Financing will provide more than just cash for the Debtors
to operate their businesses, the facility will instill a sense of
confidence in the Debtors' employees, customers, vendors, and
other important stakeholders.
The DIP financing will be in the form of a senior secured
superpriority debtor-in-possession credit facility on a
superpriority and priming basis, which will consist of a loan of
up to $1.2 million to fund operations, pay the carve-out and other
administrative expenses.
M&T Bank is the prepetition secured lender. The Debtors are
indebted to M&T Bank in the aggregate amount, as of Nov. 26, 2012,
of $13.5 million plus accrued and unpaid interest in the amount of
$105.2 million plus fees and costs relating to interest rate swap
obligations.
All obligations to the DIP loan will have superpriority
administrative expense claim status.
Subject to the default rate of interest provision, the DIP Credit
Agreement will bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at a rate per
annum equal to LIBOR plus 8%. The default rate of interest will
equal the then applicable rate plus 5.0%.
The DIP Loan will mature on Jan. 31, 2013.
MSJ LAS CROABAS: FDIC Wins SARE Declaration
-------------------------------------------
At the behest of the Federal Deposit Insurance Corporation's, as
Receiver for Westernbank Puerto Rico, Bankruptcy Judge Enrique S.
Lamoutte determined that MSJ Las Croabas Properties, Inc. is a
single asset real estate property or project as defined in the
Bankruptcy Code, 11 U.S.C. Sec.101(51B).
The Debtor listed these properties in Schedule A (Real Property):
(i) 64 apartment units, 28 boat parking spaces and 48 storage
units that have an indeterminate current value and a secured claim
in the amount of $20,203,938; (ii) lots #7266, 15498, 1723, 2597,
11831, 111832 of which no current value is listed, no amount of
secured claim is listed and also the nature of the Debtor's
interest in the property is left blank; (iii) lot of land #15,144
with 71.17 square meters (vacant land) with indeterminate value
and no secured claim attached to the same; and (iv) lot of land
#12,229 with 3.63 "cuerdas" for future development of 106
apartment units, 29 boat parking spaces, 19 jet ski parking spaces
and 1 storage room pending construction with indeterminate value
and no secured claim attached to the same.
The FDIC-R's claim was included in the Debtor's Schedule D
(Creditors Holding Secured Claims) as having been incurred in the
year 2004 with a lien consisting of an inventory loan and secured
by lands and buildings in the amount of $20,203,938, which is
unliquidated. The 341 meeting of the creditors was held and closed
on Aug. 27, 2012.
The FDIC-R filed proof of claim #5-1 on Nov. 6, 2012 in the amount
of $20,478,204.36, of which $6,700,000 is secured (which is the
same as the value of the property as included by the FDIC-R) and
the remaining $13,778,204.36 as unsecured. On Nov. 30, 2012, the
Debtor filed an objection to the secured portion of the FDIC-R'S
proof of claim #5 alleging that the FDIC failed to produce
documentation evincing that it has a perfected lien over the
Debtor's real property.
The FDIC-R also filed proof of claim #6-1 on Nov. 6, 2012, and
amended proof of claim #6-2 on Nov. 20, 2012. The FDIC-R's
amended proof of claim #6-2 is for an unsecured claim in the
amount of $40,709,406.59 and the basis for perfection is
collateral assignment of sales agreements and options. On Nov.
30, 2012, the Debtor objected to amended proof of claim #6-2
because the claim against the Debtor is related to another entity,
Sabana del Palmar, Inc. and the FDIC failed to include the
documents which demonstrate that Debtor is responsible for the
obligations of Sabana del Palmar. Whether or not the FDIC-R is a
secured creditor does not affect the determination that the Debtor
meets the definition of a single asset real estate.
A copy of the Court's Dec. 5, 2012 Opinion and Order is available
at http://is.gd/VSZGgc from Leagle.com.
MSJ Las Croabas Properties Inc., also known as Ocean at Seven
Seas, filed for Chapter 11 protection (Bankr. D.P.R. Case No.
12-05710) on July 19, 2012, in Old San Juan, Puerto Rico. The
Fajardo, Puerto Rico-based land developer tapped Carmen D. Conde
Torres, Esq., at C. Conde & Assoc., as counsel. In its petition,
the Debtor scheduled assets of $609,845 and liabilities of
$43,174,292. The petition was signed by Michael Scarfia,
president.
NEW ACADEMY FINANCE: S&P Gives 'B' CCR; $400MM Notes Get 'CCC+'
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to New Academy Finance Co. LLC, the parent of
Academy Ltd. This company is being set up to issue the new notes.
"At the same time, we assigned a 'CCC+' issue-level rating with a
'6' recovery rating to New Academy Finance Co. LLC and co-borrower
New Academy Finance Corp.'s $400 million senior notes," S&P said.
"Concurrently, we affirmed all existing ratings on Academy Ltd.,
including our 'B' corporate credit rating," S&P said.
"Although the proposed debt-financed dividend leads to a
deterioration of the company's credit profile, we believe that
Academy will continue to increase both revenues and profitability,
ultimately leading to improved credit measures over the next 12
months, partly mitigating the increase to leverage," said Standard
& Poor's credit analyst Kristina Koltunicki.
The company plans to use proceeds from the proposed notes to fund
a $400 million dividend to its shareholders.
"The stable outlook reflects our expectations for an improvement
in credit measures over the next 12 months, albeit at a slower
pace because we do not expect margin gains to be as outsized as
witnessed in the prior year. We anticipate performance will
continue to be positive primarily because of revenue gains,
resulting from positive same-store sales coupled with new store
growth. The operational gains are likely to benefit the company's
credit protection measures, but we anticipate that it will likely
remain highly leveraged with thin cash flow protection measures,
given the recent addition of debt," S&P said.
"We could lower the rating if the company is unable to
successfully manage its growth or if merchandise missteps result
in meaningful margin pressures. At that time, margins would be
about 230 basis points below our expectations and same-store sales
would be flat. Under this scenario, debt leverage would be in
the low-7.0x area. We could also lower the rating if the company
becomes more aggressive with additional debt financed dividends,
increasing leverage to a similar level," S&P said.
"Although we consider an upgrade unlikely over the near term, we
would raise the rating if operating performance exceeds our
forecast. The company would have demonstrated moderately positive
same-store sales increases, managed its new store growth well and
reduced debt by approximately $500 million from current levels.
Under this scenario, credit protection metrics would have improved
substantially, with leverage at about 5x," S&P said.
NEXTAG INC: S&P Lowers CCR to ' B+' on Weaker Performance
---------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on San Mateo, Calif.-based NexTag Inc. to 'B+' from 'BB-'.
All ratings were removed from CreditWatch, where they were placed
on Oct. 26, 2012. The outlook is negative.
"At the same time, we revised the recovery rating on NexTag's
senior secured debt to '3' from '4', indicating our expectation
for meaningful (50%-70%) recovery for debtholders in the event of
a payment default. As a result, we lowered our issue-level rating
on the senior secured debt to 'B+' (the same as the corporate
credit rating) from 'BB-'," S&P said.
"The downgrade is based on our view that profitability and cash
flow generation are unlikely to return to historical levels," said
Standard & Poor's credit analyst Andy Liu.
"Search algorithm changes by Google Inc. have significantly
reduced the amount of organic traffic (consumer Internet search
activity) going to NexTag. In an effort to maintain Internet
traffic volume going to its merchant customers, NexTag increased
its spending on search advertising, which decreases profitability.
Additionally, the rollout of Google Shopping, a competing product,
has adversely affected performance as well. We presently do not
expect these trends to reverse, although ongoing cost reduction
efforts by NexTag may be able to offset some of the margin
pressure," S&P said.
"Standard & Poor's Ratings Services' rating on NexTag reflects our
expectation that debt leverage will remain relatively low over the
intermediate term and the company will continue to generate good
discretionary cash flow. NexTag's business risk profile is
'vulnerable,' according on our criteria, based on its wide set of
competitors (especially Google), sensitivity to search algorithm
changes, and low barriers to entry. We view its financial risk as
'significant,' given our expectations for future acquisitions. Low
leverage and good cash flow only partly offset these risks. We
assess the company's management and governance as 'fair,'" S&P
said.
"NexTag owns and operates comparison shopping Web sites,
connecting more than 40 million monthly unique visitors and more
than 25,000 merchants. NexTag has operations in 15 countries,
including the U.S., Australia, Canada, France, Germany, Italy,
Japan, Spain, and the U.K. A significant majority of NexTag's
revenues are from the U.S., with the remainder from international
markets. As an online lead generator for merchants, its
performance can be sensitive to consumer discretionary spending.
When consumer spending is under pressure, shoppers are less likely
to click through to merchant websites on NexTag. Similarly, when
consumer discretionary spending rebounds, the click-through
rate is likely to increase," S&P said.
OPEN SOLUTIONS: S&P Cuts CCR to 'CCC+' on Operating Weakness
------------------------------------------------------------
Standard & Poor's Ratings Services lowered the corporate credit
rating on Glastonbury, Conn.-based Open Solutions Inc. to 'CCC+'
from 'B'. The outlook is developing.
"We also lowered the issue-level rating on the company's senior
secured debt to 'B-' from 'B+'. The recovery rating is unchanged
at '2', indicating that lenders can expect substantial (70%-90%)
recovery in the event of a payment default. At the same time we
lowered the issue-level rating on the company's subordinated notes
to 'CCC-' from 'CCC+'. The recovery rating is unchanged at '6',
indicating that lenders can expect negligible (0%-10%) recovery in
the event of payment default," S&P said.
"The rating action reflects the ongoing uncertainty surrounding
the company's ability to repay or refinance its upcoming maturing
debt, its weak liquidity, and very high leverage," said Standard &
Poor's credit analyst Jacob Schlanger. "Continuing economic
weakness and its owners' plans to sell their holdings in the
company have affected revenues, which, after a brief period of
growth, have resumed their decline."
Standard & Poor's ratings on Open Solutions reflects a targeted
industry product focus with strong competitors, very high
leverage, and weak liquidity. A contractually recurring revenue
base and high switching costs partially offset those factors. "We
view the business risk profile as 'vulnerable' and the financial
risk profile as 'highly leveraged,'" S&P said.
Open Solutions develops, markets, licenses, and supports
enterprise software and services used to perform financial
institution data processing and information management functions.
The company also has complementary offerings in Internet banking,
check imaging, and payment processing. Its customers include
banks, credit unions, thrifts, and insurance providers.
"Our rating outlook on Open Solutions is developing, meaning we
could raise or lower the ratings, reflecting the uncertain outcome
of the company's refinancing efforts. We could raise the ratings
if revenues resume their growth trajectory and the company is able
to refinance its maturing debt. The company continues to be in
discussions regarding a recapitalization financing," S&P said.
"On the other hand, we could lower the ratings if operating
results remain weak and the company does not make progress in the
coming year in its efforts to refinance the 2014 debt maturities,"
S&P said.
OTTER TAIL: Moody's Hikes Senior Unsecured Rating From 'Ba1'
------------------------------------------------------------
Moody's Investors Service upgraded the senior unsecured rating of
Otter Tail Corporation to Baa3 from Ba1, including its 9% $100
million senior unsecured notes due December 15, 2016. The rating
outlook is stable. Concurrently, Moody's affirmed the A3 Issuer
rating of its subsidiary, Otter Tail Power Company (OTP), as well
as the A3 rating on its pollution control refunding revenue bonds
but changed the rating outlook of OTP to negative from stable.
Ratings Rationale
"The upgrade of OTC's rating considers management's changed
strategy to realign the group's non-electric operations which has
resulted in the divestiture of several of the group's unregulated
subsidiaries during 2011 and 2012, including its wind tower
construction division, DMI Industries", said Natividad Martel, a
Moody's Assistant Vice President. "The rating action is also
prompted by management's renewed focus on enhancing the financial
performance of the group's remaining non-regulated businesses,
while pursuing organic growth opportunities within that business
line" added Martel.
The upgrade further acknowledges that no indebtedness is currently
outstanding at the unregulated subsidiaries except for those
amounts allocated internally by the parent company on an
intercompany basis. The action also captures the material
reduction in the holding company's outstanding indebtedness
following the OTC's prepayment in July of its 8.89% $50 million
outstanding senior unsecured note due November 30, 2017. Although
this was initially funded with borrowings under its committed
credit facility, Moody's also recognizes that OTC used proceeds
raised in connection with the DMI divestiture to repay those
amounts. As a result, parent holding company debt represented
around 23% of consolidated indebtedness at the end of September
2012 compared to about 35% at year-end 2011.
Moody's believes that these positive developments at the parent
company warrant a narrowing of the notching currently existing
between the ratings of OTC and its key subsidiary OTP. In
addition, the upgrade of OTC's rating also acknowledges the
group's adequate liquidity after OTC and OTP renewed their
respective committed credit facilities on October 29, 2012, that
have now an expiration date of October 29, 2017, a credit
positive.
"The change in OTP's rating outlook to negative is prompted by
Moody's view that over the medium-term the utility will face
challenges in maintaining its historically robust financial credit
metrics in light of the anticipated higher indebtedness to fund
its substantial multi-year capital expenditure (capex) program"
said Martel. While Moody's acknowledges that these capital outlays
are fully earmarked to grow the utility's rate base, OTC's stated
target of maintaining a 51% regulatory capital structure at OTP to
maximize its ability to generate returns will require OTC to
manage its expected equity contributions accordingly.
Nevertheless, Moody's anticipates the utility will remain exposed
to material upstream dividend distribution pressure for the parent
to meet its continued aggressive dividend policy. While OTC's
management expects that an improved financial performance from its
remaining non-electric business will reduce the pressure on the
utility's cash distributions, Moody's negative outlook for OTP
also incorporates certain uncertainty given the unregulated nature
of those non-electric businesses and their less predictable cash
flow visibility.
OTP's current A3 Issuer rating reflects the overall credit
supportive regulatory environments under which the utility
operates, albeit Moody's notes that some expected lag in the
recovery of the portion of its investments in the Big Stone plant
Air Quality Control System project to be recouped from its
Minnesota operations. Moody's anticipates this will also add
additional pressure on OTP's key credit metrics along with the
additional leverage to fund the capex program plus the substantial
increase in the debt-adjustment associated with underfunded
pension obligations of $75 million at year-end 2011 (2010: $44.6
million) which is material when compared to its $348 million of
outstanding indebtedness as of September 30, 2012. As such, OTP
reported for the last twelve month period ended September 30,
2012, CFO pre W-C to debt of around 20.7%, a material
deterioration compared to OTC's historical credit metrics, such as
its 2008-2010 CFO pre W/C to debt that averaged 25.6%.
OTP's negative outlook reflects Moody's expectation that its
credit metrics will not remain commensurate with the current A3
rating category for a sustainable period of time, such that it
will report CFO pre-W/C to debt below the 22% minimum target for
an A rated utility until its current capex program is completed in
2016.
OTC's stable outlook assumes continued credit supportive cash
flows generated by OTP, the reduction in the group's exposure to
volatile and historically poor financial performing non-electric
operations despite the current cost overruns reported by the
construction business line as well as OTC's ability to report
consolidated credit metrics that are more commensurate with the
Baa-rating category following the reduction in the parent only
indebtedness, such that it records CFO pre W/C to debt in the mid
to high teens.
For more detail about the key drivers of OTC and OTP's ratings
refer to their Credit Opinions available at www.moodys.com
Limited prospects exist for the ratings of OTC and OTP to be
upgraded in the near- to medium-term given OTP's negative outlook.
OTC's rating could be downgraded if management decides to depart
from its current corporate strategy to realign the group's non-
electric operations and not to pursue only organic growth within
this business line. Negative momentum could be triggered also if
the group reports consolidated metrics that are not commensurate
with the Baa-rating category, on a sustainable basis. A multi-
notch downgrade in OTP could also cause a downgrade in OTC's
rating.
OTP's rating is likely to be downgraded if, as anticipated, the
credit metrics remain weak for the A rating category on a
sustainable basis, including CFO-pre W/C to debt below the low
20%-range.
The last rating action on OTC and OTP was on November 30, 2009
when Moody's assigned a rating of Ba1 to OTC's currently
outstanding 9% $100 million senior unsecured notes due December
15, 2016, and affirmed OTP's senior unsecured debt obligations.
The principal methodology used in this rating was Regulated
Electric and Gas Utilities published in August 2009.
Headquartered in Fergus Falls, Minnesota and Fargo, North Dakota,
Otter Tail Corporation (OTC) is a diversified holding company
which conducts business through a portfolio of companies. For
financial reporting purposes these are classified into four
segments, namely electric, manufacturing, plastics and
construction. In 2009, the group completed a holding company
reorganization whereby Otter Tail Power Company (OTP) became a
fully owned subsidiary of the newly established parent company,
OTC.
Based in Fergus Falls, OTP is a fully regulated electric utility.
OTP's operations are subject to the purview of the Public Utility
Commissions in each of the states it operates, namely Minnesota
(around 45% of retail sales, North Dakota (over 35%), and South
Dakota (less than 9%) as well as by the Federal Energy Regulatory
Commission (FERC) for its transmission and wholesale business. As
of September 30, 2012, OTP had assets totaling $1.2 billion, and
recorded last twelve-month Funds from Operations (FFO) of about
$70 million (accounting for around 75% and 69% of PTC's
consolidated assets and FFO, respectively).
PPL CORP: Fitch Affirms 'BB+' Rating on Junior Subordinated Notes
-----------------------------------------------------------------
Fitch Ratings has affirmed the Issuer Default Ratings (IDR) and
individual security ratings of PPL Corp. (PPL) and each of its
domestic subsidiaries. Fitch also revised PPL Energy Supply's
(PPL Supply) Outlook to Negative from Stable. Simultaneously,
Fitch affirmed the Stable Outlook for all other domestic
subsidiaries.
PPL:
PPL's ratings and Outlook reflect its transformation from a
company heavily reliant on commodity sensitive businesses to one
that is highly regulated with substantially less business risk.
Driven by the acquisitions of Central Networks in April 2011 and
LG&E and KU Energy, LLC (LKE) in November 2010, regulated
operations are expected by Fitch to provide over 75% of
consolidated EBITDA by 2013. By comparison regulated operations
accounted for approximately 30% of EBITDA prior to the two
acquisitions. The proposed ratings also reflect credit metrics
that are generally consistent with the rating and lower risk
profile.
Rising capital expenditures in PPL's regulated segment pose a
potential credit risk. PPL is investing heavily in its regulated
businesses and expects to grow the regulated rate base by
approximately 7.6% annually over the next five years. The
investments will require on-going rate increases in both Kentucky
and Pennsylvania and equity support from PPL. Expenditures in
Kentucky are primarily to install environmental upgrades to comply
with new Environmental Protection Agency (EPA) standards. In
Pennsylvania the new investments are largely to replace aging
infrastructure and for transmission upgrades. The risk associated
with the magnitude of the capital expenditure program is mitigated
by regulatory provisions that provide near real time cost recovery
of invested capital for about two-thirds of projected
expenditures, including FERC jurisdictional transmission in
Pennsylvania, environmental compliance in Kentucky and all capital
investments in the UK.
In PPL's merchant power generation segment, a weak power price
environment is the primary challenge in the next two to three
years. Additionally, several unplanned plant outages due to
hardware failure adds more downward pressure and raise concern
with regard to the chronic nature of these incidents. However,
Fitch believes that the weak performance in this business segment
is manageable for PPL as the segment becomes less critical to
PPL's consolidated financial strength going forward.
Historically, PPL positions well within the rating category. Over
the last three years, on average, it produced funds from
operations (FFO)/debt of 19.8% and FFO interest coverage of 4.6x.
Going forward, Fitch expects these metrics to decline while
remaining in line with its rating, with average FFO/debt in mid-
teens and FFO interest coverage of 4x. Fitch's projection has
taken into consideration the mandatorily convertible debt issued
in 2010 and 2011 of approximately $1.2 billion and $1 billion
which currently receive 100% equity credit.
PPL and its subsidiaries have ample liquidity and manageable debt
maturities. Internal cash flow is supplemented by committed bank
lines at each of its domestic operating subsidiaries aggregating
$4.698 billion. PPL's UK subsidiaries maintain separate bank
credit facilities of GBP1.079 billion. Available cash and
equivalents at Sept. 30, 2012, were $942. There are $750 million
and $300 million senior notes due in 2013 and 2014 at PPL Supply
and $10 million in 2014 at PPL Electric Utilities (PPLEU). Fitch
believes that with internal cash flow and available credit
facilities, PPL will have sufficient liquidity to cover all
required cash needs in the next 12 to 18 months.
PPL Energy Supply, LLC (PPL Supply)
PPL Supply's Negative Outlook reflects the expected decline in
credit ratios over the next two to three years due to lower hedge
prices and gross margin, despite anticipated deleveraging and
modest capital requirements. The Outlook also reflects Fitch's
concerns over plant performance and required compliance costs at
PPL Supply's nuclear generating plant Susquehana. The plant has
experienced series of outages due to hardware failure in the past
two years and is expected to receive more permanent solution
starting 2013. Given the importance of Susquehana to PPL Supply
as a generation source (it represents 33% of power output in
2011), its performance is crucial to credit quality especially
during the market downturn. Albeit to a lesser degree, the
Negative Outlook also considers the uncertainty associated with
safety related compliance cost. The weak positioning of PPL
Supply in its rating category makes it vulnerable to any
substantial compliance requirements.
Fitch believes that over the long term, PPL Supply is well
positioned to benefit from any power price rise associated with
environmental compliance costs. The company has invested heavily
in pollution control equipment and its generating fleet is well
positioned on the dispatch curve. Earnings and cash flow also
benefit from operation of the PJM capacity market and the hedging
policy that limits earnings volatility.
PPL Supply's liquidity position is strong. The combination of
relatively short duration hedges (no more than three years) and
low commodity prices have limited collateral postings and use of
credit facilities. As of Sept. 30, 2012, it has committed credit
facility of $3.2 billion ($3 billion of which expires in November
2017 and $200 expires in March 2013), of which $594 million was
utilized. Additionally, it maintains an $800 million hedging
facility. Fitch believes these credit facilities should be
sufficient to cover all cash needs including debt maturities,
capital spending, upstream dividend and reasonable amount of
collateral posting requirements.
PPL Electric Utilities Corp (PPLEU)
PPL Electric Utilities (PPLEU)'s ratings are supported by
leverage, interest coverage and cash flow measures that are well
positioned within the 'BBB' rating category and comparable to its
peer group of electric distribution utilities with similar risk
characteristics. Over the last three years, on average, PPLEU
produced FFO to debt of 23%. For LTM Sept. 30, 2012, FFO to debt
was 21%. Going forward, we expect the metric to decline to high
teens in the next three years, as it invests in a large capital
spending program.
The ratings also benefit from the absence of commodity price
exposure and incorporate our expectations that PPLEU will receive
a reasonably constructive decision on its latest distribution rate
filling. On March 20, 2012, PPLEU requested that the PAPUC
approve a distribution base rate increase of $104.6 million or
approximately 2.9% and an 11.25% ROE. Commission decisions are
expected in the near future. 1% change in ROE will result in
reduction in revenue of approximately $23 million. PPLEU's last
rate case authorized a $77.5 million (1.6%) rate increase, equal
to about two-thirds of its $115 million rate request. The allowed
return on equity (ROE) was 10.7%, which is marginally above the
industry average.
Capital expenditures are expected to rise substantially over the
next five years (2012-2016). The higher capital expenditures are
primarily to replace an aging infrastructure and to enhance the
transmission network. Favorably, approximately 55% of the
expenditures are subject to the Federal Energy Regulatory
Commission's (FERC) formula rate regulation, which provides timely
recovery of invested capital and operating costs including a
return on equity.
Kentucky Utilities Co. (KU) and Louisville Gas & Electric Co.
(LG&E)
The ratings of the two Kentucky utility subsidiaries, Kentucky
Utilities Company (KU) and Louisville Gas and Electric Company
(LG&E) reflect strong credit metrics and constructive regulatory
policies that limit cash flow volatility and business risk. The
ratings also benefit from the Kentucky Public Service Commission's
(KPSC) track record for timely rate increases. Constructive
regulatory policies include a monthly fuel adjustment clause (FAC)
and an environmental cost recovery mechanism. Regulatory statutes
also permit the inclusion of construction work in progress (CWIP)
in rate base.
The ECR mechanism is particularly important given the two
utilities' reliance on coal-fired electric generation and the
substantial investment that will be required to meet the
Environmental Protection Agency's (EPA) newest regulations. The
ECR provides for recovery of and a return on environment
investments required as a result of coal combustion emissions.
The ECR permits the approved environmental costs to be reflected
in rates two months after incurred. In June 2011, KU and LG&E
filed an ECR plan requesting recovery of the expected $2.5 billion
of environmental compliance costs as well as operating expenses as
incurred. In December 2011, $2.3 billion of the plan was
approved.
Additionally, the utilities' results could also benefit from the
recent rate case settlement. If approved, it will allow for
LG&E's electric rates to increase by $33.7 million and gas rates
to increase by $15 million and allow for KU's electric rates to
increase by $51 million with a 10.25% ROE.
Finally, the ratings of LG&E and KU Energy LLC's (LKE), an
intermediate holding company and parent of KU and LG&E reflect the
predictable cash flow and strong credit profile of its two
regulated utility subsidiaries as well as the debt level at the
holding company.
What Could Trigger a Rating Action:
PPL
Positive:
-- Unlikely given the large capital spending program.
Negative:
-- PPL's ratings could be downgraded if capital resources are
allocated disproportionally in the relatively weak
unregulated business, resulting in increasing leverage and
FFO to debt below 16% and Debt to EBITDA above 4x beyond the
heavy utility spending period;
-- Any material adverse development in the regulatory framework
in the states or in U.K. that PPL's regulated utilities
operate in, such as change in commodity cost recovery
provisions in Pennsylvania.
PPLEU
Positive:
-- Unlikely given the large capital spending program.
Negative:
-- A materially unfavorable distribution rate case decision;
-- Any material adverse development in the regulatory framework
in Pennsylvania such as change in commodity cost recovery
provisions or return of rate freeze (though unlike in
currently low power price environment) could pressure the
ratings.
KU and LG&E
Positive:
-- Unlikely given the large capital spending program.
Negative:
-- Any material adverse development in the regulatory framework
in Kentucky.
PPL Supply
Positive:
-- An upgrade in the next two to three years is unlikely given
the Negative Outlook.
-- The Negative Outlook can be stabilized if its FFO to debt
ratio reaches approximately 25% and Debt to EBITDA at low 3x,
if the magnitude of the permanent repair at Susquehana is
manageable and plant performance stabilizes.
Negative:
-- If the permanent repair period becomes prolonged and costly
at Susquehana;
-- Fukushima compliance cost remains uncertain and could affect
the ratings negatively.
Fitch affirms the following ratings with a Stable Outlook:
PPL Corp
-- Long-term IDR at 'BBB';
-- Short-term IDR at 'F2'.
PPL Capital Funding Inc.
-- Long-term IDR at 'BBB';
-- Senior unsecured debt at 'BBB';
-- Junior subordinated notes at 'BB+';
-- Short-term IDR at 'F2'.
PPL Electric Utilities Corp.
-- Long-term IDR at 'BBB';
-- Secured debt at 'A-';--Short-term IDR at 'F2';
-- Commercial paper at 'F2'.
LG&E and KU Energy LLC
-- Long-term IDR at 'BBB+';
-- Senior unsecured debt at 'BBB+';
-- Short-term IDR at 'F2'.
Kentucky Utilities Company
-- Long-term IDR at 'A-';
-- Secured debt at 'A+';
-- Secured pollution control bonds at 'A+/F2';
-- Senior unsecured debt at 'A';
-- Short-term IDR at 'F2';
-- Commercial paper at 'F2'.
Louisville Gas and Electric Company
-- Long-term IDR at 'A-';
-- Secured debt 'A+';
-- Secured pollution control bonds at 'A+/F2';
-- Senior unsecured debt at 'A';
-- Short-term IDR at 'F2';
-- Commercial paper at 'F2'.
Fitch affirms the following ratings and revises the Outlook to
Negative from Stable:
PPL Energy Supply, LLC
-- Long-term IDR at 'BBB';
-- Senior unsecured debt at 'BBB';
-- Short-term IDR at 'F2';
-- Commercial paper at 'F2'.
Fitch withdraws the following rating due to redemption:
PPL Electric Utilities
-- Preferred stock at 'BBB-'.
PVH CORP: Moody's Assigns 'Ba3' Rating to Senior Unsecured Notes
----------------------------------------------------------------
Moody's Investors Service assigned a Ba3 (LGD 5, 85%) rating to
PVH Corp.'s proposed offering of $500 million of new 10-year
senior unsecured notes. Proceeds from the new notes, coupled with
company's proposed new $3.825 billion secured banks loans, will be
used to finance the acquisition of Warnaco Group, Inc. (Ba1/Review
for Downgrade) and to refinance existing debt of PVH. The rating
assigned to the proposed notes are subject to receipt and review
of final documentation. All other ratings as detailed below were
affirmed. The rating outlook remains stable.
The following rating was assigned:
$500 million 10-year senior unsecured notes at Ba3 (LGD 5, 85%)
The following ratings were affirmed:
Corporate Family Rating at Ba2
Probability of Default Rating at Ba2
$100 million senior secured bonds due 2023 at Ba1 (LGD 3, 33%)
$750 million five-year secured revolving credit facility at Ba1
(LGD 3, 33%)
$1.2 billion five-year secured term loan A at Ba1 (LGD 3, 33%)
$1.875 billion seven-year secured term loan B at Ba1 (LGD 3,
33%)
$600 million senior unsecured notes due 2020 at Ba3 (LGD 5,
85%)
The following ratings were affirmed, and are expected to be
withdrawn upon repayment following closing of the new bank credit
facilities:
$450 million secured revolving credit facility due 2016 at Ba1
(LGD 2, 28%)
$691 million term loan A due 2016 at Ba1 (LGD 2, 28%)
$413 million term loan B due 2016 at Ba1 (LGD 2, 28%)
Ratings Rationale
PVH's Ba2 rating reflects the company's strong market position
supported by its ownership of two of the largest global fashion
brands -- Tommy Hilfiger and Calvin Klein. The rating reflects the
global presence of these two large brands and expectations that
operating margins of these business will remain solidly in the
double digit range. While the combined company has a meaningful
presence in Europe, Moody's believes there are still meaningful
organic growth opportunities that can offset weak economic
conditions in those markets. PVH's heritage businesses-- comprised
primarily of PVH's moderate sportswear brands and dress
furnishings business as well as Warnaco's heritage intimate
apparel and Speedo businesses -- have lower organic growth
opportunities, but generate high returns on capital and stable
cash flows. The rating takes into consideration the higher level
of debt following this transaction as well as Moody's expectations
the company will utilize free cash flow to reduce debt.
The Ba3 rating assigned to the proposed senior unsecured notes
reflects their effective subordination to a meaningful level of
secured debt in PVH's capital structure.
The stable outlook reflects expectations that PVH will
successfully integrate the Warnaco acquisition and that free cash
flow will be used to reduce debt. Moody's does not anticipate any
material acquisition activity, beyond modest investments in JV's
and re-acquisition of smaller licenses consistent with historical
practice.
Ratings could be upgraded if the company makes progress
integrating the Warnaco acquisition while also reducing absolute
debt levels. The company would also need to demonstrate continued
stability in operating performance in the face of weak economic
conditions in Europe. Quantitatively, ratings could be upgraded if
debt/EBITDA was sustained below 3.75x and interest coverage
exceeded 3.25 times.
Ratings could be lowered if the company is unable to make progress
reducing debt/EBITDA below 4.25 times within 12 to 18 months from
closing of the acquisition or the company's expected very good
liquidity profile were to weaken. This would most likely be the
case if the Warnaco integration experiences unexpected issues, or
if economic conditions in key markets such as Europe weaken beyond
Moody's current expectations.
The principal methodology used in rating PVH Corp. was the Global
Apparel Industry Methodology published in May 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.
PVH CORP: S&P Rates $500-Mil. Senior Unsecured Notes Due 2022 'BB'
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' unsecured
debt rating to New York-based PVH Corp.'s proposed $500 million
senior notes due 2022, one notch below the 'BB+' corporate credit
rating. "At the same time, we are assigning our '5' recovery
rating to the unsecured notes, reflecting our expectations of
modest (10%-30%) recovery for the lenders in case of a payment
default," S&P said.
"We expect the company to use net proceeds from this debt issuance
to partially finance its pending roughly $3 billion acquisition of
Warnaco Group Inc. We expect the transaction to be completed
during the first quarter of 2013," S&P said.
"Our ratings on PVH, including our 'BB+' corporate credit rating,
reflect our view that the company's financial profile will
continue to be 'significant' following the Warnaco acquisition,
when the company will have pro forma debt-to-EBITDA leverage in
the low- to mid-4x area. In addition, we believe the company's
financial policy continues to be moderate, particularly as we
expect the company to aggressively reduce acquisition-related debt
with cash flow from operations consistent with past practices. We
believe the company's business risk profile continues to be
'satisfactory,' reflecting the corporation's good market position
as one of the larger apparel companies, its portfolio of well-
recognized brands, and its growing geographic diversification,"
S&P said.
RATINGS LIST
PVH Corp.
Corporate credit rating BB+/Stable/--
Ratings Assigned
PVH Corp.
Senior unsecured
$500 mil. notes due 2022 BB
Recovery rating 5
QUVIS INC: SeaCoast Favored in Equitable Subordination Suit
-----------------------------------------------------------
The U.S. Court of Appeals for the Tenth Circuit upheld the
district court's affirmance of a bankruptcy court order declining
to equitably subordinate the claim of SeaCoast Capital Partners
II, L.P., against QuVIS, Inc.
Douglas A. Friesen, M.D.; Marilyn R. Friesen Greenbush, Ph.D.; and
Douglas C. Cusick, along with Seacoast and other lenders, loaned
funds to QuVIS, a company that was later placed into involuntary
Chapter 11 bankruptcy. Although Friesen et al. initially
possessed a secured interest in QuVIS's assets pursuant to a UCC-1
financing statement filed with the Kansas Secretary of State, they
lost their secured status when the financing statement lapsed by
operation of state law. Seacoast, along with other lenders, noted
the lapse and filed new financing statements to secure their
interests. The bankruptcy court ruled that secured lenders would
be paid from the QuVIS estate on a first-to-file basis. Friesen
et al. initiated an adversary proceeding seeking to equitably
subordinate Seacoast's claim. The bankruptcy court concluded that
equitable subordination would be improper because Seacoast was not
an insider of QuVIS and Seacoast did not engage in inequitable
conduct. The district court affirmed.
"We agree with the thorough and persuasive orders of the
bankruptcy and district courts. Appellants have not advanced
evidence creating a question of fact as to whether Seacoast was an
insider of QuVIS. . . . Nor have they created a fact question as
to whether Seacoast engaged in inequitable conduct. . . . The
record demonstrates that Seacoast simply filed a financing
statement to secure its interest after noting a lapse as part of
its due diligence investigation," said Circuit Judge Carlos F.
Lucero, who penned the opinion.
The appellate case is, DOUGLAS A. FRIESEN, M.D.; MARILYN R.
FRIESEN GREENBUSH, Ph.D.; DOUGLAS C. CUSICK Plaintiffs-Appellants,
and JFM LIMITED PARTNERSHIP I; UNSECURED CREDITORS' COMMITTEE,
Plaintiffs, v. SEACOAST CAPITAL PARTNERS II, L.P., Defendant-
Appellee, No. 12-3099 (10th Cir.). A copy of the Tenth Circuit's
Dec. 5, 2012 Order and Judgment is available at
http://is.gd/X6qc3jfrom Leagle.com.
QuVIS, Inc., located in Topeka, Kan., sells software and hardware
that compresses and processes video data for various digital video
applications in the medical, entertainment, and military
industries. Three of QuVIS' creditors filed an involuntary
Chapter 11 petition (Bankr. D. Kan. Case No. 09-10706) against the
company on March 20, 2009. An order for relief (Doc. 16) was
entered on May 18, 2009, by consent. The Debtor filed a Chapter
11 plan in November 2009. The Court held the disclosure statement
inadequate and granted the debtor additional time to file an
amended plan. None was forthcoming and the debtor advises that no
further plan will be forthcoming because it lacks the resources to
resolve disputes with its Noteholders. The Debtor's Schedules of
Assets and Liabilities suggest the company's assets are worth
$1.4 million; other papers filed with the Court indicate that 2008
sales were about $3 million.
RESOLUTE ENERGY: Moody's Rates $150-Mil. Sr. Unsecured Notes 'B3'
-----------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to Resolute Energy
Corporation's proposed $150 million senior unsecured notes due
2020. The new notes have the same terms and will be treated as a
single series with Resolute's existing $250 million notes due
2020. Net proceeds from the notes offering will be used to finance
the pending acquisition of certain assets in the Permian Basin
from a private seller for approximately $120 million, to repay
indebtedness under its revolving credit facility and for general
corporate purposes. The rating outlook is stable.
"Resolute's tuck-in acquisition of certain Permian assets are
complementary to its existing asset portfolio and provide the
company with added scale and oil-weighted growth potential in the
Permian to balance mature cash flows from its core Aneth Field
operations," stated Michael Somogyi, Moody's Vice President --
Senior Analyst.
Ratings Rationale
The B3 rating on the proposed $150 million senior notes reflects
both the overall probability of default of Resolute, to which
Moody's assigns a PDR of B2, and a loss given default of LGD 5
(76%). The senior notes are unsecured and guaranteed by current
subsidiaries on a senior unsecured basis. All of the outstanding
senior notes will be subordinate to Resolute's $330 million senior
secured revolving credit facility. The size of this potential
priority claim to the assets relative to the amount of the senior
notes outstanding results in the notes being rated one notch
beneath the B2 Corporate Family Rating (CFR) under Moody's Loss
Given Default (LGD) Methodology.
The B2 CFR reflects Resolute's small, concentrated reserve base
and low average daily production volumes. Resolute's primary asset
is the Aneth Field in Utah. The company plans to use this mature,
tertiary recovery (CO2), relatively low-risk, long-lived asset as
the economic engine to generate free cash flow for reinvestment
and to augment that with prudent levels of debt. Using cash flows
from the production of about 90% oil and liquids in this field,
Resolute intends to expand into new fields in Wyoming and 'oilier'
properties in the Permian Basin and Rocky Mountain regions.
Resolute is acquiring approximately 6,500 net acres in the Permian
with over 80% of the reserves located in the Midland Basin (Howard
County, Texas) and the Denton Field (Lea County, New Mexico).
Combined, the acquired properties will add 4.1 million barrels of
oil equivalent (MMBoe) of estimated proved reserves, of which 73%
are crude oil, and net over 1,400 Boe of daily production volumes.
Although leveraging, pro-forma the Permian asset acquisition,
Resolute will increase its total proved reserve base to 68.9
MMBoe, comprised of 91% liquids, and production volumes to over
10,000 Boe per day.
Moody's estimates Resolute's pro-forma leverage on average daily
production and PD reserves, post this bond issuance, will rise to
approximately $40,000/Boe and $11.50/Boe, respectively. Moody's
anticipates that increasing production growth from the development
of core properties will lower these leverage metrics by mid-2014.
In addition, potential asset divestitures, capital flexibility in
Resolute's development plan and strategic commodity hedging also
provide for opportunities to managing cash flows and leverage,
while Resolute's liquidity profile is backstopped effectively full
availability under its $330 million borrowing base revolving
credit facility due April 2017.
The stable outlook is based upon Moody's expectation that
Resolute's leverage profile will not increase materially above
current levels for a sustained period of time. A key barometer for
consideration of an upgrade will be increased production beyond
the Aneth field and development of oil-weighted reserves into the
proved producing category. Should average daily production
approach 25,000 Boe per day and proved developed reserves exceed
65 million Boe, a upgrade could be considered. The ratings would
be pressured, however, should debt / average daily production
exceed $47,000 per Boe or retained cash flow / debt decline below
20% for a sustained period.
The principal methodology used in rating Resolute Energy
Corporation 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.
Resolute Energy Corporation is an independent exploration and
production company headquartered in Denver, Colorado.
RESOLUTE ENERGY: S&P Holds 'B' Corp. Credit Rating on Permian Deal
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on Resolute Energy Corp. The outlook is stable.
"At the same time, the company is planning to add $150 million to
its $250 million senior unsecured notes offering due 2020,
bringing the total amount to $400 million. We have affirmed our
'B-' issue-level rating on these notes. The '5' recovery rating on
the notes remains unchanged," S&P said.
Resolute announced it has agreed to acquire oil-producing
properties in the West Texas Permian Basin for $120 million from a
private company. The properties have estimated proven reserves of
4.1 million barrels of oil equivalent (mmboe), 73% of which are
oil, and 1,400 barrels of oil equivalent (boe) per day of
production, which will add about 6% and 15% to Resolute's roven
reserves and production, respectively. The acquisition also
expands Resolute's existing foothold in the oil-rich Permian
Basin, bringing its total acreage position to 15,500 up from 9,000
net acres previously, moderately improving its geographic
diversity. The majority of the new acreage is held by production
(HBP), and thus capital spending requirements are largely
discretionary. The primary asset being acquired is the mature
Denton field in Lea County, N.M., where the company has identified
growth opportunities through well deepenings and infill drilling.
The other key asset is the non-operated Howard County acreage,
which is producing from the Wolfberry play, and has upside
potential from horizontal drilling in the Wolfcamp and Cline
shale. Other assets included in the acquisition consist of non-
operated smaller properties, which could be divested," S&P said.
"To finance the acquisition, which we expect to close in mid-
December, Resolute has announced a $150 million add-on to its
existing 8.5% senior notes due 2020. It has also layered on new
oil hedges for 2013-2015 to lock-in cash flows. We have also
assumed reduced capital expenditures in 2013 on Resolute's
existing assets. Taking these factors into account, we estimate
Resolute's year-end 2013 debt-to-EBITDAX will increase to 3.5x,
which is still moderate or the 'B' rating, from 3.3x at year-end
2012 and just 1.8x at year-end 2011. The add-on offering is not
contingent upon the transaction closing; if for some reason the
acquisition is not consummated, the company would use incremental
debt capital for general corporate purposes," S&P said.
The ratings Resolute reflect Standard & Poor's Ratings Services'
assessment of the company's "vulnerable" business risk,
"aggressive" financial risk and "adequate" liquidity. The ratings
take into consideration the company's small size and scale, its
limited geographic diversity, the high-cost nature of its asset
base, and its position in the highly cyclical, capital-intensive,
and competitive exploration and production industry. The ratings
also reflect the company's meaningful exposure to oil (about 90%
of proven reserves and production), long-lived reserves, adequate
liquidity, and moderate debt leverage.
"The stable outlook reflects Resolute's low-risk proven reserve
base, its adequate liquidity, and the high proportion of oil in
its reserves and production mix. We are unlikely to raise the
ratings in the near term, given the company's relatively small
scale and limited geographic diversity. We could lower the ratings
if Resolute's debt-to-EBITDAX ratio were to exceed 5.0x for a
sustained period -- which would most likely occur as a result of a
large debt--financed acquisition or a major operating problem that
curtails production at the Aneth fields. We note that for debt-to-
EBITDAX to reach this level in 2013, EBITDAX would have to drop by
nearly 30% compared with 2012," S&P said.
REX ENERGY: Moody's Assigns 'B2' CFR; Rates $250MM Sr. Notes 'B3'
-----------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to Rex Energy
Corporation (REXX) proposed $250 million senior notes due 2020.
Moody's also assigned a B2 Corporate Family Rating (CFR) and
Probability of Default Rating (PDR), and an SGL-3 Speculative
Grade Liquidity (SGL) rating. The outlook is stable.
Net proceeds from the notes offering will be used to repay all
outstanding debt under REXX's senior secured revolving credit
facility and second lien term loan and for general corporate
purposes.
Issuer: Rex Energy Corporation
Assignments:
Corporate Family Rating, Assigned B2
Probability of Default rating, Assigned B2
Speculative Grade Liquidity Rating, Assigned SGL-3
US$250 million Senior Unsecured Regular Bond/Debenture,
Assigned B3
US$250 million Senior Unsecured Regular Bond/Debenture,
Assigned LGD5-76%
Ratings Rationale
The B2 CFR reflects REXX's small size, limited production base,
high capital requirements through 2015 and execution risks
surrounding its aggressive development program concentrated in the
Marcellus and Utica Shale plays in the Appalachian Basin. The B2
CFR is supported by REXX's significant reserve, production and
cash flow growth potential that should be realized as it
transitions towards liquids-rich production. REXX also benefits
from a high level of operational control that affords both
operational and financial flexibility, an active commodity hedging
program and adequate liquidity that should support development and
production growth.
REXX's operations are concentrated on its Marcellus and Utica
Shale drilling prospects in the Appalachian Basin, and in the
Illinois Basin where the company has conventional oil production
and is implementing enhanced oil recovery projects. Over the past
year, the company has shifted its operating focus toward liquids-
rich production in the Appalachian Basin. This shift is supported
by extensive drilling by the industry and de-risking of the Utica
Shale play and has proven transformative with the company growing
its proved reserve base to over 102 million barrels of oil
equivalent (MMboe) and its liquids mix rising to approximately
40%. The company's average daily production has increased 66% from
year-end 2011 to 10,800 boe per day for the nine months ending
September 2012.
The SGL-3 Speculative Grade Liquidity rating reflects adequate
liquidity. Pro forma the notes offering, REXX will have
approximately $72.5 million cash on hand and full availability
under its $240 million borrowing base revolver, which expires in
September 2015. Balance sheet cash and liquidity provided by its
credit facility should be sufficient to fund projected out-
spending of cash flow through mid-2014. The revolving credit
facility contains financial covenants that require a minimum
current ratio of 1.0x, a minimum EBITDAX / interest coverage ratio
of 3.0x and maximum total debt / EBITDAX leverage ratio of 4.25x.
The company should remain in compliance with these covenants
through the end of 2013.
The B3 senior unsecured note rating reflects both the overall
probability of default of REXX, to which Moody's assigns a PDR of
B2, and a loss given default of LGD5-76%. The size of the senior
secured revolver's priority claim relative to the senior unsecured
notes results in the notes being rated one notch beneath the B2
CFR under Moody's Loss Given Default Methodology.
The stable outlook assumes REXX will manage its growth without
meaningfully weakening its liquidity profile.
It is unlikely that REXX will be upgraded in the near term due to
its modest average daily production volumes. Successful execution
of its Appalachian development projects will dictate upward
ratings progression. An upgrade would be considered if production
can be sustained above 20,000 boe per day and maximum debt to
average daily production is less than $25,000 per boe.
A downgrade would be consider if REXX's debt to average daily
production rises towards $30,000 boe or liquidity tightens.
The principal methodology used in rating Rex Energy 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.
Rex Energy Corporation (REXX) is an exploration and production
(E&P) company with operations concentrated in the Appalachian
Basin and the Illinois Basin. REXX is head-quartered in State
College, Pennsylvania.
REX ENERGY: S&P Gives 'B' Corporate Credit Rating; Outlook Stable
-----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to State College, Pa.-based Rex Energy Corp. (Rex).
The outlook is stable.
"We also assigned our 'B-' issue-level rating (one notch lower
than the corporate credit rating) to Rex's planned $250 million
senior unsecured notes due 2020. We assigned this debt a '5'
recovery rating, indicating our expectation of modest (10% to 30%)
recovery in the event of a payment default," S&P said.
"Rex is using proceeds from the offering to pay down borrowings
under its credit facility and its second-lien term loan ($122
million and $50 million outstanding as of Sept. 30, 2012) and to
fund 2013 capital expenditures," S&P said.
"The ratings on Rex Energy Corp. reflect our assessment of the
company's 'vulnerable' business risk profile and its 'highly
leveraged' financial risk," said Standard & Poor's credit analyst
Marc D. Bromberg. "The ratings incorporate the company's
relatively small size and scale, its limited geographic diversity,
meaningful proportion of reserves and production exposed to weak
natural gas prices, current lack of takeaway capacity, its
relatively high cost base, a high proportion of riskier proved
undeveloped reserves, and its participation in the capital-
intensive and very cyclical exploration and production (E&P)
industry. Ratings also reflect the company's 'adequate' liquidity
and its prospects for increased condensate production, especially
natural gas liquids (NGLs)," S&P said.
Standard & Poor's views Rex's business profile as vulnerable
because of its relatively small proved reserve base that is
weighted to weak natural gas prices. Rex's proved reserve base was
612 billion cubic feet equivalent (Bcfe) as of Oct. 31, 2012.
However, approximately 351 Bcfe or 57% of these reserves are in
the proved undeveloped (PUD) category and 61% of its reserve base
is tied to soft natural gas. Its undeveloped reserves could be at
risk for a write down if Rex pulls back on its development
spending plans or if it is unable to increase its NGL production.
Rex's reserve base also lacks geographic diversity. Approximately
92% of its proved reserves and 83.6% of its third-quarter
production came from the Appalachian Basin, meaning its cash flows
could be at risk if it encounters processing or takeaway
challenges, weather disruption, or regulatory limitations on its
drilling and fracking program. In the Appalachian, Rex operates in
the Marcellus in Pennsylvania and the Utica in Ohio. Both of these
plays are characterized by their limited processing and takeaway
capacity as compared with mature basins such as the Permian.
Although Rex has some long-term takeaway contracts in place, some
of the infrastructure is currently in construction, meaning Rex's
production could be at risk if there is a disruption in these
projects.
"Rex's primary position in the Marcellus is in the Butler County
region in western Pennsylvania, which accounts for nearly 70% of
the company's proved reserves. Approximately 43% of reserves in
Butler contain profitable NGLs, in particular propane and ethane,
while the remainder is dry gas. Because of limited processing
capacity in the Marcellus, Rex uses most of its ethane for fuel at
its processing plant. Incoming processing capacity should allow
Rex to sell its ethane by early 2014, which we think could add to
profitability. Rex also has a non-operated position in
Westmoreland, Clearfield, and Centre Counties in the Marcellus.
This region is mostly dry gas, so we do not expect that it will
contribute much to profitability or cash flows," S&P said.
"In the Utica shale in Ohio, Rex has 15,500 net acres in the
Warrior North Prospect in Carroll County and 4,000 net acres in
the Warrior South in Guernsey, Noble, and Belmont counties.
Development of the Utica is still in its infancy, and the industry
does not have much production history in the play. Preliminary
drilling results have been promising, with solid production rates
and good liquid content. However, there have been only a small
number of wells drilled and many of the results are based on peak
rates. As a result, future production rates and the percentage of
liquids are uncertain. Rex also has a position in the Illinois
Basin, which is a very mature oil-weighted play that represents
approximately 8% of reserves. We expect that Rex will use a
combination of conventional drilling, recompletion, and enhanced
oil recovery to maximize its production of profitable crude oil.
Given the Illinois Basin's minimal production contribution and its
limited growth prospects, we do not expect it to contribute
meaningfully to Rex's profitability or credit protection measures
going forward," S&P said.
"The stable outlook reflects our expectation that Rex will
successfully develop its asset base in the Appalachian Basin. We
expect that the company will maintain leverage near 3x and
adequate liquidity for the next several years. An upgrade will
require the development of its NGL and crude oil acreage. We could
downgrade the company if we expect run rate leverage to exceed
4.75x, which could occur if Rex does not realize its production
targets," S&P said.
REX VENTURE: Kenneth Bell Reappointed as Receiver
-------------------------------------------------
District Judge Graham C. Mullen in Charlotte, N.C., issued an
order reappointing Kenneth D. Bell as Temporary Receiver for Rex
Venture Group and all entities owned or controlled by it. Since
his appointment, the Receiver has been tracing funds relating to
the case and believes he may have identified causes of action and
other potential receivership assets located in and held by
individuals located in other federal districts. To comply with
the requirements of 28 U.S.C. Sec. 754 and to confer jurisdiction
upon the Court regardless of the location of the receivership
assets or the individuals possessing those assets, the Receiver
has filed a motion seeking reappointment on the same terms
currently in place.
The Securities and Exchange Commission filed an emergency action
to halt the fraudulent unregistered offer and sale of securities
in an unregistered investment contracts constituting securities in
a combined Ponzi and Pyramid scheme perpetrated by Rex Venture
Group, d/b/a www.ZeekRewards.com and its principal, Paul Burks.
The Defendants solicit investors through the internet and over
interstate wires to participate in the ZeekRewards program, a
self-described "affiliate advertising division" for the companion
Web site, http://www.zeekler.com/, through which the Defendants
operate penny auctions.
Since approximately January 2011 through the present, the
Defendants have raised more than $600 million from approximately 1
million investors nationwide and overseas by making unregistered
offers and sales of securities through the ZeekRewards website in
the form of Premium Subscriptions and VIP Bids.
Unbeknownst to its investors, ZeekRewards is, in reality, a
massive Ponzi and pyramid scheme. Approximately 98% of
ZeekRewards' total revenues, and correspondingly the purported
share of "net profits" paid to current investors, are comprised of
funds received from new investors. The Defendants currently hold
approximately $225 million in investor funds in approximately 15
foreign and domestic financial institutions, and those funds are
at risk of imminent dissipation and depletion.
The Court's order authorizes the Receiver to file voluntary
petitions for Chapter 11 bankruptcy relief for the Company.
A copy of the District Court's Order dated Dec. 3 is available at
http://is.gd/2TVgrcfrom Leagle.com.
The case is SECURITIES AND EXCHANGE COMMISSION, Plaintiff, v. REX
VENTURE GROUP, LLC d/b/a ZEEKREWARDS.COM, and PAUL BURKS,
Defendants, Civil Action No. 3:12 cv 519, No. 12-MC-0134 (D.
W.D.N.C.).
SABANA DEL PALMAR: FDIC Wins SARE Declaration
---------------------------------------------
At the request of the Federal Deposit Insurance Corporation, as
Receiver for Westernbank Puerto Rico, Bankruptcy Judge Enrique S.
Lamoutte declared that Sabana del Palmar, Inc., is a single asset
real estate property or project as defined in the Bankruptcy Code,
11 U.S.C. Sec. 101(51B).
The Debtor listed in Schedule A (Real Property) a lot of land with
69 two or three story houses in a gated community (fully
constructed) at Mirabella Village & Club Development in Bayamon,
Puerto Rico, with an unknown current value and a secured claim in
the amount of $28,977,886. The FDIC-R's claim was included in
Debtor's Schedule D (Creditors Holding Secured Claims) as a
construction loan in the amount of $28,977,866 and was listed as
contingent and unliquidated. The 341 meeting of the creditors was
held and closed on Sept. 14, 2012.
The FDIC-R filed proof of claim #5-1 on Nov. 6, 2012 in the amount
of $32,070,760.14, of which $9,920,000 is secured (which is the
same as the value of the property as included by the FDIC-R) and
the remaining $22,150,760.14 is unsecured. On Nov. 30, the Debtor
filed an objection to the secured portion of the FDIC-R'S proof of
claim #5 alleging that the FDIC failed to produce documentation
evincing that it has a perfected lien over the Debtor's real
property.
At the hearing held on Dec. 3, 2012 to consider the motion to lift
the automatic stay filed by the FDIC-R, the parties agreed that
FDIC-R is a secured creditor and that only the amounts owed may be
in controversy.
The FDIC-R also filed proof of claim #6-1 on Nov. 6, 2012, for a
claim which it lists as an unsecured claim in the amount of
$8,709,703.97 but whose basis for perfection was included as
mortgage/security agreement. The Debtor on Nov. 30 objected to
proof of claim #6-1 because the FDIC-R categorized the same as
"secured" even though it listed $0 as the amount of the secured
claim and it failed to provide support for its assertion as a
secured creditor.
A copy of the Court's Dec. 5, 2012 Opinion and Order is available
at http://is.gd/mkerddfrom Leagle.com.
Sabana Del Palmar, Inc., dba Mirabella Village & Club, in Bayamon,
Puerto Rico, filed for Chapter 11 bankruptcy (Bankr. D.P.R. Case
No. 12-06177) on Aug. 5, 2012. Carmen D. Conde Torres, Esq., at
C.Conde & Assoc., serves as the Debtor's counsel. In its
petition, the Debtor scheduled assets of US$262,415 and
liabilities of US$49,594,964. A copy of the Company's list of its
20 largest unsecured creditors filed together with the petition is
available for free at http://bankrupt.com/misc/prb12-06177.pdf
The petition was signed by Michael J. Scarfia, president.
SABRE HOLDINGS: S&P Revises Outlook on 'B' CCR to Stable
--------------------------------------------------------
Standard & Poor's Ratings Services affirmed all ratings on
Southlake, Texas-based travel technology company Sabre Holdings
Corp., including the 'B' corporate credit rating.
"At the same time, we revised the rating outlook to stable from
positive," S&P said.
"The outlook revision to stable is based on our expectation of a
longer time frame to an upgrade," said Standard & Poor's credit
analyst Andy Liu.
"While the settlement and the multiyear distribution agreement
with AMR is a longer-term positive for Sabre, the monetary payment
to AMR does represent a short-term negative for Sabre. The terms
of the settlement were not disclosed," S&P said.
"The 'B' corporate credit rating incorporates our assumption of
fairly stable operating performance, despite an ongoing dispute
with one of its airline customers and competitive pressure at
Travelocity, its online travel agency (OTA). We believe that
Travelocity could continue to lose market share to Expedia Inc.
and Priceline.com Inc. over the intermediate term," S&P said.
"We assess the company's business risk profile as 'fair,'
reflecting its market-leading position in travel distribution in
the U.S. and growing demand for travel-related services. We view
Sabre's financial risk profile as 'highly leveraged,' as debt
leverage remains high at close to 6x as of Sept. 30, 2012. Sabre
has been very active in refinancing and reducing the size of its
2014 maturities. At the beginning of 2012, its 2014 maturities
were close to $3 billion. As of Sept. 30, 2012, its 2014
maturities were less than $250 million. We assess Sabre's
management and governance score as 'fair,'" S&P said.
"The rating outlook is stable. Standard & Poor's expects that
Sabre's credit measures will gradually improve in 2013,
notwithstanding costs related to the pending AMR settlement. If
Sabre can continue to perform and recover from the use of cash
flow for the settlement as well as resolve its dispute with US
Airways, we could raise the rating. An upgrade also would likely
entail our becoming convinced that pressures from airlines on
GDS's are abating. On the other hand, if airlines gain the ability
to dis-intermediate GDSs, resulting in lower profitability, and
shrinking discretionary cash flow, we could lower the rating," S&P
said.
SCHREPFER INDUSTRIES: Case Summary & 20 Largest Unsec Creditors
---------------------------------------------------------------
Debtor: Schrepfer Industries, Inc.
P.O. Box 782
Trinidad, CO 81082
Bankruptcy Case No.: 12-34497
Chapter 11 Petition Date: December 1, 2012
Court: United States Bankruptcy Court
District of Colorado (Denver)
Judge: Sidney B. Brooks
Debtor's Counsel: Michael J. Guyerson, Esq.
ONSAGER, STAELIN & GUYERSON, LLC
1873 S. Bellaire St.
Ste. 1401
Denver, CO 80222
Tel: (303) 512-1123
Fax: (303) 942-3502
E-mail: mguyerson@osglaw.com
Estimated Assets: $1,000,001 to $10,000,000
Estimated Debts: $1,000,001 to $10,000,000
Affiliates that simultaneously sought Chapter 11 protection:
Debtor Case No.
------ --------
Beshore Properties, LLC 12-34498
Assets: $500,001 to $1,000,000
Debts: $1,000,001 to $10,000,000
M. Schrepfer 12-34499
PT Consulting, LLC 12-34500
Assets: $100,001 to $500,000
Debts: $1,000,001 to $10,000,000
S&S Storage, LLC 12-34501
Assets: $500,001 to $1,000,000
Debts: $1,000,001 to $10,000,000
The Movie Picture Showhouse, Inc. 12-34502
The petitions were signed by M. Peter Schrepfer, shareholder.
A copy of Schrepfer Industries' list of its 20 largest unsecured
creditors filed together with the petition is available for free
at http://bankrupt.com/misc/cob12-34497.pdf
A copy of PT Consulting's list of its 17 largest unsecured
creditors filed together with the petition is available for free
at http://bankrupt.com/misc/cob12-34500.pdf
A copy of S&S Storage's list of its eight largest unsecured
creditors filed together with the petition is available for free
at http://bankrupt.com/misc/cob12-34501.pdf
SOUTHERN AIR: Taps PricewaterhouseCoopers as Tax Consultant
-----------------------------------------------------------
Southern Air Holdings, Inc., et al., ask the U.S. Bankruptcy
Court for the District of Delaware for permission to employ
PricewaterhouseCoopers LLP as tax consultant, nunc pro tunc to the
Petition Date.
PwC will, among other things:
a) analyze the material tax consequences of the proposed
reorganization;
b) review the Debtors' intercompany debt position and consider
the tax implications of maintaining or eliminating the debt;
c) assist the Debtors in determining the tax basis in their
assets, including the stock of relevant subsidiaries; and
d) prepare a spreadsheet that illustrates the relevant tax
consequences of proposed alternative restructuring plans,
including the effects of available tax elections.
The Debtors have been advised by PwC that the firm will endeavor
to coordinate with the other retained professionals in the case to
eliminate unnecessary duplication or overlap of work.
The hourly rates of PwC's personnel are:
Partner $695
Director $565
Manager $460
Senior Associate $395
Associate $265
The Debtors owe PwC $17,500 for services rendered prepetition.
PwC has informed the Debtors that it will waive any rights to the
prepetition amount upon entry of an order approving the
application.
To the best of the Debtors' knowledge, PwC is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
A Dec. 18, 2012 hearing at 10 a.m., has been set on the Debtors'
request. Objections, if any, are due Dec. 10 at 4 p.m.
About Southern Air
Based in Norwalk, Connecticut, military cargo airline Southern
Air Inc. -- http://www.southernair.com/-- its parent Southern Air
Holdings Inc. and their affiliated entities filed for Chapter 11
bankruptcy protection (Bankr. D. Del. Case Nos. 12-12690 to
12-12707) in Wilmington on Sept. 28, 2012, blaming the decline in
business from the U.S. Department of Defense, which reduced its
troop count in Afghanistan and hired Southern Air less frequently.
Bankruptcy Judge Christopher S. Sontchi presides over the case.
Brian S. Rosen, Esq., Candace Arthur, Esq., and Gabriel Morgan,
Esq., at Weil, Gotshal & Manges LLP; and M. Blake Cleary, Esq.,
and Maris J. Kandestin, Esq., at Young, Conaway, Stargatt &
Taylor, serve as the Debtor's counsel. Zolfo Cooper LLC serves as
the Debtors' bankruptcy consultant and special financial advisor.
Kurtzman Carson Consultants, LLC, serves as claims and notice
agent.
CF6-50, LLC, debtor-affiliate, disclosed $338,925,282 in assets
and $288,000,000 in liabilities as of the Chapter 11 filing. The
petition was signed by Jon E. Olin, senior vice president.
Canadian Imperial Bank of Commerce, New York Agency, the DIP agent
and prepetition agent, is represented by Matthew S. Barr, Esq.,
and Samuel Khalil, Esq., at Milbank Tweed Hadley & McCloy LLP; and
Mark D. Collins, Esq., and Katherine L. Good, Esq., at Richards
Layton & Finger PA.
Stephen J. Shimshak, Esq., and Kelley A. Cornish, Esq., at Paul
Weiss Rifkind Wharton & Garrison LLP; and Mark E. Felger, Esq., at
Cozen O'Connor, represent Oak Hill Capital Partners II, LP, OH
Aircraft Acquisition LLC, and Oak Hill Cargo 360 LLC.
The Debtors' Plan provides that lenders agreed to accept ownership
of the company as payment for their $288 million loan.
On Nov. 21, 2012, Roberta DeAngelis, U.S. Trustee for Region 3,
appointed the statutory committee of unsecured creditors.
SOUTHERN AIR: U.S. Trustee Forms Three-Member Creditors Committee
-----------------------------------------------------------------
Roberta A. DeAngelis, the U.S. Trustee for Region 3 appointed
three persons to serve in the Official Committee of Unsecured
Creditors in the Chapter 11 cases of Southern Air Holdings, Inc.,
et al.
The Committee is comprised of:
1. Arrow Air Unsecured Creditor Trust
Attn: Barry E. Mukamal, liquidating trustee
1 S.E. 3rd Ave., 10th Floor
Miami, FL 33131
Tel: (305) 995-9770
Fax: (305) 377-8331
2. Williams Aerospace, LLC
Attn: Mark Walenczyk
5050 Poplar Ave., Suite 1734
Memphis, TN 38157
Tel: (901) 255-2623
Fax: (901) 302-9278
3. Aquinas Consulting, LLC
Attn: Sally Reed
154 Herbert St.
Milford, CT 06461
Tel: (203) 876-7822
Fax: (203) 876-9804
About Southern Air
Based in Norwalk, Connecticut, military cargo airline Southern
Air Inc. -- http://www.southernair.com/-- its parent Southern Air
Holdings Inc. and their affiliated entities filed for Chapter 11
bankruptcy protection (Bankr. D. Del. Case Nos. 12-12690 to
12-12707) in Wilmington on Sept. 28, 2012, blaming the decline in
business from the U.S. Department of Defense, which reduced its
troop count in Afghanistan and hired Southern Air less frequently.
Bankruptcy Judge Christopher S. Sontchi presides over the case.
Brian S. Rosen, Esq., Candace Arthur, Esq., and Gabriel Morgan,
Esq., at Weil, Gotshal & Manges LLP; and M. Blake Cleary, Esq.,
and Maris J. Kandestin, Esq., at Young, Conaway, Stargatt &
Taylor, serve as the Debtor's counsel. Zolfo Cooper LLC serves as
the Debtors' bankruptcy consultant and special financial advisor.
Kurtzman Carson Consultants, LLC, serves as claims and notice
agent.
CF6-50, LLC, debtor-affiliate, disclosed $338,925,282 in assets
and $288,000,000 in liabilities as of the Chapter 11 filing. The
petition was signed by Jon E. Olin, senior vice president.
Canadian Imperial Bank of Commerce, New York Agency, the DIP agent
and prepetition agent, is represented by Matthew S. Barr, Esq.,
and Samuel Khalil, Esq., at Milbank Tweed Hadley & McCloy LLP; and
Mark D. Collins, Esq., and Katherine L. Good, Esq., at Richards
Layton & Finger PA.
Stephen J. Shimshak, Esq., and Kelley A. Cornish, Esq., at Paul
Weiss Rifkind Wharton & Garrison LLP; and Mark E. Felger, Esq., at
Cozen O'Connor, represent Oak Hill Capital Partners II, LP, OH
Aircraft Acquisition LLC, and Oak Hill Cargo 360 LLC.
The Debtors' Plan provides that lenders agreed to accept ownership
of the company as payment for their $288 million loan.
On Nov. 21, 2012, Roberta DeAngelis, U.S. Trustee for Region 3,
appointed the statutory committee of unsecured creditors.
STARWOOD HOTELS: Moody's Assigns '(P)Ba1' Preferred Stock Rating
----------------------------------------------------------------
Moody's Investors Service assigned a Baa2 rating to Starwood
Hotels & Resorts Worldwide Inc.'s $350 million senior unsecured
notes due 2023. In addition, Moody's assigned ratings to
Starwood's new shelf registration for Well Known Seasoned Issuers.
Starwood's existing senior unsecured debt ratings were affirmed.
The outlook is stable.
Proceeds from the $350 million senior unsecured note offering
along with cash on hand will be used to fund a cash tender offer
to purchase an aggregate amount of up to $515 million of
Starwood's other senior unsecured notes.
New ratings assigned:
$350 million senior unsecured notes due 2023 - Baa2
Senior unsecured shelf rating - (P)Baa2
Subordinated shelf rating - (P)Baa3
Preferred stock rating - (P)Ba1
Existing senior unsecured ratings affirmed:
$450 million 7.375% notes due 2015 at Baa2
$500 million 7.875% notes due 2014 at Baa2
$400 million 6.75% notes due 2018 at Baa2
$250 million 7.15% notes due 2019 at Baa2
Ratings Rationale
Starwood's Baa2 senior unsecured ratings reflect its well-defined
branding strategy and Moody's expectation that the company will
continue to generate positive free cash flow and maintain a
significant amount of availability under its $1.75 billion
revolver (not-rated) expiring 2018 which closed this past
November.
The ratings also incorporate Moody's expectation that Starwood
will manage its dividend and other shareholder friendly activities
in a manner that will preserve its current credit metrics. Pro
forma for this transaction, debt/EBITDA remains at about 2.4 times
while EBIT/Interest could improve to about 3.6 times from 3.2
times if all notes are tendered. Other positive rating
considerations include the company's increase towards higher
margin franchise brands, solid hotel development pipeline, and
good management of its time share operations.
Key rating concerns include Starwood's sensitivity to economic
cycles, risks related to growing and gaining appropriate
distribution of new home grown brands, material international
expansion and challenges in emerging markets.
The stable outlook reflects Moody's expectation that despite
further earnings improvement from cost savings initiatives, and a
lower overall cost of debt, there will be some softness in
Starwood's RevPAR growth in Europe that will temper the company's
overall earnings improvement. As a result, Moody's expects that
Starwood's leverage and coverage will remain at a level that is
consistent with its current Baa2 rating, according to Moody's
Global Lodging rating methodology. The stable outlook also
considers that as Starwood moves to a more asset light business
model and sells owned hotels, debt will be reduced at least
commensurate to the loss of earnings from the property sale.
Higher ratings would require that Starwood achieve and maintain
debt/EBITDA below 2.0 times, EBIT/Interest over 4.5 times, and
retained cash flow/ net debt greater than 25%. A higher rating
would also require that Starwood maintain its very good liquidity
as well as continue to manage its dividend and other shareholder
friendly activities in a manner consistent with its rating.
Ratings could be downgraded in the event debt/EBITDA rose above
3.0 times, EBIT to interest fell towards 3.25 times, or retained
cash flow to net debt declined towards 15% for an extended period
of time.
The principal methodology used in rating Starwood was the Global
Lodging & Cruise Industry Rating Methodology published in December
2010.
Starwood Hotels & Resorts Worldwide, Inc. owns and operates
approximately 1,128 properties in more than 100 countries. Annual
net revenues are about $3.3 billion.
SUNGARD DATA: S&P Affirms 'B+' Corp. Credit Rating; Outlook Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on Wayne, Pa.-based SunGard Data Systems Inc. The
outlook is stable.
"We also affirmed our 'BB' issue-level rating on the company's
existing senior secured notes, term loan B, and revolving credit
facility (two notches above the corporate credit rating). The
recovery rating on this debt remains '1', indicating our
expectation that lenders can expect very high (90% to 100%)
recovery in the event of a payment default," S&P said.
"In addition, we are assigning our 'BB' bank loan rating with a
recovery rating of '1' to the new extended term loan B tranche D,"
S&P said.
"We affirmed our 'B' issue-level rating on the outstanding senior
notes. The '5' recovery rating indicates our expectation that
lenders that can expect modest recovery (10% to 30%) in the event
of a payment default. Our 'B-' rating on the outstanding
subordinated notes is unchanged. The recovery rating on the notes
is '6', indicating our expectation of negligible (0% to 10%)
recovery in the event of a payment default," S&P said.
"The ratings on software and technology services company SunGard
Data Systems Inc. reflect Standard & Poor's Ratings Services'
expectation that the company's 'satisfactory' business risk
profile and significant base of recurring revenues will continue
to support its 'highly leveraged' financial risk profile," said
Standard & Poor's credit analyst Jake Schlanger. "The ratings also
reflect SunGard's healthy cash flow generation and strong position
in the fragmented market for investment-support processing
software."
SunGard reported revenues of $3.1 billion for the nine months
ended Sept. 30, 2012, compared with $3.3 billion the prior year.
The Financial Systems segment, which accounts for nearly two-
thirds of revenues, experienced a 5% decline (4% decline on a
constant currency basis), largely because of a decline in the
broker/dealer business and several significant license
transactions that occurred in 2011 with no comparable deals in
2012. The Availability Services segment (about 33% of total
revenues) reported a 4% decline (down 3% on a constant currency
basis), largely because of decreases in recovery services. This
segment has suffered pressure from mature disaster recovery market
conditions, a shift in customer demand to broader availability
solutions, and competitive pricing pressure. EBITDA of $1.2
billion and margins of 29.9% for the 12 months ended September
compared with the year earlier level of $1.3 billion and 29.2%,
respectively. "SunGard has previously indicated that it is
evaluating alternatives with respect to its Availability Services
segment, including a potential spinoff of the business. However,
the success, timing, and capital structure of SunGard following
any potential actions are uncertain and we are currently not
incorporating them into our ratings or outlook. We will assess the
effect of any transaction if and when there is a proposal to
evaluate. The company closed on the sale of its Higher Education
business, which accounted for 11% of its revenues in 2011, in
January 2012 for $1.775 billion," S&P said.
"Our stable outlook reflects SunGard's strong market position in
diversified market segments and consistent operating performance.
The dividend recapitalization is in line with our view that the
company's private-equity ownership structure is likely to prevent
sustained debt reduction and currently limits any potential for an
upgrade. The company's defensible market positions and high
recurring revenue base lessen the potential for credit
deterioration. However, sustained leverage in excess of 7x because
of acquisitions or shareholder-friendly initiatives could lead to
lower ratings," S&P said.
SYNAGRO TECHNOLOGIES: Obtains Waiver Under Credit Agreement
-----------------------------------------------------------
Synagro Technologies, Inc., has obtained a waiver of certain
breaches of the Company's credit agreement. The waiver provides
the Company time to continue to work with its lenders to address
its senior credit facility and strengthen its balance sheet.
Under the agreement, the senior lenders will waive default-related
remedies, providing the lenders and the Company additional time to
fully vet possible solutions to restructure Synagro's debt while
allowing the Company to continue normal business operations.
"The waiver agreement is a clear sign that our lenders are
supportive of our efforts to strengthen Synagro's balance sheet,"
said Eric Zimmer, the Company's President and CEO. "While we are
working diligently on the restructuring process, our focus remains
on continuing to provide industry leading biosolids management for
our customers nationwide."
About Synagro Technologies
Synagro Technologies, Inc., based in Houston, Texas, is a recycler
of bio-solids and other organic residuals in the U.S. At June 30,
2012 trailing twelve month revenues were $318 million and the
total debt balance was $532 million. The company is majority-owned
by entities of The Carlyle Group.
In August 2012, Moody's Investors Service lowered the ratings of
Synagro Technologies, including the corporate family rating to
Caa3 from Caa2. The rating outlook is negative.
Moody's said the Caa3 corporate family rating reflects very high
financial leverage against a material amount of near-term debt
maturities and weak liquidity. Synagro's revolving credit line
expires in about eight months and more than $70 million of
borrowings exist under the line, a substantial obligation in light
of the company's limited near-term cash flow prospects and an
existing cash on hand of only about $25 million. Likelihood of a
financial ratio covenant breach before the revolving credit line
expires also factors into the rating. Additionally, the April 2014
maturity on the first lien term loan will likely prevent the
company from negotiating a material extension to its revolver in
the absence of a complete refinancing of the capital structure.
TOPS HOLDING: Moody's Affirms 'B3' CFR; Rates New Sr. Notes 'B3'
----------------------------------------------------------------
Moody's Investors Service affirmed the B3 Corporate Family and
Probability of Default Ratings of Tops Holding Corporation
('Tops") and assigned a B3 rating to the company's proposed $460
million senior secured notes due 2017 ("Proposed Notes"). The
stable outlook is maintained.
Ratings Rationale
Proceeds from the Proposed Notes will be used to refinance the
existing senior secured notes, fund a $100 million distribution to
shareholders, and pay related fees and expenses. The Proposed
Notes will be guaranteed by all existing and future direct and
indirect subsidiaries of Tops.
The following rating was assigned subject to receipt and review of
final documentation:
- $460 million senior secured notes due 2017 at B3 (LGD 4, 54%)
The following ratings are affirmed:
- Corporate Family Rating at B3
- Probability of Default Rating at B3
The following rating was affirmed and will be withdrawn upon
completion of the refinancing:
- $350 million senior secured notes due 2015 at B3 (LGD 4, 53%)
The affirmation of the B3 Corporate Family Rating and Probability
of Default Rating reflect that credit metrics will remain at
levels appropriate for the rating level despite weakening as a
result of the additional debt incurred to finance the $100 million
dividend. Pro forma for the transaction debt to EBITDA will rise
to 5.3 times from 4.6 times for the lagging twelve months ended
October 6, 2012.
Tops Corporate Family Rating of B3 reflects the company's weak
credit metrics, its modest size relative to competitors, regional
concentration and financial policies skewed towards shareholder
returns. The rating is supported by its stable operating
performance in a challenging business and competitive environment,
its good regional market presence and its good liquidity.
The stable outlook reflects the expectation that Tops' credit
metrics will improve modestly over the next twelve to eighteen
months due to increased profitability. The stable outlook also
reflects that liquidity will remain good and assumes that the
company will not make any further debt financed shareholder
distributions.
Over time a rating upgrade would require improvement in
profitability, positive same store sales and consistent free cash
flow. Ratings could rise if Tops demonstrates sustained Moody's
adjusted EBITA to interest above 1.75 times and sustained Moody's
adjusted debt/EBITDA below 5.25 times while maintaining good
liquidity and a benign financial policy.
Ratings could be downgraded if same store sales and profitability
demonstrate a declining trend. Ratings could also be downgraded if
financial policies do not stay benign or if liquidity
deteriorates. Quantitatively ratings could be downgraded if
Moody's adjusted EBITA to interest is sustained below 1.25 times
or if Moody's adjusted debt/EBITDA is sustained above 5.75 times.
The principal methodology used in rating Tops 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.
Tops Holding Corporation headquartered in Williamsville, New York
is the parent of Tops Markets, LLC, a supermarket chain in Upstate
New York, Northern Pennsylvania and Vermont. The company is 71.6%
owned by Morgan Stanley Capital Partners, with remaining ownership
held largely by Graycliff Partners (formerly, HSBC Private Equity
Partners) and company management. As of October 6, 2012, the
Company operates 146 supermarkets under the banners of Tops, GU
Family Markets, Grand Union and Bryants, with an additional five
supermarkets operated by franchisees.
TOPS HOLDING: S&P Revises Outlook on 'B+' CCR on Increased Debt
---------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook to negative
from stable on Buffalo, N.Y.-based Tops Holdings Corp. At the same
time, Standard & Poor's affirmed its 'B+' long-term corporate
credit rating on the company.
"The outlook revision is based on Tops' increased debt and
weakened credit ratios following a dividend payment to its equity
sponsor," said Standard & Poor's credit analyst Charles Pinson-
Rose. "The revision also reflects the possibility that the
company's operating performance could be moderately weaker than we
expect. Therefore, Tops will not enhance its credit protection
measures as expected, and we could consider lowering the rating
within the next year" Mr. Pinson-Rose added.
"At the same time, Standard & Poor's assigned its 'B+' issue-level
rating and a '4' recovery rating to the company's proposed $460
million senior secured note offering. We rate the notes the same
as the corporate credit rating; the '4' recovery rating indicates
our expectation of average (30%-50%) recovery in the event of
default," S&P said.
"The ratings on Tops reflect our view of the company's financial
risk profile as 'highly leveraged', which we revised from
'aggressive' following this transaction. We base this revision on
our forecast of credit ratios, which incorporate the increased
debt, moderate profit growth, and some improvement in credit
ratios in the next year. The supermarket industry is experiencing
continued incursions from discounters, dollar stores, warehouse
clubs, and drug stores. Nevertheless, we believe this competition
is tempered in Tops' markets relative to the rest of the country,
and that the company is reasonably well-positioned to maintain
its current market share," S&P said.
"The negative outlook reflects what we view as pro forma credit
ratios that are relatively weak for the current rating, and the
chance that Tops will not improve its credit ratios as expected
because of weak economic conditions. If we were to modify our
forecast of adjusted debt to EBTIDA such that it was at or above
5.4x, we would consider lowering the rating. This could occur if
we believed unadjusted EBITDA would be $152 million or lower in
2013, about 5% below our forecast, which could be driven by an
additional 20-30 basis points of margin contraction," S&P said.
"On the other hand, if the company can meet our expectations in
the next year and we were comfortable that it could sustain modest
profit growth and leverage near 5x, we could revise our outlook to
stable," S&P said.
TRANSWITCH CORP: Not Meeting Nasdaq Minimum Bid Price Rules
-----------------------------------------------------------
TranSwitch Corporation received a letter on Dec. 4, 2012, from the
Nasdaq Capital Market indicating that the Company no longer meets
the minimum bid price requirement for continued listing on the
Nasdaq Capital Market as set forth in Nasdaq Listing Rule
5550(a)(2). The notice stated that the bid price of the Company's
common stock has closed below the required minimum $1.00 per share
for the previous 30 consecutive business days. The Nasdaq notice
has no immediate effect on the listing of the Company's common
stock.
In accordance with Nasdaq rules, the Company has 180 calendar days
to regain compliance with the Rule. If at any time before June 3,
2013, the bid price of the Company's common stock closes at $1.00
per share or higher for a minimum of 10 consecutive business days,
Nasdaq will notify the Company that it has regained compliance
with the Rule.
In the event the Company does not regain compliance with the Rule
prior to June 3, 2013, Nasdaq will notify the Company that its
securities are subject to delisting. However, the Company may be
eligible for additional time. To qualify, the Company will be
required to meet the continued listing requirement for market
value of publicly held shares and all other initial listing
standards for the Nasdaq Capital Market, with the exception of the
bid price requirement, and will need to provide written notice of
its intention to cure the deficiency during the second compliance
period. If such application to the Nasdaq Capital Market is
approved, then the Company may be eligible for an additional grace
period. However, if it appears to Nasdaq that the Company will
not be able to cure the deficiency, or if the Company is otherwise
not eligible, Nasdaq will provide notice that the Company's
securities will be subject to delisting. The Company may, at that
time, appeal the Nasdaq determination to a Nasdaq Hearing Panel.
Such an appeal, if granted, would stay delisting until a Panel
ruling.
The Company is considering actions that it may take in response to
this notification in order to regain compliance with the continued
listing requirements.
TranSwitch Corporation -- http://www.transwitch.com/-- (TXCC)
designs, develops and supplies innovative integrated circuit (IC)
and intellectual property (IP) solutions that provide core
functionality for voice, data and video communications equipment
for network, enterprise and customer premises applications.
VALENCE TECHNOLOGY: Amends List of 20 Largest Unsecured Creditors
-----------------------------------------------------------------
Valence Technology, Inc. filed with the U.S. Bankruptcy Court for
the Western District of Texas an amended list of its 20 largest
unsecured creditors, disclosing:
Name of Creditor Nature of Claim Amount of Claim
---------------- --------------- ---------------
Tianjin Lishen Battery Joint- Trade Debt $4,685,281
Stock Co., Ltd.
6 Lanyuan Road Huayuan Hi-Tech
Industry Park
Tianjin 300684, PR China
Carl Warden Loan $3,016,875
1516 Country Club Drive
Los Altos, CA 94024
Krieg, Keller, Sloan & Reilly Professional Fees $665,519
555 Montgomery Street, 17th Floor
San Francisco, CA 94111
Courb Contract Dispute $181,090
Amperex Technology Ltd. Trade Debt $127,938
Kuehne & Nagel Logistics NV Trade Debt $96,984
Kuehne & Nagel, Inc. Trade Debt $88,929
PMB Helin Donovan, LLP Professional Fees $66,445
Salesforce.com, Inc. Trade Debt $57,167
Krause & Weisert Professional Fees $34,811
Insight Direct Trade Debt $29,396
Next Innovation, Inc. Trade Debt $27,103
Ghedi International, Inc. Trade Debt $25,675
National Depo Litigation $22,538
McGinnis, Lovhridge &
Kilgore, LLP Professional Fees $19,666
Host Analytics, Inc. Trade Debt $17,325
Pope, Shamsie & Dooley, LLP Professional Fees $14,533
Silicon Valley Bank Credit Card $13,552
Metal Conversion Tech, LLC Trade Debt $13,315
Kim & Chang Professional Fees $12,799
The amendment reflects changes to the amounts of the creditors'
claims.
About Valence Technology
Valence Technology, Inc., filed a Chapter 11 petition (Bankr. W.D.
Tex. Case No. 12-11580) on July 12, 2012, in its home-town in
Austin. Founded in 1989, Valence develops lithium iron magnesium
phosphate rechargeable batteries. Its products are used in hybrid
and electric vehicles, as well as hybrid boats and Segway personal
transporters.
The Debtor disclosed debt of $82.6 million and assets of
$31.5 million as of March 31, 2012. The Debtor disclosed
$24,858,325 in assets and $78,520,831 in liabilities as of the
Chapter 11 filing. Chairman Carl E. Berg and related entities own
44.4% of the shares. ClearBridge Advisors, LLC owns 5.5%.
Valence expects to complete its restructuring during 2012.
Judge Craig A. Gargotta presides over the case. The Company is
being advised by Streusand, Landon & Ozburn, LLP with respect to
bankruptcy matters. The petition was signed by Robert Kanode,
CEO.
On Aug. 8, 2012, the United States Trustee for Region 7 appointed
five creditors to serve on the Official Committee of Unsecured
Creditors of the Debtor.
VALENCE TECHNOLOGY: Files Schedules of Assets and Liabilities
--------------------------------------------------------------
Valence Technology, Inc. filed with the U.S. Bankruptcy Court for
the Western District of Texas its schedules of assets and
liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $0
B. Personal Property $24,858,325
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $69,101,830
E. Creditors Holding
Unsecured Priority
Claims $11,613
F. Creditors Holding
Unsecured Non-priority
Claims $9,407,388
----------- -----------
TOTAL $24,858,325 $78,520,831
A copy of the schedules is available for free at
http://bankrupt.com/misc/VALENCE_TECHNOLOGY_sal_amended.pdf
About Valence Technology
Valence Technology, Inc., filed a Chapter 11 petition (Bankr. W.D.
Tex. Case No. 12-11580) on July 12, 2012, in its home-town in
Austin. Founded in 1989, Valence develops lithium iron magnesium
phosphate rechargeable batteries. Its products are used in hybrid
and electric vehicles, as well as hybrid boats and Segway personal
transporters.
The Debtor disclosed debt of $82.6 million and assets of
$31.5 million as of March 31, 2012. Chairman Carl E. Berg and
related entities own 44.4% of the shares. ClearBridge Advisors,
LLC owns 5.5%.
Valence expects to complete its restructuring during 2012.
Judge Craig A. Gargotta presides over the case. The Company is
being advised by Streusand, Landon & Ozburn, LLP with respect to
bankruptcy matters. The petition was signed by Robert Kanode,
CEO.
On Aug. 8, 2012, the United States Trustee for Region 7 appointed
five creditors to serve on the Official Committee of Unsecured
Creditors of the Debtor.
VALENCE TECHNOLOGY: Has Until Jan. 8 to Propose Chapter 11 Plan
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Texas
extended Valence Technology, Inc.'s exclusive periods to file a
Chapter 11 Plan and solicit acceptances for the proposed plan
until Jan. 8, 2013, and March 8, respectively.
About Valence Technology
Valence Technology, Inc., filed a Chapter 11 petition (Bankr. W.D.
Tex. Case No. 12-11580) on July 12, 2012, in its home-town in
Austin. Founded in 1989, Valence develops lithium iron magnesium
phosphate rechargeable batteries. Its products are used in hybrid
and electric vehicles, as well as hybrid boats and Segway personal
transporters.
The Debtor disclosed debt of $82.6 million and assets of
$31.5 million as of March 31, 2012. The Debtor disclosed
$24,858,325 in assets and $78,520,831 in liabilities as of the
Chapter 11 filing. Chairman Carl E. Berg and related entities own
44.4% of the shares. ClearBridge Advisors, LLC owns 5.5%.
Valence expects to complete its restructuring during 2012.
Judge Craig A. Gargotta presides over the case. The Company is
being advised by Streusand, Landon & Ozburn, LLP with respect to
bankruptcy matters. The petition was signed by Robert Kanode,
CEO.
On Aug. 8, 2012, the U.S. Trustee for Region 7 appointed five
creditors to serve on the Official Committee of Unsecured
Creditors of the Debtor. Brinkman Portillo Ronk, PC, serves as
its counsel.
VERTIS HOLDINGS: Bankr. Court OKs Sale to Quad/Graphics
-------------------------------------------------------
Quad/Graphics, Inc. and Vertis Holdings, Inc. jointly disclosed
that the U.S. Bankruptcy Court has approved the companies'
proposed sale agreement, clearing the way for the sale to close.
The companies are in the final stages of integration planning and
expect to close the transaction in January.
Quad/Graphics and Vertis first announced on Oct. 10, 2012, the
execution of an agreement through which Quad/Graphics will acquire
substantially all of the assets comprising Vertis' businesses.
Vertis simultaneously filed voluntary petitions for Chapter 11
relief to complete the sale as efficiently as possible while
maintaining continuity for its clients and employees.
Vertis and Quad/Graphics will continue to operate separately and
independently until the sale closes.
About Vertis
Vertis Holdings Inc. -- http://www.thefuturevertis.com/--
provides advertising services in a variety of print media,
including newspaper inserts such as magazines and supplements.
Vertis and its affiliates (Bankr. D. Del. Lead Case No. 12-12821),
returned to Chapter 11 bankruptcy on Oct. 10, 2012, this time to
sell the business to Quad/Graphics, Inc., for $258.5 million,
subject to higher and better offers in an auction.
As of Aug. 31, 2012, the Debtors' unaudited consolidated financial
statements reflected assets of approximately $837.8 million and
liabilities of approximately $814.0 million.
Bankruptcy Judge Christopher Sontchi presides over the 2012 case.
Vertis is advised by Perella Weinberg Partners, Alvarez & Marsal,
and Cadwalader, Wickersham & Taft LLP. Quad/Graphics is advised
by Blackstone Advisory Partners, Arnold & Porter LLP and Foley &
Lardner LLP, special counsel for antitrust advice. Kurtzman
Carson Consultants LLC is the Debtors' claims agent.
Quad/Graphics is a global provider of print and related
multichannel solutions for consumer magazines, special interest
publications, catalogs, retail inserts/circulars, direct mail,
books, directories, and commercial and specialty products,
including in-store signage. Headquartered in Sussex, Wis. (just
west of Milwaukee), the Company has approximately 22,000 full-time
equivalent employees working from more than 50 print-production
facilities as well as other support locations throughout North
America, Latin America and Europe.
Vertis first filed for bankruptcy (Bankr. D. Del. Case No.
08-11460) on July 15, 2008, to complete a merger with American
Color Graphics. ACG also commenced separate bankruptcy
proceedings. In August 2008, Vertis emerged from bankruptcy,
completing the merger.
Vertis against filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y.
Case No. 10-16170) on Nov. 17, 2010. The Debtor estimated its
assets and debts of more than $1 billion. Affiliates also filed
separate Chapter 11 petitions -- American Color Graphics, Inc.
(Bankr. S.D.N.Y. Case No. 10-16169), Vertis Holdings, Inc. (Bankr.
S.D.N.Y. Case No. 10-16170), Vertis, Inc. (Bankr. S.D.N.Y. Case
No. 10-16171), ACG Holdings, Inc. (Bankr. S.D.N.Y. Case No.
10-16172), Webcraft, LLC (Bankr. S.D.N.Y. Case No. 10-16173), and
Webcraft Chemicals, LLC (Bankr. S.D.N.Y. Case No. 10-16174). The
bankruptcy court approved the prepackaged Chapter 11 plan on
Dec. 16, 2010, and Vertis consummated the plan on Dec. 21. The
plan reduced Vertis' debt by more than $700 million or 60%.
GE Capital Corporation, which serves as DIP Agent and Prepetition
Agent, is represented in the 2012 case by lawyers at Winston &
Strawn LLP. Morgan Stanely Senior Funding Inc., the agent under
the prepetition term loan, and as term loan collateral agent, is
represented by lawyers at White & Case LLP, and Milbank Tweed
Hadley & McCloy LLP.
The Official Committee of Unsecured Creditors tapped Cooley LLP as
its lead counsel, BDO Consulting, a division of BDO USA, LLP as
its financial advisor.
VERTIS HOLDINGS: Schedules of Assets and Liabilities Filed
----------------------------------------------------------
Vertis Inc., debtor-affiliate of Vertis Holdings, Inc., et al.,
filed with the U.S. Bankruptcy Court for the District of Delaware
its schedules of assets and liabilities, disclosing:
Name of Schedule Assets Liabilities
---------------- ----------- -----------
A. Real Property $15,627,638
B. Personal Property $584,591,917*
C. Property Claimed as
Exempt
D. Creditors Holding
Secured Claims $516,322,016*
E. Creditors Holding
Unsecured Priority
Claims $522,025*
F. Creditors Holding
Unsecured Non-priority
Claims $54,851,646*
----------- -----------
TOTAL $600,219,555* $571,695,687*
These debtor-affiliates also filed their schedules, disclosing:
Company Assets Liabilities
------- ------ -----------
Mail Efficiency, LLC $0 $0*
American Color Graphics, Inc. $88,850,051* $36,146,128*
ACG Holdings, Inc. $199,150 $0*
Vertis Newark, LLC $743,665* $74,353*
Webcraft, LLC $125,654,498* $216,494,642*
Vertis Holdings, Inc. $7,598,836* $8,705,097*
Webcraft, LLC $125,654,498* $216,494,642
5 Digit Plus, LLC $1,713,590 $2,203,292*
* plus undetermined amounts
Copies of the schedules are available for free at:
http://bankrupt.com/misc/VERTISHOLDINGS_americancolor_sal.pdf
http://bankrupt.com/misc/VERTIS_HOLDINGS_inc_sal.pdf
http://bankrupt.com/misc/VERTIS_HOLDINGS_mailefficiency_sal.pdf
http://bankrupt.com/misc/VERTIS_HOLDINGS_newark_sal.pdf
http://bankrupt.com/misc/VERTIS_HOLDINGS_sal.pdf
http://bankrupt.com/misc/VERTIS_HOLDINGS_vertisinc_sal.pdf
http://bankrupt.com/misc/VERTIS_HOLDINGS_webcraftllc_sal.pdf
http://bankrupt.com/misc/VERTIS_HOLDINGS_webcraft_sal.pdf
About Vertis
Vertis Holdings Inc. -- http://www.thefuturevertis.com/--
provides advertising services in a variety of print media,
including newspaper inserts such as magazines and supplements.
Vertis and its affiliates (Bankr. D. Del. Lead Case No. 12-12821),
returned to Chapter 11 bankruptcy on Oct. 10, 2012, this time to
sell the business to Quad/Graphics, Inc., for $258.5 million,
subject to higher and better offers in an auction.
As of Aug. 31, 2012, the Debtors' unaudited consolidated financial
statements reflected assets of approximately $837.8 million and
liabilities of approximately $814.0 million.
Bankruptcy Judge Christopher Sontchi presides over the 2012 case.
Vertis is advised by Perella Weinberg Partners, Alvarez & Marsal,
and Cadwalader, Wickersham & Taft LLP. Quad/Graphics is advised
by Blackstone Advisory Partners, Arnold & Porter LLP and Foley &
Lardner LLP, special counsel for antitrust advice. Kurtzman
Carson Consultants LLC is the Debtors' claims agent.
Quad/Graphics is a global provider of print and related
multichannel solutions for consumer magazines, special interest
publications, catalogs, retail inserts/circulars, direct mail,
books, directories, and commercial and specialty products,
including in-store signage. Headquartered in Sussex, Wis. (just
west of Milwaukee), the Company has approximately 22,000 full-time
equivalent employees working from more than 50 print-production
facilities as well as other support locations throughout North
America, Latin America and Europe.
Vertis first filed for bankruptcy (Bankr. D. Del. Case No.
08-11460) on July 15, 2008, to complete a merger with American
Color Graphics. ACG also commenced separate bankruptcy
proceedings. In August 2008, Vertis emerged from bankruptcy,
completing the merger.
Vertis against filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y.
Case No. 10-16170) on Nov. 17, 2010. The Debtor estimated its
assets and debts of more than $1 billion. Affiliates also filed
separate Chapter 11 petitions -- American Color Graphics, Inc.
(Bankr. S.D.N.Y. Case No. 10-16169), Vertis Holdings, Inc. (Bankr.
S.D.N.Y. Case No. 10-16170), Vertis, Inc. (Bankr. S.D.N.Y. Case
No. 10-16171), ACG Holdings, Inc. (Bankr. S.D.N.Y. Case No.
10-16172), Webcraft, LLC (Bankr. S.D.N.Y. Case No. 10-16173), and
Webcraft Chemicals, LLC (Bankr. S.D.N.Y. Case No. 10-16174). The
bankruptcy court approved the prepackaged Chapter 11 plan on
Dec. 16, 2010, and Vertis consummated the plan on Dec. 21. The
plan reduced Vertis' debt by more than $700 million or 60%.
GE Capital Corporation, which serves as DIP Agent and Prepetition
Agent, is represented in the 2012 case by lawyers at Winston &
Strawn LLP. Morgan Stanely Senior Funding Inc., the agent under
the prepetition term loan, and as term loan collateral agent, is
represented by lawyers at White & Case LLP, and Milbank Tweed
Hadley & McCloy LLP.
WENNER MEDIA: S&P Assigns 'B' Corp. Credit Rating on Refinancing
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to New York City-based Wenner Media LLC. The rating
outlook is negative.
"At the same time we assigned our issue-level and recovery ratings
to Wenner Media's $215 million first-lien credit facilities,
consisting of a $15 million revolving credit facility due 2017 and
a $200 million term loan B due 2017. We rated this debt 'B' (the
same as the 'B' corporate credit rating on the company) with a
recovery rating of '3', indicating our expectation of meaningful
(50%-70%) recovery for lenders in the event of a payment default,"
S&P said.
"In addition, we assigned ratings to Wenner Media's existing $300
million ($194 million outstanding) term loan B due 2013 and
undrawn $25 million revolving credit facility due 2013. We rated
this debt 'B' with a recovery rating of '3'. Proceeds will be used
to refinance the company's existing term loan maturing October
2013. We expect to withdraw our ratings on this debt once the
company's proposed refinancing transaction is closed," S&P said.
"The corporate credit rating on Wenner Media LLC reflects our
expectation that leverage will remain high, given the structural
pressures of declining newsstand and print advertising revenues
facing the magazine publishing business," said Standard & Poor's
credit analyst Hal Diamond.
"Standard & Poor's see the risk that cost reductions may not fully
offset the company's weak revenue trends, and earnings
concentration in one publication also is a key risk. As a result,
we view the company's business risk profile as 'vulnerable' based
on our criteria. Given its high debt leverage, resulting from its
2006 debt-financed acquisition of the remaining 50% stake in 'US
Weekly' that it did not own and prior executive compensation and
dividend policy permitted under the existing credit agreement, we
view the company's financial risk profile as 'aggressive.' The new
credit agreement significantly lowers executive compensation and
forbids distributions unless pro forma leverage is somewhat
reduced. We assess management and governance as 'fair,' reflecting
our view that there are significant risks relating to the
company's private ownership," S&P said.
"The negative outlook reflects our expectation that debt leverage
will remain elevated over the coming year. We could revise the
outlook to stable if the company refinances its debt under
favorable terms, improves operating performance, and maintains a
cushion of compliance with its leverage covenant above 20%," S&P
said.
WP CPP HOLDINGS: S&P Gives 'B' Corp. Credit Rating; Outlook Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' corporate
credit rating to WP CPP Holdings LLC (CPP). The outlook is stable.
"At the same time, we are assigning our 'B' issue rating and '3'
recovery rating to the proposed $515 million secured first-lien
credit facility, which consists of a $100 million revolver and a
$415 million term loan. The '3' recovery rating indicates our
expectation of substantial (50%-70%) recovery in the event of
payment default. For the $185 million second-lien term loan, we
are assigning our 'CCC+' issue rating and '6' recovery rating,"
S&P said.
"Our ratings on CPP reflect our expectations that leverage (debt
to EBITDA), although initially high after the proposed
transaction, will improve steadily over the next 12 months because
of earnings growth and debt reduction from solid free cash flows,"
said Standard & Poor's credit analyst Christopher DeNicolo. "We
believe revenues and earnings will show solid growth over the next
year because of the strength in commercial aerospace market,
operational efficiency initiatives, and contributions from Turbine
Technologies Group (TTG, not rated). We assess the company's
business risk profile as 'fair,' reflecting its position as a
leading provider of sand and investment castings for commercial
aerospace and other markets (although it is much smaller than
some of its main competitors), relatively good customer and
program diversity, high barriers to entry, and efficient
operations. We assess the company's financial risk profile as
'highly leveraged' based on the company's high debt leverage and
very aggressive financial policy. We assess liquidity as
'adequate' under our criteria."
"The company, which is owned by private equity firm Warburg
Pincus, plans to use the proceeds from the new facility and a $47
million equity infusion to refinance existing debt and fund the
acquisition of TTG. CPP is acquiring TTG, a manufacturer of
superalloy precision investment cast components used predominantly
in the aerospace and power generation markets, from ESCO Corp.
(not rated). Credit measures will initially be weak, with pro
forma debt to EBITDA above 6x, funds from operations (FFO) to debt
below 10%, and EBITDA interest coverage of 2.2x. However, we
expect modest improvement over the next 12 months because of
growing earnings, as a result of the strength in the commercial
aerospace market and efforts to improve margins as well as debt
reduction from free cash flows. In 2013, we expect debt to EBITDA
to decline to 5x-5.5x and FFO to debt to improve to 10%-15%,
barring further debt-financed acquisitions," S&P said.
"CPP manufactures sand and investment castings for the commercial
aerospace (51% of sales pro forma for the TTG acquisition),
military (39%), and energy/industrial markets (10%). The company
produces components for aircraft engines, aerostructures,
industrial gas turbines, missiles, nuclear and other pump casings,
and impellers. CPP has operations in the U.S., France, and Mexico.
The acquisition of TTG will broaden CPP's product scope and depth
by introducing aerospace components used in the 'hot section' of
aircraft engines (i.e. blades and vanes), as well as increasing
its content on industrial gas turbines," S&P said.
"The commercial aerospace market is currently in a cyclical
upturn, and the major aircraft and engine manufacturers are
increasing production significantly to work down huge order
backlogs. Although defense spending is likely to be flat to
declining for the foreseeable future, CPP's products are used in
the aftermarket, including rotating parts that wear quickly, which
could see more stable funding levels. The energy market has
favorable prospects as the price of natural gas, which is
currently more competitive in relation to coal, could result in
increased demand for industrial gas turbines," S&P said.
"CPP has relatively good program diversity for the size of the
company. The company has product content on the Boeing 737, 747-8
and 777, as well as Airbus' A320. CPP is also represented on the
787 and A380, but content on these platforms is small compared
with the other programs because of low production rates and
shipset values. Revenues from the 787 should increase as
production rises. Military programs on which CPP has content
include the C-17, F-15, F-18, and F-22, which are all mature
programs that are likely to end production in the next few years.
However, the company sells parts into the aftermarket, so its
parts will be needed for many years after production of new planes
ends. The company's customer base is relatively well diversified
for an aerospace supplier, and its top 10 customers comprise about
39% of sales and the largest, General Electric, less than 10%,"
S&P said.
"Although CPP is one of the leading manufacturers of castings in
the U.S., its two main competitors, Precision Castparts and Alcoa,
are both much larger. In addition, there are a number of smaller
competitors that have more limited capabilities. The industry has
high barriers to entry because of the complexity associated with
the manufacturing process, Federal Aviation Administration
certification requirements, and long lead times for customer
acquisitions. The company has efficient operations, as evidenced
by solid EBITDA margins," S&P said.
"The outlook is stable. Revenues and earnings should see solid
growth over the next 12 months as a result of the strength in the
commercial aerospace market and efforts to reduce costs and
improve pricing. Higher earnings and debt reduction using excess
free cash flow should result in steadily improving credit ratios.
We do not expect to raise the ratings in the next 12 months but
could do so if cash flow and debt reduction is greater than we
expect, resulting in debt to EBITDA below 5x and FFO to debt above
15%. We are less likely to lower the ratings, but we could do so
if the commercial aerospace market weakens, or if debt-financed
acquisitions or dividends result in debt to EBITDA above 7x or FFO
to debt below 8%," S&P said.
* Moody's Says EU Crisis Poses Risk for US Packaging Sector
-----------------------------------------------------------
US packaging manufacturers that rely on the non-discretionary food
and beverage segment are well positioned in the near term despite
concerns about US economic growth and the impact of inflation on
food prices, Moody's Investors Service says in a new report.
The special comment, "Food and Beverage to Continue to Support US
Packaging Sector," answers questions investors most often ask
Moody's analysts about the US packaging manufacturers industry.
Organic unit volumes look set to stay flat in 2013 for US food
packagers that derive more than half of their revenues from North
American sales, including Bemis, Consolidated Container and
Plastipak, Moody's says. Even so, "the non-discretionary nature of
food and beverage sales provides a floor to demand," says Vice
President -- Senior Analyst Edward Schmidt.
Companies with greater scale and exposure to faster-growing
developing markets are likely to see the most income growth in the
next year, Mr. Schmidt says. Consumption of soft beverages and
beer is rising in these markets, as are disposable incomes.
In addition, developing markets generate higher margins for
packagers. Ball, Crown, Owens Illinois, Bemis, Reynolds, Sealed
Air and Plastipak should all benefit from their exposure to
developing countries.
Exposure to Europe remains a concern, however, as ongoing economic
weakness there affects companies' earnings and unit volumes. Many
packagers have already taken steps to reduce their European
exposure, and their earnings next year will not be affected as
much as they were in 2012. Ten of the 20 packagers that Moody's
rates generate 15% or more of their revenues in Europe, including
Crown, Greif, Owens Illinois, Reynolds and Sealed Air.
Volatility in prices for resin and other raw materials generally
do not pose a cause for concern, Moody's says. "We focus more on
how quickly companies can pass through increased costs, and the
use of contracts with cost pass-through provisions are becoming
more common," Schmidt says.
Companies such as AEP, Intertape and Tekni-Plex, which have
limited contractual relationships, are more vulnerable to resin
price increases, Moody's says.
* 7th Circuit Appoints Halfenger as E.D. Wis. Bankruptcy Judge
--------------------------------------------------------------
The Seventh Circuit Court of Appeals appointed Bankruptcy Judge G.
Michael Halfenger to a fourteen-year term of office in the Eastern
District of Wisconsin, effective January 11, 2013, (vice,
Shapiro).
Honorable G. Michael Halfenger
United States Bankruptcy Court
517 East Wisconsin Avenue, Room 140
Milwaukee, WI 53202
Telephone: 414-290-2680
Fax: 414-297-4088
Term expiration: January 10, 2027
* BOND PRICING -- For Week From Dec. 3 to 7, 2012
-------------------------------------------------
Company Coupon Maturity Bid Price
------- ------ -------- ---------
AES EASTERN ENER 9.000 1/2/2017 3.570
AES EASTERN ENER 9.670 1/2/2029 4.000
AGY HOLDING COR 11.000 11/15/2014 46.375
AHERN RENTALS 9.250 8/15/2013 68.000
ALION SCIENCE 10.250 2/1/2015 49.760
AM AIRLN PT TRST 10.180 1/2/2013 93.000
AMBAC INC 6.150 2/7/2087 3.250
AMER GENL FIN 5.000 12/15/2012 99.376
AMER GENL FIN 5.500 12/15/2012 99.600
ARK OF SAFETY 8.000 4/15/2029 6.000
ATP OIL & GAS 11.875 5/1/2015 11.375
ATP OIL & GAS 11.875 5/1/2015 11.375
ATP OIL & GAS 11.875 5/1/2015 12.190
BUFFALO THUNDER 9.375 12/15/2014 35.000
C-CALL12/12 5.000 3/15/2024 100.000
CAPMARK FINL GRP 6.300 5/10/2017 2.000
CBB-CALL12/12 7.200 11/29/2023 94.077
CENTRAL EUROPEAN 3.000 3/15/2013 46.050
CERADY-CALL12/12 2.875 12/15/2035 100.110
CHAMPION ENTERPR 2.750 11/1/2037 1.000
CIT-CALL12/12 5.850 12/15/2021 99.003
COLONIAL BANK 6.375 12/1/2015 0.125
DELUXE CORP 5.000 12/15/2012 100.225
DIRECTBUY HLDG 12.000 2/1/2017 18.750
DIRECTBUY HLDG 12.000 2/1/2017 18.750
DOWNEY FINANCIAL 6.500 7/1/2014 58.125
DYN-RSTN/DNKM PT 7.670 11/8/2016 4.875
EASTMAN KODAK CO 7.000 4/1/2017 10.250
EASTMAN KODAK CO 7.250 11/15/2013 10.000
EASTMAN KODAK CO 9.200 6/1/2021 8.000
EASTMAN KODAK CO 9.950 7/1/2018 8.050
EDISON MISSION 7.500 6/15/2013 49.176
ENERGY CONVERS 3.000 6/15/2013 40.000
FIBERTOWER CORP 9.000 11/15/2012 14.250
FIBERTOWER CORP 9.000 11/15/2012 13.875
FIBERTOWER CORP 9.000 1/1/2016 20.500
FRIENDSHIP WEST 8.000 6/15/2024 9.100
GE-CALL12/12 5.000 7/15/2028 100.000
GE-CALL12/12 5.100 12/15/2019 100.033
GE-CALL12/12 5.625 12/15/2017 100.000
GE-CALL12/12 5.625 12/15/2017 100.000
GEN ELEC CAP CRP 5.000 12/15/2012 100.000
GEN ELEC CAP CRP 5.100 12/15/2012 100.000
GEOKINETICS HLDG 9.750 12/15/2014 43.000
GLB AVTN HLDG IN 14.000 8/15/2013 32.000
GLOBALSTAR INC 5.750 4/1/2028 47.500
GMX RESOURCES 4.500 5/1/2015 46.880
HAWKER BEECHCRAF 8.500 4/1/2015 9.000
HAWKER BEECHCRAF 8.875 4/1/2015 5.500
HUTCHINSON TECH 8.500 1/15/2026 59.000
JAMES RIVER COAL 4.500 12/1/2015 43.375
JEHOVAH-JIREH 7.800 9/10/2015 10.000
KELLWOOD CO 7.625 10/15/2017 34.750
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 INC 7.500 8/1/2026 15.000
LIFECARE HOLDING 9.250 8/15/2013 14.310
LIFEPOINT CMNTY 8.400 10/20/2036 4.000
MANNKIND CORP 3.750 12/15/2013 71.250
MASHANTUCKET PEQ 8.500 11/15/2015 5.250
MASHANTUCKET PEQ 8.500 11/15/2015 15.750
MASHANTUCKET TRB 5.912 9/1/2021 5.250
METRO BAP CHURCH 8.400 1/12/2029 4.000
MF GLOBAL LTD 9.000 6/20/2038 66.500
NEWPAGE CORP 10.000 5/1/2012 5.125
NEWPAGE CORP 11.375 12/31/2014 43.500
OVERSEAS SHIPHLD 8.750 12/1/2013 39.875
PBY-CALL12/12 7.500 12/15/2014 99.052
PEBO-CALL12/12 8.620 5/1/2029 100.000
PENSON WORLDWIDE 8.000 6/1/2014 42.882
PLATINUM ENERGY 14.250 3/1/2015 47.000
PLATINUM ENERGY 14.250 3/1/2015 48.000
PMI CAPITAL I 8.309 2/1/2027 1.875
PMI GROUP INC 6.000 9/15/2016 29.500
POWERWAVE TECH 3.875 10/1/2027 10.611
POWERWAVE TECH 3.875 10/1/2027 10.000
RESIDENTIAL CAP 6.500 4/17/2013 23.250
RESIDENTIAL CAP 6.875 6/30/2015 21.000
REVEL AC INC 12.000 3/15/2018 5.750
SAVIENT PHARMA 4.750 2/1/2018 24.000
SCHOOL SPECIALTY 3.750 11/30/2026 49.500
SFI-CALL12/12 6.500 12/15/2013 99.400
TERRESTAR NETWOR 6.500 6/15/2014 10.000
TEXAS COMP/TCEH 10.250 11/1/2015 17.375
TEXAS COMP/TCEH 10.250 11/1/2015 19.540
TEXAS COMP/TCEH 10.250 11/1/2015 15.750
TEXAS COMP/TCEH 15.000 4/1/2021 28.250
TEXAS COMP/TCEH 15.000 4/1/2021 34.250
THQ INC 5.000 8/15/2014 18.250
TIMES MIRROR CO 7.250 3/1/2013 38.000
TL ACQUISITIONS 10.500 1/15/2015 25.500
TL ACQUISITIONS 10.500 1/15/2015 30.500
TRAVELPORT LLC 11.875 9/1/2016 43.500
TRAVELPORT LLC 11.875 9/1/2016 42.375
TRIBUNE CO 5.250 8/15/2015 42.250
USEC INC 3.000 10/1/2014 35.412
VERSO PAPER 11.375 8/1/2016 43.502
WCI COMMUNITIES 4.000 8/5/2023 0.500
WCI COMMUNITIES 4.000 8/5/2023 0.500
WCI COMMUNITIES 6.625 3/15/2015 0.625
*********
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"
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Each Tuesday edition of the TCR contains a list of companies with
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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
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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
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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
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Copyright 2012. All rights reserved. ISSN: 1520-9474.
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