/raid1/www/Hosts/bankrupt/TCR_Public/130514.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, May 14, 2013, Vol. 17, No. 132
Headlines
1250 OCEANSIDE PARTNERS: Has Final Approval of $2.5MM Loan
30DC INC: Discussed Current Business Model and Business Strategy
710 LONG RIDGE: CK&V and K&L OK'd as Special Litigation Counsel
710 LONG RIDGE: Cole Schotz Approved as Bankruptcy Counsel
710 LONG RIDGE: EisnerAmper Okayed as Committee Accountant
AAR CORP: Moody's Affirms 'Ba3' Corporate Family Rating
ACADEMY LTD: Moody's Hikes rating on $825MM Secured Loan to 'B1'
ACCESS PHARMACEUTICALS: Two Directors Elected to Board
AFFYMAX INC: Incurs $26.7-Mil. Net Loss in First Quarter
AHERN RENTALS: Lines Up $495 Million in Exit Loans
ALAN MURRAY: Post-Confirmation Disclosure Statement Denied
ALT HOTEL: DiamondRock Closes on Mortgage Loan Settlement
AMERICAN AIRLINES: Consolidated Traffic Decreased 1.1% in April
AMERICAN APPAREL: Incurs $46.5 Million Net Loss in 1st Quarter
AMERICANWEST BANCORPORATION: TOPrS Holders File New Plan
ANGEL FIRE: Magistrate Judge Recommends Scarborough Suit Dismissal
ANV SECURITY: Incurs $149K Net Loss in First Quarter
APPLETON PAPERS: Reports $2.14-Mil. Net Income in First Quarter
APPLIED MINERALS: Incurs $3.1 Million Net Loss in First Quarter
ARCH COAL: Fitch Downgrades Issuer Default Rating to 'B-'
ATHENS/ALPHA GAS: Cawley Loses 8th Circuit Appeal
ATP OIL: Lenders Win Auction With $691 Million Credit Bid
B&K COASTAL: Court Narrows Suit Against Promenade at Surf City
BASHAS' INC: Copyright Infringement Suit Dismissed
BERNARD L. MADOFF: Concept of Mandatory Withdrawal Expanded
BG MEDICINE: Incurs $5.4 Million Net Loss in First Quarter
BIRDSALL SERVICES: Bonus Program Okayed Pending June Sale
BOSTON GENERATING: US Power Settles Creditors' Suit for $2MM
BNC MORTGAGE: Maryland District Court Dismisses "Bowman" Suit
BROADWAY FINANCIAL: Sells $8.7 Million of Non-Performing Loans
BROADWAY FINANCIAL: Amends 2012 Annual Report
CAESARS ENTERTAINMENT: Files Form 10-Q, Had $216.7MM Loss in Q1
CENTRAL EUROPEAN: Bankruptcy Court Approves Reorganization Plan
CENTRAL EUROPEAN: To Restate Periodic Reports Retroactive 2010
CEREPLAST INC: Restructuring to Cut Annual Expenses by $800,000
CHINA JO-JO: Receives NASDAQ Listing Non-Compliance Notice
CIRCLE ENTERTAINMENT: Incurs $445,000 Net Loss in First Quarter
CIRCLE ENTERTAINMENT: Amends 2012 Form 10-K for Accounting Error
CLAIRE'S STORES: Sees 2.9% Increase in Same Store Sales for Q1
CLEAR CHANNEL: New $1.5-Bil. Term Loan Gets Moody's Caa1 Rating
CLEARWIRE CORP: Urges Stockholders to Back Sprint Transaction
CLEARWIRE CORP: Crest Takes First Step to Perfect Appraisal Rights
CODA HOLDINGS: May 20 Hearing on Loan, Sale Procedures
COMPREHENSIVE CARE: Closes on $5 Million Credit Facility
COMSTOCK MINING: Incurs $5.7 Million Net Loss in First Quarter
CONVERTED ORGANICS: Incurs $1.6 Million Net Loss in 1st Quarter
DUNE ENERGY: Issues 6.2 Million Common Shares
DUNE ENERGY: Zell Credit Held 6.5% Equity Stake at May 8
E-DEBIT GLOBAL: In Talks to Sell Distribution Networks
EASTMAN KODAK: Seeks Rejection of Contracts With Xpedx, et al.
ELBIT IMAGING: Files Plan of Arrangement with Israeli Court
ELBIT IMAGING: Trustees Withdraw Motion of Temporary Liquidator
EMMIS COMMUNICATIONS: Posts $41.9-Mil. Net Income in Fiscal 2013
EMISPHERE TECHNOLOGIES: Completes Restructuring Transactions
EMISPHERE TECHNOLOGIES: M. Rachesky Held 62.8% Stake at May 7
ENDEAVOUR INTERNATIONAL: Incurs $14MM Net Loss in First Quarter
ENERGYSOLUTIONS INC: Gets NRC OK for Transfer of Licenses
EVERTON SOCCER: Football Fans Wants Paul McCartney to Buy Club
FANNIE MAE: Reports $58.7 Billion Net Income in First Quarter
FANNIE MAE: Earnings, Dividend to Complicate GSE Reform
FASTCOMM COMMS: Venture Capital Fund's Suit v. Successor Proceeds
FILENE'S BASEMENT: Ultra Stores' $6,346,276 Claim Disallowed
FR 160: Golf Club Wants Cash Collateral; Hearing on May 28
FREESEAS INC: Issues 335,000 Add'l Settlement Shares to Hanover
GASCO ENERGY: Continues to Evaluate Strategic Alternatives
GEOKINETICS INC: Joint Plan Takes Effect; Exits Chapter 11
GMX RESOURCES: Provides Update on Reserve Estimates
GMX RESOURCES: Delays First Quarter Form 10-Q
GRANDE COMMUNICATIONS: Moody's Rates New $295MM Debt 'B2'
HALLWOOD GROUP: Stockholders Elect Michael Powers to Board
HAMPTON CAPITAL: Can Employ Getzler Henrich as Advisor
HAMPTON CAPITAL: Hires Binswanger Southern as Realtor
HAMPTON CAPITAL: Seeks Exclusivity Extension Until Aug. 5
HEARUSA INC: Liquidating Trustee Sued by Shareholders
IDERA PHARMACEUTICALS: Regains Compliance with NASDAQ Rule
IN PLAY MEMBERSHIP: Can Hire Weinman & Associates as Counsel
INSPIREMD INC: Incurs $4.8 Million Net Loss in March 31 Quarter
INSPIREMD INC: Amends 2.8 Million Shares Resale Prospectus
INTCOMEX INC: Cash Deficiencies Cue Moody's to Lower CFR to Caa1
INTELSAT INVESTMENTS: Incurs $5.6 Million Net Loss in Q1
INTERNATIONAL FUEL: Malone Bailey Succeeds BDO as Accountants
IRONSTONE GROUP: Incurs $37,500 Net Loss in First Quarter
ISC8 INC: Issues $1.1 Million Promissory Notes
ISTAR FINANCIAL: Offering $565 Million of Senior Notes
ISTAR FINANCIAL: Fitch Rates $565MM Unsecured Notes at 'B-/RR4'
JACKSONVILLE BANCORP: Reports $199,000 Net Income in 1st Quarter
KCG HOLDINGS: Moody's Assigns 'Ba3' CFR, Stable Outlook
KEMET CORP: Inks Joint Development Agreement with NEC TOKIN
KEMET CORP: Incurs $24 Million Loss in Fourth Quarter
LARSON LAND: Robinson Anthon Allowed $7,400 in Fees, Costs
LEDGEMONT CAPITAL: Former Banker Files to Liquidate
LEHMAN BROTHERS: To Explore Monetization Opportunities for Claims
LEHMAN BROTHERS: First BanCorp Loses Summary Judgment Bid
LIBERATOR INC: Incurs $179,000 Net Loss in First Quarter
LLS AMERICA: Trustee May C$103,752 From Old Orchard Campground
MAMAMANCINI'S HOLDINGS: Incurs $611K Net Loss in 1st Quarter
MERITAGE HOMES: Fitch Affirms 'B+' Long-Term Issuer Default Rating
MF GLOBAL: Trustee's Jury Demand Reveals Plans in Corzine Suit
MGM RESORTS: Reports $6.5 Million Net Income in First Quarter
MGM RESORTS: AllianceBernstein Held 2.5% Equity Stake at April 30
MODERN PRECAST: Can Hire Concannon Miller as Accountant
MONARCH COMMUNITY: Incurs $427,000 Net Loss in First Quarter
MONARCH COMMUNITY: To Effect a 1-for-5 Reverse Stock Split
MONITOR CO: Creditors Authorized to File Suits
MORGANS HOTEL: Files Form 10-Q, Incurs $11.7-Mil. Net Loss in Q1
MOUNTAIN CHINA: Posts $17.85-Mil. Net Loss in Fiscal Year 2012
MPG OFFICE: Incurs $12.4 Million Net Loss in First Quarter
MSR RESORTS: Court Narrows Finney Suit v. First Tennessee et al.
NAMCO LLC: Pool Retailer Has Final Approval of $16 Million Loan
NATIONWIDE FINANCIAL: Fitch Affirms 'BB+' Trust Preferred Rating
NEONODE INC: Incurs $3.57 Million Net Loss in First Quarter
NORTEL NETWORKS: European Retirees' Appeal Ruled 'Frivolous'
NPS PHARMACEUTICALS: Incurs $7.8 Million Net Loss in 1st Quarter
OAKLEY REDEVELOPMENT: Fitch Affirms 'BB' Rating on $25.1MM Bonds
OHANA GROUP: Seeks to Extend Plan Filing Deadline to May 31
OLD SECOND: Shares Investor Presentation Materials
ORCKIT COMMUNICATIONS: Offering 7.5MM Shares Under Incentive Plan
ORECK CORPORATION: Section 341(a) Meeting Scheduled on June 14
OTELCO INC: Incurs $1.8-Mil. Net Loss in First Quarter
OXIGENE INC: Incurs $1.9-Mil. Net Loss in First Quarter
PARKERVISION INC: Incurs $6.5-Mil. Net Loss in First Quarter
PATIENT SAFETY: Amends 26.4 Million Resale Prospectus
PATRIOT COAL: Units Gets Imminent Danger Order From MSHA
PATRIOT COAL: Incurs $115.9 Million Net Loss in First Quarter
PENN TREATY: Failure to File Periodic Reports Prompts Revocation
PHOENIX DEVELOPMENT: Section 341(a) Meeting Set on June 27
PITTSBURGH GLASS: Underperformance Prompts Moody's to Cut Ratings
QUALITY DISTRIBUTION: Files Form 10-Q, Had $9.1MM Income in Q1
QUANTUM CORP: Incurs $14.5 Million Net Loss in Fourth Quarter
RDA HOLDING: Litigation Threat Used to Hike Pot by $3.87MM
REAL ESTATE ASSOCIATES: Had No Investment in Bluewater at Dec. 31
RESIDENTIAL CAPITAL: Committee Wants Sole Authority for Suing Ally
RESIDENTIAL CAPITAL: Parties Battle Over Details
RESIDENTIAL CAPITAL: Parties Trying for Global Settlement
REVEL AC: Bankruptcy Court Confirms Prepack Reorganization Plan
RG STEEL: Group Opposes Use of Trust Funds for Creditor Payment
ROCKWELL MEDICAL: Extends Purchase Pact with DaVita Until 2018
SCHOOL SPECIALTY: Modifies Milestones Under Credit Agreements
SEAN DUNNE: Lists Assets, Debt and Household Goods
SEQUENOM INC: Incurs $29.4 Million Net Loss in First Quarter
SIGNATURE GROUP: To Monetize Certain Special Situations Assets
SPIRIT FINANCE: Incurs $8.3 Million Net Loss in First Quarter
SPRINT NEXTEL: Capital Research Had 5% Series 1 Shares in April
SPLIT VEIN: Truck Driver to Get Reduced Compensation
SUNSTATE EQUIPMENT: Moody's Hikes Rating on $170MM Notes to 'Ba3'
SUNSTONE COMPONENTS: Has Interim Approval for Chapter 11 Loan
SUNTECH POWER: Hongkuan Jiang Resigns as CHRO
T3 TROY: S.D.N.Y. Court Dismisses Involuntary Chapter 7
THERAPEUTICSMD INC: Incurs $6.4-Mil. Net Loss in First Quarter
THERAPEUTICSMD INC: Incurs $6.4 Million Net Loss in First Quarter
THOMPSON CREEK: Reports $900,000 Net Income in 1st Quarter
TIMEGATE STUDIOS: SouthPeak Opposes Quick Insider Sale
TORTILLERIA EL MAIZAL: Files for Chapter 11 in Atlanta
TRANSGENOMIC INC: Incurs $3.6 Million Net Loss in First Quarter
TRAVELPORT LIMITED: Incurs $10 Million Net Loss in First Quarter
TRIUS THERAPEUTICS: Files Form 10-Q, Incurs $17.3MM Loss in Q1
UNIFIED 2020: Section 341(a) Meeting Scheduled on June 6
UNIVERSAL HEALTH: Trustee Wants Case in Chapter 7
US POSTAL: Posts $1.9-Bil. Net Loss in Second Quarter of 2013
VIVARO CORP: Has Nod to Hire Womble Carlyle to Advise on FCC Rules
WEAVER PUBLICATIONS: Buyer Not Liable to Schumann Printers' Debt
WESTERN CAPITAL: Has Nod to Hire Eason Rohde as Litigation Counsel
WESTERN CAPITAL: Court Okays Weinman & Associates as Counsel
WRIGLEY JR: Moody's Changes Outlook on Ba1 Ratings to Positive
XZERES CORP: David Baker Held 7% Equity Stake as of April 9
ZOGENIX INC: Incurs $21 Million Net Loss in First Quarter
* Atlas Partners Purchases Loans & Liens Against Joyce Brothers
* David Oreck Releases Book "Dust to Diamonds"
* Large Companies With Insolvent Balance Sheets
*********
1250 OCEANSIDE PARTNERS: Has Final Approval of $2.5MM Loan
----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the owners of a 1,800-acre development near Kona on
the island of Hawaii received final court approval for a $2.5
million loan. Known as Hokuli'a, the project was originally
developed by Lyle Anderson, who lost his interest in the property.
The project has 3.5 miles of waterfront on the Kona coast and was
to have 730 residential units, a golf course, club and other
amenities. Total debt on the project, more than $680 million, is
attributable in part to other Anderson projects in Arizona, New
Mexico, and Scotland.
About 1250 Oceanside Partners
1250 Oceanside Partners, Front Nine LLC, and Pacific Star Company
LLC, owners of the 1,800-acre Hokuli'a luxury real estate
development near Kona on the island of Hawaii, sought Chapter 11
protection (Bankr. D. Hawaii Lead Case No. 13-00353) on March 6,
2013, in Honolulu.
The Debtors were formed by developer Lyle Anderson and were part
of his development "empire", which included developments in
Hawaii, Arizona, New Mexico and Scotland. The secured lender,
Bank of Scotland, declared a default and obtained control of the
Debtors in January 2008.
Development of the property, which has 3.5 miles of waterfront on
the Kona coast, stopped after the developers were declared in
default under the loan. Oceanside and Front Nine own most of the
land within the Hokuli'a project, which is the principal
development. Pacific Star owns the land referred to as "Keopuka",
near Hokuli'a. The Hokuli'a was to have 730 residential units, an
18-hole golf course, club and other amenities.
The Debtors say their assets are worth $68.1 million while they
are jointly liable to $625 million of debt to Sun Kona Finance
LLC, which acquired the Hawaii loan from Bank of Scotland.
30DC INC: Discussed Current Business Model and Business Strategy
----------------------------------------------------------------
30DC, Inc., has recently published a video, with its Chairman Dr.
Henry Pinskier discussing the Company's current business model and
business strategy. 30DC's management believes that its MagCast
Digital Publishing Platform is quickly becoming the dominant
Digital Publishing Platforms for the self publishing market on
Apple Newsstand.
MagCast is a complete turnkey system that includes executive
training modules allowing anyone including, Internet self
publisher of user generated content, to quickly learn how to
develop, publish, produce content on a recurring basis, and
conduct digital marketing campaigns with the goal of audience
building. Since MagCast's launch in June 2012, over 300+ MagCast-
sponsored magazines have successfully launched on Newsstand,
almost all of whom were created from scratch. The video is
available on the Investor Overview Page of the Company's corporate
Web site http://30dcinc.com/investors/news/
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.
710 LONG RIDGE: CK&V and K&L OK'd as Special Litigation Counsel
---------------------------------------------------------------
The Hon. Donald H. Steckroth of the U.S. Bankruptcy Court for the
District of New Jersey authorized 710 Long Ridge Road Operating
Company II, LLC, et al., to employ Critchley, Kinum & Vazquez, LLC
and K&L Gates LLP as special litigation counsels.
The Debtors are parties to, among other proceedings, litigation
against United Healthcare Workers East, SEIU 1199 and the New
England Health Care Employees Union, District 1199 in the U.S.
District Court for the District of New Jersey in which they seek
monetary and equitable relief pursuant to the Racketeer Influenced
and Corrupt Organizations Act, 18 U.S.C. Section 1961 et seq.
CK&V and K&L will continue representing the Debtors in the pending
RICO Litigation well as any other related issues that might arise
during the Chapter 11 cases.
To the best of the Debtors' knowledge, CK&V and K&L do not hold or
represent any interest adverse to the Debtors, their estates or
creditors with respect to the matters on which it is to be
employed.
About 710 Long Ridge
710 Long Ridge Road Operating Company II, LLC and four affiliates
own sub-acute and long-term nursing care facilities for the
elderly in Connecticut. The facilities, which are managed by
HealthBridge Management LLC, are Long Ridge of Stamford, Newington
Health Care Center, Westport Health Care Center, West River Health
Care Center, and Danbury Health Care Center.
710 Long Ridge and its affiliates sought Chapter 11 protection
(Bankr. D.N.J. Case Nos. 13-13653 to 13-13657) on Feb. 24, 2013 to
modify their collective bargaining agreements with the New England
Health Care Employees Union, District 1199, SEIU.
The Debtors owe $18.9 million to M&T Bank and $7.99 million on
loans from the U.S. Department of Housing and Urban Development
Federal Housing Administration.
Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman &
Leonard, serve as counsel to the Debtors. Logan & Company, Inc.
is the claims and notice agent. Alvarez & Marsal Healthcare
Industry Group, LLC, is the financial advisor.
Porzio, Bromberg & Newman, P.C., represents the Official Committee
of Unsecured Creditors. The Committee tapped to retain
EisnerAmper LLP as accountant.
710 LONG RIDGE: Cole Schotz Approved as Bankruptcy Counsel
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey
authorized 710 Long Ridge Road Operating Company II, LLC to employ
Cole, Schotz, Meisel, Forman & Leonard, P.A. as bankruptcy
counsel.
As reported in the Troubled Company Reporter on March 18, 2013,
Cole Schotz, among others, will advise the Debtors of their
rights, powers and duties as debtors-in-possession; advise the
Debtors in the negotiation with respect to use of cash collateral
and DIP financing; advise and prepare various pleadings &
responses to be filed in the Chapter 11 cases; and help the
Debtors in formulating, negotiating and promulgating a Chapter 11
plan.
Cole Schotz has a bankruptcy retainer of $286,005, which will be
held to secure payment of the firm's allowed postpetition fees and
expenses and applied to the firm's final invoice and fee
application approved by the Court.
To the best of the Debtor's knowledge, Cole Schotz is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About 710 Long Ridge
710 Long Ridge Road Operating Company II, LLC and four affiliates
own sub-acute and long-term nursing care facilities for the
elderly in Connecticut. The facilities, which are managed by
HealthBridge Management LLC, are Long Ridge of Stamford, Newington
Health Care Center, Westport Health Care Center, West River Health
Care Center, and Danbury Health Care Center.
710 Long Ridge and its affiliates sought Chapter 11 protection
(Bankr. D.N.J. Case Nos. 13-13653 to 13-13657) on Feb. 24, 2013 to
modify their collective bargaining agreements with the New England
Health Care Employees Union, District 1199, SEIU.
The Debtors owe $18.9 million to M&T Bank and $7.99 million on
loans from the U.S. Department of Housing and Urban Development
Federal Housing Administration.
Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman &
Leonard, serve as counsel to the Debtors. Logan & Company, Inc.
is the claims and notice agent. Alvarez & Marsal Healthcare
Industry Group, LLC, is the financial advisor.
Porzio, Bromberg & Newman, P.C., represents the Official Committee
of Unsecured Creditors. The Committee tapped to retain
EisnerAmper LLP as accountant.
710 LONG RIDGE: EisnerAmper Okayed as Committee Accountant
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey
authorized the Official Committee of Unsecured Creditors in the
Chapter 11 cases of 710 Long Ridge Road Operating Company II, LLC
to retain EisnerAmper LLP as its accountant and financial advisor.
EisnerAmper is expected to, among other things:
a) gain an understanding of the Debtors' business, books and
records and reporting systems;
b) review key pleadings and filings in connection with the
bankruptcy case, including the Debtors' statement of financial
affairs, chapter 11 schedules, and financial budgets; and
c) consult with the Committee, the Committee's counsel and the
Debtors' representatives regarding the Debtors' financial
performance.
The hourly rates of EisnerAmper's personnel are:
Partners/Principals/Directors $375 - $580
Senior Managers/Managers $210 - $395
Staff/Paraprofessionals $115 - $280
To the best of the Committee's knowledge, EisnerAmper is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About 710 Long Ridge
710 Long Ridge Road Operating Company II, LLC and four affiliates
own sub-acute and long-term nursing care facilities for the
elderly in Connecticut. The facilities, which are managed by
HealthBridge Management LLC, are Long Ridge of Stamford, Newington
Health Care Center, Westport Health Care Center, West River Health
Care Center, and Danbury Health Care Center.
710 Long Ridge and its affiliates sought Chapter 11 protection
(Bankr. D.N.J. Case Nos. 13-13653 to 13-13657) on Feb. 24, 2013 to
modify their collective bargaining agreements with the New England
Health Care Employees Union, District 1199, SEIU.
The Debtors owe $18.9 million to M&T Bank and $7.99 million on
loans from the U.S. Department of Housing and Urban Development
Federal Housing Administration.
Michael D. Sirota, Esq., at Cole, Schotz, Meisel, Forman &
Leonard, serve as counsel to the Debtors. Logan & Company, Inc.
is the claims and notice agent. Alvarez & Marsal Healthcare
Industry Group, LLC, is the financial advisor.
Porzio, Bromberg & Newman, P.C., represents the Official Committee
of Unsecured Creditors. The Committee tapped to retain
EisnerAmper LLP as accountant.
AAR CORP: Moody's Affirms 'Ba3' Corporate Family Rating
-------------------------------------------------------
Moody's Investors Service has raised the Speculative Grade
Liquidity Rating of AAR to SGL-2 from SGL-3, denoting a good,
rather than an adequate, liquidity position. All other ratings,
including the Ba3 Corporate Family Rating, have been affirmed. The
rating outlook is stable.
Ratings upgraded:
Speculative Grade Liquidity, to SGL-2 from SGL-3
Ratings affirmed:
Corporate Family, Ba3
Probability of Default, Ba3-PD
$325 million senior unsecured 7 ¬ notes due 2022, Ba3, LGD4,
53%
Rating Outlook, Stable
Ratings Rationale:
The Speculative Grade Liquidity Rating upgrade to SGL-2 from SGL-3
follows a credit facility (unrated) amendment of late April. Along
with an extension of the facility's maturity date to April 2018
from April 2016, the minimum net worth maintenance covenant was
eliminated and the definition of EBITDA was revised to provide
greater flexibility regarding expense add-backs. The covenant
changes add visibility of sustained compliance, something that was
less clear-cut before. Although the facility's commitment size was
reduced to $475 million from $580 million, availability is still
about $300 million, a good amount against the revenue base. Free
cash flow generation will probably cover near-term debt maturities
of approximately $80 million but, depending on working capital
changes and the timing of capital expenditures, some further
incremental revolver borrowing may be required.
The Ba3 Corporate Family Rating reflects AAR's scale as a long
established aircraft maintenance repair/overhaul (MRO) provider,
credit metrics on par with the rating level and a favorable
outlook for airline passenger miles. Balance between the company's
aircraft-related and defense business lines helps lessen exposure
to a weakening defense sector and helps revenue stability. Debt to
EBITDA was 3.6x and EBIT to interest was 3.5x (2/28/13, Moody's
adjusted basis), levels on par with the rating level. The rating
envisions debt to EBITDA ranging within the 3x to 4x range as the
company undertakes acquisitions to expand synergies within its
business segments, and to enhance asset return measures.
Upward rating momentum would depend on expectation of higher
return levels and steady free cash flow. Debt to EBITDA in the low
3x range, return on assets approaching 5% with free cash flow to
debt in the mid single digit percentage range would drive the
rating up. Downward rating pressure would mount with debt to
EBITDA above 4x and return on assets at or below 2%, or with a
weakening liquidity profile.
The principal methodology used in this rating 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.
AAR Corp., headquartered in Wood Dale, Illinois, is a diversified
provider of parts and services to the worldwide aviation and
aerospace/defense industry. Revenues over the twelve months ended
February 28, 2013 were $2.1 billion.
ACADEMY LTD: Moody's Hikes rating on $825MM Secured Loan to 'B1'
----------------------------------------------------------------
Moody's Investors Service upgraded Academy, Ltd.'s $825 million
secured term loan due 2018 to B1 from B2 and its $450 million
senior unsecured notes due 2019 to B3 from Caa1. Consistent with
Moody's Loss Given Default Methodology, the upgrades reflect the
December 2012 issuance of structurally subordinated unsecured
notes at Academy, Ltd.'s indirect parent company, New Academy
Finance Company LLC, which added a sizeable layer of junior debt
in the capital structure.
Academy Ltd.'s B2 corporate family rating and B2-PD probability of
default rating were affirmed, as was the Caa1 rating on FINCO's
$500 million unsecured notes due 2018. The ratings outlook remains
stable.
Moody's took the following actions on Academy, Ltd.:
Corporate Family Rating affirmed at B2;
Probability of Default Rating affirmed at B2-PD;
Senior secured term loan due 2018 upgraded to B1 (LGD3, 35%)
from B2 (LGD3, 49%);
Senior unsecured notes due 2019 upgraded to B3 (LGD5, 71%) from
Caa1 (LGD5, 86%).
Subsequent to this action, Academy, Ltd.'s corporate family and
probability of default ratings will be moved to FINCO.
Moody's took the following rating actions (and LGD assessment
changes) on New Academy Finance Company, LLC:
Senior unsecured notes due 2018 affirmed at Caa1 (LGD 6, 91%)
from (LGD6, 93%)
Ratings Rationale:
Academy's B2 Corporate Family Rating is constrained by the high
debt and leverage that stem from the August 2011 acquisition by an
affiliate of Kohlberg Kravis Roberts & Co L.P. and the $486
million debt-financed dividend in December 2012. Lease-adjusted
debt/EBITDA was about 5.9 times (using an 8 times rent multiple)
for the year ended February 2, 2013, though significantly improved
from over 7 times the prior year. The rating also reflects
Academy's limited geographic presence, small scale relative to
other global retailers, and the potential challenges inherent in
its planned ramp-up of new store growth over the intermediate-
term.
The rating favorably reflects the strength of the company's
"Academy Sports + Outdoor" brand, its good market position in the
region where it operates, and its demonstrated ability to maintain
profitable growth despite difficult economic conditions over the
past several years. Academy's liquidity is expected to remain very
good, supported by the expectation that its sizeable cash balance,
positive free cash flow and excess revolver availability will be
more than sufficient to fund working capital, capital spending,
and debt amortization over the next twelve months.
The stable outlook reflects Moody's expectation that the company
will continue to demonstrate profitable growth through solid
returns on new store openings, positive same store sales and
improved margins on cost savings initiatives. Profitability growth
should lead to improving leverage over the next twelve months.
Sustained growth in revenue and earnings while maintaining good
liquidity could lead to a ratings upgrade. The company would also
need to demonstrate the willingness and ability to improve and
maintain lower leverage through a more conservative financial
policy. Specific metrics include debt/EBITDA sustained below 5.5
times (using an 8 times rent multiple) and EBITA/interest over 1.5
times.
Academy's ratings could be downgraded if operating performance
were to materially decline, or if financial policies were to
become more aggressive, leading to sustained deterioration in
credit metrics or weaker liquidity. Debt/EBITDA above 6.5 times
(using an 8 times rent multiple) or interest coverage falling
below 1.25 times on a sustained basis could drive a downward
rating action.
The principal methodology used in rating Academy, Ltd. was the
Global Retail Industry Methodology published in June 2011. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Academy, Ltd., based in Katy, Texas, is a leading sports, outdoor
and lifestyle retailer with a broad assortment of hunting, fishing
and camping equipment and gear along with sports and leisure
products, footwear, and apparel. The company operates 161 stores
under the Academy Sports + Outdoor name in Texas and the
southeastern United States. Revenue for the year ended February 2,
2013 approached $3.7 billion. Academy was acquired by an affiliate
of Kohlberg Kravis Roberts & Co L.P. in August 2011.
ACCESS PHARMACEUTICALS: Two Directors Elected to Board
------------------------------------------------------
The annual meeting of stockholders of Access Pharmaceutical, Inc.,
was held on May 7, 2013. Mark J. Ahn and Mark J. Alvino were both
elected to serve as directors of the Company until their
successors are duly elected and qualified. The stockholders
approved, on an advisory basis, the compensation of the Company's
named executive officers and approved an advisory votes on the
compensation of the Company's named executive officers every three
years. The stockholders also approved the Certificate of
Incorporation to increase the number of authorized shares of
common stock and approved the Company's 2005 Equity Incentive Plan
to increase the number of authorized shares of common stock from
5,000,000 shares to 25,000,000. The appointment of Whitley Penn
LLP as the independent registered public accounting firm was
ratified.
About Access Pharmaceuticals
Access Pharmaceuticals, Inc., develops pharmaceutical products
primarily based upon its nano-polymer chemistry technologies and
other drug delivery technologies. The Company currently has one
approved product, one product candidate at Phase 3 of clinical
development, three product candidates in Phase 2 of clinical
development and other product candidates in pre-clinical
development.
Access Pharmaceuticals disclosed a net loss allocable to common
stockholders of $12.53 million on $4.40 million of total revenues
for the year ended Dec. 31, 2012, as compared with a net loss
allocable to common stockholders of $4.30 million on $1.84 million
of total revenues during the prior year. The Company's balance
sheet at Dec. 31, 2012, showed $1.73 million in total assets,
$18.80 million in total liabilities and a $17.07 million total
stockholders' deficit.
Whitley Penn LLP, in Dallas, Texas, issued a "going concern"
qualification on the consolidated financial statements for the
year ended Dec. 31, 2012. The independent auditors noted that
the Company has had recurring losses from operations, negative
cash flows from operating activities and has an accumulated
deficit, which conditions raise substantial doubt about the
Company's ability to continue as a going concern.
AFFYMAX INC: Incurs $26.7-Mil. Net Loss in First Quarter
--------------------------------------------------------
Affymax, Inc., filed its quarterly report on Form 10-Q, reporting
a net loss of $26.7 million on $844,000 of total revenue for the
three months ended March 31, 2013, compared with net income of
$31.5 million on $63.2 million of total revenue for the same
period last year.
The Company's balance sheet at March 31, 2013, showed
$66.7 million in total assets, $81.5 million in total liabilities,
and a stockholders' deficit of $14.8 million.
The Company said, "In February 2013 and in consultation with the
FDA, we and Takeda voluntarily recalled OMONTYS nationwide from
the market as a result of post-marketing reports regarding serious
hypersensitivity reactions, including anaphylaxis, which can be
life-threatening or fatal. In connection with the recall, we and
Takeda suspended all promotional and marketing activities for
OMONTYS. While we continue to investigate the potential cause of
the safety concerns at this time, we face significant challenges
to our business. We are unable to estimate the scope or timelines
associated with the investigation, which may be costly and time-
consuming, and with our limited funds and resources, we may not be
able to complete the investigation or ever identify the causes of
the safety concerns.
"In March 2013, we undertook plans to reorganize our operations in
order to reduce operating costs and focus on the OMONTYS safety
and other related FDA issues associated with the recall of the
product. In addition to transitioning many of the ongoing
activities to our collaborator, Takeda, our plans include a
significant reduction in force of approximately 230 employees
(75% of our workforce), including our commercial and medical
affairs field forces as well as other employees throughout the
organization.
"Even with the recent reorganization, further reductions in our
workforce and cash flows, there is no assurance that we will be
able to reduce our operating expenses enough to meet our existing
obligations and conduct ongoing operations. If we do not have
sufficient funds to continue operations, we could be required to
liquidate our assets, seek bankruptcy protection or other
alternatives."
A copy of the Form 10-Q is available at http://is.gd/45lxiy
Affymax, Inc. (Nasdaq: AFFY) is a biopharmaceutical company based
in Palo Alto, California. In March 2012, the U.S. Food and Drug
Administration approved the Company's first and only product,
OMONTYS(R) (peginesatide) Injection for the treatment of anemia
due to chronic kidney disease in adult patients on dialysis.
OMONTYS is a synthetic, peptide-based erythropoiesis stimulating
agent, or ESA, designed to stimulate production of red blood cells
and has been the only once-monthly ESA available to the adult
dialysis patient population in the U.S. The Company co-
commercialized OMONTYS with its collaboration partner, Takeda
Pharmaceutical Company Limited, or Takeda during 2012 until
February 2013, when the Company and Takeda announced a nationwide
voluntary recall of OMONTYS as a result of safety concerns.
AHERN RENTALS: Lines Up $495 Million in Exit Loans
--------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Ahern Rentals Inc. wants the bankruptcy judge in
Reno, Nevada, to authorize payment of commitment fees locking in
$495 million in financing required for approval of the equipment-
rental firm's Chapter 11 plan.
According to the report, Bank of America NA, Merrill Lynch Pierce
Fenner & Smith Inc., and Jefferies Finance LLC are willing to
provide a $350 million asset-backed loan and would charge about
$3 million in fees. For a $145 million term loan, prospective
lenders Jefferies and Husky Finance Holdings LLC would charge
$5.68 million in fees. Ahern wants the judge to hold a May 23
hearing for approval of the commitment agreements.
Closely held Ahern needs the loans to finance its reorganization
plan and fend off a competing plan filed by junior lenders.
Ahern's loans would pay off about $215 million projected to be
outstanding on the loan financing the Chapter 11 case and
$111.5 million on a term loan. Ahern said it's also exploring the
high-yield bond market for additional lending to pay off all or
some of the junior secured debt.
The report recounts that in December 2012, the bankruptcy judge
ended Ahern's exclusive right to propose a plan. The junior
lenders responded in February by filing a plan of their own to
compete with Ahern's. Either plan would end the bankruptcy
reorganization begun in December 2011. The bankruptcy judge
approved disclosure materials for both plans. The confirmation
hearing is currently set for June 24 through July 3. Ahern and
the lenders both propose paying unsecured claims in full.
Ahern's plan offers the junior lenders $160 million cash and new
debt if they accept the plan. If they don't, they are to receive
all new debt, for eventual full payment. The lenders' plan pays
all creditors in full other than the $267.7 million in second-lien
debt that converts to equity.
About Ahern Rentals
Founded in 1953 with one location in Las Vegas, Nevada, Ahern
Rentals Inc. -- http://www.ahern.com/-- offers rental equipment
to customers through its 74 locations in Arizona, Arkansas,
California, Colorado, Georgia, Kansas, Maryland, Nebraska, Nevada,
New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma,
Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah,
Virginia and Washington.
Privately held Ahern Rentals filed a voluntary Chapter 11 petition
(Bankr. D. Nev. Case No. 11-53860) on Dec. 22, 2011, after failing
to obtain an extension of the Aug. 21, 2011 maturity of its
revolving credit facility. In its schedules, the Debtor disclosed
$485.8 million in assets and $649.9 million in liabilities.
Judge Bruce T. Beesley presides over the case. Lawyers
at Gordon Silver and DLA Piper LLP (US) serve as the Debtor's
counsel. The Debtor's financial advisors are Oppenheimer & Co.
and The Seaport Group. Kurtzman Carson Consultants LLC serves as
claims and notice agent.
The Official Committee of Unsecured Creditors has tapped Covington
& Burling LLP as counsel, Downey Brand LLP as local counsel, and
FTI Consulting as financial advisor.
Counsel to Bank of America, as the DIP Agent and First Lien Agent,
are Albert M. Fenster, Esq., and Marc D. Rosenberg, Esq., at Kaye
Scholer LLP, and Robert R. Kinas, Esq., at Snell & Wilmer.
Attorneys for the Majority Term Lenders are Paul Aronzon, Esq.,
and Robert Jay Moore, Esq., at Milbank, Tweed, Hadley & McCloy
LLP. Counsel for the Majority Second Lienholder are Paul V.
Shalhoub, Esq., Joseph G. Minias, Esq., and Ana M. Alfonso, Esq.,
at Willkie Farr & Gallagher LLP.
Attorney for GE Capital is James E. Van Horn, Esq., at
McGuirewoods LLP. Wells Fargo Bank is represented by Andrew M.
Kramer, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.
Allan S. Brilliant, Esq., and Glenn E. Siegel, Esq., at Dechert
LLP argue for certain revolving lenders.
Attorneys for U.S. Bank National Association, as successor to
Wells Fargo Bank, as collateral agent and trustee for the benefit
of holders of the 9-1/4% Senior Secured Notes Due 2013 under the
Indenture dated Aug. 18, 2005, is Kyle Mathews, Esq., at Sheppard,
Mullin, Richter & Hampton LLP and Timothy Lukas, Esq., at Holland
& Hart.
In December 2012, the Court terminated Ahern's exclusive right to
propose a plan, saying the company failed to negotiate in good
faith after a year in Chapter 11. Certain holders of the Debtor's
9-1/4% senior secured second lien notes due 2013 proposed in
February their own Plan to complete with Ahern's proposal. The
Noteholder Group consists of Del Mar Master Fund Ltd.; Feingold
O'Keeffe Capital, LLC; Nomura Corporate Research & Asset
Management Inc.; Och-Ziff Capital Management Group; Sphere
Capital, LLC - Series B; and Wazee Street Capital Management, LLC.
They are represented by Laurel E. Davis, Esq., at Fennemore Craig
Jones Vargas, Kurt A. Mayr, Esq., and Daniel S. Connolly, Esq., at
Bracewell & Giuliani LLP.
In March 2013, the Court approved disclosure materials explaining
both plans. Ahern and the lenders both propose paying unsecured
claims in full. The lenders' plan fully pays unsecured creditors
when the plan is implemented. The Ahern plan pays them over a
year, thus giving unsecured creditors the right to vote only on
the Debtor's plan.
Ahern's Plan offers the junior lenders $160 million cash and new
debt if they accept the plan. Otherwise, they are slated to
receive all new debt, for eventual full payment. The lenders'
plan pays all creditors in full other than the $267.7 million in
second-lien debt that converts to equity.
ALAN MURRAY: Post-Confirmation Disclosure Statement Denied
----------------------------------------------------------
In the Chapter 11 case of Alan and Elizabeth Murray, a group of
tenants, both individually and as members of an aborted creditors'
committee, viewed the legitimate efforts of the Murrays to
reorganize their financial affairs as another opportunity to
continue their feud with them. The court set aside time in its
calendar for a lengthy hearing on the tenants' claims, which
appeared to be inflated and of dubious merit. On the eve of trial,
the tenants sought to withdraw their claims, which required leave
of court.
The court ordered that the claims could be withdrawn only with
prejudice, as to all matters contained in their proofs of claims
or which could have been asserted. The court had three reasons for
this condition. First, the court and the Murrays had spent
considerable time preparing for the trial and it was unfair to
allow the claims to be withdrawn without prejudice. Second, the
court had set aside valuable court time for the trial which could
not be filled with other matters, so it would be a waste of
judicial resources for the dispute to be left unresolved. Third,
the court felt it important to put an end to the feuding once and
for all for the benefit of the parties and all humanity.
On February 5, 2013, the court entered an order providing that
"The withdrawal is with prejudice, and said Claimants are forever
barred from pursuing or prosecuting all rights that were asserted
in said claims or could have been asserted had the claims been
actually litigated."
For some reason which the court does not understand, the Murrays
seek to amend their plan to further deal with the tenants and to
revive claims which are precluded by their confirmed plan. The
court views this effort as both unnecessary and improper.
According to Bankruptcy Judge Alan Jaroslovsky, amendment of the
plan seems unnecessary because the court has given the Murrays all
the tools they need to enforce their plan. The court is fully
capable and willing to deal with any attempt by the tenants to
avoid the effect of the plan as confirmed, should they be so
foolish as to try.
The amendment, Judge Jaroslovsky said, is improper because it
would order some future court to apply principles of issue or
claims preclusion to a case pending before it. The court has no
power to tell another court how to rule. If the tenants commence
an action in violation of the bankruptcy court's order, the
Murrays, Judge Jaroslovsky said, can seek contempt sanctions and
injunctive relief in the bankruptcy court pursuant to 11 U.S.C.
Sec. 105(a) to stop that action or they can even remove it to the
bankruptcy court. These are proper remedies, as opposed to the
improper remedies the Murrays seek.
Judge Jaroslovsky also said the proposed amendment is improper in
seeking to revive rights of the Murrays which were not preserved
in the confirmed plan. The court has no desire to perpetuate any
disputes, and it would be patently unfair to allow the Murrays to
revive their precluded claims after the tenants had withdrawn
theirs and other parties had consented to or abandoned opposition
to the plan. The order confirming the plan has preclusive effects
as to the Murrays as well as their creditors. It would be unfair
for the Murrays, in the guise of an amendment to the plan, to
avoid preclusion while their creditors are precluded.
The court sees no justification for amending the plan so that the
Murrays obtain a discharge before completion of their plan. Delay
of the discharge is the best way for the court to insure that the
Murrays perform their plan. The delay in entering discharge in no
way diminishes their protection under their plan, and the court
stands ready to enforce it. Pursuant to Sec. 1141(d)(5)(A) of the
Bankruptcy Code, cause for an early discharge must be shown and
neither the proposed supplemental disclosure statement nor the
proposed amendments to the plan show any such cause. Moreover, an
amendment to the plan is not necessary for an early discharge if
there is cause.
In a May 6, 2013 Memorandum available at http://is.gd/NtwHLGfrom
Leagle.com, Judge Jaroslovsky said he will not approve the
Murrays' post-confirmation disclosure statement.
Alan and Elizabeth Murray filed a joint Chapter 11 bankruptcy
petition (Bankr. N.D. Cal. Case No. 11-10535) on Feb. 15, 2011.
Bankruptcy Judge Alan Jaroslovsky, who oversees the case,
confirmed the Murrays' Chapter 11 plan of reorganization in an
order dated Dec. 3, 2012. At one time, the U.S. Trustee and the
official committee of unsecured creditors filed objections to the
Plan. The U.S. Trustee later withdrew his objection and the
Creditors' Committee was dissolved.
ALT HOTEL: DiamondRock Closes on Mortgage Loan Settlement
---------------------------------------------------------
DiamondRock Hospitality Company on May 10 disclosed that it closed
on the settlement of the bankruptcy and related litigation
involving its senior mortgage loan secured by the Allerton Hotel,
receiving a $5.0 million principal payment and a new $66.0 million
mortgage loan.
The disclosure was made in DiamondRock's earnings release for the
quarter ended March 31, 2013, a copy of which is available for
free at http://is.gd/MToAwP
Headquartered in Bethesda, Maryland, DiamondRock Hospitality
Company is a lodging-focused real estate investment trust that
owns a portfolio of 27 premium hotels in the United States.
About ALT Hotel LLC
ALT Hotel, LLC's sole asset is the Allerton Hotel located in the
"Magnificent Mile" area of Chicago. The Hotel is managed by Kokua
Hospitality, LLC, pursuant to a Hotel Management Agreement, dated
Nov. 9, 2006. Kokua is the exclusive manager and operator of the
Hotel, and receives management fees for its services, with the
amount of such fees directly linked to the annual performance of
the Hotel. Hotel Allerton Mezz, LLC, is the sole member of ALT
Hotel.
ALT Hotel filed for Chapter 11 bankruptcy (Bankr. N.D. Ill. Case
No. 11-19401) on May 5, 2011. Judge A. Benjamin Goldgar presides
over the case. Neal L. Wolf, Esq., Dean C. Gramlich, Esq., and
Jordan M. Litwin, Esq., at Neal Wolf & Associates, LLC, in
Chicago, Illinois, serve as bankruptcy counsel to the Debtor. In
its petition, the Debtor estimated $100 million to $500 million in
assets and $50 million to $100 million in debts. FTI Consulting
serves as the Debtor's financial advisors.
Affiliate PETRA Fund REIT Corp. sought Chapter 11 protection
(Bankr. S.D.N.Y. Case No. 10-15500) on Oct. 20, 2010.
AMERICAN AIRLINES: Consolidated Traffic Decreased 1.1% in April
---------------------------------------------------------------
AMR Corporation reported April 2013 consolidated revenue and
traffic results for its principal subsidiary, American Airlines,
Inc., and its wholly owned subsidiary, AMR Eagle Holding
Corporation.
Consolidated traffic was 1.1 percent lower year-over-year on 0.4
percent more capacity, resulting in a consolidated load factor of
81.6 percent, 1.3 points lower than the same period last year.
Domestic capacity and traffic were 1.5 percent and 1.4 percent
lower year-over-year, respectively, resulting in a domestic load
factor of 85.0 percent, 0.1 points higher compared to the same
period last year.
International load factor of 78.6 percent was 3.1 points lower
year-over-year, as traffic decreased 0.6 percent on 3.4 percent
more capacity.
April's consolidated passenger revenue per available seat mile
(PRASM) was an estimated 2.9 percent below the same period last
year. On a consolidated basis, the company boarded 8.8 million
passengers in April.
The Company's detailed results are available for free at:
http://is.gd/nbBhIC
About 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.
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.
The Retiree Committee is represented by Jenner & Block LLP's
Catherine L. Steege, Esq., Charles B. Sklarsky, Esq., and Marc B.
Hankin, Esq.
AMR and US Airways Group, Inc., on Feb. 14, 2013, announced a
definitive merger agreement under which the companies will combine
to create a premier global carrier, which will have an implied
combined equity value of approximately $11 billion. The deal is
subject to clearance by U.S. and foreign regulators and by the
bankruptcy judge overseeing AMR's bankruptcy case.
In April 2013, AMR filed a Chapter 11 plan of reorganization that
will carry out the merger. By distributing stock in the merged
airlines, the plan is designed to pay all creditors in full, with
interest.
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 APPAREL: Incurs $46.5 Million Net Loss in 1st Quarter
--------------------------------------------------------------
American Apparel, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $46.51 million on $138.06 million of net sales for
the three months ended March 31, 2013, as compared with a net loss
of $7.89 million on $132.66 million of net sales for the same
period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$326.95 million in total assets, $349.33 million in total
liabilities, and a $22.38 million total stockholders' deficit.
John Luttrell, chief financial officer of American Apparel stated,
"Today we reported a $1.4 million improvement in Adjusted EBITDA
to a loss of $ 0.7 million for the three months ended March 31,
2013 from a loss of $2.1 million for the three months ended March
31, 2012. Though the first quarter is historically the slowest
quarter of the year, retail and online sales growth and the
related leveraging of fixed costs helped us reduce our EBITDA
loss. These results were substantially in line with plan and,
accordingly, we reiterate our adjusted EBITDA guidance of $47 to
$54 million for the full year 2013. We expect key initiatives in
the areas of merchandise planning, supply chain, and inventory
control to drive further sales and expense improvements for the
balance of the year."
A copy of the Form 10-Q is available for free at:
http://is.gd/IJMqFK
April Sales Release
American Apparel announced preliminary sales for the month ended
April 30, 2013. On a preliminary basis, total net sales for April
2013 were $49.8 million, an increase of 4 percent over the prior
year period. Comparable sales increased 3 percent, which included
a 4 percent increase in comparable store sales for its retail
store channel and a 2 percent decrease in net sales for its online
channel. Wholesale net sales increased 7 percent for the month of
April.
"April represents our 23rd consecutive month of positive
comparable store growth," said Dov Charney, Chairman and chief
executive of American Apparel, Inc. "The decrease in internet
sales in the month of April was due to a shift in the timing of
certain promotions that will benefit the May online comparisons.
"So far in May we are very pleased with sales performance in our
stores and online. We believe the combination of better weather
and a strong summer offering are having a positive impact on our
overall results."
A copy of the press release is available for free at:
http://is.gd/pgtHEl
About American Apparel
Los Angeles, Calif.-based American Apparel, Inc. (NYSE Amex: APP)
-- http://www.americanapparel.com/-- is a vertically integrated
manufacturer, distributor, and retailer of branded fashion basic
apparel. As of September 2010, American Apparel employed over
10,000 people and operated 278 retail stores in 20 countries,
including the United States, Canada, Mexico, Brazil, United
Kingdom, Ireland, Austria, Belgium, France, Germany, Italy, the
Netherlands, Spain, Sweden, Switzerland, Israel, Australia, Japan,
South Korea and China.
Amid liquidity problems and declining sales, American Apparel in
early 2011 reportedly tapped law firm Skadden, Arps, Slate,
Meagher & Flom and investment bank Rothschild Inc. for advice on a
restructuring.
In April 2011, American Apparel said it raised $14.9 million in
rescue financing from a group of investors led by Canadian
financier Michael Serruya and private equity firm Delavaco Capital
Corp., allowing the casual clothing retailer to meet obligations
to its lenders for the time being. Under the deal, the investors
were buying 15.8 million shares of common stock at 90 cents
apiece. The deal allows the investors to purchase additional
27.4 million shares at the same price.
The Company incurred a net loss of $37.27 million in 2012, as
compared with a net loss of $39.31 million in 2011.
* * *
American Apparel, Inc., carries a Caa1 Corporate Family Rating
from Moody's Investors Service and a 'B-' corporate credit rating
from Standard & Poor's Ratings Services.
AMERICANWEST BANCORPORATION: TOPrS Holders File New Plan
--------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that AmericanWest Bancorporation has a new reorganization
plan proposed by a group of holders of $47.2 million in junior
subordinated debt known as TOPrS.
According to the report, the debt holders and the company had
competing plans on file in U.S. Bankruptcy Court in Spokane,
Washington. The company's plan called for liquidation. After
10 months of mediation, there was agreement for the debt holders
to file their plan on May 6 while the company withdrew its
competing plan. There is about $48 million in unsecured debt when
the debt holders' and the general unsecured creditors' claims are
combined. They have the option of receiving cash or stock in the
reorganized company. The disclosure statement doesn't peg a value
on the distributions, other than to say it's more than through
liquidation where tax benefits would be lost.
The debt holders' plan includes releases for the buyer and the
company's professionals, investment bankers, officers, and
directors.
About AmericanWest Bancorporation
Headquartered in Spokane, Washington, AmericanWest Bancorporation
(OTC BB: AWBC) -- http://www.awbank.net/-- was a bank holding
company whose principal subsidiary was AmericanWest Bank, which
included Far West Bank in Utah operating as an integrated
division of AmericanWest Bank. AmericanWest Bank was a community
bank with 58 financial centers located in Washington, Northern
Idaho and Utah.
AmericanWest Bancorporation filed for Chapter 11 protection
(Bankr. E.D. Wash. Case No. 10-06097) on Oct. 28, 2010. The
banking subsidiary was not included in the Chapter 11 filing.
Christopher M. Alston, Esq., and Dillon E. Jackson, Esq., at
Foster Pepper Shefelman PLLC, in Seattle, Washington, serve as
bankruptcy counsel. G. Larry Engel, Esq., at Morrison & Foerster
LLP, also serves as counsel.
The Debtor estimated assets of $1 million to $10 million and
debts of $10 million to $50 million in its Chapter 11 petition.
AmericanWest Bancorporation's estimates exclude its banking
unit's assets and debts. In its Form 10-Q filed with the
Securities and Exchange Commission before the Petition Date,
AmericanWest Bancorporation reported consolidated assets --
including its bank unit's -- of $1.536 billion and consolidated
debts of $1.538 billion as of Sept. 30, 2010.
In December 2010, AmericanWest completed the sale of all
outstanding shares of AmericanWest Bank to a wholly owned
subsidiary of SKBHC Holdings LLC, in a transaction approved by
the U.S. Bankruptcy Court. The bank subsidiary was sold to SKBHC
Holdings Inc. for $6.5 million cash.
ANGEL FIRE: Magistrate Judge Recommends Scarborough Suit Dismissal
------------------------------------------------------------------
Truett L. Scarborough owns several lots of land in or near the ski
resort village of Angel Fire, New Mexico, and Angel Fire Resort
Operations, LLC, has attempted to assess dues on these lots
pursuant to a negative easement filed in the real property records
of Colfax County, New Mexico. Scarborough filed a declaratory
action against AFRO and the Association of Angel Fire Property
Owners, Inc., seeking interpretation of the negative easement and
a determination that it does not apply to the properties in
question. However, because the negative easement was devised as
part of a bankruptcy proceeding, Scarborough brought the action in
the U.S. Bankruptcy Court for the District of New Mexico.
After a flurry of motions and briefing, the bankruptcy court
granted AFRO's motion to dismiss Scarborough's amended complaint,
finding that it did not have subject matter jurisdiction over the
action. Scarborough appealed, electing to have the matter heard
by the District Court for the District of New Mexico instead of
the Bankruptcy Appellate Panel in accordance with 28 U.S.C. Sec.
158(c)(1) and Federal Rule of Bankruptcy Procedure 8001(e).
Pursuant to 28 U.S.C. Sec. 636(b), this matter has been referred
to Magistrate Judge William P. Lynch to make findings of fact,
conduct legal analysis, and recommend a final disposition. In a
May 2, 2013 Proposed Findings and Recommended Disposition
available at http://is.gd/xI7B6Sfrom Leagle.com, Judge Lynch
recommends that the decision of the bankruptcy court be affirmed.
"I agree with the bankruptcy court's determination that it lacked
subject matter jurisdiction over the Scarborough proceeding and
that the action should be dismissed. I therefore recommend that
the bankruptcy court's findings and deciision be affirmed and that
this appeal be dismissed," Judge Lynch said.
The lawsuit is against an entity that acquired the Angel Fire
resort community in Colfax County, New Mexico, as part of the 1993
Chapter 11 bankruptcies (Bankr. D. Ariz. Case No. 93-12176) of the
resort's owners, The Angel Fire Corporation and Angel Fire Ski
Corporation.
As of 1993, Angel Fire Resort consisted of a ski area, a hotel, a
golf course and club house, various other recreational areas, and
several thousand subdivided residential lots.
On July 9, 1993, the Debtors filed a Chapter 11 bankruptcy
petition. Several months later, the United States Trustee
appointed a Property Owners' Committee consisting of residential
lot owners.
Several parties jointly filed an Amended Joint Plan of
Reorganization on April 20, 1995. As part of the Plan, an entity
known as Angel Projects I, the predecessor in interest to AFRO,
agreed to purchase certain assets and liabilities from the
bankruptcy estate, including real property interests in the
amenities.
The cases before the District Court are, TRUETT L. SCARBOROUGH,
Plaintiff, v. ANGEL FIRE RESORT OPERATIONS, LLC, a New Mexico
Limited Liability Company; ASSOCIATION OF ANGEL FIRE PROPERTY
OWNERS, INC., a New Mexico Nonprofit Corporation, Defendants; and
TRUETT L. SCARBOROUGH, Appellant, v. ANGEL FIRE RESORT OPERATIONS,
LLC, a New Mexico Limited Liability Company; ASSOCIATION OF ANGEL
FIRE PROPERTY OWNERS, INC., a New Mexico Nonprofit Corporation,
Appellees, Case No. 12-CV-01256 (D. N.M.).
ANV SECURITY: Incurs $149K Net Loss in First Quarter
----------------------------------------------------
ANV Security Group, Inc., filed its quarterly report on Form 10-Q,
reporting a net loss of $148,959 on $179,875 of revenues for the
three months ended March 31, 2013, compared with a net loss of
$1.1 million on $nil revenue for the same period last year.
The net loss decreased mainly due to loss from discontinued
operations of $844,986 for the three months ended March 31, 2012.
There was no loss from discontinued operations during the three
months ended March 31, 2013.
The Company's balance sheet at March 31, 2013, showed $2.6 million
in total assets, $105,216 in total current liabilities, and
stockholders' equity of $2.5 million.
According to the regulatory filing, the Company has incurred $15
million losses since inception. "Further, as of March 31, 2013,
the cash resources of the Company were insufficient to meet its
current business plan. These and other factors raise substantial
doubt about the Company's ability to continue as a going concern."
A copy of the Form 10-Q is available at http://is.gd/2zvocF
Shenzhen, China-based ANV Security Group, Inc. provides alarm
service through an internet based video service platform. This
platform performs instant notification to the owner via SMS, e-
mail, telephone or cellular phone when an alarm is triggered
worldwide in any time zone and captures the event images in user
accessible video surveillance servers.
APPLETON PAPERS: Reports $2.14-Mil. Net Income in First Quarter
---------------------------------------------------------------
Appleton Papers Inc. filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing net income
of $2.14 million on $210.83 million of net sales for the three
months ended March 31, 2013, as compared with a net loss of
$64.88 million on $219.63 million of net sales for the three
months ended April 1, 2012.
The Company's balance sheet at March 31, 2013, showed
$557.0 million in total assets, $906.9 million in total
liabilities, and a $349.87 million total deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/ygzLMh
About Appleton Papers
Appleton, Wisconsin-based Appleton Papers Inc. --
http://www.appletonideas.com/-- produces carbonless, thermal,
security and performance packaging products. Appleton has
manufacturing operations in Wisconsin, Ohio, Pennsylvania, and
Massachusetts, employs approximately 2,200 people and is 100%
employee-owned. Appleton Papers is a 100%-owned subsidiary of
Paperweight Development Corp.
* * *
Appleton Papers carries a 'B' corporate credit rating, with stable
outlook, from Standard & Poor's. IT has a 'B2/LD' probability of
default rating from Moody's.
APPLIED MINERALS: Incurs $3.1 Million Net Loss in First Quarter
---------------------------------------------------------------
Applied Minerals, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing a
net loss of $3.07 million on $25,086 of revenues for the three
months ended March 31, 2013, as compared with a net loss of
$1.81 million on $55,402 of revenues for the same period during
the prior year.
The Company's balance sheet at March 31, 2013, showed
$10.52 million in total assets, $2.75 million in total
liabilities, and $7.77 million in total stockholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/N5eCVM
About Applied Minerals
New York City-based Applied Minerals, Inc. (OTC BB: AMNL) is a
leading global producer of halloysite clay used in the development
of advanced polymer, catalytic, environmental remediation, and
controlled release applications. The Company operates the Dragon
Mine located in Juab County, Utah, the only commercial source of
halloysite clay in the western hemisphere. Halloysite is an
aluminosilicate clay that forms naturally occurring nanotubes.
The Company reported a net loss attributable to the Company of
$7.48 million in 2011, a net loss attributable to the Company of
$4.76 million in 2010, and a net loss attributable to the Company
of $6.76 million in 2009.
Going Concern
The Company has incurred material recurring losses from
operations. At March 31, 2012, the Company had a total
accumulated deficit of approximately $43,084,500. For the three
months ended March 31, 2012, and 2011, the Company sustained net
losses from exploration stage before discontinued operations of
approximately $4,056,700 and $1,695,100, respectively. The
Company said that these factors indicate that it may be unable to
continue as a going concern for a reasonable period of time. The
Company's continuation as a going concern is contingent upon its
ability to generate revenue and cash flow to meet its obligations
on a timely basis and management's ability to raise financing or
dispose of certain non-core assets as required. If successful,
this will mitigate the factors that raise substantial doubt about
the Company's ability to continue as a going concern.
Bankruptcy Warning
At Dec. 31, 2011, and 2010, the Company had accumulated deficits
of $39,183,632 and $31,543,411, respectively, in addition to
limited cash and unprofitable operations. For the year ended
Dec. 31, 2011, and 2010, the Company sustained net losses before
discontinued operations of $7,476,864 and $4,891,525,
respectively. As of March 15, 2012, the Company has not
commercialized the Dragon Mine and has had to rely on cash flow
generated from the sale of stock and convertible debt to fund its
operations. If the Company is unable to fund its operations
through the commercialization of the Dragon Mine, the sale of
equity or debt or a combination of both, it may have to file
bankruptcy.
ARCH COAL: Fitch Downgrades Issuer Default Rating to 'B-'
---------------------------------------------------------
Fitch Ratings has downgraded Arch Coal, Inc.'s (Arch Coal; NYSE:
ACI) Issuer Default Rating (IDR) and senior unsecured notes to
'B-' from 'B'.
The Rating Outlook is Negative.
Key Ratings Drivers
Arch Coal benefits from large, well-diversified operations and
good control of low-cost production. Globally, Arch is the sixth
largest coal producer based on volumes. The company sold 140.8
million tons of coal in 2012 accounting for 14% of the U.S. coal
supply. Between 84% and 91% of 2013 expected volumes are committed
and priced. Assuming no change in sales volume for 2014, between
45% and 48% of tons are committed and priced. The company has the
second largest coal reserve position in the U.S. at 5.5 billion
tons.
The credit ratings also reflect oversupply in the domestic steam
coal market which is expected to result in substantially lower
earnings through at least 2013. Visibility is constrained given
lower than historic levels of committed tonnage. Beginning in the
second half of 2012, the metallurgical coal market softened as
supply rebounded and steel production slowed. Weak metallurgical
coal prices could persist beyond 2013.
Weak earnings combined with high debt levels post the acquisition
of International Coal Group in 2011 will result in high leverage
metrics over the ratings horizon. Liquidity should remain adequate
despite the prospect of negative free cash flow. Fitch expects
financial leverage to remain elevated until industry-wide
production cuts have resulted in more balanced steam and
metallurgical coal markets.
Liquidity
At Mar. 31, 2013, cash on hand was $730 million, short-term
investments were $248 million and Fitch estimates that $277
million was available under the company's credit facilities. The
$250 million accounts receivable facility matures Dec. 10, 2013,
and is renewable annually. The $350 million credit facility
matures in June 2016. Fitch expects Arch Coal to manage within the
amended covenants. Current maturities are quite modest reflecting
$16.5 million in term loan B amortization per year.
Fitch expects free cash flow could be negative as much as $300
million for 2013 and neutral to slightly negative in 2014. Asset
sales are not anticipated.
The recovery rating on the senior secured bank facility of 'RR1'
reflects outstanding recovery prospects given default. Recovery of
the senior unsecured debt remains average.
The Negative Outlook reflects possibility that weak market
conditions could drag into 2014 and beyond. Total debt/adjusted
EBITDA for the latest 12 months ended March 31, 2013 was 9.7 times
(x). Fitch anticipates leverage increasing through the year and
remaining elevated through at least 2014.
Ratings Sensitivities
Negative: Future developments that may, individually or
collectively, lead to negative rating action include:
-- Constrained liquidity.
Positive: Not anticipated over the next 12 months given over
supply in the domestic steam coal market but future developments
that may lead to a positive rating action include:
-- Increased earnings and operating cash flow.
-- Debt levels materially reduced and positive free cash flow
on average.
Fitch has downgraded the following ratings:
-- IDR to 'B-' from 'B';
-- Senior unsecured notes to 'B-/RR4' from 'B/RR4';
-- Senior secured revolving credit facility to 'BB-/RR1' from
'BB/RR1'; and
-- Senior secured term loan to 'BB-/RR1' from 'BB/RR1'.
ATHENS/ALPHA GAS: Cawley Loses 8th Circuit Appeal
-------------------------------------------------
Thomas Cawley, a creditor of Athens/Alpha Gas Corporation, appeals
a decision of the Bankruptcy Appellate Panel for the Eighth
Circuit, affirming the bankruptcy court's denial of his motion to
determine claims. Following the bankruptcy court's confirmation of
the debtor corporation's reorganization plan in 2005, Cawley
litigated his claims in North Dakota state court. The Supreme
Court of North Dakota held that Cawley's claims were barred under
the doctrine of res judicata. The bankruptcy court granted
Cawley's subsequent motion to reopen the case, but it agreed with
the state court that Cawley's claims were precluded and denied his
motion to determine claims. The BAP affirmed the bankruptcy court
on a different ground, reasoning that the bankruptcy court lacked
subject-matter jurisdiction to consider Cawley's motion under what
has come to be known as the Rooker-Feldman doctrine.
"Because we must accord the state court's judgment preclusive
effect under 28 U.S.C. [Sec.] 1738, we affirm the decision of the
bankruptcy court on this alternative ground," the Eighth Circuit
said in May 9, 2013 decision, available at http://is.gd/axIV0C
from Leagle.com.
Between 1998 and 2002, Cawley made a series of loans to
Athens/Alpha. When Athens/Alpha filed a petition for relief under
Chapter 11 in 2002, it listed Cawley as a creditor with a secured
claim of $26,000. Cawley claims that his loans were secured by a
5% working interest in one of Athens/Alpha's wells, and that he
elected to purchase that interest in 2002 when Athens/Alpha failed
to repay him. But Cawley did not record an interest in the well or
file a proof of claim with the bankruptcy court before that court
confirmed the reorganization plan for Athens/Alpha.
A group of Athens/Alpha creditors -- Interest Holders -- objected
to Cawley's classification as a secured creditor and to his
application for administrative expenses based on his alleged
interest in the well. Cawley did not respond, and the bankruptcy
court resolved Cawley's claims in an order dated March 15, 2005:
"Any secured claim asserted by Tom Cawley is disallowed in its
entirety. The claim of Tom Cawley shall be allowed only as an
unsecured claim, subject to this Court's disposition of [Cawley's]
application for administrative expense claim." Before this order,
the Interest Holders had filed a reorganization plan that did not
account for Cawley's alleged interest in the well. The plan
provided for the formation of a successor to Athens/Alpha called
"Missouri Breaks," and transferred Athens/Alpha's interest in the
well to Missouri Breaks "free and clear of all liens, claims,
encumbrances, charges, and interests."
Cawley did not object to the plan, and the bankruptcy court
confirmed it on May 5, 2005.
On June 20, 2006, nearly a year after the bankruptcy court had
confirmed the reorganization plan, Cawley filed a motion to
determine his administrative expense claim, so that his unsecured
claim could be paid. The parties then reached an agreement to
litigate Cawley's interest in the well in North Dakota state
court. The Interest Holders commenced an action to quiet title in
the well in state district court, and Cawley withdrew his motion
in the bankruptcy court. While the quiet title action was
pending, the bankruptcy court issued a final decree closing the
Athens/Alpha bankruptcy estate.
The Interest Holders argued in the state district court that
Cawley's claimed interest in the well was "without basis" and that
he "should be determined to have no right, title, or interest of
any nature." Cawley filed an answer and counterclaim reiterating
his interest and asserting that the Interest Holders'
representations in their agreement with Cawley to litigate
ownership of the well in state court barred them from objecting to
his claim on the basis of res judicata. The court granted the
Interest Holders' motion for summary judgment, concluding that
"Cawley's claims could have, and should have, been brought during
the bankruptcy proceeding," so they were barred by res judicata
under North Dakota law.
The Supreme Court of North Dakota conducted its own res judicata
analysis and affirmed. Cawley argued that the litigation
agreement between the parties limited the scope of the state
court's jurisdiction over the matter. The agreement, he said,
provided only for the parties to litigate ownership of the well
and did not allow for arguments about res judicata. He also argued
that matters related to 11 U.S.C. Sec. 544 and other sections of
the Bankruptcy Code were outside the subject-matter jurisdiction
of the state court because such issues are within the exclusive
jurisdiction of the bankruptcy court. The North Dakota court
disagreed on both points, noting that "[r]es judicata has been
part of North Dakota law for well over a century, and state and
federal courts have concurrent jurisdiction in proceedings related
to a bankruptcy case." Therefore, said the state court, "Cawley
could not have reasonably expected that the parties could litigate
his claims as if the Athens/Alpha bankruptcy proceedings had never
occurred."
After having no success in the North Dakota courts, Cawley moved
to reopen the bankruptcy case and to determine his claims in the
bankruptcy court. The court granted Cawley's motion to reopen and
denied his motion to determine claims. The court noted that the
confirmed reorganization plan "did not include Cawley as a working
interest owner" in the well, and that Cawley did not appeal the
order confirming the plan. The court agreed with the North Dakota
courts that Cawley's claims were barred and denied his motion in
all respects. Cawley appealed the bankruptcy court's order to the
BAP, which affirmed on a different basis. The BAP concluded that
the federal bankruptcy court lacked subject-matter jurisdiction
under the Rooker-Feldman doctrine because "Cawley cannot prevail
on his motion unless the state courts were wrong." The BAP also
determined that Cawley's appeal was not frivolous, and denied the
Interest Holders' motion for sanctions against him.
Cawley appealed the BAP's ruling, contending that the Rooker-
Feldman doctrine does not apply. He argued further that the
doctrine of res judicata does not prevent consideration of his
claims, because the North Dakota courts lacked subject-matter
jurisdiction over property of the bankruptcy estate. The Interest
Holders responded to the appeals and moved for sanctions against
Cawley, pursuant to Federal Rule of Appellate Procedure 38.
"We conclude that the appeal was not frivolous, and the Interest
Holders' motion for sanctions is therefore denied," the Eighth
Circuit said.
The case, Thomas P. Cawley, Appellant, v. Frank Celeste; Robert M.
Hallmark & Associates, Inc.; Missouri Breaks, LLC; William R.
Austin; Phoenix Energy; Bobby Lankford; Erskine Williams,
Appellees, No. 12-1555 (8th Cir.).
ATP OIL: Lenders Win Auction With $691 Million Credit Bid
---------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that offshore oil and gas producer ATP Oil & Gas Corp.
will be purchased by secured lenders, mostly in return for secured
debt financing the Chapter 11 reorganization that began in August
in Houston.
The lenders came out on top at the May 7 auction with a bid of
$690.8 million. The price includes assumption of specified
liabilities and $45 million in cash to cover liens coming ahead of
the lenders' security interests. A hearing was slated May 9 for
approval of the sale.
The auction covered ATP's producing wells and leases in both deep
and shallow water. Secured lenders previously gave notice they
intended to bid using debt rather than cash.
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. Munsch Hardt Kopf & Harr, P.C., is
the conflicts counsel. Motley Rice LLC and Fayard & Honeycutt,
APC serve as special counsel. Opportune LLP is the financial
advisor and Jefferies & Company is the investment banker.
Kurtzman Carson Consultants LLC is the claims and notice agent.
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.
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.
A 7-member panel of equity security holders has also been
appointed in the case. Kyung S. Lee, Esq., and Charles M. Rubio,
Esq. of Diamond McCarthy LLP, in Houston, Texas, serve as counsel
to the Equity Committee.
B&K COASTAL: Court Narrows Suit Against Promenade at Surf City
--------------------------------------------------------------
Bankruptcy Judge J. Rich Leonard narrowed the claims lodged by B&K
Coastal, LLC d/b/a Cape Fear Paving, in its lawsuit against
Promenade at Surf City, LLC. The defendant had sought to dismiss
the complaint for failure to state a claim upon which relief may
be granted.
B&K Coastal LLC, d/b/a Cape Fear Paving, a North Carolina limited
liability company located in New Hanover County, North Carolina,
specializes in highway construction and site improvement.
Promenade at Surf City LLC, a North Carolina limited liability
company with its principal place of business in Pender County,
North Carolina, began development of Surf City Promenade located
at the intersection of Highway 50 and Highway 210 in Surf City,
North Carolina in 2009. After plans for the project were drafted
in January 2010, the defendant solicited bids to perform the work
from several contractors, including B&K Coastal. The plaintiff
and defendant entered into an agreement, made as of January 5,
2010, whereby the plaintiff would provide site work, including
grading, erosion control, storm drainage, sewer, paving and
utilities for the project. Under the site contract, the defendant
agreed to pay B&K Coastal $1,280,000 and all work was to be
completed by July 8, 2010, with the exception of certain portions
specifically referenced.
On April 29, 2010 and July 20, 2010, the parties entered into
separate agreements for the construction of turn lanes on Highway
50 and Highway 210, respectively. Under the Hwy 210 contract, the
defendant was required to pay B&K Coastal $186,545 in exchange for
the plaintiff's completion of its obligations thereunder by
September 15, 2010. The Hwy 210 contract called for the defendant
to make progress payments throughout the course of the project,
with the final payment made upon completion of the work and
certification by the North Carolina Department of Transportation.
On Jan. 28, 2011, counsel for the defendant sent B&K Coastal's
counsel a letter indicating that it was the defendant's position
that the plaintiff was in material breach of the site contract,
the Hwy 50 contract and the Hwy 210 contract. Thereafter, B&K
Coastal completed the work required under the Hwy 210 contract and
received confirmation from the NCDOT on August 2, 2011. The
plaintiff posted the required bond to be held by the NCDOT until
the expiration of the one-year warranty period. Pursuant to the
Hwy 210 contract, the plaintiff received the necessary engineer
certifications and a final inspection found the work to be
satisfactorily completed.
B&K Coastal filed the multi-count complaint initiating the
adversary proceeding on November 15, 2012 against the defendant,
asserting five separate claims for relief: (1) breach of contract;
(2) unjust enrichment; (3) fraud; (4) fraud in the inducement; and
(5) violation of the North Carolina Unfair and Deceptive Trade
Practices Act, N.C. Gen. Stat. Sections 75-1.1 et seq. On January
14, 2013, the defendant filed an answer, which included several
counterclaims and the motion to dismiss currently before the
court. In its motion to dismiss and accompanying memorandum of
law, the defendant asserts that the plaintiff's second, third,
fourth and fifth claims for relief fail to state claims upon which
relief may be granted and, therefore, must be dismissed pursuant
to Fed. R. Civ. P. 12(b)(6) and Fed. R. Bankr. P. 7012. The
plaintiff filed a reply and answer to the counterclaims asserted
by the defendant on March 7, 2013. On April 1, 2013, the defendant
filed a memorandum of law in opposition to the defendant's motion
to dismiss.
In his May 9, 2013 Order available at http://is.gd/RdFU8mfrom
Leagle.com, Judge Leonard ruled that the defendant's motion to
dismiss is allowed with respect to the plaintiff's second, third
and fourth claims for relief pursuant to Fed. R. Civ. P. 12(b)(6)
and Fed. R. Bankr. P. 7012. The defendant's motion to dismiss the
plaintiff's fifth claim for relief, however, is denied.
The case is, B&K COASTAL, LLC, Plaintiff, v. PROMENADE AT SURF
CITY, LLC, Defendant, Adv. Proc. No. 12-00287 (Bankr. E.D.N.C.).
About B&K Coastal
B&K Coastal, LLC, filed for Chapter 11 bankruptcy (Bankr. E.D.N.C.
Case No. 11-08609) on Nov. 9, 2011. B&K Coastal does business as
Cape Fear Paving, Bay Street Properties LLC, Universal
Transloaders, Riverfront Company LLC, Forestry Division, Malmo
Asphalt Plant LLC, and Wilmington Materials. George M. Oliver,
Esq., at Oliver Friesen Cheek, PLLC, serves as the Debtor's
counsel. In its petition, B&K Coastal estimated $1 million to
$10 million in assets, and $10 million to $50 million in debts.
A list of the Company's 20 largest unsecured creditors filed
together with the petition is available for free at
http://bankrupt.com/misc/nceb11-08609.pdf The petition was signed
by J. Keith Stark, managing member.
BASHAS' INC: Copyright Infringement Suit Dismissed
--------------------------------------------------
Bashas' Inc. won dismissal of the lawsuit filed against it by
Robert Kubicek Architects & Associates, Inc.
Kubicek is an architectural firm that formerly employed Bruce
Bosley. Even before hiring Bosley, Kubicek performed
architectural work on Bashas' projects. Bosley eventually became
the principal architect managing Bashas' work. Bosley left
Kubicek in 2007 and formed his own firm, The Bosley Group, taking
with him other Kubicek employees and setting off a string of
litigation.
On July 12, 2009, Bashas' filed a voluntary Chapter 11 petition.
Kubicek was given notice but never filed a proof of claim.
Instead, on October 27, 2011, Kubicek filed the original Complaint
against both Bashas' and Kubicek, alleging copyright infringement.
Kubicek v. Bosley, CV-11-2112-PHX-DGC, alleging that Bosley and
Bashas' willfully infringed and were making unlawful use of
Kubicek's copyrighted architectural plans and misappropriated
other proprietary materials in violation of 17 U.S.C. Sec. 506(a)
and common law.
On January 12, 2012, Judge Campbell granted Bashas' motion to
refer the claims against Bashas' to bankruptcy court, while
retaining the claims against Bosley. The bankruptcy court
eventually discharged Kubicek's pre-petition claims against
Bashas', but did not dismiss post-petition claims for damages and
equitable relief. Kubicek then filed the present lawsuit, asking
the District Court to withdraw the reference with respect to its
post-petition claims against Bashas'. The District Court granted
that motion and Kubicek filed the amended Complaint.
In the meantime, Judge Campbell granted in part and denied in part
Bosley's motion for summary judgment in the Bosley Action and the
case went to trial. The jury found in favor of defendants on all
claims, concluding that neither the Bosley Group nor Bosley
individually is liable to Kubicek for direct, contributory, or
vicarious copyright infringement.
In the present case, Kubicek asserts claims against Bashas' for
direct and willful infringement of copyrights and for contributory
and vicarious liability for the infringing conduct of The Bosley
Group. Given the jury verdict in the Bosley Action, finding that
Bosley is not liable for copyright infringement, Kubicek's current
claims against Bashas' for contributory and vicarious liability
based on Bosley's infringing conduct are foreclosed.
With respect to Bashas' liability for direct copyright
infringement, the first amended Complaint generally alleges that
Bashas' continues to retain infringing documents, refuses to
surrender such documents, and has used and/or made unauthorized
copies of those documents, all constituting ongoing infringements
of Kubicek's copyrighted works and misappropriation of its
propriety materials. Kubicek seeks a declaration resolving any
question regarding the right, title and ownership interest in
Kubicek's copyrighted work.
Bashas' moves to dismiss, arguing that Kubicek has failed to
identify any claims against Bashas' for post-petition conduct.
Kubicek argues in response that its post-petition claims cannot be
pled with more particularity because information for more detailed
factual allegations is solely within the control of Bashas' and it
has had inadequate opportunity to conduct discovery.
According to Arizona District Judge Frederick J. Martone, "Kubicek
argues that it is unable to plead more specific facts regarding
the infringement because it has had inadequate opportunity to
conduct discovery. The claims asserted against Bosley and Bashas'
were originally filed almost two years ago. The bifurcated claims
asserted against Bosley mirror the claims against Bashas'. These
claims have been fully explored in the Bosley Action through
discovery, jury trial, and now judgment. During these proceedings
Kubicek certainly had sufficient opportunity to frame its
Complaint in such a way as to satisfy the minimal pleading
standards of [Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct.
1937, 1949 (2009).]"
"But here there are no allegations that would support a claim for
post-petition infringement. Kubicek identifies no instances of
construction, remodeling, utilization or copying of any specific
architectural plan or other misappropriation of its proprietary
materials since the date of the Chapter 11 filing. Instead,
Kubicek's claims for both copyright infringement and state law
claims do not rise above the level of speculation."
The case is, Robert Kubicek Architects & Associates, Inc.
Plaintiff, v. Bashas' Inc., Defendant, Nos. CV 12-01497-PHX-FJM,
BK 09-16050-JMM, Adv. No. 12-AP-0226-JMM (D. Ariz.). A copy of
the Court's May 7, 2013 Order is available at http://is.gd/kn96lU
from Leagle.com.
About Bashas' Inc.
Bashas' Inc. is a 77-year-old grocery chain that owns 158 retail
stores located throughout Arizona. It is doing business as
National Grocery, Bashas Food, Bashas' United Drug, Food City,
Eddie's Country Store, A.J. Fine Foods, Western Produce, Bashas'
Distribution Center, Sportsman's, and Bashas' Dine.
The Company and its affiliates filed for Chapter 11 bankruptcy
protection on July 12, 2009 (Bankr. D. Ariz. Case No. 09-16050).
Frederick J. Petersen, Esq., at Mesch, Clark & Rothschild, P.C.,
assisted the Debtors in their restructuring efforts. Michael W.
Carmel, Ltd., served as the Debtors' co-counsel. Deloitte
Financial Advisory LLP served as financial advisors. Epiq
Bankruptcy Solutions, LLC, served as claims and notice agent. In
its bankruptcy petition, Bashas' estimated assets and debts of
$100 million to $500 million as of the Petition Date.
Judge James M. Marlar confirmed Bashas' Chapter 11 reorganization
plan in August 2010.
BERNARD L. MADOFF: Concept of Mandatory Withdrawal Expanded
-----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the liquidation of Bernard L. Madoff Investment
Securities LLC gave U.S. District Judge Jed Rakoff another
opportunity to expand the grounds on which a lawsuit filed in
bankruptcy court can or must be moved upstairs to federal district
court.
According to the report, Judge Rakoff's 12-page decision on May 7
came as a footnote in a case where he already threw out the suit
Madoff trustee Irving Picard had filed against New York Attorney
General Eric Schneiderman. Mr. Picard was trying to stop the
attorney general's $410 million settlement with feeder fund
manager J. Ezra Merkin.
In April, Judge Rakoff dismissed the suit entirely, finding that
Mr. Picard waited too long and had no right to halt the settlement
because no property of the bankrupt estate was involved to invoke
the so-called automatic stay.
In December Judge Rakoff had written a short opinion taking the
Picard-Schneiderman suit out of bankruptcy court. At the time, the
judge said he would write a full opinion later. The May 7 opinion
was the more lengthy opinion he promised.
Judge Rakoff found several reasons why he was required to take the
suit out of bankruptcy court, known technically as mandatory
withdrawal of the reference. Mr. Schneiderman sought dismissal
under a doctrine known as laches, where a suit can be tossed if
filed too late. Although Judge Rakoff admitted that the "standard
for laches is well established," taking the suit out of bankruptcy
court was required because the case "raised material and unusual
issues regarding the contours of the doctrine of laches."
As he had done before, Judge Rakoff said that the Madoff
liquidation involves the Securities Investor Protection Act, which
in part is non-bankruptcy law in Judge Rakoff's view. Because Mr.
Picard was basing his suit on concepts of "property of the estate"
under SIPA, taking the suit out of bankruptcy court was required,
according to Judge Rakoff.
Another reason the bankruptcy court shouldn't have heard the suit
was based on an 1881 U.S. Supreme Court case called Barton v.
Barbour, where receivers such as those for the Merkin funds can't
be sued without permission of the courts appointing them. In that
regard, Judge Rakoff said there was a novel issue he should
decide. Judge Rakoff believed it was incumbent on a district
judge to decide whether bankruptcy law or SIPA creates an
exception to Barton v. Barbour.
Mr. Picard is appealing dismissal of the suit to the U.S. Court of
Appeals in Manhattan. Mr. Schneiderman agreed not to distribute
most of the settlement funds until the appeal is decided.
The dispute with Schneiderman in district Court is Picard v.
Schneiderman, 12-cv-06733, U.S. District Court, Southern District
of New York (Manhattan). The lawsuit with Schneiderman in
bankruptcy court is Picard v. Schneiderman, 12-bk-01778, U.S.
Bankruptcy Court, Southern District of New York (Manhattan).
About Bernard L. Madoff
Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff
orchestrated the largest Ponzi scheme in history, with losses
topping US$50 billion. On Dec. 15, 2008, the Honorable Louis A.
Stanton of the U.S. District Court for the Southern District of
New York granted the application of the Securities Investor
Protection Corporation for a decree adjudicating that the
customers of BLMIS are in need of the protection afforded by the
Securities Investor Protection Act of 1970. The District Court's
Protective Order (i) appointed Irving H. Picard, Esq., as trustee
for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP
as his counsel, and (iii) removed the SIPA Liquidation proceeding
to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789)
(Lifland, J.). Mr. Picard has retained AlixPartners LLP as claims
agent.
On April 13, 2009, former BLMIS clients filed an involuntary
Chapter 7 bankruptcy petition against Bernard Madoff (Bankr.
S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The
petitioning creditors -- Blumenthal & Associates Florida General
Partnership, Martin Rappaport Charitable Remainder Unitrust,
Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert
US$64 million in claims against Mr. Madoff based on the balances
contained in the last statements they got from BLMIS.
On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff
Securities International Limited in London under bankruptcy
protection pursuant to Chapter 15 of the U.S. Bankruptcy Code
(Bankr. S.D. Fla. 09-16751).
The Chapter 15 case was later transferred to Manhattan. In June
2009, Judge Lifland approved the consolidation of the Madoff SIPA
proceedings and the bankruptcy case.
Judge Denny Chin of the U.S. District Court for the Southern
District of New York on June 29, 2009, sentenced Mr. Madoff to
150 years of life imprisonment for defrauding investors in United
States v. Madoff, No. 09-CR-213 (S.D.N.Y.).
Mr. Picard has made three distributions, paying more than half of
smaller claims in full and satisfying just over 50 percent of
larger customer claims totaling more than $17 billion.
BG MEDICINE: Incurs $5.4 Million Net Loss in First Quarter
----------------------------------------------------------
BG Medicine, Inc., reported a net loss of $5.41 million on
$888,000 of total revenues for the three months ended March 31,
2013, as compared with a net loss of $7.66 million on $480,000 of
total revenues for the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$23.49 million in total assets, $15.11 million in total
liabilities, and $8.37 million in stockholders' equity.
"In the first quarter we demonstrated the potential of our new
commercial strategy to drive revenue growth and improve bottom
line performance," said Eric Bouvier, president and chief
executive officer of BG Medicine. "Product sales increased
compared with the same quarter a year ago, while we managed
expenses tightly and continued to invest in activities that will
drive sales sustainably over the long-term. We are encouraged by
these results and believe they provide an early validation of the
direction we are heading."
A copy of the press release is available for free at:
http://is.gd/TDjuMq
Loan Payment Deferral
The Company previously entered into a Loan and Security Agreement
with General Electric Capital Corporation and Comerica Bank on
Feb. 10, 2012, pursuant to which the Lenders loaned the Company an
aggregate principal amount of $10 million. Under the original
terms of the Loan Agreement, the Company was obligated to repay
the principal on the term loan in 30 equal consecutive monthly
installments commencing on March 1, 2013, and made the March 1,
2013, and April 1, 2013, principal payments.
On May 8, 2013, the Company entered into the First Amendment to
Loan and Security Agreement, pursuant to which the Company's
repayment obligations were deferred until Aug. 1, 2013, resulting
in the Company being required to pay 25 equal consecutive monthly
installments commencing on Aug. 1, 2013. In addition, the
Amendment provides that the Company's deferral of principal may be
further extended as follows:
(i) if as of July 1, 2013, the Company has unrestricted cash on
hand equal to or greater than 12 times its average monthly
cash burn amount for the immediately preceding three
months, the Company may defer the repayments until
Sept. 1, 2013, and repay the amounts owed in 24 equal
consecutive monthly installments commencing on Sept. 1,
2013;
(ii) if the condition in subparagraph (i) above has been
satisfied and if the Company meets the Cash Position
Threshold as of Aug. 1, 2013, the Company may defer the
repayments until Oct. 1, 2013, and repay the amounts owed
in 23 equal consecutive monthly installments commencing on
Oct. 1, 2013; and
(iii) if the conditions in subparagraphs (i) and (ii) above have
been satisfied and if the Company meets the Cash Position
Threshold as of Sept. 1, 2013, the Company may defer the
repayments until Nov. 1, 2013, and repay the amounts owed
in 22 equal consecutive monthly installments commencing on
Nov. 1, 2013.
In addition, the Amendment provides that (i) the Company will pay
to the Lenders, at the time the term loan is repaid in full, an
additional fee of $50,000 and (ii) the exercise price of the
warrants issued in connection with the Loan Agreement are amended
from $6.82 per share to $1.70 per share.
BIRDSALL SERVICES: Bonus Program Okayed Pending June Sale
---------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that so the trustee for Birdsall Services Group Inc. can
keep essential employees on the job until the engineering firm is
sold, the bankruptcy judge approved a bonus program costing as
much as $728,300.
According to the report, Trustee Edwin Stier is authorized to pay
about 20 top managers $205,000 collectively. For dozens of lower-
level workers, the maximum bonuses total $523,300. They receive
half on signing a retention agreement and the other half three
days after the business is sold.
The trustee lined up rival Partner Assessment Corp. to make the
first bid at auction. Partner Associates will pay $5.6 million
cash plus contingent payments.
About Birdsall Services
Birdsall Services Group Inc., an engineering firm from Eatontown,
New Jersey, filed for Chapter 11 protection (Bankr. D.N.J. Case
No. 13-16743) on March 29, 2013, when the state attorney general
indicted the business and obtained a court order seizing the
assets.
Birdsall was accused by the state of violating laws prohibiting
so-called pay-to-play, where businesses make political
contributions in return for government contracts. The state
charged that the company arranged for individuals to make
contributions and then reimbursed the employees. A company
officer pleaded guilty last year to making political contributions
disguised to appear as though made by individuals.
The Chapter 11 petition filed in Trenton, New Jersey, disclosed
assets of $41.6 million and liabilities totaling $27 million.
Debt includes $3.6 million owing to a bank on a secured claim and
$2.4 million in payables to trade suppliers.
In April 2013, Birdsall reached a $3.6 million settlement that
ended New Jersey's opposition to the company's bankruptcy and
resolves the state's lawsuit aiming to seize Birdsall's assets.
As part of the settlement, Edwin Stier, a member of Stier
Anderson, was appointed as Chapter 11 trustee for Birdsall.
BOSTON GENERATING: US Power Settles Creditors' Suit for $2MM
------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that US Power Generating Co. and affiliate Astoria
Generating Co. LP are paying $2 million in settlement to extricate
themselves from a lawsuit brought by creditors of bankrupt power
producer Boston Generating LLC.
Boston Generating won approval of a Chapter 11 plan later that
year where the recovery by unsecured creditors would depend
largely on the success of lawsuits. One of the suits brought in
Manhattan bankruptcy court by the creditors' trust targeted US
Power and affiliates, contending Boston Generating became
insolvent and went bankrupt as the result of a recapitalization in
2006 where more debt was incurred.
The creditors' trust was facing a motion by US Power seeking
outright dismissal of the suit based on the notion that the
allegations were "implausible." Rather than allow the bankruptcy
judge to rule, the two sides settled this week under an agreement
where US Power and affiliates will receive releases of all claims
in return for paying $2 million.
Under Boston Generating's plan, first-lien secured lenders with
$1.142 billion in claims received a nearly full recovery from sale
of the assets.
The lawsuit is Jalbert v. US Power Generating Co. (In re Boston
Generating LLC), 12-bk-01848, U.S. Bankruptcy Court, Southern
District of New York (Manhattan).
About Boston Generating
New York-based Boston Generating, LLC, owns nearly 3,000 megawatts
of mostly modern natural gas-fired power plants in the Boston
area. Privately held Boston Generating is an indirect subsidiary
of US Power Generating Co., and considers itself as the third-
largest fleet of plants in New England.
Boston Generating filed for Chapter 11 protection (Bankr. S.D.N.Y.
Case No. 10-14419) on Aug. 18, 2010. Boston Generating estimated
its assets and debts at more than $1 billion as of the Petition
Date.
EBG Holdings LLC; Fore River Development, LLC; Mystic, LLC; Mystic
Development, LLC; BG New England Power Services, Inc.; and BG
Boston Services, LLC, filed separate Chapter 11 petitions.
D. J. Baker, Esq., at Latham & Watkins LLP, serves as bankruptcy
counsel for the Debtors. JPMorgan Securities is the Debtors'
investment banker. Perella Weinberg Partners, LP, is the Debtors'
financial advisor. Brown Rudnick LLP is the Debtors' regulatory
counsel. FTI Consulting, Inc., is the Debtors' restructuring
consultant. Anderson Kill & Olick, P.C., is the Debtors'
conflicts counsel. The Garden City Group, Inc., is the Debtors'
claims agent.
The Official Committee of Unsecured Creditors tapped the law firm
of Jager Smith P.C. as its counsel.
BNC MORTGAGE: Maryland District Court Dismisses "Bowman" Suit
-------------------------------------------------------------
Maryland District Judge Alexander Williams, Jr., granted Aurora
Loan Services LLC's request to dismiss for failure to state a
claim the lawsuit captioned as, TIA BOWMAN et al., Plaintiffs, v.
FINANCE AMERICA, LLC, et al. Defendants, Civil Action No. AW-13-
208 (D. Md.).
Tia and Roy Bowman, proceeding pro se, assert a series of claims
against various defendants related to the origination and
securitization of a mortgage loan secured by the Bowmans'
property.
On May 27, 2005, the Plaintiffs executed a Note in favor of
defendant Finance America, LLC in the amount of $382,500. To
secure the loan, the Plaintiffs granted Finance America a security
interest in the property through a Deed which was recorded in the
land records of Charles County, Maryland. The Plaintiffs learned
through a Real Estate Securitization Audit that the Note was sold
by Finance America to Defendant Structured Asset Securities Corp.
Mortgage Loan Trust 2005-GEL3 without the Plaintiffs' knowledge or
consent. Foreclosure proceedings began in April 2009 after the
Plaintiffs allegedly defaulted on their payments. The Plaintiffs
filed their Complaint on January 18, 2013, and claim that they are
entitled to compensatory and punitive damages based on the
Defendants' Deceit and Actual Fraud (Count I), Conspiracy to
Defraud (Count II), and Breach of Implied Covenant of Good Faith
and Fair Dealing (Count III). The Complaint names as Defendants
Finance America, the Trust, GMAC Mortgage LLC, and Aurora Loan
Services LLC.
On Jan. 9, 2009, BNC Mortgage LLC, successor to Finance America by
merger, filed a petition under chapter 11 of the Bankruptcy Code
in the United States Bankruptcy Court for the Southern District of
New York.
On May 14, 2012, Residential Capital LLC and certain of its
subsidiaries, including GMAC, filed a petition under chapter 11 of
the Bankruptcy Code in the United States Bankruptcy Court for the
Southern District of New York.
A copy of the Court's May 8, 2013 Memorandum Opinion is available
at http://is.gd/grj8sKfrom Leagle.com.
BROADWAY FINANCIAL: Sells $8.7 Million of Non-Performing Loans
--------------------------------------------------------------
Broadway Financial Corporation reported that its wholly-owned
subsidiary, Broadway Federal Bank, f.s.b., recently completed the
sale of approximately $8.7 million principal amount of non-
performing loans, with a net book value of $5.7 million as of
March 31, 2013. In anticipation of the sale, all of the loans
sold were classified as loans held for sale as of March 31, 2013.
The loans represented approximately 26% of the Bank's estimated
principal amount of non-performing loans held for investment and
non-performing loans held for sale as of March 31, 2013.
The sale was made in a cash transaction with an institutional
buyer and consisted of approximately $4.6 million principal amount
of multi-family residential loans, representing approximately 70%
of the Bank's non-performing multi-family residential loans, and
approximately $4.1 million principal amount of commercial real
estate loans, representing almost 54% of the Bank's non-performing
commercial real estate loans. No church loans or real estate owned
were included in the sale.
The Company expects to take a charge of approximately $471
thousand against net income in the first quarter ended March 31,
2013, because of the sale of these loans.
Separately, in early April 2013 the Company sold both a first and
a second mortgage loan on one church property with an aggregate
principal balance of approximately $540 thousand. This sale is
not expected to result in a material loss for the Bank.
Chief Executive Officer, Wayne-Kent Bradshaw stated, "These sales
represent another material reduction in our non-performing loans,
which will significantly reduce the time and resources that we
devote to managing and monitoring non-performing loans.
Furthermore, the sales further enhance our efforts to re-focus on
improving operations, pursuing growth to the extent permitted
under our Cease and Desist Orders, and completing our previously
announced Recapitalization. In addition, we believe that these
sales represent another major step in addressing regulatory
requirements to reduce our non-performing loans materially. With
the loan sales completed this year, our non-performing loans have
been reduced to approximately $20.7 million, or 5.69% of total
estimated assets, after adjusting for the sales, as of March 31,
2013, down from $37.1 million, or 9.93% of total assets at the end
of 2012."
Additional information regarding the loan sales will be made
available in the Company's Form 10-Q for the first quarter ended
March 31, 2013, which the Company expects to file in the near
future.
About Broadway Financial
Los Angeles, Calif.-based Broadway Financial Corporation was
incorporated under Delaware law in 1995 for the purpose of
acquiring and holding all of the outstanding capital stock of
Broadway Federal Savings and Loan Association as part of the
Bank's conversion from a federally chartered mutual savings
association to a federally chartered stock savings bank. In
connection with the conversion, the Bank's name was changed to
Broadway Federal Bank, f.s.b. The conversion was completed, and
the Bank became a wholly owned subsidiary of the Company, in
January 1996.
The Company is currently regulated by the Board of Governors of
the Federal Reserve System. The Bank is currently regulated by
the Office of the Comptroller of the Currency and the Federal
Deposit Insurance Corporation.
Broadway Financial disclosed net income of $588,000 on
$19.89 million of total interest income for the year ended
Dec. 31, 2012, as compared with a net loss of $14.25 million on
$25.11 million of total interest income during the prior year.
The Company's balance sheet at Dec. 31, 2012, showed $373.69
million in total assets, $355.68 million in total liabilities and
$18 million in total shareholders' equity.
Crowe Horwath LLP, in Sacramento, California, issued a "going
concern" qualification on the consolidated financial statements
for the year ended Dec. 31, 2012. The independent auditors noted
that the Company has a tax sharing liability to its consolidated
subsidiary that exceeds its available cash, the Company is in
default under the terms of a $5 million line of credit with
another financial institution lender in which the stock of its
subsidiary bank, Broadway Federal Bank is held as collateral for
the line of credit and the Company and the Bank are both under
formal regulatory agreements. Furthermore, the Company and the
Bank are not in compliance with these agreements and the Company's
and the Bank's capital plan that was submitted under the
agreements has been preliminarily approved subject to completion
of its recapitalization. Failure to comply with these agreements
exposes the Company and the Bank to further regulatory sanctions
that may include placing the Bank into receivership. These
matters raise substantial doubt about the ability of Broadway
Financial Corporation to continue as a going concern.
BROADWAY FINANCIAL: Amends 2012 Annual Report
---------------------------------------------
Broadway Financial Corporation has amended its annual report for
the period ended Dec. 31, 2012, to provide the information
required by Part III of Form 10-K because the Company's proxy
statement for the 2013 Annual Meeting of Stockholders will not be
filed within 120 days after the end of the Company's 2012 fiscal
year. The amendment does not reflect any events occuring after
the filing of the Company's original Annual Report. A copy of the
Amended Form 10-K is available at http://is.gd/kM0tKz
About Broadway Financial
Los Angeles, Calif.-based Broadway Financial Corporation was
incorporated under Delaware law in 1995 for the purpose of
acquiring and holding all of the outstanding capital stock of
Broadway Federal Savings and Loan Association as part of the
Bank's conversion from a federally chartered mutual savings
association to a federally chartered stock savings bank. In
connection with the conversion, the Bank's name was changed to
Broadway Federal Bank, f.s.b. The conversion was completed, and
the Bank became a wholly owned subsidiary of the Company, in
January 1996.
The Company is currently regulated by the Board of Governors of
the Federal Reserve System. The Bank is currently regulated by
the Office of the Comptroller of the Currency and the Federal
Deposit Insurance Corporation.
Broadway Financial disclosed net income of $588,000 on $19.89
million of total interest income for the year ended Dec. 31, 2012,
as compared with a net loss of $14.25 million on $25.11 million of
total interest income during the prior year. The Company's
balance sheet at Dec. 31, 2012, showed $373.69 million in total
assets, $355.68 million in total liabilities and $18 million in
total shareholders' equity.
Crowe Horwath LLP, in Sacramento, California, issued a "going
concern" qualification on the consolidated financial statements
for the year ended Dec. 31, 2012. The independent auditors noted
that the Company has a tax sharing liability to its consolidated
subsidiary that exceeds its available cash, the Company is in
default under the terms of a $5 million line of credit with
another financial institution lender in which the stock of its
subsidiary bank, Broadway Federal Bank is held as collateral for
the line of credit and the Company and the Bank are both under
formal regulatory agreements. Furthermore, the Company and the
Bank are not in compliance with these agreements and the Company's
and the Bank's capital plan that was submitted under the
agreements has been preliminarily approved subject to completion
of its recapitalization. Failure to comply with these agreements
exposes the Company and the Bank to further regulatory sanctions
that may include placing the Bank into receivership. These
matters raise substantial doubt about the ability of Broadway
Financial Corporation to continue as a going concern.
CAESARS ENTERTAINMENT: Files Form 10-Q, Had $216.7MM Loss in Q1
---------------------------------------------------------------
Caesars Entertainment Corporation filed with the U.S. Securities
and Exchange Commission its quarterly report on Form 10-Q
disclosing a net loss of $216.7 million on $2.14 billion of net
revenues for the quarter ended March 31, 2013, as compared with a
net loss of $281.1 million on $2.20 billion of net revenues for
the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$27.47 billion in total assets, $28.03 billion in total
liabilities, and a $560 million total deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/1F03u8
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 incurred a net loss of $1.49 billion on $8.58 billion
of net revenues for the year ended Dec. 31, 2012, as compared with
a net loss of $666.70 million on $8.57 billion of net revenues
during the prior year. The Company incurred a $823.30 million net
loss in 2010.
* * *
Caesars Entertainment carries a 'CCC' long-term issuer default
rating, with negative outlook, from Fitch and a 'Caa1' corporate
family rating with negative outlook from Moody's Investors
Service.
As reported in the TCR on Feb. 5, 2013, Moody's Investors Service
lowered the Speculative Grade Liquidity rating of Caesars
Entertainment Corporation to SGL-3 from SGL-2, reflecting
declining revolver availability and Moody's concerns that Caesars'
earnings and cash flow will remain under pressure causing the
company's negative cash flow to worsen.
In the May 7, 2013, edition of the TCR, Standard & Poor's Ratings
Services said that it lowered its corporate credit ratings on Las
Vegas-based Caesars Entertainment Corp. (CEC) and wholly owned
subsidiary Caesars Entertainment Operating Co. (CEOC) to 'CCC+'
from 'B-'.
"The downgrade reflects weaker-than-expected operating performance
in the first quarter, and our view that Caesars' capital structure
may be unsustainable over the next two years based on our EBITDA
forecast for the company," said Standard & Poor's credit analyst
Melissa Long.
CENTRAL EUROPEAN: Bankruptcy Court Approves Reorganization Plan
---------------------------------------------------------------
Central European Distribution Corporation and Roust Trading Ltd.
on May 13 disclosed that CEDC's Prepackaged Plan of Reorganization
(the Plan) on May 13 won approval from the U.S. Bankruptcy Court
for the District of Delaware, clearing the way for CEDC to emerge
from the restructuring process as a financially stronger company.
The approval means that the Court has confirmed the Plan submitted
to the Court by CEDC and that the company may proceed with the
closing of the restructuring transactions contemplated by the
Plan, which, assuming all conditions are met, is expected on or
about May 31.
"The Court's approval of our financial restructuring is a very
positive step forward for the Company," said Roustam Tariko, CEDC
Chairman. "The Company's world-class brands are now able to
continue to build on their success locally and globally and
perform as category leaders."
Required competition authority approvals already have been granted
by regulatory authorities in the Company's key markets of Poland,
Russia and Ukraine.
At the closing of the transaction, which eliminates approximately
$665.2 million of debt from the balance sheets of CEDC and its
U.S. subsidiaries, the Company will make a cash payment to holders
of its 2013 Convertible Notes and certain of its 2016 Senior
Secured Notes and issue new notes to holders of its 2016 Senior
Secured Notes and new shares to RTL, cancelling all previously
issued 2013 Convertible Notes and 2016 Senior Secured Notes and
shares of outstanding CEDC common stock. As a result of the
cancellation of CEDC's common stock, as of the day of closing of
the transaction CEDC will cease to be a public company in the U.S.
and in Poland and anticipates that its common stock will no longer
be subject to listing and trading on the Warsaw Stock Exchange.
RTL, owned by Mr. Tariko, will receive 100% of the outstanding
stock of the reorganized Company in exchange for funding CEDC's
cash payments under the Plan and the cancellation of CEDC's
existing debt obligations to RTL.
The approval of the Plan marks the culmination of more than a
year's worth of work to bolster the Company's financial structure
and create a long-term business alliance with Mr. Tariko's Russian
Standard Vodka. During that process, two entities shared
responsibility for safeguarding the interest of all CEDC
constituencies from a corporate governance standpoint: the Special
Committee of independent directors, headed by CEDC Vice Chairman
N. Scott Fine, and the Restructuring Committee, consisting of Mr.
Tariko and Mr. Fine and his fellow independent Director Markus
Sieger. These committees were assisted by the firm of Skadden,
Arps, Slate, Meagher and Flom LLP as legal advisor, the firm of
Houlihan Lokey Capital Inc. as financial advisor, and the firm of
Alvarez & Marsal LLC as chief restructuring officer.
CEDC and its U.S. subsidiaries, CEDC Finance Corporation
International, Inc. and CEDC Finance Corporation LLC (collectively
CEDC FinCo), on April 7, 2013, commenced voluntary proceedings
under Chapter 11 of the U.S. Bankruptcy Code.
The Chapter 11 filing did not involve the Company's operating
subsidiaries in Poland, Russia, Ukraine or Hungary. Those
operations, which are independently funded and generate their own
revenues, have continued normally and without interruption during
the U.S. restructuring process.
The terms of the Plan were described in the Amended and Restated
Offering Memorandum, Consent Solicitation Statement and Disclosure
Statement, dated March 8, 2013 (the Offering Memorandum), filed as
an exhibit to a tender offer statement on Schedule TO-I/A on March
8, 2013, as amended and supplemented by Supplement No. 1 to the
Offering Memorandum, dated March 18, 2013 (the Supplement), filed
as an exhibit to the Form 8-K filed on March 19, 2013.
About CEDC
Mt. Laurel, New Jersey-based Central European Distribution
Corporation is one of the world's largest vodka producers and
Central and Eastern Europe's largest integrated spirit beverages
business with its primary operations in Poland, Russia and
Hungary.
On April 7, 2013, CEDC and two subsidiaries sought bankruptcy
protection under Chapter 11 of the Bankruptcy Code (Bankr. D.
Del. Lead Case No. 13-10738) with a prepackaged Chapter 11 plan
that reduces debt by US$665.2 million.
Attorneys at Skadden, Arps, Slate, Meagher & Flom LLP serve as
legal counsel to the Debtor. Houlihan Lokey is the investment
banker. Alvarez & Marsal will provide the chief restructuring
officer. GCG Inc. is the claims and notice agent.
CENTRAL EUROPEAN: To Restate Periodic Reports Retroactive 2010
--------------------------------------------------------------
The senior management of Central European Distribution
Corporation, following consultation with the audit committee and
the board of directors of the Company, concluded that the Company
will restate its consolidated financial statements for the periods
from and after Oct. 1, 2010, to correct accounting errors
resulting from a failure to properly account for certain deferred
tax assets and liabilities relating to the acquisition of the
Russian Alcohol Group in 2009. As a result, the Company's
consolidated financial statements for the Restatement Periods
should no longer be relied upon. The restatement is not expected
to have any impact on previously reported operating income or cash
flows reported for any of the periods covered.
As previously announced, the Company changed its senior management
during January 2013, including the appointment of a new Chief
Executive Officer and Chief Financial Officer of the Company.
Following these changes, the Company's new officers continued and
completed a thorough review of the Company's business operations,
internal controls and financial statement consolidation
procedures, which had started in the fourth quarter of 2012.
Through the process of reviewing the Company's financial statement
consolidation procedures and during the preparation of the
consolidated financial statements, certain errors were identified
relating to the recognition of deferred tax assets and liabilities
relating to the acquisition of RAG.
During the Restatement Periods, the Company erroneously recognized
a deferred tax asset relating to certain transaction costs
incurred by the Company on behalf of its subsidiary in the
acquisition of RAG, based on the assumption that the costs were
temporary differences and that the related deferred tax asset
would be realized in the future. However, the costs represent a
difference in the accounting and tax books (an outside basis
difference) and the recognition criteria for a deferred tax asset
relating to those differences were not met so the deferred tax
asset should not be recognized.
Furthermore, during the Restatement Periods, the Company
recognized a deferred tax liability related to a gain on the re-
measurement of a previously held interest in RAG, based on the
assumption that related income tax would be payable in the future.
However, the recognition did not consider the fact that the
ownership of RAG was structured in such a way that this gain could
be recovered tax free. As a result the deferred tax liability
should not be recognized.
The Company estimates that the aggregate effect of the adjustments
identified to date will result in a reduction of its consolidated
net income by approximately $21 million and $6 million for the
years ended Dec. 31, 2010, and 2011, respectively. The Company
estimates that there is no material effect on the adjustment on
the periods prior to Sept. 30, 2010. These amounts are subject to
change as the Company continues its review of the accounting
matters. The adjustments are not expected to have any impact on
previously reported operating income or cash flows reported during
any of the periods covered. The adjustments do not impact the
five year projections provided by the Company in the Amended and
Restated Offering Memorandum, Consent Solicitation Statement and
Disclosure Statement, dated March 8, 2013, filed as an exhibit to
a tender offer statement on Schedule TO-I/A on March 8, 2013, as
amended and supplemented by Supplement No. 1 to the Offering
Memorandum, dated March 18, 2013, filed as an exhibit to the Form
8-K filed on March 19, 2013.
The Company believes that a thorough review of the Company's
financial statement consolidation procedures was a key and
necessary step in addressing the material weaknesses in its
internal control over financial reporting previously disclosed in
the Company's 2011 Annual Report on Form 10-K/A, and the Company's
new management team is working diligently to change the control
environment and strengthen the Company's internal control system
over financial reporting.
In light of the Company's current financial condition as well as
the on-going nature of the Company's restructuring and the need to
restate its accounts, the board of directors of the Company has
determined to delay the annual meeting of the Company's
shareholders currently scheduled for May 14, 2013, until a future
date to be determine by the Company's board of directors.
About CEDC
Mt. Laurel, New Jersey-based Central European Distribution
Corporation is one of the world's largest vodka producers and
Central and Eastern Europe's largest integrated spirit beverages
business with its primary operations in Poland, Russia and
Hungary.
On April 7, 2013, CEDC and two subsidiaries sought bankruptcy
protection under Chapter 11 of the Bankruptcy Code (Bankr. D.
Del. Lead Case No. 13-10738) with a prepackaged Chapter 11 plan
that reduces debt by US$665.2 million.
Attorneys at Skadden, Arps, Slate, Meagher & Flom LLP serve as
legal counsel to the Debtor. Houlihan Lokey is the investment
banker. Alvarez & Marsal will provide the chief restructuring
officer. GCG Inc. is the claims and notice agent.
CEREPLAST INC: Restructuring to Cut Annual Expenses by $800,000
---------------------------------------------------------------
Cereplast, Inc., announced the restructuring of its global
operations to align with current market opportunities which is
expected to reduce annual operating expenses by $600,000 to
$800,000 per year. This cost reduction will allow the Company to
dedicate this cash savings toward organic growth and the required
working capital to service new clients.
To achieve these cost savings, the Company is relocating its
corporate headquarters to Seymour, IN, and is closing its offices
in El Segundo, CA. The Company is also moving its European
headquarters to its office in Milan, Italy, and is closing the
office in Bonen, Germany, in order to strategically focus the
Company's efforts on the most immediate and dynamic markets for
bioplastics in Europe. These changes are effective as of May
2013.
Mr. Frederic Scheer, chairman and CEO of Cereplast commented, "As
we recently announced, our revenue for the first quarter of 2013
was approximately $900,000 to $1 million, exceeding the total
revenue for the entire fiscal year of 2012. We continue to be
optimistic about the revenue potential for the remainder of 2013,
which will be derived primarily from Europe and the United States.
After a thorough analysis, we determined that it would be prudent
to consolidate our operations under one roof in the USA and under
one roof in Europe. The global economy has fundamentally changed
and we are quickly adapting our market approach and operations to
maintain and build upon our competitive advantage. This measure
has been taken by management with the best interest of our
shareholders in mind, and achieves management's goal of further
reducing our operating costs and improving cash flow.
Additionally, our relocation will enable us to further focus our
resources on developing the markets where we expect to generate
significant growth in the coming years. We anticipate a smooth
transition and expect these steps will improve our financial
outlook going forward."
About Cereplast
El Segundo, Calif.-based Cereplast, Inc., has developed and is
commercializing proprietary bio-based resins through two
complementary product families: Cereplast Compostables(R) resins
which are compostable, renewable, ecologically sound substitutes
for petroleum-based plastics, and Cereplast Sustainables(TM)
resins (including the Cereplast Hybrid Resins product line), which
replaces up to 90% of the petroleum-based content of traditional
plastics with materials from renewable resources.
Cereplast disclosed a net loss of $30.16 million in 2012, as
compared with a net loss of $14 million in 2011. The Company's
balance sheet at Dec. 31, 2012, showed $16.18 million in total
assets, $26.20 million in total liabilities and a $10.02 million
total shareholders' deficit.
HJ Associates & Consultants, LLP, in Salt Lake City, Utah, issued
a "going concern" qualification on the consolidated financial
statements for the year ended Dec. 31, 2012. The independent
auditors noted that the Company has suffered significant recurring
losses, has a significant accumulated deficit, and has
insufficient working capital to fund planned operations. These
factors raise substantial doubt about the Company's ability to
continue as a going concern.
Bankruptcy Warning
"Our plan to address the shortfall of working capital is to
generate additional financing through a combination of refinancing
existing credit facilities, incremental product sales and raising
additional debt and equity financing. We are confident that we
will be able to deliver on our plans, however, there are no
assurances that we will be able to obtain any sources of financing
on acceptable terms, or at all.
If we cannot obtain sufficient additional financing in the short-
term, we may be forced to curtail or cease operations or file for
bankruptcy," according to the Company's annual report for the year
ended Dec. 31, 2012.
CHINA JO-JO: Receives NASDAQ Listing Non-Compliance Notice
----------------------------------------------------------
China Jo-Jo Drugstores, Inc. on May 10 disclosed that on May 9,
2013, it was notified by The NASDAQ Stock Market LLC, notifying it
of its failure to maintain a minimum closing bid price of $1.00
over the then preceding 30 consecutive trading days for its common
stock as required by NASDAQ Listing Rule 5550(a)(2). The Company
has until November 5, 2013, to regain compliance.
The Company intends to actively monitor the bid price for its
common stock between now and November 5, 2013, and will consider
available options to resolve the deficiency and regain compliance
with the minimum bid price requirement.
About China Jo-Jo Drugstores, Inc.
Headquartered in Hangzhou, China Jo-Jo Drugstores, Inc., through
its subsidiaries and contractually controlled affiliates, is a
retailer and wholesale distributor of pharmaceutical and other
healthcare products in the People's Republic of China. As of
March 31, 2013, the Company has 52 retail pharmacies throughout
Zhejiang Province and Shanghai.
CIRCLE ENTERTAINMENT: Incurs $445,000 Net Loss in First Quarter
---------------------------------------------------------------
Circle Entertainment Inc. filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing a
net loss of $445,264 on $0 of revenue for the three months ended
March 31, 2013, as compared with a net loss of $1.36 million on $0
of revenue for the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed $603,436 in
total assets, $16.06 million in total liabilities, and a
$15.45 million total stockholders' deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/4Gsj2e
About Circle Entertainment
New York City-based Circle Entertainment Inc. has been pursuing
the development and commercialization of its new location-based
entertainment line of business since Sept. 10, 2010, which has and
will continue to require significant capital and financing. The
Company does not currently generate any revenues from this new
line of business. The Company has no long-term financing in place
or commitments for such financing to develop and commercialize its
new location-based entertainment line of business.
Circle Entertainment disclosed a net loss of $13.89 million on $0
of revenue for the year ended Dec. 31, 2012, as compared with a
net loss of $5.27 million on $0 of revenue during the prior year.
L.L. Bradford & Company, LLC, in Las Vegas, Nevada, issued a
"going concern" qualification on the Company's consolidated
financial statements for the year ended Dec. 31, 2012. The
independent auditors noted that the Company has limited available
cash, has a working capital deficiency and will need to rely on a
funding agreement or secure new financing or additional capital in
order to pay its obligations which conditions raise substantial
doubt about the Company's ability to continue as a going concern.
CIRCLE ENTERTAINMENT: Amends 2012 Form 10-K for Accounting Error
----------------------------------------------------------------
Circle Entertainment Inc. has amended its annual report for the
year ended Dec. 31, 2012, as filed with the Securities and
Exchange Commission on March 27, 2013, to restate its audited
consolidated financial statements (other than its consolidated
statement of operations) as of Dec. 31, 2012, and for the year
then ended to reflect the effects of accounting and reporting
errors related to the incorrect classification and recording of
the funds the Company received prior to Dec. 31, 2012, under the
Funding Agreement as debt. The funds received by the Company
prior to Dec. 31, 2012, under the Funding Agreement should be
classified and recorded as equity contributions.
These accounting and reporting errors and the related adjustments
resulted in an understatement of additional paid in capital of
$3,981,616, an overstatement of total shareholders' deficit of
$3,981,616 and an overstatement of the liability due to related
parties of $3,981,616 for the year ended Dec. 31, 2012.
In addition, the Company has concluded that these accounting and
reporting errors constitute an additional material weakness in the
Company's internal control over financial reporting as of Dec. 31,
2012, and that its disclosure controls and procedures were
ineffective at Dec. 31, 2012.
The Company's restated balance sheet at Dec. 31, 2012, showed
$1.23 million in total assets, $16.33 million in total liabilities
and a $15.10 million total stockholders' deficit. The Company
previously reported $1.23 million in total assets, $20.31 million
in total liabilities and a $19.08 million total stockholders'
deficit at Dec. 31, 2012.
A copy of the Amended Form 10-K is available for free at:
http://is.gd/VfsxV0
About Circle Entertainment
New York City-based Circle Entertainment Inc. has been pursuing
the development and commercialization of its new location-based
entertainment line of business since Sept. 10, 2010, which has and
will continue to require significant capital and financing. The
Company does not currently generate any revenues from this new
line of business. The Company has no long-term financing in place
or commitments for such financing to develop and commercialize its
new location-based entertainment line of business.
Circle Entertainment disclosed a net loss of $13.89 million on $0
of revenue for the year ended Dec. 31, 2012, as compared with a
net loss of $5.27 million on $0 of revenue during the prior year.
L.L. Bradford & Company, LLC, in Las Vegas, Nevada, issued a
"going concern" qualification on the Company's consolidated
financial statements for the year ended Dec. 31, 2012. The
independent auditors noted that the Company has limited available
cash, has a working capital deficiency and will need to rely on a
funding agreement or secure new financing or additional capital in
order to pay its obligations which conditions raise substantial
doubt about the Company's ability to continue as a going concern.
CLAIRE'S STORES: Sees 2.9% Increase in Same Store Sales for Q1
--------------------------------------------------------------
Claire's Stores, Inc., expects to report a 2.9 percent increase in
consolidated same store sales for the first quarter ended May 4,
2013, with North America same store sales estimated to increase
2.3 percent, and Europe same store sales estimated to increase 4.0
percent. The Company computes same store sales on a local
currency basis, which eliminates any impact from changes in
foreign currency exchange rates. These same store sales results
are unaudited and should be considered preliminary and subject to
change.
$320MM Senior Notes Offering
Claire's Stores intends to offer $320 million aggregate principal
amount of senior notes due 2020.
The Company intends to use the net proceeds of the offering to
redeem $312.5 million aggregate principal amount of its 9.25
percent senior notes due 2015 and its 9.625 percent/10.375 percent
senior toggle notes due 2015.
The notes are being offered only to "qualified institutional
buyers" in reliance on Rule 144A under the Securities Act of 1933,
as amended, and outside the United States only to non-U.S. persons
in reliance on Regulation S under the Securities Act. The notes
have not been and will not be registered under the Securities Act
or any state securities laws and may not be offered or sold in the
United States absent registration or an applicable exemption from
the registration requirements of the Securities Act and applicable
state securities laws.
About Claire's Stores
Claire's Stores, Inc. -- http://www.clairestores.com/-- operates
as a specialty retailer of fashion accessories and jewelry for
preteens and teenagers, as well as for young adults in North
America and internationally. It offers jewelry products that
comprise costume jewelry, earrings, and ear piercing services; and
accessories, including fashion accessories, hair ornaments,
handbags, and novelty items.
Based in Pembroke Pines, Florida, Claire's Stores operates under
two brands: Claire's(R), which operates worldwide and Icing(R),
which operates only in North America. As of Jan. 31, 2009,
Claire's Stores, Inc., operated 2,969 stores in North America and
Europe. Claire's Stores also operates through its subsidiary,
Claire's Nippon, Co., Ltd., 213 stores in Japan as a 50:50 joint
venture with AEON, Co., Ltd. The Company also franchises 198
stores in the Middle East, Turkey, Russia, South Africa, Poland
and Guatemala.
Claire's Stores disclosed net income of $1.28 million on $1.55
billion of net sales for the fiscal year ended Feb. 2, 2013, as
compared with net income of $11.63 million on $1.49 billion of net
sales for the fiscal year ended Jan. 28, 2012. The Company's
balance sheet at Feb. 2, 2013, showed $2.79 billion in total
assets, $2.81 billion in total liabilities, and a $14.44 million
stockholders' deficit.
Bankruptcy Warning
The Company said the following statement in its annual report for
the fiscal year ended Feb. 2, 2013.
"If we are unable to generate sufficient cash flow and are
otherwise unable to obtain funds necessary to meet required
payments of principal, premium, if any, and interest on our
indebtedness, or if we otherwise fail to comply with the various
covenants, including financial and operating covenants in the
instruments governing our indebtedness, we could be in default
under the terms of the agreements governing such indebtedness. In
the event of such default:
* the holders of such indebtedness may be able to cause all of
our available cash flow to be used to pay such indebtedness
and, in any event, could elect to declare all the funds
borrowed thereunder to be due and payable, together with
accrued and unpaid interest;
* the lenders under our Credit Facility could elect to
terminate their commitments thereunder, cease making further
loans and institute foreclosure proceedings against our
assets; and
* we could be forced into bankruptcy or liquidation," according
to the Company's annual report for the fiscal year ended
Feb. 2, 2013.
* * *
As reported by the TCR on Oct. 1, 2012, Moody's Investors Service
upgraded Claire's Stores, Inc.'s Corporate Family and Probability
of Default ratings to Caa1 from Caa2. The upgrade of Claire's
Corporate Family Rating to Caa1 reflects its ability to address
its substantial term loan maturity in 2014 by refinancing it with
a $625 million add-on to its existing senior secured first lien
notes due 2019.
Claire's Stores, Inc., carries a 'B-' Corporate Credit Rating from
Standard & Poor's Ratings Services.
CLEAR CHANNEL: New $1.5-Bil. Term Loan Gets Moody's Caa1 Rating
---------------------------------------------------------------
Moody's Investors Service assigned a Caa1 rating to Clear Channel
Communications, Inc.'s proposed $1.5 billion term loan D. Clear
Channel's Corporate Family Rating is unchanged at Caa2. The
outlook remains Stable.
The company has announced an amendment to its current credit
facilities to exchange $1.5 billion of its $8.2 billion in term
loan B & C's which mature in January 2016, into a new term loan D
that matures two and half years later in July 2018. The security
and guarantee package is expected to be identical to the existing
term loans. While the final price has not been determined as of
this press release, the term loan D would pay L+600 instead of the
L+365 on the existing B &C tranche. There would be no required
amortization and in the case of any mandatory prepayments to the
bank loans, any paydowns would be applied first to the 2016 bank
facilities. The maintenance covenant of the existing terms loans
will be extended out to the term loan D's maturity date where it
will be set at 8.75x.
The exchange offer follows the company's issuance of PGN notes and
a draw down on its ABL facility in February 2013 to repay its TLA
facility that was scheduled to mature in 2014. The transaction
would reduce the amount of term loans maturing in January 2016
from $8.2 billion to $6.7 billion. $1.6 billion of cash pay and
toggle notes mature in August 2016 and an additional $250 million
of legacy notes mature in December 2016. While the transaction
extends Clear Channel's debt maturity profile, it is expected to
increase interest expenses by about $35 million annually, although
final pricing has not yet been determined.
Details of these rating actions are as follows:
Clear Channel Communications, Inc
$1.5 billion Term Loan D due July 2018, Assigned a Caa1 LGD-2,
20% rating
Corporate Family Rating, unchanged at Caa2
Probability of Default Rating, unchanged at Caa3-PD
Outlook, remains Stable
Ratings Rationale:
Clear Channel's Caa2 reflect the very high leverage levels of
11.4x on a consolidated basis (excluding Moody's standard lease
adjustments) and $8.6 billion of debt due in 2016 (pro-forma for
the proposed exchange offer). The ratings also include weak free
cash flow and interest coverage of 1.4x which will be further
pressured by higher interest rates from future refinancings or
extensions of its debt maturities. While the company has made
progress extending its debt maturity profile, more progress will
be needed and the anticipated increase in interest rates could be
material. Even if Clear Channel is able to refinance its 2016
maturities, the company will remain vulnerable to a slowdown in
the economy given the heightened sensitivity that its radio and
outdoor businesses have to economic conditions. The combination of
higher interest rates from a refinancing and lower EBITDA in the
event of a future economic downturn could materially impair its
interest coverage and liquidity position. In addition, there are
secular pressures on its terrestrial radio business that could
weigh on results as competition for advertising dollars and
listeners are expected to increase going forward. Also
incorporated in the rating, is the expectation that leverage
levels will remain high over the rating horizon compared to the
underlying asset value of the firm.
Despite the company's highly leveraged balance sheet, Clear
Channel possesses significant share, geographic diversity and
leading market positions in most of the 150 markets in which the
company operates. The credit also benefits from its 89% ownership
stake in Clear Channel Outdoor (CCO) which is one of the largest
outdoor media companies in the world, although it is not a
guarantor to Clear Channel's debt. Its outdoor assets generate
attractive EBITDA margins, good free cash flow, and are expected
to benefit from digital billboards that offer higher revenue and
EBITDA margins than static billboards. However, its International
operations are expected to be relatively weak in 2013 due to its
exposure to Europe. The company's strong positions in radio and
outdoor and recent sales initiatives have allowed it to grow its
national ad sales faster than many competitors in the industry
which Moody's expects to continue. Clear Channel has also
benefited from increased political spend in 2012 of $114 million,
although weakness in its traffic division has pressured overall
results. Moody's anticipates revenue, EBITDA, and leverage will be
largely unchanged in 2013 as weakness at International outdoor and
its traffic business offset growth in Americas outdoor.
The SGL-3 liquidity rating reflects the company's adequate
liquidity profile. Clear Channel benefits from its cash balance of
approximately $722 million as of Q1 2013 and the absence of any
material near-term debt maturities. Clear Channel benefits from
its Corporate Services Agreement with CCO that allows for free
cash flow generated at CCO to be upstreamed to Clear Channel,
although a recent agreement with some CCO shareholders may serve
to limit the size going forward. There is a revolving promissory
note due from Clear Channel to CCO of $728 million as of Q1 2013,
although a $200 million paydown would be required if the recent
agreement is approved. CCU would receive 89% of the proceeds due
to its ownership position so it would not materially impact their
liquidity. Clear Channel remains dependent on CCO for free cash
flow.
Clear Channel's $535 million ABL revolver matures in December
2017, but the maturity date will change to October 31, 2015 if
greater than $500 million of the term loan facilities are
outstanding one day prior to that date and May 3, 2016 if greater
than $500 million of its 2016 senior notes are outstanding one day
prior. $247 million was drawn on the facility as of Q1 2013. The
company has a substantial cushion under its secured leverage
covenant of 9.5x as of Q1 2013 (which excludes the senior notes at
Clear Channel Worldwide Holdings, Inc ("CCW")). The covenant level
steps down to 9.25x at the end of June 2013, 9x at the end of
December 2013, and 8.75x at the end of December 2014. The current
secured leverage metric, which is calculated net of cash, is 6.0x
(as of Q1 2013 and defined by the terms of the credit agreement),
down from 6.9x at the end of 2011 due largely to the dividend
payment from CCO which was used to paydown senior secured debt.
This represents a cushion in excess of 35% compared to the senior
secured leverage covenant even after the covenant steps down to
9.25x at the end of 2Q 2013.
The stable outlook reflects Moody's expectation for flat revenue
and EBITDA performance which will lead to leverage levels being
largely unchanged in 2013. The repayment of the Term Loan A early
this year leaves only $461 million of debt due in 2014 and $250
million due in 2015 and allows the company flexibility to continue
to focus on extending or refinancing the remaining $8.6 billion of
debt maturing in 2016. The company has the ability to buy back its
term loans through a Dutch auction and repurchase up to $200
million of junior debt which matures before January 2016. Given
the minimal debt maturities in the near term, Moody's expects the
company to be able to meet its debt obligations through 2015
barring a material decline in the economy or a dramatic secular
change in the radio industry.
A sustained improvement in revenue, EBITDA, and free cash flow
that led to a reduction in leverage levels to well under 10x with
improved enterprise values could lead to an upgrade. A significant
portion of the 2016 debt would also need to be refinanced so that
the company was well positioned to address its debt maturity
profile.
The rating could be lowered if EBITDA were to materially decline
due to economic weakness or if secular pressures in the radio
industry escalate so that leverage increased back above 13x and
valuations for the radio assets declined. Ratings would also be
lowered if a default or debt restructuring is imminent due to
inability to extend or refinance material amounts of the company's
debt.
The principal methodology used in this rating was Global Broadcast
and Advertising Related Industries published in May 2012. Other
methodologies used include Loss Given Default for Speculative-
Grade Non-Financial Companies in the U.S., Canada and EMEA
published in June 2009.
Clear Channel Communications, Inc. with its headquarters in San
Antonio, Texas, is a global media and entertainment company
specializing in mobile and on-demand entertainment and information
services for local communities and for advertisers. The company's
businesses include radio broadcasting and outdoor displays (via
the company's 89% ownership of Clear Channel Outdoor Holdings
Inc.). Clear Channel's consolidated revenue for the LTM period
ending Q1 2013 was approximately $6.2 billion.
CLEARWIRE CORP: Urges Stockholders to Back Sprint Transaction
-------------------------------------------------------------
The Board of Directors of Clearwire on May 13 mailed a letter to
stockholders in connection with its proposed transaction with
Sprint recommending that stockholders vote 'FOR' the proposed
transaction. The letter highlights the favorable recommendations
of leading proxy advisory services and conveys compelling reasons
why this transaction is the best strategic alternative for
shareholders by correcting misperceptions in the marketplace.
The full text of the letter follows:
May 13, 2013
Dear Fellow Stockholder:
Like you, I am a holder of Clearwire stock. My family and I have
been investors in the Company since 2008.
The decision facing all of us, to approve the transaction with
Sprint, requires a realistic analysis of Clearwire's strategic
alternatives. When the facts are distilled and the circumstances
surrounding this proposed merger are fairly assessed, I believe
that the merger with Sprint is the best strategic alternative for
all stockholders because it delivers fair, attractive and certain
value, especially in light of Clearwire's limited alternatives and
liquidity constraints.
Clearwire stockholders of record as of the close of business on
April 2, 2013, are entitled to vote at the Special Meeting of
Stockholders scheduled to occur on May 21, 2013. The Clearwire
board unanimously recommends that you vote your shares FOR all of
the proposals relating to the transaction with Sprint by returning
the WHITE proxy card with a "FOR" vote for all proposals.
LEADING PROXY ADVISORY FIRM ISS RECOMMENDS CLEARWIRE STOCKHOLDERS
VOTE 'FOR' PROPOSED TRANSACTION WITH SPRINT
Institutional Shareholder Services ("ISS") is the leading firm
that independently advises shareholders. ISS recommends that
stockholders vote FOR the proposed Sprint transaction, affirming
the board's conclusion that this combination is the best strategic
alternative for Clearwire's minority stockholders.
In its report dated May 10, 2013, ISS stated:
"The current [Sprint] offer falls within an appropriate valuation
range as determined by evaluating independent analyst price
targets, relative share price premia, and precedent transactions
for similar spectrum."
"Because the sales process appears to have been both extensive and
well-known in the industry; CLWR's business is increasingly
unviable on a stand-alone basis; the company requires interim
financing from Sprint to fund operations and satisfy interest
payments . . . a vote FOR the transaction is warranted."
ISS has endorsed the process of the strategic and financial review
conducted by the Special Committee and the board of directors, and
agrees with the recommendation that the Sprint transaction is in
the best interests of Clearwire's non-Sprint stockholders.
Clearwire's standalone prospects are risky and highly uncertain;
we urge you to maximize the value of your investment in Clearwire
and follow ISS's recommendation by voting for the Sprint
transaction.
THE SPRINT TRANSACTION WAS THE RESULT OF A RIGOROUS MULTI-YEAR
STRATEGIC REVIEW
Over a period of two years, the Clearwire board and management
undertook an extensive process to explore strategic and financial
alternatives.
Strategic alternatives evaluated and pursued included:
-- Additional wholesale partners
-- Strategic transactions including partnerships
-- A spectrum sale
-- Financial restructuring or bankruptcy
-- Financing alternatives (debt, equity)
When the potential arose that Sprint might make an offer for the
shares of Clearwire that it did not already own, the Clearwire
board promptly formed a Special Committee solely comprised of
directors independent from Sprint. The Special Committee hired
its own legal and financial advisors and conducted a careful and
rigorous process, meeting 10 times between its formation and the
transaction announcement. The Special Committee carefully
examined numerous alternatives, including conducting an extensive
market check of potential spectrum acquirers as well as spending
significant time with outside advisors to understand the
implications and risks associated with a financial restructuring.
It was after completion of this extensive and comprehensive
process that both the Special Committee and the entire board of
directors unanimously determined that the Sprint transaction was
the best alternative for Clearwire's stockholders.
SPRINT TRANSACTION OFFERS WHAT THE ALTERNATIVES CANNOT:
FAIR, ATTRACTIVE AND CERTAIN VALUE
Our stock has been as low as $0.83 in the last year. The proposed
$2.97 per share offer price equates to a total payment to
Clearwire minority stockholders of approximately $2.2 billion,
representing a:
-- 130% premium to Clearwire's closing share price on October 10,
2012, the day prior to speculation regarding Clearwire's
involvement in the SoftBank-Sprint merger negotiations
-- 40% premium to the closing share price on November 20, 2012,
the day before Clearwire received Sprint's $2.60 per share initial
non-binding indication of interest
-- 31% premium to the price received by Google for its Clearwire
Common Stock on March 1, 2012
-- 117% premium to the price received by Time Warner for its
Clearwire Common Stock on October 3, 2012
In addition, Comcast, Intel, and Bright House Networks -- which
together own ~13% of Clearwire's voting shares, or ~26% of non-
Sprint voting shares -- all significant Clearwire stockholders,
have pledged to vote their shares in support of the transaction.
SETTING THE RECORD STRAIGHT
Opponents of the transaction have made a series of assertions that
are inaccurate and unsupported. We urge you to look past the
false suggestions that Clearwire has numerous viable or attractive
alternatives to consider. We want to ensure that all stockholders
make an informed decision, so let us set the record straight by
correcting the misperceptions regarding the Sprint transaction:
Misperception #1: Multi-Customer Case (MCC) is Achievable
Reality: There is significant uncertainty in the achievability and
timing of signing an additional wholesale customer of size. With
or without a second major customer, Clearwire's funding gap is
significant.
-- MCC is only viable with another major wholesale customer in
addition to Sprint;
-- We have aggressively pursued the MCC for the past two years,
and approached nearly 100 potential partners without success in
securing a major wholesale partner in addition to Sprint; and
-- Without interest from other significant potential customers,
the ~$2 billion funding gap in the MCC quickly grows to the ~$4
billion funding gap in the Single Customer Case (SCC)
- The net proceeds from a sale of spectrum still would not be
adequate to fund this shortfall and would not address the need for
another large wholesale partner; and
- Clearwire has limited authorized shares available (fewer than
200 million) for new equity investments, and additional debt
financing would likely be expensive and dilutive and create an
untenable capital structure.
Misperception #2: Implied Spectrum Valuation is Below Market
Reality: Clearwire is unlikely to have buyer interest for all 47
billion MHz-POPs of spectrum above the $0.21/MHz-POP value implied
by Sprint proposal.
-- Our exhaustive sale process in 2010 involved contacting 37
parties and did not result in an agreement;
-- Since then, we have engaged in a series of conversations with a
number of parties that did not result in any compelling offers,
including a market check conducted in December of 2012; and
-- Preliminary, conditional offers from DISH and Verizon are for
premium portions of Clearwire's spectrum: the DISH proposal is for
a portfolio comprised of primarily owned spectrum; and the Verizon
offer is for leased spectrum primarily in large metro markets.
Misperception #3: Terms of Sprint Notes are Unfavorable
Reality: The Note Purchase Agreement with Sprint provides
liquidity to Clearwire to continue operations and build out its
network during the pendency of the merger.
-- Multiple components contribute to the value of the exchangeable
note, including the coupon, the exchange price, and when the notes
may be exchanged, which must all be considered together; and
-- The $1.50 exchange rate represents a premium to the unaffected
share price prior to the Sprint-SoftBank rumors when Clearwire was
speculated to be part of that transaction - Clearwire shares
closed at $1.30 on October 10, 2012.
Misperception #4: Financial Restructuring/Bankruptcy Would Result
in Higher Value for Stockholders
Reality: There is significant uncertainty for stockholders in a
financial restructuring filing.
-- The value stockholders could receive in a financial
restructuring is subject to many uncertainties, including:
- The existence of buyers in an auction for the entire Company;
- The ability to sell the entire spectrum portfolio without
flooding the market at non-distressed prices;
- Potential taxes on spectrum sales which could materially reduce
value to stockholders; and
- Potential damages claims by Sprint which could be substantial
and could reduce value to stockholders, among others.
-- The outcome is unlikely to yield value to stockholders
exceeding Sprint's $2.97 per share offer.
Misperception #5: Clearwire Should Pursue Path to Independence
Offered by Recent Proposals
Reality: Clearwire is evaluating these opportunities, however,
there are significant risks and the outcome to shareholders would
be highly uncertain.
-- There are significant risks and challenges to the proposed
alternatives, which are preliminary and non-binding, and if they
cannot be mitigated, it is unlikely they will provide greater
stockholder value than the Sprint offer;
-- A spectrum sale does not solve the fundamental need for
significant additional revenues, and would not provide sufficient
liquidity for operations;
-- Additional financing may be challenging, expensive and dilutive
to stockholders, if available at all; and
-- Clearwire's difficult liquidity situation will put it in a
worse position to negotiate any other strategic transaction, and
financial restructuring may be the only available alternative.
Misperception #6: A Sale of Spectrum Would Provide Sufficient and
Immediate Liquidity to Maintain Our Independence
Reality: A spectrum sale would provide limited liquidity to fund
operations, and may create additional challenges.
-- The timeframe for closing a spectrum sale would be at least six
months after the definitive agreements are signed; would not
improve liquidity prior to completion;
-- The gross proceeds of a spectrum sale will be reduced by the
net present value of spectrum leases, taxes, and distributions;
the remaining amount cannot be freely applied to fund operations,
as it must be used to acquire replacement assets or repay debt;
-- There are restrictions on the total amount of spectrum that can
be sold without Sprint's consent; and
-- Clearwire could end up in a worse position by selling a premium
portfolio, as the remaining assets would be less desirable, and
the sale may reduce potential future demand for our network.
ANALYSTS AND OTHER CREDIBLE COMMENTATORS
RECOGNIZE THE RISKS TO STOCKHOLDERS ABSENT A TRANSACTION
The proposed transaction with Sprint provides a clear solution to
the substantial funding gap Clearwire is facing. Absent the
Sprint transaction, Clearwire's prospects of securing the $2-$4
billion in additional funding necessary to continue operations and
the LTE build plan are highly uncertain. If the merger agreement
terminates as a result of shareholders failing to approve the
merger, the remaining Sprint funding would not be available, and
without alternative sources of capital we would have to curtail or
suspend substantially all of our TDD-LTE network build plan. In
such case, we forecast that our cash and short-term investments
would be depleted sometime during the first quarter of 2014.
Equity analysts recognize Clearwire's liquidity constraints, and
warn investors of the implications:
-- "Shareholder disapproval of Sprint deal could result in a
liquidity event." - Jefferies, April 26, 2013
-- "Delays Not Good for Clearwire: The concern is that the
complicated scenario surrounding CLWR / Sprint / SoftBank / Dish
could delay an ultimate conclusion for CLWR which, given its
financial standing, would not be encouraging, in our view." -
Stifel Nicolaus, April 25, 2013
-- "If Clearwire had rejected Sprint's offer, it would not only
have lost the only logical buyer of the company but also put its
single largest revenue stream in jeopardy for the future." - Piper
Jaffray, December 17, 2012
-- "We believe this transaction is in the best interests of both
shareholder bases, providing a substantial premium for Clearwire
shareholders while finally putting the conflict between the firms
to rest . . . Clearwire will no longer sit in an awkward position
attempting to source additional financing while also building a
viable business around the Sprint relationship."
- Morningstar, December 17, 2012
As previously stated, Clearwire believes that securing the
additional financing to fund the standalone business plan would be
challenging, expensive and highly dilutive to stockholders, if
available at all. Moreover, Clearwire is required to obtain the
consent of Sprint before entering into new financing arrangements
other than those agreed to under the merger agreement.
In addition, our board of directors is actively considering
whether to not make the June 1, 2013, interest payment on our
approximately $4.5 billion of outstanding debt. If the merger is
not completed, we may be forced to explore all available
alternatives, including restructuring, which could include seeking
protection under the provisions of the United States Bankruptcy
Code. We can give you no assurance that in a restructuring you
would receive any value for your shares or a value equal to or in
excess of the merger consideration.
The Clearwire board urges you not to take that chance.
Please consider all the facts. Don't be convinced otherwise: the
Clearwire board is confident that, absent the Sprint transaction,
the Company's options become increasingly limited and, day by day,
the future value for stockholders becomes even more unclear.
MAXIMIZE THE VALUE OF YOUR INVESTMENT IN CLEARWIRE
VOTE "FOR" THE SPRINT TRANSACTION ON THE WHITE PROXY CARD TODAY
The Clearwire board unanimously recommends that you vote your
shares FOR all of the proposals relating to the proposed
transaction with Sprint by returning the WHITE proxy card with a
"FOR" vote for all proposals. The failure to vote or an
abstention has the same effect as a vote against the proposed
combination. Because some of the proposals required to close the
proposed transaction requires the affirmative vote of 75% of all
outstanding shares, the votes of all of Clearwire stockholders are
important. If stockholders do not approve the proposals related
to the proposed combination, there is no assurance that your
shares of Clearwire common stock will be able to be sold for the
same or greater value in the future.
We urge you to discard any gold proxy cards you may receive, as
they were sent by a dissident stockholder. If you previously
submitted a gold proxy card, we urge you to cast your vote as
instructed on the WHITE proxy card as soon as you receive it. A
vote on the WHITE proxy card will revoke any earlier dated proxy
card that was submitted, including any white proxy card. If you
have questions or need assistance voting your shares, please
contact our proxy solicitor, MacKenzie Partners, Inc., toll-free
at (800) 322-2885 or call collect at (212) 929-5500.
On behalf of your board of directors, we thank you for your
continued support.
Sincerely,
John Stanton
Executive Chairman of the Board
About Clearwire Corporation
Kirkland, Wash.-based Clearwire Corporation (NASDAQ: CLWR)
-- http://www.clearwire.com/-- through its operating
subsidiaries, is a provider of 4G mobile broadband network
services in 68 markets, including New York City, Los Angeles,
Chicago, Dallas, Philadelphia, Houston, Miami, Washington, D.C.,
Atlanta and Boston.
The Company reported a net loss attributable to the Company of
$717.33 million in 2011, a net loss attributable to the Company of
$487.43 million in 2010, and a net loss attributable to the
Company of $325.58 million in 2009.
The Company's balance sheet at Sept. 30, 2012, showed $8.14
billion in total assets, $5.86 billion in total liabilities and
$2.28 billion in total stockholders' equity.
* * *
As reported by the Troubled Company Reporter on April 10, 2013,
Standard & Poor's Ratings Services said that its 'CCC' corporate
credit rating and all other ratings on Bellevue, Wash.-based
wireless service provider Clearwire Corp. remain on CreditWatch,
where they were placed with positive implications, on Dec. 13,
2012, following the announcement that majority-owner Sprint Nextel
Corp. offered to purchase the remaining 49% stake in Clearwire
that it did not already own. It is S&P's view that this
acquisition would most likely be linked to consummation of Japan-
based SoftBank Corp.'s pending purchase of Sprint Nextel.
CLEARWIRE CORP: Crest Takes First Step to Perfect Appraisal Rights
------------------------------------------------------------------
Crest Financial Limited, the largest of the independent, minority
stockholders of Clearwire Corporation, has told its brokerage
firms to take all necessary steps to perfect Crest's rights under
Section 262 of the Delaware General Corporation Law to seek
appraisal for the common stock of Clearwire Corporation that it
beneficially owns.
The Delaware law permits Clearwire shareholders electing to
exercise their appraisal rights to ask the Delaware Court of
Chancery to determine the fair value of their Clearwire common
stock if the Sprint-Clearwire merger is consummated and certain
other conditions are satisfied. The law states that a Clearwire
stockholder that votes FOR the Sprint-Clearwire merger cannot
elect to exercise its appraisal rights.
David Schumacher, general counsel of Crest, said: "Crest will vote
AGAINST the proposed Sprint-Clearwire merger. We are taking this
action today to preserve our rights to an appraisal by the
Delaware court. The law prevents Clearwire stockholders that vote
FOR the merger from seeking fair value for their shares through an
appraisal action. Therefore, those Clearwire shareholders that
vote FOR the merger will not be able to participate in, or benefit
from, a recovery in any appraisal action. We are optimistic that
the court will decide that the fair value of Clearwire's common
stock is significantly higher than the $2.97-a-share that Sprint
is offering for it."
Crest has long argued that the price Sprint Nextel Corporation is
offering to pay Clearwire stockholders for their shares is highly
inadequate, that the merger was structured in a way that unfairly
disadvantages minority stockholders and that Clearwire would be
better off if it remained a stand-alone company.
Crest also commended Glass, Lewis & Co., a leading proxy advisory
firm, for its recommendation urging that Clearwire stockholders
vote against the proposed merger with Sprint. Crest said is
strongly disagreed with the view of ISS that the Sprint-Clearwire
merger should succeed.
Mr. Schumacher said: "Crest Financial strongly disagrees with the
recommendation of ISS. As we have said and, we believe,
demonstrated, Clearwire would be far stronger and would provide
more value for its shareholders if were to remain a stand-alone
company. We believe that Clearwire's board and management have
agreed to sell Clearwire at a price that significantly undervalues
Clearwire's spectrum assets and they have not acted in the best
interests of Clearwire's stockholders other than Sprint.
"In sharp contrast, Glass, Lewis & Co., an important proxy
advisory firm, agrees with Crest that Sprint's offer is not the
best possible alternative available to Clearwire and its
shareholders, that Sprint's offer undervalues Clearwire and that
stockholders of Clearwire should reject the Sprint merger offer.
We are particularly baffled by ISS's analysis regarding the
actions of the Clearwire board in seeking alternatives when
Charlie Ergen of DISH Network, who provided Clearwire with a
possible alternative to the Sprint transaction, [Thurs]day
characterized DISH's dealings with the Clearwire board as a game
of 'Whac-a-Mole,' in which 'every time we answered a question,
something else popped up.'"
Masayoshi Son, Chief Executive of SoftBank, has made a number of
public statements recently regarding the SoftBank-Sprint merger
and the Sprint-Clearwire merger. It was reported in a Dow Jones
Newswire story that Son would not expect Sprint to allow
Clearwire's board to consider bankruptcy and that Sprint would
continue to finance Clearwire after a negative vote. Following
this report, Crest's Schumacher said: "Crest firmly believes that
the Clearwire board must act in the best interests of all
Clearwire shareholders. We believe that Son's statements
demonstrate that, if the Clearwire shareholders reject the Sprint-
Softbank merger, SoftBank and Sprint intend to use Sprint's
position as Clearwire's majority shareholder to make decisions
regarding the future of Clearwire that are in the best interests
of only Sprint and SoftBank and not in the best interests of all
Clearwire shareholders. If Clearwire's shareholders reject the
Sprint-Clearwire merger as we expect, Crest will aggressively
protect its rights as a minority shareholder in Clearwire."
Schumacher concluded: "Crest will continue to aggressively wage
its proxy fight against the Sprint-Clearwire merger. We are
extremely pleased with the number of holders who have reached out
to us in support of our efforts. Over the next week, Crest looks
forward to speaking to all holders to urge them to use the GOLD
proxy card and vote "AGAINST" the Sprint-Clearwire merger."
D.F. King & Co, Inc. has been retained by Crest to assist it in
the solicitation of proxies in opposition to the merger. If
stockholder have any questions or need assistance in voting the
GOLD proxy card, please call D.F. King & Co. at (800) 949-2583.
The proxy statement can be found at http://www.dfking.com/clwr
About Crest Financial Limited
Crest Financial Limited is a limited partnership under the laws of
the State of Texas. Its principal business is investing in
securities.
About Clearwire Corporation
Kirkland, Wash.-based Clearwire Corporation (NASDAQ: CLWR)
-- http://www.clearwire.com/-- through its operating
subsidiaries, is a provider of 4G mobile broadband network
services in 68 markets, including New York City, Los Angeles,
Chicago, Dallas, Philadelphia, Houston, Miami, Washington, D.C.,
Atlanta and Boston.
The Company reported a net loss attributable to the Company of
$717.33 million in 2011, a net loss attributable to the Company of
$487.43 million in 2010, and a net loss attributable to the
Company of $325.58 million in 2009.
The Company's balance sheet at Sept. 30, 2012, showed $8.14
billion in total assets, $5.86 billion in total liabilities and
$2.28 billion in total stockholders' equity.
* * *
As reported by the Troubled Company Reporter on April 10, 2013,
Standard & Poor's Ratings Services said that its 'CCC' corporate
credit rating and all other ratings on Bellevue, Wash.-based
wireless service provider Clearwire Corp. remain on CreditWatch,
where they were placed with positive implications, on Dec. 13,
2012, following the announcement that majority-owner Sprint Nextel
Corp. offered to purchase the remaining 49% stake in Clearwire
that it did not already own. It is S&P's view that this
acquisition would most likely be linked to consummation of Japan-
based SoftBank Corp.'s pending purchase of Sprint Nextel.
CODA HOLDINGS: May 20 Hearing on Loan, Sale Procedures
------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Coda Holdings Inc. received interim approval of a
$1.9 million loan provided by several noteholders. The final
hearing on the full $5 million financing package will take place
May 20.
The company filed a Chapter 11 petition with an agreement in hand
for selling the business to lenders for $25 million, assuming no
better offer at auction. There will be a May 20 hearing for
approval of sale procedures. The buyers want competing bids
submitted by May 31, with an auction on June 3 and a hearing to
approve sale on June 6.
The noteholders are to be the so-called stalking horse submitting
the first bid of $25 million at auction. Subject to adjustment,
the price would be paid partly with the loan financing bankruptcy.
An affiliate of Fortress Investment Group LLC is a holder of
$15.8 million of the notes and one of the providers of bankruptcy
financing.
About CODA Holdings
Los Angeles, California-based CODA Energy --
http://www.codaenergy.com-- manufactures energy products based on
lithium-ion batteries, adaptive battery-management technology and
scalable system architecture. CODA Energy's products feature a
modular design that provides reliable, secure, cost-effective
solutions for a wide range of energy and power needs, including
peak shaving, load leveling, renewable energy integration,
frequency regulation, voltage support, and transmission and
distribution (T&D) upgrade deferral.
CODA Holdings, Inc., Coda Energy LLC and three other affiliates
filed for Chapter 11 bankruptcy (Bankr. D. Del. Lead Case No.
13-11153) on May 1, 2013, to enable the Company to complete a
sale, confirm a plan, and emerge from bankruptcy in a stronger
position to execute its new business plan. The Company expects
the sale process to take 45 days to complete.
FCO MA CODA Holdings LLC, an affiliate of Fortress Investment
Group, is leading a consortium of lenders intending to provide DIP
financing to enable the Company's energy storage business to
remain fully operational during the restructuring process. The
consortium, or its designee, will also as stalking horse bidder to
acquire the Company post-bankruptcy. In addition, the Company
will seek to monetize value of its existing automotive business
assets.
CODA disclosed assets of $10 million to $50 million and
liabilities of less than $100 million. The Debtors have incurred
prepetition a significant amount of secured indebtedness: secured
notes of with principal in the amount of $59.1 million; term loans
in the principal amount of $12.6 million; and a bridge loan with
$665,000 outstanding. FCO and other bridge loan lenders have
"enhanced priority" over other secured noteholders that did not
participate in the bridge loans, pursuant to the intercreditor
agreement.
CODA's legal advisor in connection with the restructuring is White
& Case LLP. Emerald Capital Advisors serves as its Chief
Restructuring Officer and restructuring advisor, and Houlihan
Lokey serves as its investment banker for the restructuring.
Sidley Austin LLP is serving as FCO MA CODA Holdings LLC's legal
advisor.
COMPREHENSIVE CARE: Closes on $5 Million Credit Facility
--------------------------------------------------------
Comprehensive Care Corporation has closed a $5 million Senior
Secured Credit Facility with TCA Global Credit Master Fund. Under
terms of the agreement, funds will be made available to
Comprehensive Care on an as-needed basis, with the initial draw
down set at $1 million.
"The Company's Pharmacy Savings Program is well underway with the
Company having already retained the services of several senior
sales executives; advanced its negotiations with various union
leaders and union locals; signed an agreement with Blasters,
Drillers and Miners Union, Local 29, with plans to 'go live' with
the Company's new pharmacy program within the next two months;
and, retained the services of Colonel Ramon Martinez as the new
President of CompCare Pharmacy Solutions, Inc. The traction that
the Company's new pharmacy program is receiving is even better
than we expected. We are confident that the faster we are able to
roll out the pharmacy program, the more market share we will be
able to capture. We view the Credit Facility with TCA as not only
an endorsement by them of the validity of our pharmacy program,
but also reflective of their belief in management's ability to
execute. We very much appreciate this level of support and are
confident in our ability to justify TCA's and our investors belief
in us," said Clark A. Marcus, Chairman and CEO of CompCare.
"TCA Global Credit Master Fund provides financing to listed
companies and private entities to assist them in their growth and
allow them to take advantage of the opportunities in their
sector," said Donna Silverman, Managing Director of TCA Fund
Management Group. "We had a number of preliminary talks with
CompCare's management team and were initially intrigued by their
unique approach towards reducing the ever-rising pharmacy costs in
healthcare. We look forward to working with CompCare and watching
our financial assistance move them forward in maturing their
Pharmacy Savings Program to the greatest extent possible."
About Comprehensive Care
Tampa, Fla.-based Comprehensive Care Corporation provides managed
care services in the behavioral health, substance abuse, and
psychotropic pharmacy management fields.
Comprehensive Care disclosed a net loss attributable to common
stockholders of $6.99 million in 2012, as compared with a net loss
attributable to common stockholders of $14.08 million in 2011.
The Company's balance sheet at Dec. 31, 2012, showed $6.12 million
in total assets, $29.06 million in total liabilities and a $22.94
million total stockholders' deficiency.
Mayer Hoffman McCann P.C., in Clearwater, Florida, issued a "going
concern" qualification on the consolidated financial statements
for the year ended Dec. 31, 2012. The independent auditors noted
that the Company has suffered recurring losses from operations and
has not generated sufficient cash flows from operations to fund
its working capital requirements. This raises substantial doubt
about the Company's ability to continue as a going concern.
COMSTOCK MINING: Incurs $5.7 Million Net Loss in First Quarter
--------------------------------------------------------------
Comstock Mining Inc. filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $5.76 million on $3.78 million of total revenues for the three
months ended March 31, 2013, as compared with a net loss of
$7.33 million on $111,722 of total revenues for the same period
during the prior year.
The Company's balance sheet at March 31, 2013, showed
$47.76 million in total assets, $25.34 million in total
liabilities, and $22.42 million in total stockholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/S6MiQs
About Comstock Mining
Virginia City, Nev.-based Comstock Mining Inc. is a Nevada-based,
gold and silver mining company with extensive, contiguous property
in the historic Comstock district. The Company began acquiring
properties in the Comstock in 2003. Since then, the Company has
consolidated a substantial portion of the Comstock district,
secured permits, built an infrastructure and brought the
exploration project into test mining production. The Company
continues acquiring additional properties in the Comstock
district, expanding its footprint and creating opportunities for
exploration and mining. The goal of the Company's strategic plan
is to deliver stockholder value by validating qualified resources
(measured and indicated) and reserves (probable and proven) of
3,250,000 gold equivalent ounces by 2013, and commencing
commercial mining and processing operations by 2011, with annual
production rates of 20,000 gold equivalent ounces.
Comstock Mining disclosed a net loss of $30.76 million in 2012, a
net loss of $11.60 million in 2011 and a net loss of $60.32
million in 2010.
CONVERTED ORGANICS: Incurs $1.6 Million Net Loss in 1st Quarter
---------------------------------------------------------------
Converted Organics Inc. filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing a
net loss of $1.58 million on $400,402 of revenues for the three
months ended March 31, 2013, as compared with net income of $2.96
million on $386,666 of revenues for the same period during the
prior year.
The Company's balance sheet at March 31, 2013, showed
$2.66 million in total assets, $5.19 million in total liabilities,
and a $2.53 million total stockholders' deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/xYnMGx
About Converted Organics
Boston, Mass.-based Converted Organics Inc. utilizes innovative
clean technologies to establish and operate environmentally
friendly businesses. Converted Organics currently operates in
three business areas, namely organic fertilizer, industrial
wastewater treatment and vertical farming.
Converted Organics disclosed a net loss of $8.42 million in 2012,
as compared with a net loss of $17.98 million in 2011.
Moody, Famiglietti & Andronico, LLP, in Tewksbury, Massachusetts,
issued a "going concern" qualification on the consolidated
financial statements for the year ended Dec. 31, 2012, citing
recurring losses and negative cash flows from operations and an
accumulated deficit that raises substantial doubt about the
Company's ability to continue as a going concern.
DUNE ENERGY: Issues 6.2 Million Common Shares
---------------------------------------------
Dune Energy, Inc., on May 8, 2013, issued 6,249,996 shares of its
Common Stock to certain of its existing investors in exchange for
aggregate consideration of $10,000,000. The shares were issued
pursuant to those certain Stock Purchase Agreements between the
Company and the same existing investors, dated as of Dec. 20,
2012. The shares of Common Stock were issued in reliance on an
exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended. After giving effect to this transaction,
the total number of outstanding shares of the Company is
65,256,644.
About Dune Energy
Dune Energy, Inc. (NYSE AMEX: DNE) -- http://www.duneenergy.com/
-- is an independent energy company based in Houston, Texas.
Since May 2004, the Company has been engaged in the exploration,
development, acquisition and exploitation of natural gas and crude
oil properties, with interests along the Louisiana/Texas Gulf
Coast. The Company's properties cover over 90,000 gross acres
across 27 producing oil and natural gas fields.
Dune Energy disclosed a net loss of $7.85 million in 2012, as
compared with a net loss of $60.41 million in 2011. The Company's
balance sheet at Dec. 31, 2012, showed $266.46 million in total
assets, $118.43 million in total liabilities and $148.02 million
in total stockholders' equity.
DUNE ENERGY: Zell Credit Held 6.5% Equity Stake at May 8
--------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Zell Credit Opportunities Side Fund, L.P.,
and Chai Trust Company, LLC, disclosed that, as of May 8, 2013,
they beneficially owned 4,214,915 shares of common stock of
Dune Energy, Inc., representing 6.5% of the shares outstanding.
The reporting persons previously disclosed beneficial ownership of
3,792,068 common shares or 6.4% equity stake as of Dec. 20, 2012.
A copy of the regulatory filing is available for free at:
http://is.gd/2vddhS
About Dune Energy
Dune Energy, Inc. (NYSE AMEX: DNE) -- http://www.duneenergy.com/
-- is an independent energy company based in Houston, Texas.
Since May 2004, the Company has been engaged in the exploration,
development, acquisition and exploitation of natural gas and crude
oil properties, with interests along the Louisiana/Texas Gulf
Coast. The Company's properties cover over 90,000 gross acres
across 27 producing oil and natural gas fields.
Dune Energy disclosed a net loss of $7.85 million in 2012, as
compared with a net loss of $60.41 million in 2011. The Company's
balance sheet at Dec. 31, 2012, showed $266.46 million in total
assets, $118.43 million in total liabilities and $148.02 million
in total stockholders' equity.
E-DEBIT GLOBAL: In Talks to Sell Distribution Networks
------------------------------------------------------
E-Debit Global Corporation is currently in the final negotiation
stages for the Purchase and Sale of 45 percent of the issued and
outstanding shares of all classes of Group Link Inc. held by E-
Debit with an Edmonton, Alberta-based investment group, Screenfin
Inc.
"During the past 8 months, E-Debit has been engaged in the re-
establishment and roll out of its distribution, marketing and
sales organization branded GROUP-LINK INC. With experienced
marketing and development management in place E-Debit has
determined it is the opportune time to spin the day to day Group
Link marketing and distribution network operations out of the
company's direct responsibilities.
As a result, E-Debit is currently in ongoing discussions with an
Edmonton, Alberta based investment group Screenfin Inc. headed by
Group Link Inc. President and CEO Adam Ursulak to purchase 45
percent of the issued and outstanding shares of all classes of
Group Link Inc. held by E-Debit. We are currently in the initial
stages of our due diligence and investigation of the opportunities
this sale will bring to E-Debit and the impact on our Corporate
structure resulting from the proposed sale," advises Doug Mac
Donald, E-Debit's President and CEO.
"Concurrently we continue to focus our attention on how to
capitalize, benefit and expand the reach of our present position
within the payments and "non-conventional bank" financial services
business not only nationally but internationally. This requires
financial and operational partnering and if successful this sale
is the first stage of this partnering effort," added Mr. Mac
Donald.
About E-Debit Global
Calgary, Canada-based E-Debit Global Corporation's primary
business is the sale and operation of cash vending (ATM) and point
of sale (POS) machines in Canada.
As reported in the TCR on April 23, 2012, Schumacher & Associates,
Inc., in Littleton, Colorado, expressed substantial doubt about E-
Debit Global's ability to continue as a going concern, citing the
Company's net losses for the years ended Dec. 31, 2012, and 2011,
and working capital and stockholders' deficits at Dec. 31, 2012,
and 2011.
The Company's balance sheet at March 31, 2013, showed
US$1.2 million in total assets, US$3.4 million in total
liabilities, and a stockholders' deficit of US$2.2 million.
The Company has recurring net losses from operations, and had a
working capital deficit and a stockholders' deficit at March 31,
2013 and Dec. 31, 2012.
EASTMAN KODAK: Seeks Rejection of Contracts With Xpedx, et al.
--------------------------------------------------------------
Eastman Kodak Co. seeks approval from U.S. Bankruptcy Judge Allan
Gropper to cancel its contracts with Chicony Power Technology Co.
Ltd., Creative Sensor Inc., DecisionOne Corp. and Xpedx. A list
of the contracts is available for free at http://is.gd/xJYSOk
About Eastman Kodak
Rochester, New York-based Eastman Kodak Company and its U.S.
subsidiaries on Jan. 19, 2012, filed voluntarily Chapter 11
petitions (Bankr. S.D.N.Y. Lead Case No. 12-10202) in Manhattan.
Subsidiaries outside of the U.S. were not included in the filing
and are expected to continue to operate as usual.
Kodak, founded in 1880 by George Eastman, was once the world's
leading producer of film and cameras. Kodak sought bankruptcy
protection amid near-term liquidity issues brought about by
steeper-than-expected declines in Kodak's historically profitable
traditional businesses, and cash flow from the licensing and sale
of intellectual property being delayed due to litigation tactics
employed by a small number of infringing technology companies
with strong balance sheets and an awareness of Kodak's liquidity
challenges.
In recent years, Kodak has been working to transform itself from
a business primarily based on film and consumer photography to a
smaller business with a digital growth strategy focused on the
commercialization of proprietary digital imaging and printing
technologies. Kodak has 8,900 patent and trademark registrations
and applications in the United States, as well as 13,100 foreign
patents and trademark registrations or pending registration in
roughly 160 countries.
Attorneys at Sullivan & Cromwell LLP and Young Conaway Stargatt &
Taylor, LLP, serve as counsel to the Debtors. FTI Consulting,
Inc., is the restructuring advisor. Lazard Freres & Co. LLC, is
the investment banker. Kurtzman Carson Consultants LLC is the
claims agent.
The Official Committee of Unsecured Creditors has tapped Milbank,
Tweed, Hadley & McCloy LLP, as its bankruptcy counsel.
Michael S. Stamer, Esq., David H. Botter, Esq., and Abid Qureshi,
Esq., at Akin Gump Strauss Hauer & Feld LLP, represent the
Unofficial Second Lien Noteholders Committee.
The Retirees Committee has hired Haskell Slaughter Young &
Rediker, LLC, and Arent Fox, LLC as Co-Counsel; Zolfo Cooper,
LLC, as Bankruptcy Consultants and Financial Advisors; and the
Segal Company, as Actuarial Advisors.
Robert J. Stark, Esq., Andrew Dash, Esq., and Neal A. D'Amato,
Esq., at Brown Rudnick LLP, represent Greywolf Capital Partners
II; Greywolf Capital Overseas Master Fund; Richard Katz, Kenneth
S. Grossman; and Paul Martin.
Kodak completed the $527 million sale of digital-imaging
technology on Feb. 1, 2013. Kodak intends to reorganize by
focusing on the commercial printing business.
At the end of April 2013, Kodak filed a proposed reorganization
plan offering 85 percent of the stock to holders of the remaining
$375 million in second-lien notes. The other 15 percent is for
unsecured creditors with $2.7 billion in claims and retirees who
have a $635 million claim from the loss of retirement benefits.
ELBIT IMAGING: Files Plan of Arrangement with Israeli Court
-----------------------------------------------------------
Elbit Imaging Ltd. has filed a motion with the Tel Aviv District
Court to convene meetings of its unsecured creditors and
shareholders for the approval of the proposed restructuring of its
Unsecured Financial Debt pursuant to a plan of arrangement under
Section 350 of the Israeli Companies Law, 5759-1999. The terms
and conditions of the Arrangement resulted from discussions with
holders of the various series of the Company's outstanding Series
1 and Series A to Series G notes, including York Capital
Management Global Advisors, LLC, and Davidson Kempner Capital
Management LLC, other creditors and Mordechay Zisser, the
Company's Chief Executive Officer and Executive President, member
of the Company's board of directors and indirect controlling
shareholder of the Company.
As of March 31, 2013, the outstanding balance of all accrued and
unpaid financial debt (including interest and CPI linkage) under
the Notes and other unsecured loans of the Company equaled
approximately NIS 2,472 million (approximately $694 million).
Pursuant to the terms of the Arrangement, upon the effectiveness
of the Arrangement all of the Company's Unsecured Financial Debt
will be extinguished in exchange for new ordinary shares of the
Company and new notes to be issued by the Company, as follows:
The Company will issue 161,235,018 New Shares, representing
immediately following that exchange 86% of the Company's
outstanding share capital on a fully diluted basis (excluding
existing options to purchase 1,729,251 ordinary shares granted to
the Company's and its affiliates' employees and office holders
prior to the Arrangement, a new incentive compensation plan to be
approved by the Company's new board of directors following the
effective time of the Arrangement and any warrants that may be
issued to Bank Hapoalim B.M., to the extent so issued, as a result
of new understandings with the Bank, to the extent such
understandings are achieved.
The Company will issue New Notes in the aggregate principal amount
of NIS 300 million (approximately $84 million), which will be
linked to the consumer price index and bear interest at the rate
of 8.0% per annum, payable on a semi-annual basis commencing on
Dec. 31, 2013. The principal of the New Notes will be repayable
in a single payment at the end of five years from the date of
issuance thereof. The New Notes will be prepayable at any time
without penalty and will be required to be prepaid with the net
proceeds that may be obtained from the issuance of other notes.
The New Notes will be secured by a negative pledge such that the
Company may not pledge any of the property or assets of the
Company, subject to certain exceptions.
The New Shares and the New Notes will be allocated among the
various unsecured creditors in proportion to the outstanding
balance (principal, interest and CPI linkage) under each
obligation as of the effective date of the Arrangement, and any
fraction of a share will be rounded up to the nearest whole share.
The New Shares will be listed for trading on both the Tel Aviv
Stock Exchange and the NASDAQ Stock Market, and the New Notes will
be listed for trading on the Tel Aviv Stock Exchange at the
effective date of the Arrangement. The Company will endeavor to
file with the Securities and Exchange Commission within 30 days of
the effective date of the Arrangement a registration statementwith
respect to the New Shares 'to the extent required to permit their
unrestricted resale'.
Amendments to the Company's Articles of Association
Pursuant to the terms of the Arrangement, subject to receipt of
the requisite approval of the Arrangement by the Company's
shareholders, the Company will amend its Articles of Association
to provide that (i) the number of directors will not be greater
than seven, in addition to two external directors, and (ii) the
Company's board of directors will be elected by holders of a
majority of the outstanding ordinary shares, provided however that
the board of directors will be authorized to appoint directors to
the extent the board is comprised of less than the maximal number,
and (iii) the Company's registered share capital, which is
currently 50,000,000 ordinary shares of par value NIS 1.00 per
share (of which 24,902,809 ordinary shares were issued and
outstanding and 3,388,910 were treasury shares), will be increased
to 200,000,000 ordinary shares of no par value per share. In
addition, all of the treasury shares will be cancelled.
Eastgate Warrant
Eastgate Property LLC holds a warrant to purchase up to 3.3
percent of the Company's fully diluted share capital, for no
consideration, until March 31, 2014. Pursuant to an understanding
between the Company and Eastgate, Eastgate will exercise the
warrant for and not more than 1,344,752 ordinary shares
immediately following the consummation of the Arrangement, at
which time the warrant will terminate. The Company will endeavor
to sign a binding agreement with Eastgate to reflect this
understanding.
Secured Debt
The Arrangement contemplates that the secured debt owed by the
Company to the Bank and the collateral securing such obligations
will remain in place in accordance with the existing loan and
security agreements with the Bank. The Company and the Bank are
negotiating certain amendments to the existing agreements with the
Bank and the joining of the Bank as a party to the Arrangement.
The Company will notify at least three trading days prior to the
date which will be set as the date in which the unsecured
creditors vote over the Arrangement in accordance with Section
350, as to the results of the discussions with the Bank and
consequently whether or not the Bank will join the Arrangement and
the respective changes to the Arrangement resulting from the Bank
joining or not joining the Arrangement.
Management Compensation
Following the effectiveness of the Arrangement and the election of
the Company's new board of directors, the Company's board will
discuss the adoption of a new incentive compensation plan for the
Company's and its affiliates' office holders and employees
providing for the issuance of options to purchase 15 percent-20
percent of the Company's ordinary shares outstanding immediately
following the effectiveness of the Arrangement and the terms of
engagement of Mr. Zisser as the Company's Chief Executive Officer,
including without limitations, the issuance of option under the
Incentive Plan.
Related Party Transactions
Upon the effectiveness of the Arrangement, the Company's audit
committee and the audit committee of the applicable companies
under the Company's control will be entitled to examine all
transactions entered into prior to such time between such company
and Mr. Zisser or any entity under his control or in which Mr.
Zisser or any entity under his control has a personal interest and
will have the right to terminate any of such transactions
immediately.
Board of Directors
As soon as practicable following the effectiveness of the
Arrangement, the Company will convene a meeting of the Company's
shareholders regarding the termination of service of the Company's
current directors (excluding the Company's external directors) and
the election of the Company's new board of directors. The Company
will endeavor to hold such meeting no less than 30 days following
the effective date of the Arrangement.
Conditions Precedent
The Arrangement is subject to various conditions, including the
receipt of: (i) the approval of the Court under Section 350,
following a hearing, including a determination that the
Arrangement is fair to, or in the best interests of, the Company's
unsecured creditors; (ii) the approval of the Tel Aviv Stock
Exchange; (iii) a tax ruling issued by the Israeli Tax Authority
regarding the tax, if any, applicable to the Company and the
unsecured creditors as a result of the Arrangement; (iv) the
approval by the requisite majority of the Company's unsecured
creditors; (v) all requisite corporate approvals; and (vi) any
other approvals required by law or material contracts to the
extent required to consummate the Arrangement.
Additional Provisions
Upon the effectiveness of the Arrangement, the Company, its office
holders, the Note holders and the other unsecured creditor, the
trustees for the Note holders, the Company's controlling
shareholder and other shareholders and their respective affiliates
and representatives will be released from any and all claims the
grounds of which preceded the effectiveness of the Arrangement,
including all claims related to the Notes and the management of
the Company and all companies under the Company's control, other
than claims related to acts or omissions that were criminal,
willful or fraudulent. Accordingly, the applicable pending legal
proceedings against the Company, its office holders or the
Company's controlling shareholder will be dismissed.
Until such time as the Company's new board of directors is elected
following the effectiveness of the Arrangement, the Company's
letter of undertakings entered into with the trustees of the Notes
on March 19, 2013, will continue to be in effect.
Upon the Company's filing of the proposed Arrangement with the
Court, the non-binding summary of terms dated Feb. 27, 2013, with
York and DK with respect to the proposed restructuring of the
Company's outstanding indebtedness expired.
About Elbit Imaging
Tel-Aviv, Israel-based Elbit Imaging Ltd. (TASE, NASDAQ: EMITF)
hold investments in real estate and medical companies. The
Company, through its subsidiaries, also develops shopping and
entertainment centers in Central Europe and invests in and manages
hotels.
Brightman Almagor Zohar & Co., in Tel-Aviv, Israel, expressed
substantial doubt about Elbit Imaging's ability to continue as a
going concern following the financial results for the year ended
Dec. 31, 2012.
The Certified Public Accountants noted that in the period
commencing Feb. 1, 2013, through Feb. 1, 2014, the Company is to
repay its debenture holders NIS 599 million (principal and
interest). "Said amount includes NIS 82 million originally
payable on Feb. 21, 2013, that its repayment was suspended
following a resolution of the Company's Board of Directors. The
Company's Board also resolved to suspend any interest payments
relating to all the Company's debentures. In addition, as of
Dec. 31, 2012, the Company failed to comply with certain financial
covenants relating to bank loans in the total amount as of such
date of NIS 290 million.
"These matters raise substantial doubt about the Company's ability
to continue as a going concern."
ELBIT IMAGING: Trustees Withdraw Motion of Temporary Liquidator
---------------------------------------------------------------
Elbit Imaging Ltd. said that the trustees of Series B Notes
(representing an outstanding balance amount of NIS 16.5 million
(pari) (approximately 0.7% of the total unsecured debt of the
Company), have submitted to the Tel Aviv District Court a motion
to remove their motion for the appointment of a temporary
liquidator for the Company (but not the motion to liquidate the
Company, that is scheduled for hearing) with regard to the
liquidation proceedings initiated by the Trustees of Series B
Notes.
About Elbit Imaging
Tel-Aviv, Israel-based Elbit Imaging Ltd. (TASE, NASDAQ: EMITF)
hold investments in real estate and medical companies. The
Company, through its subsidiaries, also develops shopping and
entertainment centers in Central Europe and invests in and manages
hotels.
Brightman Almagor Zohar & Co., in Tel-Aviv, Israel, expressed
substantial doubt about Elbit Imaging's ability to continue as a
going concern following the financial results for the year ended
Dec. 31, 2012.
The Certified Public Accountants noted that in the period
commencing Feb. 1, 2013, through Feb. 1, 2014, the Company is to
repay its debenture holders NIS 599 million (principal and
interest). "Said amount includes NIS 82 million originally
payable on Feb. 21, 2013, that its repayment was suspended
following a resolution of the Company's Board of Directors. The
Company's Board also resolved to suspend any interest payments
relating to all the Company's debentures. In addition, as of
Dec. 31, 2012, the Company failed to comply with certain financial
covenants relating to bank loans in the total amount as of such
date of NIS 290 million.
"These matters raise substantial doubt about the Company's ability
to continue as a going concern."
EMMIS COMMUNICATIONS: Posts $41.9-Mil. Net Income in Fiscal 2013
----------------------------------------------------------------
Emmis Communications Corporation filed with the U.S. Securities
and Exchange Commission its annual report on Form 10-K disclosing
net income attributable to common shareholders of $41.96 million
on $196.08 million of net revenues for the year ended Feb. 28,
2013, as compared with net income attributable to common
shareholders of $79.49 million on $202.21 million of net revenues
for the year ended Feb. 29, 2012.
The Company's balance sheet at Feb. 28, 2013, showed $261.62
million in total assets, $224.52 million in total liabilities and
$37.09 million in total equity.
A copy of the Form 10-K is available for free at:
http://is.gd/2kzrj8
About Emmis Communications
Headquartered in Indianapolis, Indiana, Emmis Communications
Corporation -- http://www.emmis.com/-- owns and operates 22 radio
stations serving New York, Los Angeles, Chicago, St. Louis,
Austin, Indianapolis, and Terre Haute, as well as national radio
networks in Slovakia and Bulgaria. The company also publishes six
regional and two specialty magazines.
As reported by the TCR on Oct. 16, 2012, Moody's Investors Service
placed the ratings of Emmis Communications Corporation on review
for upgrade following the company's earnings release for 2Q12
(ended August 31, 2012) indicating good performance for radio
operations and plans to refinance existing high coupon debt
facilities. Emmis Communications carries a 'B3' Corporate Family
Rating from Moody's.
* * *
This concludes the Troubled Company Reporter's coverage of Emmis
Communications until facts and circumstances, if any, emerge that
demonstrate financial or operational strain or difficulty at a
level sufficient to warrant renewed coverage.
EMISPHERE TECHNOLOGIES: Completes Restructuring Transactions
------------------------------------------------------------
Emisphere Technologies, Inc., on May 7, 2013, issued to MHR
Capital Partners Master Account LP, MHR Capital Partners (100) LP,
MHR Institutional Partners II LP, and MHR Institutional Partners
IIA LP:
(i) amended and restated warrants, originally issued to MHR in
August 2009 to purchase, in the aggregate, 3,729,323 shares
of the Company's common stock;
(ii) amended and restated warrants, originally issued to MHR in
June 2010 to purchase, in the aggregate, 865,000 shares of
the Company's common stock;
(iii) amended and restated warrants, originally issued to MHR in
August 2010 to purchase, in the aggregate, 3,598,146 shares
of the Company's common stock;
(iv) amended and restated warrants, originally issued to MHR in
July 2011 to purchase, in the aggregate, 3,805,307 shares
of the Company's common stock; and
(v) new warrants to MHR to purchase 10,000,000 shares of the
Company's common stock.
The MHR Restructuring Warrants entitle MHR to purchase, in the
aggregate, 21,997,776 shares of the Company's common stock at an
exercise price of $.50 per share, and will expire on July 8, 2019.
The exercise price of the MHR Restructuring Warrants and number of
Warrant Shares issuable upon exercise of the MHR Restructuring
Warrants are subject to adjustment upon the occurrence of events
described in the MHR Restructuring Warrants, including stock
dividends, stock splits, combinations of shares, and certain
fundamental corporate transactions.
Also pursuant to the MHR Restructuring, the Company issued to MHR
(i) amended and restated 11 percent senior secured convertible
notes, originally issued to MHR in 2006 and thereafter having an
aggregate outstanding balance of $33,038,438 as of May 6, 2013;
(ii) amended and restated promissory notes, originally issued to
MHR in 2010 having an aggregate outstanding balance of $637,167 as
of May 6, 2013; and (iii) amended and restated promissory notes,
originally issued to MHR in 2012 having an aggregate outstanding
balance of $1,493,275 as of May 6, 2013.
On May 6, 2013, the Company received $10 million from Novo Nordisk
A/S in connection with the transactions contemplated by that
certain Amendment No. 2 to the Development and License Agreement,
dated June 21, 2008, between the Company and Novo Nordisk. The
Amendment was entered into by the Company and Novo Nordisk on
April 26, 2013, as previously disclosed in the Company's Current
Report on Form 8-K filed on April 30, 2013.
A copy of the Form 8-K is available for free at:
http://is.gd/57R05p
About Emisphere
Cedar Knolls, N.J.-based Emisphere Technologies, Inc., is a
biopharmaceutical company that focuses on a unique and improved
delivery of therapeutic molecules or nutritional supplements using
its Eligen(R) Technology. These molecules are currently available
or are under development.
Emisphere Technologies, Inc., filed with the U.S. Securities and
Exchange Commission its annual report on Form 10-K disclosing a
net loss of $1.92 million on $0 of revenue for the year ended
Dec. 31, 2012, as compared with net income of $15.05 million on $0
of revenue during the prior year.
For the three months ended Dec. 31, 2012, the Company reported net
income of $627,000 on $0 of revenue, as compared with net income
of $19.81 million on $0 of revenue for the same period a year ago.
The Company's balance sheet at Dec. 31, 2012, showed $2.17 million
in total assets, $68.24 million in total liabilities and a $66.06
million total stockholders' deficit.
Going Concern Doubt
McGladrey LLP, in New York, issued a "going concern" qualification
on the consolidated financial statements for the year ended
Dec. 31, 2012. The independent auditors noted that the Company
has suffered recurring losses from operations, has a significant
working capital deficiency, has limited cash availability and is
in default under certain promissory notes. This raises
substantial doubt about the Company's ability to continue as a
going concern.
EMISPHERE TECHNOLOGIES: M. Rachesky Held 62.8% Stake at May 7
-------------------------------------------------------------
In an amended Schedule 13D filing with the U.S. Securities and
Exchange Commission, Mark H. Rachesky, M.D., and his affiliates
disclosed that, as of May 7, 2013, they beneficially owned
71,382,070 shares of common stock of Emisphere Technologies, Inc.,
representing 62.8% of the shares outstanding. Mr. Rachesky
previously reported beneficial ownership of 39,043,957 common
shares or a 48.1% equity stake at April 26, 2013. A copy of the
amended regulatory filing is available at http://is.gd/DLhCOm
About Emisphere
Cedar Knolls, N.J.-based Emisphere Technologies, Inc., is a
biopharmaceutical company that focuses on a unique and improved
delivery of therapeutic molecules or nutritional supplements using
its Eligen(R) Technology. These molecules are currently available
or are under development.
Emisphere Technologies, Inc., filed with the U.S. Securities and
Exchange Commission its annual report on Form 10-K disclosing a
net loss of $1.92 million on $0 of revenue for the year ended
Dec. 31, 2012, as compared with net income of $15.05 million on $0
of revenue during the prior year.
For the three months ended Dec. 31, 2012, the Company reported net
income of $627,000 on $0 of revenue, as compared with net income
of $19.81 million on $0 of revenue for the same period a year ago.
The Company's balance sheet at Dec. 31, 2012, showed $2.17 million
in total assets, $68.24 million in total liabilities and a $66.06
million total stockholders' deficit.
Going Concern Doubt
McGladrey LLP, in New York, issued a "going concern" qualification
on the consolidated financial statements for the year ended
Dec. 31, 2012. The independent auditors noted that the Company
has suffered recurring losses from operations, has a significant
working capital deficiency, has limited cash availability and is
in default under certain promissory notes. This raises
substantial doubt about the Company's ability to continue as a
going concern.
ENDEAVOUR INTERNATIONAL: Incurs $14MM Net Loss in First Quarter
---------------------------------------------------------------
Endeavour International Corporation reported a net loss of
$14.04 million on $57.67 million of revenues for the three months
ended March 31, 2013, as compared with a net loss of $35.26
million on $15.16 million of revenues for the same period during
the prior year.
The Company's balance sheet at March 31, 2013, showed
$1.50 billion in total assets, $1.36 billion in total liabilities,
$43.70 million in series C convertible preferred stock, and
$90.30 million in stockholders' equity.
"This quarter has been about execution and keeping our development
projects moving forward. The drilling of our production wells at
West Rochelle and Bacchus continues on schedule. We have worked
through a significant number of the processing issues at Alba and
expect to see better production levels from the field in the
second half of the year," said William L. Transier, chairman,
chief executive officer and president. "Our strategic review
process remains on-going. We intend to bring the process to
conclusion as soon as a thorough evaluation of all the options is
completed by our Board of Directors."
A copy of the press release is available for free at:
http://is.gd/LzDHgA
About Endeavour International
Houston-based Endeavour International Corporation (NYSE: END)
(LSE: ENDV) is an oil and gas exploration and production company
focused on the acquisition, exploration and development of energy
reserves in the North Sea and the United States.
For the year ended Dec. 31, 2012, the Company incurred a net loss
of $126.22 million on $219.05 million of revenue, as compared with
a net loss of $130.99 million on $60.09 million of revenue during
the prior year.
* * *
As reported by the TCR on March 5, 2013, Moody's Investors Service
downgraded Endeavour International Corporation's Corporate Family
Rating to Caa3 from Caa1. Endeavour's Caa3 CFR reflects its weak
liquidity, small production and proved reserve scale, geographic
concentration and the uncertainties regarding its future
performance given the inherent execution risks related to its
offshore North Sea operations for a company of its size.
In the Feb. 22, 2013, edition of the TCR, Standard & Poor's
Ratings Services lowered its corporate credit rating on Houston,
Texas-based Endeavour International Corp. (Endeavour) to 'CCC+'
from 'B-'. The rating action reflects S&P's expectation that
Endeavour could have insufficient liquidity to meet its needs due
to the delay in production from its Rochelle development.
ENERGYSOLUTIONS INC: Gets NRC OK for Transfer of Licenses
---------------------------------------------------------
EnergySolutions, Inc., has received all required U.S. Nuclear
Regulatory Commission approvals for the indirect transfer of NRC
licenses. NRC approval was the last regulatory requirement for
completing the previously announced merger agreement with
affiliates of Energy Capital Partners II, LLC.
The Company expects to consummate the merger on or about May 24,
2013, after which time the Company's common stock will be delisted
from the New York Stock Exchange.
EnergySolutions entered into an Agreement and Plan of Merger, by
and among EnergySolutions, Rockwell Holdco, Inc., a Delaware
corporation, and Rockwell Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub")
relating to the acquisition of EnergySolutions by Parent. Parent
and Merger Sub are affiliates of Energy Capital Partners II, LP.
On April 5, 2013, EnergySolutions, Parent and Merger Sub entered
into the First Amendment to the Merger Agreement.
In January of 2013, EnergySolutions notified the U.S. Nuclear
Regulatory Commission about the Merger and requested the NRC's
consent to the proposed indirect transfer of control of the
Company's NRC radioactive material licenses and permits pursuant
to the Merger. On May 9, 2013, the NRC consented to the indirect
transfer of control of the Company's NRC licenses and permits
pursuant to the Merger.
About EnergySolutions
Salt Lake City, Utah-based EnergySolutions offers customers a full
range of integrated services and solutions, including nuclear
operations, characterization, decommissioning, decontamination,
site closure, transportation, nuclear materials management, the
safe, secure disposition of nuclear waste, and research and
engineering services across the fuel cycle.
EnergySolutions reported net income of $3.92 million in 2012, as
compared with a net loss of $193.64 million in 2011. The
Company's balance sheet at Dec. 31, 2012, showed $2.65 billion
in total assets, $2.35 billion in total liabilities and
$300.91 million in total stockholders' equity.
Bankruptcy Warning
"Our senior secured credit facility contains financial covenants
requiring us to maintain specified maximum leverage and minimum
cash interest coverage ratios. The results of our future
operations may not allow us to meet these covenants, or may
require that we take action to reduce our debt or to act in a
manner contrary to our business objectives.
"Our failure to comply with obligations under our senior secured
credit facility, including satisfaction of the financial ratios,
would result in an event of default under the facilities. A
default, if not cured or waived, would prohibit us from obtaining
further loans under our senior secured credit facility and permit
the lenders thereunder to accelerate payment of their loans and
not renew the letters of credit which support our bonding
obligations. If we are not current in our bonding obligations, we
may be in breach of our contracts with our customers, which
generally require bonding. In addition, we would be unable to bid
or be awarded new contracts that required bonding. If our debt is
accelerated, we currently would not have funds available to pay
the accelerated debt and may not have the ability to refinance the
accelerated debt on terms favorable to us or at all particularly
in light of the tightening of lending standards as a result of the
ongoing financial crisis. If we could not repay or refinance the
accelerated debt, we would be insolvent and could seek to file for
bankruptcy protection. Any such default, acceleration or
insolvency would likely have a material adverse effect on the
market value of our common stock," the Company said in its annual
report for the year ended Dec. 31, 2012.
* * *
As reported in the Jan. 9, 2013 edition of the TCR, Standard &
Poor's Ratings Services placed its ratings, including its 'B'
corporate credit rating, on EnergySolutions on CreditWatch with
developing implications.
"The CreditWatch placement follows EnergySolutions' announcement
that it has entered into a definitive agreement to be acquired by
a subsidiary of Energy Capital Partners II," said Standard &
Poor's credit analyst Jim Siahaan.
EnergySolutions is permitted to engage in discussions with other
suitors, which may include other financial sponsors or strategic
buyers.
EVERTON SOCCER: Football Fans Wants Paul McCartney to Buy Club
--------------------------------------------------------------
Gino Clarke, a lifelong Liverpool football fan has organized an
effort to have Liverpool native and Beatles legend Sir Paul
McCartney save a legendary British Everton football team from
falling into the wrong hands.
A Ukrainian billionaire who has put thousands of American and
European farmers out of business through bankruptcy and is one of
the largest egg producers in the world is attempting to buy the
Everton Soccer Club, a founding member of the British Premier
League.
Mr. Clarke is trying to gather one million signatures throughout
England and the United States where Sir McCartney has residences.
Names will be gathered online and at football stadiums every
weekend and rallies and protests will be held worldwide at every
location where McCartney appears during his concert tour.
McCartney is now on a worldwide concert tour which kicked off last
week in Brazil and has dates throughout summer 2013.
Everton was approached by an investment group led by Ukrainian
billionaire Oleg Bakhmatyuk with intent to buy it. Scandals have
erupted around the world tied to Bakhmatyuk's nefarious business
dealings and connections to a slew of dubious companies, most
notably the acquisition of a poultry manufacturing plant in North
Carolina (U.S.) that fell into bankruptcy less than six months
later, causing thousands of farmers and plant workers to lose
their jobs.
Founded in 1878, Everton Football Club is a member of the English
Premier League and has competed in the top division for a record
110 seasons and have won the League Championship nine times. The
club's supporters are known as Evertonians.
FANNIE MAE: Reports $58.7 Billion Net Income in First Quarter
-------------------------------------------------------------
Federal National Mortgage Association filed with the U.S.
Securities and Exchange Commission its quarterly report on Form
10-Q disclosing net income of $58.68 billion on $30.18 billion of
total interest income for the three months ended March 31, 2013,
as compared with net income of $2.71 billion on $33.78 billion of
total interest income for the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$3.32 trillion in total assets, $3.25 trillion in total
liabilities, and $62.36 billion in total equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/lrqvNM
A press release on the financial results is available at:
http://is.gd/FRXyEc
About Fannie Mae
Federal National Mortgage Association, aka Fannie Mae, is a
government-sponsored enterprise that was chartered by U.S.
Congress in 1938 to support liquidity, stability and affordability
in the secondary mortgage market, where existing mortgage-related
assets are purchased and sold.
The U.S. Department of the Treasury owns Fannie Mae's senior
preferred stock and a warrant to purchase 79.9% of its common
stock, and Treasury has made a commitment under a senior preferred
stock purchase agreement to provide Fannie with funds under
specified conditions to maintain a positive net worth.
Conservatorship
Fannie Mae has operated under the conservatorship of the Federal
Housing Finance Agency since Sept. 6, 2008. Fannie Mae has not
received funds from Treasury since the first quarter of 2012. The
funding the company has received under the senior preferred stock
purchase agreement with the U.S. Treasury has provided the company
with the capital and liquidity needed to maintain its ability to
fulfill its mission of providing liquidity and support to the
nation's housing finance markets and to avoid a trigger of
mandatory receivership under the Federal Housing Finance
Regulatory Reform Act of 2008. For periods through March 31,
2013, Fannie Mae has requested cumulative draws totaling $116.1
billion. Under the senior preferred stock purchase agreement, the
payment of dividends cannot be used to offset prior Treasury
draws. Accordingly, while Fannie Mae has paid $35.6 billion in
dividends to Treasury through March 31, 2013, Treasury still
maintains a liquidation preference of $117.1 billion on the
company's senior preferred stock.
In August 2012, the terms governing the company's dividend
obligations on the senior preferred stock were amended. The
amended senior preferred stock purchase agreement does not allow
the company to build a capital reserve. Beginning in 2013, the
required senior preferred stock dividends each quarter equal the
amount, if any, by which the company's net worth as of the end of
the preceding quarter exceeds an applicable capital reserve
amount. The applicable capital reserve amount is $3.0 billion for
each quarter of 2013 and will be reduced by $600 million annually
until it reaches zero in 2018.
The amount of remaining funding available to Fannie Mae under the
senior preferred stock purchase agreement with Treasury is
currently $117.6 billion. Fannie Mae is not permitted to redeem
the senior preferred stock prior to the termination of Treasury's
funding commitment under the senior preferred stock purchase
agreement. The limited circumstances under which Treasury's
funding commitment will terminate are described in "Business--
Conservatorship and Treasury Agreements" in the company's annual
report on Form 10-K for the year ended Dec. 31, 2012.
FANNIE MAE: Earnings, Dividend to Complicate GSE Reform
-------------------------------------------------------
Fannie Mae's strong first quarter financial results and its
planned $59.4 billion dividend payment to the U.S. Treasury will
likely complicate efforts to pursue far-reaching GSE reform,
according to Fitch Ratings. "Better operating trends at both
Fannie Mae and Freddie Mac, driven by continued healing in the
housing market and the growing role of recent-vintage mortgages,
will likely further reduce pressure on Congress to overhaul the
U.S. housing finance system," Fitch says.
"The political motivation to overhaul the GSEs and the broader
mortgage market remains limited. With the point where taxpayers
are effectively made whole on their investment in GSEs now in
sight, we believe broad reform will become more challenging to
achieve. The Federal Housing Finance Agency has recently
undertaken some initiatives to reduce Fannie and Freddie's
dominance in the housing market. However, GSEs have been operating
under conservatorship for close to five years and continue to
dominate the market.
"A one-time accounting adjustment, the reversal of a $50.6 billion
deferred tax asset (DTA) allowance, drove the bulk of Fannie Mae's
first quarter net income of $58.7 billion. The increase in net
worth to $62.4 billion requires Fannie to pay a significantly
higher dividend to the Treasury under the terms of the amended
support agreement. The GSE plans to fund the payment with proceeds
from debt issuance.
"We think this incremental debt is manageable within the context
of Fannie's balance sheet and the debt limit set out in the senior
preferred-stock purchase agreement. Fannie's debt was $144 billion
below the limit on March 31.
"Fannie will make a cash dividend payment of $59.4 billion to the
Treasury by June 30. After that payment, total dividends paid by
Fannie will represent 81% of its cumulative draw from the
Treasury. We believe the cumulative dividends paid by Fannie could
exceed the $117 billion in senior preferred stock owned by the
Treasury by late this year or early 2014, based on the current
earnings run-rate.
"Freddie Mac continues to evaluate its DTA allowance, but Fitch
believes it will likely follow suit and reverse its $30 billion
reserve in the coming quarters, as its financial performance has
also improved significantly over the past year. As a result, it
would also pay a substantially higher dividend to Treasury. The
dividends do not technically reduce the $187 billion injected into
the GSEs by the Treasury. However, both entities will have paid
cumulative dividends representing over 80% of the Treasury's
investment, once Freddie Mac reverses its DTA allowance.
"Excluding the impact of the large DTA reversal, Fannie's pretax
earnings for the first quarter were strong at $8.1 billion.
Results were supported by an increase in net interest income and
continued improvement in credit quality. As a result of the Bank
of America settlement completed in the first quarter, Fannie
recorded a one-time benefit to net interest income. Excluding this
benefit, Fannie's core earnings results for the first quarter were
largely consistent with fourth-quarter 2012 results.
"As asset quality improved, Fannie reduced its total loss reserves
by $2.4 billion during the quarter. The serious delinquency rate
dropped to 3.02% at March 31, compared with 3.29% at year-end
2012. Net sales prices for REO also rose as the housing market
recovery continued in the quarter.
"We do not expect the reversals in the DTA allowance for Fannie
Mae -- or the potential reversal for Freddie Mac -- to have an
impact on ratings for either entity. The ratings are directly
linked to the U.S. sovereign rating based on the U.S. government's
direct financial support."
For a detailed review of the outlook for the GSEs and reform
options, see "U.S. Housing Finance GSEs" Where to From Here?,"
dated Feb. 28, 2013, at www.fitchratings.com.
FASTCOMM COMMS: Venture Capital Fund's Suit v. Successor Proceeds
-----------------------------------------------------------------
Edelson V, L.P., a venture capital fund, sued Encore Networks,
Inc., and Peter C. Madsen, Encore's President and CEO, alleging
fraud, negligent misrepresentation, unjust enrichment, and a
breach of fiduciary duty in connection with Edelson's equity
investment in Encore. Encore's predecessor was a failed private
communications technology company that went bankrupt and,
according to Edelson, was reincarnated as Encore. Edelson alleges
that Encore failed to disclose this history, exaggerated the
firm's sales and financial data, and stated that certain firms had
contracted with Encore when, in fact, they had not. Encore then
diverted business opportunities and assets into another entity
where the defendants were shareholders but Edelson was not.
Encore has moved to dismiss the First Amended Complaint for
failure to state a claim, raising five main points:
1. Edelson ratified its investment after receiving the
audited financial statements that form the basis of
Edelson's claims;
2. Edelson's claims are barred by the statute of limitations;
3. The alleged misrepresentations and omissions are not
actionable because they are statements of opinion
and/or publicly disclosed;
4. Encore and Madsen claim that the First Amended Complaint
is not pled with the specificity required by Federal
Rule of Procedure 9(b); and
5. Edelson's breach of fiduciary duty claim against Madsen
is derivative, and thus belongs to the corporation.
In a May 9, 2013 Opinion available at http://is.gd/ttE0Jgfrom
Leagle.com, District Judge Kevin McNulty ruled that Edelson's
complaint is sufficient and denied Encore's motion to dismiss.
Encore was formed in 2002 as the successor entity to FastComm
Communications Corp., a telecommunications company that develops
and sells integrated network security applications and converged
signaling, voice, and data solutions for carriers and businesses
in the United States, Latin America, and Asia. Madsen served as
the President, Chief Executive Officer, and Chairman of the Board,
and as a Director of Encore.
From 1993 to 1998, FastComm suffered substantial business losses,
and on June 2, 1998, it filed a voluntary Chapter 11 bankruptcy
petition. Significant losses continued: for the fiscal year
ending April 30, 1999, FastComm reported a loss of about $9
million; for the fiscal year ending April 30, 2000, $5.5 million;
and for the fiscal year ending April 30, 2001, almost $13 million.
FastComm's sales of its signaling product line declined from $6.7
million in the nine months ending January 27, 2001, to $2.1
million in the nine months ending January 26, 2002.
Around May 5, 2002, FastComm again filed for Chapter 11
bankruptcy. By the summer of 2002, however, Wesley Clover
International Corporation a/k/a Wesley Clover Corporation, its
sole secured creditor, seized all of FastComm's assets.
FastComm's Chapter 11 bankruptcy proceeding was converted to a
Chapter 7. FastComm's assets, including its customers, products,
technology, and management, were rolled into Encore.
Edelson also sued Wesley Clover and Terence H. Matthews. On
Oct. 11, 2012, the Court dismissed the claims against these
defendants for lack of personal jurisdiction.
The case is, EDELSON V., L.P., Plaintiff, v. ENCORE NETWORKS,
INC., et al., Defendants, Civ. No. 2:11-5802 (KM) (D. N.J.).
FILENE'S BASEMENT: Ultra Stores' $6,346,276 Claim Disallowed
------------------------------------------------------------
Bankruptcy Judge Kevin J. Carey sustained Filene's Basement LLC's
objection and disallowed the proof of claim (#2302) filed by Ultra
Stores Inc. for $6,346,276. Ultra's claim arises from an alleged
breach of contract by the Debtors as a result of the Debtors'
closure of leased stores where Ultra was licensed to operate
jewelry departments. The claim is comprised of its alleged lost
future profits for the full term of the contract.
A copy of the Court's May 8, 2013 Memorandum is available
http://is.gd/d03MTXfrom Leagle.com.
About Filene's Basement
Massachusetts-based Filene's Basement, also called The Basement,
is the oldest off-price retailer in the United States. The
Basement focuses on high-end goods and is known for its
distinctive, low-technology automatic markdown system.
Filene's Basement first filed for Chapter 11 bankruptcy protection
in August 1999. Filene's Basement was bought by a predecessor of
Retail Ventures, Inc., the following year. Retail Ventures in
April 2009 transferred the unit to Buxbaum.
Filene's Basement, Inc. and its affiliates filed for Chapter 22
(Bankr. D. Del. Case No. 09-11525) on May 4, 2009, represented by
lawyers at Pachulski Stang Ziehl & Jones LLP. Epiq Bankruptcy
Solutions serves as claims and notice agent. The Debtors
disclosed assets of $236 million, including real estate of $97.7
million, and liabilities of $94 million, including $31.1 million
owing on a revolving credit with Bank of America NA as agent. In
addition, there were $11.1 million in letters of credit
outstanding on the revolver.
The 2009 Debtor was formally renamed FB Liquidating Estate,
following the sale of all of its assets to Syms Corp. in June
2009.
Pursuant to the Liquidating Plan confirmed in January 2010,
secured creditors in the Chapter 11 case have been paid in full,
and holders of priority, administrative and convenience class
claims have received 100% of their allowed claims. As reported by
the Troubled Company Reporter on Dec. 20, 2010, Alan Cohen,
Chairman of Abacus Advisors LLC and Chief Restructuring Officer
for FB Liquidating Estate disclosed that a second distribution of
dividend checks to Filene's unsecured creditors amounting to 12.5%
of approved claims has been made, bringing the cumulative
distributions on unsecured claims to 62.5%.
On Nov. 2, 2011, Syms Corp. placed itself, Filene's Basement and
two other units in Chapter 11 bankruptcy (Bankr. D. Del. Case Nos.
11-13511 to 11-13514) after a failed bid to sell the business.
The two units are Syms Clothing Inc. and Syms Advertising Inc.
Judge Kevin J. Carey presides over the case. Lawyers at Skadden
Arps Slate Meagher & Flom LLP serve as the Debtors' counsel. The
Debtors tapped Rothschild Inc. as investment banker and Cushman
and Wakefield Securities, Inc., as real estate financial advisors.
Syms shuttered its namesake and Filene's Basement outlets upon the
bankruptcy filing and tapped a joint venture of Gordon Brothers
Retail Partners LLC and Hilco Merchant Resources LLC to run the
going-out-of-business sales. The sale may continue until Jan. 31,
2012.
Filene's Basement estimated $1 million to $10 million in assets
and $50 million to $100 million in debts. The petitions were
signed by Gary Binkoski, authorized representative of Filene's
Basement.
The official committee of unsecured creditors appointed in the
2011 case has retained Hahn & Hessen LLP as legal counsel.
Holders of equity in Syms Corp. pushed for an official
shareholders' committee and separation of the Syms and Filene's
Basement bankruptcy estates.
Gordon Brothers and Hilco are represented by Goulston & Storrs,
P.C. and Ashby & Geddes, P.A.
FR 160: Golf Club Wants Cash Collateral; Hearing on May 28
----------------------------------------------------------
U.S. Bankruptcy Court for the District of Arizona will hold on May
28, 2013, at 10:30 a.m., a hearing on Flagstaff Ranch Golf Club's
motion for order allowing the turnover of the proceeds of the sale
of Lot 132, being held by FR 160, to Golf Club.
Golf Club claims that the proceeds, totaling $109,376.25,
constitute its cash collateral.
The Debtor received title to 51 lots and a plot of land commonly
known as Tract H in the Flagstaff Ranch Golf Club Community
through a trustee sale held on or around July 9, 2008. Pursuant
to the Flagstaff Ranch governing documents, each owner of a lot or
lots is obligated to buy a social membership or golf membership.
On July 28, 2008, the Debtor filed the first of two consolidated
adversary proceedings, seeking declaratory relief excusing it from
the obligation to pay certain dues and fees set forth in the
Flagstaff Ranch CC&R's and Declaration of Golf Club Easement,
which require all property owners to pay dues associated with the
required Memberships. Golf Club filed a counterclaim against IMH
in the Adversary. Subsequently, Golf Club brought an action
against the Debtor in Coconino County Superior Court seeking a
judicial foreclosure of Debtor's real property, which was removed
to the bankruptcy court.
To settle the dispute between the parties, Golf Club and the
Debtor entered into a settlement agreement on Jan. 25, 2010, which
included these terms:
a. The Debtor will deliver to Golf Club a promissory note in
the amount of $4.59 million;
b. The Debtor will deliver a promissory note in the amount of
$720,000;
c. The Debtor will deliver a first position deed of trust on
the Lots and Tract H;
d. The Debtor will pay the unpaid dues and assessments for
the Lots and the unpaid Flagstaff Ranch Property Owners
Association dues for the Lots, Tract H, and other
properties the Debtor may acquire by way of foreclosure at
Flagstaff Ranch;
e. The Debtor will pay the unpaid Flagstaff Ranch Mutual
Waste Water Company assessments for the Lots, Tract H, and
other properties the Debtor may acquire by way of
foreclosure at Flagstaff Ranch; and
f. The Debtor will make timely payment of the monthly golf
dues, monthly assessments, taxes, and insurance associated
with the Lots and Tract H.
Beginning on Jan. 1, 2012, the Debtor ceased making timely payment
of the Membership dues, FRPOA dues, and FRMWWC assessments
associated with the Lots and Tract H, as required by the CC&R's,
Declaration of Golf Club Easement, and Settlement Agreement. As a
result, the Debtor breached the Settlement Agreement and the IMH
DOT and was no longer entitled to a partial release associated
with any of its Lots or Tract H. On June 12, 2012, on the eve of
a noticed trustee's sale, the Debtor filed a voluntary petition
for relief under Chapter 11.
For the benefit of Golf Club, the Debtor executed the first
position deed of trust, which specifically states that Golf Club's
security interest continues to encumber the Lots and Tract H (and
thus the proceeds from the sale of those lots) unless and until a
partial release is obtained. Due to the Debtor's Jan. 1, 2012
default, a partial release was no longer available and Golf Club's
lien, in its entirety, continued to attach to Debtor's real
property, including Lot 132. Golf Club has a perfected security
interest in the proceeds of Lot 132.
Golf Club says that while adequate protection payments have been
ordered, the Debtor effectively depleted Golf Club's collateral to
make payments. While Golf Club's collateral has been recently
replenished, the Court made clear that making payments out of Golf
Club's cash collateral for adequate protection payments does not
constitute adequate protection. Nor has Debtor made any
indication that it intends to use or needs to utilize Golf Club's
cash collateral under the terms of its amended reorganization plan
which is fully funded under the Debtor's cash flow projections by
Lot sales and a ?new value? contribution.
The Debtor's actions have harmed Golf Club by reducing the amount
of dues being paid (which represent the Debtor's share of the
operating expenses necessary to maintain Flagstaff Ranch) pending
this bankruptcy and its second attempt to reorganize, even though
the money being held by Debtor is not needed as part of the
proposed plan implementation, Golf Club states.
Golf Club is represented by:
Gordon Silver
Thomas E. Littler, Esq.
Robert C. Warnicke, Esq.
Courtney R. Radow, Esq.
One East Washington, Suite 400
Phoenix, Arizona 85004
Tel: (602) 256-0400
Fax: (602) 256-0345
E-mail: elizabeth@trospercommunications.com
About FR 160
FR 160 LLC, originally named IMH Special Asset NT 160 LLC, was
formed for the purpose of owning 51 residential lots and Tract H
at the Flagstaff Ranch Golf Club Community generally located in
Coconino County, Arizona. In January 2011, to resolve disputes
with the golf club, the parties entered into an agreement where
FR 160 delivered to the golf club a promissory note in the amount
of $4,950,000, a promissory note of $720,000 and a deed of trust
on the real property. FR 160 failed to make certain payments and
the golf club initiated the non-judicial foreclosure process.
FR 160 commenced bankruptcy to stop the trustee's sale of the
property. It filed a Chapter 11 petition (Bankr. D. Ariz. Case
No. 12-13116) in Phoenix on June 12, 2012.
FR 160, which claims to be a Single Asset Real Estate as defined
in 11 U.S.C. Sec. 101(51B), estimated assets of up to $50 million
and debts of up to $100 million. Attorneys at Snell & Wilmer
L.L.P., in Phoenix, serve as counsel.
The U.S. Trustee has not appointed an official committee in the
case due to an insufficient number of persons holding unsecured
claims against the Debtor that have expressed interest in serving
on a committee. The U.S. Trustee reserves the right to appoint a
committee should interest develop among the creditors.
Attorneys at Gordon Silver, in Phoenix, represent creditor
Flagstaff Ranch Golf Club as counsel.
FREESEAS INC: Issues 335,000 Add'l Settlement Shares to Hanover
---------------------------------------------------------------
The Supreme Court of the State of New York, County of New York,
entered an order on April 17, 2013, approving, among other things,
the fairness of the terms and conditions of an exchange pursuant
to Section 3(a)(10) of the Securities Act of 1933, as amended, in
accordance with a stipulation of settlement between FreeSeas Inc.,
and Hanover Holdings I, LLC, in the matter entitled Hanover
Holdings I, LLC v. FreeSeas Inc., Case No. 153183/2013. Hanover
commenced the Action against the Company on April 8, 2013, to
recover an aggregate of $1,792,416 of past-due accounts payable of
the Company, plus fees and costs. The Order provides for the full
and final settlement of the Claim and the Action. The Settlement
Agreement became effective and binding upon the Company and
Hanover upon execution of the Order by the Court on April 17,
2013.
Pursuant to the terms of the Settlement Agreement approved by the
Order, on April 17, 2013, the Company issued and delivered to
Hanover 560,000 shares of the Company's common stock, $0.001 par
value, on April 22, 2013, the Company issued and delivered to
Hanover 300,000 Additional Settlement Shares, and on April 29,
2013, the Company issued and delivered to Hanover another 325,000
Additional Settlement Shares.
The Settlement Agreement provides that the Initial Settlement
Shares will be subject to adjustment on the trading day
immediately following the Calculation Period to reflect the
intention of the parties that the total number of shares of Common
Stock to be issued to Hanover pursuant to the Settlement Agreement
be based upon a specified discount to the trading volume weighted
average price of the Common Stock for a specified period of time
subsequent to the Court's entry of the Order.
Hanover demonstrated to the Company's satisfaction that it was
entitled to receive 335,000 Additional Settlement Shares, and that
the issuance of those Additional Settlement Shares to Hanover
would not result in Hanover exceeding the beneficial ownership
limitation. Accordingly, on May 6, 2013, the Company issued and
delivered to Hanover the 335,000 shares.
A copy of the Form 8-K is available for free at:
http://is.gd/vnKshM
About FreeSeas Inc.
Headquartered in Athens, Greece, FreeSeas Inc., formerly known as
Adventure Holdings S.A., was incorporated in the Marshall Islands
on April 23, 2004, for the purpose of being the ultimate holding
company of ship-owning companies. The management of FreeSeas'
vessels is performed by Free Bulkers S.A., a Marshall Islands
company that is controlled by Ion G. Varouxakis, the Company's
Chairman, President and CEO, and one of the Company's principal
shareholders.
The Company's fleet consists of six Handysize vessels and one
Handymax vessel that carry a variety of drybulk commodities,
including iron ore, grain and coal, which are referred to as
"major bulks," as well as bauxite, phosphate, fertilizers, steel
products, cement, sugar and rice, or "minor bulks." As of Oct.
12, 2012, the aggregate dwt of the Company's operational fleet is
approximately 197,200 dwt and the average age of its fleet is 15
years.
Freeseas disclosed a net loss of US$30.88 million in 2012, a net
loss of US$88.19 million in 2011, and a net loss of US$21.82
million in 2010. The Company's balance sheet at Dec. 31, 2012,
showed US$114.35 million in total assets, $106.55 million in
total liabilities and US$7.80 million in total shareholders'
equity.
RBSM LLP, in New York, issued a "going concern" qualification on
the consolidated financial statements for the year ended Dec. 31,
2012. The independent auditors noted that the Company has
incurred recurring operating losses and has a working capital
deficiency. In addition, the Company has failed to meet
scheduled payment obligations under its loan facilities and has
not complied with certain covenants included in its loan
agreements. It has also failed to make required payments to
Deutsche Bank Nederland as agreed to in its Sept. 7, 2012,
amended and restated facility agreement and received notices of
default from First Business Bank. Furthermore, the vast majority
of the Company's assets are considered to be highly illiquid and
if the Company were forced to liquidate, the amount realized by
the Company could be substantially lower that the carrying value
of these assets. These conditions among others raise substantial
doubt about the Company's ability to continue as a going concern.
GASCO ENERGY: Continues to Evaluate Strategic Alternatives
----------------------------------------------------------
Gasco Energy, Inc. on May 13 disclosed that it is continuing to
evaluate its strategic alternatives for the Company's assets,
including a sale of the Company or all of its assets. Stephens,
Inc., Gasco's financial advisor, has been assisting and continues
to assist in the evaluation process, which is intended to maximize
the value of Gasco's assets.
As previously disclosed, since mid-year 2012, the Company has been
seeking to restructure or refinance its debt or to sell some or
all of its assets to improve its liquidity position. While these
efforts have not been successful to date, Gasco is continuing to
evaluate and pursue various options to address the Company's
liquidity constraints.
It is possible these strategic alternatives will require the
Company to make a pre-package, pre-arranged or other type of
filing for protection under Chapter 11 of the U.S. Bankruptcy
Code. In addition, because the Company has not made the required
interest payment on its outstanding 5.50% convertible senior notes
due 2015 within 30 days after the date when due, an event of
default has occurred under the indenture governing the notes and
an involuntary petition for bankruptcy may be filed against Gasco.
These factors raise substantial doubt about the Company's ability
to continue as a going concern.
The Company cannot provide any assurances that it will be
successful in accomplishing any of these plans or that any of
these actions can be effected on a timely basis, on satisfactory
terms or maintained once initiated. Furthermore, the Company's
cash management strategies may limit its ability to successfully
execute its strategic alternatives.
The strategic review process has not been initiated as a result of
any particular offer. The Company does not intend to disclose
developments with respect to this process except to the extent
required under applicable securities regulations.
About Gasco Energy
Denver-based Gasco Energy, Inc. -- http://www.gascoenergy.com--
is a natural gas and petroleum exploitation, development and
production company engaged in locating and developing hydrocarbon
resources, primarily in the Rocky Mountain region and in
California's San Joaquin Basin. Gasco's principal business is the
acquisition of leasehold interests in petroleum and natural gas
rights, either directly or indirectly, and the exploitation and
development of properties subject to these leases. Gasco focuses
its drilling efforts in the Riverbend Project located in the Uinta
Basin of northeastern Utah, targeting the oil-bearing Green River
Formation and the natural gas-prone Wasatch, Mesaverde, Blackhawk,
Mancos, Dakota and Morrison formations.
In its auditors' report on the consolidated financial statements
for the year ended Dec. 31, 2012, KPMG LLP, in Denver, Colorado,
expressed substantial doubt about Gasco Energy's ability to
continue as a going concern. The independent auditors noted that
the Company has suffered recurring losses and negative cash flows
from operations.
The Company reported a net loss of $22.2 million on $8.9 million
of revenues in 2012, compared with a net loss of $7.3 million on
$18.3 million of revenues in 2011. The Company's balance sheet at
Dec. 31, 2012, showed $53.9 million in total assets, $36.2 million
in total liabilities, and stockholders' equity of $17.7 million.
According to the annual report for the year ended Dec. 31, 2012,
to continue as a going concern, the Company must generate
sufficient operating cash flows, secure additional capital or
otherwise pursue a strategic restructuring, refinancing or other
transaction to provide it with additional liquidity. "The Company
has engaged a financial advisor to assist it in evaluating such
potential strategic alternatives. It is possible these strategic
alternatives will require the Company to make a pre-package, pre-
arranged or other type of filing for protection under Chapter 11
of the U.S. Bankruptcy Code."
GEOKINETICS INC: Joint Plan Takes Effect; Exits Chapter 11
----------------------------------------------------------
Geokinetics Inc. on May 10 disclosed that the Company and its
domestic subsidiaries have successfully emerged from chapter 11
protection and the Company's second modified joint plan of
reorganization has become effective. David J. Crowley, the
President and Chief Executive Officer of the Company, said, "On
behalf of more than 4,000 fellow employees, operating in over 10
countries across the globe, I am delighted to announce
Geokinetics' emergence from chapter 11. With the combination of a
significantly de-levered balance sheet and the support of our new
stakeholders I am optimistic about the prospects for our Company.
I am particularly encouraged by the support that our new
stakeholders have already demonstrated through their $25 million
investment in new equity capital. Our ability to compress the
timeline for restructuring and limit the effect on our product
lines was made possible by the patience and trust we received from
our valued clients, the teamwork and collaboration with our key
suppliers, and the dedication and professionalism of our
employees. Our future at Geokinetics looks very bright."
As provided under the Plan, the Company's $50 million secured
credit facility was repaid in full, the $300 million (plus accrued
and unpaid interest) of the Company's senior secured notes was
converted into a new class of common stock of the reorganized
Company and allowed general unsecured claims were either paid in
full upon the effectiveness of the Plan or will be paid in full in
the ordinary course of business. In addition, the outstanding
borrowings under the Company's $25 million debtor-in-possession
credit facility provided by certain of the Company's new
stakeholders were repaid with shares of the new class of common
stock, as noted above. The previously existing class of common
stock of the Company was canceled.
In connection with its emergence from chapter 11, the Company
entered into a $75 million senior secured asset-based revolving
credit facility with Wells Fargo Bank, National Association. The
proceeds of the initial borrowings under the new credit facility
were used to make certain distributions as provided in the Plan.
The Company's Claims Agent maintains a website containing
Bankruptcy Court documents and other updates at
http://www.gokrestructuring.com
Akin Gump Strauss Hauer & Feld LLP is serving as the Company's
legal advisor and Rothschild Inc. is serving as the Company's
financial advisor.
About Geokinetics Inc.
Headquartered in Houston, Texas, Geokinetics Inc., a Delaware
corporation founded in 1980, provides seismic data acquisition,
processing and integrated reservoir geosciences services, and
land, transition zone and shallow water OBC environment
geophysical services.
Geokinetics Inc. and its nine affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 13-10472) on March 10,
2013, with a prepackaged Chapter 11 plan that converts $300
million of senior secured notes into 100% of the reorganized
Company's common stock.
Akin Gump Strauss Hauer & Feld LLP serves as counsel to the
Debtors; Richards, Layton & Finger, P.A., is co-counsel;
Rothschild Inc. is the financial advisor and investment banker;
UHY LLP is the independent auditor; and GCG, Inc., is the claims
agent and administrative agent. The Debtors also obtained
approavbl to employ Ernst & Young LLP.
Geokinetics Inc. incurred a net loss applicable to common
stockholders of $93.06 million in 2012, a net loss applicable to
common stockholders of $231.25 million in 2011 and a net loss
applicable to common stockholders of $147.53 million in 2010.
The Company's balance sheet at Dec. 31, 2012, showed $392.89
million in total assets, $593.53 million in total liabilities,
$93.31 million in preferred stock, Series B-1 Senior Convertible,
and a $293.94 million total stockholders' deficit.
GMX RESOURCES: Provides Update on Reserve Estimates
---------------------------------------------------
GMX Resources Inc. is providing the following production
information and an updated sensitivity analysis regarding the
Company's estimated proved reserves in connection with information
being provided to potential purchasers of the Company's assets.
As previously disclosed, the Company's year-end 2012 reserve
estimates were prepared by DeGolyer and McNaughton, an independent
reserve engineering firm.
January 2013 Production
Average daily production of the Company's Bakken properties for
January 2013 was 533 BOE/ day. The Company's East Texas
production, including Haynesville/Bossier properties, was 13.9
MMcfe/day during January 2013. The Company's total average daily
production was 2,843 BOE/day during January 2013.
March 31, 2013 Estimated Proved Reserves
Based on management's roll-forward of estimated proved reserves as
of March 31, 2013, based on an average annual NYMEX strip pricing
as of April 18, 2013, and after deductions for first quarter 2013
production and including certain changes in interests for asset
swaps of undeveloped acreage including proved undeveloped (PUD)
locations and anticipated timing for PUD drilling (but without
further adjustments for type-curves based on first quarter 2013
production or changes that may be applicable based on timing of
current projected future drilling), the Company's estimated proved
reserves with respect to certain areas is set forth below. Since
the Company is currently operating as a debtor-in-possession
following its April 1, 2013 filing for Chapter 11 bankruptcy
protection under a limited capital budget, it cannot reasonably
forecast, and is not updating any prior public projections
regarding, its future drilling program.
NYMEX Natural Gas and Oil Pricing
Proved Reserves 3/31/13 -Annual Average NYMEX Natural Gas and Oil
Strip Pricing
Oil/NGLs Natural Gas MMBOE
MMbls Bcf
Proved Developed
Bakken/Three Forks 2.0 1.2 2.2
Haynesville/Bossier 55.0 9.2
Cotton Valley and Other 0.4 0.1
Proved Undeveloped
Bakken/Three Forks 7.6 4.2 8.3
Haynesville/Bossier 106.0 17.7
Cotton Valley and Other
Total Proved 9.6 166.9 37.4
PV-10 PV 10 %
($ in Millions) Total Proved
Proved Developed $51.5 20.7%
Bakken/Three Forks 93.2 37.6%
Haynesville/Bossier 1.0 0.4%
Cotton Valley and Other
Proved Undeveloped
Bakken/Three Forks 38.0 15.3%
Haynesville/Bossier 64.4 25.9%
Cotton Valley and Other
Total Proved $248.1 100.0%
(a) Company roll forward of DeGolyer and MacNaughton prepared
December 31, 2012 report with interest changes and PUDs retimed.
The proved reserves as of March 31, 2013 for oil are calculated
based on the annual average NYMEX West Texas Intermediate ("WTI")
price as of April 18, 2013 adjusted for quality, transportation
fees and regional price differentials. The annual averages used
for oil were $86.83, $84.91, $83.34, $82.43, $81.85, $81.37,
$80.98, $80.46, and $80.24 for 2013, 2014, 2015, 2016, 2017, 2018,
2019, and 2020 and thereafter, respectively per barrel. For
natural gas the proved reserves were based on the annual average
NYMEX strip price as of April 18, 2013. The annual averages used
were $4.68, $4.52, $4.58, $4.68, $4.80, $4.99, $5.21, $5.47,
$5.79, $6.13, $6.48, $6.85 and $7.22 for 2013, 2014, 2015, 2016,
2017, 2018, 2019, 2020, 2021, 2022, 2023, and 2024 and thereafter,
respectively per MMBTU and was adjusted for energy content,
transportation fees, regional price differences, and system
shrinkage.
(b) PV-10 represents the present value, discounted at 10% per
annum, of estimated future net revenue before income tax of the
Company's estimated proved reserves. The PV-10 value is different
than the standardized measure of discounted estimated future net
cash flows which is calculated after income taxes. The Company
believes the PV-10 is a useful measure for evaluating the relative
monetary significance of their proved reserves. Investors may use
the PV-10 as a basis for comparison of the relative size and value
of the Company's reserves to its peers. However, due to the
Company's fully reserved net deferred tax assets, its standardized
measure of discounted estimated net cash flows is currently the
same as its PV-10.
(c) Totals may not equal the sum due to rounding.
Summary of Reserve Differences for Sensitivity Comparisons
Bakken - 10.5 MMBOE (versus 8.9 MMBOE in December 31, 2102 SEC
reserve report), based on 19 producing wells, 22 net PUDs as of
March 31, 2013 and 35,728 net acres.
Haynesville Bossier; Cotton Valley and Other - 161.5 Bcfe (versus
160.5 Bcfe in December 31, 2012 SEC reserve report).
Total estimated proved reserves - 37.4 MMBOE (versus 35.6 MMBOE in
December 31, 2012 SEC reserve report).
Proved reserves PV-10 - $248 million (versus $80.1 million in
December 31, 2012 SEC reserve report).
(1) PV-10 represents the present value, discounted at 10% per
annum, of estimated future net revenue before income tax of the
Company's estimated proved reserves. The PV-10 value is different
than the standardized measure of discounted estimated future net
cash flows which is calculated after income taxes. The Company
believes the PV-10 is a useful measure for evaluating the relative
monetary significance of their proved reserves. Investors may use
the PV-10 as a basis for comparison of the relative size and value
of the Company's reserves to its peers. However, due to the
Company's fully reserved net deferred tax assets, its standardized
measure of discounted estimated net cash flows is the same as its
PV-10.
Additional information regarding GMXR's Chapter 11 proceedings can
be found at http://dm.epiq11.com/GMXor by calling 877-854-0023
(within U.S.) or +1-503-597-7711 (outside U.S.).
About GMX Resources
GMX Resources Inc. -- http://www.gmxresources.com/-- is an
independent natural gas production company headquartered in
Oklahoma City. GMXR has 53 producing wells in Texas & Louisiana,
24 proved developed non-producing reservoirs, 48 proved
undeveloped locations and several hundred other development
locations. GMXR has 9,000 net acres on the Sabine Uplift of East
Texas. GMXR has 7 producing wells in New Mexico.
The Company's balances sheet at Sept. 30, 2012, showed $343.14
million in total assets and $467.64 million in total liabilities.
GMX Resources filed a Chapter 11 petition in its hometown (Bankr.
W.D. Okla. Case No. 13-11456) on April 1, 2013, so secured lenders
can buy the business in exchange for $324.3 million in first-lien
notes. As of the Petition Date, GMXR had long-term debt of
approximately $427 million (outstanding principal amount):
Outstanding
Principal
---------
Senior Secured Notes due December 2017 $324,340,000
Senior Secured Second-Priority Notes due 2018 $51,500,000
Convertible Senior Notes due May 2015 $48,296,000
Senior Notes due February 2019 $1,970,000
Joint Venture Financing $1,261,000
------------
Total $427,367,000
The Debtors tapped Andrews Kurth, LLP, as bankruptcy counsel,
Crowe & Dunlevy as conflicts counsel, Jefferies LLC as investment
banker and Epiq Bankruptcy Solutions, LLC as claims and notice
agent.
GMX RESOURCES: Delays First Quarter Form 10-Q
---------------------------------------------
GMX Resources Inc. notified the U.S. Securities and Exchange
Commission that the filing of its quarterly report for the period
ended March 31, 2013, will be delayed. The Company has determined
that it is unable to file its Quarterly Report on Form 10-Q
without unreasonable effort and expense due to the focus of the
Company's resources (including personnel and available funds) on
the bankruptcy process. The Company intends to make those
disclosures as are required in the bankruptcy process.
About GMX Resources
GMX Resources Inc. -- http://www.gmxresources.com/-- is an
independent natural gas production company headquartered in
Oklahoma City. GMXR has 53 producing wells in Texas & Louisiana,
24 proved developed non-producing reservoirs, 48 proved
undeveloped locations and several hundred other development
locations. GMXR has 9,000 net acres on the Sabine Uplift of East
Texas. GMXR has 7 producing wells in New Mexico.
The Company's balances sheet at Sept. 30, 2012, showed $343.14
million in total assets and $467.64 million in total liabilities.
GMX Resources filed a Chapter 11 petition in its hometown (Bankr.
W.D. Okla. Case No. 13-11456) on April 1, 2013, so secured lenders
can buy the business in exchange for $324.3 million in first-lien
notes. As of the Petition Date, GMXR had long-term debt of
approximately $427 million (outstanding principal amount):
Outstanding
Principal
---------
Senior Secured Notes due December 2017 $324,340,000
Senior Secured Second-Priority Notes due 2018 $51,500,000
Convertible Senior Notes due May 2015 $48,296,000
Senior Notes due February 2019 $1,970,000
Joint Venture Financing $1,261,000
------------
Total $427,367,000
The Debtors tapped Andrews Kurth, LLP, as bankruptcy counsel,
Crowe & Dunlevy as conflicts counsel, Jefferies LLC as investment
banker and Epiq Bankruptcy Solutions, LLC as claims and notice
GRANDE COMMUNICATIONS: Moody's Rates New $295MM Debt 'B2'
---------------------------------------------------------
Moody's Investors Service assigned a B2 corporate family rating to
Grande Communications Networks LLC and a B2 rating to its proposed
first lien credit facility, consisting of a $35 million revolver
(expected to be undrawn at close) and a $260 million first lien
term loan. The company plans to use proceeds primarily to repay
existing debt (approximately $155 million) and to fund a $100
million distribution to equity sponsor ABRY Partners. The outlook
is stable.
A summary this action follows. Ratings are subject to a review of
final documentation.
Grande Communications Networks LLC
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B3-PD
Senior Secured First Lien Bank Credit Facility, Assigned B2,
LGD3, 35%
Outlook, Stable
Ratings Rationale:
Moody's estimates leverage at almost 5 times debt-to-EBITDA pro
forma for the proposed transaction, and this leverage poses risk
for a small (about $200 million annual revenue) company operating
in an intensely competitive environment, driving Grande's B2
corporate family rating. Expectations for positive (albeit modest)
free cash flow as capital intensity diminishes after several years
of significant investment support the rating. Also, Grande's high
quality network supports strong growth prospects for its
residential high speed data business and its commercial business.
The upgraded plant also positions it well to defend and grow its
market share. However, the sponsor ownership creates event risk.
Moody's expects leverage to decline through EBITDA growth and some
debt reduction over at least the next year or two, but beyond that
time period an increase in leverage to support a sponsor return,
whether in the form of incremental dividends or a leveraging sale
of the company, is likely.
The stable outlook incorporates expectations for positive free
cash flow and for Grande's leverage to fall to the low to mid 4
times debt-to-EBITDA range over the next 12 to 18 months. The
outlook also assumes the company achieves EBITDA growth through a
combination of adding units, price increases, and a slight
improvement in EBITDA margin from 2012.
Lack of scale and the sponsor ownership constrain the rating.
However, Moody's would consider an upgrade based on expectations
for sustained leverage in the mid 3 times debt-to-EBITDA range and
sustained debt-to-free cash flow in the high single digits. An
upgrade would also require expectations for good liquidity and
continued positive trends in operating metrics such as revenue per
homes passed and triple play equivalent.
Expectations for sustained leverage in excess of 6 times debt-to-
EBITDA or sustained negative free cash flow would likely have
negative ratings implications. Evidence of a shift in the
competitive landscape such that Moody's anticipated a
deterioration in Grande's subscriber penetration levels could also
warrant a negative action.
The principal methodology used in this rating was Global Pay
Television - Cable and Direct-to-Home Satellite Operators
Methodology published in April 2013. Other methodologies used
include Loss Given Default for Speculative-Grade Non-Financial
Companies in the U.S., Canada and EMEA published in June 2009.
Grande Communications Networks LLC provides video, high speed
data, and voice services to about 145,000 residential and
commercial customers in six core Texas markets: Midland-Odessa,
San Antonio, Corpus Christi, Dallas, Waco, and Austin. The company
maintains headquarters in San Marcos, Texas, has annual revenue of
approximately $200 million, and is owned primarily by ABRY
Partners. Executives from Patriot Media, who run RCN Telecom
Services LLC (B1 Stable), another cable company primarily owned by
ABRY, manage Grande.
HALLWOOD GROUP: Stockholders Elect Michael Powers to Board
----------------------------------------------------------
At The Hallwood Group Incorporated's annual meeting of
stockholders held on May 7, 2013, Michael R. Powers was elected as
director to hold office for three years. The Company's other
directors are Charles A. Crocco, Jr., whose term of office as a
director continues until the 2014 annual meeting, Anthony J.
Gumbiner, the Chairman of the Board, whose term of office as a
director continues until the 2015 annual meeting, and Amy H.
Feldman, whose term of office as a director continues until the
2015 annual meeting.
About Hallwood Group
Dallas, Texas-based The Hallwood Group Incorporated (NYSE MKT:
HWG) operates as a holding company. The Company operates its
principal business in the textile products industry through its
wholly owned subsidiary, Brookwood Companies Incorporated.
Brookwood is an integrated textile firm that develops and produces
innovative fabrics and related products through specialized
finishing, treating and coating processes.
Prior to October 2009, The Hallwood Group Incorporated held an
investment in Hallwood Energy, L.P. ("Hallwood Energy"). Hallwood
Energy was a privately held independent oil and gas limited
partnership and operated as an upstream energy company engaged in
the acquisition, development, exploration, production, and sale of
hydrocarbons, with a primary focus on natural gas assets. The
Company accounted for the investment in Hallwood Energy using the
equity method of accounting. Hallwood Energy filed for bankruptcy
in March 2009. In connection with the confirmation of Hallwood
Energy's bankruptcy in October 2009, the Company's ownership
interest in Hallwood Energy was extinguished and the Company no
longer accounts for the investment in Hallwood Energy using the
equity method of accounting.
Hallwood Group incurred a net loss of $17.94 million in 2012, as
compared with a net loss of $6.33 million in 2011. The Company's
balance sheet at Dec. 31, 2012, showed $70.97 million in total
assets, $29.77 million in total liabilities and $41.19 million in
total stockholders' equity.
Deloitte & Touche LLP, in Dallas, Texas, issued a "going concern"
qualification on the consolidated financial statements for the
year ended Dec. 31, 2012. The independent auditors noted that
the Company is dependent on its subsidiary to receive the cash
necessary to fund its ongoing operations and obligations. It is
uncertain whether the subsidiary will be able to make payment of
dividends to its fund ongoing operations. These conditions raise
substantial doubt about its ability to continue as a going
concern.
HAMPTON CAPITAL: Can Employ Getzler Henrich as Advisor
------------------------------------------------------
Hampton Capital Partners, LLC, sought and obtained approval from
the Bankruptcy Court to hire Getzler Henrich & Associates LLC as
financial consultant.
Getzler will, among other things, give the Debtor advice with
respect to the operation of its business, including an evaluation
of the desirability of the continuance of the business,
development of its restructuring options and determination of the
Debtors' cash requirements in the absence of sales prospects, the
ability and means which some or all of the assets could be
refinanced or liquidated, and any other matter relevant to the
case or to the formulation of a plan.
The firm will bill on an hourly basis at these rates:
Principal / Managing Director $475 to $595
Director / Specialists $364 to $515
Associate Professionals $150 to $365
Travel time is billed at 50% of the hourly rate.
The hourly rate of L. Frank Melazzo, a managing director in the
firm's Charlotte office, is $400 for this assignment, which
represents a 25% discount to his customary billing rate.
The firm will also seek reimbursement of out-of-pocket expenses.
Getzler attests it represents no other entity in connection with
the Chapter 11 case, represents or holds no interest adverse to
the interest of the estate, and is "disinterested" as that term is
defined in U.S.C. Sec. 101.
About Hampton Capital
Hampton Capital Partners, LLC, an Aberdeen, N.C.-based
manufacturer of residential and commercial tufted carpets under
the Gulistan name, filed a Chapter 11 petition (Bankr. M.D.N.C.
Case No. 13-bk-80015) on Jan. 7, 2013.
The Company has been producing carpet under the Gulistan name
since 1924, although it traces its roots back to 1818, when an
Armenian textile importer established a business in Turkey. The
company began manufacturing carpet in Aberdeen in 1957, and was
acquired by J.P. Stevens & Co. Inc. in 1964. Over the last 25
years, Gulistan Carpet has undergone several ownership changes.
In addition to its headquarters and manufacturing operations in
Aberdeen, the company has a plant in Wagram, N.C.
Northen Blue, LLP, serves as counsel to the Debtor. Getzler
Henrich & Associates LLC is the financial consultant.
Five creditors have been appointed to serve on the Official
Committee of Unsecured Creditors of Hampton Capital Partners LLC.
HAMPTON CAPITAL: Hires Binswanger Southern as Realtor
-----------------------------------------------------
Hampton Capital Partners LLC asks the U.S. Bankruptcy Court for
permission to employ Douglas M. Faris and the firm of Binswanger
Southern (N.C.), Inc., to list, market and sell the Debtor's
primary manufacturing plant located at 3140 NC 5 Highway, in
Aberdeen, North Carolina.
Douglas M. Faris, senior vice president of Binswanger Company,
attests that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
Binswanger has agreed to compensation of 5% of the gross sales
proceeds from the sale of the Property.
About Hampton Capital
Hampton Capital Partners, LLC, an Aberdeen, N.C.-based
manufacturer of residential and commercial tufted carpets under
the Gulistan name, filed a Chapter 11 petition (Bankr. M.D.N.C.
Case No. 13-bk-80015) on Jan. 7, 2013.
The Company has been producing carpet under the Gulistan name
since 1924, although it traces its roots back to 1818, when an
Armenian textile importer established a business in Turkey. The
company began manufacturing carpet in Aberdeen in 1957, and was
acquired by J.P. Stevens & Co. Inc. in 1964. Over the last 25
years, Gulistan Carpet has undergone several ownership changes.
In addition to its headquarters and manufacturing operations in
Aberdeen, the company has a plant in Wagram, N.C.
Northen Blue, LLP, serves as counsel to the Debtor. Getzler
Henrich & Associates LLC is the financial consultant.
Five creditors have been appointed to serve on the Official
Committee of Unsecured Creditors of Hampton Capital Partners LLC.
HAMPTON CAPITAL: Seeks Exclusivity Extension Until Aug. 5
---------------------------------------------------------
Hampton Capital Partners LLC asks the U.S. Bankruptcy Court to
extend until Aug. 5, 2013, the exclusive period to file its
Chapter 11 plan and disclosure statement. The Debtor also seeks
to extend the exclusive period to confirm a plan to Oct. 7, 2013.
Hearing on the motion is scheduled for May 30, 2013 at 10:00 a.m.
at Courtroom, Durham.
Hampton Capital Partners, LLC, an Aberdeen, N.C.-based
manufacturer of residential and commercial tufted carpets under
the Gulistan name, filed a Chapter 11 petition (Bankr. M.D.N.C.
Case No. 13-bk-80015) on Jan. 7, 2013.
The Company has been producing carpet under the Gulistan name
since 1924, although it traces its roots back to 1818, when an
Armenian textile importer established a business in Turkey. The
company began manufacturing carpet in Aberdeen in 1957, and was
acquired by J.P. Stevens & Co. Inc. in 1964. Over the last 25
years, Gulistan Carpet has undergone several ownership changes.
In addition to its headquarters and manufacturing operations in
Aberdeen, the company has a plant in Wagram, N.C.
Northen Blue, LLP, serves as counsel to the Debtor. Getzler
Henrich & Associates LLC is the financial consultant.
Five creditors have been appointed to serve on the Official
Committee of Unsecured Creditors of Hampton Capital Partners LLC.
HEARUSA INC: Liquidating Trustee Sued by Shareholders
-----------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the liquidating trustee for HearUSA Inc. is being
sued by shareholders for using the wrong record date in doling out
a $37 million distribution last year to stockholders.
The report relates that, according to plaintiffs in a lawsuit
filed May 7, Joseph Luzinski, the liquidating trustee, tried to
use other shareholders' or creditors' money in a secret agreement
to pay off the equity holder who first raised a complaint about
not being paid.
According to the report, when presented with the facts at a
hearing on April 18, U.S. Bankruptcy Judge Erik P. Kimball in West
Palm Beach, Florida, said he "would be very surprised if there
wasn't a breach of fiduciary duty by somebody involved in
representing the estate in this case."
Judge Kimball, the report adds, also said "it would be wise" for
Mr. Luzinski to file a report "before I ask for one" describing
who among shareholders was paid correctly and who wasn't.
Mr. Rochelle recounts that HearUSA's was an atypical liquidating
Chapter 11 plan that paid creditors in full, leaving 97 cents a
share for distribution to holders of common stock. The existing
preferred stock was to be paid at face value plus accrued
dividends. A ruling by the bankruptcy court and the Chapter 11
plan provided that May 14, 2012, was the record date for
distributions to shareholders. According to the papers at the
time, later trades in the stock wouldn't be honored in making
distributions. The plan was approved with a May 16, 2012,
confirmation order and implemented June 18, 2012. According to
shareholders who filed the lawsuit in bankruptcy court, an
incorrect June 18 distribution date was communicated to Depository
Trust Co. when the time came for distributions to stockholders.
The eight plaintiffs in the lawsuit owned stock on the original
record date and sold the stock before the allegedly incorrect
record date. They claim to be owed almost $1 million because they
didn't receive a distribution. The suit demands payment of the
distribution.
Before the suit was filed, Mr. Luzinski reached a settlement
with one of the plaintiffs and tried to keep the settlement
agreement secret. When asked at the April 18 hearing about the
source of the money for the settlement, Mr. Luzinski's lawyer,
Douglas Bates from Berger Singerman LLP in Miami, said the money
would come from the bankrupt estate.
Judge Kimball, the report discloses, said the settlement couldn't
be secret and indicated he was inclined not to approve the
settlement because the money should come from whomever made the
mistake. At that point, Mr. Bates withdrew the settlement motion,
according to a hearing transcript. The judge ended the April 18
hearing by saying that if "something doesn't happen in the next
month," he would appoint an examiner, "assuming I still have the
power."
Rodney McFadden, one of the plaintiffs who didn't receive his
distribution, said in an e-mailed statement that the complaint
will be followed by a motion to remove Mr. Luzinski and compel
repayment of fees received since emergence from Chapter 11.
Mr. Luzinski is a senior vice president with Development
Specialists Inc. The suit is "without merit," and DSI intends to
defend it "vigorously," Robert Weiss, DSI's general counsel, told
Bloomberg News.
The lawsuit is Jacks v. Luzinski (In re HearUSA Inc.),
13-01370, U.S. Bankruptcy Court, Southern District of Florida
(West Palm Beach).
About HearUSA Inc.
HearUSA, Inc., which sells hearing aids in 10 states, filed for
Chapter 11 bankruptcy protection (Bankr. S.D. Fla. Case No.
11-23341) on May 16, 2011, to sell the business for $80 million to
William Demant Holdings A/S. The Debtor said that assets are
$65.6 million against debt of $64.7 million as of March 31, 2010.
HearUSA owes $31.3 million to Siemens Hearing Instruments Inc.,
the principal supplier and primary secured lender.
Judge Erik P. Kimball presides over the case. Brian K. Gart,
Esq., Paul Steven Singerman, Esq., and Debi Evans Galler, Esq., at
Berger Singerman, P.A., represent the Debtor. The Debtor has
tapped Bryan Cave LLP as special counsel; Sonenshine Partners LLC,
investment banker; Development Specialist Inc., restructuring
advisor ans Joseph J. Luzinski as chief restructuring officer; and
AlixPartners LLC, as communications consultant. Trustee Services,
Inc., serves as claims and notice agent.
The Official Committee of Unsecured Creditors has been appointed
in the case. Robert Paul Charbonneau, Esq., and Daniel L. Gold,
Esq., at Ehrenstein Charbonneau Calderin, represent the Creditors
Committee.
An Official Committee of Equity Security Holders has also been
appointed. Mark D. Bloom, Esq., at Greenberg Traurig P.A., in
Miami, Fla., represents the Equity committee as counsel.
In connection with the closing of the transactions contemplated by
the Asset Purchase Agreement, on Sept. 13, 2011, the Company filed
a Certificate of Amendment to its Restated Certificate of
Incorporation with the Delaware Secretary of State in order to
change its name to "HUSA Liquidating Corporation". The
Certificate of Amendment was effective on the date of filing.
The effective date of the Chapter 11 Plan of Liquidation of
HearUSA, Inc., took effect on June 18, 2012.
IDERA PHARMACEUTICALS: Regains Compliance with NASDAQ Rule
----------------------------------------------------------
Idera Pharmaceuticals, Inc., has been formally notified by The
NASDAQ Stock Market LLC that the Company has evidenced compliance
with the minimum stockholders' equity requirement for continued
listing on The NASDAQ Capital Market, as required by the decision
of the NASDAQ Listing Qualifications Panel dated March 5, 2013.
Accordingly, the Company has regained compliance with the minimum
stockholders' equity requirement for continued listing pursuant to
NASDAQ Listing Rule 5450(b)(2) and the matter has been closed.
About Idera Pharmaceuticals
Cambridge, Massachusetts-based Idera Pharmaceuticals, Inc., is a
clinical stage biotechnology company engaged in the discovery and
development of novel synthetic DNA- and RNA-based drug candidates
that are designed to modulate immune responses mediated through
Toll-like Receptors, or TLRs. The Company has two drug
candidates, IMO-3100, a TLR7 and TLR9 antagonist, and IMO-8400, a
TLR7, TLR8, and TLR9 antagonist, in clinical development for the
treatment of autoimmune and inflammatory diseases.
In the auditors' report on the consolidated financial statements
for the year ended Dec. 31, 2012, Ernst & Young LLP, in Boston,
Mass., expressed substantial doubt about Idera's ability to
continue as a going concern, citing recurring losses and negative
cash flows from operations and the necessity to raise additional
capital or alternative means of financial support, or both, prior
to Dec. 31, 2013, in order to continue to fund its operations.
The Company reported a net loss of $19.2 million on $51,000 of
revenue in 2012, compared with a net loss of $23.8 million on
$53,000 of revenue in 2011. Revenue in 2012 and 2011 consisted of
reimbursement by licensees of costs associated with patent
maintenance.
The Company's balance sheet at Dec. 31, 2012, showed $10.8 million
in total assets, $4.2 million in total liabilities, $5.9 million
of Series D Redeembale Convertible Preferred Stock, and
stockholders' equity of $706,000.
IN PLAY MEMBERSHIP: Can Hire Weinman & Associates as Counsel
------------------------------------------------------------
In Play Membership Golf, Inc., sought and obtained permission from
the U.S. Bankruptcy Court to employ Weinman & Associates, P.C., as
bankruptcy counsel to assist in, among others, the preparation of
statements and schedules, the plan of reorganization and
disclosure statement, and related matters. The firm has received
$10,000 from Stacey Hart, the Debtor's principal. The firm will
bill at its customary rates:
Hourly Rate
-----------
Jeffrey A. Weinman, Esq. $450
William A. Richey (Paralegal) $200
Lisa Barenberg (Paralegal) $150
In Play Membership Golf, Inc., doing business as Deer Creek Golf
Club and Plum Creek Golf and Country Club, filed a Chapter 11
petition (Bankr. D. Col. Case No. 13-14422) in Denver on March 22,
2013. The Debtor estimated assets and liabilities of at least $10
million.
According to the docket, the Chapter 11 plan and disclosure
statement are due July 22, 2013.
INSPIREMD INC: Incurs $4.8 Million Net Loss in March 31 Quarter
---------------------------------------------------------------
InspireMD, Inc., reported a net loss of $4.88 million on
$1.51 million of revenues for the three months ended March 31,
2013, as compared with a net loss of $3.14 million on
$1.13 million of revenues for the same period during the prior
year.
For the nine months ended March 31, 2013, the Company incurred a
net loss of $14.31 million on $3.37 million of revenues, as
compared with a net loss of $13.65 million on $4.41 million of
revenues for the same period a year ago.
The Company's balance sheet at March 31, 2013, showed $9.79
million in total assets, $13.20 million in total liabilities, and
a $3.40 million total capital deficiency.
Alan Milinazzo, president and CEO of InspireMD, said, "Since
joining the Company on January 3rd, we have made significant
progress in key strategic areas of the business. In addition to a
solid increase in quarterly revenues, we obtained the CE Mark for
our carotid stent and we strengthened our board and executive
management team. Momentum continued in April as we re-capitalized
the Company, uplisted to the NYSE MKT and received regulatory
approval to begin enrolling patients in our MASTER II clinical
trial. These achievements represent a very good start to 2013 and
we expect to continue to deliver strong results on multiple fronts
throughout the year."
A copy of the press release is available for free at:
http://is.gd/q92wmf
About InspireMD
InspireMD, Inc., was organized in the State of Delaware on
Feb. 29, 2008, as Saguaro Resources, Inc., to engage in the
acquisition, exploration and development of natural resource
properties. On March 28, 2011, the Company changed its name from
"Saguaro Resources, Inc." to "InspireMD, Inc."
Headquartered in Tel Aviv, Israel, InspireMD, Inc., is a medical
device company focusing on the development and commercialization
of its proprietary stent platform technology, Mguard. MGuard
provides embolic protection in stenting procedures by placing a
micron mesh sleeve over a stent. The Company's initial products
are marketed for use mainly in patients with acute coronary
syndromes, notably acute myocardial infarction (heart attack) and
saphenous vein graft coronary interventions (bypass surgery).
InspireMD reported a net loss of US$17.59 million on US$5.35
million of revenue for the year ended June 30, 2012, compared with
a net loss of US$6.17 million on US$4.67 million of revenue during
the prior year.
Kesselman & Kesselman, in Tel Aviv, Israel, issued a "going
concern" qualification on the consolidated financial statements
for the year ended June 30, 2012. The independent auditors noted
that the Company has had recurring losses, negative cash flows
from operating activities and has significant future commitments
that raise substantial doubt about its ability to continue as a
going concern.
The Company said the following statement in its quarterly report
for the period ended Dec. 31, 2012: "The Company has had
recurring losses and negative cash flows from operating activities
and has significant future commitments. For the six months ended
December 31, 2012, the Company had losses of approximately $9.4
million and negative cash flows from operating activities of
approximately $5.8 million. The Company's management believes
that its financial resources as of December 31, 2012 should enable
it to continue funding the negative cash flows from operating
activities through the three months ended September 30, 2013.
Furthermore, commencing October 2013, the Company's senior secured
convertible debentures (the "2012 Convertible Debentures") are
subject to a non-contingent redemption option that could require
the Company to make a payment of $13.3 million, including accrued
interest. Since the Company expects to continue incurring
negative cash flows from operations and in light of the cash
requirement in connection with the 2012 Convertible Debentures,
there is substantial doubt about the Company's ability to continue
operating as a going concern. These financial statements include
no adjustments of the values of assets and liabilities and the
classification thereof, if any, that will apply if the Company is
unable to continue operating as a going concern."
INSPIREMD INC: Amends 2.8 Million Shares Resale Prospectus
----------------------------------------------------------
InspireMD, Inc., filed an a post-effective amendment to its
registration statement on Form S-1 to, among other things, (i)
convert the registration statement on Form S-1 into a registration
statement on Form S-3 and (ii) deregister 1,905,775 shares of
common stock issuable upon conversion of the Company's senior
secured convertible debentures due April 5, 2014, which debentures
were exchanged on April 16, 2013, for an aggregate of $8,787,234
in cash, 2,159,574 shares of common stock and three year warrants
to purchase 659,091 shares of the Company's common stock at an
exercise price of $3.00 per share.
The Form S-1 prospectus relates to the resale of up to 2,844,089
shares of the Company's common stock to be offered by Platinum
Partners Value Arbitrage Fund LP, Osiris Investment Partners,
L.P., Endicott Management Partners, LLC, et al., comprised of
195,652 currently outstanding shares of common stock and 2,648,437
shares of common stock issuable upon the exercise of outstanding
common stock purchase warrants.
The Company will not receive any of the proceeds from the sale of
common stock by the selling stockholders. However, the Company
will generate proceeds in the event of a cash exercise of the
warrants by the selling stockholders. The Company intends to use
those proceeds, if any, for general corporate purposes. The
Company will pay the expenses of registering these shares.
The Company's common stock is listed on the NYSE MKT under the
symbol "NSPR." On May 8, 2013, the last reported sale price of
the Company's common stock as reported on the NYSE MKT was $2.80
per share.
A copy of the Amended Prospectus is available at:
http://is.gd/fz0qie
About InspireMD
InspireMD, Inc., was organized in the State of Delaware on
Feb. 29, 2008, as Saguaro Resources, Inc., to engage in the
acquisition, exploration and development of natural resource
properties. On March 28, 2011, the Company changed its name from
"Saguaro Resources, Inc." to "InspireMD, Inc."
Headquartered in Tel Aviv, Israel, InspireMD, Inc., is a medical
device company focusing on the development and commercialization
of its proprietary stent platform technology, Mguard. MGuard
provides embolic protection in stenting procedures by placing a
micron mesh sleeve over a stent. The Company's initial products
are marketed for use mainly in patients with acute coronary
syndromes, notably acute myocardial infarction (heart attack) and
saphenous vein graft coronary interventions (bypass surgery).
The Company's balance sheet at Dec. 31, 2012, showed US$11.59
million in total assets, US$11.39 million in total liabilities and
a US$204,000 in total equity.
InspireMD reported a net loss of US$17.59 million on US$5.35
million of revenue for the year ended June 30, 2012, compared with
a net loss of US$6.17 million on US$4.67 million of revenue during
the prior year.
Kesselman & Kesselman, in Tel Aviv, Israel, issued a "going
concern" qualification on the consolidated financial statements
for the year ended June 30, 2012. The independent auditors noted
that the Company has had recurring losses, negative cash flows
from operating activities and has significant future commitments
that raise substantial doubt about its ability to continue as a
going concern.
The Company said the following statement in its quarterly report
for the period ended Dec. 31, 2012:
"The Company has had recurring losses and negative cash flows from
operating activities and has significant future commitments. For
the six months ended December 31, 2012, the Company had losses of
approximately $9.4 million and negative cash flows from operating
activities of approximately $5.8 million. The Company's
management believes that its financial resources as of December
31, 2012 should enable it to continue funding the negative cash
flows from operating activities through the three months ended
September 30, 2013. Furthermore, commencing October 2013, the
Company's senior secured convertible debentures (the "2012
Convertible Debentures") are subject to a non-contingent
redemption option that could require the Company to make a payment
of $13.3 million, including accrued interest. Since the Company
expects to continue incurring negative cash flows from operations
and in light of the cash requirement in connection with the 2012
Convertible Debentures, there is substantial doubt about the
Company's ability to continue operating as a going concern. These
financial statements include no adjustments of the values of
assets and liabilities and the classification thereof, if any,
that will apply if the Company is unable to continue operating as
a going concern."
INTCOMEX INC: Cash Deficiencies Cue Moody's to Lower CFR to Caa1
----------------------------------------------------------------
Moody's Investors Service downgraded Intcomex, Inc.'s Corporate
Family Rating to Caa1 from B3, Probability of Default rating to
Caa1-PD from B3-PD, and the rating for its senior notes to Caa1
from B3. The ratings outlook is changed to negative from stable.
Moody's also lowered Intcomex's speculative grade liquidity rating
to SGL-4 from SGL-3. The ratings action reflects Intcomex's weak
liquidity and financial performance and Moody's view that the
company's debt levels may be unsustainable over the long term.
Ratings Rationale:
The downgrade of Intcomex's CFR to Caa1 reflects the company's
high financial leverage and persistent free cash flow deficits due
to weak profitability and large working capital requirements.
Moody's believes that Intcomex will have weak liquidity in the
next 12 to 18 months due to lack of flexibility under its
financial covenants and expectations of negative free cash flow
continuing over this period. Furthermore, Intcomex's revolving
credit facility matures in July 2014 and its senior notes are due
in December 2014, and successful refinancing of these debt
facilities on economically feasible terms is paramount for the
company's ability to generate positive free cash flow. Intcomex's
limited financial resources constrain management's ability to grow
higher margin in-country operations and to diversify product
revenues through growth in mobile handset distribution and
services.
The Caa1 CFR additionally reflects Intcomex's intensely
competitive IT products distribution market and its modest scale
relative to the large-scale IT distributors. However, Intcomex has
good market position in its core markets in the Latin America and
Caribbean (LAC) region as a result of its long operating history
in the region. Intcomex's core markets in the LAC region have good
economic growth prospects. Income levels are rising in these
markets and low existing penetration levels of personal computers
and mobile devices should spur healthy demand for IT products and
mobile devices. Intcomex also benefits from moderate barriers to
entry in Intcomex's certain markets due to unique regulations and
trade practices in individual countries in the LAC region,
although competition from IT distributors and OEMs selling direct
to high-volume markets is intensifying.
The negative outlook reflects the refinancing risk related to
Intcomex's debt maturities in 2014, especially in the context of
the company's weak cash flow generation. Moody's believes that
absent a material turnaround in the company's profitability or
meaningful debt reduction, the probability of default will remain
elevated. The negative outlook incorporates potentially tight
operating cushion or need for covenant relief in the next 12
months given the company's weak levels of profitability.
Moody's could stabilize Intcomex's ratings if its liquidity
position improves. Moody's could raise Intcomex's ratings if the
company addresses its debt maturities on economically feasible
terms, sustains increases in profitability that lead to free cash
flow generation in the low-to-mid single digit percentages of
total debt, and maintains total debt-to-EBITDA leverage of less
than 5.5x (both metrics on Moody's adjusted basis).
Conversely, Intcomex's ratings could be downgraded further if its
liquidity continues to weaken and the company is unable to extend
debt maturities, leading to heightened risk of a default.
Moody's has taken the following rating actions:
Issuer: Intcomex, Inc.
Corporate-Family Rating -- Caa1, Downgraded from B3
Probability of Default Rating -- Caa1-PD, Downgrade from B3-PD
$120 million ($110 million outstanding) senior notes due 2014
-- Caa1, LGD4, (58%), Downgraded from B3, LGD4 (50%)
Speculative grade liquidity, Changed to SGL-4 from SGL-3
Outlook: Changed to Negative from Stable
The principal methodology used in this rating was the Global
Distribution & Supply Chain Services 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.
Intcomex, Inc., headquartered in Miami, Florida, is a distributor
of information technology products in 39 countries in Latin
America and the Caribbean. The company reported $1.43 billion in
annual revenue in 2012.
INTELSAT INVESTMENTS: Incurs $5.6 Million Net Loss in Q1
--------------------------------------------------------
Intelsat Investments S.A., formerly known as Intelsat S.A., filed
with the U.S. Securities and Exchange Commission its quarterly
report on Form 10-Q disclosing a net loss of $5.61 million on
$655.12 million of revenue for the three months ended March 31,
2013, as compared with a net loss of $24.26 million on $644.16
million of revenue for the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$17.14 billion in total assets, $18.38 billion in total
liabilities, and a $1.28 billion total Intelsat Investment S.A.
shareholder's deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/xHxXKd
About Intelsat
Luxembourg-based Intelsat is the leading provider of satellite
services worldwide. For over 45 years, Intelsat has been
delivering information and entertainment for many of the world's
leading media and network companies, multinational corporations,
Internet Service Providers and governmental agencies. Intelsat's
satellite, teleport and fiber infrastructure is unmatched in the
industry, setting the standard for transmissions of video, data
and voice services. From the globalization of content and the
proliferation of HD, to the expansion of cellular networks and
broadband access, with Intelsat, advanced communications anywhere
in the world are closer, by far.
Intelsat S.A. incurred a net loss of $145 million in 2012, a net
loss of $433.99 million in 2011, and a net loss of $507.76 million
in 2010.
* * *
As reported by the TCR on April 26, 2013, Moody's Investors
Service upgraded Intelsat Investments S.A.'s (Intelsat; formerly
Intelsat S.A.) corporate family rating (CFR) to B3 from Caa1,
while also upgrading ratings for certain of the company's debt
instruments as well as its probability of default rating (PDR;
upgraded to B3-PD from Caa1-PD). The rating action concludes a
review initiated on April 2, 2013, when Intelsat's indirect
ultimate parent company, Intelsat S.A. (formerly Intelsat Global
Holdings S.A.) announced an equity issue with most of the proceeds
reducing debt at Intelsat and its subsidiaries. With the review
concluded, Intelsat's ratings outlook was changed to stable.
INTERNATIONAL FUEL: Malone Bailey Succeeds BDO as Accountants
-------------------------------------------------------------
The Board of Directors of International Fuel Technology, Inc.,
terminated the engagement of BDO USA, LLP, as the Company's
independent registered accounting firm. This action effectively
dismisses BDO as the Company's independent registered accounting
firm for the fiscal year ending Dec. 31, 2012.
BDO's reports on the Company's consolidated financial statements
for the fiscal years ended Dec. 31, 2011, and 2010 did not contain
an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting
principles, except that the report included an explanatory
paragraph relating to an uncertainty as to the Company's ability
to continue as a going concern. Furthermore, during the Company's
two most recent fiscal years and through May 8, 2013, there have
been no disagreements with BDO on any matter of accounting
principles or practices, financial statement disclosure or
auditing scope or procedure, which disagreements, if not resolved
to BDO's satisfaction, would have caused BDO to make reference to
the subject matter of the disagreement in connection with its
reports on the Company's consolidated financial statements for
such periods.
For the years ended Dec. 31, 2011, and 2010 and through May 8,
2013, there were no "reportable events" as that term is described
in Item 304(a)(1)(v) of Regulation S-K.
On May 8, 2013, the Company's Board of Directors appointed Malone
Bailey LLP as the Company's new independent registered accounting
firm. During the Company's two most recent fiscal years and
through May 8, 2013, neither the Company nor anyone acting on the
Company's behalf consulted Malone Bailey with respect to any of
the matters or reportable events set forth in Item 304(a)(2)(i)
and (ii) of Regulation S-K.
About International Fuel
St. Louis, Mo.-based International Fuel Technology, Inc., is a
technology company that has developed a range of liquid fuel
additive formulations that enhance the performance of petroleum-
based fuels and renewable liquid fuels.
BDO USA, LLP, in Chicago, Illinois, issued a "going concern"
qualification on the consolidated financial statements for the
year ended Dec. 31, 2011, citing recurring losses from operations,
working capital and stockholders' deficits and cash obligations
and outflows from operating activities that raise substantial
doubt about its ability to continue as a going concern.
The Company reported a net loss of $2.57 million in 2011, compared
with a net loss of $2.21 million in 2010.
The Company's balance sheet at Sept. 30, 2012, showed
$2.45 million in total assets, $4.74 million in total liabilities
and a $2.28 million total stockholders' deficit.
IRONSTONE GROUP: Incurs $37,500 Net Loss in First Quarter
---------------------------------------------------------
Ironstone Group, Inc., filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $37,560 for the three months ended March 31, 2013, as compared
with a net loss of $13,755 for the same period during the prior
year.
The Company's balance sheet at March 31, 2013, showed
$1.10 million in total assets, $1.49 million in total liabilities,
and a $392,749 total stockholders' deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/vNxRen
About Ironstone Group
San Francisco, Calif.-based Ironstone Group, Inc., and
subsidiaries have no operations but are seeking appropriate
business combination opportunities.
Madsen & Associates CPA's, Inc., in Murray, Utah, issued a "going
concern" qualification on the consolidated financial statements
for the year ended Dec. 31, 2012. The independent auditors noted
that the Company does not have the necessary working capital for
its planned activity, which raises substantial doubt about its
ability to continue as a going concern.
ISC8 INC: Issues $1.1 Million Promissory Notes
----------------------------------------------
ISC8, Inc., and Costa Brava Partnership III L.P. entered into a
Sixth Omnibus Amendment, which amends and modifies the terms of
certain promissory notes of the Company and the Security
Agreement, dated March 16, 2011, as amended, between the Company
and Costa Brava, to permit the issuance of promissory notes,
subordinate the liens securing certain promissory notes, and make
the Notes and certain senior subordinated notes rank pari passu
with one another upon a liquidation of the Company. Costa Brava
is the Company's largest stockholder and one of its largest
creditors.
On April 30, 2013, the Company consummated an offering consisting
of the issuance of senior subordinated secured convertible
promissory notes to certain accredited investors in the principal
amount of $1,145,000. The Notes, which are part of a series of
Notes intended to be issued by the Company aggregating up to $4
million in principal amount, and are part of the same series of
Notes as the 12 percent senior subordinated promissory notes
issued on or after Sept. 27, 2012, to The Griffin Fund, LP, mature
on the earlier of Sept. 30, 2013, or the date that the Company
issues securities to investors in one or more transactions
resulting in gross proceeds to the Company of at least $5 million.
The Notes accrue simple interest at the rate of 12 percent per
annum, and are secured by all assets of the Company under the
terms of the Security Agreement. Costa Brava serves as the
representative of the Holders under the Security Agreement and has
broad discretion as the Holder representative in exercising the
rights of the Holders under the Security Agreement.
The Notes are convertible at the election of the Holder into that
number of shares of the Company's common stock determined by
dividing the outstanding principal and accrued interest due and
payable under the Notes by $.12. The Holder has the right to
convert the outstanding principal and accrued interest due and
payable under the Notes in connection with a Qualified Financing
by applying the Conversion Amount to the purchase of the
securities issued in connection with the Qualified Financing.
The Notes are subordinate to the Existing Secured Debt of the
Company, as that term is defined in the Notes. Payment of all
amounts due and payable under the terms of the Notes are
accelerated in the event of an event of default under the terms of
the Notes.
As additional consideration for the issuance of the Notes, the
Holders were issued a total of 3,180,556 shares of the Company's
common stock, representing a value equal to 25 percent of the
principal amount of the Notes purchased by each Holder, calculated
using a share value equal to $.09 per share.
J.P. Turner & Company, L.L.C., acted as placement agent for the
issuance of the Notes and the Shares. The Placement Agent received
(i) cash commissions totaling $223,000, representing 8 percent of
the gross proceeds of the Offering, (ii) $50,000, representing an
expense allowance, and (iii) warrants to purchase up 602,667
shares of common stock of the Company. The Placement Agent
Warrants have an exercise price equal to $0.09 per share.
The net proceeds from the issuance of the Notes and Shares, or
approximately $872,000, are expected to be used for general
corporate purposes.
The Notes, Shares and Placement Agent Warrants were offered and
sold in transactions exempt from registration under the Securities
Act in reliance on Section 4(2) thereof and Rule 506 of Regulation
D thereunder. Each of the Holders represented that it was an
"accredited investor" as defined in Regulation D.
About ISC8 Inc.
Costa Mesa, California-based ISC8 Inc. is engaged in the design,
development, manufacture and sale of a family of security
products, consisting of cyber security solutions for commercial
and U.S. government applications, secure memory products, some of
which utilize technologies that the Company has pioneered for
three-dimensional ("3-D") stacking of semiconductors, systems in a
package ("Systems in a Package" or "SIP"), and anti-tamper
systems.
Squar, Milner, Peterson, Miranda & Williamson, LLP, in Newport
Beach, California, expressed substantial doubt about ISC8 Inc.'s
ability to continue as a going concern. The independent auditors
noted that as of Sept. 30, 2012. the Company has negative working
capital of $10.1 million and a stockholders? deficit of
$35.4 million.
The Company reported a net loss of $19.7 million on $4.2 million
of revenues in fiscal 2012, compared with a net loss of
$15.8 million on $5.2 million of revenues in fiscal 2011.
The Company's balance sheet at Sept. 30, 2012, showed $6.1 million
in total assets, $41.5 million in total liabilities, and a
stockholders' deficit of $35.4 million.
ISTAR FINANCIAL: Offering $565 Million of Senior Notes
------------------------------------------------------
iStar Financial Inc. filed with the U.S. Securities and Exchange
Commission a preliminary prospectus relating to the offering of
$265,000,000 3.875% Senior Notes due 2016 and $300,000,000 4.875%
Senior Notes due 2018.
Interest payments are due semi-annually on Jan. 1 and July 1,
commencing Jan. 1, 2014.
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays
Capital Inc., and J.P. Morgan Securities LLC serve as joint
bookrunners.
The company will use a portion of the net proceeds from the
offering of the 3.875% Senior Notes due 2016 and the 4.875% Senior
Notes due 2018 to redeem the remaining $96.8 million aggregate
principal amount of its 8.625% Senior Notes due 2013 and the
remainder of the net proceeds, together with cash on hand, to
redeem the remaining $448.6 million aggregate principal amount of
its 5.95% Senior Notes due 2013.
A copy of the FWP is available for free at http://is.gd/AkxUD3
About iStar Financial
New York-based iStar Financial Inc. (NYSE: SFI) provides custom-
tailored investment capital to high-end private and corporate
owners of real estate, including senior and mezzanine real estate
debt, senior and mezzanine corporate capital, as well as corporate
net lease financing and equity. The Company, which is taxed as a
real estate investment trust, provides innovative and value added
financing solutions to its customers.
iStar Financial incurred a net loss of $241.43 million in 2012,
following a net loss of $25.69 million in 2011. The company
reported a net loss of $41.3 million on $94.5 million of revenue
in the first quarter of 2013.
* * *
In March 2013, Fitch Ratings affirmed iStar's 'B-' issuer default
rating and revised the outlook to "positive" from "stable." The
revision of the outlook to positive is based on the company's
demonstrated access to the unsecured debt market, which, combined
with certain secured debt refinancings, have significantly
improved SFI's near-term debt maturity profile.
As reported by the TCR on Oct. 5, 2012, Standard & Poor's Ratings
Services affirmed its 'B+' long-term issuer credit rating on iStar
Financial.
In October 2012, Moody's Investors Service upgraded the corporate
family rating to B2 from B3. The current rating reflects the
REIT's success in extending near term debt maturities and
improving fundamentals in commercial real estate. The ratings on
the October 2012 senior secured credit facility takes into account
the asset coverage, the size and quality of the collateral pool,
and the term of facility.
ISTAR FINANCIAL: Fitch Rates $565MM Unsecured Notes at 'B-/RR4'
---------------------------------------------------------------
Fitch Ratings has assigned 'B-/RR4' credit ratings to the
$565 million aggregate principal amount 3.875% senior unsecured
notes due 2016 and 4.875% senior unsecured notes due 2018 issued
by iStar Financial Inc. (NYSE: SFI).
The 3.875% notes were issued at 100% of par, representing a 353
basis point spread to the benchmark treasury yield. The 4.875%
notes were issued at 100% of par, representing a 413 basis point
spread to the benchmark treasury yield.
The company intends to use the net proceeds to redeem the
remaining $97 million of its 8.625% senior notes due 2013, and the
remainder of the net proceeds, together with cash on hand, to
redeem the remaining $448 million of its 5.95% senior notes due
2013.
Fitch currently rates iStar Financial Inc. as follows:
--Issuer Default Rating (IDR) 'B-';
--2012 senior secured tranche A-1 due March 2016 'BB-/RR1';
--2012 senior secured tranche A-2 due March 2017 'B+/RR2';
--February 2013 secured credit facility due 2017 'BB-/RR1';
--Senior unsecured notes 'B-/RR4';
--Convertible senior notes 'B-/RR4';
--Preferred stock 'CCC-/RR6'.
The Rating Outlook is Positive.
Key Rating Drivers
Fitch revised iStar's Outlook to Positive on March 18, 2013 based
on the company's demonstrated access to the unsecured debt market,
which, combined with certain secured debt refinancings, have
significantly improved SFI's near-term debt maturity profile. The
affirmation was also driven by continued weak portfolio metrics,
particularly non-performing loans relative to the size of the
total loan portfolio.
Improvements in the company's loan and operating property
portfolios should increase its ability to repay upcoming
indebtedness. Stronger performance should be driven by the mild
improvement in commercial real estate fundamentals, value
stabilization, and financing markets (which increases the
likelihood of iStar's borrowers to repay their debt).
Mixed Portfolio Quality
The quality of SFI's loan portfolio has remained roughly the same,
with non-performing loans representing approximately 39% of the
company's gross loan portfolio balance as of March 31, 2013, down
from 42% as of Dec. 31, 2012.
As of March 31, 2013, commercial operating properties, excluding
hotels and multifamily properties, were 60.7% leased compared to
44.2% leased as of March 31, 2012, indicative of improving
commercial real estate fundamentals. As of March 31, 2013, net
lease assets were 95.0% leased compared to 94.4% leased as of
March 31, 2012.
The land segment represented 18% of the company's total portfolio
assets. Value realization from this segment may be protracted and
weigh on fixed charge coverage and leverage.
High Leverage
Despite an improved debt maturity profile, the company's leverage
measured on a GAAP earnings basis (defined as net debt divided by
annual recurring operating EBITDA) of approximately 17x as of
March 31, 2013 remains stubbornly high, although it is down from
approximately 26x as of Dec. 31, 2011. Reported EBITDA may
understate SFI's cash generation power, given that the accounting
for non-performing loans and real estate owned (REO) allows it to
recognize income only upon cash receipt or resolution of the loan.
For example, the company has generated approximately $1.6 billion
of asset monetizations over the last 12 months, mostly from
repayments of and principal collections on loans, driving a $1.5
billion reduction in total debt during that same time period.
Low Coverage
Fixed charge coverage (defined as recurring operating EBITDA
before non-cash impairments, provisions and gains divided by the
sum of interest expense and preferred stock dividends) was only
0.6x for the 12 months ended March 31, 2013 and was 0.6x for the
year ended Dec. 31, 2012, compared with 0.5x and 1.1x for the
years ended Dec. 31, 2011 and 2010, respectively. Fitch expects
this ratio to strengthen moderately as the company reduces debt
from asset sales and begins to recognize additional GAAP earnings
from lease-up of assets within its operating property segment and
sales of residential properties.
Constrained Growth
The company is moderately constrained by non-compliance with an
unsecured bond fixed charge incurrence covenant, which limits the
company's ability to incur any additional debt to grow its
investment portfolio. SFI's growth will occur via investment of
asset sales proceeds, such as the recently announced sale of LNR
Property LLC and from external capital raising, such as the
company's recent $200 million convertible preferred stock
offering.
Lower Quality Unencumbered Pool
SFI's corporate unsecured obligations will need to be serviced by
the company's unencumbered pool, income from assets serving as
collateral for the 2012 secured financings, and external sources
of liquidity, given that both the 2012 senior secured financing
and February 2013 secured credit facility debt transactions
require that collateral repayments, sales proceeds and other
monetizations be used primarily to repay debt encumbering
collateral pools for each financing. Fitch believes there may be
adverse selection whereby higher-quality assets are collateral for
SFI's secured financings, leaving lower-quality assets in the
unencumbered pool.
A portion of SFI's unencumbered assets is liquid and could be sold
to meet corporate obligations. The company's recent sale of its
24% ownership interest of LNR Property LLC generated $220 million
in net proceeds to SFI, indicative of some liquidity of the
company's unencumbered asset base.
Recoveries
While concepts of Fitch's Recovery Rating methodology are
considered for all companies, explicit Recovery Ratings are
assigned only to those companies with an IDR of 'B+' or below. At
the lower IDR levels, there is greater probability of default so
the impact of potential recovery prospects on issue-specific
ratings becomes more meaningful and is more explicitly reflected
in the ratings dispersion relative to the IDR.
The February 2013 secured credit facility and 2012 senior secured
tranche A-1 ratings of 'BB-/RR1', or a three-notch positive
differential from iStar's 'B-' IDR, are based on Fitch's estimate
of outstanding recovery in the 91%-100% range. Together with 2012
senior secured tranche A-2, these obligations represent first lien
security claims on collateral pools comprising primarily
performing loans and credit tenant lease assets. The 2012 senior
secured tranche A-1 has amortization payment priority relative to
the A-2 tranche.
The 2012 senior secured tranche A-2 rating of 'B+/RR2', or a two-
notch positive differential from iStar's 'B-' IDR, is based on
Fitch's estimate of superior recovery. Together with the A-1
tranche, these obligations represent first lien security claims on
a collateral pool comprising primarily performing loans and credit
tenant lease assets, but would receive principal amortization only
upon the full repayment of the A-1 tranche.
The senior unsecured notes and senior convertible notes ratings of
'B-/RR4' are in line with iStar's 'B-' IDR, based on Fitch's
estimate of good recovery based on iStar's current capital
structure.
While the application of Fitch's recovery criteria indicates a
stronger 'RR3' recovery, the company may further encumber a
portion of its unencumbered pool to repay unsecured indebtedness.
This action benefits the IDR at the detriment of recoveries, and
Fitch has incorporated the presence of the unencumbered pool in
the 'B-' IDR. This adverse selection also results in less liquid
and less traditional commercial real estate collateral remaining
in the unencumbered pool to support bondholder recoveries,
resulting in Fitch rating recoveries of the unsecured corporate
obligations at 'RR4'.
The preferred stock rating of 'CCC-/RR6' or a three-notch negative
differential from iStar's 'B-' IDR, is based on Fitch's estimate
of poor recovery based on iStar's current capital structure.
Fitch's recovery ratings criteria provide flexibility for a two-
or three-notch negative differential between the IDR and
instrument rating. A three-notch negative differential is based on
the nature of iStar's perpetual preferred stock - a deeply
subordinated security that has weak terms and remedies available
both before and after a general corporate default (e.g. no stated
maturity, an inability for holders to put the security back to the
company, and iStar has the ability to defer dividends indefinitely
without triggering a corporate default).
Positive Outlook
The Positive Outlook is based on iStar's ability to access the
unsecured bond market five times since 2012, raising $1.3 billion.
These offerings, combined with a refinancing of certain secured
debt financings have created a stronger liquidity profile and
manageable debt maturities until 2016. In addition, the nascent
recovery in commercial real estate fundamentals and value should
enable the company to further monetize assets within its operating
property segment and its unencumbered asset pool more broadly.
Rating Sensitivities
The following may have a positive impact on iStar's ratings and/or
Outlook:
-- The ability to incur additional debt under the company's debt
incurrence fixed charge covenant;
-- Improvement in the quality of the unencumbered pool, measured
by the sum of non-performing loans, other real estate owned
and real estate held for investment comprising less than 25%
of the unencumbered pool;
-- Monetization of the company's unencumbered real estate
investment portfolio via asset sales to repay unsecured debt;
-- Continued demonstrated access to the common equity or
unsecured bond market.
The following may have a negative impact on the ratings and/or
Outlook:
-- Deterioration in the quality of iStar's loan portfolio,
including an increase in non-performing loans and additional
provisions for loan losses;
-- An increase in the operating property segment as a percentage
of the company's investments.
JACKSONVILLE BANCORP: Reports $199,000 Net Income in 1st Quarter
----------------------------------------------------------------
Jacksonville Bancorp, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
net income of $199,000 on $6.36 million of total interest income
for the three months ended March 31, 2013, as compared with net
income of $1.28 million on $6.67 million of total interest income
for the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$520.89 million in total assets, $487.47 million in total
liabilities and $33.42 million in total shareholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/7Ecr4M
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.
Jacksonville Bancorp disclosed a net loss of $43.04 million in
2012, a net loss of $24.05 million in 2011 and a $11.44 million
net loss in 2010.
"Both Bancorp and the Bank must meet regulatory capital
requirements and maintain sufficient capital and liquidity and our
regulators may modify and adjust such requirements in the future.
The Bank's Board of Directors has agreed to a Memorandum of
Understanding (the "2012 MoU") with the FDIC and the OFR for the
Bank to maintain a total risk-based capital ratio of 12.00% and a
Tier 1 leverage ratio of 8.00%. As of December 31, 2012, the Bank
was well capitalized for regulatory purposes and met the capital
requirements of the 2012 MoU. If noncompliance or other events
cause the Bank to become subject to formal enforcement action, the
FDIC could determine that the Bank is no longer "adequately
capitalized" for regulatory purposes. Failure to remain
adequately capitalized for regulatory purposes could affect
customer confidence, our ability to grow, our costs of funds and
FDIC insurance costs, our ability to make distributions on our
trust preferred securities, and our business, results of
operation, liquidity and financial condition, generally,"
according to the Company's annual report for the year ended
Dec. 31, 2012.
KCG HOLDINGS: Moody's Assigns 'Ba3' CFR, Stable Outlook
-------------------------------------------------------
Moody's Investors Service assigned a B1 corporate family rating to
KCG Holdings, Inc. and a Ba3 rating to a $535 million Secured
First Lien Term Loan as well as a $20 million revolving credit
facility for KCG Holdings, Inc. KCG Holdings, Inc. is a new
holding company formed to facilitate the $1.3 billion planned
merger between Knight Capital Group and GETCO LLC, scheduled to
close on July 1, 2013. The outlook on the ratings is stable.
Rating Rationale
The B1 corporate family rating reflects KCG's core franchise of
electronic trading and market-making - focused on the most liquid
securities and contracts listed on the world's major exchanges and
trading venues. Management's strategy is to position KCG to take
advantage of the long-term trend within global capital markets
towards automated processes for liquidity provision with low
barriers to entry, tighter spreads and increased transparency of
execution. The core franchise is supplemented by a suite of
execution services including dark pools, algorithmic execution,
and bond and currency trading venues.
There is a degree of "right-way" risk to the KCG business model
-- provided operational risk can be controlled and technological
leadership can be maintained. Periods of capital market
uncertainty and volatility stimulates demand for risk transfer --
which can make liquidity provision more profitable. The model is
also scalable, and strong operating leverage should be evident if
market volumes or volatility increases. Although the firm will
trade large volumes, holding times are very short and individual
positions are extremely granular. Nonetheless, as Knight Capital's
August 1 trading loss and GETCO's 2012 performance suggest,
customer confidence and ease of switching, as well as the pace of
technological change, can cause franchise value to dissipate
quickly, and the ratings reflect this risk.
The B1 rating also reflects a high degree of merger execution
risk. The merger is occurring while both predecessor firms are
still working to improve their operational effectiveness. The
heritage KCG organization is enhancing controls surrounding
connections to execution venues. At the same time, to combat
declines in market share, GETCO is in the midst of a spending
program to enhance its speed and efficiency at collecting
information, identifying and interpreting market signals, and
creating and deploying orders. Furthermore, scheduled debt
repayment in the first year relies on completion of asset sales
and realizing capital efficiencies from merging operations.
However, if the complex merger execution goes as planned, and
GETCO's trading efficiency improves, upward pressure could develop
on KCG's corporate family rating.
The B1 rating is bolstered by KCG's very liquid balance sheet and
substantial base of tangible common equity. The asset side of the
balance sheet is naturally liquid, given the velocity of trading
at KCG and the emphasis on exchange traded instruments.
Furthermore, the risk of miss-marking is low, given the paucity of
less liquid positions. The firm has a substantial excess cash
position beyond anticipated liquidity needs and has low balance
sheet leverage.
The B1 rating also incorporates the risks of new regulation which
may negatively impact high-frequency trading in general, and KCG's
business model in particular. Regulators in various jurisdictions
are analyzing the impact of various forms of high-frequency
trading on market quality, liquidity and volatility. As a
practical matter it may be difficult to craft regulation that
limits certain types of trading without also impacting high-
frequency high-volume market makers.
The Ba3 rating on the Senior Secured Term Loan Facility, receives
one notch of uplift from the B1 corporate family rating. This
uplift reflects the loan's structural protections and its
seniority within the capital structure of the holding company.
Structural protections include perfected security interests in the
assets of the holding company as well as a sizeable tranche of
second lien securities that should limit senior creditor losses in
the case of a default.
The principal methodology used in this rating was Global
Securities Industry Methodology published in December 2006.
KEMET CORP: Inks Joint Development Agreement with NEC TOKIN
-----------------------------------------------------------
KEMET Corporation, through its wholly owned subsidiary KEMET
Electronics Corporation, has entered into two agreements with NEC
TOKIN: a Development and Cross Licensing Agreement and an Amended
and Restated Private Label Agreement.
"As the first of many tangible benefits from our Joint Venture
with NEC TOKIN, the agreements present real benefits to both our
customers and to all KEMET stakeholders. They allow us to expand
our product offerings, create additional channels and accelerate
the development process for new solutions," said Per Loof, KEMET
chief executive officer. "These are exciting times for our
customers, employees and investors," continued Loof.
In the Development and Cross Licensing Agreement, each of KEMET
and NEC TOKIN licenses to the other, on a non-exclusive basis, all
of its solely owned patent rights, trade secret rights and certain
other intellectual property rights, all as relate to or are useful
in the development or production of valve metal capacitors (which
includes tantalum and aluminum capacitors). The Agreement
provides a framework for collaborative research and development
activities, including the establishment of a Technical Steering
Committee. The technical collaboration from this new arrangement
should provide customers of both companies with accelerated access
to next-generation products. The Agreement also provides NEC
TOKIN with access to certain of the benefits of KEMET's vertically
integrated tantalum supply chain.
In the Amended and Restated Private Label Agreement, each of KEMET
and NEC TOKIN agree to make available for sale to the other, for
resale to end-use customers, all of the products that it
manufactures. Each company will continue to maintain a separate
sales organization and establish independent prices for their
respective products.
A copy of the Licensing Agreement is available for free at:
http://is.gd/nlbLdn
About KEMET
KEMET, based in Greenville, South Carolina, is a manufacturer and
supplier of passive electronic components, specializing in
tantalum, multilayer ceramic, film, solid aluminum, electrolytic,
and paper capacitors. KEMET generated revenues of $851 million
for the latest 12 months ended Dec. 31, 2012. KEMET's common
stock is listed on the NYSE under the symbol "KEM."
The Company's balance sheet at Dec. 31, 2012, showed $926.34
million in total assets, $622.52 million in total liabilities and
$303.81 million in total stockholders' equity.
* * *
As reported by the TCR on March 26, 2013, Moody's Investors
Service downgraded KEMET Corp.'s Corporate Family Rating to Caa1
from B2 and the Probability of Default Rating to Caa1-PD from B2-
PD based on Moody's expectation that KEMET's liquidity will be
pressured by maturing liabilities and negative free cash flow due
to the interest burden and continued operating losses at the Film
and Electrolytic segment.
KEMET carries a 'B+' corporate credit rating from Standard &
Poor's Ratings Services.
KEMET CORP: Incurs $24 Million Loss in Fourth Quarter
-----------------------------------------------------
KEMET Corporation reported a net loss before equity loss from NEC
TOKIN of $23.99 million on $203.03 million of net sales for the
quarter ended March 31, 2013, as compared with a net loss before
equity loss from NEC TOKIN of $11.70 million on $210.66 million of
net sales for the same period during the prior year.
For the fiscal year ended March 31, 2013, the Company incurred a
loss before equity loss from NEC TOKIN of $80.92 million on
$842.95 million of net sales, as compared with income before
equity loss from NEC TOKIN of $6.69 million on $984.83 million of
net sales for the fiscal year ended March 31, 2012.
Per Loof, KEMET's chief executive officer, stated, "Revenue
remained more or less flat to our prior quarter as forecasted and
seems to have leveled off at this level for at least one more
quarter. The team remains focused on delivering improved
financial results even as the industry remains trapped by an
economy that is moving sideways. We expect to see benefits during
our next fiscal year from our relationship with NEC TOKIN
primarily related to our recently signed PLP and cross-licensing
agreements. We are optimistic that we can build significant
shareholder value from our recent equity investment."
Changes to Senior Management Team
The Company has accepted the resignations of Conrado Hinojosa,
Executive Vice President -- Tantalum Business Group and Marc
Kotelon, Executive Vice President -- Global Sales. Charles C.
Meeks, Jr., will take over as head of the Tantalum Business Group,
and John J. Drabik will assume the leadership of Global Sales.
While the changes are effective immediately, Messrs. Hinojosa and
Kotelon will assist in an orderly transition through the end of
June.
Mr. Loof, stated, "I expect the change in the new management line-
up will accelerate our drive toward our timeless model financial
expectations. It is imperative we improve our financial
performance even if the world economic conditions in our industry
remain sluggish. I would like to thank Conrado and Marc for their
contributions and leadership during their time with KEMET. We
wish them well in their future endeavors."
* Charles (Chuck) Meeks is appointed Executive Vice President
-- Tantalum & Ceramic Business Groups. Meeks' 30 year career
with KEMET has spanned the areas of process engineering,
ceramics plant management and Senior VP -- Ceramic Business
Unit. Most recently, Meeks served as the Executive Vice
President -- Ceramic, Film & Electrolytic Business Group. He
has a Bachelor of Science degree in Ceramic Engineering and a
Master of Business Administration from Clemson University.
* John Drabik is appointed Senior Vice President -- Global
Sales. Drabik joined KEMET in 1997 and has held positions of
increasing responsibility in Sales and Product Management,
including Sales District Manager, and Director -- Product
Line Management, Ceramic. Prior to this appointment he was
the Vice President of Sales - Americas. He holds a Bachelor
of Science in Management with a Minor in Marketing from
Purdue University and is a 2007 graduate of the KEMET
Leadership Forum.
* Robert (Bob) Willoughby is appointed Vice President -- Film &
Electrolytic Business Group. He joined the Company in 1985
and has held positions in Diagnostic Engineering, Quality,
Director of Process Engineering and Vice President of
Operations -- Film & Electrolytic Business Group. He holds a
Bachelor of Science degree in Engineering from Clemson
University and is a 2007 graduate of the KEMET Leadership
Forum.
To Layoff 202 Employees
KEMET Corporation announced a reduction in force which will affect
approximately 202 employees in 10 countries, representing 6.75
percent of the Company's salaried workforce and 2 percent of the
global workforce. The Company said it has recorded a charge to
earnings related to severance expenses of $1.8 million in the
March 31, 2013, quarter financial results reported this morning as
a result of this action. The Company will take an additional
charge of $2.6 million in the upcoming quarter ending June 30,
2013.
The Company expects to achieve cost savings related to these
actions and other cost eliminations of approximately $3.8 million
per quarter beginning in the Sept. 30, 2013, quarter and
$12.3 million in its fiscal year ending March 31, 2014.
Mr. Loof stated, "We remain steadfast in our quest to lower our
cost structure in view of the lethargic economy that has affected
the volumes in our industry and the Company over the past couple
of quarters. We expect to see significant leverage on these
actions when the business climate returns to normal levels
combined with the vertical integration of our tantalum supply
chain and the expected improvement in our Film & Electrolytic
business from our continuing restructuring efforts. Today's
action is an early synergy benefit from our investment in NEC
TOKIN, allowing us to significantly lower our breakeven threshold
to within current revenue projections."
About KEMET
KEMET, based in Greenville, South Carolina, is a manufacturer and
supplier of passive electronic components, specializing in
tantalum, multilayer ceramic, film, solid aluminum, electrolytic,
and paper capacitors. KEMET generated revenues of $851 million
for the latest 12 months ended Dec. 31, 2012. KEMET's common
stock is listed on the NYSE under the symbol "KEM."
The Company's balance sheet at Dec. 31, 2012, showed
$926.34 million in total assets, $622.52 million in total
liabilities, and $303.81 million in total stockholders' equity.
* * *
As reported by the TCR on March 26, 2013, Moody's Investors
Service downgraded KEMET Corp.'s Corporate Family Rating to Caa1
from B2 and the Probability of Default Rating to Caa1-PD from B2-
PD based on Moody's expectation that KEMET's liquidity will be
pressured by maturing liabilities and negative free cash flow due
to the interest burden and continued operating losses at the Film
and Electrolytic segment.
KEMET carries a 'B+' corporate credit rating from Standard &
Poor's Ratings Services.
LARSON LAND: Robinson Anthon Allowed $7,400 in Fees, Costs
----------------------------------------------------------
In the bankruptcy case of Larson Land Company, LLC, Idaho
Bankruptcy Judge Terry L. Myers granted an amended application for
professional compensation of the law firm of Robinson, Anthon &
Tribe. Specifically, the Court allowed the firm $6,819 in fees
and $638.91 as reimbursement of expenses.
The firm represented Larson Land Company when the Debtor first
filed a chapter 11 petition and while it was briefly a chapter 11
debtor in possession. The firm also represented the Debtor after
a chapter 11 trustee was appointed. It has represented the Debtor
after the case was converted to a chapter 7 liquidation.
A copy of the Court's May 8, 2013 Memorandum of Decision is
available at http://is.gd/138DoEfrom Leagle.com.
About Larson Land
Ontario, Oregon-based Larson Land Company LLC, fka Select Onion
Co. LLC -- http://www.selectonion.com/-- was a privately held
agribusiness company that grew, stored, processed and shipped
bagged onions, fresh processed onions, whole peel onions, IQF
onions, and delicious raw breaded hand packed onion rings. It
filed a Chapter 11 petition (Bankr. D. Idaho Case No. 12-00820) in
Boise, Idaho, on April 12, 2012, estimating assets of up to $100
million and debts of up to $500 million.
Other than some dry land wheat, as of the Petition Date there were
no crops growing on the Debtor's farm land. The Debtor also
ceased processing operations following the Petition ate.
Brent T. Robinson, Esq., at Robinson, Anthon & Tribe, served as
the Debtor's counsel.
Judge Terry L. Myers, at the behest of the U.S. Trustee, ordered
the appointment of a Chapter 11 trustee to replace management of
the Debtor. Hawley Troxell Ennis & Hawley, LLP and Ball Janik LLP
represent John L. Davidson, the Chapter 11 trustee for the Debtor.
Robert D. Miller, Jr., U.S. Trustee for Region 18, appointed five
unsecured creditors to serve on the Official Committee of
Unsecured Creditors.
On Jan. 16, 2013, the case was converted to a Chapter 7
liquidation, and Janine Reynard was appointed as Chapter 7
trustee.
LEDGEMONT CAPITAL: Former Banker Files to Liquidate
---------------------------------------------------
Ledgemont Capital Group LLC and its former brokerage subsidiary
Ledgemont Securities LLC filed petitions on May 3 in Delaware for
liquidation in Chapter 7 (Bankr. D. Del. Lead Case No. 13-11196).
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Ledgemont Capital described itself on the company Web
site as a boutique merchant bank. A court filing says the company
no longer has "any physical address." Some of the furniture and
other property remains at 595 Madison Ave. in Manhattan.
The report relates that the brokerage subsidiary gave up its
license in March and hadn't transacted business for clients since
January 2012.
The parent's petition lists asset of more than $10 million and
debt less than $10 million. The brokerage listed assets and debt
both less than $100,000.
The Debtor is represented by:
Evan T. Miller, Esq.
BAYARD, P.A.
222 Delaware Avenue, Suite 900
Wilmington, DE 19801
Tel: 302-429-4227
Fax: 302-658-6395
E-mail: emiller@bayardlaw.com
LEHMAN BROTHERS: To Explore Monetization Opportunities for Claims
-----------------------------------------------------------------
Lehman Brothers Holdings Inc. on May 19 disclosed that it intends
to explore monetization opportunities related to the general
unsecured claims against Lehman Brothers Inc. held by it and
certain of its controlled affiliates. Lehman has retained Lazard
to advise it in connection with exploring these opportunities.
There is no assurance that Lehman will proceed with any such
opportunities.
Subject to the occurrence of certain events, the Claims will be
allowed pursuant to the settlement agreement, reached on February
21, 2013 between Lehman and James W. Giddens, Trustee for the SIPA
Liquidation of LBI. The agreement was approved by the United
States Bankruptcy Court for the Southern District of New York on
April 16, 2013.
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.
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.
LEHMAN BROTHERS: First BanCorp Loses Summary Judgment Bid
---------------------------------------------------------
First BanCorp, the bank holding company for FirstBank Puerto Rico,
on May 13 filed a Form 8-K that disclosed that the United States
Bankruptcy Court for the Southern District of New York has denied
the Bank's Motion for Summary Judgment filed in connection with
its claim to recover certain assets posted as collateral with
Lehman Brothers, Inc.
This matter relates to the claim that the Bank filed against
Barclays Capital in the Bank's attempt to recover the securities
(or the cash equivalence thereof) that were posted as collateral
in connection with certain interest hedge agreements executed with
a Lehman affiliate. Since the second quarter of 2009, the
Corporation classified the pledged securities as a non-performing
asset with a book value of $64.5 million. Because of the
bankruptcy court's May 10, 2013 decision, the Corporation has
determined that it is probable that the asset has been impaired
and will recognize a non-cash charge associated with the
impairment of approximately $64.5 million, plus $2.1 million in
accrued interest, during the second quarter of 2013 to write-off
the carrying value of the pledged securities. The Bank intends to
appeal the court's decision denying its Motion for Summary
Judgment.
In addition to this lawsuit, the Corporation continues to pursue
its claim filed in the bankruptcy court in January 2009 in the
proceedings under the Securities Investor Protection Act ("SIPA")
with regard to Lehman. The Corporation's claim was filed on the
basis that under SIPA the Corporation was a "customer" that
"entrusted" the pledged securities to Lehman for safe keeping,
and, accordingly, should be afforded protection thereunder. The
Corporation's claim has not yet been resolved by the court.
"Over the past three years we have been diligently working with
counsel in this litigation and have been reporting the status of
the litigation in our corporate filings. Based on Friday's court
decision, we have determined to take the full impairment charge.
We will continue our efforts through the legal process to recover
the value of the assets that we strongly believe belong to the
Corporation. Despite the impact of this charge in the second
quarter, our capital ratios will remain strong," said First
BanCorp.'s President and CEO Aurelio Aleman.
About First BanCorp
First BanCorp. -- http://www.firstbankpr.com-- is the parent
corporation of FirstBank Puerto Rico, a state-chartered commercial
bank with operations in Puerto Rico, the Virgin Islands and
Florida, and of FirstBank Insurance Agency. First BanCorp. and
FirstBank Puerto Rico operate within U.S. banking laws and
regulations. The Corporation operates a total of 153 branches,
stand-alone offices, and in-branch service centers throughout
Puerto Rico, the U.S. and British Virgin Islands, and Florida.
Among the subsidiaries of FirstBank Puerto Rico are First Federal
Finance Corp., a small loan company; FirstBank Puerto Rico
Securities, a broker-dealer subsidiary; First Management of Puerto
Rico; and FirstMortgage, Inc., a mortgage origination company. In
the U.S. Virgin Islands, FirstBank operates First Express, a small
loan company. First BanCorp's shares of common stock trade on the
New York Stock Exchange under the symbol FBP.
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.
LIBERATOR INC: Incurs $179,000 Net Loss in First Quarter
--------------------------------------------------------
Liberator, Inc., filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $179,265 on $3.56 million of net sales for the three months
ended March 31, 2013, as compared with a net loss of $1,965 on
$3.96 million of net sales for the same period during the prior
year.
For the nine months ended March 31, 2013, the Company incurred a
net loss of $69,080 on $10.75 million of net sales, as compared
with a net loss of $134,950 on $11.21 million of net sales for the
same period a year ago.
The Company's balance sheet at March 31, 2013, showed $3.35
million in total assets, $4.71 million in total liabilities and a
$1.36 million total stockholders' deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/2DYM16
About Liberator Inc.
Atlanta, Georgia-based Liberator is a vertically integrated
manufacturer that designs, develops and markets products and
accessories that enhance intimacy. Liberator is also a nationally
recognized brand trademark, brand category and a patented line of
products commonly referred to as sexual positioning shapes and sex
furniture.
The Company reported a net loss of $782,417 fiscal 2012, compared
with a net loss of $801,252 in fiscal 2011.
Webb & Company, P.A., in Boynton Beach, Fla., expressed
substantial doubt about Liberator's ability to continue as a going
concern following the fiscal 2012 financial results. The
independent auditors noted that the Company has a net loss of
$782,417, a working capital deficiency of $1.6 million, an
accumulated deficit of $7.8 million, and negative cash flow from
continuing operations of $464,800.
LLS AMERICA: Trustee May C$103,752 From Old Orchard Campground
--------------------------------------------------------------
In the case, BRUCE P. KRIEGMAN, solely in his capacity as court-
appointed Chapter 11 Trustee for LLS America, LLC, Plaintiff, v.
OLD ORCHARD CAMPGROUND, Defendant, US District Case No. 12-CV-445-
RMP, Bankruptcy No. 09-06194-PCW 11, Adv. No. 11-80196-PCW 11
(Bankr. E.D. Wash.), the Hon. Patricia C. Williams, sitting in the
U.S. Bankruptcy Court for the Eastern District of Washington,
filed a Report and Recommendation regarding plaintiff's Motion for
Default Judgment filed with the bankruptcy court in this adversary
proceeding.
The Report and Recommendation is made pursuant to the Hon. Rosanna
Malouf Peterson's Order Withdrawing the Reference and Referring to
Bankruptcy Court for Further Proceedings entered on July 10, 2012
in district court case No. 12-CV-00445-RMP.
The Recommendation is that plaintiff's Motion for Default Judgment
be granted and the attached Default Judgment be entered in the
adversary proceeding. The basis for this recommendation is that a
Clerk's Order of Default was entered by the District Court on
October 12, 2012.
Bankruptcy Judge Peterson had decreed that the plaintiff will have
judgment against Old Orchard Campground, as follows:
1. Monetary Judgment in the amount of C$103,752.33,
pursuant to 11 U.S.C. Sec. 550 and RCW 19.40.071;
2. Transfers in the amount of C$103,752.33 made to the
Defendant within four years prior to the Petition
Filing Date are avoided and the Plaintiff may take
all necessary action to preserve the same, pursuant
to 11 U.S.C. Secs. 544, 550, 551 and 548(a) and (b)
and RCW 19.40.041(1) and (2) and RCW 19.40.071;
3. All transfers to Old Orchard Campground are set aside
and the Plaintiff is entitled to recover the same, or
the value thereof, from Old Orchard Campground for
the benefit of the estate of LLS America, pursuant to
11 U.S.C. Secs. 544, 550 and 551;
4. All proofs of claim of the Defendant which have been
filed or brought or which may be filed or brought by,
on behalf of, or for the benefit of Defendant Old
Orchard Campground or its affiliated entities, against
the Debtor's estate, in this bankruptcy or related
bankruptcy proceedings, are disallowed and subordinated
to the monetary judgment granted herein and Old
Orchard Campground will not be entitled to collect on
its proof of claim (Claim No. 425-1) until the monetary
judgment is satisfied by Defendant Old Orchard Campground
in full, pursuant to 11 U.S.C. Secs. 502(d), 510(c)(1)
and 105(a);
5. A constructive trust is established over the proceeds
of all transfers in favor of the Trustee for the
benefit of the estate of LLS America; and
6. The Plaintiff is awarded costs (i.e. filing fee) of
US$250, for a total judgment of C$103,752.33, plus
US$250, which will bear interest equal to the weekly
average of one-year constant maturity (nominal)
treasury yield as published by the Federal Reserve
System.
A copy of Judge Williams' Report and Recommendation dated May 8,
2013, is available at http://is.gd/mYVHfAfrom Leagle.com.
About Little Loan Shoppe
LLS America LLC, doing business as Little Loan Shoppe, operated an
online payday loan business. Affiliate Team Spirit America
provided the manpower, management and equipment for Little Loan
Shoppe. The companies are among a multitude of Canadian and
American business entities owned and operated by Doris E. Nelson,
a/k/a Dee Nelson, a/k/a Dee Foster. Investors claimed Ms. Nelson
operated a Ponzi scheme. Ms. Nelson allegedly told investors they
could earn as much as 60% on money her companies used to make
payday loans to consumers. American and Canadian investors bought
notes worth US$29 million and another C$26,000,000. However, the
investors received no payments after March 2009.
One investor group placed a related company, LLS-A LLC, into
bankruptcy in July 10, 2009.
LLS America LLC filed for bankruptcy (Bankr. D. Nev. Case No.
09-23021) on July 21, 2009, before Judge Linda B. Riegle. Gregory
E. Garman, Esq., at Gordon Silver, served as the Debtor's counsel.
In its petition, the Debtor disclosed $2,661,584 in assets and
$24,013,837 in debts. The petition was signed by Ralph Gamble,
CEO of the Company.
The case was subsequently moved to Washington state (Bankr. E.D.
Wash. Case No. 09-06194). Charles Hall was appointed as examiner
in the case.
MAMAMANCINI'S HOLDINGS: Incurs $611K Net Loss in 1st Quarter
------------------------------------------------------------
MamaMancini's Holdings, Inc., filed its quarterly report on Form
10-Q, reporting a net loss of $611,388 on $1.8 million of sales
for the three months ended March 31, 2013, compared with a net
loss of $400,157 on $1.1 million of sales for the same period last
year.
The Company's balance sheet at March 31, 2013, showed $2.2 million
in total assets, $665,261 in total current liabilities, and
stockholders' equity of $1.5 million.
According to the Company, it may require additional funding to
finance the growth of its current and expected future operations
as well as to achieve its strategic objectives. "The Company
believes its current available cash along with anticipated
revenues may be insufficient to meet its cash needs for the near
future if it does not receive the anticipated additional funding.
There can be no assurance that financing will be available in
amounts or terms acceptable to the Company, if at all. These
conditions raise substantial doubt about our ability to continue
as a going concern."
A copy of the Form 10-Q is available at http://is.gd/A32vJC
East Rutherford, N.J.-based MamaMancini's Holdings, Inc., is a
manufacturer and distributor of a line of beef meatballs with
sauce, turkey meatballs with sauce, Italian sausage with sauce and
other similar Italian meats with sauces.
MERITAGE HOMES: Fitch Affirms 'B+' Long-Term Issuer Default Rating
------------------------------------------------------------------
Fitch Ratings has affirmed the ratings for Meritage Homes
Corporation (NYSE: MTH), including the company's long-term IDR at
'B+'. Fitch has also revised MTH's Rating Outlook to Positive from
Stable.
Key Rating Drivers
The ratings and Outlook for MTH are influenced by the company's
execution of its business model, conservative land policies,
geographic diversity and healthy liquidity position. The Positive
Outlook also takes into account our expectation of further
moderate improvement in the housing market in 2013 and 2014, share
gains by MTH and hence volume outperformance relative to industry
trends as the market continues its shift to trade-up housing
(Meritage's strength) and much better profitability and sharply
improved credit metrics.
MTH's sales are reasonably dispersed among its 15 metropolitan
markets within seven states. The company ranks among the top 10
builders in such markets as Houston, Dallas/Fort Worth, San
Antonio and Austin, TX; Orlando and Tampa, FL; Phoenix, AZ;
Riverside/San Bernardino, CA; Denver, CO; and Sacramento, CA. The
company also builds in the East Bay/Central Valley, CA; Las Vegas,
NV; Inland Empire, CA; Tucson, AZ; and Raleigh-Durham, NC. MTH
also announced its entry into the Charlotte, North Carolina market
last year and reported its first orders in that market during the
fourth quarter of 2012. Currently, about 65% -70% of MTH's home
deliveries are to first- and second-time trade-up buyers, 30% -
35% to entry-level buyers, less than 5% are to luxury and active
adult (retiree) homebuyers.
Improving Housing Market
Fitch's housing forecasts for 2013, assume a continued moderate
rise off the bottom of 2011. New home inventories are at
historically low levels and affordability is near record highs. In
a slowly growing economy with still above average distressed home
sales competition, less competitive rental cost alternatives, and
low mortgage rates (on average), the housing recovery will be
maintained this year.
Fitch's housing estimates for 2013 are as follows: Single family
starts are forecast to grow 18.3% to 633,000, while multifamily
starts expand about 19% to 292,000; Single-family new home sales
should increase approximately 22% to 448,000 as existing home
sales advance 7.5% to 5.01 million.
Average single-family new home prices (as measured by the Census
Bureau), which dropped 1.8% in 2011, increased 8.7% in 2012.
Median home prices expanded 2.4% in 2011 and grew 7.9% in 2012.
Average and median home prices should improve approximately 5.0%
and 4.0%, respectively, in 2013.
Industry challenges (although somewhat muted) remain, including
continued relatively high levels of delinquencies, potential of
short-term acceleration in foreclosures, and consequent meaningful
distressed sales, limited supply of developed lots in the most
attractive markets, and restrictive credit qualification
standards.
Land Strategy
MTH employs conservative land and construction strategies. The
company typically options or purchases land only after necessary
entitlements have been obtained so that development or
construction may begin as market conditions dictate.
Under normal circumstances MTH extensively uses lot options, and
that is expected to be the future strategy in markets where it is
able to do so. The use of non-specific performance rolling options
gives the company the ability to renegotiate price/terms or void
the option, which limits downside risk in market downturns and
provides the opportunity to hold land with minimal investment.
However, as of March 31, 2013, only 19% of MTH's lots were
controlled through options - a much lower than typical percentage
due to considerable option abandonments and write-offs in recent
years. Additionally, there are currently fewer opportunities to
option lots and, in certain cases, the returns for purchasing lots
outright are far better than optioning lots from third parties.
Total lots controlled, including those optioned, were 21,029 at
March 31, 2013. This represents a 4.6-year supply of total lots
controlled based on trailing 12-months deliveries. On the same
basis, MTH's owned lots represent a supply of 3.8 years.
Liquidity/Debt
MTH successfully managed its balance sheet during the severe
housing downturn, allowing the company to accumulate cash and pay
down its debt as it pared down inventory. The company had
unrestricted cash of $325.0 million and investments and securities
of $88.9 million at March 31, 2013. The company's debt totaled
$881.2 million at the end of the first quarter.
In March 2013, MTH completed an offering of $175 million aggregate
principal amount of 4.50% senior notes due 2018. Concurrent with
this offering, the company announced a tender offer to repurchase
any or all of its 7.731% senior subordinated notes due 2017 and
subsequently issued a call offer to repurchase any and all
remaining notes not tendered. As a result of the tender offer, as
of March 31, 2013, MTH had repurchased $16.7 million of the $99.8
million outstanding. Subsequent to quarter-end, the company
retired the remaining untendered 2017 notes through the call for
redemption.
MTH's next debt maturity isn't until March 2018, when its 4.50%
$175 million senior notes become due.
In July 2012, the company entered into a new $125 million
unsecured revolving credit facility maturing in 2015. There were
no oustandings under the revolver as of March 31, 2013.
MTH generated negative cash flow from operations during the past
two years as the company started to rebuild its land position. The
company had negative cash flow of $220.5 million during 2012 after
spending $480 million on land and development during the year.
Fitch expects the company to moderately increase its land and
development spending during 2013, resulting in negative cash flow
of about $100 million - $150 million this year.
Fitch is comfortable with this strategy given the company's
liquidity position and debt maturity schedule. Fitch expects MTH
over the next few years will maintain liquidity (consisting of
cash and investments and the revolving credit facility) of at
least $225 million - $250 million, a level which Fitch believes is
appropriate given the challenges still facing the industry.
Rating Sensitivities
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;
-- Free cash flow trends and uses; and
-- MTH's cash position.
Positive rating actions may be considered if the recovery in
housing continues at a healthy pace and shows durability; MTH
shows sustained improvement in credit metrics (such as
homebuilding debt to EBITDA consistently below 5x); and the
company continues to maintain a healthy liquidity position (above
$250 million).
A negative rating action could be triggered if the industry
recovery dissipates; 2013/2014 revenues drop high-teens or greater
while the pretax loss is higher than 2011 levels; and MTH's
liquidity position falls sharply, perhaps below $200 million as
the company maintains an overly aggressive land and development
spending program.
Fitch affirms the following ratings for MTH with a Positive
Outlook:
-- Long-term Issuer Default Rating (IDR) at 'B+';
-- Senior unsecured debt at 'BB-/RR3'.
The Recovery Rating (RR) of 'RR3' on the company's senior
unsecured debt indicates good recovery prospects for holders of
these debt issues. MTH's exposure to claims made pursuant to
performance bonds and joint venture debt 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 the RR.
MF GLOBAL: Trustee's Jury Demand Reveals Plans in Corzine Suit
--------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that when bankruptcy trustees like Louis Freeh file
lawsuits in bankruptcy court, they ordinarily hope the bankruptcy
judge will hold a trial without a jury. It's usually the defendant
who demands a jury trial, trying to maximize chances the lawsuit
will be kicked upstairs to U.S. district court.
The report relates that as Chapter 11 trustee for MF Global
Holdings Ltd., Mr. Freeh's suit against former Chief Executive
Officer Jon Corzine and two other senior executives is the
exception that proves the rule. Mr. Freeh himself filed a demand
for a jury trial, perhaps on the theory that a jury of ordinary
citizens would be more generous than a judge in finding facts and
awarding damages in the suit claiming the senior executives'
mismanagement led to MF Global's demise.
The jury trial demand, Mr. Rochelle adds, also informs the
question of whether or when the suit will be removed from
bankruptcy court, because bankruptcy judges don't have the right
to conduct jury trials.
By asking for a jury, Mr. Freeh is all but conceding that the
trial against Mr. Corzine ultimately will be held in U.S. district
court. The question remains whether the suit will remain in
bankruptcy court during pretrial proceedings.
Mr. Rochelle notes that it remains to be seen whether Mr. Corzine
files papers in district court asking for the suit to be taken
upstairs immediately. There is a developing pattern in Manhattan
courts where district judges allow cases to remain in bankruptcy
court until ready for jury trial. In the liquidation of Bernard
L. Madoff Investment Securities LLC, a district judge took suits
quickly out of bankruptcy court to decide threshold issues
involving non-bankruptcy law.
In the Madoff case, U.S. District Judge Jed Rakoff decided a
myriad of legal issues and then returned the cases to bankruptcy
court to supervise fact investigations. Ultimately, the suit
against Mr. Corzine will be prosecuted by a trust created for
creditors under MF Global's approved reorganization plan.
Mr. Freeh filed the Corzine suit on April 22 in U.S. Bankruptcy
Court in Manhattan, contending that MF Global's senior managers
breached their fiduciary duties. The MF Global Holdings parent
and the brokerage subsidiary went into separate bankruptcies on
discovery of a $1.6 billion shortfall in funds that should have
been segregated for customers.
The complaint says that Mr. Corzine, a former governor and
Democratic U.S. senator from New Jersey, "dramatically changed the
company's business plan without addressing existing systemic
weaknesses that ultimately caused the plan to fail." Freeh also
says that "Corzine engaged in risky trading strategies that
strained the company's liquidity."
Other defendants in the suit are former President Bradley Abelow
and former Chief Financial Officer Henri Steenkamp.
The lawsuit is Freeh v. Corzine (In re MF Global Holdings Ltd.),
13-01333, U.S. Bankruptcy Court, Southern District New York
(Manhattan).
About MF Global
New York-based MF Global -- http://www.mfglobal.com/-- was 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 also was 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.
On Oct. 31, 2011, 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), 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.
On Nov. 7, 2011, the United States Trustee appointed the statutory
creditors' committee in the Debtors' cases. At the behest of the
Statutory Creditor's Committee, the Court directed the U.S.
Trustee to appoint a chapter 11 trustee. On Nov. 28, 2011, the
Bankruptcy Court entered an order approving the appointment of
Louis J. Freeh, Esq., of Freeh Group International Solutions, LLC,
as Chapter 11 trustee.
On Dec. 19, 2011, MF Global Capital LLC, MF Global Market Services
LLC and MF Global FX Clear LLC filed voluntary Chapter 11
petitions (Bankr. S.D.N.Y. Case Nos. 11-15808, 11-15809 and
11-15810). On Dec. 27, the Court entered an order installing Mr.
Freeh as Chapter 11 Trustee of the New Debtors.
On March 2, 2012, MF Global Holdings USA Inc. filed a voluntary
Chapter 11 petition (Bankr. S.D.N.Y. Case No. 12-10863), and Mr.
Freeh also was installed as its Chapter 11 Trustee.
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 Chapter 11 Trustee has tapped (i) Freeh Sporkin & Sullivan
LLP, as investigative counsel; (ii) FTI Consulting Inc., as
restructuring advisors; (iii) Morrison & Foerster LLP, as
bankruptcy counsel; and (iv) Pepper Hamilton as special counsel.
The Official Committee of Unsecured Creditors has retained
Capstone Advisory Group LLC as financial advisor, while lawyers at
Proskauer Rose LLP serve as counsel.
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.
In April 2013, the Bankruptcy Court approved MF Global Holdings'
plan to liquidate its assets. Bloomberg News reported that the
court-approved disclosure statement initially told
creditors with $1.134 billion in unsecured claims against the
parent holding company why they could expect a recovery of 13.4%
to 39.1% from the plan. As a consequence of a settlement with
JPMorgan, supplemental materials informed unsecured creditors
their recovery was reduced to the range of 11.4% to 34.4%. Bank
lenders will have the same recovery on their $1.174 billion claim
against the holding company. As a consequence of the settlement,
the predicted recovery became 18% to 41.5% for holders of $1.19
billion in unsecured claims against the finance subsidiary,
one of the companies under the umbrella of the holding company
trustee. Previously, the predicted recovery was 14.7% to 34% on
bank lenders' claims against the finance subsidiary.
MGM RESORTS: Reports $6.5 Million Net Income in First Quarter
-------------------------------------------------------------
MGM Resorts International filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
net income attributable to the Company of $6.54 million on $2.35
billion of revenues for the three months ended March 31, 2013, as
compared with a net loss of $217.25 million on $2.28 billion of
revenues for the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$26.05 billion in total assets, $18.17 billion in total
liabilities, and $7.87 billion in total stockholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/71cRbI
About MGM Resorts
MGM Resorts International (NYSE: MGM) --
http://www.mgmresorts.com/-- has significant holdings in gaming,
hospitality and entertainment, owns and operates 15 properties
located in Nevada, Mississippi and Michigan, and has 50%
investments in four other properties in Nevada, Illinois and
Macau.
The Company reported net income of $3.23 billion in 2011 and a net
loss of $1.43 billion in 2010.
Bankruptcy Warning
In the Form 10-K for the year ended Dec. 31, 2011, the Company
said that any default under the senior credit facility or the
indentures governing the Company's other debt could adversely
affect its growth, its financial condition, its results of
operations and its ability to make payments on its debt, and could
force the Company to seek protection under the bankruptcy laws.
* * *
As reported by the TCR on Nov. 14, 2011, Standard & Poor's Ratings
Services raised its corporate credit rating on MGM Resorts
International to 'B-' from 'CCC+'. In March 2012, S&P revised
the outlook to positive from stable.
"The revision of our rating outlook to positive reflects strong
performance in 2011 and our expectation that MGM will continue to
benefit from the improving performance trends on the Las Vegas
Strip," S&P said.
In March 2012, Moody's Investors Service affirmed its B2 corporate
family rating and probability of default rating. The affirmation
of MGM's B2 Corporate Family Rating reflects Moody's view that
positive lodging trends in Las Vegas will continue through 2012
which will help improve MGM's leverage and coverage metrics,
albeit modestly. Additionally, the company's declaration of a $400
million dividend ($204 million to MGM) from its 51% owned Macau
joint venture due to be paid shortly will also improve the
company's liquidity profile. The ratings also consider MGM's
recent bank amendment that resulted in about 50% of its
$3.5 billion senior credit facility being extended one year from
2014 to 2015.
As reported by the TCR on Oct. 15, 2012, Fitch Ratings has
affirmed MGM Resorts International's (MGM) Issuer Default Rating
(IDR) at 'B-' and MGM Grand Paradise, S.A.'s (MGM Grand Paradise)
IDR at 'B+'.
MGM RESORTS: AllianceBernstein Held 2.5% Equity Stake at April 30
-----------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, AllianceBernstein LP disclosed that, as of
April 30, 2013, it beneficially owned 12,374,018 shares of common
stock of MGM Resorts International representing 2.5% of the shares
outstanding. A copy of the regulatory filing is available at:
http://is.gd/V14OaS
About MGM Resorts
MGM Resorts International (NYSE: MGM) --
http://www.mgmresorts.com/-- has significant holdings in gaming,
hospitality and entertainment, owns and operates 15 properties
located in Nevada, Mississippi and Michigan, and has 50%
investments in four other properties in Nevada, Illinois and
Macau.
The Company reported net income of $3.23 billion in 2011 and a net
loss of $1.43 billion in 2010. MGM's balance sheet at Sept. 30,
2012, showed $27.83 billion in total assets, $18.56 billion in
total liabilities, and $9.26 billion in total stockholders'
equity.
Bankruptcy Warning
In the Form 10-K for the year ended Dec. 31, 2011, the Company
said that any default under the senior credit facility or the
indentures governing the Company's other debt could adversely
affect its growth, its financial condition, its results of
operations and its ability to make payments on its debt, and could
force the Company to seek protection under the bankruptcy laws.
* * *
As reported by the TCR on Nov. 14, 2011, Standard & Poor's Ratings
Services raised its corporate credit rating on MGM Resorts
International to 'B-' from 'CCC+'. In March 2012, S&P revised
the outlook to positive from stable.
"The revision of our rating outlook to positive reflects strong
performance in 2011 and our expectation that MGM will continue to
benefit from the improving performance trends on the Las Vegas
Strip," S&P said.
In March 2012, Moody's Investors Service affirmed its B2 corporate
family rating and probability of default rating. The affirmation
of MGM's B2 Corporate Family Rating reflects Moody's view that
positive lodging trends in Las Vegas will continue through 2012
which will help improve MGM's leverage and coverage metrics,
albeit modestly. Additionally, the company's declaration of a $400
million dividend ($204 million to MGM) from its 51% owned Macau
joint venture due to be paid shortly will also improve the
company's liquidity profile. The ratings also consider MGM's
recent bank amendment that resulted in about 50% of its
$3.5 billion senior credit facility being extended one year from
2014 to 2015.
As reported by the TCR on Oct. 15, 2012, Fitch Ratings has
affirmed MGM Resorts International's (MGM) Issuer Default Rating
(IDR) at 'B-' and MGM Grand Paradise, S.A.'s (MGM Grand Paradise)
IDR at 'B+'.
MODERN PRECAST: Can Hire Concannon Miller as Accountant
-------------------------------------------------------
VCW Enterprises, Inc., dba M&T Precast, fka Modern Precast
Concrete, Inc., sought and obtained permission from the U.S.
Bankruptcy Court for the Eastern District of Pennsylvania to
employ Concannon Miller & Co., P.C., as accountant, to perform
specific tax compliance services.
CM will provide the Debtor these services:
a. preparation of federal income tax return, Form 1120S
(included in flat fee);
b. preparation of state income tax returns for New Jersey,
New York and Pennsylvania (included in flat fee);
c. tax consulting services in excess of preparation of
federal and state tax returns, if needed (not included in
flat fee); and
d. miscellaneous routine accounting services upon request
(not included in flat fee).
The Debtor seeks to employ CM on a flat fee basis, in an amount
not to exceed $6,000, to complete necessary federal and state tax
returns. The Debtor also reserves the right to seek to employ CM,
on an hourly basis, to perform other services in the event the
services are deemed by the Debtor to be necessary. CM's hourly
rates are:
Anthony R. Deutsch $300
Dorothy Leigh $160
Milan Slak $300
Virginia Hamiton $190
Prior to the Petition Date, the certified public accounting firm
of CM provided tax compliance and return services to the Debtor.
As of the Petition date, the Debtor owed CM $27,400 for this pre-
petition work. CM has agreed to waive this pre-petition claim and
is therefore disinterested.
Anthony R. Deutsch, a shareholder of CM, attested to the Court
that the firm is a disinterested person as the term is defined in
the Bankruptcy Code and does not represent any interest adverse to
the Debtor and its estate.
About Modern Precast
Modern Precast Concrete, Inc. filed a Chapter 11 petition (Bankr.
E.D. Penn. Case No. 12-21304) on Dec. 16, 2012, in Reading,
Pennsylvania. Aaron S. Applebaum, Esq. and Barry D. Kleban, Esq.,
at McElroy Deutsch Mulvaney & Carpenter LLP, in Philadelphia, Pa.,
serve as counsel to the Debtor. The Debtor estimated up to
$50 million in both assets and liabilities. West Family
Associates, LLC (Case No. 12-21306) and West North, LLC (Case No.
12-21307) also sought Chapter 11 protection. The petitions were
signed by James P. Loew, chief financial officer.
Founded in 1946 as Woodrow W. Wehrung Excavating, Modern Precast
is a leading manufacturer and distributor of precast concrete
structures, pipes and related products. Modern also purchases and
resells related products. Modern operates from two facilities, a
91,010 square-foot facility in Easton, Pennsylvania and a 43,784
square-foot facility in Ottsville, Pennsylvania.
Modern is a single source supplier of virtually every precast
concrete product needed for residential, commercial/industrial,
Department of Transportation and municipality projects.
Modern, on a consolidated basis, generated revenues of
$23.4 million and $19.4 million and operating EBITDA of
$1.4 million and ($382,000) for years 2010 and 2011, respectively.
The Debtors have tapped Beane Associates, Inc. as financial
restructuring advisor and McElroy, Deutsch, Mulvaney & Carpenter,
LLP as attorneys. Griffin Financial Group, LLC serves as
investment banker.
The Official Committee of Unsecured Creditors is represented by
Ciardi Ciardi & Astin. The Committee tapped Eisneramper LLP as
its accountants and financial advisor.
On Jan. 18, 2013, the Bankruptcy Court approved the sale of the
substantially all of the Debtors' assets to OldCastle Precast,
Inc., for a total proposed purchase price of $7,800,000 to the
Debtors, plus the Sellable Inventory Value, plus the AR Value,
less the WIP Adjustment, less any remaining amounts payable with
respect to any items of Equipment that are subject to capital
leases as described in the asset purchase agreement.
MONARCH COMMUNITY: Incurs $427,000 Net Loss in First Quarter
------------------------------------------------------------
Monarch Community Bancorp, Inc., reported a net loss available to
common stock of $427,000 on $1.57 million of net interest income
for the three months ended March 31, 2013, as compared with a net
loss available to common stock of $501,000 on $1.67 million of net
interest income for the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$196.66 million in total assets, $186.62 million in total
liabilities, and $10.04 million in stockholders' equity.
"We are very pleased with the Bank's progress," stated Richard J.
DeVries, president and CEO of Monarch Community Bank and Monarch
Community Bancorp, Inc. "and anticipate that this will enhance our
probability for success as we prepare to embark on a capital
raise. With nine new residential loan production offices in place
throughout Michigan and Indiana, and the recent expansion of our
commercial lending staff, we believe the bank is well positioned
for profitable growth."
A copy of the press release is available for free at:
http://is.gd/XtcqTp
Coldwater, Michigan-based Monarch Community Bancorp, Inc. (OTC QB:
MCBF) is the parent company of Monarch Community Bank. The Bank
operates five full service retail offices in Branch, Calhoun and
Hillsdale counties and eight loan production offices in Kalamazoo,
Calhoun, Berrien, Ingham, Lenawee, Kent, Livingston and Jackson
counties and one in Steuben county, Indiana.
In its audit report on the consolidated financial statements for
the year ended Dec. 31, 2012, Plante & Moran, PLLC, in Grand
Rapids, Michigan, expressed substantial doubt about Monarch
Community's ability to continue as a going concern, noting that
the Corporation has suffered recurring losses from operations and
as of Dec. 31, 2012, did not meet the minimum capital requirements
as established by its regulators,
The Company reported a net loss of $353,000 on net interest income
of $6.5 million in 2012, compared with a net loss of $353,000 on
net interest income of $6.8 million in 2011.
MONARCH COMMUNITY: To Effect a 1-for-5 Reverse Stock Split
-----------------------------------------------------------
Monarch Community Bancorp, Inc., the parent company of Monarch
Community Bank, has filed Articles of Amendment with the State of
Maryland to conduct a one for five reverse stock split of its
common stock. Pursuant to the reverse stock split, each holder of
Monarch common stock will receive 1 share of common stock for
every 5 shares owned as of May 28, 2013, the effective date of the
reverse stock split. Fractional shares will be rounded up to the
next whole share for each stockholder holding fractional shares
after the execution of the reverse stock split. Monarch
anticipates that its common stock will begin trading on a split
adjusted basis when the market opens on May 28, 2013. Beginning
on that date, Monarch's common stock is expected to trade for a
period of 20 trading days under the ticker symbol MCBFD, after
which it is expected to revert to trading under the ticker symbol
MCBF. The common shares will also trade under a new CUSIP number.
As a result of the reverse stock split, the number of outstanding
common shares will be reduced from 2,049,485 to 409,897, subject
to adjustment for fractional shares. The reverse stock split will
not affect any stockholder's ownership percentage of Monarch's
common shares, except to the limited extent that the reverse stock
split would result in any stockholder owning a greater number of
shares as a result of the rounding up of fractional shares to the
nearest whole share. As provided by Maryland General Corporations
Law, stockholder approval is not required. After the reverse
stock split takes effect, stockholders holding physical share
certificates will receive instructions from Registrar and Transfer
Company, Monarch's exchange agent, regarding the process for
exchanging the shares.
Monarch has also engaged two well respected investment banking
firms to co-lead a private placement equity offering of $16.5
million. The equity offering is conditioned upon Monarch
completing a transaction with the U.S. Department of Treasury for
the retirement of Monarch's Capital Purchase Program (CPP)
preferred stock and accrued, unpaid interest and dividends,
totaling approximately $8.2 million, for the total sum of
approximately $4.5 million. The offering is also contingent upon
regulatory approvals and other conditions. The securities offered
will not be registered under the Securities Act of 1933, as
amended, and may not be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements.
"We are hopeful that we will reach agreement with the U.S.
Treasury to retire the CPP preferred stock," stated Richard J.
DeVries, president and CEO of Monarch Community Bancorp, Inc., and
Monarch Community Bank. Our goal is to not only retire our
obligation to the U.S. Treasury, but to also satisfy the capital
requirements contained in the FDIC/OFIR consent order entered into
with Monarch Community Bank in May of 2010."
Monarch expects to hold its 2013 annual meeting of stockholders on
Aug. 20, 2013. Proxy materials are expected to be mailed in July
to stockholders of record on June 28, 2013.
About Monarch Community
Coldwater, Michigan-based Monarch Community Bancorp, Inc. (OTC QB:
MCBF) is the parent company of Monarch Community Bank. The Bank
operates five full service retail offices in Branch, Calhoun and
Hillsdale counties and eight loan production offices in Kalamazoo,
Calhoun, Berrien, Ingham, Lenawee, Kent, Livingston and Jackson
counties and one in Steuben county, Indiana.
Plante & Moran, PLLC, in Grand Rapids, Michigan, expressed
substantial doubt about Monarch Community's ability to continue as
a going concern, noting that the Corporation has suffered
recurring losses from operations and as of Dec. 31, 2012, did not
meet the minimum capital requirements as established by its
regulators.
The Company reported a net loss of $353,000 on net interest income
of $6.5 million in 2012, compared with a net loss of $353,000 on
net interest income of $6.8 million in 2011. The Company's
balance sheet at Dec. 31, 2012, showed $190.3 million in total
assets, $179.8 million in total liabilities, and stockholders'
equity of $10.5 million.
MONITOR CO: Creditors Authorized to File Suits
----------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the creditors' committee for Monitor Co. Group LP,
once a consulting firm from Cambridge, Massachusetts, will be in
the driver's seat rather than the company when in it comes to
filing lawsuits and making settlements.
The report relates that with consent from the company and no
objection from creditors, the committee received permission this
week from the bankruptcy court in Delaware for the creditors'
representative to bring lawsuits in the company's name. The
committee said it has identified about $14 million in suits that
can be brought. In addition the committee was authorized to file
a $2 million preference suit against the landlord in Cambridge. A
preference is a payment within 90 days of bankruptcy on account of
late payment on a debt.
The business was sold in January to Deloitte Consulting LLP under
contract claimed to be worth $116.2 million. After the sale, the
bankrupt company changed its name to MCG LP.
About Monitor Company
Monitor Company Group LP -- http://www.monitor.com/-- is a global
consulting firm with 1,200 personnel in offices across 17
countries worldwide. Founded in 1983 by six entrepreneurs, and
headquartered in Cambridge, Massachusetts, Monitor advises for-
profit, sovereign, and non-profit clients on growing their
businesses and economies and furthering their charitable purposes.
Monitor and several affiliates filed for Chapter 11 bankruptcy
(Bankr. D. Del. Case Nos. 12-13042 to 12-13062) on Nov. 7, 2012.
Judge Hon. Christopher S. Sontchi presides over the case. Pepper
Hamilton LLP and Ropes & Gray LLP serve as the Debtors' counsel.
The financial advisor is Carl Marks Advisory Group LLC. Epiq
Bankruptcy Solutions, LLC is the claims and noticing agent.
The petitions were signed by Bansi Nagji, president.
Cole, Schotz, Meisel, Forman & Leonard, P.A., represents the
Committee of Unsecured Creditors as counsel.
Bank of America is represented in the case by Jinsoo Kim, Esq.,
and Timothy Graulich, Esq., at Davis Polk & Wardwell LLP; and Mark
D. Collins, Esq., at Richards Layton & Finger PA.
J. Gregory Milmoe, Esq., and Shana A. Elberg, Esq., at Skadden
Arps Slate Meagher & Flom LLP in New York; and Mark Chehi, Esq.,
and Christopher DiVirgilio, Esq., at Skadden Arps in Delaware,
represent Deloitte Consulting LLP.
Caltius Partners IV LP; Caltius Partners Executive IV, LP; and CP
IV Pass-Through (Monitor) LP are represented by John Sieger, Esq.,
at Katten Muchin Rosenman LLP.
Monitor's consolidated unaudited financial statements as of
June 30, 2012, which include the assets and liabilities of non-
Debtor foreign subsidiaries, reflected total assets of roughly
$202 million (including $93 million in current assets) and total
liabilities of roughly $200 million.
Monitor filed for bankruptcy to sell substantially all of their
businesses and assets to Deloitte Consulting LLP, a Delaware
registered limited liability partnership and DCSH Limited, a UK
company limited by shares, subject to higher or otherwise better
offers. The base purchase price set forth in the Stalking Horse
Agreement is $116.2 million, plus (i) assumption of certain
liabilities and (ii) certain cure costs for assumed contracts.
The Stalking Horse Agreement provides for the Stalking Horse
Bidder to receive a combined breakup fee and expense reimbursement
of $4 million.
The Debtors held an auction on Nov. 28, 2012, at the offices of
the Sellers' counsel, Ropes & Gray LLP in New York. In mid-
January 2013, Judge Sontchi allowed the Debtors to sell its assets
to Deloitte Consulting for $116.2 million.
MORGANS HOTEL: Files Form 10-Q, Incurs $11.7-Mil. Net Loss in Q1
----------------------------------------------------------------
Morgans Hotel Group Co. filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing a
net loss of $11.76 million on $47.68 million of total revenues for
the three months ended March 31, 2013, as compared with a net loss
of $14.73 million on $40.82 million of total revenues for the same
period during the prior year.
The Company's balance sheet at March 31, 2013, showed $583.62
million in total assets, $731.82 million in total liabilities,
$6.32 million in redeemable noncontrolling interest of
discontinued operations and a $154.52 million total deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/DOvaNQ
About Morgans Hotel Group
Based in New York, Morgans Hotel Group Co. (Nasdaq: MHGC) --
http://www.morganshotelgroup.com/-- is widely credited as the
creator of the first "boutique" hotel and a continuing leader of
the hotel industry's boutique sector. Morgans Hotel Group
operates and owns, or has an ownership interest in, Morgans,
Royalton and Hudson in New York, Delano and Shore Club in South
Beach, Mondrian in Los Angeles and South Beach, Clift in San
Francisco, Ames in Boston, and Sanderson and St Martins Lane in
London. Morgans Hotel Group and an equity partner also own the
Hard Rock Hotel & Casino in Las Vegas and related assets. Morgans
Hotel Group also manages hotels in Isla Verde, Puerto Rico and
Playa del Carmen, Mexico. Morgans Hotel Group has other property
transactions in various stages of completion, including projects
in SoHo, New York and Palm Springs, California.
The Company incurred a net loss attributable to common
stockholders of $66.81 million in 2012, a net loss attributable to
common stockholders of $95.34 million in 2011, and a net loss
attributable to common stockholders of $89.96 million in 2010.
MOUNTAIN CHINA: Posts $17.85-Mil. Net Loss in Fiscal Year 2012
--------------------------------------------------------------
Mountain China Resorts on May 10 reported its financial results
for the fiscal year ended December 31, 2012. MCR reports its
results in Canadian Dollars.
Financial Results
Total revenue and the net results were from resort operations with
no real estate sales revenue during the Reporting Period. For the
year ended December 31, 2012, the Company generated revenues from
resort operations of $9.45 million and a net loss of $17.85
million or $0.06 per share compared to $6.66 million and a net
loss of $42.66 million or $0.21 per share. Resort Operations
EBITDA from continuing operations for the 2012 year were $2.54
million compared to negative $0.8 million in the 2011 year.
Resort operations expenses from continuing operations totaled
$8.08 million for the year ended December 31, 2012 compared to
$6.43 million in 2011. Operations expenses within the resorts are
mainly attributable to snow making, grooming, staffing, fuel and
utilities, which also include the G&A expenses relating to the
resort's senior management, marketing and sales, information
technology, insurance and accounting.
Corporate general and administrative expenses ("G&A expenses")
totaled $1.51 million for the year ended December 31, 2012
compared to $1.46 million in 2011. This amount mainly comprised
executive employee costs, public company costs, and corporate
information technology costs.
Depreciation and amortization expense from continuing operations
totaled $11.18 million for the year ended December 31, 2012
compared to $12.38 million in 2011.
The Group incurred financing cost of $8 million for the year ended
December 31, 2012 from continuing operations compared to $7.41
million in 2011. Financing costs were mainly related to the loan
interest, and also included bank administrative fees, and service
charges.
Cash and cash equivalents totaled $14.08 million and working
capital was negative $60.66 million as at December 31, 2012.
Operations Sun Mountain Yabuli
The 2012-2013 MCR's Sun Mountain Yabuli Resort winter season
operations commenced on November 24, 2012 and closed on March 24,
2013. The 2011-2012 winter season operations commenced on
November 26, 2011 and closed on March 25, 2012. The revenue of
Sun Mountain Yabuli Resort operation comprises mainly by mountain
operation, beverage, skiing-related services and hotel lodging.
Skiing-related services includes rental of ski equipment, goggles,
lockers, gloves, etc, sales of ski equipment and skiing training
services offered in the ski school. It also includes the mountain
operation which is using the facilities built in the mountain,
such as sight-seeing trams, snow tubing and alpine. Revenue from
the Yabuli Resort for the year ended December 31, 2012 was $9.45
million versus $6.66 million in 2011.
Sun Mountain Yabuli - Real Estate Development
At the end of Fiscal 2010, the Company had finished working on the
exterior decoration of the 55 villas of which three were completed
with interior finishing. At this time of the reporting date,
certain construction is still needed on the exterior grounds to
complete lighting, roads and utility connections. Management
expected to be able to begin selling the villas and use the
proceeds to complete the construction. As of December 31, 2012
the Company had not been successful in selling any of the villas.
Management is of the opinion that in order to complete sales it is
necessary to first complete the exterior construction. Management
estimates these additional construction costs to be $4,486 and has
plans to commence construction in the summer of 2013.
Since 2010, due to a combination of temporary Chinese government
policies trying to cool down the rapid growing housing price in
mainland China, the property investment demand have gone down
significantly, which also impacted the Yabuli area. At the same
time, with a tight expense budget and shortage of working capital,
the Company had decided for the time being not to take the risk by
inputting its limited working capital into the villa's remaining
public infrastructure construction (for example:public
lighting)(for example:roads)(for example:landscape engineering)
and a full scale marketing and advertising regime. However, the
Company does have confidence with its first of a kind skiing in
and skiing out villas in China. And the Company will be
reasonably flexible with its pricing when the market shows sign of
a turn around. No other detail milestones for the above matter
are available from the Company as the related government policies
are set to be temporary but with durations undetermined.
Going Concern Doubt
The Company has an accumulated deficit, a working capital
deficiency and has defaulted on a bank loan, which casts
substantial doubt on the Company's ability to continue as a going
concern. The Company's ability to meet its obligations as they
fall due and to continue to operate as a going concern is
dependent on further financing and ultimately, the attainment of
profitable operations. These consolidated financial statements do
not include any adjustments to the amounts and classifications of
assets and liabilities that might be necessary should the Company
be unable to continue as a going concern. Management of the
Company plans to fund its future operation by obtaining additional
financing through loans and private placements and through the
sale of the properties held for sale. However, there is no
assurance that the Company will be able to obtain additional
financing or sell the properties held for sale.
Subsequent Events
On February 17, 2013, the convertible debenture with CZL of $7,600
(Note 15 (b)(ii)) was due. The Company did not repay the loan and
it is currently in default.
In April 2013 the Company was made aware by the bank with an
outstanding balance of $39,315, that they are taking legal actions
to demand repayment. As of the reporting date that Company has
not received any formal claim.
Fiscal 2012 Major Corporate Developments
Club Med Resorts management has further improved the revenue of
Sun Mountain Yabuli Resort
In 2012, Club Med started its first summer operation from July 14
till September 2, 2012 for a total of 50 days at the Sun Mountain
Yabuli Resort. The resort provided outdoor activities including:
archery, cross country mountain bike/hiking, mountain top
afternoon tea party, etc. The first summer operation of ClubMed
promoted the Yabuli summer brand, so that guests from all over the
country could experience Yabuli beautiful summer scenery. The
revenue created in the summer operations reached $1.2 million in
2012, and management is expecting the revenue to be further
increased to $1.5 million in the 2013 summer operation.
New bank loan for the amount of RMB140 million
On February 14, 2012, the Company secured a new bank loan for the
amount of $22.36 million (RMB140 million) with the Harbin Bank.
The New Bank Loan carries a three year term with a maturity date
of February 15, 2015 and a fixed annual interest rate of 7.315%,
with interest to be paid on a monthly basis commencing February
16, 2012. The principal of the New Bank Loan is repayable in four
instalments of $5.59 million (RMB35 million) each, starting with
the first instalment repayment due on August 15, 2013 and each
subsequent instalment repayment due every six month thereafter.
The original 23.96 million (RMB150 million) bank loan with the
same bank was repaid with advances from a short term bridge loan
made by a third party trust company when it was due in on February
9, 2012. The Company then used the advance from the New Bank Loan
and $1.60 million (RMB10 million) of its own funds to repay bridge
loan from the third party trust company.
Debt Restructuring
On February 8, 2012, the Company entered into a Debt Settlement
Agreement with Melco Leisure and Entertainment Group Limited for
the settlement of a loan in the principal of US$12 million made by
Melco to the Company and a loan in the principal of US$11 million
made by Melco to Mountain China Resorts Investment Limited, the
Company's Cayman subsidiary, both in 2008. On May 29, 2012, the
Company and Melco entered into Amended and Restated Debt
Settlement Agreement to clarify details of the loan settlement
mechanism and procedures to implement the settlement of the Melco
Loans. As of the reporting date, the Company has not implemented
the transactions contemplated under the Amended and Restated Debt
Settlement Agreement at this time. The Melco Loans have matured
on 31 March 2013, so that the entire Melco Loans now become
immediately due and payable.
Non-Brokered Private Placement
On February 22, 2012, the Company announced that it has closed the
non-brokered private placement of 105,700,000 common shares
initiated in September 16, 2011, priced at $0.18 per Share for
gross proceeds of $19 million. The proceeds from the Offering
will be used for general working capital and for the repayment of
certain debentures. The Shares are subject to a TSX Venture
Exchange hold period of four months and one day from closing of
the Offering. On March 9, 2012, the Shares were issued to the
corresponding shareholders.
Loan Defaults
On March 2, 2012, Yabuli Resort missed the second principal
repayment in the amount of $4.79 million (RMB 30 million) under
its $39.93 million (RMB 250 million) loan agreement with the China
Construction Bank. On March 31, 2013 the Company defaulted on its
third principal payment of 6.34 million (RMB40 million). According
to the Loan Agreement between Yabuli and Construction Bank,
Construction Bank has the right to accelerate Yabuli's obligation
to repay the entire unpaid principal plus interest immediately and
to take legal actions to enforce on the security. The collaterals
associated with the loan agreement are made up of the Company's
land use rights and property and equipment with a carrying value
of approximately $68.64 million as at December 31, 2012. During
the Company's initial negotiation with the bank, the bank required
the Company to repay the interest. However, the Company has
stopped the interest payment starting from February 2012. As a
result, negotiations have ceased and the bank has indicated their
intention to take possession of the pledged assets if the loan
principal and interest are not repaid in full. On December 31,
2012 the principal and interest owing was $39,315. As of the
reporting date that Company has not received any formal claim.
About MCR
Headquartered in Beijing, Mountain China Resorts --
http://www.mountainchinaresorts.com-- is a developer of four
season destination ski resorts in China.
MPG OFFICE: Incurs $12.4 Million Net Loss in First Quarter
----------------------------------------------------------
MPG Office Trust, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $12.44 million on $45.01 million of total revenue
for the three months ended March 31, 2013, as compared with net
income of $10.46 million on $59.21 million of total revenue for
the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$1.45 billion in total assets, $1.98 billion in total liabilities,
and a $530.56 million total deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/TWN5yZ
A copy of the Supplemental Operating and Financial Data for the
quarter ended March 31, 2013, is available for free at:
http://is.gd/uR5VUC
About MPG Office Trust
MPG Office Trust, Inc., fka Maguire Properties Inc. --
http://www.mpgoffice.com/-- owns and operates Class A office
properties in the Los Angeles central business district and is
primarily focused on owning and operating high-quality office
properties in the Southern California market. MPG Office Trust is
a full-service real estate company with substantial in-house
expertise and resources in property management, marketing,
leasing, acquisitions, development and financing.
For the year ended Dec. 31, 2012, the Company reported net income
of $396.11 million, as compared with net income of $98.22 million
on $234.96 million of total revenue during the prior year.
In its Form 10-K filing with the Securities and Exchange
Commission for the fiscal year ended Dec. 31, 2012, the Company
said it is working to address challenges to its liquidity
position, particularly debt maturities, leasing costs and capital
expenditures. The Company said, "We do not currently have
committed sources of cash adequate to fund all of our potential
needs, including our 2013 debt maturities. If we are unable to
raise additional capital or sell assets, we may face challenges in
repaying, extending or refinancing our existing debt on favorable
terms or at all, and we may be forced to give back assets to the
relevant mortgage lenders. While we believe that access to future
sources of significant cash will be challenging, we believe that
we will have access to some of the liquidity sources identified
above and that those sources will be sufficient to meet our near-
term liquidity needs."
On March 11, 2013, the Company entered into an agreement to sell
US Bank Tower and the Westlawn off-site parking garage. The
transaction is expected to close June 28, 2013, subject to
customary closing conditions. The net proceeds from the
transaction are expected to be roughly $103 million, a portion of
which may potentially be used to make loan re-balancing payments
on the Company's upcoming 2013 debt maturities at KPMG Tower and
777 Tower.
Roughly $898 million of the company's debt matures in 2013.
"Our ability to access the capital markets to raise capital is
highly uncertain. Our substantial indebtedness may prevent us
from being able to raise debt financing on acceptable terms or at
all. We believe we are unlikely to be able to raise equity
capital in the capital markets," the Company said.
"Future sources of significant cash are essential to our liquidity
and financial position, and if we are unable to generate adequate
cash from these sources we will have liquidity-related problems
and will be exposed to material risks. In addition, our inability
to secure adequate sources of liquidity could lead to our eventual
insolvency."
MSR RESORTS: Court Narrows Finney Suit v. First Tennessee et al.
----------------------------------------------------------------
Mark A. Finney owned Units 40, 60, and 70 of the Arizona Biltmore
Hotel Villas and Condominiums. The Properties were included in a
rental pool agreement with the Arizona Biltmore Hotel that leased
out the units as part of the hotel operations. The rental pool
agreement provided rental revenues for the units. On April 11,
2007, Mr. Finney entered into three separate notes and deeds of
trust with First Horizon Home Loans Corporation for the
Properties. With First Horizon's agreement, Mr. Finney quit-
claimed the Properties to Conlon Group. Mr. Finney is the
president and principal shareholder of the Conlon Group. First
Horizon later merged into its parent, First Tennessee Bank
National Association.
In February 2011, the entities owning and controlling the Arizona
Biltmore Hotel filed a chapter 11 bankruptcy, which put the rental
pool agreement in danger of cancellation. As a result of the
filing of the bankruptcy, the market value of the Properties began
to decline.
Mr. Finney created an unsecured creditors committee and attempted
to get confirmation of the rental pooling agreement and a related
settlement in the Biltmore's bankruptcy action. As a result of
his actions in the bankruptcy case, Mr. Finney was unable to make
the required payments on the notes for the Properties. Mr. Finney
contacted a representative of his lender to request a modification
of the loan documents in the form of a temporary reduction in the
interest payments. Mr. Finney also requested that the lender join
the bankruptcy proceeding to protect its interest in the
collateral Properties. Mr. Finney was advised that no decisions
regarding his loan could be made at that time because his lender
was in the process of changing servicers.
After Nationstar Mortgage LLC was appointed as servicer of Mr.
Finney's loans, Mr. Finney again attempted to obtain a
modification of the loans. First Tennessee et al. refused to
entertain any modifications of the loans and told Mr. Finney that
there were no qualifying programs for modification related to the
Properties because First Tennessee et al. did not offer
modifications for rental properties. Mr. Finney then obtained
counsel and asked his counsel to attempt to negotiate a
modification agreement with the lender or its representatives. Mr.
Finney's counsel's attempts to negotiate a modification were
unsuccessful as the Plaintiff's counsel was told that no
modifications were available for rental properties.
As a result of the allegations, Mr. Finney et al. claim that First
Tennessee et al. have breached paragraphs 9 and 12 of the deeds of
trust and have breached their duty of good faith and fair dealing
to the Plaintiffs.
The Plaintiffs filed their original complaint in Maricopa County
Superior Court. Thereafter, the Defendants removed the case to
this Court. The Defendants then moved to dismiss the original
Complaint. The Court granted the Motion to Dismiss and granted
the Plaintiffs leave to amend. The Plaintiffs then filed an
Amended Complaint. The Defendants now move to dismiss the Amended
Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).
In a May 6, 2013 Order available at http://is.gd/yaKI0Xfrom
Leagle.com, Senior District Judge James A. Teilborg granted, in
part, and denied, in part, the Defendants' Motion to Dismiss the
First Amended Complaint.
The case is, Mark A. Finney; and the Conlon Group Arizona, LLC, a
Missouri limited liability company authorized to do business in
Arizona, Plaintiffs, v. First Tennessee Bank, a Tennessee
corporation, as successor by merger to First Horizon Home Loans
Corporation, a Kansas corporation; Nationstar Mortgage, LLC, a
Delaware limited liability company doing business in Arizona; and
the Bank of New York Mellon, formerly known as the Bank of New
York Trust Company, a foreign corporation authorized to do
business in Arizona, Defendants, No. CV-12-01249-PHX-JAT
(D. Ariz.).
About MSR Hotels
MSR Hotels & Resorts, Inc., returned to Chapter 11 by filing a
voluntary bankruptcy petition on May 8, 2013 (Bankr. S.D.N.Y. Case
No. 13-11512) in Manhattan. MSR Hotels & Resorts, formerly known
as CNL Hospitality Properties, Inc., and as CNL Hotels & Resorts,
Inc., listed $500,001 to $1 million in assets, and $50 million to
$100 million in liabilities in its petition.
Paul M. Basta, Esq., at Kirkland & Ellis, LLP, represents the
Debtor.
MSR Resorts sought Chapter 11 bankruptcy to thwart a lawsuit by
lender Five Mile Capital Partners that claims it is owed tens of
millions of dollars related to the recent sale of several luxury
resorts. MSR Hotels will seek to sell its remaining assets and
wind down.
MSR Hotels, formerly known as CNL Hotels & Resorts Inc., owned a
portfolio of eight luxury hotels with over 5,500 guest rooms. 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.
Then known as MSR Resort Golf Course LLC, the company 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 2011 filings were 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.
In the 2011 petitions, the five resorts had $2.2 billion in assets
and $1.9 billion in debt as of Nov. 30, 2010. In its 2011
schedules, MSR Resort disclosed $59,399,666 in total assets and
$1,013,213,968 in total liabilities.
In the 2011 bankruptcy, James H.M. Sprayregen, P.C., Esq., Paul M.
Basta, Esq., Edward O. Sassower, Esq., and Chad J. Husnick, Esq.,
at Kirkland & Ellis, LLP, served as the Debtors' bankruptcy
counsel. Houlihan Lokey Capital, Inc., acted as the Debtors'
financial advisor. Kurtzman Carson Consultants LLC acted as the
Debtors' claims agent.
The Official Committee of Unsecured Creditors in the 2011 case was
represented by Martin G. Bunin, Esq., and Craig E. Freeman, Esq.,
at Alston & Bird LLP, in New York.
In March 2012, the Debtors won Court approval to sell the Doral
Golf Resort to Trump Endeavor 12 LLC, an affiliate of Donald
Trump's Trump Organization LLC, for $150 million. An auction was
held in February that year but no other bids were received.
The 2011 Debtors won approval of a bankruptcy-exit plan in
February this year. That plan was predicated on the sale of the
remaining four resorts by the Government of Singapore Investment
Corp. -- the world's eighth-largest sovereign wealth fund,
according to the Sovereign Wealth Fund Institute -- for $1.5
billion.
U.S. Bankruptcy Judge Sean Lane, who oversaw the 2011 cases,
overruled Plan objections by the U.S. Internal Revenue Service and
investor Five Mile. The IRS and Five Mile alleged that the sale
created a tax liability of as much as $331 million that may not be
paid.
Bloomberg News reported that the exit plan provides for repayment
of 96% of secured debt and 100% of general unsecured debt. Five
Mile stood to lose about $58 million, including investments by
pension funds and other parties, David Friedman, Esq., a lawyer
for Five Mile, said during the Plan approval hearing, according to
Bloomberg.
That Plan was declared effective on Feb. 28, 2013.
On April 9, 2013. Five Mile sued Paulson & Co. executives and MSR
Hotels in New York state court, alleging they (i) mishandled the
company's intellectual property and other assets in a bankruptcy
sale, and failed to get the best price for the assets, and (ii)
owe Five Mile $58.7 million on a loan. According to a Reuters
report, Five Mile seeks $58.7 million representing sums owed,
including interest and costs, plus at least $100 million for
breach of fiduciary duty, gross negligence and corporate waste.
NAMCO LLC: Pool Retailer Has Final Approval of $16 Million Loan
---------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Namco LLC received final court approval for $16
million in financing provided by Salus Capital Partners LLC, owed
$9.3 million on a revolving credit when the Chapter 11
reorganization began in March.
The report recounts that before bankruptcy there were discussions
with investors and management to contribute $1.5 million in
capital for some of the equity. The bankruptcy was timed to
coincide with the main selling season, where 64 percent of sales
are generated between April and July.
About Namco
Manchester, Connecticut-based Namco, LLC, is a 37-store retailer
of swimming pools and accessories owned 50-50 by Garmark Partners
II LLC and J.H. Whitney & Co. It filed a petition for Chapter 11
protection (Bankr. D. Del. Case No. 13-10610) on March 24, 2013,
in Wilmington. Judge Peter J. Walsh presides over the case.
Anthony M. Saccullo, Esq., at A.M. Saccullo Legal, LLC, and Thomas
H. Kovach, Esq., at Thorp Reed & Armstrong, LLP, serve as the
Debtor's counsel. Olshan Frome & Wolosky, LLP, is the Debtor'
general bankruptcy counsel. Epiq Bankruptcy Solutions, LLC, is
the Debtor's claims and noticing agent. Clear Thinking Group,
LLC, serves as the Debtor's restructuring agent.
In its Petition, the Debtor estimated its assets and debts at
between $10 million to $50 million each. The Petition was signed
by Lee Diercks, chief restructuring officer.
Roberta A. DeAngelis, U.S. Trustee for Region 3, appointed seven
members to the Official Committee of Unsecured Creditors.
NATIONWIDE FINANCIAL: Fitch Affirms 'BB+' Trust Preferred Rating
----------------------------------------------------------------
Fitch Ratings has affirmed the Insurer Financial Strength (IFS)
ratings of Nationwide Mutual Insurance Company (NMIC) and its
related intercompany pool members (collectively, Nationwide), as
well as Nationwide Life Insurance Company (NLIC), at 'A'. In
addition, Fitch has affirmed the ratings on NMIC's outstanding
surplus notes at 'BBB'.
Fitch has also affirmed the following ratings of Nationwide
Financial Services, Inc. (NFS):
-- Issuer Default Rating (IDR) at 'BBB+';
-- Senior unsecured notes at 'BBB';
-- Trust preferred securities at 'BB+'.
The Rating Outlook is Stable for all ratings. (A full rating list
follows at the end of this press release).
Key Rating Drivers
The rating affirmation reflects Nationwide's strong competitive
position in personal lines insurance, and a more moderate position
in commercial lines insurance, which was enhanced by the merger
with Harleysville Mutual Insurance Company (Harleysville) in 2012.
The affirmation also reflects business diversification benefits
provided by Nationwide Mutual's wholly owned Financial Services
segment (NFS), which offers a variety of individual protection and
asset accumulation products, as well as group products and
services.
Similar to other personal lines carriers, underwriting performance
was materially affected by catastrophes in the last two years.
Weather-related claims were more than $1.5 billion in 2012,
including $400 million in claims related to Superstorm Sandy,
compared with $2.3 billion reported in 2011. The statutory
combined ratio (including Harleysville) improved to 107.5% for
2012 from 110.7% for 2011.
The property/casualty (P/C) segment reported a net operating gain
of $117 million based on GAAP financial statements compared with
an operating loss of $213 million for 2011. NFS contributed net
operating income of $606 million in 2012.
Nationwide's statutory surplus increased 8% to $13.9 billion at
Dec. 31, 2012, primarily as a result of the addition of
Harleysville. Fitch views the company's capitalization as worse
than many peers as the quality of capital is diminished by a high
percentage of surplus notes. Unstacked operating leverage
(excluding the carrying value of NFS from policyholders' surplus)
is relatively high at 1.6x. The score for P/C operations on
Fitch's capital model was 'strong' at year-end 2011.
Fitch views NFS' statutory capitalization as strong relative to
peers and solidly supports the company's profile. Total adjusted
capital (TAC) totaled $4.1 billion, consolidated RBC was 559%, and
operating leverage was 8.8x at Dec. 31, 2012. The risky assets
ratio was lower at 51% than the industry at 87% for Dec. 31, 2012.
Fitch notes that NFS has relatively high exposure to variable
annuity products and mortgage-related investments.
Fitch estimates that Nationwide's debt-to-capital, including
operating leverage and undisclosed FAS 115 unrealized bond gains,
declined to 20.9% at year-end 2012, due to debt maturities and the
addition of Harleysville's policyholder equity. This compares to
financial leverage ratio (FLR) for peers with senior debt rated
'BBB', and Fitch's P/C universe of 14.9% and 22.7%, respectively.
Rating Sensitivities
Key rating triggers that could lead to a downgrade include:
ongoing poor underwriting profitability that widens from recent
performance relative to both mutual company and industry averages;
significant deterioration in operating earnings generated by the
life and annuity business; material weakening in capital strength
as measured by Fitch's capital model, NAIC RBC or unstacked
operating leverage greater than 1.75x; and/or a debt-to-capital
ratio, including short-term debt and operating debt, of greater
than 30%.
Key rating triggers that could lead to an upgrade include: a
sustained improvement in underwriting performance as measured by a
combined ratio below 100%; improved catastrophe and overall risk
management through difficult underwriting and economic conditions;
an improvement in capital strength as measured by Fitch's capital
model or unstacked operating leverage below 1.0x; and a
significant reduction in the degree to which NFS' earnings are
leveraged to the equity market.
Fitch has affirmed the following ratings with a Stable Outlook:
Nationwide Mutual Insurance Co.
-- IDR at 'A-';
-- 8.25% surplus notes due Dec. 1, 2031 at 'BBB';
-- 7.875% surplus notes due April 1, 2033 at 'BBB';
-- 6.60% surplus notes due April 15, 2034 at 'BBB';
-- 5.81% surplus notes due Dec. 15, 2024 at 'BBB';
-- 9.375% surplus notes due Aug. 15, 2039 at 'BBB'.
Nationwide Financial Services Inc.
-- IDR at 'BBB+';
-- 5.625% senior notes due Feb. 13, 2015 at 'BBB';
-- 5.10% senior notes due Oct. 1, 2015 at 'BBB';
-- 5.375% senior notes due March 25, 2021 at 'BBB';
-- 7.899% trust preferred due March 1, 2037 at 'BB+'.
Nationwide Mutual Insurance Co.
Nationwide Mutual Fire Insurance Co.
Crestbrook Insurance Co.
National Casualty Co.
Nationwide Agribusiness Insurance Co.
Nationwide Insurance Company of America
Scottsdale Insurance Co.
Farmland Mutual Insurance Co.
Colonial County Mutual Insurance Company
Nationwide Assurance Company
Nationwide General Insurance Company
Nationwide Lloyds
Nationwide Property & Casualty Insurance Company
Titan Indemnity Company
Titan Insurance Company
Victoria Automobile Insurance Company
Victoria Fire & Casualty Company
Victoria Select Insurance Company
Victoria Specialty insurance Company
Scottsdale Indemnity Company
Scottsdale Surplus Lines Insurance Company
Western Heritage Insurance Company
Allied Property & Casualty Insurance Company
AMCO Insurance Company
Depositors Insurance Company
Nationwide Affinity Company
--IFS at 'A'.
Nationwide Life Insurance Co.
-- IFS at 'A';
-- Short-term IDR at 'F1';
-- Short-term IFS at 'F1';
-- Commercial paper at 'F1'.
Nationwide Life Global Funding I
-- Program rating at 'A'.
NEONODE INC: Incurs $3.57 Million Net Loss in First Quarter
-----------------------------------------------------------
Neonode Inc. filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $3.57 million on $548,000 of net revenues for the three months
ended March 31, 2013, as compared with a net loss of $1.58 million
on $1.16 million of net revenues for the same period during the
prior year.
The Company's balance sheet at March 31, 2013, showed
$9.52 million in total assets, $4.22 million in total liabilities
and $5.29 million in total stockholders' equity.
"Our performance for the quarter ended March 31, 2013 is in line
with our internal expectations, and is reflective of the
seasonality for our customers' production," said Thomas Eriksson,
Neonode CEO. "More significantly, however, during 2013, we have
made significant leaps, particularly in our PC-related
technologies, and have experienced growing traction with new and
old customers."
A copy of the Form 10-Q is available for free at:
http://is.gd/1JCSAo
Annual Meeting Results
On May 6, 2013, the Company held its annual meeting of
stockholders, at which:
1. Mr. John Reardon was reelected to the Board of Directors for
a three year term;
2. the advisory vote related to executive compensation was
ratified;
3. the increase in the number of shares reserved under the
Company's 2006 Equity Incentive Plan was ratified; and
4. the appointment of KMJ Corbin & Company LLC to serve as the
Company's independent auditors for the year ended Dec. 31,
2013 was ratified.
About Neonode Inc.
Lafayette, Calif.-based Neonode Inc. (OTC BB: NEON)
-- http://www.neonode.com/-- provides optical touch screen
solutions for hand-held and small to midsize devices.
The Company incurred a net loss of $9.28 million in 2012, a net
loss of $17.14 million in 2011 and a $31.62 million net loss in
2010.
NORTEL NETWORKS: European Retirees' Appeal Ruled 'Frivolous'
------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that trial preparations in the dispute over how to
allocate $7 billion generated when Nortel Networks Inc. sold its
assets will proceed uninterrupted because the bankruptcy judge in
Delaware ruled May 7 that an appeal by representatives of European
retirees is "frivolous."
The report recounts that in early April, the U.S. bankruptcy judge
and the judge in Canada ruled against the foreign retirees by
concluding that an agreement made during the bankruptcy with the
courts' approvals didn't require arbitration. The retirees
appealed, and U.S. Bankruptcy Judge Kevin Gross gave his consent
so the appeal could proceed immediately to the U.S. Court of
Appeals in Philadelphia.
The report notes that ordinarily, an appeal doesn't halt
proceedings in lower courts. In cases involving arbitration, the
appeals court in Philadelphia has a special rule saying that
proceedings halt when there is an appeal from a ruling denying
arbitration.
The appeals court made an exception, saying lower-court
proceedings may go forward when the arbitration appeal is
"frivolous." On May 7, Judge Gross listed several reasons why the
appeal is frivolous, including the fact that the agreement
supposedly calling for arbitration was one he approved in the
first place.
Judge Gross, the report adds, said that the inability to agree
over a distribution of the $7 billion has kept the case "tied up
in knots seemingly forever." The judge said that halting
allocations from proceeding during an appeal would "punish the
non-appealing parties."
Nortel generated $9 billion from liquidation of assets. Mediation
failed, prompting Judge Gross and the court in Canada to schedule
trials next year on how to divide proceeds among creditors in the
U.S., Canada, and Europe.
About Nortel Networks
Headquartered in Ontario, Canada, Nortel Networks Corporation and
its various affiliated entities provided next-generation
technologies, for both service provider and enterprise networks,
support multimedia and business-critical applications. Nortel did
business in more than 150 countries around the world. Nortel
Networks Limited was the principal direct operating subsidiary of
Nortel Networks Corporation.
On Jan. 14, 2009, Nortel Networks Inc.'s ultimate corporate parent
Nortel Networks Corporation, NNI's direct corporate parent Nortel
Networks Limited and certain of their Canadian affiliates
commenced a proceeding with the Ontario Superior Court of Justice
under the Companies' Creditors Arrangement Act (Canada) seeking
relief from their creditors. Ernst & Young was appointed to serve
as monitor and foreign representative of the Canadian Nortel
Group. That same day, the Monitor sought recognition of the CCAA
Proceedings in U.S. Bankruptcy Court (Bankr. D. Del. Case No.
09-10164) under Chapter 15 of the U.S. Bankruptcy Code.
That same day, NNI and certain of its affiliated U.S. entities
filed voluntary petitions for relief under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 09-10138).
In addition, the High Court of England and Wales placed 19 of
NNI's European affiliates into administration under the control of
individuals from Ernst & Young LLP. Other Nortel affiliates have
commenced and in the future may commence additional creditor
protection, insolvency and dissolution proceedings around the
world.
On May 28, 2009, at the request of administrators, the Commercial
Court of Versailles, France, ordered the commencement of secondary
proceedings in respect of Nortel Networks S.A. On June 8, 2009,
Nortel Networks UK Limited filed petitions in U.S. Bankruptcy
Court for recognition of the English Proceedings as foreign main
proceedings under Chapter 15.
U.S. Bankruptcy Judge Kevin Gross presides over the Chapter 11 and
15 cases. Mary Caloway, Esq., and Peter James Duhig, Esq., at
Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as
Chapter 15 petitioner's counsel.
In the Chapter 11 case, James L. Bromley, Esq., at Cleary Gottlieb
Steen & Hamilton, LLP, in New York, serves as the U.S. Debtors'
general bankruptcy counsel; Derek C. Abbott, Esq., at Morris
Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware
counsel. The Chapter 11 Debtors' other professionals are Lazard
Freres & Co. LLC as financial advisors; and Epiq Bankruptcy
Solutions LLC as claims and notice agent.
The United States Trustee appointed an Official Committee of
Unsecured Creditors in respect of the U.S. Debtors. An ad hoc
group of bondholders also was organized.
Fred S. Hodara, Esq., at Akin Gump Strauss Hauer & Feld LLP, in
New York, and Christopher M. Samis, Esq., at Richards, Layton &
Finger, P.A., in Wilmington, Delaware, represent the Official
Committee of Unsecured Creditors.
An Official Committee of Retired Employees and the Official
Committee of Long-Term Disability Participants tapped Alvarez &
Marsal Healthcare Industry Group as financial advisor. The
Retiree Committee is represented by McCarter & English LLP as
Delaware counsel, and Togut Segal & Segal serves as the Retiree
Committee. The Committee retained Alvarez & Marsal Healthcare
Industry Group as financial advisor, and Kurtzman Carson
Consultants LLC as its communications agent.
Several entities, particularly, Nortel Government Solutions
Incorporated and Nortel Networks (CALA) Inc., have material
operations and are not part of the bankruptcy proceedings.
As of Sept. 30, 2008, Nortel Networks Corp. reported consolidated
assets of $11.6 billion and consolidated liabilities of $11.8
billion. The Nortel Companies' U.S. businesses are primarily
conducted through Nortel Networks Inc., which is the parent of
majority of the U.S. Nortel Companies. As of Sept. 30, 2008, NNI
had assets of about $9 billion and liabilities of $3.2 billion,
which do not include NNI's guarantee of some or all of the Nortel
Companies' about $4.2 billion of unsecured public debt.
Since the commencement of the various insolvency proceedings,
Nortel has sold its business units and other assets to various
purchasers. Nortel has collected roughly $9 billion for
distribution to creditors. Of the total, $4.5 billion came from
the sale of Nortel's patent portfolio to Rockstar Bidco, a
consortium consisting of Apple Inc., EMC Corporation,
Telefonaktiebolaget LM Ericsson, Microsoft Corp., Research In
Motion Limited, and Sony Corporation. The consortium defeated a
$900 million stalking horse bid by Google Inc. at an auction. The
deal closed in July 2011.
Nortel has filed a proposed plan of liquidation in the U.S.
Bankruptcy Court. The Plan generally provides for full payment on
secured claims with other distributions going in accordance with
the priorities in bankruptcy law.
NPS PHARMACEUTICALS: Incurs $7.8 Million Net Loss in 1st Quarter
----------------------------------------------------------------
NPS Pharmaceuticals, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $7.79 million on $25.43 million of total revenues
for the three months ended March 31, 2013, as compared with a net
loss of $10.56 million on $22.92 million of total revenues for the
same period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$188.46 million in total assets, $192.71 million in total
liabilities, and a $4.24 million total stockholders' deficit.
"The launch of Gattex is off to an excellent start and while it is
still early days, we are confident that we will achieve our goal
of having 200 to 300 patients on this life-changing treatment by
the end of 2013," said Francois Nader, MD, president and chief
executive officer of NPS Pharmaceuticals. "By regaining the ex-
U.S. rights for teduglutide and PTH 1-84 from Takeda, we have
established NPS as a global orphan disease company with commercial
products in the U.S. and in Europe. In parallel, we have made
good progress toward resolving the current fill-finish issues for
our second potential commercial orphan drug, Natpara. We expect
to file Natpara's U.S. Biologic License Application for
hypoparathyroidism in the second half of this year."
A copy of the Form 10-Q is available for free at:
http://is.gd/4PqHVr
Annual Meeting Results
On May 7, 2013, the Company held its 2013 annual meeting of
stockholders. These directors were elected by the stockholders:
(a) Michael W. Bonney, B.A.;
(b) Colin Broom, M.D.;
(c) Georges Gemayel, Ph.D.;
(d) Pedro Granadillo, B.S.;
(e) James G. Groninger, M.B.A.;
(f) Francois Nader, M.D., M.B.A.;
(g) Rachel R. Selisker, CPA; and
(h) Peter G. Tombros, M.S., M.B.A.
The stockholders approved the amended and restated 2005 Omnibus
Incentive Plan of the Company and the advisory vote on executive
compensation. The appointment of KPMG LLP as the Company's
independent registered public accounting firm for the fiscal year
ending Dec. 31, 2013, was also ratified.
A copy of the Form 8-K is available for free at:
http://is.gd/Hf3dWZ
3.5 Million Shares Issuance
The Company filed with the SEC a Form S-8 registration statement
to register 3,500,000 shares of common stock reserved for issuance
under the Company's 2005 Omnibus Incentive Plan, as amended and
restated. The proposed maximum aggregate offering price is $46.32
million. A copy of the prospectus is available for free at:
http://is.gd/LZ6U2r
About NPS Pharmaceuticals
Based in Bedminster, New Jersey, NPS Pharmaceuticals Inc. (Nasdaq:
NPSP) -- http://www.npsp.com/-- is developing new treatment
options for patients with rare gastrointestinal and endocrine
disorders.
NPS reported a net loss of $36.26 million in 2011, a net loss of
$31.44 million in 2010 and a net loss of $17.86 million in 2009.
OAKLEY REDEVELOPMENT: Fitch Affirms 'BB' Rating on $25.1MM Bonds
----------------------------------------------------------------
Fitch Ratings affirms the 'BB' rating on the following Oakley
Redevelopment Agency (RDA), CA tax allocation bonds (TABs):
-- $25.1 million subordinate TABs, series 2008A.
The Rating Outlook on the subordinate TABS remains Negative.
In addition, Fitch affirms the 'A' rating on the following senior
TABs of the RDA:
-- $6.9 million TABs, series 2003.
The Rating Outlook on the series 2003 TABs remains Stable.
Security
Per the indenture, the senior TABs are secured by net tax
increment, with a portion of debt service additionally secured by
housing set aside revenues and funds held in the low/moderate
income housing fund. As funds held in the low/moderate income
housing fund are no longer available following the dissolution of
RDAs in California, the additional pledge currently provides no
benefit.
The subordinate bonds are secured by net tax increment after debt
service payment on the agency's senior 2003 TABs. Both series of
TABs are also secured with cash funded debt service reserve funds.
Key Rating Drivers
INSUFFICIENT PLEDGED REVENUES: The 'BB' rating of the subordinate
TABs reflects Fitch-calculated debt service coverage, based on
pledged revenues, falling below 1 times (x) in fiscals 2012 and
2013. Although debt service has been paid from non-pledged sources
and the debt service reserve fund has not been tapped, the
Negative Outlook reflects Fitch's concern that without assessed
value (AV) growth pledged revenue may remain inadequate, keeping
combined debt service coverage below 1x for the indefinite future.
VULNERABLE TAX BASE: The project area has experienced a severe
contraction in AV since fiscal 2008, and after steady leveling off
through fiscal 2012 the rate of decline accelerated modestly in
fiscal 2013. Fitch remains concerned that additional AV declines
are possible despite some positive signs in the local real estate
market.
SURPLUS HOUSING REVENUES APPEAR AVAILABLE: Housing revenues are no
longer restricted following the dissolution of RDAs and are being
used to make full and timely debt service payments on the
subordinate bonds. However, this practice is inconsistent with the
bond indenture, which specifies that only non-housing increment is
pledged. Fitch believes further clarification as to the
availability of revenue not pledged under the indenture is needed
before factoring this increased coverage into the rating.
SOLID COVERAGE ON SENIOR BONDS: The 'A' rating on the senior lien
TABs reflects solid debt service coverage, largely due to low
leverage, that is unlikely to be materially impaired even if AV
were to deteriorate significantly.
MODERATELY CONCENTRATED TAX BASE: The project area benefits from
its large size, limited but ongoing development, and good long-
term growth prospects given the city's general economic
characteristics and access to major labor markets. The tax base is
moderately concentrated with the top 10 taxpayers comprising 20%
of AV and 28% of incremental value (IV).
RDA DISSOLUTION: The city was recognized as a successor agency
(SA) to the RDA and has successfully completed three recognized
obligation payment schedules (ROPS), which include debt service on
the bonds, following approval by the oversight board and the
state. The SA has received sufficient payments, along with
available cash reserves, to cover the debt service included in the
ROPS.
RATING SENSITIVITIES:
ADDITIONAL AV DECLINE: Further AV deterioration from present
levels likely would result in a downgrade of the rating.
RESOLUTION ON HOUSING REVENUE AVAILABILITY: Stabilization of the
rating could result if the use of the housing revenues for non-
housing obligations remains unchallenged or is upheld through
court action.
CREDIT PROFILE
Inadequate Subordinate Debt Service Coverage
The project area experienced a sharp 29% AV contraction from
fiscal 2008 to fiscal 2013, reducing Fitch estimated combined debt
service coverage to just 0.97x and 0.92x in fiscals 2012 and 2013,
respectively. The SA used non-pledged cash assets to cover the
shortfall on its debt service payments in fiscal 2012 and applied
non-pledged housing revenues, which were restricted for housing-
related obligations prior to the dissolution of RDAs, to make the
fiscal 2013 payments. The cash funded debt service reserve
securing the subordinate bonds remains whole and untapped.
Fitch views the use of non-pledged housing revenues to support
debt service payments as a potential future source of credit
enhancement, if the practice continues and the legal status of the
funds is clarified. Fitch is not aware of lawsuits directly
challenging the use of housing funds to support non-housing
related debt payments. However, various issues are being litigated
following the dissolution of RDAs, creating some uncertainty
regarding the longer-term reliance on the non-pledged revenue
stream to support debt payments. As such, these funds are not
currently included in Fitch's coverage analysis.
Fiscal 2013 AV Decline; Additional Weakness Possible
Project area AV declined by 2.7% in fiscal 2013 after nearly flat
performance in fiscal 2012. Management attributed the decline to a
re-assessment of commercial properties that offset a very modest
increase in residential AV.
Management's financial projections for fiscal 2014 include a
modest 1.4% increase in AV, which Fitch views as potentially
optimistic given recent performance. While data from Zillow.com
shows rising home values in Oakley for the first time in several
years, the net impact on project area AV remains uncertain given
the limited volume and the number of homes selling for a loss.
Stress Tests Demonstrate Payment Vulnerability
Fitch conducted stress tests under original conditions (requiring
the 20% housing set aside) and adjusted conditions (eliminating
the 20% housing set-aside requirement). In both cases, without the
use of non-pledged resources or AV growth, pledged revenues would
be insufficient to fully cover combined debt service payments,
resulting in the potential use of the subordinate debt service
reserve fund as early as fiscal year 2014.
In scenarios featuring an acceleration of AV losses or persistent,
modest AV declines the debt service reserve fund is both tapped
and depleted prior to final bond maturity. For example, in a
stress scenario performed under original conditions, a 3% AV loss
in fiscal 2014 followed by 1% annual losses from fiscal 2015-2018
would result in the depletion of the subordinate debt service
reserve by fiscal 2018.
Under adjusted conditions, which given credit to the former
housing set-aside, Fitch-calculated debt service coverage on the
subordinate bonds would fall to 1.0x in fiscal 2014 with a 7% AV
decline.
Senior Lien Retains Solid Coverage
Despite the severe AV contraction, Fitch-estimated senior debt
service coverage for fiscal 2013 remains solid at 2.9x due to the
bonds' low leverage levels. Even under the various stress
scenarios described above, senior debt service coverage remains at
solid levels.
Moderately Concentrated Tax Base
The agency's project area is a large 1,537 acres and tax payers
represent various commercial, industrial, and residential
(approximately 66% of AV) interests. The tax base is moderately
concentrated with the top 10 payers making up 20% of AV and 28% of
IV.
Mixed Economy
The city of Oakley serves approximately 36,000 residents in north-
eastern Contra Costa County. Located between San Francisco and
Sacramento, this exurban bedroom community offers residents access
to both employment markets. Economic characteristics are mixed,
and the city's tax base was impacted severely by the distressed
local housing market. The city's unemployment rate improved over
the past year and the city's rate of 5.8% (February 2013) compares
favorably with that of the state (9.7%) and nation (8.1%).
OHANA GROUP: Seeks to Extend Plan Filing Deadline to May 31
-----------------------------------------------------------
Ohana Group, LLC, asks the U.S. Bankruptcy Court to extend until
May 31, 2013, the deadline to file its Chapter 11 plan and
disclosure statement. The Debtor also seeks to extend its
solicitation period to Aug. 2, 2013
Ohana Group LLC, in Seattle, Washington, filed for Chapter 11
bankruptcy (Bankr. W.D. Wash. Case No. 12-21904) on Nov. 30, 2012.
Judge Marc Barreca oversees the case. James L. Day, Esq., at Bush
Strout & Kornfeld LLP, serves as bankruptcy counsel. In its
petition, the Debtor scheduled $16,000,000 in assets and
$11,696,131 in liabilities.
OLD SECOND: Shares Investor Presentation Materials
--------------------------------------------------
Old Second Bancorp, Inc., has filed with the U.S. Securities and
Exchange Commission a copy of the investor presentation materials
containing information that members of the management of Old
Second Bancorp will use from time to time, either all or in part,
during visits with investors, analysts, and other interested
parties to assist such parties' understanding of Old Second. The
investor presentation materials are available for free at:
http://is.gd/6WK7v1
Old Second Bancorp has amended its report on Form 8-K filed on
April 24, 2013, to correct the Company's and the Bank's total
capital ratios which were underreported in the press release
announcing the Company's earnings for the first fiscal quarter
ended March 31, 2013. The Earnings Release has been reissued with
the corrected information, and a copy of which is available for
free at http://is.gd/WLZyrt
About Old Second
Old Second Bancorp, Inc., is a financial services company with its
main headquarters located in Aurora, Illinois. The Company is the
holding company of Old Second National Bank, a national banking
organization headquartered in Aurora, Illinois and provides
commercial and retail banking services, as well as a full
complement of trust and wealth management services. The Company
has offices located in Cook, Kane, Kendall, DeKalb, DuPage,
LaSalle and Will counties in Illinois.
Old Second reported a net loss available to common stockholders of
$5.05 million in 2012, as compared with a net loss available to
common stockholders of $11.22 million in 2011.
The Company's balance sheet at March 31, 2013, showed $1.95
billion in total assets, $1.87 billion in total liabilities and
$75.85 million in total stockholders' equity.
ORCKIT COMMUNICATIONS: Offering 7.5MM Shares Under Incentive Plan
-----------------------------------------------------------------
Orckit Communications Ltd. is offering 7,500,000 ordinary shares
issuable under the Company's Share Incentive Plan for a proposed
maximum aggregate offering price of $1.33 million. A copy of the
Form S-8 prospectus is available for free at http://is.gd/anfkBP
About Orckit
Tel-Aviv, Israel-based Orckit Communications Ltd. (TASE: ORCT)
engages in the design, development, manufacture and marketing of
advanced telecom equipment to telecommunication service providers
in metropolitan areas. The Company's products are transport
telecommunication equipment targeting high capacity packetized
metropolitan networks.
ORCKIT Communications disclosed a net loss of $6.46 million on
$11.19 million of revenues for the year ended Dec. 31, 2012, as
compared with a net loss of $17.38 million on $15.58 million of
revenues for the year ended Dec. 31, 2011.
The Company's balance sheet at Dec. 31, 2012, showed $15.49
million in total assets, $23.88 million in total liabilities and a
$8.38 million total capital deficiency.
Kesselman & Kesselman, issued a "going concern" qualification on
the consolidated financial statements for the year ended Dec. 31,
2012. The independent auditors noted that the Company has a
capital deficiency, recurring losses, negative cash flows from
operating activities and has significant future commitments to
repay its convertible subordinated notes. These facts raise
substantial doubt as to the Company's ability to continue as a
going concern.
ORECK CORPORATION: Section 341(a) Meeting Scheduled on June 14
--------------------------------------------------------------
A meeting of creditors in the bankruptcy case of Oreck Corporation
will be held on June 14, 2013, at 09:00 a.m. at Customs House, 701
Broadway, Room 100, Nashville, Tenn.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
meeting of creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Oreck Corporation and eight affiliates sought Chapter 11
protection (Bankr. M.D. Tenn. Lead Case No. 13-04006) in
Nashville, Tennessee, on May 6, 2013, with plans to sell the
business as a going concern. William T. Nolan signed the petition
as president/secretary. The Debtor estimated assets and debts of
at least $10 million. Alexandra E. Dugan, Esq., and William L
Norton III, Esq., at Bradley Arant Boult Cummings, LLP, serve as
the Debtor's counsels. BMC Group Inc. is the Debtor's claims
agent. Judge Keith M. Lundin presides over the case.
OTELCO INC: Incurs $1.8-Mil. Net Loss in First Quarter
------------------------------------------------------
Otelco Inc. filed its quarterly report on Form 10-Q, reporting a
net loss of $1.8 million on $21.0 million of revenues for the
three months ended March 31, 2013, compared with net income of
$818,238 on $25.4 million of revenues for the same period last
year.
Total revenues of $21.0 million decreased 17.3% in the three
months ended March 31, 2013, from $25.4 million for the three
months ended March 31, 2012. The expiration of the TWC contract
on December 31, 2012 was the primary reason for the decrease in
revenue.
During the first quarter of 2013, the Company incurred
reorganization items of $1.4 million. All $1.4 million of
reorganization items are associated with legal and advisory fees
directly related to the Reorganization Cases.
The Company's balance sheet at March 31, 2013, showed
$168.4 million in total assets, $311.8 million in total
liabilities, and a stockholders' deficit of $143.4 million.
A copy of the Form 10-Q is available at http://is.gd/sXiffn
About Otelco Inc.
Oneonta, Alabama-based Otelco Inc. operates eleven rural local
exchange carriers ("RLECs") serving subscribers in north central
Alabama, central Maine, western Massachusetts, central Missouri,
western Vermont and southern West Virginia.
On March 24, 2013, the Company and each of its direct and indirect
subsidiaries filed voluntary petitions for reorganization under
Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 13-
10593) in order to effectuate their prepackaged Chapter 11 plan of
reorganization -- a plan that already has been accepted by 100% of
the Company's senior lenders, as well as holders of over 96% in
dollar amount of Otelco's senior subordinated notes who cast
ballots. Otelco's restructuring plan will strengthen the Company
by deleveraging its balance sheet and reducing its overall
indebtedness by approximately $135 million.
The Company's restructuring counsel is Willkie Farr & Gallagher
LLP and its financial advisor is Evercore Partners. The
restructuring counsel for the administrative agent for the senior
lenders is King & Spalding LLP and its financial advisor is FTI
Consulting.
On May 6, 2013, the Bankruptcy Court entered an order confirming
the Plan.
OXIGENE INC: Incurs $1.9-Mil. Net Loss in First Quarter
-------------------------------------------------------
OXiGENE, Inc., filed its quarterly report on Form 10-Q, reporting
a net loss of $1.88 million $nil revenue for the three months
ended March 31, 2013, compared with a net loss of $1.89 million on
$114,000 of revenue for the same period last year.
The Company's balance sheet at March 31, 2013, showed
$5.18 million in total assets, $833,000 in total current
liabilities, and stockholders' equity of $4.35 million.
A copy of the Form 10-Q is available at http://is.gd/cfMgVh
South San Francisco, Calif.-based OXiGENE, Inc., is a clinical-
stage, biopharmaceutical company developing novel therapeutics
primarily to treat cancer.
* * *
Ernst & Young LLP, in Redwood City, California, expressed
substantial doubt about OXiGENE, Inc.'s ability to continue as a
going concern, following their audit of the Company's financial
statements for the year ended Dec. 31, 2012. The independent
auditors noted that the Company has incurred operating losses
since inception and expects to continue to incur operating losses
over the next several years.
PARKERVISION INC: Incurs $6.5-Mil. Net Loss in First Quarter
------------------------------------------------------------
ParkerVision, Inc., filed its quarterly report on Form 10-Q,
reporting a net loss of $6.5 million for the three months ended
March 31, 2013, compared with a net loss of $4.1 million for the
same period last year. The Company had no product or royalty
revenue for the three months ended March 31, 2013, or 2012.
The Company's balance sheet at March 31, 2013, showed
$28.3 million in total assets, $2.0 million in total liabilities,
and stockholders' equity of $26.3 million.
The Company said, "We do not expect that revenue generated from
the sale of our RF chipsets in 2013, if any, will be sufficient to
cover our operational expenses and we expect that our continued
losses and use of cash will be funded from our cash and available
for sale securities of $17.8 million at March 31, 2013. These
resources may be sufficient to support our liquidity requirements
through 2013; however, these resources may not be sufficient to
support our liquidity requirements for the next twelve months and
beyond without further cost containment measures that, if
implemented, may jeopardize our future growth plans. These
circumstances raise substantial doubt about our ability to
continue as a going concern."
A copy of the Form 10-Q is available at http://is.gd/B9t6oG
Jacksonville, Florida-based ParkerVision, Inc., designs, develops
and markets its proprietary radio frequency ("RF") technologies
and products for use in semiconductor circuits for wireless
communication products.
* * *
As reported in the TCR on March 25, 2013, PricewaterhouseCoopers
LLP, in Jacksonville, Florida, expressed substantial doubt about
ParkerVision's ability to continue as a going concern, citing the
Company's recurring losses from operations and negative cash flows
in every year since inception.
PATIENT SAFETY: Amends 26.4 Million Resale Prospectus
-----------------------------------------------------
Patient Safety Technologies, Inc., filed with the U.S. Securities
and Exchange Commission a post-effective amendment no.2 to the
Form S-1 registration statement to update certain information in
the prospectus, including as a result of the Company filing its
annual report on Form 10-K for the year ended Dec. 31, 2012.
The prospectus relates to the offering by Kinderhook Partners,
L.P., JMR Capital Limited, David Spiegel, et al., of up to
26,470,170 shares of common stock, par value $0.0001 per share.
All of the shares of common stock offered by this prospectus are
being sold by the selling stockholders. These shares include
16,102,637 issued and outstanding shares of common stock,
8,492,533 shares of common stock issuable upon conversion of the
Company's issued and outstanding Series B Convertible Preferred
Stock, or Series B Preferred Stock, and 1,875,000 shares of common
stock underlying unexercised warrants to purchase common stock.
The Company will not receive any proceeds from the sale of common
stock by the selling stockholders. The Company will receive
proceeds from the selling stockholders from any exercise of their
warrants made on a cash basis.
The Company's common stock is quoted on the OTC Bulletin Board
under the symbol "PSTX." On May 3, 2013, the closing price of the
Company's common stock was $1.59 per share.
A copy of the Amended Prospectus is available for free at:
http://is.gd/Om8HAj
About Patient Safety Technologies
Patient Safety Technologies, Inc. (OTC: PSTX) --
http://www.surgicountmedical.com/-- through its wholly owned
operating subsidiary SurgiCount Medical, Inc., provides the
Safety-Sponge(TM) System, a system designed to improve the
standard of patient care and reduce health care costs by
preventing the occurrence of surgical sponges and other retained
foreign objects from being left inside patients after surgery.
RFOs are among one of the most common surgical errors.
Patient Safety reported a net loss of $1.89 million in 2011,
compared with net income of $2 million during the prior year. The
Company's balance sheet at Sept. 30, 2012, showed $19.98 million
in total assets, $7.51 million in total liabilities and
$12.47 million in total stockholders' equity.
PATRIOT COAL: Units Gets Imminent Danger Order From MSHA
--------------------------------------------------------
Eastern Associated Coal, LLC, a subsidiary of Patriot Coal
Corporation, received an imminent danger order under Section
107(a) of the Mine Act at the Federal No. 2 mine on May 2, 2013.
During an examination of the ventilation system of the Federal No.
2 mine, an MSHA representative detected an accumulation of excess
methane in a worked-out gob region of the mine where employees do
not work or travel. In addition, the MSHA representative detected
an improper reversal of airflow at an evaluation point. The
Company took appropriate actions to alleviate the conditions, and
normal mining operations resumed shortly afterward. No injuries
resulted from the conditions. The Company disputes that the
conditions constitute an imminent danger as set forth under
Section 107(a) and intends to vigorously contest the issuance of
the Order.
The Dodd-Frank Wall Street Reform and Consumer Protection Act was
enacted on July 21, 2010. Section 1503 of the Dodd-Frank Act
requires a Current Report on Form 8-K if a company is issued an
imminent danger order under Section 107(a) of the Federal Mine
Safety and Health Act of 1977 by the federal Mine Safety and
Health Administration.
About Patriot Coal
St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer
and marketer of coal in the eastern United States, with 13 active
mining complexes in Appalachia and the Illinois Basin. The
Company ships to domestic and international electricity
generators, industrial users and metallurgical coal customers, and
controls roughly 1.9 billion tons of proven and probable coal
reserves.
Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11
petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y.
Lead Case No. 12-12900) on July 9, 2012. Patriot said it had
$3.57 billion of assets and $3.07 billion of debts, and has
arranged $802 million of financing to continue operations during
the reorganization.
Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone
Advisory Partners LP is serving as financial advisor, and AP
Services, LLC is providing interim management services to Patriot
in connection with the reorganization. Ted Stenger, a Managing
Director at AlixPartners LLP, the parent company of AP Services,
has been named Chief Restructuring Officer of Patriot, reporting
to the Chairman and CEO. GCG, Inc. serves as claims and noticing
agent.
The U.S. Trustee appointed a seven-member creditors committee.
Kramer Levin Naftalis & Frankel LLP serves as its counsel.
Houlihan Lokey Capital, Inc., serves as its financial advisor and
investment banker. Epiq Bankruptcy Solutions, LLC, serves as its
information agent.
On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's
bankruptcy case to St. Louis. The order formally sending the
reorganization to Missouri was signed December 19 by the
bankruptcy judge. The New York Judge in a Jan. 23, 2013 order
denied motions to transfer the venue to the U.S. Bankruptcy Court
for the Southern District of West Virginia.
PATRIOT COAL: Incurs $115.9 Million Net Loss in First Quarter
-------------------------------------------------------------
Patriot Coal Corporation filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $115.90 million on $343.29 million of total revenues
for the three months ended March 31, 2013, as compared with a net
loss of $75.29 million on $502.57 million of total revenues for
the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed $3.71
billion in total assets, $4.04 billion in total liabilities and a
$327.78 million total stockholders' deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/oJwQPn
About Patriot Coal
St. Louis-based Patriot Coal Corporation (NYSE: PCX) is a producer
and marketer of coal in the eastern United States, with 13 active
mining complexes in Appalachia and the Illinois Basin. The
Company ships to domestic and international electricity
generators, industrial users and metallurgical coal customers, and
controls roughly 1.9 billion tons of proven and probable coal
reserves.
Patriot Coal and nearly 100 affiliates filed voluntary Chapter 11
petitions in U.S. bankruptcy court in Manhattan (Bankr. S.D.N.Y.
Lead Case No. 12-12900) on July 9, 2012. Patriot said it had
$3.57 billion of assets and $3.07 billion of debts, and has
arranged $802 million of financing to continue operations during
the reorganization.
Davis Polk & Wardwell LLP is serving as legal advisor, Blackstone
Advisory Partners LP is serving as financial advisor, and AP
Services, LLC is providing interim management services to Patriot
in connection with the reorganization. Ted Stenger, a Managing
Director at AlixPartners LLP, the parent company of AP Services,
has been named Chief Restructuring Officer of Patriot, reporting
to the Chairman and CEO. GCG, Inc. serves as claims and noticing
agent.
The U.S. Trustee appointed a seven-member creditors committee.
Kramer Levin Naftalis & Frankel LLP serves as its counsel.
Houlihan Lokey Capital, Inc., serves as its financial advisor and
investment banker. Epiq Bankruptcy Solutions, LLC, serves as its
information agent.
On Nov. 27, 2012, the New York bankruptcy judge moved Patriot's
bankruptcy case to St. Louis. The order formally sending the
reorganization to Missouri was signed December 19 by the
bankruptcy judge. The New York Judge in a Jan. 23, 2013 order
denied motions to transfer the venue to the U.S. Bankruptcy Court
for the Southern District of West Virginia.
PENN TREATY: Failure to File Periodic Reports Prompts Revocation
----------------------------------------------------------------
The U.S. Securities and Exchange Commission has revoked the
registration of Penn Treaty American Corporation's securities
pursuant to Section 12(j) of the Exchange Act. The revocation was
a result of the Company's failure to file any periodic reports
with the Commission since the period ended Dec. 31, 2006. The
Company has consented to the entry of the Revocation Order.
About Penn Treaty American
Penn Treaty American Corporation -- https://www.penntreaty.com/ --
through its wholly owned direct and indirect subsidiaries, Penn
Treaty Network America Insurance Company, American Network
Insurance Company, American Independent Network Insurance Company
of New York, Network Insurance Senior Health Division and Senior
Financial Consultants Company, is engaged in the underwriting,
marketing and sale of individual and group accident and health
insurance products, principally covering long term nursing home
and home health care.
On Oct. 2, 2009, the Insurance Commissioner of the Commonwealth of
Pennsylvania filed in the Commonwealth Court of Pennsylvania
Petitions for Liquidation for PTNA and American Network Insurance
Company. PTNA is a direct insurance company subsidiary of Penn
Treaty American Corporation, and ANIC is a subsidiary of PTNA.
PHOENIX DEVELOPMENT: Section 341(a) Meeting Set on June 27
----------------------------------------------------------
A meeting of creditors in the bankruptcy case of Phoenix
Development and Land Investment, LLC, will be held on June 27,
2013, at 11:00 a.m. at Athens 341(a) Meeting Room. Creditors have
until Sept. 25, 2013, to submit their proofs of claim.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
meeting of creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
About Phoenix Development
Phoenix Development and Land Investment, LLC, filed a Chapter 11
bankruptcy petition (Bankr. M.D. Ga. Case No. 13-30596) in Athens,
Georgia, on May 6, 2013. The Watkinsville, Georgia-based company
disclosed total assets of $31.7 million and liabilities of
$4.31 million in its schedules. The petition was signed by Conway
Broun as manager. Ernest V. Harris, Esq., at Harris & Liken, LLP,
serves as the Debtor's counsel.
The Debtor owns a 45-acre property on Milledge Avenue and
Whitehall Road, in Athens, valued at $5.5 million and pledged as
collateral to a $4 million debt to SCB&T, NA. The Debtor's
declared assets include at least $22 million in claims against
insurance companies and the Board of Regents of Georgia.
PITTSBURGH GLASS: Underperformance Prompts Moody's to Cut Ratings
-----------------------------------------------------------------
Moody's Investors Service lowered the ratings of Pittsburgh Glass
Works, LLC - Corporate Family and Probability of Default Ratings,
to B3 and B3-PD, from B2 and B2-PD, respectively. In a related
action, Moody's lowered the rating of the $325 million senior
secured note to B3 from B2. The rating outlook is stable.
Ratings lowered:
Corporate Family Rating, to B3 from B2
Probability of Default, to B3-PD from B2-PD
$325 million senior secured note, to B3 (LGD4, 58%) from B2 (LGD4,
55%)
Rating Rationale
The lowering of PGW's Corporate Family Rating to B3 reflects the
company's underperformance to Moody's expectations since assigning
the initial ratings and the expectation that the weakness in the
company's automotive replacement glass and insurance and service
segment will continue to underperform. PGW's OEM revenues have
benefited from recovering passenger car demand in North America.
However, weaker revenues in the ARG and I&S segments offset most
of these OEM revenue gains. Lower ARG and I&S revenues have been
driven by weak passenger car aftermarket demand, the reduction of
volume with a major insurance customer, and lower than expected
replacement rates.
Profit margins in general are higher in the ARG and I&S segments.
PGW's performance has also been negatively impacted by start-up
cost related to the company's new fabrication facility recently
brought online in Poland and competitive pricing pressures in the
ARG segment. As a result, Moody's estimates that Debt/EBITDA for
the LTM period ending March 31, 2013 was approximately 5.8x
(including Moody's standard adjustments) and EBIT/Interest
approximated 1x.
PGW's management expects that start up costs related to the Poland
facility to materially fall off over the near-term as production
volumes increase. However, Moody's believes that weak aftermarket
demand will continue to pressure revenue growth in the ARG
segment. In addition weak macroeconomic conditions in Europe may
pressure the company's regional growth expectations.
The stable outlook reflects Moody's expectation that growth in
PGW's OEM segment (about 62% of 2012 revenues) over the near-term
will help mitigate revenue weakness in the ARG and I&S segment
over the near-term. In addition, the company's adequate liquidity
profile should support operating flexibility.
PGW is anticipated to have an adequate liquidity profile over the
near-term supported by availability under the $180 million asset
based revolving credit facility and the reversal of the cash drain
with diminishing start-up costs at the company's Poland facility
leading to break even cash flow generation over the near-term. PGW
modest cash balance levels are expect to remain unchanged over the
near-term. The revolving credit facility is expected to remain
available over the next twelve months subject to borrowing base
limitations and amounts funded to date supporting the company's
cash burn through the LTM period ending March 31, 2013. The senior
secured notes do not have financial maintenance covenants. The
asset based revolving credit facility has a springing fixed charge
coverage test of 1.0x when availability falls below certain
levels. Alternative liquidity is limited as essentially all the
company's domestic assets secure the revolving credit and senior
secured notes.
Future events that have the potential to drive PGW's outlook or
ratings higher include: improvement in operating performance which
results in Debt/EBITDA approaching 4.5x, and EBIT/Interest
consistently above 1.5x, combined with positive free cash flow
generation.
Future events that have the potential to drive PGW's outlook or
ratings lower include: reduced automotive demand which inhibits
the company's ability to improve profit margins; additional
customer or market share losses in any of the company's segments,
disruptions in the company's operations resulting from planned
manufacturing expansions; or a deterioration in liquidity.
Consideration for a lower rating could arise if any combination of
these factors results in Debt/EBITDA approaching 6.5x, or
EBIT/interest coverage maintained below 1.0x.
The principal methodology used in this rating 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.
PGW manufactures, fabricates and delivers glass products and
solutions to automotive OEMs directly or through third party
suppliers; manufactures replacement auto glass and distributes
related sundries to the glass replacement aftermarket; and
provides a suite of software and services that manages the auto
glass insurance claims process, inventory and work flow for glass
retailers. PGW is primarily owned by affiliates of Kohlberg and
Company and PPG Industries.
QUALITY DISTRIBUTION: Files Form 10-Q, Had $9.1MM Income in Q1
--------------------------------------------------------------
Quality Distribution, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
net income of $9.14 million on $229.42 million of total operating
revenues for the three months ended March 31, 2013, as compared
with net income of $6.70 million on $191.91 million of total
operating revenues for the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed $510.52
million in total assets, $521.63 million in total liabilities, and
a $11.11 million total shareholders' deficit.
A copy of the Form 10-Q is available for free at:
http://is.gd/wdAJcc
About Quality Distribution
Quality Distribution, LLC, and its parent holding company, Quality
Distribution, Inc., are headquartered in Tampa, Florida. The
company is a transporter of bulk liquid and dry bulk chemicals.
The company's 2010 revenues are approximately $686 million.
Apollo Management, L.P., owns roughly 30% of the common stock of
Quality Distribution, Inc.
Quality Distribution reported net income of $50.07 million for the
year ended Dec. 31, 2012, as compared with net income of $23.43
million in 2011.
Bankruptcy Warning
According to the Company's annual report for the period ended
Dec. 31, 2012, the Company had consolidated indebtedness and
capital lease obligations, including current maturities, of $418.8
million as of Dec. 31, 2012. The Company must make regular
payments under the ABL Facility and its capital leases and semi-
annual interest payments under its 2018 Notes.
The Company's 2018 Notes issued in the quarter ended Dec. 31,
2010, carry high fixed rates of interest. In addition, interest
on amounts borrowed under the Company's ABL Facility is variable
and will increase as market rates of interest increase. The
Company does not presently hedge against the risk of rising
interest rates. The Company's higher interest expense may reduce
its future profitability. The Company's future higher interest
expense and future redemption obligations could have other
important consequences with respect to the Company's ability to
manage its business successfully, including the following:
* it may make it more difficult for the Company to satisfy its
obligations for its indebtedness, and any failure to comply
with these obligations could result in an event of default;
* it will reduce the availability of the Company's cash flow to
fund working capital, capital expenditures and other business
activities;
* it increases the Company's vulnerability to adverse economic
and industry conditions;
* it limits the Company's flexibility in planning for, or
reacting to, changes in the Company's business and the
industry in which the Company operates;
* it may make the Company more vulnerable to further downturns
in its business or the economy; and
* it limits the Company's ability to exploit business
opportunities.
The ABL Facility matures August 2016. However, the maturity date
of the ABL Facility may be accelerated if the Company defaults on
its obligations.
"If the maturity of the ABL Facility and/or such other debt is
accelerated, we may not have sufficient cash on hand to repay the
ABL Facility and/or such other debt or be able to refinance the
ABL Facility and/or such other debt on acceptable terms, or at
all. The failure to repay or refinance the ABL Facility and/or
such other debt at maturity would have a material adverse effect
on our business and financial condition, would cause substantial
liquidity problems and may result in the bankruptcy of us and/or
our subsidiaries. Any actual or potential bankruptcy or liquidity
crisis may materially harm our relationships with our customers,
suppliers and independent affiliates."
QUANTUM CORP: Incurs $14.5 Million Net Loss in Fourth Quarter
-------------------------------------------------------------
Quantum Corp. reported a net loss of $14.50 million on
$139.95 million of total revenue for the three months ended March
31, 2013, as compared with a net loss of $11.05 million on
$160.30 million of total revenue for the same period during the
prior year.
For the 12 months ended March 31, 2013, the Company incurred a net
loss of $52.41 million on $587.57 million of total revenue, as
compared with a net loss of $8.81 million on $652.37 million of
total revenue for the same period a year ago.
The Company's balance sheet at March 31, 2013, showed
$371.14 million in total assets, $452.72 million in total
liabilities, and a $81.58 million stockholders' deficit.
"Although this was a challenging year for storage generally, and a
particularly tough one for tape, we grew our disk systems and
software revenue to a new high, maintained our market share
leadership in tape, introduced a broad range of innovative new
products and further improved our balance sheet," said Jon Gacek,
president and CEO of Quantum. "We will build on this progress in
the new fiscal year to drive a balance of growth and profit, and,
we are well-positioned to do so.
"Our product portfolio is a key strength, and we will continue to
be aggressive about utilizing our technology assets to create
products and solutions that are clearly differentiated and deliver
superior value to customers in both data protection and big data
management. This will include new deduplication, virtualization,
cloud, workflow and archive offerings."
A copy of the press release is available for free at:
http://is.gd/194K4D
About Quantum Corp.
Based in San Jose, California, Quantum Corp. (NYSE:QTM) --
http://www.quantum.com/-- is a storage company specializing in
backup, recovery and archive. Quantum provides a comprehensive,
integrated range of disk, tape, and software solutions supported
by a world-class sales and service organization.
RDA HOLDING: Litigation Threat Used to Hike Pot by $3.87MM
----------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the Reader's Digest Association creditors' committee
used the threat of litigation to persuade the publisher's senior
creditors into contributing an additional $3.875 million toward
claims of unsecured creditors totaling $135 million.
According to the report, combined with $500,000 offered
originally, the pot of $4.375 million means the recovery by
unsecured creditors under the company's proposed reorganization
plan rises from less than 0.1 percent to 3 percent. The unsecured
creditors' committee is now supporting the plan.
The report relates that the settlement with the unsecured
committee was laid out in the revised reorganization plan with the
U.S. Bankruptcy Court in White Plains, New York. Assuming the
judge formally approves the explanatory disclosure statement soon,
there will be a June 28 confirmation hearing for approval of the
plan.
The committee contended the company was ascribing too little value
to the one-third of the stock of foreign subsidiaries that wasn't
subject to secured lenders' claims. The committee also sought the
right to sue company management and opposed provisions in the plan
granting releases to executives and others.
The settlement means the creditors' committee supports approval of
the plan and allows the company to hand out releases. Secured
lenders are waiving rights they otherwise would have for receiving
payment on their deficiency claims from the pot for unsecured
creditors. The classes of unsecured creditors must vote for the
plan to receive the enhanced distribution.
The plan will complete an agreement negotiated before the February
Chapter 11 filing with holders of 70 percent of what amounts to
$475 million in second-lien floating-rate notes. The debt will be
converted into the new equity.
About Reader's Digest
Reader's Digest is a global media and direct marketing company
that educates, entertains and connects consumers around the world
with products and services from trusted brands. For more than 90
years, the flagship brand and the world's most read magazine,
Reader's Digest, has simplified and enriched consumers' lives by
discovering and expertly selecting the most interesting ideas,
stories, experiences and products in health, home, family,
food, finance and humor.
RDA Holding Co. and 30 affiliates (Bankr. S.D.N.Y. Lead Case No.
13-22233) filed for Chapter 11 protection on Feb. 17, 2013,
with an agreement with major stakeholders for a pre-negotiated
chapter 11 restructuring. Under the plan, the Debtor will issue
the new stock to holders of senior secured notes.
RDA Holding Co. listed total assets of $1,118,400,000 and total
liabilities of $1,184,500,000 as of the Petition Date.
Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the
Debtors. Evercore Group LLC is the investment banker. Epiq
Bankruptcy Solutions LLC is the claims and notice agent.
Reader's Digest, together with its 47 affiliates, first sought
Chapter 11 protection (Bankr. S.D.N.Y. Case No. 09-23529) Aug. 24,
2009 and exited bankruptcy Feb. 19, 2010.
REAL ESTATE ASSOCIATES: Had No Investment in Bluewater at Dec. 31
-----------------------------------------------------------------
Real Estate Associates Limited VII holds a 99.9% general partner
interest in Real Estate Associates IV, which, in turn, holds a 99%
limited partnership interest in Bluewater Limited Dividend Housing
Association, a Michigan limited partnership.
Bluewater owns a 116-unit apartment complex located in Port Huron,
Michigan. On May 6, 2013, REA IV entered into an Assignment and
Assumption Agreement by and among REA IV, as Assignor, Joel I.
Ferguson and AMG-MGT, LLC, a Michigan limited liability company as
Assignees, and AMG and Bluewater Corporation, a Michigan
corporation, as general partners of Bluewater, pursuant to which
REA IV transferred the Bluewater limited partnership interests
held by it to the Assignees in exchange for the cancellation by
the Assignees of two non-recourse promissory notes, each in the
principal amount of $460,000, previously issued by REA IV to the
Assignees. Real Estate Associates Limited VII's investment
balance in Bluewater was zero at Dec. 31, 2012. The Registrant
did not receive any proceeds from the sale.
About Real Estate Associates
Real Estate Associates Limited VII is a limited partnership which
was formed under the laws of the State of California on May 24,
1983. On Feb. 1, 1984, the Partnership offered 2,600 units
consisting of 5,200 limited partnership interests and warrants to
purchase a maximum of 10,400 additional limited partnership
interests through a public offering managed by E.F. Hutton Inc.
The Partnership received $39,000,000 in subscriptions for units of
limited partnership interests (at $5,000 per unit) during the
period from March 7, 1984 to June 11, 1985.
The general partners of the Partnership are National Partnership
Investments Corp., a California Corporation, and National
Partnership Investments Associates II. The business of the
Partnership is conducted primarily by NAPICO, a subsidiary of
Apartment Investment and Management Company, a publicly traded
real estate investment trust.
As of Sept. 30, 2012, and Dec. 31, 2011, the Partnership holds
limited partnership interests in 1 and 11 Local Limited
Partnerships, respectively, and a general partner interest in REA
IV which, in turn, holds limited partnership interests in 3 and 8
additional Local Limited Partnerships, respectively; therefore,
the Partnership holds interests, either directly or indirectly
through REA IV, in 4 and 19 Local Limited Partnerships,
respectively. The other general partner of REA IV is NAPICO. The
Local Limited Partnerships own residential low income rental
projects consisting of 403 and 1,237 apartment units at Sept. 30,
2012, and Dec. 31, 2011, respectively. The mortgage loans of
these projects are payable to or insured by various governmental
agencies.
The Partnership disclosed net income of $13.01 million on $0 of
revenue for the year ended Dec. 31, 2012, as compared with a net
loss of $861,000 on $0 of revenue during the prior year.
The Company's balance sheet at Dec. 31, 2012, showed $1.04 million
in total assets, $8.17 million in total liabilities, and a
$7.12 million total partners' deficit.
Ernst & Young LLP, in Greenville, South Carolina, issued a "going
concern" qualification on the consolidated financial statements
for the year ended Dec. 31, 2012. The independent auditors noted
that the Partnership continues to generate recurring operating
losses. In addition, notes payable and related accrued interest
totalling $8.09 million are in default due to non-payment. These
conditions raise substantial doubt about the Partnership's ability
to continue as a going concern.
RESIDENTIAL CAPITAL: Committee Wants Sole Authority for Suing Ally
------------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the creditors' committee for Residential Capital LLC,
a subsidiary of non-bankrupt Ally Financial Inc., wants the
exclusive right to sue Ally, assuming the upcoming examiner's
report and mediation fail to bring home a global settlement.
According to the report, in April holders of about $1 billion in
ResCap notes filed papers seeking permission to sue alongside the
committee. The committee's request for authority to sue was
discussed at the May 8's hearing in U.S. Bankruptcy Court in New
York. The judge said he will rule on the motion after the
examiner files his report.
On May 8, the examiner said he will file his report by May 10,
assuming no unforeseen circumstances intervene. Wilmington Trust
Co., in its role as indenture trustee, contends that the committee
more represents ResCap operating company creditors and therefore
can't adequately stand up for noteholders with claims against the
holding company.
In papers filed May 8, the committee said it alone represents all
creditors. Allowing the noteholders to prosecute a companion suit
would complicate the litigation and settlement, the committee
said.
The noteholders' motion for authority to sue will be on the
court's calendar for hearing on June 12.
ResCap filed papers May 8 to end a dispute with the U.S. Trustee
about maximum severance payments for senior managers. Congress
imposed limits on severance for senior executives. To resolve
ambiguities in the statute in the calculation of executives'
maximum severance, ResCap filed papers explaining why the company
believes $136,000 is the most for any one executive. Although
they are not all scheduled to leave, there would be six senior
executives to whom the severance cap would apply. The severance
issue will come to court for hearing on May 23.
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.
ResCap sold most of the businesses for a combined $4.5 billion.
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.
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).
RESIDENTIAL CAPITAL: Parties Battle Over Details
------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that at a May 14 hearing, the U.S. Bankruptcy Court in New
York will be faced with the question of who should pay for
preserving and selling the remaining assets of Residential Capital
LLC in an orderly fashion.
ResCap said it has about $1.5 billion in assets remaining after
most of the business was sold for $4.5 billion. ResCap and the
official unsecured creditors' committee say that 95 percent of the
remaining assets represent collateral for non-bankrupt parent Ally
Financial Inc. or holders of the 9.625 percent junior secured
notes due 2015. ResCap and the committee want the court to rule at
the May 14 hearing that some $30 million in free cash can't be
used to preserve and sell the collateral.
The report relates that Ally and the junior secured noteholders
point to a waiver under 11 U.S.C. Section 506(c) early in the case
where, in return for permission to use lenders' cash collateral,
ResCap waived the right to charge secured creditors with the cost
of preserving their collateral.
The junior secured noteholders, the report discloses, were the
target of a lawsuit ResCap filed on May 3. The suit asks the
bankruptcy judge to determine whether collateral for the
noteholders exceeds the $2.1 billion they are owed. ResCap
contends that the noteholders "manufactured an oversecured
position" to establish a right to interest accruing after
bankruptcy. ResCap, which was Ally's mortgage-servicing
subsidiary, says the collateral value is $1.51 billion, compared
with the noteholders' claim for $2.22 billion in principal and
interest.
To support the claim for value in excess of the debt, the
noteholders contend they have a lien on property known as general
intangibles, including goodwill. The noteholders also allege they
have liens on lawsuit recoveries.
At a May 7 hearing, the bankruptcy judge was slated to decide if
ResCap's exclusive right to propose a Chapter 11 plan will be
extended. The judge will also deal with the question of whether
the creditors' committee can file lawsuits in place of ResCap.
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.
ResCap sold most of the businesses for a combined $4.5 billion.
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.
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).
RESIDENTIAL CAPITAL: Parties Trying for Global Settlement
---------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Residential Capital LLC, its non-bankrupt parent Ally
Financial Inc., and the official creditors' committee are trying
to negotiate a global settlement to decide how much Ally must pay
for a release of claims by ResCap's creditors, the bankruptcy
judge in Manhattan was told at a hearing May 7.
The hearing was held on ResCap's motion for an extension of the
exclusive right to propose a reorganization plan. When all
was said and done, the judge signed an order expanding exclusivity
to June 6, a shorter extension negotiated by the committee. The
extension granted was about half what ResCap originally sought.
The report discloses that absent a global agreement, ResCap, which
had been Ally's mortgage-servicing subsidiary, said it would try
to file a plan within a month resolving as many claims as
possible. The parties are in mediation conducted by another
bankruptcy judge.
The report recounts that in February, ResCap terminated an
agreement made before bankruptcy where Ally would have paid
$750 million in return for broad releases of claims from ResCap
and creditors. The agreement had been controversial since the
onset of bankruptcy. The indenture trustee for senior unsecured
noteholders said in a court filing that $750 million was "far
too small" for the claims being released. The official unsecured
creditors committee's court filing called the payment no basis for
a consensual reorganization plan.
The May 7 hearing, the report adds, also dealt with the creditors'
committee's request for permission to sue Ally. The judge said he
will issue a ruling after the examiner files his report.
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.
ResCap sold most of the businesses for a combined $4.5 billion.
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.
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).
REVEL AC: Bankruptcy Court Confirms Prepack Reorganization Plan
---------------------------------------------------------------
Revel AC Inc. on May 13 disclosed that the U.S. Bankruptcy Court
for the District of New Jersey (Camden) has confirmed Revel's
prepackaged plan of reorganization under Chapter 11 of the
Bankruptcy Code. The Plan was unanimously accepted by creditors
voting on the plan in connection with the Company's voluntary pre-
packaged solicitation of votes. Revel expects to emerge from
Chapter 11 before the end of May after the conditions to
effectiveness of the plan are satisfied.
Revel has secured $350 million in exit financing, including a $75
million revolver to fund working capital and a $275 million term
loan, which will be used to pay expenses related to the
restructuring and repay the outstanding borrowings under the
debtor-in-possession financing.
The Plan will substantially reduce Revel's debt load from
approximately $1.52 billion to $272 million, through an exchange
of debt for equity, and annual interest expense will decrease from
approximately $102 million to $46 million. A significant amount
of the cash that was previously used for interest payments will
now be available to fund ongoing operations. On a cash basis, the
interest expense will be reduced by 96%, from $102 to $4 million,
thereby improving cash flow.
Jeffrey Hartmann, Revel's Interim Chief Executive Officer,
commented, "The confirmation of our plan is the last major
milestone of the restructuring process. We look forward to
officially emerging from Chapter 11 by the end of this month with
a right-sized balance sheet and a significant reduction in our
annual interest expense. The restructuring has been nothing short
of transformative for Revel, and I would like to thank our lenders
for their ongoing faith in our business, as well as our guests,
vendors and employees for their continued support."
"Upon emergence," Hartmann continued, "we will enter the summer
season on firmer financial footing, focused on driving growth and
attracting guests to the property through an expanding range of
amenities and exciting new programming. Greater casino floor
appeal, new gaming rewards, the recent opening of our player's
lounge and high-limits slots area, seven-day-a-week programming,
our new 24-hour, three-meal-per-day restaurant, Relish, and the
upcoming openings of a Noodle Bar and HQ Beach Club all strengthen
our ability to offer a personalized Revel experience and uniquely
position us to attract gaming, leisure and business meeting guests
alike."
Revel's legal advisor in connection with the restructuring is
Kirkland & Ellis LLP. Alvarez & Marsal serves as its
restructuring advisor and Moelis & Company serves as its
investment banker for the restructuring.
Objections Filed
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that creditors filed objections to Revel AC's prepackaged
reorganization plan scheduled for approval at a May 13
confirmation hearing.
The Ravel hotel on Queens Plaza South in Long Island City, New
York, claims that the Debtor's Revel casino in Atlantic City, New
Jersey, allegedly infringes the registered trademark belonging to
the Ravel hotel.
Tishman Construction Corp., the construction manager for the
hotel, takes issue with plan provisions that would bar claims
against third parties not themselves in bankruptcy. The U.S.
Trustee lodged a similar objection.
The Ravel hotel wants the plan modified to ensure that its ability
to contest Revel's trademark isn't barred by the upcoming exit
from Chapter 11. Already accepted by creditors, the plan will
reduce debt for borrowed money by 82 percent, from $1.52 billion
to $272 million. For a projected 19 percent recovery, holders of
an $896 million secured term loan are to receive all the new
equity under the plan. General unsecured creditors will be paid
in full.
About Revel AC
Revel AC, Inc. -- http://www.revelresorts.com/-- owns and
operates Revel, a Las Vegas-style, beachfront entertainment resort
and casino located on the Boardwalk in the south inlet of Atlantic
City, New Jersey.
Revel AC Inc. along with four affiliates sought bankruptcy
protection (Bankr. D.N.J. Lead Case No. 13-16253) on March 25,
2013, in Camden, New Jersey, with a prepackaged plan that reduces
debt by $1.25 billion.
Revel's legal advisor in connection with the restructuring is
Kirkland & Ellis LLP. Alvarez & Marsal serves as its restructuring
advisor and Moelis & Company serves as its investment banker for
the restructuring. Epiq Bankruptcy Solutions is the claims and
notice agent.
RG STEEL: Group Opposes Use of Trust Funds for Creditor Payment
---------------------------------------------------------------
A group of trust beneficiaries is blocking efforts by RG Steel
Wheeling LLC to obtain a court order authorizing its chief
financial officer to act on behalf of the company under a trust
agreement with PNC Bank N.A.
The group led by Richard Carter expressed concern the funds held
by the trust would be used to pay RG Steel creditors. The
beneficiaries also said the steel maker made no contributions to
the trust, and "has no authority to act in any respect with the
trust."
RG Steel, as successor to Wheeling-Pittsburgh Steel Corp., is a
party to a 1990 agreement between WPSC and PNC Bank N.A. The
companies signed the agreement to establish a trust to hold and
distribute certain funds held in connection with WPSC's employee
benefit plans.
The steel maker wants the funds returned to it to maximize
recoveries of its creditors.
About RG Steel
RG Steel LLC -- http://www.rg-steel.com/-- is the United States'
fourth-largest flat-rolled steel producer with annual steelmaking
capacity of 7.5 million tons. It was formed in March 2011
following the purchase of three steel facilities located in
Sparrows Point, Maryland; Wheeling, West Virginia and Warren,
Ohio, from entities related to Severstal US Holdings LLC. RG
Steel also owns finishing facilities in Yorkville and Martins
Ferry, Ohio. It also owned Wheeling Corrugating Company and has a
50% ownership in Mountain State Carbon and Ohio Coatings Company.
RG Steel along with affiliates, including WP Steel Venture LLC,
sought bankruptcy protection (Bankr. D. Del. Lead Case No. 12-
11661) on May 31, 2012. Bankruptcy was precipitated by liquidity
shortfall and a dispute with Mountain State Carbon, LLC, and a
Severstal affiliate, that restricted the shipment of coke used in
the steel production process.
The Debtors estimated assets and debts in excess of $1 billion.
As of the bankruptcy filing, the Debtors owe (i) $440 million,
including $16.9 million in outstanding letters of credit, to
senior lenders led by Wells Fargo Capital Finance, LLC, as
administrative agent, (ii) $218.7 million to junior lenders, led
by Cerberus Business Finance, LLC, as agent, (iii) $130.5 million
on account of a subordinated promissory note issued by majority
owner The Renco Group, Inc., and (iv) $100 million on a secured
promissory note issued by Severstal.
Judge Kevin J. Carey presides over the case.
The Debtors are represented in the case by Robert J. Dehney, Esq.,
and Erin R. Fay, Esq., at Morris, Nichols, Arsht & Tunnell LLP,
and Matthew A. Feldman, Esq., Shaunna D. Jones, Esq., Weston T.
Eguchi, Esq., at Willkie Farr & Gallagher LLP, represent the
Debtors. Conway MacKenzie, Inc., serves as the Debtors' financial
advisor and The Seaport Group serves as lead investment banker.
Donald MacKenzie of Conway MacKenzie, Inc., as CRO. Kurtzman
Carson Consultants LLC is the claims and notice agent.
Wells Fargo Capital Finance LLC, as Administrative Agent, is
represented by Jonathan N. Helfat, Esq., and Daniel F. Fiorillo,
Esq., at Otterbourg, Steindler, Houston & Rosen, P.C.; and Laura
Davis Jones, Esq., and Timothy P. Cairns, Esq., at Pachuiski Stang
Ziehi & Jones LLP.
Renco Group is represented by lawyers at Cadwalader, Wickersham &
Taft LLP.
Kramer Levin Naftalis & Frankel LLP represents the Official
Committee of Unsecured Creditors. Huron Consulting Services LLC
serves as the Committee's financial advisor.
The Debtor has sold off the principal plants. The sale of the
Wheeling Corrugating division to Nucor Corp. brought in $7
million. That plant in Sparrows Point, Maryland, fetched the
highest price, $72.5 million. CJ Betters Enterprises Inc. paid
$16 million for the Ohio plant.
ROCKWELL MEDICAL: Extends Purchase Pact with DaVita Until 2018
--------------------------------------------------------------
Rockwell Medical, Inc., entered into a First Amended and Restated
Products Purchase Agreement with DaVita Healthcare Partners, Inc.,
the Company's largest customer, which supersedes the Products
Purchase Agreement dated Feb. 16, 2011. The Amended and Restated
Agreement, among other modifications, extends the term of the
agreement from Dec. 31, 2013, to Dec. 31, 2018, unless sooner
terminated in accordance with the Amended and Restated Agreement.
If, following expiration of the term, the parties have not
completed an extension or a new purchase agreement, the Amended
and Restated Agreement continues to provide that it will continue
in effect until terminated by either party with 90 days written
notice or until the completion of an extension or a replacement
agreement. The Amended and Restated Agreement continues to
provide for a commitment by Purchaser to purchase the Company's
dialysate products upon specified terms and conditions and
substantially increases the minimum number of the Purchaser's
clinics which are committed to using their best efforts to
purchase all of their requirements from the Company. The Amended
and Restated Agreement also continues to provide the Purchaser
with the right to purchase new products manufactured, sold,
licensed or distributed by the Company at prices to be agreed upon
by the parties.
About Rockwell
Rockwell Medical, Inc. (Nasdaq: RMTI), headquartered in Wixom,
Michigan, is a fully-integrated biopharmaceutical company
targeting end-stage renal disease ("ESRD") and chronic kidney
disease ("CKD") with innovative products and services for the
treatment of iron deficiency, secondary hyperparathyroidism and
hemodialysis (also referred to as "HD" or "dialysis").
Rockwell's lead investigational drug is in late stage clinical
development for iron therapy treatment in CKD-HD patients. It is
called Soluble Ferric Pyrophosphate ("SFP"). SFP delivers iron to
the bone marrow in a non-invasive, physiologic manner to
hemodialysis patients via dialysate during their regular dialysis
treatment.
Plante & Moran, PLLC, in Clinton Township, Michigan, expressed
substantial doubt about Rockwell Medical's ability to continue as
a going concern, citing the Company's recurring losses from
operations, negative working capital, and insufficient liquidity.
The Company reported a net loss of $54.0 million in 2012, compared
with a net loss of $21.4 million in 2011. The Company's balance
sheet at Dec. 31, 2012, showed $17 million in total assets, $27
million in total current liabilities, and a stockholders' deficit
of $10 million.
SCHOOL SPECIALTY: Modifies Milestones Under Credit Agreements
-------------------------------------------------------------
School Specialty, Inc., and certain of its wholly-owned
subsidiaries executed amendments to these agreements:
(A) the Senior Secured Super Priority Debtor-in-Possession
Credit Agreement by and among the Company, certain of its
subsidiaries, U.S. Bank National Association, as
Administrative Agent and Collateral Agent and the lenders
party to the Ad Hoc Amendment; and
(B) the Debtor-in-Possession Credit Agreement by and among
Wells Fargo Capital Finance, LLC (as Administrative Agent,
Co-Collateral Agent, Co-Lead Arranger and Joint Book
Runner), and GE Capital Markets, Inc. (as Co-Collateral
Agent, Co-Lead Arranger and Joint Book Runner and
Syndication Agent), General Electric Capital Corporation
(as Syndication Agent), and the lenders that are party to
the Asset-Based Credit Agreement and the Company and
certain of its subsidiaries (the "ABL Amendment").
The Ad Hoc Amendment, executed on May 3, 2013, among other things,
(1) sets a new schedule of milestones; (2) modifies the deadline
for a Ad Hoc DIP Agreement covenant related to certain third party
agreements to no later than May 31, 2013, and (3) allows the
lenders under the Ad Hoc DIP Agreement to accept repayment
consideration in the form of capital stock of the reorganized
Company in addition to cash.
The ABL Amendment, executed on May 6, 2013, among other things,
(1) sets a new schedule of milestones, and (2) limits the
revolving loan amounts to $55,000,000 until the Administrative
Agent has received exit financing commitment letters.
About School Specialty
Based in Greenville, Wisconsin, School Specialty is a supplier of
educational products for kindergarten through 12th grade. Revenue
in 2012 was $731.9 million through sales to 70% of the
country's 130,000 schools.
School Specialty and certain of its subsidiaries filed voluntary
petitions for reorganization under Chapter 11 (Bankr. D. Del.
Lead Case No. 13-10125) on Jan. 28, 2013. The petition estimated
assets of $494.5 million and debt of $394.6 million.
The Debtors are represented by lawyers at Paul, Weiss, Rifkind,
Wharton & Garrison LLP and Young, Conaway, Stargatt & Taylor, LLP.
Alvarez & Marsal North America LLC is the restructuring advisor
and Perella Weinberg Partners LP is the investment banker.
Kurtzman Carson Consultants LLC is the claims and notice agent.
The ABL Lenders are represented by lawyers at Goldberg Kohn and
Richards, Layton and Finger, P.A. The Ad Hoc DIP Lenders led by
U.S. Bank are represented by lawyers at Stroock & Stroock & Lavan
LLP, and Duane Morris LLP. The lending consortium consists of
some of the holders of School Specialty Inc.'s 3.75% Convertible
Subordinated Notes Due 2026.
The Official Committee of Unsecured Creditors appointed in the
case is represented by lawyers at Brown Rudnick LLP and Venable
LLP.
Bayside is represented by Pepper Hamilton LLP and Akin Gump
Strauss Hauer & Feld LLP.
School Specialty in April 2013 decided to reorganize rather than
sell. The company filed a so-called dual track plan that called
for selling the business at auction on May 8 or reorganizing while
giving stock to lenders and unsecured creditors. The company
later served a notice that the auction was canceled and the plan
would proceed by swapping debt for stock to be owned by lenders,
noteholders, and unsecured creditors.
SEAN DUNNE: Lists Assets, Debt and Household Goods
---------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Irish real-estate developer Sean Dunne filed formal
lists of property and debt last week showing assets with a total
claimed value of $55.2 million and liabilities totaling $942.2
million.
The assets include $40.8 million of real estate, all in Ireland.
Among the $280.2 million in secured creditors and $612.2 million
in unsecured creditors, almost all are in Ireland.
Although Mr. Dunne made and lost his fortune in Ireland, he filed
bankruptcy in the U.S. claiming he now resides in Connecticut.
The property lists show $10,000 of household furnishing he claims
are exempt from creditors' claims. The household goods are
located at a home in Dublin.
Mr. Dunne says his monthly income currently is $22,000 and monthly
expenses are $21,800.
Mr. Dunne's bankruptcy isn't a reorganization. It's a Chapter 7
liquidation where a trustee was appointed automatically to sell
the assets and make distributions to creditors.
About Sean Dunne
Irish real estate developer Sean Dunne filed a liquidating
Chapter 7 bankruptcy petition (Bankr. D. Conn. Case No. 13-50484)
on March 30, 2013, in Bridgeport, Connecticut. Mr. Dunne says he
now lives and works in Connecticut.
Mr. Dunne said he filed for bankruptcy in the U.S. because Ulster
Bank was applying to an Irish court for permission to commence
bankruptcy proceedings there.
Mr. Dunne disclosed asset of less than $10 million and debt
exceeding $500 million.
SEQUENOM INC: Incurs $29.4 Million Net Loss in First Quarter
------------------------------------------------------------
Sequenom, Inc., filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $29.36 million on $38.49 million of total revenues for the
three months ended March 31, 2013, as compared with a net loss of
$24.42 million on $14.92 million of total revenues for the same
period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$227.99 million in total assets, $205.58 million in total
liabilities, and $22.41 million in total stockholders' equity.
"The volume of 35,000 MaterniT21TM PLUS tests accessioned in the
first quarter shows that Sequenom CMM continued to take advantage
of its first mover position in the non-invasive prenatal
diagnostic (NIPT) market by increasing its penetration of the NIPT
market and maintaining its dominant market share. The recent
announcement that Sequenom CMM had accessioned over 100,000
MaterniT21 PLUS test samples since the test was launched in
October of 2011 is further evidence of the remarkable success of
this testing service," said Harry F. Hixson, Jr., Ph.D., Chairman
and CEO of Sequenom. "Furthermore, we are making progress in our
negotiations within the payor community, with more than 70 million
patients now under coverage who have access to the MaterniT21 PLUS
test."
"We are pleased to see sequential improvements in volume, revenue
and margin during the quarter, an indication of steady growth and
sustained momentum in 2013," said Paul V. Maier, Sequenom's CFO.
"As we complete the process of moving our billing and collections
processes in-house, we anticipate even greater control in
monitoring our payments from payors and improved workflows that
will help us improve our collection cycle and reimbursement."
A copy of the Form 10-Q is available for free at:
http://is.gd/YpGjx1
About Sequenom
Sequenom, Inc. (NASDAQ: SQNM) -- http://www.sequenom.com/-- is a
life sciences company committed to improving healthcare through
revolutionary genetic analysis solutions. Sequenom develops
innovative technology, products and diagnostic tests that target
and serve discovery and clinical research, and molecular
diagnostics markets. The company was founded in 1994 and is
headquartered in San Diego, California.
Sequenom disclosed a net loss of $117.02 million in 2012, a net
loss of $74.13 million in 2011 and a net loss of $120.84 million
in 2010.
SIGNATURE GROUP: To Monetize Certain Special Situations Assets
--------------------------------------------------------------
Signature Group Holdings, Inc. on May 10 disclosed that it has
completed the sale of its performing residential loan portfolio.
Signature will receive net proceeds of $18.9 million, resulting in
a $3.8 million gain to be recognized in the second quarter.
In addition, the Company is reporting that it is in advanced
discussions to also sell its nonperforming residential loan
portfolio and certain real estate owned having an aggregate
carrying value of $7.5 million, with an expected closing date on
or before May 31, 2013. This transaction is expected to generate
gross proceeds in excess of $8.0 million.
Commenting on the transaction, Chris Colville, Chief Executive
Officer, stated, "An auction process for these assets was
conducted to take advantage of favorable market conditions, and I
am pleased with the results. The sale of these legacy assets
represents continuing execution of management's strategy to
strengthen the balance sheet in order to facilitate additional
acquisitions."
Separately, Signature disclosed that the final decree for the
bankruptcy case of the Company's predecessor, Fremont General
Corporation, was entered by the judge on April 15, 2013.
About Signature Group
Signature Group Holdings, Inc. --
http://www.signaturegroupholdings.com/-- is a diversified
business and financial services enterprise with principal
activities in industrial distribution and special situations debt.
Signature has significant capital resources and is actively
seeking acquisitions as well as growth opportunities for its
existing businesses. The Company was formerly a $9 billion in
assets industrial bank and financial services business that
reorganized during a two-year bankruptcy period. The
reorganization provided for Signature to maintain federal net
operating loss tax carryforwards in excess of $850 million.
Fremont General Corp. filed for Chapter 11 protection (Bankr. C.D.
Calif. Case No. 08-13421) on June 18, 2008. Robert W. Jones,
Esq., and J. Maxwell Tucker, Esq., at Patton Boggs LLP, Theodore
Stolman, Esq., Scott H. Yun, Esq., and Whitman L. Holt, Esq., at
Stutman Treister & Glatt, represented the Debtor as counsel.
Kurtzman Carson Consultants LLC was the Debtor's noticing agent
and claims processor. Lee R. Bogdanoff, Esq., Jonathan S.
Shenson, Esq., and Brian M. Metcalf, at Klee, Tuchin, Bogdanoff &
Stern LLP, represented the Official Committee of Unsecured
Creditors as counsel. Fremont's formal schedules showed
$330,036,435 in total assets and $326,560,878 in total debts.
Fremont General emerged from bankruptcy and filed Amended and
Restated Articles of Incorporation with the Secretary of State of
Nevada on June 11, 2010, which, among other things, changed the
Debtor's name to Signature Group Holdings, Inc.
Signature's plan of reorganization became effective on June 11,
2010. The name change also took effect as of that date.
SPIRIT FINANCE: Incurs $8.3 Million Net Loss in First Quarter
-------------------------------------------------------------
Spirit Finance Capital, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss attributable to common stockholders of $8.33 million on
$72.80 million of total revenues for the three months ended
March 31, 2013, as compared with a net loss attributable to common
stockholders of $12.40 million on $69.50 million of total revenues
for the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed $3.24
billion in total assets, $2.02 billion in total liabilities and
$1.22 billion in total stockholders' equity.
Mr. Thomas H. Nolan, Jr., chairman and chief executive officer of
Spirit Realty Capital, stated, "We are pleased with our first
quarter results, which affirm the stable earnings quality of our
portfolio and our continuing investment in selective real estate
opportunities that meet our underwriting standards and enhance the
diversity of our tenant base. We remain on track to complete the
merger with Cole Credit Property Trust II in the third quarter and
look forward to operating as a new combined corporation with an
enhanced ability to generate attractive, sustainable returns for
investors."
A copy of the Form 10-Q is available for free at:
http://is.gd/arlXPL
Amendment to Merger Agreement
On May 8, 2013, Spirit Realty Capital, Inc., Spirit Realty, L.P.,
Cole Credit Property Trust II, Inc., and Cole Operating
Partnership II, LP, entered into an amendment to the Agreement and
Plan of Merger, dated Jan. 22, 2013, which provides for the merger
of the Company with and into CCPT II with CCPT II continuing as
the surviving corporation.
The Amendment provides for the cash-out of fractional shares of
common stock, par value $0.01 per share, of CCPT II outstanding
immediately prior to the effective time of the Merger. Pursuant
to the Amendment, at the effective time of the Merger, (i) holders
of fractional shares of CCPT II Common Stock outstanding
immediately prior to the effective time of the Merger and (ii)
holders of common stock, par value $0.01 per share, of the Company
entitled to receive fractional share consideration pursuant to the
Merger Agreement, will receive cash in an amount equal to that
fractional part of a share of CCPT II Common Stock multiplied by
the product of (x) the volume weighted average price of Spirit
Common Stock for the 10 trading days immediately prior to the
closing date, starting with the opening of trading on the first
trading day to the closing of the second to last trading day prior
to the closing date, as reported by Bloomberg, and (y) 0.525.
A copy of the Amendment is available for free at:
http://is.gd/LFQDOM
About Spirit Finance
Spirit Finance Corporation, headquartered in Phoenix, Arizona, is
a REIT that acquires single-tenant, operationally essential real
estate throughout United States to be leased on a long-term,
triple-net basis to retail, distribution and service-oriented
companies.
* * *
As reported by the TCR on Oct. 9, 2012, Standard & Poor's Ratings
Services raised its corporate credit rating on Spirit Realty
Capital Inc. (Spirit) to 'B' from 'CCC+' and revised our outlook
on the company to stable from developing. "The upgrade reflects
Spirit Realty Capital Inc.'s successful completion of an IPO of
its common stock, which raised $465 million of net proceeds," said
credit analyst Elizabeth Campbell.
In the Sept. 15, 2011, edition of the TCR, Moody's Investors
Service affirmed the corporate family rating of Spirit Finance
Corporation at Caa1.
"This rating action reflects Spirit's consistent compliance with
its term loan covenants throughout the downturn (despite
relatively thin cushion at certain times), as well as the recent
debt paydown which, in Moody's view, will help Spirit remain in
compliance within the stated covenant limits going forward."
SPRINT NEXTEL: Capital Research Had 5% Series 1 Shares in April
---------------------------------------------------------------
In an amended Schedule 13G filing with the U.S. Securities and
Exchange Commission, Capital Research Global Investors disclosed
that, as of April 30, 2013, it beneficially owned 161,824,000
shares of Series 1 Common Stock of Sprint Nextel Corporation
representing 5.4% of the shares outstanding. Capital Research
previously owned 319,983,800 shares of Series 1 common stock at
March 30, 2012. A copy of the amended regulatory filing is
available for free at http://is.gd/oGUN3a
About Sprint Nextel
Overland Park, Kan.-based Sprint Nextel Corp. (NYSE: S)
-- http://www.sprint.com/-- is a communications company offering
a comprehensive range of wireless and wireline communications
products and services that are designed to meet the needs of
individual consumers, businesses, government subscribers and
resellers.
Sprint Nextel incurred a net loss of $4.32 million in 2012, a net
loss of $2.89 million in 2011, and a net loss of $3.46 million in
2010. The Company's balance sheet at March 31, 2013, showed
$50.75 billion in total assets, $44.28 billion in total
liabilities, and $6.47 billion in total shareholders' equity.
Bankruptcy Warning
"If the Merger Agreement terminates and we are unable to raise
sufficient additional capital to fulfill our funding needs in a
timely manner, or we fail to generate sufficient additional
revenue from our wholesale and retail businesses to meet our
obligations beyond the next twelve months, our business prospects,
financial condition and results of operations will likely be
materially and adversely affected, substantial doubt may arise
about our ability to continue as a going concern and we will be
forced to consider all available alternatives, including a
financial restructuring, which could include seeking protection
under the provisions of the United States Bankruptcy Code," the
Company said in its annual report for the period ended Dec. 31,
2012.
On Dec. 17, 2012, the Company entered into an agreement and plan
of merger pursuant to which Sprint agreed to acquire all of the
outstanding shares of Clearwire Corporation Class A and Class B
common stock not currently owned by Sprint, SOFTBANK CORP., which
or their affiliates. At the closing, the outstanding shares of
common stock will be canceled and converted automatically into the
right to receive $2.97 per share in cash, without interest.
* * *
As reported by the TCR on Oct. 17, 2012, Standard & Poor's Ratings
Services said its ratings on Overland Park, Kan.-based wireless
carrier Sprint Nextel Corp., including the 'B+' corporate credit
rating, remain on CreditWatch. "The CreditWatch update follows
the announcement that Sprint Nextel has agreed to sell a majority
stake to Softbank," said Standard & Poor's credit analyst Allyn
Arden.
In the Oct. 17, 2012, edition of the TCR, Moody's Investors
Service has placed all the ratings of Sprint Nextel, including its
B1 Corporate Family Rating, on review for upgrade following the
announcement that the Company has entered into a series of
definitive agreements with SOFTBANK CORP.
As reported by the TCR on Aug. 8, 2012, Fitch Ratings affirms,
among other things, the Issuer default rating (IDR) of Sprint
Nextel and its subsidiaries at 'B+'. The ratings for Sprint
reflect the ongoing execution risk both operationally and
financially regarding several key initiatives that the company
expects will improve cash generation, network performance and
longer-term profitability.
SPLIT VEIN: Truck Driver to Get Reduced Compensation
----------------------------------------------------
Split Vein Coal Company, Inc., obtained partial victory in its
challenge to the Motion for Payment of Administrative Claim filed
by Victor J. Kocur, Jr., in the Debtor's Chapter 11 case. The
Application requests compensation and expenses totaling $103,218.
In a May 9, 2013 Opinion available at http://is.gd/P5dyBCfrom
Leagle.com, Bankruptcy Judge Mary D. France approved the
Application in the reduced amount of $84,758.
Split Vein Coal Company Inc. is a Pennsylvania corporation located
in Northumberland County. Prior to the filing of its bankruptcy
petition, the Debtor's business activities included the recovery,
reprocessing, and sale of coal refuse ("culm") recovered from
lands leased for this purpose. The Debtor's Chapter 11 petition
was filed on May 19, 2003.
For several months in 2005 and a few weeks in 2008 and 2009,
Kocur, a truck driver and heavy equipment operator who has been
involved in the coal mining business since 1976, provided services
to the Debtor in various ways related to a fire that had burned
within a culm bank owned by the Debtor near the town of Excelsior,
Pennsylvania. The Debtor's culm was ultimately removed from the
Excelsior Bank and sold by a third party, Gilberton Coal Company.
Alleging that Gilberton had unlawfully converted its property, the
Debtor filed a complaint to recover the sale proceeds and was
awarded $639,685 on December 11, 2009. Once the funds were
received from Gilberton, the Debtor's counsel made distribution to
its creditors under the confirmed plan. The Debtor's counsel sent
the balance of the funds, approximately $207,000, to Elwood Swank,
the Debtor's sole shareholder and president.
On Dec. 21, 2012, Kocur filed the Application seeking payment from
the Debtor's bankruptcy estate for the services he rendered
pertaining to the fire. Kocur requests compensation of $73,770
for 1229 hours worked and reimbursement of expenses totaling
$29,448. On Jan. 14, 2013, the Debtor filed an Answer asserting
various arguments for denying the Application. On Jan. 23, 2013,
Mr. Swank filed a motion to intervene in the matter, which was
granted on Feb. 5, 2013. He is Mr. Swank's stepson.
The case is, VICTOR J. KOCUR, JR., Movant/Applicant v. SPLIT VEIN
COAL COMPANY, INC., Objectant, v. ELWOOD SWANK, Intervenor, Case
No. 1:03-bk-02974MDF (Bankr. M.D. Pa.)
SUNSTATE EQUIPMENT: Moody's Hikes Rating on $170MM Notes to 'Ba3'
-----------------------------------------------------------------
Moody's Investors Service upgraded Sunstate Equipment Co., LLC's
$170 million senior secured notes three notches to Ba3 from B3.
Concurrently, the B2 Corporate Family Rating and Probability of
Default Rating of B2-PD were affirmed. The notes rating upgrade is
based on the recent change in the company's capital structure with
a greater portion of unsecured debt replacing secured debt. The
existing $170 million senior secured notes now effectively rank
ahead of the new unsecured revolver in the priority of claims
waterfall.
A new $300 million unsecured revolving credit facility (unrated)
due March 2018 is being provided by Sunstate's affiliate Sumitomo
Corp. of America (a wholly owned subsidiary of Sumitomo
Corporation of Tokyo,"Sumitomo"). The new revolver replaces the
company's current $190 million asset-backed revolving credit
facility due March 2016. The ratings outlook remains stable.
Ratings affirmed:
Corporate Family Rating, at B2
Probability of Default Rating, at B2-PD
Ratings raised:
$170 million senior secured notes due 2016, to Ba3 (LGD-2, 23%)
from B3 (LGD-5, 76%)
Outlook, stable
Ratings Rationale:
Sunstate Equipment's B2 CFR was affirmed reflecting the
expectation that industry conditions will continue to remain
favorable over the intermediate term supporting the positive trend
in credit metrics. A moderate improvement in credit metrics is
anticipated to be driven largely by an increase in absolute EBITDA
levels stemming from continued growth in revenue. The ratings also
recognize that although the positive trend in operating metrics is
expected to continue, the rate of improvement will not be as high
as it was over the last year when the industry was recovering from
a severe downturn. The B2 corporate family rating also reflects
the company's small scale relative to other rated peers and
exposure to the highly cyclical equipment rental industry which is
closely tied to non-residential construction activity. Moreover,
the company is regionally focused with a large part of its
business in the Southwestern portion of the United States.
Although the company will likely draw additional amounts under the
revolver in future periods to support business growth,
commensurate EBITDA growth should keep metrics sustained at the B2
rating level over the intermediate term. Of note, Sumitomo
increased its ownership in Sunstate Equipment to 80 percent from
20 percent late last year.
The stable outlook is supported by Sunstate's good liquidity
profile and Moody's view that positive U.S. equipment rental
industry fundamentals should continue to be supportive of its B2
credit profile over the intermediate term.
Factors that could lead to a positive outlook or stronger ratings
include Sunstate demonstrating an ability to continue growing
sales while maintaining current margins, greater cash flow
generation, lowering its debt/EBITDA to below 4.0 times and
demonstrating EBITDA/interest coverage at or above 3.5 times on a
sustained basis.
Developments that could establish negative pressure on the ratings
include significant declines in revenues and margins, a
deterioration in the company's liquidity profile, or an elevation
of its debt/EBITDA towards 5.0 times on a sustained basis and
EBITDA/interest falling below the 1.0 times level.
The principal methodology used in this rating was the Global
Equipment and Automobile Rental 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.
Sunstate Equipment Co. LLC, headquartered in Phoenix, AZ, is a
regional equipment supplier with over 50 branches predominately in
the Southwestern U.S. The company is 80 percent owned by SMS
International Corporation, a subsidiary of Sumitomo Corporation
and the remaining 20 percent interest owned by Watts Holding, Inc.
(Sunstate's founder Mike Watts). Annual revenues approximate $230
million.
SUNSTONE COMPONENTS: Has Interim Approval for Chapter 11 Loan
-------------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Sunstone Components Group Inc. on May 6 received
interim approval for $120,000 in new financing. There is a
preliminary agreement to sell the business to Pancon Corp.
Temecula, California-based Sunstone was the target of an
involuntary Chapter 11 petition filed in early April in U.S.
Bankruptcy Court in Riverside, California, by Snowbird Capital
Mezzanine Fund I LP, a subordinate secured lender owed $6.7
million. Comerica Bank, owed about $5.1 million, is the senior
secured lender. The bank is providing an additional $220,000
loan for the bankruptcy. The final financing hearing will take
place May 20.
According to a statement, there is a letter of intent with Pancon,
a Stoughton, Massachusetts connector maker controlled by private-
equity investor Milestone Partners. The price wasn't disclosed.
About Sunstone Components Group
Headquartered in Temecula, California, Sunstone Components Group
is a provider of precision metal stamping and insert injection
moldings
Snowbird Capital Mezzanine Fund, a subordinate secured lender owed
$6.7 million by Sunstone Components Group, Inc., filed an
involuntary Chapter 11 bankruptcy petition for Sunstone on April
5, 2013 (Bankr. C.D. Cal. Case No. 13-16232). The Debtor is
represented by attorneys at Landau Gottfried & Berger, LLP. The
petitioner tapped Arent Fox, LLP as counsel.
Comerica Bank, owed about $5.1 million, is the senior secured
lender. The bank is providing an additional $220,000 loan for the
bankruptcy.
On May 2, 2013, the company consented to being in Chapter 11 in
order to sell substantially all of the Company's assets.
SUNTECH POWER: Hongkuan Jiang Resigns as CHRO
---------------------------------------------
Mr. Hongkuan Jiang has tendered his resignation as chief human
resources officer of the Company for personal reasons. Mr. Steven
Duan has been appointed human resources director to lead the
Corporate Human Resources function.
About Suntech
Wuxi, China-based Suntech Power Holdings Co., Ltd. (NYSE: STP)
produces solar products for residential, commercial, industrial,
and utility applications. With regional headquarters in China,
Switzerland, and the United States, and gigawatt-scale
manufacturing worldwide, Suntech has delivered more than
25,000,000 photovoltaic panels to over a thousand customers in
more than 80 countries.
As reported by the TCR on March 20, 2013, Suntech Power Holdings
Co., Ltd., has received from the trustee of its 3% Convertible
Notes a notice of default and acceleration relating to Suntech's
non-payment of the principal amount of US$541 million that was due
to holders of the Notes on March 15, 2013. That event of default
has also triggered cross-defaults under Suntech's other
outstanding debt, including its loans from International Finance
Corporation and Chinese domestic lenders.
T3 TROY: S.D.N.Y. Court Dismisses Involuntary Chapter 7
-------------------------------------------------------
Bankruptcy Judge Martin Glenn dismissed the involuntary Chapter 7
petitions filed by SPQR Capital (Cayman) Ltd., Lansdowne Capital,
S.A., and Crest One SpA against TPG Troy LLC and T3 Troy LLC,
pursuant to a May 9 Memorandum Opinion and Order available at
http://is.gd/3uxbdifrom Leagle.com.
The Petitioners commenced these cases against the Troy Entities to
recover what they have not yet been able to recover in numerous
lawsuits in multiple other venues. The Petitioners allege that
the Troy Entities, which were dissolved in 2007, should be held
liable for notes issued by a non-debtor because the Troy Entities
were the alter egos of the issuer that defaulted on the notes.
The Court finds that the Involuntary Petitions must be dismissed
because the alleged alter ego claims are the subject of a bona
fide dispute and, in addition, the Troy Entities have established
grounds for abstention under section 305(a)(1) of the Bankruptcy
Code.
Petitioner SPQR Cayman is a Cayman Islands holding company
affiliate of SPQR Capital LLP, a London based hedge fund that has
commenced multiple actions in various courts based on the
purported claims that are the basis for the Involuntary Petitions.
Petitioner Crest One SpA is an entity with an office in Rome,
Italy and is 100% owned by Petitioner SPQR Cayman. Petitioner
Lansdowne Capital, S.A. is an entity with an office in Luxembourg
and is 100% owned by Petitioner SPQR Cayman.
The Troy Entities were Delaware limited liability companies before
the filing of a certificate of cancellation with the Delaware
Secretary of State on December 17, 2007. The Troy Entities'
principal business was the ownership, directly or indirectly, of
securities of TIM Hellas Telecommunications S.A., a Greek societe
anonyme that provided mobile telecommunications services in
Greece, and its affiliates. When the Troy Entities dissolved in
2007, they ceased all business and stopped incurring debts, to the
extent they ever did, and receiving income. As a result of its
dissolution, the Troy Entities have no fixed creditors and no
material assets.
The involuntary Chapter 7 cases are In re TPG Troy, LLC, (Bankr.
S.D.N.Y. Case No. 12-14965; and In re T3 TROY, LLC, (Bankr.
S.D.N.Y. Case No. 12-14966).
The TPG Troy parties are represented by Andrew Glenn, Esq., and
Michael Angell, Esq., at Kasowitz Benson Torres & Friedman LLP.
SPQR Capital et al. are represented by Jared Stamell, Esq., and
Andrew Goldenberg, Esq. -- goldenberg@ssnyc.com -- at Stamell &
Schager LLP.
THERAPEUTICSMD INC: Incurs $6.4-Mil. Net Loss in First Quarter
--------------------------------------------------------------
TherapeuticsMD, Inc., filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $6.37 million on $1.53 million of net revenues for the three
months ended March 31, 2013, as compared with a net loss of $13.28
million on $721,692 of net revenues for the same period during the
prior year.
The Company reported a net loss of $35.1 million on $3.8 million
of revenues in 2012, compared with a net loss of $12.9 million on
$2.1 million of revenues in 2011.
The Company's balance sheet at March 31, 2013, showed $44.19
million in total assets, $4.24 million in total liabilities and
$39.94 million in total stockholders' equity.
Liquidity
"In March and April 2013, we sold an aggregate of 29,411,765 and
1,954,587 shares, respectively, of our common stock in a public
offering to raise $45.4 million and $3.1 million, respectively,
after deducting underwriting discounts and commissions and other
offering expenses paid by us. We believe our existing cash and
cash equivalents will be sufficient to fund our operations,
including the clinical development of our hormone therapy products
for the next 12 months. In light of this public offering, we have
re-evaluated our ability to continue as a going concern.
Accordingly, we are of the opinion that the substantial doubt
regarding our ability to continue as a going concern has been
mitigated."
In the auditors' report accompanying the consolidated financial
statements for the year ended Dec. 31, 2012, Rosenberg Rich Baker
Berman & Company, in Somerset, New Jersey, expressed substantial
doubt about TherapeuticsMD's ability to continue as a going
concern, citing the Company's loss from operations of
approximately $16 million and negative cash flow from operations
of approximately $13 million.
A copy of the Form 10-Q is available for free at:
http://is.gd/hsfVsJ
About TherapeuticsMD
Boca Raton, Florida-based TherapeuticsMD, Inc. (OTC QB: TXMD) is a
women's healthcare product company focused on creating and
commercializing products targeted exclusively for women. The
Company currently manufactures and distributes branded and generic
prescription prenatal vitamins as well as over-the-counter
vitamins and cosmetics. The Company is currently focused on
conducting the clinical trials necessary for regulatory approval
and commercialization of advanced hormone therapy pharmaceutical
products designed to alleviate the symptoms of and reduce the
health risks resulting from menopause-related hormone
deficiencies.
THERAPEUTICSMD INC: Incurs $6.4 Million Net Loss in First Quarter
-----------------------------------------------------------------
TherapeuticsMD, Inc., reported a net loss of $6.37 million on
$1.53 million of net revenues for the three months ended March 31,
2013, as compared with a net loss of $13.28 million on $721,692 of
net revenues for the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$44.19 million in total assets, $4.24 million in total liabilities
and $39.94 million in total stockholders' equity.
"With our newly strengthened balance sheet, NYSE MKT listing, and
strong portfolio of bioidentical hormone therapy product
candidates, we believe TherapeuticsMD is well positioned for
success as we execute our strategy to become a leader in the
women's healthcare field," said Robert G. Finizio, chief executive
officer.
A copy of the press release is available for free at:
http://is.gd/VzvpPI
About TherapeuticsMD
Boca Raton, Florida-based TherapeuticsMD, Inc. (OTC QB: TXMD) is a
women's healthcare product company focused on creating and
commercializing products targeted exclusively for women. The
Company currently manufactures and distributes branded and generic
prescription prenatal vitamins as well as over-the-counter
vitamins and cosmetics. The Company is currently focused on
conducting the clinical trials necessary for regulatory approval
and commercialization of advanced hormone therapy pharmaceutical
products designed to alleviate the symptoms of and reduce the
health risks resulting from menopause-related hormone
deficiencies.
In the auditors' report accompanying the consolidated financial
statements for the year ended Dec. 31, 2012, Rosenberg Rich Baker
Berman & Company, in Somerset, New Jersey, expressed substantial
doubt about TherapeuticsMD's ability to continue as a going
concern, citing the Company's loss from operations of
approximately $16 million and negative cash flow from operations
of approximately $13 million.
The Company reported a net loss of $35.1 million on $3.8 million
of revenues in 2012, compared with a net loss of $12.9 million on
$2.1 million of revenues in 2011.
THOMPSON CREEK: Reports $900,000 Net Income in 1st Quarter
----------------------------------------------------------
Thompson Creek Metals Company Inc. filed with the U.S. Securities
and Exchange Commission its quarterly report on Form 10-Q
disclosing net income of $900,000 on $108.7 million of total
revenues for the three months ended March 31, 2013, as compared
with net income of $1.1 million on $113.6 million of total
revenues for the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed $3.42
billion in total assets, $2.04 billion in total liabilities and
$1.37 billion in stockholders' equity.
Kevin Loughrey, the Company's Chairman and chief executive
officer, stated, "We are pleased to report continued improvement
of operational performance at both our Thompson Creek and Endako
Mines, compared to the fourth quarter of 2012. We achieved lower
cash costs per pound produced and increased sales compared to the
fourth quarter of 2012. Metallurgical recovery at our Endako Mine
has also continued to improve. The Company's first quarter
operational performance was significantly improved from a year
earlier, with increased production and sales, and significantly
decreased costs. We are also pleased to report that construction
of the Mt. Milligan Mine remains on schedule. We currently
anticipate commissioning and start-up in August of 2013, and
commercial production of copper and gold in the fourth quarter of
2013."
A copy of the Form 10-Q is available for free at:
http://is.gd/NYQqto
About Thompson Creek Metals
Thompson Creek Metals Company Inc. is a growing, diversified North
American mining company. The Company produces molybdenum at its
100%-owned Thompson Creek Mine in Idaho and Langeloth
Metallurgical Facility in Pennsylvania and its 75%-owned Endako
Mine in northern British Columbia. The Company is also in the
process of constructing the Mt. Milligan copper-gold mine in
central British Columbia, which is expected to commence production
in 2013. The Company's development projects include the Berg
copper-molybdenum-silver property and the Davidson molybdenum
property, both located in central British Columbia. Its principal
executive office is in Denver, Colorado and its Canadian
administrative office is in Vancouver, British Columbia. More
information is available at http://www.thompsoncreekmetals.com
* * *
As reported by the TCR on Aug. 14, 2012, Standard & Poor's Ratings
Services lowered its long-term corporate credit rating on Denver-
based molybdenum miner Thompson Creek Metals Co. to 'CCC+' from
'B-'. "These rating actions follow Thompson Creek's announcement
of weaker production and higher cost expectations through next
year," said Standard & Poor's credit analyst Donald Marleau.
In the May 9, 2012, edition of the TCR, Moody's Investors Service
downgraded Thompson Creek Metals Company Inc.'s Corporate Family
Rating (CFR) and probability of default rating to Caa1 from B3.
Thompson Creek's Caa1 CFR reflects its concentration in
molybdenum, relatively small size, heavy reliance currently on two
mines, and the need for favorable volume and price trends in order
to meet its increasingly aggressive capital expenditure
requirements over the next several years.
TIMEGATE STUDIOS: SouthPeak Opposes Quick Insider Sale
------------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that SouthPeak Interactive Corp., a creditor with a
$10 million judgment, raised an objection to TimeGate Studios
Inc.'s request for approval of its DIP financing.
TimeGate wants the bankruptcy judge to sell the business by May 31
to the two main shareholders. The Debtor proposes a May 28
deadline for competing bids, followed by a May 31 auction.
According to the report, SouthPeak filed an objection laying out
the history of disputes over a game-development agreement that
ended with a $10 million arbitration award against TimeGate. The
award was set aside in federal district court and then reinstated
by the U.S. Court of Appeals in New Orleans, according to
SouthPeak's court papers. Papers show the judgment includes fraud
in inducing SouthPeak into the contract where SouthPeak paid $6.8
million for TimeGate to develop a game that SouthPeak would
publish.
SouthPeak says TimeGate intends to use bankruptcy "to ram through
an insider asset-confiscation plan that lets the insiders keep
everything and gives nothing to unsecured creditors like
SouthGate."
About TimeGate Inc.
Video-game developer TimeGate Studios Inc. filed a petition for
Chapter 11 protection (Bankr. S.D. Tex. Case No. 13-32527) on
May 1 in Houston and wants the bankruptcy judge to sell the
business by May 31 to the two main shareholders.
Sugarland, Texas-based TimeGate estimated less than $10 million
and debt exceeding $10 million as of the Chapter 11 filing. The
Debtor owes $2.3 million on revolving credits to shareholders Alan
Chaveleh and Morteza Baharloo. They propose buying the business
in exchange for $2.1 million of the debt and $500,000 in cash.
Karl Daniel Burrer, Esq., at Haynes & Boone, LLP, is the
bankruptcy counsel for the Debtor.
TORTILLERIA EL MAIZAL: Files for Chapter 11 in Atlanta
------------------------------------------------------
Tortilleria El Maizal Inc., a commercial tortilla manufacturer,
filed a petition for Chapter 11 reorganization (Bankr. N.D. Ga.
Case No. 13-59899) on May 5 in Atlanta.
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that the Kennesaw, Georgia-based company has factories or
distribution facilities in Georgia, North Carolina, Indiana and
Mississippi. It supplies tortilla products every week to 3,000
customers in 23 states.
The primary secured creditor is SunTrust Bank, owed $8.8 million.
Assets are less than $10 million while debt exceeds $10 million,
according to the petition.
TRANSGENOMIC INC: Incurs $3.6 Million Net Loss in First Quarter
---------------------------------------------------------------
Transgenomic, Inc., reported a net loss of $3.58 million on $7.37
million of net sales for the three months ended March 31, 2013, as
compared with a net loss of $2.69 million on $7.20 million of net
sales for the same period during the prior year.
The Company's balance sheet at March 31, 2013, showed
$41.39 million in total assets, $17.32 million in total
liabilities and $24.06 million in stockholders' equity.
"The top line growth in our core Laboratory Services segment in
the first quarter was fueled by our newer product offerings, which
include our Nuclear Mitome, ScoliScoreTM and C-GAAP tests," said
Craig Tuttle, president and chief executive officer. "As we
progress throughout the year, it remains our goal to increase
revenues in both our Laboratory Services and Diagnostic Tools
segments through the commercialization of new products that have
been acquired, in-licensed, or developed internally."
A copy of the press release is available for free at:
http://is.gd/tP0L9D
A copy of the Form 10-Q is available for free at:
http://is.gd/CGFAM0
About Transgenomic
Transgenomic, Inc. -- http://www.transgenomic.com/-- is a global
biotechnology company advancing personalized medicine in
cardiology, oncology, and inherited diseases through its
proprietary molecular technologies and world-class clinical and
research services. The Company is a global leader in cardiac
genetic testing with a family of innovative products, including
its C-GAAP test, designed to detect gene mutations which indicate
cardiac disorders, or which can lead to serious adverse events.
Transgenomic has three complementary business divisions:
Transgenomic Clinical Laboratories, which specializes in molecular
diagnostics for cardiology, oncology, neurology, and mitochondrial
disorders; Transgenomic Pharmacogenomic Services, a contract
research laboratory that specializes in supporting all phases of
pre-clinical and clinical trials for oncology drugs in
development; and Transgenomic Diagnostic Tools, which produces
equipment, reagents, and other consumables that empower clinical
and research applications in molecular testing and cytogenetics.
Transgenomic believes there is significant opportunity for
continued growth across all three businesses by leveraging their
synergistic capabilities, technologies, and expertise. The
Company actively develops and acquires new technology and other
intellectual property that strengthens its leadership in
personalized medicine.
Transgenomic incurred a net loss of $8.32 million in 2012, a net
loss of $9.78 million in 2011 and a net loss of $3.13 million in
2010.
Forbearance Agreement
On Feb. 7, 2013, the Company entered into a Forbearance Agreement
with Dogwood Pharmaceuticals, Inc., a wholly owned subsidiary of
Forest Laboratories, Inc., and successor-in-interest to PGxHealth,
LLC, with an effective date of Dec. 31, 2012. In December 2012,
the Company commenced discussions with the Lender to defer the
payment due on Dec. 31, 2012, until March 31, 2013. As of
Dec. 31, 2012, an aggregate of $1.4 million was due and payable
under the Note by Transgenomic, and non-payment would constitute
an event of default under the Note and that certain Security
Agreement, dated as of Dec. 29, 2010, entered into between
Transgenomic and PGX. Pursuant to the Forbearance Agreement, the
Lender agreed, among other things, to forbear from exercising its
rights and remedies under the Note and the Security Agreement as a
result of the Event of Default.
TRAVELPORT LIMITED: Incurs $10 Million Net Loss in First Quarter
----------------------------------------------------------------
Travelport Limited filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $10 million on $548 million of net revenue for the three months
ended March 31, 2013, as compared with a net loss of $12 million
on $550 million of net revenue for the same period during the
prior year.
The Company's balance sheet at March 31, 2013, showed
$3.20 billion in total assets, $4.41 billion in total liabilities,
and a $1.21 billion total deficit.
"We are today reporting an increase in underlying revenue, a
growth in underlying Adjusted EBITDA, and a significantly
strengthened Travelport group balance sheet following April's
successful refinancing. We continue to deliver on our growth
strategy and the successful development of our business with
increased hospitality, payment processing and services revenue, as
evidenced by the leap in RevPas for the period, which exceeded our
expectations. We look forward to the future with growing
confidence."
A copy of the Form 10-Q is available for free at:
http://is.gd/aoAH0Y
About Travelport Holdings
Headquartered in Atlanta, Georgia, Travelport provides transaction
processing services to the travel industry through its global
distribution system business, which includes the group's airline
information technology solutions business. During FYE2011, the
group reported revenues and adjusted EBITDA of US$2 billion and
US$507 million, respectively.
Travelport Limited incurred a net loss of $236 million in 2012, as
compared with net income of $172 million in 2011.
* * *
As reported by the TCR on Oct. 10, 2011, Standard & Poor's Ratings
Services lowered its long-term corporate credit ratings on travel
services provider Travelport Holdings Limited (Travelport
Holdings) and indirect subsidiary Travelport LLC (Travelport) to
'SD' (selective default) from 'CC'.
The downgrades follow the implementation of a capital
restructuring, which was necessary because of the Travelport
group's high leverage, weak liquidity, and the upcoming maturity
of its $693 million (as of end-June 2011) PIK loan in March 2012.
"According to our criteria, we view this restructuring as a
distressed exchange and tantamount to a default (see 'Rating
Implications Of Exchange Offers And Similar Restructurings,
Update,' published May 12, 2009, on RatingsDirect on the Global
Credit Portal)," S&P related.
In May 2012, Moody's Investors Service affirmed the Caa1 corporate
family rating (CFR) and probability of default rating (PDR) of
Travelport LLC.
TRIUS THERAPEUTICS: Files Form 10-Q, Incurs $17.3MM Loss in Q1
--------------------------------------------------------------
Trius Therapeutics, Inc., filed with the U.S. Securities and
Exchange Commission its quarterly report on Form 10-Q disclosing
a net loss of $17.28 million on $1.72 million of total revenues
for the three months ended March 31, 2013, as compared with a net
loss of $7.60 million on $9.83 million of total revenues for the
same period a year ago.
The Company's balance sheet at March 31, 2013, showed
$89.81 million in total assets, $17.54 million in total
liabilities, and $72.27 million in total stockholders' equity.
A copy of the Form 10-Q is available for free at:
http://is.gd/ipnvIo
About Trius Therapeutics
San Diego, Calif.-based Trius Therapeutics, Inc. (Nasdaq: TSRX) --
http://www.triusrx.com/-- is a biopharmaceutical company focused
on the discovery, development and commercialization of innovative
antibiotics for serious, life-threatening infections. The
Company's first product candidate, torezolid phosphate, is an IV
and orally administered second generation oxazolidinone being
developed for the treatment of serious gram-positive infections,
including those caused by MRSA. In addition to the company's
torezolid phosphate clinical program, it is currently conducting
two preclinical programs using its proprietary discovery platform
to develop antibiotics to treat infections caused by gram-negative
bacteria.
Trius Therapeutics incurred a net loss of $53.92 million in 2012,
a net loss of $18.25 million in 2011 and a $23.86 million net loss
in 2010.
UNIFIED 2020: Section 341(a) Meeting Scheduled on June 6
--------------------------------------------------------
A meeting of creditors in the bankruptcy case of Unified 2020
Realty Partners, LP, will be held on June 6, 2013, at 3:00 p.m. at
Dallas, Room 976. Creditors have until Sept. 4, 2013, to submit
their proofs of claim.
This is the first meeting of creditors required under Section
341(a) of the Bankruptcy Code in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
meeting of creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Unified 2020 Realty Partners, LP, filed a bare-bones petition
under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No.
13-32425) in its home-town in Dallas on May 6, 2013. The petition
was signed by Edward Roush as president of general partner. The
Debtor disclosed $34 million in total assets and $21 million in
liabilities. The Debtor says it owns and leases infrastructure
critical to telecommunications companies and data center
facilities. The Debtor is represented by Arthur I. Ungerman,
Esq., in Dallas. Judge Stacey G. Jernigan presides over the
Chapter 11 case.
UNIVERSAL HEALTH: Trustee Wants Case in Chapter 7
-------------------------------------------------
Bill Rochelle, the bankruptcy columnist for Bloomberg News,
reports that Universal Health Care Group Inc., a St. Petersburg,
Florida-based owner of insurance companies and health maintenance
organizations, no longer has any operating businesses, there are
no employees, and the cash is gone.
The newly-appointed Chapter 11 trustee Soneet R. Kapila filed
papers on May 7 asking the bankruptcy judge in Tampa, Florida to
convert the reorganization effort to a liquidation in Chapter 7.
After the Chapter 11 filing in early February, the bankruptcy
court approved sale of the operating companies for $33 million.
Then the case began falling apart. Florida regulators took over
the two subsidiaries in Florida. Then the FBI executed a warrant
and searched Universal's office on March 28, prompting the
bankruptcy court to appoint Mr. Kapila as trustee. Recently,
regulators in Texas and Nevada took over the other two operating
companies, collapsing the sale entirely. Mr. Kapila says the
company now should be liquidated in Chapter 7 because there is no
business, no employees and no cash.
About Universal Health Care
Universal Health Care Group, Inc., owns an insurance company and
three health-maintenance organizations that provide managed care
services for government sponsored health care programs, focusing
on Medicare and Medicaid.
Universal Health was founded in 2002 by Dr. A.K. Desai and grew
its operations of offering Medicare plans to more than 37,000
members to over 20 states.
Universal Health filed a Chapter 11 bankruptcy protection (Bankr.
M.D. Fla. Case No. 13-01520) on Feb. 6, 2013, after Florida
regulators moved to put two of the company's subsidiaries in
receivership.
Universal Health Care estimated assets of up to $100 million and
debt of less than $50 million in court filings in Tampa, Florida.
Harley E. Riedel, Esq., at Stichter Riedel Blain & Prosser, in
Tampa, serves as counsel to the Debtor.
US POSTAL: Posts $1.9-Bil. Net Loss in Second Quarter of 2013
-------------------------------------------------------------
The U.S. Postal Service ended the second quarter of its 2013
fiscal year (Jan. 1 - March 31) with a net loss of $1.9 billion.
The Postal Service continues to grow revenue and reduce expenses
by using the tools available to it under existing law. However,
without passage of comprehensive legislation to provide the Postal
Service with a workable business model for today's marketplace,
large quarterly financial losses will continue.
"To return the Postal Service to solvency requires a comprehensive
approach, which is reflected in our updated Five-Year Business
Plan," said Postmaster General and CEO Patrick Donahoe. "The plan
provides an achievable roadmap to restore financial stability and
preserve affordable mail service for the American public. The
major elements of the plan must be pursued and executed within a
short window of opportunity to avoid unsustainable losses and
potentially becoming a long-term burden to the American taxpayer."
The Postal Service needs to save $20 billion annually by 2016.
Many of the savings cannot be achieved without the following
legislative action:
-- Require a USPS Health Care Plan (resolves the Retiree Health
Plan prepayment issue)
-- Refund the FERS overpayment and adjust the FERS payment
schedule
-- Adjust delivery frequency (six-day package/five-day mail
delivery)
-- Streamline the governance model
-- Allow USPS the authority to expand products and services
-- Require a defined contribution retirement plan for future
postal employees
-- Provide instructions to arbitrators to consider USPS's
financial condition in interest arbitration awards
-- Reform workers' compensation
The Postal Service has already reached its debt limit of $15
billion. It also has defaulted on $11.1 billion due for retiree
health benefits in 2012 and also expects to default on an
additional $5.6 billion on September 30, 2013. In addition, the
Postal Service owes an estimated $17 billion on future workers'
compensation claims. "These obligations of nearly $50 billion and
continuing losses highlight the need for immediate legislative
reform to give us the latitude to execute on our Five-Year Plan
and improve our ability to repay these obligations and return to
profitability," said Chief Financial Officer Joe Corbett.
Mr. Corbett says the plan also requires aggressive actions to
increase operational efficiency and improve the Postal Service's
liquidity position, including the accelerated consolidation of
mail processing, retail and delivery networks in order to better
align them with mail volumes and changing customer needs and
continued administrative reductions.
The Postal Service also continues to reduce costs by reducing work
hours. In the second quarter, work hours were reduced by
approximately 7 million hours, a 2.4 percent reduction compared to
the same period last year. "Even with a 6.2 percent volume
increase in Shipping and Packages compared to the same period last
year, we were able to reduce these work hours to increase
efficiency," Mr. Corbett added, noting that work hour reductions
have been the single largest contributor to the ongoing
achievement of savings targets.
The number of career employees decreased by approximately 25,000
in the second quarter and by 46,000 in the last year. These
reductions have been accomplished primarily through attrition and
separation incentives. The Postal Service now has the lowest
number of career employees since 1966.
Second Quarter Results of Operations Compared to Same Period Last
Year
-- Total mail volume of 38.8 billion pieces compared to 39.4
billion pieces
-- First-Class Mail revenue declined 2.7 percent on a volume
decline of 4.1 percent
-- Standard Mail revenue increased 2.4 percent on a volume
increase of 1.0 percent
-- Shipping and Package revenue increased 9.3 percent on a volume
increase of 6.2 percent
-- Operating revenue of $16.3 billion, an increase of $121 million
or 0.7 percent. The slight increase is attributable to the strong
growth in Postal Service Shipping and Packages business
supplemented by a modest increase in Standard Mail revenue, offset
by the decline in First-Class Mail.
-- Operating expenses of $18.2 billion compared to $19.4 billion,
a decrease of 6.2 percent. The large decrease reflects last
year's accrual for the additional retiree health benefit
prefunding payment and reduced 2013 work hours.
While the continuing shift to electronic communication
alternatives had a pronounced negative effect on First-Class Mail
volume and revenue, the growth of e-commerce and successful
marketing campaigns continued to grow Postal Service Shipping and
Package business. Total Shipping and Packages revenue in the
second quarter increased $267 million, or 9.3 percent, compared to
the same period last year. For the six months ended March 31,
Shipping and Package revenue is up 6.9 percent. The increases are
reflective of successful efforts to take advantage of the growing
area of shipping and packages and compete in the ground shipping
services and "last-mile" e-commerce fulfillment markets.
Standard (Advertising) Mail revenue in the second quarter
increased over the same quarter in the previous year, the second
consecutive quarter of growth. Standard Mail revenues were $96
million, or 2.4 percent, greater in the second quarter compared to
the same time last year. The year-to-date revenue increase totals
2.8 percent, on a volume increase of 2.4 percent. The year-to-
date increase is largely attributable to political and election
mail in the first quarter. Promotional incentives for advertisers
introduced in the second quarter designed to promote the
integration of mobile technologies into marketers' direct mail
pieces are expected to further boost Standard Mail revenue later
in the fiscal year.
First-Class Mail revenue, the Postal Service's most profitable
service category, decreased $198 million, or 2.7 percent, in the
second quarter compared to the same period last year, with a
volume decrease of 713 million pieces, or 4.1 percent. The most
significant factor contributing to the ongoing decline continues
to be the migration toward electronic communication and
transactional alternatives.
About U.S. Postal Service
A self-supporting government enterprise, the U.S. Postal Service
is the only delivery service that reaches every address in the
nation, 151 million residences, businesses and Post Office Boxes.
The Postal Service receives no tax dollars for operating expenses,
and relies on the sale of postage, products and services to fund
its operations. With 32,000 retail locations and the most
frequently visited website in the federal government, usps.com,
the Postal Service has annual revenue of more than $65 billion and
delivers nearly 40 % of the world's mail. If it were a private
sector company, the U.S. Postal Service would rank 35th in the
2011 Fortune 500. In 2011, the U.S. Postal Service was ranked
number one in overall service performance, out of the top 20
wealthiest nations in the world, Oxford Strategic Consulting.
Black Enterprise and Hispanic Business magazines ranked the Postal
Service as a leader in workforce diversity. The Postal Service
has been named the Most Trusted Government Agency for six years
and the sixth Most Trusted Business in the nation by the Ponemon
Institute.
The Postal Service receives no tax dollars for operating expenses
and relies on the sale of postage, products and services to fund
its operations.
The U.S. Postal Service ended the first three months of its 2012
fiscal year (Oct. 1 - Dec. 31, 2011) with a net loss of $3.3
billion. Management expects large losses to continue until the
Postal Service has implemented its network re-design and down-
sizing and has restructured its healthcare program. Additionally,
the return to financial stability requires legislation which gives
the Postal Service typical commercial freedoms, including delivery
flexibility, returns over $10 billion of amounts overpaid to the
Federal Government and resolves the need to prefund retiree
healthcare at rates not assessed any other entity in the United
States.
To return to profitability, CEO Patrick Donahoe has advanced a
plan to reduce annual costs by $20 billion by 2015. The plan
includes continued aggressive actions to generate additional
revenue and reduce operating expenses. To reach the goal, the
Postal Service also needs changes in the law. "Passage of
legislation is urgently needed that provides the Postal Service
with the speed and flexibility needed to cut costs that are not
under our control, including employee health care costs," Donahoe
said in February 2012 "The changes will give the Postal Service a
bright future and provide the nation with affordable and reliable
delivery for generations to come."
VIVARO CORP: Has Nod to Hire Womble Carlyle to Advise on FCC Rules
------------------------------------------------------------------
The Hon. Martin Glenn of the U.S. Bankruptcy Court for the
Southern District of New York has granted Vivaro Corporation, et
al., permission to employ and retain Womble Carlyle Sandridge &
Rice, LLP, as special counsel, nunc pro tunc to Feb. 5, 2013, in
matters related compliance with the Federal Communications
Commission rules and regulations in connection with the sale of
the Debtors' assets.
As reported by the Troubled Company Reporter on April 12, 2013,
WCSR sought final approval, allowance, payment and reimbursement
of (a) total compensation of $2,897.50 and, (b) reimbursement of
necessary, documented and reasonable expenses in the amount of
$0.00, incurred in the conduct of providing services to the
Debtors from Feb. 5, 2013, through Feb. 8, 2013.
About Vivaro Corp.
Vivaro Corp., which specializes in the sale of international
calling cards in the U.S., filed a Chapter 11 petition (Bankr.
S.D.N.Y. Case No. 12-13810) on Sept. 5, 2012, together with six
other related companies, including Kare Distribution Inc. The
Debtor is represented by Frederick E. Schmidt, Esq., at Hanh V.
Huynh, Esq., at Herrick, Feinstein LLP. Garden City Group Inc. is
the claims and notice agent.
A five-member official committee of unsecured creditors has been
appointed in the case.
WEAVER PUBLICATIONS: Buyer Not Liable to Schumann Printers' Debt
----------------------------------------------------------------
Miles Multimedia, LLC, which purchased some of the assets of
Weaver Publications, Inc., in a distressed sale seeks a
declaration that it has no successor liability to pay Weaver's
outstanding debt to Schumann Printers, Inc. The case was tried to
the Court on April 22-23, 2013. In a May 2, 2013 Findings of
Fact, Conclusions of Law, and Order of Judgment available at
http://is.gd/CK3doHfrom Leagle.com, District Judge R. Brooke
Jackson in Colorado sided with Miles Multimedia, holding that
Miles has no obligation to pay the debt that Weaver owes to
Schumann.
Weaver, a Colorado company, provided publishing and marketing
services for convention and visitor bureaus and state tourism
agencies, meaning that it assisted its customers in attracting
visitors. The Colorado Tourism Office was one of Weaver's
customers. Weaver would write articles about vacation
opportunities in Colorado and then subcontract with printers who
would print brochures, maps, and so forth. Weaver also
subcontracted with other companies to distribute the materials,
such as by placing them in racks and responding to telephone and
other requests for information.
In 2004, Weaver was sold to Prospect Partners, a private equity
fund, which saddled the publishing company with substantial long-
term bank debt. In April 2010, Prospect Partners announced plans
to sell its interest in Weaver. The Jordan Edmiston Group, Inc.,
an investment banking firm, assisted in the marketing and sale of
the company, assembling a list of about 90 prospective purchasers.
Schumann Printers, a printing company located in Wisconsin, is one
of Weaver's vendors. During the busy October through December
2010 season, Schumann was Weaver's largest printing vendor.
During that period Schumann's invoices totaled $994,139.
Schumann, like other vendors, was not aware that Weaver was in the
process of being sold.
Miles Multimedia, a Delaware company headquartered in Florida, was
one of Weaver's principal competitors. Miles Multimedia was not
included in the initial list of 90 possible buyers for Weaver
because Weaver was reluctant to provide its financial information
to Mr. Miles.
During negotiations between both companies' representatives, Miles
Multimedia's founder, owner and chief executive, Roger Miles,
learned that Prospect Partners intended to have Weaver do an
Assignment for the Benefit of Creditors or "ABC." An ABC is a
means of liquidating assets to pay creditors, essentially an
insolvency proceeding that is an alternative to a Chapter 7 or
Chapter 11 bankruptcy governed by federal law. Mr. Miles
acknowledges that this signaled to him that it was unlikely that
everyone who was entitled to be paid would get paid.
On January 28, 2011, both companies reached a verbal agreement on
an asset purchase. Under a January 31, 2011 proposal, which Mr.
Miles regarded as essentially equivalent to his previous two
offers from his perspective, just structured differently, (1)
Miles Multimedia would pay Weaver $400,000 in cash; (2) Miles
Multimedia would pay a royalty obligation Weaver owed to the
Colorado Tourism Office in the amount of $100,000 directly to the
Colorado Tourism Office; (3) Miles Multimedia would fulfill
Weaver's obligations to distribute materials to customers under
contract, called by the parties "fulfillment services," which
would avoid Weaver's defaulting on those obligations; (4) Miles
would attempt to collect Weaver's accounts receivable, still
estimated to be approximately $1.8 million and turn what it
collected over to Weaver; and (5) Weaver would retain all cash it
then possessed, approximately $1.7 million. In exchange, (1) Miles
would have access to Weaver's customer list; (2) Weaver would
partner with Miles in making a pitch to the Colorado Tourism
Office; (3) Miles would receive Weaver's personal property (office
equipment, fixtures, computers, etc.); (4) Miles would receive
Weaver's "trade credits;" and (5) Miles would assume no other
debts or obligations of Weaver and would not assist Weaver in the
payment of those debts.
An Asset Purchase Agreement was prepared, and the deal closed on
February 14, 2011. Mr. Miles received a list of Weaver's royalty
obligations owed to its customers, which also showed Weaver's
debts to its vendors (but not Weaver's outstanding bank debt) at
the closing.
Miles Multimedia's $400,000 cash payment went to the trustee for
the Assignment for the Benefit of Creditors, Silverman Consulting.
The trustee also received $1.7 million of Weaver's retained cash
and approximately $1.5 to $1.6 million of Weaver's accounts
receivable that Miles was able to collect on Weaver's behalf. The
trustee applied the funds to the secured bank debt.
Unsecured creditors were not paid. The vendors, including Schumann
which was Weaver's largest trade creditor, were not paid.
Miles engaged Schumann for two projects on that basis. However,
the two parties could not thereafter agree on terms that they both
would accept, and that was the end of the business relationship
between Miles and Schumann. Miles Multimedia has, however,
continued to do business with the other five of the six largest
Weaver vendors.
Schumann sued Weaver. However, Schumann apparently indicated that
it might sue Miles Multimedia on a successor liability theory.
Miles won the race to the courthouse by filing the present suit,
seeking a declaration that it has no obligation to Schumann.
Schumann wasn't the only unpaid vendor that squawked. Vision
Graphics, which had prepared maps for Weaver, threatened to
interfere with Miles' distribution of the maps; Miles settled by
paying half their loss and offering them new business. On-time
Delivery threatened to cease fulfilling its contract and to seize
assets; Miles negotiated a settlement and paid them $10,000.
USA-800, which provided a call-in service, refused to permit Miles
to use the telephone number until it paid $7,000 that was owed to
it. Miles paid.
While Miles negotiated relatively small settlements with those
three vendors, Schumann's debt was another story. Weaver's
obligation to Schumann's of $994,139, exclusive of interest, is
not only the largest vendor obligation, but it constituted close
to half of the total and dwarfed the others.
The case is, MILES MULTIMEDIA, LLC, a Delaware limited liability
company, Plaintiff, v. SCHUMANN PRINTERS, INC., a Wisconsin
corporation, Defendant, Civil Action No. 11-cv-03150-RBJ (D.
Colo.).
WESTERN CAPITAL: Has Nod to Hire Eason Rohde as Litigation Counsel
------------------------------------------------------------------
Western Capital Partners LLC sought and obtained authorization
from the U.S. Bankruptcy Court for the District of Colorado to
employ Eason Rohde, LLC, counsel, to handle litigation on behalf
of the bankruptcy estate.
Eason Rohde will represent the Debtor in any litigation arising
related or as a result of the bankruptcy petition. This will
include contested matters and adversary proceedings in which the
estate is involved, including the investigation of claims and the
prosecution thereof which the estate deems appropriate.
Eason Rohde will be paid at these hourly rates:
David Eason $325
Bruce Rohde $325
Law Clerk $125
Paralegals $125
To the best of the Debtor's knowledge, Eason Rohde is a
disinterested person as the term is defined in the Bankruptcy Code
and does not represent any interest adverse to the Debtor and its
estate.
Western Capital Partners LLC filed a bare-bones Chapter 11
petition (Bankr. D. Col. Case No. 13-15760) in Denver on April 10,
2013. The Englewood-based company estimated assets and debt of
$10 million to $50 million. The Debtor is represented by Jeffrey
Weinman, Esq., in Denver. Judge Michael E. Romero presides over
the case.
WESTERN CAPITAL: Court Okays Weinman & Associates as Counsel
------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Colorado has granted
Western Capital Partners LLC permission to employ Weinman &
Associates, P.C., as its attorney.
Wein will, among other things, prepare the statements and
schedules, and the plan of reorganization and disclosure
statements at these hourly rates:
Jeffrey A. Weinman $450
William A. Richey, Paralegal $200
Lisa Barenberg, Paralegal $150
Weinman has received a $25,000 retainer from the Debtor. A
portion of the retainer was expended on pre-petition services and
costs including the filing fee. The balance of the retainer will
be kept in a Coltaf account. Weinman claims an attorneys lien in
the retained funds. Upon information and belief, no party in
interest has a senior lien or interest in the funds being retained
by Weinman.
Jeffrey A. Weinman, Esq., President of Weinman, attested to the
Court that the firm is a disinterested person as the term is
defined in the Bankruptcy Code and does not represent any interest
adverse to the Debtor and its estate.
Western Capital Partners LLC filed a bare-bones Chapter 11
petition (Bankr. D. Col. Case No. 13-15760) in Denver on April 10,
2013. The Englewood-based company estimated assets and debt of
$10 million to $50 million. Judge Michael E. Romero presides over
the case.
WRIGLEY JR: Moody's Changes Outlook on Ba1 Ratings to Positive
--------------------------------------------------------------
Moody's Investors Service affirmed the Ba1 Corporate Family Rating
and the Ba1-PD Probability of Default Rating of Wrigley (Wm) Jr.
Company and changed the rating outlook to positive from stable.
Moody's also affirmed existing ratings of secured debt instruments
at Baa1.
The outlook revision to positive reflects Moody's expectation that
Wrigley's credit metrics will continue to improve, with leverage
decreasing over the next 12 to 18 months as debt is repaid. It
also reflects Moody's assumption that the capital structure will
be simplified when the remaining secured notes mature over the
course of the next year. While the company will still carry the
burden of $4.4 billion in high coupon subordinated notes, these
notes are subject to early redemption in October, 2014 allowing
for potential refinancing which could lower interest costs and
improve coverage metrics. Moody's does not currently assume that
such a refinancing will occur.
Ratings Rationale:
Wrigley's Ba1 Corporate Family Rating is supported by the
company's global reach, portfolio of well known leading
confectionary brands, high profit margins and predictable cash
flow. These strengths are balanced against relatively high
financial leverage that was the result of the 2008 acquisition by
Mars, Inc. (Mars). Moody's expects that leverage, which fell to
just below 4 times by the end of 2012, will continue to decline
over time through debt repayment and earnings growth.
Moody's takes into consideration the implicit support of parent
company Mars, that has a comparatively stronger credit profile
than Wrigley's and has invested nearly $14 billion in cash and
assets in Wrigley. This relationship enhances Wrigley's short-term
liquidity profile; however, given that there are no formal support
agreements or parent guarantees in place, there is not sufficient
support to warrant notching Wrigley's long-term debt ratings
higher.
Ratings Affirmed:
Corporate Family Rating at Ba1;
Probability of Default Rating at Ba1-PD;
$200 million senior secured revolving credit facility expiring
2014 at Baa1 (LGD 1, 2%);
Senior secured notes due 2013-2014 at Baa1 (LGD 1, 2%)
An upgrade to investment grade would require Wrigley to maintain
stable operating performance and to achieve and sustain stronger
credit metrics, including debt/EBITDA sustained below 4.0 times,
and EBITA/interest of at least 3.0 times. In order to strengthen
its credit metrics sufficiently to warrant an upgrade, Wrigley
will need to refinance or repay a significant portion of its
current capital securities.
Conversely, a downgrade could be triggered by deterioration in
Wrigley's core operation performance or a major leveraged
acquisition that causes debt/EBITDA to rise above 5.0 times.
The assigned Baa1 ratings on the senior secured debt instruments
are three notches higher than the Corporate Family Rating,
reflecting their all-assets secured position.
The principal methodology used in this rating was the Global
Packaged Goods published in December 2012. Other methodologies
used include Loss Given Default for Speculative-Grade Non-
Financial Companies in the U.S., Canada and EMEA published in June
2009.
XZERES CORP: David Baker Held 7% Equity Stake as of April 9
-----------------------------------------------------------
In a Schedule 13G filing with the U.S. Securities and Exchange
Commission, David N. Baker disclosed that, as of April 9, 2013, he
beneficially owned 2,733,994 shares of common stock of XZERES
Corp. representing 7.01% of the shares outstanding. A copy of the
regulatory filing is available for free at http://is.gd/G1HcPV
About XZERES Corp.
Headquartered in Wilsonville, Oregon, XZERES Corp. designs,
develops, and markets distributed generation, wind power systems
for the small wind (2.5kW-100kW) market as well as power
management solutions.
As reported by the Troubled Company Reporter on July 3, 2012,
Silberstein Ungar, PLLC, in Bingham Farms, Michigan, expressed
substantial doubt about XZERES' ability to continue as a going
concern, following its audit of the Company's financial position
and results of operations for the fiscal year ended Feb. 29, 2012.
The independent auditors noted that the Company has incurred
losses from operations, has negative working capital, and is in
need of additional capital to grow its operations so that it can
become profitable.
The Company's balance sheet at Nov. 30, 2012, showed $4.11 million
in total assets, $5.13 million in total liabilities and a
$1.02 million total stockholders' deficit.
ZOGENIX INC: Incurs $21 Million Net Loss in First Quarter
---------------------------------------------------------
Zogenix, Inc., filed with the U.S. Securities and Exchange
Commission its quarterly report on Form 10-Q disclosing a net loss
of $21.05 million on $6.98 million of total revenue for the three
months ended March 31, 2013, as compared with a net loss of $10.29
million on $18.34 million of total revenue for the same period
during the prior year.
The Company's balance sheet at March 31, 2013, showed
$65.57 million in total assets, $70.56 million in total
liabilities, and a $4.99 million total stockholders' deficit.
Roger Hawley, chief executive officer of Zogenix, stated, "We
recently had an update call with the FDA regarding the status of
the Zohydro ER new drug application (NDA). On the call, the FDA
indicated that they are preparing to take action on the Zohydro
NDA in the summer 2013. While they declined to provide any
specific reasons for the delay, we have concluded the FDA are
working on several broader opioid related issues that need to be
addressed prior to an action on our NDA. We were not informed of
any deficiencies in the application, which suggests that the
remaining steps in the review process are finalizing the Zohydro
ER REMS, to be consistent with the updated class-wide REMS, and
labeling discussions. We are disappointed with the ongoing delay,
and remain prepared to launch the product three to four months
after potential approval."
A copy of the Form 10-Q is available for free at:
http://is.gd/Gi3bSl
About Zogenix Inc.
Zogenix, Inc. (NASDAQ: ZGNX), with offices in San Diego and
Emeryville, California, is a pharmaceutical company
commercializing and developing products for the treatment of
central nervous system disorders and pain.
Zogenix incurred a net loss of $47.38 million in 2012, as compared
with a net loss of $83.90 million in 2011.
Ernst & Young LLP, in San Diego, California, issued a "going
concern" qualification on the consolidated financial statements
for the year ended Dec. 31, 2012, citing recurring losses from
operations and lack of sufficient working capital which raise
substantial doubt about the Company's ability to continue as a
going concern.
* Atlas Partners Purchases Loans & Liens Against Joyce Brothers
---------------------------------------------------------------
An affiliate of Atlas Partners has participated in a venture that
purchased the senior secured and the junior mortgage/mezzanine
loans and liens against Joyce Brothers Storage & Van Co. in order
to maximize the value of the company and its assets.
Special Opportunity Value Fund, LP also participated in the
transaction.
* David Oreck Releases Book "Dust to Diamonds"
----------------------------------------------
Last week the world learned of the Chapter 11 filing of Oreck Inc.
Reasons stated ranged from increased competition to low demand.
But the real reason for the downfall of the company has been
largely overlooked. What most don't know is that David Oreck sold
his interest in the company approximately 10 years ago to venture
capitalists and has had no financial interest in the company
since.
Over the last decade, Mr. Oreck witnessed these individuals place
the company deeply in debt while paying themselves large
dividends. They also moved in direct opposition to the original
principles that made the company so strong.
This so disturbed Mr. Oreck that he wrote and recently released a
book entitled Dust to Diamonds that showed exactly what he did to
make the company great and how other businesses can do the same.
The bankruptcy filing now stands as proof that his business
principles were right and if the individuals who took over Oreck,
Inc. had stuck to those ideas, they would be more than profitable
enough today. Mr. Oreck's contention is that venture capitalists
are robbing American companies and unnecessarily contributing to
the continued loss of American jobs and this is just one example
of that trend.
Mr. Oreck is very concerned about the fate of the 650+ employees
of the company and knows that the company can once again be strong
and vibrant with the right leadership. He and his family are
currently negotiating a buy back of the company to accomplish
these goals.
About the Author, David Oreck
David Oreck is an American entrepreneur and patriot. He served as
a navigator in World War II, and then returned to begin a career
in sales in New York City, far away from his Midwest roots. After
almost two decades of sales and marketing experience in the
corporate world, Oreck struck out on his own and founded the Oreck
Company. He then used revolutionary marketing ideas a household
name. Oreck's success came through a clear and unique
understanding of how to market a small business and he shares that
knowledge with lecture audiences and entrepreneurs nationwide.
* Large Companies With Insolvent Balance Sheets
-----------------------------------------------
Total
Share- Total
Total Holders' Working
Assets Equity Capital
Company Ticker ($MM) ($MM) ($MM)
------- ------ ------ -------- -------
ABSOLUTE SOFTWRE ABT CN 120.5 (14.1) (11.1)
ADA-ES INC ADES US 92.5 (39.8) (11.0)
AK STEEL HLDG AKS US 3,906.1 (109.7) 604.0
AMC NETWORKS-A AMCX US 2,568.3 (825.3) 620.4
AMER AXLE & MFG AXL US 3,029.6 (107.9) 354.0
AMER RESTAUR-LP ICTPU US 33.5 (4.0) (6.2)
AMERISTAR CASINO ASCA US 2,125.6 (2.6) (60.2)
AMR CORP AAMRQ US 23,852.0 (8,376.0) (2,465.0)
AMYLIN PHARMACEU AMLN US 1,998.7 (42.4) 263.0
ANGIE'S LIST INC ANGI US 108.3 (0.1) 3.3
ARRAY BIOPHARMA ARRY US 128.4 (31.7) 64.0
AUTOZONE INC AZO US 6,662.2 (1,550.1) (1,108.4)
BERRY PLASTICS G BERY US 5,082.0 (315.0) 517.0
CABLEVISION SY-A CVC US 7,246.2 (5,626.0) (319.5)
CAESARS ENTERTAI CZR US 27,475.0 (560.0) 1,227.1
CAPMARK FINANCIA CPMK US 20,085.1 (933.1) -
CC MEDIA-A CCMO US 16,292.7 (7,995.2) 1,211.7
CENTENNIAL COMM CYCL US 1,480.9 (925.9) (52.1)
CHINA XUEFENG EN CXEE US 0.0 (0.0) (0.0)
CHOICE HOTELS CHH US 546.0 (539.3) 56.8
CIENA CORP CIEN US 1,885.2 (78.6) 741.2
CINCINNATI BELL CBB US 2,872.4 (698.2) (51.9)
COMVERSE INC CNSI US 823.2 (28.4) (48.9)
DELTA AIR LI DAL US 45,068.0 (1,943.0) (5,427.0)
DEX MEDIA INC DXM US 2,658.8 (17.7) (13.5)
DIRECTV DTV US 20,650.0 (5,748.0) 69.0
DOMINO'S PIZZA DPZ US 476.6 (1,323.4) 85.0
DUN & BRADSTREET DNB US 1,902.0 (1,097.0) (194.9)
FAIRPOINT COMMUN FRP US 1,656.5 (360.7) 5.5
FERRELLGAS-LP FGP US 1,503.0 (42.3) (22.2)
FIFTH & PACIFIC FNP US 826.3 (170.2) (17.7)
FOREST OIL CORP FST US 1,895.0 (104.8) (127.8)
FREESCALE SEMICO FSL US 3,139.0 (4,540.0) 1,209.0
GENCORP INC GY US 1,385.2 (379.1) 32.0
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 27,882.0 (8,012.0) 1,796.0
HOVNANIAN ENT-A HOV US 1,580.3 (481.2) 935.2
HUGHES TELEMATIC HUTC US 110.2 (101.6) (113.8)
HUGHES TELEMATIC HUTCU US 110.2 (101.6) (113.8)
INCYTE CORP INCY US 330.4 (175.0) 173.4
INFOR US INC LWSN US 5,846.1 (480.0) (306.6)
INSYS THERAPEUTI NEOL US 14.5 (30.8) (41.8)
INSYS THERAPEUTI INSY US 14.5 (30.8) (41.8)
IPCS INC IPCS US 559.2 (33.0) 72.1
ISTA PHARMACEUTI ISTA US 124.7 (64.8) 2.2
JUST ENERGY GROU JE US 1,510.8 (273.1) (287.1)
JUST ENERGY GROU JE CN 1,510.8 (273.1) (287.1)
L BRANDS INC LTD US 6,019.0 (1,014.0) 667.0
LIN TV CORP-CL A TVL US 1,201.4 (86.6) (101.7)
LORILLARD INC LO US 3,749.0 (1,796.0) 1,158.0
MANNKIND CORP MNKD US 215.2 (146.8) (231.9)
MARRIOTT INTL-A MAR US 6,523.0 (1,377.0) (732.0)
MDC PARTNERS-A MDCA US 1,418.5 (12.4) (165.9)
MDC PARTNERS-A MDZ/A CN 1,418.5 (12.4) (165.9)
MEDIA GENERAL-A MEG US 734.7 (193.7) 38.1
MERITOR INC MTOR US 2,337.0 (1,014.0) 208.0
MERRIMACK PHARMA MACK US 149.0 (6.4) 89.8
MONEYGRAM INTERN MGI US 4,892.0 (171.7) 14.1
MORGANS HOTEL GR MHGC US 583.6 (148.2) 110.7
MPG OFFICE TRUST MPG US 1,450.5 (530.6) -
NATIONAL CINEMED NCMI US 831.0 (308.8) 122.2
NAVISTAR INTL NAV US 8,531.0 (3,309.0) 1,517.0
NEKTAR THERAPEUT NKTR US 447.9 (2.6) 183.8
NPS PHARM INC NPSP US 188.5 (4.2) 133.4
NYMOX PHARMACEUT NYMX US 1.8 (7.4) (1.9)
ODYSSEY MARINE OMEX US 26.9 (20.8) (25.2)
ORGANOVO HOLDING ONVO US 16.7 (5.3) (6.2)
PALM INC PALM US 1,007.2 (6.2) 141.7
PDL BIOPHARMA IN PDLI US 312.8 (93.7) 189.9
PHILIP MORRIS IN PM US 37,418.0 (2,732.0) 2,152.0
PHILIP MRS-BDR PHMO11B BZ 37,418.0 (2,732.0) 2,152.0
PLAYBOY ENTERP-A PLA/A US 165.8 (54.4) (16.9)
PLAYBOY ENTERP-B PLA US 165.8 (54.4) (16.9)
PROTECTION ONE PONE US 562.9 (61.8) (7.6)
QUALITY DISTRIBU QLTY US 510.5 (11.1) 88.5
RALLY SOFTWARE D RALY US 35.8 (1.1) 1.3
REGAL ENTERTAI-A RGC US 2,451.8 (706.2) 117.1
RENAISSANCE LEA RLRN US 57.0 (28.2) (31.4)
RENTPATH INC PRM US 208.0 (91.7) 3.6
RESVERLOGIX CORP RVX CN 14.0 (20.2) (4.7)
REVLON INC-A REV US 1,241.9 (655.1) 152.9
RURAL/METRO CORP RURL US 303.7 (92.1) 72.4
SALLY BEAUTY HOL SBH US 1,892.1 (280.5) 523.4
SILVER SPRING NE SSNI US 494.3 (104.0) 60.1
SINCLAIR BROAD-A SBGI US 2,734.5 (97.3) (18.2)
SUPERVALU INC SVU US 11,034.0 (1,415.0) (1,380.0)
TAUBMAN CENTERS TCO US 3,302.5 (184.4) -
TESORO LOGISTICS TLLP US 363.2 (18.1) 11.1
TETRAPHASE PHARM TTPH US 14.1 (3.2) 3.7
THRESHOLD PHARMA THLD US 113.9 (21.8) 88.3
TOWN SPORTS INTE CLUB US 406.2 (50.7) (13.2)
ULTRA PETROLEUM UPL US 2,035.4 (562.2) (293.0)
UNISYS CORP UIS US 2,323.2 (1,545.4) 453.1
VECTOR GROUP LTD VGR US 1,066.8 (108.3) 422.2
VERISIGN INC VRSN US 2,071.1 (39.1) (91.2)
VIRGIN MOBILE-A VM US 307.4 (244.2) (138.3)
VISKASE COS I VKSC US 334.7 (3.4) 113.5
WEIGHT WATCHERS WTW US 1,218.6 (1,665.5) -
WEST CORP WSTC US 3,940.9 (850.2) 297.8
WESTMORELAND COA WLB US 943.0 (286.5) (3.0)
XOMA CORP XOMA US 88.9 (0.9) 60.6
*********
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., Washington, D.C., 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 2013. 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 $975 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 Peter A.
Chapman at 215-945-7000 or Nina Novak at 202-241-8200.
*** End of Transmission ***