/raid1/www/Hosts/bankrupt/TCR_Public/121211.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, December 11, 2012, Vol. 16, No. 344
Headlines
30DC INC: Officially Launched MagCast Digital Partner Program
A & N REAL ESTATE: Single-Asset Debtor Files for Ch. 11
ABUNDANT LIFE: Raleigh Church Files Bankruptcy Over $4.1MM Debt
AFFINION GROUP: S&P Cuts CCR to 'B-' on Likely Leverage Increase
AMERICAN AIRLINES: Goldman, Barclays Among Potential Lenders
AMERICAN AXLE: Estimates 2013-2015 Business Backlog at $1.25BB
AMERICAN TIRE: ABL Upsize No Impact on Moody's 'B2' CFR
ANCESTRY.COM INC: Moody's Assigns B2 CFR/PDR; Outlook Stable
APPLIED DNA: G. Catenacci Won't Stand for Re-Election as Director
ARCHDIOCESE OF MILWAUKEE: Parishes Are Separate Entities
ATP OIL: Agrees to Fund $27.1 Million Into Trust Account
AVANTAIR INC: Lorne Weil Discloses 31.3% Equity Stake
BACK YARD BURGERS: Wins Approval of Disclosure Statement
BALLARD BUS: Carlsbad School Bus Contractor Files Chapter 11
BIOFUEL ENERGY: Cargill Biofuels Discloses 4.3% Equity Stake
BON-TON STORES: Files Form 10-Q, Incurs $10MM Loss in Fiscal Q3
BILLMYPARENTS INC: Receives $2.5MM From Sale of Common Shares
BIOFUEL ENERGY: Cargill Biofuels Discloses 4.3% Equity Stake
BON-TON STORES: Files Form 10-Q, Incurs $10MM Loss in Fiscal Q3
CAESARS ENTERTAINMENT: Plans to Issue $300 Million Senior Notes
CAPITOL BANCORP: Purchase Agreement with VS CB Cancelled
CCC ATLANTIC: Case Summary & 21 Largest Unsecured Creditors
CHAMPION INDUSTRIES: Receives $1.1 Million from Assets Sale
CIRCLE STAR: Provides Operational Update on Drilling Activities
CRAWFORDSVILLE LLC: Files for Chapter 11 in Iowa
CRAWFORDSVILLE LLC: Proposes Bradshaw Fowler as Counsel
DCB FINANCIAL: Successfully Raised $13.2 Million in Capital
EARL L. PICKETT: Court Won't Stay Lawsuits Against Owner
EINSTEIN NOAH: S&P Withdraws 'B' Rating on $265MM Sr. Secured Debt
EL FARMER: Files for Chapter 11 in Puerto Rico
EMISSION SOLUTIONS: Dawn Ragan Appointed as CRO
ENERGY FUTURE: Issues $1.1 Billion Senior Toggle Notes
FEDERAL-MOGUL CORP: Moody's Rates New $1.2BB Term Loan 'B1'
FEDERAL-MOGUL CORP: S&P Rates $1.2-Bil. Senior Secured Debt 'B'
FIRST MARINER: Shareholders Elect Three Directors to Board
FRANKLIN PIERCE: Moody's Lowers Rating on Bonds to 'Caa1'
FREDERICK'S OF HOLLYWOOD: Gets Non-Compliance Notice from Nasdaq
GENERAL MOTORS: Trial in Saab Suit to Begin February
GRAY TELEVISION: Ray Deaver to Retire from Board This Month
GUIDED THERAPEUTICS: Completes Electrical Testing of LuViva
HALCON RESOURCES: S&P Raises Corporate Credit Rating to 'B'
HANESBRANDS INC: Moody's Reviews 'Ba3' CFR/PDR for Upgrade
HECKMANN CORP: S&P Affirms 'B+' CCR Over Power Fuels Transaction
HOSTESS BRANDS: Allowed to End Distribution Contracts
HOVNANIAN ENTERPRISES: Fitch Affirms 'CCC' Issuer Default Rating
INTERFAITH MEDICAL: Meeting to Form Creditors' Panel on Dec. 13
INTERNATIONAL LEASE: S&P Keeps 'bb+' Stand-Alone Credit Profile
INTERNATIONAL TEXTILE: W. Carmichael Named to Board of Directors
JACKSONVILLE BANCORP: Fails to Comply with NASDAQ Bid Price Rule
JAMES RIVER: Steelhead Partners Lowers Equity Stake to 2.6%
JOSEPH PREBUL: E.D. Tenn. Court Affirms Dismissal of Lawsuit
KAINOS PARTNERS: Appeal Over Dunkin' Donuts Accord Dismissed
LAGUARDIA ASSOCIATES: Wells Fargo Not Entitled to Prepayment Fee
LANDMARK AVIATION: Moody's Affirms 'B3' CFR; Outlook Stable
LAS VEGAS SANDS: Fitch Assigns 'BB+' Issuer Default Rating
LEHMAN BROTHERS: Trustee Settles LB Bankhaus' $1.35-Bil. Claim
LEHMAN BROTHERS: UK Appeals Court to Scrutinize Lehman FSD
LEHMAN BROTHERS: FYI, et al., Oppose ADR Rules Amendment
LEHMAN BROTHERS: LBI Trustee Wins Nod of IRS Agreements
LEVEL 3: Level 3 LLC Guarantees 7% Senior Notes Unconditionally
LONE PINE: S&P Puts 'B' Corp. Credit Rating on Watch Negative
MARBLE CLIFF: Jan. 4 Status Hearing Set for 32-Year Repayment Plan
MARINA BIOTECH: Incurs $1.75-Mil. Net Loss in Third Quarter
MCCLATCHY CO: Offering $910 Million of 9% Senior Secured Notes
MDC PARTNERS: Moody's Affirms 'B2' CFR; Rates $80MM Note 'B3'
METROPLAZA HOTEL: Case Summary & 19 Largest Unsecured Creditors
MF GLOBAL: Singapore Creditors to Get First Interim Payment
MICHIGAN: Governor Seeks New Law Permitting Emergency Takeovers
MITCHEL'S CHIMNEY: Files Chapter 7 to Liquidate Business
MODERN PRECAST: Proposes Beane Associates as Advisor
MODERN PRECAST: Proposes McElroy Deutsch as Chapter 11 Counsel
MODERN PRECAST: Case Summary & 31 Largest Unsecured Creditors
MOMENTIVE PERFORMANCE: Obtains $300MM Commitments from Lenders
MORTGAGE GUARANTY: Moody's Confirms B2 IFS Rating; Outlook Neg.
MSR RESORT: Resorts to Be Sold to GIC After Canceled Auction
NET TALK.COM: Replaced Consolidated Debenture with 11 Debentures
NORSE ENERGY: US Unit Files Chapter 11; Seeks DIP Financing
PACKAGING DYNAMICS: Moody's Says Groupe De Luxe Deal Credit Pos.
PHIBRO ANIMAL: Moody's Affirms 'B3' CFR/PDR; Outlook Positive
RESIDENTIAL CAPITAL: Maciel Lawsuit Against GMAC Stayed
REVSTONE INDUSTRIES: Meeting to Form Creditors' Panel on Dec. 17
RK AUTOMOTIVE: Files Chapter 7 to Liquidate Business
SAAB AUTOMOBILE: Trial in Suit Against GM to Begin February
SAINT VINCENTS: Coreys Have Green Light to Amend Malpractice Suit
SANDLEWOOD AFFORDABLE: S&P Cuts Rating on 2 Bond Issues to 'BB'
SEACOR HOLDINGS: S&P Rates $350-Mil. Convertible Notes 'BB'
SEARCHMEDIA HOLDINGS: Reduces Warrant Price, Extends Expiration
SEQUA CORP: S&P Rates $1BB Loan 'B'; $400MM Unsecured Notes 'CCC+'
SG ACQUISITION: S&P Assigns 'B' Corporate Credit Rating
SNO MOUNTAIN: Court Okays March 1 Auction, Permits Cash Use
SNO MOUNTAIN: Files Schedules of Assets and Liabilities
SOLAR POWER: Crowe Horwath Replaces KPMG as Accountants
SOUTHEAST WAFFLES: 6th Cir. Affirms Dismissal of Suit v. IRS
SPRINGLEAF FINANCE: William Kandel to Assume VP and CAO Roles
TELETOUCH COMMUNICATIONS: Maturity of EWB Loan Extended to Feb. 3
VESTA CORP: Moody's Withdraws 'B2' CFR/PDR, 'B1' Loan Rating
VIRGIN OFFSHORE: TGSN Fails in Bid to Stop Assumption of License
VOICE ASSIST: Michael Metcalf Serving as Interim CFO
VYCOR MEDICAL: To Effect a 1-for-150 Reverse Stock Split
W.T. HARVEY LUMBER: Building-Supply Retailer Enters Chapter 11
WATER PIK: Moody's Says $37MM Dividend Recap Credit Negative
WIGGINS FARMS: Court Rejects Plan, Doubts Feasibility
WILLIAM LYON: Amends 380.4 Million Common Shares Prospectus
WISP RESORT: Court Approves Sale to EPR Unit for $23.5 Million
WP CPP HOLDINGS: Moody's Assigns 'B2' CFR/PDR; Outlook Stable
WPCS INTERNATIONAL: Rights Agreement with Interwest Expires
WPCS INTERNATIONAL: Secures $4-Mil. Private Placement Financing
Z TRIM HOLDINGS: Five Directors Elected to Board
* Total New U.S. Bankruptcies Fell 12% in November
* Large Companies With Insolvent Balance Sheets
*********
30DC INC: Officially Launched MagCast Digital Partner Program
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30DC, Inc., has officially launched its MagCast "Partner Program"
following the signing of its initial 20 members.
The Partner Program allows qualified MagCast members - also called
MagCasters - to market the MagCast Digital Publishing Platform in
their specialized market segment and receive an affiliate sales
commission for new customer sales. At this stage, eligibility is
limited to MagCasters who have published at least one magazine.
As part of its broader business development plans, 30DC will be
announcing further MagCast marketing initiatives at a later date.
The company is also open to discussions about potential, key
strategic partnerships with businesses that have complementary
audiences.
Under the Partner Program, MagCasters will earn a 30% monthly
commission on new customer fees (currently $297 per month). In
discussing the program, 30DC CEO Ed Dale said, "We wanted our
existing MagCasters to be the first ones to offer MagCast. They
have worked with the product intensively, and therefore we believe
they can promote its effectiveness, versatility and ease of use.
MagCast is a premium product and it's important that partners meet
strict quality criteria."
Mr. Dale elaborated further in saying, "We're really excited to
spread the word on MagCast through our partners. We believe we
can spread the word much faster through an outside network of
partners rather than an in-house sales team. Furthermore as
partners introduce new MagCasters, those new MagCasters in turn
bring new MagCasters and the network has the potential for rapid
viral expansion to levels well beyond the current 1,200 users and
175+ magazines."
To date, 30DC has focused MagCast on the Internet marketing and
business opportunity industry vertical with the majority of sales
coming from that market segment. By concentrating on that market
first, and acquiring a sizeable number of Internet marketers as
the initial MagCast users, the Company believes it has a built in
sales force that is already well-versed with MagCast and excited
about the results they are achieving. This group of enthusiastic
MagCast users can then "pay it forward" by marketing it to
colleagues in other markets, via direct referral, in the Partner
Program and beyond.
MagCast is a collaboration of 30DC and Netbloo Media Ltd., who
jointly developed the concept and design of the platform. More
information about the MagCast publishing platform can be found at
http://www.MagCast.co.
About 30DC Inc.
New York-based 30DC, Inc., provides Internet marketing services
and related training to help Internet companies in operating their
businesses. It operates in two divisions, 30 Day Challenge and
Immediate Edge.
The Company reported a net loss of $1.44 million for the fiscal
year ended June 30, 2011, following a net loss of $1.06 million in
fiscal 2010.
As reported in the TCR on Dec. 19, 2011, Marcum LLP, in New York,
expressed substantial doubt about 30DC's ability to continue as a
going concern, following the Company's results for the fiscal year
ended June 30, 2011. The independent auditors noted that the
Company has had recurring losses, and has a working capital and
stockholders' deficiency as of June 30, 2011.
The Company's balance sheet at March 31, 2012, showed $1.82
million in total assets, $2.21 million in total liabilities and a
$394,450 total stockholders' deficiency.
The Company said in its quarterly report for the period ending
March 31, 2012, that if it is unable to raise additional capital
or encounters unforeseen circumstances, it may be required to take
additional measures to conserve liquidity, which could include,
but not necessarily be limited to, issuance of additional shares
of the Company's stock to settle operating liabilities which would
dilute existing shareholders, curtailing its operations,
suspending the pursuit of its business plan and controlling
overhead expenses. The Company cannot provide any assurance that
new financing will be available to it on commercially acceptable
terms, if at all. These conditions raise substantial doubt about
the Company's ability to continue as a going concern.
A & N REAL ESTATE: Single-Asset Debtor Files for Ch. 11
-----------------------------------------------------
A & N Real Estate LLC, a single-asset real estate company, filed
for protection from creditors in Alexandria, Virginia, on Dec. 5,
citing assets and liabilities each exceeding $1 million.
Carla Main, substituting for Bloomberg News bankruptcy columnist
Bill Rochelle, reports that Annandale, Virginia-based A & N Real
Estate owns property located at 3901 Centerview Drive, Suites A
and B, Chantilly, Virginia, according to a filing. It said in
court papers that it values the property at $1.6 million, and that
there are secured liens, in the form of a mortgage and condo dues,
of $1.88 million on the property. There is also an unsecured lien
of $50,000.
ABUNDANT LIFE: Raleigh Church Files Bankruptcy Over $4.1MM Debt
---------------------------------------------------------------
The News Observer's Jeanna Smialek reports an East Raleigh (N.C.)
church, Abundant Life Church of God in Christ, filed for Chapter
11 bankruptcy Dec. 6 with the goal of restructuring more than
$4 million in debts. The church consists of a sanctuary and a
Family Life Center, and has a congregation of more than a
thousand.
The report notes Abundant Life's buildings and property are valued
at $7 million, according to the filing. Abundant Life's 5.15-acre
property at 4400 Old Poole Road was used to secure the 2007 loan,
according to Wake County property records.
The report, citing court filings, says Abundant Life has a $3.8
million balance on its mortgage with Foundation Capital Resources
of Springfield, Mo., and owes $4.1 million in liabilities in
total.
Pastor Stenneth E. Powell organized Abundant Life in May 1990.
According to the report, the pastor said the family center, which
offers aerobics, basketball and weight training equipment, a
technology center and a professional recording studio, and hosts
services including a day care, has been a major expense since it
opened about a decade ago.
The report also relates Pastor Powell said he expects congregation
members to donate enough to cover the entire $3.8 million loan
balance within the next month. He said the organization is just
buying time with the bankruptcy filing. The report notes the
church's income, which includes donations, is down 31% this year
compared to 2010, when it raised $1.54 million, according to its
bankruptcy filing. In 2011, the church had income of $1.36
million.
The report relates Pastor Powell makes $161,438 a year from the
church, and his wife, Beverly Powell, makes $32,445, according to
the bankruptcy filing. The couple's sons, Joshua Powell and
Stenneth Powell Jr., make $6,783 and $26,050, plus $1,560 in
monthly rent since April, respectively.
AFFINION GROUP: S&P Cuts CCR to 'B-' on Likely Leverage Increase
----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
rating on U.S.-based integrated marketer Affinion Group Holdings
Inc. to 'B-' from 'B' and removed all ratings from CreditWatch,
where they were placed with negative implications on Aug. 20,
2012.
"At the same time, we lowered all issue-level ratings on the
company's debt by one notch, in conjunction with the downgrade.
The recovery ratings on these debt issues remain unchanged," SB&P
said.
"The downgrade reflects the company's weak near-term operating
outlook, increasing debt leverage, and only near-term covenant
relief provided by the recent amendment to the credit facility,"
said Standard & Poor's Ratings Services.
"Also, operating company Affinion Group Inc. is not in compliance
with its restricted payments test of 5x. This covenant permits it
to pay dividends to the parent, Affinion Group Holdings Inc., so
that the holding company can pay cash semiannual interest payments
of $18.9 million in May and November on its 11.625% senior notes
due 2015. We believe that Affinion Group Holdings has the
resources to make its next three semiannual interest payments,
with its current cash resources of slightly more than $19 million
and the $40 million operating company restricted payment
provision," S&P said.
"The rating reflects our assessment of the company's business risk
profile as 'weak,' because of continued membership attrition in
many of its services, some affinity partner concentration
(especially in the financial services industry), and competitive
pressures in the membership marketing business. Relatively high
leverage, a record of acquisitions and special dividends, and
minimal discretionary cash flow underpin our view of Affinion's
financial risk profile as 'highly leveraged.' We assess management
and governance as 'fair,' as we believe there are significant
risks relating to its private equity ownership," S&P said.
"Affinion is a direct marketer of membership, insurance, and
credit card ancillary services, primarily sold under the names of
affinity partner institutions, such as financial institutions and
retailers. We consider its industry mature and heavily dependent
on ongoing spending to acquire new members. The company has some
customer concentration as the top 10 domestic financial
institutions contributed 28% of the company's membership business.
Revenue from its existing customer base has historically generated
a significant percentage of sales, but organic revenue has been
recently declining, reflecting weak conditions in the financial
services industry. Direct mail, which we view as facing declining
fundamentals, remains a significant marketing channel for the
company to acquire new members. We expect the company to continue
to expand its online marketing efforts, though response rates
could decline because many players are pursuing a similar
strategy," S&P said.
AMERICAN AIRLINES: Goldman, Barclays Among Potential Lenders
------------------------------------------------------------
Carla Main, substituting for Bloomberg News bankruptcy columnist
Bill Rochelle, reports that Goldman Sachs Group Inc. and Barclays
Plc joined a creditor group in American Airlines' bankruptcy case
that may provide financing for the carrier's restructuring. The
committee has expanded to 20 members from 12 since September,
according to a filing Dec. 6 in U.S. Bankruptcy Court in New York
disclosing the members and their company debt holdings.
The report relates that American Airlines' parent, AMR Corp., said
in court papers in August that it would negotiate with the group
about potential financing for its reorganization. It won court
approval to pay fees of the group's advisers as negotiations
proceed.
According to the report, the group holds claims against American
Airlines and AMR. Besides Goldman Sachs and Barclays, members
include JPMorgan Chase & Co., Credit Suisse Group AG, Claren Road
Asset Management and Marathon Asset Management.
Separately, the lawyer for AMR's unsecured creditors committee,
the report relates, warned American Airlines pilots of the risks
of rejecting a tentative contract that would allow the carrier's
post-bankruptcy plan to be weighed against a US Airways Group Inc.
merger, three people familiar with the matter said. Jack Butler
of Skadden, Arps, Slate, Meagher & Flom LLP told members of the
Allied Pilots Association in meetings in three cities that pilots
would lose a 13.5% stake in a restructured AMR if the deal isn't
approved, said the people, who asked not to be identified because
the talks were private.
A successful vote would help the creditors' panel evaluate AMR's
preferred strategy to leave bankruptcy on its own and US Airways'
takeover push. AMR needs a contract with the pilots, the only
union without a new accord, to determine its future costs. Voting
by American's 8,000 active pilots was scheduled to end Dec. 7.
Since reaching the tentative agreement on Nov. 9, the union has
urged ratification in meetings in eight cities that began Dec. 1,
according to the APA's Web site. The sessions to which Butler was
invited included a forum Dec. 5 near the airline's headquarters,
the APA said in a message to members on its Web site.
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 AXLE: Estimates 2013-2015 Business Backlog at $1.25BB
--------------------------------------------------------------
American Axle & Manufacturing Holdings, Inc., which is traded as
AXL on the NYSE, announced that its backlog of new and incremental
business launching from 2013 through 2015 is estimated at $1.25
billion in future annual sales.
AAM's $1.25 billion new and incremental business backlog for 2013
- 2015 reflects an approximately 4% increase when compared to the
previous three-year backlog for 2012-2014. The growth represents
successful efforts to diversify the business by increasing AAM's
exposure to global growth markets, advancing and innovating AAM's
product portfolio, and growing AAM's customer base.
Highlights of AAM's $1.25 billion new and incremental business
backlog for 2013 - 2015 include the following:
* Industry-first order for AAM's EcoTrac all-wheel-drive (AWD):
AAM's EcoTrac AWD system will be featured on a major
passenger car and crossover vehicle program beginning in
2013. This system enables a vehicle manufacturer to offer a
fuel-efficient, environment-friendly option to provide the
safety, ride and handling performance of an AWD system for
passenger cars and crossover vehicles.
* Significant progress on customer diversification initiatives:
Over 50% of AAM's $1.25 billion new and incremental business
backlog for 2013 - 2015 is for customers other than GM. This
includes new and expanded orders supporting multiple global
premium vehicle manufacturers including Chrysler, Daimler
Truck, Ford, Honda, Jaguar Land Rover, Mercedes Benz, Nissan,
Tata Motors, Volvo Powertrain and others.
* Continued expansion of product portfolio: Approximately two-
thirds of AAM's $1.25 billion new and incremental business
backlog for 2013 - 2015 is for passenger car, crossover
vehicle and commercial vehicle programs.
* Growth in global markets: Approximately 40% of AAM's $1.25
billion new and incremental business backlog is for programs
sourced outside of North America. These awards support AAM's
expansion in the growing global markets of Brazil, China,
India and Thailand.
"AAM's success in growing the new business backlog is supporting
our ability to grow faster than the industry with an estimated
compound annual growth rate of greater than 10% from 2012 through
2015," said AAM President & Chief Executive Officer David C.
Dauch. "We are pleased that our focused R&D investment is driving
AAM to deliver on our long term strategic goals of expanding and
diversifying our customer base and product portfolio on a global
basis, while meeting the market demands of fuel efficiency,
reduced emissions, safety, ride and handling."
AAM values its new and incremental business backlog based on
production volume estimates and program design direction provided
by its customers. The actual sales value of these awards will
depend on product volumes, program launch timing and foreign
currency exchange. AAM does not include sales of unconsolidated
joint ventures in its new business backlog.
About American Axle
Headquartered in Detroit, Michigan, American Axle & Manufacturing
Holdings Inc. (NYSE: AXL) -- http://www.aam.com/-- manufactures,
engineers, designs and validates driveline and drivetrain systems
and related components and chassis modules for light trucks, sport
utility vehicles, passenger cars, crossover vehicles and
commercial vehicles.
The Company's balance sheet at Sept. 30, 2012, showed $2.67
billion in total assets, $3.17 billion in total liabilities and a
$497.7 million total stockholders' deficit.
* * *
In January 2012, Fitch Ratings has affirmed the 'B+' Issuer
Default Ratings (IDRs) of American Axle & Manufacturing.
Fitch expects leverage to trend downward over the intermediate
term, however, as the company gains traction on its new business
wins. Looking ahead, Fitch expects free cash flow to be
relatively weak, but positive, in 2012 with the steep ramp-up
in new business and as the company continues to make investments
in both capital assets and research and development work to
support growth opportunities in its customer base and product
offerings. Beyond 2012, free cash flow is likely to strengthen
meaningfully as the new programs coming on line in the near term
begin to produce higher levels of cash.
As reported by the TCR on Sept. 6, 2012, Moody's Investors Service
has affirmed the B1 Corporate Family Rating (CFR) and Probability
of Default Rating (PDR) of American Axle & Manufacturing Holdings,
Inc.
American Axle carries a 'BB-' corporate credit rating from
Standard & Poor's Ratings Services.
"The 'BB-' corporate credit rating on American Axle reflects the
company's 'weak' business risk profile and 'aggressive' financial
risk profile, which incorporate substantial exposure to the highly
cyclical light-vehicle market," S&P said, as reported by the TCR
on Sept. 6, 2012.
AMERICAN TIRE: ABL Upsize No Impact on Moody's 'B2' CFR
-------------------------------------------------------
Moody's Investors Service said that American Tire Distributor's
(ATD) increase of its asset based revolving credit facility (ABL)
is slightly positive for liquidity but has no impact on the
company's B2 Corporate Family Rating, SGL-2 liquidity rating or
stable outlook. "Revolver availability may not necessarily remain
high to the extent that there are suitable acquisition targets and
distribution center openings that may be funded with debt," stated
Mariko Semetko, an Analyst at Moody's.
Ratings Rationale
The principal methodology used in rating American Tire was the
Global Distribution & Supply Chain Services Industry Methodology
published in November 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.
American Tire Distributors, Inc., headquartered in Huntersville,
NC, is a wholesale distributor of tires (over 95% of sales),
custom wheels, and related tools. It operates over 100
distribution centers and generated approximately $3.4 billion in
revenues in the twelve months ended September 29, 2012. Private
equity firm TPG Capital, L.P. (TPG) has owned the company since
May 2010.
ANCESTRY.COM INC: Moody's Assigns B2 CFR/PDR; Outlook Stable
------------------------------------------------------------
Moody's Investors Service assigned a first-time B2 corporate
family rating and a B2 probability of default rating to
Ancestry.com Inc. Moody's also assigned a B1 rating to Ancestry's
proposed senior secured facilities, and a Caa1 rating to the
company's proposed senior unsecured bank bridge facility. Ancestry
will use the proceeds from the new debt to finance the take
private transaction by private equity firm Permira. The ratings
outlook is stable.
Rating Rationale
Ancestry's B2 corporate family rating reflects the company's high
pro forma leverage stemming from the company's pending leveraged
buyout, estimated at 6.2 times at closing. The ratings are
supported by the company's leading market position in the online
genealogical market, consistent cash flow generation, a good
operating outlook and solid liquidity.
Over the intermediate term, Moody's anticipates good financial
performance. Driven by Ancestry's currently 2 million plus
customer base, subscription model, and good subscriber retention
rates, Moody's expects revenue growth in the mid-single digit
range with operating margins in the low to mid 20% range,
reflecting Moody's view that the company will likely be fairly
aggressive in spending in order to expand into new geographies and
markets.
Although Moody's expects Ancestry to generate consistent free cash
flow, it does not anticipate material debt reduction beyond the
required 1% per annum term loan amortization as the company will
likely be fairly aggressive in spending in order to expand into
new geographies and markets. Consequently, Moody's expects
adjusted debt to EBITDA of about 5.0 to 5.5x over the intermediate
term with free cash flow to debt in the mid single digit range
(calculated using Moody's standard adjustments).
The following ratings were assigned:
Corporate Family Rating: B2
Probability of default: B2
$50 million senior secured revolver due five years from
closing, B1, LGD3(33%)
$670 million senior secured term loan due seven years from
closing, B1, LGD3(33%)
$300 million proposed senior unsecured notes due eight years
from closing, Caa1, LGD5(87%)
Ratings outlook: stable
The assigned ratings are subject to review of final documentation
and no material change in the terms and conditions of the
transaction as advised to Moody's.
The stable outlook reflect Moody's expectations that Ancestry will
maintain its leading market position in its niche segment and
generate low-to-mid single digit revenue growth, operating margins
in the mid 20% range, and consistent levels of free cash flow. It
also incorporates expectations that management will not engage in
debt financed acquisitions outside the scope of its revolving
credit facility and that the company will maintain a good
liquidity profile.
The ratings could be upgraded if Ancestry is likely to sustain
revenue growth and expand operating margins above 25%, while
sustaining adjusted debt to EBITDA to below 4.5 times and
maintaining a good liquidity profile.
The ratings could be lowered if there is a deterioration in
business fundamentals evidenced by subscriber or revenue declines
and operating margins falling below 20%. Additionally, a more
aggressive use of financial leverage such that adjusted debt /
EBITDA is sustained above 6.5 times could pressure the rating.
The principal methodology used in rating Ancestry.com was the
Global Business & Consumer Service 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.
APPLIED DNA: G. Catenacci Won't Stand for Re-Election as Director
-----------------------------------------------------------------
Gerald Catenacci advised the Board of Directors of Applied DNA
Sciences, Inc., that he would not stand for re-election as a
director of the Company at the Company's 2013 Annual Meeting of
Stockholders.
On Nov. 30, 2012, the Board of Directors of the Company increased
the annual salary payable to Dr. James A. Hayward, chairman,
president and chief executive officer of the Company, from
$225,000 to $350,000. In addition, the Board granted a cash bonus
of $150,000 to Dr. Hayward which would be payable upon the closing
of an additional $5.5 Million investment by Crede CG II, Ltd.,
agreed to occur on the date a registration statement is declared
effective by the Securities and Exchange Commission relating to
the resale of shares of Common Stock issued or to be issued to
Crede.
On Nov. 30, 2012, the Board of Directors of the Company increased
the annual salary payable to Mr. Kurt H. Jensen, chief financial
officer of the Company, from $225,000 to $315,000. In addition,
the Board granted a cash bonus of $100,000 to Mr. Jensen.
On Nov. 30, 2012, the Board of Directors of the Company granted a
cash bonus of $10,000 to Mr. Ming-Hwa Liang, chief technology
officer and secretary of the Company.
About Applied DNA
Stony Brook, N.Y.-based Applied DNA Sciences, Inc., is principally
devoted to developing DNA embedded biotechnology security
solutions in the United States.
RBSM LLP, in New York, noted in its report on Applied DNA's fiscal
2011 financial results that the Company has suffered recurring
losses and does not have significant cash or other material
assets, nor does it have an established source of revenues
sufficient to cover its operations, which raises substantial doubt
about its ability to continue as a going concern.
The Company reported a net loss of $10.51 million for the fiscal
year ended Sept. 30, 2011, compared with a net loss of $7.91
million during the prior year.
The Company's balance sheet at June 30, 2012, showed $1.97 million
in total assets, $653,910 in total liabilities, all current, and
$1.31 million in total stockholders' equity.
ARCHDIOCESE OF MILWAUKEE: Parishes Are Separate Entities
--------------------------------------------------------
Annysa Johnson of the Milwaukee Journal Sentinel reports U.S.
Bankruptcy Judge Susan V. Kelley ruled Thursday, Dec. 6, that the
Catholic Archdiocese of Milwaukee's 200-plus parishes are separate
legal entities and their assets will not be consolidated with the
archdiocese's as part of its bankruptcy. The report notes the
parishes could still face separate lawsuits over more than $35
million in parish investment funds that the archdiocese moved off
its books in 2005.
The report notes Judge Kelley was slated to decide as early as
Friday, Dec. 7, whether to allow the bankruptcy creditors --
including hundreds of sexual abuse victims, the archdiocese's
pension and health care funds, and others -- to sue to recover at
least a portion of those millions.
The report relates attorneys for the creditors argued in a
Thursday hearing that the archdiocese fraudulently transferred the
money to shield it from sex abuse claims. They pointed to the
minutes of a 2003 meeting of the archdiocese's finance committee
in which it discussed "setting up a trust fund to shelter the
Parish Deposit Fund."
The Catholic Archdiocese of Milwaukee faces more than a dozen
civil fraud lawsuits over its handling of clergy sex abuse cases.
The report relates Archdiocese attorney Frank LoCoco called the
charges "ridiculous" and the threatened lawsuit "blackmail." Any
such suits, he said, could drag on for years, destroy parishes and
make it impossible for the archdiocese to continue its ministries.
The report notes a lawsuit is already pending over $57 million in
a Cemetery Trust Fund created by the archdiocese in 2007. The
archdiocese and two victims have jointly filed a complaint aimed
at recovering what could be hundreds of millions of dollars from
newly discovered insurance policies. The archdiocese and its
creditors have agreed to postpone disputes over the archdiocese's
sprawling headquarters complex known as the Cousins Center and at
least some assets of the Faith in Our Future Trust established in
2007 to hold the proceeds of a $105 million capital campaign.
Without such a "tolling agreement," the report relates, any
lawsuits to recover assets -- including the Parish Deposit Fund --
would have to be filed by Jan. 4, two years after the start of the
bankruptcy.
About Archdiocese of Milwaukee
The Diocese of Milwaukee was established on Nov. 28, 1843, and
was elevated to an Archdiocese on Feb. 12, 1875, by Pope Pius
IX. The region served by the Archdiocese consists of 4,758 square
miles in southeast Wisconsin which includes counties Dodge, Fond
du Lac, Kenosha, Milwaukee, Ozaukee, Racine, Sheboygan, Walworth,
Washington and Waukesha. There are 657,519 registered Catholics
in the Region.
The Catholic Archdiocese of Milwaukee, in Wisconsin, filed for
Chapter 11 bankruptcy protection (Bankr. E.D. Wisc. Case No.
11-20059) on Jan. 4, 2011, to address claims over sexual abuse
by priests on minors.
The Archdiocese became at least the eighth Roman Catholic diocese
in the U.S. to file for bankruptcy to settle claims from current
and former parishioners who say they were sexually molested by
priests.
Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., in
Milwaukee, Wisconsin, serves as the Archdiocese's counsel. The
Official Committee of Unsecured Creditors in the bankruptcy case
has retained Pachulski Stang Ziehl & Jones LLP as its counsel, and
Howard, Solochek & Weber, S.C., as its local counsel.
The Archdiocese estimated assets and debts of $10 million to
$50 million in its Chapter 11 petition.
(Catholic Church Bankruptcy News; Bankruptcy Creditors' Service,
Inc., http://bankrupt.com/newsstand/or 215/945-7000)
ATP OIL: Agrees to Fund $27.1 Million Into Trust Account
--------------------------------------------------------
Effective as of Nov. 15, 2012, but approved by the Bankruptcy
Court on Nov. 29, 2012, ATP Oil & Gas Corporation entered into a
Decommissioning Trust Agreement with the United States of America,
acting by and through the Bureau of Ocean Energy Management, of
the United States Department of the Interior, and JPMorgan Chase
Bank, N.A., pursuant to which the Company will fund a trust
account to comply with supplemental bonding requirements related
to its decommissioning obligations for the following properties:
OCS-G27532 (High Island Block A-589), OCS-G24130 (Mississippi
Canyon Block 942), OCS-G26078 (Ship Shoal Block 351), OCS-G19822
(Ship Shoal Block 358), OCS-G14518 (South Timbalier Block 48) and
OCS-G24786 (West Cameron Block 663). Pursuant to the DTA, the
Company is able to meet its regulatory bonding requirements
related to its decommissioning obligations for those properties by
funding $27,105,000, which is the total estimated decommissioning
obligation for those properties. Half of this amount will be
deposited with the Trustee by Jan. 31, 2012, with the second half
deposited with the Trustee in quarterly installments over the
following 18 months.
In connection with entering into the DTA, the Company entered into
four additional Decommissioning Trust Agreements on substantially
identical terms to the DTA except with respect to (i) the
properties covered by the agreement, (ii) the underlying
decommissioning obligation amount and (iii) the funding schedule.
Effective as of Nov. 29, 2012, and approved by the Bankruptcy
Court on Nov. 29, 2012, the Company entered into a Settlement
Agreement with the United States of America, acting by and through
BOEM and the Bureau of Safety and Environmental Enforcement, each
of the United States Department of the Interior, pursuant to which
the Company, BOEM and BSEE agreed to compromise the Aug. 17, 2012,
order issued by BOEM and BSEE insofar as it pertained to the
Company's decommissioning obligations for certain of its oil and
gas leases. As a result of its entry into the Settlement
Agreement, the Company is not required to post any up-front bond
amount related to the Idle Iron Blocks. The Settlement Agreement
is limited to the specified Idle Iron Blocks and does not address
any other disputes between the Company and the Department of the
Interior as to any other issue regarding the Company's
decommissioning obligations related to any other properties.
A copy of the Decommissioning Agreement is available at:
http://is.gd/LhxdaJ
A copy of the Settlement Agreement is available at:
http://is.gd/UIhFXf
A copy of the Form 8-K is available for free at:
http://is.gd/7RAm5B
About ATP Oil
Houston, Tex.-based ATP Oil & Gas Corporation is an international
offshore oil and gas development and production company focused
in the Gulf of Mexico, Mediterranean Sea and North Sea.
ATP Oil & Gas filed a Chapter 11 petition (Bankr. S.D. Tex. Case
No. 12-36187) on Aug. 17, 2012. Attorneys at Mayer Brown LLP,
serve as bankruptcy counsel. Porter Hedges LLP serves as local
co-counsel. Munsch Hardt Kopf & Harr, P.C., is the conflicts
counsel. Opportune LLP is the financial advisor and Jefferies &
Company is the investment banker. Kurtzman Carson Consultants LLC
is the claims and notice agent. Blackhill Partners, LLC, provided
James R. Latimer, III as chief restructuring officer to the
Debtor. Filings with the Bankruptcy Court and claims information
are available at http://www.kccllc.net/atpog
ATP disclosed assets of $3.6 billion and $3.5 billion of
liabilities as of March 31, 2012. Debt includes $365 million on a
first-lien loan where Credit Suisse AG serves as agent. There is
$1.5 billion on second-lien notes with Bank of New York Mellon
Trust Co. as agent. ATP's other debt includes $35 million on
convertible notes and $23.4 million owing to third parties for
their shares of production revenue. Trade suppliers have claims
for $147 million, ATP said in a court filing. In its schedules,
the Debtor disclosed $3,249,576,978 in assets and $2,278,831,445
in liabilities as of the Chapter 11 filing.
An official committee of unsecured creditors has been appointed in
the case. Evan R. Fleck, Esq., at Milbank, Tweed, Hadley &
McCloy, in New York, represents the Creditors Committee as
counsel. Duff & Phelps Securities, LLC, serves as its financial
advisors. The Committee tapped Epiq Bankruptcy Solutions, LLC as
its information agent.
AVANTAIR INC: Lorne Weil Discloses 31.3% Equity Stake
-----------------------------------------------------
In a Schedule 13D filing with the U.S. Securities and Exchange
Commission, Lorne Weil and his affiliates disclosed that, as of
Nov. 16, 2012, they beneficially own 15,820,430 shares of common
stock of Avantair, Inc., representing 31.35% of the shares
outstanding. Mr. Weil has been a director of the Company since
November 2010. A copy of the filing is available for free at:
http://is.gd/vVXmAU
About Avantair Inc.
Headquartered in Clearwater, Fla., Avantair, Inc. (OTC BB: AAIR)
-- http://www.avantair.com/-- sells fractional ownership
interests in, and flight hour card usage of, professionally
piloted aircraft for personal and business use, and the management
of its aircraft fleet. According to AvData, Avantair is the fifth
largest company in the North American fractional aircraft
industry.
Avantair also operates fixed flight based operations (FBO) in
Camarillo, California and in Caldwell, New Jersey. Through these
FBOs and its headquarters in Clearwater, Florida, Avantair
provides aircraft maintenance, concierge and other services to its
customers as well as to the Avantair fleet.
The Company's balance sheet at Sept. 30, 2012, showed
$84.22 million in total assets, $122.83 million in total
liabilities, $14.82 million in series A convertible preferred
stock, and a $53.43 million total stockholders' deficit.
BACK YARD BURGERS: Wins Approval of Disclosure Statement
--------------------------------------------------------
Carla Main, substituting for Bloomberg News bankruptcy columnist
Bill Rochelle, reports that Back Yard Burgers Inc. obtained
approval of its amended disclosure statement from the U.S.
Bankruptcy Court in Wilmington, Delaware.
According to the report, the court's Dec. 5 order sets a voting
deadline of Jan. 7 on the plan of reorganization. Approval of the
disclosure statement starts the clock for Back Yard to gather
support for the plan. A confirmation hearing is scheduled for
Jan. 13. Objections to the plan must be filed by Jan. 7.
The report relates that in the amended disclosure statement, Back
Yard said it "has engaged in extensive negotiations" with its
prepetition secured lender Harbert Mezzanine Partners, LP and
their equity holders, and the debtor-in-possession lenders, Pharos
Capital Partners II and Pharos Capital Partners II-A, as well as
with creditors.
According to the report, the plan contemplates converting debtor-
in-possession claims to new capital stock and issuing of new
restructured senior secured notes. In addition, there will be a
distribution of cash to unsecured creditors, according to the
filing. About $1.3 million will be applied to administrative
claims, and $600,000 will go toward priority tax claims. The
estimated aggregate allowed amount of DIP claims proposed under
the amended plan is $2.9 million. Back Yard said it estimates a
recovery of as much as all of that sum through the issuance of new
capital stock.
About Back Yard Burgers
Back Yard Burgers -- http://backyardburgers.com/-- operates and
franchises more than 150 quick-service restaurants in 20 states,
primarily in markets throughout the Southeast region of the United
States. Back Yard Burgers Inc. and three of its affiliates sought
Chapter 11 protection (Bankr. D. Del. Case Nos. 12-12882 to
12-12885) on Oct. 17, 2012, with a pre-negotiated restructuring
plan that has the support of both the Company's majority owner and
secured lender. The debtor-affiliates are BYB Properties, Inc.,
Nashville BYB, LLC, and Little Rock Back Yard Burgers, Inc.
Attorneys at Greenberg Traurig serve as bankruptcy counsel. Saul
Ewing LLP is the conflicts counsel. GA Keen Realty Advisors is
the real estate advisor. Rust Consulting/Omni Bankruptcy is
the claims and notice agent. Back Yard Burgers estimated up to
$10 million in assets and at least $10 million in liabilities.
BALLARD BUS: Carlsbad School Bus Contractor Files Chapter 11
------------------------------------------------------------
The Carlsbad Current-Argus reports that Ballard Bus Inc., the only
school bus contractor in the city of Carlsbad, New Mexico, has
filed for Chapter 11 bankruptcy protection to keep operating while
restructuring and making payments to creditors. wners Harley and
Debby Ballard said if they can't find a way to keep the company
operational in the next couple of months, they may be forced to
close their doors after 42 years in business. The report noted
the company's contract with the Carlsbad School District for the
2010-11 school year was $1.1 million. Ballard said the state
decreased the contract by $24,500 in March 2010. The contract was
further reduced in each of the years that followed.
BIOFUEL ENERGY: Cargill Biofuels Discloses 4.3% Equity Stake
------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Cargill Biofuels Investments, LLC, disclosed
that, as of Nov. 28, 2012, it beneficially owns 235,300 shares of
common stock of Biofuel Energy Corp. representing 4.32% of the
shares outstanding. Cargill previously reported beneficial
ownership of 8,273,386 common shares or a 7.93% equity stake as of
Dec. 31, 2011. A copy of the amended filing is available for free
at http://is.gd/NcEuMh
About Biofuel Energy
Denver, Colo.-based BioFuel Energy Corp. (Nasdaq: BIOF) --
http://www.bfenergy.com/-- aims to become a leading ethanol
producer in the United States by acquiring, developing, owning and
operating ethanol production facilities. It currently has two
115 million gallons per year ethanol plants in the Midwestern corn
belt.
The Company reported a net loss of $10.36 million in 2011,
compared with a net loss of $25.22 million during the prior year.
The Company's balance sheet at Sept. 30, 2012, showed $263.16
million in total assets, $196.94 million in total liabilities and
$66.22 million in total equity.
Bankruptcy Warning
"Drought conditions in the American Midwest have significantly
impacted this year's corn crop and caused a significant reduction
in the corn yield. Since the end of the second quarter, this has
led to a significant increase in the price of corn and a
corresponding narrowing in the crush spread. The crush spread has
narrowed as ethanol prices have not risen correspondingly with
rising corn prices, due to an oversupply of ethanol. As a result,
the Company announced on September 24, 2012 that it had decided to
idle its Fairmont facility until the crush spread improves. In
the event crush spreads narrow further, we may choose to curtail
operations at our Wood River facility or idle the facility and
cease operations altogether until such time as crush spreads
improve. We expect fluctuations in the crush spread to continue.
"Due to our limited and declining liquidity, during the third
quarter the Company determined that the two operating subsidiaries
of the LLC (the "Operating Subsidiaries") would not make the
regularly-scheduled payments of principal and interest that were
due under the outstanding Senior Debt Facility on September 28,
2012, in an aggregate amount of $3.6 million. As a result, the
Operating Subsidiaries received a Notice of Default on September
28, 2012 from First National Bank of Omaha, as Administrative
Agent for the Senior Debt Facility, concerning the failure to make
the regularly-scheduled payments of principal and interest. On
November 5, 2012, the Operating Subsidiaries and its lenders
entered into a Forbearance Agreement whereby its lenders agreed to
forbear from exercising their remedies under the Senior Debt
Facility until November 15, 2012. The Company is engaged in
active and continuing discussions with its lenders and their
advisors regarding the terms of a potential capital infusion into
the Operating Subsidiaries. This capital may take the form of a
capital contribution from the Company, additional loans, a long-
term forbearance or restructuring under the Senior Debt Facility,
some combination of the foregoing, or another form yet to be
determined. While the Company intends to reach resolution with its
lenders with respect to this matter, there can be no assurance it
will be able to do so on terms that are favorable or acceptable to
the Company, or at all.
"As of September 30, 2012, the Operating Subsidiaries had $170.5
million of indebtedness outstanding under the Senior Debt
Facility. The entire amount outstanding under the Senior Debt
Facility has been classified as a current liability in the
September 30, 2012 consolidated balance sheet. If the Company is
unable to reach an agreement with its lenders under the Senior
Debt Facility, and if its lenders successfully exercise their
remedies under the Senior Debt Facility, the Company may be unable
to continue as a going concern, and could be forced to seek relief
from creditors through a filing under the U.S. Bankruptcy Code."
BON-TON STORES: Files Form 10-Q, Incurs $10MM Loss in Fiscal Q3
---------------------------------------------------------------
The Bon-Ton Stores, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $10.14 million on $668.73 million of net sales for
the 13 weeks ended Oct. 27, 2012, compared with a net loss of
$22.03 million on $656.07 million of net sales for the 13 weeks
ended Oct. 29, 2011.
For the 39 weeks ended Oct. 27, 2012, the Company reported
$95.96 million on $1.90 billion of net sales, compared with a net
loss of $90.32 million on $1.90 billion of net sales for the 39
weeks ended Oct. 29, 2011.
The Company's balance sheet at Oct. 27, 2012, showed $1.84 billion
in total assets, $1.80 billion in total liabilities, and
$40.30 million in total shareholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/39txqg
About Bon-Ton Stores
The Bon-Ton Stores, Inc., with corporate headquarters in York,
Pennsylvania and Milwaukee, Wisconsin, operates 276 department
stores, which includes 11 furniture galleries, in 23 states in the
Northeast, Midwest and upper Great Plains under the Bon-Ton,
Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman,
Herberger's and Younkers nameplates and, in the Detroit, Michigan
area, under the Parisian nameplate.
* * *
As reported by the TCR on July 13, 2012, Moody's Investors Service
revised The Bon-Ton Stores, Inc.'s Probability of Default Rating
to Caa1/LD from Caa3. The Caa1/LD rating reflects the company's
exchange of $330 million of new senior secured notes due 2017 for
$330 million of its unsecured notes due 2014. Moody's also
affirmed the company's Corporate Family Rating at Caa1 and
affirmed the Caa3 rating assigned to the company's senior
unsecured notes due 2014.
Moody's said the affirmation of the company's 'Caa1' corporate
family rating reflects the company's persistent negative trends in
sales and operating margins and uncertainties that the company's
strategies to reverse these trends will be effective.
BILLMYPARENTS INC: Receives $2.5MM From Sale of Common Shares
-------------------------------------------------------------
BillMyParents, Inc., entered into subscription agreements with
seven accredited investors pursuant to which the Company issued
7,300,000 shares of its common stock, $0.001 par value at a
purchase price of $0.40 per share. Pursuant to the terms of the
Offering, the Company issued five year warrants to purchase up to
an additional 6,875,000 shares of its common stock in the
aggregate, at an exercise price of $0.50 per share, to two
investors, and five year warrants to purchase up to 106,250 shares
of its common stock in the aggregate, at an exercise price of
$0.60 per share, to five investors.
The Offering resulted in net proceeds to the Company of
approximately $2,580,500 after deducting fees and expenses
totaling $339,500. The placement agent, a FINRA registered
broker-dealer, in connection with the financing received a cash
fee totaling $292,000 and will receive warrants to purchase up to
730,000 shares of common stock at an exercise price of $0.50 per
share as compensation.
Pursuant to the terms of the Offering, the Company has entered
into a Registration Rights Agreement with each investor pursuant
to which the Company is required to file a registration statement
for the re-sale of the Common Shares, as well as the common stock
underlying the Warrants, within 150 days after the final closing
of the Offering, and to use our commercially reasonable efforts to
cause the registration statement to be declared effective as
promptly as possible after filing.
About BillMyParents
San Diego, Calif.-based BillMyParents, Inc., markets prepaid cards
with special features aimed at young people and their parents.
BMP is designed to enable parents and young people to collaborate
toward the goal of responsible spending.
In the auditors' report accompanying the consolidated financial
statements for the year ended Dec. 31, 2011, BDO USA, LLP,
expressed substantial doubt about the Company's ability to
continue as a going concern. BDO noted that the Company has
incurred net losses since inception and has an accumulated
deficit, and stockholders' deficiency at Sept. 30, 2011.
The Company reported a net loss of $14.2 million for the fiscal
year ended Sept. 30, 2011, compared with a net loss of
$6.9 million for the fiscal year ended Sept. 30, 2010.
The Company's balance sheet at June 30, 2012, showed $7.83 million
in total assets, $1.47 million in total liabilities, all current,
and $6.36 million in total stockholders' equity.
BIOFUEL ENERGY: Cargill Biofuels Discloses 4.3% Equity Stake
------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Cargill Biofuels Investments, LLC, disclosed
that, as of Nov. 28, 2012, it beneficially owns 235,300 shares of
common stock of Biofuel Energy Corp. representing 4.32% of the
shares outstanding. Cargill previously reported beneficial
ownership of 8,273,386 common shares or a 7.93% equity stake as of
Dec. 31, 2011. A copy of the amended filing is available for free
at http://is.gd/NcEuMh
About Biofuel Energy
Denver, Colo.-based BioFuel Energy Corp. (Nasdaq: BIOF) --
http://www.bfenergy.com/-- aims to become a leading ethanol
producer in the United States by acquiring, developing, owning and
operating ethanol production facilities. It currently has two
115 million gallons per year ethanol plants in the Midwestern corn
belt.
The Company reported a net loss of $10.36 million in 2011,
compared with a net loss of $25.22 million during the prior year.
The Company's balance sheet at Sept. 30, 2012, showed
$263.16 million in total assets, $196.94 million in total
liabilities and $66.22 million in total equity.
Bankruptcy Warning
"Drought conditions in the American Midwest have significantly
impacted this year's corn crop and caused a significant reduction
in the corn yield. Since the end of the second quarter, this has
led to a significant increase in the price of corn and a
corresponding narrowing in the crush spread. The crush spread has
narrowed as ethanol prices have not risen correspondingly with
rising corn prices, due to an oversupply of ethanol. As a result,
the Company announced on September 24, 2012 that it had decided to
idle its Fairmont facility until the crush spread improves. In
the event crush spreads narrow further, we may choose to curtail
operations at our Wood River facility or idle the facility and
cease operations altogether until such time as crush spreads
improve. We expect fluctuations in the crush spread to continue.
"Due to our limited and declining liquidity, during the third
quarter the Company determined that the two operating subsidiaries
of the LLC (the "Operating Subsidiaries") would not make the
regularly-scheduled payments of principal and interest that were
due under the outstanding Senior Debt Facility on September 28,
2012, in an aggregate amount of $3.6 million. As a result, the
Operating Subsidiaries received a Notice of Default on September
28, 2012 from First National Bank of Omaha, as Administrative
Agent for the Senior Debt Facility, concerning the failure to make
the regularly-scheduled payments of principal and interest. On
November 5, 2012, the Operating Subsidiaries and its lenders
entered into a Forbearance Agreement whereby its lenders agreed to
forbear from exercising their remedies under the Senior Debt
Facility until November 15, 2012. The Company is engaged in
active and continuing discussions with its lenders and their
advisors regarding the terms of a potential capital infusion into
the Operating Subsidiaries. This capital may take the form of a
capital contribution from the Company, additional loans, a long-
term forbearance or restructuring under the Senior Debt Facility,
some combination of the foregoing, or another form yet to be
determined. While the Company intends to reach resolution with its
lenders with respect to this matter, there can be no assurance it
will be able to do so on terms that are favorable or acceptable to
the Company, or at all.
"As of September 30, 2012, the Operating Subsidiaries had $170.5
million of indebtedness outstanding under the Senior Debt
Facility. The entire amount outstanding under the Senior Debt
Facility has been classified as a current liability in the
September 30, 2012 consolidated balance sheet. If the Company is
unable to reach an agreement with its lenders under the Senior
Debt Facility, and if its lenders successfully exercise their
remedies under the Senior Debt Facility, the Company may be unable
to continue as a going concern, and could be forced to seek relief
from creditors through a filing under the U.S. Bankruptcy Code."
BON-TON STORES: Files Form 10-Q, Incurs $10MM Loss in Fiscal Q3
---------------------------------------------------------------
The Bon-Ton Stores, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $10.14 million on $668.73 million of net sales for
the 13 weeks ended Oct. 27, 2012, compared with a net loss of
$22.03 million on $656.07 million of net sales for the 13 weeks
ended Oct. 29, 2011.
For the 39 weeks ended Oct. 27, 2012, the Company reported $95.96
million on $1.90 billion of net sales, compared with a net loss of
$90.32 million on $1.90 billion of net sales for the 39 weeks
ended Oct. 29, 2011.
The Company's balance sheet at Oct. 27, 2012, showed $1.84 billion
in total assets, $1.80 billion in total liabilities, and
$40.30 million in total shareholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/39txqg
About Bon-Ton Stores
The Bon-Ton Stores, Inc., with corporate headquarters in York,
Pennsylvania and Milwaukee, Wisconsin, operates 276 department
stores, which includes 11 furniture galleries, in 23 states in the
Northeast, Midwest and upper Great Plains under the Bon-Ton,
Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman,
Herberger's and Younkers nameplates and, in the Detroit, Michigan
area, under the Parisian nameplate.
* * *
As reported by the TCR on July 13, 2012, Moody's Investors Service
revised The Bon-Ton Stores, Inc.'s Probability of Default Rating
to Caa1/LD from Caa3. The Caa1/LD rating reflects the company's
exchange of $330 million of new senior secured notes due 2017 for
$330 million of its unsecured notes due 2014. Moody's also
affirmed the company's Corporate Family Rating at Caa1 and
affirmed the Caa3 rating assigned to the company's senior
unsecured notes due 2014.
Moody's said the affirmation of the company's 'Caa1' corporate
family rating reflects the company's persistent negative trends in
sales and operating margins and uncertainties that the company's
strategies to reverse these trends will be effective.
CAESARS ENTERTAINMENT: Plans to Issue $300 Million Senior Notes
---------------------------------------------------------------
Caesars Entertainment Corporation announced that Caesars Operating
Escrow LLC and Caesars Escrow Corporation, wholly owned
unrestricted subsidiaries of Caesars Entertainment Operating
Company, Inc., are proposing to issue $300 million aggregate
principal amount of 9% senior secured notes due 2020 in a private
offering that is exempt from the registration requirements of the
Securities Act of 1933, as amended. The Notes are to be issued
under the same indenture governing the 9% senior secured notes due
2020 that were issued on Aug. 22, 2012, but the Notes and the
Existing Notes will not be fungible until the completion of a
registered exchange offer pursuant to which holders that exchange
their Notes or Existing Notes will collectively receive registered
9% senior secured notes due 2020 that will have a single CUSIP
number and thereafter be fungible. The offering is subject to
market conditions and other factors. Upon satisfaction of certain
conditions, CEOC would assume the Escrow Issuers' obligations
under the Notes.
Caesars intends to use the net proceeds from the offering to pay
related fees and expenses and for general corporate purposes,
which may include the repayment, redemption, retirement or
repurchase in the open market of a portion of CEOC's outstanding
indebtedness. CEOC may use up to $150 million of the proceeds of
the offering to retire outstanding indebtedness based on
prevailing prices and market and other considerations existing at
the time, although no assurance can be given that CEOC will be
able to do so on terms acceptable to it or at all.
The Notes are being offered only to qualified institutional buyers
in reliance on Rule 144A under the Securities Act, and outside the
United States, only to non-U.S. investors pursuant to Regulation
S. The Notes will not be initially registered under the
Securities Act or any state securities laws and may not be offered
or sold in the United States absent an effective registration
statement or an applicable exemption from registration
requirements or a transaction not subject to the registration
requirements of the Securities Act or any state securities laws.
About Caesars Entertainment
Caesars Entertainment Corp., formerly Harrah's Entertainment Inc.
-- http://www.caesars.com/-- is one of the world's largest casino
companies, with annual revenue of $4.2 billion, 20 properties on
three continents, more than 25,000 hotel rooms, two million square
feet of casino space and 50,000 employees. Caesars casino resorts
operate under the Caesars, Bally's, Flamingo, Grand Casinos,
Hilton and Paris brand names. The Company has its corporate
headquarters in Las Vegas.
Harrah's announced its re-branding to Caesar's on mid-November
2010.
The Company reported a net loss of $666.70 million in 2011, and a
net loss of $823.30 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $28.34
billion in total assets, $28.22 billion in total liabilities and
$114.7 million in total Caesars stockholders' equity.
* * *
As reported by the TCR on March 28, 2012, Moody's Investors
Service upgraded Caesars Entertainment Corp's Corporate Family
Rating (CFR) and Probability of Default Rating both to Caa1 from
Caa2. The upgrade of Caesars' ratings reflects very good
liquidity, an improving operating outlook for gaming in a number
of the company's largest markets that is expected to drive
earnings growth, the completion of a bank amendment that resulted
in the extension of debt maturities to 2018 from 2015, and the
public listing of the company's equity that increases financial
flexibility by providing it with another potential source of
capital. The upgrade of the SGL rating reflects minimal debt
maturities over the next few years, significant cash balances
(approximately $900 million at December 31, 2011) and revolver
availability that will be more than sufficient to fund the
company's cash interest and capital spending needs.
In the Aug. 17, 2012, edition of the TCR, Standard & Poor's
Ratings Services revised its rating outlook on Las Vegas-based
Caesars Entertainment Corp. and wholly owned subsidiary Caesars
Entertainment Operating Co. Inc. to negative from stable. "We
affirmed all other ratings on the companies, including our 'B-'
corporate credit rating," S&P said.
As reported by the TCR on Aug. 17, 2012, Fitch Ratings affirmed
CEC's long-term issuer default rating at 'CCC'.
CAPITOL BANCORP: Purchase Agreement with VS CB Cancelled
--------------------------------------------------------
The securities purchase agreement entered into by Capitol Bancorp
Ltd. and VS CB Stock Acquisition, LLC, and the asset purchase
agreement with VS CB Asset Acquisition, LLC, were terminated by
the Purchaser pursuant to a provision in each Agreement that
allowed the Purchaser to terminate at any time prior to expiration
of the due diligence period, which ended Nov. 30, 2012. Due to
regulatory complications with the Corporation's legal inability to
advance due diligence expenses and attorney fees to the Purchaser,
the Purchaser did not undertake the diligence review.
The terms of the Securities Purchase Agreement provided for VS CB
to purchase 1,750,000 shares of the Corporation's Class B common
stock for $35 million and 15,000 shares of the Corporation's
Series A preferred stock for $15 million, in each case contingent
on the Corporation's emergence from bankruptcy and subject to the
terms and conditions contained in the Securities Purchase
Agreement.
Under the terms of the Asset Purchase Agreement, which was also
contingent on emergence from bankruptcy and subject to the terms
and conditions contained in the Asset Purchase Agreement, the
Corporation had agreed to sell to VS AA certain nonperforming
commercial and residential mortgage loans with an aggregate unpaid
principal balance of approximately $207 million.
About Capitol Bancorp
Capitol Bancorp Ltd. and Financial Commerce Corporation filed
voluntary Chapter 11 bankruptcy petitions (Bankr. E.D. Mich. Case
Nos. 12-58409 and 12-58406) on Aug. 9, 2012.
Capitol Bancorp -- http://www.capitolbancorp.com/-- is a
community banking company with a network of individual banks and
bank operations in 10 states and total consolidated assets of
roughly $2.0 billion as of June 30, 2012. CBC owns roughly 97% of
FCC, with a number of CBC affiliates owning the remainder. FCC,
in turn, is the holding company for five of the banks in CBC's
network. CBC is registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended, 12 U.S.C. Sec. 1841,
et seq., and trades on the OTCQB under the symbol "CBCR."
Lawyers at Honigman Miller Schwartz and Cohn LLP represent the
Debtors as counsel.
In its petition, Capitol Bancorp scheduled $112,634,112 in total
assets and $195,644,527 in total liabilities. The petitions were
signed by Cristin K. Reid, corporate president.
The Company's balance sheet at Sept. 30, 2012, showed
$1.749 billion in total assets, $1.891 billion in total
liabilities, and a stockholders' deficit of $141.8 million.
CCC ATLANTIC: Case Summary & 21 Largest Unsecured Creditors
-----------------------------------------------------------
Debtor: CCC Atlantic, LLC
1201 New Road
Linwood, NJ 08221
Bankruptcy Case No.: 12-13290
Chapter 11 Petition Date: December 6, 2012
Court: U.S. Bankruptcy Court
District of Delaware (Delaware)
Debtor's Counsel: Kevin Scott Mann, Esq.
CROSS & SIMON, LLC
913 N. Market Street, 11th Floor
P.O. Box 1380
Wilmington, DE 19899-1380
Tel: (302) 777-4200
Fax: (302) 777-4224
E-mail: kmann@crosslaw.com
Estimated Assets: $10,000,001 to $50,000,000
Estimated Liabilities: $10,000,001 to $50,000,000
The petition was signed by Robin A. Karman, managing member.
Debtor's List of Its 21 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Ballard Spahr LLP Legal $198,000
210 Lake Drive East, Suite 200
Cherry Hill, NJ 08002-1163
Vanguard Cleaning Systems Inc. Trade Debt $60,252
131-D Gaither Drive Mount
Laurel, NJ 08054
Hoagland, Longo, Moran, Legal $54,174
Dunst & Doukas
c/o Vincent M. Carita, Esq.
40 Paterson Street, P.O. Box 480
New Brunswick, NJ 08903
Constellation NewEnergy, Inc. Trade Debt $29,763
Honig & Greenberg, LLC Legal $13,268
Evergreen Consolidated, LLC Trade Debt $12,483
Charles H. Nugent, Jr., Esquire Legal $9,217
Goldenberg, Mackler, Sayegh, Legal $7,731
Mintz, Pfeffer, Bonchi & Gill
Brickman Group Trade Debt $7,653
Otis Elevator Company Trade Debt $6,177
Sapphire Builders Trade Debt $6,700
Hawks & Company Trade Debt $5,532
Lopez, Theodosio & Larkin, LLC Trade Debt $4,775
Done Right Landscaping, LLC Trade Debt $4,500
June Stambaugh Trade Debt $4,500
Advance Management Corporation Trade Debt $2,096
William McLees Architecture Trade Debt $2,080
Direct Energy Business Trade Debt $2,000
J. Wilhelm Roofing Company, Inc. Trade Debt $683
Advance Door & Supply Co. LLC Trade Debt $605
Xerox Capital Services, LLC Trade Debt $427
CHAMPION INDUSTRIES: Receives $1.1 Million from Assets Sale
-----------------------------------------------------------
Donihe Graphics, Inc., and The Merten Company, both wholly owned
subsidiaries of Champion Industries, Inc., sold substantially all
the machinery and equipment headquartered in Kingsport, Tennessee,
and in Cincinnati, Ohio, to Graphics International, LLC., pursuant
to an Asset Purchase Agreement dated Nov. 30, 2012. The Sellers
received approximately $1,100,000 or $1,050,000 net of selling
commissions in cash at closing, with another $175,000 due if
certain real estate located in Kingsport, Tennessee, is sold to
Buyer prior to Dec. 25, 2012. The proceeds of this transaction
were utilized to pay the Bullet Note issued by Champion pursuant
to the terms of the First Amended and Restated Credit Agreement
dated Oct. 19, 2012, among Champion and various lenders from time
to time party thereto and Fifth Third bank, an Ohio banking
corporation, as Administrative Agent and L/C Issuer.
The Agreement contains representations and warranties, covenants
and indemnification provisions common to transactions of its
nature.
About Champion Industries
Champion Industries, Inc., is a commercial printer, business forms
manufacturer and office products and office furniture supplier in
regional markets in the United States. The Company also publishes
The Herald-Dispatch daily newspaper in Huntington, WV. The
Company's sales force sells printing services, business forms
management services, office products, office furniture and
newspaper advertising. Its subsidiaries include Interform
Corporation, Blue Ridge, Champion Publishing, Inc., The Dallas
Printing, The Bourque Printing, The Capitol, and The Herald-
Dispatch.
The Company reported a net loss of $3.97 million for the year
ended Oct. 31, 2011, compared with net income of $488,134 during
the prior year.
The Company's balance sheet at July 31, 2012, showed
$51.21 million in total assets, $51.98 million in total
liabilities, and a $767,157 total shareholders' deficit.
CIRCLE STAR: Provides Operational Update on Drilling Activities
---------------------------------------------------------------
Circle Star Energy Corp. announced that drilling has commenced in
Trego County, Kansas, ahead of schedule. The Company owns a 25%
working interest and a 20% net revenue interest until payout at
which time the Company will convert to a 43.75% working interest
and a 35% net revenue interest after payout.
The initial well in Trego County is planned to drill to 4,200 feet
and test the Arbuckle, Kansas-Lansing and other formations that
are productive in the area. According to the Kansas Geological
Survey, oil and/or natural gas is produced in 93 of 105 Kansas
counties with the Arbuckle Formation accounting for 36% of total
oil production in Kansas. Located in Northwest Kansas, Trego
County has been the site of several major oil discoveries,
including its first oil pool discovery in May 1929, and
cumulatively produced 66,787,369 bbls to date.
About Circle Star
Houston, Tex.-based Circle Star Energy Corp. owns royalty,
leasehold, operating, net revenue, net profit, reversionary and
other mineral rights and interests in certain oil and gas
properties in Texas. The Company's properties are in Crane,
Scurry, Victoria, Dimmit, Zavala, Grimes, Madison, Robertson,
Fayette, and Lee Counties.
The Company reported a net loss of $11.07 million on $942,150 of
total revenues for the year ended April 30, 2012, compared with a
net loss of $31,718 on $0 of total revenues during the prior
fiscal year.
Hein & Associates LLP, in Dallas, Texas, issued a "going concern"
qualification on the consolidated financial statements for the
year ended April 30, 2012. The independent auditors noted that
the Company has suffered recurring losses from operations and has
a working capital deficit which raise substantial doubt about the
Company's ability to continue as a going concern.
The Company's balance sheet at July 31, 2012, showed $8.36 million
in total assets, $4.46 million in total liabilities, and
$3.89 million in total stockholders' equity.
CRAWFORDSVILLE LLC: Files for Chapter 11 in Iowa
------------------------------------------------
Crawfordsville, LLC, and three affiliates sought Chapter 11
protection (Bankr. S.D. Iowa Lead Case No. 12-03748) in Council
Bluffs, Iowa, on Dec. 7, 2012.
Crawfordsville filed schedules disclosing $5.17 million in assets
and $32.2 million in liabilities, including $19.6 million owed to
secured creditors. The Debtor owns parcels of land in Montgomery
County, Indiana.
A debtor-affiliate, Brayton LLC, disclosed assets of $14.2 million
and liabilities of $27.8 million in its schedules. The Debtor
owns the 20-acre of land and buildings known as Goldfinch Place in
Audobon County, Iowa, which is valued at $1.68 million. The
schedules say the company has $10.5 million in claims for
disgorgement and damages resulting from fraudulent conveyances and
preferential payments to dissociated partners.
The Debtors are seeking joint administration of their Chapter 11
cases.
Crawfordsville, et al., are subsidiaries of Natural Pork
Production II, LLP. Hog raiser Natural Pork filed for Chapter 11
bankruptcy (Bankr. S.D. Iowa Case No. 12-02872) on Sept. 11,
2012, in Des Moines.
CRAWFORDSVILLE LLC: Proposes Bradshaw Fowler as Counsel
-------------------------------------------------------
Crawfordsville, LLC, and three affiliates filed applications to
employ the law firm of Bradshaw, Fowler, Proctor & Fairgrave,
P.C., as their reorganization counsel.
It is anticipated that the firm's Donald F. Neiman, Esq., and
Jeffrey D. Goetz, Esq., will be lead counsel and will primarily
provide legal services to the Debtor.
The firm has requested a $10,000 retainer to guaranty payment of
its postpetition services and costs in connection with the case.
Mr. Goetz's hourly rate is $300 and will increase to $320 as of
Jan. 1, 2013. Paralegals' rates are generally from $50 to $125
per hour and associates' rates are generally from $130 to $250 per
hour.
The firm serves as counsel to the Debtors' parent, Natural Pork
Production II, LLP, in its own pending Chapter 11 case.
DCB FINANCIAL: Successfully Raised $13.2 Million in Capital
-----------------------------------------------------------
DCB Financial Corp, parent holding company of The Delaware County
Bank & Trust Company, Lewis Center, Ohio, announced the successful
completion of the Company's $13.2 million capital raise.
The $13.2 million capital raise involved a rights offering to
existing DCBF shareholders and a private offering to local standby
investors. The rights offering was oversubscribed. DCB Financial
Corp anticipates that it will close the private offering and issue
the 3,474,964 shares of common stock to the standby investors and
rights offering participants as soon as possible after Dec. 5,
2012. The new capital will allow the Delaware County Bank to meet
the increased capital ratios required by its regulators and to
provide capital to fuel future growth.
"This is great day for DCB Financial Corp and the Delaware County
Bank," noted Ronald J. Seiffert, president and chief executive
officer. "Despite the tough economic climate, both our existing
shareholders and the local new investors who participated in this
offering see the potential and enthusiasm surrounding our company.
With this infusion of capital we are positioned to satisfy the
regulatory capital requirements and have the ability and
flexibility to execute on future growth opportunities."
DCB retained Sandler O'Neill + Partners, L.P. (Sandler O'Neill) as
its financial adviser, Vorys, Sater, Seymour and Pease, LLP,
(Vorys) as its legal counsel and Broadridge Financial as the
subscription and information agent to assist the company in
raising the necessary capital.
"We were very fortunate to have had the expertise, professionalism
and counsel of Sandler O'Neill, Vorys and Broadridge," added
Seiffert. "The process of raising capital in this economic
environment was arduous and their assistance was invaluable."
About DCB Financial
DCB Financial Corp. is a financial holding company headquartered
in Lewis Center, Ohio. The Corporation has one wholly-owned
subsidiary bank, The Delaware County Bank and Trust Company (the
"Bank"). The Corporation also has two additional wholly owned
subsidiaries, DCB Title and DCB Insurance Services LLC. DCB Title
provides standard real estate title services, while DCB Insurance
Services LLC provides a variety of insurance products. However,
neither nonbank subsidiary is material to the financial results of
the Corporation. The Bank has one wholly-owned subsidiary, ORECO,
which is used to process other real estate owned.
The Corporation was incorporated under the laws of the State of
Ohio in 1997, as a financial holding company under the Bank
Holding Company Act of 1956, as amended, by acquiring all
outstanding shares of the Bank. The Corporation acquired all such
shares of the Bank after an interim bank merger, consummated on
March 14, 1997. The Bank is a commercial bank, chartered under
the laws of the State of Ohio, and was organized in 1950.
The Bank provides customary retail and commercial banking services
to its customers, including checking and savings accounts, time
deposits, IRAs, safe deposit facilities, personal loans,
commercial loans, real estate mortgage loans, installment loans,
trust and other wealth management services. The Bank also
provides cash management, bond registrar and paying agent services
for commercial and public unit entities. Through its subsidiary
Datatasx, the Bank provided data processing and other bank
operational services to other financial institutions. Those
services were discontinued in September 2011, and were not a
significant part of operations or revenue.
In October 2010, the Corporation's wholly-owned bank subsidiary
entered into a Consent Agreement with the FDIC which requires that
Tier-1 and Total Risk Based Capital percentages reach 9.0% and
13.0% respectively. As of March 31, 2012, the Bank's capital
ratios, as previously noted, were not at these levels.
The Corporation and its subsidiaries meet all published regulatory
capital requirements. The ratio of total capital to risk-weighted
assets was 10.3% at March 31, 2012, while the Tier 1 risk-based
capital ratio was 6.7%.
As reported in the TCR on April 5, 2012, Plante & Moran PLLC, in
Columbus, Ohio, said DCB's bank subsidiary is not in compliance
with revised minimum regulatory capital requirements under a
formal regulatory agreement with the banking regulators. "Failure
to comply with the regulatory agreement may result in additional
regulatory enforcement actions."
The Company's balance sheet at Sept. 30, 2012, showed $494.19
million in total assets, $458.44 million in total liabilities and
$35.75 million in total stockholders' equity.
EARL L. PICKETT: Court Won't Stay Lawsuits Against Owner
--------------------------------------------------------
Bankruptcy Judge William L. Stocks declined to place Earl L.
Pickett under the cloak of Chapter 11 protection. The judge
denied the request of Mr. Pickett's namesake company, Earl L.
Pickett Enterprises, Inc., for a stay of the lawsuits against the
company's sole shareholder, sole director, president and chief
operating officer.
Mr. Pickett manages the ongoing business operations of the Debtor
and is managing the efforts of the Debtor to reorganize its
affairs in the case. Two lawsuits are pending against Mr. Pickett
in the Superior Court of Wake County. One of the lawsuits was
brought by The Pantry, Inc., and seeks a recovery of $87,941.58
plus attorneys' fees and costs. The other lawsuit was brought by
Mansfield Oil Company of Gainesville Georgia, Inc., and seeks a
recovery of $19,355.56 plus attorneys' fees and costs. In each of
the lawsuits, the basis for the claim against Mr. Pickett is a
personal guaranty allegedly executed by Mr. Pickett guaranteeing
the obligations of the Debtor to the respective plaintiffs.
The Debtor argued that Mr. Pickett has been sued as a guarantor of
the company's obligations. The Debtor said this creates the
required identity of interest between the Debtor and Mr. Pickett
in that Mr. Pickett will be entitled to indemnity from the Debtor
if he is held liable as a guarantor of the Debtor's obligations.
Judge Stocks wasn't convinced. He pointed out that a judgment
against Mr. Pickett will not necessarily prejudice the Debtor
since under 11 U.S.C. Section 502(e)(1) a guarantor's claim for
reimbursement or contribution is entitled to no better status than
the claim of the creditor guaranteed by such guarantor. The
evidence also was insufficient to show that the pending lawsuits
will make such a demand upon Mr. Pickett's time and attention.
Neither lawsuit appears to be so complex factually or legally that
Mr. Pickett would not be left with sufficient time to fulfill his
role in assisting with the formulation of a plan of reorganization
for the Debtor while continuing to manage the operations of the
Debtor.
A copy of the Court's Dec. 5, 2012 Opinion and Order is available
at http://is.gd/eODF91from Leagle.com.
Earl L. Pickett Enterprises, Inc., filed for Chapter 11 bankruptcy
(Bankr. M.D.N.C. Case No. 12-81284) in Durham on Aug. 29, 2012.
EINSTEIN NOAH: S&P Withdraws 'B' Rating on $265MM Sr. Secured Debt
------------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its 'B' issue-level
rating and '3' recovery rating on Lakewood, Co.-based Einstein
Noah Restaurant Group Inc.'s $265 million senior secured credit
facility. The company planned to use the proceeds to fund a
dividend to its shareholders and refinance existing debt. However,
the proposed transaction did not close and the company instead
amended its existing credit agreement from Dec. 20, 2010. Under
the restated and amended credit facility, Einstein will have a
$100 million term loan and about $40 million outstanding under its
$75 million revolving credit facility. The company plans to use
the proceeds from the incremental debt to fund a one-time special
dividend to its shareholders.
"Our 'B' corporate credit rating and stable outlook on Einstein
Noah remains unchanged. We plan to meet with the company's
management to refine our analysis of its financial policies," S&P
said.
RATINGS LIST
Einstein Noah Restaurant Group Inc.
Corporate Credit Rating B/Stable/--
Ratings Withdrawn
To From
Einstein Noah Restaurant Group Inc.
$265 Mil. Sr Sec. Credit Fac. N.R. B
Recovery Rating N.R. 3
EL FARMER: Files for Chapter 11 in Puerto Rico
----------------------------------------------
El Farmer Inc. filed a Chapter 11 petition (Bankr. D.P.R. Case No.
12-09687) in Old San Juan, Puerto Rico, on Dec. 7, 2012.
The Debtor filed schedules disclosing $18.3 million in assets and
$12.0 million in liabilities, including $11.0 million owed to
secured creditor Banco Popular De Puerto Rico. The Debtor owns
farm lands in Isabela, Puerto Rico.
The Debtor's counsel -- Modesto Bigas Mendez, Esq., at Bigas &
Bigas -- will charge $250 per hour for services performed for the
Debtor.
EMISSION SOLUTIONS: Dawn Ragan Appointed as CRO
-----------------------------------------------
Ben Tinsley at Jacksonville Daily Progress reports Dawn M. Ragan,
who is serving as chief restructuring officer for the Lon Morris
College's bankruptcy estate, on Thursday was formally appointed
CRO to oversee the Chapter 11 proceedings for Emission Solutions
Inc., according to documents filed in United States Bankruptcy
District, Eastern District of Texas, Sherman Division.
The report says Ms. Ragan, 51, will be receiving roughly $5,000 a
week in the case. Her work for Lon Morris nets her roughly
$12,000 weekly, according to the fee structure requested for her
work July 2 through Sept. 30, 2012. Ms. Ragan has been involved
in one capacity or another with Lon Morris College's bankruptcy
proceedings since May.
"Dawn Ragan . . . is fully empowered to transact all business and
act on behalf of the company," states James D. Lapicola, sole
director of Emission Solution Inc. in court documents, the report
relates.
The report also says for Ms. Ragan, this involuntary Chapter 11
affair started Nov. 2, when she and the Austin company for which
she works, Bridgepoint Consulting, were tentatively hired to start
work on the bankruptcy case. Because the company has no ongoing
operations, little cash and few liquid assets, the game plan is
for Ms. Ragan and other officials to try to free up, recover and
sell, patents that are valued at $3 million, court records show.
The report relates there was a possible conflict in the case when
a U.S. Trustee involved with the case recently attempted to have
Ms. Ragan removed as CRO. The trustee was concerned a proposed
lender in the case and the lender's ex-husband, both proposed
loaners, may have selected Ragan for their benefit, "rather than
the debtor's creditors," court documents show. However, while the
judge declined to name Ms. Ragan a Chapter 11 Trustee in the case,
he kept her on as CRO.
According to the TCR's records, Emission Solutions, Inc., filed
for Chapter 11 (Bankr. E.D. Tex. Case No. 12-42530) on Sept. 14,
2012. It filed the petition pro se. A copy of the petition is
available at http://bankrupt.com/misc/txeb12-42530.pdf
ENERGY FUTURE: Issues $1.1 Billion Senior Toggle Notes
------------------------------------------------------
Energy Future Intermediate Holding Company LLC, a wholly-owned
subsidiary of Energy Future Holdings Corp., and EFIH Finance Inc.,
a direct, wholly-owned subsidiary of EFIH, completed a private
debt exchange transaction pursuant to an Exchange Agreement among
the Issuers and certain funds and accounts managed by
institutional investors.
Pursuant to the Exchange Agreement, the Issuers issued
approximately $1.145 billion aggregate principal amount of its
11.25%/12.25% Senior Toggle Notes due 2018 in exchange for the
surrender by the Exchange Holders of approximately $234 million
aggregate principal amount of 5.55% Series P Senior Notes due
Nov. 15, 2014, of EFH Corp., approximately $510 million aggregate
principal amount of 6.50% Series Q Senior Notes due Nov. 15, 2024,
of EFH Corp., approximately $453 million aggregate principal
amount of 6.55% Series R Senior Notes due Nov. 15, 2034, of EFH
Corp., approximately $94 million aggregate principal amount of
10.875% Senior Notes due 2017 of EFH Corp. and approximately $313
million aggregate principal amount of 11.250%/12.000% Senior
Toggle Notes due 2017 of EFH Corp., including any accrued but
unpaid interest on the Old Notes. The Old Notes have been
deposited in a custody account of EFIH and remain outstanding.
The Issuers entered into an indenture with The Bank of New York
Mellon Trust Company, N.A., as trustee. Pursuant to the
Indenture, the Issuers issued $1.145 billion aggregate principal
amount of New Notes. The New Notes will mature on Dec. 1, 2018.
A copy of the Indenture is available at no charge at:
http://is.gd/Cls0dM
The Issuers also entered into a registration rights agreement with
the Exchange Holders. Pursuant to the Registration Rights
Agreement, the Issuers have agreed to register with the U.S.
Securities and Exchange Commission notes having substantially
identical terms as the New Notes as part of an offer to exchange
those registered notes for the New Notes and to complete that
exchange offer no later than 365 days after Dec. 5, 2012. A copy
of the Registration Rights Agreement is available for free at:
http://is.gd/b6UttR
Prior to the Exchange, certain of the Exchange Holders who held a
majority of the outstanding aggregate principal amount of the
Series Q Notes gave their consent to certain amendments to the
Indenture, dated as of Nov. 1, 2004, between EFH Corp. and BNYM,
and related documents. The Series Q Indenture governs the Series
Q Notes. As a result of the consent, EFH Corp. and BNYM, as
trustee under the Series Q Indenture, entered into a Supplemental
Indenture, dated as of Dec. 5, 2012, that amended and supplemented
the Series Q Indenture. The amendments to the Series Q Indenture,
among other things, modify or eliminate substantially all of the
restrictive covenants contained in the Series Q Indenture, modify
or eliminate certain events of default, modify covenants regarding
mergers and consolidations and modify or eliminate certain other
provisions of the Series Q Indenture, including the limitation on
the incurrence of secured indebtedness. A copy of the
Supplemental Indenture is available at http://is.gd/aZvYdx
Also prior to the Exchange, certain of the Exchange Holders who
held a majority of the outstanding aggregate principal amount of
the Series R Notes gave their consent to certain amendments to the
Indenture, dated as of Nov. 1, 2004, between EFH Corp. and BNYM,
and related documents. The Series R Indenture governs the Series
R Notes. As a result of the consent, EFH Corp and BNYM, as
trustee under the Series R Indenture, entered into a Supplemental
Indenture, dated as of Dec. 5, 2012, that amended and supplemented
the Series R Indenture. The amendments to the Series R Indenture,
among other things, modify or eliminate substantially all of the
restrictive covenants contained in the Series R Indenture, modify
or eliminate certain events of default, modify covenants regarding
mergers and consolidations and modify or eliminate certain other
provisions of the Series R Indenture, including the limitation on
the incurrence of secured indebtedness. A copy of the
Supplemental Indenture is available at http://is.gd/0YDjuH
A complete copy of the Form 8-K is available for free at:
http://is.gd/nAvxYc
About Energy Future
Energy Future Holdings Corp., formerly known as TXU Corp., is a
privately held diversified energy holding company with a portfolio
of competitive and regulated energy businesses in Texas. Oncor,
an 80%-owned entity within the EFH group, is the largest regulated
transmission and distribution utility in Texas.
The Company delivers electricity to roughly three million delivery
points in and around Dallas-Fort Worth. EFH Corp. was created in
October 2007 in a $45 billion leverage buyout of Texas power
company TXU in a deal led by private-equity companies Kohlberg
Kravis Roberts & Co. and TPG Inc.
Energy Future had a net loss of $1.91 billion on $7.04 billion of
operating revenues for the year ended Dec. 31, 2011, compared with
a net loss of $2.81 billion on $8.23 billion of operating revenues
during the prior year.
The Company's balance sheet at Sept. 30, 2012, showed
$42.73 billion in total assets, $51.90 billion in total
liabilities and a $9.16 billion total deficit.
* * *
As reported by the TCR on Aug. 15, 2012, Moody's downgraded the
Corporate Family Rating (CFR) of EFH to Caa3 from Caa2 and
affirmed its Caa3 Probability of Default Rating (PDR) and SGL-4
Speculative Grade Liquidity Rating. The downgrade of EFH's CFR to
Caa3 from Caa2 reflects the company's financial distress and
limited financial flexibility.
FEDERAL-MOGUL CORP: Moody's Rates New $1.2BB Term Loan 'B1'
-----------------------------------------------------------
Moody's Investors Service assigned a B1 rating to Federal-Mogul
Corporation's proposed amended and extended senior secured term
loan facility. In a related action, Moody's assigned a Ba3 rating
to the proposed amended senior secured asset based revolver and
affirmed the following ratings: Federal-Mogul's Corporate Family
and Probability of Default Ratings at B2; senior term loan due
2015 at B1; and Speculative Grade Liquidity rating at SGL-3. The
rating outlook is stable.
The following ratings were assigned :
B1 (LGD3, 33%) to the new $1.2 billion senior secured term loan
due January 2017;
Ba3 (LGD3, 32%) to the amended $650 million senior secured
asset based revolver
The following ratings were affirmed:
Corporate Family Rating, at B2;
Probability of Default Rating, at B2;
Existing $540 million senior secured asset based revolver at
Ba3 (LGD3, 32%), this rating will be withdrawn upon completion
of the new amended facility;
Non-extended amounts of the $1.96 billion senior secured term
loan due December 2014, at B1(LGD3, 33%);
$1.0 billion senior secured term loan facility due December
2015, which includes a $50 million senior secured synthetic
letter of credit facility and a $0.95 billion senior secured
term loan, at B1 (LGD3, 33%)
Speculative Grade Liquidity Rating at SGL- 3
Rating Rationale
Federal-Mogul recently announced its intention to amend its
existing asset based revolving loan facility and senior secured
term loan B facility. The amendment for the asset based revolving
loan facility includes increases in its commitment to $650 million
from $540 million, and extending its maturity date to 2017
(subject to certain conditions) from 2013, and certain other
modifications. The amendment for the senior secured term loan B
facility includes extending $1.2 billion of the current
outstandings to 2017 from 2014, and certain other modifications.
Federal-Mogul also entered into an agreement under which it will
privately place approximately $150 million of common stock to a
subsidiary of Icahn Enterprises L.P. The company has also agreed
to commence a subsequent rights offering of $150 million to
shareholders of record. Icahn Enterprises has agreed to backstop
the rights offering. The refinancing plan is conditioned upon a
voluntary prepayment by Federal-Mogul of up to $300 million on the
extended term loans. The equity investment and existing cash
balances will be used to fund such prepayment.
The completion of the refinancing transaction should provide
additional financial flexibility over the intermediate term as
Federal-Mogul manages through weakening automotive demand in
Europe and weaker commercial vehicle demand in North America. The
company's announced restructuring actions and any additional
headcount reductions also are expected to help mitigate these
pressures. The refinancing transaction does not impact Federal-
Mogul's B2 Corporate Family Rating (see press release dated
October 25, 2012).
The principal methodology used in rating Federal-Mogul was the
Global Automotive Supplier Industry Methodology published in
January 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.
Federal-Mogul Corporation, headquartered in Southfield, Michigan,
is a leading global supplier of vehicular parts, components,
modules and systems to customers in the automotive, small engine,
heavy-duty, marine, railroad, aerospace and industrial markets.
The company's primary operating segments are: Powertrain: -
pistons, rings, liners, valve seats & guides, bearings, bushings,
ignition, sealing and systems protection products; and Vehicle
Components Solutions: - Engine and sealing components, braking,
wipers, steering & suspension, fluids and chemicals for
aftermarket customers. Revenues for fiscal 2011 were $6.9 billion.
FEDERAL-MOGUL CORP: S&P Rates $1.2-Bil. Senior Secured Debt 'B'
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' issue rating
and '4' recovery rating to Southfield, Mich.-based auto supplier
Federal-Mogul Corp.'s proposed $1.2 billion senior secured term
loan B due Jan. 2, 2017. "The '4' recovery rating indicates our
expectation of average (30% to 50%) recovery in the event of a
payment default. Federal Mogul has indicated that it will use the
proceeds from the proposed note offering to refinance a portion of
its existing $1.8 billion term loan B due Dec. 2014. As part of
this transaction the company plans to prepay $300 million of term
loan debt with proceeds of a $150 million equity investment by a
subsidiary of Icahn Enterprises L.P., the company's largest
stockholder, in a private placement transaction as well as cash on
hand. In addition, the company has agreed to a subsequent equity
rights offering of $150 million, backstopped by Icahn Enterprises-
-but we assume that transaction will not occur this year. Also as
part of this transaction the company has proposed increasing the
size of its asset-based loan revolver to $650 million and
extending the maturity to 2017 from 2013," S&P said.
"The 'B' corporate credit rating on Federal Mogul reflects its
'highly leveraged' financial risk profile. Total adjusted debt to
EBITDA of about 7x exceeds our expectation for the rating, but the
equity offering will modestly reduce debt. The 'weak' business
risk profile reflects our assessment of the company as a major
participant in the cyclical and highly competitive global auto
industry. Notwithstanding the extension of some maturities, the
negative outlook continues to reflect our view that the company
needs to successfully address upcoming maturities and make
progress toward improving credit metrics to retain the current
rating," S&P said.
RATINGS LIST
Federal-Mogul Corp.
Corporate Credit Rating B/Negative/--
New Ratings
Federal-Mogul Corp.
$1.2 bil sr secd term loan B due 2017 B
Recovery Rating 4
FIRST MARINER: Shareholders Elect Three Directors to Board
----------------------------------------------------------
The annual meeting of the shareholders of First Mariner Bancorp
was held on Dec. 3, 2012. At the Annual Meeting, the shareholders
elected Mark A. Keidel, Robert Caret and John J. Oliver, Jr., to
serve as directors, each for a three-year term with terms expiring
in 2015. The shareholders also ratified the appointment of
Stegman & Company as the Company's independent registered public
accounting firm for the year ending Dec. 31, 2012.
About First Mariner
Headquartered in Baltimore, Maryland, First Mariner Bancorp
-- http://www.1stmarinerbancorp.com/-- is a bank holding company
whose business is conducted primarily through its wholly owned
operating subsidiary, First Mariner Bank, which is engaged in the
general general commercial banking business. First Mariner was
established in 1995 and has total assets in excess of $1.3 billion
as of Dec. 31, 2010.
"Quantitative measures established by regulation to ensure capital
adequacy require the [First Mariner] Bank to maintain minimum
amounts and ratios of total and Tier I capital to risk-weighted
assets, and of Tier I capital to average quarterly assets," the
Company said in the filing. "As of March 31, 2011, the Bank was
"under-capitalized" under the regulatory framework for prompt
corrective action."
For the year ended Dec. 31, 2011, Stegman & Company, in Baltimore,
Maryland, expressed substantial doubt about the Company's ability
to continue as a going concern. The independent auditors noted
that the Company continued to incur significant net losses in
2011, primarily from loan losses and costs associated with real
estate acquired through foreclosure. The Company has insufficient
capital per regulatory guidelines and has failed to reach capital
levels required in the Cease and Desist Order issued by the
Federal Deposit Insurance Corporation in September 2009.
The Company's balance sheet at Sept. 30, 2012, showed
$1.29 billion in total assets, $1.30 billion in total liabilities,
and a $8.76 million total stockholders' deficit.
Bankruptcy Warning
As of Dec. 31, 2011, the Bank's and the Company's capital levels
were not sufficient to achieve compliance with the higher capital
requirements the Company was required to have met by June 30,
2010. The failure to meet and maintain these capital requirements
could result in further action by the Company's regulators.
In the September Order, the FDIC and the Commissioner directed the
Bank to raise its leverage and total risk-based capital ratios to
6.5% and 10%, respectively, by March 31, 2010 and to 7.5% and 11%,
respectively, by June 30, 2010. The Company did not meet these
requirements. The Company has been in regular communication with
the staffs of the FDIC and the Commissioner regarding efforts to
satisfy the higher capital requirements.
First Mariner currently does not have any material amounts of
capital available to invest in the Bank and any further increases
to the Company's allowance for loan losses and operating losses
would negatively impact the Company's capital levels and make it
more difficult to achieve the capital levels directed by the FDIC
and the Commissioner.
Because the Company has not met all of the capital requirements
set forth in the September Order within the prescribed timeframes,
the FDIC and the Commissioner could take additional enforcement
action against the Company, including the imposition of monetary
penalties, as well as further operating restrictions. The FDIC or
the Commissioner could direct us to seek a merger partner or
possibly place the Bank in receivership. If the Bank is placed
into receivership, the Company would cease operations and
liquidate or seek bankruptcy protection. If the Company were to
liquidate or seek bankruptcy protection, First Mariner does not
believe that there would be assets available to holders of the
capital stock of the Company.
FRANKLIN PIERCE: Moody's Lowers Rating on Bonds to 'Caa1'
---------------------------------------------------------
Moody's Investors Service has downgraded Franklin Pierce
University's rating to B3 from B1 on the Series 1998 and 2004
bonds and to Caa1 on the Series 1994 bonds issued through the
Hampshire Higher Education and Health Facilities Authority. The
rating outlook remains negative.
Summary Rating Rationale
The downgrade of Franklin Pierce's rating on the Series 1998 and
2004 bonds to B3 with a negative outlook is based on a challenged
student market position and heavy reliance on student charges,
extremely thin unrestricted liquidity, weakening operating
performance and debt service coverage by Moody's calculation,
declining net tuition revenue and weak fundraising. The rating
also reflects dependence on a secured operating line of credit for
cyclical cash flow and significant leverage. The line of credit
has a short maturity, requiring the university to seek renewals
every six months.
The downgrade of the Series 1994 bonds to Caa1, one rating notch
lower than the Series 1998 and 2004 bonds, reflects lack of a debt
service reserve fund given the university's low liquidity and
challenged revenue raising ability to support debt service. As of
June 30, 2012, Franklin Pierce had $2.5 million of Series 1994
bonds outstanding. They mature in 2019.
Challenges
* Difficulty of a relatively young private university to
establish a presence and reputation in a crowded and highly
competitive higher education market challenged by limited
fundraising and small endowment, operating base and
enrollment.
* Heavy reliance on student charges, comprising 95% of Moody's
adjusted operating revenue and very weak fundraising (less
than $1 million of total gift revenue in FY2012). This high
reliance is a particular challenge given three consecutive
years of declining net tuition revenue, leading to a negative
operating margin in FY 2011 and FY 2012 by Moody's
calculation. The university's regional student draw coupled
with a low freshmen to sophomore retention rate (approximately
63%) challenges the university to grow enrollment.
* Extremely thin unrestricted monthly liquidity, with $2.3
million of unrestricted liquidity covering only 60% of demand
debt and providing 19.1 monthly days cash to cover operating
expenses based on FY 2012 financials. The university relies on
draws on the line of credit for seasonal cash flow.
* Decline in financial resources attributable to investment
losses and a $2.3 million draw on cash for capital renovations
leaving the university with negative $2.1 million expendable
financial resources in FY 2012, down from $403,000 in FY 2011.
* Reliance on an operating line of credit for seasonal cash flow
with relatively short renewal periods of six months. If the
bank decides not to renew the line of credit, all principal
and accrued interest outstanding would be due and payable by
expiration. Based on FY 2012 results, the university also has
a thin cushion to its covenant requirements.
Strengths
* Enrollment grew nearly 3.0% in fall 2012 to 1,991 full-time
equivalent (FTE) students from 1,935 students in fall 2011
driven by undergraduate enrollment on its main campus in
Rindge, New Hampshire. The university's enrollment has
diversified with approximately 80% undergraduate in fall 2012
compared to 90% undergraduate in fall 2008. Despite this
enrollment growth in fall 2012, fall 2012 FTE represents a 6%
decline over fall 2008 FTE.
* Bondholders of the Series 1994, 1998, and 2004 bonds benefit
from a mortgage pledge and the Series 1998 and 2004 bonds are
further secured by a cash funded debt service reserve fund.
* Management engaged in a comprehensive strategic plan focusing
on recruitment and retention, as well as an assessment of
programs across all of its campuses.
* No additional borrowing plans and management does not
anticipate drawing down financial resources. All of the
university's rated debt is fixed rate.
Outlook
The negative outlook reflects ongoing pressure on the university's
market position, net tuition revenue growth (its primary revenue
stream) and liquidity. It also reflects refinancing risk of an
expiring bank line of credit in March 2013 which the university
relies on for seasonal cash flow, and thin headroom under debt
financial covenants.
What Could Make The Rating Go UP
Unlikely given the negative outlook. Any upgrade would be driven
by substantial growth in unrestricted liquidity and financial
resources coupled with stable enrollment, a trend of net tuition
growth, larger cushion under financial covenants and improved
operating cash flow including better fundraising
What Could Make The Rating Go DOWN
Violation of covenant requirements that could result in
acceleration of all or a portion of debt; inability to refinance
operating line; additional borrowing; erosion or encumbrance of
unrestricted liquidity; further declines in enrollment; continued
stagnant or declining net tuition revenue or net tuition per
student
Principal Rating Methodology
The principal methodology used in this rating was U.S. Not-for-
Profit Private and Public Higher Education published in August
2011.
FREDERICK'S OF HOLLYWOOD: Gets Non-Compliance Notice from Nasdaq
----------------------------------------------------------------
Frederick's of Hollywood Group Inc. has received a notice from the
NYSE MKT indicating that, based on the Company's shareholders'
equity as reported in its Form 10-K for the year ended July 28,
2012, the Company is not in compliance with Section 1003(a)(iii)
of the NYSE MKT Company Guide, having less than $6 million of
shareholders' equity while sustaining losses from continuing
operations and net losses in its five most recent fiscal years.
On Nov. 30, 2011, the Company had received a notice from the NYSE
MKT indicating that, based on the Company's shareholders' equity
as reported in its Form 10-K for the year ended July 30, 2011, the
Company was not in compliance with Sections 1003(a)(i) and (ii) of
the NYSE MKT Company Guide, having less than $2 million and $4
million of shareholders' equity while sustaining losses from
continuing operations and net losses in two out of its three most
recent fiscal years, and net losses in three out of its four most
recent fiscal years, respectively. On Jan. 6, 2012, the Company
had submitted a plan to the NYSE MKT addressing how it intended to
regain compliance with those continued listing standards by
May 30, 2013, which plan was accepted by the NYSE MKT. The
Company intends to supplement its compliance plan by Dec. 31,
2012, to address how it will regain compliance with Section
1003(a)(iii) of the NYSE MKT Company Guide.
The Company's common stock continues to trade on the NYSE MKT
under the symbol "FOH" with the trading symbol extension "BC" to
denote non-compliance with the NYSE MKT's continued listing
standards.
About Frederick's of Hollywood
Frederick's of Hollywood Group Inc. (NYSE Amex: FOH) --
http://www.fredericks.com/-- through its subsidiaries, sells
women's intimate apparel, swimwear and related products under its
proprietary Frederick's of Hollywood brand through 122 specialty
retail stores, a world-famous catalog and an online shop.
Frederick's of Hollywood sought bankruptcy in July 10, 2000. On
Dec. 18, 2002, the court approved the company's plan of
reorganization, which became effective on Jan. 7, 2003, with the
closing of the Wells Fargo Retail Finance exit financing facility.
The Company incurred a net loss of $6.43 million for the year
ended July 28, 2012, compared with a net loss of $12.05
million for the year ended July 30, 2011. The Company's balance
sheet at July 28, 2012, showed $41.47 million in total assets,
$42.25 million in total liabilities and a $783,000 total
shareholders' deficiency.
GENERAL MOTORS: Trial in Saab Suit to Begin February
----------------------------------------------------
Jeff Bennett, writing for Dow Jones Newswires, reports that Judge
Gershwin Drain of the U.S. District Court in Detroit, Mich.,
agreed on Thursday to hear arguments in February over the fate of
a $3 billion lawsuit filed against General Motors Co. by former
subsidiary, Saab Automobile AB, which claims it was forced into
bankruptcy after GM blocked a financial deal that would have saved
the company. The hearing will begin Feb. 19.
The report relates Saab and its controlling partner, Dutch auto
maker Spyker NV, sued GM in August, alleging the Detroit auto
maker interfered with Spyker's plans to sell Saab to the China
Youngman Automobile Group Co. GM executives worried Youngman
would have access to GM technology and compete against the U.S.
auto maker in China, according to the suit. After the deal
collapsed, Saab launched liquidation proceedings in December 2011.
The report notes GM claims the suit is without merit and has asked
the court to dismiss it.
Spyker purchased Saab in 2010 for $74 million in cash and $326
million in preferred shares. At the time, GM was exiting from its
own bankruptcy proceedings and had been looking to close or sell
the Swedish brand, along with other divisions.
About Saab Automobile AB and Saab Cars N.A.
Saab Automobile AB is a Swedish car manufacturer owned by Dutch
automobile manufacturer Swedish Automobile NV, formerly Spyker
Cars NV. Saab halted production in March 2011 when it ran out of
cash to pay its component providers. On Dec. 19, 2011, Saab
Automobile AB, Saab Automobile Tools AB and Saab Powertain AB
filed for bankruptcy after running out of cash.
Some of Saab's assets were sold to National Electric Vehicle
Sweden AB, a Chinese-Japanese backed start-up that plans to make
an electric car using Saab Automobile's former factory, tools and
designs.
On Jan. 30, 2012, more than 40 U.S.-based Saab dealerships filed
an involuntary Chapter 11 petition for Saab Cars North America,
Inc. (Bankr. D. Del. Case No. 12-10344). The petitioners,
represented by Wilk Auslander LLP, assert claims totaling $1.2
million on account of "unpaid warranty and incentive
reimbursement and related obligations" or "parts and warranty
reimbursement." Leonard A. Bellavia, Esq., at Bellavia Gentile &
Associates, in New York, signed the Chapter 11 petition on behalf
of the dealers.
The dealers want the vehicle inventory and the parts business to
be sold, free of liens from Ally Financial Inc. and Caterpillar
Inc., and "to have an appropriate forum to address the claims of
the dealers," Leonard A. Bellavia said in an e-mail to Bloomberg
News.
Saab Cars N.A. is the U.S. sales and distribution unit of Swedish
car maker Saab Automobile AB. Saab Cars N.A. named in December
an outside administrator, McTevia & Associates, to run the
company as part of a plan to avoid immediate liquidation
following its parent company's bankruptcy filing.
On Feb. 24, 2012, the Court granted Saab Cars NA relief under
Chapter 11 of the Bankruptcy Code.
Donlin, Recano & Company, Inc., was retained as claims and
noticing agent to Saab Cars NA in the Chapter 11 case.
On March 9, 2012, the U.S. Trustee formed an official Committee
of Unsecured Creditors and appointed these members: Peter Mueller
Inc., IFS Vehicle Distributors, Countryside Volkwagen, Saab of
North Olmstead, Saab of Bedford, Whitcomb Motors Inc., and
Delaware Motor Sales, Inc. The Committee tapped Wilk Auslander
LLP as general bankruptcy counsel, and Polsinelli Shughart as its
Delaware counsel.
GRAY TELEVISION: Ray Deaver to Retire from Board This Month
-----------------------------------------------------------
Ray M. Deaver, age 72, notified Gray Television, Inc., that he
will retire from the board of directors of the Company effective
Dec. 31, 2012.
About Gray Television
Formerly known as Gray Communications System, Atlanta, Georgia-
based Gray Television, Inc., is a television broadcast company.
Gray currently operates 36 television stations serving 30 markets.
Each of the stations are affiliated with either CBS (17 stations),
NBC (10 stations), ABC (8 stations) or FOX (1 station). In
addition, Gray currently operates 38 digital second channels
including 1 ABC, 4 Fox, 7 CW, 16 MyNetworkTV and 1 Universal
Sports Network affiliates plus 8 local news/weather channels and 1
"independent" channel in certain of its existing markets.
The Company's balance sheet at Sept. 30, 2012, showed
$1.27 billion in total assets, $1.11 billion in total liabilities,
$13.19 million in series D perpetual preferred stock, and
$149.94 million in total stockholders' equity.
* * *
As reported by the TCR on Sept. 26, 2012, Moody's Investors
Service upgraded Gray Television, Inc.'s Corporate Family Rating
(CFR) and Probability of Default Rating (PDR) each to B3 from
Caa1. The upgrades reflect Moody's expectations for the company
to benefit from strong political revenue demand through November
2012 resulting in improved credit metrics combined with
management's commitment to reduce leverage.
In the April 9, 2012, edition of the TCR, Standard & Poor's
Ratings Services raised its corporate credit rating on Atlanta,
Ga.-based TV broadcaster Gray Television Inc. to 'B' from 'B-'.
"The 'B' rating reflects company's still-high debt leverage and
weak discretionary cash flow, as well as our expectation that the
company will maintain adequate headroom with its financial
covenants in the absence of any further tightening of covenant
thresholds. The stable rating outlook reflects our expectation
that Gray will maintain lease-adjusted debt to average trailing-
eight-quarter EBITDA below 7.5x. We also expect the company to
generate modest positive discretionary cash flow in 2012," S&P
said.
GUIDED THERAPEUTICS: Completes Electrical Testing of LuViva
-----------------------------------------------------------
Guided Therapeutics, Inc., has successfully completed
electromagnetic compatibility testing, one of two major categories
of third-party testing required to label the LuViva Advanced
Cervical Scan, a non-invasive device used to detect cervical
disease that leads to cancer, with the ISO 60601 Edition 3 CE Mark
and Canadian Standards Association (CSA) Mark.
"Electromagnetic compatibility testing can be the most challenging
of the major certification components, and we are pleased to
report our successful outcome," said Richard Fowler, Senior Vice
President of Engineering at Guided Therapeutics. "Basic safety
testing, the next phase of work to be done at the third-party
testing facility, is expected to be completed in the next two to
three weeks."
Upon successful completion of the basic safety testing, LuViva
will be eligible for labeling with the CSA Mark. The CSA Mark,
while not required for marketing in Canada, is sometimes preferred
by some larger medical institutions.
The final step for the CE Mark, after successful completion of the
basic safety testing, is to complete the review of documentation
for usability, risk management and software, which is scheduled to
occur over the next few weeks. Guided Therapeutics will then
immediately apply the Edition 3 CE Mark to the LuViva in order to
support international product launch in the first quarter of 2013.
"Upon achieving these regulatory milestones, we expect to be able
to scale up production to meet demand for LuViva in 2013 and
beyond," added Mr. Fowler.
LuViva currently has marketing approval from Health Canada and
received its first CE Mark, an ISO 60601 Edition 2 Notification,
in July. Guided Therapeutics was awarded ISO 13485 certification
in January 2011. Additionally, LuViva has been under U.S. Food
and Drug Administration Premarket review since Sept. 23, 2010.
The Company filed an amended PMA application with the FDA in
November 2012.
About Guided Therapeutics
Guided Therapeutics, Inc. (OTC BB and OTC QB: GTHP)
-- http://www.guidedinc.com/-- is developing a rapid and painless
test for the early detection of disease that leads to cervical
cancer. The technology is designed to provide an objective result
at the point of care, thereby improving the management of cervical
disease. Unlike Pap and HPV tests, the device does not require a
painful tissue sample and results are known immediately. GT has
also entered into a partnership with Konica Minolta Opto to
develop a non-invasive test for Barrett's Esophagus using the
LightTouch technology platform.
The Company reported a net loss of $6.64 million in 2011, compared
with a net loss of $2.84 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed
$4.77 million in total assets, $2.64 million in total liabilities
and $2.12 million in total stockholders' equity.
In its report on the Company's 2011 Form 10-K, UHY LLP, in
Sterling Heights, Michigan, noted that the Company's recurring
losses from operations and accumulated deficit raise substantial
doubt about its ability to continue as a going concern.
Bankruptcy Warning
"At September 30, 2012, the Company had working capital of
approximately $607,000 and it had stockholders' equity of
approximately $2.0 million, primarily due to the recurring losses,
offset in part by the recognition of the warrants exchanged as
part of the Warrant Exchange Program. As of September 30, 2012,
the Company was past due on payments due under its notes payable
in the amount of approximately $406,000.
"The Company's capital-raising efforts are ongoing. If sufficient
capital cannot be raised during the first quarter of 2013, the
Company has plans to curtail operations by reducing discretionary
spending and staffing levels, and attempting to operate by only
pursuing activities for which it has external financial support,
such as under its development agreement with Konica Minolta and
additional NCI or other grant funding. However, there can be no
assurance that such external financial support will be sufficient
to maintain even limited operations or that the Company will be
able to raise additional funds on acceptable terms, or at all. In
such a case, the Company might be required to enter into
unfavorable agreements or, if that is not possible, be unable to
continue operations, and to the extent practicable, liquidate
and/or file for bankruptcy protection."
HALCON RESOURCES: S&P Raises Corporate Credit Rating to 'B'
-----------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit
rating on Houston-based Halcon Resources Corp. to 'B' from 'B-'
and removed the rating from CreditWatch positive where it was
placed on Oct. 22. The outlook is stable.
"The 'CCC+' issue rating and '6' recovery rating on the company's
$1.5 billion senior unsecured notes are unchanged. The '6'
recovery rating indicates our expectation of negligible (0% to
10%) recovery for lenders in the event of a default," S&P said.
"The upgrade follows Halc¢n's completed transaction to acquire
Williston Basin properties from Petro-Hunt LLC and Pillar Energy
LLC in a transaction with a substantial equity funding component,"
said Standard & Poor's credit analyst Halcon Resources Corp. "The
transaction materially increases the company's reserves and
production in properties contiguous to existing operations and
lowers debt leverage on a pro forma basis."
"At the close of the acquisitions, Halcon has approximately 115
million barrels of oil equivalent (mmboe) of proved reserves and
production of approximately 26,500 barrels of oil equivalent per
day (boe/d), which supports the current rating. Oil and natural
gas liquids account for 79% of reserves and 49% are characterized
as proved-developed, the lowest-risk category. We view both a high
liquids proportion and high proved-developed percentage relatively
favorably, although proved-undeveloped reserves can provide
opportunities for growth. Historical operating costs (lease
operating expense, production taxes, and general and
administrative costs) are high at about $26 per boe reflecting
the mature nature of a substantial portion of Halc¢n's producing
assets, which require artificial lift to produce. We expect costs
to improve to below $20 per boe as Halc¢n adds new production, and
that internal reserve replacement will be adequate as the company
develops its extensive acreage holdings."
"The stable outlook reflects our expectation that Halc¢n will
manage its ambitious cost reduction and production growth targets
while maintaining projected leverage under 5x debt to EBITDA and
improving liquidity. Meeting financial goals while funding an
aggressive capital spending program require that Halcon obtain
significant external funding. We would consider a positive rating
action if Halc¢n achieves its growth objectives while managing
debt to EBITDA in the area of 4x or lower, improving liquidity and
managing capital spending closer to internally generated cash
flow. We would consider a negative rating action if the company
faces material liquidity issues that limit its access to capital
to fund its growth or if debt to EBITDA exceeds 5x without a clear
path to improvement," S&P said.
HANESBRANDS INC: Moody's Reviews 'Ba3' CFR/PDR for Upgrade
----------------------------------------------------------
Moody's Investors Service placed all credit ratings of Hanesbrands
Inc.'s on review for upgrade. The company's SGL -- 2 Speculative
Grade Liquidity rating was affirmed. LGD Assessments are subject
to change.
The following ratings were place on review for upgrade:
Corporate Family Rating at Ba3
Probability of Default Rating at Ba3
Senior Secured Revolver at Baa3
Senior Unsecured Notes due Dec 2020 at B1
Senior Unsecured Notes due Dec 2016 at B1
The following rating was affirmed:
Speculative Grade Liquidity rate at SGL-2
Ratings Rationale
The review for upgrade reflects the significant progress Hanes has
made in deleveraging its balance sheet this year through the
redemption of the remaining $145 million of their floating rate
senior notes in October in addition to the announced redemption of
$250 million of the 8% Senior Notes on December 27, 2012. At the
same time Hanes should continue to see the benefits of cheaper raw
material costs in 4Q 2012 and 1Q 2013. In addition to improving
operations, Moody's expects Hanesbrands to remain committed to
utilizing cash flows in the near term to pay down debt. The review
for upgrade will consider the realization of improvements in
operating margins in connection with significant declines in key
raw material costs during 2012 as well as continued progress in
debt repayment.
The principal methodology used in rating Hanesbrands Inc. 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.
HECKMANN CORP: S&P Affirms 'B+' CCR Over Power Fuels Transaction
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B+' corporate
credit rating on Scottsdale, Ariz.-based Heckmann Corp.
"We also removed our issue-level rating on the company's existing
senior unsecured notes from CreditWatch, where we originally
placed it with positive implications on Oct. 24, 2012. We raised
the issue rating on this debt to 'B' from 'B-' and revised the
recovery rating to '5' from '6'. We increased the par amount of
the notes to $400 million from $250 million and withdrew our
ratings on the $150 million of senior unsecured notes which were
previously issued under Rough Rider Escrow Inc., a wholly owned
unrestricted subsidiary of Heckmann Corp. Heckmann has now assumed
the obligations of Rough Rider Escrow and has become the issuer of
the notes through a mandatory redemption. The notes constitute an
additional issuance of Heckmann's existing 9.875% senior notes due
2018 and are governed by the existing April 10, 2012, indenture,"
S&P said.
"The affirmation reflects our view that Heckmann's credit quality
will remain stable following its acquisition of Power Fuels," said
credit analyst James Siahaan. "We believe Heckmann's market
position and credit statistics will improve, but the resulting
benefits are not yet sufficient to warrant higher ratings at this
time."
"The stable outlook on Heckmann reflects our expectation that
hydraulic fracturing activity in the various shale basins in which
the company operates will remain satisfactory to support solid
sales and profitability over the next year, and that the company
will integrate the acquisition of Power Fuels without any major
difficulties. Our base-case reflects our view that, over the next
year, Heckmann will be able to maintain adjusted EBITDA margins of
about 28% and with FFO-to-debt of 24%," S&P said.
"We could raise the ratings modestly if the company establishes
and maintains a track record of reliable operating performance and
its business prospects remain robust. Another important factor in
our consideration of a higher rating is whether Heckmann maintains
adequate liquidity despite high capital spending and seasonal
working capital-related borrowings," S&P said.
"We could lower the ratings if downside risks to our forecast
materialize, such as greater-than-expected debt incurrence to fund
acquisitions, unfavorable economic trends that reduce the
profitability of hydraulic fracturing, environmental-related
regulations that curtail drilling activity and investments, a
disruption in water pipelines, other operating problems that could
constrain liquidity, or significant debt incurrence to fund a
shareholder distribution. Based on our scenario forecasts, we
could take a negative rating action if the company's sales growth
in 2013 does not meet expectations and its EBITDA margins decrease
to 20%. If this happens, Heckmann's FFO-to-total adjusted debt
would likely fall to about 15%," S&P said.
HOSTESS BRANDS: Allowed to End Distribution Contracts
-----------------------------------------------------
Carla Main, substituting for Bloomberg News bankruptcy columnist
Bill Rochelle, reports that Hostess Brands Inc. won a judge's
permission to end distribution contracts stretching from Alaska to
Saudi Arabia as part of its wind-down. Hostess listed 99
distributors in court papers, in locations including Roswell, New
Mexico; San Juan, Puerto Rico; Gun Barrel City, Texas; Anchorage;
and Al-Khobar, Saudi Arabia.
"A sound purpose exists" for eliminating the contracts, U.S.
Bankruptcy Judge Robert Drain in White Plains, New York, wrote in
a Dec. 5 order, according to the report. He gave the distributors
30 days to file claims with the court seeking money they're owed.
The report relates that the company said Wednesday that Chief
Executive Officer Gregory Rayburn won't share in a $1.83 million
management incentive payout approved by Judge Drain because he was
retained to help with the bankruptcy and "is not a Hostess
employee."
Hostess told Judge Drain at a Nov. 29 hearing that it would be
unable to provide retiree benefits for some former employees,
cutting $1.1 million a month slated for pensioners.
About Hostess Brands
Founded in 1930, Irving, Texas-based Hostess Brands Inc., is known
for iconic brands such as Butternut, Ding Dongs, Dolly Madison,
Drake's, Home Pride, Ho Hos, Hostess, Merita, Nature's Pride,
Twinkies and Wonder. Hostess has 36 bakeries, 565 distribution
centers and 570 outlets in 49 states.
Hostess filed for Chapter 11 bankruptcy protection early morning
on Jan. 11, 2011 (Bankr. S.D.N.Y. Case Nos. 12-22051 through
12-22056) in White Plains, New York. DHostess Brands disclosed
assets of $982 million and liabilities of $1.43 billion as of the
Chapter 11 filing.
The bankruptcy filing was made two years after predecessors
Interstate Bakeries Corp. and its affiliates emerged from
bankruptcy (Bankr. W.D. Mo. Case No. 04-45814).
In the new Chapter 11 case, Hostess has hired Jones Day as
bankruptcy counsel; Stinson Morrison Hecker LLP as general
corporate counsel and conflicts counsel; Perella Weinberg Partners
LP as investment bankers, FTI Consulting, Inc. to provide an
interim treasurer and additional personnel for the Debtors, and
Kurtzman Carson Consultants LLC as administrative agent.
Matthew Feldman, Esq., at Willkie Farr & Gallagher, and Harry
Wilson, the head of turnaround and restructuring firm MAEVA
Advisors, are representing the Teamsters union.
Attorneys for The Bakery, Confectionery, Tobacco Workers and Grain
Millers International Union and Bakery & Confectionery Union &
Industry International Pension Fund are Jeffrey R. Freund, Esq.,
at Bredhoff & Kaiser, P.L.L.C.; and Ancela R. Nastasi, Esq., David
A. Rosenzweig, Esq., and Camisha L. Simmons, Esq., at Fulbright &
Jaworski L.L.P.
The official committee of unsecured creditors selected New York
law firm Kramer Levin Naftalis & Frankel LLP as its counsel. Tom
Mayer and Ken Eckstein head the legal team for the committee.
Hostess Brands in mid-November opted to pursue the orderly wind
down of its business and sale of its assets after the Bakery,
Confectionery, Tobacco and Grain Millers Union (BCTGM) commenced a
nationwide strike. The Debtor failed to reach an agreement with
BCTGM on contract changes. Hostess Brands said it intends to
retain approximately 3,200 employees to assist with the initial
phase of the wind down. Employee headcount is expected to decrease
by 94% within the first 16 weeks of the wind down. The entire
process is expected to be completed in one year.
The bankruptcy judge signed a formal order on Nov. 30 giving final
approval to wind-down procedures. The latest budget projects the
$49 million loan for the Chapter 11 case being paid down to
$21.2 million by Feb. 22.
HOVNANIAN ENTERPRISES: Fitch Affirms 'CCC' Issuer Default Rating
----------------------------------------------------------------
Fitch Ratings has affirmed the ratings for Hovnanian Enterprises,
Inc. (NYSE: HOV), including the company's Issuer Default Rating
(IDR), at 'CCC'.
The rating for HOV is influenced by the company's execution of its
business model, land policies, and geographic, price point and
product line diversity. The rating additionally reflects the
company's liquidity position, substantial debt and high leverage.
Fitch's housing forecasts for 2012 have been raised a few times
this year but still assume a below-trendline cyclical rise off a
very low bottom. In a slow-growth economy with somewhat
diminished distressed home sales competition, less competitive
rental cost alternatives, and new and existing home inventories at
historically low levels, total housing starts should improve
27.6%, while new home sales increase 19.9% and existing home sales
grow 9%. For 2013, total housing starts should grow 16.7% while
new home sales advance 22% and existing home sales improve 7%.
The company ended the July 2012 quarter with $219.3 million of
unrestricted cash on the balance sheet and no major debt
maturities until calendar 2014, when approximately $37 million of
senior notes become due.
While the company currently has an adequate liquidity position,
Fitch is somewhat concerned that the company is willing to operate
with a cash target level of between $170 million and $245 million
(including $48.1 million of restricted cash) to take advantage of
land acquisition opportunities. Given that the company does not
have a revolving credit facility, Fitch is concerned that this
level of cash does not provide a large enough liquidity cushion in
the event that the housing recovery dissipates. The absence of a
bank credit facility also means a lack of bank oversight, which is
a useful check on management's appetite for risk.
Management has shown its ability to manage land and development
spending. HOV spent roughly $236 million on land and development
during the first nine months of 2012. This compares to $305
million of land and development spending during the first nine
months of fiscal 2011. The company entered into a $250 million
land-banking arrangement with GSO Capital Partners LP (GSO), the
credit arm of The Blackstone Group. Funds managed by GSO will
acquire a portfolio of land parcels and option finished lots on a
quarterly takedown basis back to HOV. This arrangement allows the
company to effectively control some land on a just-in-time basis,
turn its inventory faster, and reduce capital that could be tied-
up in longer-term projects.
HOV had negative cash flow from operations ($90.2 million) for the
latest 12 months (LTM) ended July 31, 2012. For all of fiscal
2012, Fitch expects the company will be cash flow negative by $50
million to $75 million. Fitch also anticipates the company will
be cash flow negative in fiscal 2013 as it continues to rebuild
its land position. Fitch currently projects HOV's unrestricted
cash position will be between $150 million and $200 million by
year-end 2013.
At July 31, 2012, the company controlled 29,261 lots (including
unconsolidated joint ventures), of which 56.4% were owned and the
remaining lots controlled through options and joint venture
partnerships. Based on LTM closings, HOV controlled six years of
land and owned roughly 3.4 years of land.
Future ratings and Outlooks will be influenced by broad housing-
market trends as well as company specific activity, such as trends
in land and development spending, general inventory levels,
speculative inventory activity (including the impact of high
cancellation rates on such activity), gross and net new order
activity, debt levels and especially free cash flow trends and
uses, and the company's cash position.
HOV's ratings are constrained in the intermediate term because of
relatively high leverage metrics. However, a positive rating
action may be considered if the recovery in housing is
significantly stronger than the agency's current outlook, if HOV's
interest coverage is above 1x, and liquidity improves from current
levels.
A negative rating action could be triggered if the industry
recovery dissipates; HOV's 2013 revenues drop mid-teens while the
pretax loss approaches 2011 levels; and HOV's liquidity position
falls sharply, perhaps below $125 million.
Fitch affirms the following ratings for HOV:
-- Long-term IDR at 'CCC';
-- Senior secured first lien notes due 2020 at 'B-/RR2';
-- Senior secured notes due 2021 at 'CCC-/RR5';
-- Senior secured second lien notes due 2020 at 'CC/RR6';
-- Senior unsecured notes at 'CC/RR6';
-- Exchangeable note units due 2017 at 'CC/RR6';
-- Series A perpetual preferred stock at 'C/RR6'.
Fitch's Recovery Rating (RR) of 'RR2' on HOV's senior secured
first-lien notes indicates good recovery prospects for holders of
these debt issues. The 'RR5' on the senior secured notes due 2021
indicates below-average recovery prospects in a default scenario.
The 'RR6' on HOV's senior secured second-lien notes, senior
unsecured notes, senior subordinated notes and preferred stock
indicates poor recovery prospects in a default scenario. HOV's
exposure to claims made pursuant to performance bonds and the
possibility that part of these contingent liabilities would have a
claim against the company's assets were considered in determining
the recovery for the unsecured debtholders. Fitch applied a
liquidation value analysis for these RRs.
INTERFAITH MEDICAL: Meeting to Form Creditors' Panel on Dec. 13
---------------------------------------------------------------
Tracy Hope Davis, United States Trustee for Region 2, will hold an
organizational meeting on Dec. 13, 2012, at 1:00 p.m. in the
bankruptcy case of Interfaith Medical Center, Inc. The meeting
will be held at:
Office of the United States Trustee
Section 341(a) Meeting Rooms
Second Floor, Suite 2579
Conrad B. Duberstein U. S. Courthouse
271 Cadman Plaza East
Brooklyn, NY 11201
The sole purpose of the meeting will be to form a committee or
committees of unsecured creditors in the Debtors' case.
The organizational meeting is not the meeting of creditors
pursuant to Section 341 of the Bankruptcy Code. A representative
of the Debtor, however, may attend the Organizational Meeting, and
provide background information regarding the bankruptcy cases.
To increase participation in the Chapter 11 proceeding, Section
1102 of the Bankruptcy Code requires that the United States
Trustee appoint a committee of unsecured creditors as soon as
practicable. The Committee ordinarily consists of the persons,
willing to serve, that hold the seven largest unsecured claims
against the debtor of the kinds represented on the committee.
Section 1103 of the Bankruptcy Code provides that the Committee
may consult with the debtor, investigate the debtor and its
business operations and participate in the formulation of a plan
of reorganization. The Committee may also perform other services
as are in the interests of the unsecured creditors whom it
represents.
Interfaith Medical Center filed for Chapter 11 bankruptcy on
Dec. 2, disclosing total assets of $142.4 million and liabilities
of $341 million.
INTERNATIONAL LEASE: S&P Keeps 'bb+' Stand-Alone Credit Profile
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Los
Angeles-based aircraft operating lessor International Lease
Finance Corp. (ILFC), including its 'BBB-' corporate credit
rating, on CreditWatch with negative implications.
American International Group Inc. (AIG), parent of ILFC, confirmed
discussions to sell a 90% stake in ILFC to a group of five Chinese
investors.
"Our current rating on ILFC includes one notch for potential
support from AIG," said Standard & Poor's credit analyst Betsy
Snyder. "We had previously expected AIG, which has stated that
ILFC is a noncore asset, to sell a stake in ILFC through an IPO.
Based upon that scenario, we previously indicated we would no
longer include one notch of support under our criteria. However,
we also indicated that we could raise the stand-alone credit
profile (SACP) of ILFC to 'bbb-', offsetting the loss of potential
support from AIG and resulting in an affirmation of the ratings."
"Based upon preliminary information, we now believe it is likely
that we would keep our current SACP at 'bb+', maintain the stable
outlook, and withdraw our one notch for potential support from
AIG. This would result in lowering the corporate credit rating on
ILFC to 'BB+' if the sale occurs as we expect. The potential sale
will be subject to regulatory approvals in the U.S. and China.
We will assess the company's operating and financial strategy and
prospects under the potential new owners to resolve the
CreditWatch listing.
INTERNATIONAL TEXTILE: W. Carmichael Named to Board of Directors
----------------------------------------------------------------
The board of directors of International Textile Group, Inc.,
appointed William P. Carmichael as a director to replace David H.
Storper, who resigned from the Board.
Mr. Carmichael, a private consultant, co-founded The Succession
Fund in 1998 to provide an exit strategy to owners of privately
held companies. This Fund was sold in 2007. Prior to forming The
Succession Fund, Mr. Carmichael worked for Price Waterhouse for
four years, and has twenty-six years of experience in various
financial positions with global consumer product companies. Mr.
Carmichael currently serves on the boards of directors of Cobra
Electronics Corporation, The Finish Line, Inc., and McMoran
Exploration Co., and as a Trustee of the Columbia Funds.
Mr. Carmichael's compensation for service as a director will be
consistent with that of the Company's other non-employee directors
not affiliated with the Company, WL Ross & Co., LLC, or Wilbur L.
Ross, Jr., the chairman of the Board. There are no arrangements
or understandings between Mr. Carmichael and any other person
pursuant to which he was selected as a director, and there are no
transactions involving Mr. Carmichael that would be required to be
reported under Item 404(a) of Regulation S-K.
About International Textile
International Textile Group, Inc., is a global, diversified
textile manufacturer headquartered in Greensboro, North Carolina,
with current operations principally in the United States, China,
Mexico, and Vietnam. ITG's long-term focus includes the
realization of the benefits of its global expansion, including
reaching full production at ITG facilities in China and Vietnam,
and continuing to seek other strategic growth opportunities.
The Company's balance sheet at Sept. 30, 2012, showed $367.41
million in total assets, $469.69 million in total liabilities and
a $102.28 million total stockholders' deficit.
The Company incurred a net loss of $69.43 million in 2011,
compared with a net loss of $46.30 million in 2010.
JACKSONVILLE BANCORP: Fails to Comply with NASDAQ Bid Price Rule
----------------------------------------------------------------
Jacksonville Bancorp, Inc., on Nov. 29, 2012, received notice from
the Listing Qualifications staff of The Nasdaq Stock Market
stating that the Company no longer complies with Nasdaq Listing
Rule 5450(a)(1), as the bid price of the Company's common stock
closed below the minimum $1.00 per share for the 30 consecutive
business days prior to the date of the letter. In accordance with
Nasdaq Listing Rule 5810(c)(3)(A)(i), the Company will be provided
an initial grace period of 180 days, or until May 28, 2013, to
regain compliance with the Minimum Bid Price Rule. The Company
may regain compliance with the Minimum Bid Price Rule if the
closing bid price of the Company's common stock remains at or
above $1.00 per share for a minimum of 10 consecutive business
days at any time before May 28, 2013. If the Company does not
regain compliance with the Minimum Bid Price Rule by May 28, 2013,
the Company may be eligible for an additional grace period of 180
days if it satisfies all of the requirements, other than the
minimum bid price requirement, for listing on the Nasdaq Capital
Market.
The Notice has no effect on the listing of the Company's common
stock at this time and the Company's common stock will continue to
trade on the Nasdaq Global Market under the symbol "JAXB." The
Company intends to monitor the bid price for its common stock
between now and May 28, 2013, and will consider various options
available to the Company if its common stock does not trade at a
level that is likely to regain compliance.
The Notice follows a notice received by the Company on July 26,
2012, from the Staff stating that the Company no longer complied
with the minimum Market Value of Publicly Held Shares requirement
for continued listing on the NASDAQ Global Market. The Company
will regain compliance with the MVPHS requirement if at any time
before Jan. 22, 2013, when the relevant 180-day compliance period
expires, the Company's MVPHS, based on the closing bid price of
the Company's common stock, is at least $5 million for at least 10
consecutive business days.
About Jacksonville Bancorp
Jacksonville Bancorp, Inc., a bank holding company, is the parent
of The Jacksonville Bank, a Florida state-chartered bank focusing
on the Northeast Florida market with approximately $583 million in
assets and eight full-service branches in Jacksonville, Duval
County, Florida, as well as the Company's virtual branch. The
Jacksonville Bank opened for business on May 28, 1999, and
provides a variety of community banking services to businesses and
individuals in Jacksonville, Florida.
According to the Form 10-Q for the period ended June 30, 2012, the
Bank was adequately capitalized at June 30, 2012. Depository
institutions that are no longer "well capitalized" for bank
regulatory purposes must receive a waiver from the FDIC prior to
accepting or renewing brokered deposits. The Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA") generally
prohibits a depository institution from making any capital
distribution (including paying dividends) or paying any management
fee to its holding company, if the depository institution would
thereafter be undercapitalized.
The Bank had a Memorandum of Understanding ("MoU") with the FDIC
and the Florida Office of Financial Regulation that was entered
into in 2008, which required the Bank to have a total risk-based
capital of at least 10% and a Tier 1 leverage capital ratio of at
least 8%. Recently, on July 13, 2012, the 2008 MoU was replaced
by a new MoU, which, among other things, requires the Bank to have
a total risk-based capital of at least 12% and a Tier 1 leverage
capital ratio of at least 8%. "We did not meet the minimum
capital requirements of these MOUs at June 30, 2012, and Dec. 31,
2011, when the Bank had total risk-based capital of 8.09% and
9.85% and Tier 1 leverage capital of 5.26% and 6.88%,
respectively."
Jacksonville's balance sheet at Sept. 30, 2012, showed $551.55
million in total assets, $537.97 million in total liabilities and
$13.57 million in total shareholders' equity.
JAMES RIVER: Steelhead Partners Lowers Equity Stake to 2.6%
-----------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Steelhead Partners, LLC, and its affiliates
disclosed that, as of Dec. 3, 2012, they beneficially own 942,505
shares of common stock of James River Coal Company representing
2.6% of the shares outstanding. Steelhead previously reported
beneficial ownership of 3,023,700 common shares or a 8.5% equity
stake as of Dec. 31, 2011. A copy of the amended filing is
available for free at http://is.gd/RGAZjs
About James River
Headquartered in Richmond, Virginia, James River Coal Company
(NasdaqGM: JRCC) -- http://www.jamesrivercoal.com/-- mines,
processes and sells bituminous steam and industrial-grade coal
primarily to electric utility companies and industrial customers.
The company's mining operations are managed through six operating
subsidiaries located throughout eastern Kentucky and in southern
Indiana.
The Company reported a net loss of $39.08 million in 2011,
compared with net income of $78.16 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed
$1.28 billion in total assets, $947.34 million in total
liabilities and $341.87 million in total shareholders' equity.
* * *
In the Dec. 6, 2012, edition of the TCR, Moody's Investors Service
downgraded James River Coal Company's Corporate Family Rating
("CFR") and Probability of Default Rating ("PDR") to Caa1 from B3.
The downgrades reflects weakening credit protection
metrics as a result of a very difficult environment facing coal
producers in Central Appalachia and Moody's view that the
company's earnings and cash flow profile will remain challenged in
the near-term.
As reported by the TCR on Nov. 19, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Richmond, Va.-based
James River Coal Co. to 'CCC' from 'SD' (selective default).
"We raised our rating on James River Coal because we understand
that the company has stopped repurchasing its debt at deep
discounts, for the time being," said credit analyst Megan
Johnston.
JOSEPH PREBUL: E.D. Tenn. Court Affirms Dismissal of Lawsuit
------------------------------------------------------------
District Judge Curtis L. Collier in Chattanooga, Tenn., affirmed a
bankruptcy court order dismissing the Second Amended Complaint
filed by James Paris as trustee for Joseph Prebul, Prebul Chrysler
Jeep Dodge, LLC, and Carolex, LLC, against Steven Bensusan,
Alliance Investments Group, LLC, 117 Seventh Avenue South Property
Co., L.P., TSE Group, LLC, Danny Bensusan, DBS International, LLC,
and Gary D. Chazen.
Beginning in 1995, Danny Bensusan or related entities began making
loans to Prebul Jeep, Inc., or Prebul himself. Danny Bensusan and
these entities continued loaning Prebul Jeep funds over the next
decade. Danny Bensusan requested repayment on these accounts in
July 2008, but Prebul Jeep and Prebul himself were unable to pay
the full balance of the outstanding loans. Prebul executed a
promissory note on August 1, 2008 for $7,641,362.48 in favor of
Danny Bensusan. After the note was executed, Danny Bensusan
attempted to collect on the balance or receive security for the
note. Prebul claimed these efforts included "implied and express
threats of criminal prosecution and incarceration." In November
2008, Danny Bensusan proposed a Forbearance Agreement which
required Prebul to transfer assets or proceeds to Danny Bensusan,
including Prebul's stake in TSE. Prebul refused to execute the
agreement.
In 2009, Danny Bensusan filed an action in the circuit court of
Hamilton County, Tennessee against Prebul and others alleging
fraud, conspiracy to defraud and convert assets, breach of
fiduciary duty, negligent misrepresentation and supervision,
conversion, breach of contract, and promissory estoppel. These
claims were related to funds loaned to Prebul. The case was
removed to the Eastern District of Tennessee briefly, but was
remanded due to incomplete diversity. Subsequently, the case was
removed to the Bankruptcy Court of the Eastern District of
Tennessee.
Concurrent with the action, Prebul et al. pleaded guilty to an
indictment in the United States District Court for the Southern
District of New York for theft of funds in the custody of a bank
in violation of 18 U.S.C. Sections 2 and 2113(b), and agreed to
forfeit $6,783,082.82. Danny Bensusan was listed as a victim to
Prebul's criminal offense.
After removal to the bankruptcy court, Danny Bensusan voluntarily
dismissed his claims. However, the counterclaims of Prebul et al.
remained as asserted in the Second Amended Complaint. Count one
of the SAC alleged that "loans" between Danny Bensusan or related
entities and Prebul and Prebul Jeep were no longer enforceable
because the August 2008 promissory note Prebul executed in favor
of Danny Bensusan constituted a novation. Counts two through four
alleged Danny Bensusan's prepetition actions constituted civil
conspiracies to commit extortion, procure breach of contract, and
intentionally interfere with business relationships. Count five
alleged TSE, which consists of Prebul, Chazen, and DBS, engaged in
minority oppression, and the majority interest holders breached
their fiduciary duties to Prebul. Count six sought to dissolve TSE
under New York law due to Prebul's bankruptcy filing.
Prebul et al. filed a motion to dismiss the SAC on the grounds
that each of the six counts failed to state a cause of action upon
which relief could be granted. The bankruptcy court granted the
motion to dismiss on July 19, 2011. The court concluded count one
failed because Prebul et al. did not allege facts sufficient to
establish novation; namely, Prebul et al. did not allege facts
showing all parties intended the August 2008 promissory note to
extinguish prior obligations. Count two failed because Prebul et
al. did not allege a resulting injury from the extortion. Count
three failed because there were no allegations Bensusan et al.
intended to induce a breach, no facts alleged that establish
malice, no allegation of an actual breach, and no facts that
showed causation or harm. Count four failed because Prebul et al.
did not allege intent to interfere, and did not allege causation
or assert damages. Count five failed because, of the few actions
that could be brought directly rather than as a derivative claim,
the bare allegations alleged in the SAC were insufficient to state
a claim under the Twombly standard. Finally, count six failed
because the dissolution provision of the New York Limited
Liability Company Law was an ipso facto clause in violation of
Sec. 541(c)(1)(B) of the Bankruptcy Code. Prebul et al. appealed
to the District Court seeking review of the bankruptcy court's
decision.
The case is JOSEPH PREBUL, et al., Appellants, v. STEVEN BENSUSAN,
et al., Appellees, No. 1:11-CV-214 (E.D. Tenn.). A copy of the
Court's Nov. 30, 2012 Memorandum is available at
http://is.gd/IEHKTafrom Leagle.com.
Chattanooga, Tennessee-based Prebul Automotive Group owned 11 car
dealerships in Tennessee and Georgia. It was ran by car dealer
Joe Prebul. Prebul Auto Group filed for Chapter 7 bankruptcy
protection in February 2009 after massive losses and after Mr.
Prebul was arrested for wire fraud.
KAINOS PARTNERS: Appeal Over Dunkin' Donuts Accord Dismissed
------------------------------------------------------------
District Judge Leonard P. Stark rejected an appeal filed by
Roberta A. DeAngelis, Acting United States Trustee for Region 3,
from the Bankruptcy Court's April 1, 2010 order approving a global
settlement among Kainos Partners Holding Company LLC; the official
committee of unsecured creditors appointed in its case; Dunkin'
Brands, Inc., Dunkin' Donuts Franchising, Inc., DBI Stores LLC,
Dunkin' Donuts Franchised Restaurants, LLC, CIT Group/Equipment
Financing, Inc., Kainos Investment Partners I, LLC; Kainos
Investment Partners II, LLC; and PCEP II KPHC Holdings, Inc.
The District Court said the U.S. Trustee's appeal is equitably
moot. The Global Settlement was approved by the Bankruptcy Court
and its implementation was not stayed.
"The settlement was a complex and integrated resolution of the
many claims involving the parties, and the Court is not persuaded
that relief can be granted to [the U.S. Trustee] without causing
adverse consequences to numerous parties, including general
unsecured creditors not before the Court who are still awaiting
distributions under the Plan, and whose distributions would be
further delayed if the settlement were unwound," Judge Stark said.
No plan of reorganization was filed while the Debtors were in
Chapter 11. Instead, the Debtors, their secured lenders, and the
Committee ultimately negotiated and entered into the Global
Settlement to effectuate a purchase and sale of substantially all
of the Debtors' assets. The Global Settlement included, inter
alia, certain payments and mutual releases.
In connection with the Global Settlement, the parties' final Asset
Purchase Agreement included a negotiated "Carve-Out" provision.
Under that provision, if Buyer is the successful bidder for one or
more stores in the Case and the Official Committee of Unsecured
Creditors supports the transaction, Dunkin' Brands, Inc. will at
Closing assign to the Seller's estate for the benefit of (i) non-
lender general unsecured creditors and (ii) unpaid fees and
expenses of Committee professionals in excess of $125,000, its
right to repayment of $250,000 of the so-called CML Subsidy Loans
and CML Subsidy Loan Obligations as those terms are defined in the
Amended and Restated DIP Financing, Ratification and Intercreditor
Agreement dated as of July 2009, by and among Seller, the Lenders
and the other parties thereto, as amended and in effect). If the
Buyer is the successful bidder for one or more stores, Dunkin
Brands, Inc. will also (i) waive its right to repayment of the
remaining $238,693 of the CML Subsidy Loans and CML Subsidy Loan
Obligations; (ii) waive its right to repayment of obligations
under the DIP Agreement, including but not limited to, the Dunkin'
Debt; (iii) release the Seller from any obligations with respect
to the pre-petition mortgages granted to Dunkin' Brands, Inc.; and
(iv) waive its right to assert any claim against the Purchase
Price, the Carve-Out and/or the Excluded Assets.
The Debtors submitted the terms of the APA to the Bankruptcy Court
for approval. Over the U.S. Trustee's objection, the Bankruptcy
Court approved the APA. The Bankruptcy Court rejected the U.S.
Trustee's argument that using the $250,000 payment for the sole
benefit of the Committee professionals and general unsecured
creditors violated the statutory priority scheme; the U.S. Trustee
argued that unpaid administrative claimants and priority unsecured
creditors enjoyed a right to those proceeds that was superior to
that of the general unsecured creditors. The Bankruptcy Court
found that the $250,000 was a payment by the secured creditors in
exchange for resolving potential claims and causes of action of
the estate against the Debtors' secured lender.
The U.S. Trustee appeals the Settlement Order on the ground that
the Bankruptcy Court erred as a matter of law in approving the
Global Settlement, regardless of any perceived benefit to the
estate. The U.S. Trustee contends that the distribution of the
sale proceeds approved by the Bankruptcy Court violate the
Bankruptcy Code's comprehensive priority scheme. The U.S. Trustee
argues that it does not seek to reverse either the sale of estate
assets or the Settlement Agreement but instead only asks the Court
to vacate the "Carve-Out" or "Earmark Provision," i.e., that
portion of the settlement agreement directing the estate to use
the designated funds solely to pay the Committee's lawyers and
financial advisors and the general unsecured creditors. The U.S.
Trustee requests that the $250,000 assigned to the estate for the
benefit of general unsecured creditors and Committee professionals
be returned to the bankruptcy estate for distribution by the
Chapter 7 Trustee.
Randy A. Skinner, Esq., was appointed trustee to administer the
Kainos General Unsecured Trust. The Kainos GUC Trust was
established by the Committee and the Debtors in furtherance of
their settlement agreement. Mr. Skinner contends that, with
respect to the $250,000 in settlement payments directed to general
unsecured creditors (and their professionals): (i) the res of the
Kainos GUC Trust is not comprised of estate assets but from a
carve-out from the secured creditors' collateral, and (ii) payment
of the res to the Kainos GUC Trust in no way violates the
Bankruptcy Code's statutory priority scheme. Mr. Skinner
additionally contends the appeal should be dismissed as equitably
moot because the U.S. Trustee never sought a stay of the
Bankruptcy Court's Settlement Order and, accordingly, the Kainos
GUC Trustee has been proceeding to carry out his duties to the
beneficiaries of the Kainos GUC Trust.
The case before the District Court is, ROBERTA A. DEANGELIS,
UNITED STATES TRUSTEE FOR REGION 3, Appellant, v. OFFICIAL
COMMITTEE OF UNSECURED CREDITORS AND KAINOS PARTNERS HOLDING
COMPANY, LLC, Appellees, Nos. 09-12292 (BLS), 10-560-LPS (D.
Del.). A copy of the Court's Nov. 30, 2012 Memorandum Order is
available at http://is.gd/OSUNWyfrom Leagle.com.
About Kainos Partners
Greer, South Carolina-based Kainos Partners Holding Company, LLC
-- http://www.kainospartners.com/-- operates the "donut-and-
coffee" franchises. The Company and its affiliates filed for
Chapter 11 (Bankr. D. Del. Lead Case No. 09-12292) on July 6,
2009. Two of its affiliates filed for separate Chapter 11
petitions (Bankr. D. Del. Case Nos. 09-13213 to 09-13214) on Sept.
15, 2009. An affiliate filed for separate Chapter 11 petition
(Bankr. D. Del. Case No. 09-13285) on Sept. 23, 2009. Attorneys
at the Law Offices of Joseph J. Bodnar represent the Debtors in
their restructuring efforts. In its petition, the Debtors listed
assets and debts both ranging from $10 million and $50 million.
LAGUARDIA ASSOCIATES: Wells Fargo Not Entitled to Prepayment Fee
----------------------------------------------------------------
Chief Bankruptcy Judge Stephen Raslavich struck out the prepayment
fee as a part of the claim filed by C-III Asset Management, LLC,
As Special Servicer For Wells Fargo Bank, N.A., As Trustee,
against the estate of LaGuardia Associates, L.P. The Debtor,
joined by the Official Committee of Unsecured Creditors, objected
to that portion of the claim by the Debtor's first mortgage
holder.
The prepayment fee is characterized in the applicable loan
documents as a "yield maintenance charge." The crux of the
dispute centers on a few key passages in the Note and Mortgage
which describe the circumstances upon which the prepayment fee
becomes owed. Wells Fargo takes the position that the fee became
an affirmative part of the borrower's indebtedness on March 3,
2010, after the Debtor had defaulted on its payment obligations
and Wells Fargo, in turn, had accelerated the maturity date of the
loan. The Debtor and the Committee conversely maintain that the
triggering events required in order for the prepayment fee to
accrue have not occurred as of this time, such that no fee is now
due. Both sides strenuously insist that the clear language of the
relevant instruments unequivocally supports their respective
positions. According to the Court, the amount in controversy
sizable at roughly $15 million, making the determination one of
clearly significant impact to the Chapter 11 case.
A copy of the Court's Dec. 5, 2012 Opinion is available at
http://is.gd/EPaKhJfrom Leagle.com.
About LaGuardia Associates
ECBM, Landmark Food Corp. and Penn Glass filed an involuntary
Chapter 11 petition (Bankr. E.D. Pa. Case No. 11-19334) against
King of Prussia, Pennsylvania-based LaGuardia Associates L.P. on
Dec. 6, 2011. LaGuardia Associates owns and operates the
LaGuardia Plaza Hotel, formerly known as LaGuardia Crowne Plaza
Hotel. The petitioning creditors alleged holding roughly $171,000
in debt. Judge Stephen Raslavich oversees the case, replacing
Judge Jean K. FitzSimon. The petitioning creditors are
represented by Ashely M. Chan, Esq., at Hangley Aronchick Segal &
Pudlin.
This is the second bankruptcy for LaGuardia Associates. The
company and its debtor-affiliate, Field Hotel Associates LP,
sought Chapter 11 protection (Bankr. E.D. Pa. Case No. 04-34514)
on Oct. 29, 2004. Martin J. Weis, Esq., at Dilworth Paxon LLP,
represented the Debtors as counsel in the 2004 case. Ashely M.
Chan, Esq., and Myron Alvin Bloom, Esq., at Hangley Aronchick
Segal & Pudlin, represented the Official Committee of Unsecured
Creditors. In its 2004 petition, LaGuardia Associates estimated
assets and debts of $10 million to $50 million.
In March 2007, the Bankruptcy Court confirmed the Third Amended
Chapter 11 Liquidation Plan filed by U.S. Bank NA, as successor in
interest to SunTrust Bank, for Field Hotel Associates.
LANDMARK AVIATION: Moody's Affirms 'B3' CFR; Outlook Stable
-----------------------------------------------------------
Moody's Investors Service has assigned a B2 rating to proposed $60
million first lien add-on term loan and Caa2 rating to the
proposed $30 million second lien add-on term loan of LM U.S.
Member LLC ("Landmark Aviation" and includes co-borrower, LM U.S.
Corp Acquisition Inc.). Concurrently, Moody's affirmed all ratings
of Landmark Aviation, including the B3 corporate family rating.
The rating outlook is stable.
Proceeds from the proposed add-on term loans, in combination with
additional equity contributed by The Carlyle Group ("Carlyle"),
will be used to fund Landmark Aviation's acquisition of First
Aviation Services, Inc. ("FAS"). FAS is a fixed base operator at
Teterboro Airport in New Jersey.
The following ratings have been assigned (subject to review of
final documentation):
B2 (LGD3, 34%) to the proposed $60 million first lien add-on
term loan due October 2019; and
Caa2 (LGD 5, 84%) to the proposed $30 million second lien add-
on term loan due October 2020
The following ratings have been affirmed:
Corporate family rating at B3;
Probability of default rating at B3;
B2 (LGD 3, 34%) on the $75 million first lien revolver due
October 2017;
B2 (LGD 3, 34%) on the $260 million first lien term loan due
October 2019; and
Caa2 (LGD 5, 84%) on the $130 million second lien term loan due
October 2020.
Rating Rationale
The B3 CFR initially incorporated Moody's expectation that
acquisitions would be a part of Landmark Aviation's growth
strategy. The FAS acquisition is large and closely follows the LBO
by Carlyle, however, leverage will not change meaningfully.
Moody's views FAS as a strategic fit for Landmark Aviation as it
will provide access to the nation's largest business aviation
airfield, which is located in the US's largest metro area, and
should enhance its relationship with a major customer. Further,
Moody's believes access to Teterboro will provide network
synergies that should enhance Landmark Aviation's value
proposition to existing and new customers, although competition is
expected to be meaningful given the presence of the company's two
largest competitors at Teterboro.
The B3 corporate family rating reflects Landmark Aviation's high
financial leverage (debt to EBITDA above 7x, Moody's-adjusted
basis) and Moody's view that capital projects planned over the
next two years will limit the amount of free cash flow available
for debt reduction. While jet-based general aviation activity
levels should improve over the next few years, high financial
leverage makes the prospect of healthier credit statistics rather
dependent on the magnitude of activity growth ahead. The B3 CFR
acknowledges this need for rather strong growth to temper the
initially high leverage burden and to establish better financial
resiliency given the sensitivity of business travel to
macroeconomic factors and tax policy. Small size, a recent history
of low operating profit, and aggressive growth ambitions that may
continue to raise debt levels weigh on ratings. The B3 rating also
considers the company's network of FBO locations, including
positions at several leading high traffic airports, and the
relatively constant dollar margin realized on fuel sales.
A ratings upgrade is unlikely in 2013 and would depend on the
company's ability to reduce debt to EBITDA to the 5x range with
free cash flow to debt in the mid single digit range. Downward
rating pressure would follow debt to EBITDA above 8x or liquidity
concerns, such as those stemming from covenant compliance, much
revolver dependence or lack of free cash flow. (All foregoing
metrics are on a Moody's-adjusted basis.)
The principal methodology used in rating Landmark was the Global
Aerospace and Defense Industry Methodology published in June 2010.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
Landmark Aviation is the acquisition vehicle through which
entities of the Carlyle Group will acquire Landmark Aviation FBO
Holdings LLC ("Landmark Aviation"). Headquartered in Houston, TX.
Landmark Aviation operates 50 bases for general aviation services
across North America and Western Europe. Principal offerings
include refueling, light maintenance and repair of private jets,
replacement parts as well as airplane parking, cleaning and
chartering on behalf of owners. Revenues in 2011 were about $494
million.
LAS VEGAS SANDS: Fitch Assigns 'BB+' Issuer Default Rating
----------------------------------------------------------
Fitch Ratings has assigned initial 'BB+' Issuer Default Ratings
(IDRs) to the following issuers:
-- Las Vegas Sands Corp. (LVS Corp; LVS when discussing
consolidated entity),
-- Las Vegas Sands LLC (LVS LLC),
-- Sands China Ltd. (Sands China),
-- VML U.S. Finance LLC (VML), and
-- Marina Bay Sands Pte. Ltd (MBS).
Fitch has also assigned a 'BBB-' rating to the senior secured
credit facilities at LVS LLC, VML and MBS. The Rating Outlook is
Stable.
RATIONALE
The 'BB+' IDR reflects LVS' strong financial profile supported by
manageable debt levels, significant cash balances and a robust
discretionary free cash flow (FCF) profile. LVS also maintains a
strong business profile supported by high quality assets in
attractive regulatory regimes, which provides the company with the
best global market exposure profile in the industry.
The ratings also consider LVS' history of being an aggressive
developer of large-scale gaming-centric integrated resorts,
management's limited track record of adhering to stated financial
policies, and recent corporate governance issues.
LVS' financial strength has improved significantly over the past
several quarters, largely driven by the impressive ramp up of
Marina Bay Sands in Singapore ($1.49 billion of EBITDA for the
latest 12-month [LTM] period) and the winding down of LVS'
considerable project pipeline. An upgrade of the IDR to
investment grade would hinge on maintenance of its strong
financial profile, management's capital allocation policies as it
pursues development opportunities and returns cash to
shareholders, and/or further clarity on its governance issues.
The 'BB+' IDR reflects the risk that the company could increase
leverage in order to pursue multiple large-scale projects at once.
LVS has historically been an aggressive developer and is actively
seeking projects in several jurisdictions where certain regulatory
changes are required to make large-scale casino resort
developments feasible and more operator/developer friendly. The
timing of such regulatory changes and subsequent licensing
processes are hard to predict, therefore the capex spend on these
developments could potentially be lumpy and pressure LVS'
liquidity and credit metrics if multiple projects are taken on at
once.
This concern is partially mitigated by LVS' attractive liquidity
profile. As of Sept. 30, 2012, LVS had roughly $3.3 billion of
available cash, $1.4 billion of revolver availability, and LTM
discretionary FCF of $2.4 billion, which provides significant
financial flexibility to invest in multiple projects, return cash
to shareholders, and maintain modest leverage. LVS will use some
of its cash and revolver availability to fund the $2.25 billion
special dividend payable on Dec. 18.
DEBT STRUCTURE
As of Sept. 30, 2012, LVS had $9.5 billion of total debt
consisting of $2.5 billion of debt related to U.S. and corporate
operations, $3.2 billion of debt related to Macao operations, and
$3.8 billion of debt related to Singapore operations.
U.S. Related Debt
In the U.S., debt consists mostly of $2.4 billion in term and
delayed draw loans outstanding on its LVS LLC credit facility.
The facility also includes a $500 million revolver, which was
undrawn as of Sept. 30, 2012. LVS LLC is the borrower under the
credit facility and loans are guaranteed and secured by the assets
(not capital stock) of all major U.S. subsidiaries except Sands
Bethworks Gaming LLC (SBG) and Sands Bethworks Retail LLC (SBR;
together with SBG, PA Subsidiaries). Essentially, pledged hard
asset collateral for LVS LLC consists of the company's Las Vegas
assets, which generated $359 million of LTM Adjusted Property
EBITDA.
Macao-Related Debt
LVS' Macao operations are subsidiaries of Sands China Ltd., a Hong
Kong-listed company, of which LVS Corp. has a 70.2% stake. The
VML credit facility is the only major debt at Sands China and
consists of a $3.2 billion term loan and a $500 million undrawn
revolver as of Sept. 30, 2012. The facility is guaranteed and
secured by all major Macao subsidiaries' assets including the
Venetian Macao, Sands Macao, Four Seasons and Sands Cotai Central,
which generated $1.8 billion of LTM Adjusted Property EBITDA.
The Parisian (Site 3) is owned by Venetian Cotai Limited (owner of
the Venetian and the Four Seasons) and can be transferred to an
unrestricted subsidiary or a third-party pursuant to section
7.7(xx) of the credit agreement.
Singapore Related Debt
The only major debt at MBS is the new SG$5.1 billion (US$4.16
billion) credit facility it entered into in June 2012. It
consists of a SG$4.6 billion (US$3.75 billion) term loan and an
undrawn SG$500 million (US$407.9 million) revolver. The facility
is secured by all major assets of MBS, which generated $1.5
billion of LTM Adjusted Property EBITDA.
Rating Linkage
Fitch links the IDRs across all rated subsidiaries, which
reflects:
-- LVS Corp's organizational structure and dividend policy
whereby 70.2% of any dividend paid by Sands China ($1.2
billion in 2012) goes to LVS Corp.
-- International subsidiaries' ability to move cash freely to
the U.S. given the subsidiaries' strong financial profiles
and relaxed restricted payment covenants in the credit
agreements (MBS recently eliminated an excess cash sweep
requirement in its amended credit facility). Cash tax
leakage is manageable as Macao's gaming tax generates foreign
tax credits in the U.S., Macao's income tax is minimal and
Singapore's tax rate is relatively low at 17%.
-- Convergence of credit quality among the restricted groups
with LVS paying down a significant amount of debt at the U.S.
restricted group using cash generated elsewhere. U.S. debt
declined by over 50% since year-end 2009 from $5.2 billion to
$2.5 billion.
-- The company's operational and strategic structure, which
includes common brands, common management, and cross-
marketing between properties and markets. Singapore and
Macao have royalty fee agreements with LVS LLC, which owns
LVS' trademarks. For the LTM period ending Sept. 30, 2012
these payments were $129 million.
Transaction Specific Ratings
The 'BBB-' ratings on the Macao and Singapore secured credit
facilities reflect a one-notch positive differential from the
'BB+' IDR due to strong asset coverage. Fitch believes the Macao
and Singapore facilities are well over-collateralized.
Asset collateral coverage for the LVS LLC secured credit facility
is not as strong. LVS' Las Vegas assets generated $359 million in
LTM Adjusted Property EBITDA, resulting in leverage of 7.0x,
assuming no contribution from non-collateral assets. However, the
LVS LLC credit benefits from its ownership in MBS, Sands China and
PA Subsidiaries, which generate royalty fees and distributions for
LVS LLC (restricted group leverage is 5.2x if royalty fees are
included in EBITDA).
LVS trademarks are owned by LVS LLC and part of the collateral
package. For the LTM period ending Sept. 30, 2012, the U.S.
restricted group received $129 million in royalty fees associated
with the trademarks from unrestricted subsidiaries including $98
million from MBS and $31 million from the Macao subsidiaries.
Lenders should note that the U.S. credit agreement permits LVS LLC
to transfer Intellectual Property to other unrestricted
subsidiaries "in connection with a reorganization of the LVS
Corp's and its Subsidiaries' portfolio of Intellectual Property"
(section 6.7(t)).
CREDIT METRICS AND FINANCIAL POLICIES
LVS' credit metrics are strong for the 'BB+' IDR. Fitch calculates
consolidated gross and net leverage for LTM period through Sept.
30, 2012 at 2.9x and 1.9x, respectively. Fitch's consolidated
leverage calculations deducts corporate expense and minority
interest from EBITDA and deducts cage cash from cash balances.
Management has indicated a target net leverage range through
development cycles of 1.5x-3.0x, which does not consider the above
adjustments.
There would likely be rating pressure if Fitch forecasted gross
and/or net leverage were to sustain above 5.0x and 4.0x,
respectively, so there is ample headroom at the 'BB+' IDR for
additional leverage.
If Fitch were to consider an upgrade to a 'BBB-' IDR, there would
be little tolerance for gross and/or net leverage above 4.0x and
3.0x, respectively.
In November, LVS announced a 40% increase in regular dividends and
a $2.25 billion special dividend payable Dec. 18th. The company
retains ample financial flexibility to manage capital allocation
policies with respect to returning cash to shareholders. Given
the potential for lumpy capex if multiple projects were being
developed at once, Fitch would assess how management demonstrates
this flexibility when considering an upgrade to investment grade.
When pursuing new developments, LVS has indicated that it expects
to contribute 25%-35% in equity to any new project. Adherence to
stated financial policies is an important consideration for an
investment grade IDR, so an upgrade could be precluded if a higher
level of debt were planned for a project.
Free Cash Flow
LVS has been generating sizable discretionary FCF since second-
half 2010, when Marina Bay Sands had its first full quarter of
operations. As of Sept. 30, 2012, LTM discretionary FCF was
roughly $2.4 billion before approximately $1 billion in
development capex and nearly $1 billion in dividends.
Supported by Fitch's forecast of continued organic growth and
further ramp up of Sands Cotai Central, annual discretionary FCF
could approach $3 billion by the end of 2013. This should
adequately cover the existing $1.15 billion regular LVS Corp.
dividends ($1.64 billion if paid entirely by Sands China since
29.8% of its dividends goes to minority holders) and the
development costs of The Parisian ($600 million in 2013 and $1.2
billion in 2014). Fitch expects the remaining cash to be
allocated between repayment of debt (including scheduled
amortization), funding additional growth capex, share repurchases
and increasing regular dividends.
Liquidity
As of Sept. 30, 2012, LVS had $3.75 billion of cash on hand
(includes approximately $400 million in cage cash, so
excess/available cash is roughly $3.35 billion). Of the $3.75
billion, $1.55 billion is in Macao (70.2% owned by LVS), $673
million is in Singapore, $940 million is in the U.S. restricted
group and $582 million is at the corporate level (or other
subsidiaries).
LVS also has $1.4 billion in available revolver capacity ($500
million in U.S., $500 million in Macao and $402 million in
Singapore) for total available liquidity net of cage cash of $4.7
billion. The amount that is available to the U.S. group is closer
to $4.1 billion after accounting for the minority shareholders of
Sands China. Some of this liquidity will be used to fund the
$2.25 billion special dividend that was payable on Dec. 18, but
liquidity will remain adequate for the ratings.
LVS has $98 million in debt coming due in 2013, $1.12 billion in
2014 ($769 million in non-extended U.S. loans), $1.73 billion in
2015 (mostly amortization of VMLF and MBS credit facilities) and
$4.38 billion in 2016 ($1.38 billion in extended U.S. loans, $2.08
billion in VMLF loans and $906 million in MBS amortization).
LVS' credit facilities have leverage based maintenance covenants
but there is considerable cushion at each restricted group. (The
U.S. covenant is very accommodating, as it includes international
earnings in the calculation to the extent there is cash
dividends).
Governance Concerns
Reported inquiries into the company's alleged non-compliance with
Foreign Corrupt Practices Act (FCPA) and Anti-Money Laundering
(AML) laws is an overhang for the credit profile that Fitch has
factored into the 'BB+' IDR. In Fitch's opinion, the most
plausible risk stemming from allegations is an assessment of a
fine(s), which should be easily absorbed in LVS' financial
profile, judging by FCPA/AML case precedents. See Fitch's report
titled U.S. Foreign Corrupt Practices Act -- No Minor Matter
(dated June 1, 2010) for analysis of some of the higher profile
FCPA cases and their credit implications.
A more serious tail risk concern is the risk of LVS losing a
gaming license or concession in one of the jurisdictions in which
it operates. However, Fitch considers this a low probability risk
when taking into account that revocations of gaming licenses are
rare (and unprecedented in Singapore and Macao) as well as LVS'
significant market share and invested capital in these more
critical markets.
Market Exposure
Macao and Singapore account for 92% of the company's LTM property
EBITDA. LVS maintains approximately 50% and 20% gaming revenue
market share in Singapore and Macao, respectively, and through
Sept. 30, 2012 LVS spent $4.6 billion and $8.4 million on capex in
the respective markets.
Macao (51% of LTM Property EBITDA)
LVS is well positioned in Macao with approximately 1 million
square feet of gaming space in the market. This gaming space plus
an extensive complement of amenities and hotel rooms allows LVS to
freely adjust to the demands of the market, which Fitch believes
will skew towards the mass market in the near-to-medium term . The
gaming space permits LVS to move the tables that it is allocated
by Macao government between mass and VIP business as conditions
warrant without making major reconfigurations or structural
changes to the gaming space, a luxury that most other operators do
not have. The space also permits LVS to more heavily utilize
electronic tables games (ETGs) and slots, which is becoming a more
meaningful segment in Macao and for which there are no unit
restrictions.
Fitch forecasts 12% gaming revenue growth for Macao for full year
2012 (13% year-to-date through November) and 8% growth in 2013.
In 2013, growth will be led by double-digit growth in the mass
market with VIP lagging in the low-to-mid single digit range.
Fitch expects LVS to exceed Fitch's 2013 forecast for the market
due to the capacity factor discussed above and the additional
allocation of table games that LVS expects by early 2013, which
would bring its total mass market tables above 1,000.
LVS' Sands Cotai Central, which opened in April 2012 and is
opening additional phases through 2012 and into 2013, will be the
last major casino to open in Macao until at least mid-2015 when a
series of new gaming projects are expected to roll out including
LVS' own $2.7 billion The Parisian. The company will contribute
$800 million in equity towards the project, with the remainder
being funded through project financing according to the company's
third-quarter earnings presentation.
Singapore (42% of LTM Property EBITDA)
In Singapore, LVS benefits from a regulated duopoly at least
through 2017, when the government can issue additional licenses.
LVS' only competition in the meantime is Genting Singapore's
Resorts World Sentosa, which is more family oriented compared to
Marina Bay Sands.
Marina Bay Sands opened in April 2010 and is largely ramped up
with an-adjusted LTM EBITDA of $1.5 billion for period ending
Sept. 30, 2012. Further growth will be hindered by gaming
position constraints imposed by LVS' Development Agreement, which
limits the gaming floor area to 15,000 square meters, which
translates into approximately 161,000 square feet (Marina Bay
Sands has 160,000 square feet of gaming space). Also Marina Bay
Sands may not have more than 2,500 gaming machines; however, there
are no limits on table games. In the third-quarter 2012, Marina
Bay Sands on average had 2,441 machines and 619 table games.
Fitch does expect some incremental EBITDA growth to result from
further refining the gaming customer mix (VIP has an effective tax
of 8.5% vs. 20.5% for mass table and slots). The company has also
expressed a desire to expand its hotel, which reached occupancy of
99.8% in third-quarter 2012 with an ADR of $361. Hotel represents
only about 10% of the property's gross revenues but the extra
rooms would help LVS better yield its gaming space as well the
ancillary segments such as retail and convention business.
United States (12% of LTM Property EBITDA)
About two-thirds of U.S. property EBITDA is generated by the
Venetian and Palazzo properties on the Las Vegas Strip. Fitch
maintains a favorable outlook for the Strip operators, which
should benefit from no meaningful new supply coming on-line for
another three to five years. Year-to-date through September the
Strip gaming revenues are up 2.5% and Fitch expects similar trend
to continue into 2013 with strong international play growth
offsetting more lackluster domestic table and slot play. LVS'
properties should be able to capture fair share of the
international play given the opportunity to cross-market with the
company's international properties.
The balance of U.S. property EBITDA (almost a third) is generated
by Sands Bethlehem in eastern Pennsylvania. Sands Bethworks LLC,
the subsidiary holding the gaming license, is 86.4% owned by LVS
with the remainder owned by third-party investors.
What Could Trigger A Rating Action
Positive: Future developments that may, individually or
collectively, lead to positive rating action include:
-- Maintaining leverage below 4x on gross basis and 3x on net
basis for an extended period;
-- Keeping to its articulated financial policies including
contributing at least 25% equity towards projects, and/or
-- Favorable resolution of inquiries and lawsuits related to
governance matters discussed above.
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
-- Leverage exceeding 5x on gross basis and 4x on net basis for
an extended period, likely driven pursuing multiple large-
scale projects at once;
-- Deviating from to its articulated financial policies
including contributing at least 25% equity towards projects,
and/or
-- Loss of a license/concession related to inquiries related to
governance matters discussed above.
Fitch assigns ratings to Las Vegas Sands Corp and subsidiaries as
follows:
Las Vegas Sands Corp.
-- Issuer Default Rating (IDR): 'BB+', Outlook Stable.
Las Vegas Sands LLC
-- IDR: 'BB+', Outlook Stable;
-- US$500 million secured revolving credit facility: 'BBB-';
-- US$1.8 billlion secured term loan B: 'BBB-';
-- US$608 million secured delay draw 1 & 2: 'BBB-'.
Sands China Ltd.
-- Issuer Default Rating (IDR): 'BB+', Outlook Stable.
VML US Finance LLC
-- IDR: 'BB+', Outlook Stable
-- US$500 million Macao secured revolving credit facility:
'BBB-';
-- US$3.2 billion Macao secured term loan: 'BBB-'.
Marina Bay Sands Pte. Ltd.
-- IDR: 'BB+', Outlook Stable;
-- SGD 500 million Singapore secured revolving credit facility:
'BBB-';
-- SGD 4.6 billion Singapore secured term loan: 'BBB-'.
LEHMAN BROTHERS: Trustee Settles LB Bankhaus' $1.35-Bil. Claim
--------------------------------------------------------------
The trustee liquidating Lehman Brothers Holdings Inc.'s brokerage
asked the U.S. Bankruptcy Court for the Southern District of New
York to approve a deal with Lehman Brothers Bankhaus AG to cut its
$1.35 billion in claims by more than half.
Under the deal, Lehman Brothers Bankhaus, the company's German
affiliate, can assert a claim of $600 million against the
brokerage. In exchange, the German affiliate agreed to release
all other claims it may have against the brokerage.
The deal is formalized in a 16-page agreement, which can be
accessed for free at http://is.gd/IXvSUH
"The settlement agreement avoids the costs and inherent
uncertainty attendant to litigation," said the trustee's lawyer,
Christopher Kiplok, Esq., at Hughes Hubbard & Reed LLP, in New
York.
"The proposed settlements are the product of significant effort
to reconcile Bankhaus's substantial claims," the lawyer said in a
court filing.
A court hearing is scheduled for January 16, 2013. Objections
are due by December 20.
Last month, the trustee reached a deal with Citigroup to settle
their dispute over $1 billion in collateral. The deal requires
Citigroup to pay $360 million to the brokerage and forgo its $75
million claim in exchange for the dismissal of a lawsuit against
the company.
The trustee also obtained court approval of his settlement with
Switzerland-based Lehman Brothers Finance AG last month. Under
the deal, Lehman's Swiss affiliate can assert a claim of more
than $549 million against the brokerage, down from the $6 billion
it originally wanted.
The $6 billion settlement marked the first time Lehman Brothers
Finance, which conducted most of Lehman's foreign derivatives
business and half of its equity-derivatives trades, has settled
with another Lehman affiliate, The Wall Street Journal reported.
The brokerage is being unwound by James Giddens, the court-
appointed trustee, in accordance with the Securities Investor
Protection Act.
Individual customers of the brokerage received all $92.3 billion
they were owed almost immediately after Lehman's bankruptcy. The
bulk of the Lehman customer accounts, with assets of more than
$40 billion, have been transferred to Barclays PLC, The Journal
reported.
However, other customers of the brokerage, mostly hedge funds and
big banks, have had to wait as Mr. Giddens sorted out claims
issues both in the U.S. and overseas.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: UK Appeals Court to Scrutinize Lehman FSD
----------------------------------------------------------
The 38 Lehman Brothers companies fighting to be excluded from The
Pension Regulator's so-called financial support direction have
secured a hearing in the U.K. Court of Appeal in April 2013,
according to a report by Professional Pensions.
The court will hold a hearing on April 29 or 30 to consider the
appeal of the Lehman companies to review a ruling handed down by
the Upper Tribunal tax and chancery chamber.
The Upper Tribunal upheld the Lehman Brothers Pension Scheme
trustees' right to appeal an earlier decision by the pension
regulator's determinations panel not to impose the FSD on the
38 Lehman companies as the trustees are "directly affected" by
that decision.
The pensions regulator had previously decided to issue an FSD
against only six companies within the Lehman group, and did not
pursue the remaining 38 targets. That decision was referred by
the trustees to the Upper Tribunal.
Peter Murphy, a member of Sackers' Regulatory Team, said if the
38 companies succeed they will not have to fight the FSD further.
"If they succeed on that point then those targets won't even have
to address the substance of whether an FSD should be issued
against them," Professional Pensions quoted Mr. Murphy as saying.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: FYI, et al., Oppose ADR Rules Amendment
--------------------------------------------------------
A group of funds led by FYI Ltd. is blocking efforts by Lehman
Brothers Holdings Inc. to win approval of its request to amend an
order issued by a bankruptcy judge.
Last month, Lehman asked U.S. Bankruptcy Judge James Peck to
amend his order dated April 19, 2010, which facilitated the
resolution of claims against the company and approved so-called
alternative dispute resolution procedures.
Lehman proposed the removal of the 120-day cap for the maximum
duration of a mediation, and that it apply to all unresolved
claims.
In a court filing, the group's lawyer said it is not the
claimants but Lehman which stands to gain from extending the
period for mediation.
"It is the bankruptcy estates that benefit from delay tactics in
claims litigation such as attempting to extend a mediation
indefinitely," said D. Ross Martin, Esq., at Ropes & Gray LLP, in
Boston, Massachusetts.
The funds assert a claim of $262 million against Lehman's special
financing unit, which stemmed from the termination of their swap
deal.
The proposed amendment also drew flak from Giants Stadium LLC,
which asserts a claim of $585 million against Lehman related to
swaps on a $700 million financing of the New Meadowlands stadium.
Giants Stadium said Lehman "offers scant justification" for the
amendment, adding that it grants the company "unwarranted
leverage over claimants who have waited years to be heard on
their claims."
A court hearing is scheduled for December 12. Objections were due
November 29.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEHMAN BROTHERS: LBI Trustee Wins Nod of IRS Agreements
-------------------------------------------------------
The trustee liquidating Lehman Brothers Holdings Inc.'s brokerage
obtained court approval of its agreements with the commissioner
of the Internal Revenue Service.
The agreements call for the settlement of the agency's potential
claims against the brokerage and other members of Lehman's
consolidated group for not complying with the listing and
reporting requirements of the Internal Revenue Code.
The first agreement related to the original issue discount bond
transactions allows IRS to assert a claim of $340,385 against the
brokerage.
Meanwhile, under the terms of the second agreement related to
various tax shelter transactions, the agency can assert a claim
of $7,045,788.
About Lehman Brothers
Lehman Brothers Holdings Inc. -- http://www.lehman.com/-- was
the fourth largest investment bank in the United States. For
more than 150 years, Lehman Brothers has been a leader in the
global financial markets by serving the financial needs of
corporations, governmental units, institutional clients and
individuals worldwide.
Lehman Brothers filed for Chapter 11 bankruptcy Sept. 15, 2008
(Bankr. S.D.N.Y. Case No. 08-13555). Lehman's bankruptcy
petition disclosed US$639 billion in assets and US$613 billion in
debts, effectively making the firm's bankruptcy filing the
largest in U.S. history. Several other affiliates followed
thereafter.
Affiliates Merit LLC, LB Somerset LLC and LB Preferred Somerset
LLC sought for bankruptcy protection in December 2009.
The Debtors' bankruptcy cases are handled by Judge James M. Peck.
Harvey R. Miller, Esq., Richard P. Krasnow, Esq., Lori R. Fife,
Esq., Shai Y. Waisman, Esq., and Jacqueline Marcus, Esq., at
Weil, Gotshal & Manges, LLP, in New York, represent Lehman. Epiq
Bankruptcy Solutions serves as claims and noticing agent.
Dennis F. Dunne, Esq., Evan Fleck, Esq., and Dennis O'Donnell,
Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, serve
as counsel to the Official Committee of Unsecured Creditors.
Houlihan Lokey Howard & Zukin Capital, Inc., is the Committee's
investment banker.
On Sept. 19, 2008, the Honorable Gerard E. Lynch of the U.S.
District Court for the Southern District of New York, entered an
order commencing liquidation of Lehman Brothers, Inc., pursuant
to the provisions of the Securities Investor Protection Act (Case
No. 08-CIV-8119 (GEL)). James W. Giddens has been appointed as
trustee for the SIPA liquidation of the business of LBI.
The Bankruptcy Court approved Barclays Bank Plc's purchase of
Lehman Brothers' North American investment banking and capital
markets operations and supporting infrastructure for US$1.75
billion. Nomura Holdings Inc., the largest brokerage house in
Japan, purchased LBHI's operations in Europe for US$2 plus the
retention of most of employees. Nomura also bought Lehman's
operations in the Asia Pacific for US$225 million.
Lehman emerged from bankruptcy protection on March 6, 2012, more
than three years after it filed the largest bankruptcy in U.S.
history. The Chapter 11 plan for the Lehman companies other than
the broker was confirmed in December 2011.
Lehman made its first payment of $22.5 billion to creditors in
April 2012 and a second payment of $10.2 billion on Oct. 1. A
third distribution is set for around March 30, 2013. The
brokerage is yet to make a first distribution to non-customers.
Bankruptcy Creditors' Service, Inc., publishes Lehman Brothers
Bankruptcy News. The newsletter tracks the Chapter 11 proceeding
undertaken by Lehman Brothers Holdings, Inc., and other
insolvency and bankruptcy proceedings undertaken by its
affiliates. (http://bankrupt.com/newsstand/or 215/945-700)
LEVEL 3: Level 3 LLC Guarantees 7% Senior Notes Unconditionally
---------------------------------------------------------------
Level 3 Financing, Inc., a wholly owned subsidiary of Level 3
Communications, Inc., entered into a Supplemental Indenture, dated
as of Dec. 6, 2012, to the Indenture dated as of Aug. 6, 2012,
among Parent, as guarantor, Level 3 Financing, as issuer, and The
Bank of New York Mellon Trust Company, N.A., as trustee, relating
to Level 3 Financing's 7% Senior Notes due 2020. The Guarantee
Supplemental Indenture was entered into among Level 3 Financing,
Level 3 Communications, LLC, a wholly owned subsidiary of Parent,
and the Trustee. Pursuant to the Guarantee Supplemental
Indenture, Level 3 LLC has provided an unconditional, unsecured
guaranty of the Notes. The Guarantee Supplemental Indenture is
available for free at http://is.gd/SzHype
On Dec. 6, 2012, Level 3 Financing entered into an additional
Supplemental Indenture, dated as of Dec. 6, 2012, to the
Indenture. The Subordination Supplemental Indenture was entered
into among Level 3 Financing, Parent, Level 3 LLC and the Trustee.
Pursuant to the Subordination Supplemental Indenture, the
unconditional, unsecured guaranty of Level 3 LLC of the Notes is
subordinated in any bankruptcy, liquidation or winding up
proceeding of Level 3 LLC to all obligations of Level 3 LLC under
the Level 3 Financing Amended and Restated Credit Agreement, dated
as of March 13, 2007. The Subordination Supplemental Indenture is
available for free at http://is.gd/A5P9VA
About Level 3 Communications
Headquartered in Broomfield, Colorado, Level 3 Communications,
Inc., is a publicly traded international communications company
with one of the world's largest communications and Internet
backbones.
The Company reported a net loss of $756 million in 2011, a net
loss of $622 million in 2010, and a net loss of $618 million in
2009.
The Company's balance sheet at Sept. 30, 2012, showed
$13.21 billion in total assets, $12.01 billion in total
liabilities, and $1.20 billion in total stockholders' equity.
* * *
As reported by the TCR on April 2, 2012, Fitch Ratings upgraded
Level-3 Communications' Issuer Default Rating to 'B' from 'B-' on
Oct. 4, 2011, and assigned a Positive Outlook. The rating action
followed LVLT's announcement that the company closed on its
previously announced agreement to acquire Global Crossing Limited
(GLBC) in a tax-free, stock-for-stock transaction.
In the July 20, 2012, edition of the TCR, Moody's Investors
Service affirmed Level 3 Communications, Inc.'s corporate family
and probability of default ratings at B3. The Company's B3
ratings are based on expectations that net synergies from the
recently closed acquisition of Global Crossing Ltd. will reduce
expenses sufficiently such that Level 3 will be modestly cash flow
positive (on a sustained basis) by late 2013.
Level 3 carries a 'B-' corporate credit rating from Standard &
Poor's Ratings Services.
LONE PINE: S&P Puts 'B' Corp. Credit Rating on Watch Negative
-------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B' long-term
corporate credit on Calgary, Alta.-based independent exploration &
production (E&P) company Lone Pine Resources Canada Ltd. on
CreditWatch with negative implications. At the same time, Standard
& Poor's lowered its issue-level rating on Lone Pine's senior
unsecured notes to 'CCC+' from 'B-' and placed it on CreditWatch
with negative implications. Standard & Poor's also revised the
recovery rating on the notes to '6' from '5', indicating its
expectation of negligible (0%-10%) recovery for bondholders in a
default scenario.
"The CreditWatch placement reflects our view that in the absence
of any external funding, most likely from asset sales, we will
lower the ratings on Lone Pine in the next few months," said
Standard & Poor's credit analyst Aniki Saha-Yannopoulos. "We
believe that the company's cash flow will decline in 2013 due to
lower-than-expected production, rising operating costs, and low
commodity prices. "Under our price assumptions and with no change
in its current capital structure, we believe Lone Pine there is
significant risk that the company will be unable to comply with
its debt-to-EBITDA covenant next year," Ms. Saha-Yannopoulos
added.
The ratings on Lone Pine reflect Standard & Poor's view of the
company's "vulnerable" business risk profile and "highly
leveraged" financial risk profile. S&P assesses management as
"fair". The ratings reflect what Standard & Poor's views as Lone
Pine's operations in the E&P industry, declining production, weak
commodity prices, deteriorating credit measures, and less-than-
adequate liquidity.
Lone Pine is a small E&P company with most of its production from
Alberta. The company's capex budget focuses mostly on the liquids
play, especially Evi field. As of Dec. 31, 2011, Lone Pine had a
reserve base of 401 billion cubic feet equivalent and an average
production of 82.4 million cubic feet a day for third-quarter
2012. As of Sept. 30, 2012, the company had about C$468 million
in adjusted debt, which includes adjustments for operating leases
(about C$14 million) and asset-retirement obligations (about C$11
million).
"We intend to resolve the CreditWatch before the end of February,
and sooner if the company announces any material transaction,
including resolution of its asset portfolio review. We believe
that there is a strong likelihood of us lowering the corporate
credit and senior unsecured debt ratings if Lone Pine makes no
positive announcement, either operational or financial, during
this period," S&P said.
MARBLE CLIFF: Jan. 4 Status Hearing Set for 32-Year Repayment Plan
------------------------------------------------------------------
Bankruptcy Judge Charles M. Caldwell in Columbus, Ohio, will hold
a hearing Jan. 4, 2013, at 2:00 p.m. to consider any memoranda
filed regarding confirmation of Marble Cliff Crossing Apartments,
LLC, and discuss the status and future of the Chapter 11
proceeding.
On Nov. 1 through 30, 2012, the Court conducted a trial to confirm
the plan and related amendments filed on behalf of Marble Cliff.
The only objecting party and holder of the most significant
secured and unsecured claims, is MTGLQ Investors, LP.
The Debtor proposes to pay in full MTGLQ's secured claim over a
period of 32 years with interest at a market rate determined by
the Court. MTGLQ responds that such loan terms are not available
in the market, that the Debtor does not have the financial ability
to consummate the plan, and liquidation would inevitably follow
plan confirmation.
The dispute is under advisement, and the parties may file
memoranda, of no more than 30 pages, on or before Dec. 28, 2012.
The Court has detailed critical concerns the parties should
consider in preparing memoranda.
During the trial, representatives of the Debtor's interests
testified including the property manager, Mr. Chris Deibel, the
managing partner, Mr. Brad Armstrong, and the non-managing
partner, Mr. John Chester. Mr. Andrew McCorkle testified on the
status of the methane gas remediation, a Mr. John Carr testified
about available loan terms for apartment communities, and the
Debtor's insurance broker, Mr. Ronald E. Nelson, testified
regarding the Debtor's loss history and potential impact of the
remediation project.
On behalf of MTGLQ's interests, the Court heard testimony from a
Mr. Jerry M. Morris regarding available loan terms for apartment
communities, and a Mr. Thomas W. Chatham regarding future
availability and cost of insurance after the discovery of methane
gas at the apartment complex. In addition, the Creditor presented
testimony from a Mr. James R. Maddox, regarding available loan
terms for apartment communities.
The Court perceives impediments to confirmation, including but not
limited to:
a. feasibility of the proposed plan, as amended;
b. appropriate rates of interest for creditors; and
c. length of repayment on the $31,750,708.00 secured claim
of the Creditor.
From the Court's perspective, however, feasibility is the
dispositive concern.
With feasibility as the chief concern, the evidence presented
suggests a considerable potential for extraordinary post-
confirmation expenses that may cause the plan to fail. Those
factors include:
a. increased costs for the methane gas remediation project;
b. larger insurance expenses given the multi-year
implementation of the remediation plan;
c. fluctuations in demand for apartments over time, based
upon the economy and entrance of competitors to the
market;
d. catastrophic, weather-related insurance losses, similar to
those experienced in the past; and,
e. major repair and replacement costs associated with the
aging of the property.
"Neither the Court nor the parties can predict the future, and
there is always an element of risk associated with plan
confirmation. In this case, however, history dictates a heightened
degree of skepticism in the face of the future drawn by the
Debtor," Judge Caldwell said. "The apartment community is atop a
former quarry filled with construction and organic debris. The
complex experienced great financial difficulties in the opening
years, due to unanticipated road construction. The Debtor
defaulted on its HUD-guaranteed loan, ultimately leading to
[MTGLQ's] purchase of the obligation for a discount at auction."
"Even with this history, the plan as most recently amended does
not guarantee irrevocable capital contributions and/or loans from
the owners to fund operations and plan payments, should the
Debtor's projections vary from reality. The Second Amended Plan
does provide for the commitment of loans up to $1,500,000 from the
owners to the Debtor. The commitment, however, is subject to
substantial reservations that appear to favor the owners rather
than the estate and its creditors," Judge Caldwell said.
On Nov. 30, 2012, the Debtor filed an amended loan commitment;
however, it only provides that the owners are personally
obligated, without any other enhancement of the terms. Further,
the evidence is at best sketchy on the financial ability of the
owners to fund the commitment. Indeed, during the Debtor's case on
rebuttal, the Court questioned Mr. Armstrong regarding this
deficiency, and he did not have any documentation prepared at the
time. The Court requires a substantial showing from the owners and
any of their related entities that includes, for example,
financial statements, bank account records, and tax returns.
Given the proposed 32-year repayment term on MTGLQ's secured
claim, Judge Caldwell said, a substantial, definite and
irrevocable commitment from the owners becomes more necessary to
provide proof of plan feasibility.
"The Court understands that the Creditor acquired both the loan
and its remaining term at auction and for a discounted price. The
Court, however, must weigh these factors against the related loss
of the federal guaranty. Further, the record suggests that
commercially available loan terms are presently in the range of
ten years. Certainly, a shorter repayment term on the Creditor's
secured claim, which for example provides for sale or refinancing
by a date certain, reduces the risk to the Creditor's interests,
and all other parties dependent upon the success and consummation
of the proposed plan."
Judge Caldwell said the parties should also consider the creation
of reserve accounts in the names of the Debtor and the Creditor,
in which agreed upon sums are deposited by the Debtor on a monthly
basis to defray potential extraordinary expenses. The reserve
accounts could also include any loan commitments and/or capital
contributions from the owners. These types of arrangements will
not interfere with the Debtor's control over rents, but rather
will provide continued assurance that the rents benefit the estate
and all of its creditors. Further, the parties should consider
non-recourse carve-outs for any fraud or gross mismanagement that
may occur after confirmation.
A copy of the Court's Dec. 5, 2012 Scheduling Order is avaiable at
http://is.gd/VvJXIPfrom Leagle.com.
Marble Cliff Crossing Apartments, LLC, filed for Chapter 11
bankruptcy (Bankr. S.D. Ohio Case No. 11-61545) in 2011.
MARINA BIOTECH: Incurs $1.75-Mil. Net Loss in Third Quarter
-----------------------------------------------------------
Marina Biotech, Inc., reported a net loss of $1.75 million on
$1.10 million of revenue for the three months ended Sept. 30,
2012, compared with a net loss of $4.38 million on $286,000 of
revenue for the same period during the prior year.
For the nine months ended Sept. 30, 2012, the Company reported a
net loss of $5.49 million on $2.89 million of revenue, compared
with a net loss of $11.63 million on $629,000 of revenue for the
same period a year ago.
The Company's balance sheet at Sept. 30, 2012, showed $8.01
million in total assets, $10.36 million in total liabilities and a
$2.35 million total stockholders' deficit.
"The market value and the volatility of our stock price, as well
as general market conditions and our current financial condition,
could make it difficult for us to complete a financing or
collaboration transaction on favorable terms, or at all. Any
financing we obtain may further dilute the ownership interest of
our current stockholders, which dilution could be substantial, or
provide new stockholders with superior rights than those possessed
by our current stockholders. If we are unable to obtain
additional capital when required, and in the amounts required, we
may be forced to modify, delay or abandon some or all of our
programs, or to discontinue operations altogether. Additionally,
any collaboration may require us to relinquish rights to our
technologies. These factors, among others, raise substantial
doubt about our ability to continue as a going concern."
A copy of the Q3 Form 10-Q is available for free at:
http://is.gd/YLiLcg
Marina Biotech recorded net income of $1.08 million for the three
months ended June 30, 2012, compared with a net loss of $3.58
million for the same period a year ago. For the six months ended
June 30, 2012, the Company reported a net loss of $3.74 million,
compared with a net loss of $7.25 million for the same period
during the prior year. A copy of the Q2 Form 10-Q is available
for free at http://is.gd/naZ7S5
For the three months ended March 31, 2012, the Company incurred a
net loss of $4.82 million, compared with a net loss of $3.66
million for the same period during the prior year. A copy of the
Q1 Form 10-Q is available for free at http://is.gd/qK0ikW
About Marina Biotech
Marina Biotech, Inc., headquartered in Bothell, Washington, is a
biotechnology company focused on the discovery, development and
commercialization of nucleic acid-based therapies utilizing gene
silencing approaches such as RNA interference ("RNAi") and
blocking messenger RNA ("mRNA") translation. The Company's goal
is to improve human health through the development, either through
its own efforts or those of its collaboration partners and
licensees, of these nucleic acid-based therapeutics as well as the
delivery technologies that together provide superior treatment
options for patients. The Company has multiple proprietary
technologies integrated into a broad nucleic acid-based drug
discovery platform, with the capability to deliver novel nucleic
acid-based therapeutics via systemic, local and oral
administration to target a wide range of human diseases, based on
the unique characteristics of the cells and organs involved in
each disease.
On June 1, 2012, the Company announced that, due to its financial
condition, it had implemented a furlough of approximately 90% of
its employees and ceased substantially all day-to-day operations.
Since that time substantially all of the furloughed employees have
been terminated. As of Sept. 30, 2012, the Company had
approximately 11 remaining employees, including all of its
executive officers, all of whom are either furloughed or working
on reduced salary. As a result, since June 1, 2012, its internal
research and development efforts have been minimal, pending
receipt of adequate funding.
KPMG LLP, in Seattle, expressed substantial doubt about Marina
Biotech's ability to continue as a going concern following the
2011 financial results. The independent auditors noted that the
Company has ceased substantially all day-to-day operations,
including most research and development activities, has incurred
recurring losses, has a working capital and accumulated deficit
and has had recurring negative cash flows from operations.
The Company reported a net loss of $29.42 million in 2011,
compared with a net loss of $27.75 million in 2010.
May File for Bankruptcy
The Company said the following statement in its annual report on
Form 10-K for the year ended Dec. 31, 2011:
"We have experienced and continue to experience operating losses
and negative cash flows from operations, as well as an ongoing
requirement for substantial additional capital investment. We
expect that we will need to raise substantial additional capital
to continue our operations beyond Oct. 31, 2012. We are currently
pursuing a variety of funding options, including equity offerings,
partnering/co-investment, venture debt and commercial licensing
agreements for our technologies. There can be no assurance as to
the availability or terms upon which such financing and capital
might be available. If we are not successful in our efforts to
raise additional funds by Oct. 31, 2012, we may be required to
further delay, reduce the scope of, or eliminate one or more of
our development programs or discontinue operations altogether."
"As a result, there is a significant possibility that we will file
for bankruptcy or seek similar protection. Moreover, it is
possible that our creditors may seek to initiate involuntary
bankruptcy proceedings against us, which would force us to make
defensive voluntary filing(s) of our own. If we restructure our
debt or file for bankruptcy protection, it is very likely that our
common stock will be severely diluted if not eliminated entirely."
MCCLATCHY CO: Offering $910 Million of 9% Senior Secured Notes
--------------------------------------------------------------
The McClatchy Company has priced its offering of $910 million
aggregate principal amount of its 9.00% Senior Secured Notes due
2022 to qualified institutional buyers pursuant to Rule 144A under
the Securities Act of 1933, as amended, and outside the United
States to non-U.S. persons pursuant to Regulation S under the
Securities Act. The aggregate principal amount of notes to be
issued has been increased from the originally announced $750
million to $910 million. The offering is expected to close on
Dec. 18, 2012, subject to satisfaction of customary closing
conditions.
The notes will have an issue price of 100.00% and will be senior
obligations of McClatchy and will be guaranteed by each of
McClatchy's material domestic and certain other subsidiaries that
guarantee indebtedness under McClatchy's credit agreement. The
notes and guarantees will be secured by a first-priority lien on
certain of McClatchy's and the subsidiary guarantors' assets and
will rank pari passu with liens granted under McClatchy's credit
agreement. However, the proceeds of any collection or other
realization of collateral received in connection with the exercise
of remedies will be applied first to repay amounts due under
McClatchy's revolving credit facility and certain "superpriority"
obligations that McClatchy may incur in the future, before the
holders of the notes receive those proceeds. Interest will be
payable semi-annually at a rate of 9.00% per annum on December 15
and June 15 of each year, commencing on June 15, 2013.
McClatchy intends to use the net proceeds of the offering,
together with borrowings under its credit agreement and cash on
hand, to fund its cash tender offer for any and all of the
approximately $846 million aggregate principal amount of its
11.50% Senior Secured Notes due 2017.
Commences Tender Offer
The McClatchy Company has commenced an offer to purchase for cash
up to $700 million of its outstanding 11.50% senior secured notes
due 2017 and solicitation of consents relating to its outstanding
Notes.
Holders of Notes that are validly tendered at or prior to 5:00
p.m., New York City time on Dec. 11, 2012, and who have validly
delivered (and not validly revoked) consents to the proposed
amendments on or prior to the Early Tender Date will receive
$1,103.40 for each $1,000 principal amount of Notes tendered,
which includes an early tender payment of $30 per $1,000 principal
amount of Notes. Holders of the Notes that are validly tendered
(and not validly withdrawn) after the Early Tender Date and on or
prior to the Expiration Date will receive $1,073.40 for each
$1,000 principal amount of Notes tendered, subject to proration
under the terms of the Offer to Purchase.
J.P. Morgan Securities LLC, BofA Merrill Lynch and Credit Suisse
Securities (USA) LLC are the Dealer Managers and Consent
Solicitation Agents for the Offer.
In a subsequent press release, the Company amended and restated
its previously announced offer to purchase for cash its
outstanding 11.50% senior secured notes due 2017 and solicitation
of consents relating to its outstanding Notes to increase the
amount the Company is offering to purchase in the Offer from up to
$700 million aggregate principal amount of Notes to any and all
outstanding Notes, and to amend the Consent Solicitation.
About The McClatchy Company
Sacramento, Calif.-based The McClatchy Company (NYSE: MNI)
-- http://www.mcclatchy.com/-- is the third largest newspaper
company in the United States, publishing 30 daily newspapers, 43
non-dailies, and direct marketing and direct mail operations.
McClatchy also operates leading local Web sites in each of its
markets which extend its audience reach. The Web sites offer
users comprehensive news and information, advertising, e-commerce
and other services. Together with its newspapers and direct
marketing products, these interactive operations make McClatchy
the leading local media company in each of its premium high growth
markets. McClatchy-owned newspapers include The Miami Herald, The
Sacramento Bee, the Fort Worth Star-Telegram, The Kansas City
Star, The Charlotte Observer, and The News & Observer (Raleigh).
The Company's balance sheet at Sept. 23, 2012, showed
$2.88 billion in total assets, $2.67 billion in total liabilities,
and $210.29 million in stockholders' equity.
* * *
McClatchy carries a 'Caa1' corporate family rating from Moody's
Investors Service. In May 2011, Moody's changed the rating
outlook from stable to positive following the company's
announcement that it closed on the sale of land in Miami for
$236 million. The outlook change reflects Moody's expectation
that McClatchy will utilize the net proceeds to reduce debt,
including its underfunded pension position, which will reduce
leverage by approximately half a turn and lower required
contributions to the pension plan over the next few years.
McClatchy Co. carries a 'B-' Corporate Credit Rating from
Standard & Poor's Ratings Services.
MDC PARTNERS: Moody's Affirms 'B2' CFR; Rates $80MM Note 'B3'
-------------------------------------------------------------
Moody's Investors Service assigned a B3 rating to MDC Partners
Inc.'s new $80 million senior unsecured note and affirmed the
existing ratings. The Corporate Family Rating (CFR) and
Probability of Default Rating (PDR) was affirmed at B2 and the
existing $345 million senior unsecured note was affirmed at B3.
The outlook remains stable.
The $80 million senior unsecured note is expected to be issued at
a premium and have identical terms to the existing senior
unsecured notes that mature in 2016. Moody's expects the proceeds
and cash on hand to be used to paydown the revolving credit
facility which has $124 million drawn currently. While the terms
are expected to be the same as the existing note, it will trade
separately. After one year Moody's anticipates that it will be
consolidated into the existing note issue.
Rating Summary:
Issuer: MDC Partners Inc.
$80 million Senior Unsecured Note due November 2016 assigned
B3 LGD4 -- 66%
Corporate Family Rating B2 affirmed
Probability of Default Rating B2 affirmed
$345 million Senior Unsecured Note due November 2016 B3
affirmed; LGD4 -- 66% updated from LGD4 -68%
Outlook, remains stable
Ratings Rationale
The B2 CFR reflects MDC's high leverage level (7.7x as of Q3 2012
including Moody's standard adjustments and including deferred
acquisition consideration and minority interest puts as debt), the
company's aggressive acquisition strategy, and its sensitivity to
consumer spending that leads to above average risk. The rating
also reflects its smaller scale and low EBITDA margins compared to
its larger competitors. Dividend payments of over $17 million
annually and its aggressive acquisition strategy which has been
financed with upfront payments in addition to contingent deferred
acquisition consideration payments, limit its liquidity position.
While Moody's base case scenario has leverage improving in 2013 as
the level of investments decline, cost cutting initiatives are
carried out, and revenue grows, the additional long term debt
positions the company weakly at the existing rating level.
Management has stated its goal of decreasing leverage, but the
company has targeted deleveraging previously. MDC's leverage
covenant calculation does not include items such as contingent
deferred acquisition payments or minority interest puts and
includes substantial add backs for stock based compensation.
After three acquisitions in the beginning of 2012, Moody's expects
limited acquisition activity in the near term as the company
focuses on optimizing the company's existing assets. However, over
time Moody's expects more acquisitions to address client needs
internationally and domestically. The company benefits from strong
organic revenue growth, a focus on digital advertising, and
improvements in diversifying its revenue stream which has lessened
its dependence on any one key client compared to prior years. If
the company is able to minimize acquisitions and grow organically,
the leverage and liquidity position would improve as the deferred
acquisition payments are paid down over the next several years.
The liquidity position is adequate as indicated by its SGL-3
rating. Reoccurring acquisition consideration payments and
minority equity put rights which effectively act as short term
debt, limit its liquidity position and make the company reliant on
its revolver facility. The current portion of deferred acquisition
consideration is $83 million and the long term portion is $86
million as of Q3 2012. The company is currently in compliance with
its financial covenants. As the existing credit agreement for the
revolver has been modified several times, Moody's does not expect
that the company would have a problem getting an additional
amendment if needed unless there was a material deterioration in
performance or economic conditions. The company could benefit from
working capital improvements as part of its recent acquisition of
media companies, but reliance on this source for liquidity could
be problematic in an economic downturn.
The outlook is stable reflecting Moody's expectation for leverage
to improve as revenue grows, acquisition consideration payments
are made, investment spending subsides, and efforts to cut costs
and realize efficiencies lead to improved margin levels. However,
a material deterioration in ad spending due to an economic
downturn or poor operational performance that impacted earnings
would put pressure on the current ratings levels.
Given the downgrade in June 2012 and the addition of $80 million
in long term debt, a positive rating action is not expected in the
near future. Positive rating pressure could develop if leverage
declines to less than 4x (including Moody's adjustments) on a
sustained basis, acquisition consideration payments and put rights
decline materially, free cash flow as a percentage of debt
improves to over 10%, and the company maintains a good liquidity
position with a less aggressive financial policy.
The rating would be downgraded if the company fails to grow EBITDA
so that leverage does not decline below 7.25x (including Moody's
adjustments) by the end of 2013 and start to generate positive
free cash flow after acquisition consideration payments, minority
interest puts and dividend payments.
MDC Partners' ratings were assigned by evaluating factors that
Moody's considers relevant to the credit profile of the issuer,
such as the company's (i) business risk and competitive position
compared with others within the industry; (ii) capital structure
and financial risk; (iii) projected performance over the near to
intermediate term; and (iv) management's track record and
tolerance for risk. Moody's compared these attributes against
other issuers both within and outside MDC Partners' core industry
and believes MDC Partners' ratings are comparable to those of
other issuers with similar credit risk. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
MDC Partners Inc. is a marketing communications and consulting
services holding company that provides advertising, interactive
marketing, direct marketing, database and customer relationship
management, sales promotion, corporate communications, market
research, corporate identity, design and branding and other
related services. Crispin Porter + Bogusky (Crispin Porter) and
kirshenbaum bond senecal + partners (kirshenbaum bond) are MDC's
two largest agencies. Revenue as of Q3 2012 was $1.024 billion.
METROPLAZA HOTEL: Case Summary & 19 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Metroplaza Hotel, LLC
fdba Metroplaza Two Associates, LLC
Metroplaza Two Associates, LLC
120 Wood Avenue South
Iselin, NJ 08830
Bankruptcy Case No.: 12-38611
Chapter 11 Petition Date: December 6, 2012
Court: U.S. Bankruptcy Court
District of New Jersey (Trenton)
Judge: Raymond T. Lyons, Jr.
Debtor's Counsel: Joseph J. DiPasquale, Esq.
TRENK, DIPASQUALE, DELLA FERA & SODONO, P.C.
347 Mt. Pleasant Avenue, Suite 300
West Orange, NJ 07052
Tel: (973) 243-8600
Fax: (973) 243-8677
E-mail: jdipasquale@trenklawfirm.com
Scheduled Assets: $36,193,069
Scheduled Liabilities: $42,191,460
The petition was signed by James Wolosoff, managing member.
Affiliate that filed separate Chapter 11 petition:
Entity Case No. Petition Date
------ -------- -------------
Inn at Woodbridge, Inc. 12-38603 12/06/12
Metroplaza Hotel's List of Its 19 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Natural Wellness Center LLC Security Deposit $70,011
120 Wood Avenue South, Suite 504
Iselin, NJ 08830
Gold Group Enterprises Security Deposit $31,166
120 Wood Avenue South, Suite 401
Iselin, NJ 08830
Domino Foods, Inc. Security Deposit $23,410
120 Wood Avenue South, Suite 406
Iselin, NJ 08830
Lloyds TSB Bank PLC Security Deposit $21,500
Starpoint Solutions, Inc. Security Deposit $20,833
Combined Computer Resources Security Deposit $17,600
Natural Taste of Asia, LLC Security Deposit $16,667
Corodemus & Corodemus, LLC Security Deposit $15,354
Mind Lance, Inc. Security Deposit $11,060
Corporate Training Corp. Security Deposit $10,900
Omptimum Health Strategies LLC Security Deposit $10,000
It by Design Security Deposit $9,592
Samiti Marketing Inc. Security Deposit $6,579
All Jersey Mechanical & -- $6,426
Construction
Cramer Rosenthal McGlynn, LLC Security Deposit $6,333
Nichani Holdings LLC Security Deposit $6,050
Direct Energy Services, LLC Security Deposit $5,801
Contech Systems, Inc. Security Deposit $5,688
Medesco LLC Security Deposit $5,273
MF GLOBAL: Singapore Creditors to Get First Interim Payment
-----------------------------------------------------------
Carla Main, substituting for Bloomberg News bankruptcy columnist
Bill Rochelle, reports that MF Global Holdings Ltd.'s liquidators
said unsecured creditors in Singapore will get an interim payment
of 15 cents on the dollar later this month. The unsecured
creditors in Singapore are among the first, "if not the first," to
receive a partial repayment of their debts at MF Global units
around the globe, the liquidators said in an e-mailed statement to
Bloomberg. The Singapore unit had more than 6,000 customers who
traded futures and options, foreign exchange and bullion
contracts.
About MF Global
New York-based MF Global (NYSE: MF) -- http://www.mfglobal.com/--
is one of the world's leading brokers of commodities and listed
derivatives. MF Global provides access to more than 70 exchanges
around the world. The firm is also one of 22 primary dealers
authorized to trade U.S. government securities with the Federal
Reserve Bank of New York. MF Global's roots go back nearly 230
years to a sugar brokerage on the banks of the Thames River in
London.
MF Global Holdings Ltd. and MF Global Finance USA Inc. filed
voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Case Nos. 11-15059
and 11-5058) on Oct. 31, 2011, after a planned sale to Interactive
Brokers Group collapsed. As of Sept. 30, 2011, MF Global had
$41,046,594,000 in total assets and $39,683,915,000 in total
liabilities. It is easily the largest bankruptcy filing so far
this year.
Judge Honorable Martin Glenn presides over the Chapter 11 case.
J. Gregory Milmoe, Esq., Kenneth S. Ziman, Esq., and J. Eric
Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, serve
as bankruptcy counsel. The Garden City Group, Inc., serves as
claims and noticing agent. The petition was signed by Bradley I.
Abelow, Executive Vice President and Chief Executive Officer of MF
Global Finance USA Inc.
The Securities Investor Protection Corporation commenced
liquidation proceedings against MF Global Inc. to protect
customers. James W. Giddens was appointed as trustee pursuant to
the Securities Investor Protection Act. He is a partner at Hughes
Hubbard & Reed LLP in New York.
Jon Corzine, the former New Jersey governor and co-CEO of
Goldman Sachs Group Inc., stepped down as chairman and chief
executive officer of MF Global just days after the bankruptcy
filing.
U.S. regulators are investigating about $633 million missing from
MF Global customer accounts, a person briefed on the matter said
Nov. 3, according to Bloomberg News.
Bankruptcy Creditors' Service, Inc., publishes MF GLOBAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by MF Global Holdings and other insolvency and
bankruptcy proceedings undertaken by its affiliates.
(http://bankrupt.com/newsstand/or 215/945-7000)
MICHIGAN: Governor Seeks New Law Permitting Emergency Takeovers
---------------------------------------------------------------
Carla Main, substituting for Bloomberg News bankruptcy columnist
Bill Rochelle, reports that financially distressed Michigan cities
and school districts could choose between mediation with
creditors, bankruptcy or a state-appointed emergency manager under
legislation Governor Rick Snyder and Republican lawmakers said
they would introduce Dec. 6.
According to the report, the proposal would replace a 2011 law
repealed by voters on Nov. 6, according to a statement from
Michigan's treasury department. That law gave emergency managers
sweeping powers to fire elected officials, sell community assets
and cancel union contracts to balance budgets. Five cities and
three school districts now operate with emergency managers under a
weaker 1990 law, which would be replaced by the new measure.
The report relates that the repeal of Public Act 4 left the state
without enough clout to rescue cities and schools from insolvency,
Mr. Snyder has said. The governor had championed the 2011 law,
which opponents called undemocratic and an affront to local
voters. The proposal came as Republicans who run the Legislature
considered a right-to-work law banning mandatory dues collections
from workers covered by union contracts. Several hundred union
supporters crammed into the state Capitol Dec. 5 to protest
against the bill with loud chants audible in the Senate chamber.
The new financial rescue proposal, the report discloses, would
retain the state's power to declare financial emergencies in
cities and school districts, while giving local governments the
options to reach a consent agreement with the state similar to one
Detroit has, mediation, an emergency manager or a Chapter 9
bankruptcy. Under current law, the state must approve a
bankruptcy request. The proposed new law would tie a Chapter 9
filing to a full state review of city or school district finances.
While the new bill would reinstate broad powers for emergency
managers, local officials would have authority to approve certain
decisions made by the managers, or develop alternate solutions
that produce equal savings. The proposal would also permit local
officials to ask the governor to remove emergency managers after a
year, or dismiss them with a two-thirds vote of a governing body
such as a city council.
MITCHEL'S CHIMNEY: Files Chapter 7 to Liquidate Business
--------------------------------------------------------
The Washington Post reports Mitchel's Chimney & Masonry
Specialists, Inc., in Woodbridge, Va., filed for Chapter 7
liquidation (Bankr. E.D. Va. Case No. 12-17064) in Alexandria
Division, on Nov. 30, 2012. Robert M. Gants, Esq. (Tel: 703-684-
2000), serves as the Debtor's counsel. In its petition, the
company listed under $50,000 in assets and between $100,001 to
$500,000 in liabilities. Its largest unsecured creditor is
National Chimney Supply, owed $21,658.
The Post notes in a Chapter 7 liquidation, a court-appointed
trustee sells assets to pay creditors' claims. The company then
ceases operations.
MODERN PRECAST: Proposes Beane Associates as Advisor
----------------------------------------------------
Modern Precast Concrete Inc. and its affiliates seek leave to
employ the firm of Beane Associates, Inc., as financial advisor
to:
a. review of all loan documents, budgets and past financial
statements.
b. assist Debtors in the development of "true cash flow"
projections including back up schedules and recommendations
to monitor and improve cash flow.
c. assist Debtors in development of a plan to present to
lending institutions to include recommended business
strategies to increase revenues, reduce costs and
restructure current debt structure.
d. assist Debtors in development of an "all-entities"
restructuring and recapitalization plan, i.e., plan of
reorganization, and execution thereof.
e. attend and participate in meetings with Debtors and current
lenders and other stakeholders.
f. assist in any other matters that may be appropriate in the
cases related to the foregoing.
Prepetition, the firm received payments in the form of advance
retainers from the Debtor. A total of $10,000 of the retainers
were unused.
BAI does not hold or represent any interest adverse to the estate,
and is a disinterested person.
Compensation will be payable to BAI on an hourly basis, plus
reimbursement of actual, necessary expenses incurred by BAI. The
firm has agreed to provide services to the Debtors at the rate of
$295 per hour, which is the rate regularly charged by BAI.
MODERN PRECAST: Proposes McElroy Deutsch as Chapter 11 Counsel
--------------------------------------------------------------
Modern Precast Concrete Inc. and its affiliates desire to employ
McElroy, Deutsch, Mulvaney & Carpenter LLP as their attorneys for
matters relating to the bankruptcy cases. The Debtors seek to
retain MDMC as their counsel because of the firm's experience and
knowledge in the field of debtors' and creditors' rights, and its
expertise and knowledge practicing in bankruptcy court. The
Debtors propose to pay MDMC its customary hourly rates in effect
from time to time and to reimburse MDMC for expenses. As of the
Petition Date, MDMC held an unused retainer of $8,936.
The Debtors lacked sufficient funds to provide MDMC with a
meaningful retainer in the Chapter 11 cases. The Debtors
understand that MDMC's willingness to represent the Debtors in
connection with the Chapter 11 cases is conditioned upon the
agreement of the Debtors' pre- and post-petition lender, M&T Bank
to provide a $150,000 carve-out in the aggregate for the Debtors'
professionals (MDMC and Beane Associates, Inc., financial advisor)
for the two-month period of debtor in possession financing. In an
"event of default" under the DIP Credit Agreement, MDMC and Beane
are limited to a reduced "Post-Event of Default Carve-Out," capped
at $50,000 in the aggregate.
MODERN PRECAST: Case Summary & 31 Largest Unsecured Creditors
-------------------------------------------------------------
Debtor: Modern Precast Concrete, Inc.
3900 Glover Road
Easton, PA 18040
Bankruptcy Case No.: 12-21304
Chapter 11 Petition Date: December 6, 2012
Court: U.S. Bankruptcy Court
Eastern District of Pennsylvania (Reading)
Judge: Richard E. Fehling
Debtor's Counsel: Aaron S. Applebaum, Esq.
MCELROY DEUTSCH MULVANEY & CARPENTER LLP
Suburban Station Building, Suite 1500
1617 John F. Kennedy Boulevard
Philadelphia, PA 19103
Tel: (215) 557-2900
E-mail: aapplebaum@mdmc-law.com
- and ?
Barry D. Kleban, Esq.
MCELROY DEUTSCH MULVANEY & CARPENTER, LLP
Suburban Station Building, Suite 1500
1617 John F. Kennedy Boulevard
Philadelphia, PA 19103
Tel: (215) 557-2900
E-mail: bkleban@mdmc-law.com
Debtor's
Financial Advisor
and Investment
Banker: GRIFFIN FINANCIAL GROUP, LLC
Debtor's
Financial
Restructuring
Advisor: BEANE ASSOCIATES, INC.
Estimated Assets: $10,000,001 to $50,000,000
Estimated Liabilities: $10,000,001 to $50,000,000
Affiliates that simultaneously filed separate Chapter 11
petitions:
Entity Case No.
------ --------
West Family Associates, LLC 12-21306
West North, LLC 12-21307
The petitions were signed by James P. Loew, chief financial
officer.
Modern Precast Concrete's List of Its 31 Largest Unsecured
Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
*United States Small Business Loan $2,757,840
Administration
2120 Riverfront Drive, Suite 100
Little Rock, AR 72202-1794
*Pennsylvania Industrial Loan $1,553,000
Development Authority
Commonwealth Keystone Building
400 North Street, 4th Floor M East
Harrisburg, PA 17120
Fry's Plastic Trade Debt $1,037,747
560 Rabbittown Road
Muncy, PA 17756
Essroc Cement Corp. Trade Debt $281,086
3938 Easton Nazareth Highway
Nazareth, PA 18064
J M Ahle Trade Debt $275,406
2 Herman Street
South River, NJ 08882
Sika Corporation Trade Debt $266,985
23868 Network Place
Chicago, IL 60673-1238
A L Patterson Inc. Trade Debt $262,697
300 Ben Fairless Drive
Fairless Hills, PA 19030
Premier Tech Aqua Trade Debt $238,782
R T H Transport LLC Trade Debt $192,778
A B E Materials ? Easton Trade Debt $189,013
Schlusselbauer North Trade Debt $163,648
Belvidere Sand & Gravel Trade Debt $162,916
Re-Steel Distribution Co Inc. Trade Debt $160,516
Engineered Wire Products Trade Debt $130,373
Metal Partners Rebar Trade Debt $113,524
Morgan's Welding Trade Debt $109,550
King Steel Corporation Trade Debt $108,607
Bollinger Electric Inc. Trade Debt $101,908
Apex Mfg Co Inc. Trade Debt $98,495
United Concrete Products Trade Debt $94,547
William Elek Inc. Trade Debt $90,734
Plumstead Materials Trade Debt $83,146
EASD Tax Collector ? Anne Trade Debt $72,003
Dayton Superior Trade Debt $59,391
General Supply Co. Trade Debt $57,442
Rodota Inc. Trade Debt $55,849
Holcim Trade Debt $49,178
EJ Trade Debt $44,287
Micro Solutions Plus Trade Debt $40,017
American Manufacturing Trade Debt $38,989
*M&T Bank Loan Undetermined
MOMENTIVE PERFORMANCE: Obtains $300MM Commitments from Lenders
--------------------------------------------------------------
Momentive Performance Materials Inc. entered into an incremental
amendment to its senior secured credit agreement whereby certain
revolving facility lenders agreed to make approximately $300
million of revolving facility commitments available for revolving
facility loans under the Company's senior secured credit
agreement.
The incremental amendment and the new revolving commitments became
effective on Nov. 30, 2012, following the termination of the
existing revolving commitments. The new revolving commitments
will mature on Dec. 3, 2014. The new revolving loans will bear
interest at a rate per annum of LIBOR plus 4.75% until the date
that is 60 days after Nov. 16, 2012, from which time the new
revolving loans will bear interest at a rate per annum of LIBOR
plus 6.00%.
A copy of the Second Incremental Facility Agreement is available
for free at http://is.gd/tlReVa
About Momentive Performance
Momentive Performance Materials, Inc., is a producer of silicones
and silicone derivatives, and is engaged in the development and
manufacture of products derived from quartz and specialty
ceramics. As of Dec. 31, 2008, the Company had 25 production
sites located worldwide, which allows it to produce the majority
of its products locally in the Americas, Europe and Asia.
Momentive's customers include companies in industries, such as
Procter & Gamble, 3M, Goodyear, Unilever, Saint Gobain, Motorola,
L'Oreal, BASF, The Home Depot and Lowe's.
The Company had a net loss of $140 million in 2011, following a
net loss of $63 million in 2010. Net loss in 2009 was
$42 million.
The Company's balance sheet at Sept. 30, 2012, showed
$2.98 billion in total assets, $3.94 billion in total liabilities,
and a $960 million in total deficit.
* * *
As reported by the TCR on May 14, 2012, Moody's Investors Service
lowered Momentive Performance Materials Inc.'s Corporate Family
Rating (CFR) and Probability of Default Rating (PDR) to Caa1 from
B3. The action follows the company's weak first quarter results
and expectations for a slower than expected recovery in volumes in
2012.
In the Aug. 15, 2012, edition of the TCR, Standard & Poor's
Ratings Services lowered all of its ratings on MPM by two notches,
including the corporate credit rating to 'CCC' from 'B-'. The
outlook is negative.
"The likelihood that earnings and cash flow will remain very weak
for the next several quarters prompted the downgrade," explained
credit analyst Cynthia Werneth. "In our view, leverage is
unsustainably high, with total adjusted debt to EBITDA above 15x
as of June 30, 2012."
MORTGAGE GUARANTY: Moody's Confirms B2 IFS Rating; Outlook Neg.
--------------------------------------------------------------
Moody's Investors Service has confirmed the insurance financial
strength (IFS) rating of Mortgage Guaranty Insurance Corporation
(MGIC) at B2, to reflect the group's recent settlement of a
commercial dispute with Freddie Mac, a Government-sponsored Entity
(GSE), which also extended conditional approval to write new
business through year-end 2013. Moody's has also confirmed the IFS
rating of MGIC Indemnity Corporation (MIC) at Ba3, the senior debt
rating of MGIC's parent company MGIC Investment Corporation (MTG)
at Caa3, and downgraded MTG's junior subordinated debt rating to C
(hyb). The outlook is negative for the IFS ratings. The rating
actions follow the reviews for downgrade initiated on August 8,
2012.
Ratings Rationale
On November 30, MGIC Investment Corporation (MTG), the parent and
holding company of MGIC, announced that it settled a pool
insurance dispute with Freddie Mac, one of its major
counterparties. Freddie Mac also extended to December 31, 2013,
conditional eligibility of MGIC Indemnity Corporation (MIC), a
wholly owned subsidiary of MGIC, to write business in states where
MGIC cannot. As part of the settlement, MGIC will pay Freddie Mac
a total of $267.5 million; MTG made a $100 capital contribution to
MGIC; and MIC's resources are available to enhance MGIC's
liquidity, if needed.
The confirmation of the financial strength ratings reflects the
resolution of the dispute and the extension of Freddie Mac's
approval to write new business that removes substantial
uncertainty about the firm's ability to continue operating. The
dispute, if unresolved, could have materially hurt MGIC's business
prospects, given Freddie Mac is a major counterparty for the firm.
The $267.5 million settlement payment to Freddie Mac includes $100
million to be paid by 11 December 2012, with the remaining $167.5
million to be paid in 48 equal installments beginning on 2 January
2013. MTG's $100 million capital contribution to MGIC and
spreading the payment across four years helps alleviate near-term
liquidity pressure given MGIC's substantial ongoing claims payment
obligations. The dispute was related to pool insurance policies
that were issued by MGIC to Freddie Mac subject to a single
aggregate loss limit. According to MGIC, Freddie Mac's view was
that the limit should remain constant over the life of the
policies, while MGIC believed the initial aggregate loss limit
should decrease as coverage under each policy terminated. Freddie
Mac interpreted the aggregate loss limit to be approximately $535
million higher than MGIC, according to MGIC.
Freddie Mac's approval allows MIC to continue writing new business
until year-end 2013. With $443 million of statutory surplus as of
30 September 2012, MIC would be a well-capitalized active
insurance writer, absent requirements to support MGIC. However,
Freddie Mac's agreement formalized the linkage between MIC and
MGIC, which adversely affects MIC's credit profile. As long as the
Freddie Mac's agreement is in force, MIC is obligated to support
MGIC's liquidity needs and MIC's business written is expected to
revert back to MGIC in states where MGIC would regain regulatory
capital compliance. According to the agreement, subject to
regulatory approval, MGIC could access MIC's capital in an amount
necessary for MGIC to maintain sufficient liquidity. However, when
determining the maximum dividend that MIC could prudently pay to
MGIC, the regulator intends to take into account of the interests
of MIC's policyholders and other standards for dividends imposed
by law.
The negative outlook for the financial strength ratings reflects
uncertainty related to continued extension of regulatory and GSEs'
approval beyond year end 2013, the weak statutory surplus position
and eroding liquidity at MGIC, which makes it susceptible to
severe adverse loss developments in its sizable legacy book. In
addition, the negative outlook of MIC reflects its linkage with
MGIC, as potential liquidity support to MGIC could weaken MIC's
resources.
The Caa3 senior debt rating indicates that MTG's ability to repay
debt holders remains impaired. The downgrade of its junior
subordinated debt reflects that holding company resources are
further reduced due to the $100 million capital contribution to
MGIC this week, and the coupon of the deferrable subordinated debt
has been suspended since September 2012. The holding company's
direct financial resources totaled $425 million before the $100
million capital contribution to MGIC. MTG needs to service $100
million of senior debt due in 2015 and $345 million of senior
convertible debt due in 2017, with annual interest payments
totaling $23 million. The coupon payment for the $390 million of
subordinated debt due in 2063 has been deferred.
The following ratings are confirmed, all with negative outlooks:
Mortgage Guaranty Insurance Corporation -- insurance financial
strength rating at B2
MGIC Investment Corporation -- senior unsecured debt at Caa3
MGIC Indemnity Corporation -- insurance financial strength
rating at Ba3
The following rating has been downgraded:
MGIC Investment Corporation -- junior subordinated debt to C
(hyb), from Ca (hyb).
MGIC Investment Corporation, headquartered in Milwaukee, Wisconsin
is the holding company for Mortgage Guaranty Insurance Company
(MGIC), one of the largest US mortgage insurers, with $165 billion
of primary insurance in force as of 30 September 2012. Mortgage
Indemnity Corporation, a mortgage insurance subsidiary of MGIC,
was recently recapitalized to write insurance in states that would
not waive MGIC's regulatory capital requirements.
The principal methodology used in this rating was Moody's Global
Rating Methodology for the Mortgage Insurance Industry published
in February 2007.
MSR RESORT: Resorts to Be Sold to GIC After Canceled Auction
------------------------------------------------------------
Carla Main, substituting for Bloomberg News bankruptcy columnist
Bill Rochelle, reports that Government of Singapore Investment
Corp. is set to buy a group of resorts owned by hedge fund Paulson
& Co. for $1.5 billion after no competing bidders emerged for the
bankrupt properties. An auction for the properties was canceled
after no competing bids were received, leaving GIC, a sovereign
wealth fund, as the successful bidder, according to a filing on
Dec. 5 in U.S. Bankruptcy Court in Manhattan.
The report notes that the sale comes after a joint venture that
includes Paulson acquired eight resorts through a foreclosure last
year. Five of the properties, including the Grand Wailea in Hawaii
and La Quinta Resort & Club in California, then filed for
bankruptcy protection.
The resorts sought approval in August for an auction with GIC
acting as the lead bidder. The Doral golf resort in Miami was sold
earlier to Donald Trump.
According to the report, GIC, a creditor in the bankruptcy case,
agreed to buy the Grand Wailea, La Quinta, the Arizona Biltmore in
Phoenix, the Claremont resort in Berkeley, California, and
property at the Doral, according to court papers.
The bid includes cash and debt owed to GIC, known as a credit bid,
according to court papers.
About MSR Resort
MSR Hotels & Resorts, formerly known as CNL Hotels & Resorts Inc.,
owned a portfolio of eight luxury hotels with over 5,500 guest
rooms, including the Arizona Biltmore Resort & Spa in Phoenix, the
Ritz-Carlton in Orlando, Fla., and Hawaii's Grand Wailea Resort
Hotel & Spa in Maui.
On Jan. 28, 2011, CNL-AB LLC acquired the equity interests in the
portfolio through a foreclosure proceeding. CNL-AB LLC is a joint
venture consisting of affiliates of Paulson & Co. Inc., a joint
venture affiliated with Winthrop Realty Trust, and affiliates of
Capital Trust, Inc.
Morgan Stanley's CNL Hotels & Resorts Inc. owned the resorts
before the Jan. 28 foreclosure.
Following the acquisition, five of the resorts with mortgage debt
scheduled to mature on Feb. 1, 2011, were sent to Chapter 11
bankruptcy by the Paulson and Winthrop joint venture affiliates.
MSR Resort Golf Course LLC and its affiliates filed for Chapter 11
protection (Bankr. S.D.N.Y. Lead Case No. 11-10372) in Manhattan
on Feb. 1, 2011. The resorts subject to the filings are Grand
Wailea Resort and Spa, Arizona Biltmore Resort and Spa, La Quinta
Resort and Club and PGA West, Doral Golf Resort and Spa, and
Claremont Resort and Spa.
James H.M. Sprayregen, P.C., Esq., Paul M. Basta, Esq., Edward O.
Sassower, Esq., and Chad J. Husnick, Esq., at Kirkland & Ellis,
LLP, serve as the Debtors' bankruptcy counsel. Houlihan Lokey
Capital, Inc., is the Debtors' financial advisor. Kurtzman Carson
Consultants LLC is the Debtors' claims agent.
The five resorts had $2.2 billion in assets and $1.9 billion in
debt as of Nov. 30, 2010, according to court filings. In its
schedules, debtor MSR Resort disclosed $59,399,666 in total assets
and $1,013,213,968 in total liabilities.
The Official Committee of Unsecured Creditors is represented by
Martin G. Bunin, Esq., and Craig E. Freeman, Esq., at Alston &
Bird LLP, in New York.
NET TALK.COM: Replaced Consolidated Debenture with 11 Debentures
----------------------------------------------------------------
Net Talk.com, Inc., on Oct. 16, 2012, issued to an institutional
accredited investor a consolidated 10% Senior Secured Debenture,
due Dec. 31, 2013, memorializing total advances of $1,150,000 made
to the Company from July 2, 2012, to Oct. 16, 2012.
On Dec. 5, 2012, the Company replaced the Original Consolidated
Debenture with 11 separate 10% Senior Secured Debentures, due
Dec. 31, 2013. The total aggregate principal balance of the
Reissued Debentures is $1,150,000. The terms of each Reissued
Debenture are substantially similar to the terms of the Original
Consolidated Debenture. Each Reissued Debenture, among other
matters, accrues interest at 10% per annum, is payable in full on
Dec. 31, 2013, is secured by all of the assets of the Company, and
provides for a default rate of interest of no less than 18% upon
an event of default. Proceeds from the Original Consolidated
Debenture were used for marketing and general working capital.
About Net Talk.com
Based in Miami, Fla., Net Talk.com, Inc., is a telephone company,
that provides, sells and supplies commercial and residential
telecommunication services, including services utilizing voice
over internet protocol technology, session initiation protocol
technology, wireless fidelity technology, wireless maximum
technology, marine satellite services technology and other similar
type technologies.
The Company reported a net loss of $26.17 million for the year
ended Sept. 30, 2011, compared with a net loss of $6.30 million
during the prior year.
The Company's balance sheet at Sept. 30, 2012, showed $5.58
million in total assets, $20.52 million in total liabilities,
$7.20 million in redeemable preferred stock, and a $22.15 million
total stockholders' deficit.
NORSE ENERGY: US Unit Files Chapter 11; Seeks DIP Financing
-----------------------------------------------------------
Norse Energy Corp. ASA on Dec. 8 disclosed that its US subsidiary
holding company, Norse Energy Holdings, Inc., filed a voluntary
petition for Chapter 11 bankruptcy protection and reorganization
under the United States Bankruptcy Code.
Norse Energy Holdings filed a Chapter 11 bankruptcy petition
(Bankr. W.D.N.Y. Case No. 12-13695) on Dec. 7, 2012, estimating
less than $50,000 in assets and less than $100,000 in liabilities.
The Debtor is represented by:
Janet G. Burhyte, Esq.
GROSS, SHUMAN, BRIZDLE & GILFILLAN, P.C.
465 Main Street, Suite 600
Buffalo, NY 14203
Tel: (716) 854-4300
E-mail: jburhyte@gross-shuman.com
Judge Carl L. Bucki presides over the case.
Norse Energy Corp. said the subsidiary Chapter 11 filing will
likely constitute an event of default under the loan agreement in
respect of the NEC convertible callable bond issue 2012/2015 (ISIN
NO 001064079 (http://tel:001064079).0). This may result in the
outstanding bonds in the amount of US$21 million at the Norse
Energy Corp. ASA level being declared to be in default and due for
payment, if the bondholders elect to do so.
The Company has a significant land position of 130,000 net acres
in New York State with certified 2C contingent resources of 951
MMBOE as of June 30, 2012.
Katy Stech, writing for The Wall Street Journal, reported that
executives last week put Norway's Norse Energy Corp.'s U.S. unit
under Chapter 11 protection in the U.S. Bankruptcy Court in
Buffalo, N.Y., while they look for a bankruptcy loan that would
help pay for its seven nonproducing wells and pay off bondholders
who have extended about $21 million to the company.
WSJ says the company in its bankruptcy petition, said it had about
$32 million in debt but valued its assets at $0.
The report relates Norse Energy Corp. USA has been unable to tap
into the pools of gas beneath the 133,000 acres of its land
outside Syracuse, N.Y., while state environmental regulators write
new hydraulic-fracturing rules. According to the report, in its
most recent quarterly report, the company said it is positioned to
pull 951 net million barrels of oil equivalent from the ground
once the New York State Department of Environmental Conservation
lifts the four-year-old moratorium on hydraulic fracturing, or
fracking, a controversial method of extracting reserves from shale
deposits. Norse Energy officials said they expect regulators to
begin permitting again in the first quarter of 2013.
The report says the company's bonds aren't due to be paid off
until 2015, but the company said it was recently ordered by a New
York court to put nearly $8 million in an account until a judge
can determine whether it owes a Buffalo-based business partner any
money.
According to the report, Bradford Drilling Associates filed a
lawsuit against the U.S. unit for payment after it drilled six
wells, arguing that the unit owes $10 million. Late last month, a
New York judge ordered the Norse Energy unit to deposit nearly $8
million into an account while it awaits a trail set for the second
half of 2013, according to a company press release.
The WSJ report relates that the company, running short on money
during the drilling ban, tried to raise money by selling assets.
Earlier this year, it sold "substantially all of the company's
producing wells" for $37 million to former Norse Energy Chief
Executive Oivind Risberg.
PACKAGING DYNAMICS: Moody's Says Groupe De Luxe Deal Credit Pos.
----------------------------------------------------------------
Moody's Investors Service said that Packaging Dynamics
Corporation's acquisition of Canada-based food packaging
manufacturer Groupe De Luxe, completed on November 30, 2012, is
modestly credit positive but does not impact Packaging Dynamics'
B2 CFR and stable outlook.
Packaging Dynamics Corporation is a manufacturer and converter of
value-added food packaging products, specialty bleached and
unbleached lightweight papers, and flexible adhesive lamination
structures. Headquartered in Chicago, Packaging Dynamics is a
portfolio company of private equity investment firm Kohlberg &
Company. The company generated approximately $724 million of
revenues for the twelve months ended September 30, 2012.
PHIBRO ANIMAL: Moody's Affirms 'B3' CFR/PDR; Outlook Positive
-------------------------------------------------------------
Moody's Investors Service changed the ratings outlook of Phibro
Animal Health Corporation to positive from stable as well as
affirmed the company's corporate family and probability of default
ratings at B3. Additionally, Moody's affirmed the Caa1 rating on
the company's $300 million senior unsecured notes.
The change in the outlook to positive reflects improvement in the
company's financial performance. Moody's projects Phibro's
adjusted debt-to-EBITDA to hover around 5 times and adjusted
EBITDA-CAPEX/interest expense to be around 1.5 times by the end of
fiscal 2013. The affirmation of the B3 corporate family rating
considers the near-term refinancing risk and uncertainty regarding
Phibro's capital structure post refinancing or redemption of
upcoming debt maturities.
The following rating actions were taken:
Corporate family rating, affirmed at B3;
Probability of default rating, affirmed at B3;
$300 million, 9.25% Senior Unsecured Notes, due 2018, affirmed
at Caa1 and LGD rate changed to LGD4, 60% from LGD4, 59%.
Rating Rationale
The B3 corporate family rating considers Phibro's relatively small
revenue base versus many of its competitors. Moreover, the
company's aggressive financial policy with regards to dividends
and acquisitions as well as upcoming debt maturities weigh on the
rating. Additionally, the B3 corporate family rating reflects
Moody's expectation of adjusted free cash flow-to-debt below 5% in
the next twelve months. The B3 rating also considers Phibro's
concentration in the highly competitive animal health and
nutrition end-markets as well as its exposure to volatile trace
mineral prices. The risks inherent in the sector the company
operates in include overall competitive environment, regulatory
restrictions on the use of MFAs, governmental restrictions on
manufacturing and approval of new products, potential outbreaks of
animal diseases, and raw material costs.
At the same time, the B3 rating considers Phibro's adjusted debt-
to-EBITDA of around 5.3 times and adjusted EBITDA-CAPEX/interest
expense at 1.4 times for the trailing twelve month (TTM) period
ended September 30, 2012. The rating is also supported by Moody's
expectations for global protein consumption expansion,
particularly in emerging countries. However, potential reduction
in the number of production animals in the U.S. could pressure
volumes and higher feed prices could affect pricing negatively.
Moody's notes that Phibro derives about 65% of its net sales from
U.S.
The positive outlook reflects improvement in the company's credit
metrics and projected good liquidity profile.
The ratings could be downgraded if adjusted debt-to-EBITDA exceeds
7.5 times, liquidity weakens, and the company's free cash flow
turns negative. Additionally, a material debt-financed acquisition
or additional shareholder friendly activities could result in a
ratings downgrade.
The company's ratings are constrained due to its relatively small
size, upcoming debt maturities, and highly leveraged capital
structure. However, if Phibro's is able to increase its adjusted
free cash flow-to-debt above 5% on a sustained basis while
maintaining adjusted debt leverage below 6 times and adjusted
EBITDA-CAPEX/interest expense above 1.5 times, the ratings could
be upgraded.
The principal methodology used in rating Phibro Animal Health
Corporation was the Global Manufacturing Industry 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.
Phibro Animal Health Corporation is a diversified global
developer, manufacturer and marketer of a broad range of animal
health and nutrition products to the poultry, swine, cattle and
aquaculture markets. Phibro is also a manufacturer and marketer of
performance products for use in the ethanol, personal care,
automotive, chemical catalyst and electronics markets. BFI Co. LLC
owns a majority of Phibro's common shares. Revenues for the TTM
period ended September 30, 2012 were approximately $657 million.
RESIDENTIAL CAPITAL: Maciel Lawsuit Against GMAC Stayed
-------------------------------------------------------
In view of GMAC Mortgage, LLC's bankruptcy filing, District Judge
Edward M. Chen stays all proceedings in the lawsuit, MARTHA
MACIEL, et al., Plaintiffs, v. GMAC MORTGAGE, LLC, Defendant, No.
C-12-3030 EMC (N.D. Calif.). All hearing dates, including a Dec.
11 hearing to consider the Defendant's motion to dismiss, are
vacated, pending termination of the automatic stay under 11 U.S.C.
Sec. 362(a) or a determination by the United States District Court
for the Southern District of New York that the Plaintiffs may
proceed with the lawsuit notwithstanding the automatic stay. The
lawsuit disputes title and ownership of the Plaintiff's home on a
variety of bases, including allegedly invalid securities
transactions, failures to properly disclose required information
to the Plaintiffs, and placing the Plaintiffs in a loan they could
not afford. A copy of the Court's Dec. 4, 2012 Order is available
at http://is.gd/AUgVzdfrom Leagle.com.
About Residential Capital
Residential Capital LLC, the unprofitable mortgage subsidiary of
Ally Financial Inc., filed for bankruptcy protection (Bankr.
S.D.N.Y. Lead Case No. 12-12020) on May 14, 2012.
Neither Ally Financial nor Ally Bank is included in the bankruptcy
filings.
ResCap, one of the country's largest mortgage originators and
servicers, was sent to Chapter 11 with 50 subsidiaries amid
"continuing industry challenges, rising litigation costs and
claims, and regulatory uncertainty," according to a company
statement.
ResCap disclosed $15.68 billion in assets and $15.28 billion in
liabilities as of March 31, 2012.
Centerview Partners LLC and FTI Consulting are acting as financial
advisers to ResCap. Morrison & Foerster LLP is acting as legal
adviser to ResCap. Curtis, Mallet-Prevost, Colt & Mosle LLP is
the conflicts counsel. Rubenstein Associates, Inc., is the public
relations consultants to the Company in the Chapter 11 case.
Morrison Cohen LLP is advising ResCap's independent directors.
Kurtzman Carson Consultants LLP is the claims and notice agent.
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in New York, serves
as counsel to Ally Financial.
The Bankruptcy Court in November 2012 approved ResCap's sale of
its mortgage servicing and origination platform assets to Ocwen
Loan Servicing, LLC and Walter Investment Management Corporation
for $3 billion; and its portfolio of roughly 50,000 whole loans to
Berkshire Hathaway for $1.5 billion. The sale of the assets,
subject to satisfaction of customary closing conditions including
certain third party consents, is expected to close in the first
quarter of 2013.
The partnership of Ocwen and Walter defeated the last bid of $2.91
billion from Fortress Investment Group's Nationstar Mortgage
Holdings Inc., which acted as stalking horse bidder, at an auction
that began Oct. 23, 2012. The $1.5 billion offer from Warren
Buffett's Berkshire Hathaway Inc. was declared the winning bid for
a portfolio of loans at the auction on Oct. 25.
Bankruptcy Creditors' Service, Inc., publishes RESIDENTIAL CAPITAL
BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding
undertaken by affiliates of Residential Capital LLC and its
affiliates (http://bankrupt.com/newsstand/or 215/945-7000).
REVSTONE INDUSTRIES: Meeting to Form Creditors' Panel on Dec. 17
----------------------------------------------------------------
Roberta A. DeAngelis, United States Trustee for Region 3, will
hold an organizational meeting on Dec. 17, 2012, at 1:30 p.m. in
the bankruptcy cases of Revstone Industries, LLC and Spara, LLC.
The meeting will be held at:
J Caleb Boggs Federal Building
844 King Street, Room 5209
Wilmington, DE 19801
The sole purpose of the meeting will be to form a committee or
committees of unsecured creditors in the Debtors' case.
The organizational meeting is not the meeting of creditors
pursuant to Section 341 of the Bankruptcy Code. A representative
of the Debtor, however, may attend the Organizational Meeting, and
provide background information regarding the bankruptcy cases.
To increase participation in the Chapter 11 proceeding, Section
1102 of the Bankruptcy Code requires that the United States
Trustee appoint a committee of unsecured creditors as soon as
practicable. The Committee ordinarily consists of the persons,
willing to serve, that hold the seven largest unsecured claims
against the debtor of the kinds represented on the committee.
Section 1103 of the Bankruptcy Code provides that the Committee
may consult with the debtor, investigate the debtor and its
business operations and participate in the formulation of a plan
of reorganization. The Committee may also perform other services
as are in the interests of the unsecured creditors whom it
represents.
As reported in the Troubled Company Reporter on Dec. 6, 2012,
Revstone Industries, LLC, a maker of truck-engine parts, filed a
bare-bones Chapter 11 petition (Bankr. D. Del. Case No. 12-13262)
on Dec. 3.
According to http://www.revstone.com/Revstone is a Lexington,
Kentucky and Southfield, Michigan-based manufacturer of
lightweight components and tooling for steering, power trains and
other systems.
Ascalon Enterprises, LLC, owns 100% of the Debtor.
RK AUTOMOTIVE: Files Chapter 7 to Liquidate Business
----------------------------------------------------
The Washington Post reports RK Automotive LLC in Frederick, Md.,
filed for Chapter 7 liquidation (Bankr. D. Md. Case No. 12-31515)
on Dec. 1. Lawrence Heffner serves as the Debtor's counsel. In
its petition, the Debtor listed $100,001 to $500,000 in both
assets and debts.
The Post notes in a Chapter 7 liquidation, a court-appointed
trustee sells assets to pay creditors' claims. The company then
ceases operations.
SAAB AUTOMOBILE: Trial in Suit Against GM to Begin February
-----------------------------------------------------------
Jeff Bennett, writing for Dow Jones Newswires, reports that Judge
Gershwin Drain of the U.S. District Court in Detroit, Mich.,
agreed on Thursday to hear arguments in February over the fate of
a $3 billion lawsuit filed against General Motors Co. by former
subsidiary, Saab Automobile AB, which claims it was forced into
bankruptcy after GM blocked a financial deal that would have saved
the company. The hearing will begin Feb. 19.
The report relates Saab and its controlling partner, Dutch auto
maker Spyker NV, sued GM in August, alleging the Detroit auto
maker interfered with Spyker's plans to sell Saab to the China
Youngman Automobile Group Co. GM executives worried Youngman
would have access to GM technology and compete against the U.S.
auto maker in China, according to the suit. After the deal
collapsed, Saab launched liquidation proceedings in December 2011.
The report notes GM claims the suit is without merit and has asked
the court to dismiss it.
Spyker purchased Saab in 2010 for $74 million in cash and $326
million in preferred shares. At the time, GM was exiting from its
own bankruptcy proceedings and had been looking to close or sell
the Swedish brand, along with other divisions.
About Saab Automobile AB and Saab Cars N.A.
Saab Automobile AB is a Swedish car manufacturer owned by Dutch
automobile manufacturer Swedish Automobile NV, formerly Spyker
Cars NV. Saab halted production in March 2011 when it ran out of
cash to pay its component providers. On Dec. 19, 2011, Saab
Automobile AB, Saab Automobile Tools AB and Saab Powertain AB
filed for bankruptcy after running out of cash.
Some of Saab's assets were sold to National Electric Vehicle
Sweden AB, a Chinese-Japanese backed start-up that plans to make
an electric car using Saab Automobile's former factory, tools and
designs.
On Jan. 30, 2012, more than 40 U.S.-based Saab dealerships filed
an involuntary Chapter 11 petition for Saab Cars North America,
Inc. (Bankr. D. Del. Case No. 12-10344). The petitioners,
represented by Wilk Auslander LLP, assert claims totaling $1.2
million on account of "unpaid warranty and incentive
reimbursement and related obligations" or "parts and warranty
reimbursement." Leonard A. Bellavia, Esq., at Bellavia Gentile &
Associates, in New York, signed the Chapter 11 petition on behalf
of the dealers.
The dealers want the vehicle inventory and the parts business to
be sold, free of liens from Ally Financial Inc. and Caterpillar
Inc., and "to have an appropriate forum to address the claims of
the dealers," Leonard A. Bellavia said in an e-mail to Bloomberg
News.
Saab Cars N.A. is the U.S. sales and distribution unit of Swedish
car maker Saab Automobile AB. Saab Cars N.A. named in December
an outside administrator, McTevia & Associates, to run the
company as part of a plan to avoid immediate liquidation
following its parent company's bankruptcy filing.
On Feb. 24, 2012, the Court granted Saab Cars NA relief under
Chapter 11 of the Bankruptcy Code.
Donlin, Recano & Company, Inc., was retained as claims and
noticing agent to Saab Cars NA in the Chapter 11 case.
On March 9, 2012, the U.S. Trustee formed an official Committee
of Unsecured Creditors and appointed these members: Peter Mueller
Inc., IFS Vehicle Distributors, Countryside Volkwagen, Saab of
North Olmstead, Saab of Bedford, Whitcomb Motors Inc., and
Delaware Motor Sales, Inc. The Committee tapped Wilk Auslander
LLP as general bankruptcy counsel, and Polsinelli Shughart as its
Delaware counsel.
SAINT VINCENTS: Coreys Have Green Light to Amend Malpractice Suit
-----------------------------------------------------------------
Supreme Court, New York County Judge Alice Schlesinger grants the
request of Richard and his wife llenthai Corey to amend a medical
malpractice lawsuit against St. Vincent's Catholic Medical Center
of New York. The judge, meanwhile, allows St. Vincent's to
conduct further deposition of the plaintiffs' amended claims. A
status conference was set for Dec. 5 to confirm a date for the
deposition and any further discovery.
The case is, RICHARD COREY and ILENTHAI COREY, v. ST. VINCENT'S
CATHOLIC MEDICAL CENTER OF NEW YORK-MANHATTAN, ROBIN MITNICK,
M.D., MICHAEL GERARDI, M.D., DANIEL SILVERSHINE, M.D., CONCORDE
MEDICAL GROUP, and TOKO MORIMOTO, M.D., Defendants, Docket No.
117120/07 (N.Y.). A copy of the Court's Nov. 26 2012 NY Slip Op
32848(U) is available at http://is.gd/rREn2Pfrom Leagle.com.
About Saint Vincents
Saint Vincents Catholic Medical Centers of New York, doing
business as St. Vincent Catholic Medical Centers --
http://www.svcmc.org/-- was anchored by St. Vincent's Hospital
Manhattan, an academic medical center located in Greenwich Village
and the only emergency room on the Westside of Manhattan from
Midtown to Tribeca, St. Vincent's Westchester, a behavioral health
hospital in Westchester County, and continuing care services that
include two skilled nursing facilities in Brooklyn, another on
Staten Island, a hospice, and a home health agency serving the
Metropolitan New York area.
Saint Vincent Catholic Medical Centers of New York and six of its
affiliates first filed for Chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case Nos. 05-14945 through 05-14951).
St. Vincents Catholic Medical Centers returned to bankruptcy by
filing another Chapter 11 petition (Bankr. S.D.N.Y. Case No.
10-11963) on April 14, 2010. The Debtor estimated assets of
$348 million against debts totaling $1.09 billion in the new
petition.
Although the hospitals emerged from the prior reorganization in
July 2007 with a Chapter 11 plan said to have "a realistic chance"
of paying all creditors in full, the bankruptcy left the medical
center with more than $1 billion in debt. The new filing occurred
after a $64 million operating loss in 2009 and the last potential
buyer terminated discussions for taking over the flagship
hospital.
On June 29, 2012, the Bankruptcy Court entered an order confirming
Saint Vincents' Second Amended Chapter 11 Plan. The plan was
declared effective on the same day. Saint Vincents shed off
assets during the bankruptcy.
SANDLEWOOD AFFORDABLE: S&P Cuts Rating on 2 Bond Issues to 'BB'
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its long-term rating to
'BB' from 'A-' on Charlotte Housing Authority, N.C.'s (Sandlewood
Apartments) tax-exempt multifamily housing revenue bonds series
2011A and taxable series 2011A-T, issued for Sandlewood Affordable
Housing LLC. The outlook is negative.
"The downgrade reflects our view of the project's declining
financial performance," said Standard & Poor's credit analyst
Raymond S. Kim.
More specifically, the downgrade reflects S&P's view of these
weaknesses:
-- The very low debt service coverage level of 0.64 x maximum
annual debt service (MADS) through the first six months of
2012;
-- The project's reliance on contributions from its developer, an
unrated entity, to pay project expenses; and
-- The very low occupancy rates at the property, due to the
eviction of 25 tenants in 2011.
However, the above-mentioned weaknesses are offset by S&P's
opinion of these strengths:
-- The Section 8 housing assistance payment contract provided for
50 of the project's 150 units, and the pledge to bondholders
of anticipated renewal contracts with Department of Housing &
Urban Development under the Multifamily Assisted Housing and
Reform Act of 1997, expected to extend the contract for the
life of the bonds; and
-- The debt service reserve fund funded at 12 months' MADS.
The project is located at 7100 Snow Lane, Charlotte, N.C. and is
spread across approximately 14 acres. It has been recently
renamed to Heritage Park Apartments. The property consists of 150
units contained in 21 two-story garden and townhouse buildings.
SEACOR HOLDINGS: S&P Rates $350-Mil. Convertible Notes 'BB'
-----------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB' issue rating
to SEACOR Holdings Inc.'s $350 million convertible notes due 2027.
"We have assigned a '3' recovery rating to this debt, indicating
our expectation of meaningful (50% to 70%) recovery, in the event
of a payment default. Our 'BB' corporate credit rating and
negative outlook on the company remains unchanged," S&P said.
"SEACOR plans to use $125 million of the proceeds to repay
borrowings on its $360 million credit facility, resulting in pro
forma availability of $245 million as of Sept. 30, 2012. It will
use the remaining balance for general corporate purposes,
including share repurchases or dividend payments. Pro forma for
this transaction and the spin-off of its Era Group segment,
Seacor's debt on Sept. 30, 2012 (inclusive of operating leases and
excluding its 5.875% note that matured Oct. 1, 2012) was more than
$1 billion," S&P said.
"The ratings on SEACOR reflect our view of the company's 'fair'
business risk and 'significant' financial risk. The ratings also
incorporate the company's diversified business profile as an
operator of marine vessels serving the offshore oil and gas
exploration and production (E&P) and oilfield services industries
and its position in dry bulk inland barges. We consider SEACOR's
liquidity to be strong. Partially buffering these strengths,
ratings reflect the company's currently aggressive leverage
measures, its exposure to the volatile marine services business,
and the expected spin-off of its aviation business (Era Group),
which we consider to be a stable source of cash flows," S&P said.
RATINGS LIST
SEACOR Holdings Inc.
Corporate credit rating BB/Negative/--
New Rating
$300 mil convertible notes due 2027 BB
Recovery rating 3
SEARCHMEDIA HOLDINGS: Reduces Warrant Price, Extends Expiration
---------------------------------------------------------------
SearchMedia Holdings Limited provided holders of its Public
Warrants, Insider Warrants, and Underwriter Warrants the
opportunity to exercise up to one-third of the Warrants held by
them at a reduced exercise price and to extend the term and reduce
the exercise price of certain of their remaining Warrants that are
not exercised.
In accordance with the terms of the Warrants and the Warrant
Agreement governing the Warrants, SearchMedia will reduce the
exercise price for up to one-third of each holder's outstanding
Warrants beginning Dec. 5, 2012. From Dec. 5, 2012, until
Dec. 26, 2012, a holder of Warrants may exercise up to one-third
of their outstanding Warrants at a reduced exercise price of $1.25
per share with respect to Public Warrants and Insider Warrants and
$1.46 per share with respect to Underwriter Warrants. The
exercise of these Warrants and the issuance of the ordinary shares
underlying these Warrants is covered by the Company's Registration
Statement on Form F-3, which is on file with the Securities and
Exchange Commission.
At the expiration date of the Warrants, which is Feb. 19, 2013,
the expiration date of a participating holder's remaining Warrants
equal to two times the number of Warrants exercised will be
extended until Dec. 26, 2013, and the exercise price of the
Extended Warrants will be reduced to $2.50 per share for Public
Warrants and Insider Warrants and $2.92 per share for Underwriter
Warrants. From Dec. 26, 2012, until Feb. 19, 2013, the Extended
Warrants will be held in escrow and will not trade on the NYSE MKT
during this time. On Feb. 20, 2013, the Extended Warrants will be
released from escrow for continued trading on the NYSE MKT under
the symbol "IDI.WS," subject to the continued listing of the
Company's securities.
The offer to exercise Warrants at a reduced price begins on
Dec. 5, 2012, for all Warrant holders of record on that date and
ends at 5:00 p.m. Eastern Time on Dec. 26, 2012. No exceptions
will be made to this deadline, unless the Company extends the
deadline. Materials describing the exercise price reduction and
procedures for holders to exercise their Warrants have been filed
with the SEC and are being mailed to Warrant holders of record on
Dec. 5, 2012.
The Company believes certain of its significant ordinary security
holders, including Dr. Phillip Frost, intend to exercise up to
one-third of their Warrants at the reduced exercise price, however
neither the Company nor its Board of Directors makes any
recommendation regarding whether or not any Warrant holder should
elect to exercise their Warrants.
About SearchMedia
SearchMedia is a leading nationwide multi-platform media company
and one of the largest operators of integrated outdoor billboard
and in-elevator advertising networks in China. SearchMedia
operates a network of high-impact billboards and one of China's
largest networks of in-elevator advertisement panels in 50 cities
throughout China. Additionally, SearchMedia operates a network of
large-format light boxes in concourses of eleven major subway
lines in Shanghai. SearchMedia's core outdoor billboard and in-
elevator platforms are complemented by its subway advertising
platform, which together enable it to provide a multi-platform,
"one-stop shop" services for its local, national and international
advertising clients.
Marcum Bernstein & Pinchuk LLP, in New York, issued a "going
concern" qualification on the consolidated financials statements
for the year ended Dec. 31, 2011. The independent auditors noted
that the Company has suffered recurring losses and has a working
capital deficiency of approximately $31,000,000 at Dec. 31, 2011,
which raises substantial doubt about its ability to continue as a
going concern.
Searchmedia Holdings reported a net loss of $13.45 million
in 2011, a net loss of $46.63 million in 2010, and a net loss of
$22.64 million in 2009.
The Company's balance sheet at June 30, 2012, showed US$39.18
million in total assets, US$41.22 million in total liabilities and
a US$2.04 million total shareholders' deficit.
SEQUA CORP: S&P Rates $1BB Loan 'B'; $400MM Unsecured Notes 'CCC+'
------------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on Tampa, Fla.-based Sequa Corp. The outlook is
stable. "At the same time, we are assigning our 'B' issue rating
and '3' recovery rating to the proposed $1.5 billion senior
secured credit facility, which consists of a $200 million revolver
and a $1.3 billion term loan. The '3' recovery rating indicates
our expectation of substantial (50%-70%) recovery in the event of
payment default. We also assigned our 'CCC+' issue rating and '6'
recovery rating to the proposed $400 million of senior unsecured
notes. The '6' recovery rating indicates our expectation of
negligible (0%-10%) recovery," S&P said.
"Our ratings on Sequa reflect our expectations that its currently
weak credit protection measures will improve gradually over the
next year because of increasing earnings and debt reduction," said
Standard & Poor's credit analyst Christopher DeNicolo. "The growth
in earnings is due to continued strength in the commercial
aerospace market, cost reductions and efficiency initiatives, and
the contributions from a recent acquisition. We expect debt to
EBITDA to decline to 5.5x-6x in 2013 and funds from operations
(FFO) to debt to increase to more than 10%. As a privately owned
company, Sequa does not publicly disclose its financial results.
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 view the company's business risk
profile as 'fair,' reflecting its major positions in cyclical and
competitive niche markets. We assess liquidity as 'adequate' and
management and governance 'fair' under our criteria," S&P said.
"On Nov. 15, 2012, Sequa sold its Automotive segment, consisting
of ARC Automotive and Casco, for $320 million and used $195
million of the net proceeds to pay down bank debt. The Automotive
segment represented 20% of 2011 sales and 17% of adjusted segment
EBITDA. The divestiture reduces Sequa's product and end-market
diversity somewhat, but the auto supplier business is more
cyclical and has greater pricing pressures than the aerospace
market. Margins in the Automotive segment, while respectable, had
declined in recent years as a result of lower demand following the
2008-2009 recession. Additionally, the business would have
required additional capital expenditures to increase capacity and
introduce new products, funds that the company can now use to
reduce debt," S&P said.
"Following the sale of the automotive business, Sequa is now
composed of two business segments: Chromalloy Gas Turbine LLC (68%
of revenues from continuing operations) and Precoat Metals (32%).
Chromalloy primarily supports the airline industry as a leading
independent supplier in the repair, manufacture, and coating of
blades, vanes, and other components of gas turbine engines,
particularly those for commercial aircraft. Good technological
capabilities, a low-cost structure, several strategic partnerships
and initiatives, and long-term customer relationships enhance
Chromalloy's competitive position. However, the unit competes with
original equipment manufacturers (OEMs) that focus on increasing
market share and have greater financial resources than Chromalloy.
Improvements in commercial aerospace are expected to continue
through 2013, while military sales are anticipated to be flat to
down because of continuing uncertainty and federal budget
pressures," S&P said.
Precoat Metals applies protective and decorative coatings for
steel and aluminum coils used primarily in the building products
industry (industrial and commercial construction). The building
products segment represents about 60% of Precoat's business and
primarily serves the nonresidential construction market. Precoat
also serves customers in heating, ventilation, and air
conditioning (HVAC); windows and doors; appliance; transportation;
container; and others. Precoat has good niche positions in the
markets it serves. On Oct. 21, 2011, Sequa acquired Roll Coater
Inc., one of its primary competitors in the coating business. The
acquisition increased Sequa's scale in coil coating and created
cost synergies through a combination of facility rationalization,
elimination of redundant overhead, and supply chain efficiencies.
The metal coating business will likely only see modest growth
because of the sluggish recovery in nonresidential construction.
"The outlook is stable. Revenues and earnings should see some
growth in 2013 because of strength in commercial aerospace, cost
reduction efforts, and the contribution from an acquisition. We
expect higher earnings and debt reduction using excess free cash
flow will lead to improving, albeit still weak, credit protection
measures over the next 12 months. However, we are unlikely to
raise the rating unless increased cash flow and debt reduction
results in debt to EBITDA below 5x and we believe the company's
operational prospects and management's financial policy will
enable leverage to stay below this level. We could lower the
ratings if the commercial aerospace market weakens, or debt-
financed dividends or acquisitions result in debt to EBITDA above
7x," S&P said.
SG ACQUISITION: S&P Assigns 'B' Corporate Credit Rating
-------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'B' long-term
counterparty credit rating to SG Acquisition Inc. "At the same
time, we assigned our 'B' debt rating with a '3' recovery rating--
indicating our expectation for meaningful (50%-70%) recovery of
principal in the event of a default--to the company's proposed
senior secured first-lien facilities, consisting of a $170 million
term loan due 2018 and $20 million revolver (undrawn at close) due
2017. We also assigned our 'CCC+' debt rating with a '6' recovery
rating--indicating our expectation for negligible a (0%-10%)
recovery of principal in the event of a default--to the company's
proposed $50 million senior secured second-lien term loan due
2019," S&P said.
"The corporate credit rating on SG Acquisition reflects the
company's significant leverage and weak credit metrics, small
revenue base with client concentration risks, and operations
concentration in the niche ancillary F&I market," said Standard &
Poor's credit analyst Blake Mock.
"SG Acquisition issued a $170 million secured first-lien term loan
and $50 million secured second-lien term loan. As of Sept. 30,
2012, its pro forma trailing-12-month total obligations to
adjusted EBITDA ratio was 4.8x. At the same time, its pro forma
EBITDA fixed-charge coverage ratio for the same period was 2.8x.
In our analysis of SG Acquisition, we make certain adjustments to
generally accepted accounting principals (GAAP) financial
statements since the third-party administrator (TPA) nature of the
business is driven by cash flows rather than earned premiums and
losses incurred over the life of the contracts. Annual 2011
revenues totaled $239 million--much smaller than many of its
competitors--with 37% of the revenue-producing contracts coming
from its three largest clients. SG Acquisition's operations are
concentrated in the niche ancillary F&I market, leaving its
operating performance vulnerable to many macroeconomic factors,
including vehicle sales and the financing environment," S&P said.
"These weaknesses are partially mitigated by organic revenue and
EBITDA growth, an experienced management team, and a loyal
institutional client base. SG Acquisition has been very successful
with recent request for proposal (RFP) wins, increasing revenue to
$233 million in the first three quarters of 2012 versus $177
million for the same period in 2011; EBITDA increased to $33
million in the same period in 2012 from $11 million in 2011.
Behind the company's significant growth is an experienced and
knowledgeable management team with the top six executives having
more than 100 years combined experience in the F&I industry.
Although vulnerable to client concentration risks, SG Acquisition
has never lost a client and the average client relationship is
about six years. Its loyal client base consists of large motor
vehicle original equipment manufacturers, large national vehicle
retailers and individual agents," S&P said.
"The stable outlook reflects our view that SG Acquisition will
continue its organic growth strategy with the potential for
signing on more large institutional clients. For 2013, we expect a
mid-single-digit percentage increase, potentially subject to
upward pressure from newly won contracts and increased revenue
from contracts won in 2012," Mr. Mock continued. "We expect
adjusted EBITDA margins to be about 15% for 2012 and 2013. We
expect the company's year-end 2013 total obligations to adjusted
EBITDA ratio to be below 5x and its EBITDA fixed-charge coverage
ratio to be above 2x. While we do not anticipate raising the
ratings over the next 12 months given the company's limited
competitive profile and high leverage, we could lower the rating
if leverage and coverage ratios or EBITDA margins deteriorate
relative to peers. We recognize the company's performance is
dependent on car sales and leases and, as such, a significant fall
in car sales and leases could have a negative impact on the
ratings."
SNO MOUNTAIN: Court Okays March 1 Auction, Permits Cash Use
-----------------------------------------------------------
James Haggerty, writing for The Times-Tribune, reports that
Eastern District of Pennsylvania Bankruptcy Judge Jean FitzSimon
on Thursday instructed Gary Seitz, the trustee overseeing the
bankruptcy of the Sno Mountain recreation complex, to conduct an
auction of the property by March 1 and close the sale by April 8.
The report relates the judge also instructed the trustee to hire
an investment banker by next week to begin marketing the
recreation complex for sale. She also allowed the use of the
facility's cash to continue operations.
Sno Mountain faces more than $24 million in debt. The report says
a May 2010 appraisal values the 440-acre Scranton skiing and water
park complex "upon achieving a stabilized level of performance"
this year at $27.3 million, documents state.
About Sno Mountain
Various parties -- predominated by various limited partners of Sno
Mountan LP, including Richard Ford, Charles Hertzog, Edward
Reitmeyer, who are each guarantors of certain obligations owing by
Sno Mountain -- filed an involuntary Chapter 11 petition against
Sno Mountain (Bankr. E.D. Pa. Case No. 12-19726) On Oct. 15, 2012.
The other petitioning parties include Wynnewood Capital Partners,
L.L.C., t/a WCP Snow Mountain Partners, L.P., and Kathleen
Hertzog.
The Alleged Debtor is the owner and operator of a popular ski
mountain resort and water park known as "Sno Mountain," located at
1000 Montage Mountain Road in Scranton, Pennsylvania. The
Debtor's bankruptcy case is a "single asset real estate" case
within the meaning of 11 U.S.C. Sec. 101(51)(B).
Judge Jean K. FitzSimon oversees the case. Brian Joseph Smith,
Esq., at Brian J. Smith & Associates PC, represents the
petitioning creditors.
Gary Seitz has been appointed as trustee overseeing the bankruptcy
of the Sno Mountain recreation complex.
SNO MOUNTAIN: Files Schedules of Assets and Liabilities
-------------------------------------------------------
James Haggerty, writing for The Times-Tribune, reports that Sno
Mountain filed schedules of assets and liabilities Thursday in
Bankruptcy Court, listing more than $14.6 million in secured debt,
along with more than $9.5 million in unsecured claims.
The report says a May 2010 appraisal values the 440-acre Scranton
skiing and water park complex "upon achieving a stabilized level
of performance" this year at $27.3 million, documents state. Sno
Mountain claims just $171,562 in personal property value,
including $90,000 in pending credit-card payments and $62,133 in
rent owed by its restaurant contractor. It also is delinquent on
more than $1.6 million in employee withholding and unemployment
compensation taxes, sales and business levies, the company
acknowledges.
The report notes Sno Mountain's largest secured creditor is DFM
Realty Inc., an affiliate of National Penn Bank, which is owed
more than $8.9 million on two mortgages. DFM initially opposed
the trustee's effort to use Sno Mountain's cash to continue
operations but entered a stipulation that includes a timetable for
the sale of the property. The report says Catharine Bower,
spokeswoman for National Penn, declined to comment.
According to the report, Sno Mountain owes the state Department of
Economic and Community Development $4.3 million, the schedules
state. The complex defaulted on a $5 million state loan in 2011
and renegotiated terms earlier this year.
According to the report, the facility owes Scranton $328,595 in
unspecified taxes and $28,530 in employee withholding taxes. It
also owes the state more than $1.1 million in payroll, sales,
employee withholding and unemployment taxes and owes $407,434 to
the Internal Revenue Service in employee taxes.
The report says among unsecured creditors, Mr. Carlson has a claim
for $853,175. WCP Sno Mountain, which includes members of the
facility's ownership group, is owed more than $2.6 million, and
Wynnewood Capital Partners, a Montgomery County investment group
has a $1.4 million stake.
The report also relates a budget submitted by Gary Seitz, the
trustee overseeing the bankruptcy of the Sno Mountain recreation
complex, projects Sno Mountain will generate $2.9 million in
revenue from Nov. 12 to March 13. It estimates net cash before
interest and bankruptcy costs will total $1.02 million and
expenses will amount to $1.95 million.
About Sno Mountain
Various parties -- predominated by various limited partners of Sno
Mountan LP, including Richard Ford, Charles Hertzog, Edward
Reitmeyer, who are each guarantors of certain obligations owing by
Sno Mountain -- filed an involuntary Chapter 11 petition against
Sno Mountain (Bankr. E.D. Pa. Case No. 12-19726) On Oct. 15, 2012.
The other petitioning parties include Wynnewood Capital Partners,
L.L.C., t/a WCP Snow Mountain Partners, L.P., and Kathleen
Hertzog.
The Alleged Debtor is the owner and operator of a popular ski
mountain resort and water park known as "Sno Mountain," located at
1000 Montage Mountain Road in Scranton, Pennsylvania. The
Debtor's bankruptcy case is a "single asset real estate" case
within the meaning of 11 U.S.C. Sec. 101(51)(B).
Judge Jean K. FitzSimon oversees the case. Brian Joseph Smith,
Esq., at Brian J. Smith & Associates PC, represents the
petitioning creditors.
Gary Seitz has been appointed as trustee overseeing the bankruptcy
of the Sno Mountain recreation complex.
SOLAR POWER: Crowe Horwath Replaces KPMG as Accountants
-------------------------------------------------------
Solar Power, Inc., dismissed KPMG LLP as the Company's independent
registered public accounting firm. The Company's Audit Committee
of the Board of Directors approved the dismissal of KPMG. This
action was taken with the goal of significantly reducing audit
fees and lowering operating expenses of the Company. KPMG's audit
report on the Company's consolidated financial statements as of
and for the fiscal year ended Dec. 31, 2011, did not contain any
adverse opinion or disclaimer of opinion, nor was it qualified or
modified as to uncertainty, audit scope or accounting principle.
On Nov. 29, 2012, the Company, as approved by the Audit Committee,
appointed Crowe Horwath LLP as the Company's independent
registered public accounting firm for the fiscal year ending
Dec. 31, 2012. During the Company's two most recent fiscal years
and any subsequent periods prior to the Company's engagement of
Crowe Horwath, neither the Company nor anyone acting on its behalf
consulted with Crowe Horwath regarding the application of
accounting principles to a specified transaction, either completed
or proposed, the type of audit opinion that might be rendered on
the Company's financial statements, any matters being the subject
of a disagreement or reportable event or any other matter as
defined in Items 304(a)(1)(iv) or (a)(1)(v) of Regulation S-K.
However, following a transaction between Crowe Horwath and Perry-
Smith LLP, partners and other professionals of Perry-Smith LLP
joined Crowe Horwath on Nov. 1, 2011. For the year ended Dec. 31,
2010, Perry-Smith LLP issued a report dated March 14, 2011,
April 16, 2012, as to the effects of the restatement discussed in
the report. Prior to the issuance of its report on the
restatement, the Company consulted with partners representing
Perry-Smith LLP (which continues to exist) regarding the
restatement, and the audit report on the restated financial
statements was issued by those partners in their capacity as
partners of Perry-Smith LLP, and not in their capacity as partners
of Crowe Horwath.
About Solar Power
Roseville, Calif.-based Solar Power, Inc., is a global solar
energy facility ("SEF") developer offering its own brand of high-
quality, low-cost distributed generation and utility-scale SEF
development services. Primarily, the Company works directly with
and for developers around the world who hold large portfolios of
SEF projects for whom it serves as an engineering, procurement and
construction contractor. The Company also performs as an
independent, turnkey SEF developer for one-off distributed
generation and utility-scale SEFs.
The Company's balance sheet at Sept. 30, 2012, showed
$187.8 million in total assets, $149.1 million in total
liabilities, and stockholders' equity of $38.7 million.
"Our parent company, LDK Solar Co., Ltd., who owns 70% of the
Company's outstanding Common Stock, has disclosed publicly that it
had a net loss and negative cash flows from operations for the
year ended Dec. 31, 2011, and has a working capital deficit and
was not in compliance with certain financial covenants on its
indebtedness at Dec. 31, 2011. These factors raise substantial
doubt as to LDK's ability to continue as a going concern. While
management of LDK believes that it has a plan to satisfy LDK's
liquidity requirements for a reasonable period of time, there is
no assurance that its plan will be successfully implemented," the
Company said in its quarterly report for the period ended
Sept. 30, 2012.
SOUTHEAST WAFFLES: 6th Cir. Affirms Dismissal of Suit v. IRS
------------------------------------------------------------
The United States Court of Appeals for the Sixth Circuit upheld
the Bankruptcy Appellate Panel's affirmance of the bankruptcy
court's order dismissing for failure to state a claim Southeast
Waffles LLC's adversary proceeding against the United States,
seeking avoidance of prepetition payments of tax penalties as
fraudulent transfers under the Bankruptcy Code, 11 U.S.C. Sec.
548(a)(1)(B), and the Tennessee Uniform Fraudulent Transfer Act,
Tenn. Code Ann. Sec. 66-3-301 et seq.
SEW seeks recovery from the IRS of prepetition tax penalty
payments in the amount of $637,652 or, in the alternative, an
offset in the amount of the penalty payments against the tax
amounts still owed to the IRS.
Throughout the period from Jan. 1, 2005, to the Petition Date, SEW
failed to pay all of the federal income tax withholding, social
security (FICA), and unemployment (FUTA) taxes that were due to
the Internal Revenue Service. SEW also failed to timely file all
returns relating to these taxes. Because SEW employed many
hundreds of individuals in the restaurants it operated, the
payments due to the IRS for federal income tax withholding, FICA,
and FUTA taxes were sizable.
During the four years prior to the Petition Date, the IRS assessed
penalties well in excess of $1,500,000 for SEW's failure to timely
file its tax returns and to fully and timely pay the taxes due.
Throughout this time period, SEW was insolvent and owed unsecured
debts to one or more creditors.
After the penalties were assessed, SEW made payments that were
applied to its tax obligations and also made several undesignated
prepetition payments to the IRS that were applied in partial
satisfaction of the assessed penalties. SEW's complaint does not
make clear how the IRS divided SEW's payments among penalties,
taxes, and interest.
The case is, SOUTHEAST WAFFLES, LLC, Plaintiff-Appellant, v.
UNITED STATES DEPARTMENT OF TREASURY/INTERNAL REVENUE SERVICE,
Defendant-Appellee, No. 11-6522 (6th Cir.). A copy of the Sixth
Circuit's Dec. 6, 2012 Opinion is available at http://is.gd/2EkIKp
from Leagle.com.
About SouthEast Waffles
Headquartered in Nashville, Tennessee, SouthEast Waffles, LLC dba
Waffle House -- http://www.southeastwaffles.com/-- was formed in
1999 for the purpose of purchasing, and operating as a franchisee,
Waffle House restaurants. SEW filed for Chapter 11 protection on
(Bankr. M.D. Tenn. Case No. 08-07552) Aug. 25, 2008.
Barbara Dale Holmes, Esq., David Phillip Canas, Esq., Glenn Benton
Rose, Esq., and Tracy M. Lujan, Esq., at Harwell Howard Hyne
Gabbert & Manner represented the Debtor in its restructuring
efforts. When the Debtor filed for protection from its creditors,
it listed assets and debt of between $10 million and $50 million
each.
At the time of the bankruptcy, SEW operated roughly 113 Waffle
House restaurants located in Tennessee, Alabama, Mississippi, and
Kentucky. SEW's Chapter 11 plan was confirmed by the Bankruptcy
Court at the end of September 2009 and the plan took effect
automatically on Oct. 1. The plan, which was supported by the
Official Committee of Unsecured Creditors, was built upon the
transfer of stores to franchiser Waffle House Inc. SEW sold
substantially all of its assets effective Oct. 1, 2009. No
trustee was appointed in SEW's bankruptcy case. A liquidation
agent, Gary M. Murphey, was appointed to administer SEW's residual
assets. Mr. Murphey continues to serve in that role. The plan
was designed to pay unsecured creditors between 25% and 38% over
10 years. The secured lender FirstBank was to have a note to pay
off $8.1 million in debt.
SPRINGLEAF FINANCE: William Kandel to Assume VP and CAO Roles
-------------------------------------------------------------
Leonard J. Winiger, vice president and chief accounting officer of
Springleaf Finance Corporation, advised the Company of his intent
to retire and to resign as an officer of the Company and its
subsidiaries on or about Dec. 31, 2012. The Company anticipates
that William Kandel, currently an Assistant Controller of the
Company, will be assuming the position of Vice President and Chief
Accounting Officer upon Mr. Winiger's retirement.
Mr. Kandel, age 55, has been Assistant Controller since July 2008.
Since September 2006, he also has served as Chief Financial
Officer for Wilmington Finance, Inc., a subsidiary of the Company.
Before assuming the duties at Wilmington, Mr. Kandel had been
employed by the Company in several capacities since 1990,
including Vice President of Corporate Development and Director of
Budgeting.
About Springleaf Finance
Springleaf was incorporated in Indiana in 1927 as successor to a
business started in 1920. From Aug. 29, 2001, until the
completion of its sale in November 2010, Springleaf was an
indirect wholly owned subsidiary of AIG. The consumer finance
products of Springleaf and its subsidiaries include non-conforming
real estate mortgages, consumer loans, retail sales finance and
credit-related insurance.
The Company's balance sheet at Sept. 30, 2012, showed
$15.05 billion in total assets, $13.74 billion in total
liabilities and $1.31 billion in total shareholder's equity.
* * *
The Troubled Company Reporter said on Feb. 8, 2012, that Standard
& Poor's Ratings Services lowered its issuer credit rating on
Springleaf Finance Corp. and its issue credit rating on the
company's senior unsecured debt to 'CCC' from 'B'. Standard &
Poor's also said it lowered its issue credit ratings on
Springfield's senior secured debt to 'CCC+' from 'B+' and on the
company's preferred debt to 'CC' from 'CCC-'. The outlook on
Springleaf's issuer credit rating is negative.
"Springleaf's announcement that it will shut down about 60
branches and stop lending in 14 states highlights the operating,
funding, and liquidity challenges that the firm faces as it works
to pay down the $2 billion of debt coming due in 2012 and to
establish a stable long-term funding strategy. The downgrade also
reflects the company's poor earnings, exposure to weak residential
markets and uncertainty about its ability to refinance debt or
securitize assets over the coming year. We believe that should
its funding or securitization options become unavailable, the
company will not have enough liquidity to survive 2012, and in
that case a distressed debt exchange would be likely. The company
has retained financial advisors to assess its options," S&P said.
As reported by the TCR on Sept. 11, 2012, Fitch Ratings has
withdrawn the 'CCC' IDR assigned to Springleaf Finance, Inc., as
the entity no longer exists.
In the June 5, 2012, edition of the TCR, Moody's Investors Service
downgraded Springleaf Finance Corporation's senior unsecured and
corporate family ratings to Caa1 from B3. The downgrade reflects
Springleaf's funding constraints and uncertain liquidity outlook,
increased operational stresses, and record of operating losses
since early 2008.
TELETOUCH COMMUNICATIONS: Maturity of EWB Loan Extended to Feb. 3
-----------------------------------------------------------------
East West Bank approved an extension on the maturity date of a
loan with Teletouch Communications, Inc., to Feb. 3, 2013.
Effective Nov. 3, 2012, the interest rate on the loan was amended
from a variable rate of the Wall Street Journal Prime Rate with no
floor to fixed rate of 7.00%. The principal amount of the loan is
$2,091,598, with the first two regular payments on the loan in the
amount of $19,283 due Dec. 3, 2012, and the last payment in the
amount of $2,090,322 due on Feb. 3, 2013.
About Teletouch
Teletouch Communications, Inc., offers a comprehensive suite of
wireless telecommunications solutions, including cellular, two-way
radio, GPS-telemetry and wireless messaging. Teletouch is an
authorized provider of AT&T (NYSE: T) products and services
(voice, data and entertainment) to consumers, businesses and
government agencies, as well as an operator of its own two-way
radio network in Texas. Recently, Teletouch entered into national
agency and distribution agreements with Sprint (NYSE: S) and
Clearwire (NASDAQ: CLWR), providers of advanced 4G cellular
network services. Teletouch operates a chain of 26 retail and
agent stores under the "Teletouch" and "Hawk Electronics" brands,
in conjunction with its direct sales force, customer care (call)
centers and various retail eCommerce Web sites including:
http://www.hawkelectronics.com/and http://www.hawkexpress.com/
Through its wholly-owned subsidiary, Progressive Concepts, Inc.,
Teletouch operates a national distribution business, PCI
Wholesale, primarily serving large cellular carrier agents and
rural carriers, as well as auto dealers and smaller consumer
electronics retailers, with product sales and support available
through http://www.pciwholesale.com/and
http://www.pcidropship.com/among other B2B oriented Web sites.
The Company's balance sheet at Aug. 31, 2012, showed $11.88
million in total assets, $18.21 million in total liabilities and a
$6.33 million total shareholders' deficit.
BDO USA, LLP, in Houston, Texas, issued a "going concern"
qualification on the consolidated financial statement for the year
ended May 31, 2012. The independent auditors noted that the
Company has increasing working capital deficits, significant
current debt service obligations, a net capital deficiency along
with current and predicted net operating losses and negative cash
flows which raise substantial doubt about its ability to continue
as a going concern.
VESTA CORP: Moody's Withdraws 'B2' CFR/PDR, 'B1' Loan Rating
------------------------------------------------------------
Moody's Investors Service has withdrawn all ratings of Vesta
Corporation, including the B2 corporate family and probability of
default ratings ("CFR" and "PDR", respectively). Vesta is no
longer contemplating a first lien term loan issuance and has no
rated debt.
The following ratings were withdrawn:
Corporate Family Rating -- B2
Probability of Default Rating -- B2
$200 million 1st lien Term Loan -- B1 (LGD3 -- 34%)
Ratings Rationale
The principal methodology used in rating Vesta Corporation was the
Global Business & Consumer Service 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.
VIRGIN OFFSHORE: TGSN Fails in Bid to Stop Assumption of License
----------------------------------------------------------------
Bankruptcy Judge Elizabeth W. Magner denied the request of TGSN
for stay pending its appeal of a prior court order permitting the
trustee for the Chapter 11 estate of Virgin Offshore U.S.A., Inc.,
to assume a Master License Agreement for Geophysical Data with
TGSN.
Offshore on Jan. 16, 2003, acquired a non-exclusive license to use
geophysical data from TGSN. Offshore made a one-time payment of
$183,488 to license the data for a period of 25 years.
The Chapter 11 Trustee moved to assume the License Agreement and
gave notice of his intention to utilize the Data for development
of Ship Shoal 153. The request did not include assignment of the
License Agreement to a third party.
TGSN opposed assumption on the grounds (1) the License Agreement
terminated pursuant to an ipso facto clause contained in the
contract triggering termination on the filing of bankruptcy; and
(2) assignment of the contract was prohibited under federal law.
At the hearing on the Motion to Assume, counsel for TGSN conceded
that ipso facto clauses triggering termination of agreements upon
the filing of bankruptcy are unenforceable under the terms of
bankruptcy law.
On appeal, TGSN argues that granting the stay will not adversely
affect or cause substantial harm to Trustee or any other party in
interest.
The converse is actually true, Judge Magner said. The Chapter 11
Trustee, the judge held, requires access to the Data in the daily
course of business operations. The estate is in the business of
exploring for and developing oil and gas properties. Only through
these activities will creditors be paid and the costs of
administration be funded. The Trustee is in the process of
evaluating the estate's mineral interests both as they presently
exist and may develop.
"Access to the Data is both critical and necessary to this effort.
Without the Data, Trustee cannot analyze the value of interests in
the applicable mineral blocks, propose future development, or
effectively consider offers from third parties for purchase of its
oil and gas assets. Any delay in turning over what is rightfully
property of the debtor's estate will substantially harm Trustee's
ability to reorganize. As a result, a stay of this ruling will
work substantial harm on the estate," Judge Magner said.
A copy of the Court's Dec. 6, 2012 decision is available at
http://is.gd/AD2O9yfrom Leagle.com.
About Virgin Offshore
Virgin Offshore U.S.A., Inc., is in the business of acquiring,
exploring and developing oil and gas properties with its parent,
Virgin Oil Co., Inc. Creditors Dynamic Energy Services LLC,
Precision Drilling Company, LP, and Tanner Services LLC, owed
$1,895,824 in the aggregate, commenced an involuntary Chapter 11
bankruptcy proceeding against Virgin Offshore USA (Bankr. E.D. La.
Case No. 11-13028) on Sept. 16, 2011. The petitioning creditors
are represented by Michael A. Crawford, Esq., at Taylor Porter
Brooks & Phillips LLP, H. Kent Aguillard, Esq., at Young, Hoychick
and Aguillard; and Jacque B. Pucheu, Jr., Esq., at Pucheu, Pucheu
& Robinson, LLP.
Offshore consented to entry of the Order for Relief and filed a
Motion to Appoint Chapter 11 Trustee on Oct. 6, 2011. The Order
for Relief was entered on Oct. 12, and on Oct. 14, Gerald H.
Schiff was appointed as the chapter 11 Trustee of the Offshore
estate. Offshore scheduled $2,330,734 in assets and $13,046,823
in liabilities.
An affiliate of Virgin Offshore USA, Virgin Oil Company Inc.,
filed a Chapter 11 petition (Bankr. E.D. La. Case No. 09-11899) on
June 25, 2009.
The 2011 involuntary Chapter 11 bankruptcy petition against Virgin
Offshore USA, Inc., has been transferred to Judge Elizabeth W.
Magner. The case was first given to Judge Jerry A. Brown.
VOICE ASSIST: Michael Metcalf Serving as Interim CFO
----------------------------------------------------
Michael Metcalf, Voice Assist, Inc.'s Chief Executive Officer and
Secretary has been appointed as interim Chief Financial Officer.
The Company anticipates adding four additional directors to its
Board and has already received commitments from three new
independent directors to join the Board. The Company will be
announcing the addition of the new directors shortly.
Rod Shipman resigned from his position as lead independent
director and Chair of the Audit, Compensation and Governance &
Nominating Committees of Voice Assist effective Nov. 30, 2012.
On Dec. 2, 2012, William Osmundsen resigned from his position as
Chief Financial Officer and Treasurer of the Company, effective
immediately.
On Dec. 3, 2012, Scott Fox resigned from his position as a
director of the Company, effective immediately.
Messrs. Shipman's, Osmundsen's and Fox's resignations were not
related to any disagreement or dispute with the Company's
management or the members of the Board of Directors of the
Company.
About Voice Assist
Lake Forest, Calif.-based Voice Assist, Inc., operates a cloud-
based speech recognition platform that supports speech recognition
based enterprise services such as Customer Relationship Management
(CRM), field force automation, as well as direct-to-enterprise
services such as virtual assistants that unify communications and
direct-to-consumer "safe driving" services that allow SMS, email,
and social media messaging through a single personal phone number.
In the auditors' report accompanying the annual report for the
year ended Dec. 31, 2011, Mantyla McReynolds LLC, in Salt Lake
City, Utah, expressed substantial doubt about Voice Assist's
ability to continue as a going concern. The independent auditors
noted that the Company has working capital deficits and has
incurred losses from operations and negative operating cash flows
during the years ended Dec. 31, 2011, and 2010.
The Company reported a net loss of $10.24 million on $872,010 of
revenues for 2011, compared with a net loss of $1.30 million on
$1.26 million of revenues for 2010.
The Company's balance sheet at Sept. 30, 2012, showed $992,163 in
total assets, $795,265 in total liabilities and $196,897 in total
stockholders' equity.
VYCOR MEDICAL: To Effect a 1-for-150 Reverse Stock Split
--------------------------------------------------------
Vycor Medical, Inc.'s Board of Directors took action by unanimous
written consent and on Dec. 3, 2012, the holders of a majority of
the voting power of the outstanding capital stock of the Company
as of Nov. 30, 2012, took action by written consent in lieu of a
special meeting of the shareholders, to ratify and approve an
amendment to the Company's Certificate of Incorporation, as
amended, to effect a reverse stock split of the Company's issued
and outstanding common stock by a ratio of 1:150. Pursuant to
Rule 14c-2 under the Securities Exchange Act of 1934, as amended,
the Reverse Stock Split will not be implemented until a date at
least 20 days after the date on which an Information Statement has
been mailed to the stockholders, approval of the action by FINRA
and designation of a new CUSIP number for the post-split stock.
As of the Record Date, the Company's authorized capitalization
consisted of 1,500,000,000 shares of Common Stock, of which
857,249,895 shares were issued and outstanding and 10,000,000
shares of Preferred Stock authorized, of which 100 shares are
designated as Series C Convertible Preferred Stock. 39.3 shares
of Series C Convertible Preferred Stock are outstanding and
convertible into 87,333,328 shares of common stock. Each share of
Common Stock entitles its holder to one vote on each matter
submitted to the shareholders. Holders of the Company's Series C
Convertible Preferred Stock were not entitled to vote. However,
because shareholders holding at least a majority of the voting
rights of all outstanding shares of capital stock as of the Record
Date have voted in favor of the foregoing action by resolution
dated Dec. 3, 2012; and having sufficient voting power to approve
such action through their ownership of capital stock, no other
shareholder consents will be solicited.
About Vycor Medical
Boca Raton, Fla.-based Vycor Medical, Inc. (OTC BB: VYCO)
-- http://www.VycorMedical.com/-- is a medical device company
committed to making neurological brain, spinal and other surgical
procedures safer and more effective. The Company's flagship,
Patent Pending ViewSite(TM) Surgical Access Systems represent an
exciting new minimally invasive access and retraction system that
holds the potential for speedier, safer and more economical brain,
spinal and other surgeries and a quicker patient discharge.
Vycor's innovative medical instruments are designed to optimize
neurosurgical site access, reduce patient risk, accelerate
recovery, and add tangible value to the professional medical
community.
The Company reported a net loss of $4.77 millionin 2011, compared
with a net loss of $1.98 million in 2010.
Paritz & Company, P.A., in Hackensack, New Jersey, expressed
substantial doubt about the Company's ability to continue as a
going concern following the 2011 annual results. The independent
auditors noted that the Company has incurred a loss since
inception, has a net accumulated deficit and may be unable to
raise further equity.
The Company's balance sheet at Sept. 30, 2012, showed $2.69
million in total assets, $3.86 million in total liabilities and a
$1.17 million total stockholders' deficit.
W.T. HARVEY LUMBER: Building-Supply Retailer Enters Chapter 11
--------------------------------------------------------------
W.T. Harvey Lumber Co., the retail and wholesale supplier of
lumber and building supplies, filed for Chapter 11 protection,
declaring assets of $2 million and debts of $5.16 million.
Carla Main, substituting for Bloomberg News bankruptcy columnist
Bill Rochelle, reports that Harvey Lumber, which operates out of
Columbus and Phenix City, Alabama, filed first-day motions seeking
permission to use cash collateral and asking for an expedited
hearing.
Vendor creditors include Ace Hardware ($243,435); Allied Building
Stores Inc. ($259,322); and Dairyman's Supply Co. ($195,351).
According to the report, a meeting of creditors has been scheduled
for Jan. 8.
W.T. Harvey Lumber filed a Chapter 11 petition (Bankr. M.D. Ga.
Case No. 12-41182) on Dec. 4, 2012. Fife M. Whiteside, Esq., at
Fife M. Whiteside, P.C., in Columbus, Georgia, serves as counsel.
WATER PIK: Moody's Says $37MM Dividend Recap Credit Negative
------------------------------------------------------------
Moody's Investors Service said that Water Pik, Inc.'s proposed $37
million dividend recapitalization is credit negative as it will
use substantially all of the company's cash on hand and half of
its revolver availability. The dividend will be funded with about
$27 million of cash on hand and $10 million of drawings under the
company's $20 million revolver. As a result, the company's
liquidity will be weaker following the dividend recapitalization.
Headquartered in Fort Collins, Colorado, Water Pik, Inc. sells
oral healthcare and showerhead products. Oral healthcare is
divided into consumer oral healthcare (COH) and professional oral
healthcare (POH). The showerhead division sells replacement
showerheads under the Water Pik brand name to mass merchandisers
and home improvement centers. Revenues are approximately $170
million. Water Pik's financial sponsors are EG Capital Group, LLC
(majority owner) and the Carlyle Group.
WIGGINS FARMS: Court Rejects Plan, Doubts Feasibility
-----------------------------------------------------
Bankruptcy Judge Randy D. Doub declined to give his stamp of
approval on Wiggins Farms, Inc.'s amended Chapter 11 plan of
reorganization, saying the Debtor has not proven by a
preponderance of the evidence that the Plan is feasible within the
meaning of 11 U.S.C. Sec. 1129(a)(11).
The Court has concerns with the ability of the Debtor to fund the
proposed plan payments. The Court also held that the Debtor has
failed to show the confirmation of the plan will not likely be
followed by liquidation or the need for further reorganization.
The Court, however, permits the Debtor to file an amended plan and
disclosure statement.
The Debtor intends to operate as a debtor in possession through
continued operation of the farm, which consists of equipment lease
payments from JSBF Partnership and management fees from poultry
and swine contracts.
The Court noted that the Plan, Disclosure Statement, and evidence
presented at the hearing do not provide information regarding
JSBF's income or ability to make contributions to the Debtor. JSBF
and the Debtor have not entered into any written contracts
requiring JSBF to continue contributing to the Debtor. Even if
such contracts existed, the Debtor has failed to produce any
information regarding JSBF's income and its ability to fund the
Debtor's Plan.
Wiggins Farms filed the Plan and the Disclosure statement on Aug.
24, 2012; it filed an Amendment to Chapter 11 Plan on Oct. 2,
2012. Objections to the Plan were filed by Crop Production
Services, Inc.; Branch Banking and Trust Company; and AgCarolina
Financial, ACA. Response to the Plan was also filed by the
Bankruptcy Administrator.
AgCarolina is the Debtor's primary secured creditor under seven
promissory notes. AgCarolina is secured by the Debtor's real
property and equipment. Further, AgCarolina claims a security
interest in the Debtor's contract rights, accounts receivable, and
other personal property assets. The approximate aggregate of the
seven loans as of the petition date was $2,364,327 not including
AgCarolina's accrued legal fees and costs.
The Debtor's Plan consists of 25 classes. The approximate total
of general unsecured claims is $505,989.32, which the Debtor
proposes to pay in full. As of the hearing date, all creditors
had submitted accepting ballots or failed to submit ballots, with
the exception of AgCarolina which filed a ballot rejecting the
Plan.
As to AgCarolina, the Plan proposes to treat the claims as fully
secured in the amount of $2,364,327.00 with the balance amortized
over 25 years at an annual interest rate of 4.5%. The Plan
proposes that the Debtor make quarterly payments of $39,504.83
with the entire principal and unpaid interest due seven years from
the effective date of the Plan. The Plan further provides that
during the loan repayment period, the Debtor will be permitted to
sell any equipment securing its loans with AgCarolina. If such a
sale should occur, AgCarolina will release its lien in exchange
for payment of 25% of the net proceeds resulting from the sale.
The Debtor's projections for November 2012 through October 2013
provide its total revenue per month will be approximately
$115,000.00. Of that amount, JSBF is projected to pay $90,000.00
per month, James T. Wiggins and Maria L. Wiggins are projected to
pay $20,000.00 per month and the Debtor's trucking income consists
of $5,000.00 per month. The Debtor's monthly reports show from
May through September, JSBF has paid approximately $59,400.00 per
month to the Debtor.
In its objection, AgCarolina said (1) the Plan is not feasible;
(2) the Plan is not fair and equitable; (3) it is an oversecured
creditor entitled to payment of interest and reasonable fees,
costs and charges, including attorneys' fees, pursuant to 11
U.S.C. Sec. 506(b) and the Plan does not provide for the payment
of these fees; (4) the Plan fails the best interest of creditors
test; and (5) Class 25 of the Plan violates the absolute priority
rule by allowing the Debtor's equity owners to retain their
interests unimpaired when payment of other creditors is stretched
over time and there is no security for repayment of unsecured
creditors' claims.
According to Judge Doub, the monthly reports to date do not show
feasibility. According to the Debtor's Projections, JSBF is to pay
$90,000 per month to the Debtor, which consists of approximately
78% of the Debtor's projected monthly income. Presently there is
no written contract with JSBF. The Debtor's monthly reports show
that since the petition date, JSBF has paid on average
approximately $59,400 per month to the Debtor. The Plan and
Disclosure Statement are devoid of any information regarding
JSBF's ability to make the projected payments of $90,000 per
month, the judge said.
A copy of Judge Doub's Dec. 6, 2012 Order is available at
http://is.gd/nd4xlRfrom Leagle.com.
About Wiggins Farms
La Grange, North Carolina-based Wiggins Farms, Inc., filed for
Chapter 11 bankruptcy protection (Bankr. E.D.N.C. Case No. 12-
02651) on April 4, 2012. The Debtor owns a multiple generational
family farm specializing in managing commercial swine and poultry
growing contracts, as well as leasing farm equipment for crop
production in Lenoir and Wayne Counties.
Judge Randy D. Doub oversees the case. Jason L. Hendren, Esq., at
Hendren & Malone, PLLC, serves as the Debtor's bankruptcy counsel.
In its petition, the Debtor estimated $1 million to $10 million in
assets and debts. A copy of the Company's list of its 19 largest
unsecured creditors filed together with the petition is available
for free at http://bankrupt.com/misc/nceb12-02651.pdf The
petition was signed by James Scott Wiggins, vice president.
WILLIAM LYON: Amends 380.4 Million Common Shares Prospectus
-----------------------------------------------------------
William Lyon Homes filed with the U.S. Securities and Exchange
Commission an amendment no.1 to the Form S-1 relating to the
registration of the following shares of Class A Common Stock,
Class C Common Stock and Convertible Preferred Stock of the
Company, to satisfy registration rights that the Company granted
in connection with the Company's Joint Plan of Reorganization on
Feb. 25, 2012, and certain recent corporate transactions:
* 210,349,302 shares of the Company's Class A common stock,
$0.01 par value per share which includes the shares of class
A common Stock issuable upon conversion of the Company's
outstanding Class B common stock, $0.01 par value per share,
or Class B common stock and warrants to purchase Class B
common stock, upon conversion of the Company's outstanding
Class C common stock, $0.01 par value per share, or Class C
common stock and upon conversion of the Company's Convertible
Preferred Stock, $0.01 par value per share, or Convertible
Preferred Stock;
* 93,116,110 shares of Class C common stock, which includes the
shares of Class C common stock issuable upon conversion of
the outstanding Convertible Preferred Stock; and
* 77,005,744 shares of Convertible Preferred Stock.
The Company is not selling any securities under this prospectus
and will not receive any proceeds from the sale of the securities
by the selling stockholders. The securities to which this
prospectus relates may be offered and sold from time to time
directly by the selling stockholders or alternatively through
underwriters or broker dealers or agents.
There is currently no public trading market for the capital stock
of the Company and such capital stock is not presently traded on
any market or securities exchange. The Company intends to have a
registered broker-dealer apply to have the securities registered
hereby quoted on the Over-the-Counter Bulletin Board.
A copy of the amended prospectus is available for free at:
http://is.gd/ctTajw
About William Lyon Homes
Based in Newport Beach, California, William Lyon Homes and its
subsidiaries -- http://www.lyonhomes.com/-- are primarily engaged
in designing, constructing and selling single family detached and
attached homes in California, Arizona and Nevada.
William Lyon Homes and its affiliates commenced a prepackaged
Chapter 11 reorganization (Bankr. D. Del. Lead Case No. 11-14019)
on Dec. 19, 2011. William Lyon had been pursuing an out-of-court
restructuring since January. The reorganization plan, announced
in November, will reduce debt on borrowed money from $510 million
to $328 million. The Debtors intend to obtain approval of the
bankruptcy plan at a hearing beginning Feb. 10, 2012.
The Chapter 11 plan already has been accepted by 97% in amount and
93% in number of senior unsecured notes. The Plan exchanges the
notes for equity and generates $85 million in new cash. Holders
owed $300 million on senior unsecured notes are to exchange the
debt for $75 million in new secured notes plus 28.5% of the common
equity. The Lyon family will invest $25 million in return for 20%
of the common stock and warrants for another 9.1%. Senior secured
lenders led by ColFin WLH Funding LLC, an affiliate of real-estate
finance and investment company Colony Financial Inc., would
receive a new $235 million 10.25% three-year secured note for
existing secured claim of at least $206 million in principal.
There will be a rights offering to buy $10 million in common stock
and $50 million in convertible preferred stock, representing 51.5%
of the new equity. A noteholder has agreed to buy any of the
offering that isn't purchased.
The company didn't make a $7.5 million interest payment payable
Oct. 1, 2011, on $138.8 million in 10.75% senior notes due 2013.
William Lyon expects to pay its remaining creditors in full,
including vendors and other general unsecured creditors.
Judge Christopher S. Sontchi presides over the case. Lawyers at
Pachulski Stang Ziehl & Jones LLP serve as the Debtors' counsel.
Lawyers at Irell & Manella LLP serve as their special counsel.
Alvarez & Marsal North America LLC serves as the Debtors'
financial advisors. Kurtzman Carson Consultants, LLC, serves as
the Debtors' claims and notice agent. The petition says assets
are $593.5 million with debt totaling $606.6 million as of
Sept. 30, 2011.
Counsel to the Backstop Investors are Matthew K. Kelsey, Esq., and
J. Eric Wise, Esq., at Gibson, Dunn & Crutcher LLP. Counsel to
the Ad Hoc Noteholders Group are Mark Shinderman, Esq., and Neil
Wertlieb, Esq., at Milbank, Tweed, Hadley & McCloy LLP. Delaware
Counsel to the Ad Hoc Noteholders Group is Robert J. Dehney, Esq.,
at Morris, Nichols, Arsht & Tunnell LLP. The Prepetition Agent
and the Prepetition Secured Lenders are represented by David P.
Simonds, Esq., at Akin Gump Strauss Hauer & Feld LLP and David
Stratton, Esq., at Pepper Hamilton LLP. The Prepetition Lenders
also have hired FTI Consulting Inc. as advisors.
No creditors committee has yet been appointed by the Office of the
U.S. Trustee.
William Lyon Homes emerged from its voluntary pre-packaged chapter
11 reorganization with the effectiveness of its plan of
reorganization having occurred on February 25. The U.S.
Bankruptcy Court confirmed the Company's pre-packaged plan of
reorganization on February 10th, just 53 days after its plan and
related petitions were filed.
* * *
In the Nov. 8, 2012, edition of the TCR, Standard & Poor's
assigned a 'B-' corporate credit rating to William Lyon Homes Inc.
"Our ratings on William Lyon reflect the company's 'highly
leveraged' financial profile, marked by low interest coverage and
debt leverage metrics that remain high following its
reorganization," said credit analyst Matthew Lynam.
As reported by the TCR on Oct. 31, 2012, Moody's Investors Service
assigned Caa1 corporate family and probability of default ratings
to William Lyon Homes. The Caa1 corporate family rating reflects
William Lyon's elevated debt leverage (proforma homebuilding debt
to capitalization ratio of 70%), relatively low gross margins,
ongoing operating losses, and relatively small size, scale and
business diversity.
WISP RESORT: Court Approves Sale to EPR Unit for $23.5 Million
--------------------------------------------------------------
The Associated Press reports that the bankruptcy judge in
Greenbelt, Maryland, on Dec. 4 approved the sale of the Wisp
resort to EPT Ski Properties, a unit of EPR Properties, for $23.5
million. The judge also approved the sale of a golf course and
other land to National Land Partners for $6.1 million. Formal
closing dates for the sales are expected in December.
AP also relates home sites in the Lodestone golf-course
development didn't sell as well as expected.
About Wisp Resort et al.
Recreational Industries, Inc., D.C. Development, LLC, Wisp Resort
Development, Inc., and The Clubs at Wisp, LLC, operated a ski
resort and real estate development companies located in Garrett
County, Maryland generally known as Wisp Resort. The Wisp Resort
comprises approximately 2,200 acres of master planned and fully
entitled land, 32 ski trails covering 132 acres of skiable terrain
with 12 lifts and two highly-rated golf courses.
Financial problems were caused by a guarantee given to Branch
Banking & Trust Co. to secure a $29.6 million judgment the bank
obtained on a real estate development within the property.
Recreational Industries, D.C. Development, Wisp Resort Development
and The Clubs at Wisp filed for Chapter 11 bankruptcy (Bankr. D.
Md. Lead Case No. 11-30548) on Oct. 15, 2011, after defaulting on
nearly $30 million in loans from BB&T Corp. to build the golf
course community. D.C. Development disclosed $91,155,814 in
assets and $46,141,245 in liabilities as of the Chapter 111
filing.
The Debtors engaged Logan, Yumkas, Vidmar & Sweeney LLC as counsel
and tapped Invotex Group as financial restructuring consultant.
SSG Capital Advisors, LLC, serves as exclusive investment banker
to the Debtors. The Official Committee of Unsecured Creditors has
tapped Cole, Schotz, Meisel, Forman & Leonard, P.A. as counsel.
WP CPP HOLDINGS: Moody's Assigns 'B2' CFR/PDR; Outlook Stable
-------------------------------------------------------------
Moody's Investors Service assigned a B2 corporate family rating to
WP CPP Holdings, LLC (CPP), along with B1 ratings for its proposed
first lien bank credit facilities and a Caa1 rating for its
proposed second lien term loan. The rating outlook is stable.
Proceeds from the proposed financing and an equity contribution
from CPP's sponsor, Warburg Pincus LLC, will be used to refinance
existing debt and pay for the acquisition of the Turbine
Technologies Group (TTG) from ESCO Corporation.
The following ratings were assigned to CPP (subject to review of
final documentation):
B2 corporate family rating (CFR);
B2 probability of default rating;
B1 (LGD3, 35%) rating for the $100 million senior secured
revolving credit facility due 2017;
B1 (LGD3, 35%) rating for the $415 million senior secured term
loan B due 2019; and
Caa1 (LGD5, 86%) rating for the $185 million senior secured
second lien term loan due 2020.
Ratings Rationale
With proforma leverage just above 6.0x at close of the TTG
acquisition, on a Moody's adjusted basis, CPP is weakly positioned
at the B2 rating level. The rating incorporates Moody's
expectation that high aircraft delivery forecasts by airframe
builders will drive demand for CPP's and TTG's products over the
next 12-18 months, which should support earnings growth, cash flow
generation and balance sheet deleveraging to a more appropriate
level for the rating.
The B2 CFR reflects CPP's small scale relative to competitors,
exposure to potential cuts in military spending by the US
Department of Defense, a sector that accounts for roughly a
quarter of proforma 2012 sales, and an elevated level of
integration risk following the TTG acquisition, the largest deal
in company history. These factors are balanced against CPP's
consistently high margins, its sole source position with many
customers, a diversified customer base, limited exposure to any
one aircraft platform in its aerospace business (50% of proforma
2012 sales), and a good liquidity profile.
Moody's expects the acquisition of TTG to add scale to CPP's
castings manufacturing capabilities and enhance customer, end-
market and product diversification. Further, Moody's expects
integration efforts to be focused mainly on back-office
redundancies, and that TTG's margins, which are meaningfully lower
than CPP's, will trend upwards as integration efforts are
completed.
The stable outlook is prospective in that it anticipates
meaningful deleveraging will occur over the next 12-18 months and
that CPP will be successful in managing its integration of TTG.
Further, the stable outlook reflects Moody's view that strength in
commercial aerospace, industrial gas turbines and energy end-
markets will more than offset potential weakness in military
business over this period.
At close, Moody's expects CPP to maintain a good liquidity profile
benefiting from modest annual cash flow generation and a sizeable,
undrawn $100 million revolver that doesn't matures until 2017.
Moody's expects capital spending to be manageable and do not
expect integration plans to consume much cash. The deal is
covenant-lite, with no covenants unless revolver borrowings reach
$20 million. At $20 million, the company would be required to meet
a net first lien leverage covenant, although Moody's notes
considerable headroom even if this covenant becomes effective.
Moody's does not, however, anticipate that the company will
require $20 million of borrowings over the next year.
The B1 rating on the term loan and revolver reflect their
seniority position in the consolidated capital structure,
including the benefits of all-asset liens and both upstream and
downstream guarantees. The Caa1 rating on the second lien loans
reflects their junior position relative to the aforementioned
first lien lenders, with an explicit second lien status and the
same guarantees as provided to first lien lenders.
The ratings are unlikely to be upgraded prior to the completion of
the TTG integration efforts and a reduction in leverage to around
4.5x on sustainable basis. An upgrade would also require
strengthening of margins and a demonstrated ability to generate
consistently strong cash flows. A rating downgrade would likely
occur if integration efforts were to be more challenging than
initially anticipated and margin improvements at TTG are
prolonged, with resultant leverage approaching 6.5x.
The principal methodology used in rating CPP was the Global
Aerospace and Defense Industry Methodology published in June 2010.
Other methodologies used include Loss Given Default for
Speculative-Grade Non-Financial Companies in the U.S., Canada and
EMEA published in June 2009.
CPP, headquartered in Pomona CA, is a castings manufacturer of
engineered components and sub-assemblies for the commercial
aerospace military and defense and energy markets. TTG is a
supplier investment cast components provider for the aerospace,
power generation, M&D, and industrial end-markets. Combined
revenues are expected to total roughly $485 million for 2012.
WPCS INTERNATIONAL: Rights Agreement with Interwest Expires
-----------------------------------------------------------
WPCS International Incorporated and Interwest Transfer Co., Inc.,
as Rights Agent, entered into Amendment No. 1 to the Rights
Agreement dated Feb. 24, 2010, to accelerate the expiration of the
Rights to Dec. 4, 2012. As a result of the Amendment, the Rights
expired and the Rights Agreement terminated effective 5:00 p.m.,
New York City time, on Dec. 4, 2012.
On Feb. 24, 2010, the Company declared a dividend of one preferred
share purchase right for each outstanding share of the Company's
common stock, par value $0.0001 per share, and authorized the
issuance of one Right for each share of Common Stock which will
become outstanding between the Record Date and the earliest to
occur of the Distribution Date, the redemption or exchange of the
Rights, or the expiration of the Rights.
A copy of the Rights Agreement is available for free at:
http://is.gd/TSP6cO
About WPCS International
Exton, Pennsylvania-based WPCS International Incorporated provides
design-build engineering services that focus on the implementation
requirements of communications infrastructure. The Company
provides its engineering capabilities including wireless
communication, specialty construction and electrical power to the
public services, healthcare, energy and corporate enterprise
markets worldwide.
As reported by the TCR on Dec. 8, 2011, WPCS International and its
United Stated based subsidiaries, previously entered into a loan
agreement, dated April 10, 2007, as extended, modified and amended
several times, with Bank of America, N.A. The Company is seeking
alternative debt financing and has conducted discussions with
other senior lenders to replace the Loan Agreement. The Company
may not be successful in obtaining alternative debt financing or
additional financing sources may not be available on acceptable
terms. If the Company is required to repay the Loan Agreement,
the Company has sufficient working capital to repay the
outstanding borrowings.
J.H. COHN LLP, in Eatontown, New Jersey, issued a "going concern"
qualification on the consolidated financial statements for the
fiscal year ended April 30, 2012. The independent auditors noted
that the Company is in default of certain covenants of its credit
agreement and has incurred operating losses, negative cash flows
from operating activities and has a working capital deficiency as
of April 30, 2012. These matters raise substantial doubt about
the Company's ability to continue as a going concern.
WPCS reported a net loss attributable to the Company of
$20.54 million for the year ended April 30, 2012, compared to a
net loss attributable to the Company of $36.83 million during the
prior fiscal year.
The Company's balance sheet at July 31, 2012, showed $25.95
million in total assets, $18.78 million in total liabilities and
$7.16 million in total equity.
Going Concern
On Jan. 27, 2012, WPCS and its United States-based subsidiaries
Suisun City Operations, Seattle Operations, Portland Operations,
Hartford Operations, Lakewood Operations, and Trenton Operations,
entered into a loan and security agreement with Sovereign Bank,
N.A.
on July 12, 2012, the Company executed the Surety Financing and
Confession of Judgment Agreement with Zurich American Insurance
Company. The Company is not in compliance with the terms of the
Zurich Agreement. As a result of the Company's noncompliance, the
Company instructed the owner of this project to make at all
current and future payments directly to Zurich.
The Company's failure to comply with the terms of the Credit
Agreement and the Zurich Agreement, as well as the Company's
losses from operations for the three months ended July 31, 2012,
raise substantial doubt about the Company's ability to continue as
a going concern. At July 31, 2012, the Company had cash and cash
equivalents of $1,257,920 and working capital of $1,412,252, which
consisted of current assets of $20,145,533 and current liabilities
of $18,733,281. As of Sept. 12, 2012, the Company had remaining
availability under the Credit Agreement of $1,554,500.
Andrew Hidalgo, CEO of WPCS, commented, "I am pleased to report a
substantial improvement in financial performance quarter over
quarter. For the first quarter, our operation centers generated
$695,000 in EBITDA on revenue of $13.4 million. Even our Trenton
Operations, which is coming off a difficult year of losses,
generated positive EBITDA of $208,000 in the first quarter. The
projects that generated the losses are behind us. We have
strengthened the balance sheet and income statement. Our
challenge continues to be cash flow. The current debt facility of
$2 million with Sovereign Bank is not sufficient to meet our
future operating requirements. We need to replace this debt
facility as a priority. If we are able to obtain an adequate debt
facility, we believe we will be in a better position for growth
and increased shareholder value."
WPCS INTERNATIONAL: Secures $4-Mil. Private Placement Financing
---------------------------------------------------------------
WPCS International Incorporated has entered into a private
placement with six accredited investors for the sale of $4 million
of senior secured convertible notes and warrants to purchase
shares of WPCS' common stock.
Under the general terms of the Notes, WPCS will be able to draw
down daily against the $4 million of gross proceeds based on
available cash in a lockbox account plus 95% of available
qualified accounts receivables, less a reserve of $250,000 and
less the total amount of principal, accrued interest, fees, costs
and expenses owed pursuant to the Notes. At closing, it is
anticipated that WPCS will initially draw down approximately $2.2
million to retire the existing $2 million senior revolving line of
credit with Sovereign Bank, N.A., and related fees and expenses.
The Notes are convertible into shares of common stock at an
initial conversion price of $0.3768 per share.
The investors will also receive warrants to purchase an aggregate
of 15,923,567 shares, exercisable for five years at an initial
exercise price of $0.471 per share. The conversion and exercise
prices of the Notes and Warrants will be adjusted to 85% of market
price on the occurrence of certain future adjustment dates as
defined in the transaction documents. The Notes will mature on
the eighteen-month anniversary of the closing date and will bear
interest at the rate of 4% per annum, payable quarterly in
arrears.
Joseph Heater, chief financial officer of WPCS, commented, "We are
pleased to announce the successful completion of the financing.
The Notes provide adequate financing to repay Sovereign Bank and
gives us the ability to obtain additional working capital through
the available qualified accounts receivable parameters and from
any future conversion of Notes to common shares. We believe we
are completing a turnaround in operating performance while
securing the working capital needed to deliver better operating
results in the future."
Amends Form S-3
The Company filed a post-effective amendment No. 1 to the Form S-3
(File No. 333-165927), which was declared effective by the
Securities and Exchange Commission on April 20, 2010, to
deregister all unsold shares of common stock registered under the
Registration Statement, and to terminate the effectiveness of the
Registration Statement.
About WPCS International
Exton, Pennsylvania-based WPCS International Incorporated provides
design-build engineering services that focus on the implementation
requirements of communications infrastructure. The Company
provides its engineering capabilities including wireless
communication, specialty construction and electrical power to the
public services, healthcare, energy and corporate enterprise
markets worldwide.
As reported by the TCR on Dec. 8, 2011, WPCS International and its
United Stated based subsidiaries, previously entered into a loan
agreement, dated April 10, 2007, as extended, modified and amended
several times, with Bank of America, N.A. The Company is seeking
alternative debt financing and has conducted discussions with
other senior lenders to replace the Loan Agreement. The Company
may not be successful in obtaining alternative debt financing or
additional financing sources may not be available on acceptable
terms. If the Company is required to repay the Loan Agreement,
the Company has sufficient working capital to repay the
outstanding borrowings.
J.H. COHN LLP, in Eatontown, New Jersey, issued a "going concern"
qualification on the consolidated financial statements for the
fiscal year ended April 30, 2012. The independent auditors noted
that the Company is in default of certain covenants of its credit
agreement and has incurred operating losses, negative cash flows
from operating activities and has a working capital deficiency as
of April 30, 2012. These matters raise substantial doubt about
the Company's ability to continue as a going concern.
WPCS reported a net loss attributable to the Company of
$20.54 million for the year ended April 30, 2012, compared to a
net loss attributable to the Company of $36.83 million during the
prior fiscal year.
The Company's balance sheet at July 31, 2012, showed
$25.95 million in total assets, $18.78 million in total
liabilities and $7.16 million in total equity.
Going Concern
On Jan. 27, 2012, WPCS and its United States-based subsidiaries
Suisun City Operations, Seattle Operations, Portland Operations,
Hartford Operations, Lakewood Operations, and Trenton Operations,
entered into a loan and security agreement with Sovereign Bank,
N.A.
on July 12, 2012, the Company executed the Surety Financing and
Confession of Judgment Agreement with Zurich American Insurance
Company. The Company is not in compliance with the terms of the
Zurich Agreement. As a result of the Company's noncompliance, the
Company instructed the owner of this project to make at all
current and future payments directly to Zurich.
The Company's failure to comply with the terms of the Credit
Agreement and the Zurich Agreement, as well as the Company's
losses from operations for the three months ended July 31, 2012,
raise substantial doubt about the Company's ability to continue as
a going concern. At July 31, 2012, the Company had cash and cash
equivalents of $1,257,920 and working capital of $1,412,252, which
consisted of current assets of $20,145,533 and current liabilities
of $18,733,281. As of Sept. 12, 2012, the Company had remaining
availability under the Credit Agreement of $1,554,500.
Andrew Hidalgo, CEO of WPCS, commented, "I am pleased to report a
substantial improvement in financial performance quarter over
quarter. For the first quarter, our operation centers generated
$695,000 in EBITDA on revenue of $13.4 million. Even our Trenton
Operations, which is coming off a difficult year of losses,
generated positive EBITDA of $208,000 in the first quarter. The
projects that generated the losses are behind us. We have
strengthened the balance sheet and income statement. Our
challenge continues to be cash flow. The current debt facility of
$2 million with Sovereign Bank is not sufficient to meet our
future operating requirements. We need to replace this debt
facility as a priority. If we are able to obtain an adequate debt
facility, we believe we will be in a better position for growth
and increased shareholder value."
Z TRIM HOLDINGS: Five Directors Elected to Board
------------------------------------------------
At the Annual Meeting of Shareholders of Z Trim Holdings, Inc., on
Dec. 3, 2012, the Company's shareholders elected Steven J. Cohen,
Morris Garfinkle, Brian S. Israel, Mark Hershhorn and Edward Smith
III as directors of the Company to serve until the next Annual
Meeting of Shareholders in 2013 or until their successors are
elected and qualified.
The shareholders also approved the amended and restated Z Trim
Holdings, Inc., Incentive Compensation Plan and ratified the
appointment of M&K CPAs, LLC, as the Company's independent
registered accounting firm for the fiscal year 2013.
About Z Trim
Mundelein, Ill.-based Z Trim Holdings, Inc., is a functional food
ingredient company which provides custom product solutions that
help answer the food industry's problems. Z Trim's revolutionary
technology provides value-added ingredients across virtually all
food industry categories. Z Trim's all-natural products, among
other things, help to reduce fat and calories, add fiber, provide
shelf-stability, prevent oil migration, and add binding capacity
-- all without degrading the taste and texture of the final food
products.
M&K CPAs,PLLC, in Houston, Texas, expressed substantial doubt
about the Company's ability to continue as a going concern
following the 2011 financial results. The independent auditors
noted that the Company had a working capital deficit and
reoccurring losses as of Dec. 31, 2011.
The Company reported a net loss of $6.94 million in 2011, compared
with a net loss of $10.91 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed $4.41
million in total assets, $24.99 million in total liabilities,
$6.36 million in total commitment and contingencies, and a $26.93
million total stockholders' deficit.
* Total New U.S. Bankruptcies Fell 12% in November
--------------------------------------------------
The American Bankruptcy Institute said in a statement, citing data
provided by Epiq Systems Inc., that total November bankruptcy
filings in the U.S. fell 12% from the same month last year.
November bankruptcy filings declined to 86,946 last month from
98,534 a year earlier. Non-commercial bankruptcies decreased by
11% to 82,747. Total commercial bankruptcies dropped 19% to 4,199
filings last month, from 5,216 in November 2011, while commercial
Chapter 11 filings increased, ABI said. There were 664 commercial
Chapter 11 filings last month, 21% more than in October and 10%
more than November 2011, according to the report.
* Large Companies With Insolvent Balance Sheets
-----------------------------------------------
Total
Share- Total
Total Holders' Working
Assets Equity Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------ -------- -------
ABSOLUTE SOFTWRE ABT CN 128.8 (7.2) 2.7
ADVANCED BIOMEDI ABMT US 0.2 (2.0) (1.6)
AK STEEL HLDG AKS US 3,920.7 (413.9) 450.0
AMC NETWORKS-A AMCX US 2,152.9 (915.4) 505.9
AMER AXLE & MFG AXL US 2,674.2 (497.7) 372.3
AMER RESTAUR-LP ICTPU US 33.5 (4.0) (6.2)
AMERISTAR CASINO ASCA US 2,096.6 (25.6) (26.5)
AMYLIN PHARMACEU AMLN US 1,998.7 (42.4) 263.0
ANACOR PHARMACEU ANAC US 42.8 (6.2) 15.9
ARRAY BIOPHARMA ARRY US 85.5 (96.4) 4.1
AUTOZONE INC AZO US 6,398.0 (1,591.4) (682.2)
BERRY PLASTICS G BERY US 5,025.0 (452.0) (4,000.0)
BOSTON PIZZA R-U BPF-U CN 167.0 (86.0) 0.4
CABLEVISION SY-A CVC US 7,285.3 (5,730.1) (85.3)
CAPMARK FINANCIA CPMK US 20,085.1 (933.1) -
CC MEDIA-A CCMO US 16,402.3 (7,847.3) 1,449.3
CENTENNIAL COMM CYCL US 1,480.9 (925.9) (52.1)
CHOICE HOTELS CHH US 483.1 (569.4) 7.5
CIENA CORP CIEN US 1,915.3 (60.3) 710.4
CINCINNATI BELL CBB US 2,752.3 (684.6) (68.2)
CLOROX CO CLX US 4,747.0 (20.0) 20.0
COMVERSE INC CNSI US 830.6 (80.6) (105.9)
CYTORI THERAPEUT CYTX US 32.0 (9.7) 8.2
DELTA AIR LI DAL US 44,352.0 (48.0) (5,061.0)
DIRECTV DTV US 20,353.0 (4,735.0) 953.0
DOMINO'S PIZZA DPZ US 441.0 (1,345.5) 74.0
DUN & BRADSTREET DNB US 1,821.6 (765.7) (615.8)
DYAX CORP DYAX US 57.2 (48.4) 26.7
DYNEGY INC DYN US 5,971.0 (1,150.0) 1,364.0
FAIRPOINT COMMUN FRP US 1,798.0 (220.7) 31.1
FERRELLGAS-LP FGP US 1,397.3 (27.5) (50.9)
FIESTA RESTAURAN FRGI US 289.7 6.6 (13.1)
FIFTH & PACIFIC FNP US 843.4 (192.2) 33.5
FREESCALE SEMICO FSL US 3,329.0 (4,489.0) 1,305.0
GENCORP INC GY US 908.1 (164.3) 48.1
GLG PARTNERS INC GLG US 400.0 (285.6) 156.9
GLG PARTNERS-UTS GLG/U US 400.0 (285.6) 156.9
GRAHAM PACKAGING GRM US 2,947.5 (520.8) 298.5
HCA HOLDINGS INC HCA US 27,302.0 (6,563.0) 1,411.0
HEADWATERS INC HW US 680.9 (3.1) 73.5
HOVNANIAN ENT-A HOV US 1,624.8 (404.2) 881.0
HOVNANIAN ENT-B HOVVB US 1,624.8 (404.2) 881.0
HUGHES TELEMATIC HUTC US 110.2 (101.6) (113.8)
HUGHES TELEMATIC HUTCU US 110.2 (101.6) (113.8)
INCYTE CORP INCY US 296.5 (220.0) 141.1
INFOR US INC LWSN US 5,846.1 (480.0) (306.6)
IPCS INC IPCS US 559.2 (33.0) 72.1
ISTA PHARMACEUTI ISTA US 124.7 (64.8) 2.2
JUST ENERGY GROU JE CN 1,536.5 (279.0) (177.1)
JUST ENERGY GROU JE US 1,536.5 (279.0) (177.1)
LIMITED BRANDS LTD US 6,427.0 (515.0) 973.0
LIN TV CORP-CL A TVL US 864.4 (35.0) 67.2
LORILLARD INC LO US 3,424.0 (1,564.0) 1,364.0
MARRIOTT INTL-A MAR US 5,865.0 (1,296.0) (1,532.0)
MERITOR INC MTOR US 2,501.0 (982.0) 270.0
MONEYGRAM INTERN MGI US 5,247.0 (163.6) (95.3)
MORGANS HOTEL GR MHGC US 577.0 (125.2) (8.7)
NATIONAL CINEMED NCMI US 828.0 (347.7) 107.6
NAVISTAR INTL NAV US 11,143.0 (358.0) 1,585.0
NEXSTAR BROADC-A NXST US 611.4 (160.3) 35.1
NPS PHARM INC NPSP US 165.5 (46.7) 121.9
NYMOX PHARMACEUT NYMX US 2.1 (7.7) (1.6)
OMEROS CORP OMER US 32.8 (0.8) 9.6
PALM INC PALM US 1,007.2 (6.2) 141.7
PDL BIOPHARMA IN PDLI US 249.9 (115.5) 170.6
PLAYBOY ENTERP-A PLA/A US 165.8 (54.4) (16.9)
PLAYBOY ENTERP-B PLA US 165.8 (54.4) (16.9)
PRIMEDIA INC PRM US 208.0 (91.7) 3.6
PROTECTION ONE PONE US 562.9 (61.8) (7.6)
QUALITY DISTRIBU QLTY US 513.1 (19.7) 62.0
QUICKSILVER RES KWK US 2,490.2 (146.7) 68.0
REALOGY HOLDINGS RLGY US 7,351.0 (1,742.0) (484.0)
REGAL ENTERTAI-A RGC US 2,198.1 (552.4) 77.4
REGULUS THERAPEU RGLS US 40.7 (8.5) 21.0
RENAISSANCE LEA RLRN US 57.0 (28.2) (31.4)
REVLON INC-A REV US 1,183.6 (680.7) 104.7
RURAL/METRO CORP RURL US 303.7 (92.1) 72.4
SALLY BEAUTY HOL SBH US 2,065.8 (115.1) 686.5
SAREPTA THERAPEU SRPT US 53.1 (4.6) (13.0)
SHUTTERSTOCK INC SSTK US 46.7 (29.9) (32.9)
SINCLAIR BROAD-A SBGI US 2,245.5 (52.4) (14.1)
TAUBMAN CENTERS TCO US 3,152.7 (86.1) -
TEMPUR-PEDIC INT TPX US 913.5 (12.5) 207.0
TESLA MOTORS TSLA US 809.2 (27.9) (101.3)
TESORO LOGISTICS TLLP US 291.3 (78.5) 50.7
THRESHOLD PHARMA THLD US 86.2 (44.1) 68.2
ULTRA PETROLEUM UPL US 2,593.6 (109.6) (266.6)
UNISYS CORP UIS US 2,254.5 (1,152.6) 371.3
VECTOR GROUP LTD VGR US 885.6 (102.9) 243.0
VERISIGN INC VRSN US 1,983.3 (26.6) (86.9)
VIRGIN MOBILE-A VM US 307.4 (244.2) (138.3)
WEIGHT WATCHERS WTW US 1,198.0 (1,720.4) (273.7)
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers"
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com/
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors" Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
Tumanda, Howard C. Tolentino, Joseph Medel C. Martirez, Carmel
Paderog, Meriam Fernandez, Ronald C. Sy, Joel Anthony G. Lopez,
Cecil R. Villacampa, Sheryl Joy P. Olano, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman,
Editors.
Copyright 2012. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $775 for 6 months delivered via
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firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***